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As a parent of a high school student, what should my short-term cash policy be to optimize my college costs? | There is no simple answer to your question. It depends on many things, perhaps most notably what college your daughter ends up going to and what kind of aid you hope to receive. Your daughter will probably fill out the FAFSA as part of her financial aid application. Here is one discussion of what parental assets "count" towards the Expected Family Contribution on the FAFSA. You can find many similar pages by googling. Retirement accounts and primary residence are notable categories that do not count. So, if you were looking to reduce your "apparent" assets for aid purposes, dumping money into your mortgage or retirement account is a possibility. However, you should be cautious when doing this type of gaming, because it's not always clear exactly how it will affect financial aid. For one thing, "financial aid" includes both grants and loans. Everyone wants grants, but sometimes increasing your "eligibility" may just make you (or your daughter) eligible for larger loans, which may not be so great. Also, each college has its own system for allocating financial aid. Individual schools may ask for more detailed information (such as the CSS Profile). So strategies for minimizing your apparent assets that work for one school may not work for others. Some elite schools with large endowments have generous aid policies that allow even families with sizable incomes to pay little or nothing (e.g., Stanford waives tuition for most families with incomes under $125,000). You should probably research the financial aid policies of schools your daughter is interested in. It can be helpful to talk to financial aid advisors at colleges, as well as high school counselors, not to mention general financial advisors if you really want to start getting technical about what assets to move around. Needless to say, it all begins with talking with your daughter about her thoughts on where to go. |
Buying a multi-family home to rent part and live in the rest | This is one of those too good to be true things that is actually true. Why? Because only you can do this. Only you can deduct for primary home mortgage interest, only you can get a low cost mortgage (others would have to get investor mortgages at a higher interest rate). So its only a great deal for you. More people would do it if they could, but they can't, thats why you can and should do this. I have a similar setup and it is terrific. |
How can I avoid international wire fees or currency transfer fees? | Check global ATM alliance they are banks that use reciprocal benefits on each other in other countries without fees. For example the in the USA Bank of America and In France it is BNP Paribas. Both are banks in this alliance. I use this option between the United States and the Caribbean my banks of choice are Bank of America in the US and in the Caribbean I use Scotia Bankand since I have accounts in both weekends I can use both ATM cards on any of these two banks without any processing fees!!!! You should check the global ATM alliance to see if it is an option that you could use. |
How to take advantage of home appreciation | Assuming "take advantage" means continue to build wealth, as opposed to blow it all on a fancy holiday... Downgrade As you already note, you could downgrade/downsize. This could happen via moving to a smaller house in the same area, or moving to an area where the cost of buying is less. HELOC Take out a Home Equity Line of Credit. You could use the line of credit to do home improvements further boosting the asset value (forced appreciation, assuming the appreciation to date is simply market based). Caution is required if the house has already appreciated "considerably" - you want to keep the home value within tolerance levels for the area. (Best not to have the only $300K house on a street of $190K-ers...) Home Equity Loan Assuming you have built up equity in the house, you could leverage that equity to purchase another property. For most people this would form part of the jigsaw for getting the financing to purchase again. |
What is the purpose of the wash sale rule? | Overall the question is one of a political nature. However, this component can have objective answers: "What behavior is trying to be prevented?" There are mechanisms by which capital gains can be deferred (1031 like-kind exchange, or simply holding a long position for years) or eliminated by the estate step up in basis. With these available, mechanisms that enable basis-reduction are ripe for abuse. On the other hand, if this truly bothers you then if you meet the IRS qualifications of a day trader, you may elect to use "mark to market" accounting, eliminating this entirely as a concern. Special rules for traders of securities |
Why does capital gains tax apply to long term stock holdings? | In Australia we have a 50% capital gain discount if you hold the asset for more than 12 months, whether it is in shares, property or other assets. The main reason is to encourage people to invest long-term instead of speculating or trading. The government sees speculation or short term trading as more risky than long term investing for the everyday mum and dad investor, so rewards people it sees taking the lower risk long term view. In my opinion, long term investing, short term trading and speculation can all be risky for someone who is unedutated in the financial markets, and the first rule of investing should be to consider the asset itself and not the tax implications. |
Can everyday people profit from unexpected world events? | In the UK there are spread betting firms (essentially financial bookmakers) that will take large bets 24x7. Plus, interbank forex is open 24x7 anyway. And there are a wide array of futures markets in different jurisdictions. There are plenty of ways to find organizations who are willing to take the opposite position that you do, day or night, provided that you qualify. |
Selling on eBay without PayPal? | One option might be to set up a separate bank account and a separate credit card account, which you would use only for your ebay transactions. I have a friend who does a lot of selling on ebay, and this is exactly what she did. It's reasonable to want to protect your personal finances from any complications that might arise with PayPal and/or ebay. But since you definitely have to provide a bank account and c.c. number (there's no way around this), the best solution might be to set up separate "ebay-only" accounts. And be sure not to link them to any of your personal accounts, for added protection. If you're planning to do a lot of selling, this is probably a good idea anyway just for record-keeping purposes. If you do a lot of selling on ebay, you might consider setting up a "merchant account". There are some limitations on international transactions (currently you can't sell to residents of UK, Australia, or France), and payment processing is a few days slower. But there seem to be fewer fees/risks/etc associated with a merchant account. I don't know much more about it, but here's an article from an ebay seller, including pros and cons of PayPal vs. merchant accounts. http://www.ebay.com/gds/Selling-on-eBay-without-PayPal/10000000021351301/g.html |
Is it possible to borrow money to invest in a foreign country? | Yes it is possible. It would depend on Banks policies whether they would lend. Quite a few large corporations borrow money in one country for business needs in other country |
My Brokerage statement shows “Adjusted due to previous wash sale disallowed loss” what does this mean? | Well it would appear that you had a wash sale that canceled out a loss position. Without seeing the entire report, I couldn't tell you exactly what was happening or how you triggered § 1091. But just from the excerpted images, it appears as though your purchase of stock was layered into multiple tranches - perhaps you acquired more of the stock in the 61-day period than you sold (possibly because of a prior holding). If in the 61-day period around the sale of stock (30 days before and 30 days after), you also acquire the same stock (including by contract or option), then it washes out your loss. If you held your stock for a while, then in a 61-day period bought more, and sold some, then any loss would be washed out by the acquisition. Of course it is also a wash sale if your purchase of the stock follows your sale, rather than precedes it. Your disallowed loss goes into the basis of your stock holding, so will be meaningful when you do have a true economic sale of that stock. From IRS Pub 550: A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale. Looking at your excerpted account images, we can see a number of positions sold at a loss (sale proceeds less than basis) but each one is adjusted to a zero loss. I suspect the fuller picture of your account history and portfolio will show a more complicated and longer history with this particular stock. That is likely the source of the wash sale disallowed loss notations. You might be able to confirm that all the added numbers are appearing in your current basis in this stock (or were reflected upon your final exit from the stock). |
Financing a vehicle a few months before I expect to apply for a mortgage? | Buy a modest vehicle with a manageable payment. Keep the payment low enough ($200-300/month) to keep your DTI (Debt-To-Income) ratio clear. The short-term ding to your credit for new credit should disappear in 3-6 months (your time horizon). Having a mix of credit is part of the credit scoring model, so having an installment loan is not a bad thing. Relax. |
What should I be aware of as a young investor? | If you are going to the frenzy of individual stock picking, like almost everyone initially, I suggest you to write your plan to paper. Like, I want an orthogonal set of assets and limit single investments to 10%. If with such limitations the percentage of brokerage fees rise to unbearable large, you should not invest that way in the first hand. You may find better to invest in already diversified fund, to skip stupid fees. There are screeners like in morningstar that allow you to see overlapping items in funds but in stocks it becomes trickier and much errorsome. I know you are going to the stock market frenzy, even if you are saying to want to be long-term or contrarian investor, most investors are convex, i.e. they follow their peers, despite it would better to be a concave investor (but as we know it can be hard). If the last part confused you, fire up a spreadsheet and do a balance. It is a very motivating activity, really. You will immediately notice things important to you, not just to providers such as morningstar, but alert it may take some time. And Bogleheads become to your rescue, ready spreadsheets here. |
What are some factors I should consider when choosing between a CPA and tax software | Hiring a CPA comes into play if you're doing something that requires judgement or planning, such as valuation of internal shares in a partnership, valuation of assets in an asset swap, or distribution of the proceeds of a liquidation. That said, I would strongly suggest hiring someone who is also a Tax Attorney over a plain old CPA. In the event you do need representation to clarify positions or assertions, you're probably going to need to hire one anyway. Qualified representation is much cheaper to hire up front than after the fact. If all you need is help filing compliance paperwork (returns), software should be more than adequate. |
Is there such thing as a Checking account requiring pre-approval / white-list? | I don't believe there is such a process. My observation (i.e. my opinion) is that banks will have a level of security walls appropriate to the cost vs risk they experience. Since as Frazell says, your liability is limited for this type of fraud, you personally bear little if any risk. If this fraud were common enough that the cost of your proposal outweighed the expense, they would implement it. On a similar note. Credit card fraud can be reduced ten fold if a PIN were required for all purchases. The 3 digits on the back helps prove the card is there, and you just didn't steal the from 16 digits, but a 6-8 digit PIN required at point of sale would be tough for the thief to guess. How much software to do this would cost, I don't know, but the idea is brilliant, even if it's mine. 10 fold reduction, if not 100 fold. (Any bank guys reading?) |
How to acquire assets without buying them? | There are a number of ways someone acquires assets without buying it. People could have inherited assets. They could have been gifted assets. They might have won assets in a lawsuit (unlikely to be a mall, but not impossible). They could have married into the assets. So there's other ways of acquiring assets without purchasing them. |
Does my net paycheck decrease as the year goes on due to tax brackets filling up? | It seems that you are misunderstanding how your taxes are calculated. You seem to be under the impression that once you pass $37,450 annual income, ALL of your income will be taxed at 25%. However, in reality, only the income you earn above that amount will be taxed at 25%. You can use this chart to determine exactly how much federal tax you will pay; As you can see, if you earned, $37,500 in a year, you would only be charged 25% taxes on $50 (and you will pay 15% on the amount between $9226 and $37450, and 10% on the amount from $0 to $9225, which is $5126.25 when summed together). |
