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Is there any algorithm to calculate highest possible return on stock market? | You can statistically estimate the maximal loss/gain over a period of time T by the highest loss/gain during any of the same length time intervals in during the life of the stock. Using logarithmic prices to be more accurate. |
Why gamma scalping is not advised for retail traders with reg T margin | My interpretation of that sentence is that you can't do the buying/selling of shares outright (sans margin) because of the massive quantity of shares he's talking about. So you have to use margin to buy the stocks. However, because in order to make significant money with this sort of strategy you probably need to be working dozens of stocks at the same time, you need to be familiar with portfolio margin. Since your broker does not calculate margin calls based on individual stocks, but rather on the value of your whole portfolio, you should have experience handling margin not just on individual stock movements but also on overall portfolio movements. For example, if 10% (by value) of the stocks you're targeting tend to have a correlation of -0.8 with the price of oil you should probably target another 10% (by value) in stocks that tend to have a correlation of +0.8 with the price of oil. And so on and so forth. That way your portfolio can weather big (or even small) changes in market conditions that would cause a margin call on a novice investor's portfolio. |
When a stock price rises, does the company get more money? | When a stock price rises, the company's assets are worth more. This doesn't mean it gets more cash directly, but it can liquidate (= sell) some of its stocks for a higher return than before. |
Does high frequency trading (HFT) punish long-term investment? | I disagree strongly with the other two answers posted thus far. HFT are not just liquidity providers (in fact that claim is completely bogus, considering liquidity evaporates whenever the market is falling). HFT are not just scalping for pennies, they are also trading based on trends and news releases. So you end up having imperfect algorithms, not humans, deciding the price of almost every security being traded. These algorithms data mine for news releases or they look for and make correlations, even when none exist. The result is that every asset traded using HFT is mispriced. This happens in a variety of ways. Algos will react to the same news event if it has multiple sources (Ive seen stocks soar when week old news was re-released), algos will react to fake news posted on Twitter, and algos will correlate S&P to other indexes such as VIX or currencies. About 2 years ago the S&P was strongly correlated with EURJPY. In other words, the American stock market was completely dependent on the exchange rate of two currencies on completely different continents. In other words, no one knows the true value of stocks anymore because the free market hasnt existed in over 5 years. |
The equivalent of the standing order in the internet age for the UK specifically | A standing order is still the right way to do this. Most bank accounts have online access and will let your customer setup the standing order online, without having to fill in a paper form. |
Where to start with personal finance in Canada? | There are some great answers on this site similar to what you asked, with either a non-jurisdictional or a US-centric focus. I would read those answers as well to give yourself more points of view on early investing. There are a few differences between Canada and the US from an investing perspective that you should also then consider, namely tax rules, healthcare, and education. I'll get Healthcare and Education out of the way quickly. Just note the difference in perspective in Canada of having government healthcare; putting money into health-savings plans or focusing on insurance as a workplace benefit is not a key motivating factor, but more a 'nice-to-have'. For education, it is more common in Canada for a student to either pay for school while working summer / part-time jobs, or at least taking on manageable levels of debt [because it is typically not quite as expensive as private colleges in the US]. There is still somewhat of a culture of saving for your child's education here, but it is not as much of a necessity as it may be in the US. From an investing perspective, I will quickly note some common [though not universal] general advice, before getting Canadian specific. I have blatantly stolen the meat of this section from Ben Miller's great answer here: Oversimplify it for me: the correct order of investing Once you have a solid financial footing, some peculiarities of Canadian investing are below. For all the tax-specific plans I'm about to mention, note that the banks do a very good job here of tricking you into believing they are complex, and that you need your hand to be held. I have gotten some criminally bad tax advice from banking reps, so at the risk of sounding prejudiced, I recommend that you learn everything you can beforehand, and only go into your bank when you already know the right answer. The 'account types' themselves just involve a few pages of paperwork to open, and the banks will often do that for free. They make up their fees in offering investment types that earn them management fees once the accounts are created. Be sure to separate the investments (stocks vs bonds etc.) vs the investment vehicles. Canada has 'Tax Free Savings Accounts', where you can contribute a certain amount of money every year, and invest in just about anything you want, from bonds to stocks to mutual funds. Any Income you earn in this account is completely tax free. You can withdraw these investments any time you want, but you can't re-contribute until January 1st of next year. ie: you invest $5k today in stocks held in a TFSA, and they grow to $6k. You withdraw $6k in July. No tax is involved. On January 1st next year, you can re-contribute a new $6K, and also any additional amounts added to your total limit annually. TFSA's are good for short-term liquid investments. If you don't know for sure when you'll need the money, putting it in a TFSA saves you some tax, but doesn't commit you to any specific plan of action. Registered Retirement Savings Plans allow you to contribute money based on your employment income accrued over your lifetime in Canada. The contributions are deducted from your taxable income in the year you make them. When you withdraw money from your RRSP, the amount you withdraw gets added as additional income in that year. ie: you invest $5k today in stocks held in an RRSP, and get a $5k deduction from your taxable income this year. The investments grow to $6k. You withdraw $6k next year. Your taxable income increases by $6k [note that if the investments were held 'normally' {outside of an RRSP}, you would have a taxable gain of only 50% of the total gain; but withdrawing the amount from your RRSP makes the gain 100% taxable]. On January 1st next year, you CANNOT recontribute this amount. Once withdrawn, it cannot be recontributed [except for below items]. RRSP's are good for long-term investing for retirement. There are a few factors at play here: (1) you get an immediate tax deduction, thus increasing the original size of investment by deferring tax to the withdrawal date; (2) your investments compound tax-free [you only pay tax at the end when you withdraw, not annually on earnings]; and (3) many people expect that they will have a lower tax-rate when they retire, than they do today. Some warnings about RRSP's: (1) They are less liquid than TFSA's; you can't put money in, take it out, and put it in again. In general, when you take it out, it's out, and therefore useless unless you leave it in for a long time; (2) Income gets re-characterized to be fully taxable [no dividend tax credits, no reduced capital gains tax rate]; and (3) There is no guarantee that your tax rate on retirement will be less than today. If you contribute only when your tax rate is in the top bracket, then this is a good bet, but even still, in 30 years, tax rates might rise by 20% [who knows?], meaning you could end up paying more tax on the back-end, than you saved in the short term. Home Buyer Plan RRSP withdrawals My single favourite piece of advice for young Canadians is this: if you contribute to an RRSP at least 3 months before you make a down payment on your first house, you can withdraw up to $25k from your RRSP without paying tax! to use for the down payment. Then over the next ~10 years, you need to recontribute money back to your RRSP, and you will ultimately be taxed when you finally take the money out at retirement. This means that contributing up to 25k to an RRSP can multiply your savings available for a down payment, by the amount of your tax rate. So if you make ~60k, you'll save ~35% on your 25k deposited, turning your down payment into $33,750. Getting immediate access to the tax savings while also having access to the cash for a downpayment, makes the Home Buyer Plan a solid way to make the most out of your RRSP, as long as one of your near-term goals is to own your own home. Registered Pension Plans are even less liquid than RRSPs. Tax-wise, they basically work the same: you get a deduction in the year you contribute, and are taxed when you withdraw. The big difference is that there are rules on when you are allowed to withdraw: only in retirement [barring specific circumstances]. Typically your employer's matching program (if you have one) will be inside of an RPP. Note that RPP's and RRSP's reduce your taxes on your employment paycheques immediately, if you contribute through a work program. That means you get the tax savings during the year, instead of all at once a year later on April 30th. *Note that I have attempted at all times to keep my advice current with applicable tax legislation, but I do not guarantee accuracy. Research these things yourself because I may have missed something relevant to your situation, I may be just plain wrong, and tax law may have changed since I wrote this to when you read it. |
Consolidating company pensions | Have you shopped around? I would agree that the fees seem high. The first question I would ask if if the .75% management fee is per year or per month? If it is per month, you will almost certainly lose money each year. A quick search shows that Fidelity will allow one to transfer their pensions into a self directed account. Here in the US, where we have 401Ks, it is almost always better to transfer them into something self directed once you leave an employer. Fidelity makes it really easy, and I always recommend them. (No affiliation.) Here in the US they actually pay you for you transferring money into your account. This can come in the form of free stock trades or money added to your account. I would encourage you to give them or their competitors a look in order to make an informed decision. Often times, a person with lowish balances, can't really afford to pay those high management fees. You might need in the 10s of millions before something like that makes sense. |
Downside to temporarily lowering interest rates? | This is brilliant for AmEx; they make a cut off of every transaction you do, so even if you pay it off before you ever pay interest, they still may take some. Balance transfers, on the other hand, generally have a transfer fee that locks in a percent, depending on the offer. For your own sake, it can be a good deal if you Considering that they make some money, it makes sense why they offer people this - merchants, as you'll read from Nerd Wallet, are paying extra to use credit cards. |
What does an options premium really mean? | Intuitive? I doubt it. Derivatives are not the simplest thing to understand. The price is either in the money or it isn't. (by the way, exactly 'at the money' is not 'in the money.') An option that's not in the money has time value only. As the price rises, and the option is more and more in the money, the time value drops. We have a $40 stock. It makes sense to me that a $40 strike price is all just a bet the stock will rise, there's no intrinsic value. The option prices at about $4.00 for one year out, with 25% volatility. But the strike of $30 is at $10.68, with $10 in the money and only .68 in time premium. There's a great calculator on line to tinker with. Volatility is a key component of options trading. Think about it. If a stock rises 5%/yr but rarely goes up any more or less, just steady up, why would you even buy an option that was even 10% out of the money? The only way I can describe this is to look at a bell curve and how there's a 1/6 chance the event will be above one standard deviation. If that standard deviation is small, the chance of hitting the higher strikes is also small. I wrote an article Betting on Apple at 9 to 2 in which I describe how a pair of option trades was set up so that a 35% rise in Apple stock would return 354% and Apple had two years to reach its target. I offer this as an example of options trading not being theory, but something that many are engaged in. What I found curious about the trade was that Apple's volatility was high enough that a 35% move didn't seem like the 4.5 to 1 risk the market said it was. As of today, Apple needs to rise 13% in the next 10 months for the trade to pay off. (Disclosure - the long time to expiration was both good and bad, two years to recover 35% seemed reasonable, but 2 years could bring anything in the macro sense. Another recession, some worldwide event that would impact Apple's market, etc. The average investor will not have the patience for these long term option trades.) |
