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In US, is it a good idea to hire a tax consultant for doing taxes? | Good professional tax advice is expensive. If your situation is simple, then paying someone doesn't give you more than you could get from a simple software package. In this case, doing your own taxes will save you money this year, and also help you next year, as your situation grows steadily more complex. If you don't do your own taxes when you're single with a part time job, you'll never do it when you have a family, a full time job, a side business, and many deductions. Learning how to do your taxes over time, as your 'tax life' becomes complex, is a valuable skill. If your situation is complex, you will need pay a lot to get it done correctly. Sometimes, that cost is worthwhile. At bare minimum, I would say 'attempt to do your taxes yourself, first'. This will force you to organize your files, making the administrative cost of doing your return lower (ie: you aren't paying your tax firm to sort your receipts, because you've already ordered them nicely with your own subtotals, everything perfectly stapled together). If your situation is complex, and you find a place to get it done cheaply (think H&R Block), you will not be getting value for service. I am not saying a low-end tax firm will necessarily get things wrong, but if you don't have a qualified professional (read: university educated and designated) doing your return, the complexities can be ignored. Low-end tax firms typically hire seasonal staff, train them for 1-2 weeks, and mostly just show them how to enter tax slips into the same software you could buy yourself. If you underpay for professional services, you will pay the price, metaphorically speaking. For your specific situation, I strongly recommend you have a professional service look at your returns, because you are a non-resident, meaning you likely need to file in your home country as well. Follow what they do with your return, and next year, see how much of it you can do yourself. Before you hire someone, get a fee quote, and shop around until you find someone you are comfortable with. $1k spent now could save you many headaches in the future. |
How should I calculate the opportunity cost of using a 401(k) loan? | There is no equation. Only data that would help you come to the decision that's right for you. Assuming the 401(k) is invested in a stock fund of one sort or another, the choice is nearly the same as if you had $5K cash to either invest or pay debt. Since stock returns are not fixed, but are a random distribution that somewhat resembles a bell curve, median about 10%, standard deviation about 14%. It's the age old question of "getting a guaranteed X% (paying the debt) or a shot at 8-10% or so in the market." This come up frequently in the decision to pre-pay mortgages at 4-5% versus invest. Many people will take the guaranteed 4% return vs the risk that comes with the market. For your decision, the 401(k) loan, note that the loan is due if you separate from the company for whatever reason. This adds an additional layer of risk and another data point to the mix. For your exact numbers, the savings is barely $50. I'd probably not do it. If the cards were 18%, I'd lean toward the loan, but only if I knew I could raise the cash to pay it back to not default. |
What's the minimum revenue an LLC must make in Florida or NY states? | Depends on the State. In California, for example, you pay a franchise tax of $800 every year just for having LLC, and in addition to that - income tax on gross revenue. But in other States (like Wyoming, for example) there's no taxes at all, only registration fees (which may still amount to ~$100-300 a year). IRS doesn't care about LLC's at all (unless you chose to treat is as a corporation). You need to understand that in the US we have the "Federal Government" (IRS is part of that) and the "State Government" that deals with business entities, in each of the 50 States. Since you're talking about Italy, and not EU, you should similarly be talking about the relevant State, and not US. |
What U.S. banks offer two-factor authentication (such as password & token) for online banking? | StasM, It's taken a while but many banks offer tokens - although they tend to limit the accounts for which they will be issued. All of the following issue tokens, but there are many more: CitiBank JP Morgan Union Bank Wells Fargo Callaway Bank Wachovia Bank of North Dakota The River Bank of Wisconsin Metcalf Bank, Kansas Stonebridge Bank In 2005 federal regulators stipulated that banks needed to get better with security for online banking customers, but they did not endorse a particular technology. Tokens (aka fobs) were endorsed. The news was negatively received by the banks because putting more steps in the way of a customer drives the customer away. See this 2005 report for more info: http://www.usatoday.com/tech/news/computersecurity/2005-11-02-cybercrime-prevention_x.htm My guess is a tipping point was reached since then, where customers became savvy of the risks, and that the "extra steps" became less an issue than the "extra security". |
When is the right time to buy a new/emerging technology? | When is the right time to buy a new/emerging technology? When it's trading at a discount that allows you to make your money back and then some. The way you presented it, it is of course impossible to say. You have to look at exactly how much cheaper and efficient it will be, and how long that will take. Time too has a cost, and being invested has opportunity cost, so the returns must not only arrive in expected quantity but also arrive on time. Since you tagged this investing, you should look at the financial forecasts of the business, likely future price trajectories, growth opportunity and so on, and buy if you expect a return commensurate with the risk, and if the risk is tolerable to you. If you are new to investment, I would say avoid Musk, there's too much hype and speculation and their valuations are off the charts. You can't make any sensible analysis with so much emotion running wild. Find a more obscure, boring company that has a sound business plan and a good product you think is worth a try. If you read about it on mainstream news every day you can be sure it's sucker bait. Also, my impression that these panels are actually really expensive and have a snowball's chance in Arizona (heh) in a free market. Recently the market has been manipulated through green energy subsidies of a government with a strong environmentalist voter base. This has recently changed, in case you haven't heard. So the future of solar panels is looking a bit uncertain. I am thinking about buying solar panels for my roof. That's not an investment question, it's a shopping question. Do you actually need a new roof? If no, I'd say don't bother. Last I checked the payoff is very small and it takes over a decade to break even, unless you live in a desert next to the Mexican border. Many places never break even. Electricity is cheap in the United States. If you need a new roof anyway, I suppose look at the difference. If it's about the same you might as well, although it's guaranteed to be more hassle for you with the panels. Waiting makes no sense if you need a new roof, because who knows how long that will take and you need a roof now. If a solar roof appeals to you and you would enjoy having one for the price available, go ahead and get one. Don't do it for the money because there's just too much uncertainty there, and it doesn't scale at all. If you do end up making money, good for you, but that's just a small, unexpected bonus on top of the utility of the product itself. |
