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Is interest on a personal loan tax deductible? | Assuming USA: It is possible to make the interest deductible if you go to the trouble of structuring, and filing, the loan as an actual mortgage on a primary residence. Websearching "intra-family loan" will find several firms which specialize in this. It costs about $700 for all the paperwork and filing fees as of last time I checked, so unless you're going to pay at least three times that in interest over the life of the loan it probably isn't worth considering. (For an additional fee they'll take care of the payment processing, if you'd really rather be hands-off about it.) I have no idea whether the paperwork fees and processing fees can be deducted from the interest as a cost of producing that income. In theory that ought to be true, but I Am Not A Lawyer. Or accountant. Note: one of the interesting factors here is that the IRS sets a minimum interest rate on intra-family loans. It's pretty low (around 0.3%), so in most cases you can say you gifted the difference if you'd prefer to charge less... but that does set a floor on what the IRS will expect the lender to declare, and pay taxes on. There's a lot more that can be said about this, but since I am NOT an expert I'll refer you to those who are. I have no affiliation with any of this except as a customer, once; it seemed pretty painless but I can't claim to know whether they were really handling everything exactly correctly. The website seemed to do a pretty good job of explaining what choices had to be made and their effects, as well as discussing how these can be used to avoid excess gift taxes by spreading the gift over a number of years. |
Is there a good options strategy that has a fairly low risk? | By coincidence, I entered this position today. Ignore the stock itself, I am not recommending a particular stock, just looking at a strategy. The covered call. For this stock trading at $7.47, I am able, by selling an in-the-money call to be out of pocket $5.87/sh, and am obliged to let it go for $7.00 a year from now. A 19% return as long as the stock doesn't drop more than 6% over that time. The chart below shows maximum profit, and my loss starts if the stock trades 21% below current price. The risk is shifted a bit, but in return, I give up potential higher gains. The guy that paid $1.60 could triple his money if the stocks goes to $12, for example. In a flat market, this strategy can provide relatively high returns compared to holding only stocks. |
Is it sensible to keep savings in a foreign currency? | I don't think that it's a good idea to have cash savings in different currencies, unless you know which will be the direction of the wind for that currency. You can suffer a lot of volatility and losses if you just convert your savings to another currency without knowing anything about which direction that pair will take. Today we can see Brexit, but this is a fact that has been discounted by the market, so the currencies are already adjusted to that fact, but we don't know what will happen in the future, maybe Trump will collapse the US economy, or some other economies in Asia will raise to gain more leadership. If you want to invest in an economy, I think that it's a best idea to invest on companies that are working in that country. This is a way of moving your money to other currencies, and at least you can see how is the company performing. |
Problems with Enterprise Value and better valuation techniques | How you use the metric is super important. Because it subtracts cash, it does not represent 'value'. It represents the ongoing financing that will be necessary if both the equity plus debt is bought by one person, who then pays himself a dividend with that free cash. So if you are Private Equity, this measures your net investment at t=0.5, not the price you pay at t=0. If you are a retail investor, who a) won't be buying the debt, b) won't have any control over things like tax jurisdictions, c) won't be receiving any cash dividend, etc etc .... the metric is pointless. |
How credible is Stansberry's video “End of America”? | Predictions, especially doomsday predictions, can go wrong quickly. I would be careful of anyone calling an "end" to a country like the U.S., especially, if they have something to gain and a history of being wrong. On the other hand, someone warning of something with a past of financial credibility can be quite useful. For instance, compare Frank Stansberry to Jesse Colombo (@TheBubbleBubble on Twitter). Jesse was one of the few who predicted the financial crisis in 2004 and is currently warning of new bubbles (ie: the higher education bubble) - even admitting to profiting off of some of them and encouraging others to do the same. However, his assertions can be investigated to verify accuracy, but they are hardly the end of the end (in fact, Jesse likes to boast that he's an optimist and thinks eventually we'll usher in a Golden Age). Frank Stansberry, on the other hand, doesn't seem to carry the credibility; a brief internet search generated some issues he's had with the SEC about misleading investors. (Completely forgot to add, Mike Shedlock - Mish - also has made some predictions that have come true and clashed with some other financial advisers over inflation vs. deflation. While people were screaming "HYPER-INFLATION" back in 2008-2009, Mish constantly attacked them for being wrong, and has continued to be right. Some of his political views, of course, aren't popular, but some of his financial predictions have been stellar.) Anyone who warns of anything should always be checked out for both what they've said, what they are currently saying, and what their agenda is. As one of my mentors warned me, everyone has an agenda and that's not always bad - their agenda may align with yours, just make sure it does. [On a humorous side note, my father has predicted the end of the world every six months since 1994.] |
Is it a good practice to keep salary account and savings account separate? | There are a lot of good answers, but I will share my experience. First, a savings account needs to be for savings. If your in the US you have "Regulation D" to deal with and that will bite you on the rear if you go over those limits. Specially easy to do if your purchasing from a savings account. Next having an "Income" account and a "Spending" account can be a very good tool to build a nest egg. So for example you get $1500 into your income account and then move $1000 to your spending account then budget based on that $1000. This is an amazing thing to do, so long as you have the discipline to never transfer that extra $500, and pretend your broke when you run out of the $1000. That being said there is no reason that you can't do that in one account. It's all preference. My wife and I use YNAB (an envelope budgeting system) to do just that. We don't need the separate accounts. We are no more likely to "not spend" in one account then we are to "not spend" in two accounts. It's all just self discipline and what you need to do. This does lead to the situation we call YNAB broke. It's when we have to start choosing between "going hungry" or getting that new DVD, even though our bank account has $5,000 in it. It's even harder when you choose "go hungry" and have to follow through with it, even though you have enough to buy a used car in your bank account. But rather it's "YNAB broke" or your spending account is empty and your income account it full, the result is the same. It's up to "you" to have the self discipline not to spend. Rather that's in one account or two makes little difference. |
How to keep control of shared expenses inside marriage? | I'd say its time to merge finances! |
If a stock doesn't pay dividends, then why is the stock worth anything? | Stocks represent partial ownership of the company. So, if you owned 51% of the stock of the company (and therefore 51% of the company itself), you could decide to liquidate all the assets of the company, and you would be entitled to 51% of the proceeds from that sale. In the example above, it would have to be Common Stock, as preferred stock does not confer ownership. *In a situation where it is not possible to buy 51% or more of the company (for example, it's not for sale), this is not possible, so the value of the stock could be much less. |
When should I open a “Line of credit” at my bank? | A line of credit is a poor substitute for an emergency fund. Banks typically have a clause that allows them to stop further withdrawals from your line of credit if there is a change of vaguely defined type. For example, if you lose your job they can stop you from making withdrawals from your line-of-credit. |
Conservative ways to save for retirement? | I'd say that because you are young, even the 'riskier' asset classes are not as risky as you think, for example, assuming conservatively that you only have 30 years to retirement, investing in stocks index might be a good option. In short term share prices are volatile and prone to bull and bear cycles but given enough time they have pretty much always outperformed any other asset classes. The key is not to be desperate to withdraw when an index is at the bottom. Some cycles can be 20 years, so when you need get nearer retirement you will need to diversify so that you can survive without selling low. Just make sure to pick an index tracker with low fees and you should be good to go. A word of warning is of course past performance is no indication of a future one, but if a diversified index tracker goes belly up for 20+ years, we are talking global calamity, in which case buy a shotgun and some canned food ;) |
Withdraw funds with penalty or bear high management fees for 10 years? | I think the main question is whether the 1.5% quarterly fee is so bad that it warrants losing $60,000 immediately. Suppose they pull it out now, so they have 220000 - 60000 = $160,000. They then invest this in a low-cost index fund, earning say 6% per year on average over 10 years. The result: Alternatively, they leave the $220,000 in but tell the manager to invest it in the same index fund now. They earn nothing because the manager's rapacious fees eat up all the gains (4*1.5% = 6%, not perfectly accurate due to compounding but close enough since 6% is only an estimate anyway). The result: the same $220,000 they started with. This back-of-the-envelope calculation suggests they will actually come out ahead by biting the bullet and taking the money out. However, I would definitely not advise them to take this major step just based on this simple calculation. Many other factors are relevant (e.g., taxes when selling the existing investment to buy the index fund, how much of their savings was this $300,000). Also, I don't know anything about how investment works in Hong Kong, so there could be some wrinkles that modify or invalidate this simple calculation. But it is a starting point. Based on what you say here, I'd say they should take the earliest opportunity to tell everyone they know never to work with this investment manager. I would go so far as to say they should look at his credentials (e.g., see what kind of financial advisor certification he has, if any), look up the ethical standards of their issuers, and consider filing a complaint. This is not because of the performance of the investments -- losing 25% of your money due to market swings is a risk you have to accept -- but because of the exorbitant fees. Unless Hong Kong has got some crazy kind of investment management market, charging 1.5% quarterly is highway robbery; charging a 25%+ for withdrawal is pillage. Personally, I would seriously consider withdrawing the money even if the manager's investments had outperformed the market. |
Split buying a house 3 ways. How do I approach this? | I would second the advice to not do this. Real estate ownership is complex to begin with, involving a constant stream of maintenance, financing, and other decisions. It is difficult enough to do for a single individual or a family as a unit (a couple), but at least spouses are forced to compromise. Friends are not, and you can end up with long-running conflicts and impasses. Financial transactions of any kind impose tensions on relationships, and friendships are no exception. If you want your friendship to survivie, do not sacrifice it to the financial arrangement which seems like a good idea at the moment. My advice would be to steer clear, no matter how attractive on the surface the deal might look. Focus on your own individual finances and use discipline and patience to save the amount needed for acquiring a separate investment property. But it will be 100% yours, and will save tons of headache. Since you are still considering this deal, it's a great time to politely change your mind and walk away - believe me, a few minutes of inconvenience will save you years of frustration. Good luck! |