Should I learn to do my own tax? | I would advise against "pencil and paper" approach for the following reasons: You should e-file instead of paper filing. Although the IRS provides an option of "Fillable Forms", there's no additional benefit there. Software ensures correctness of the calculations. It is easy to make math errors, lookup the wrong table It is easy to forget to fill a line or to click a checkbox (one particular checkbox on Schedule B cost many people thousands of dollars). Software ask you questions in a "interview" manner, and makes it harder to miss. Software can provide soft copies that you can retrieve later or reuse for amendments and carry-overs to the next year, making the task next time easier and quicker. You may not always know about all the available deductions and credits. Instead of researching the tax changes every year, just flow with the interview process of the software, and they'll suggest what may be available for you (lifetime learners credit? Who knows). Software provides some kind of liability protection (for example, if there's something wrong because the software had a bug - you can have them fix it for you and pay your penalties, if any). It's free. So why not use it? As to professional help later in life - depending on your needs. I'm fully capable of filling my own tax returns, for example, but I prefer to have a professional do it since I'm not always aware about all the intricacies of taxation of my transactions and prefer to have a professional counsel (who also provides some liability coverage if she counsels me wrong...). Some things may become very complex and many people are not aware of that (I've shared the things I learned here on this forum, but there are many things I'm not aware of and the tax professional should know). |
What's the purpose of having separate checking and savings accounts? | Additionally, it used to be the case that savings accounts would have a noticeably higher interest than checking accounts (if the checking account paid any at all). So you would attempt to maximize your cash working for you by putting as much as you could into the savings account and then only transferring out what you needed to cover bills, etc into the checking account. |
Shares; are they really only for the rich/investors? | I think I have a better answer for this since I have been an investor in the stock markets since a decade and most of my money is either made through investing or trading the financial markets. Yes you can start investing with as low as 50 GBP or even less. If you are talking about stocks there is no restriction on the amount of shares you can purchase the price of which can be as low as a penny. I stared investing in stocks when I was 18. With the money saved from my pocket money which was not much. But I made investments on a regular period no matter how less I could but I would make regular investments on a long term. Remember one thing, never trade stock markets always invest in it on a long term. The stock markets will give you the best return on a long term as shown on the graph below and will also save you money on commission the broker charge on every transaction. The brokers to make money for themselves will ask you to trade stocks on short term but stock market were always made to invest on a long term as Warren Buffet rightly says. And if you want to trade try commodities or forex. Forex brokers will offer you accounts with as low as 25 USD with no commissions. The commission here are all inclusive in spreads. Is this true? Can the average Joe become involved? Yes anyone who wants has an interest in the financial markets can get involved. Knowledge is the key not money. Is it worth investing £50 here and there? Or is that a laughable idea? 50 GBP is a lot. I started with a few Indian Rupees. If people laugh let them laugh. Only morons who don't understand the true concept of financial markets laugh. There are fees/rules involved, is it worth the effort if you just want to see? The problem with today's generation of people is that they fear a lot. Unless you crawl you dont walk. Unless you try something you dont learn. The only difference between a successful person and a not successful person is his ability to try, fail/fall, get back on feet, again try untill he succeeds. I know its not instant money, but I'd like to get a few shares here and there, to follow the news and see how companies do. I hear that BRIC (brasil, russia, india and china) is a good share to invest in Brazil India the good thing is share prices are relatively low even the commissions. Mostly ROI (return on investment) on a long term would almost be the same. Can anyone share their experiences? (maybe best for community wiki?) Always up for sharing. Please ask questions no matter how stupid they are. I love people who ask for when I started I asked and people were generous enough to answer and so would I be. |
Why do some expiration dates have more open interest for options? | The third Friday of each month is an expiration for the monthly options on each stock. Stock with standardized options are in one of three "cycles" and have four open months at any give time. See http://www.investopedia.com/terms/o/optioncycle.asp In addition some stocks have weekly options now. Those generally have less interest because they are necessarily short-term. Anything expiring on April 8 and 22 (Fridays this year but not third Fridays of the month) are weeklies. The monthly options are open for longer periods of time so they attract more interest over the time that they are open. They also potentially attract a different type of investor due to their length of term, although, as it gets close to their expiration date they may start to behave more like weeklies. |
How to manage household finances (income & expenses) [duplicate] | Obviously, there are many approaches. I’ll describe what we do and why we think it is successful. I have seen many couples having disagreements and even divorce over money; it seems that this is a typical reason to fight and sometimes fight badly. The realization is that different people have different preferences what to spend their money on, and if you are not rich, it continuously leads to disagreements - ‘did you really need another pair of shoes?’, etc. Our solution is a weekly allowance. First, all our money goes into one pot and is considered equal. Many couples find that a difficult step, but I never thought twice about it - I trust my spouse, and I share my life with her, so why not my money? From this, we agree on an ‘allowance’ that is used to cover any non-common cost; this includes all clothing, dining out, buying things, etc. The amount was chosen to match about what we spent for those things anyway, and then adjusted annually. The main point is that there is no critique allowed about what this is spent on - you can blow it all on shoes, or buy books, or wine and dine, or gamble it away, whatever. We are doing this since 23 years now, and we are very happy with the results; we never have financial ‘fights’ anymore. Disadvantages are the effort - you need to keep track of it somehow. Either you use a separate credit card, or hand it out in cash, or have a complete accounting (I do the latter, because I want to). Regarding all other spend, we use the accounting to plan ahead for at least a year on all cost and income that are expected, and that shows us the available cash flow and where it might get tight. It also shows you where the money goes, and where you could cut if cutting is needed (or wanted). Again, there is some effort in collecting the data, but it is worth it (for us). |
If I get cash compensation for my stocks (following a merger for example) does that qualify for capital gains tax? | In the US this is considered a sale, and the proceeds will be taxed as if you've sold the stocks in any other way. The decision about the treatment (capital, ordinary, etc) is dependent on what kind of stock that is, how you acquired it, how long have you held it, etc. If it is a regular stock that you bought as an investment and held it for more than a year - then it will likely to be a capital gain treatment. However, this is only relevant for the US taxation. Since you're a UK person, you should also check how it is handled in the UK, which may or may not be different. |
How prudent would it be to invest (stocks/equity) in businesses that are based on Cash transactions? | If they're hiding their profits from the government, what makes you think they wouldn't hide their profits from their shareholders? |
Borrowing money to buy shares for cashflow? | Don't do it. I would sell one of my investment houses and use the equity to pay down your primary mortgage. Then I would refinance my primary mortgage in order to lower the payments. |
Can a business refuse to take credit cards? | Businesses are free to decide what payment methods they accept for their goods and services. Businesses sometimes advertise what credit cards they accept by posting some stickers at their door. When your credit card isn't among them and you don't have enough cash with you, ask about your card before you order. If a business doesn't accept your credit card, your best recourse is to take your business elsewhere. When you already ate there and got into an awkward situation because you assumed that they would accept your card, you might also want to write an online review of the place and warn others to bring cash for their visit (but please be fair in the review. When the food and service are decent, a restaurant doesn't deserve a one star rating just because they don't take credit cards). Note that businesses have good reasons to not accept credit cards. It often means additional cost for them in form of: But there is also a more shady reason. Taking payment in cash means that there is no electronic trail of the transaction. That makes it far easier for an establishment to misreport their income. They might under-report it to evade taxes or over-report it to launder money (both are illegal, of course). |
What is the best use of “spare” money? | You may also want to consider short term, low risk investments. Rolling Certificate of Deposits can be good for this. They don't grow like an Index Fund but there's 0 risk and they will grow faster than your bank. For my bank as an example today's rates on my Money Market is 0.10% APY while the lowest CD (90 days) is 0.20% APY with a 5 year going up to 0.90% APY. It's not substantial by any stretch but its secure and the money would just be sitting in my bank otherwise. For more information look at: What is CD laddering and what are its pros and cons? |
Should I pay my Education Loan or Put it in the Stock Market? | 2.47% is a really, really good rate, doubly so if it's a fixed rate, and quadruply so if the interest is tax-deductible. That's about as close to "free money" as you're ever going to get. Heck, depending on what inflation does over the next few years, it might even be cheaper than free. So if you have the risk tolerance for it, it's probably more effective to invest the money in the stock market than to accelerate your student loan payoff. You can even do better in the bond market (my go-to intermediate-term corporate bond fund is yielding nearly 4% right now.) Just remember the old banker's aphorism: Assets shrink. Liabilities never shrink. You can lose the money you've invested in stocks or bonds, and you'll still have to pay back the loan. And, when in doubt, you can usually assume you're underestimating your risks. If you're feeling up for it, I'd say: make sure you have a good emergency fund outside of your investment money - something you could live on for six months or so and pay your bills while looking for a job, and sock the rest into something like the Vanguard LifeStrategy Moderate Growth fund or a similar instrument (Vanguard's just my personal preference, since I like their style - and by style, I mean low fees - but definitely feel free to consider alternatives). You could also pad your retirement accounts and avoid taxes on any gains instead, but remember that it's easier to put money into those than take it out, so be sure to double-check the state of your emergency fund. |
If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes? | You are not required to file a tax return in Canada if you have no taxable income. If you do not file a return you may be requested to by Canada Revenue Agency, and then you'll need to file one. There are hundreds of thousands of Canadian residents who do not file tax returns. The Minister who overlooks the CRA may assess any amount of taxes on any resident whether they file a return or not. There are penalties for failing to file a return or filing late. The penalties are based on a percentage of the taxes owed. If you owe no taxes, then the penalties are meaningless. |
Why can it be a bad idea to buy stocks after hours? | Unless you want to be a short term day trader, then it is not foolish to be an end of day trader. If you are looking to be a medium to long term trader/investor then it is quite acceptable to put orders in after market close. Some would say it is even less risky, because you are not watching the price fluctuate up and down and letting your emotions getting the best of you. |
Negatives to increased credit card spending limit? [duplicate] | There is another drawback, and this is why I keep a low-limit card for online purchases and another for carrying in risky/unfamiliar situations (e.g. travelling) a small limit acts as as damage limitation in the event of theft. In theory you may not be liable if your card is stolen and used. In practice you may be out of pocket for a considerable amount of time, and trying to spend large sums on an overlimit card will soon trip it up (especially if those large sums are out of the ordinary) |