Changes in Capital Gains Tax in the US - Going to 20% in 2011? | Consider doing things that will allow for tax deductions, such as short selling. The IRS has regulations on this as well. And consider that Futures are taxed more favorably than other kinds of investments. (60% taxed as long term, 40% taxed as short term) |
Is CFD a viable option for long-term trading? | Yes it is viable but uncommon. As with everything to do with investment, you have to know what you are doing and must have a plan. I have been successful with long term trading of CFDs for about 4 years now. It is true that the cost of financing to hold positions long term cuts into profits but so do the spreads when you trade frequently. What I have found works well for me is maintaining a portfolio that is low volatility, (e.g. picking a mix of positions that are negatively correlated) has a good sharpe ratio, sound fundamentals (i.e. co-integrated assets - or at least fairly stable correlations) then leveraging a modest amount. |
Roth IRA all in one fund, or not? [duplicate] | In your case, you could very well leave it in something like FFFFX, which for readers is a self balancing fund with a target retirement date of 2040. These funds are a conglomeration of other funds that tend to move more conservatively as time passes. However, I like to put no more than 10% of my portfolio in one fund with exceptions made for balances less than 20K. So If I had 18K it really wouldn't matter if it was in FUSEX a S&P 500 index fund. However by investing in FFFFX you pretty much meet that requirement. So you are golden if that fund meets your goals. For me, I kind of hate bonds and despite being of similar age, I have almost no money invested in bonds. |
Looking for advice on rental property | I think the first step is to be thankful that your relationship with this person has not degenerated into lawsuits and bickering. That would greatly affect your cash flow and valuations! It also seems that this person is open to a variety of solutions. This truly is a gift. I see two options without taking a mortgage or fronting cash: The key here is if the 65% property already has a mortgage. Does it have enough equity to provide 15% cash out, and cover the existing mortgage? What is the interest rate? Can you get a lower rate that will reduce the impact of a higher mortgage payment will have on your income? Can you have your partner finance the 15%? In the end there really isn't a way to divest this company without impacting your income. |
What is this discrepency between Fidelity's and Google's stock price chart; large price spike? | This is from Google Finance right now. |
Should I invest in my house, when it's in my wife's name? | It is my opinion that part of having a successful long-term relationship is being committed to the other person's success and well-being. This commitment is a form of investment in and of itself. The returns are typically non-monetary, so it's important to understand what money actually is. Money is a token people exchange for favors. If I go to a deli and ask for a sandwich. I give them tokens for the favor of having received a sandwich. The people at the deli then exchange those tokens for other favors, and that's the entire economy: people doing favors for other people in exchange for tokens that represent more favors. Sometimes being invested in your spouse is giving them a back rub when they've had a hard day. The investment pays off when you have a hard day and they give you a back rub. Sometimes being invested in your spouse is taking them to a masseuse for a professional massage. The investment pays off when they get two tickets to that thing you love. At the small scale it's easy to mostly ignore minor monetary discrepancies. At the large scale (which I think £50k is plenty large enough given your listed net worth) it becomes harder to tell if the opportunity cost will be worth making that investment. It pretty much comes down to: Will the quality-of-life improvements from that investment be better than the quality-of-life improvements you receive from investing that money elsewhere? As far as answering your actual question of: How should I proceed? There isn't a one-size fits all answer to this. It comes down to decisions you have to make, such as: * in theory it's easy to say that everyone should be able to trust their spouse, but in practice there are a lot of people who are very bad at handling money. It can be worthwhile in some instances to keep your spouse at an arms length from your finances for their own good, such as if your spouse has a gambling addiction. With all of that said, it sounds like you're living in a £1.5m house rent-free. How much of an opportunity cost is that to your wife? Has she been freely investing in your well-being with no explicit expectation of being repaid? This can be your chance to provide a return on her investment. If it were me, I'd make the investment in my spouse, and consider it "rent" while enjoying the improvements to my quality of life that come with it. |
Why do governments borrow money instead of printing it? | The Government doesn't borrow money. It in fact simply prints it. The bond market is used for an advanced way of controlling the demand for this printed money. Think about it logically. Take 2011 for example. The Govt spent $1.7 trillion more than it took in. This is real money that get's credited in to people's bank accounts to purchase real goods and services. Now who purchases the majority of treasuries? The Primary Dealers. What are the Primary Dealers? They are banks. Where do banks get their money? From us. So now put two and two together. When the Govt spends $1.7 trillion and credits our bank accounts, the banking system has $1.7 trillion more. Then that money flows in to pension funds, gets spent in to corporation who then send that money to China for cheap products... and eventually the money spent purchases up Govt securities for investments. We had to physically give China 1 trillion dollars for them to be able to purchase 1 trillion dollars in securities. So it makes sense if you think about how the math works in the real world. |
What one bit of financial advice do you wish you could've given yourself five years ago? | When I was contracting I wish I had joined a tax efficient umbrella organisation rather than just work as a sole trader. I also wish I had put money aside to pay my taxes rather than just spend it all. :( |
Is there software to buy and sell stocks in real time on very small moves in price? | Note that the pros pay for extremely fast access and are literally fighting over nanoseconds to get every possible advantage. Your system won't come close to that by several orders of magnitude. Consider the implications for the kinds of automated trading you want to perform. (Pico was overstating it. Nano, at the processor level and in terms of which transaction is first into the buffers, is certainly true. A millisecond is a Long Time in this domain.) |
Isn't an Initial Coin Offering (ICO) a surefire way to make tons of money? | A sure-fire way to make money? Hell no. There are tonnes of scams and money grabs out there, not to mention the fact that most ICOs are based on projects that are going nowhere. Having said that, there are many ICOs each month that will do very well in the future. The best thing to do is to shortlist a number of projects you like the sound of and then sit down and research each of them. Some of the key things to look out for, aside from whether you think the idea is a good one are: The team. Do they have a proven track record? Are they reputable? Is what they claim provable? Google team member names and check to see if they have a legit Linkedin profile. The Whitepaper. Is it clearly worded without spelling and grammar mistakes? Does it have a well defined roadmap with provable achievements to-date? The ICO format. How much are they looking to raise and is it a realistic figure? Are unsold tokens burnt? Is there a maximum contribution limit per investor? What does the competition look like? If they are first to market then this will make the startup way more attractive. The above are probably the most important things to consider though there are many other things to investigate. I have written a fairly comprehensive guide to all the things I look out for when analyzing the investability of an ICO. You might want to check it out before firing out your Bitcoin and ETH into dubious projects. |
Where can I invest for the Short Term and protect against Inflation? | Your goals are mutually exclusive. You cannot both earn a return that will outpace inflation while simultaneously having zero-risk of losing money, at least not in the 2011 market. In 2008, a 5+% CD would have been a good choice. Here's a potential compromise... sacrifice some immediate liquidity for more earnings. Say you had $10,000 saved: In this scheme, you've diversified a little bit, have access to 50% of your money immediately (either through online transfer or bringing your bonds to a teller), have an implicit US government guarantee for 50% of your money and low risk for the rest, and get inflation protection for 75% of your money. |
Should I deduct or capitalize the cost to replace a water heater in my rental property? (details Below) | You may be able to choose. As a small business, you can expense certain depreciable assets (section 179). But by choosing to depreciate the asset, you are also increasing the cost-basis of the property. Are you planning to sell the property in the next couple of years? Do you need a higher basis? Section 179 - Election to expense certain depreciable business assets |
Definitions of leverage and of leverage factor | This would clear out a lot more. 1) Leverage is the act of taking on debt in lieu of the equity you hold. Not always related to firms, it applies to personal situations too. When you take a loan, you get a certain %age of the loan, the bank establishes your equity by looking at your past financial records and then decides the amount it is going to lend, deciding on the safest leverage. In the current action leverage is the whole act of borrowing yen and profiting from it. The leverage factor mentions the amount of leverage happening. 10000 yen being borrowed with an equity of 1000 yen. 2) Commercial banks: 10 to 1 -> They don't deal in complicated investments, derivatives except for hedging, and are under stricter controls of the government. They have to have certain amount of liquidity and can loan out the rest for business. Investment banks: 30 to 1 -> Their main idea is making money and trade heavily. Their deposits are limited by the amount clients have deposited. And as their main motive is to get maximum returns from the available amount, they trade heavily. Derivatives, one of the instruments, are structured on underlyings and sometimes in multiple layers which build up quite a bit of leverage. And all of the trades happen on margins. You don't invest $10k to buy $10k of a traded stock. You put in, maybe $500 to take up the position and borrow the rest of the amount per se. It improves liquidity in the markets and increases efficiency. Else you could do only with what you have. So these margins add up to the leverage the bank is taking on. |
Should you keep your stocks if you are too late to sell? | You should distinguish between the price and the value of a company: "Price is what you pay, value is what you get". Price is the share price you pay for one share of the company. Value is what a company is worth (based on fundamental analysis, one of the principles of value investing). I would recommend selling the stock only if the company's value has deteriorated due to fundamental changes (e.g. better products from competitors, declining market) and its value is lower than the current share price. |
Book or web site resources for an absolute beginner to learn about stocks and investing? | The Motley Fool's How to Invest How To Invest Benjamin Graham's The Intelligent Investor The Intelligent Investor If you like The Intelligent Investor then try Benjamin's Security Analysis. But that one is not a beginner book. |
Can buying REIT's be compared to investing in Real Estate? | A couple of distinctions. First, if you were to "invest in real estate" were you planning to buy a home to live in, or buy a home to rent out to someone else? Buying a home as a primary residence really isn't "investing in real estate" per se. It's buying a place to live rather than renting one. Unless you rent a room out or get a multi-family unit, your primary residence won't be income-producing. It will be income-draining, for the most part. I speak as a homeowner. Second, if you are buying to rent out to someone else, buying a single home is quite a bit different than buying an REIT. The home is a lot less liquid, the transaction costs are higher, and all of your eggs are in one basket. Having said that, though, if you buy one right and do your homework it can set you on the road for a very comfortable retirement. |
