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Flex spending accounts and hsa when changing jobs | Some of this may depend on how your employer chose to deal with your notice period. Most employers employ you for the duration (which means you'd be covered for March on your insurance). They could 'send you home' but pay you (in which case you're an employee for the duration still); or they could terminate you on your notice day, and give you effectively a severance equal to two weeks' pay. That is what it sounds like they did. They should have made this clear to you when you left (on 2/23). Assuming you work in an at-will state, there's nothing wrong (legally) with them doing it this way, although it is not something I believe is right morally. Basically, they're trying to avoid some costs for your last two weeks (if they employ you through 3/6, they pay for another month of insurance, and some other things). In exchange, you lose some insurance benefits and FSA benefits. Your FSA terminates the day you terminate employment (see this pdf for a good explanation of these issues). This means that the FSA administrator is correct to reject expenses incurred after 2/23. The FSA is in no way tied to your insurance plan; you can have one or the other or both. You still can submit claims for expenses prior to 2/23 during your runout period, which is often 60 or 90 days. In the future, you will want to think ahead when leaving employment, and you may want to time when you give notice carefully to maximize your benefits in the event something like this happens again. It's a shady business practice in my mind (to terminate you when you give notice), but it's not unknown. As far as the HSA/FSA, you aren't eligible to contribute to an HSA in a year you're also in an FSA, except that they use "plan year" in the language (so if your benefits period is 6/1/yy - 5/31/yy, that's the relevant 'year'). I'd be cautious about opening a HSA without advice from a tax professional, or at least a more knowledgeable person here. |
What prevents interest rates from rising? | To protect yourself from an increase in interest rates get a fixed rate loan. The loan terms: interest rate, number of payments, monthly payments will be fixed for the loan. Of course if rate for the rest of the market drops during the period of the loan, you may be able to refinance the loan. But if you can't refinance, or won't refinance, the drop in rates for the rest of the market doesn't help you. If you want to be able to have your rate float you can get a variable rate loan. Of course it can float up, or it can float down. So you take that risk. Because of that risk adjustable rate loans start at a lower rate. If the market interest rate drops far enough many people will refinance into a fixed rate loan at a lower rate than they could have gotten at the start. For adjustable rate loans the lender, during the application process, details how the rate is determined. It is pegged to be x% above some national or international interest rate that they don't have any control over. If that base rate moves then your loan rate may move. They also specify how often it will adjust, and the maximum it can adjust between each adjustments and over the entire life of the loan. That rate that starts initially lower than the fixed rate loan is the enticement that many people have to pick an adjustable rate loan. Some do it because they believe they will payoff the loan before the rates get too high, or they will see enough increase in income so they can afford the higher monthly payment if rates rise. If they are wrong about these things they may find themselves in trouble. The terms of the adjustable rate loan still have to follow the terms of the contract: the lender can't change the % offset or the source used to used to set interest rate. |
Is 0% credit card utilization worse than 1-20% credit card utilization for any reason other than pure statistics? | you can relate everything on a credit report, and how things are calculated, to life scenarios. thats a 100% fact, and thats what people need to go by when designing their credit dicipline/diet. utilization: any kind of resource in life. water, food, energy, and etc. who would you want to live with more, the guy that just eats way too much, uses way too much energy than they need, and wastes way more water than they need? assuming there was no water cycle. payment history: speaks for itself derogatory remarks: s*** happens. thats what makes life life, but when given chances to fix your mistakes and own up to them, like i and every other responsible adult have done, and you dont, thats living up to the exact definition of derogatory. disrespecting and not caring. who wants to lend to someone who doesnt care? so if youre not gonna care, we will just put this special little remark in the derogatory section and show that you dont care about when you make mistakes. f*** it right? lol. well, thats what that section is for. showing you wont try to fix things when they go sour. if i had a guy who was fixing my roof, and did a bad job, but did everything he could to fix it, i wouldnt give him a bad rep at all. if a guy messed up my roof, and just said cya thanks for your money, hes getting a derogatory remark. credit age: just like life. showing the ability to maintain EVERY other aspect of a report for X amount of time. its like getting old as a person. after X amount of years, a lot of people will be able to say more about you as a person. whether youre a real male reproductive organ or an amazing guy. total accounts: is like taking on jobs as a self employed person or any business. if you have a lot of jobs, people must want you to do their work. it shows how people "like you." hard inquiries: this is the one category of them all i dont fully agree on, can go either way, and i hate it. i really cant think of a life scenario to relate it to, so i kind of think its a prevention mechanism/keep a person in check kind of thing. like to save them from themself and save the lenders. for example, if a guy has great utilization, and just goes insane applying for credit cards, hell get everyone of them because hes showing almost no utilization. then said guy goes and looses his job, but since he racked up 50 cards at 1k each, now he can destroy 50k in credit. thats just my take, but thats EXACTLY how i look at it from TU/EX/EQs point of view. |
Is it a good practice to keep salary account and savings account separate? | My wife and I do this. We have one account for income and one for expenditures (and around 7 others for dedicated savings.) Doing this we are forcing ourselves to keep track of all expenditures as we have to manually transfer funds from one to the other, we try to do this periodically (every Wednesday) and then keep the expenditures within what is actually on the account. It is a really good way to keep track of everything. Bear in mind that our bank provides a fast handy smartphone app where we both can check our account as well as transfer funds in less than 10 seconds. (Fingerprint authentication, instant funds transfer as well as zero fees for transfers.) Right now we have a credit card each attached to the expenditures account, but earlier we only had a debit card each and no credit cards. Meaning that when the weekly funds ran out we where simply not able to pay. We did this to mimic living only on cash and when the cash runs out you simply have to stop buying stuff. And at the same time we could accrue quite a bit of savings. I would definitely recommend this if you have problems with over expenditures. |
Estate taxes and the top 1 percent by net worth | There are two key reasons: Consider a family of four, two kids and two adults, that has a net worth of $20 million. Each of these four people live in a top 1% household. But any of those four people can die, and their estate will not pay any estate tax. Both kids and one spouse can die, and still no estate tax will be paid. Only when the last spouse dies would there be any estate tax. Also, consider a person who dies but whose assets do not flow into their estate. For example, their assets could be held in an inter-vivos trust. People with higher net worths are much more likely to use trusts to avoid or minimize estate taxes. |
Do I only have to pay income tax on capital gains? | On the revenue only. This amount of 10$ will be considered as interest and fully taxable. It will not be a capital gain. But why would you decide to declare it as an income? 100$ is insignificant. If you lend small amount to friends it cannot be considered a lending business. |
What should I do about proxy statements? | You own a fractional share of the company, maybe you should care enough to at least read the proxy statements which explain the pro and con position for each of the issues you are voting on. That doesn't seem like too much to ask. On the other hand, if you are saying that the people who get paid to be knowledgeable about that stuff should just go make the decisions without troubling you with the details, then choose the option to go with their recommendations, which are always clearly indicated on the voting form. However, if you do this, it might make sense to at least do some investigation of who you are voting onto that board. I guess, as mpenrow said, you could just abstain, but I'm not sure how that is any different than just trashing the form. As for the idea that proxy votes are tainted somehow, the one missing piece of that conspiracy is what those people have to gain. Are you implying that your broker who has an interest in you making money off your investments and liking them would fraudulently cast proxy votes for you in a way that would harm the company and your return? Why exactly would they do this? I find your stance on the whole thing a bit confusing though. You seem to have some strong opinions on corporate Governance, but at the same time aren't willing to invest any effort in the one place you have any control over the situation. I'm just sayin.... Update Per the following information from the SEC Website, it looks like the meaning of a proxy vote can vary depending on the mechanics of the specific issue you are voting on. My emphasis added. What do "for," "against," "abstain"and "withhold" mean on the proxy card or voter instruction form? Depending on what you are voting on, the proxy card or voting instruction form gives you a choice of voting "for," "against," or "abstain," or "for" or "withhold." Here is an explanation of the differences: Election of directors: Generally, company bylaws or other corporate documents establish how directors are elected. There are two main types of ways to elect directors: plurality vote and majority vote. A "plurality vote" means that the winning candidate only needs to get more votes than a competing candidate. If a director runs unopposed, he or she only needs one vote to be elected, so an "against" vote is meaningless. Because of this, shareholders have the option to express dissatisfaction with a candidate by indicating that they wish to "withhold" authority to vote their shares in favor of the candidate. A substantial number of "withhold" votes will not prevent a candidate from getting elected, but it can sometimes influence future decisions by the board of directors concerning director nominees. A "majority vote" means that directors are elected only if they receive a majority of the shares voting or present at the meeting. In this case, you have the choice of voting "for" each nominee, "against" each nominee, or you can "abstain" from voting your shares. An "abstain" vote may or may not affect a director's election. Each company must disclose how "abstain" or "withhold" votes affect an election in its proxy statement. This information is often found toward the beginning of the proxy statement under a heading such as "Votes Required to Adopt a Proposal" or "How Your Votes Are Counted." Proposals other than an election of directors: Matters other than voting on the election of directors, like voting on shareholder proposals, are typically approved by a vote of a majority of the shares voting or present at the meeting. In this situation, you are usually given the choice to vote your shares "for" or "against" a proposal, or to "abstain" from voting on it. Again, the effect of an "abstain" vote may depend on the specific voting rule that applies. The company's proxy statement should again disclose the effect of an abstain vote. |
Roth vs. Whole Insurance vs. Cash | Cash/CD's for a house downpayment = Good. Resist the urge to invest this money unless you're not planning on the house for at least 5 years. Roth IRA - Good. Amounts contributed are able to be withdrawn without tax penalties, though you would really need to be in a crisis for this to be a good idea. It's your long-term, retirement money. The earlier you start, the better. Use your 401K at work, if it's offered. Contribute to the Roth as much as you can, as well. Whole life ("Cash value") life insurance: Be careful... Cash-value life insurance (Whole, Universal, Variable Universal) must be watched more closely as you age. Once they reach that "magical" point of being self-sustaining, you cannot relax. The annual cost of insurance is taken from the cash value, which your premium payments replenish. If you stop making premium payments, eventually the cost of insurance (which goes up every year) will erode your cash value down to nothing, at which point more premium must be paid to keep the policy in force. This often happens in your old age, when you can least afford the surprise, and costs are highest. Some advisors get messed up in their priorities when they start depending on the 8-10% commissions they are paid on insurance policies. Since premiums for cash-value policies are far higher than for term policies, you might get some insight into your advisor if they ignore your attempts to consider a term policy. Because of the insurance costs' effects on your cash value, these types of policies are some of the most inefficient and expensive ways to invest. You are better off not investing via a life insurance policy. You don't need life insurance unless someone depends on your financial contribution to their life (spouse and children, for example). Some people just like the peace of mind it brings, and some people want a lump sum to leave as a gift to their loved ones (which is an expensive way to leave a gift). You can have these "feel-good" benefits with a term policy for much less money, if you must have them. Unless you expect to become uninsurable at some point in the future, you should consider using term insurance to meet your life insurance needs until it is no longer needed. |
