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Are binary options really part of trading? | you bet that a quote/currency/stock market/anything will rise or fall within a period of time. ... So, what is the relationship with trading ? I see no trading at all since I don't buy or sell quotes. So, if you just wander in and say "oh, hey, look, a bunch of options, i'm going to play games and have excitement" then that is, in fact, some sort of gambling. Indeed, most trading activities will be like that to you. On the other hand, you might be engaged in other business where those things matter. You might be doing a lot of trading elsewhere in the market, for instance, and suddenly everyone freaks out and the stock market goes crazy and you lose a ton of money. To protect yourself from losing a ton of money, you might buy a binary option based on VIX (the volatility index) going over a certain level. If you're not in a business where you're buying it to protect yourself, then you should probably only buy the options if you have reason to think it'll be profitable and worth the risk. If you don't understand the risks, skip it. |
Why are Rausch Coleman houses so cheap? Is it because they don't have gas? | Research the company that is all I can say this company has horrible reviews. They show on their Facebook page great reviews but if you really look through all reviews the high ratings are from past and current employees. All other reviews from actual home owners are bad. They make a lot of false promises and build very cheap homes that will not last without several costly problems within the near future. Most people that buy one of their houses sell it within a few years because they start having so many problems. They have outside vendors doing all the work and do not make these vendors very accountable. I know I was a manager with Rausch for several years. STAY AWAY! |
Calculate Finance Rate, Interest Amount when we have below line Fees | The equation for the payment is This board does not support Latex (the number formatting code) so the above is an image, the code is M is the payment calculated, n is the number of months or periods to pay off, and i is the rate per period. You can see that with i appearing 3 times in this equation, it's not possible to isolate to the form i=.... so a calculator will 'guess,' and use, say, 10%. It then raises or lowers the rate until the result is within the calculator's tolerance. I've observed that unlike other calculations, when you hit the button to calculate, a noticeable time lag occurs. I hope I haven't read too much into your question, it seemed to me this was what you asked. |
What should I be doing to protect myself from identity theft? | I've received letters notifying me of data breaches in the past. In the end, I've never signed up for the offered protection service, figuring if "they" can hack Target or ADP or the IRS, they can hack anybody, like... Equifax. And now Equifax has been hacked. My family's Social Security Numbers were stolen from a hospital database. I think that information, plus public information was used to gain further data from the IRS FAFSA tool. (we got a letter from the IRS). Ultimately, fraudsters used whatever data they had to file a tax return with the IRS and with the Cali FTB (we don't and never have lived in California). We got letters from both, and managed to stop the fraud before it really impacted us...other than having to file a paper tax form this past tax season. Anyway... in a world where Equifax gets hacked: the only solution is: I don't bother with the crazy password schemes you talk about... I have a few different passwords I use, but most my investment accounts use the same username and password. It's all about risk. Bruce Schneier says the same thing. The amount to spend on security should depend on what you're trying to protect. I don't care much if somebody gets into my google account, because I have a google account just because I have to. I barely use it at all. Similarly my yahoo account. My yahoo account uses my "insecure password", and my investment accounts use my "secure password". Credit Card info? Meh. Unless they get into the credit card company database, which undoubtedly has my Social Security Number, it's not that big of a deal. Yeah, they can make fraudulent charges, but there are legal protections, so in theory I can't be out any money. So think this way: what's the risk, and what's the appropriate level of effort to take to mitigate that risk. |
Why can't the Fed lower interest rates below zero? | If the Federal Reserve were to pay banks to hold money, they would need to get the money from somewhere to do so. They would have three options: Go to Congress, and request and authorization of funds. As an quasi-independent entity, however, it would be both highly unorthodox for an institution to diminish its own authority by requesting funding, and politically difficult for the Congress to appropriate it. Transfer held-assets After QE & QE2, the Fed is now the holder of several assets (mortgages and the like) that are already unorthodox for it to hold. It acquired these assets in the first place to soak up excess demand. If these assets were transferred back to banks, it would have exactly the opposite effect - increasing supply and further suppressing the value of the assets they would be trying to shore up by lowering the interest rate. "Print money" The fed could raise the money supply by issuing new bonds. This is inherently inflationary, and while pretty much everyone agrees this isn't bad in the short run, there is already widespread fear that in the long run, QE by itself is going to unleash massive inflation once growth returns anyway. To keep "pushing on this string" would only excerabate these fears, and quite likely turn it into a self-fufilling prophecy. In short, the Fed "could" pay banks to hold money, but the political and economic consequences of raising the needed funds to do so would all undermine the institution or the desired effect. |
Why don't more people run up their credit cards and skip the country? | It's harder than you think. Once card companies start seeing your debt to credit line ratios climb, they will slash your credit lines quickly. Also, cash credit lines are always much smaller, so in reality, such a scheme would require you to buy goods that can be converted to cash, which dilutes your gains and makes it more likely that you're going to get detected and busted. Think of the other problems. Where do you store your ill-gotten gains? How do you get the money out of the country? How will your actions affect your family and friends? Also, most people are basically good people -- the prospect of defrauding $100k, leaving family and friends behind and living some anonymous life in a third world country isn't an appealing one. If you are criminally inclined, building up a great credit history is not very practical -- most criminals are by nature reactive and want quick results. |
If I'm cash-flow negative, should I dollar-cost-average the money from my bonus over the entire year? | You will maximize your expected wealth by investing all the money you intend to invest, as soon as you have it available. Don't let the mythos of dollar cost averaging induce you to allocate more much money to a savings account than is optimal. If you want the positive expected return of the market, don't put your money in a savings account. That's especially true now, when you are certainly earning a negative real interest rate on your savings account. Dollar cost averaging and putting all your money in at the beginning would have the same expected return except that if you put all your money in earlier, it spends more time in the market, so your expected return is higher. Your volatility is also higher (because your savings account would have very low volatility) but your preference for investment tells me that you view the expected return and volatility tradeoff of the stock market as acceptable. If you need something to help you feel less stress about investing right away, think of it as dollar cost averaging on a yearly basis instead of monthly. Further, you take take comfort in knowing that you have allocated your wealth as you can instead of letting it fizzle away in real terms in a bank account. |
Risk to Reward Ratio Calculation | If you plan to take profit at $1.00 then your profit will be $40. Then, if you set your stop at $0.88 then your loss if you get stopped will be $20. So your Reward : Risk = 2:1. Note, that this does not take into account brokerage in and out and any slippage from the price gapping past your stop loss. |
How do I pick the right company for investing services? | Traditional brokers There are tons of players in this market, especially in USA. You have traditional brokers, brokers tied to your bank and a bunch of startups. The easiest is probably a broker tied to your bank, because you probably don't have to wait to fund your brokerage account and can start trading immediately. Often the older/traditional brokers don't have very intuitive interfaces, it's the startups who do a better job at this. But honestly it doesn't really matter, because you can use reporting services that are different from the services you use to execute your trades. Meaning that you only use the interface of your broker to execute trades (buy or sell), and use third party services to monitor your holdings. Monitoring services: Google Finance, Yahoo Finance, Sigfig, Morningstar,... are services allowing you to monitor your holdings. But you can't execute trades with them. Start-ups: Then there are a bunch of startups that offer investment services besides the traditional brokers. Start-up > Robinhood The most ambitious one is Robinhood, which offers the same service as a traditional broker, but completely free (most of the traditional brokers charge a flat fee and/or percentage when buying/selling hodlings) and with an intuitive interface. They're mobile first, but announced they will be launching their service on the web soon. Start-up > Acorns Another popular, mobile-first start-up is Acorns. They offer a lazy-investing service which rounds your everyday purchases and uses the change to invest. It's great when investing is not on your mind, but you still want to invest without realizing it. Start-ups > Robo-advisors Robo-advisors auto-invest your money across a bunch of funds picked based on your risk profile. Because the robo-advisers are fairly new, they often have the most intuitive interfaces. These robo-advisors often don't allow you to pick individual holdings, so these services are best when you want to passively invest. Meaning you don't want to look at it very often, and let them do the investing for you. There are tons of robo-advisor start-ups: Betterment, Wealthfront, Personal Capital, Sigfig, FutureAdvisor,... Also bigger parties jumped on this trend with their offerings: Schwab Intelligent Portfolios, Ally Managed Portfolio, Vanguard Personal Advisor, etc. Summary: It's fun to pick individual stocks, but if you start out it can be overwhelming. Robinhood is probably the best start, they have reduced functionality, but gets you going with an attractive interface. But soon you'll realize it's extremely hard to beat the market. Meaning that hand-picking stocks statistically gives you a worse return than just buying into the general stock market (like S&P500). So you can decide to just buy one fund with a traditional broker that covers the general stock market. Or you can decide to try out one of the many robo-advisors. They haven't been around that long, so it's hard to tell how effective these are and whether they beat the market. If you're young, and you believe in start-ups (who often try to challenge the traditional players), try out one of the robo-advisors. If you want to play a bit and are addicted to your smartphone, try out Robinhood. If you are addicted to your phone, but don't want to check up on your investments all the time, go for Acorns. Of course you can combine all these. Lastly, there are tons of cryptocurrencies which might give you a large return. Tons of startups offer intuitive interfaces to trade cryptocurrencies like Coinbase, Gemini, Kraken. But beware, there is a lot of risk involved in trading cryptocurrencies, it's completely unregulated etc. But definitely check them out. Oh, and you can also invest by giving out loans through LendingClub, Prosper etc. Who can you trust? Above gives you an overview of your options intermingled with some reasoning. But regarding your question "who can I trust" in terms of advice, it's up to yourself. Most traditional broker services don't give you any advice at all, you're on your own. Robo-advisors don't give you advice either, but let their proprietary algorithm do the job. Are these reliable? Nobody can tell, they haven't been around long enough, and they need to go through a bear market (a crash) to see how they respond during rough times. Some robo-advisors offer you personal consultancy (I believe Sigfig and PersonalCapital) does this (limited to a few hours per year). But obviously they'll try to promote their robo-advisor services. |
I'm in the U.S. What are vehicles to invest in international stocks? | You can look into specific market targeted mutual funds or ETF's. For Norway, for example, look at NORW. If you want to purchase specific stocks, then you'd better be ready to trade on local stock exchanges in local currency. ETrade allows trading on some of the international stock exchanges (in Asia they have Hong Kong and Japan, in Europe they have the UK, Germany and France, and in the Americas they have the US and Canada). Some of the companies you're interested in might be trading there. |
