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How are people able to spend more than what they make, without going into debt? | Bezos made very little "money." But he is very wealthy because of stock grants and options, from his previous years. Banks or brokerage firms will lend him (or anyone else) up to half the value of his stock. In Bezos' case, we're talking about billions. So he could, if he wanted to, cash out half of those billions. If the stock continues to go up (as it has), he will be able to cash out more each year. Imagine a person earning $1 a year in cash with $1 billion of stock, on which he can borrow up to $500 million. That, in a nutshell, is Bezos (with larger numbers). |
Do stock option prices predicate the underlying stock's movement? | Options are an indication what a particular segment of the market (those who deal a lot in options) think will happen. (and just because people think that, doesn't mean it will) Bearing in mind however that people writing covered-calls may due so simply as part of a strategy to mitigate downside risk at the expense of limiting upside potential. The presence of more people offering up options is to a degree an indication they are thinking the price will fall or hold steady, since that is in effect the 'bet' they are making. OTOH the people buying those options are making the opposite bet.. so who is to say which will be right. The balance between the two and how it affects the price of the options could be taken as an indication of market sentiment (within the options market) as to the future direction the stock is likely to take. (I just noticed that Blackjack posted the forumula that can be used to model all of this) To address the last part of your question 'does that mean it will go lower' I would say this. The degree to which any of this puts actual pressure on the stock of the underlying instrument is highly debatable, since many (likely most) people trading in a stock never look at what the options for that stock are doing, but base their decision on other factors such as price history, momentum, fundamentals and recent news about the company. To presume that actions in the options market would put pressure on a stock price, you would need to believe that a signficant fraction of the buyers and sellers were paying attention to the options market. Which might be the case for some Quants, but likely not for a lot of other buyers. And it could be argued even then that both groups, those trading options, and those trading stocks, are both looking at the same information to make their predictions of the likely future for the stock, and thus even if there is a correlation between what the stock price does in relation to options, there is no real causality that can be established. We would in fact predict that given access to the same information, both groups would by and large be taking similar parallel actions due to coming to similar conclusions regarding the future price of the stock. What is far MORE likely to pressure the price would be just the shear number of buyers or sellers, and also (especially since repeal of the uptick rule) someone who is trying to actively drive down the price via a lot of shorting at progressively lower prices. (something that is alleged to have been carried out by some hedge fund managers in the course of 'bear raids' on particular companies) |
How to acquire skills required for long-term investing? | I feel that OP's question is fundamentally wrong and an understanding of why is important. The stock market, as a whole, in the USA has an average annualized return of 11%. That means that a monkey, throwing darts at a board, can usually turn 100K into over three million in thirty-five years. (The analog I'm drawing is a 30-year old with 100K randomly picking stocks will be a multi-millionaire at 65). So to be "good" at investing in the stock market, you need to be better than a monkey. Most people aren't. Why? What mistakes do people make and how do you avoid them? A very common mistake is to buy high, sell low. This happened before and after the 08's recession. People rushed into the market beforehand as it was reaching its peak, sold when the market bottomed out then ignored the market in years it was getting 20+% returns. A Bogle approach for this is to simply consistently put a part of your income into the market whether it is raining or shining. Paying high fees. Going back to the monkey example, if the monkey charges you a 2% management fees, which is low by Canadian standards, the monkey will cost you one million dollars over the course of the thirty-five years. If the monkey does a pretty good job it is a worthy expenditure. But most humans, including professional stock pickers, are worst than a monkey at picking stocks. Another mistake is adjusting your plan. Many people, when the market was giving bull returns before the 08's crash happily had a large segment of their wealth in stocks. They thought they were risk tolerant. Crash happened, they moved towards bonds. Then bonds returns were comically low while stocks soared. Had they had a plan, almost any consistent plan, they'd have done better. Another genre of issues is just doing stupid things. Don't buy that penny stock. Don't trade like crazy. Don't pay 5$ commission on a 200$ stock order. Don't fail to file your taxes. Another mistake, and this burdens a lot of people, is that your long-term investments are for long-term investing. What a novel idea. You're 401K doesn't exist for you to get a loan for a home. Many people do liquidate their long-term savings. Don't. Especially since people who do make these loans or say "I'll pay myself back later" don't. |
Understanding differences between S&P500 index-tracking ETFs | Regarding SPY: "One SPDR unit is valued at approximately 1/10 of the value of the S&P 500. Dividends are distributed quarterly, and are based on the accumulated stock dividends held in trust, less any expenses of the trust." (source) These are depository receipts, not the actual stocks. Regarding IVV: "The component stocks are weighted according to the total float-adjusted market value of their outstanding shares. The Fund invests in sectors, such as energy, information technology, industrials, financials, consumer staples, healthcare, telecom services, consumer discretionary and materials." (more here) VOO is the Vanguard S&P 500 ETF. The tracking error seems pretty small to me. I went to Google Finance and plotted the percent change for all four on one chart. They lie pretty much on top of one another. The actual dollar value of each one doesn't matter nearly as much as the fact that they move up and down almost in lock-step. There may be a larger difference going farther out, but for three separate financial products, the agreement is still remarkably good. |
Any experience with maxing out 401(k)? | On #1: One way to make it less painful is to "split" your raises between yourself and your 401k. That is, if you get a 2% raise, increase your contribution to the 401K by 1% and keep the other 1%. Keep doing this until you are maxed out. You won't miss money you never had nearly as much as money you were used to living on. On #2: Yes, go with the Roth. Another consideration: If you are ever going to max out your 401K it is best to do it early even if you have to cut back later than to wait. Take advantage of the extra investment time while you are young. |
Will I be paid dividends if I own shares? | Yes, as long as you own the shares before the ex-dividend date you will get the dividends. Depending on your instructions to your broker, you can receive cash dividends or you can have the dividends reinvested in more shares of the company. There are specific Dividend ReInvestment Plans (or DRIPs) if you are after stock growth rather than income from dividend payments. |
Can one use Google Finance to backtest (i.e. simulate trades in the past)? | If you use Google Finance, you will get incorrect results because Google Finance does not show the dividend history. Since your requirement is that dividends are re-invested, you should use Yahoo Finance instead, downloading the historical 'adjusted' price. |
Long term saving: Shares, Savings Account or Fund | There is no rule of thumb (although some may suggest there is). Everybody will have different goals, investment preferences and risk tolerances. You need to figure this out by yourself by either education yourself in the type of investments you are interested in or by engaging (and paying for) a financial advisor. You should not be taking advice from others unless it is specifically geared for your goals, investment DNA and risk tolerance. The only advice I would give you is to have a plan (whether you develop it yourself or pay a financial advisor to develop one). Also, don't have all your savings sitting in cash, as long-term you will fall behind the eight ball in real returns (allowing for inflation). |
Is short selling a good hedging strategy during overzealous market conditions? | Point of order: "What goes up must come down" refers to gravity of terrestrial objects below escape velocity and should not be generalized beyond its intent. It's not true that stocks MUST come down just because they have gone up. For example, we would not expecting the price of oil to come down to 1999 levels, right? Prices, including those of stocks, are not necessarily cyclical. Anyway, short selling isn't necessarily a bad idea. In some sense, it is insurance if you have a lot of assets (like maybe your human capital) that will take a dive when the market goes down. Short selling would have lost a lot of money in your case as the stock market between 2011 (when you wrote the question) and 2014 (when I wrote this answer) performed very well. On average the long side stock market should make money over long periods of time as compensation for risk and the short side should lose money, so it's not a good way to make money if you don't have an informational advantage. Like all insurance, it protects you against certain calamities, but on average it costs you money. |
Should I use a credit repair agency? | I think you already have a lot of good ideas here. I also don't agree with going with a company to "repair" your credit. They don't have any secret method on how to do so anyway, it takes time and hard work. Cut out things that you are more luxury items. Cable for me is a must (Haha) but I can go without having HBO, showtime, etc. Make a list of the things you currently pay for and you will be able to see exactly what you can't "live without" and what you can live without. The good thing nowadays there's so many side gig options available! Check out this article here: https://www.learnvest.com/2017/06/this-is-how-much-you-could-make-through-airbnb-uber-and-7-other-popular-side-gigs. This goes into detail on how much you can make on these sites on a monthly average. Since you're in IT, you can use fiverr! I've used fiverr a lot of projects, you create your own deadlines, work schedule, you accept the jobs you want, similar to your UBer and Lyft but Fiverr has a lot of contractors with a variety of skills specifically in IT, lots of demand for web developers not sure what IT field you're in. Hope this helps! Good luck! |
How can I get a wholesaler ID number? | Small businesses are often governed by local regulations and state law. In a low liability small quantity arena, you should be able to get away with a DBA (doing business as) arrangement, such as DBA "Jay's Gem's". A small business license may come with a state Tax ID and satisfy your supplier, but a Federal EIN can be obtained from the IRS, and may be necessary to apply for the business license. It wouldn't hurt to talk to the local chamber of commerce or state small business agencies if you have questions about local requirements. |