How can home buying be considered a sound investment with all of that interest that needs to be paid? | I'm going to start with your title question: How can home buying be considered a sound investment with all of that interest that needs to be paid? If taken literally, this is a loaded question because if you pay cash for a home, you don't pay any interest. Furthermore, if your interest rate is 3% for 10 years you won't pay nearly as much interest as you will if your rate is 10% for 30 years, so "all of that interest" is relative to your personal situation. Having said that, of course I understand what you mean. Most people pay interest, and interest is expensive, so how do you calculate if it's worth it? That question has been asked and answered, but for your particular situation, you really have two separate questions: I believe you should answer these questions independently. If you move far away, it's probably the case that you can save a lot of money by either renting or buying in that location. So you should first consider if it's worth it to move, and then if it is, decide if it's worth it to rent or buy. If you decide not to move far away, then decide if maybe you can save money by renting somewhere near your current home. Since it sounds like if you move you may have to become a landlord, living close by to your tenant may also make it easier to deal with problems when they arise. |
Is it wise for an independent contractor to avoid corporation tax by planning to only break even each year? | IANAL (and nor am I an accountant), so I can't give a definitive answer as to legality, but AFAIK, what you propose is legal. But what's the benefit? Avoiding corporation tax? It's simplistic – and costly – to think in terms like that. You need to run the numbers for different scenarios, and make a plan. You can end up ahead of the game precisely by choosing to pay some corporate tax each year. Really! Read on. One of the many reasons that self-employed Canadians sometimes opt for a corporate structure over being a sole proprietor is to be able to not pay themselves everything the company earns each year. This is especially important when a business has some really good years, and others, meh. Using the corporation to retain earnings can be more tax effective. Example: Imagine your corporation earns, net of accounting & other non-tax costs except for your draws, $120,000/year for 5 years, and $0 in year 6. Assume the business is your only source of income for those 6 years. Would you rather: Pay yourself the entire $120,000/yr in years 1-5, then $0 in year 6 (living off personal savings you hopefully accumulated earlier), subjecting the $120,000/yr to personal income tax only, leaving nothing in the corporation to be taxed? Very roughly speaking, assuming tax rates & brackets are level from year to year, and using this calculator (which simplifies certain things), then in Ontario, then you'd net ~$84,878/yr for years 1-5, and $0 in year 6. Overall, you realized $424,390. Drawing the income in this manner, the average tax rate on the $600,000 was 29.26%. vs. Pay yourself only $100,000/yr in years 1-5, leaving $20,000/yr subject to corporation tax. Assuming a 15.5% combined federal/provincial corporate tax rate (includes the small business deduction), then the corp. is left with $16,900/yr to add to retained earnings in years 1-5. In year 6, the corp. has $84,500 in retained earnings to be distributed to you, the sole owner, as a dividend (of the non-eligible kind.) Again, very roughly speaking, you'd personally net $73,560/yr in years 1-5, and then on the $84,500 dividend in year 6, you'd net $73,658. Overall, you realized $441,458. Drawing the income in this manner, the average tax rate on the $600K was 26.42%. i.e. Scenario 2, which spreads the income out over the six years, saved 2.84% in tax, or $14,400. Smoothing out your income is also a prudent thing to do. Would you rather find yourself in year 6, having no clients and no revenue, with nothing left to draw on? Or would you rather the company had saved money from the good years to pay you in the lean one? |
Stocks and bonds have yields, but what is a yield? | Yield can be thought of as the interest rate you would receive from that investment in the form of a dividend for stocks or interest payments on a bond. The yield takes into account the anticipated amount to be received per share/unit per year and the current price of the investment. Of course, the yield is not a guaranteed return like a savings account. If the investment yield is 4% when you buy, it can drop in value such that you actually lose money during your hold period, despite receiving income from the dividend or interest payments. |
Should I sell and rebuy stocks before the end of the year to trigger a gain and offset capital losses? | You have multiple issues buried within this question. First, we don't know your tax bracket. For my answer, I'll assume 25%. This simply means that in 2016, you'll have a taxable $37,650 or higher. The interesting thing is that losses and gains are treated differently. A 25%er's long term gain is taxed at 15%, yet losses, up to $3000, can offset ordinary income. This sets the stage for strategic tax loss harvesting. In the linked article, I offered a look at how the strategy would have resulted in the awful 2000-2009 decade producing a slight gain (1%, not great, of course) vs the near 10% loss the S&P suffered over that time. This was by taking losses in down years, and capturing long term gains when positive (and not using a carried loss). Back to you - a 15%er's long term gain tax is zero. So using a gain to offset a loss makes little sense. Just as creating a loss to offset the gain. The bottom line? Enjoy the loss, up to $3000 against your income, and only take gains when there's no loss. This advice is all superseded by my rule "Don't let the tax tail wag the investing dog." For individual stocks, I would never suggest a transaction for tax purposes. You keep good stocks, you sell bad ones. Sell a stock to take a short term loss only to have it recover in the 30 day waiting period just once, and you'll learn that lesson. Learn it here for free, don't make that mistake at your own expense. |
Swap hedging a currency hedge | I decided to try this in order to get a feel of it. As far as the interest rates are concerned, it works. You can set it up and forget about holding time as long as the rates and positions stay within a range. The problem is that currency volatility turns the interest paid for shorting USD/JPY into noise at best. And if you look to past performance over a year... Let's just say there is a reason they pay you to hold NZD. So, unless you think buying NZD/USD is a good idea to begin with, you should put your money elsewhere. |
Creating a Limited company while still fully employed | I was just thinking ahead, can I apply for Limited company now, while fully time employed, and not take any business until I get a contract. Yes. You can open as many companies you want(assuming you are sane). There is no legal provisions regarding who can open a company. What happens if I create a company and it has no turnover at all? Does this complicate things later? After you open a company, you have to submit your yearly statements to Companies House, whether you have a billion pounds turnover or 0. If you claim VAT that has also to be paid after you register for VAT. VAT registration is another registration different from opening a limited company. Is it the same if I decided to take a 1,2 or x month holiday and the company again will not incur any turnover? Turnover is year end, so at the year end you have to submit your yearly results, whether you took a 12 month holiday or a week's holiday. Is it a OK to do this in foresight or should I wait weeks before actually deciding to search for contracts. No need to open a limited company now, if you are so paranoid. Opening a company in UK takes 5 minutes. So you can open a company after landing a contract. |
Are Investment Research websites worth their premiums? | Anyone who claims they can consistently beat the market and asks you to pay them to tell you how is a liar. This cannot be done, as the market adjusts itself. There's nothing they could possibly learn that analysts and institutional investors don't already know. They earn their money through the subscription fees, not through capital gains on their beat-the-market suggestions, that means that they don't have to rely on themselves to earn money, they only need you to rely on them. They have to provide proof because they cannot lie in advertisements, but if you read carefully, there are many small letters and disclaimers that basically remove any liability from them by saying that they don't take responsibility for anything and don't guarantee anything. |
Are stocks always able to be bought and sold at market price? | Many of the Bitcoin exchanges mimic stock exchanges, though they're much more rudimentary offering only simple buy/sell/cancel orders. It's fairly normal for retail stock brokerage accounts to allow other sorts of more complex orders, where once a certain criteria is met, (the price falls below some $ threshold, or has a movement greater than some %) then your order is executed. The space between the current buy order and the current sell order is the bid/ask spread, it's not really about timing. Person X will buy at $100, person Y will sell at $102. If both had a price set at $101, they would just transact. Both parties think they can do a little bit better than the current offer. The width of the bid/ask spread is not universal by any means. The current highest buy order and the current lowest sell order, are both the current price. The current quoted market price is generally the price of the last transaction, whether it's buy or sell. |
Are online mortgage lenders as good as local brick-and-mortar ones? | I had a pretty good experience with Lending Tree, although they are a mortgage broker, not a lender themselves. |
What are the common income tax deductions used by “rich” salaried households? | From Rich Dad, Poor Dad. 3 Major Things: With rental real estate, in addition to mortgage interest, you also deduct property taxes, and must claim depreciation (cost of house / 27.5 years) Business Expenses. For example, buy a yacht and put it in a charter fleet. Deduct interest on the loan, depreciation of the asset, property taxes, upkeep of the boat. Your "business" earns profit from chartering the boat, which if I recall correctly is taxed at a lower rate. You get to go sailing for free. Then there was the concept of subdividing the businesses. If you own a restaurant, create another business to own the property, and the equipment used in the company. Then lease the equipment and rent the land to the restaurant. Now admittedly I thought this was like the Daylight Savings plan of tax avoidance, I mean now aren't you essentially having two companies paying half the taxes. I am sure there are well paid CPAs that make the math happen, perhaps using insurance plans.. Perhaps each business funds a "whole life" insurance account, and contributes vast amounts into that. Then you take a loan from your insurance account. Loans of course are not income, so not taxed. The third way is to create your own bank. Banks are required to have reserves of 9%. Meaning if I have $100 dollars, the FDIA allows me to loan $1,111. I then charge you 20% interest, or $222/yr. Now how much can I loan? ...well you can see how profitable that is. Sure you pay taxes, but when you print your own money who cares? Most of this is just gleamed from books, and government publications, but that was my general understanding of it. Feel free to correct the finer points. |
How can a person protect his savings against a country default? | These have the potential to become "end-of-the-world" scenarios, so I'll keep this very clear. If you start to feel that any particular investment may suddenly become worthless then it is wise to liquidate that asset and transfer your wealth somewhere else. If your wealth happens to be invested in cash then transferring that wealth into something else is still valid. Digging a hole in the ground isn't useful and running for the border probably won't be necessary. Consider countries that have suffered actual currency collapse and debt default. Take Zimbabwe, for example. Even as inflation went into the millions of percent, the Zimbabwe stock exchange soared as investors were prepared to spend ever-more of their devaluing currency to buy stable stocks in a small number of locally listed companies. Even if the Euro were to suffer a critical fall, European companies would probably be ok. If you didn't panic and dig caches in the back garden over the fall of dotcom, there is no need to panic over the decline of certain currencies. Just diversify your risk and buy non-cash (or euro) assets. Update: A few ideas re diversification: The problem for Greece isn't really a euro problem; it is local. Local property, local companies ... these can be affected by default because no-one believes in the entirety of the Greek economy, not just the currency it happens to be using - so diversification really means buying things that are outside Greece. |