Pensions, why bother? | The stock market at large has about a 4.5% long-term real-real (inflation-fees-etc-adjusted) rate of return. Yes: even in light of the recent crashes. That means your money invested in stocks doubles every 16 years. So savings when you're 25 and right out of college are worth double what savings are worth when you're 41, and four times what they're worth when you're 57. You're probably going to be making more money when you're 41, but are you really going to be making two times as much? (In real terms?) And at 57, will you be making four times as much? And if you haven't been saving at all in your life, do you think you're going to be able to start, and make the sacrifices in your lifestyle that you may need? And will you save enough in 10 years to live for another 20-30 years after retirement? And what if the economy tanks (again) and your company goes under and you're out of a job when you turn 58? Having tons of money at retirement isn't the only worthy goal you can pursue with your money (ask anyone who saves money to send kids to college), but having some money at retirement is a rather important goal, and you're much more at risk of saving too little than you are of saving too much. In the US, most retirement planners suggest 10-15% as a good savings rate. Coincidentally, the standard US 401(k) plan provides a tax-deferred vehicle for you to put away up to 15% of your income for retirement. If you can save 15% from the age of 20-something onward, you probably will be at least as well-off when you retire as you are during the rest of your life. That means you can spend the rest on things which are meaningful to you. (Well, you should also keep around some cash in case of emergencies or sudden unemployment, and it's never a good idea to waste money, but your responsibilities to your future have at least been satisfied.) And in the UK you get tax relief on your pension contribution at your income tax rate and most employers will match your contributions. |
Would it make sense to take a loan from a relative to pay off student loans? | I struggle to see the value to this risk from the standpoint of your mother-in-law. This is not a small amount of money for a single person to lend to a single person ignoring your personal relationship. Right now, using a blended rate of about 8% and a 5 year payment period, your cost on that $50,000 is somewhere in the neighborhood of $11,000 with a monthly payment around $1,014. Using the same monthly payment but paying your MIL at 5% you'll complete the loan about 3.5 months sooner and save about $5,000, she will make about $6,000 in interest over 5 years against a $50,000 outlay. Alternatively, you can just prioritize payments to the more expensive loans. It's difficult to work out a total cost comparison without your expected payoff timelines and amount(s) you're currently paying toward all the loans. I'm sure a couple hours with a couple of spreadsheets could yield a plan that would net you a savings substantially close to the $5,000 you'd save by risking your mother in law's money. A lot of people think personal lending risk is about the relationship between the people involved, but there's more to it than that. It's not about you and your wife separating, it's not about the awkward dinner and conversations if you lose your job. Something might physically happen to you, you could become disabled or die. Right now, that's an extremely diversified and calculated risk taken by a gigantic lender. Unless your mother in law is very wealthy, this is not nearly enough reward to assume this sort of risk (in my opinion). Her risk FAR outpaces your potential five year savings. IF you wanted to pursue this as a means of paying interest to a family member rather than the bank, I'd only borrow an amount I budgeted and intended to pay within this single year. Say $10,000 against the highest interest loan. |
Can I negotiate a credit card settlement by stopping payments? | This strategy will have long lasting effects since negative items can persist for many years, making financing a home difficult, the primary source of household credit. It is also very risky. You can play hard, but then the creditor may choose you to be the one that they make an example out of by suing you for a judgement that allows them to empty your accounts and garnish your wages. If you have no record of late payments, or they are old and/or few, your credit score will quickly shoot up if you pay down to 10% of the balance, keep the cards, and maintain that balance rate. This strategy will have them begging you to take on more credit with offers of lower interest rates. The less credit you take on, the more they'll throw at you, and when it comes time to purchase a home, more home can be bought because your interest rates will be lower. |
Should I sell the home in 2014 or continue to rent it out? | You need to get the current tax software, the 2013 filing software is out already, even though it needs to update itself before filing, as the final forms aren't ready yet. Then you will look carefully at Schedule E to understand what gets written off. I see you are looking at the $2200 rent vs your own rent of $2100, but of course, the tax form doesn't care about your rent. You offset the expenses of that house against the income. The expenses are the usual suspects, mortgage interest, property tax, repairs, etc. But there's one big thing new landlords are prone to forgetting. Depreciation. It's not optional. Say the house cost you $400K. This is your basis. You need to separate the value of land which is not depreciated. For a condo with no land it can be as little as 10%, when we bought our house, for insurance purposes, the land was nearly 40% of the full value. Say you do the research and decide 30% (for land), then 70% = $280K. Depreciation is taken each year over a 27.5 year period, or just over $10,000 per year. (Note, the forms will help you get your year 1 number, as you didn't have a full year.) This depreciation helps with your cash flow during the year (as you should do the math, and if you keep the house, adjust your W4 withholdings for 2014, that lump sum you'll get in April won't pay the bills each month) but is 'recaptured' on sale. At some point in the future, you may save enough to buy a house where you wish to live, but need to sell the rental. Consider a 1031 Exchange. It's a way to sell a rental and buy a new one without triggering a taxable event. What I don't know is how long the new house must be a rental before the IRS would then allow you to move in. The same way you turned your home into a rental, a rental can be turned back to a primary residence. I just doubt you can do it right after the purchase. As fellow member @littleadv would advise, "get professional advice." And he's right. I've just offered what you might consider. The first year tax return with that Schedule E is the toughest as it's brand new. The next year is simple in comparison. The question of selling immediately is tough. Only you can decide whether the risk of keeping it is too great. You're saying you don't have the money to cover two month's vacancy. That scares me. I'd focus on beefing up the emergency account. And securing a credit line. You mentioned the tax savings. My opinion is that for any investment,the tax tail should never wag the investing dog. Buy or sell a stock based on the stock, not the potential tax bill for the sale. In your situation, the rent and expenses will cancel each other, and the depreciation is a short term loan, from a tax perspective. If you sold today, what do you net? If you analyzed the numbers now, what is your true income from the property each year? Is that return worth it? A good property will provide cash flow, principal reduction each year, and normal increase in value. This takes a bit of careful looking at the numbers. You might feel you're just breaking even, but if the principal is $12K less after a year, that's something you shouldn't ignore. On the other hand, an exact 'break-even' with little equity at stake offered you a leveraged property where any gains are a magnified percentage of what you have at risk. Last - welcome to Money.SE - consider adding some more details to your profile. |
I'm only spending roughly half of what I earn; should I spend more? | If you are happy, really honestly happy, there is no need to change because you read it somewhere. While I believe that budgeting in some fun is smart so you don't go crazy, I am really speaking for myself. I personally have to work at not spending more than I make, so I need to blow off some steam. I also think that you will find in the future something you want to do that costs money, and you would be glad to have it now. The same rules apply for you as they apply to everybody |
Why is day trading considered riskier than long-term trading? | But I don't see how it's any different than buying a stock at a low price and holding on to it for some months. Based on your question, I would say the difference is time. Day trading by its nature is a 6-hour endeavor. If you buy low and are planning to sell high, then you only have a few hours to make this happen. As a previous poster mentioned, there is a lot of "white noise" that occurs on a weekly/daily/hourly/min basis. Long-term investors have the time to wait it out. Although, as a side note, if you were a buy-and-hold investor from the 1960s-early 1980s, then buy and hold was not very good. Is it just the psychological/addictive aspect of it? This is the biggest reason. Day trading is stressful and stress can cause financially destructive decisions such as over-leveraging, over-trading, etc. Why is day trading stressful? Because you are managing hundreds to thousands of trades a year. When combined with the lack of time in a day to make moves, it becomes stressful. Also, many day traders do it full time. Which adds to the pressure to be correct and to be incredible at money managment. A lot of buy-and-hold investors have full time jobs and may only check their positions every month or so. |
Should I buy a home or rent in my situation? | If I were you, I would rent. Wait to buy a home. Here is why: When you say that renting is equal in cost to a 30-year mortgage, you are failing to consider several aspects. See this recent answer for a list of things that need to be considered when comparing buying and renting. You have no down payment. Between the two of you, you have $14,000, but this money is needed for both your emergency fund and your fiancée's schooling. In your words: "we can’t reeaallllly afford a home." A home is a big financial commitment. If you buy a home before you are financially ready, it will be continuous trouble. If you need a cosigner, you aren't ready to buy a home. I would absolutely advise whoever you are thinking about cosigning for you not to do so. It puts them legally on the hook for a house that you can't yet afford. You aren't married yet. You should never buy something as big as a home with someone you aren't married to; there are just too many things that can go wrong. (See comments for more explanation.) Wait until you are married before you buy. Your income is low right now. And that is okay for now; you've been able to avoid the credit card debt that so many people fall into. However, you do have student loans to pay, and taking on a huge new debt right now would be potentially disastrous for you. Your family income will eventually increase when your fiancée gets her degree and gets a job, and at that time, you will be in a much better situation to consider buying a house. You need to move "ASAP." Buying a house when you are in a hurry is a generally a bad idea. When you look for a home, you need to take some time looking so you aren't rushed into a bad deal that you will regret. Even if you decide you want to buy, you should first find a place to rent; then you can take your time finding the right house. To answer your question about escrow: When you own a house, two of the required expenses that you will have besides the mortgage payment are property taxes and homeowner's insurance. These are large payments that are only due once a year. The bank holding the mortgage wants to make sure that they get paid. So to help you budget for these expenses and to ensure that these expenses are paid, the bank will add these to your monthly mortgage payment, and set them aside in a savings account (called an escrow account). Then when these bills come due once a year, they are paid for out of the escrow account. |
Where to find out conversion ratio between General Motors bonds and new GM stock? | I would imagine that as a holder you will receive information in the post when it's made public, but I don't think it's been decided yet. This thread on the Motley Fool boards is keeping an eye on them - you might want to keep an eye on the thread. |
Are parking spaces and garage boxes a good investment? | No no no no!!!! Do not spend 25k on a damn slab of concrete when you don't even own the land! You are not "truly" the owner unless you legally own the land. I don't care what country your talking about. If you like I'll come over to your place, mix and pour some concrete on the floor, and you can pay me 5 euro. Deal? Buy the smallest parcel of land you can find. Own the land. Pour some concrete on it and viola!!! |
Is inflation a good or bad thing? Why do governments want some inflation? | Inflation is theft! It is caused when banks lend money that someone deposited, but still has claim to - called fractional reserve banking. On top of that, the Federal Reserve Bank (in the US) or the Central Bank of the currency (i.e. Bank of Japan, European Central Bank, etc.) can increase the monetary base by writing checks out of thin air to purchase debt, such as US Treasury Bonds. Inflation is not a natural phenomenon, it is completely man-made, and is caused solely by the two methods above. Inflation causes the business cycle. Lower interest rates caused by inflation cause long-term investment, even while savings is actually low and consumption is high. This causes prices to rise rapidly (the boom), and eventually, when the realization is made that the savings is not there to consume the products of the investment, you get the bust. I would encourage you to read or listen to The Case Against the Fed by Murray N. Rothbard - Great book, free online or via iTunes. |