Is there strategy to qualify stock options with near expiry date for long term capital gain tax? | According to page 56 of the 2015 IRS Publication 550 on Investment Income and Expenses: Wash sales. Your holding period for substantially identical stock or securities you acquire in a wash sale includes the period you held the old stock or securities. It looks like the rule applies to stocks and other securities, including options. It seems like the key is "substantially identical". For your brokerage / trading platform to handle these periods correctly for reporting to IRS, it seems best to trade the same security instead of trying to use something substantially identical. |
How can I increase my hourly pay as a software developer? | It's a tough thing to do. You should look for a salaried position. Your freelance skills will be much better received, if you've worked for a couple of companies doing programming full time. Nothing beats working at it all day long for a few years. If you're set on being freelance, write some utility that will be popular, and submit it to Freshmeat.net. Now that's asking a lot. Those on the Web looking for programmers will most likely want you to work for 'sweat equity'. That is, a share in the company for you labour. In other words "FREE". I've done my share of those, and if you're just getting into this, you should steer away from them. You may hit the jackpot, but you won't sleep for the next few years ;-) |
Snowball debt or pay off a large amount? | Dave Ramsey would tell you to pay the smallest debt off first, regardless of interest rate, to build momentum for your debt snowball. Doing so also gives you some "wins" sooner than later in the goal of becoming debt free. |
If I short-sell a dividend-paying stock, do I have to pay the dividend? | Yes, you would. You owe it to the person you borrowed the shares from. (source) |
Is Stock Trading legal for a student on F-1 Visa in USA? [duplicate] | As an F1 student, I have been investing (and occasionally buying and selling within few weeks) for several years, and I have never had problems (of course I report to IRS gains/losses every year at tax time). On the other hand, the officer in charge of foreign students at my school advised me to not run ads on a website and make a profit. So, it seems to me that investing is perfectly legit for a F1 student, as it's not considered a business activity. That's obviously my personal understanding, you may want to speak with an immigration attorney to be on the safe side. |
Best Time to buy a stock in a day | You want to buy when the stock market is at an all-time low for that day. Unfortunately, you don't know the lowest time until the end of the day, and then you, uh can't buy the stock... Now the stock market is not random, but for your case, we can say that effectively, it is. So, when should you buy the stock to hopefully get the lowest price for the day? You should wait for 37% of the day, and then buy when it is lower than it has been for all of that day. Here is a quick example (with fake data): We have 18 points, and 37% of 18 is close to 7. So we discard the first 7 points - and just remember the lowest of those 7. We bear in mind that the lowest for the first 37% was 5. Now we wait until we find a stock which is lower than 5, and we buy at that point: This system is optimal for buying the stock at the lowest price for the day. Why? We want to find the best position to stop automatically ignoring. Why 37%? We know the answer to P(Being in position n) - it's 1/N as there are N toilets, and we can select just 1. Now, what is the chance we select them, given we're in position n? The chance of selecting any of the toilets from 0 to K is 0 - remember we're never going to buy then. So let's move on to the toilets from K+1 and onwards. If K+1 is better than all before it, we have this: But, K+1 might not be the best price from all past and future prices. Maybe K+2 is better. Let's look at K+2 For K+2 we have K/K+1, for K+3 we have K/K+2... So we have: This is a close approximation of the area under 1/x - especially as x → ∞ So 0 + 0 + ... + (K/N) x (1/K + 1/K+1 + 1/K+2 ... + 1/N-1) ≈ (K/N) x ln(N/K) and so P(K) ≈ (K/N) x ln(N/K) Now to simplify, say that x = K/N We can graph this, and find the maximum point so we know the maximum P(K) - or we can use calculus. Here's the graph: Here's the calculus: To apply this back to your situation with the stocks, if your stock updates every 30 seconds, and is open between 09:30 and 16:00, we have 6.5 hours = 390 minutes = 780 refreshes. You should keep track of the lowest price for the first 289 refreshes, and then buy your stock on the next best price. Because x = K/N, the chance of you choosing the best price is 37%. However, the chance of you choosing better than the average stock is above 50% for the day. Remember, this method just tries to mean you don't loose money within the day - if you want to try to minimise losses within the whole trading period, you should scale this up, so you wait 37% of the trading period (e.g. 37% of 3 months) and then select. The maths is taken from Numberphile - Mathematical Way to Choose a Toilet. Finally, one way to lose money a little slower and do some good is with Kiva.org - giving loans to people is developing countries. It's like a bank account with a -1% interest - which is only 1% lower than a lot of banks, and you do some good. I have no affiliation with them. |
How do Islamic Banking give loans for housing purposes? | As I understand it, if the "borrower" puts a down payment of 20% and the bank puts down 80%, then the bank and the "borrower" own the home jointly as tenants in common with a 20%-80% split of the asset amongst them. The "borrower" moves into the home and pays the bank 80% of the fair rental value of the home each month. {Material added/changed in edit: For the purposes of illustration, suppose that the "borrower" and the bank agree that the fair rental per month is 0.5% of the purchase cost. The "borrower" pays 80% of that amount i.e. 0.4% of the purchase cost to the bank on a monthly basis. The "borrower" is not required to do so but may choose to pay more money than this 0.4% of the purchase cost each month, or pay some amount in a lump sum. If he does so, he will own a larger percentage of the house, and so future monthly payments will be a smaller fraction of the agreed-upon fair rental per month. So there is an incentive to pay off the bank.} If and when the house is sold, the sale price is divided between "borrower" and bank according to the percentage of ownership as of the date of sale. So the bank gets to share in the profits, if any. On the other hand, if the house is sold for less than the original purchase price, then the bank also suffers in the loss. It is not a case of a mortgage being paid off from the proceeds and the home-owner gets whatever is left, or even suffering a loss when the dust has settled; the bank gets only its percentage of the sale price even if this amount is less than what it put up in the first place minus any additional payments made by the "borrower". I have no idea how other costs of home ownership (property taxes, insurance, repair and maintenance) or improvements, additions, etc are handled. Ditto what happens on Schedule A if such a "loan" is made to a US taxpayer. |
How can I get a wholesaler ID number? | Seems like it's more dependent on who you want to be your supplier. The times I've been involved in requesting this, each company had its own application form. They usually need proof of business activity, which gets back to SpecKK's answer. |
Is it financially advantageous and safe to rent out my personal car? | The moment that you start to rent your car to strangers you are talking about using your car as a business. Will it be financially advantageous? If you can convince somebody to rent your vehicle for more than your required monthly payments then it might be. Of course you have to determine what would be the true cost of ownership for you. It could include your auto loan, and insurance, but you would be saving on the garage costs. Of course if you don't have it rented 100% of the time you will still have some costs. Your insurance company will need to know about your plan. They charge based on the risk. If you aren't honest about the situation they won't cover you if something goes wrong. The local government may want to know. They charge different car registration fees for businesses. If there are business taxes they will want that. Taxes. you are running a business so everybody from the federal governemnt to the local government may want a cut. Plus you will have to depreciate the value of the item. Turning the item from a personal use item to a business item can have tax issues. If you don't own it 100% the lender may also have concerns about making sure their collateral survives. Is it safe? and from the comments to the question : Should I do a contract or something that would protect me? Nope. it isn't safe unless you do have a contract. Of course that contract will have to be drawn up by a lawyer to make sure it protects you from theft, negligence, breach of contract.... You will have to be able to not just charge rent, but be able to repossess the car if they don't return it on time. You will have to be able to evaluate if the renter is trustworthy, or you may find your car is in far worse shape if you can even get it back. |
What are reasons a company would want to be listed on one exchange vs. another? | Listing on NYSE has more associated overhead costs than listing on NASDAQ. In the case of young technology companies, this makes NASDAQ a more attractive option. Perhaps the most important factor is that NYSE requires that a company has an independent compensation committee and an independent nominating committee while NASDAQ requires only that executive compensation and nominating decisions are made by a majority of independent directors. No self-respecting, would-be-instant-billionare tech entreprenuer is going to want some independent committee lording it over their pay packet. Additionally, listing on NYSE requires a company have stated guidance for corporate governance while NASDAQ imposes no such requirement. Similarly, NYSE requires a company have an internal audit team while NASDAQ imposes no such requirement. Fees on NYSE are also a bit higher than NASDAQ, but the difference is not significant. A good rundown of the pros/cons: http://www.investopedia.com/ask/answers/062215/what-are-advantages-and-disadvantages-listing-nasdaq-versus-other-stock-exchanges.asp |
Is the contribution towards Employment Insurance (EI) wasted if I never get fired, or are my premiums refunded? | I would suggest they are not wasted because your premiums fund unemployment insurance, which is a net to prevent people from going under if they lose their jobs. Unemployment insurance is in many ways an incubator for success because it allows an entrepreneur to take more risk in starting a business because failure won't mean devastation. Perhaps that person who took the risk because of the ability to fail started the business that you now work for. Society works better (in my opinion) by keeping the bottom closer to the top. Paying into the unemployment insurance fund indirectly provides you opportunity. |