How much of my home loan is coming from a bank, how much it goes back? | When you get a loan (car, home, student) the lending company (bank) give the (auto dealer, previous home owner, school) money. You as the borrow promise to pay this money back with interest. So in your case the 100,000 you borrow requires a payment for principal and interest of ~965 per month. After 240 payments you will have paid the bank ~231,605. So who got the ~131,000 in interest. The bank did. It was used to pay interest to the people who made deposits into the bank. It was also used to pay the expenses of the bank: salaries, retirement, rent, electricity, computers, etc. If the bank is a company with investors they may have to pay dividends to them to. Of course not all loans are successfully paid back, so some of the payment goes to cover the loans that are in default. In many cases loans are also refinanced, or the house is sold long before the 20-30 year term is up. In these cases the amount of interest received for that loan is much less than anticipated, but the good news is that it can be loaned out again. |
Investment strategy for retired couple | The safest investment in the United States is Treasures. The Federal Reserve just increased the short term rate for the first time in about seven years. But the banks are under no obligation to increase the rate they pay. So you (or rather they) can loan money directly to the United States Government by buying Bills, Notes, or Bonds. To do this you set up an account with Treasury Direct. You print off a form (available at the website) and take the filled out form to the bank. At the bank their identity and citizenship will be verified and the bank will complete the form. The form is then mailed into Treasury Direct. There are at least two investments you can make at Treasury Direct that guarantee a rate of return better than the inflation rate. They are I-series bonds and Treasury Inflation Protected Securities (TIPS). Personally, I prefer the I-series bonds to TIPS. Here is a link to the Treasury Direct website for information on I-series bonds. this link takes you to information on TIPS. Edit: To the best of my understanding, the Federal Reserve has no ability to set the rate for notes and bonds. It is my understanding that they can only directly control the overnight rate. Which is the rate the banks get for parking their money with the Fed overnight. I believe that the rates for longer term instruments are set by the market and are not mandated by the Fed (or anyone else in government). It is only by indirect influence that the Fed tries to change long term rates. |
Principal 401(k) managed fund fees, wow. What can I do? | I would even say 1% is not even reasonable in this age. The short answer is there probably isn't much you can do directly. However, there are a few things to consider: |
Advice on strategy for when to sell | It was not 100% clear if you have held all of these stocks for over a year. Therefore, depending on your income tax bracket, it might make sense to hold on to the stock until you have held the individual stock for a year to only be taxed at long-term capital gains rates. Also, you need to take into account the Net Investment Income Tax(NIIT), if your current modified adjusted income is above the current threshold. Beyond these, I would think that you would want to apply the same methodology that caused you to buy these in the first place, as it seems to be working well for you. 2 & 3. No. You trigger a taxable event and therefore have to pay capital gains tax on any gains. If you have a loss in the stock and repurchase the stock within 30 days, you don't get to recognize the loss and have to add the loss to your basis in the stock (Wash Sales Rules). |
Making an offer on a property - go in at market price? | Firstly, the agent doesn't work for you. He works for himself. It's in his interest not to get you a house at the lowest cost but to sell you a house. The higher the price the higher his commission is, or the higher the probability that the seller will sell it meaning less work for him. It depends on the market what price you should give. If I were you, I would do my own research about this area and not just trust the agent's assessment of it being a "seller's" market. Not sure where we are talking about but as you know, house prices have fallen a lot in the last few years and the economy isn't doing that well. It also depends on yourself. Every house is different and there's an emotional attachment to buying property. How much do you really want this house? Would it matter if you didn't get it? Are you prepared to keep looking? If this is your dream house, then maybe it is worth offering a bit more to ensure that you get it. If not, and you are prepared to wait, then yeah, I would shoot a little lower and see what they say. One thing I will say though is generally even if you give them a low offer, unless they're getting lots of other offers or they have to sell urgently, alot of the times the seller will come back and try to negotiate with you anyway. After all, it's business and they're there to get the highest price. |
How smart is it to really be 100% debt free? | My take is that there are many factors to consider when deciding whether to accelerate payment of a debt beyond the require minimum. Ideally you would want to be debt-free with a home owned outright, a pension big enough to lead a nice life for the rest of your days and plenty of savings to cover any unexpected expenses. Being debt-free is not a bad thing but it should not come at the expense of your overall financial health. |
Finding out actual items bought via credit card issuer and not the store receipt? | As a merchant I can tell you that the only thing the bank gets from me. Is the total amount and a category for my business. No detail, not ever. |
Investment Options for 14-year old? | As you are 14, you cannot legally buy premium bonds yourself. Your parents could buy them and hold them for you, mind you. That said, I'm not a fan of premium bonds. They are a rather weird combination of a savings account and a lottery. Most likely, you'll receive far less than the standard interest rate you'd get from a savings account. Sure, they may pay off, but they probably won't. What I would suggest, given that you expect to need the money in five years, is simply place it in a savings account. Shop around for the best interest rate you can find. This article lists interest rates, though you'll want to confirm that it is up to date. There are other investment options. You could invest in a mutual fund which tracks the stock market or the bond market, for example. On average, that'll give you a higher rate of return. But there's more risk, and as you want the money in five years, I'd be uncomfortable recommending that at this time. If you were looking at investing for 25 years, that'd be a no-brainer. But it's a bit risky for 5 years. Your investment may go down, and that's not something I'd have been happy with when I was 14. There may be some other options specific to the UK which I don't know about. If so, hopefully someone else will chime in. |
23 and on my own, what should I be doing? | Congratulations on earning a great income. However, you have a lot of debt and very high living expenses. This will eat all of your income if you don't get a hold of it now. I have a few recommendations for you. At the beginning of each month, write down your income, and write down all your expenses for the month. Include everything: rent, food, utilities, entertainment, transportation, loan payments, etc. After you've made this plan for the month, don't spend any money that's not in the plan. You are allowed to change the plan, but you can't spend more than your income. Budgeting software, such as YNAB, will make this easier. You are $51,000 in debt. That is a lot. A large portion of your monthly budget is loan payments. I recommend that you knock those out as fast as possible. The interest on these loans makes the debt continue to grow the longer you hold them, which means that if you take your time paying these off, you'll be spending much more than $51k on your debt. Minimize that number and get rid of them as fast as possible. Because you want to get rid of the debt emergency as fast as possible, you should reduce your spending as much as you can and pay as much as you can toward the debt. Pay off that furniture first (the interest rate on that "free money" is going to skyrocket the first time you are late with a payment), then attack the student loans. Stay home and cook your own meals as much as possible. You may want to consider moving someplace cheaper. The rent you are paying is not out of line with your income, but New York is a very expensive place to live in general. Moving might help you reduce your expenses. I hope you realize at this point that it was pretty silly of you to borrow $4k for a new bedroom set while you were $47k in debt. You referred to your low-interest loans as "free money," but they really aren't. They all need to be paid back. Ask yourself: If you had forced yourself to save up $4k before buying the furniture, would you still have purchased the furniture, or would you have instead bought a used set on Craigslist for $200? This is the reason that furniture stores offer 0% interest loans. They got you to buy something that you couldn't afford. Don't take the bait again. You didn't mention credit cards, so I hope that means that you don't owe any money on credit cards. If you do, then you need to start thinking of that as debt, and add that to your debt emergency. If you do use a credit card, commit to only charging what you already have in the bank and paying off the card in full every month. YNAB can make this easier. $50/hr and $90k per year are fairly close to each other when you factor in vacation and holidays. That is not including other benefits, so any other benefits put the salaried position ahead. You said that you have a few more years on your parents' health coverage, but there is no need to wait until the last minute to get your own coverage. Health insurance is a huge benefit. Also, in general, I would say that salaried positions have better job security. (This is no guarantee, of course. Anyone can get laid off. But, as a contractor, they could tell you not to come in tomorrow, and you'd be done. Salaried employees are usually given notice, severance pay, etc.) if I were you, I would take the salaried position. Investing is important, but so is eliminating this debt emergency. If you take the salaried position, one of your new benefits will be a retirement program. You can take advantage of that, especially if the company is kicking in some money. (This actually is "free money.") But in my opinion, if you treat the debt as an emergency and commit to eliminating it as fast as possible, you should minimize your investing at this point, if it helps you get out of debt faster. After you get out of debt, investing should be one of your major goals. Now, while you are young and have few commitments, is the best time to learn to live on a budget and eliminate your debt. This will set you up for success in the future. |
Can a Roth IRA be used as a savings account? | Sounds like a bad idea. The IRA is built on the power of compounding. Removing contributions will hurt your retirement savings, and you will never be able to make that up. Instead, consider tax-free investments. State bonds, Federal bonds, municipal bonds, etc. For example, I invest in California muni bonds fund which gives me ~3-4% annual dividend income - completely tax free. In addition - there's capital appreciation of your fund holdings. There are risks, of course, for example rate changes will affect yields and capital appreciation, so consult with someone knowledgeable in this area (or ask another question here, for the basics). This will give you the same result as you're expecting from your Roth IRA trick, without damaging your retirement savings potential. |
What does it mean that stocks are “memoryless”? | I think that "memoryless" in this context of a given stock's performance is not a term of art. IMO, it's an anecdotal concept or cliche used to make a point about holding a stock. Sometimes people get stuck... they buy a stock or fund at 50, it goes down to 30, then hold onto it so they can "get back to even". By holding the loser stock for emotional reasons, the person potentially misses out on gains elsewhere. |
Paying off a loan with a loan to get a better interest rate | I don't know what rates are available to you now, but yes, if you can refinance your car at a better rate with no hidden fees, you might save some money in interest. However, there are a couple of watchouts: Your original loan was a 6 year loan, and you have 5 years remaining. If you refinance your car with a new 6 year loan, you will be paying on your car for 7 years total, and you will end up paying more interest even though your interest rate might have gone down. Make sure that your new loan, in addition to having a lower rate than the old loan, does not have a longer term than what you have remaining on the original loan. Make sure there aren't any hidden fees or closing costs with the new loan. If there are, you might be paying your interest savings back to the bank in fees. If your goal is to save money in interest, consider paying off your loan early. Scrape together extra money every month and send it in, making sure that it is applied to the principal of your loan. This will shorten your loan and save you money on interest, and can be much more significant than refinancing. After your loan is paid off, continue saving the amount you were spending on your car payment, so you can pay cash for your next car and save even more. |