Why is being “upside down” on a mortgage so bad? | I can think of a few reasons why they seem like a bigger deal to people than similar situations with other loans. As you point out, though, being underwater on your home loan is a less serious condition than having large student loans and a poor paying job, for example. If the student loan situation ever comes to a head, we may have people talking about student loans in hushed tones. |
Does a larger down payment make an offer stronger? | There is considerable truth to what your realtor said about the Jersey City NJ housing market these days. It is a "hot" area with lots of expensive condos being bought up by people working on Wall Street in NYC (very easy commute by train, etc) and in many cases, the offers to purchase can exceed the asking price significantly. Be that as is may, the issue with accepting a higher offer but smaller downpayment is that when the buyer's lender appraises the property, the valuation might come in lower and the buyer may have to come up with the difference, or be required to accept a higher interest rate, or be refused the loan altogether if the lender estimates that the buyer is likely to default on the loan because his credit-worthiness is inadequate to support the monthly payments. So, the sale might fall through. Suppose that the property is offered for sale at $500K, and consider two bids, one for $480K with 30% downpayment ($144K) and another for $500K with 20% downpayment ($100K). If the property appraises for $450K, say, and the lender is not willing to lend more than 80% of that ($360K), then Buyer #1 is OK; it is only necessary to borrow $480K - $144K = $336K, while Buyer #2 needs to come up with another $40K of downpayment to be able to get the loan, or might be asked to pay a higher interest rate since the lender will be lending more than 80% of the appraised value, etc. Of course, Buyer #2's lender might be using a different appraiser whose valuation might be higher etc, but appraisals usually are within the same ballpark. Furthermore, good seller's agents can make good estimates of what the appraisal is likely to be, and if the asking price is larger than the agent's estimate of appraised value, then it might be to the advantage of the selling agent to recommend accepting the lower offer with higher downpayment over the higher offer with smaller downpayment. The sale is more likely to go through, and an almost sure 6% of $480K (3% if there is a buyer's agent involved) in hand in 30 days time is worth more than a good chance of nothing at the end of 15 days when the mortgage is declined, during which the house has been off the market on the grounds that the sale is pending. If you really like a house, you need to decide what you are willing to pay for it and tailor your offer accordingly, keeping in mind what your buyer's agent is recommending as the offer amount (the higher the price, the more the agent's commission), how much money you can afford to put down as a downpayment (don't forget closing costs, including points that might be need to be paid), and what your pre-approval letter says about how much mortgage you can afford. If you are Buyer #1, have a pre-approval letter for $360K, and have enough savings for a downpayment of up to $150K, and if you (or your spouse!) really, really, like the place and cannot imagine living in any other place, then you could offer $500K with 30% down (and blow the other offer out of the water). You could even offer more than $500K if you want. But, this is a personal decision. What your realtor said is perfectly true in the sense that for Y > Z, an offer at $X with $Y down is better than an offer at $X with $Z down. It is to a certain extent true that for W > X, a seller would find an offer at $X with $Y down to be more attractive that an offer at $W with $Z$ down, but that depends on what the appraisal is likely to be, and the seller's agent's recommendations. |
Pay down on second mortage when underwater? | You're welcome to throw in the towel and stop paying any time you want. You'll just suffer the consequences of doing so. It sounds like you're concerned about losing your job "in the next few years." What are you doing to stem this off? Are you building up a side income? Are you building up portable skills -- ones that can be used anywhere? If you think you have a few years left, use them. Build something up. You may be able to recover more quickly, or last longer until you find a new job. Some of my blogging friends have been at it about as long as I have, and they're in high-five, low-six figures now. For blogging. Some did it even faster. All it takes is time. Your expenses for starting a blog are $10/month plus cutting out two hours of TV / drinking / anything else consumer-ish to learn more about your favorite interest, write about it, and interact with the online community. That's just one idea. Season to taste or choose a different meal altogether. Are you frugal? Are you looking for ways to cut expenses? If you can find extra money to save a little bit more and knock out just one of those debts (say, the car), you'll be able to throw that payment at the student loan. Then they'll both be gone, and you can save up a cushion for yourself faster. I just think it's a little weak to give up when you're not really in trouble yet. You're tight, but you can get through that. |
Can a company have a credit rating better than that of the country where it is located? | In one personal finance book I read that if a company is located in a country with credit rating X it can't have credit rating better (lower - i.e. further from AAA level) than X. This is simply wrong. Real world evidence proves it wrong. Automatic Data Processing (ADP), Exxon Mobile (XOM), Johnson & Johnson (JNJ), and Microsoft (MSFT) all have a triple-A rating today, even though the United States doesn't. Toyota (TM) remained triple-A for many years even after Japanese debt was downgraded. The explanation was the following: country has rating X because risk of doing business with it is X and so risk of doing business with any company located in that country automatically can't be better than X. When reading financial literature, you should always be critical. Let's evaluate this statement. First off, a credit rating is not the "risk of doing business." That is way too generic. Specifically, a credit rating attempts to define an individual or company's ability to repay it's obligations. Buying treasuries constitutes as doing business with the gov't, but you can argue that buying stamps at USPS is also doing business with the gov't, and a credit rating won't affect the latter too much. So a credit rating reflects the ability of an entity to repay it's obligations. What does the ability of a government to repay have to do with the ability of companies in that country to repay? Not much. Certainly, if a company keeps it's surplus cash all in treasuries, then downgrading the government will affect the company, but in general, the credit rating of a company determines the company's ability to pay. |
Are all financial advisors compensated in the same way? | No, they certainly are not compensated the same way. Some are paid by commission that they earn from the products they sell (ie, certain mutual funds, insurance, etc.) Others are paid for their advice based on an hourly fee, or a percentage of the portfolio you have to invest. This is a great question, because too many of us just assume that if someone is in the business, they will give trustworthy advice. This may certainly be the case, but think about it, the financial planner at your bank (who also is a mutual fund specialist - just flip that handy business card over) is employed by Bank X. Bank X sells mutual funds, GIC's, insurance, all kinds of great products. That Bank X employee is not likely to tell you about products from Bank Z down the street that might be a better fit for you. Find a fee based planner, someone you can pay by the hour for advice, and let them help you review products across the industry. It's like asking your bank for mortgage advice...they will discuss the options THEY offer, but may not tell you about a deal down the street. Using a mortgage broker helps you find the best deal across the board. I believe the current issue of Moneysense magazine has an insert discussing planners. Their magazine and website (www.moneysense.ca) are good sources of reliable, Canadian financial advice. |
Do I pay a zero % loan before another to clear both loans faster? | See many past answers: you will usually save the most money by paying off the highest-intetest-rate loan first. (Remember to allow for tax effects, if any, when comparing real interest rates.) Some folks are more motivated to simplify their finances than to save money; in that case you might pay off the smallest loan first. |
I'm about to be offered equity by my employer. What should I expect? | In my experience, any kind of equity you may be offered by the company is just a carrot. Your offer may be written in such a way that your potential ownership represents, say, 1% of the company today. But if the company goes for a round of financing your ownership percentage can get diluted. If this happens a couple of times and the terms of financing aren't very favorable then your percentage can go from that 1% down to 0.001%, making the equity worthless. I've known people who heard their company was being bought and thought they might get some kind of payoff. Come to find out the company hadn't done all that well and there wasn't anything to pay out after the main investors got some money back. (The main investors took a loss.) For obvious reasons, management wasn't keeping the staff up to date about the fact that they were operating in the red and their options were worthless. Some people grumbled about lawyers and filing lawsuits, but at the end of the day, there wasn't any money to be won. Keep this in mind. As to your question regarding what to look out for: |
Approximate IT company valuation (to proximate stock options value) | This situation sounds better than most, the company it seems likely to be profitable in the future. As such it is a good candidate to have a successful IPO. With that your stock options are likely to be worth something. How much of that is your share is likely to be very small. The workers that have been their since the beginning, the venture capitalist, and the founders will make the majority of profits from an IPO or sale. Since you and others hired at a similar time as you are assuming almost no risk it is fair that your share of the take is small. Despite being 1/130 employees expect your share of the profits to be much smaller than .77%. How about we go with .01%? Lets also assume that they go public in 2.5 years and that revenues during that time continue to increase by about 25M/year. Profit margins remains the same. So revenues to 112M, profits to 22.5M. Typically the goal for business is to pay no more than 5 times profits, that could be supplanted by other factors, but let's assume that figure. So about 112M from the IPO. So .01% of that is about 11K. That feels about right. Keep in mind there would be underwriting fees, and also I would discount that figure for things that could go wrong. I'd be at about 5K. That would be my expected value figure, 5K. I'd also understand that there is a very small likelihood that I receive that amount. The value received is more likely to be zero, or enough to buy a Ferarri. There might also be some value in getting to know these people. If this fails will their next venture be a success. In my own life, I went to work for a company that looked great on paper that just turned out to be a bust. Great concept, horrible management, and within a couple of years of being hired, the company went bust. I worked like a dog for nothing. |
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Any tax advantage for registering a residential house as a business? (I want to apply legal pressure to my landlord) | To the best of my knowledge, in California there's no such thing as registering a place as a business. There's zoning (residential/commercial/mixed/etc), and there's "a business registered at a place". But there's no "place registered as a business". So you better clarify what it is that you think your landlord did. It may be that the place is used for short term rentals, in which case the landlord may have to have registered a business of short term rentals there, depending on the local municipal or county rules. Specifically regarding the deposit, however, there's a very clear treatment in the California law. The landlord must provide itemized receipt for the amounts out of the deposit that were used, and the prices should be reasonable and based on the actual charges by the actual vendors. If you didn't get such a receipt, or the amounts are bogus and unsubstantiated - you have protection under the CA law. |