Could the loan officer deny me even if I have the money as a first time home buyer? | My credentials: I used to work on mortgages, about 5 years ago. I wasn't a loan officer (the salesman) or mortgage processor (the grunt who does the real work), but I reviewed their work fairly closely. So I'm not an absolute authority, but I have first-hand knowledge. Contrary to the accepted answer, yes the bank is obligated to offer you a loan - if you meet their qualifications. This may sound odd, and as though it's forcing a bank to give money when it doesn't want to, but there is good reason. Back in the 1950's through 1980's, banks tended to deny loans to African Americans who were able to buy nicer homes because the loan officer didn't quite 'feel' like they were capable of paying off an expensive house, even if they had the exact same history and income as a white person who did get approved. After several rounds of trying to fix this problem, the government finally decreed that the bank must have a set, written criteria by which it will approve or decline loans, and the interest rates provided. It can change that criteria, but those changes must apply to all new customers. Banks are allowed a bit of discretion to approve loans that they may normally decline, but must have a written reason (usually it's due to some relationship with the customer's business (this condition adds a lot of extra rules), or that customer has a massive family and all 11 other siblings have gotten loans from the same loan officer - random rare stuff that can be easily documented if/when the government asks). The bank has no discretion to decline a loan at will - I've seen 98-year-olds sign a 30-year mortgage, and the bank was overjoyed because it showed that they didn't discriminate against the elderly. The customer could be a crackhead, and the bank can't turn them down if their paperwork, credit, and income is good. The most the loan officer could do is process the loan slowly and hope the crackhead gets arrested before the bank spends any more money. The regulations for employees new to the workforce are a bit less wonderful, but the bank will want 30+ days of income history (30 days, NOT 4 weeks) if you have it. BUT, if you are a fresh new employee, they can do the loan using your written and signed job offer as proof of income. However, I discourage you from using this method to buy a house. You are much, much better off renting for a while and learning the local area before you shop for a house. It's too easy to buy a house without knowing the city, then discover that you have a hideously slow drive to work and are in the worst part of town. And, you may not like the company as much, or you may not be a good fit. It's not uncommon to leave a company within a year or two. You don't want a house that anchors you to one place while you need the freedom to explore career options. And consider this: banks love selling mortgages, but they hate holding them. They want to collect that $10,000 closing fee, they couldn't care less about the 4% interest trickling in over 30 years. Once they sign the mortgage, they try to sell it to investors who want to buy high-grade debt within a month. That sale gives them all the money back, so they can use it to sell another mortgage and collect another $10,000. If the bank has its way, it has offloaded your mortgage before you send the first payment to them. As a result, it's a horrible idea to buy a house unless you expect to live there at least 5 or 10 years, because the closing costs are so high. |
How do I calculate the dwelling coverage I need from the information I have? | Never take the first quote. Consider what it would really cost to replace the house -- to rebuild and pay for living while you do so (including demolition, etc.) and/or pay off the mortgage and return your equity if it is a financed property. Most insurances will have a limit on how much coverage you can get based on the property value and your goods value estimates. Shop around for a company that will give you a good price but also good customer service and a smooth claims process. They should be solvent (able to pay your claim if, say, a tornado hit the whole neighborhood). And they should cover your reasonable replacement costs. And remember, insurance is about the big losses like fires. Know what you are comfortable self insuring (higher or lower deductibles, optional coverages, etc.) and you will have an easier time getting the coverage you need for the price you want to pay. |
Should I pay off my credit card online immediately or wait for the bill? | I am going to break rank slightly with the consensus so far. Here's the deal, it probably DOES help your credit slightly to pay it multiple times per month if it isn't a hassle, but the bump is likely to be minimal and very temporary. Here's why: A key component of your score is your credit usage ratio. That is the ratio of how much of your credit limits you are using. You want to keep this number down as low as possible. Now here is where it gets tricky. Although you have a grace period to pay off your card with no interest, the credit card companies don't generally report the balance as of the due date. They either report the high balance or an average balance over the month. That is, it is based on how much you use, not how much balance you carry over each month. It isn't very intuitive, but that's just how it is. So technically, keeping that balance lower over the course of the month WILL probably help you, but the credit usage ratio is generally a rolling average over the last x months, so the effect will wear off quickly. So it is probably not worth doing unless you know you are going to apply for a loan in the next 6 months and need a temporary, small bump. Another consideration is that paying early provides no real financial benefit in terms of finance charges, but you are giving up liquidity which does have some value. 1) You probably could get at least a little interest for keeping the money in your account a few more weeks. 2) If you have a major financial emergency, e.g. broken down car, you might appreciate the fact that you kept your options open to carry that balance over a month. |
If stock price drops by the amount of dividend paid, what is the use of a dividend | I'm fairly convinced there is no difference whatsoever between dividend payment and capital appreciation. It only makes financial sense for the stock price to be decreased by the dividend payment so over the course of any specified time interval, without the dividend the stock price would have been that much higher were the dividends not paid. Total return is equal. I think this is like so many things in finance that seem different but actually aren't. If a stock does not pay a dividend, you can synthetically create a dividend by periodically selling shares. Doing this would incur periodic trade commissions, however. That does seem like a loss to the investor. For this reason, I do see some real benefit to a dividend. I'd rather get a check in the mail than I would have to pay a trade commission, which would offset a percentage of the dividend. Does anybody know if there are other hidden fees associated with dividend payments that might offset the trade commissions? One thought I had was fees to the company to establish and maintain a dividend-payment program. Are there significant administrative fees, banking fees, etc. to the company that materially decrease its value? Even if this were the case, I don't know how I'd detect or measure it because there's such a loose association between many corporate financials (e.g. cash on hand) and stock price. |
Do Americans really use checks that often? | Ever since my apartment complex started accepting rent payments online, I've almost never written a check. I use my debit card for everything. And I get paid by direct deposit. |
How to calculate car insurance quote | Does the Insurance value differ from state to state (for example I've a car in Hawaii and there is another car in Illinois with same model, make and same features), does the Insurance vary for both? Yes, quotes will vary based on where you live for various reasons, (propensity for accidents, value of cars, etc.), and state laws regarding required car insurance can vary. How is the insurance quote calculated? It's likely a proprietary formula that the insurance company will not disclose. If they did, they could be giving away a competitive advantage. However, like all insurance, the goal is to determine the probability of the insured having an accident, and the projected cost of such an accident. That will be based on actuarial tables for each of the risk factors you mention. |
Payroll reimbursments | After reading OP Mark's question and the various answers carefully and also looking over some old pay stubs of mine, I am beginning to wonder if he is mis-reading his pay stub or slip of paper attached to the reimbursement check for the item(s) he purchases. Pay stubs (whether paper documents attached to checks or things received in one's company mailbox or available for downloading from a company web site while the money is deposited electronically into the employee's checking account) vary from company to company, but a reasonably well-designed stub would likely have categories such as Taxable gross income for the pay period: This is the amount from which payroll taxes (Federal and State income tax, Social Security and Medicare tax) are deducted as well as other post-tax deductions such as money going to purchase of US Savings Bonds, contributions to United Way via payroll deduction, contribution to Roth 401k etc. Employer-paid group life insurance premiums are taxable income too for any portion of the policy that exceeds $50K. In some cases, these appear as a lump sum on the last pay stub for the year. Nontaxable gross income for the pay period: This would be sum total of the amounts contributed to nonRoth 401k plans, employee's share of group health-care insurance premiums for employee and/or employee's family, money deposited into FSA accounts, etc. Net pay: This is the amount of the attached check or money sent via ACH to the employee's bank account. Year-to-date amounts: These just tell the employee what has been earned/paid/withheld to date in the various categories. Now, OP Mark said My company does not tax the reimbursement but they do add it to my running gross earnings total for the year. So, the question is whether the amount of the reimbursement is included in the Year-to-date amount of Taxable Income. If YTD Taxable Income does not include the reimbursement amount, then the the OP's question and the answers and comments are moot; unless the company has really-messed-up (Pat. Pending) payroll software that does weird things, the amount on the W2 form will be whatever is shown as YTD Taxable Income on the last pay stub of the year, and, as @DJClayworth noted cogently, it is what will appear on the W2 form that really matters. In summary, it is good that OP Mark is taking the time to investigate the matter of the reimbursements appearing in Total Gross Income, but if the amounts are not appearing in the YTD Taxable Income, his Payroll Office may just reassure him that they have good software and that what the YTD Taxable Income says on the last pay stub is what will be appearing on his W2 form. I am fairly confident that this is what will be the resolution of the matter because if the amount of the reimbursement was included in Taxable Income during that pay period and no tax was withheld, then the employer has a problem with Social Security and Medicare tax underwithholding, and nonpayment of this tax plus the employer's share to the US Treasury in timely fashion. The IRS takes an extremely dim view of such shenanigans and most employers are unlikely to take the risk. |
Why ever use a market order? | What you are saying is a very valid concern. After the flash crash many institutions in the US replaced "true market orders" (where tag 40=1 and has no price) with deep in the money limit orders under the hood, after the CFTC-SEC joint advisory commission raised concerns about the use of market orders in the case of large HFT traders, and concerns on the lack of liquidity that caused market orders that found no limit orders to execute on the other side of the trade, driving the prices of blue chip stocks into the pennies. We also applaud the CFTC requesting comment regarding whether it is appropriate to restrict large order execution design that results in disruptive trading. In particular, we believe there are questions whether it is ever appropriate to permit large order algorithms that employ unlimited use of market orders or that permit executions at prices which are a dramatic percentage below the present market price without a pause for human review So although you still see a market order on the front end, it is transformed to a very aggressive limit in the back end. However, doing this change manually, by selling at price 0 or buying at 9999 may backfire since it may trigger fat finger checks and prevent your order from reaching the market. For example BATS Exchange rejects orders that are priced too aggressively and don't comply with the range of valid prices. If you want your trade to execute right now and you are willing to take slippage in order to get fast execution, sending a market order is still the best alternative. |
Pay Yourself With Credit Card Make Money With Cash Back [duplicate] | The idea is old as dirt, and some millions of people had it before you. Credit card swipes cost you between 2.4 and 4.5%, depending on the cards, the provider, and the amounts, plus potentially a fixed small amount per swipe. Of course, a 2% cash back card cost more than 2% to swipe; and a 3% cash back card cost more than 3% to swipe; those guys are not morons. |