How smart is it to really be 100% debt free? | Very smart. Let other people pay you interest. Don't pay other people interest. And, yes, I know it's possible to borrow money from one place and lend it to another place at a slightly higher rate, but why bother. |
Should you keep your stocks if you are too late to sell? | The price at which a stock was purchased is a sunk cost--that is, you cannot go back in time and reverse the decision you made to purchase that stock. Another example of a sunk cost would be purchasing a non-refundable, non-transferable movie ticket. Sunk costs have the tendency to create a cognitive bias in which we feel that the amount we paid at some point in the past should have some sort of bearing on the decision we make now--the purchaser of the ticket feels he must go see the movie even if he no longer wishes too, lest the ticket "go to waste"... the investor hopelessly clings to a battered stock for that tiny chance that just maybe some day it will return to its former glory. This is referred to as the "sunk cost fallacy" and is considered to be irrational behavior by economists. Keeping this in mind, your hopes and dreams for the stock at the time you purchased it should have no bearing on the decision you make now. Similarly, whether the stock has risen or fallen in price since your purchase date should have no bearing. Instead, you must consider what you expect the stock to do from this very moment on into the future--that is, you must act at the margin. You've indicated that you are faced with two choices--sell the stock now, incur the loss, but benefit from the tax break (Option A). This benefit is quite easily quantifiable--it is your marginal tax rate multiplied by the additive inverse of the loss (assuming you have/will have other gains to offset). Let's just assume that you incurred a $1000 loss, at a marginal tax rate of 20%, which means your tax benefit for the loss is $200. The second choice--to hold the stock in hopes of it rising in price (Option B)--is a bit harder to quantify. You must assume that today is day zero, and that every cent in price the stock rises is a gain to you, and every cent in price the stock looses is a loss to you. If you believe that the stock will rise to a price that will net your more than your tax benefit from option A, then holding the stock is more favorable than selling it at a loss today. Conversely, if you believe this stock will fall even further in the future, or not rise enough to net you $200 (per the example), then Option A is preferable. Granted, there are some additional complications that play into your decision. By selling the stock today, you not only get a tax benefit from the loss, but you've also freed up the funds previously used to purchase that stock to be invested elsewhere (in hopefully a better performing asset). If you choose to stick with your current stock, then the gains you may have netted elsewhere must be considered as an opportunity cost associated with Option B. Finally, the tax benefit is essentially guaranteed (so in our example, a $200 risk free return), while sticking with the stock in Option B still comes with some risk. |
Is there a mathematical formula to determine a stock's price at a given time? | The fallacy in your question is in this statement: "The formulas must exist, because prices can be followed real time." What you see are snapshots of the current status of the stock, what was the last price a stock was traded at, what is the volume, is the price going up or down. People who buy and hold their stock look at the status every few days or even every few months. Day traders look at the status every second of the trading day. The math/formula comes in when people try to predict where the stock is going based on the squiggles in the line. These squiggles move based on how other people react to the squiggles. The big movements occur when big pieces of news make large movements in the price. Company X announces the release of the key product will be delayed by a year; the founder is stepping down; the government just doubled the order for a new weapon system; the insiders are selling all the shares they can. There are no formulas to determine the correct price, only formulas that try to predict where the price may go. |
How does delta of an option change with time if underlying price is constant? | As the option approaches expiry, the delta will approach zero or one, depending on whether you're in or out of the money. This might be easiest to conceptualise if you look at the option value as a function of the stock price, and then realise that the delta is the slope of that curve. Now, as we get closer to expiry, time value fades away, and we get closer and closer to the intrinsic value, which looks like this hockey stick: __/ As you see, close to expiry, if you're out of the money, you have nothing (with delta zero), while if you're in the money, you have a forward (with delta one). |
Is a currency “hedged” ETF actually a more speculative instrument than an unhedged version? | Overall, since gold has value in any currency (and is sort of the ultimate reserve currency), why would anyone want to currency hedge it? Because gold is (mostly) priced in USD. You currency hedge it to avoid currency risk and be exposed to only the price risk of Gold in USD. Hedging it doesn't mean "less speculative". It just means you won't take currency risk. EDIT: Responding to OP's questions in comment what happens if the USD drops in value versus other major currencies? Do you think that the gold price in USD would not be affected by this drop in dollar value? Use the ETF $GLD as a proxy of gold price in USD, the correlation between weekly returns of $GLD and US dollar index (measured by major world currencies) since the ETF's inception is around -47%. What this says is that gold may or may not be affected by USD movement. It's certainly not a one-way movement. There are times where both USD and gold rise and fall simultaneously. Isn't a drop in dollar value fundamentally currency risk? Per Investopedia, currency risk arises from the change in price of one currency in relation to another. In this context, it's referring to the EUR/USD movement. The bottom line is that, if gold price in dollar goes up 2%, this ETF gives the European investor a way to bring home that 2% (or as close to that as possible). |
What is the probabiltiy of being assigned if the call expires in the money | If you are in the money at expiration you are going to get assigned to the person on the other side of the contract. This is an extremely high probability. The only randomness comes from before expiration. Where you may be assigned because a holder exercised the option before expiration, this can unbalance some of your strategies. But in exchange, you get all the premium that was still left on the option when they exercised. An in the money option, at expiration, has no premium. The value of your in the money option is Current Stock price - Strike Price, for a call. And Strike price - Current Stock price, for a put. Thats why there is no free lunch in this scenario. |
Buying a home without a Real Estate Agent - Who should I get to do the paperwork? | For a real estate transaction there are multiple stages: From the sellers viewpoint: From the buyers viewpoint: If both parties are comfortable skipping some of the steps the role of the agent can be minimized. How will a fair price be determined? Some realism might be needed, to make sure that the loan appraisal will not be a problem. Will an inspection still be needed? What warranty will exist if the A/C dies this summer? If you still want help from an agent one should be able to help for far less than the normal commission. The seller normally interviews three agents before selecting one, do the same in this situation. Ask how much they would charge for a sale between friends. They can complete their task in just a couple of hours. If the home inspection comes back relatively clean, the transaction should be very easy. The paperwork is the biggest hurdle. You should jointly identify a local settlement company. They will be the ones actually filing the paperwork. They have lawyers. They will check the county records office for existing liens, plats, mortgages and address all the issues. They can send the proper paperwork to the existing mortgage companies and arrange for mortgage insurance. The cost will be the same regardless of the presence of real estate agents and other lawyers. When they say a lawyer is required, it is only because of the paperwork. |
How does the value of an asset (valued in two different currencies) change when the exchange rate changes? | The value of the asset doesn't change just because of the exchange rate change. If a thing (valued in USD) costs USD $1 and USD $1 = CAN $1 (so the thing is also valued CAN $1) today and tomorrow CAN $1 worth USD $0.5 - the thing will continue being worth USD $1. If the thing is valued in CAN $, after the exchange rate change, the thing will be worth USD $2, but will still be valued CAN $1. What you're talking about is price quotes, not value. Price quotes will very quickly reach the value, since any deviation will be used by the traders to make profits on arbitrage. And algo-traders will make it happen much quicker than you can even notice the arbitrage existence. |
Will my Indian debit card work in the U.S.? | Debit cards with the Visa or Mastercard symbol on them work technically everywhere where credit cards work. There are some limitations where the respective business does not accept them, for example car rentals want a credit card for potential extra charges; but most of the time, for day-to-day shopping and dining, debit cards work fine. However, you should read up the potential risks. A credit card gives you some security by buffering incorrect/fraudulent charges from your account, and credit card companies also help you reverse incorrect charges, before you ever have to pay for it. If you use a debit card, it is your money on the line immediately - any incorrect charge, even accidential, takes your money from your account, and it is gone while you work on reversing the charge. Any theft, and your account can be cleaned out, and you will be without money while you go after the thief. Many people consider the debit card risk too high, and don't use them for this reason. However, many people do use them - it is up to you. |
Is there any chance for a layperson to gain from stock exchange? [duplicate] | Currencies are a zero-sum game. If you make money, someone else will lose it. Because bank notes sitting in a pile don't create anything useful. But shares in companies are different, because companies actually do useful things and make money, so it's possible for all investors to make money. The best way to benefit is generally to put your money into a low-cost index fund and then forget about it for at least five years. |
Calculating savings from mortgage interest deduction vs. standard deduction? | Those choices aren't mutually exclusive. Yes, most discussion of the mortgage interest deduction ignores the fact that for a standard itemizer, much, if not all of this deduction can be lost. For 2011, the std deduction for a single is $5,800. It's not just mortgage interest that's deductible, state income tax, realestate tax, and charitable contributions are among the other deductions. If this house is worth $350K, the property tax is about $5K, and since it's not optional, I'd be inclined to assume that it's the deduction that offsets the std deduction. Most states have an income tax, which tops off the rest. You are welcome to toss this aside as sophistry, but I view it as these other deductions as 'lost' first. I'm married, and our property tax is more than our standard deduction, so when doing the math, the mortgage is fully deductible, as are our contributions. In your case, the numbers may play out differently. No state tax? Great, so it's the property tax and deductions you'd add up first and decide on the value the mortgage deduction brings. Last, I don't have my mortgage for the deduction, I just believe that long term my other investments will exceed, after tax, the cost of that mortgage. |
Should I sell a 2nd home, or rent it out? | I kind of hate piling on with another opinion, but this is too long for a comment. I did what you are thinking of doing, I would at least try renting it for a couple years so long as: The primary risks of renting are mostly related to unexpected costs and bad tenants, you've got a very healthy income, so as long as you maintain a nice emergency fund it doesn't sound like keeping this property as a rental will be too much risk. If the rental market is strong where your house is, then you have a better chance of avoiding bad tenants. I like to keep my rent a little lower than the max I think it could go for, to attract more applications and hopefully find someone who will be a good longer term tenant. Tax-free gains So long as you lived in your house 2 of the last 5 years, you can sell without paying capital gains tax on your profit, so you could try renting it for 2 years and then sell. That was a key for me when I converted my first house to a rental. I liked that flexibility, there's still the typical renting risks associated, but it's not a lifelong commitment. You can get 2 years of increased equity/appreciation tax-free, or you could find you enjoy it and keep it for the long haul. |