Is www.onetwotrade.com a scam? | OneTwoTrade is a binary option seller, and they are officially licensed by the Malta Gaming Authority. They are not in any way licensed or regulated as an investment, because they don't do actual investing. Is your money safe? If you mean will they take your money and run off with it, then no they probably won't just take your deposit and refuse to return any money to you for nothing - that would be a terrible way to make money for the long-term. If you mean "will I lose my money?" - oh yeah, you probably will! Binary options - outside of special sophisticate financial applications - are for people who think day trading has too little risk, or who would prefer online poker with a thin veneer of "it's an investment!" In the words of Forbes, Don't Gamble On Binary Options: If people want to gamble, that’s their choice. But let’s not confuse that with investing. Binary options are a crapshoot, pure and simple. These kinds of businesses run like a casino - there's a built-in house advantage, you are playing odds (which are against you), and the fundamental product is trying to bet on short-term volatility in financial markets. This is often ridiculously short-terms, measured in minutes. It's often called "all or nothing options", because if you bet wrong you lose almost everything - they give you a little bit of the money you bet back (so you will bet again, preferably with more of your own money). If you bet correctly you get a pay-out, just like in craps or roulette. If you are looking to gamble online, this is one method to do it. But this isn't investing, you are as mathematically likely to lose your money and/or become addicted as any other form of money-based gambling, and absolutely treat it the same way you would a casino: decide how much money you are willing to spend on the adventure before you start, and expect you'll likely not get much or any of that money back. However, I will moralize on this point - I really hate being lied to. Casinos, sports betting, and poker all generally have the common decency to call it what it is - a game where you are playing/betting. These sorts of "investment" providers are woefully dishonest: they say it's an exciting financial market, a new type of investment, investors are moving to this to secure their futures, etc. It's utterly deceptive and vile, and it's all about as up-front and honest as penny auction websites. If you are going to gamble, I'd urge you to do it with people who have the decency to to call it gambling and not lie to you and ask for a "minimum investment". |
What kind of life insurance is cheaper? I'm not sure about term vs. whole vs. universal, etc | TL;DR: Only term is pure insurance and is the cheapest. The rest are mixtures of insurance and savings/investment. Typically the mixtures are not as efficient as doing it yourself, except that there can be tax advantages as well as the ability to borrow from your policy in some cases. |
How important is disability insurance, e.g. long-term, LTD? Employer offers none | The reason to have disability insurance is to replace your income if you become disabled and are no longer able to work. For this purpose, it is kind of similar to life insurance where you want to replace your income to take care of people that depend on your income if you die, but now you are included in the people that depend on your income. If your employer doesn't provide any disability insurance then it would be wise to look for some Long Term disability insurance. Short Term disability is more expensive than long term and it is USUALLY better and cheaper to have a good emergency fund to provide for a short term disability such as being sick for a month and not able to work than to buy short-term. As a web developer - you should be able to get long term disability insurance at a reasonable cost, unless you have some dangerous hobbies like forest fire fighting or shark juggling. |
Is there a candlestick pattern that guarantees any kind of future profit? | Nothing is guaranteed - candlesticks are not crystal balls nor is any part of technical analysis. Candlestick patterns used correctly and in combination with other western technical indicators can increase the probability of a trade going into the derived direction, but they are not a guarantee - which is why you should always use stop losses with your candlestick or any trading. In saying that, another candlestick pattern that can provide high probability trades is the Doji, or a combination of Dojis in a row at a market extreme. Note that both Engulfing patterns and Dojis work best at price extremes (highs and lows) and in combination with other technical indicators such as an overbought momentum indicator at a market high, or an oversold momentum indicator at a market low. EDIT - An Example Here is a sample trade I placed on the 17th October and am currently 15.6% in profit on. See the chart below as it shows taking the trade on the open of the following day after a bullish engulfing pattern appeared at the bottom of a downtrend on the 16th in combination with the Slow Stochastic crossing over in the oversold region (below 20%). I would consider this a high probability trade and have placed an initial stop loss at 10% below my open price in case the trade went against me. As the price moved up I moved the 10% stop loss up as a trailing stop loss. My profit target is set at 25% or $4.00. |
Events that cause major movement in forex? | Anything related to the central bank will have a large impact, as they are the ones who determine interest rates, and interest rates have a big effect on currency flows. GDP is also important, as when there is an economic slowdown it may result in the central bank reducing rates to boost economic activity. The opposite is also true, large increases in GDP may mean that an interest rate hike might be needed. Inflation data is also very important. Again, large changes in inflation either way may push the central bank towards changing rates. This data typically is in the form of CPI Note that each central bank is different. They all have specific mandates and specific pieces of economic data that they place emphasis on. The Federal Reserve as of late has closely been watching inflation data, especially wage inflation data, and employment. Significant deviations in these data points from whats expected by investors can greatly move the market. However, these specific factors are a little less important for, say, Mexico, which is mostly concerned with headline inflation. Read the statements issued by the central banks to find out whats important to them. Central banks also issue expectations for things like growth, CPI, etc. If these expectations are not met, it may result in a policy change, or at least talk of a policy change, at the next meeting of the central bank. Anticipating these policy changes and trading accordingly is one strategy to be a profitable forex trader Also, there are several forex news calendars online that indicate what is likely to be high impact news. These can be helpful starting out. |
Where can I find historical ratios of international stock indexes? | I found a possible data source. It offers fundamentals i.e. the accounting ratios you listed (P/E, dividend yield, price/book) for international stock indexes. International equity indices based on EAFE definitions are maintained by Professor French of French-Fama fame, at Dartmouth's Tuck Business School website. Specifics of methodology, and countries covered is available here. MSCI is the data source. Historical time interval for most countries is from 1975 onward. (Singapore was one of the countries included). Obtaining historical ratios for international stock indices is not easily found for free. Your question didn't specify free though. If that is not a constraint, you may wish to check the MSCI Barra international stock indices also. |
What assets does the term “security” encompass? | A good reference to what encompasses "securities" are detailed in the Securities Act of 1933, which was enacted by the United States federal government. One main exception, which I would still consider securities for your purposes, would be "commercial paper". These are exempt from the securities act because they mature in 270 days of less, but they function much like bonds or promissory notes Therefore though, it would not encompass currencies and commodities. It really comes down to the structure of the agreement for transferring or holding the particular kind of underlying asset. |
Taking out a loan to pay down a mortgage | You have the 2 properties, and even though the value of property B is less than the amount you owe on it hopefully you have some equity in propery A. So if you do have enough equity in property A, why don't you just go to the one lender and get both property A and B refinanced under the same mortgage. This way hopefully the combined equity in both properties would be enough to cover the full amount of the loan, and you have the opportunity to refinance at favourable rate and terms. Sounds like you are in the USA with an interest rate of 3.25%, I am in Australia and my mortgage rates are currently between 6.3% to 6.6%. |
Rollover 401k into Roth IRA? | There is some advantage to putting your house downpayment in the Roth to get tax-free growth. However this advantage is offset by the risk of the investment losing value in the short period before you take advantage of it. You might go this route if the timeline is greater than 5 years and you use a conservative investment vehicle. |
Why can't I short a particular stock? | In order to short a stock, you have to borrow the number of shares that you're shorting from someone else who holds the shares, so that you can deliver the shares you're shorting if it becomes necessary to do so (usually; there's also naked short selling, where you don't have to do this, but it's banned in a number of jurisdictions including the US). If a stock has poor liquidity, or is in high demand for shorting, then it may well be impossible to find anyone from whom it can be borrowed, which is what has happened in this instance. |
Can a custodian refuse prior-year IRA/HSA deposit postmarked April 15? | I had a situation like this also. A client deposited an IRA check to his local P.O. prior to collection p/up, thinking this meant it would be postmarked April 15. It may have been picked up, but wasn't postmarked until the next day, and my firm refused to consider it as timely. I do remember discussing it w/my Retirement Services Dept. Maybe they made an exception for me and my client, but maybe not. I don't remember. Good luck. |
income tax for purchased/sold short term & long term shares | No Tax would have been deducted at the time of purchase/sale of shares. You would yourself be required to compute your tax liability and then pay taxes to the govt. In case the shares sold were held for less than 1 year - 15% tax on capital gains would be levied. In case the shares sold were held for more than 1 year - No Tax would be levied and the income earned would be tax free. PS: No Tax is levied at the time of purchase of shares and Tax is only applicable at the time of sale of shares. |
How to calculate S corporation distribution from past K-1s? | Disclaimer: I'm not a tax professional, or an expert on S-Corps. However, I do have my own S-Corp, and my decision process for taking a distribution has nothing (directly) to do with K-1 past or present, or profit and loss. If I have "extra" cash in my S-Corp, I take a distribution. Assuming I do my taxes correctly, the money will be taxed whether I take a distribution or leave it in the business. So it really comes down to how much cash the business requires to continue operating and meeting its expenses. |
Paid cash for a car, but dealer wants to change price | Don't take the car back! The dealership wants you to take it back to try and earn more money. Simply stated, the dealerships hate paid up front cash deals. They make money on the financing. So to call back and try to up their fee is them realizing their not making a large enough profit. Say thank you and move on. The deal is done!! |
How long should I keep my bills? | In general, you don't need to keep bills around for more than a few months. The exceptions are: anything that was itemized on your federal or state income taxes. You want to keep these around for seven years in case of an audit by the IRS brokerage statements buying/selling stocks, bonds, mutual funds, etc. You need to know how much you bought a stock for when you sell it, to calculate capital gains. information relating to major renovations to your house. This can be used to reduce the gain when you sell. anything relating to a business, again for tax and valuation purposes. When selling a house, the last years worth of utility bills might be useful, to show potential buyers. However, I get almost all of my recurring bills electronically now. They get saved and backed up. In that case, its easier to just keep everything than to selectively delete stuff. It takes very little space, is easier to find things than in paper files, and is much less hassle when moving than boxes full of paper. |
Starting long-term savings account as a college student | Where is the money coming from? If you already have the money (inheritance, gifts or similar) sitting in your account, you can just buy e.g. index funds from Vanguard, Robinhood or other low-cost brokerages. But first you should estimate how much money you need for your studies - it is a bit of a gamble to invest money that you'll need to withdraw in a few years time. Even though the average return may be quite high (12% sounds like an overestimate, more commonly quoted figure is 7%), over short timespans your stocks will go up and down randomly. Once you actually have a job and have income from it, then the 401k and IRA and similar retirement accounts start to make sense. There is no need to have all your savings in the same account, so you can start saving now already. |