How do third-party banks issue car loans? | I have had it two way now: I got pre-approval from my credit union which just so happened to be one of the bigger vehicle lenders in the metro area. What I found out was that the dealership (which was one of the bigger ones in the metro area) had a computer system that looked up my deal with the credit union. Basically, I signed some contracts and the CU and the dealership did whatever paperwork they needed to without me. I bought a used car and drove it off of the lot that night, and I didn't ever go back (for anything financial) Both my wife and her sister received blank checks that were valid up to a certain amount. In the case of my sister in law, she signed the check, the dealership called to confirm funds and she drove off. In the case of my wife, she ended up negotiating a better deal with dealer finance, but I was assured she only had to sign the check, get it verified and drive the car home. |
Difference between full and mini futures contract | Both of these are futures contracts on the Ibovespa Brasil Sao Paulo Stock Exchange Index; the mini being exactly that, a mini version (or portion) of the regular futures contract. The mini counterpart makes trading the index more affordable to individual investors and hence increase liquidity. |
Are those “auto-pilot” programs a scam or waste of time? | Genuine (nearly) passive income can be had from some kinds of investing. Index funds are an example of a mostly self-managing investment. Of course investment involves some risk (the income is essentially paying you for taking that risk) and returns are reasonable but proportional to the risk -- IE, not spectacular unless the risk is high. If someone is claiming they can get you better than market rate of return, look carefully at what they are getting out of it and what the risks are. Fees subtract directly from your gains, and if they claim there is no additional risk, they need to prove that. You are giving someone your money. Be very sure you are going to get it back. If it isn't self-evident where the income comes from, it's probably a scam. If someone is using the term "auto-pilot", it is almost certainly a scam. If they are talking about website advertising and the like, it is far from autopilot if you want to make any noticable amount of money (though you may make money for them). |
Expense ratio of an ETF included in the price or calculated separately | The expense ratio reduces the return of the ETF; your scenario of paying 100.0015 is that of a load. Most (all?) ETFs can be bought without paying a load (sales charge as a percent of amount invested), and some ETFs can be bought without paying a brokerage fee (fixed or variable charge for a buy transaction just like buying any other stock through the brokerage) because the brokerage has waived it. Your broker might charge fees for both buying and selling shares in an ETF, but in any case, this is quite separate from the expense ratio. |
What's a good personal finance management web app that I can use in Canada? | Here's a link with comparison of various online and offline PF software: http://personalfinancesoftwarereviews.com/compare-personal-finance-software/ |
How to teach personal reconciliation and book balancing | If you are wanting to teach your kids basic accounting principles there is some good stuff on Khan Academy. However most of the stuff takes practice to really make it hit home and its kinda boring (Especially to kids who may or may not care about it). Maybe if you help them set up an account on Mint so that they are at least aware of their finances. Think it also has a heap of videos you can watch that teaches basic personal finance. If you actually want them to understand the techniques and methods behind creating & maintaining a personal ledger/journal and reconciling it against a bank account you are getting into what undergraduates study and there are plenty of first year textbooks around. Look around for a second hand one that is a few revisions old and they are usually dirt cheap (I scored one for only a dollar not that long ago). I feel like the mindset is what matters most. Journals and all that jazz are easy if you have the right mindset. That is something that you really have to demonstrate to your children rather than teach. Meaning you yourself keeping your finances in order and showing them how you organise and file your bills/ credit cards etc. (So they learn the importance of keeping financial records; meaning in the future when its talked about it doesn't fall on deaf ears) Emphasize the whole "living within your means" because even if they don't understand bookkeeping or learn anything else at least their finances won't turn out too bad. |
Why can I see/trade VIX but not S&P/TSX 60 VIX? | S&P/TSX 60 VIX (CAD) is an equation and as the implied volatility of two close to the money TSX 60 options change, the output changes. This is why the intra-day price fluctuates on a graph like a traded product. Although VIXC can't be traded, it can still be used as an important signal for traders. The excerpt is from slide 12, more information can be found here. https://www.m-x.ca/f_publications_en/vixc_presentation_en.pdf Futures (stage 2) Options, ETFs, OTC Products (stage 3) have not been implemented. |
If I have a home loan preapproval letter for x, can the seller know this without me explicitely telling them? | The seller has a legitimate desire to know of your preapproval. I have two current anecdotes on this issue. As a realtor helping a client buy a home, I worked closely with buyer's bank, and got a pre-approval for the amount we were offering. When there was a counteroffer, and we were going to raise the price, the bank upped the numbers on the pre-approval letter. I have a property of my own I am trying to sell. I had a negotiated price, P&S, but no pre-approval from the buyer. The buyer of his home couldn't get a mortgage, and so far, the deal has fallen through. I agree with you, you don't want to signal you can afford more, nor show any emotion about how great that house is. That's just giving the seller a bargaining chip. |
When is Cash Value Life Insurance a good or bad idea? | Here's what I'd consider: |
Is it a good idea to teach children that work is linearly related to income? | My family instilled in me early on that hard work was important, and the output of that work was its reward. My grandparents really made in impression with me about telling the truth and being fair (probably after I was busted for lying and cheating about something) -- I remember my grandfather talking about the solem trust associated with shaking hands over something. I remember opening a savings account at school on bank day and being really excited about the interest accruing... but my folks never really allowed us to spend it on toys or other stuff. I didn't really think about money at all until I was probably about 10 or 11, when I started watching "Wall Street Week" on PBS with my dad on Friday night and bombarding him with dozens of questions. Then games like Sim City really got me going... my grandmother was always amazed that I was talking about bonding construction projects. I think that before 10 or so, kids needn't concern themselves with money, but should understand responsibility, the rewards that come from working hard, and the consequences for not doing so. |
Ideal investments for a recent college grad with very high risk tolerance? | If you're sure you want to go the high risk route: You could consider hot stocks or even bonds for companies/countries with lower credit ratings and higher risk. I think an underrated cost of investing is the tax penalties that you pay when you win if you aren't using a tax advantaged account. For your speculating account, you might want to open a self-directed IRA so that you can get access to more of the high risk options that you crave without the tax liability if any of those have a big payout. You want your high-growth money to be in a Roth, because it would be a shame to strike it rich while you're young and then have to pay taxes on it when you're older. If you choose not to make these investments in a tax-advantaged account, try to hold your stocks for a year so you only get taxed at capital gains rates instead of as ordinary income. If you choose to work for a startup, buy your stock options as they vest so that if the company goes public or sells privately, you will have owned those stocks long enough to qualify for capital gains. If you want my actual advice about what I think you should do: I would increase your 401k percentage to at least 10% with or without a match, and keep that in low cost index funds while you're young, but moving some of those investments over to bonds as you get closer to retirement and your risk tolerance declines. Assuming you're not in the 25% tax bracket, all of your money should be in a Roth 401k or IRA because you can withdraw it without being taxed when you retire. The more money you put into those accounts now while you are young, the more time it all has to grow. The real risk of chasing the high-risk returns is that when you bet wrong it will set you back far enough that you will lose the advantage that comes from investing the money while you're young. You're going to have up and down years with your self-selected investments, why not just keep plugging money into the S&P which has its ups and downs, but has always trended up over time? |
If I believe a stock is going to fall, what options do I have to invest on this? | What financial instruments are there that are profitable when an underlying assets falls? The instrument you are looking for is called an Option, specifically a Put Option. It allows you, within the validity date, to sell ('Put') the respective shares to the option giver, at the predefined Strike Price. For example, let's assume APPL trades currently at 100 $ per share, and you think they will go down a lot. You buy one Put Option for 100 shares (they always come for larger amounts like 100s) for a Strike Price of 90 $, and pay 5 $ for it (it would be cheap if nobody believes they will fall that much). Note the last sentence under 2. - it is rather easy and very common when trading options to make complete losses. You have been warned. Are they available for IPOs? They could be available for IPOs, even before the IPO. However, someone has to put them out (some large bank, typically), which is some effort, and they would only do that if they expect enough interest and volume in the trade. most of the time, there will be no such options on the market. Are they available for foreign stocks?Yes, but again only selectively - only if the stock is well known and interesting enough for a broad audience. |
GnuCash, how do I book loan from credit card, being paid back with salary? [duplicate] | When you pay the flight, hotel, conference attendance fees of $100: When you repay the credit card debt of $100: When you receive the gross salary of $5000: Your final balance sheet will show: Your final income statement will show: Under this method, your "Salary" account will show the salary net of business expense. The drawback is that the $4900 does not agree with your official documentation. For tax reporting purposes, you report $5000 to the tax agency, and if possible, report the $100 as Unreimbursed Employee Expenses (you weren't officially reimbursed). For more details see IRS Publication 529. |
Why are american call options more valuable than european options ONLY if the underlying asset pays cash flows? | Really all you need to know is that American style can be exercised at any point, European options cannot be exercised early. Read on if you want more detail. The American style Call is worth more because it can be exercised at any point. And when the company pays a dividend, and your option is in the money, if the extrinsic value is worth less than the dividend you can be exercised early. This is not the case for a European call. You cannot be exercised until expiration. I trade a lot of options, you wont be exercised early unless the dividend scenario I mentioned happens. Or unless the extrinsic value is nothing, but even then, unless the investor really wants that position, he is more likely to just sell the call for an equivalent gain on 100 shares of stock. |
Hiring a teenager as a household employee | First you need to ensure that you are not violating any Federal child labor laws. I would look at this: U.S. Dept of Labor, Wage & Hour Div., Standards for 14- and 15-Year Olds in Nonagricultural Employment. These were the items that pertained to Federal Law, for 14 year olds: 14 is the minimum age for employment in specified occupations outside of school hours for limited periods of time each day and each week. Fourteen- and 15-Year-Olds May Not Be Employed: There is a section on minimum allowed wage payment to young workers, and also a list of allowed types of work for 14 and 15 year old's. The type of household helper tasks described definitely fell within what was allowed for child labor. The same page details what sort of forms need to be filled out. I think this is something that is done quite commonly. Here are specifics in New York State for minimum wage for minors and for employing 14 year olds. |