Ways to establish credit history for international student | I came to US as an international student several years ago, and I have also experienced the same situation like most of the international students in finding ways to build credit history. Below I list out some possible approaches you may want to consider: I. Get a student job at campus (recommended) I think the best way is to get a student job in university, say a teaching assistant or student helper. In this case, you can be provided with a social security number and start to build your own credit history. II. Get credit card You can also consider to apply for a credit card. There are indeed some financial institutions that can provide credit cards for international students with no or limited credit scores requirement, say Discover and Bank of America. However, it is relatively hard to get approved, simply because hey may put more restriction in other aspects. For example, you may be required to keep sufficient bank balance above several thousand dollars during a period of time, or you should prove that you have relatives with citizenship in US who can provide your financial aid if needed. III. Apply for a loan (recommended) Getting a loan product is another alternative to get out of this difficult situation, but most of people don’t realize that. There are some FinTech start-ups in United States that specifically focus on international students’ loan financing. One representative example is Westbon (Westbon ), an online lending company that specializes in providing car loan for international students with no SSN or credit history. I once used their loan product to finance a Honda Accord, and Westbon reported my loan transaction records to US credit bureau during my repayment process. Later when I officially got my SSN number, I found my credit history has been automatically synchronized and I don’t have to start from all over again. It never be an easy journey for international students to build credit history in United States. What approach you should make really depends on you own situation. I hope the information above can be useful and good luck for your credit journey! |
Can a Covered Call be called away before the expiration date? | Yes. If I own a call, an American call option can be exercised at my wish. A European call can only be exercised at expiration, by the way. Your broker doesn't give you anything but a current quote for a given strike price. There are a number of good option related questions here. A bit of searching and reading will help you understand the process. |
What headaches will I have switching from Quicken to GnuCash? | It's been a long time since I've used MS Money and/or Quickbooks (never Quicken), but I've used GnuCash over the past year or so. It works, but it does suffer from some usability problems. Some of the UI is clunky. Data entry sequences are a little harder than they should be. Reports could be a little prettier. But overall it does work, and it's the best I've found on linux. (I would definitely appreciate pointers to something better.) |
Buying my first car out of college | Read "Stop Acting Rich" by Dr Thomas Stanley. I'm concerned that even before you've earned your first paycheck you want a flashy car. $4800/yr on $63K/yr income is just about half what I'd recommend to someone who starts working. 10% is the minimum, if and only if, the employer matches 5, for a total 15% saved. Do it in a pretax account and when you go back to grad school convert to Roth. |
What is meant by a market that is technically strong | A technically strong stock or market is simply a stock or market which is up-trending and has been up-trending for a while. Just as a fundamentally strong stock is one with good fundamentals (a stock that is healthy and making higher profits year after year and continually improving), a technically strong stock has a healthy uptrend that continues to go up and up. Apple was technically strong until it hit $700 (its price stayed above the 200 day MA for a long period until after it hit $700, then broke down through the 200 day MA shortly after - the uptrend was over). I will usually buy stocks which are both fundamentally and technically strong, as a technically strong stock will generally stay technically strong longer if it also has strong and good fundamentals. |
Low risk hybrid investment strategy | I recall similar strategies when (in the US) interest rates were quite a bit higher than now. The investment company put 75% or so into into a 5 year guaranteed bond, the rest was placed in stock index options. In effect, one had a guaranteed return (less inflation, of course) of principal, and a chance for some market gains especially if it went a lot higher over the next 5 years. The concept is sound if executed correctly. |
Accepting high volatility for high long-term returns | Modern portfolio theory dramatically underestimates the risk of the recommended assets. This is because so few underlying assets are in the recommended part of the curve. As investors identify such assets, large amounts of money are invested in them. This temporarily reduces measured risk, and temporarily increases measured return. Sooner or later, "the trade" becomes "crowded". Eventually, large amounts of money try to "exit the trade" (into cash or the next discovered asset). And so the measurable risk suddenly rises, and the measured return drops. In other words, modern portfolio theory causes bubbles, and causes those bubbles to pop. Some other strategies to consider: |
IRA for work and my business | Yes, you can have both. You'll need business income to contribute to a SEP IRA though. |
What to do with small dividends in brokerage account? | Some brokerages will allow you to enroll your account in a dividend reinvestment plan -- TD Ameritrade and I think Schwab for example. The way the plan works is that they would take your $4 and give you whatever fractional share of the ETF it is worth on the payment date. There are no fees associated with this purchase (or at least there are in the programs I've seen -- if you have to pay a fee, look for another brokerage). You may also be able to enroll specific securities instead of the entire account into dividend reinvestment. Call your brokerage to see what they offer. |