As a young adult, what can I be doing with my excess income? | You apparently assume that pouring money into a landlord's pocket is a bad thing. Not necessarily. Whether it makes sense to purchase your own home or to live in a rental property varies based on the market prices and rents of properties. In the long term, real estate prices closely follow inflation. However, in some areas it may be possible that real estate prices have increased by more than inflation in the past, say, 10 years. This may mean that some (stupid) people assume that real estate prices continue to appreciate at this rate in the future. The price of real estates when compared to rents may become unrealistically high so that the rental yield becomes low, and the only reasonable way of obtaining money from real estate investments is price appreciation continuing. No, it will not continue forever. Furthermore, an individual real estate is a very poorly diversified investment. And a very risky investment, too: a mold problem can destroy the entire value of your investment, if you invest in only one property. Real estates are commonly said to be less risky than stocks, but this applies only to large real estate portfolios when compared with large stock portfolios. It is easier to build a large stock portfolio with a small amount of money to invest when compared to building a large real estate portfolio. Thus, I would consider this: how much return are you going to get (by not needing to pay rent, but needing to pay some minor maintenance costs) when purchasing your own home? How much does the home cost? What is the annual return on the investment? Is it larger than smaller when compared to investing the same amount of money in the stock market? As I said, an individual house is a more risky investment than a well-diversified stock portfolio. Thus, if a well-diversified stock portfolio yields 8% annually, I would demand 10% return from an individual house before considering to move my money from stocks to a house. |
First job: Renting vs get my parents to buy me a house | Rent. You have no idea whether you will still be in the same part of the country five years from now; you may not even be in the same country. A house is a boat anchor you really do not need or want at this time. It's also a set of obligations you may not want to take on yet. And buying is not automatically more financially advantageous than renting, when you remember that money not going into the house can go into your retirement plan or other investments. |
Advice for opening an IRA as a newbie | First, a Roth is funded with post tax money. The Roth IRA deposit will not offset any tax obligation you might have. The IRA is not an investment, it's an account with a specific set of tax rules that apply to it. If you don't have a brokerage account, I'd suggest you consider a broker that has an office nearby. Schwab, Fidelity, Vanguard are 3 that I happen to have relationships with. Once the funds are deposited, you need to choose how to invest for the long term. The fact that I'd choose the lowest cost S&P ETF or mutual fund doesn't mean that's the ideal investment for you. You need to continue to do research to find the exact investment that matches your risk profile. By way of example, up until a few years ago, my wife and I were nearly 100% invested in stocks, mostly the S&P 500. When we retired, four years ago, I shifted a bit to be more conservative, closer to 80% stock 20% cash. |
Are there contracts for fixed pay vs. fixed pay rates? | In general the other party will expect you to keep your promises. If you promise to do something for a fixed amount of money, you take on a risk and it is no longer their problem if you work slower than you planned. In principle it could even be the case that you take on a project and fail, after which the company may not have to pay at all. So regardless of how things should be written in your books (For example a theoretical pay above minimum wage but a loss for your private company): An important thing to note is that if you are worried about ending up below minimum wage, you are definitely asking a fee that is too low. You should keep in mind that your fee should include a fair compensation for the expected work, and a fair compensation for the risk that you have taken on. |
How Should I Go About Buying a Car? (College Student) | So you want to buy a car but have no money saved up.... That's going to be hard!! I'd suggest you get a part-time job, save up and buy a used car. Even with the minimum wage pay in the U.S., if you are in the U.S., you could save up and buy a car in less than a month. This route would be the quickest way for you to get a car but it would also teach you the responsibility of having one since it appears you have never owned a car before. Now the car will most definitely not be fancy or look like the cars that your peer's parents bought but at least it will get you from point A to point B. I'd look on Craigslist or your local neighborhood for cars that have not moved in a while or have for sale signs. Bring a mechanically inclined friend with you and contact the owner and explain them your situation. There are nice people out there that would give you deep discounts based on the fact that you are a student trying to get by. Now you have to get registration and insurance. There are many insurance companies that give discounts to students as well who have good GPAs and driving records. If you happen to get a car for a good deal, take good car of it. Once you graduate and further your career, you can resell it for a profit. I also would not suggest you get any loans for a car given your situation. |
Can I withdraw from my Roth IRA retirement account to fund a startup? | There are two methods of doing this Pulling out the money and paying the penalty if any, and going on your way. Having the Roth IRA own the business, and being an employee. If you go with the second choice, you should read more about it on this question. |
Can I place a stock limit order to buy above the current price? Can I place a stock limit order to sell below the current price? | You are better off just placing a market order if you want to buy or sell straight away and avoid the queues. A market order will guarantee the purchase or sale of your shares, but it won't guarantee the price. |
What is the difference between a scrip dividend and a stock split? | Investopedia has a good definition. Stock dividends are similar to cash dividends; however, instead of cash, a company pays out stock. Stock splits occur when a company perceives that its stock price may be too high. Stock splits are usually done to increase the liquidity of the stock (more shares outstanding) and to make it more affordable for investors to buy regular lots (a regular lot = 100 shares). |
I received a share of Apple stock. Now what? | Congratulations! You own a (very small) slice of Apple. As a stockholder, you have a vote on important decisions that the company makes. Each year Apple has a stockholder meeting in Cupertino that you are invited to. If you are unable to attend and vote, you can vote by proxy, which simply means that you register your vote before the meeting. You just missed this year's meeting, which was held on February 26, 2016. They elected people to the board of directors, chose an accounting firm, and voted on some other proposals. Votes are based on the number of shares you own; since you only own one share, your vote is very small compared to some of the other stockholders. Besides voting, you are entitled to receive profit from the company, if the company chooses to pay this out in the form of dividends. Apple's dividend for the last several quarters has been $0.52 per share, which means that you will likely receive 4 small checks from Apple each year. The value of the share of stock that you have changes daily. Today, it is worth about $100. You can sell this stock whenever you like; however, since you have a paper certificate, in order to sell this stock on the stock market, you would need to give your certificate to a stock broker before they can sell it for you. The broker will charge a fee to sell it for you. Apple has a website for stockholders at investor.apple.com with some more information about owning Apple stock. One of the things you'll find here is information on how to update your contact information, which you will want to do if you move, so that Apple can continue to send you your proxy materials and dividend checks. |
Why would a company with a bad balance sheet be paying dividends? | One reason a company might choose to pay a dividend is because of the desire of influential stockholders to receive the dividend. In the case of Ford, for example, there are 70 million shares of Class B stock which receive the same dividend per share as do the common stock holders. Even though there are 3.8 billion shares of common stock, the Class B owners (which are Ford family) hold 40% of the voting power and so their desires are given much weight. The Class B owners prefer regular dividends because if enough were to sell their Class B shares, all Class B shares (as a block) would have their voting power drop from 40% to 30%, and with further sales all special voting would be lost and each Class B share would be equivalent to a common share in voting power. Hence the Class B owners, both for themselves and for all of the family members holding Class B, avoid selling shares and prefer receiving dividends. |
When do I pay taxes if I'm self employed? | I strongly recommend that you talk to an accountant right away because you could save some money by making a tax payment by January 15, 2014. You will receive Forms 1099-MISC from the various entities with whom you are doing business as a contractor detailing how much money they paid you. A copy will go to the IRS also. You file a Schedule C with your Form 1040 in which you detail how much you received on the 1099-MISC forms as well as any other income that your contracting business received (e.g. amounts less than $600 for which a 1099-MISc does not need to be issued, or tips, say, if you are a taxi-driver running your own cab), and you can deduct various expenses that you incurred in generating this income, including tools, books, (or gasoline!) etc that you bought for doing the job. You will need to file a Schedule SE that will compute how much you owe in Social Security and Medicare taxes on the net income on Schedule C. You will pay at twice the rate that employees pay because you get to pay not only the employee's share but also the employer's share. At least, you will not have to pay income tax on the employer's share. Your net income on Schedule C will transfer onto Form 1040 where you will compute how much income tax you owe, and then add on the Social Security tax etc to compute a final amount of tax to be paid. You will have to pay a penalty for not making tax payments every quarter during 2013, plus interest on the tax paid late. Send the IRS a check for the total. If you talk to an accountant right away, he/she will likely be able to come up with a rough estimate of what you might owe, and sending in that amount by January 15 will save some money. The accountant can also help you set up for the 2014 tax year during which you could make quarterly payments of estimated tax for 2014 and avoid the penalties and interest referred to above. |
Deducting Hobby Expenses on my Federal Income Taxes? | I suggest to start charging slightly more than needed to cover expenses. All you need is to show profit. It doesn't have to be significant - a couple of hundred of dollars of consistent yearly profit should suffice to show a profitable business. Then you can deduct on Schedule C all the related expenses. The caveat is that the profit (after the deduction of the expenses will be a bit smaller) will be subject to not only income tax but also the self-employment tax. But at least you'll pay tax on profit that is not entirely phantom. I remember suggesting you getting a professional consultation on this matter a while ago. You should really do that - talk to a EA/CPA licensed in your state, it may be well worth the $100-200 fee they'll charge for the consultation (if at all...). |
What intrinsic, non-monetary value does gold have as a commodity? | This was answered wonderfully in a recent Planet Money podcast: Why Gold?. Here are some higlights of gold: If listening to podcasts isn't your thing, read this summary. |
Best Practices for Managing Paper Receipts | I store all my receipts digitally, and make sure to input them into accounting program sooner than later, just so I don't forget about it. For practical purposes, the two important things are: Any kind of a digital system makes this pretty easy, even just putting the sums in a spreadsheet and the receipts into files with the date in the name. However, because it's easy enough, I also have a box where I stuff the paper receipts. I expect never to need them, but should something very weird happen to my computer and backups, they would be there. |
What should I look for when looking for stocks that are 'on-sale'? | Don't invest. Keep cash. And wait till you see a crash in the price of some of your favorite blue chip stocks. But wait till the true bottom is in...you will know when is the right time as it will be obvious. |
Does an issue of bonus shares improve shareholder value? | This IS a stock split. http://en.wikipedia.org/wiki/Stock_split Ratios of 2-for-1, 3-for-1, and 3-for-2 splits are the most common, but any ratio is possible. Splits of 4-for-3, 5-for-2, and 5-for-4 are used, though less frequently. Investors will sometimes receive cash payments in lieu of fractional shares. |