How can I estimate the value of private stock behind employee stock options? | It is difficult to value a private company. Most of the valuations is based on how one feels the idea would translate into revenue in some future time. The VC firms take into account various factors to determine the price, but more often then not, its their hunch. Even VC don't make money on all picks, very few picks turn out to be stars, most picks lose money they have invested. Few picks just return their money. So if you feel that the idea/product/brand/people are great and would someday make good money, invest into it. Else stay away. |
Reconciling transactions reimbursing myself for expenses as self-employed (UK) | Any money that ScottMcGready gives to the company is a personal loan that must be repaid by the company at some point without tax consequences. Any money that the company gives to ScottMcGready is either salary (Scott pays income tax, company counts this as cost), or a dividend (Scott pays dividend tax), or a loan (Scott must repay the loan). |
Why do people always talk about stocks that pay high dividends? | Someone who buys a stock is fundamentally buying a share of all future dividends, plus the future liquidation value of the company in the event that it is liquidated. While some investors may buy stocks in the hope that they will be able to find other people willing to pay more for the stock than they did, that's a zero sum game. The only way investors can make money in the aggregate is if either stocks pay dividends or if the money paid for company assets at liquidation exceeds total net price for which the company sold shares. One advantage of dividends from a market-rationality perspective is that dividend payments are easy to evaluate than company value. Ideally, the share price of a company should match the present per-share cash value of all future dividends and liquidation, but it's generally impossible to know in advance what that value will be. Stock prices may sometimes rise because of factors which increase the expected per-share cash value of future dividends and liquidations. In a sane market, rising prices on an item will reduce people's eagerness to buy and increase people's eagerness to sell. Unfortunately, in a marketplace where steady price appreciation is expected the feedback mechanisms responsible for stability get reversed. Rapidly rising prices act as a red flag to buyers--unfortunately, bulls don't see red flags as signal to stop, but rather as a signal to charge ahead. For a variety of reasons including the disparate treatment of dividends and capital gains, it's often not practical for a company to try to stabilize stock prices through dividends and stock sales. Nonetheless, dividends are in a sense far more "real" than stock price appreciation, since paying dividends generally requires that companies actually have sources of revenues and profits. By contrast, it's possible for stock prices to go through the roof for companies which have relatively few assets of value and no real expectation of becoming profitable businesses, simply because investors see rising stock prices as a "buy" signal independent of any real worth. |
Do money markets fluctuate during market crashes? | As the commenters have already indicated, money market mutual funds are not guaranteed to maintain principal during all market conditions, and investments in mutual funds are not insured against loss due to market changes. That said, you can run a price search on Vanguard's website and see these results: So, despite all the economic problems since 1975, VMMXX has never traded at a price other than $1.00. |
US Banks offering Security Tokens in 2012 | Bank of America "safe-pass" generates a code that is sent to your phone as a text message. Its an optional feature, this happens during log in, if you enter that code correctly, then you are taken to your more traditional login, which also features the weak (but widely heralded) two-factor authentication which shows a picture you chose and a password field. Some other banks do other things, but yes, your craigslist phone verification is generally more secure. |
Why is the breakdown of a loan repayment into principal and interest of any importance? | The other answers have touched on amortization, early payment, computation of interest, etc, which are all very important, but I think there's another way to understand the importance of knowing the P/I breakdown. The question mentions the loan payment as "cash outflow". That is true, but from an accounting perspective (disclaimer: I am not an accountant, but I know enough of the basics to be dangerous), the outflow needs to be directed to different accounts. The loan principal appears as a liability on your personal balance sheet, which you could use, for example, in determining net worth. The principal amount in your payment should be applied to reduce the liability account. The interest payment goes into the expense account. Another way to look at it is that the principal, while it does reduce your cash account, can be thought of as an internal transfer to the liability account, thus reducing the size of the liability. The interest payment cannot. Aside: From this perspective, the value of the home is an asset, and the difference between the asset account and the loan liability account is the equity in the house (as pointed out in different language by the accepted answer). Of course, precisely determining the value of an illiquid asset like a house at any given moment pretty much requires you to actually sell it, so those accounts are hard to maintain in real-time (the liability of the loan is much easier to track). |
Investing/business with other people's money: How does it work? | Basically, you either borrow money, or get other people to invest in your business by buying stock or something analogous. Sometimes you can get people to "park" money with you. For example, many people deposit money in a bank checking account. They don't get any interest or other profit from this, they just do it because the bank is a convenient place to store their money. The bank then loans some percentage of this money out and keeps the interest. I don't doubt that people have come up with more clever ways to use other people's money. Borrowing money for an investment or business venture is risky because if you lose money, you may be unable to pay it back. On the other hand, investors expect a share of the profit, not just a fixed interest rate. |
What is the purpose of property tax? | Property taxes are levied by the local authorities to pay for their services. Since the services are continuous - so are the charges. You need someone to pave a road to your house, to build infrastructure, to maintain the police force, fire department, local schools etc. That's what your property taxes are going to. However, at times the property taxes become more than what the owners have actually paid for the house. Think of a house bought in the midst of a recession at a bargain price of $20K, but at the top of the market bubble costs $2M. The poor guy who bought it for $20K should pay as if he had ever had $2M? It can certainly be the case that the property taxes change drastically over the years and sometimes people have to give up their property because they cannot afford the taxes. That is exactly the thought that had led Californians to amend the Constitution in Prop 13. |
When are investments taxed? | An investment is sold when you sell that particular stock or fund. It doesn't wait until you withdraw cash from the brokerage account. Whether an investment is subject to long term or short term taxes depends on how long you held that particular stock. Sorry, you can't get around the higher short term tax by leaving the money in a brokerage account or re-investing in something else. If you are invested in a mutual fund, whether it's long or short term depends on when you buy and sell the fund. The fact that the fund managers are buying and selling behind your back doesn't affect this. (I don't know what taxes they have to pay, maybe you really are paying for it in the form of management fees or lower returns, but you don't explicitly pay the tax on these "inner" transactions.) Your broker should send you a tax statement every year giving the numbers that you need to fill in to the various boxes of your income tax form. You don't have to figure it out. Of course it helps to know the rules. If you've held a stock for 11 1/2 months and are planning to sell, you might want to consider waiting a couple of weeks so it becomes a long term capital gain rather than short term and thus subject to lower tax. |
Doctor's office won't submit claim to insurance after 5 months | I'm a business law student, so medical stuff isn't really my specialty. I'll share with you what I know though. First, as to the legality, I'm not aware of anything making it illegal for them to consider their business with you concluded. Absent any contract between you and the doctor, it seems to me that you agreed to pay them in cash. If I was the business, I'd assume our business had been concluded as well. As for any contracts between the insurance company and the doctor's office, as far as I know, that's between them. That wouldn't give you standing to sue the doctor. I'm unfamiliar with a patient submitting insurance claims, but if that's something you are allowed to do with your insurance company and all you need is more information, submit a request for your medical records to the doctor. Under United States law, your medical records are yours. You have a right to receive a copy of them. Keep in mind though that the doctor's office may charge you a small copying fee to cover expenses they incur while making a copy for you. As far as complaining, I would suggest your local Better Business Bureau. Each state generally has a medical board which oversees doctors. You might lodge a complaint with them as well. I hope this helps. Keep in mind that I'm not an attorney. This is not legal advice. This is only what I personally would do if I were in your situation. You can and should consult an attorney who is licensed to practice law in your particular jurisdiction. |
Should the poor consider investing as a means to becoming rich? | Given that a poor person probably has much less to invest, how can odds be in their favor? To add to Lan's great answer, if one is "poor" because they don't have enough income to build wealth (invest), then there are only two ways to change the situation - earn more or spend less. Neither are easy but both are usually possible. One can take on side jobs, look for a better-paying career, etc. Cutting spending can also be hard but is generally easier than adding income. In general, wealth building is more about what you do with your income than about how much you make. Obviously the more you make, the easier it is, but just about anyone can build wealth if they spend less than they make. Once your NET income is high enough that you have investible income, THEN you can start building wealth. Unfortunately many people have piles of debts to clean up before they are able to get to that point. What could a small guy with $100 do to make himself not poor anymore, right? Just having $100 is not going to make you "rich". There is a practical limit to how much return you can make short of high-risk activities like gambling, lottery tickets, etc. (I have actually seen this as a justification for playing the lottery, which I disagree with but is an interesting point). If you just invest $100 at 25% per year (for illustration - traditional investments typically only make 10-12% on average), in 10 years you'll have about $931. If instead you invest $100 per month at 12% annualized, in 10 years you'll have over $23,000. Not that $23,000 makes you rich - the point is that regularly saving money is much more powerful than having money to start with. |