Will a small investment in a company net a worthwhile gain? | If the shares rise in value 50% over the next few years, you will have the same return that I would see if I bought 100 or 1000 shares. The only issue with a small purchase is that even a $5 commission is a high percent. But the rest of the math is the same. |
What would be a wise way to invest savings for a newly married couple? | I agree with @Pete that you may be well-advised to pay off your loans first and go from there. Even though you may not be "required" to make payments on your own loan based on your income, that debt will play a large factor in your borrowing ability until it is gone, which hinders your ability to move toward home ownership. If you are in a fortunate enough position to totally pay off both your loan and hers from cash on hand then you should. It would still leave you with more than $112,000 and no debt, which is a big priority and advantage for a young couple. Mind you, this doesn't keep you from starting an investment plan with some portion of the remaining funds (the advice to keep six months' income in the bank is very wise) through perhaps a mutual fund if you don't want to directly manage the investments yourself. The advantage of mutual funds is the ability to choose the level of risk you're willing to take and let professionals manage how to achieve your goals for you. You can always make adjustments to your funds as your circumstances change. Again, I'd emphasize ridding yourself of the student loan debt as the first move, then looking at how to invest the remainder. |
Best buying price on stock marketing based on market depth detail (CSE atrad tool) | When I first started working in finance I was given a rule of thumb to decide which price you will get in the market: "You will always get the worst price for your deal, so when buying you get the higher ask price and when selling you get the lower bid price." I like to think of it in terms of the market as a participant who always buys at the lowest price they can (i.e. buys from you) and sells at the highest price they can. If that weren't true there would be an arbitrage opportunity and free money never exists for long. |
Why is the price of my investment only updated once per day? | Mutual funds are collections of investments that other people pay to join. It would be simpler to calculate the value of all these investments at one time each day, and then to deem that any purchases or sales happen at that price. The fund diversifies rather than magnifies risk, looking to hold rather than enjoy a quick turnaround. Nobody really needs hourly updated price information for an investment they intend to hold for decades. They quote their prices on a daily basis and you take the daily price. This makes sense for a vehicle that is a balanced collection of many different assets, most of which will have varying prices over the course a day. That makes pricing complicated. This primer explains mutual fund pricing and the requirements of the Investment Company Act of 1940, which mandates daily price reporting. It also illustrates the complexity: How does the fund pricing process work? Mutual fund pricing is an intensive process that takes place in a short time frame at the end of the day. Generally, a fund’s pricing process begins at the close of the New York Stock Exchange, normally 4 p.m. Eastern time. The fund’s accounting agent, which may be an affiliated entity such as the fund’s adviser, or a third-party servicer such as the fund’s administrator or custodian bank, is usually responsible for calculating the share price. The accounting agent obtains prices for the fund’s securities from pricing services and directly from brokers. Pricing services collect securities prices from exchanges, brokers, and other sources and then transmit them to the fund’s accounting agent. Fund accounting agents internally validate the prices received by subjecting them to various control procedures. For example, depending on the nature and extent of its holdings, a fund may use one or more pricing services to ensure accuracy. Note that under Rule 22c-1 forward pricing, fund shareholders receive the next daily price, not the last daily price. Forward pricing makes sense if you want shareholders to get the most accurate sale or purchase price, but not if you want purchasers and sellers to be able to make precise calculations about gains and losses (how can you be precise if the price won't be known until after you buy or sell?). |
Buying and selling the same stock | I think what you're asking is, Can I buy 1000 shares of the stock at $1. For $1000. it goes up to $2, then sell 500 shares of the stock with proceeds of $1000, now having my original $1000 out of it, and still owning 500 shares. And that not create a taxable event. Since all I did was take my cost basis back out, and didn't collect any gains. And then I want to repeat that over and over. Nope, not in the USA anyway. Each sale is a separate taxable event. The first sale will have proceeds of $1000 and a cost basis of $500, with $500 of capital gains, and taxes owed at the time of that sale. The remaining stock will have a cost basis of $500 and proceeds of whatever you sell it for in the future. The next batch of stock will have a cost basis of whatever you pay for it. The only thing that works anything like the way you're thinking, is a Roth IRA... You can put your cost basis in, pull it back out, and put it back in again, all tax free. But every time your cost basis cycles in, that counts towed your contribution limits unless you do it fast enough to call it a rollover. |
Will capital gains affect my tax bracket? | I think you're misunderstanding how tax brackets work. If you make $1 more and that bumps you into a higher bracket, only THAT particular dollar will be taxed at the higher tax bracket rate... Not your entire income. Short term capital gains are treated as income. Long term capital gains have a special tax rate currently. |
How do top investors pull out 20% ROI? | First of all, the annual returns are an average, there are probably some years where their return was several thousand percent, this can make a decade of 2% a year become an average of 20% . Second of all, accredited investors are allowed to do many things that the majority of the population cannot do. Although this is mostly tied to net worth, less than 3% of the US population is registered as accredited investors. Accredited Investors are allowed to participate in private offerings of securities that do not have to be registered with the SEC, although theoretically riskier, these can have greater returns. Indeed a lot of companies that go public these days only do so after the majority of the growth potential is done. For example, a company like Facebook in the 90s would have gone public when it was a million dollar company, instead Facebook went public when it was already a 100 billion dollar company. The people that were privileged enough to be ALLOWED to invest in Facebook while it was private, experienced 10000% returns, public stock market investors from Facebook's IPO have experienced a nearly 100% return, in comparison. Third, there are even more rules that are simply different between the "underclass" and the "upperclass". Especially when it comes to leverage, the rules on margin in the stock market and options markets are simply different between classes of investors. The more capital you have, the less you actually have to use to open a trade. Imagine a situation where a retail investor can invest in a stock by only putting down 25% of the value of the stock's shares. Someone with the net worth of an accredited investor could put down 5% of the value of the shares. So if the stock goes up, the person that already has money would earn a greater percentage than the peon thats actually investing to earn money at all. Fourth, Warren Buffett's fund and George Soros' funds aren't just in stocks. George Soros' claim to fame was taking big bets in the foreign exchange market. The leverage in that market is much greater than one can experience in the stock market. Fifth, Options. Anyone can open an options contract, but getting someone else to be on the other side of it is harder. Someone with clout can negotiate a 10 year options contract for pretty cheap and gain greatly if their stock or other asset appreciates in value much greater. There are cultural limitations that prompt some people to make a distinction between investing and gambling, but others are not bound by those limitations and can take any kind of bet they like. |
Index ETF or Index mutual fund - standard brokerage account | The ETF is likely better in this case. The ETF will generally generate less capital gains taxes along the way. In order to pay off investors who leave a mutual fund, the manager will have to sell the fund's assets. This creates a capital gain, which must be distributed to shareholders at the end of the year. The mutual fund holder is essentially taxed on this turnover. The ETF does not have to sell any stock when an investor sells his shares because the investor sells the shares himself on the open market. This will result in a capital gain for the specific person exiting his position, but it does not create a taxable event for anyone else holding the ETF shares. |
What assets would be valuable in a post-apocalyptic scenario? | Barton Biggs's book Wealth, War and Wisdom aims to answer the question of what investments are best-suited to preserving value despite large-scale catastrophes by looking at how various investments and assets performed in countries affected by WWII. In Japan, stocks and urban land turned out to be good investments; in France, farm land and gold did better. Stocks outperformed bonds in nearly every country. Phil Greenspun recently wrote a review of the book. |
60% Downpayment on house? | Voluntarily assuming a loan is a bad idea, especially for a non-investment purpose. It would be one thing to take on a loan to operate a business or buy a piece of capital equipment, like a machine that would make you money. Borrowing money to have a more luxurious house is foolish. The smart move is to buy a good quality home that will meet your needs for as little as possible. Having $800,000 leaves a quit a bit of leeway in that department. You don't say where you live, but if this occurred in my area (eastern Massachusetts) I would buy a house for $500,000 and then invest the remaining $300,000. If I lived in the California bay area, it might be necessary to spend the whole $800,000. Either way there should be no need to borrow money. Also, if you buy a house for cash, often you can get a substantially better deal than if you have to involve a bank. Not owing anyone money is a huge psychological advantage in business and in life in general. View being debt-free as a springboard to success and happiness. |
How do I get the latest or even realtime information of institutions stock buy/sell action? | Of course not, this is confidential information in the same way that I cannot phone up your bank and ask to see a list of the transactions that you have made. Any bank has to be extremely careful about protecting the private transactions of it's customers and would be subject to heavy fines if it revealed this information without the customer's consent. |
60% Downpayment on house? | Keep in mind, this is a matter of preference, and the answers here are going to give you a look at the choices and the member's view on the positive/negative for each one. My opinion is to put 20% down (to avoid PMI) if the bank will lend you the full 80%. Then, buy the house, move in, and furnish it. Keep track of your spending for 2 years minimum. It's the anti-budget. Not a list of constraints you have for each category of spending, but a rear-view mirror of what you spend. This will help tell you if, in the new house, you are still saving well beyond that 401(k) and other retirement accounts, or dipping into that large reserve. At that point, start to think about where kids fit into your plans. People in million dollar homes tend to have child care that's 3-5x the cost the middle class has. (Disclosure - 10 years ago, our's cost $30K/year). Today, your rate will be about 4%, and federal marginal tax rate of 25%+, meaning a real cost of 3%. Just under the long term inflation rate, 3.2% over the last 100 years. I am 53, and for my childhood right through college, the daily passbook rate was 5%. Long term government debt is also at a record low level. This is the chart for 30 year bonds. I'd also suggest you get an understanding of the long term stock market return. Long term, 10%, but with periods as long as 10 years where the return can be negative. Once you are at that point, 2-3 years in the house, you can look at the pile of cash, and have 3 choices. We are in interesting times right now. For much of my life I'd have said the potential positive return wasn't worth the risk, but then the mortgage rate was well above 6-7%. Very different today. |