Is it accurate to say that if I was to trade something, my probability of success can't be worse than random? | The previous answers make valid points regarding the risks, and why you can't reasonably compare trading for profit/loss to a roll of the die. This answer looks at the math instead. Your assumption: I have an equal probability to make a profit or a loss. Is incorrect, for the reasons stated in other answers. However, the answer to your question: Can I also assume that probabilistically speaking, a trader cannot do worst than random? Is "yes". But only because the question is flawed. Consequently it's throwing people in all directions with their answers. But quite simply, in a truly random environment the worst case scenario, no matter how improbable, is that you lose over and over again until you have nothing left. This can happen in sequential rolls of the dice AND in trading securities/bonds/whatever. You could guess wrong for every roll of the die AND all of your stock picks could become worthless. Both outcomes result in $0 (assuming you do not gamble with credit). Tell me, which $0 is "worse"? Given the infinite number of plays that "random" implies, the chance of losing your entire bankroll exists in both scenarios, and that is enough by itself to make neither option "worse" than the other. Of course, the opposite is also true. You could only pick winners, with an unlimited upside potential, but again that could happen with either dice rolls or stock picks. It's just highly improbable. my chances cannot be worse than random and if my trading system has an edge that is greater than the percentage of the transaction that is transaction cost, then I am probabilistically likely to make a profit? Nope. This is where it all falls apart. Just because your chances of losing it all are similarly improbable, does not make you more likely to win with one method or the other. Regression to the mean, when given infinite, truly random outcomes, makes it impossible to "have an edge". Also, "probabilistically" isn't a word, but "probably" is. |
Can everyday people profit from unexpected world events? | NASDAQ has Pre and After market : NASDAQ Trading Schedule Regular Trading Session Schedule The NASDAQ Stock Market Trading Sessions (Eastern Time) Pre-Market Trading Hours from 4:00 a.m. to 9:30 a.m. Market Hours from 9:30 a.m. to 4:00 p.m. After-Market Hours from 4:00 p.m. to 8:00 p.m. Quote and order-entry from 4:00 a.m. to 8:00 p.m. Quotes are open and firm from 4:00 a.m. to 8:00 p.m. You can trade in Pre/After Market but liquidity is very low. If an "unexpected world events" occurs, the volume/liquidity will most certainly increase. Another example is the Forex Market that's open 24/7 around the world. As one major forex market closes, another one opens. According to GMT, for instance, forex trading hours move around the world like this: available in New York between 01:00 pm – 10:00 pm GMT; at 10:00 pm GMT Sydney comes online; Tokyo opens at 00:00 am and closes at 9:00 am GMT; and to complete the loop, London opens at 8:00 am and closes at 05:00 pm GMT. This enables traders and brokers worldwide, together with the participation of the central banks from all continents, to trade online 24 hours a day. src |
Do I need to file a 1099 form for contractors associated with hobby income? | You are expected to file 1099 for each person you pay $600 a year. I.e.: not a one time payment, but the total over the course of the year. Since we don't know how much and what else you paid - we cannot answer this question. The real question you're asking is that if you're treating the enterprise as a hobby, whether you're supposed to file 1099s at all. The answer to that question is yes. You should talk to your tax adviser (a EA/CPA licensed in your state) about this, and whether it is the right thing for you to do treating this as a hobby at all. |
Who creates money? Central banks or commercial banks? | Scenario 1 is typically the better description. If commercial banks were allowed to simply "create" money, they wouldn't be in the mess they're in now. In the U.S., the central bank is the Federal Reserve or Fed, and is the only entity (not the government, not the banks, not the people) that is allowed to create money "out of thin air". It does this primarily by buying government debt. The government spends more than it takes in, and so to come up with the deficit, it issues bonds. The Fed buys a certain amount of these bonds, and simply prints the money (or more realistically authorized the electronic transfer of $X to the Treasury) which the government then spends. That places money in the hands of corporations and the people, who turn around and spend it. However, long-term, the interest charges on money borrowed from the Fed will actually remove money from the economy. The central banks, therefore, have to constantly make marginal changes to various monetary policy tools they have when the economy is just humming along. If they do nothing, then too much of a short-term increase in money supply will result in there being "too much money" which makes an individual monetary unit worth less (inflation), while making money too hard to get will reduce the rate at which it's spent, reducing GDP and causing recessions. The exact scenario you describe is typically seen in cases where the government is running with a balanced budget, and the central bank thus can't give its "new money" to the government to spend when it wants to increase the money supply. In that situation, the central bank instead lowers its lending rate, the percentage interest that it will charge on loans made to other banks, thereby encouraging those banks to borrow more of the money created by the central bank. Those banks will then use the money to make loans, invest in the market, etc etc which puts the money in the economy. In the U.S., the Fed does have this tool as well, but increases or decreases in the "Federal Funds Rate" are typically used to influence the rate that banks charge each other to borrow money, thus encouraging or discouraging this lending. A lowering in the interest rate makes banks more likely to borrow from each other (and from the Fed but the amount of money "created" this way is a drop in the bucket compared to current "quantitative easing"), and thus increases the "turnover" of the existing money in the economy (how many times a theoretical individual dollar is spent in a given time period). |
What are the financial advantages of living in Switzerland? | Companies, especially big ones, find in Switzerland a business-friendly environment and often benefit from a special tax regime. Don't mix the companies interests with yours. |
Stock valuation - Volkswagen | The primary reason a scandal like this hurts the company is the "bottom line." Any legal action means defense costs. In this case the potential of massive fines became reality. And a buyback program. So, if any publicly traded company stacked up $10B in assets, doused it in diesel and set it on fire, their stock would take a dip too. Billions in revenue directed to the expense side of the ledger instead of the profit side. That money should have gone to building the company and dividends. |
I'm 23, living at home, and still can't afford my own property. What could I do? | I wouldn't be too concerned, yet. You're young. Many young people are living longer in the family home. See this Guardian article: Young adults delay leaving family home. You're in good company. Yet, there will come a time when you ought to get your own place, either for your own sanity or your parents' sanity. You should be preparing for that and building up your savings. Since you've got an income, you should – if you're not already – put away some of that money regularly. Every time you get paid, make a point of depositing a portion of your income into a savings or investment account. Look up the popular strategy called Pay Yourself First. Since you still live at home, it's possible you're a little more loose with spending money than you should be – at least, I've found that to be the case with some friends who lived at home as young adults. So, perhaps pretend you're on your own. What would your rent be if you had to find a place of your own? If, say, £600 instead of the £200 you're currently paying, then you should reduce your spending to the point where you can save at least £400 per month. Follow a budget. With respect to your car, it's great you recognize your mistake. We're human and we can learn from our mistakes. Plan to make it your one and only car mistake. I made one too. With respect to your credit card debt, it's not an insurmountable amount. Focus on getting rid of that debt soon and then focus on staying out of debt. The effective way to use credit cards is to never carry a balance – i.e. pay it off in full each month. If you can't do that, you're likely overspending. Also, look at what pensions your employer might offer. If they offer matching contributions, contribute at least as much to maximize the tax free extra pay this equates to. If you have access to a defined benefit plan, join it as soon as you are eligible. Last, I think it's important to recognize that at age 23 you're just starting out. Much of your career income earning potential is ahead of you. Strive to be the best at what you do, get promotions, and increase your income. Meanwhile, continue to save a good portion of what you earn. With discipline, you'll get where you want to be. |
Are solar cell panels and wind mills worth the money? | Solar water heaters are definitely worth the money (if you live in sunny states like South-South-West or Hawaii, at least). In some countries (like Greece, Cyprus and Israel, to name a few) most people use hot water from the solar heaters almost exclusively. I pay $30-$40 a month to PG&E for the privilege. Unfortunately, in the US these heaters are much more expensive than they are in the more advanced European countries, so all the savings go to drain because of the vast price difference ($300 for a gas heater vs $2000 for a solar heater). |
Contract job (hourly rate) as a 1099: How much would I be making after taxes? | There are way too many details missing to be able to give you an accurate answer, and it would be too localized in terms of time & location anyway -- the rules change every year, and your local taxes make the answer useless to other people. Instead, here's how to figure out the answer for yourself. Use a tax estimate calculator to get a ballpark figure. (And keep in mind that these only provide estimates, because there are still a lot of variables that are only considered when you're actually filling out your real tax return.) There are a number of calculators if you search for something like "tax estimator calculator", some are more sophisticated than others. (Fair warning: I used several of these and they told me a range of $2k - $25k worth of taxes owed for a situation like yours.) Here's an estimator from TurboTax -- it's handy because it lets you enter business income. When I plug in $140K ($70 * 40 hours * 50 weeks) for business income in 2010, married filing jointly, no spouse income, and 4 dependents, I get $30K owed in federal taxes. (That doesn't include local taxes, any itemized deductions you might be eligible for, IRA deductions, etc. You may also be able to claim some expenses as business deductions that will reduce your taxable business income.) So you'd net $110K after taxes, or about $55/hour ($110k / 50 / 40). Of course, you could get an answer from the calculator, and Congress could change the rules midway through the year -- you might come out better or worse, depending on the nature of the rule changes... that's why I stress that it's an estimate. If you take the job, don't forget to make estimated tax payments! Edit: (some additional info) If you plan on doing this on an ongoing basis (i.e. you are going into business as a contractor for this line of work), there are some tax shelters that you can take advantage of. Most of these won't be worth doing if you are only going to be doing contract work for a short period of time (1-2 years). These may or may not all be applicable to you. And do your research into these areas before diving in, I'm just scratching the surface in the notes below. |
Should I pay off my student loan before buying a house? | Paying off your student loan before buying a house is certainly a great risk reduction move for you. It will lower your debt to income ratio allowing your mortgage approval to go easier and it will free up more of your dollars to pay for the many miscellaneous projects that come with buying a house. I think that if you are considering paying off your student loan before buying a house that means that your student loans are an amount you can fathom paying off and that you are motivated to be rid of your student loan debt. Go for it and pay off your student loan. |
Can stock brokerage firms fail? | Yes, the entire financial system is based on trust. As we have seen repeatedly, even the ratings agencies can be wrong and in collusion. You need to understand what products have any insurance/contingency/recourse if things don't go as planned. A lot of people were surprised when they found out SIPC didn't ensure futures when MF Global declared bankruptcy last fall. |