How to find a public company's balance sheet and income statement? | Filter by the filings when you look at the search results. The 10-K will include the annual report, which included fiscal year-end financial statements. Quarterly reports and statements are in the 10-Q filing. The filing will include a LOT of other information, but there should be a section called "Financial Statements" or something similar that will include all pertinent financials statements. You can also find "normalized" balance sheets and income statements on the "finance" pages of the main web search sites (Google, Yahoo, MSN) and other sites that provide stock quotes. If you're looking to do basic comparisons versus in-depth statement analysis those may be sufficient for you. |
Multi-Account Budgeting Tools/Accounts/Services | I know of websites that do this, but I don't know of banks that do. Is there any reason you want to do this at a bank rather than use a service? My main concern with using a bank for this would be the risk of overdraft fees |
How can I find ISIN numbers for stock options? | Because an equity option can be constructed at essentially any price by two willing counterparties on an exchange, there are not enough ISINs to represent the entire (i.e. infinite) option chain for even a single stock on a single expiration date. As a result, ISINs are not generated for each individual possible options contract. Instead the ISIN is used only to refer to the "underlying" symbol, and a separate formula is used to refer to the specific option contract for that symbol: So that code you pasted is not an ISIN but rather the standard US equity option naming scheme that you need to provide in addition to the ISIN when talking to your broker. Note that ISINs and formulas for referring to option contracts in other countries can behave quite differently. Also, there are many countries and markets that don't need ISINs because the products in question only exist on a single exchange. In those cases the exchange is pretty much free to make up whatever ID scheme it wants. P.S. Now I'm curious how option chains are identified for strike prices above $99,999. I looked up the only stock I can think of that trades above that price (BRK.A), but it doesn't seem to have an option chain (or at least Google doesn't show it) ... |
Why does FlagStar Bank harass you about payments within grace period? | One option is to try to get a month ahead on your mortgage payments. Rather than using the current month's rent to pay the current month's mortgage payments, try to use the previous month's rent to pay the current month's mortgage payments. This should allow you to pay on time rather than late but not unacceptably late. |
What is a good size distribution for buying gold? | Diversification is an important aspect of precious metals investing. Therefore I would suggest diversifying in a number of different ways: |
Selecting between investment vehicles for income | You have a comparatively small sum to invest, and since you're presumably expecting to go to college.university soon, where you may well need the money, you also have a short timescale for your investment. I don't think anything stock-related would be good for you -- you need a longer timescale for stock market investments, at least five years and preferably ten or more. I don't know the details of Australian savings, but I'd suggest just finding a bank that is giving a good interest rate for a one-year fixed-term savings account. |
How to rescue my money from negative interest? | First off, the answer to your question is something EVERYONE would like to know. There are fund managers at Fidelity who will a pay $100 million fee to someone who can tell them a "safe" way to earn interest. The first thing to decide, is do you want to save money, or invest money. If you just want to save your money, you can keep it in cash, certificates of deposit or gold. Each has its advantages and disadvantages. For example, gold tends to hold its value over time and will always have value. Even if Russia invades Switzerland and the Swiss Franc becomes worthless, your gold will still be useful and spendable. As Alan Greenspan famously wrote long ago, "Gold is always accepted." If you want to invest money and make it grow, yet still have the money "fluent" which I assume means liquid, your main option is a major equity, since those can be readily bought and sold. I know in your question you are reluctant to put your money at the "mercy" of one stock, but the criteria you have listed match up with an equity investment, so if you want to meet your goals, you are going to have to come to terms with your fears and buy a stock. Find a good blue chip stock that is in an industry with positive prospects. Stay away from stuff that is sexy or hyped. Focus on just one stock--that way you can research it to death. The better you understand what you are buying, the greater the chance of success. Zurich Financial Services is a very solid company right now in a nice, boring, highly profitable business. Might fit your needs perfectly. They were founded in 1872, one of the safest equities you will find. Nestle is another option. Roche is another. If you want something a little more risky consider Georg Fischer. Anyway, what I can tell you, is that your goals match up with a blue chip equity as the logical type of investment. Note on Diversification Many financial advisors will advise you to "diversify", for example, by investing in many stocks instead of just one, or even by buying funds that are invested in hundreds of stocks, or indexes that are invested in the whole market. I disagree with this philosophy. Would you go into a casino and divide your money, putting a small portion on each game? No, it is a bad idea because most of the games have poor returns. Yet, that is exactly what you do when you diversify. It is a false sense of safety. The proper thing to do is exactly what you would do if forced to bet in casino: find the game with the best return, get as good as you can at that game, and play just that one game. That is the proper and smart thing to do. |
What's the difference between Market Cap and NAV? | At any given moment, one can tally the numbers used for NAV. It's math, and little more. The Market Cap, which as you understand is a result of share value. Share value (stock price) is what the market will pay today for the shares. It's not only based on NAV today, but on future expectations. And expectations aren't the same for each of us. Which is why there are always sellers for the buyers of a stock, and vice-versa. From your question, we agree that NAV can be measured, it's the result of adding up things that are all known. (For now, let's ignore things such as "goodwill.") Rarely is a stock price simply equal to the NAV divided by the number of shares. Often, it's quite higher. The simplest way to look at it is that the stock price not only reflects the NAV, but investors' expectations looking into the future. If you look for two companies with identical NAV per share but quite different share prices, you'll see that the companies differ in that one might be a high growth company, the other, a solid one but with a market that's not in such a growth mode. |
Building a Taxable Portfolio Properly | Not a bad strategy. However: If you REALLY want tax efficiency you can buy stocks that don't pay a dividend, usually growth stocks like FB, GOOGL, and others. This way you will never have to pay any dividend tax - all your tax will be paid when you retire at a theoretically lower tax rate (<--- really a grey tax area here). *Also, check out Robin Hood. They offer commission free stock trading. |
How did I end up with a fraction of a share? | Theoretically, yes, you can only buy or sell whole shares (which is why you still have .16 shares in your account; you can't sell that fraction on the open market). This is especially true for voting stock; stock which gives you voting rights in company decisions makes each stock one vote, so effectively whomever controls the majority of one stock gets that vote. However, various stock management policies on the part of the shareholder, brokerage firm or the issuing company can result in you owning fractional shares. Perhaps the most common is a retirement account or other forward-planning account. In such situations, it's the dollar amount that counts; when you deposit money you expect the money to be invested in your chosen mix of mutual funds and other instruments. If the whole-shares rule were absolute, and you wanted to own, for instance, Berkshire Hathaway stock, and you were contributing a few hundred a month, it could take you your entire career of your contributions sitting in a money-market account (essentially earning nothing) before you could buy even one share. You are virtually guaranteed in such situations to end up owning fractions of shares in an investment account. In these situations, it's usually the fund manager's firm that actually holds title to the full share (part of a pool they maintain for exactly this situation), and your fractional ownership percentage is handled purely with accounting; they give you your percentage of the dividends when they're paid out, and marginal additional investments increase your actual holdings of the share until you own the whole thing. If you divest, the firm sells the share of which you owned a fraction (or just holds onto it for the next guy fractionally investing in the stock; no need to pay unnecessary broker fees) and pays you that fraction of the sale price. Another is dividend reinvestment; the company may indicate that instead of paying a cash dividend, they will pay a stock dividend, or you yourself may indicate to the broker that you want your dividends given to you as shares of stock, which the broker will acquire from the market and place in your account. Other common situations include stock splits that aren't X-for-1. Companies often aren't looking to halve their stock price by offering a two-for-one split; they may think a smaller figure like 50% or even smaller is preferable, to fine tune their stock price (and thus P/E ratio and EPS figures) similar to industry competitors or to companies with similar market capitalization. In such situations they can offer a split that's X-for-Y with X>Y, like a 3-for-2, 5-for-3 or similar. These are relatively uncommon, but they do happen; Home Depot's first stock split, in 1987, was a 3-for-2. Other ratios are rare, and MSFT has only ever been split 2-for-1. So, it's most likely that you ended up with the extra sixth of a share through dividend reinvestment or a broker policy allowing fractional-share investment. |
What do brokers do with bad stock? | For every seller, there's a buyer. Buyers may have any reason for wanting to buy (bargain shopping, foolish belief in a crazy business, etc). The party (brokerage, market maker, individual) owning the stock at the time the company goes out of business is the loser . But in a general panic, not every company is going to go out of business. So the party owning those stocks can expect to recover some, or all, of the value at some point in the future. Brokerages all reserve the right to limit margin trading (required for short selling), and during a panic would likely not allow you to short a stock they feel is a high risk for them. |