How does conversion of Secured Convertible Notes work? | Let's assume that the bonds have a par value of $1,000. If conversion happens, then one bond would be converted into 500 shares. The price in the market is unimportant. Regardless of the share price in the market, the income per share would be increased by the absence of $70 in interest expense. It would be decreased by the lost tax deduction. It would be further diluted by the increase in 500 shares. Likewise, the debt would be extinguished and the equity section increased. Whether it increased or decreased on a per share basis would depend upon the average amount paid in per share in the currently existing structure, adjusted for changes in retained earnings since the initial offering and for any treasury shares. There would be a loss in value, generally, if it is trading far from $2.00 because it would be valued based on the market price. Had the bond not converted, it would trade in the market as a pure bond if the stock price is far below the strike price and as an ordinary pure bond plus a premium if near enough to the strike price in a manner that depends upon the time remaining under the conversion privilege. I cannot think of a general case where someone would want to convert below strike and indeed, barring a very strange tax, inheritance or legal situation (such as a weird divorce), I cannot think of a case where it would make sense. It often does not make sense to convert far from maturity either as the option premium only vanishes well above $2. The primary case for conversion would be where the after-tax dividend is greater than the after-tax interest payment. |
Calculating a simply complicated return? | Since you have the balance at equal periods and the cash flows at the period ends, the best return calculation in this case is the true time-weighted return. See http://en.wikipedia.org/wiki/Time-weighted_return#Formulae So, notwithstanding some ambiguity about your figures, here is a calculation using the first three periods from your second table. Giving a total return over the three periods of -23.88% If the periods are months, multiply by four to annualise. |
How can I buy and sell the same stock on the same day? | Because it takes 3 business days for the actual transfer of stock to occur after you buy or sell to the next owner, your cash is tied up until that happens. This is called the settlement period. Therefore, brokers offer "margin", which is a form of credit, or loan, to allow you to keep trading while the settlement period occurs, and in other situations unrelated to the presented question. To do this you need a "margin account", you currently have a "cash account". The caveat of having a retail margin account (distinct from a professional margin account) is that there is a limited amount of same-day trades you can make if you have less than $25,000 in the account. This is called the Pattern Day Trader (PDT) rule. You don't need $25k to day trade, you will just wish you had it, as it is easy to get your account frozen or downgraded to a cash account. The way around THAT is to have multiple margin accounts at different brokerages. This will greatly increase the number of same day trades you can make. Many brokers that offer a "solution" to PDT to people that don't have 25k to invest, are offering professional trading accounts, which have additional fees for data, which is free for retail trading accounts. This problem has nothing to do with: So be careful of the advice you get on the internet. It is mostly white noise. Feel free to verify |
Opening and funding an IRA in three days - is this feasible? | Some banks and credit unions have IRA accounts. They pay interest like a savings account or a CD but they are an IRA. After the 15th you can roll them over into a IRA at one of the big investment companies so you can get invest in an index or Target Retirement Fund. But it is not too late. Opening an account at one of the big companies takes ten minutes (you need to know your social security number and your bank account info) they can pull it out of your bank account. I helped my kid do the same thing this week. We went on-line Tuesday night, and they pulled the money from his account on Thursday morning. Also know which type you want (Roth or regular) before you start. Also make sure you specify that the money is for 2013 not 2014. |
I need a car for 2 years. Buy or lease (or something else)? | Any one of your three options is viable and has its advantages and disadvantages. Personally, I would go for the used option, but I am can-do kind of person. If you don't like micro-managing a car, you may prefer leasing. A new car is sort of the middle of the road option. Leasing will be most expensive and most liability. If you have an accident, the leasing arrangements are designed to extract money from you... heavily. Even a minor accident can require you to pay for expensive repairs, usually much more expensive than if you had your own car fixed. So, not only will you pay more per month, but your accident liability will be a lot higher. With your own car, you will need to sell it (or bring it back to the UK) obviously. A used car will be the cheapest option. A non-descript used car from the local area can also make you "blend in" and be less like to be targeted by a criminal as an outsider. As long as you stay away from dealers and buy the car from a private person of good reputation, you have an odds-on chance of getting a decent car. Make sure you check out the person and make sure they are "real". Some dealers, called "curbstoners", try to pretend to be original owners. You can always spot such frauds because the title will be new. Make sure the same owner has had the car for at least 3-4 years and that it says that on the title. Also, try to buy from somebody who is financially well off--they have less reason to try to screw you. Students, people under 30 and working class are bad people to buy from. Married professionals over age 35 are the right kind of person to buy from. |
What's the least risky investment for people in Europe? | Putting the money in a bank savings account is a reasonably safe investment. Anything other than that will come with additional risk of various kinds. (That's right; not even a bank account is completely free of risk. Neither is withdrawing cash and storing it somewhere yourself.) And I don't know which country you are from, but you will certainly have access to your country's government bonds and the likes. You may also have access to mutual funds which invest in other countries' government bonds (bond or money-market funds). The question you need to ask yourself really is twofold. One, for how long do you intend to keep the money invested? (Shorter term investing should involve lower risk.) Two, what amount of risk (specifically, price volatility) are you willing to accept? The answers to those questions will determine which asset class(es) are appropriate in your particular case. Beyond that, you need to make a personal call: which asset class(es) do you believe are likely to do better or less bad than others? Low risk usually comes at the price of a lower return. Higher return usually involves taking more risk (specifically price volatility in the investment vehicle) but more risk does not necessarily guarantee a higher return - you may also lose a large fraction of or even the entire capital amount. In extreme cases (leveraged investments) you might even lose more than the capital amount. Gold may be a component of a well-diversified portfolio but I certainly would not recommend putting all of one's money in it. (The same goes for any asset class; a portfolio composed exclusively of stocks is no more well-diversified than a portfolio composed exclusively of precious metals, or government bonds.) For some specifics about investing in precious metals, you may want to see Pros & cons of investing in gold vs. platinum?. |
Options revisited: Gold fever | You'll still lose a little bit if you buy a put option at the current price. No such thing as free hedging. Let's say you have 100 shares of IAU that you bought for exactly $12.50 per share. This is $1,250. Now let's say you bought a put option with a strike price of $13 that expires in April 2011. The current price for this option is $1.10 per share, or $110. You can sell your IAU for $1,300 any time before the expiration date, but this leaves $60 in time value. The price of the options will always have a time component that is a premium on the difference between the current price and the strike price. (Oh, forgot to add in commissions to this.) |
Are you preparing for a possible dollar (USD) collapse? (How?) | Invest in other currencies and assets that have "real" value. And personally I don't count gold as something of real value. Of course its used in the industry but besides that its a pretty useless metal and only worth something because everybody else thinks that everybody thinks its worth something. So I would buy land, houses, stocks, ... |
Wage earners of age ≥ 60 with dependents: What Life Insurance, if any, should they buy? | Without knowing the WSC's objectives, priorities of those objectives and affordability we cannot determine which type of insurance is best. Life insurance for seniors is very expensive if you examine the per unit cost (e.g. cost per $1000 of death benefit). Therefore affordability is a critical deciding factor for WSC. Let's assume that we know the WSC's affordability and therefore the monthly premium is a fixed determined number, then there is a inverse relationship between the length of coverage and the amount of coverage. We have to achieve a balance between these two factors to best meet the WSC's objective. If the proposed plan is not affordable then the WSC must leave out his/her objectives with lesser priorities out of the total coverage amount. |
Trading on exchanges or via brokerage companies? | Yes when I place an order with my broker they send it out to the exchange. - For individual investors, what are some cons and pros of trading on the exchanges directly versus indirectly via brokers? I may be mistaken(I highly doubt it), but from my understanding you cannot trade directly through an exchange as a retail investor. BATS allows membership but it is only for Your firm must be a registered broker-dealer, registered with a Self Regulatory Organization (SRO) and connected with a clearing firm. No apple (aapl) is listed on the NASDAQ so trades go through the NASDAQ for aapl. Caterpillar Inc (CAT) is listed on the NYSE so trades go through the NYSE. The exchange you trade on is dependent on the security, if it is listed on the NYSE then you trade on the NYSE. As a regular investor you will be going through a broker. When looking to purchase a security it is more important to know about the company and less important to know what exchange it is listed on. Since there are rules a company must comply with for it to be listed on certain exchanges, it does make a difference but that is more the case when speaking about a stock listed Over the Counter(OTC) or NYSE. It is not important when asking NYSE or NASDAQ? Selecting a broker is something that's dependent on your needs. You should ask your self, "whats important to me?", "Do I want apps(IE: iPhone, android)?" "Do I need fancy trading tools?". Generally all the brokers you listed will most likely do the trick for you. Some review sites: Brokerage Review Online Broker Review 2012 Barron's 2012 Online Broker Review |
Using Loan to Invest - Paying Monthly Installments with Monthly Income | Here are my re-run figures. Not counting capital gains taxes, I calculate you need to be making 1.875% per annum or 0.155% per month on your $8,000 investment to break-even on the loan. It's interesting that the return you need to gain to break-even is less than the interest you're paying, even with commission. It happens because the investment is gaining a return on an increasing amount while the load is accruing interest on a decreasing amount. Ref. r, logarithmic return |
How does the price of oil influence the value of currency? | Because we need energy in the form of oil. If more of our money is spent on oil, there is less money to spend on other items especially luxuries like dining out and new cars (ironically) Since there is less money available, the price of other things shift with it and the whole economy moves. Since less money is available, the value of a single dollar goes up. Basically, it is because we as a species (let alone nations) are unbelievably dependent on having oil at this point in our existence. How do currency markets work? What factors are behind why currencies go up or down? |
Can I depreciate a car given to me? | Yes, you can depreciate gifts to your business subject to the special rules in § 1011 and Regulation § 1.1011–1 and 1.167(g)–1. It is dual basis property so when you sell the item your gain/loss basis will be different. Adjusted basis of the donor for gain, FMV on the date received for the loss. Minus any depreciation you add, of course, in both cases. |
How do you find out who the investors are in a U.S. stock? e.g. how ownership may be concentrated? | I don't think that you will be able to find a list of every owner for a given stock. There are probably very few people who would know this. One source would be whoever sends out the shareholder meeting mailers. I suspect that the company itself would know this, the exchange to a lesser extent, and possibly the brokerage houses to a even lesser extent. Consider these resources: |