How much do large sell orders affect stock price? | Most of the investors who have large holdings in a particular stock have pretty good exit strategies for those positions to ensure they are getting the best price they can by selling gradually into the volume over time. Putting a single large block of stock up for sale is problematic for one simple reason: Let's say you have 100,000 shares of a stock, and for some reason you decide today is the day to sell them, take your profits, and ride off into the sunset. So you call your broker (or log into your brokerage account) and put them up for sale. He puts in an order somewhere, the stock is sold, and your account is credited. Seems simple, right? Well...not so fast. Professionals - I'm keeping this simple, so please don't beat me up for it! The way stocks are bought and sold is through companies known as "market makers". These are entities which sit between the markets and you (and your broker), and when you want to buy or sell a stock, most of the time the order is ultimately handled somewhere along the line by a market maker. If you work with a large brokerage firm, sometimes they'll buy or sell your shares out of their own accounts, but that's another story. It is normal for there to be many, sometimes hundreds, of market makers who are all trading in the same equity. The bigger the stock, the more market makers it attracts. They all compete with each other for business, and they make their money on the spread between what they buy stock from people selling for and what they can get for it selling it to people who want it. Given that there could be hundreds of market makers on a particular stock (Google, Apple, and Microsoft are good examples of having hundreds of market makers trading in their stocks), it is very competitive. The way the makers compete is on price. It might surprise you to know that it is the market makers, not the markets, that decide what a stock will buy or sell for. Each market maker sets their own prices for what they'll pay to buy from sellers for, and what they'll sell it to buyers for. This is called, respectively, the "bid" and the "ask" prices. So, if there are hundreds of market makers then there could be hundreds of different bid and ask prices on the same stock. The prices you see for stocks are what are called the "best bid and best ask" prices. What that means is, you are being shown the highest "bid" price (what you can sell your shares for) and the best "ask" price (what you can buy those shares for) because that's what is required. That being said, there are many other market makers on the same stock whose bid prices are lower and ask prices are higher. Many times there will be a big clump of market makers all at the same bid/ask, or within fractions of a cent of each other, all competing for business. Trading computers are taught to seek out the best prices and the fastest trade fills they can. The point to this very simplistic lesson is that the market makers set the prices that shares trade at. They adjust those prices based (among other factors) on how much buying and selling volume they're seeing. If they see a wave of sell orders coming into the system then they'll start marking down their bid prices. This keeps them from paying too much for shares they're going to have to find a buyer for eventually, and it can sometimes slow down the pace of selling as investors and automated systems notice the price decline and decide to wait to sell. Conversely, if market makers see a wave of buy orders coming into the system, they'll start marking their ask prices up to maximize their gains, since they're selling you shares they bought from someone else, presumably at a lower price. But they typically adjust their prices up or down before they actually fill trades. (sneaky, eh?) Depending on how much volume there is on the shares of the company you're selling, and depending on whether there are more buyers than sellers at the moment, your share sell order may be filled at market by a market maker with no real consequence to the share's price. If the block is large enough then it's possible it will not all sell to one market maker, or it might not all happen in one transaction or even all at the same price. This is a pretty complex subject, as you can see, and I've cut a LOT of corners and oversimplified much to keep it comprehensible. But the short answer to your question is -- it depends. Hope this helps. Good luck! |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | This is a real difficult situation and I think the correct way to proceed here is to be honest and straightforward. |
Investment Options for 14-year old? | A fourteen-year-old can invest a few thousand into commuting to a part-time job or an education. If you can wait five years for a couple hundred you can wait two to four years for a car (or gas money) or a class (or some textbooks.) |
privacy concerns when receiving money from paypal from strangers? | You'll need to check PayPal's terms of service for that first question. I would imagine you could, as my wife and I both have personal PayPal accounts listed at the same address. When you receive money, the senders will only see the (full) name on your account, the amount, and the transaction ID. If you set up a business account, the name on your account will be replaced with the company name. Your mailing address will not be made visible. Yes, PayPal provides an export option of your transaction history. For reference: If your volume greater than $20,000 across 200 or more transactions, then they'll be issuing a 1099-K form, anyway. That depends on the payment method. Bank transfers are instant, where cards require a settlement delay. PayPal provides buyer protection, so I'd be very dutiful in logging all of your work done to provide proof of completion, in case someone disputes a payment. Disputes can take place up to 45 days from the date of the transaction. Chargebacks can take place 120 days or more after the transaction (depends on the card network). |
Would cross holding make market capitalization apparently more? | I started to work out, step by step, why this doesn't work, but the scenario is too convoluted to make that helpful. Basically, you're making mistakes in some or all of the following spots: |
How to share income after marriage and kids? | My suggestion would be that you're looking at this the wrong way, though for good reasons. Once you are a family, you should - and, in most cases I've seen, will - think of things differently than you do now. Right now, your post above is written from a selfish perspective. Not to be insulting, and not implying selfish is a bad thing - I don't mean it negatively. But it is how you're defining this problem: from a self-interested, selfish point of view. "Fair" and "unfair" only have meaning from this point of view; something can only be unfair to you if you come from a self-centered viewpoint. Try to think of this from a family-centric viewpoint, and from your significant other's point of view. You're absolutely right to want both of you to be independent financially as far as is possible; but think about what that means from all three points of view (your family's, yours, and hers)? Exactly what it means will depend on the two of you separately and together, but I would encourage you to start with a few basics that make it likely you'll find a common ground: First of all, ensure your significant other has a retirement account of her own that is funded as well as yours is. This will both make life easier if you split up, and give her a safety net if something happens to you than if you have all of the retirement savings. I don't know how your country manages pensions or retirement accounts, but figure out how to get her into something that is as close to equal to yours as possible. Make sure both of you have similar quality credit histories. You should both have credit cards in your own names (or be true joint owners of the accounts, not just authorized users, where that is possible), and both be on the mortgage/etc. when possible. This is a common issue for women whose spouse dies young and who have no credit history. (Thanks @KateGregory for reminding me on this one) Beyond that, work out how much your budget allows for in spending money for the two of you, and split that equally. This spending money (i.e., "fun money" or money you can do whatever you like with) is what is fundamentally important in terms of financial independence: if you control most of the extra money, then you're the one who ultimately has control over much (vacations, eating out, etc.) and things will be strained. This money should be equal - whether it is literally apportioned directly (each of you has 200 a month in an account) or simply budgeted for with a common account is up to you, whatever works best for your personal habits; separate accounts works well for many here to keep things honest. When that money is accounted for, whatever it is, split the rest of the bills up so that she pays some of them from her income. If she wants to be independent, some of that is being in the habit of paying bills on time. One of you paying all of the bills is not optimal since it means the other will not build good habits. For example, my wife pays the warehouse club credit card and the cell phone bill, while I pay the gas/electric utilities. Whatever doesn't go to spending money and doesn't go to the bills she's personally responsible for or you're responsible for (from your paycheck) should go to a joint account. That joint account should pay the larger bills - mortgage/rent, in particular - and common household expenses, and both of you should have visibility on it. For example, our mortgage, day-care costs, major credit card (which includes most of our groceries and other household expenses) come from that joint account. This kind of system, where you each have equal money to spend and each have some household responsibilities, seems the most reasonable to me: it incurs the least friction over money, assuming everyone sticks to their budgeted amounts, and prevents one party from being able to hold power over another. It's a system that seems likely to be best for the family as a unit. It's not "fair" from a self-centered point of view, but is quite fair from a family-centered point of view, and that is the right point of view when you are a family, in my opinion. I'll emphasize here also that it is important that no one party hold the power, and this is set up to avoid that, but it's also important that you not use your earning power as a major arguing point in this system. You're not "funding her lifestyle" or anything like that: you're supporting your family, just as she is. If she were earning more than you, would you cut your hours and stay at home? Trick question, as it happens; regardless of your answer to that question, you're still at the same point: both of you are doing the thing you're best suited for (or, the thing you prefer). You're both supporting the family, just in different ways, and suggesting that your contribution is more valuable than hers is a great way to head down the road to divorce: it's also just plain incorrect. My wife and I are in almost the identical situation - 2 kids, she works part time in the biological sciences while spending plenty of time with the kids, I'm a programmer outearning her significantly - and I can tell you that I'd more than happily switch roles if she were the bread earner, and would feel just as satisfied if not more doing so. And, I can imagine myself in that position, so I can also imagine how I'd feel in that position as far as how I value my contribution. |
How is a stop order price different from an ask price | Stop order is triggered when the market reaches the price you set. Until then - its not on the books. Your understanding is wrong in that you don't go to read the definition of the term. |
Can I claim a tax deduction for working from home as an employee? I work there 90% of the time | The general rule is: Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly: Exclusively seems to be the toughest standard and I do not know exactly how strict the IRS's interpretation is. Working in your living room where you regularly watch TV and have people over on the weekends would seem to fail that test. A separate room with your computer in it would pass it. If it was your only computer and you regularly played online games with it, that would seem to be a grey area. The IRA booklet covering this area is here http://www.irs.gov/pub/irs-pdf/p587.pdf I know people that have rented rooms in other places or made use of rental offices for this purpose. |
Should I file a change of address with the IRS? | The most important thing to do when moving is to change your address with the post office. This will forward most mail for a year, and even automatically send change of address notices to many businesses that send mail to you. If you do this, and the IRS needs to send you something over the next year, you'll get it. The IRS does have a procedure for changing your address, and you would want to do this if you are expecting something from the IRS and are unable to do a change of address with the post office for some reason. But if you do forward your mail and you aren't expecting a refund check, I don't think it is necessary. The IRS will get your new address when you file your return next year. |
how does one start an investing club (as a company)? | Taxes are the least of your concerns. Your friends need licenses. Although this COULD be avoided entirely with certain craftily worded disclaimers and exemptions and the WAY that money is given to them. |
What are some well known or well regarded arguments against investing? | I think you're confusing risk analysis (that is what you quoted as "Taleb Distribution") with arguments against taking risks altogether. You need to understand that not taking a risk - is by itself a risk. You can lose money by not investing it, because of the very same Taleb Distribution: an unpredictable catastrophic event. Take an example of keeping cash in your house and not investing it anywhere. In the 1998 default of the Russian Federation, people lost money by not investing it. Why? Because had they invested the money - they would have the investments/properties, but since they only had cash - it became worthless overnight. There's no argument for or against investing on its own. The arguments are always related to the investment goals and the risk analysis. You're looking for something that doesn't exist. |