Why does a long/purchased call option have a long position in the option itself? | It will be helpful to establish some definitions: Long "Long" is financial slang for "to have possession of an asset", legally, and "to debit an asset", financially. Short "Short" is financial slang for "to be liable for an asset", legally, and "to credit an asset", financially. Option "Option" is financial slang for "to have the right but not obligation to force the liable to perform action", legally. Without limits and when taken to absurdity, this can mean slavery. For equities, this means "to have the right but not the obligation to force the liable to buy/sell a specified asset at a specified price with a specified expiration for that right" for a call/put, respectively. By the above, a call option is "the right but not the obligation to force the liable to buy a specified asset at a specified price with a specified expiration for that right". By the definition of "long" above, a call option is actually not long the underlying. By the definitions above and with a narrower scope applied to equities & indexes, to be "long" the call means "to have the right but not the obligation to force the liable to buy a specified asset at a specified price with a specified expiration for that right" while to be "short" the call means "to have the obligation to be forced to sell a specified asset at a specified price with a specified expiration for that right". So, to be "long" a call means to simply own the call. |
Why are currency forwards needed? | Suppose you're a European Company, selling say a software product to a US company. As much as you might want the US company to pay you in Euros they might insist (or you'll lose the contract) that you agree pricing in USD. The software is licensed on a yearly recurring amount, say 100K USD per year payable on the 1st January every year. In this example, you know that on the 1st Jan that 100K USD will arrive in your USD bank account. You will want to convert that to Euros and to remove uncertainty from your business you might take out an FX Forward today to remove your currency risk. If in the next 9 months the dollar strengthens against the Euro then notionally you'll have lost out by taking out the forward. Similarly, you've notionally gained if the USD weakens against the EURO. The forward gives you the certainty you need to plan your business. |
Are online mortgage lenders as good as local brick-and-mortar ones? | I had a pretty good experience with Lending Tree, although they are a mortgage broker, not a lender themselves. |
How are people able to spend more than what they make, without going into debt? | If you make $10 in salary, $5 in interest on savings, and $10 in dividends, your income is $25, not $10. If you have a billion dollars in well-invested assets, you can take a loan against those assets and the interest payment on the loan will be smaller than the interest you earn on the assets. That means your investment will grow faster than your debt and you have a net positive gain. It makes no sense to do this if the value of your asset is static. In that case, you would be better off just to withdraw from the asset and spend it directly, since a loan against that static asset will result in you spending your asset plus interest charges. If you have a good enough rate of return on your investment, you may actually be able to do this in perpetuity, taking out loan after loan, making the loan payments from the loan proceeds, while the value of your original asset pool continues to grow. At any given time, though, a severe downturn in the market could potentially leave you with large debts and insufficient value in your assets to back the debt. If that happens, you won't be getting another loan and the merry-go-round will stop spinning. It's a bit of a Ponzi scheme, in a way. The U.S. government has done exactly this for a long time and has gotten away with it because the dollar has been the world's reserve currency. You could always get a loan against the value of the U.S. currency in the past. Those days may be dwindling, with more countries choosing alternative currencies to conduct business with and the dollar becoming comparatively weaker into the foreseeable future. If you have savings, you can spend more than you make, which will put you into debt, then you can draw down your savings to pay that debt, and at the end of the month you will be out of debt, but have less in savings. You cannot do this forever. Eventually, you run out of savings. If you have no savings, you immediately go into debt and stay there when you spend more than you make. This is simple arithmetic. If you have no savings, but you own assets (real estate, securities, a collection of never-opened Beatles vinyl records, a bicycle), then you could spend more than you make, and be in debt, but have the potential to liquidate assets to pay off all or part of the debt. This depends on finding a buyer and negotiating a price that helps you enough to make a real difference. If you have a car, and you owe $10 on it, but you can only find a buyer willing to pay $8 for the car, that doesn't help you unless you can refinance the $2 and your new payment amount is lower than the old payment amount. But then you're still $2 in debt on the car even though you no longer possess it, and you've still increased your debt by spending more than you made. If you stay on this path, sooner or later you will not have any assets left and you will be in debt, plain and simple. As a wrinkle in the concrete example, let's say you have stock options with your employer. This is a form of a "call." You could also purchase a call through a broker in the stock market, or for a commodity in the futures market. That means you pay up front for the right to buy a specific amount of an asset at a fixed price (usually with an expiration date). You don't own the stock, you just have the right to buy it at the call price, regardless of the current market value when you buy it. In the case of employee stock options, your upfront cost is in the form of a vesting schedule. You have to remain employed for a set time before a specific number of stocks become eligible for you to purchase at your option price (the stocks "vest" on a certain date). Remain employed longer, and more stocks may vest, depending on your contract. If you quit or are terminated before that date, you forfeit your options. If you stick around through your vesting schedule, you pay real money to buy the stock at your option price. It only makes sense to do this if the market value of the stock is higher than your option price. If the current market value is lower than your option price, you're better off just buying the asset at the current market value, or waiting and hoping that the value increases before your contract expires. You could drive yourself into debt by spending more than you make, but still have a chance to eliminate your debt by exercising your call/option and then re-selling the asset if it is worth more than what you pay for it. But you may have to wait for a vesting period to elapse before you can exercise your option (depending on the nature of your contract). During this waiting period, you are in debt, and if you can't service