In a competitive market, why is movie theater popcorn expensive? | One explanation is that movie patrons are considering their total willingness to pay for the movie experience so that if the ticket price plus the market price of popcorn is less than their willingness to pay (WTP), the theater has an opportunity to extract more consumer surplus by charging higher than market prices for the popcorn (that is, price discrimination). There is a working paper on the subject by Gill and Hartmann (2008), the abstract of which reads: Prices for goods such as blades for razors, ink for printers and concessions at movies are often set well above cost. Theory has shown that this could yield a profitable price discrimination strategy often termed “metering.” The idea is that a customer’s intensity of demand for aftermarket goods (e.g. the concessions) provides a meter of how much the customer is willing to pay for the primary good (e.g. admission). If this correlation in tastes for the two goods is positive, a high price on the aftermarket good allows firms to extract a greater total price (admissions plus concessions) from higher type customers. This paper develops a simple aggregate model of discrete-continuous demand to motivate how this correlation can be tested using simple regression techniques and readily available firm data. Model simulations illustrate that the regressions can be used to predict whether aftermarket prices should be above, below or equal to their marginal cost. We then apply the approach to box-office and concession data from a chain of Spanish theaters and find that high priced concessions do extract more surplus from customers with a greater willingness to pay for the admission ticket. Locay and Rodriquez (1992) make a similar argument in a JPE article. They essentially argue that purchases of things like movie tickets are made by groups; once individuals are constrained by the group's choice, the firm has additional market power: We present models in which price discrimination in the context of a two-part price can occur in some competitive markets. Purchases take place in groups, which choose which firms to patronize. While firms are perfectly competitive with respect to groups, they have some market power over individual consumers, who are constrained by their groups' choices. We find that firms will charge an entry fee that is below marginal cost, and the second part of the price is marked up above marginal cost. The markup not only is positive but increases with the quality of the product. The quote you are looking for is similar, and again attributes the discrepancy to price discrimination. From the Armchair Economist (p. 159): The purpose of expensive popcorn is not to extract a lot of money from customers. That purpose would be better served by cheap popcorn and expensive movie tickets. Instead, the purpose of expensive popcorn is to extract different sums from different customers. Popcorn lovers, who have more fun at the movies, pay more for their additional pleasure. That is, some people like popcorn more than others. The latter idea is that the movie experience for popcorn lovers is worth more than the sum of its parts: that a movie ticket + popcorn is worth more than either of them separately for some people. |
Opening American credit cards while residing in the UK | nan |
How to rebalance a passive portfolio if I speculate a war is coming? | Normally, in a war everybody suffers and the entire economy goes down. Military contractors do better than average, but the average sucks. The way to take advantage of knowing a war is coming is to leave as soon as possible. There are strategic materials that can become valuable in a war, but such investments are generally very specialized and not something an ordinary investor would be in a position to exploit. The most profitable businesses in war are food, oil, and ammunition. |
How to fix Finance::Quote to pull quotes in GnuCash | The yahoo finance API is no longer which broke the Finance:Quote perl module. The Finance:Quote developers have been quick to fix things and have produced several new versions in the last week or two. The short of it is that you need to update Finance:Quote, then obtain an AlphaVantage free key and tell Gnucash to use AlphaVantage as it's source for online quotes by editing your securities in the Price Editor. |
How does a online only bank protect itself against fraud? | Much of what you're asking will not be disclosed for obvious security reasons, so don't be surprised when call center people say they "don't know". They may actually not know, but even if they did, they'd be fired if they were to say anything. Nothing could be a touchier subject than online security for the financial institutions. I don't know of reliable sources for the data you're asking about, and I don't know the banks or other firms would release it. For a bank to talk about its incidence rates of fraud would be unusual, because none of these institutions wants to appear "less safe" than their competitors. If there's any information out there then it's going to be pretty vague. None of these institutions wants the "bad guys" to know what their degree of success is against one bank versus any other. I hope that makes sense. The smaller banks usually piggyback their data on the networks of the larger financial institutions, so they are as secure (as a general rule) as the larger banks' networks they're running on. Also, your transactions on your credit cards are not generally handled directly by your bank anyway, unless it's one of the big heavyweights like Chase or Bank of America. All transactions run through merchant processors, who act as intermediaries between merchants and the banks, and those guys are pretty damned good at security. I've met some of the programmers, and they're impressive to me (I've been a programmer for 35 years and can't put a finger on these guys!). Most banks require that you must provide proof of identity when opening an account, and that ID must me the standards of the "USA Real ID Act". Here's an excerpt from the Department of Homeland Security website on what Real ID is: Passed by Congress in 2005, the REAL ID Act enacted the 9/11 Commission’s recommendation that the Federal Government “set standards for the issuance of sources of identification, such as driver's licenses.” The Act established minimum security standards for state-issued driver’s licenses and identification cards and prohibits Federal agencies from accepting for official purposes licenses and identification cards from states that do not meet these standards. States have made considerable progress in meeting this key recommendation of the 9/11 Commission and every state has a more secure driver’s license today than before the passage of the Act. In order for banks to qualify for FDIC protection, they must comply with the Real ID standards when opening accounts. As with any business (especially online), the most effective way to minimize fraud is vigilant monitoring of data. Banks and other online financial entities have become very adept at pattern analysis and simply knowing where and what to look for when dealing with their customers. There are certainly sophisticated measures which are kept carefully out of the public eye for doing this, and obviously they're good at it. They have to be, right? There's no way to completely eliminate fraud -- too much incentive exists for the "bad guys" to not constantly search for new ways to run their schemes, and the good guys will always be at the disadvantage, because there's no way to anticipate everything anyone might come up with. Just look at online viruses and malware. Your antivirus software can only deal with what it knows about, and the bad guys are always coming up with some new variant that gets past the filters until the antivirus maker learns of it and comes up with a way to deal with it. Your question's a good one to ponder, and I wouldn't want to be the chief of internet security for a bank or online institution, because I'd lay awake at night pondering when the call's going to come that we finally ran out of luck! (grin) I hope this was helpful. Good luck! |
If our economy crashes, and cash is worthless, should i buy gold or silver | Neither. Food, fuel, and tools. Books on how to make and use basic tools -- the books published for farmers who want to kluge their own solutions might be helpful. Heck, help defend a library; it will be beyond price as soon as things settle out a bit. Having skills like blacksmithing and knowing how to teach could go a long way. SF really has explored this in better detail than we could possibly cover here. |
Does borrowing from my 401(k) make sense in my specific circumstance? | Since most of the answers are flawed in their logic, I decided to respond here. 1) "What if you lose your job, you can't pay back the loan" The point of the question was to reduce the amount paid per month. So obviously it would be easier to pay off the 401k loan rather than the 3 separate loans that are in place now. Also it's stated in the question that there's a mortgage, a child with medical costs, a car loan, student loans, other debt. On the list of priorities the 401k loan does not make the top 10 concerns if they lost their job. 2) "Consider stopping the 401k contribution" This is such a terrible idea. If you make the full contribution to the 401k and then just withdraw from the 401k rather than getting a loan you only pay a 10% penalty tax. You still get 90% of the company match. 3) "You lose compound interest" While currently the interest you get on a 401k (depending on how that money is invested) is higher than the interest you pay on your loans (which means it would be advantageous to keep the loans and keep contributing to the 401k), it's very unreliable and might even go down. I think you actually have a good case for getting a loan against the 401k if a) You have your spending and budget under control b) Your income is consistent c) You are certain that the loan will be paid back. My suggestion would be to take a loan against the 401k, but keep the current spending on the loans consistent. If you don't need the extra $150 per month, you really should try to pay off the loans as fast as you can. If you do need the $150 extra, you are lowering the mental threshold for getting more loans in the future. |
2016, USA banks with low/no fee for incoming OVERSEAS USD wire transfers? | Ally Bank $0 - from their website (emphasis mine): To receive a wire transfer from a non-U.S. bank: Incoming wire transfers from a non-US bank are processed by our designated receiving bank, JP Morgan Chase Bank, N.A. You'll need to provide the following information to the person or business sending the wire transfer to you: Receiving Bank: JP Morgan Chase Bank, N.A. ABA/Routing Number: 021000021 Address: 1 Chase Manhattan PLZ, New York, NY 10005 SWIFT Code or Bank Identification Code: CHASUS33 Beneficiary Account Number: 802904391 Beneficiary Name: List 'Ally Bank' since the wire is being processed by JP Morgan Chase Bank, N.A. Further Credit: Your Ally Bank Account Number and your name as it appears on your Ally Bank account. Note: We won't charge you to receive a wire transfer into your Ally account. https://www.ally.com/help/search.html?term=SWIFT&console=false&context=Help&domain=www.ally.com§ion=Help+%26+FAQs Alliant Credit Union $0 - from their website (emphasis mine): Direct international wire transfers International wire transfers are handled through our correspondent bank for processing. International wires can take up to 10 business days to be credited to the receiving institution. Funds should be wired to: Northern Trust ABA# 071000152 "Note: US Banks do not use SWIFT codes. This ABA # is used in place of SWIFT codes for US Banks." 50 South La Salle Street, Chicago, IL 60603 For further credit: Alliant Credit Union Account Number 35101804 11545 W. Touhy Avenue, Chicago, IL 60666 For final credit: Member’s name and complete address (No P.O. Box) Member’s 14-digit account number Destination of funds (checking, savings or loan number) Incoming wire transfers: Wire transfers received Monday - Friday, 7:00am - 3:00pm, CT, will be credited to your account the same day. Wire transfers received after 3:00pm, CT, Monday - Friday and on the weekend will be credited the next business day. Fees: We do not charge a fee to receive incoming wire funds. However, the financial institution wiring the funds may charge for this service. http://www.alliantcreditunion.org/help/receiving-a-wire-transfer-to-your-alliant-account |
What's the process to buy an old house to tear it down and create a new one? | Thank you for your response KeithB and Ross. I was researching more about this and looks like I have to follow all these steps (please, correct me if I'm wrong): |
How are shares used, and what are they, physically? | How to 'use' your shares: If you own common shares in a company (as opposed to a fund) then you have the right (but not the obligation) to excersize one vote per share on questions put before the shareholders. Usually, this occurs once a year. Usually these questions regard approval of auditors. Sometimes they involve officers such as directors on the board. You will be mailed a form to fill out and mail back in. Preferred shares usually are not voting shares,but common shares always are. By the way, I do not recommend owning shares in companies. I recommend funds instead,either ETFs or mutual funds. Owning shares in companies puts you at risk of a failure of that company. Owning funds spreads that risk around,thus reducing your exposure. There are, really, two purposes for owning shares 1) Owning shares gives you the right to declared dividends 2) Owning shares allows you to sell those shares at some time in the future. (Hopefully at a profit) One obscure thing you can do with owned shares is to 'write' (sell) covered put options. But options are not something that you need to concern yourself with at this point. You may find it useful to sign up for a free daily email from www.investorwords.com. |
Effective Interest Rate from bifurcated interest rate | If the APR is an effective rate. If the APR is a nominal rate compounded monthly, first convert it to an effective rate. |
When to start investing in the stock market? | Investing requires capital, and the fastest way to get the capital is to develop good saving habits. Investing is an ongoing process to help you accumulate wealth, so to take advantage of compounding, the earlier you start, the better. I can suggest a few pointers to get you started on the investing journey. Godspeed! :) |
Is Amazon's offer of a $50 gift card a scam? | Amazon has 2 different cards you can apply for, a store card and a credit card. The credit card is through Chase. The deal is not a scam, I can confirm this because I applied for their credit card and got $70 in the form of a digital gift card. By giving customers free money for signing up for their cards they get more people who are willing to give it a try. Once you have a card, you get benefits like 3-5 percent back on Amazon purchases that will entice consumers to use the card. Amazon likely has an agreement with Chase and they are hoping to get you hooked with the free money and benefits. |