How are shares used, and what are they, physically? | For some very small private companies I know of (and am part of), paper stocks do exist. You can sit at the table with the damn things in your hand and wave them in people's faces. They tell everyone how much of the company you own as a result of the money you ponied up. On the other hand, most stocks are now electronic. Nothing to hold. Just electronic records to review. They still represent how much you own of the company because of some amount of money you have put at risk, but they aren't anywhere near as much fun as the old-fasioned paper proofs. (As MrChrister notes, you can pay a small fee to get paper if you like, even for some big companies. Some of these paper stocks are remarkably elaborate and fine looking, but hardly necessary.) (You can see more info about what stocks are and what sort of stocks exist here: http://www.wikinvest.com/wiki/What_is_a_stock%3F) |
What is a straddle? | A straddle is an options strategy in which one "buys" or "sells" options of the same maturity (expiry date) that allow the "buyer" or "seller" to profit based on how much the price of the underlying security moves, regardless of the direction of price movement. IE: A long straddle would be: You buy a call and a put at the same strike price and the same expiration date. Your profit would be if the underlying asset(the stock) moves far enough down or up(higher then the premiums you paid for the put + call options) (In case, one waits till expiry) Profit = Expiry Level - Strike Price - (Premium Paid for Bought Options) Straddle |
Double-entry bookkeeping: When selling an asset, does the money come from, Equity or Income? | It's better to use the accounting equation concept: Asset + Expenses = Capital + Liabilities + Income If you purchase an asset: Suppose you purchased a laptop of $ 500, then its journal will be: If you sell the same Laptop for $ 500, then its entry will be: |
Should I file taxes or Incorperate a personal project? | I don't know what you mean by "claim for taxes," I think you mean pay taxes. I'm not sure how corps function in Canada but in the US single owner limited liability entities typically pass the net income through to the owner to be included in their personal tax return. So it seems all of this is more or less moot, because really you should probably already be including your income sourced from this project on your personal taxes and that's not really likely to change if you formed something more formal. The formal business arrangements really exist to limit the liability of the business spilling over in to the owner's assets. Or trouble in the owner's life spilling over to interrupt the business operation. I don't know what kind of business this is, but it may make sense to set up one of the limited liability arrangements to ensure that business liability doesn't automatically mean personal liability. A sole proprietorship or in the US we have DBA (doing business as) paperwork will get you a separate tax id number, which may be beneficial if you ever have to provide a tax ID and don't want to use your individual ID; but this won't limit your liability the way incorporating does. |
What does “100% stock dividend” mean? | A 100% stock dividend means that you get one share of the "stock dividend" for every share you own. For example, Google did this in 2014 when they gave all of their Class A shareholders one class C share for every Class A that they owned. If the 100% stock dividend is for the exactly the same stock, it is basically the same as a 2-for-1 stock split. If, however, the 100% stock dividend is to give you a different stock, then this is typically due to a corporate reorganization or demerger/spinoff event. Some countries have different tax treatments for the events - for example, with demergers in Australia, Class Rulings need to be obtained from the Australian Taxation Office to declare demergers as tax free. A recent demerger was in Australia as South32, demerged from BHP Billiton. References: http://economix.blogs.nytimes.com/2014/04/02/the-many-classes-of-google-stock/ http://www.bhpbilliton.com/investors/shareholderinfo/demerger-taxation-information |
New to investing — I have $20,000 cash saved, what should I do with it? | Another thought: Higher education in the US is frightfully expensive with the sticker price for a 4-year undergraduate degree at a decent private college us sitting at around $250,000 and rising fast. Consider starting a 529 savings plan especially if you planning on more kids. |
Claiming mileage allowances, what are the rules/guidelines? | I believe so (that you can, not that you are greedy) I run my own business and, generally speaking, am 'charging' my company 40p per mile as per the quote above. I did not know about the ability to claim the shortfall, as it is not relevant to me, but it makes perfect sense and I'm sure that a phone call to HMRC will help you understand how to claim. As for the greedy question - personally I think that laws are there for a reason (both ways) so if there's money to be claimed - there's no reason not to do so, unless of course the hassle is greater than the potential gain. One last note - not sure exactly what the rules around this are, but I know that the allowance is not applicable for one's general commute and so if you're travelling to the same place over 40% of the time for more than two years you are no longer allowed to claim these miles. |
Is paying off your mortage a #1 personal finance priority? | You say A #1 priority, that implies multiple #1 priorities. Long term or medium term my goal is to pay off the mortgage. But short term paying off the mortgage isn't a concern. Some people are comfortable with a mortgage during retirement, others aren't. When I was younger the mortgage concern was not being overextended. I didn't want to be in a situation that dictated my financial decisions because I needed to make a big house payment. Being overextended is no longer a concern for me. Now I am looking in more detail about how my retirement will actually play out. How to handle my actual retirement income sources. For me, not having a mortgage simplifies my planning. |
What are the benefits of opening an IRA in an unstable/uncertain economy? | As I stated in my comment on @JCotton's answer, the only way you benefit by putting your money in an IRA or other tax-deferred vehicle is if you expect to have a lower tax rate when you withdraw than when you put the money in. If you look at @JCotton's numbers and remember to pay taxes when you withdraw the money in 30 years, you will see that both situations - paying taxes now or 30 years from now - give you the exact same dollar amount if the tax rates are the same at both points in time. So if you put money in an IRA, you're betting on the fact that the government will not substantially raise interest rates by then, and/or that you will be in a lower tax bracket. To me, the only valid reasons to invest in an IRA or 401K are the following: However, you should also consider the major downside that the money is locked away and, at best, inconvenient to access when you need it. At worst, you have to pay taxes and penalties if you ever withdraw that money. If you are a financially responsible person, I think you're generally better off keeping your money outside of an IRA or 401K, with the exception of making sure to get all of your employer's matching contributions. |
Should I participate in a 401k if there is no company match? | I believe @Dilip addressed your question alread, I am going to focus on your second question: What are the criteria one should use for estimating the worth of the situation? The criteria are: I hope this helps. |
Previous owner of my home wants to buy it back but the property's value is less than my loan… what to do? | It's a short sale. See these for good overviews: http://www.realtor.org/library/library/fg335 http://homebuying.about.com/od/4closureshortsales/a/shortsalebasics.htm You'll want input from your lawyer and accountant (assuming the lender says they would accept such a sale). Best of luck - sounds like this could be a great opportunity for you if it all comes together. DO NOT talk to a realtor. |
I file 83(b) election, but did't include a copy of it in that year’s tax return | This may be relevant: it suggests that IRS is lenient with the attachment of the form with 1040. To paraphrase: "The ruling involved a taxpayer who timely filed the election with the IRS within 30 days of the property transfer but who did not attach a copy of the election to his or her Form 1040 for the year of the transfer. Fortunately for the taxpayer in question, the ruling indicated that the submission of the election to the IRS within 30 days of the property transfer fulfilled the requirements for a valid election, and the failure to attach the copy to the tax return did not affect the validity of the election. The IRS requested that the taxpayer forward a copy of the election to the IRS to be associated with the processing of the tax return. - See more at: http://www.bnncpa.com/services/employee_benefit_plans/blog/irs_rules_that_failure_to_attach_83b_election_to_form_1040_did_not_invalida#sthash.0c3h2nJY.dpuf" If someone wants to grok the IRS ruling: http://www.irs.gov/pub/irs-wd/1405008.pdf And this is the article where I saw the above referenced. www.bnncpa.com/services/employee_benefit_plans/blog/irs_rules_that_failure_to_attach_83b_election_to_form_1040_did_not_invalida |
How many stocks will I own in n years if I reinvest my dividends? | Your example shows a 4% dividend. If we assume the stock continues to yield 4%, the math drops to something simple. Rule of 72 says your shares will double in 18 years. So in 18 years, 1000 shares will be 2000, at whatever price it's trading. Shares X (1.04)^N years = shares after N years. This is as good an oversimplification as any. |
Is Amazon's offer of a $50 gift card a scam? | it's not a scam. it's not even too good to be true. frankly it's the lowest sign up bonus i've ever seen for a credit card. you would be better off signing up for a flagship card from one of the major banks (e.g. chase sapphire, citi double cash, discover it, amex blue). those cards regularly offer sign up bonuses worth between 400$ and 1000$. however, you can't get all the cards at once. noteably chase has a fairly firm limit of 5 new cards per 24 month. the other banks have similar, less publicized limits on who they will approve for a new card. so, by applying for this amazon card you are hurting your chances of getting far more lucrative sign up bonuses. it is however worth noting that those larger bonuses usually come with a minimum spending requirement (e.g. spend 1k$-3k$ in the first 3 months) |
Is it sensible to redirect retirement contributions from 401(k) towards becoming a landlord? | This is going to seem pretty far off the beaten path, but I hope when you finish reading it you'll see the point... Suppose someone offered you a part time job: Walk their dog once per day for at least 20 minutes, and once per week pick up the dog poo from their lawn. Your compensation is $300/month. Now suppose instead you are given two choices for a job: Your preference probably has more to do with your personality and interests than the finances involved. |
Asset classes: Is a Guaranteed Investment Certificate (GIC) considered a bond? | Instead of "stocks" I would refer to that asset class as "equity." Instead of bonds, I would refer to that asset class as "fixed income." Given that more general terminology, GICs would fit into fixed income. |
What could cause a stock to trade below book value? | A company's stock value is indicative of the market's collective belief of the future of the company. The relationship of between price and book value will vary according to the quality of the company, the category of stock, etc. In extreme cases, say Bank of America, the stock trades at a fraction of book, because BOA's books are a fantasy by most people's reckoning. |
Why don't banks allow more control over credit/debit card charges? | quid has expressed some of the disadvantages with this approach, but there is another. Vendors will not want to give you any goods you buy with your credit card until they are sure they will get the money. With your suggested approach buying something with a credit card now looks like: No vendor is going to stand for this for even moderate sized transactions, so in reality they will just decline your card if you have this facility enabled. |