your debt (i.e. make payments acceptable to your creditors) your things could get repossessed. Oh, don't forget that you'll also pay a brokerage fee to sell the asset after you exercise your option. Further, if you have exhausted your savings and nobody will give you a loan to exercise your stock (or futures) options, then in the end you would be even further in debt because you already paid for the call, but you are unable to capitalize it and you'll lose what you already paid. If you can get a loan to exercise your option, but you're a bad credit risk, chances are good that the lender will draft a contract requiring you to immediately pay back the loan proceeds plus a fee out of the proceeds of re-selling the stock or other asset. In fact the lender might even draft a contract assigning ownership of your options to them, and stipulating that they'll pay you what's left after they subtract their fee. Even if you can get a traditional loan, you will pay interest over time. The end result is that your debt has still cost you very real money beyond the face value of the debt. Finally, if the asset for which you have a call has decreased in value lower than the current market value, you would be better off buying it directly in the market instead of exercising your option. But you'll pay transaction fees to do that, and the entire action would be pure speculation (or "investment"), but not an immediate means to pay off your debt. Unless you have reliable insider trading information. But then you risk running afoul of the law. Frankly it might be better to get a loan to pay off your debt than to buy an "investment" hoping the value will increase, unless you could guarantee that the return on your investment would be bigger than the cumulative interest and late fees on your debt (or the risk of repossession of your belongings). Remember that nothing you owe a debt on is actually yours, not your house, not your car, not your bicycle, not your smartphone. Most of the time, your best course of action is to make minimum payments on your lowest-interest debts and make extra payments on your highest interest debt, up to the highest total payment you can tolerate (set something aside in a rainy day fund just in case). As you pay off the highest-interest debt, shift the amount you were paying on that debt to make extra payments on your next highest-interest debt until that one is paid off, and repeat on down the line until you're out of debt, then live within your means so that you don't find yourself working at McDonald's because you don't have a choice when you're in your 80's. |
Why is auto insurance ridiculously overpriced for those who drive few miles? | 4000 miles a year is not a few! European average is about 9000... But nevertheless... But when it comes to risk, then: 1) Nothing stops you from changing circumstances and drive 10 times as much as in previous yers. The insurance remains the same. The only thing the insurance company can do is to charge you more next year (taking the miles you've made this year as a basis for calculations)* 2) Drivers who drive very seldom are a huge risk because of their low experience. I know a few people that drive more than 100 miles only a few times a year, and on average once a year have accident during that drives. It doesn't mean that an average sunday driver have similar risk of accident as daily driver, but it's in no way similar. *) Germany/Switzerland based, the whole EU is likely to be the same |
First time investor wanting to invest in index funds especially Vanguard | Congratulations on deciding to save money and choosing to invest it. One thing to know about mutual funds including index funds is that they typically require a minimum investment of a few thousand dollars, $3000 being a typical amount, unless the investment is in an IRA in which case $1000 might be a minimum. In some cases, automated monthly investments of $50 or $100 might need to be set up if you are beginning with a small balance. There is nothing wrong with your approach. You now should go and look at the various requirements for specific index funds. The Fidelity and Vanguard families are good choices and both offer very low-cost index funds to choose from, but different funds can have different requirements regarding minimum investments etc. You also have a choice of which index you want to follow, the S&P 500 Index, MidCap Indexes, Small-Cap Indexes, Total Stock Market Indexes etc., but your choice might be limited until you have more money to invest because of minimum investment rules etc. Most important, after you have made your choice, I urge you to not look every day, or even every month, to see how your investment is doing. You will save yourself a lot of anxiety and will save yourself from making wrong decisions. Far too many investors ignore the maxim "Buy Low, Sell High" and pull money out of what should be long-term investments at the first flicker of a downturn and end up buying high and selling low. Finally, the time is approaching when most stock funds will be declaring dividends and capital gains distributions. If you invest now, you may end up with a paper profit on which you will have to pay taxes (in non-tax-advantaged accounts) on your 2012 tax return (this is called "buying a dividend"), and so you might want to spend some time investigating now, but actually make the investment in late December after your chosen fund has made its distributions (the date for this will be on the fund's web site) or in early 2013. |
Does “income” include capital gains? | For example, if I have an income of $100,000 from my job and I also realize a $350,000 in long-term capital gains from a stock sale, will I pay 20% on the $350K or 15%? You'll pay 20% assuming filing single and no major offsets to taxable income. Capital gains count towards your income for determining tax bracket. They're on line 13 of the 1040 which is in the "income" section and aren't adjusted out/excluded from your taxable income, but since they are taxed at a different rate make sure to follow the instructions for line 44 when calculating your tax due. |
How does a preferred share “Annual Concurrent Retraction Privilege” work? | A retraction privilege is a right extended to the shareholder that allows such shareholder to demand repayment of the principal. If one exercises the right to retract, the shares are exchanged for principal plus a sweetener and/or less a penalty. The requirement to provided matched shares means that the shares purchased plus those matched by the employer only have retraction privileges. Unmatched shares do not. To be certain, it's always best to read all contracts, but in essence, this is a way to "cash out" of the preferred shares. The consent to resale is a power granted to the holder over the corporation to resell the retracted shares. If it's granted, the corporation can sell to another party; if not, the corporation will have to retire the shares and issue new shares to maintain the previous number of shares outstanding. It is likely that withholding consent has a penalty, and/or granting consent has a sweetener. |