Any Tips on How to Get the Highest Returns Within 4 Months by Investing in Stocks? | What you're asking for is a short-term, large return investment. When looking for big returns in a short period of time, risk is inevitable. The more risk you are willing to assume, the higher your potential returns. Of course, the flip is is that the higher your risk, the higher the potential to lose all your money! Since this is an exercise for school (and not real money and not your life savings) your best bet is to "go big or go home". You can safely assume 100% risk! Don't look for value stocks, dividend stocks, or anything that pays a steady return over a long period of time. Instead, look for something risky that has the potential of going up, up, up in the next few months. Are you allowed to trade options in your fake portfolio? Options can have big risk and big reward potential. Penny stocks are super volatile, too. Do some research, look for a fad. In other words, you will most likely lose it all. But you get a little lucky, you could win this thing outright by making some risky investments. A 5% chance of winning $3000 vs 95% of going broke may be pretty good odds if everyone else is value investing for just a few months. You will need to get lucky. Go big or go home! |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | I think playing certain kinds of lottery is as economically sound as buying certain kinds of insurance. A lottery is an inverted insurance. Let me elaborate. We buy insurance for at least two reasons. The first one is clear: We pay a fee to protect ourselves from a risk which we don't want to (or cannot) bear. Although on average buying insurance is a loss, because we pay all the insurance's office buildings and employee's salaries, it still is a reasonable thing to do. (But it should also be clear that it is unreasonable to buy insurance for risks one could easily bear oneself.) The second reason to buy insurance is that it puts us at ease. We don't have to be afraid of theft or of a mistake we make which would make us liable or of water damage to our house. In that sense we buy freedom of sorrow for a fee, even if the damage wouldn't in fact ruin us. That's totally legitimate. Now I want to make the argument that buying a lottery ticket follows the same logic and is therefore not economically unreasonable at all. While buying a lottery ticket is on average a loss, it provides us with a chance to obtain an amount of money we would normally never get. (Eric Lippert made this argument already.) The lottery fee buys us a small chance of something very valuable, much as the insurance frees us from a small risk of something very bad. If we don't buy the ticket, we may have 0% chance of becoming (extremely) rich. If we buy one, we clearly have a chance > 0%, which can be considered an improvement. (Imagine you'd have a 0.0000001% chance to save the life of a loved one with a ticket who'd be 100% doomed otherwise. You'd bite.) Even the second argument, that an insurance puts us at ease, can be mirrored for lotteries. The chance to win something may provide entertainment in our otherwise dull everyday life. Considering that playing the lottery only makes sense for the chance to obtain more money than otherwise possible, one should avoid lotteries which have lots of smaller prizes because we are not really interested in those. (It would be more economical to save the money for smaller amounts.) We ideally only want lotteries which lean on the big money prizes. |
How to manage currency risk in international investing | Let's make a few assumptions: You have several ways of achieving (almost) that, in ascending complexity: Note that each alternative will have a cost which can be small (forwards, futures) or large (CFDs, debit) and the hedge will never be perfect, but you can get close. You will also need to decide whether you hedge the unrealised P&L on the position and at what frequency. |
Do I pay a zero % loan before another to clear both loans faster? | Your goal of wanting to eliminate your debts early is great. Generally, you can save more money by paying off loans with higher interest rates first. However, it sounds like you are excited about the idea of eliminating one of your car loans in two months. There is nothing wrong with that; it is good to be excited about eliminating debt. I like your plan. Pay off the $14.6k loan first, then apply the $635 monthly payment to the $19.4k loan. You'll have that loan paid off almost 3 years early. Perhaps you'll find some additional money to apply to it and get rid of it even earlier. After you've eliminated both car loans, save up that $1000/month for your next car. That will allow you to pay cash for it, which will allow you to negotiate the best price and save interest. 0% loans are not free money. Other answers will tell you to wait as long as possible to pay off your 0% loan, but I think there can be good reasons to eliminate smaller loans first, regardless of interest. |
How much time does a doctor's office have to collect balance from me? | They have forever to collect a balance from you. Furthermore they can add whatever penalties and fees they wish to increase that balance. Worst of all, they don't have to remind you or send you bills or any other notification. You owed it when you left the office. (There very well could be local laws that require notifications, but that isn't really the issue here.) That dentist has every right to deny you service until you settle the account. Forever. The statute of limitations on collecting that debt via court: http://www.bankrate.com/finance/savings/when-does-your-debt-expire.aspx Which covers the rules on HOW LONG they have to collect the debt. Owing the money is one thing, but the rules and tools that you creditor has to collect the debt are another. You are probably worried about them suing you. But if you don't pay the debt (or settle in some way), that dentist can refuse to provide services to you, even if they write off the debt. Ways you can be punished by your dentist for not paying the bill are: Depending on your jurisdiction and/or type of debt, they typically only report it on your credit (if they are reporting at all) for 7 years. Even if you pay and settle the account, it will still be reported on your credit report for 7 years. The difference is how it is reported. They can report that "user133466 is a super reliable person who always pays debts on time". They can say "user133466 is a flake who pays, but takes a while to pay". Or they can say "user133466 is a bad person to provide services before collecting money, because user133466 don't pay bills". Other people considering lending you money are going to read these opinions and decide accordingly if they want to deal with you or not. And they can say that for 7 years. The idea of credit reporting is that you settle up as soon as possible and get your credit report to reflect the truth. One popular way to collect a debt to is to sue you for it. There, each state has a different time period on how long a creditor has to sue you for a debt. http://www.bankrate.com/finance/credit-cards/state-statutes-of-limitations-for-old-debts-1.aspx If you pay part of the debt, that will often reset the clock on the statute of limitations, so be sure any partial or negotiated settlements state very clearly, in writing, that payment is considered payment in full on the debt. Then you keep that record forever. There are other interesting points in the Fair Debt Collection Practices Act. See Debt collectors calling? Know your rights. They can only contact you in certain ways, they must respond to you in certain ways, and they have limits on what they can say, who they can say it to, and when they can say it. There are protections from mean or vicious bill collectors, but that doesn't sound like who you are dealing with. I don't know that the FDCPA is a tool you need to use in this case. You should negotiate your debt and try your best to settle up. From your post, both parties dropped the ball, and both parties should give a little. You should pay no or minor late fees, and the doctor should report your credit positively when you do so. If you both made honest mistakes, they both parties should acknowledge that and be fair, and not defensive. This is not legal advice. But you owe the debt, so you should settle up. I don't think it is fair for you to not pay because they didn't mail you a paper. However I also do not think it is fair for the doctor to run up fees and not remind you of the bill. Finally, you didn't bring up insurance or many other details. Those details can change the answer. |
How does Robinhood stock broker make money? | Charging very high prices for additional standard services: See Commission & Fees: https://brokerage-static.s3.amazonaws.com/assets/robinhood/legal/RHF%20Retail%20Commisions%20and%20Fees%20Schedule.pdf Link is down in the footer, to the left... |
Tax relief on UK salary income | The broker that is issuing the moneys after vesting is more than likely deducting a notional amount of tax and NI based on UK income tax laws. If you are not a UK resident, then you should pay income tax on those stock options based on your own tax residency. Best thing to do is speak directly with the broker to explain the situation, ask them to not deduct anything from your stock options - but keep in mind that you will need to declare these earnings yourself and pay the correct rate of tax. From my own personal experience, the UK employer more than likely receives the net value (after the notional tax and NI have been deducted) and in usual circumstances create a tax liability on your payslip (if you were working and had earnings). If of course this deduction is being made by the employer, then you can simply ask them to correct this (most UK payroll software will automatically deduct tax and NI for payments after leaving unless manually intervened, so they probably aren't aware if it is them doing so). |
Can I take money from my employee stock and put it towards another stock? | Only if you sell the stock in question, and use the proceeds to buy other stock. (You should probably never feel bad about selling your company stock, even if it goes up a lot later, because from a risk-exposure basis you are already exposed to your company's performance through your career. Unless you have a lot of other savings, you should diversify.) |
How do we know the number of shorted shares of a stock? | For a company listed on NASDAQ, the numbers are published on NASDAQ's site. The most recent settlement date was 4/30/2013, and you can see that it lists 27.5 million shares as held short. NASDAQ gets these numbers from FINRA member firms, which are required to submit them to the exchange twice a month: Each FINRA member firm is required to report its “total” short interest positions in all customer and proprietary accounts in NASDAQ-listed securities twice a month. These reports are used to calculate short interest in NASDAQ stocks. FINRA member firms are required to report their short positions as of settlement on (1) the 15th of each month, or the preceding business day if the 15th is not a business day, and (2) as of settlement on the last business day of the month.* The reports must be filed by the second business day after the reporting settlement date. FINRA compiles the short interest data and provides it for publication on the 8th business day after the reporting settlement date. |
Do precious metals and mining sector index funds grow as much as the general stock market? | Metals and Mining is an interesting special case for stocks. It's relationship to U.S. equity (SPX) is particularly weak (~0.3 correlation) compared to most stocks so it doesn't behave like equity. However, it is still stock and not a commodities index so it's relation to major metals (Gold for instance) is not that strong either (-0.6 correlation). Metals and Mining stocks have certainly underperformed the stock market in general over the past 25years 3% vs 9.8% (annualized) so this doesn't look particularly promising. It did have a spectacularly good 8 year period ('99-'07) though 66% (annualized). It's worth remembering that it is still stock. If the market did not think it could make a reasonable profit on the stock the price would decrease until the market thought it could make the same profit as other equity (adjusted slightly for the risk). So is it reasonable to expect that it would give the same return as other stock on average? Yes.. -ish. Though as has been shown in the past 25 years your actual result could vary wildly both positive and negative. (All numbers are from monthly over the last 25 years using VGPMX as a M&M proxy) |
Where are Bogleheadian World ETFs or Index funds? | Half VTI (Vanguard Total Stock Market ETF) and half VEU (Vanguard FTSE All-World ex-US ETF), and stop futzing. The US is roughly half the world market cap so this is like a total world equity index. Very low costs. VTI Expense ratio is 0.04% as of 04/27/2017. I don't know what you mean by RSG, but it could be either a waste processor or a gold miner. Either way it seems kind of speculative to hold even 10% of your wealth. |
Does inflation equal more loans? | What is the relationship between inflation and interest rates? notes a relationship between inflation and interest rates that would suggest high inflation would imply higher interest rates that would mean less loans as money becomes more expensive in a sense. In contrast, in times of low inflation then rates may be low and thus there is a greater chance of people and businesses wanting loans. |
Will I be liable for taxes if I work for my co. in India for 3 months while I am with my husband in UK | Generally all the countries have similar arrangement regarding Income Tax, if you live in the UK for more than you stay in India for a given year then the Indian authorities won't be able to tax you but you might come under the UK Tax Law. |