What's the difference between stocks and shares? | For all practical purposes the words mean the same thing. Shares are just stock in a particular company whereas stock can refer to shares over many companies. Investopedia has a good explaination. If you are a financial journalist you might want to make sure you are using the right term at the right time, but otherwise they are synonyms. |
Cost Basis in Retirement Accounts Irrelevant? | One thing to keep in mind is that with Roth accounts, there are different withdrawal considerations based on your contributions. For example, you can withdraw Roth IRA contributions whenever you want in the future. However this really has nothing to do with your cost basis and purely to do with the contribution amount vs balance. |
Consequences of buying/selling a large number of shares for a low volume stock? | The effect of making a single purchase, of size and timing described, would not cause market disequilibrium, it would only hurt you (and your P&L). As @littleadv said, you would be unlikely to get your order filled. You asked about making a "sudden" purchase. Let's say you placed the order and were willing to accept a series of partial fills e.g. in 5,000 or 10,000 share increments at a time, over a period of hours. This would be a more moderate approach. Even spread out over the span of a day, this remains unwise. A better approach would be to buy small lots over the course of a week or month. But your transaction fees would increase. Investors make money in pink sheets and penny stocks due to increases in share price of 100% (on the low end), with a relatively small number of shares. It isn't feasible to earn speculator profits by purchasing huge blocks (relative to number of shares outstanding) of stock priced < $1.00 USD and profit from merely 25% price increases on large volume. |
How should I report earning from Apple App Store (from iTunes Connect) in Washington state? | If you're waiting for Apple to send you a 1099 for the 2008 tax season, well, you shouldn't be. App Store payments are not reported to the IRS and you will not be receiving a 1099 in the mail from anyone. App Store payments are treated as sales commissions rather than royalties, according to the iTunes Royalty department of Apple. You are responsible for reporting your earnings and filing your own payments for any sums you have earned from App Store. – https://arstechnica.com/apple/2009/01/app-store-lessons-taxes-and-app-store-earnings The closest thing to sales commissions in WA state seems to be Service and Other Activities described at http://dor.wa.gov/content/FileAndPayTaxes/BeforeIFile/Def_TxClassBandO.aspx#0004. When you dig a little deeper into the tax code, WAC 458-20-224 (Service and other business activities) includes: (4) Persons engaged in any business activity, other than or in addition to those for which a specific rate is provided in chapter 82.04 RCW, are taxable under the service and other business activities classification upon gross income from such business. - http://apps.leg.wa.gov/wac/default.aspx?cite=458-20-224 I am not a lawyer or accountant, so caveat emptor. |
I have a 2008 HHR under finance it needs a new engine | I know, this isn't a direct answer to your question about unloading a used car-- I've always donated it to charity and written off the price it got at auction on my taxes -- but I think the following might be useful to anyone facing a big repair bill: You know your car's condition. (If in doubt, pay your mechanic to evaluate it "as if he was considering buying it for his daughter".) If you were shopping for a used car, and you found one exactly like yours, in exactly the same condition, treated exactly as well as you treat yours (and with all the records to prove that), but with the repairs already done... how much would you be willing to pay for it? If that number is more than the repair cost, repairing is a good deal. If it's less than the repair cost, is it enough less to justify the hassle of car shopping? If so, unload it and use the repair money to buy something better. If it's in the middle... flip a coin, or pick whichever makes you feel better. |
Deductible expenses paid with credit card: In which tax year would they fall? | I'm assuming you're operating on the cash basis of accounting, based on your comment "Cash, I think that's the only way for a sole propriator (sic)" Consider: There are two distinct but similar-name concepts here: "paid for" (in relation to a expense) and "paid off" (in relation to a debt). These both occur in the case you describe: Under the cash basis of accounting, when you can deduct an expense is based on when you paid for the expense, not when you eventually pay off any resulting debt arising from paying for the expense. Admittedly, "cash basis" isn't a great name because things don't solely revolve around cash. Rather, it's when money has changed hands – whether in the form of cash, check, credit card, etc. Perhaps "monetary transaction basis" might have been a better name since it would capture the paid-for concept whether using cash or credit. Unfortunately, we're stuck with the terminology the industry established. |
Is it sensible to keep savings in a foreign currency? | Is it sensible to keep savings in a foreign currency? The answer varies from one country to the next, but in the UK (or any other mature economy), I would advise against it. There are better ways to hedge against currency risks with the funds readily available to you through your ISA. You can keep your money relatively safe and liquid without ever paying a currency exchange fee. |
When should I walk away from my mortgage? | Very few people's credit is worth $100,000. The average homeowner's credit (family of four with good to very good credit) is worth about $30,000. This is a pure business decision. The bank knew the law when they extended the mortgage to you, and part of the amount they're charging you goes to cover the risk that you might opt to walk away. The mortgage was an agreement between you and the bank and it specified the penalty for you walking away. Taking the agreed upon penalty for an action specifically contemplated in the agreement is also keeping the agreement. |
My investment account is increasingly and significantly underperforming vs. the S&P 500. What should I do? | You say: To clarify, my account is with BlackRock and the fund is titled "MID CAP GROWTH EQUITY-CLASS A" if that helps. Not totally sure what that means. You should understand what you're investing in. The fund you have could be a fine investment, or a lousy one. If you don't know, then I don't know. The fund has a prospectus that describes what equities the fund has a position in. It will also explain the charter of the fund, which will explain why it's mid-cap growth rather than small-cap value, for example. You should read that a bit. It's almost a sure thing that your father had to acknowledge that he read it before he purchased the shares! Again: Understand your investments. |
How to withdraw money from currency account without having to lose so much to currency conversion? | In answer to the "how I can perform withdrawal with the lower rate (having GBP)?" part of your question, as Joe stated you need to use another bank or currency exchange company to convert the GBP to PLN. Most of the UK banks charge similar amounts, and it's usually not possible to transfer the GBP to a foreign bank unless you have a GBP account with them. Some currency exchange firms are Transferwise, FairFX, CaxtonFX, a web search will show a fuller range. You could also use Paypal to do the transfer (if you have a paypal account) by transferring the GBP from Barclays to your paypal account and then from there to your PLN account. |
Where can I lookup accurate current exchange rates for consumers? | Current and past FX rates are available on Visa's website. Note that it may vary by country, so use your local Visa website. |
How does one value Facebook stock as a potential investment? | You could try this experiment: pay for an Ad/banner on Facebook for 1 month. The Ad/banner should link to your ecommerce site. Then see if the Ad/banner does or does not convert into ecommerce orders ("converting" means that people coming to your eccomerce site from Facebook after having clicked on your Ad/banner really buy something on your site). If it does convert, you will go on paying for Ads/banners and other people will do the same for their sites, so FB might make cash in next years. But if it does NOT convert you and everybody else will soon discover and stop paying for Ads/banners, thus it will be hard for Facebook to make money with Advertising, thus Facebook might be just a big bubble (unless they find other ways of making money). I did the experiment I suggested above and the conversion rate was an absoulte ZERO!!! (Instead Google Adwords converted well for the same site). So IMHO I would stay away from FB. But remember that stock market is emotional (at least on short periods of time), so it might be that even if FB wil never become a cash cow, for the 1st few months people (expecially small investors tempeted by the brand) might go crazy for the stocks and buy buy buy, making the price go up up up. EDIT in reply to some comments below arguing that my answer was boiled down to one single experiment: General Motors said Tuesday that it will stop paid advertising on Facebook...the social media paid ads simply weren't delivering the hoped-for buyers... (CNN May/15/2012) A donkey can not fly either when it's me (with a single experiment) trying to make it fly or the entire GM workforce. |
Stock sale cost basis calculations for 2013, now that rules changed, is FIFO or another method the smartest financially? | Once again I offer some sage advice - "Don't let the tax tail wag the investing dog." Michael offers an excellent method to decide what to do. Note, he doesn't base the decision on the tax implication. If you are truly indifferent to holding the stock, taxwise, you might consider selling just the profitable shares if that's enough cash. Then sell shares at a loss each year if you have no other gains. That will let you pay the long term gain rate on the shares sold this year, but offset regular income in years to come. But. I'm hard pressed to believe you are indifferent, and I'd use Michel's approach to decide. Updated - The New Law is simply a rule requiring brokers to track basis. Your situation doesn't change at all. When you sell the shares, you need to identify which shares you want to sell. For older shares, the tracking is your responsibility, that's all. |
If there's no volume discount, does buying in bulk still make sense? | Let me add a counterpoint. I don't know about you, but for some psychological reason, when I know I have an abundance of something I tend to be less frugal about the way I consume it. For example: When there is a six pack of cokes in the fridge I feel like I am more prone to not drink them up so quickly so I have some for later on. However, if I knew I had 3 more cases in the pantry, I seem to go through a lot more of them. |
What are the common income tax deductions used by “rich” salaried households? | As was stated, households earning over $250k/yr don't all get their income one way. Below that threshold, even in the six figure range, most households are in one of two categories; salary/wage/commission workers, and those living off of nest eggs/entitlements (retired, disabled, welfare). Above $250k, though, are a lot of disparate types of incomes: Now, you specifically mentioned wage earners above $250k. Wage earners typically have the same "tax havens" that most of us do; the difference is usually that they are better able to make use of them: In other words, there are many ways for a high-end wage earner to live the good life and write a lot of it off. |
How much would it cost me to buy one gold futures contract on Comex? | Brokers usually have this kind of information, you can take a look at interactive brokers for instance: http://www.interactivebrokers.co.uk/contract_info/v3.6/index.php?action=Details&site=GEN&conid=90384435 You are interested in the initial margin which in this case is $6,075. So you need that amount to buy/sell 1 future. In the contract specification you see the contract is made for 100 ounces. At the current price ($1,800/oz), that would be a total of $180,000. It is equivalent to saying you are getting 30x leverage. If you buy 1 future and the price goes from $1,800 to $1,850, the contract would go from $180,000 to $185,000. You make $5,000 or a 82% return. I am pretty sure you can imagine what happens if the market goes against you. Futures are great! (when your timing is perfect). |