Is it worth it to reconcile my checking/savings accounts every month? | While it's wise, easier and safer to check your transactions online a few times a month, I opt to receive and file paper statements as a hard copy back up of account history. Any reconciliation I perform is a quick glance to make sure the numbers sound right. It's probably a small waste of time and space, but it settles some of my paranoia (due to my training as a computer engineer) about failure of electronic banking systems. If someone tampers with bank records or a SAN explodes and wipes out a bunch of account data, then I will have years worth of paper statements to back up my numbers. Having years worth of statements printed on the banks stationary will have better credibility in court than a .pdf or printout thereof that could have been doctored, in case I ever needed to take my bank to court. A little piece of mind for the price of a letter opener, a square foot file box and a couple of minutes a month. |
How smart is it to really be 100% debt free? | Debt increases your exposure to risk. What happens if you lose your job, or a major expense comes up and you have to make a hard decision about skipping a loan payment? Being debt free means you aren't paying money to the bank in interest, and that's money that can go into your pocket. Debt can be a useful tool, however. It's all about what you do with the money you borrow. Will you be able to get something back that is worth more than the interest of the loan? A good example is your education. How much more money will you make with a college degree? Is it more than you will be paying in interest over the life of the loan? Then it was probably worth it. Instead of paying down your loans, can you invest that money into something with a better rate of rate of return than the interest rate of the loan? For example, why pay off your 3% student loan if you can invest in a stock with a 6% return? The money goes to better use if it is invested. (Note that most investments count as taxable income, so you have to factor taxes into your effective rate of return.) The caveat to this is that most investments have at least some risk associated with them. (Stocks don't always go up.) You have to weigh this when deciding to invest vs pay down debts. Paying down the debt is more of a "sure thing". Another thing to consider: If you have a long-term loan (several years), paying extra principal on a loan early on can turn into a huge savings over the life of the loan, due to power of compound interest. Extra payments on a mortgage or student loan can be a wise move. Just make sure you are paying down the principal, not the interest! (And check for early repayment penalties.) |
What is insider trading exactly? | Insider trading is any trading done on material non-public information relating to an instrument. If my sister, who works for a drugs testing company, tells me that stage 3 trials of a drug look like they will fail and I trade on that information (probably by shorting a company's stock) that is insider trading. If an employee of that firm trades on that same stock knowing that the trials are likely to fail that is too. If an employee of that company trades on the stock without knowing that information that is NOT insider trading. If I know from an insider I met at the pub that a large orange producer has seen a fall in production due to a blight and I trade on oranges futures, even though I am not directly trading in the stock it is still insider trading. I mentioned that the information must be material, that means that it must have the potential to move the market; if I know that a firm is going to increase profits by 10% this year it is not material if analyst expectations are for a similar rise. You are right that small scale insider trading, such as by employees and their families, is relatively unregulated and unchecked but directors and C-level employees of a firm are required to publish all and any dealings that they have in the stock and several have been caught and penalized for insider trading. edit: http://www.sec.gov/spotlight/insidertrading/cases.shtml details some cases, many involving director and C-level employees, that the SEC has prosecuted recently. Incidentally I work in financial fraud monitoring and we use an analytic based on previous days' trades and today's news (i.e. when the information becomes public) to identify traders who might either be indulging in or receiving orders to trade on insider information. Essentially this works by looking for large changes in position against an instrument that later has material information releases relevant to it. One final thing to think about: given that being caught will generally cause perpetrators to go to prison and be banned from director level jobs and/or trading for life as well as a large, life-changing fine and a massive loss of reputation not many people with insider information want to risk trading on it, myself included. |
What are the ins/outs of writing equipment purchases off as business expenses in a home based business? | First of all, Dilip's answer explains well how the business deductions generally work. For most (big) expenses you depreciate it. However, in some cases you need to capitalize it, which is another accounting method. When you capitalize your expense, it becomes part of the basis of the product you're creating. Since you're an engineer, this might be relevant for you. Talk to your tax adviser. How exactly you deduct/depreciate/capitalize things, and what expense goes which way depends greatly on the laws and jurisdictions. Even in the US, different states have different laws, and the IRS and State laws don't have to conform (unfortunately). For example, the limitations on Sec. 179 deduction in 2010-2011 were 20 times higher on Federal level than in the State of California. This could have lead to cases where you fully deducted your expense on your Federal tax return, but need to continue and depreciate it on your State return (or vice versa). Good tax adviser is crucial to avoid or manage these cases. |
What does “Settling your Debt” entail, and how does it compare to other options? | Basically, these guys break all your eggs then try to make an omelet. Your lender(s) must really believe that you have no ability to pay before they'll settle, which generally entails not paying them until your creditworthiness is in the tank. Bankruptcy laws exist for a reason. If your credit is in the tank, you can't make your payments and you're shopping to settle your debts, it's not likely a bankruptcy would worsen your situation; in fact, quite the opposite. But, people have hugely negative feelings toward bankruptcy and don't want to be called a "deadbeat", these services prey on those people. |
Looking to buy a property that's 12-14x my income. How can it be done? | What options do I have? Realistically? Get a regular full time job. Work at it for a year or so and then see about buying a house. That said, I recently purchased a decent home. I am self-employed and my income is highly erratic. Due to how my clients pay me, my business might go a couple months with absolutely no deposits. However, I've been at this for quite a few years. So, even though my business income is erratic, I pay myself regularly once a month. In order to close the deal with the mortgage company I had to provide 5 years worth of statements on my business AND my personal bank accounts. Also I had about a 30% down payment. This gave the bank enough info to realize that I could absolutely make the payments and we closed the deal. I'd say that if you have little to no actual financial history, don't have a solid personal income and don't have much of a down payment then you probably have no business buying a house at this point. The first time something goes wrong (water heater, ac, etc) you'll be in a world of trouble. |
How to account for startup costs for an LLC from personal money? | An LLC is a pass-through entity in the USA, so profits and losses flow through to the individual's taxes. Thus an LLC has a separate TIN but the pass-through property greatly simplifies tax filings, as compared to the complicated filings required by C-corps. |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | 'If i co-sign that makes me 100% liable if for any reason you can't or won't pay. Also this shows up on a credit report just like it's my debt. This limits the amount i can borrow for any reason. I don't want to take on your debt, that's your business and i don't want to make it mine'. |
I am a Resident Alien for tax purposes. Can I claim exemptions from the India - US Tax Treaty (21)? | I was able to find several references that claim that the Indo-US treaty provision is limited to five years: Here it says this (on page 20): Generally the treaty exemption for students is limited to the first five calendar years that the international student is in the U.S. However there is no set time limit for students from Belgium, Bulgaria, China, The Netherlands, and Pakistan. However, I couldn't find any specific time limit neither in the treaty nor in the technical explanation. The explanation says: Thus, for example, an Indian resident who visits the United States as a student and becomes a U.S. resident according to the Code, other than by virtue of acquiring a green card, would continue to be exempt from U.S. tax in accordance with this Article so long as he is not a U.S. citizen and does not acquire immigrant status in the United States. The saving clause does apply to U.S. citizens and immigrants. However, the treaty explicitly says this: The benefits of this Article shall extend only for such period of time as may be reasonable or customarily required to complete the education or training undertaken. The reason for this last paragraph is to ensure that you don't artificially prolong your student status, and the 5 year limit may come out of the interpretation of this specific paragraph. Similar paragraph exists in the US-China treaty, and the explanation for that treaty says this: These exemptions may be claimed only for the period reasonably necessary to complete the education or training. In some cases, the course of study or training may last less than year. For most undergraduate college or university degrees the appropriate period will be four years. For some advanced degrees, such as in medicine, the required period may be longer, e.g., seven years. Based on this, it is my personal impression that if you're an undergraduate student and studying the same degree (and not, for example, finished your BA, and started your MS) - you are no longer eligible for the treaty benefit. But I suggest you ask a professional (EA/CPA licensed in your State) for a more reliable tax advice on the matter. I'm not a tax professional and this is not a tax advice. |
Google Finance: Input Parameters For Simple Moving Averages | I looked at this a little more closely but the answer Victor provided is essentially correct. The key to look at in the google finance graph is the red labled SMA(###d) would indicate the period units are d=days. If you change the time axis of the graph it will shift to SMA(###m) for period in minutes or SMA(###w) for period in weeks. Hope this clears things up! |
How do you find reasonably priced, quality, long lasting clothing? | Use resources like Consumer Reports and recommendations from like-minded friends to figure out brands which have a reputation for making quality clothes. Then trust, but verify. Ideally have a friend who sews a lot go with you on a clothing expedition if you don't know how to determine quality in clothing. People who sew knew their fabrics, and this could be very helpful to you. Start at places that are known for quality clothing, but make sure the reputation hasn't outlived reality. I'd look for: Once you've identified places that you can trust, wait for sales at those stores. I've found that shopping sales at department stores (or better, places like L. L. Bean) is cheaper than a discount retailer and much easier. Even cheaper, go to a thrift store and look for those brands in timeless styles. Your mileage will vary in terms of the what people throw out in your area. Thrift stores work extremely well in high cost of living areas where people give away nearly new items. |
How do used vehicle exchange programs at car dealerships work? | Yikes! Not always is this the case... For example, you purchased a new car with an interest rate of 5-6%or even higher... Why pay that much interest throughout the loan. Sometimes trading in the vehicle at a lower rate will get you a lower or sometimes the same payment even with an upgraded (newer/safer technology) design. The trade off? When going from New to New, the car may depreciate faster than what you would save from the interest savings on a new loan. Sometimes the tactics used to get you back to the dealership could be a little harsh, but if you do your research long before you inquire, you may come out on the winning end. Look at what you're paying in interest and consider it a "re-finance" of your car but taking advantage of the manufacturer's low apr special to off-set the costs. |
Are services provided to Google employees taxed as income or in any way? | In many countries, giving something free to the employee is considered a taxable income equivalent, and taxes have to be paid on it. As it cannot be assigned to specific employees, the company pays a flat tax on it, so it actually costs the company more. Also, not all employees value it equally, or consider it as a part of their income, so reducing the salary accordingly would not be considered ok by many employees. As a result, the company can only do it as an additional offer, which is too expensive for small businesses. |