Importance of dividend yield when evaluating a stock? | Dividends yield and yield history are often neglected, but are very important factors that you should consider when looking at a stock for long-term investment. The more conservative portion of my portfolio is loaded up with dividend paying stocks/MLPs like that are yielding 6-11% income. In an environment when deposit and bond yields are so poor, they are a great way to earn reasonably safe income. |
What investment strategy would you deduce from the latest article from Charles Munger? | So, I've read the article in question, "Basically, It's Over". Here's my opinion: I respect Charlie Munger but I think his parable misses the mark. If he's trying to convince the average person (or at least the average Slate-reading person) that America is overspending and headed for trouble, the parable could have been told better. I wasn't sure how to follow some of the analogies he was making, and didn't experience the clear "aha" I was hoping for. Nevertheless, I agree with his point of view, which I see as: In the long run, the United States is going to have serious difficulty in supporting its debt habit, energy consumption habit, and its currency. In terms of an investment strategy to protect oneself, here are some thoughts. These don't constitute a complete strategy, but are some points to consider as part of an overall strategy: If the U.S. is going to continue amassing debt fast, it would stand to reason it will become a worse credit risk, requiring it to pay higher interest rates on its debt. Long-term treasury bonds would decline as rates increase, and so wouldn't be a great place to be invested today. In order to pay the mounting debt and debt servicing costs, the U.S. will continue to run the printing presses, to inflate itself out of debt. This increase in the money supply will put downward pressure on the U.S. dollar relative to the currencies of better-run economies. U.S. cash and short-term treasuries might not be a great place to be invested today. Hedge with inflation-indexed bonds (e.g. TIPS) or the bonds of stronger major economies – but diversify; don't just pick one. If you agree that energy prices are headed higher, especially relative to U.S. dollars, then a good sector to invest a portion of one's portfolio would be world energy producing companies. (Send some of your money over to Canada, we have lots of oil and we're right next door :-) Anybody who has already been practicing broad, global diversification is already reasonably protected. Clearly, "diversification" across just U.S. stocks and bonds is not enough. Finally: I don't underestimate the ability of the U.S. to get out of this rut. U.S. history has impressed upon me (as a Canadian) two things in particular: it is highly capable of both innovating and of overcoming challenges. I'm keeping a small part of my portfolio invested in strong U.S. companies that are proven innovators – not of the "financial"-innovation variety – and with global reach. |
What is the correct answer for percent change when the start amount is zero dollars $0? | What is the probability of a real occasion (meaning not just an example) being exactly zero? Even if you have 0.1 you can still do the math. Also, it is kind of depending on the occasion. For example, you want to calculate the ROI of an investment for which you had zero capital and you made that investment with leverage, meaning you got a loan. In order to get that loan you should have provided a collateral, so in this case as a starting sum you use the collateral. In another example, say EAT it's difficult to have exactly zero. So, in most cases you won't have to deal with zero values, only positives and negatives. |
Pay via Debit Card or Bank's portal | There are reward points that you have already mentioned. Some banks also give reward points for netbanking transfer, although very few and less than debit card. On a fraudulent site, debit card adds a layer, if compromised, easy to change. i.e just hot list the card, get a new card issued. Netbanking quite a few banks have incorrect implementation and difficult to change the login ID / User ID. The dispute resolution mechanism is well established as there is master or visa network involved. The ease of doing transaction is with netbanking as for card one has to remember 16 digits, expiry, cvv. The entire process of card usage is multiparty, on slow connection if something goes wrong, it takes 3 days to figure out. In netbanking it is instantaneous. You just login to bank and see if the debit has gone through. |
Who owned my shares before me? | The answer in theory is yes. The answer in reality is no. Let me explain: Combine all of these lists and perhaps you could get a complete record. |
What are the benefits of opening an IRA in an unstable/uncertain economy? | You bring up a valid concern. IRAs are good retirement instruments as long as the rules don't change. History has shown that governments can change the rules regarding retirement accounts. As long as you have some of your retirement assets outside of an IRA I think IRAs are good ways to save for retirement. It's not possible to withdraw the money before retirement without penalty. Also, you will be penalized if you do not withdraw enough when you do retire. |
Why do banks encourage me to use online bill payment? | One other aspect of this is that the bank will plan to eventually approach the merchant that they are sending paper checks to and say "why don't you sign up with us and give us your ACH info, and we won't send you checks?" And a lot of merchants will say "sure", because someone has to open those checks and take them down to the bank, and that isn't free. And that time while the money is in the mail, or sitting on someone's desk to be deposited, that is money that isn't working for you. So everyone wins. |
How to calculate the rate of return on selling a stock? | You probably want the Internal Rate of Return (IRR), see http://en.wikipedia.org/wiki/Internal_rate_of_return which is the compound interest rate that would produce your return. You can compute it in a spreadsheet with XIRR(), I made an example: https://spreadsheets.google.com/ccc?key=0AvuTW2HtDQfYdEsxVlM0RFdrRk1QS1hoNURxZkVFN3c&hl=en You can also use a financial calculator, or there are probably lots of web-based calculators such as the ones people have mentioned. |
Is it better to buy a computer on my credit card, or on credit from the computer store? | In my experience dealing with credit cards and store cards, you may find that the store card is much more flexible than the credit card in terms of the enforcement of the card agreement. For instance, I've missed payments on credit cards and only been 1 day late and saw a rate increase, but on a store card when the same thing happened, it was like they didn't even notice. Granted, this was a 100% store card with no VISA/MC logo on it, and it was through their bank. This may not be true of all store cards and your experience may differ, but I felt like the store card was more of a tool for acquiring the merchandise and helping the store make a sale than it was for some big bank to make money off of my interest. With credit cards, you are the product, and the bank makes money purely from interest. The store, on the other hand, makes money from selling the product, and credit helps increase sales. My suggestion is to avoid credit altogether as all debt is risk, but if you must use credit, you may have a better experience with the store card. Of course, don't forget to consider the interest rates, payment plan, and other fees that may apply as they may affect your decision in terms of which to go with. |