How should I calculate the opportunity cost of using a 401(k) loan? | One way to analyze the opportunity cost of using a 401K loan would be to calculate your net worth after using a 401K loan. If your net worth increases then the 401K loan would be advisable. Note that the calculations provided below do not take into account tax considerations. A net worth calculation is where you add all your assets and then subtract all your liabilities. The resulting number is your net worth. First, calculate the net worth of not taking the loan and simply paying the credit card interest. This means you only pay the interest on the credit card. In addition to the parameters identified in your question, two additional parameters will need to be considered: Cash and the market rate of return on the 401K. Scenario 1 (only pay credit card interest): After 12 months all you have paid is the interest on the credit card. The 401K balance is untouched so it will hopefully grow. The balance on the credit card remains at the end of 12 months. Scenario 2 (use 401K loan to pay credit card balance): You borrow $5,000 from your 401K to pay the credit card balance. You will have to pay $5,000 plus the 401K interest rate back into your 401K account. Use the following equation to determine when Scenario 2 increases your net worth more than scenario 1: Thus, if your credit card interest rate is greater than the rate you can earn on your 401K then use the 401K loan to pay off the credit card balance. Another scenario that should be considered: borrow money from somewhere else to pay off the credit card balance. Scenario 3 (external loan to pay credit card balance): You borrow $5,000 from somewhere besides your 401K to pay off the credit card balance. The following is used to determine if you should use an external loan over the 401K loan: This means you should use an external loan if you can obtain an interest rate less than the rate of return you can earn on your 401K. The same methodology can be used to compare Scenario 3 to Scenario 1. |
Can't the account information on my checks be easily used for fraud? | Yes, and there are almost no checks (no pun intended) on people pulling money from your account using a routing number. It is an EXTREMELY insecure system. If you want a real Halloween scare, read this article: Easy Check Fraud Technique Draws Scrutiny. Unfortunately you just have to live with it. If you are curious why this loophole is allowed to continue, consider how hard it is to close it without undermining the convenience of checks. Short of you going to the bank with each person you write a check to and showing ID to validate the transaction, I don't see how you could continue to use a negotiable instrument like this without such a security hole. The ultimate answer is going to have to be replacing checks with other means of payment. |
What is the p/e ratio? | The price to earnings ratio is a measure of the company's current share price compared to the annual net earnings per share. The other way to think about this is the number of years a company would take to pay back the share price if the earnings stay constant. This ignores factors like inflation and can be used as an indicator of risk. During the internet bubble many companies had P/E above 24 and no possible means of earning back the share prices that were inflated largely due to speculation. Most tools like Google Finance will list the P/E for a particular quote. |
Looking to buy a property that's 12-14x my income. How can it be done? | You need a cosigner. Someone prepared to repay the mortgager if you should fail to. Needless to say this is going to have to be someone who knows you and trusts you very much. One way is to find someone prepared to share a house with you. Buy a bigger house than you would otherwise need. You would own half each, and the sharing agreement would specify that if one of you defaulted on their payments the other would get a larger share according to how much extra they end up paying. The other way is to find a silent partner, who doesn't live there. They put up no money unless you actually default. They would almost certainly have to be part owners, but you can structure the agreement so that you end up with the whole house if you succeed in paying off the mortgage, or miss no payments until you sell. Parents sometimes do this for their kids. |
Why are options created? | At my soon to be legendary Stock Options Cafe, I recently wrote an article "Betting On Apple at 9 to 2." It described a trade in which a 35% move in a stock over a fixed time (2 years) would result in a 354% gain in one's bet. In this case, the options serve to create remarkable leverage for speculators. In general, option help provide liquidity and extend the nature of the risk/reward curve. There are option trades that range from conservative (e.g. a 'covered call') to wildly speculative, as the one I described above. |
How do I get into investing? | Don't do it until you have educated yourself enough to know what you are doing. I hope you won't take this personally, but given that you are wandering around asking random strangers on the Internet how to "get into investing," I feel safe in concluding that you are by no means a sophisticated enough investor to be choosing individual investments, nor should you be trusting financial advisors to choose investments for you. Believe me, they do not have your interests at heart. I usually advise people in your position to start by reading one book: A Random Walk Down Wall Street by Burton Malkiel. Once you've read the book by Malkiel you'll understand that the best strategy for all but the most sophisticated investors is to buy an index fund, which simply purchases a portfolio of ALL available stocks without trying to pick winners and losers. The best index funds are at Vanguard (there is also a Vanguard site for non-US residents). Vanguard is one of the very, very, very few honest players in the business. Unlike almost any other mutual fund, Vanguard is owned by its investors, so it has no profit motive. They never try to pick individual stocks, so they don't have to pay fancy high-priced analysts to pick stocks. If you find it impossible to open a Vanguard account from wherever you're living, find a local brokerage account that will allow you to invest in the US stock market. Many Vanguard mutual funds are available as ETFs which means that you buy and sell them just like any other stock on the US market, which should be easy to do from any reasonably civilized place. |
How does the process of “assignment” work for in-the-money Options? | I often sell covered calls, and if they are in the money, let the stock go. I am charged the same fee as if I sold online ($9, I use Schwab) which is better than buying back the option if I'm ok to sell the stock. In my case, If the option is slightly in the money, and I see the options are priced well, i.e. I'd do another covered call anyway, I sometimes buy the option and sell the one a year out. I prefer to do this in my IRA account as the trading creates no tax issue. |
What is the best, low risk investment I can make now? | TL;DR - go with something like Barry Ritholtz's All Century Portfolio: 20 percent total U.S stock market 5 percent U.S. REITs 5 percent U.S. small cap value 15 percent Pacific equities 15 percent European equities 10 percent U.S. TIPs 10 percent U.S. high yield corp bonds 20 percent U.S. total bond UK property market are absurdly high and will be crashing a lot very soon The price to rent ratio is certainly very high in the UK. According to this article, it takes 48 years of rent to pay for the same apartment in London. That sounds like a terrible deal to me. I have no idea about where prices will go in the future, but I wouldn't voluntarily buy in that market. I'm hesitant to invest in stocks for the fear of losing everything A stock index fund is a collection of stocks. For example the S&P 500 index fund is a collection of the largest 500 US public companies (Apple, Google, Shell, Ford, etc.). If you buy the S&P 500 index, the 500 largest US companies would have to go bankrupt for you to "lose everything" - there would have to be a zombie apocalypse. He's trying to get me to invest in Gold and Silver (but mostly silver), but I neither know anything about gold or silver, nor know anyone who takes this approach. This is what Jeremy Siegel said about gold in late 2013: "I’m not enthusiastic about gold because I think gold is priced for either hyperinflation or the end of the world." Barry Ritholtz also speaks much wisdom about gold. In short, don't buy it and stop listening to your friend. Is buying a property now with the intention of selling it in a couple of years for profit (and repeat until I have substantial amount to invest in something big) a bad idea? If the home price does not appreciate, will this approach save you or lose you money? In other words, would it be profitable to substitute your rent payment for a mortgage payment? If not, you will be speculating, not investing. Here's an articles that discusses the difference between speculating and investing. I don't recommend speculating. |
I received $1000 and was asked to send it back. How was this scam meant to work? | OK, there is no way in hell that a stranger should have your contact details. there is no way in hell that a stranger should be able to determine your name from that account number unless you are previously known to them. Have they explained to your satisfaction how any previous relationship was established? It was correct to direct them back to their own bank or their branch manager if they bank with the CBA. There are procedures in place for this, and you are in the clear if the bank handles it. Even there is a previous relationship, and you are in their address book, think long and hard about their "bona fides". It may not have been a scam they may have had fat fingers and be genuinely out of pocket now. It is SOP that if you refuse to refund the money the banks will become less helpful. (EDIT - you have consented to retrun the money). EDIT - IF you had not consented... Disclosure: I am a former CBA employee and a 20 year veteran of NetBank, and these are my own opinions. |
What effect does a company's earnings have on the price of its stock? | Market price of a stock typically trades in a range of Price/Earnings Ratio (P/E ratio). Or in other words, price of a stock = Earnings * P/E ratio Because of this direct proportionality of stock price with earnings, stock prices move in tandem with earnings. |
When does Ontario's HST come into effect? | In general you must charge HST on and after July 1, 2010. However, in the case of delivered sales, you must charge HST if the transfer of goods will happen on or after July 1,2010. Example: A person comes into my hypothetical store on June 29, 2010 and buys a couch. They opt to have it delivered by my truck on July 2, 2010. I should charge HST on this purchase, not GST/PST. References: |
Why do interest rates increase or decrease? | My answer is specific to the US because you mentioned the Federal Reserve, but a similar system is in place in most countries. Do interest rates increase based on what the market is doing, or do they solely increase based on what the Federal Reserve sets them at? There are actually two rates in question here; the Wikipedia article on the federal funds rate has a nice description that I'll summarize here. The interest rate that's usually referred to is the federal funds rate, and it's the rate at which banks can lend money to each other through the Federal Reserve. The nominal federal funds rate - this is a target set by the Board of Governors of the Federal Reserve at each meeting of the Federal Open Market Committee (FOMC). When you hear in the media that the Fed is changing interest rates, this is almost always what they're referring to. The actual federal funds rate - through the trading desk of the New York Federal Reserve, the FOMC conducts open market operations to enforce the federal funds rate, thus leading to the actual rate, which is the rate determined by market forces as a result of the Fed's operations. Open market operations involve buying and selling short-term securities in order to influence the rate. As an example, the current nominal federal funds rate is 0% (in economic parlance, this is known as the Zero Lower Bound (ZLB)), while the actual rate is approximately 25 basis points, or 0.25%. Why is it assumed that interest rates are going to increase when the Federal Reserve ends QE3? I don't understand why interest rates are going to increase. In the United States, quantitative easing is actually a little different from the usual open market operations the Fed conducts. Open market operations usually involve the buying and selling of short-term Treasury securities; in QE, however (especially the latest and ongoing round, QE3), the Fed has been purchasing longer-term Treasury securities and mortgage-backed securities (MBS). By purchasing MBS, the Fed is trying to reduce the overall risk of the commercial housing debt market. Furthermore, the demand created by these purchases drives up prices on the debt, which drives down interest rates in the commercial housing market. To clarify: the debt market I'm referring to is the market for mortgage-backed securities and other debt derivatives (CDO's, for instance). I'll use MBS as an example. The actual mortgages are sold to companies that securitize them by pooling them and issuing securities based on the value of the pool. This process may happen numerous times, since derivatives can be created based on the value of the MBS themselves, which in turn are based on housing debt. In other words, MBS aren't exactly the same thing as housing debt, but they're based on housing debt. It's these packaged securities the Fed is purchasing, not the mortgages themselves. Once the Fed draws down QE3, however, this demand will probably decrease. As the Fed unloads its balance sheet over several years, and demand decreases throughout the market, prices will fall and interest rates in the commercial housing market will fall. Ideally, the Fed will wait until the economy is healthy enough to absorb the unloading of these securities. Just to be clear, the interest rates that QE3 are targeting are different from the interest rates you usually hear about. It's possible for the Fed to unwind QE3, while still keeping the "interest rate", i.e. the federal funds rate, near zero. although this is considered unlikely. Also, the Fed can target long-term vs. short-term interest rates as well, which is once again slightly different from what I talked about above. This was the goal of the Operation Twist program in 2011 (and in the 1960's). Kirill Fuchs gave a great description of the program in this answer, but basically, the Fed purchased long-term securities and sold short-term securities, with the goal of twisting the yield curve to lower long-term interest rates relative to short-term rates. The goal is to encourage people and businesses to take on long-term debt, e.g. mortgages, capital investments, etc. My main question that I'm trying to understand is why interest rates are what they are. Is it more of an arbitrary number set by central banks or is it due to market activity? Hopefully I addressed much of this above, but I'll give a quick summary. There are many "interest rates" in numerous different financial markets. The rate most commonly talked about is the nominal federal funds rate that I mentioned above; although it's a target set by the Board of Governors, it's not arbitrary. There's a reason the Federal Reserve hires hundreds of research economists. No central bank arbitrarily sets the interest rate; it's determined as part of an effort to reach certain economic benchmarks for the foreseeable future, whatever those may be. In the US, current Fed policy maintains that the federal funds rate should be approximately zero until the economy surpasses the unemployment and inflation benchmarks set forth by the Evans Rule (named after Charles Evans, the president of the Federal Reserve Bank of Chicago, who pushed for the rule). The effective federal funds rate, as well as other rates the Fed has targeted like interest rates on commercial housing debt, long-term rates on Treasury securities, etc. are market driven. The Fed may enter the market, but the same forces of supply and demand are still at work. Although the Fed's actions are controversial, the effects of their actions are still bound by market forces, so the policies and their effects are anything but arbitrary. |