How do you invest in real estate without using money? | They're probably talking about flipping houses. The conventional wisdom when flipping is to purchase the property with a mortgage or other loan on day-0. Do the work to rehabilitate it. Get it listed for re-sale promptly (this step has varying strategies) with a profitable price but one that will make it move. Have the house sold on or before the first payment would be due. This is anywhere from 30 to 60 days. The flipper then never has to make a payment on the mortgage or loan, the costs of rehabilitating the home are recovered promptly (potentially before any loan, credit card payments, or invoices are due), and there is a profit. This also assumes that either a 100% loan or some other mechanism is used to address closing costs and fees. This model fits the premise of the infomercial in that you make money investing in real estate but never have to tie up any of your own money in the process. |
Is compounding interest on investments a myth? | This post may be old anyhow here's my 2 cents. Real world...no. Compounding is overstated. I have 3 mutual funds, basically index funds, you can go look them up. vwinx, spmix, spfix in 11 years i've made a little over 12,000 on 50,000 invested. That averages 5%. That's $1,200 a year about. Not exactly getting rich on the compounding "myth?". You do the math. I would guess because overly optimistic compounding gains are based on a straight line gains. Real world...that aint gonna happen. |
If I have $1000 to invest in penny stocks online, should I diversify risk and invest in many of them or should I invest in just in one? | If you want to put in $1000 into penny stocks, I wouldn't be calling that investing but more like speculation or gambling. You might have better odds at a casino. If you don't have much money at the moment to invest properly and you are just starting out as an investor, I would spend that $1000 on educating yourself so that by the time you have more money to invest you can come up with a better investment strategy. |
I am the sole owner of an LLC. Does it make a difference if I file as an S-Corp or a sole-member LLC? | In the United States, with an S-Corp, you pay yourself a salary from company earnings. That portion is taxed at an individual rate. The rest of the company earnings are taxed as a corporation, which often have great tax benefits. If you are making over $80K/year, the difference can be substantial. A con is that there is more paperwork and you have to create a "board" of advisors. |
How can I figure out when I'll be able to write call options of a stock? | Call the CBOE, the Chicago Board of Options Exchange I've requested options on several IPOs in the past. You mainly have to convince them that there is a market for them (or they won't be inclined to provide liquidity). The CBOE could talk to the company in question to help convince them, or the CBOE will just tell you when the options will begin trading. Oh yeah, sometimes they'll ask you who you work for, just try to avoid that question, they don't like to talk to individual/retail investors. |
How are people able to spend more than what they make, without going into debt? | I don't know about Jeff Bezos in particular but, in general, and with a a few other notorious exceptions like Warren Buffet, billionaires also have incomes (salary, dividends, fees to seat on various boards of directors, etc.) in the millions, not the tens of thousand. That's typically still much lower than their wealth but certainly enough to sustain a comfortable lifestyle. However it's still true that some billionaires have so much of their wealth tied up in a single corporation that they could not practically get it all out at once, if they ever wanted to. But they can still typically sell at least some shares, which is exactly what Jeff Bezos has done to buy the Washington Post for example. |
Is it acceptable to receive payment from U.S. in Indian saving bank account via PayPal? | It is fine to receive payments into Indian Savings Bank account. There are no restriction on deposits. There are only restrictions on number of withdrawls in a quarter. A Current[a.k.a Checking] account makes it easier to manage. You haven't asked about tax, but I you may already know you would need to pay taxes irrespective of whether you got the money in Savings or Current account. Edit: Any individual can open a Current Account on individual's name. There is no restriction. There are multiple aspects to determine whether the activity you are doing is a service as defined by the Service Tax Rules. Please consult a CA to guide you. For less than 5K INR he would not only advice you but also do everything required to file taxes. |
Is paying off your mortage a #1 personal finance priority? | Paying off your house quickly should be a #2-level priority, behind making sure you have some basic savings but definitely ahead of any investing concerns, because your house is not an investment; it's your home. (If you're brave/foolish enough to try buying houses-as-investments in the current climate, this obviously doesn't apply to you!) This isn't a financial matter so much as an issue of basic prudence. If something disastrous happens, (you lose your job, get in a serious car accident, your kid comes down with cancer, etc,) it will put tremendous strain on your financial resources. If you own your home outright when this happens, it means that no matter what else might go wrong, you can't get foreclosed on and end up out on the streets, and that's worth more than any rate of return you can reasonably expect to find even in the best of times. It's a well-known investing maxim to "never bet anything that you can't afford to lose." In light of that, consider this: if you have a mortgage that is not paid off, that's exactly what you're doing. You are placing a bet against a bank that you'll remain solvent long enough to pay off the mortgage, and your home is the wager. Mortgages may be a necessary evil with housing prices being what they are, but make no mistake, they are evil. Get rid of yours as quickly as you can. |
Can I apply prior years' capital losses against my employee stock option exercise? | As I recall, the gain for ISOs is considered ordinary income, and capital losses can only negate up to $3000 of this each year. If you exercised and held the stock, you have ordinary income to the exercise price, and cap gain above that, if you hold the stock for two years. EDIT - as noted below, this answer works for USians who found this question, but not for the OP who is Canadian, or at least asked a question at it relates to Canada's tax code. |
Why liquidity implies tight spread and low slippage | You have just answered your question in the last sentence of your question: More volume just means more people are interested in the stock...i.e supply and demand are matched well. If the stock is illiquid there is more chance of the spread and slippage being larger. Even if the spread is small to start with, once a trade has been transacted, if no new buyers and sellers enter the market near the last transacted price, then you could get a large spread occurring between the bid and ask prices. Here is an example, MDG has a 50 day moving average volume of only 1200 share traded per day (obviously it does not trade every day). As you can see there is already an 86% spread from the bid price. If a new bid price is entered to match and take out the offer price at $0.039, then this spread would instantly increase to 614% from the bid price. |
What is bespoke insurance? | The word bespoke means made to order. Bespoke insurance means non-cookie cutter. That mean the thing your are trying to protect, or the risk to that item is not normally covered; so you need a non-standard type of policy. Your neighborhood insurance company doesn't handle a bespoke policy. There are companies that do. Reinsurance is insurance on insurance. Company X has a risk they want to insure, so they go to insurance company A. After a while insurance company A realizes that they have sold a few of these policies and they have a risk if they guessed wrong. So they take out a policy with insurance company B to protect themselves if more than some percentage of their policies go bad. That policy takes bespoke reinsurance. |
Insurance, healthcare provider, apparent abuse, lack of transparency | I wouldn't classify your treatment as abuse. Medical billing has become more complex not less complex. You need to learn to ask even more questions regarding expenses, you probably need to see these price quotes in writing. You did several things correctly. Staying in-network generally is best because many plans have two deductible limits: In-network, and out-of-network. You need to make sure that the insurance company does credit you with having paid the new patient fee. That will qualify as an expense toward the deductible and your maximum out of pocket for the year. Some doctors offices don't send to insurance companies items that they know will not be covered, not remembering that these costs are critical under the High deductible plans with a health savings account. Doctors offices have problems determining how much the cost to you will be. It depends not just on the insurance company but also which type of plan you have, which sub-plan you have, and are you covered by more than one plan. Not to mention individual deductibles, family deductibles, and annual out-of-pocket amount. All this is wanted prior to the doctor seeing the patient. Most doctors offices will work with you, they know that each insurance plan treats each medical billing code differently, sometimes they make a mistake. Talk to them. |
Why do people always talk about stocks that pay high dividends? | Mostly we invest in companies to make money. The money can be paid to as in the form of dividends that are a share of the profit. Or the company can convince enough people that it will make a lot higher profit next year, so its stock prices increases. Clearly a company that reinvests its 20% profit from one shop to open an 2nd shop is doing well and is a good investment. But, But, But... we only have the companies word for it! A dividend paying company finds it a lot harder to hide bad news for long, as it will not have the money in the bank to pay the dividends. |
Does the stock market create any sort of value? | In general, I think you're conflating a lot of ideas. The stock market is not like a supermarket. With the exception of a direct issue, you're not buying your shares from the company or from the New York Stock Exchange you're buying from an owner of stock, Joe, Sally, a pension fund, a hedge fund, etc; it's not sitting on a shelf at the stock market. When you buy an Apple stock you don't own $10 of Apple, you own 1/5,480,000,000th of Apple because Apple has 5,480,000,000 shares outstanding. When a the board gets together to vote on and approve a dividend the approved dividend is then divided by 5.48 billion to determine how much each owner receives. The company doesn't pay dividends out to owners from a pot of money it received from new owners; it sold iPhones at a profit and is sending a portion of that profit to the owners of the company. "When you buy stock, it is claimed that you own a small portion of the company. This statement has no backing, as you cannot exchange your stock for the company's assets." The statement does have backing. It's backed by the US Judicial system. But there's a difference between owning a company and owning the assets of the company. You own 1/5,480,000,000 of the company and the company owns the company's assets. Nevermind how disruptive it would be if any shareholder could unilaterally decide to sell a company's buildings or other assets. This is not a ponzi scheme because when you buy or sell your Apple stock, it has no impact on Apple, you're simply transacting with another random shareholder (barring a share-repurchase or direct issue). Apple doesn't receive the proceeds of your private transaction, you do. As far as value goes, yes the stock market provides tons of value and is a staple of capitalism. The stock market provides an avenue of financing for companies. Rather than taking a loan, a company's board can choose to relinquish some control and take on additional owners who will share in the spoils of the enterprise. Additionally, the exchanges deliver value via an unbelievable level of liquidity. You don't have to go seek out Joe or Sally when you want to sell your Apple stock. You don't need to put your shares on Craigslist in the hope of finding a buyer. You don't have to negotiate a price with someone who knows you want to sell. You just place an order at an exchange and you're aligned with a buyer. Also understand that anything can move up or down in value without any money actually changing hands. Say you get your hands on a pair of shoes (or whatever), they're hot on the market, very rare and sought after. You think you can sell them for $1,000. On tonight's news it turns out that the leather is actually from humans and the CEO of the company is being indicted, the company is falling apart, etc. Your shoes just went from $1,000 to $0 with no money changing hands (or from $1,000 to $100,000 depending on how cynical you are). |
Can I buy stocks directly from a public company? | If the company has a direct reinvestment plan or DRIP that they operate in house or contract out to a financial company to administer, yes. There can still be transaction fees, and none of these I know of offer real time trading. Your trade price will typically be defined in the plan as the opening or closing price on the trade date. Sometimes these plans offer odd lot sales at a recent running average price which could provide a hundred dollar or so arbitrage opportunity. |
Apartment lease renewal - is this rate increase normal? | If it is true that for the same price, you could get a better place (or that for a lower price you could get an equivalent place), you should do some soul-searching to decide what monetary value you would place on the hassle of moving to such an alternative. You should then negotiate aggressively for a rent that is no more than the rent of the alternative place plus your hassle costs, and if the landlord does not meet your price, you should refuse to renew your lease, and instead move out to an alternative. (Of course, you might also want to double-check your research to ensure you really can get such a good alternative, and that your new landlords won't try a similar bait-and-switch and force you to move again in a year.) Barring local ordinances such as rent control laws, I don't think it's worth it to worry about whether the increase is "normal". If you can get a better deal somewhere else, then what your landlords are asking is too much. If you have a good relationship with them on a personal level you may be able to tell them this in a nice way and thus get them to make a more reasonable offer. Otherwise, the landlords will learn that their expectations are unreasonable when all their tenants move out to cheaper places. |