Why would I want a diversified portfolio, versus throwing my investments into an index fund? | Diversification is extremely important and the one true "Free Lunch" of investing, meaning it can provide both greater returns and less risk than a portfolio that is not diversified. The reason people say otherwise is because they are talking about "true" portfolio diversification, which cannot be achieved by simply spreading money across stocks. To truly diversify a portfolio it must be diversified across multiple, unrelated "Return Drivers." I describe this throughout my best-selling book and am pleased to provide complimentary links to the following two chapters, where I discuss the lack of diversification from spreading money solely across stocks (including correlation tables), as well as the benefits of true portfolio diversification: Jackass Investing - Myth #8: Trading is Gambling – Investing is Safer Jackass Investing - Myth #20: There is No Free Lunch |
Should I pay more than 20% down on a home? | I'd stick with 20% down. Truth is - we don't know enough about you. Are you single and staying that way? How is your retirement savings doing? As others asked, any other debt? You can put 20% down, take a breath and see how it's going. I did just that, the 20%. We then had a baby, and 5 nanny-years to pay for. When she was gone, all that money went to the mortgage, and after refinancing (with no points no closing) we have 7 years to go. Just under 20 years beginning to end. During that time we've saved for college (just about fully funded) and for retirement (both with matched 401(k) accounts). Remember, if you lose your job, a house with a lower mortgage means nothing when there's still the next payment due. But that cushion of cash can be handy. |
At what point should I begin paying off student loans? | All great answers. The only thing I didn't see mentioned was that student loans are not dischargable in a bankruptcy. So for example if you took money that could have gone to student loans and poured it into other debt, then for some reason declared bankruptcy later, your student load debt would remain while other debt would be discharged; essentially that money would have been better spent on the student loan. This isn't to advocate that you should pay down student loans with the intent of declaring bankruptcy, or that this makes it a better decision necessarily, just a factor that is sometimes forgotten. |
Close to retirement & we may move within 7 years. Should we re-finance our mortgage, or not? | I would think it depends on when within the 7 years you're planning to move. If you want to move within a year or two, the closing costs for the new mortgage may postpone the break even until after your move date; that wouldn't be a financially smart decision. If your plans suggest you're going to move after the break even point I'd definitely refi sooner rather than later and would try to reduce the term, either by overpaying or by choosing a 15 year mortgage that should have an even lower interest rate anyway. |
Is This A Scam? Woman added me on LinkedIn first, then e-mailed offering me millions of dollars [duplicate] | In general, if you think something even MIGHT be a scam, the answer is"yes". |
What implications does having the highest household debt to disposable income ratio have on Australia? | It is basically the same situation what US was when the crash happened. People took on debt without the means to pay, even with awful credit records. But the problem isn't the debt people take on themselves, but with the limited disposable income they have how efficiently can their debts be serviced. And how do banks who lend out money can recover their money. When banks lend money to all and sundry, they have to take care of defaults and that is when financial wizardry comes into play. In US people have the option to default on their debt and refinance it, so banks assumed default and tried to hedge their risks. If this is an option in Australia, be ready for a crash else not to worry about much. If banks continue lending expect higher inflation rates, higher interest rates and maybe a downgrade of bonds issued by the Australian government. Higher import costs and a boom in exports because of devalued Australian dollar. |
Is sales tax for online purchases based on billing- or shipping address? | The technical answer is defined by the laws of state you live in but most (all?) states with a sales tax have some form of use tax. Where if you buy something in another state for use in your home state you are technically liable for sales tax on it regardless of whether the merchant charged you tax on it or not. I don't think many people actually pay the use taxes, and enforcement generally seems rare. |
Is there any online personal finance software without online banking? | PocketSmith is another tool you might like to consider. No personal banking details are required, but you can upload your transactions in a variety of formats. Pocketsmith is interesting because it really focus on your future cash flow, and the main feature of the interface is around having a calendar(s) where you easily enter one off or repetitive expenses/income. http://www.pocketsmith.com/ |
Pay bill now or later? | Another, perhaps simpler approach to the same result as @BenMiller. Firstly, if you can pay off the debt today, for 1695.70 cash, then that is the amount of your debt to the hospital. There is no such thing as a discount for cash; just extra money to pay if don't pay immediately. This extra money is called interest, and the hospital is indeed charging you interest. Use any mortgage program to find the interest rate if you pay off a debt of 1695.70 with 60 monthly payments of 37.68. The program should tell you that you are paying 12.64% effective annual interest. If you can earn more than that, after taxes, with your money somewhere else, then invest the cash there and pay off the hospital over time. If you can't, then pay off the debt immediately, and avoid writing 60 cheques. EDIT: Incorrect calculation revised as per @Ben Miller |
How to make use of EUR/USD fluctuations in my specific case? | Remember that converting from EU to USD and the other way around always costs you money, at least 0.5% per conversion. Additionally, savings accounts in EU and USA have different yields, you may want to compare which country offers you the best yields and move your money to the highest yielding account. |
Buying my first car out of college | I realize I'm drudging up a somewhat old post here (apologies), but I've found myself in a similar situation recently and thought I would chime in. I was considering buying a car where the loan amount would be right around 25k. I tried justifying this by saying it's ridiculously fast (I'm young and stupid, this is appealing), has AWD (nice for Colorado), and a hatchback with plenty of room for snowboards and whatnot in back. This is in comparison to my Civic which has high mileage, can hardly make it up hills due to the high altitude, sucks in snow, and has little room for anything. You have your reasons, I have mine. The thing is, our reasons are just us trying to rationalize an unwise purchase - just admit it, you know it's true. Just so you can see I'm in a similar financial situation, I'm 22, just graduated, and started a job making well over 80k with salary and signing bonus, plus 20k in RSUs on the side. After budgeting I can still put away over 2k/month after I've factored in a car payment, insurance, rent, etc etc. Yes, I could "afford" this car... it's just dumb though dude. Don't do it. There are better things we can do with our money. And guess what, I've been drooling over this car since middle school too. |
What's behind the long secular bull market in U.S. Treasuries? | I believe that it's largely irrational, fueled largely by foreign investors that are afraid to invest anywhere else. There are a few people out there right now who are writing about this: http://www.marketwatch.com/story/us-treasuries-largest-bubble-in-world-history-says-nia-2011-08-30 http://articles.businessinsider.com/2010-08-25/markets/30080511_1_fed-first-yields-mbs As to why would you invest in long-dated versus short? Probably to chase yield. The 30 year yields 30x more than the 1 year. It's also easier to buy on the long end if you believe that the economy will remain slow for another decade or two and therefore the central banks will keep rates low for a very long time. Of course, at the moment, long-dated treasury prices are artificially high because of operation twist. |
How should I begin investing real money as a student? | I started my account with $500 so I know where you're coming from. For the words of caution, in about 2009 we entered a pretty significant bull market. During this period you could basically buy almost any big name company and do pretty well for yourself. So don't be too cocky about your ability to pick winners in the middle of a bull market. Over the last few years you'd have to try pretty hard to consistently pick losers. I absolutely think you should put real money in the game when you have this sort of interest. However, at your $400-600 level broker fees will eat any sort of active trading or short term profit you could muster. Stock trading is not a great way to make money in the short term. If you're looking to save for something specific you should put that money in a zero risk savings account. You should do more research on brokers. Find the lowest possible trade commission at an organization where you can meet the account opening minimum. A $10 commission is 11% more than a $9 commission. |
I can make a budget, but how can I get myself to consistently follow my budget? | Try a tool like mint.com that will send you text messages regarding how you budget is going. If you use mint, set up your budget to send you reminders before you hit your budget. Example: if my budget for dining out is $100, I tell mint.com it is $50 and I get nagging text messages after $50 to remind me to keep a lid on my spending. |
Resources to begin trading from home? | A good place to start is to read, such as : Robert T. Kiyosaki : poor dad rich dad. It is quite simple but it gives the good mindset to start. But moreover it is stated in the book : "the best investement you can make is educate yourself". You current situation is quite difficcult, but don't give up on your study. From your post i didn't understand : do you have a master degree? If you love math, learn coding and find a job in banking or else. People that know how to code AND have a good level in math worth a lot. |
Which banks have cash-deposit machines in Germany? | I know that many HSBC ATMs at branches in the US and Canada offer this service (they actually scan and shred checks as you deposit them). Perhaps they do same in Germany... but not all ATMs offer this feature. |
How to trade large number of shares? | If you really did have a large share size, a market order would move the price more so in your desired direction. Although your cost basis would be less ideal. Just use limit orders and scale in to a position. You can also exercise puts to be short stock |
How expensive is it to keep minimal cash at a brokerage? | You're trying to mitigate the risk of having your investments wiped out by fraud committed by your broker by using margin loans to buy stock secured by other, non-cash assets in your account. The solution that you are proposing does not make any sense at all. You mitigate a very low probability/high impact risk by doing something that comes with a high probability/medium impact risk. In addition to interest costs, holding stocks on margin subjects you to the very real risk of being forced to sell assets at inopportune times to meet margin calls. Given the volatility that the markets are experiencing in 2011, there is a high risk that some irrational decision in Greece could wipe you out. If I were worried about this, I would: If you have enough money that SIPC protection limits are an issue, you desperately need a financial adviser. Do not implement any strategy involving margin loans until you talk to a qualified adviser. |