Why are interest rates on saving accounts so low in USA and Europe? | The 8% rate offered by Russian banks on US Dollar accounts reflects the financial problems they have. They would prefer to lend US Dollars on the international financial markets at the same rate as US banks, but loans to Russian banks are considered to be more risky. In fact, the estimated "default" risk is ~6%. Your ruble deposits at Russian banks are most likely backed by state guarantees, which reduces the risk and therefore the effective interest rate. |
Are ACH transfers between individuals possible? | Yes, many banks offer such a service. Often such payments can be made through their "bill pay" interface. You log in to your account on the bank's website, enter the recipient's routing and account numbers, and off you go. You could ask your bank whether they offer this. If not, you could change banks to one that does. |
How to mitigate the risk of Euro Stoxx 50 ETF? | While you would reduce risk by diversifying into other stock ETFs across the world, Developed Market returns (and Emerging Markets to a lesser extent) are generally highly correlated with another (correlation of ~0.85-0.90). This implies that they all go up in bull-markets and go down together in bear markets. You are better off diversifying into other asset-classes given your risk tolerance (such as government bonds, as you have mentioned). Alternatively, you can target a portfolio owning all of the assets in the universe (assuming you're trading in Frankfurt, a combination of something similar to H4ZJ and XBAG, but with higher volumes and/or lower fees)! A good starting resource would be the Bogleheads Wiki: https://www.bogleheads.org/wiki/Asset_allocation |
I carelessly invested in a stock on a spike near the peak price. How can I salvage my investment? | Yes, you could sell what you have and bet against others that the stock price will continue to fall within a period of time "Shorting". If you're right, your value goes UP even though the stock price goes down. This is a pretty darn risky bet to make. If you're wrong, there's no limit to how much money you can owe. At least with stocks they can only fall to zero! When you short, and the price goes up and up and up (before the deadline) you owe it! And just as with stocks, someone else has to agree to take the bet. If a stock is pretty obviously tanking, its unlikely that someone would oppose your bet. (It's probably pretty clear that I barely know what I'm talking about, but I was surprised not to see this listed among the answers.) |
Can you sell stocks/commodities for any price you wish (either direct or market)? | I think for this a picture is worth a thousand words. This is a "depth chart" that I pulled from google images, specifically because it doesn't name any security. On the left you have all of the "bids" to buy this security, on the right you have the "asks" to sell the security. In the middle you have the bid/ask spread, this is the space between the highest bid and the lowest ask. As you can see you are free to place you order to the market to buy for 232, and someone else is free to place their order to the market to sell for 234. When the bid and the ask match there's a transaction for the maximum number of available shares. Alternatively, someone can place a market order to buy or sell and they'll just take the current market price. Retail investors don't really get access to this kind of chart from their brokers because for the most part the information isn't terribly relevant at the retail level. |
Anyone have experience with Brink's 5% savings account? | Down in the Fine Print are these points to consider for the limit: For an average daily balance up to but not exceeding $5,000.00, the interest rate for the Savings Account is 4.91% with an annual percentage yield (APY) of 5.00%. For that portion of the average daily balance of the Savings Account that is $5,000.01, or more, the interest rate is 0.49% with an annual percentage yield (APY) of 0.50%. The interest rates and APYs of each tier may change. The APYs were accurate as of March 1, 2014. These are promotional rates and may change without notice pursuant to applicable law. No minimum balance necessary to open Savings Account or obtain the yield(s). Because Savings Account funds are withdrawn through the Card Account (maximum 6 such transfers per calendar month), Card Account transaction fees could reduce the interest earned on the Savings Account. Card Account and Savings Account funds are FDIC-insured upon verification of Cardholder's identity. For purposes of FDIC coverage limit, all funds held on deposit by the Cardholder at BofI Federal Bank will be aggregated up to the coverage limit, currently $250,000.00. |
Why will the bank only loan us 80% of the value of our fully paid for home? | To supplement existing answers: the appraised value does not necessarily represent the net amount the bank could actually recover with a foreclosure. Let's look at it from the point of view of the bank. Suppose the property appraises at $200,000 and they do what you want: loan you $200,000 with the property as collateral. Now suppose a short time later, you quit paying the mortgage and they have to foreclose. Can the bank get their $200,000 back? An appraisal is only an estimate; nobody can predict perfectly how much a property will sell for. Maybe the appraiser missed something significant, and the property will only fetch $180,000. Even if the appraisal was accurate when it was made, property values may have dropped in the meantime. Maybe a sudden economic crisis is driving real estate prices down across the board. Maybe interest rates have spiked. Maybe the county has changed the zoning regulations to locate a toxic waste dump next door to the property. In any of these cases, the property may again fetch well under $200,000. Maybe the condition of the property has changed. Perhaps you trashed the place and it will take $30,000 to clean it up. (People have a tendency to do things like that when they get foreclosed.) If the bank wants to get full market value for the property, they will incur the usual costs of selling a property: paying a real estate agent's commission, painting, renting furniture to stage the property, and so on. This will eat into the net amount they actually get from the sale. It may take some time (perhaps months) for a property to sell at its full market value. During this time, the bank is out $200,000. That's money they would rather be loaning out at interest to someone else, so this represents lost income. Foreclosing a mortgage is a fairly complicated procedure. The bank has to pay its staff, including lawyers, for a significant number of hours to get the foreclosure done. There will be court filing fees and so on. If you refuse to leave, they may have to get the sheriff to evict you; that has a fee as well. If you fight the foreclosure, that racks up even more legal fees. This too eats into the net proceeds from the sale. So if the bank loans you the full $200,000, they stand a pretty significant risk of not getting all of it back, after expenses. You can understand that risk may not be worth the interest they would get from you on the extra $40,000. On the other hand, if they loan you only 80% of the property's appraised value ($160,000), they effectively shift that risk onto you. Should you default on the loan, and they foreclose, all they have to do is sell the property for $160,000 or a little bit more. That shouldn't be too hard, even if it is not freshly painted or a bit trashed. They probably don't need to hire a real estate agent: just hold a quick auction, maybe first calling up a few investors who might be interested in flipping it. If it happens to sell for more than the outstanding principal of the loan, plus the bank's costs, then they will pay you the difference; but they have no incentive to make that happen, and every incentive to just get it sold quick. So any difference between the property's true value and the actual sale price now represents a loss to you first, not to the bank. So you can see why the bank would rather not loan you the full value of the property. 80% is a somewhat arbitrary figure but it cuts their risk by a lot. |
Why would refinancing my mortgage increase my PMI, even though rates are lower? | Is that an FHA loan you have? And you're wanting to do one of those low cost FHA re-fi's, right? The answer is that in between when you first got that loan and now, the government's changed the rules on PMI for FHA loans. It more than doubled the amount of monthly PMI you have to pay. The new rates, efective April 18th, 2011, as as follows: It used to be 0.50% per year for the 30 year. So that's why the PMI would go up. There is another rule in play too, specific to that no-cost FHA refi -- the government requires that the combined (principal+interest+pmi) monthly payment after the refi is at least 4% lower than the current payment. Note that the no-cost refi does not require a new appraisal. Some options present themselves, but only if you can show some equity in a appraisal: 1) if an appraisal shows at least 10% equity, you can go refi to a standard mortgage. You might even be able to find one that doesn't require PMI at that level. If you have 20% equity, you're golden -- no pmi. 2) See what the monthly payment will be if you refi to the 15 year FHA mortgage. Between the much lower PMI, and the much lower interest rates (15 year is usually about 0.75% less than a 30 year), it might not be much more than what you're paying now. And you'd save a huge amount of money over time, and get out from that PMI much earlier (it stops when your principal drops below 80% of the loan amount). This would require that reappraisal. |
Should I buy or lease a car given that its not a super luxury car and I only drive 15 miles/d on avg? | I have a few recommendations/comments: The trick here is to make it clear to the dealer that you will not be getting a new car from them and their only hope of making some money is to sell you your own car. You need to be prepared to walk away and follow through. DON'T buy a new car from them even if you end up turning it in! They could still come back a day later and offer a deal. Leasing a new car every 3 years is not the best use of money. You have to really, really like that new car feeling every three years and be willing to pay a premium for it. If you're a car nut (like me) and want to spend money on a luxury car, it's far wiser to purchase a slightly used luxury vehicle, keep it for 8+ years, and that way you won't have a car payment half the time! |
How might trading volume affect future share price? | Volumes are used to predict momentum of movement, not the direction of it. Large trading volumes generally tend to create a price breakout in either positive or negative direction. Especially in relatively illiquid stocks (like small caps), sudden volume surges can create sharp price fluctuations. |
Why is the stock market price for a share always higher than the earnings per share? | What you have to remember is you are buying a piece of the company. Think of it in terms of buying a business. Just like a business, you need to decide how long you are willing to wait to get paid back for your investment. Imagine you were trying to sell your lemonade stand. This year your earnings will be $100, next year will be $110, the year after that $120 and so on. Would you be willing to sell it for $100? |
Can one get a house mortgage without buying a house? | I've never heard of a loan product like that. Yes, if they keep the funds in an account, it is no risk to the bank, but they would essentially need to go through the loan process twice for the same loan: when you pick a house, they need to reevaluate everything, along with appraising and approving the house. Even if you did find a bank that would do this for you, there are a few problems with this scheme. You would be paying interest before you have a need for this money, negating the savings you might achieve if the interest rates go up. In addition, your "balance" will go down as "payments" are deducted from your loan, and when you finally find a home to buy, you might not have enough for the house you want. You'll need to borrow more than you need, which will further negate any possible savings. It is impossible to know how fast rates will climb. If I were you, I would stick to saving for your down payment, and just get the best rate you can when you are ready to buy. Another potential idea for you is to lock an interest rate. When you apply for a mortgage, the interest rate is often locked for as much as 60 days, to protect the borrower in the event that the rates go up. You could ask the bank if you can pay a fee to lock the rate even longer. I don't know if that is possible or not. And, of course, the fee would eat into your potential savings. |
Does it make any sense to directly contribute to reducing the US national debt? | I think it would have the same effect as paying off a compulsive gambler's debts. Until Congress and the people who vote for them can exercise some fiscal responsibility sending more money to Washington is pointless. In fact, I'd argue that if you were a multi-trillionaire and could pay off the whole thing through a donation, we'd be back to deficits within a decade (or less). |