What is the meaning of “short selling” or “going short” a stock? | Rich's answer captures the basic essence of short selling with example. I'd like to add these additional points: You typically need a specially-privileged brokerage account to perform short selling. If you didn't request short selling when you opened your account, odds are good you don't have it, and that's good because it's not something most people should ever consider doing. Short selling is an advanced trading strategy. Be sure you truly grok selling short before doing it. Consider that when buying stock (a.k.a. going long or taking a long position, in contrast to short) then your potential loss as a buyer is limited (i.e. stock goes to zero) and your potential gain unlimited (stock keeps going up, if you're lucky!) Whereas, with short selling, it's reversed: Your loss can be unlimited (stock keeps going up, if you're unlucky!) and your potential gain is limited (i.e. stock goes to zero.) The proceeds you receive from a short sale – and then some – need to stay in your account to offset the short position. Brokers require this. Typically, margin equivalent to 150% the market value of the shares sold short must be maintained in the account while the short position is open. The owner of the borrowed shares is still expecting his dividends, if any. You are responsible for covering the cost of those dividends out of your own pocket. To close or cover your short position, you initiate a buy to cover. This is simply a buy order with the intention that it will close out your matching short position. You may be forced to cover your short position before you want to and when it is to your disadvantage! Even if you have sufficient margin available to cover your short, there are cases when lenders need their shares back. If too many short sellers are forced to close out positions at the same time, they push up demand for the stock, increasing price and deepening their losses. When this happens, it's called a short squeeze. In the eyes of the public who mostly go long buying stock, short sellers are often reviled. However, some people and many short sellers believe they are providing balance to the market and preventing it sometimes from getting ahead of itself. [Disambiguation: A short sale in the stock market is not related to the real estate concept of a short sale, which is when a property owner sells his property for less than he owes the bank.] Additional references: |
Why is it important to research a stock before buying it? | Most markets around the world have been downtrending for the last 6 to 10 months. The definition of a downtrend is lower lows and lower highs, and until you get a higher low and confirmation with a higher high the downtrend will continue. If you look at the weekly charts of most indexes you can determine the longer term trend. If you are more concerned with the medium term trend then you could look at the daily charts. So if your objective is to try and buy individual stocks and try to make some medium to short term profits from them I would start by first looking at the daily charts of the index your stock belongs to. Only buy when the intermediate trend of the market is moving up (higher highs and higher lows). You can do some brief analysis on the stocks your interested in buying, and two things I would add to the short list in your question would be to check if earnings are increasing year after year. The second thing to look at would be to check if the earnings yield is greater than the dividend yield, that way you know that dividends are being paid out from current earnings and not from previous earning or from borrowings. You could then check the daily charts of these individual stocks and make sure they are uptrending also. Buy uptrending stocks in an uptrending market. Before you buy anything write up a trading plan and develop your trading rules. For example if price breaks through the resistance line of a previous high you will buy at the open of the next day. Have your money management and risk management rules in place and stick to your plan. You can also do some backtesting or paper trading to check the validity of your strategy. A good book to read on money and risk management is - "Trade your way to Financial Freedom" by Van Tharp. Your aim should not be to get a winner on every trade but to let your winners run and keep your losses small. |
In India, what is the difference between Dividend and Growth mutual fund types? | The difference between dividend and growth in mutual funds has to do with the types of stocks the mutual fund invests in. Typically a company in the early stages are considered growth investments. In this phase the company needs to keep most of its profits to reinvest in the business. Typically once a company gets a significant size the company's growth prospects are not as good so the company pays some of its profits in the form of a dividend to the shareholders. As far as which is the best buy is totally a personal choice. There will be times when one is better then the other. Most likely you will want to "diversify" and invest in both types. |
How can I determine if my portfolio's rate of return has been “good”, or not? | It's important to realize that any portfolio, if sufficiently diversified should track overall GDP growth, and anything growing via a percentage per annum is going to double eventually. (A good corner-of-napkin estimate is 70/the percentage = years to double). Just looking at your numbers, if you initially put in the full $7000, an increase to $17000 after 10 years represents a return of ~9.3% per annum (to check my math $7000*1.09279^10 ≈ $17000). Since you've been putting in the $7000 over 10 years the return is going to be a bit more than that, but it's not possible to calculate based on the information given. A return of 9.3% is not bad (some rules of thumb: inflation is about 2-4% so if you are making less than that you're losing money, and 6-10% per annum is generally what you should expect if your portfolio is tracking the market)... I wouldn't consider that rate of return to be particularly amazing, but it's not bad either, as you've done better than you would have if you had invested in an ETF tracking the market. The stock market being what it is, you can't rule out the possibility that you got lucky with your stock picks. If your portfolio was low-risk, a return of 9%ish could be considered amazing, but given that it's about 5-6 different stocks what I'd consider amazing would be a return of 15%+ (to give you something to shoot for!) Either way, for your amount of savings you're probably better off going with a mutual fund or an ETF. The return might be slightly lower, but the risk profile is also lower than you picking your stocks, since the fund/ETF will be more diversified. (and it's less work!) |
How much does it cost to build a subdivision of houses on a large plot of land? | Let's think like a real estate developer. First you need to check with the zoning commission the restrictions for the area. Let's say that the plot is actually suitable for 10 homes. You buy the land. You also need to finance the build itself. If you don't have enough cash you need to acquire financing from banks and perhaps from other sources as well, because banks won't loan you the entire amount. Next you need to divide the plot into 10 pieces, making sure that each piece has driveway access to the street and plan access to utilities (water/sewer/electricity/broadband/phone lines). Plan the size and position of each house. Get building approval. This is a process that can take some time, especially if they have follow-up questions. Get a builder to build the houses, including ground work and preparation for utilities. Get approval for the finished houses. A building inspector will check that the houses follow the permission and all laws and regulations that apply. This step can entail time and added cost. Get a real estate agent to sell the new homes. Often, the selling process starts in the planning phase and early buyers are able to influence both the layout of the house and the finish. Your cost estimate included a profit of 140k for each house. From that a builder needs to subtract financing costs, real estate agent costs, any costs that you forgot to factor in, budget overdrafts, contingency costs, and salaries for your staff and yourself. I estimate the project time to 1.5-2 years. So, we have an $8M project with a gross profit of $1.4M (not including all costs). Net profit probably just a few hundred thousand. Or less. Real estate developers with local knowledge would be able to make a much more accurate estimate on both time and cost. My guess is that they have, and since the plot hasn't sold in a while, either the price is at the upper end of what makes a profitable project or there are other restrictions that limit the number/size of homes that can be built on it. |
Does 83(b) cause a tax liability when exchanging startup stock for public stock? | I was told by the lawyers there was no tax consequence because the two numbers were the same. That is correct. However, a tax professional tells me that since the start-up stock was "realized" there invokes a taxable event now. That is correct. I'm now led to believe I owe cap-gains tax on the entire 4 year vest this year That is incorrect. You owe capital gains tax on the sale of your startup stock. Which is accidentally the exact same amount you "paid" for the new unvested stocks. There's no taxable event with regards to the new stocks because the amount you paid for them was the amount you got for the old stocks. But you did sell the old stocks, and that is a taxable event. |
Should I avoid credit card use to improve our debt-to-income ratio? | If you pay it off before the cycle closes it will look like you have 100% available credit. So if you credit card statement closes on the 7th pay it off on the 6th in full don't pay it when its due 2/3 weeks later. Then after three months of doing that your credit score will go up based on the fact that your debt ratio is so low. That ratio is 30% of your credit score. It will help quite alot. |
Getting started in stock with one special field of activity | I don't think investing in only one industry, which you may know well, is very wise. You may want to invest in that industry but you should not restrict yourself from investing solely in that industry. There are many times when your chosen industry may not be performing very well and other industries are performing much better. If you restrict yourself to just one industry you may be either out of the market for long periods of time or your portfolio may show negative returns for extended periods of time. You may want to know an industry or a number of companies very well but do not fall in love with them. The worst thing you can do is get emotional about an investment, an investment is there to make you money not for you to get emotional about. Don't restrict yourself, instead look to maximise your returns with investments that are performing better at the time. |
High-risk investing is better for the young? Why? | The reason that you are advised to take more risk while you are young is because the risk is often correlated to a short investment horizon. Young people have 40-50 years to let their savings grow if they get started early enough. If you need the money in 5-15 years (near the end of your earning years), there is much more risk of a dip that will not correct itself before you need the money than if you don't need the money for 25-40 years (someone whose career is on the rise). The main focus for the young should be growth. Hedging your investments with gold might be a good strategy for someone who is worried about the volatility of other investments, but I would imagine that gold will only reduce your returns compared to small-cap stocks, for example. If you are looking for more risk, you can leverage some of your money and buy call options to increase the gains with upward market moves. |
Is selling put options an advisable strategy for a retiree to generate stable income? | As you move toward retirement, your portfolio is supposed to move toward low risk, stable investments, more bonds, less stocks, etc. Your question implies that you want to increase your income, most likely because your income is not satisfying your desires. First, any idea that you have that risks your savings, just eliminate it. You are not able to replace those savings. The time for those kind of plays has passed. However, you can improve your situation. Do random odd jobs. Find a part time job that you're willing to do for 10 hours a week or something. Keep this money separate from your retirement savings. Research the stock trades you would like to make and use that 'extra' money to play in the market. Set a rule that you do not touch your nest egg for trading. You may find that being retired gives you the time to do the #1 thing that helps investors make good investments -- research. Then when you make your first million doing this, write a book. If you call it Retire - And Then Get Rich, I expect royalties and a dedication. |
60% Downpayment on house? | To answer your precise question, your plans are not at all misguided, and are in fact very reasonable. You are clearly financially very comfortable, and from the tone of your post it sounds like you value security and simplicity over maximizing your investment return over the coming years. If money was the most important thing to you then you would stay shackled to your high paying jobs. @JoeTaxpayer's answer has some great information for a person who is interested in maximizing their investment return. If you followed that advice, you might increase your return on investments by up to 1%/year (I'm just throwing a ball park number out there). So your choice is simple. Peace of mind on one hand and perhaps 1% additional return on investments on the other hand. |