Why are there so many stock exchanges in the world? | Stock exchanges have been undergoing a period of consolidation for the past hundred years for the exact reasons you mentioned. The existence of digital trading, harmonized laws and regulations, and fewer relevant currencies have made it more practical for mergers and acquisitions between exchanges. Stock exchanges are most often times private companies that compete with other exchanges, so that also promotes the existence of many exchanges. |
Why is mortgage interest deductible in the USA for a house you live in? | Well quite a few countires have tax breaks on the first house you own ... this is typically to promote people to have atleast one house of their own ... having a house of your own provides lot more stability in the long run ... and without tax breaks it makes it difficult for quite a few to own a house ... the tax breaks form a motiviation as well ... There are at times other effects of this breaks, people buying houses beyond their need [bigger house than required] or capacity [buying in a central / expensive location] by maximizing the breaks ... |
What assets would be valuable in a post-apocalyptic scenario? | I find these type of questions silly, but I'll bite: |
Selling on eBay without PayPal? | It's been a short while since I sold on eBay, but I had a feedback rating of about 4,500 so I've done a lot of transactions. The trump card is, and always will be, the buyer's ability to contact their credit card company and reverse the charges. PayPal has no policy to stop this even though they claim to "vigorously defend Sellers from chargebacks" on their website. You will lose this case 100% of the time. I don't see how that will change if you have your own terminal. The Buyer can still reverse the charges. Since you know the card number maybe you can contact his credit card company but it's probably not going to do much. I've found PayPal is more Seller friendly in terms of PayPal claims. For example, the customer has a duty to pay postage to return the product and that's a cost for him. You also have things like online tracking which shows delivery and PayPal has an IP log to see where the payments are coming from. That helped me when a buyer claimed that someone else made the payment. Because people often break into someone's house and make PayPal payments for them....heh. You really just need to use PayPal. You'll get more customers and better prices and it will offset the losses from scammers. Also, about 99% of buyers are honest people. Consider the scammers a cost of doing business and keep making money off of the good Buyers. If you're just pissed off that people actually scammed you, get over it. Don't cut off your nose to spite your face. It's just part of doing business on eBay. |
A friend wants to use my account for a wire transfer. Is this a scam or is it legitimate? | This is not only a scam but it is potentially fraud that may get you in trouble. This "friend" of yours will wire you some money in which you do not know where this money is really from. It's obvious from other answers that his story is fictitious. Thus it is likely that this money was stolen through another scam/hack in which now he wants to wash this money through your bank account. If it turns out that is was stolen, any money you withdrawal for your "cut", will have to be returned and your account will be frozen. |
How to reduce mortgage rate with low income but high assets | The bit I don't quite understand is why you are thinking about staying in debt in the first place - you're basically thinking about shuffling around assets and liabilities in order to stay in debt? I think what I would do in your situation is to liquidate enough of the investments you have and pay off the mortgage. This doesn't change your net worth position less the fees etc that you might incur, but it'll save you the interest for the mortgage over the remaining term of your mortgage. |
Landlord living in rental unit - tax implications? | Does allowing family to stay at the rental jeopardize my depreciation? No, accumulated depreciation that hasn't been deducted reduces your basis in the event of sale. That doesn't go anywhere. Accumulating more may not be allowed though. If the property is no longer rental (i.e.: personal use, your family member lives there for free), you cannot claim expenses or depreciation on it. If you still rent it out to your family member, but not at the fair market value, then you can only claim expenses up to the rental income. I.e.: you can only depreciate up to the extent the depreciation (after all the expenses) not being over the income generated. You cannot generate losses in such case, even if disallowed. If you rent to your family member at the market rate (make sure it is properly documented), then the family relationship really doesn't matter. You continue accumulating expenses as usual. |
Why would a company care about the price of its own shares in the stock market? | Aside of the other (mostly valid) answers, share price is the most common method of valuating the company. Here is a bogus example that will help you understand the general point: Now, suppose that Company A wants to borrow $20 Million from a bank... Not a chance. Company B? Not a problem. Same situation when trying to raise new funds for the market or when trying to sell the company or to acquire another |
Optimal pricing of close to zero marginal cost content | Software or any online service fits this category I suppose. There are two apps I pay for that are "free." Evernote and Pandora. Evernote is free for 40MB, $45/yr for 500MB/mo transfer. Pandora is free for 40hrs/mo, $36/yr unlimited. When I use a free product and hit the limit it's a sign to me that I value that product and the owners deserve to get paid. To me, both products provide value that's well above the cost they are asking. In this case, both products are annual subscriptions, but offer monthly as well. You don't mention the type of product you have, the two I listed are similar in billing type, but very difference end uses. The question is - How do you provide value and make your customers want to pay you? BTW - the ~$40/yr give or take, seems a good price point. Under $50, it feels a fair price to pay for a useful product. |
Do Fundamentals Matter Anymore in Stock Markets? | All you have to do is ask Warren Buffet that question and you'll have your answer! (grin) He is the very definition of someone who relies on the fundamentals as a major part of his investment decisions. Investors who rely on analysis of fundamentals tend to be more long-term strategic planners than most other investors, who seem more focused on momentum-based thinking. There are some industries which have historically low P/E ratios, such as utilities, but I don't think that implies poor growth prospects. How often does a utility go out of business? I think oftentimes if you really look into the numbers, there are companies reporting higher earnings and earnings growth, but is that top-line growth, or is it the result of cost-cutting and other measures which artificially imply a healthy and growing company? A healthy company is one which shows year-over-year organic growth in revenues and earnings from sales, not one which has to continually make new acquisitions or use accounting tricks to dress up the bottom line. Is it possible to do well by investing in companies with solid fundamentals? Absolutely. You may not realize the same rate of short-term returns as others who use momentum-based trading strategies, but over the long haul I'm willing to bet you'll see a better overall average return than they do. |
S-Corp partnership startup. How to pay owners with minimal profit? | We don't make enough to really consider it a salary, but I've heard using a draw without a salary is a bad idea. As any other illegal action, not paying yourself a reasonable salary when being a corporate officer is indeed a bad idea. I have no idea what I need to do to actually get some money in our pockets. The answer is simple. You need to earn more money. Since it is S-Corp, it doesn't matter if you keep the profits on the corporate account or distribute - the profits will be taxed to you. You are also, as I said above, required by law to pay yourself a reasonable salary. Reasonable meaning corresponding to market rates. Paying a CPA or a Software Engineer a minimum wage will not be reasonable. That is, of course, if you're profitable, you're not required to pay yourself more money than the corporation actually has. Just to be clear, my answer refers to the question asked, and the confusing answer above that made a claim that has no substantiation in the law. I do not intend to write a thesis about pros and cons of using S-Corp every time a question about reasonable salary is asked. |
Using stable short-term, tax-free municipal bond funds to beat the bank? | Banks' savings interest is ridiculous, has always been, compared to other investment options. But there's a reason for that: its safe. You will get your money back, and the interest on it, as long as you're within the FDIC insurance limits. If you want to get more returns - you've got to take more risks. For example, that a locality you're borrowing money to will default. Has happened before, a whole county defaulted. But if you understand the risks - your calculations are correct. |
Who Can I Hire To Calculate the Value of An Estate? | Generally, it would be an accountant. Specifically in the case of very "private" (or unorganized, which is even worse) person - forensic accountant. Since there's no will - it will probably require a lawyer as well to gain access to all the accounts the accountant discovers. I would start with a good estate attorney, who in turn will hire a forensic accountant to trace the accounts. |
What happens to my stocks when broker goes bankrupt? | If you are using a US broker, you are protected by SIPC up to $500,000. SIPC also oversees the liquidation of the broker itself, either by appointing a trustee, or by directly contacting clients. If they are able to transfer accounts to a healthy broker before bankruptcy, they will do so, but if not, you will need to file a claim with them. |
Iraqi Dinars. Bad Investment, or Worst Investment? | Currency, like gold and other commodities, isn't really much of an investment at all. It doesn't actually generate any return. Its value might fluctuate at a different rate than that of the US dollar or Euro, but that's about it. It might have a place as a very small slice of a basket of global currencies, but most US / European households don't actually need that sort of basket; it's really more of a risk-management strategy than an investment strategy and it doesn't really reflect the risks faced by an ordinary family in the US (or Europe or similar). Investments shouldn't generally be particularly "exciting". Generally, "exciting" opportunities mean that you're speculating on the market, not really investing in it. If you have a few thousand dollars you don't need and don't mind losing, you can make some good money speculating some of the time, but you can also just lose it all too. (Maybe there's a little room for excitement if you find amazing deals on ordinary investments at the very bottom of a stock market crash when decent, solid companies are on sale much cheaper than they ordinarily are.) |