What happens to people without any retirement savings? | According to both Huffington Post and Investopedia: Trying to retire without any savings in the bank can be difficult, and that difficulty is compounded by other factors senior citizens need to keep in mind as they age, like health issues and mobility. If saving money is not possible for you, retirement doesn’t have to pass you by. There are plenty of government-assisted and nonprofit programs that can help you, such as the Commodity Supplemental Food Program, Medicare, senior housing help from Housing and Urban Development and other resources. Therefore, to answer your questions: Is this pretty much the destiny of everyone who cannot save for retirement? Yes, if you do not have help from family (or friends) then you have a chance of ending up homeless and/or on government assistance. Do most people really never retire? There are people who really will never retire. There are stories in the news about Walmart greeters or McDonald's cashiers who are in their 80s and 90s working because they need to support themselves. However, that's not the case for everyone. There's a greeter at my local Costco who is in her 80s and she works because she loves it (her career was in consulting and she doesn't have a lack of retirement money. She just really likes talking to people.). What really happens? I can't answer what really happens because I have never experienced it and don't know people that do. Therefore I have to go off of what the two articles have said. |
Technical Analysis not working | You cannot just read one book and some articles on Technical Analysis and some indicators and expect to be an expert and everything to just start falling into place and give you signals that will tell you when to buy and sell with precision and massive profits all the time. It is like someone reading a book on how to drive a car and then expecting to drive flawlessly the first time they sit in the driver's seat, or someone reading a book on brain surgery and expecting to be able to operate on a live patient the next day. It looks like you are using 3 or 4 indicators to get daily buy and sell signals on a daily chart for an EFT you're looking to hold for decades. So firstly you are using short term indicators for a long term outlook. You need to decide what timeframe you plan to hold your investments for and use chart periods and indicators that suit that timeframe. Secondly, each indicator can be used in a number of ways and the settings you use for each indicator can determine whether you get earlier or later signals. Also, you need to work out which indicators work well together and are complementary, compared to those that don't work well together and give conflicting signals. All this information will come together for you the more you read about and practice the art of Technical Analysis. If your timeframe is very long-term (decades) I would be using mainly a weekly chart, with a longer period MA, the ROC indicator and possibly some trend lines. Keep it simple. The price itself is very important too. You can determine when a trend is starting or has ended purely using the price. The definition of an uptrend is higher highs and higher lows, so on the weekly chart if there is a lower high followed by a lower low - this could be the end of the uptrend. If we get a lower low followed by a lower high - this again could be the end of the uptrend. These could be a good time to start getting cautious and maybe looking to sell. If you are using stop losses (which I recommend) this may be a good time to tighten your stops. Similarly, a downtrend is defined as lower lows and lower highs. If we get a higher low followed by a higher high it could be the end of the downtrend and maybe the start of an uptrend. This could be a good time to start getting ready to buy. You need to learn about how and where to set your buy and sell orders (including stops) and whether you wait for confirmation when you get a signal. All this takes some time, but the more you read, the more you attend live events and the more you practice the more they will become second nature. In order to get the best out of Technical Analysis you will need to learn, plan, practice and execute. A good book to help you prepare your trading plan is "Smart Trading Plans" by Justine Pollard. One of my favourite books is "The Complete Trading Course - Price Patterns, Strategies, Setups, and Execution Tactics" by Corey Rosenbloom. And another good book is "Trade your Way to Financial Freedom" by Van Tharp. |
Should I fund a move by borrowing or selling other property assets? | It is a lot easier to make money when you are not in debt. If you can sell the apartment, get rid of your existing mortgage and buy the new house outright, that is probably the best course of action. |
Do governments support their own bonds when their value goes down? | Without getting to hung-up on terminology here, the management of a company will often attempt to keep stock prices high because of a number of reasons: Ideally companies keep prices up through performance. In some cases, you'll see companies do other things spending cash and/or issuing bonds to continue to pay dividends (e.g. IBM), or spending cash and/or issuing bonds to pay for stock buybacks (e.g. IBM). These methods can work for a time but are not sustainable and will often be seen as acts of desperation. Companies that have a solid plan for growth will typically not do much of anything to directly change stock prices. Bonds are a bit different because they have a fairly straight-forward valuation model based on the fact that they pay out a fixed amount per month. The two main reason prices in bonds go down are: The key here is that bonds pay out the same thing per month regardless of their price or the price of other bonds available. Most stocks do not pay any dividend and for much of those that do, the main factor as to whether you make or lose money on them is the stock price. The price of bonds does matter to governments, however. Let's say a country successfully issued some 10 year bonds last year at the price of 1000. They pay 1% per month (to keep the math simple.) Every month, they pay out $10 per bond. Then some (stupid) politicians start threatening to default on bond payments. The bond market freaks and people start trying to unload these bonds as fast as they can. The going price drops to $500. Next month, the payments are the same. The coupon rate on the bonds has not changed at all. I'm oversimplifying here but this is the core of how bond prices work. You might be tempted to think that doesn't matter to the country but it does. Now, this same country wants to issue some more bonds. It wants to get that 1% rate again but it can't. Why would anyone pay $1000 for a 1% (per month) bond when they can get the exact same bond with (basically) the same risks for $500? Instead they have to offer a 2% (per month) rate in order to match the market price. A government (or company) could in fact put money into the bond market to bolster the price of it's bonds (i.e. keep the rates down.) The problem is that if you are issuing bonds, it's generally (caveats apply) because you need cash that you don't have so what money are you going to use to buy these bonds? Or in other words, it doesn't make sense to issue bonds and then simply plow the cash gained from that issuance back into the same bonds you are issuing. The options here are a bit more limited. I have to mention though that the US government (via a quasi-governmental entity) did actually buy it's own bonds. This policy of Quantitative Easing (QE) was done for more complicated reasons than simply keeping the price of bonds up. |
Split buying a house 3 ways. How do I approach this? | Get everything in writing. That includes ownership %, money in, money out, who is allowed to use the place, how much they need to pay the other partners, who pays for repairs, whether to provide 'friends and family' discounts, who is allowed to sell, what happens if someone dies, how is the mortgage set up, what to do if one of you becomes delinquent, etc. etc. etc. Money and friends don't mix. And that's mostly because people have different ideas in their head about what 'fair' means. Anything you don't have in writing, if it comes up in a disagreement, could cause a friendship-ending fight. Even if you are able to agree on every term and condition under the sun, there's still a problem - what if 5 years from now, someone decides that a certain clause isn't fair? Imagine one of you needs to move into the condo because your primary residence was pulled out from under you. They crash at the condo because they have no where else to go. You try to demand payment, but they lost their job. The agreement might say "you must pay the partnership if you use the condo personally, at the standard monthly rate * # of days". But what is the penalty clause - is everything under penalty of eviction, and forced sale of the condo and distribution of profits? Following through on such a penalty means the friendship would be over. You would feel guilty about doing it, and also about not doing it [at the same time, your other partner loses their job, and can't make 1/3rd of the mortgage payments anymore! They need the rent or the bank will foreclose on their house!] etc etc etc Even things like maintenance - are the 3 of you going to do it yourselves? Labour distributed how? Will anyone get a management fee? What about a referral fee for a new renter? Once you've thought of all possible circumstances and rules, and drafted it in writing, go talk to a lawyer, and maybe an accountant. There will be many things you won't have considered yet, and paying a few grand today will save you money and friends in the future. |
Primerica: All it claims to be? | I was a Primerica representative, left to be on my own, and then returned. Insurance is one matter that depends on the individual. Some do not need it. For example, when I was an independent agent with an independent marketing organization (IMO) (oh yes! multi-level is everywhere, dont kid yourself) I had an upline as well. We were pushed to sell final expense [burial insurance]. As an ethical agent, I believe this is a bad business practice. Primerica does not sell unneeded insurance to old people. How can you justify selling the elderly, insurance to cover them for $10,000, at almost 100 to 150 a month? I told my elderly potential clients, after seeing they live on a tight budget, that they were better off purchasing a cremation policy or funeral package than burial insurances as it would save them money in the long run. Primerica is right in saying they are the only ones out there catering to the Working Class and Middle-America. Where else can you start an Individual Retirement Account (IRA) with $25 a month? Nowhere! All the other insurance producers want more money. They don't want to spend their time with what they call "losers". I love showing Poor people how the Rich get richer. Poor people should know the truth. |
Credit cards: How is a cash advance different from a purchase? Why are the fees so high? | Essentially speaking, when you purchase goods worth $100 using your card, the store has to pay about $2 for the transaction to the company that operates that stores' credit card terminal. If you withdraw cash from an ATM, you might be charged a fee for such a transaction. However, the ATM operator doesn't pay the credit processor such a transaction fee - thus, it is classified as a cash transaction. Additionally, performing cash advances off a CC is a rather good indicator of a bad financial health of the user, which increase the risk of default, and in some institutions is a factor contributing to their internal creditworthiness assessment. |
What is the principle of forming an arbitrage strategy? | Arbitrage is basically taking advantage of a difference in price. Generally extending to "in different places for the same thing". A monetary version would be interlisted stocks, that is stocks in companies that are on both the NYSE/Nasdaq and Toronto stock exchanges. If somebody comes along and buys a large number of shares in Toronto, that will tend to make the price go up - standard supply and demand. But if someone else can buy shares instead in NY, and then sell them in Toronto where the first person is buying up shares, where the price is higher, they the the arbitrageur (second person) can make pretty easy money. By its very nature, this tends to bring the prices back in line, as NY will then go up and Toronto will then go down (ignoring FX rates and the like for ease of explanation). The same can work for physical goods, although it does tend to get more complex with taxes, duties, and the like. |
Simultaneous long/short India | I know its not legal to have open long and short position on specific security (on two stock exchanges - NSE/BSE) There is nothing illegal about it. There are prescribed ways on how this is addressed. In Cash Segment / Intra Day trades: One can short sell a security. If by end of day he does not buy the security; it goes into Auction. The said security is purchased on your behalf. Any profit or loss arising out of this is charged to you. Similarly one can buy a security; if one does not pay the amount by end of day; it would go into auction and sold. Any profit or loss arising out of this is charged to you. If you short sell a security on one exchange; you have to buy it on same exchange. If you buy on other exchange; it will not be adjusted against this short position. Also is it legal to have long position on stock and short its derivative (future/option)? There are no restrictions. Edit: @yety Party A shorts 10 shares of HDFC today in Intra-Day Cash Segment purchased by Party B. Rather than buying back 10 shares or allowing it to go into auction... Party A borrows 10 HDFC Shares from "X" via SLB for a period of say 6 months [1 month to 1 year]. This is recorded as Party A obligation to "X". These 10 borrowed shares are transferred to Party B. So Party "X" doesn't have any HDFC shares at this point in time. However in exchange, Party X receives fees for borrowing from Party A. If there is dividend, are declared, Company pays Party B. However SLB recovers identical amount from Party A and pays Party X. If there is 1:1 split, now party A owes Party X 20 HDFC Shares. On maturity [after 6 months], Party A has to buy these from market and given back the borrowed shares to Party X. If there are some other corporate actions, i.e. mergers / amalgamations ... the obligation of Party A to Party X is closed immediately and position settled. Of course there are provisions whereby party A can pay back the shares earlier or party X can ask for shares earlier and there are rules/trades/mechanisms to facilitate this. |