How does historical data get adjusted for dividends, exactly? | If you download the historical data from Yahoo, you will see two different close prices. The one labeled 'Close' is simply the price that was quoted on that particular day. The one labeled 'Adj Close' is the close price that has been adjusted for any splits and dividends that have occurred after that date. For example, if a stock splits 10:1 on a particular date, then the adjusted close for all dates prior to that split will have been divided by 10. If a dividend is paid, then all dates prior will have that amount subtracted from their adjusted quote. Using the adjusted close allows you to compare any two dates and see the true relative return. |
How much money should I lock up in my savings account? | One issue which I don't see addressed in the answers so far is how to structure bank accounts to get the highest return possible. What you're describing sounds like a certificate of deposit (CD): 'ranging from 1% for 9 months to 2.3% for 5 years' There is a concept which was once more common called a CD Ladder, which still allows you to access your money, while also giving you the highest interest rate offered by the bank. To set one up you divide your account into 5 equal parts, then open 5 CDs with different periods (1-5 years). Each time a new CD matures (once a year), you purchase another 5 year CD with those funds, plus any new money you want to save. Thus you're getting a higher and higher rate, until all of your accounts are earning the 5 year CD rate, and you're never more than a year away from getting money out of the account if a need comes up. |
Money put down on home | To quote Judge Judy: "Our courts are not in the business of settling assets of couples who decide to play house". This is one of the reasons we put off buying houses with a partner until we are married. The courts have rules for couples who marry, then split, but none for those who don't. In the scenerio you spelled out, you are at the mercy of your ex-boyfriend as far as getting your downpayment back. Legally, you are entitled to 50% of the funds remaining after the sale and expenses. |
Why would you ever turn down a raise in salary? | At least with US tax law where you only pay taxes at the higher rate for the income above the minimum for that tax bracket, you will always wind up ahead taking the raise if you are simply concerned with after tax (FICA) income. For example, assume you were making $8,350 (the top end of the 10% bracket in the US), and got a $100 raise, you would be taxed roughly as follows: After Tax Income Before Raise: $8,350 x (100% - 10%) After Tax Income After Raise: $8,350 x (100%-10%) + $100 x (100%-15%) You can easily see that the second number is always higher than the first as long as the raise is a positive amount (obviously). |
Deductions greater than Income : Traditional IRA to Roth Conversion? | Answering for just the US part, yes, you should be able to do this and it's a good strategy. The only additional gotcha I can think of is that if you've made after-tax contributions to your traditional IRA, you need to prorate the conversion, you can't just convert all the pre-tax or all the after-tax. I'm not familiar with Oregon personal income tax so there may be additional gotchas there. |
How does spot-futures arbitrage work in the gold market? | You're missing the cost-of-carry aspect: The cost of carry or carrying charge is the cost of storing a physical commodity, such as grain or metals, over a period of time. The carrying charge includes insurance, storage and interest on the invested funds as well as other incidental costs. In interest rate futures markets, it refers to the differential between the yield on a cash instrument and the cost of the funds necessary to buy the instrument. So in a nutshell, you'd have to store the gold (safely), invest your money now, i.e. you're missing out on interests the money could have earned until the futures delivery date. Well and on top of that you need to get the gold shipped to London or wherever the agreed delivery place is. Edit: Forgot to mention that of course there are arbitrageurs that make sure the futures and spot market prices don't diverge. So the idea isn't that bad as I might have made it sound but being in the arbitrage business myself I should disclaim that profits are small and arbitraging is highly automated, so before you spot a $1 profit somewhere between any two contracts, you can be quite sure it's been taken by an arbitrageur already. |
Why liquidity implies tight spread and low slippage | Theoretically, it's a question of rate of return. If a desired or acceptable rate of return for market makers' capital is X, and X is determined by the product of margin & turnover then higher turnover means lower margin for a constant X. Margin, in the case of trading, is the bid/ask spread, and turnover, in the case of trading, is volume. Empirically, it has been noted in the last markets still offering such wide-varying evidence, equity options: http://faculty.baruch.cuny.edu/lwu/890/mayhew_jf2002.pdf |
How does a defined contribution plan work | It is comparing apples to oranges. From govt or institution point of view defined contribution is better than defined benefits as they don't have to carry obligations. Although defined benefit sounds good, one can't guarantee it will be enough when you retire compared to inflation. It often becomes political issue. Defined contribution puts you in charge. |
Are buyouts always for higher than the market value of a stock? | Buyouts are usually for more than the ORIGINAL value of a stock. That's because the price "premium" represents an incentive for holders to "tender" their shares to the would-be buyer. Sometimes in these situations, the stock price rises above the proposed buyout price, in anticipation of a higher takeover bid from a SECOND party (that may or may not materialize). To answer the other part of the question, does a bidder have a chance of taking over a dying company for less than the market price? That is a strategy sometimes referred to as a "take under," and it has not been a notably successful strategy. That's because it goes against "human nature" (of the seller). "Where there is life, there is hope." They would seldom accept a lower price for "sure" survival, when the market is telling them that they are worth a higher price. Very few people realize that the market may disappear tomorrow. Think of all the homeowners who won't cut their price, but insist on bids that meet recent "comps." And if the company is really dying, the prospective buyer may be best served by waiting until it does, and then pick up the individual pieces at auction. |
Finding out actual items bought via credit card issuer and not the store receipt? | The store keeps track of what you buy. It is all part of their big data. The knowledge of what you buy helps them project future sales. It allows them to target their marketing. But maybe even more importantly they can sell this knowledge to outside companies. They aren't going to give away that information to another company that would love to have that data, just so they could sell it. Stores use those loyalty cards to be able to link your household to those purchases. Those discounts, or free products, are what they use to entice you to give up your privacy. The fact that in your town young adults love caramel apples, even more than the town next door, makes them confident that your town will love caramel apple scented shampoo. Thus they send you coupons when it become available. They will also sell this knowledge to the shampoo companies. Do some stores make it possible for you to download the data? Yes they do. Apple stores send all receipts via email. Kohls allows me to see detail information about my transactions on line. There must be others. I don't know if any are grocery stores. |
Identifying “Dividend Stocks” | How do you find good quality dividend stocks? That is an easy one. Past performance has always been my key to this answer. also remember why you are investing in the first place. Do you want cash flow, security or capital growth. Also let's not forget... how much time do you want to devote to this venture. There is going to be a balance in your investing and your returns. More time in... the higher returns you get. As for finding good dividend stocks, look to the Dividend Aristocrats or the Dividend Contenders. These companies have consistently increased their payouts to their investors for years. There is a trading strategy that could escalate your returns. Dividend Capturing, simply put... You buy the stock before the ex-date and sell after date of record. Thus collecting a dividend and moving on to the next one. Warning: though this is a profitable strategy, it only works with certain stocks so do your research or find a good source. |
Self-employment alongside full-time job | What you need to do is register as a sole trader. This will automatically register you for self assessment so you don't have to do that separately. For a simple business like you describe that's it. Completing your self assessment will take care of all your income tax and national insurance obligations (although as mentioned in your previous question there shouldn't be any NI to pay if you're only making £600 or so a year). |
What can I do when the trading price of a stock or ETF I want to buy is too high? | You have a couple of options: Auto-investing in an open-end mutual fund. Some companies may waive a minimum if you sign up for an automatic investing, e.g. T. Rowe Price will waive its minimum if you agree to invest $100/month. There may be some lower ones out there as well. Some brokers like ShareBuilder have programs where someone could auto-invest getting fractional shares with each purchase. However, something to consider is what percentage is it costing you to buy each time as it may be quite a bit of friction if you are paying $4 a purchase and only buying $40, this is 10% of your investment being eaten up in costs that I'd highly advise taking the first option. |
Did my salesman damage my credit? What can I do? | This shows the impact of the inquiries. It's from Credit Karma, and reflects my inquiries over the past two years. In my case, I refinanced 2 properties and the hit is after this fact, so my score at 766 is lower than when approved. You can go to Credit Karma and see how your score was impacted. If in fact the first inquiry did this, you have cause for action. In court, you get more attention by having sufficient specific data to support your claim, including your exact damages. |