Are stock purchases on NASDAQ trackable to personal information? | The broker will probably submit records to the IRS, so there isn't anonymity at that level... |
How to categorize credit card payments? | Using the Transfer category is the best place to put these categories, as that accurately reflects what the transaction is. If you have your credit card and bank account linked in Mint, the debit and credit to both accounts will net to $0 in the category. I would not recommend using "Hide from budget and trends" as sometimes multiple (erroneous) transactions pop up and having a category that should but, in error, does not net to $0 will raise your attention to possibly duplicate transactions. You can ask Mint to always categorize certain transactions in certain ways. On any of your payments, if you click "Edit Details" and then select the Transfer category, you can ask Mint to always make that classification: |
Do US mutual funds and ETFs pay taxes on dividends? | Mutual funds don't pay taxes themselves, they distribute any dividends or capital gains to the shareholders. Thus, if you hold a mutual fund in a tax-advantaged account like a 401k or IRA then the distribution isn't a taxable event while in a regular taxable account you would have to pay taxes on the distributions. From Forbes: There can be foreign companies on US stock exchanges that would still work the same way. Unilever for example is an Anglo-Dutch multinational listed on the NYSE as "UN." |
Are stock index fund likely to keep being a reliable long-term investment option? | A diversified portfolio (such as a 60% stocks / 40% bonds balanced fund) is much more predictable and reliable than an all-stocks portfolio, and the returns are perfectly adequate. The extra returns on 100% stocks vs. 60% are 1.2% per year (historically) according to https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations To get those average higher stock returns, you need to be thinking 20-30 years (even 10 years is too short-term). Over the 20-30 years, you must never panic and go to cash, or you will destroy the higher returns. You must never get discouraged and stop saving, or you will destroy the higher returns. You have to avoid the panic and discouragement despite the likelihood that some 10-year period in your 20-30 years the stock market will go nowhere. You also must never have an emergency or other reason to withdraw money early. If you look at "dry periods" in stocks, like 2000 to 2011, a 60/40 portfolio made significant money and stocks went nowhere. A diversified portfolio means that price volatility makes you money (due to rebalancing) while a 100% stocks portfolio means that price volatility is just a lot of stress with no benefit. It's somewhat possible, probably, to predict dry periods in stocks; if I remember the statistics, about 50% of the variability in the market price 10 years out can be explained by normalized market valuation (normalized = adjusted for business cycle and abnormal profit margins). Some funds such as http://hussmanfunds.com/ are completely based on this, though a lot of money managers consider it. With a balanced portfolio and rebalancing, though, you don't have to worry about it very much. In my view, the proper goal is not to beat the market, nor match the market, nor is it to earn the absolute highest possible returns. Instead, the goal is to have the highest chance of financing your non-financial goals (such as retirement, or buying a house). To maximize your chances of supporting your life goals with your financial decisions, predictability is more important than maximized returns. Your results are primarily determined by your savings rate - which realistic investment returns will never compensate for if it's too low. You can certainly make a 40-year projection in which 1.2% difference in returns makes a big difference. But you have to remember that a projection in which value steadily and predictably compounds is not the same as real life, where you could have emergency or emotional factors, where the market will move erratically and might have a big plunge at just the wrong time (end of the 40 years), and so on. If your plan "relies" on the extra 1.2% returns then it's not a reasonable plan anyhow, in my opinion, since you can't count on them. So why suffer the stress and extra risk created by an all-stocks portfolio? |
Buy a parking spot and rent it out, or invest savings in an interest-bearing account? | From strictly a gross revenue point of view, the parking spot is going to yield a higher rate (5.4%) versus a 3% savings account, assuming you have it rented all year. Your break-even point (not considering other expenses) is 7-8 months of rent per year. So, what are things to consider? Here's a few to start with. The parking spot is a nice investment in that you get a decent return, and the potential for appreciation. The savings account/CD will give you a fixed return with no risk. To support your decision, make sure you understand all of the costs and understand all of the downside risk. If you're 50 and this is alot of money to you, be conservative. If you're 25 and have a good job, you can afford to chase the yield. |
UK university student finance - should I use my sponsorship money to pay the debt? | Borrow the lot (as your family recommended)! The extra money will come in useful when you want to buy a house and move back to the area where your employer is. The government loan in the UK is a fantastic system, just a shame they are charging you so much in tuition fees... |
Why does a real estate seller get to know the financing arrangements of the buyer? | The buyer discloses the financing arrangements to the seller because it makes his offer more attractive. When a seller receives and accepts an offer, the deal does not usually close until 30 to 60 days later. If the buyer cannot come up with the money by closing, the deal falls apart. This is a risk for the seller. When a seller is considering whether or not to accept an offer, it is helpful to know the likelihood that the buyer can actually obtain the amount of cash in the offer by the closing date. If the buyer can't acquire the funding, the offer isn't worth the paper it is printed on. The amount of the down payment vs. the amount of financing is also relevant to the seller. Let me give you a real-world example that happened to me once when I was selling a house. The buyer was doing a no-money-down mortgage and had no money for a down payment. He was even borrowing the closing costs. We accepted the offer, but when the bank did the appraisal, it was short of the purchase price. For most home sales, this would not be a problem, as long as the appraisal was more than the amount borrowed. But in this case, because the amount borrowed was more than the appraisal, the bank had a problem. The deal was at risk, and in order to continue either the buyer had to find some money somewhere (which he couldn't), or we had to lower the price to save the deal. Certainly, accepting the offer from a buyer with no cash to bring to the table was a risk. (In our case, we got lucky. We found some errors that were made in the appraisal, and got it redone.) |
What options exist to make money in the US on a work-restricted visa? | Are you planning to not pay taxes? Any time someone has income in the U.S., it is subject to U.S. taxes. You must file tax returns (and pay taxes if necessary) if you have income above a certain threshold, regardless of whether you're not authorized to work or not. If you plan to intentionally not pay taxes, then that's a whole other matter from working without authorization. Working without authorization is an immigration issue. It probably violates the conditions of your status, which will make you to automatically lose your status. That may or may not affect when you want to want to visit, immigrate to, or get other immigration benefits in the U.S. in the future; and at worst you may be deported. It's a complicated topic, but not really relevant for this site. |
How to reconcile a credit card that has an ongoing billing dispute? | What I would prefer is top open a new category charges under dispute and park the amount there. It can be made as an account as well in place of a income or expenses category. This way your account will reconcile and also you will be able to track the disputes. |
Is it possible to make money off of a private company? | Another way to do this is go to work for that company. Companies in this situation normally offer low pay, long hours, and stock options. Given a sufficient grant, it could be all very lucrative or worthless. Even if you have no electronics background you might be able to work in a different capacity. There were secretaries at various companies that became wealthy off of their stock options. |
Expecting to move in five years; how to lock mortgage rates? | If interest rates have gone up, don't sell when you move. Refinance to lock in a low rate and rent out your current house when you move. Let the rent pay your new mortgage. |
What are the options for a 19-year-old college student who only has about $1000? | Kid, you need to start thinking in thresholds. There are several monetary thresholds that separate your class from a more well funded class. 1) You cannot use margin with less than $2000 dollars Brokers require that you have at least $2000 before they will lend to you 2) In 2010, Congress banned under 21 year olds from getting access to credit. UNLESS they get cosigned. This means that even if you have $2000, no broker will give you margin unless you have a (good) credit history already. There was a good reason for this, but its based on the assumption that everyone is stupid, not the assumption that some people are objective thinkers. 3) The brokers that will open an account for you have high commissions. The commissions are so high that it will destroy any capital gains you may make with your $1000. For the most part. 4) The pattern day trader rule. You cannot employ sophisticated risk management while being subject to the pattern day trader rule. It basically limits you from trading 3 times a day (its more complicated than that read it yourself) if you have less than $25,000 in one account. 5) Non-trade or stock related investments: Buy municipal or treasury bonds. They will give you more than a savings account would, and municipals are tax free. This isn't exactly what I would call liquid though - ie. if you wanted to access your money to invest in something else on a whim. 6) What are you studying? If its anything technical then you might get a good idea that you could risk your money on to create value. But I would stick to high growth stocks before blowing your $1000 on an idea. Thats not exactly what I would call "access to capital". 7) Arbitrage. Lets say you know a friend that buys the trendy collectors shoes at discount and sells them for a profit. He might do this with one $200 pair of tennis shoes, and then use the $60 profit different to go buy video games for himself. If he wanted to scale up, he couldn't because he never has more than $200 to play with. In comparison, you could do 5 pairs ($200 x 5) and immediately have a larger operation than him, making a larger profit ($60 x 5 = $300, now you have $1300 and could do it again with 6 pairs to make an even great er profit) not because you are better or worked at it, but solely because you have more capital to start with. Keep an eye out for arbitrage opportunities, usually there is a good reason they exist if you notice it: the market is too small and illiquid to scale up with, or the entire market will be saturated the next day. (Efficient Market Theory, learn about it) 8) Take everything I just taught you, and make a "small investor newsletter" website with subscribers. Online sites have low overhead costs. |