How exactly could we rank or value how “rich” a company brand is? | Those rankings in particular that you cite are compiled by Millward Brown and the methodology is explained like this: |
Further Understanding of Wash Sale Rules | Disallowed losses due to the wash sale rule are added to the basis of the repurchased shares. In your example, on day two you paid $0.70 per share. Then the disallowed $0.30 loss from the previous day gets added to the basis, making your total basis $1.00 per share. When you sell at the end of the day for $1.00 per share, your net gain/loss is zero. Furthermore, you can recapture disallowed losses by selling the last lot of ABC, completely divesting yourself of all holdings in ABC for at least 31 days. Even if that last lot was a loss, when taking into account the increased basis from previously disallowed wash sale losses, you can claim the loss fully on this last, non-wash sale. |
How do you calculate the rate of return (ROR) when buying and selling put options? | RoR for options you bought is fairly easy: (Current Value-Initial Cost)/Initial Cost gives you the actual return. If you want the rate of return, you need to annualize that number: You divide the return you got above by the number of days the investment was in place, and then multiply that number by the number of days in a year. (365 if you're using calendar days, about 255 if you're using trading days.) RoR for options you sold is much more complex: The problem is that RoR is basically calculating the size of your return relative to the capital it tied up to earn it. That's simple when you bought something; the capital tied up is the money you put up. It's more complex on a position like a short option, where the specific transaction in question generates cash when it's put on. The correct way to deal with this is to A) Bundle your strategy (options, stock and collateral) into one RoR where appropriate, and B) include any needed collateral to support the short option in the calculation. So, if you sell a "cash-secured" put, where you have to post the money that you'd need to take delivery of the shares if they were put to you, the initial cost is the total amount you'd need to put the trade on: in this case, it's the cash amount, less the premium you collected for selling the put. That's just one example. But the approach holds more broadly: if you're using covered calls, your original cost is the cost of the stock less the premium generated by the sale of the call. |
Calculating savings from mortgage interest deduction vs. standard deduction? | Those choices aren't mutually exclusive. Yes, most discussion of the mortgage interest deduction ignores the fact that for a standard itemizer, much, if not all of this deduction can be lost. For 2011, the std deduction for a single is $5,800. It's not just mortgage interest that's deductible, state income tax, realestate tax, and charitable contributions are among the other deductions. If this house is worth $350K, the property tax is about $5K, and since it's not optional, I'd be inclined to assume that it's the deduction that offsets the std deduction. Most states have an income tax, which tops off the rest. You are welcome to toss this aside as sophistry, but I view it as these other deductions as 'lost' first. I'm married, and our property tax is more than our standard deduction, so when doing the math, the mortgage is fully deductible, as are our contributions. In your case, the numbers may play out differently. No state tax? Great, so it's the property tax and deductions you'd add up first and decide on the value the mortgage deduction brings. Last, I don't have my mortgage for the deduction, I just believe that long term my other investments will exceed, after tax, the cost of that mortgage. |
Dividend vs Growth Stocks for young investors | In financial theory, there is no reason for a difference in investor return to exist between dividend paying and non-dividend paying stocks, except for tax consequences. This is because in theory, a company can either pay dividends to investors [who can reinvest the funds themselves], or reinvest its capital and earn the same return on that reinvestment [and the shareholder still has the choice to sell a fraction of their holdings, if they prefer to have cash]. That theory may not match reality, because often companies pay or don't pay dividends based on their stage of life. For example, early-stage mining companies often have no free cashflow to pay dividends [they are capital intensive until the mines are operational]. On the other side, longstanding companies may have no projects left that would be a good fit for further investment, and so they pay out dividends instead, effectively allowing the shareholder to decide where to reinvest the money. Therefore, saying "dividend paying"/"growth stock" can be a proxy for talking about the stage of life + risk and return of a company. Saying dividend paying implies "long-standing blue chip company with relatively low capital requirements and a stable business". Likewise "growth stocks" [/ non-dividend paying] implies "new startup company that still needs capital and thus is somewhat unproven, with a chance for good return to match the higher risk". So in theory, dividend payment policy makes no difference. In practice, it makes a difference for two reasons: (1) You will most likely be taxed differently on selling stock vs receiving dividends [Which one is better for you is a specific question relying on your jurisdiction, your current income, and things like what type of stock / how long you hold it]. For example in Canada, if you earn ~ < $40k, your dividends are very likely to have a preferential tax treatment to selling shares for capital gains [but your province and specific other numbers would influence this]. In the United States, I believe capital gains are usually preferential as long as you hold the shares for a long time [but I am not 100% on this without looking it up]. (2) Dividend policy implies differences in the stage of life / risk level of a stock. This implication is not guaranteed, so be sure you are using other considerations to determine whether this is the case. Therefore which dividend policy suits you better depends on your tax position and your risk tolerance. |
Should I pay off my 50K of student loans as quickly as possible, or steadily? Why? | I recently paid-off $40k in student loan debt. One of the motivations for me to accelerate my payments was that over time, as my income increased, the amount of student loan interest I could write-off on taxes started to phase-out. |
How much lump sum investment in stocks would be needed to yield a target stable monthly income? | I will add another point to ChrisinEdmonton's answer... I recognize that this is perhaps appropriate as a comment--or maybe 1/2 of an answer, but the comment formatting is inadequate for what I want to say. The magic formula that you need to understand is this: (Capital Invested) * (Rate of Return) = (Income per Period) When ChrisinEdmonton says that you need $300,000, he is doing some basic algebra... (Capital Required) = (Income per Period) / (Rate of Return) So if you're looking at $12,000 per year in passive income as a goal, and you can find a "safe" 4% yield, then what ChrisinEdmonton did is: $12,000 / 0.04 = $300,000 You can use this to play around with different rates of return and see what investment options you can find to purchase. Investment categories like REITs will risk your principal a little more, but have some of the highest dividend yields of around 8%--12%. You would need $100,000--$150,000 at those yields. Some of the safest approaches would be bonds or industrial stocks that pay dividends. Bonds exist around 3%--4%, and industrial dividend stocks (think GE or UTX or Coca Cola) tend to pay more like 2%-3%. The key point I'm trying to make is that if you're looking for this type of passive income, I recommend that you don't plan on the income coming from gains to the investment... This was something that ChrisinEdmonton wasn't entirely clear about. It can be complicated and expensive to whittle away at a portfolio and spend it along the way. |
Cash flow implications of converting primary mortgaged residence to rental | The rental income is indeed taxable income, but you reduce the taxable portion of it by deducting expenses (including mortgage interest, maintenance, insurance, HOA, real estate tax, and of course depreciation). Due to the depreciation, you may end up breaking even, or having very little taxable income. Note that when you sell the property, your basis is reduced by the depreciation you were allowed to deduct (even if you haven't deducted it for whatever reason), and also the personal residence exclusion might no longer be applicable - i.e.: you'll have to pay capital gains tax. You will not be able to deduct a loss though if you sell now, so it may be better to depreciate it as a rental, rather then sell at a loss that won't affect your taxes. Also, consider the fact that the basis for the depreciation is not the basis you currently have in the property (because you're under water). You have to remember that when calculating the taxes. This is not a tax advice, and you should seek a professional help. |
Is insurance worth it if you can afford to replace the item? If not, when is it? | In general, if you can afford to replace something, you are able to "self-insure". You really want to understand a little of the statistics before you can make a generic call, but my rule of thumb is that insurance via "extended warranty" is rarely a good deal. Here is a simple expected value math formula you can apply (when the > is true, then you should buy it): replacement cost x likelihood of using warranty % > cost of insurance You can then back-compute, what is the likelihood that I'd need to lose this item to break even? Given your numbers: $2000 x Y > $350 or Y > (350/2000) or Y > 17.5% So if you think there is a 17.5% or greater chance that you'll need to have you system replaced (i.e. not just a simple fix) AND (as Scott pointed out) you'll be able to actually use the replacement warranty then the applecare is a good purchase. Note, this only applies to items you can replace out-of-pocket without significant burden, because if you didn't have the $10k to replace your car, it wouldn't matter if the insurance wasn't such a good deal (especially if you need the car to get to work, etc.) So the obvious question is: "Why would a for-profit company ever offer insurance on something they are statistically likely to lose money on?" The obvious answer is "they wouldn't," but that doesn't mean you should never buy this type of insurance, because you may have statistically significant circumstances. For instance, I purchased a $40 remote helicopter as a gift for my children. I also paid the $5 for a "no questions asked" warranty on it because, knowing my kids, I knew there was a nearly 100% chance they would break it at least once. In this case, this warranty was well worth the $5, because they did break it! Presumably they make money on these warranties because most of the purchasers of the plan are more attentive (or too lazy to make the claim) than in this case. Edit note: I incorporated Scott's comment about likelihood of being able to utilize the warranty into a combined "likelihood of using warranty" term. This term could be broken up into likelihood of needing replacement x likelihood of actually getting company to replace it I didn't do this above because it makes it a little harder to understand, and may not be a major factor in all cases, but you can definitely add it after the fact (i.e. if there's only a 90% chance Applecare will pay out at all, then divide the 17.5% by 0.9 to get 19.4% likelihood of needing the replacement for it to be cost effective). More complete formulas can be derived also (including terms for full replacement costs vs repair costs and including terms for "deductible" type costs or shipping), but I'm trying to keep things relatively simple for those who aren't statistics nerds like I am. |
401(k) not fully vested at time of acquisition | Unfortunately, the money that is not vested is not yours. It belongs to your employer. They have promised to give it to you after you have been with the company for a certain length of time, but if you aren't still with the company after that time, no matter what the reason, the money never becomes yours. Sorry to hear about this. It would have been nice if your company had waived the vesting requirement like this guy's employer did, but I don't think they are required to do so, unfortunately. If it's a lot of money, you could ask an attorney, but as @JoeTaxpayer said, AT&T and IBM probably know what they are doing. |
How can a person with really bad credit history rent decent housing? | This tale makes me sad the more I learn of it. I am impressed with your dedication and caring for your ex-wife and particularly your kids; you seem like a good person from your questions. But you are tired and exasperated too. You have every right to be. The problem isn't how this woman can rent a new apartment (which there isn't a good way that won't screw over some unsuspecting landlord) but how to get this woman into conseling on a regular basis. Not just money, but personal or group therapy. She honestly needs help and must face this problem herself otherwise these questions will never stop. I know you mentioned this doesn't appear to be an option, anf maybe it isn't your job, but I. See your questions are much deeper than personal finance. I wish you the best and I really do admire your resolve to take care of your kids. |
Saving tax for long term stock investment capital gain by quiting my current job? | The capital gain is counted as part of your income. So with a million capital gain you will be in a high tax bracket, and have to pay the corresponding capital gains tax rate on the million. |
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