What happens if futures contract seller defaults? | MD-Tech answered: The answer is in your question: derivatives are contracts so are enforced in the same way as any other contract. If the counterparty refuses to pay immediately they will, in the first instance be billed by any intermediary (Prime Broker etc.) that facilitated the contract. If they still refuse to pay the contract may stipulate that a broker can "net off" any outstanding payments against it or pay out using deposited cash or posted margins. The contract will usually include the broker as an interested party and so they can, but don't need to, report a default (such that this is) to credit agencies (in some jurisdictions they are required to by law). Any parties to the trade and the courts may use a debt collection agency to collect payments or seize assets to cover payment. If there is no broker or the counterparty still has not paid the bill then the parties involved (the party to the trade and any intermediaries) can sue for breach of contract. If they win (which would be expected) the counterparty will be made to pay by the legal system including, but not limited to, seizure of assets, enforced bankruptcy, and prison terms for any contempts of court rulings. All of this holds for governments who refuse to pay derivatives losses (as Argentina did in the early 20th century) but in that case it may escalate as far as war. It has never done so for derivatives contracts as far as I know but other breaches of contract between countries have resulted in armed conflict. As well as the "hard" results of failing to pay there are soft implications including a guaranteed fall in credit ratings that will result in parties refusing to do business with the counterparty and a separate loss of reputation that will reduce business even further. Potential employees and funders will be unwilling to become involved with such a party and suppliers will be unwilling to supply on credit. The end result in almost every way would be bankruptcy and prison sentences for the party or their senior employees. Most jurisdictions allow for board members at companies in material breach of contract to be banned from running any company for a set period as well. edit: netting off cash flows netting off is a process whereby all of a party's cash flows, positive and negative, are used to pay each other off so that only the net change is reflected in account balances, for example: company 1 cash flows netting off the total outgoings are 3M + 500k = 3.5M and total incomings are 1.2M + 1.1M + 1.2M = 3.5M so the incoming cash flows can be used to pay the outgoing cash flows leaving a net payment into company1's account of 0. |
Can I buy only 4 shares of a company? | The least expensive way to buy such small amounts is through ING's Sharebuilder service. You can perform a real-time trade for $9, or you can add a one-time trade to their investment schedule for $4 (transaction will be processed on the next upcoming Tuesday morning). They also allow you to purchase fractional shares. |
Investment strategy for 401k when rolling over soon | The time horizon for your 401K/IRA is essentially the same, and it doesn't stop at the day you retire. On the day you do the rollover you will be transferring your funds into similar investments. S&P500 index to S&P 500 index; 20xx retirement date to 20xx retirement date; small cap to small cap... If your vested portion is worth X $'s when the funds are sold, that is the amount that will be transferred to the IRA custodian or the custodian for the new employer. Use the transfer to make any rebalancing adjustments that you want to make. But with as much as a year before you leave the company if you need to rebalance now, then do that irrespective of your leaving. Cash is what is transferred, not the individual stock or mutual fund shares. Only move your funds into a money market account with your current 401K if that makes the most sense for your retirement plan. Also keep in mind unless the amount in the 401K is very small you don't have to do this on your last day of work. Even if you are putting the funds in a IRA wait until you have started with the new company and so can define all your buckets based on the options in the new company. |
Why can't a US state default, but a EU state can? | But do you know about a US state risking to go default now or in the past? Ultimately, a US state could go into default. However, I doubt that such a scenario would be allowed to transpire. This seems to happen to California with some regularity. That is, risking default. What would happen is not quite well known: "There is no provision for a state to go bankrupt," Kyser said. "I don't think anyone really knows what will happen or even if the state will go into receivership if it does default. I can tell you this, officials are looking at all the (current) laws." (source) I believe that the answer to your question is that it could happen, but likely would not be allowed to occur. The nature of the EU and US are quite different. The individual states forming the US are not separate nations. For better or for worse, the US is a stronger federation than the EU. (Something that is lamented at times when the Feds mess with the purview of the locals.) |
How can I figure out how a stock's price would change after I buy shares? | It depends on many factors, but generally, the bid/ask spread will give you an idea. There are typically two ways to buy (or sell) a security: With a limit order, you would place a buy for 100 shares at $30-. Then it's easy, in the worst case you will get your 100 shares at $30 each exactly. You may get lucky and have the price fall, then you will pay less than $30. Of course if the price immediately goes up to say $35, nobody will sell at the $30 you want, so your broker will happily sit on his hands and rake in the commission while waiting on what is now a hail Mary ask. With a market order, you have the problem you mention: The ticker says $30, but say after you buy the first 5 shares at $30 the price shoots up and the rest are $32 each - you have now paid on average $31.9 per share. This could happen because there is a limit order for 5 at $30 and 200 at $32 (you would have filled only part of that 200). You would be able to see these in the order book (sometimes shown as bid/ask spread or market depth). However, the order book is not law. Just because there's an ask for 10k shares at $35 each for your $30 X stock, doesn't mean that by the time the price comes up to $35, the offer will still be up. The guy (or algorithm) who put it up may see the price going up and decide he now wants $40 each for his 10k shares. Also, people aren't obligated to put in their order: Maybe there's a trader who intends to trade a large volume when the price hits a certain level, like a limit order, but he elected to not put in a limit order and instead watch the ticker and react in real time. Then you will see a huge order suddenly come in out of nowhere. So while the order book is informative, what you are asking is actually fundamentally impossible to know fully, unless you can read the minds of every interested trader. As others said, in "normal" securities (meaning traded at a major exchange, especially those in the S&P500) you simply can't move the price, the market is too deep. You would need millions of dollars to budge the price, and if you had that much money, you wouldn't be asking here on a QA site, you would have a professional financial advisor (or even a team) that specializes in distributing your large transaction over a longer time to minimize the effect on the market. With crazier stocks, such as OTC and especially worthless penny stocks with market caps of $1 mil or less, what you say is a real problem (you can end up paying multiples of the last ticker if not careful) and you do have to be careful about it. Which is why you shouldn't trade penny stocks unless you know what you're doing (and if you're asking this question here, you don't). |
Why is it important to research a stock before buying it? | The only sensible reason to invest in individual stocks is if you have reason to think that they will perform better than the market as a whole. How are you to come to that conclusion other than by doing in-depth research into the stock and the company behind it? If you can't, or don't want to, reach that conclusion about particular stocks then you're better off putting your money into cheap index trackers. |
Effect of Job Change on In-Progress Mortgage Application | Best advice is to ask your lender. That being said, if you are changing jobs, but keeping the same type of job you are usually ok and if the loan was approved before, it would still be approved. If you switch from W-2 to 1099 or vice-versa, permanent to contract, switch industries (software dev to accountant), or make less money there is a strong risk of the loan being declined. |
Why does gold have value? | Gold's value starts with the fact that its supply is steady and by nature it's durable. In other words, the amount of gold traded each year (The Supply and Demand) is small relative to the existing total stock. This acting as a bit of a throttle on its value, as does the high cost of mining. Mines will have yields that control whether it's profitable to run them. A mine may have a $600/oz production cost, in which case it's clear they should run full speed now with gold at $1200, but if it were below $650 or so, it may not be worth it. It also has a history that goes back millennia, it's valued because it always was. John Maynard Keynes referred to gold as an archaic relic and I tend to agree. You are right, the topic is controversial. For short periods, gold will provide a decent hedge, but no better than other financial instruments. We are now in an odd time, where the stock market is generally flat to where it was 10 years ago, and both cash or most commodities were a better choice. Look at sufficiently long periods of time, and gold fails. In my history, I graduated college in 1984, and in the summer of 82 played in the commodities market. Gold peaked at $850 or so. Now it's $1200. 50% over 30 years is hardly a storehouse of value now, is it? Yet, I recall Aug 25, 1987 when the Dow peaked at 2750. No, I didn't call the top. But I did talk to a friend advising that I ignore the short term, at 25 with little invested, I only concerned myself with long term plans. The Dow crashed from there, but even today just over 18,000 the return has averaged 7.07% plus dividends. A lengthy tangent, but important to understand. A gold fan will be able to produce his own observation, citing that some percent of one's holding in gold, adjusted to maintain a balanced allocation would create more positive returns than I claim. For a large enough portfolio that's otherwise well diversified, this may be true, just not something I choose to invest in. Last - if you wish to buy gold, avoid the hard metal. GLD trades as 1/10 oz of gold and has a tiny commission as it trades like a stock. The buy/sell on a 1oz gold piece will cost you 4-6%. That's no way to invest. Update - 29 years after that lunch in 1987, the Dow was at 18448, a return of 6.78% CAGR plus dividends. Another 6 years since this question was asked and Gold hasn't moved, $1175, and 6 years' worth of fees, 2.4% if you buy the GLD ETF. From the '82 high of $850 to now (34 years), the return has a CAGR of .96%/yr or .56% after fees. To be fair, I picked a relative high, that $850. But I did the same choosing the pre-crash 2750 high on the Dow. |
Are there online brokers in the UK which don't require margin account? | I don't know what you are on about, as most online brokers should offer standard brokerage without margin. As trading with magin is considered more risky by most (especially if you don't know what you are doing), so one would have to fill out additional application forms and possibly undergo some training before getting a margin account open. A quick search on the net provided some examples, here is one - IG, who provide 3 type of accounts - Spread Betting and CFDs (both leveraged) and Stockbroking (which is non-leveraged). |
Is there any truth to the saying '99% of the world's millionaires have become rich by doing real estate'? | This quote has it almost backwards. Thomas J. Stanley's recent book (he's one of the duo who researched and wrote about The Millionaire Next Door) claims that the top occupation of millionaires is "business owner / self-employed" (28%). "Real estate investor" is lumped in with "other" (9%), and if the ordering is correct in the list, it's no more than 2% of the total. (source) |
What does it mean to a life insurance policy holder to convert from a stock to mutual insurance company? | A stock insurance company is structured like a “normal” company. It has shareholders (that are the company's investors), who elect a board of directors, who select the senior executive(s), who manage the people who run the actual company. The directors (and thus the executives and employees) have a legal responsibility to manage the company in a way which is beneficial for the shareholders, since the shareholders are the ultimate owner of the company. A mutual insurance company is similar, except that the people holding policies are also the shareholders. That is, the policyholders are the ultimate owners of the company, and there generally aren't separate shareholders who are just “investing” in the company. These policyholder-shareholders elect the board of directors, who select the senior executive(s), who manage the people who run the actual company. In practice, it probably doesn't really make a whole lot of difference, since even if you're just a "customer" and not an "owner" of the company, the company is still going to want to attract customers and act in a reasonable way toward them. Also, insurance companies are generally pretty heavily regulated in terms of what they can do, because governments really like them to remain solvent. It may be comforting to know that in a mutual insurance company the higher-ups are explicitly supposed to be working in your best interest, though, rather than in the interest of some random investors. Some might object that being a shareholder may not give you a whole lot more rights than you had before. See, for example, this article from the Boston Globe, “At mutual insurance firms, big money for insiders but no say for ‘owners’ — policyholders”: It has grown into something else entirely: an opaque, poorly understood, and often immensely profitable world in which some executives and insiders operate with minimal scrutiny and, no coincidence, often reap maximum personal rewards. Policyholders, despite their status as owners, have no meaningful oversight of how mutual companies spend their money — whether to lower rates, pay dividends, or fund executive salaries and perks — and few avenues to challenge such decisions. Another reason that one might not like the conversion is the specific details of how the current investor-shareholders are being paid back for