Do I need multiple credit monitoring services? | Good question given what happened with Equifax You could avoid paying extra to Experian for monitoring all three, if you are getting free monitoring from Equifax(Only if Experian charges less for monitoring their own vs monitoring all three). If you do cancel monitor all three then the only one you would not be monitoring is Trans Union, but you should be fine as most finance companies report to at least two credit unions. But if you want to be 100% sure then monitor all three. But I would regard that as an overkill(personal opinion) |
Should I accept shares as payment? | I like the answer given by mikeazo. If paid in cash would you immediately buy the stock of the company? We all want to be the next Steve Jobs (or Woz), but the truth is that a Jobs comes along only once in a lifetime and chances are that you are not him. We have seen this kind of question here before. Search the site for the answers given previously. |
What are the ins/outs of writing-off part of one's rent for working at home? | Tax regulations vary from country to country - some permitting more deductions, some less - but here are a few guidelines. As regards the home-office: As regards the deductions: Think of it like this: in order to have space for a home-office you needed a bigger home. That leads to increased rates, heating, insurance and so on. Many tax regulators recognise that these are genuine expenses. The alternative is to rent a separate office and incur greater expenses, leading to increased deductions and less overall tax paid (which won't finance the deficit). The usual test for deductions is: was the expense legitimately incurred in the pursuit of revenue? The flexibility permitted will vary by tax authority but you can frequently deduct more than you expected. |
Getting financial advice: Accountant vs. Investment Adviser vs. Internet/self-taught? | Do I need an Investment Adviser? No, but you may want to explore the idea of having one. Is he going to tell me anything that my accountant can't? Probably. How much expertise are you expecting from your accountant here? Do you think your accountant knows everything within the realms of money from taxes, insurance products, investments and all your choices and what would work or wouldn't? Seems like it could be a tall order to my mind. My accountant did say to come to him for advice on investment/business issues. So, he is willing, but is he able? Not asking about his competence, but rather "is there something that only an Investment Adviser can provide, by law, that an accountant can't"? Not that I know though don't forget how much expertise are you expecting here from one person. Is this person intended to answer all your money questions? But isn't that something that my accountant could/should do? Perhaps though how well are you expecting one person to be aware of so much stuff? I want you to know all the tax law so I can minimize taxes, maximize my investment returns, cover me with adequate insurance, and protect my savings seems like a bit much to put on one entity. Do I need either of them? Won't the Internet and sites like this one suffice? Need no. However, how much time are you prepared to spend learning the basics of strategies that work for you? How much money are you prepared to put into things to learn what works and doesn't? While it is your decision, consider how to what extent do you diagnose your medical issues through the internet versus going to see a doctor? Be careful of how much of a do it yourself approach you want to go here and recognize that there are multiple approaches that may work. The question is which trade-offs are OK for you. |
How May Cash be Spent Approaching Bankruptcy? | Bankruptcy law is complex. You need a lawyer who can advise you both on the statute and relevant case law for the district where you file. Your lawyer can advise you whether actions you contemplate are allowed. You can obtain advice prior to filing as you seek to determine whether the law and the relief it offers are suitable to your situation. Anyone considering filing BK should know that they will need to provide fairly extensive information. You should learn about BK as you seek to understand whether that path is the best for your situation. You should ask your lawyer specific questions about your situation and try to learn as much as you can. You should read about the problems with taking out debt or making debt repayments to creditors (especially family) prior to filing BK. These actions could impact your case and cause it to be dismissed, and could even be considered criminal (again, you need a lawyer). Some things to learn about as you contemplate Bankruptcy Be aware that BK is federal law, and you will be required to provide extensive information about your financial situation. You will be required to show up for the creditors meeting and testify that you have provided correct information. The trustee may (will) supply objections to which you and your lawyer will need to respond. Among other things, you will supply, You should seek legal advice about things that might become important, Even though you will have guidance from your lawyer, you are the one seeking relief, and you need to understand your own situation and the law. |
Gap in domestic Health Insurance coverage, expect higher premiums? | The insurance company is must assume you do have a preexisting condition you are unaware of. The reason for that is that Affordable Care Act precludes the Insurance company from denying coverage of them if you do. Insurance companies are businesses. They are in business to make money(unless you have a nonprofit insurer). They can not do that if you can buy insurance only when you need for them to pay out. So even though you may not have a preexisting condition, they are precluded from requiring an examination that would detect the most expensive preexisting conditions (hidden cancers, neurological, autoimmune disorders). So the companies must do what takes business sense and either deny you coverage or charge a rate that covers the risk they would be forced to take. In your question on travel there was a response that suggested you get international health insurance instead of travel health insurance that would be considered credible coverage. You are trying to save money which on a personal level is a good idea. However that is against the societal and business need that you maintain health coverage during your healthy times to cover the costs of those who need expensive treatment. So you will be monetarily penalized should you choose to reenter the society of insured people. Once you have paid the higher rate for up to 18 months you should be able to get a better policy for people who have had continuous coverage. Alternately you may be lucky enough to start working for a company that provides health insurance with out requiring continuous coverage. |
How might trading volume affect future share price? | You can't tell for sure. If there was such a technique then everyone would use it and the price would instantly change to reflect the future price value. However, trade volume does say something. If you have a lemonade stand and offer a large glass of ice cold lemonade for 1c on a hot summer day I'm pretty sure you'll have high trading volume. If you offer it for $5000 the trading volume is going to be around zero. Since the supply of lemonade is presumably limited at some point dropping the price further isn't going to increase the number of transactions. Trade volumes reflect to some degree the difference of valuations between buyers and sellers and the supply and demand. It's another piece of information that you can try looking at and interpreting. If you can be more successful at this than the majority of others on the market (not very likely) you may get a small edge. I'm willing to bet that high frequency trading algorithms factor volume into their trading decisions among multiple other factors. |
Why do US retirement funds typically have way more US assets than international assets? | It's likely that the main reason is the additional currency risk for non-USD investments. A wider diversification in general lowers risk, but that has to be balanced by the risk incurred when investing abroad. This implies that the key factor isn't so much the country of residence, but the currency of the listing. Euro funds can invest across the whole Euro zone. Things become more complex when you consider countries whose currency is less trusted and whose economy is less diversified. In those cases, the "currency risk" may be more due to the national currency, which justifies a more global investment strategy. |
For very high-net worth individuals, does it make sense to not have insurance? | The point about insurance is solidarity. Think about this: In London a few hundred years ago people first started insuring their houses against fire. There were several insurance companies, and if you used one you got a marker on your house. So if your house caught fire they would come and check, and they would put the fire out only if it had their marker on it. Now, in most places these days the fire brigade will always come and always put your fire out. We expect this, and we are happy to pay for this service by taxation, and we do not fret about wasted money if we pay it for decades without ever having a fire. We also do not complain if the neighbour's house burns, and they get the full fire service which we have been paying for. Now all the fire brigade do is rescue you and put your fire out. Here in Germany every house owner is also obliged to have fire insurance, so if your house burns it can be repaired or rebuilt. Everyone pays insurance premiums, and I never heard anyone complain if they paid for 50 years and never claimed anything. If you need a new house the payout is huge. But the premiums are low. This only works if everyone is insured. This can only work if we all accept the concept of solidarity. It is easy to say, I don't smoke so I don't need to insure against fire, or, I live a healthy life so I don't need to insure against cancer. But lightning does not check your CV before it strikes. It hits you or your fellow man, and how can you justify not helping your neighbour? Insurance can only work if we all take part. |
What dictates the costs of creating an options contract? (Commissions breakdown) | I'm not positive my answer is complete, but from information on my broker's website, the following fees apply to a US option trade (which I assume you're concerned with given fee in dollars and the mention of the Options Clearing Corporation): They have more detail for other countries -- see https://www.interactivebrokers.co.uk/en/index.php?f=commission&p=options1 for North America. Use the sub-menu near the top of the page to pick Europe or Asia. The brokerage-charged commission for this broker is as low as $0.25 per contract with a $1.00 minimum. Though I've been charged less than $1 to STO an options position, as well as less than $1 to BTC an options position, so not sure about that minimum. Regarding what I read as your overall underlying question (why are option fees so high), in my research this broker has one of the cheapest commission rates on options I've ever seen. When I participate in certain discussions, I'm routinely told that these fees are unbelievable and that $5.95, $7.95, or even $9.95 are considered low fees. I've heard this so much, and discussed commissions with enough people who've refused to switch brokers, that I conclude there just isn't enough competition to drive prices lower. If most people won't switch brokers to go from $9.95 to $1 per trade, there simply isn't a reason to lower rates. |
What does dividends passed mean in terms of stock? | A "covenant" is a solemn promise to engage in or refrain from a specified action. Every company must do a balancing act while declaring the dividends in terms of companies interest (can it use the surplus cash to generate more revenue) to shareholders' interests, giving back to them the profits that due. Many countries have regulations governing as to when and how much the dividends may be given. It also lays out the policy about declaring dividends to protect everyones' interest. For example if the company has a huge suit pending against it, the company is not supposed to distribute the surplus cash as dividends and when the suit goes against it, its left when no money to pay ... or other such examples where the interests of one or the other party is compromised. The company law board ensures that all this is adhered to in a fair manner. So essentially "these covenants include provisions about passing dividends", means that due diligence has be exercised by the company in order to arrive at the dividends that are to be paid out. |