GNUCash: How to count up equity? | I would take each of these items and any others and consider how you would count it as an expense in the other direction. If you have an account for parking expenses or general transportation funds, credit that account for a refund on your parking. If you have an account for expenses on technology purchases, you would credit that account if you sell a piece of equipment as you replace it with an upgrade. If you lost money (perhaps in a jacket) how would you account for the cash that is lost? Whatever account would would subtract from put a credit for cash found. |
What is the basis of an asset that is never depreciated? | That's tricky, actually. First, as the section 1015 that you've referred to in your other question says - you take the lowest of the fair market value or the actual donor basis. Why is it important? Consider these examples: So, if the relative bought you a brand new car and you're the first title holder (i.e.: the relative paid, but the car was registered directly to you) - you can argue that the basis is the actual money paid. In essence you got a money gift that you used to purchase the car. If however the relative bought the car, took the title, and then drove it 5 miles to your house and signed the title over to you - the IRS can argue that the car basis is the FMV, which is lower because it is now a used car that you got. You're the second owner. That may be a significant difference, just by driving off the lot, the car can lose 10-15% of its value. If you got a car that's used, and the donor gives it to you - your basis is the fair market value (unless its higher than the donor's basis - in which case you get the donor's basis). You always get the lowest basis for losses (and depreciation is akin to a loss). Now consider the situation when your relative is a business owner and used the car for business. He didn't take the depreciation, but he was entitled to. IRS can argue that the fact that he didn't take is irrelevant and reduce the donor's basis by the allowable depreciation. That may bring your loss basis to below the FMV. I suggest you take it to a tax professional licensed in your state who will check all the facts and circumstances of your situation. Your relative might be slapped with a gift tax as well, if the car FMV is above certain amount (currently the exemption is $14000). |
Understanding SEC Filings | There are a whole host of types of filings. Some of them are only relevant to companies that are publicly traded, and other types are general to just registered corps in general. ... and many more: http://reportstream.io/explore/has-form Overall, reading SEC filings is hard, and for some, the explanations of those filings is worth paying for. Source: I am currently trying to build a product that solves this problem. |
What is Systematic about Systematic Investment Plan (SIP) and who invented it? | According to https://en.wikipedia.org/wiki/Systematic_Investment_Plan it's nothing but a fancy term for plain old dollar cost averaging. |
A University student wondering if investing in stocks is a good idea? | For most people, investing in the stock market directly is one of the last things to do. That's not to say you shouldn't, but rather that there are other things to consider as well. Start with automatic monthly deposits to a liquid account such as savings or money market. The morale boost you get from seeing the balance grow is nearly impossible to beat. Following that, paying down any debts such as student loans or credit cards. Once you've done that, then you should look at company sponsored 401k plans or IRAs. Sharebuilder offers IRAs holding whichever stock or fund you pick. Again, automatic monthly deposits are the way to go here. Good luck, and happy investing :) |
When (if) I should consider cashing in (selling) shares to realize capital gains? | How about this rule? Sell 10% of your shares every time they double in price. (of course, only buy stocks that repeatedly double in price) |
Responsible investing - just a marketing trick? | A share is just a part ownership of a company. If you buy a share of a green stock in the open market, you now just own part of a green company. Just like if you buy a house, the money you paid moves to the former owner, but what you are getting is a clear asset in return that you now own. Via mutual funds/indexes this can get a little more complicated (voting rights etc tend to go to the mutual/indexing company rather than the holders of the fund), but is approximately the same thing: the fund buys assets on the open market, then holds them, buys more, or sells them on behalf of the fund investors. |
How do annual risks translate into long-term risks? | The short answer is the annualised volatility over twenty years should be pretty much the same as the annualised volatility over five years. For independent, identically distributed returns the volatility scales proportionally. So for any number of monthly returns T, setting the annualization factor m = 12 annualises the volatility. It should be the same for all time scales. However, note the discussion here: https://quant.stackexchange.com/a/7496/7178 Scaling volatility [like this] only is mathematically correct when the underlying price model is driven by Geometric Brownian motion which implies that prices are log normally distributed and returns are normally distributed. Particularly the comment: "its a well known fact that volatility is overestimated when scaled over long periods of time without a change of model to estimate such "long-term" volatility." Now, a demonstration. I have modelled 12,000 monthly returns with mean = 3% and standard deviation = 2, so the annualised volatility should be Sqrt(12) * 2 = 6.9282. Calculating annualised volatility for return sequences of various lengths (3, 6, 12, 60 months etc.) reveals an inaccuracy for shorter sequences. The five-year sequence average got closest to the theoretically expected figure (6.9282), and, as the commenter noted "volatility is [slightly] overestimated when scaled over long periods of time". Annualised volatility for varying return sequence lengths Edit re. comment Reinvesting returns does not affect the volatility much. For instance, comparing some data I have handy, the Dow Jones Industrial Average Capital Returns (CR) versus Net Returns (NR). The return differences are somewhat smoothed, 0.1% each month, 0.25% every third month. More erratic dividend reinvestment would increase the volatility. |
Methods for forecasting price? | Assuming a price is set on an free market there are particular difficulties to pricing. A free market is one where the price is entirely determined by the willingness of people to buy and sell at a particular price point. What you perceive as price, is actually the "tick", i.e. the quote of the last transaction. The first and most serious major obstacle to pricing is a variation of the prisoners dilemma, a psychological phenomenon. For instance, bitcoin might be worth 4$ now, but you believe it will be worth 5$ in 3 days. Will you buy bitcoin? If acting only on your conviction, yes. But what if you consider what other people will do? Will others believe bitcoin will be worth 5$ in 3 days? Will they act on their conviction? Will the others believe that others believe that it wil be worth 5$ in 3 days, and will the others believe that the others who believe will act on their conviction? Will the others believe that others believe of still others who believe that they will act on their conviction? It goes on like this ad-infinitum. The actual behavior of any individual on the market is essentially chaotic and unpredictable (for the reason stated above and others). This is related to a phenomenon you call market efficiency. An efficient market always reflects the optimal price-point at any given time. If that is so, then you cannot win on this market, because at the time you would have to realize a competitive edge, everybody else has already acted on that information. Markets are not 100% efficient of course. But modern electronic markets can be very, very efficient (as say compared to stock markets fro 100 years ago, where you could get a competitive edge just by having access to a fast courier). What makes matters rather more difficult for price forecasting is that not only are humans engaging in the market, machines are as well. The machines may not be terribly good at what they do, but they are terribly fast. The machines that work well (i.e. don't loose much) will survive, and the ones that don't will die in short order. Since speed is one of the major benefits of the machines over humans, they tend to make markets even more efficient. Another phenomenon to price forecasting is that of information and entropy. Suppose you found a reliable method to predict a market at a given time. You act on this information and indeed you make a profit. The profit you will be able to achieve will diminish over time until it reaches zero or reverts. The reason for this is that you acted on private information, which you leaked out by engaging in a trade. The more successful you are in exploiting your forecast, the better you train every other market participant to react to their losses. Since for every trade you make successfully, there has to be somebody who lost. People or machines who lose on markets usually exit those markets in some fashion. So even if the other participants are not adjusting their behavior, your success is weeding out those with the wrong behavior. Yet another difficulty in pricing forecasts are black-swan events. Since information can have a huge impact on pricing, the sudden appearance of new information can throw a conservative forecast completely off the rails and incur huge losses (or huge unexpected benefits). You cannot quantify black-swan events in any shape or form. It is my belief that you cannot predict efficient and well working markets. You might be able to predict some very sub-optimal markets, but usually, hedge-funds are always on the hunt for inefficient markets to exploit, so by simple decree of market economics, the inefficient markets tend to be a perpetually dying species. |
Does Implied Volatilty factor in all known future events? | From every article I've encountered, the chicken and egg aspect suggests that IV is produced by looking at options pricing, and calculating the IV from that. The implication is that whatever is known at that time is included in the price. And that when you see a particular option trade an unusual number of contracts at a given price, the implication is that someone thinks they know something that's not already priced in, i.e. that the current price is not accurate, they can profit on the future event. |
Is selling put options an advisable strategy for a retiree to generate stable income? | No. In good years, the income seems free. In a down year, particularly a bad one, the investor will be subject to large losses that will prove the strategy a bad one. On the other hand, one often hears of the strategy of selling puts on stock you would like to own. If the stock rises, you keep the premium, if it drops, you own it at a bit of a discount from that starting point. |
Tax Write-offs and knowing how much I need to spend before the end of the year | (I'm assuming USA tax code as this is untagged) As the comments above suggest there is no "right" answer or easy formula. The main issue is that you likely got into business to make money and if you make money consistently you will pay taxes. Reinvesting generally should be a business decision where the main concern is revenue growth and taxes are an important but secondary concern. Taxes can be complicated, but for a small LLC shouldn't be that bad. I highly recommend that you take some time closely analyze your business and personal taxes for the previous year. Once you understand the problem better, you can optimize around it. If it is a big concern, some companies buy software so they can estimate their taxes periodically through the year and make better decisions. |
How can I spend less? | Try the Envelope Budgeting System. It is a pretty good system for managing your discretionary outflows. Also, be sure to pay yourself first. That means treat savings like an expense (mortgage, utilities, etc.) not an account you put money in when you have some left over. The problem is you NEVER seem to have anything leftover because most people's lifestyle adjusts to fit their income. The best way to do this is have the money automatically drafted each month without any action required on your part. An employer sponsored 401K is a great way to do this. |
I am a contractor with revenue below UK's VAT threshold. Should I register for VAT? | The most important thing to remember is that being VAT registered, you must add VAT to every bill, so every bill will be 20% higher. If the bill payer is a company, they don't care because they deduct the 20% VAT from their own VAT bill. If the bill payer is a private person, their cost of your services has just gone up by 20% and it is going to hurt your business. So the question is, what kind of customers do you have? But if your customers are companies, then the flat rate scheme mentioned above is very little work and puts a nice little amount of extra cash in your pocket (suitable if your bills are mostly for your work and not for parts that you buy for the customer and bill them for). |