Does the sale of personal items need to be declared as income on my income taxes? | Books would be considered Personal-Use Property according to Canada's income tax laws. The most detailed IT I was able to find is IT-332R, which says: GAINS AND LOSSES 3. A gain on the disposition of personal-use property is normally a capital gain within the meaning of paragraph 39(1)(a). Where the property is a principal residence, the gain > is computed under paragraph 40(2)(b) or (c). 4. Under subparagraph 40(2)(g)(iii), a loss on a disposition of personal-use property, other than listed personal property, is deemed to be nil. [...] This part of the bulletin indicates that a gain might be considered a capital gain - not income. However, you don't get to book a loss as a capital loss. This is the first hint that your book sale - which is actually an exempt capital loss - shouldn't go on your tax return unless it's one of the "listed" items: LISTED PERSONAL PROPERTY 7. Listed personal property is defined in paragraph 54(e) to mean personal-use property that is all or any portion of, or any interest in or right to, any (a) print, etching, drawing, painting, sculpture, or other similar work of art, (b) jewellery, (c) rare folio, rare manuscript, or rare book, (d) stamp, or (e) coin. So unless you're selling rare books, the disposition (sale) of them is essentially exempt as income, regardless of whether you sold it at a profit or at a loss. If it is rare, then you might be able to consider it a capital loss, which doesn't help you much unless you had other capital gains, but you can carry over capital losses to future years. There's also a newer IT related to hobbies and "collecting" items, IT-334R2. This one says: 11. In order for any activity or pursuit to be regarded as a source of income, there must be a reasonable expectation of profit. Where such an expectation does not exist (as is the case with most hobbies), neither amounts received nor expenses incurred are included in the income computation for tax purposes and any excess of expenses over receipts is a personal or living expense, the deduction of which is denied by paragraph 18(1)(h). On the other hand, if the hobby or pastime results in receipts of revenue in excess of expenses, that fact is a strong indication that the hobby is a venture with an expectation of profit; if so, the net income may be taxable as income from a business. The current version of IT-504, Visual Artists and Writers, discusses the concept of "a reasonable expectation of profit" in greater detail. Where a hobby consists of collecting personal-use property or listed personal property, dispositions should be accounted for as described in the current version of IT-332, Personal-Use Property. (emphasis mine) In other words, if it's not the type of thing where you'd make a tax deduction when you bought it in the first place, then you clearly don't need to report it as income when you sell it. Just to be absolutely clear here: The fact that you are selling them at a loss is not actually what's important here. What's important is that, if the books aren't collectibles, then you would have had no expectation of profit. If you did have that expectation then you could have made a tax deduction when you first purchased them. So in this case, it is probably not necessary for you to report the income; however, for the benefit of other readers, in some cases you might need to report it under "other income" or book it as a capital gain/loss, depending on what those personal items are and whether or not you made a net profit. |
Pay down on second mortage when underwater? | I think everyone else answered before you added the info about your car loan in your comment. While it makes sense to pay off loans with the highest interest rate first, keep in mind that in most cases you can deduct mortgage interest from your taxable income. So the after-tax rate of interest that you're paying on your 8.6% second mortgage will be less than your 7% car loan, assuming that your tax bracket is more than 18% (federal and state combined). If you plan to use your funds to pay down debt, definitely attack the car loan first. |
What is a good way to save money on car expenses? | Can you tell I'm having fun with this question? Here's another great list, from Finally Frugal, which includes the above items, but also these gems: Avoid idling. Now, this just annoys me. Walking past a line of idling cars at the transit center waiting for their human 'pickup', makes me crazy! It makes me want to knock on the window, shake my finger, and give 'em a piece of my mind. I don't do it, because I don't have a death wish. Turn the car off when you're not driving it. Combine trips. I used to be one of those people who would run to Target, go home, remember something I needed at the grocery store and go out for that, come home again, then run out to the library. All of these places are within a two mile radius of my house. Making lists before leaving the house has helped me to group my errands within one trip, meaning fewer back and forth trips. Slow down. Your parents were right. Slow is better. Not only is it safer to drive the speed limit, you'll be increasing your car's efficiency and reducing the amount of fuel your vehicle uses. |
Can my rent to own equity be used as a downpayment? | I do not think the bank would consider the 52K as equity. Typically, a rent-to-own lease is technically a lease-option contract where you lease for a fixed amount and at some point during the lease you have the option to buy it at a discounted price. I think the bank would consider it a negotiated price. I know that those down payment assistance plans are considered price negotiation by the IRS for the purpose of basis cost and I suspect this would be similar where your basis is $236,800 and not $296,000. |
Free Historical Commodity Prices in txt? | You can find gold historical prices on the kitco site. See the "View Data" button. |
What to do when a job offer is made but with a salary less than what was asked for? | If you take less than you think you are worth, you will hate that job with a purple passion in short order. Either make peace with the amount you settle on or move on. |
Is it better to pay an insurance deductible, or get an upgrade? | I'm going to guess you're on Verizon and your wife has an iPhone. I just went through this exact same situation with my mom's phone last week. When you're off contract with Verizon you're saving $25/month on your plan (at least, I am), so staying off contract is big. If you do the monthly payment you're paying full retail over 2 years, without interest, so you do stay off contract at least. Here's the thing, as long as it's a 16GB iPhone 5 or better, you're going to be able to Craigslist it for the cost of the deductible, no problems. To me that makes the decision pretty easy to make. As long as you can Craigslist it for more than the deductible, get the insurance replacement. Then when you want a new phone you can sell your old one. Since you can sell the phone, I think that makes the comparison between the deductible and deciding to pay off the $100 now and start payments on the new phone less relevant. The real comparison I'd suggest looking at is the value of the phone and the deductible. |
Paypal website donations without being a charity | Yes, PayPal allows you to add a donate button to your website. You're responsible for any tax record-keeping related to income from the donate button. |
What is the incentive for a bank to refinance a mortgage at a lower rate? | It also reduces risk from the bank's eyes. Believe it or not, they do lose out when people don't pay on their mortgages. Take the big 3 (Wells, Chase and BoA). If they have 50 million mortgages between the 3 of them and 20% of people at one point won't be able to pay their mortgage due to loss of income or other factors, this presents a risk factor. Although interest payments are still good, reducing their principal and interest keeps them tied down for additional (or sometimes shorter) time, but now they are more likely to keep getting those payments. That's why credit cards back in 07 and 08 reduced limits for customers. The risk factor is huge now for these financial institutions. Do your research, sometimes a refi isn't the best option. Sometimes it is. |
If stock price drops by the amount of dividend paid, what is the use of a dividend | The stock will slowly gain that $1 during the year. Suppose we have the highly theoretical situation that a company's stock is worth exactly $10 right after it paid its dividend, its dividend is always $1 per stock, and the company and everything else is so stable that its value never changes. Then the stock value right before the next dividend is paid will be close to $11 -- after all, it's worth a certain $1 dividend the next day, plus the $10 stock. And in between, half a year after the dividend was paid, it will be in between, say $10.50, or actually slightly less than that (because people like to buy in late so they can make money some other way with the money first). But the point holds -- the price decrease on the day that dividend is paid had been building up the whole period before that decrease. So stock dividends do make you money. |
How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap! | I came across an article posted at Squawkfox last week. It's particularly relevant to answering this question. See 10 Ways to Cut Your Fitness Membership Costs. Here's an excerpt: [...] If you’re in the market for a shiny new gym membership, it may be wise to read the fine print and know your rights before agreeing to a fitness club contract. No one wants to be stuck paying for a membership they can no longer use, for whatever reason. But if you’re revved and ready to burn a few calories, here are ten ways to get fitter while saving some cash on a fitness club or gym membership. Yay, fitness tips! [...] Check it out! |
When is it worth it to buy dividend-bearing stocks? | Yes, they are, and you've experienced why. Generally speaking, stocks that pay dividends will be better investments than stocks that don't. Here's why: 1) They're actually making money. They can finagle balance sheets and news releases, but cash is cash, it tells no lies. They can't fake it. 2) There's less good they can do with that money than they say. When a business you own is making money, they can do two things with it: reinvest it into the company, or hand it over to you. All companies must reinvest to some degree, but only a few companies worth owning can find profitable ways of reinvesting all of it. Having to hand you, the owner, some of the earnings helps keep that money from leaking away on such "necessities" like corporate jets, expensive printer paper, or ill-conceived corporate buyouts. 3) It helps you not freak out. Markets go up, and markets go down. If you own a good company that's giving you a nice check every three months, it's a lot easier to not panic sell in a downturn. After all, they're handing you a nice check every three months, and checks are cash, and cash tells no lies. You know they're still a good company, and you can ride it out. 4) It helps others not freak out. See #3. That applies to everyone. That, in turn means market downturns weigh less heavily on companies paying solid dividends than on those that do not. 5) It gives you some of the reward of investing in good companies, without having to sell those companies. If you've got a piece of a good, solid, profitable, growing company, why on earth would you want to sell it? But you'd like to see some rewards from making that wise investment, wouldn't you? 6) Dividends can grow. Solid, growing companies produce more and more earnings. Which means they can hand you more and more cash via the dividend. Which means that if, say, they reliably raise dividends 10%/year, that measly 3% dividend turns into a 6% dividend seven years later (on your initial investment). At year 14, it's 12%. Year 21, 24%. See where this is going? Companies like that do exist, google "Dividend Aristocrats". 7) Dividends make growth less important. If you owned a company that paid you a 10% dividend every year, but never grew an inch, would you care? How about 5%, and it grows only slowly? You invest in companies, not dividends. You invest in companies to make money. Dividends are a useful tool when you invest -- to gauge company value, to smooth your ride, and to give you some of the profit of the business you own. They are, however, only part of the total return from investing -- as you found out. |
Investing / Options idiot - how can I get out of this position? | My understanding is that all ETF options are American style, meaning they can be exercised before expiration, and so you could do the staggered exercises as you described. |
Will a credit card issuer cancel an account if it never incurs interest? | I would think it extremely unlikely that an issuer would cancel your card for having an ADB of approximately zero. The issuer charges the vendor that accepts a card a percentage of the transaction (usually up to ~3%, AMEX is generally higher) - so they are making money even if you carry no balance on your card (the specific language for various vendor-side (acceptor) credit card agreements boils down to "we are essentially giving you, the vendor, a short-term loan and you will pay us for it). This why you see credit-card minimum purchase amounts at places like hot-dog stands - they're getting nailed on the percentage. This is also why, when given the choice between "Debit or Credit" for a particular card, I choose where to put the hit on the company I like less - the retailer or the bank. |
Is having a 'startup fund' a good idea? | Saving money for the future is a good thing. Whether spending those savings on a business venture makes sense, will depend on a few factors, including: (1) How much money you need that business to make [ie: will you be quitting your job and relying on the business for your sole income? Or will this just be a hobby you make some pocket change from?] (2) How much the money the business needs up front [some businesses, like simple web design consulting, might have effectively $0 in cash startup costs, where starting a franchise restaurant might cost you $500k-$1M on day 1] (3) How risky it is [the general stat is that something like 50% of all new businesses fail in their first year, and I think for restaurants that number is often given as 75%+] But if you don't have a business idea yet, and save for one in the future but never get that 'perfect idea', the good news is that you've saved a bunch of money that you can instead use for retirement, or whatever other financial goals you have. So it's not the saving for a new business that is risky, it's the spending. Part of good personal financial management is making financial goals, tracking your progress to those goals, and changing them as needed. In a simpler case, many people want to own their own home - this is a common financial goal, just like early retirement, or starting your own business, or paying for your kids' college education. All those goals are helped by saving money, so your job as someone mindful of personal finances, is to prioritize those goals in accordance to what is important for you. |