Why call option price increases with higher volatility | The entire premise of purchasing a call option is your expectation that the prices will rise. So even though there is a possibility of prices falling, you wouldn't mind paying higher premiums in a volatile market for a call option because you're bullish and are expecting the volatility to eventually turn out in your favour i.e. prices to rise |
For what dates are the NYSE and U.S. stock exchanges typically closed? | The NYSE publishes a list of holidays at its website. New link: https://www.nyse.com/markets/hours-calendars Old link in the original answer that doesn't work now: http://www.nyse.com/about/newsevents/1176373643795.html Hope that helps! |
Retirement & asset allocation of $30K for 30 year old single guy | IMHO bonds are not a good investment at this present time, nor generally. Appreciate for a moment that the yield of an investment is DIRECTLY related to the face/trading value. If a thing (bond/stock) trades for $100 and yields 3%, it pays $3. In the case of a bond, the bond doesn't pay a % amount, it pays a $ amount. Meaning it pays $3. SO, for the yield to rise, what has to happen to the trading price? It has to decrease. As of 2013/14 bonds are trading at historically LOW yields. The logical implication of this is if a bond pays a fixed $ amount, the trading price of the bond has to have increased. So if you buy bonds now, you will see a decrease in its face value over the long term. You may find the first tool I built at Simple Stock Search useful as you research potential investments. |
Which Roth IRA is the best for a 21 year old who has about $1500? | Your question seems like you don't understand what a Roth IRA is. A Roth IRA isn't an investment, per se. It is just a type of account that receives special tax treatment. Just like a checking and savings account are different at a bank, a ROTH IRA account is just flagged as such by a brokerage. It isn't an investment type, and there aren't really different ROTH IRA accounts. You can invest in just about anything inside that account so that is what you need to evaluate. One Roth IRA account is as good as any other.As to what to invest your money in inside a ROTH, that is a huge question and off-topic per the rules against specific investing advice. |
How can I check my credit score? | http://annualcreditreport.com/ That's the official site for getting your free yearly credit report (one free per year from each of the 3 reporting bureaus). |
What's the purpose of having separate checking and savings accounts? | If your debit card/ATM card is stolen or lost, someone else might be able to withdraw money from the checking account that it is tied to, or buy things with the card and have the money taken out of the checking account to pay the merchant. Subject to daily withdrawal limits imposed by your bank, a considerable amount of money could be lost in this way. At least in the US, debit or ATM cards, although they are often branded Mastercard or Visa, do not provide the same level of protection as credit cards for which the liability is limited to $50 until the card is reported as lost or stolen and $0 thereafter. Note also that the money in your savings account is safe, unless you have chosen an automatic overdraft protection feature that automatically transfers money from your savings account into the checking account to cover overdrafts. So that is another reason to keep most of your money in the savings account and only enough for immediately foreseeable needs in the checking account (and to think carefully before accepting automatic overdraft protection offers). These days, with mobile banking available via smartphones and the like, transferring money yourself from savings to checking account as needed might be a preferred way of doing things on the go (until the smartphone is stolen!) |
At what percentage drop should you buy to average down | TL;DR; There is no silver bullet. You have to decide how much to invest and when on your own. Averaging down definition: DEFINITION of 'Average Down' The process of buying additional shares in a company at lower prices than you originally purchased. This brings the average price you've paid for all your shares down. BREAKING DOWN 'Average Down' Sometimes this is a good strategy, other times it's better to sell off a beaten down stock rather than buying more shares. So let us tackle your questions: At what percentage drop of the stock price should I buy more shares. (Ex: should I wait for the price to fall by 5% or 10% to buy more.) It depends on the behaviour of the security and the issuer. Is it near its historical minimum? How healthy is the issuer? There is no set percentage. You can maximize your gains or your losses if the security does not rebound. Investopedia: The strategy is often favored by investors who have a long-term investment horizon and a contrarian approach to investing. A contrarian approach refers to a style of investing that is against, or contrary, to the prevailing investment trend. (...) On the other side of the coin are the investors and traders who generally have shorter-term investment horizons and view a stock decline as a portent of things to come. These investors are also likely to espouse trading in the direction of the prevailing trend, rather than against it. They may view buying into a stock decline as akin to trying to "catch a falling knife." Your second question: How many additional shares should I buy. (Ex: Initially I bought 10 shares, should I buy 5,10 or 20.) That depends on your portfolio allocation before and after averaging down and your investor profile (risk apettite). Take care when putting more money on a falling security, if your portfolio allocation shifts too much. That may expose you to risks you shouldn't be taking. You are assuming a risk for example, if the market bears down like 2008: Averaging down or doubling up works well when the stock eventually rebounds because it has the effect of magnifying gains, but if the stock continues to decline, losses are also magnified. In such cases, the investor may rue the decision to average down rather than either exiting the position or failing to add to the initial holding. One of the pitfalls of averaging down is when the security does not rebound, and you become too attached to be able to cut your losses and move on. Also if you are bullish on a position, be careful not to slip the I down and add a T on said position. Invest with your head, not your heart. |
Optimal way for withdrawing vested company match from my 401k? | You can borrow against a 401k for 5 years. This defers any penalty fees that the IRS mandates. Put the cash back in your 401k within those 5 years. you can also solo administer 401k plans even if you have an unincorporated business, so you can start one of those if you have any other form of cashflow, and there may be a way to get the other plan rolled into your solo one. http://www.irs.gov/publications/p560/ch04.html#en_US_publink10009053 |
Why is the stock market price for a share always higher than the earnings per share? | Earnings per share are not directly correlated to share price. NV Energy, the company you cited as an example, is an electric utility. The growth patterns and characteristics of utilities are well-defined, so generally speaking the value of the stock is driven by the quality of the company's cash flow. A utility with a good history of dividend increases, a dividend that is appropriate given the company's fiscal condition, (ie. A dividend that is not more than 80% of earnings) and a good outlook will be priced competitively. For other types of companies cash flow or even profits do not matter -- the prospects of future earnings matter. If a growth stock (say Netflix as an example) misses its growth projections for a quarter, the stock value will be punished. |
How to measure a currencies valuation or devaluation in relevance to itself | It's very hard to measure the worth of an abstract concept like money, particularly over long periods of time. In the modern era we have things like the Consumer Price Index (CPI) in the United States, where the Bureau of Labor Statistics literally sends "shoppers" out to find prices of things and surveys people to find out what they buy. This results in a variety of "indexes" which variously get reported by media outlets as "inflation" (or "deflation" if the change in value goes the other way). There are also other measurements available like the MIT Billion Prices Project which attempt to make their own reading of the "worth" of currencies. Those kinds of things are about the only ways to measure a currency's change in "value to itself" because a currency is basically only worth what one can buy with it. While it isn't "all the world's currencies combined", there is a concept of the International Monetary Fund's "Special Drawing Rights (SDR)", which is a basket of five currencies used by world central banks to help "back" each other's currencies, and is (very) occasionally used as a unit of currency for international contracts. One might be able to compare the price of one currency to that of the SDR, or even to any other weighted average of world currencies that one wanted, but I don't think it's done nearly as often as comparing currencies to the basket of goods one can buy to find "inflation". Even though one might think what would be important to measure would be overall Money Supply Inflation, much more often people care more about measuring Price Inflation. (Occasionally people worry about Wage Inflation, but generally that's considered a result of high Price Inflation.) In order to try to keep this on topic as a "personal finance" thing rather than an "economics" thing, I guess the question is: Why do you want to know? If you have some assets in a particular currency, you probably care most about what you'll be able to buy with them in the future when you want or need to spend them. In that sense, it's inflation that you're likely caring about the most. If you're trying to figure out which currency to keep your assets in, it largely depends on what currency your future expenses are likely to be in, though I can imagine that one might want to move out of a particular currency if there's a lot of political instability that you're expecting to lead to high inflation in a currency for a time. |
Malaysian real estate: How to know if the market is overheated or in a bubble? | I don't buy the "house prices will always increase due to the increased cost of raw materials" argument. In a lot of countries you will find that the cost of (re)building a property is substantially lower than its perceived sale value. If it wasn't, there would be no incentive for developers to take the risk of buying the land and building houses on it. Say the cost of building the house is 50% of the sale price (which might already be generous). Materials probably account for half of the building cost so you've got 25% tail wagging 75% dog? I'd start to worry if people buy property as a get rich quick scheme, which seems to be what you're describing. |
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