What does PMI mean? | Private Mortgage Insurance. It's money that you pay to an insurance company to make the lender whole in the event that you go into default. It's a real waste of money for you. If you are trying to finance more than 80% of the value of a home, a standard mortage is likely to require that you get PMI. Nowadays there are other options which involve paying substantially more interest. |
To rebalance or not to rebalance | This answer will assume you know more math than most. An ideal case: For the point of argument, first consider the following admittedly incorrect assumptions: 1) The prices of all assets in your investment universe are continuously differentiable functions of time. 2) Investor R (for rebalance) continuously buys and sells in order to maintain a constant proportion of each of several investments in his portfolio. 3) Investor P (for passive) starts with the same portfolio as R, but neither buys nor sells Then under the assumptions of no taxes or trading costs, it is a mathematical theorem that investor P's portfolio return fraction will be the weighted arithmetic mean of the return fractions of all the individual investments, whereas investor R will obtain the weighted geometric mean of the return fractions of the individual investments. It's also a theorem that the weighted arithmetic mean is ALWAYS greater than or equal to the weighted geometric mean, so regardless of what happens in the market (given the above assumptions) the passive investor P does at least as well as the rebalancing investor R. P will do even better if taxes and trading costs are factored in. The real world: Of course prices aren't continuously differentiable or even continuous, nor can you continuously trade. (Indeed, under such assumptions the optimal investing strategy would be to sample the prices sufficiently rapidly to capture the derivatives and then to move all your assets to the stock increasing at the highest relative rate. This crazy momentum trading would explosively destabilize the market and cause the assumptions to break.) The point of this is not to argue for or against rebalancing, but to point out that any argument for rebalancing which continues to hold under the above ideal assumptions is bogus. (Many such arguments do.) If a stockbroker standing to profit from commission pushes rebalancing on you with an argument that still holds under the above assumptions then he is profiting off of BS. |
Should you always max out contributions to your 401k? | First, the limit this year is $16,500, $22,000 for age 50 or older. Next, does the company give you any match? If so, how much? Some will match your deposits dollar for dollar up to a certain percent of your pay. If you make $50k and deposit say 6%, that's $3k matched by company, for example. This deposit/match is the first priority. Next, you should understand the expenses in the account. A bad 401(k) with high cost quickly negates any tax deferral benefit. The 401(k) options also may be limited, what are the choices of investments? Is your income high enough that you can save $21,500? One thought is to save enough to drop back out of the 25% bracket, and go Roth after that. This is a good balance for most. By the way, Fairmark is a great site to see what bracket you are in. If your return is simple, you can just find your standard deduction and exemption numbers and get to your taxable income very simply. The debate of of Roth vs Pretax (for both IRA and 401(k) accounts) can get pretty complex, but I found the majority of earners falling into the "live in the 15% bracket, tops" range. |
Purchasing ETFs when (pretty much) everything else is maxed out | Most ETFs are index funds, meaning you get built in diversification so that any one stock going down won't hurt the overall performance much. You can also get essentially the same index funds by directly purchasing them from the mutual fund company. To buy an ETF you need a brokerage account and have to pay a transaction fee. Buying only $1000 at a time the broker transaction fee will eat too much of your money. You want to keep such fees way down below 0.1%. Pay attention to transaction fees and fund expense ratios. Or buy an equivalent index fund directly from the mutual fund company. This generally costs nothing in transaction fees if you have at least the minimum account value built up. If you buy every month or two you are dollar cost averaging, no matter what kind of account you are using. Keep doing that, even if the market values are going down. (Especially if the market values are going down!) If you can keep doing this then forget about certificates of deposit. At current rates you cannot build wealth with CDs. |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | insurance premiums My annual car premium always caught me off guard until I set up a dedicated savings account for it. |
Any Ubiquitous Finance App That is on Mac, iOS and Windows? | You can try SplashMoney. It works on many platforms, including iPhone, iPod and Mac, but also Palm OS, Android, Blackberry and windows. I've been using it —since more than two years now— with my old Palm OS PDA and it works great. As I work mainly with Linux, I've tested very few times its synchronization with its desktop companion running on windows. |
How do I report this cash bonus/tip on income tax return? | How do I report this on our income tax return? You should include it on Line 7 of your Form 1040. Additionally, you should report the extra payment to your employer if it was greater that $20. You can use From 4070 to do this if your employer does not provide you with a form. And finally, you are right, you should Form 4137 to report any tips that you include on your Form 1040 in order to pay the required social security and medicare taxes. Credit is due to glibdud and Nathan L for constructive feedback! Thanks! |
Short term cutting losses in a long term investment | What might make more sense is to 'capture' your losses. Sell out the funds you have, move into something else that is different enough that the IRS won't consider it a wash sale, and you can then use those losses to offset gains (you can even carry them forward) You would still be in the market, just having made a sort of 'sideways move'. A month or two later (once you are clear of wash sale rules) you could shift back to your original choices. (this answer presumes you are in the US, or somewhere that lets you use losses to offset gains) |
Is there such a thing as a deposit-only bank account? | Do you write checks? You are giving your bank account and routing number to anybody you have ever given a check to. Your employer is paying taxes on your behalf, so they need your social security number so they can pay your social security taxes. Account and routing numbers are how deposits are made. If you are concerned, create a free checking account, collect the direct deposit and each payday go to the bank and withdraw your money to put it where you like. Nothing is deposit only because you will want your money back. Finally, you would be shocked at how little it takes to make a draft on your account in the US. Certainly not your SSN, Address, or even your name. |
Tax implications of restricted stock units | With the Employee Stock Purchase Plan stock, if you sell it in less than 18 months from exercise, the discount you bought it at (normally 15%) becomes taxable income and included in your W-2. |
How can I avoid international wire fees or currency transfer fees? | One way is to wire transfer large amounts. If you transfer $5,000 at one go, that $50 fee works out to 1%, same as the $5 on a $500 ATM withdrawal (and ATM fees, hidden and explicit, tend to be higher than $5). The downside is exchange rate risk (taking more money at one go exposes you to that day's rate, good or bad, vs taking it in multiple chunks). If you're American, you also have to report large transfers and foreign balances on your taxes. Shopping around for a good home bank (with low wire & foreign ATM fees), is quite important. |
Is it possible to make money by getting a mortgage? | I think this is possible under very special conditions. The important part of the description here is probably retired and rich. The answers so far apply to people with "normal" incomes - both in the sense of "not rich" and in the sense of "earned income." If you sit at the top tax bracket and get most of your income through things like dividends, then you might be able to win multiple ways with the strategy described. First you get the tax deduction on the mortgage interest, which everyone has properly noted is not by itself a winning game - You spend more than you save. BUT... There are other factors, especially for the rich and those whose income is mostly passive: I'm not motivated enough on the hypothetical situation to come up with a detailed example, but I think it's possible that this could work out. In any case, the current answers using "normal sized" incomes and middle tax brackets don't necessarily give the insight that you might hope if the tax payer really is unusually wealthy and retired. |
Is it possible to influence a company's actions by buying stock? | You can execute block trades on the options market and get exercised for shares to create a very large position in Energy Transfer Partners LP without moving the stock market. You can then place limit sell orders, after selling directly into the market and keep an overhang of low priced shares (the technical analysis traders won't know what you specifically are doing, and will call this 'resistance'). If you hit nice even numbers (multiples of 5, multiples of 10) with your sell orders, you can exacerbate selling as many market participants will have their own stop loss orders at those numbers, causing other people to sell at lower and lower prices automatically, and simultaneously keep your massive ask in effect. If your position is bigger than the demand then you can keep a stock lower. The secondary market doesn't inherently affect a company in any way. But many companies have borrowed against the price of their shares, and if you get the share price low enough they can get suddenly margin called and be unable to service their existing debt. You will also lose a lot of money doing this, so you can also buy puts along the way or attempt to execute a collar to lower your own losses. The collar strategy is nice because it is unlikely that other traders and analysts will notice what you are doing, since there are calls, puts and share orders involved in creating it. One person may notice the block trade for the calls initially, but nobody will notice it is part of a larger strategy with multiple legs. With the share position, you may also be able to vote on some things, but that solely depends on the conditions of the shares. |
Are stock prices likely drop off a little bit on a given friday afternoon? | There are classes of 'traders' who close their positions out every evening, not just on fridays. But their are other types of businesses who trade shortly before or nearly right at market close with both buys and sells There are lots of theories as to how the market behaves at various times of day, days of the week, months of the year. There are some few patterns that can emerge but in general they don't provide a lot of 'lift' above pure random chance, enough so that if you 'bet' on one of these your chances of being wrong are only very slightly different from being right, enough so that it's not really fair to call any of them a 'sure thing'. And since these events are often fairly widely spaced, it's difficult to play them often enough to get the 'law of large numbers' on your side (as opposed to say card-counting at a blackjack table) which basically makes betting on them not much different from gambling |
How do I research, analyze, and choose the right mutual fund for a roth ira? | There is a lot of interesting information that can be found in a fund's prospectus. I have found it very helpful to read books on the issue, one I just finished was "The Boglehead's Guide to Investing" which speaks mostly on mutual and index funds. Actively managed funds mean that someone is choosing which stocks to buy and which to sell. If they think a stock will be "hot" then they buy it. Research has shown that people cannot predict the stock market, which is why many people suggest index based funds. An index fund generally tracks a group of companies. Example: an index fund of the S&P 500 will try to mimic the returns that the S&P 500 has. Overall, managed funds are more expensive than index funds because the fund manager must be paid to manage it. Also, there is generally more buying and selling so that also increases the tax amount you would owe. What I am planning on doing is opening a Roth IRA with Vanguard, as their funds have incredibly low fees (0.2% on many). One of the most important things you do before you buy is to figure out your target allocation (% of stocks vs % of bonds). Once you figure that out then you can start narrowing down the funds that you wish to invest in. |
Consequences of not closing an open short sell position? | 2 things may happen. Either your positions are closed by the broker and the loss or profit is credited to your account. Else it is carried over to the next day and you pay interest on the stocks lent to you. What happens will be decided by the agreement signed between you and your broker. |
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