Should I invest my money in an ISA or Government bonds? (Or any other suggestion) | So you are off to a really good start. Congratulations on being debt free and having a nice income. Being an IT contractor can be financially rewarding, but also have some risks to it much like investing. With your disposable income I would not shy away from investing in further training through sites like PluralSite or CodeSchool to improve weak skills. They are not terribly expensive for a person in your situation. If you were loaded down with debt and payments, the story would be different. Having an emergency fund will help you be a good IT contractor as it adds stability to your life. I would keep £10K or so in a boring savings account. Think of it not as an investment, but as insurance against life's woes. Having such a fund allows you to go after a high paying job you might fail at, or invest with impunity. I would encourage you to take an intermediary step: Moving out on your own. I would encourage renting before buying even if it is just a room in someone else's home. I would try to be out of the house in less than 3 months. Being on your own helps you mature in ways that can only be accomplished by being on your own. It will also reduce the culture shock of buying your own home or entering into an adult relationship. I would put a minimum of £300/month in growth stock mutual funds. Keeping this around 15% of your income is a good metric. If available you may want to put this in tax favored retirement accounts. (Sorry but I am woefully ignorant of UK retirement savings). This becomes your retire at 60 fund. (Starting now, you can retire well before 68.) For now stick to an index fund, and once it gets to 25K, you may want to look to diversify. For the rest of your disposable income I'd invest in something safe and secure. The amount of your disposable income will change, presumably, as you will have additional expenses for rent and food. This will become your buy a house fund. This is something that should be safe and secure. Something like a bond fund, money market, dividend producing stocks, or preferred stocks. I am currently doing something like this and have 50% in a savings account, 25% in a "Blue chip index fund", and 25% in a preferred stock fund. This way you have some decent stability of principle while also having some ability to grow. Once you have that built up to about 12K and you feel comfortable you can start shopping for a house. You may want to be at the high end of your area, so you should try and save at least 10%; or, you may want to be really weird and save the whole thing and buy your house for cash. If you are still single you may want to rent a room or two so your home can generate income. Here in the US there can be other ways to generate income from your property. One example is a home that has a separate area (and room) to park a boat. A boat owner will pay some decent money to have a place to park their boat and there is very little impact to the owner. Be creative and perhaps find a way where a potential property could also produce income. Good luck, check back in with progress and further questions! Edit: After some reading, ISA seem like a really good deal. |
Boyfriend is coowner of a house with his sister, he wants to sell but she doesn't | Rent the property?? Is that a possible solution? Since selling the house is not an option and living in it isn't either, then perhaps renting it is the way to go? Since no explanation for the sister's motives is given, i'd speculate it is a mixture of emotional and financial concerns. Maybe mostly emotional. I imagine letting go of the one physical thing that has memories of you and your parents attached to it is very difficult. I don't think getting a lawyer or doing what's convenient for only your boyfriend is the way to go...But that's my own personal opinion. Clearly, he only has one close family member left alive. Creating permanent wounds in that relationship will cost more along the way. And quite frankly, if the house is owned 50-50, don't you need both owners to sign the deed to sell the house anyways? If renting is not an option, then maybe refinancing the mortgage to lower payments? Or Airbnb it only half the time? Or rent it out for events to help with payments? Or ask the sister for a little money...Not for half the mortgage, but at least a few hundred dollars to maintain the house and heat. If she is indeed concerned with the property, then maintaining it to prevent serious damagae is in her interests, no matter her income. |
Why buy insurance? | (Disclosure - I am a real estate agent, involved with houses to buy/sell, but much activity in rentals) I got a call from a man and his wife looking for an apartment. He introduced itself, described what they were looking for, and then suggested I google his name. He said I'd find that a few weeks back, his house burned to the ground and he had no insurance. He didn't have enough savings to rebuild, and besides needing an apartment, had a building lot to sell. Insurance against theft may not be at the top of your list. Don't keep any cash, and keep your possessions to a minimum. But a house needs insurance for a bank to give you a mortgage. Once paid off, you have no legal obligation, but are playing a dangerous game. You are right, it's an odds game. If the cost of insurance is .5% the house value and the chance of it burning down is 1 in 300 (I made this up) you are simply betting it won't be yours that burns down. Given that for most people, a paid off house is their largest asset, more value that all other savings combined, it's a risk most would prefer not to take. Life insurance is a different matter. A person with no dependents has no need for insurance. For those who are married (or have a loved one), or for parents, insurance is intended to help survivors bridge the gap for that lost income. The 10-20 times income value for insurance is just a recommendation, whose need fades away as one approaches independence. I don't believe in insurance as an investment vehicle, so this answer is talking strictly term. |
Free “Rich Dad” education, with “free gift”: Is it legitimate, or is it a sales ploy? | As with any business, there's a huge learning curve. Rich Dad gives you the fundamentals.. which are sound.. you then need to spend time getting the nitty gritty details of the business ... be it real estate, stock investing etc. Kiyosaki is a wealthy man... I've listened to some of his podcasts and he know what he's talking about.. AND.. he's been in the business for 20+ years. |
Strategy for investing large amount of cash | Dollar Cost Averaging would be the likely balanced approach that I'd take. Depending on the size of the sum, I'd likely consider a minimum of 3 and at most 12 points to invest the funds to get them all working. While the sum may be large relative to my net worth, depending on overall scale and risk tolerance I could see doing it in a few rounds of purchasing or I could see taking an entire year to deploy the funds in case of something happening. I'd likely do monthly investments myself though others may go for getting more precise on things. |
Is unrealized gain part of asset? | Stocks, as an asset, represent the sum of the current market value of all of your holdings. If your portfolio is showing unrealized gains and losses, then that net amount is inherently reflected in the current market value of your holdings. That's not to say cost basis is not important. Any closed trades, realized gains or losses, will of course have an impact on your taxable income. So, it couldn't hurt to keep track of your cost basis from a tax standpoint, but understand that the term "asset" refers to the current market values and does not consider base amounts. Taxes do. Perhaps consider making separate cells for cost basis, but also bear in mind that most if not all of the major online discount brokers will provide transferring of cost basis information electronically to the major online tax service providers. |
Why are auto leases stubbornly strict about visa status and how to work around that? | When getting a car always start with your bank or credit union. They are very likely to offer better loan rate than the dealer. Because you start there you have a data point so you can tell if the dealer is giving you a good rate. Having the loan approved before going to the dealer allows you to negotiate the best deal for the purchase price for the car. When you are negotiating price, length of loan, down payment, and trade in it can get very confusing to determine if the deal is a good one. Sometimes you can also get a bigger rebate or discount because to the dealer you are paying cash. The general advice is that a lease for the average consumer is a bad deal. You are paying for the most expensive months, and at the end of the lease you don't have a car. With a loan you keep the car after you are done paying for it. Another reason to avoid the lease. It allows you to purchase a car that is two or three years old. These are the ones that just came off lease. I am not a car dealer, and I have never needed a work visa, but I think their concern is that there is a greater risk of you not being in the country for the entire period of the lease. |
Accepting high volatility for high long-term returns | This is basically what financial advisers have been saying for years...that you should invest in higher risk securities when you are young and lower risk securities when you get older. However, despite the fact that this is taken as truth by so many financial professionals, financial economists have been unable to formulate a coherent theory that supports it. By changing the preferences of their theoretical investors, they can get solutions like putting all your investments in a super safe asset until you get to a minimum survival level for retirement and then investing aggressively and many other solutions. But for none of the typically assumed preferences does investing aggressively when young and becoming more conservative as you near retirement seem to be the solution. I'm not saying there can be no such preferences, but the difficulty in finding them makes me think maybe this idea is not actually correct. Couple of problems with your intuition that you should think about: It's not clear that things "average out" over time. If you lose a bunch of money in some asset, there's no reason to think that by holding that asset for a while you will make back what you lost--prices are not cyclical. Moreover, doesn't your intuition implicitly suggest that you should transition out of risky securities as you get older...perhaps after having lost money? You can invest in safe assets (or even better, the tangency portfolio from your graph) and then lever up if you do want higher risk/return. You don't need to change your allocation to risky assets (and it is suboptimal to do so--you want to move along the CAL, not the curve). The riskiness of your portfolio should generally coincide (negatively) with your risk-aversion. When you are older and more certain about your life expectancy and your assets, are you exposed to more or less risks? In many cases, less risks. This means you would choose a more risky portfolio (because you are more sure you will have enough to live on until death even if your portfolio takes a dive). Your actual portfolio consists both of your investments and your human capital (the present value of your time and skills). When you are young, the value of this capital changes significantly with market performance so you already have background risk. Buying risky securities adds to that risk. When you are old, your human capital is worth little, so your overall portfolio becomes less risky. You might want to compensate by increasing the risk of your investments. EDIT: Note that this point may depend on how risky your human capital is (how likely it is that your wage or job prospects will change with the economy). Overall the answer to your question is not definitively known, but there is theoretical evidence that investing in risky securities when young isn't optimal. Having said that, most people do seem to invest in riskier securities when young and safer when they are older. I suspect this is because with life experience people become less optimistic as they get older, not because it is optimal to do so. But I can't be sure. |
High credit utilization, some high interest - but credit score not overly bad. How to attack debt in this situation? | While paying off your debt quickly is obviously desirable it is simply not going to be possible. Even with tight budgeting I think you will struggle to put more than £500 or so per month towards your debt. I would keep trying to move the highest interest debt onto something cheaper, be it a loan, a balance transfer credit card ( http://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards#nofees ) etc. It is also worth looking at your current credit cards more carefully. Sometimes you may be able to get a balance transfer deal on an existing card by talking to the card issuer, then shuffle your debt around to take advantage of it ( http://www.moneysavingexpert.com/credit-cards/cut-credit-card-interest ) Some think it's taboo but in your position I would also be seriously considering if you have any friends and family who can lend you money at a less crippling interest rate. |
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