their investment in the process of the conversion to mutual ownership, and what that might do to the funds on hand that are supposed to be there to keep the firm solvent for the policyholders. From another Boston Globe article on the conversion of SBLI to a mutual company, “Insurer SBLI wants to get banks out of its business,” professor Robert Wright is cautiously optimistic but wants to ensure the prior shareholders aren't overpaid: Robert Wright, a professor in South Dakota who has studied insurance companies and owns an SBLI policy, said he would prefer the insurer to be a mutual company that doesn’t have to worry about the short-term needs of shareholders. But he wants to ensure that SBLI doesn’t overpay the banks for their shares. “It’s fine, as long as it’s a fair price,” he said. That article also gives SBLI's president's statement as to why they think it's a good thing for policyholders: If the banks remained shareholders, they would be likely to demand a greater share of the profits and eat into the dividends the insurance company currently pays to the 536,000 policyholders, about half of whom live in Massachusetts, said Jim Morgan, president of Woburn-based SBLI. “We’re trying to protect the policyholders from having the dividends diluted,” Morgan said. I'm not sure there's an obvious pros/cons list for either way, but I'd think that I'd prefer the mutual approach, just on the principle that the policyholders “ought” to be the owners, because the directors (and thus the executives and employees) are then legally required to manage the company in the best interest of the policyholders. I did cast a Yes vote in my proxy on whether SBLI ought to become a mutual company (I'm a SBLI term-life policyholder.) But policy terms aren't changing, and it'd be hard to tell for sure how it'd impact any dividends (I assume the whole-life policies must be the ones to pay dividends) or company solvency either way, since it's not like we'll get to run a scientific experiment trying it out both ways. I doubt you'd have a lot of regrets either way, whether it becomes a mutual company and you wish it hadn't or it doesn't become one and you wish it had. |
Is it true that if I work 6 months per year, it is better than to work for 1 calendar year and take a break for 1 year? | In many cases spanning across years will indeed be beneficial. Deductions: You get to take twice as much in deductions (twice the standard deduction, or itemizing - if you can) when you span over two years than in one. IRA: You can only contribute in years when you have earned income. You have all the income in year 1 and none in year 2 - you can only contribute in year 1. You have half of the income in year 1 and half of the income in year 2 - you can contribute in both years (up to the limit/earned income, whichever is less). Social Security: You get 4 credits for each year you earned ~16K in. You earned 32K in year 1, and nothing in year 2 - you get 4 credits. You split it in half for each year - you get 8 credits. The list can go on. If you can do the planning ahead of time and can chose the time periods of your work freely (which is not something most people can do), you can definitely plan ahead with taxes in mind. This is called Tax Planning. |
If I buy a share from myself at a higher price, will that drive the price up so I can sell all my shares the higher price? | This probably won't be a popular answer due to the many number of disadvantaged market participants out there but: Yes, it is possible to distort the markets for securities this way. But it is more useful to understand how this works for any market (since it is illegal in securities markets where company shares are involves). Since you asked about the company Apple, you should be aware this is a form of market manipulation and is illegal... when dealing with securities. In any supply and demand market this is possible especially during periods when other market participants are not prevalent. Now the way to do this usually involves having multiple accounts you control, where you are acting as multiple market participants with different brokers etc. The most crafty ways to do with involve shell companies w/ brokerage accounts but this is usually to mask illegal behavior In the securities markets where there are consequences for manipulating the shares of securities. In other markets this is not necessary because there is no authority prohibiting this kind of trading behavior. Account B buys from Account A, account A buys from Account B, etc. The biggest issue is getting all of the accounts capitalized initially. The third issue is then actually being able to make a profit from doing this at all. Because eventually one of your accounts will have all of the shares or whatever, and there would still be no way to sell them because there are no other market participants to sell to, since you were the only one moving the price. Therefore this kind of market manipulation is coupled with "promotions" to attract liquidity to a financial product. (NOTE the mere fact of a promotion does not mean that illegal trading behavior is occurring, but it does usually mean that someone else is selling into the liquidity) Another way to make this kind of trading behavior profitable is via the derivatives market. Options contracts are priced solely by the trading price of the underlying asset, so even if your multiple account trading could only at best break even when you sell your final holdings (basically resetting the price to where it was because you started distorting it), this is fine because your real trade is in the options market. Lets say Apple was trading at $200 , the options contract at the $200 strike is a call trading at $1 with no intrinsic value. You can buy to open several thousand of the $200 strike without distorting the shares market at all, then in the shares market you bid up Apple to $210, now your options contract is trading at $11 with $10 of intrinsic value, so you just made 1000% gain and are able to sell to close those call options. Then you unwind the rest of your trade and sell your $210 apple shares, probably for $200 or $198 or less (because there are few market participants that actually valued the shares for that high, the real bidders are at $200 and lower). This is hardly a discreet thing to do, so like I mentioned before, this is illegal in markets where actual company shares are involved and should not be attempted in stock markets but other markets won't have the same prohibitions, this is a general inefficiency in capital markets in general and certain derivatives pricing formulas. It is important to understand these things if you plan to participate in markets that claim to be fair. There is nothing novel about this sort of thing, and it is just a problem of allocating enough capital to do so. |
Is it beneficial to my credit score if I close my youngest credit lines while preserving my current credit utilization rate? | Credit Score is rather misleading, each provider of credit uses their own system to decide if they wish to lend to you. They will also not tell you how the combine all the factoring together. Closing unused account is good, as it reduced the risk of identity theft and you have less paperwork to deal with. It looks good if a company that knows you will agrees to give you more credit, as clearly they think you are a good risk. Having more total credit allowed on account is bad, as you may use it and not be able to pay all your bills. Using all your credit is bad, as it looks like you are not in control. Using a “pay day lender” is VERY bad, as only people that are out of control do so. Credit cards should be used for short term credit paying them off in full most months, but it is OK to take advantage of some interest free credit. |
Is it common for a new car of about $16k to be worth only $4-6k after three years? | It depends completely on the car. Some cars retain their value much better, and others drop in value like a rock (no pun intended). The mileage and condition on a car also has a huge impact on value. According to this site, cars on average lose 46% of their value in three years, so seeing one that drops 62% in roughly 3 years does not seem impossible. That value could also have been trade-in value, which is significantly lower than what you could get with a private party sale (or what you'd pay to get that same car from a dealer) One example: a new Ford Taurus (lowest model) has a Kelly Blue Book value of $28,000. A 2014 Taurus (lowest model) with average mileage and in fair condition has a private party value of about $12,000, for a 57% drop in value. Note: I picked Taurus because it's a car that should not have exceptional resale value (unlike BMW, trucks, SUVs), not to make any kind of judgement of the quality or resellability of the car) |
Withholding for unexpected Short-Term Capital Gains and Penalties | Assuming U.S. law, there are "safe harbor" provisions for exactly this kind of situation. There are several possibilities, but the most likely one is that if your withholding and estimated tax payments for 2016 totaled at least as much as your tax bill for 2015 there's no penalty. For the full rules, see IRS Publication 17. |
Getting money from online websites I own to my UK bank account | Now i want to get this money in my new UK bank account, does this mean that gov will take taxes from this money as well. Yes that is income and you have to pay tax on that. But it might be a bit complicated than that, so I would ask you to call up HMRC or visit an accountant or maybe ask the finance people of your employer. Also one of my family members send us money every few months and will send to this bank from now on, does taxes also apply on this? See the HMRC page about capital gains tax on gifts: You won't have to pay Capital Gains Tax when you give a gift to your husband, wife or civil partner - as long as both of the following apply: It's useful to keep a note of what the asset cost you. Your spouse or civil partner may need this to work out their Capital Gains Tax when they dispose of the asset. Example: Mr B lives with his wife and gives her an antique table that he bought for £12,000 in 2003. Mrs B spends £500 restoring the table, eventually selling it for £20,000. Her total costs are £12,500 (£500 plus Mr B's original cost £12,000). Mrs B's gain is £7,500 (£20,000 less £12,500). When you make a gift to a family member or other person you're connected with, you'll need to work out the gain or loss. This doesn't apply to gifts you make to your spouse or civil partner. This also applies if you dispose of an asset to them in any other way - for example, you sell it to them for a low price. A 'connected person' in this context is someone such as your brother, sister, child, parent, grandparent, mother-in-law or business partner. Follow the link below for more information about connected people and Capital Gains Tax. You must get a valuation of the asset at the time you made the gift. Use this value in place of any amount you received for the asset to work out your gain or loss. If you gave the asset away, then of course the amount you received for it will be nothing. If you make a loss you can only deduct the loss from gains you make on gifts or other disposals to the same person. |
Buying USA Stocks from Sri Lanka | I'm not aware of any method to own US stocks, but you can trade them as contract for difference, or CFDs as they are commonly known. Since you're hoping to invest around $1000 this might be a better option since you can use leverage. |
Buying a foreclosed property | No, it is not true. It depends on the market, the banks' inventory, the original debt that was owed, etc etc. The banks generally want to recover their money, so in case of underwater properties they may end up hold a property for years until prices bounce back (as it happened during the last crisis when many houses were boarded for months/years until banks put them back on the market hoping to sell at a price that would allow them to recover their losses). |
Can my own corporation deduct my expenses even if I am a full time employee? | No, your business cannot deduct your non-business expenses. You can only deduct from your business income those reasonable expenses you paid in order to earn income for the business. Moreover, for there to be a tax benefit, your business generally has to have income (but I expect there are exceptions; HST input tax credits come to mind.) The employment income from your full-time job wouldn't count as business income for your corporation. The corporation has nothing to do with that income – it's earned personally, by you. With respect to restaurant bills: These fall under a category known as "meals & entertainment". Even if the expense can be considered reasonable and business-related (e.g. meeting customers or vendors) the Canada Revenue Agency decided that a business can only deduct half of those kinds of expenses for tax purposes. With respect to gasoline bills: You would need to keep a mileage and expense log. Only the portion of your automobile expenses that relate to the business can be deducted. Driving to and from your full-time job doesn't count. Of course, I'm not a tax professional. If you're going to have a corporation or side-business, you ought to consult with a tax professional. (A point on terminology: A business doesn't write off eligible business expenses — it deducts them from business income. Write off is an accounting term meaning to reduce the value of an asset to zero. e.g. If you damaged your car beyond repair, one could say "the car is a write-off.") |