Rollover into bond fund to do dollar cost averaging [duplicate] | Many would recommend lump sum investing because of the interest gains, and general upward historical trend of the market. After introducing DCA in A Random Walk Down Wall Street, Malkiel says the following: But remember, because there is a long-term uptrend in common-stock prices, this technique is not necessarily appropriate if you need to invest a lump sum such as a bequest. If possible, keep a small reserve (in a money fund) to take advantage of market declines and buy a few extra shares if the market is down sharply. I’m not suggesting for a minute that you try to forecast the market. However, it’s usually a good time to buy after the market has fallen out of bed. Just as hope and greed can sometimes feed on themselves to produce speculative bubbles, so do pessimism and despair react to produce market panics. - A Random Walk Down Wall Street, Burton G. Malkiel He goes on from there to recommend a rebalancing strategy. |
Should I take contributions out of my Roth IRA to live off of? | Take another job. From a personal finance perspective this is the wrong reason to dip into a retirement account. You will lose so much ground towards actually retiring. Sure you won't be taxed, but you will be missing so much opportunity where that money won't be working for your retirement. The off-topic answer to take to the start-ups stackexchange site is: don't quit your day job until your business plan is written out and you have an idea of where to get your startup capital. |
What is the process of getting your first share? | You could also look up stock trading games. Basically, you get x amount of "money" and "invest" it in stocks, trying to get the highest return of the group in y amount of time. They are a decent way to get used to how different types of trades work without having to risk any real money, while having enough "money" to invest that you can try different things. Of course, as others have mentioned they may or may not include all the nuances, like minimum investments and brokerage fees, but at least you can learn and see how the different buying and selling options work. |
What are “headwinds” and “tailwinds” in financial investments? | The term "tailwinds" describes some condition or situation that will help move growth higher. For example, falling gas prices will help a delivery company be more profitable. Lower gas prices is said to be a tailwind for the freight services industry. "Headwinds" are just the opposite. Its a situation what will make growth more difficult. For example, if the price of beef goes much higher, McDonald's is facing headwinds. It's a nautical term. If the wind is at your back (tailwind), that will help you move forward more quickly. If you are moving into a headwind, that will only make progress more difficult. |
Borrowing 100k and paying it to someone then declaring bankruptcy | Note that in the UK at least this scam - not so dissimilar from what you propose - seems be perfectly legal behaviour: Evidence to date is that both of you can expect to walk away without much consequence. |
Do my 401k/Roth accounts benefit from compounding? | You might be confusing two different things. An advantage of investing over a long term is the compounding of returns. Those returns can be interest, dividends, or capital gains. The mix between them depends on what you invest it and how you invest in it. This advantage applies whether your investment is in a taxable brokerage account or in a tax-advantaged 401K or IRA. So, start investing early so that you have longer for this compounding of returns to happen. The second thing is the tax deferral you get from 401(k) or IRAs. If you invest in a ordinary taxable account, then you have to pay taxes on your interest and dividends for the year in which they occur. You also have to pay taxes on any capital gains which you realize during the year. These yearly tax payments are then money that you don't get the benefit of compounding on. With 401(k) and IRAs, you don't have to pay taxes during these intermediate years. |
How to trade “exotic” currencies? | There are firms that let you do this. I believe that Saxo Bank is one such firm (note that I'm not endorsing the company at all, and have no experience with it) Keep in mind that the reason that these currencies are "exotic" is because the markets for trading are small. Small markets are generally really bad for retail/non-professional investors. (Also note: I'm not trying to insult Brazil or Thailand, which are major economies. In this context, I'm specifically concerned with currency trading volume.) |
How much will a stock be worth after a merger? | For the first and last questions, I can do this multiple ways. For the middle question, I'll just make up values. If you want different ones, you will have to redo the math. I am going to assume that you participate in the merger exchange, swapping your share for their offer. If you own one share, it depends how they handle fractional shares. Your original one share of ABC can be worth either one share of XYZ or 1.05 shares of XYZ. If you get one share, you typically get an additional $.80 cash to make up for the fractional share. You might ask why you don't just get $20 cash and one share of XYZ. Consider the case where you own twenty shares of ABC. Then you'd own twenty-one shares of XYZ and $384. No need for fractional shares. Beyond all this though, the share value of XYZ is not set autocratically. The shares might be worth $16, $40, or $2 after the merger. If both stocks are perfectly valued and the market is aware of that value, then it will depend partially on the number of shares of each. For example, if we assume there are 10,000 shares of ABC and 50,000 shares of XYZ (including the shares paid for ABC), then their initial market values are $320,000 for ABC and $800,000 for XYZ. XYZ is paying $360,000, so its value drops to $440,000. But it is gaining ABC, which is worth $320,000. Net value now is $760,000 or $15.20 per share. This has assumed that the shares transferred from XYZ to the shareholders of ABC were already included in the market value. This may mean that the stock price was previously $20 or so with almost 40,000 shares in circulation. Then they issued new shares, diluting the value down to $16. We could start at 50,000 shares at $16 and end up with 60,000 to 60,050 shares at $13.332 to $13.333 per share. Then XYZ is really only paying $326,658.31 for ABC. That's a premium of only $6,658.31 for ABC and gives a final stock value of $13.222 per share. The problem though is that in reality, there is no equivalent of perfect value. So I say again that the market value might be $15.20 (the theoretic answer that best fits the question given the example quantities of shares), $13, $20, or something else. It will depend on how the market perceives the deal. Is the combined company worth more or less than the sum of its parts? And beyond this, you will have $19.20 to $20 in cash in addition to your XYZ share (or 1.05 shares). Assuming 1.05 shares, that would be $15.96 plus the $19.20--that's $35.16 total in theory or anything from $19.20 up in practice. With the givens, the only thing of which you can be sure is the $19.20 cash. The value of the stock is up in the air. If XYZ is only privately traded, this is still true. The stock is worth the price that someone will pay for it. The "someone" is just more limited with privately traded stocks. |
What is the best way to get a “rough” home appraisal prior to starting the refinance process? | It's extremely easy to get a rough valuation of your home. Just phone a real estate agent. Virtually any real estate agent will come and value your home free. Even if you say outright "I'm not considering selling, I just want a valuation" they will probably do it, because for them getting contacts of people who might one day want to sell their home is all-important. Even if a few turn you down, some will do it. You might say that an agent isn't going to be as accurate as an appraiser, and you are right. There is also an expectation that they will evaluate higher than the real value, to persuaade you to sell. That probably isn't a big issue, and it's something you can compensate for. And even an appraiser is going to be based somewhat on speculation. You might try to do this calculation yourself, but an agent has access to the actual sale prices of nearby houses - you can't get that information. You only have access to the asking prices. And did I mention they will do it for free? |
Explanations on credit cards in Canada | I think it's worth pointing out explicitly that the biggest difference between a credit card (US/Canada) and a debit card (like your French carte de crédit) is that with a credit card, it's entirely possible to not pay the bill or to pay only the "minimum payment" when asked. This results in you owing significantly more money due to interest, which can snowball into higher and higher levels of debt, and end up getting rapidly out of control. This is the reason why you should ALWAYS pay off the ENTIRE balance every month, as attested to in the other answers; it's not uncommon to find people in the US with thousands of dollars of debt they can't pay off from misuse of credit cards. |
Are services provided to Google employees taxed as income or in any way? | Others have pointed out that many benefits offered by employers "for free" are actually taxed; the employee must pay taxes on the value of what they're receiving (usually services of some kind). This is called imputed income. Also pointed out was that healthcare is an exception; a specifically protected class of benefits that aren't taxed. But sometimes they are. Many companies now offer domestic partner health coverage as well, regardless of whether the couple is in any kind of civil union or other arrangement. The costs to the employee vary, but it's often that they simply pay double of what their individual coverage contribution would be. Independent of the employee's direct contribution for their domestic partner, they must also pay taxes on the value of the employer's cost of the coverage. This can be significant, as typically the employer is paying the lion's share of the healthcare cost. |
Did the New York Stock Exchange ever close on a weekday so they could file paperwork? | Yes, from June 1968 until December 1968, they closed the NYSE every Wednesday so they could catch up on paperwork representing billions of dollars in unprocessed transactions. Even after the NYSE re-opened on Wednesdays in January 1969, they still had to close it early at 2pm for seven more months. Forbes has a description of this: Not to be forgotten, though, is the Paperwork Crunch. In a day of email and the Cloud and trading completed in microseconds, the idea that Wall Street needed Wednesdays off in the late 1960′s to catch up on back-office tasks seems especially quaint. Yet, in 1968, the NYSE found itself sitting on more than $4 billion in unprocessed transactions. Trading had risen to 21 million shares daily; by contrast, even in the heavy volume days in 1929, trading never went above 16 million shares. Papers stacked on desks. A (now old) joke formed: If a fan blew the wrong way in a Wall Street office, visitors below could expect a ticker-tape parade. “Everybody agreed that the securities-processing system had virtually broken down, and the only major point of dispute was who was more responsible for the mess: the back offices of the brokerage firms of the stock-transfer agents,” Securities and Exchange Commission Commissioner Ray Garrett, Jr. said in 1974. Some 100 broker-dealers failed, crumbling under the pressure of fulfilling those back-orders. The fix: an organization akin to the FDIC, the Securities Investor Protection Corporation. Wall Street would stick to the shortened weeks from June to December; in January, Wednesday trading resumed, though it ended early at 2 for another seven months. |
Typical discount for cash purchase on $1+ million homes? | First, I assume you understand that 'Cash Offer' doesn't mean you really show up with cash (in a duffel bag...), but is an expression that designates that you don't need a mortgage approval, but have the money in your accounts. The advantages for the seller are With both cases depending on the seller's situation, there can't be a generic answer, and the 'discount' will be all over the place between zero and several percent. |
What is a Master Limited Partnership (MLP) & how is it different from plain stock? | MLP stands for master limited partnership. Investors who buy into one are limited partners, rather than shareholders, and have their taxable income reported on K-1s, rather than 1099s. MLPs are engaged in businesses (e.g. real estate, natural resources) that generate a lot of cash that doesn't need to be "reinvested," or put back into the company. Because of this feature, the IRS will exempt it from corporate tax if it pays out at least 95% of its income in the form of dividends. The advantage is that you avoid the "double taxation" common to most corporations, and get a higher yield as a result. The disadvantage is that the company can't retain earnings for growth, and needs to borrow money if it wants to grow. In this regard, an MLP is much like a utility (except that a utility has to pay corporate taxes, and is otherwise heavily regulated by the Federal and/or state governments). You can look upon an MLP as an unregulated utility. This means that MLPs are most suitable for utility type investors who are more interested in current income, than capital gains. Because they are unregulated, they are riskier than utilities. |
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