Online tutorials for calculating DCF (Discounted Cash Flow)? | Here's a link to an online calculator employing the Discounted Cash Flow method: Discounted Cash Flows Calculator. Description: This calculator finds the fair value of a stock investment the theoretically correct way, as the present value of future earnings. You can find company earnings via the box below. [...] They also provide a link to the following relevant article: Investment Valuation: A Little Theory. Excerpt: A company is valuable to stockholders for the same reason that a bond is valuable to bondholders: both are expected to generate cash for years into the future. Company profits are more volatile than bond coupons, but as an investor your task is the same in both cases: make a reasonable prediction about future earnings, and then "discount" them by calculating how much they are worth today. (And then you don't buy unless you can get a purchase price that's less than the sum of these present values, to make sure ownership will be worth the headache.) [...] |
How to acquire skills required for long-term investing? | Far and away the most valuable skill in investing, in my opinion, is emotional fortitude. You need to have the emotional stability and confidence to trust your decision making and research to hold on down days. |
How can I find a list of all North American ETF's including symbols? | You can use www.etfdb.com and search on geography. |
How to prevent myself from buying things I don't want | Remember where they said "Life, liberty and the pursuit of happiness? That is the essence of this problem. You have freedom including freedom to mess up. On the practical side, it's a matter of structuring your money so it's not available to you for impulse buying, and make it automatic. Have you fully funded your key necessities? You should have an 8-month emergency fund in reserve, in a different savings account. Are you fully maxing out your 401K, 403B, Roth IRA and the like? This single act is so powerful that you're crazy not to - every $1 you save will multiply to $10-100 in retirement. I know a guy who tours the country in an RV with pop-outs and tows a Jeep. He was career Air Force, so clearly not a millionaire; he saved. Money seems so trite to the young, but Seriously. THIS. Have auto-deposits into savings or an investment account. Carry a credit card you are reluctant to use for impulse buys. Make your weekly ATM withdrawal for a fixed amount of cash, and spend only that. When your $100 has to make it through Friday, you think twice about that impulse buy. What about online purchases? Those are a nightmare to manage. If you spend $40 online, reduce your ATM cash withdrawal by $40 the next week, is the best I can think of. Keep in mind, many of these systems are designed to be hard to resist. That's what 1-click ordering is about; they want you to not think about the bill. That's what the "discount codes" are about; those are a fake artifice. Actually they have marked up the regular price so they are only "discounting" to the fair price. You gotta see the scam, unsubscribe and/or tune out. They are preying on you. Get angry about that! Very good people to follow regularly are Suze Orman or Dave Ramsey, depending on your tastes. As for the ontological... freedom is a hard problem. Once food and shelter needs are met, then what? How does a free person deny his own freedom to structure his activities for a loftier goal? Sadly, most people pitching solutions are scammers - churches, gurus, etc. - after your money or your mind. So anyone who is making an effort to get seen by you and promise to help you is probably not a good guy. Though, Napoleon Hill managed to pry some remarkable knowledge from Andrew Carnegie in his book "Think and Grow Rich". Tony Robbins is brilliant, but he lets his staff sell expensive seminars and kit, which make him look like just another shyster. Don't buy that stuff, you don't need it and he doesn't need you to buy it. |
How much money should I lock up in my savings account? | No, don't bother. You need to decide what you are saving for, and how much risk you are prepared to take. It would make sense if you wanted the money only in x years, and couldn't afford to lose say 20% or more if the stock market crashed the day before you needed the cash. Typically if you are about to retire and buy an annuity, you want to protect your capital. This isn't you. At 28, you might be saving for a wedding, a deposit on a house, possibly for school fees, or for eventual retirement. It doesn't sound like you need to get back exactly 24k in July 2022. Keep the 6 months expenses in accounts that you can withdraw from at short notice. Some of this in a current account, some might be in a savings account that doesn't pay interest if you make withdrawals. After that, I'd stick most of the rest in stock market tracker funds, but you might go for actively managed funds instead (ask another question and take professional advice, there will presumably be local tax considerations too), and add in most of your monthly savings too. These should beat the 2.3% over the 5 years, and you can liquidate them easily if you want to buy a house. If there is a recession and a stock market dip, you presumably have the flexibility to hold on to them longer for the economy to recover. And if you are intending to buy a house, then a recession will probably also involve a fall in house prices, so the loss in your savings will be somewhat balanced by the drop in the purchase price of your house. Of course, the worst case scenario is a severe downturn where you lose your job, are unemployed for a considerable period of time, burn through your emergency fund, and need to sell shares at a considerable loss to meet your expenses. You might have family or dependents that you can borrow from or would need to support, which would change your tolerance for risk. Having money locked away for 5 years in this scenario is even worse. So if you don't want to put all your non-emergency savings into the stock market, you still want to choose something that is accessible at a slightly lower interest rate. But ultimately it sounds like you can afford to lose some of your savings, and the probability is that you will be rewarded with much better returns than 2.3% over 5 years. |
Opportunity to buy Illinois bonds that can never default? | If you give money to a person or entity, and they don't have the ability to pay you back, it doesn't matter if they are legally required to pay you. |
How do I know when I am financially stable/ready to move out on my own? | It's hard to financially justify buying a house just for one person to live in. You end up being 'over-housed' (and paying for it). Would you rent a whole house for yourself? A condo might be an option - but TO ME the maintenance fees are hard to take (and they are notorious for increasing dramatically as the building ages). You could consider buying a house that includes 1 or 2 rental units, or sharing with a friend. You do run the risk of having bad tenants though, and you have additional maintance to deal with. Having a rental unit in my modest house has worked out very well for me (living alone), and I have been VERY fortunate with tenants. |
How to find a business consultant that would ensure that all your business activities are legal and compliant with all regulations? | Getting a specific service recommendation is off-topic, but the question of what type of professional you need seems on-topic to me. You may be looking for more than one professional in this case, but you could try these to start your search: Different people do things differently, but I think it would be pretty common to have a relationship (i.e. contract, retainer agreement, at least have met the person in case you have an "emergency") with a business law attorney and either a CPA or tax attorney. You may try not to use them too much to keep costs down, but you don't want to be searching for one after you have an issue. You want to know who you're going to call and may establish at least a basis working relationship. |
What exactly is a “bad,” “standard,” or “good” annual raise? If I am told a hard percentage and don't get it, should I look elsewhere? | What makes a "standard" raise depends on how well the economy is doing, how well your particular industry is doing, and how well your employer is doing. All these things change constantly, so anyone who says, "a good raise is 5%" or whatever number is being simplistic. Even if true when he said it, it won't necessarily be true next year, or this year in a different industry, etc. The thing to do is to look for salary surveys that are reasonably current and applicable. If today, in your industry, the average annual raise is 3% -- again, just making up a number -- then that's what you should think of as "standard". If you want a number, okay: In general, as a first-draft number, I look for a raise that's 2% or so above the current inflation rate. Yes, of course I'd LIKE to get a 20% raise every year, but that's not going to happen in real life. On the other hand if a company gives me raises that don't keep pace with inflation, than barring special circumstances I'm going to be looking for another job. But there are all sorts of special circumstances. If the economy is in a depression and unemployment in my field is 50%, I'll probably figure I'm lucky to have a job at all and not be too worried about raises. If the economy is booming and all my friends are getting 10% and 20% raises, then I'll want that too. As others have said, in the United States at least, the best way to get a pay raise is to change jobs. I think most American companies are absolutely stupid about this. They don't want to give current employees big raises, so they let them quit, and then hire replacements at a much higher salary than they were paying the guy they just drove to quit. And the replacement doesn't know the company and may have a lot to learn before he is fully productive. And then they congratulate themselves that they kept raises this year to only 3% -- even though total salaries paid went up by 10% because the new hires demanded higher salaries. They actively punish employees for staying with the company. (Reminds me of an article I read in a business magazine by an executive of a cell phone company. He bemoaned the fact that in the cell phone industry it is very hard to keep customers: they are constantly switching to other vendors. And I thought, Duh, maybe it's because you offer big discounts for the first year or two, and after that you jack your prices up through the roof. You actively punish your customers for staying with you more than 2 years, and then you wonder why customers leave after 2 years.) Oh, if you do change jobs: Absolutely do not buy a line of "we'll start you off with this lower salary but don't worry because you'll get a big raise in a year". When you're looking for a job, it's very easy to turn down a poor offer. Once you have taken a job, leaving to get another job is a big decision and a lot of work. So you have way more bargaining power on starting salary than on raises. And the company knows it and is trying to take advantage of it. Also consider not just percentage increase but what you're making now versus what other people with similar experience are making. If people comparable to you are making $50k and you're making $30k, you're more likely to get a big raise than if you're already making $80k. If the company says, "We just don't have the budget to give you a raise", the key question is, "Is that true?" If the company is tottering on the edge of bankruptcy and trying to cut costs everywhere, then even if they know you're a good and productive employee, they may really just not have the money to give you a good raise. But if business is booming, this could just be an excuse. It might be an excuse for "we're trying to bleed employees white so the CEO can get another million dollar bonus this year". Or it might be a euphemism for "you're really not a very useful employee and we're seriously thinking of firing you, no way we're going to give you a raise for the little bit of work you do when you bother to show up". My final word: Be realistic. What matters isn't what you want or think you need, but what you are worth to the company, and what other people with similar skills are willing to work for. If you are doing work that brings in $20k per year for the company, there is no way they are going to pay you more than $20k for very long. You can go on and on about how expensive it is these days to pay the mortgage and pay medical bills and feed your 10 children and support your cocaine addiction, but none of that is relevant to what you are worth to the company. Likewise if there are millions of people out there who would love to have your job for $20k, if you demand a lot more than that they're going to fire you and hire one of them. Conversely, if you're bringing in $100k a year for the company, they'll be willing to pay you a substantial percentage of that. |
Paying off student loan or using that money for a downpayment on a house | Two years ago, I wrote an article titled Student Loans and Your First Mortgage in response to this exact question posed by a fellow blogger. The bottom line is that the loan payment doesn't lower your borrowing power as it fits in the slice between 28% (total housing cost) and 38% (total monthly debt burden) when applying for a loan. But, the $20K is 20% down on $100K worth of house. With median home prices in the US in the mid-high $100Ks, you're halfway there. In the end, it's not about finance, it's a question of how badly you want to buy a house. If I got along with the parents, I'd stay as long as I was welcome, and save every dollar I could. Save for retirement, save for as large a downpayment as you can, and after you buy the house, pay the student loan aggressively. I moved out the week after I graduated. |
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