Looking for a good source for Financial Statements | All websites pull Statement data line by line from central databases. They get to choose which line items to pull, and sometimes they get the plus/minus wrong and sometimes the Statements they recreate don't add up. Nothing you can do about it. All the sites have problems. I personally think the best is Morningstar eg http://financials.morningstar.com/income-statement/is.html?t=POT®ion=can&culture=en-US Use these summary sites at the start of your decision process, but later confirm the facts straight from the Edgar or Sedar for Cdn companies http://www.sedar.com/search/search_form_pc_en.htm |
When do I need to return short stock to the lender | If the owner of the stock wants it back, they "call" it back. There are no guarantees of how long you can keep it for your short, or the cost involved to hold it. Usually, everyone knows about a particular set-up (e.g. a warrant or convertible bond mispricing) that is attractive for arbitrage. This causes the associated stock to be in high demand thus expensive to borrow for shorting, or impossible to find for any price at all. |
Rental Properties: Is it good or bad that I can't find rental listings on that street? | Finding Zero is the expected result of your Craigslist check. You will have to do a lot more research. A local agent can help you determine the number of days they stay on the market before they are rented. They can also help determine the spread between purchase costs and rental cost. You will also have to figure in the cost of hiring a local management company, if you don't want to drive to Syracuse every time the renter has a problem in the middle of the night, or in the middle of a blizzard. |
Does the USA have a Gold reserve? | The US does have a gold reserve. The main reserves are held at Fort Knox but there is even more gold, mostly owned by other countries, stored in the basement of the New York Federal Reserve Bank (Think Die Hard 3). The United States Bullion Depository, often known as Fort Knox, is a fortified vault building located adjacent to Fort Knox, Kentucky, used to store a large portion of United States official gold reserves and occasionally other precious items belonging or entrusted to the federal government. The United States Bullion Depository holds 4,578 metric tons (5046 tons) of gold bullion (147.2 million oz. troy). This is roughly 2.5% of all the gold ever refined throughout human history. Even so, the depository is second in the United States to the Federal Reserve Bank of New York's underground vault in Manhattan, which holds 7,000 metric tons (7716 tons) of gold bullion (225.1 million oz. troy), some of it in trust for foreign nations, central banks and official international organizations. Source: Wikipedia |
Is trading stocks easier than trading commodities? | I would not argue if its more difficult, its different, and it much depends what kind of stocks you refer to, i take large caps as example. The players are different. Companies and even govts may hedge in the commodities (futures) market while in big caps this and other entities mainly invest. (Of course there’s HFT in large caps too). Futures often come with way higher leverage, lower spread and less commissions than stocks attracting retail and institutional speculators/HFT. Another big difference is that commodity prices react to all kind of news events (Stocks do too, but not that much and frequent), this kind of reactions big caps only do on earnings or on news directly affecting the company. Commodities are much more volatile on geo economic / political news events. This combined with higher leverage & HFT produces astounding moves. To sum it up, the players are different and act different than in large stocks, liquidity may be another thing. |
What are some examples of unsecured loans | Some other unsecured loans that are common: |
Ghana scam and direct deposit scam? | So Linda/Josie's initial plan was to have your dad pay money to (supposedly) help her get the gold chest. After he would have paid, there would have been another complication, and more yet (someone to bribe, a plane ticket to buy, transport to arrange, customs to handle, whatever, the list would last as long as there's money to take). Even if he does not have much money, the appeal of his share of the treasure could have been enough to tempt him to spend money he can't, or borrow, etc. Once "she" found out that he doesn't have any money and/or is apparently not willing to send any, "she" switched to a different scam: she would send him a large check, have him deposit it on his bank account, transfer most of the money (minus his generous share) to "her". Once the money is irreversibly transferred, the check will bounce. End result: 0 in the account before the transaction, minus a lot afterwards. It's quite simple: if an e-mail from a perfect stranger includes any of the following keywords, it's a scam: |
Is it wise to invest small amounts of money short-term? | This is slightly opinion based. Is it appropriate to invest small amounts for short periods of time? At your age and the time period, I would say NO. This is because although the index fund do return 6-7% on average, there are several times it blips and goes negative as well. Stock Markets in short periods like 6 months can be unpredictable. At times a downturn will remain stagnant for periods of 2-3 years before suddenly zoom ahead. If you are not to particular about the time when you need the changes done; i.e. the changes can in worst case wait for few years; then yes investing in Index fund would make sense. Else you are well off keeping this in savings. Try CD's if they can offer better rates for such durations. |
How can I escalate a credit dispute when the bureau “confirms” the item? | I was I a similar position as you, and sometimes credit bureaus might be difficult to deal with, especially when high amounts of money are involved. To make the long story short, someone opened a store credit card under my name and made a charge of around 3k. After reporting this to the bureaus, they did not want to remove the account from my credit report citing that the claim was "frivolous". After filing a police report, the police officer gave me the phone number for the fraud department of this store credit card, and after they investigated, they removed the account from my credit. I would suggest to do the following: Communicating with Creditors and Debt Collectors You have the right to: Stop creditors and debt collectors from reporting fraudulent accounts. After you give them a copy of a valid identity theft report, they may not report fraudulent accounts to the credit reporting companies. Get copies of documents related to the theft of your identity, like transaction records or applications for new accounts. Write to the company that has the documents, and include a copy of your identity theft report. You also can tell the company to give the documents to a specific law enforcement agency. Stop a debt collector from contacting you. In most cases, debt collectors must stop contacting you after you send them a letter telling them to stop. Get written information from a debt collector about a debt, including the name of the creditor and the amount you supposedly owe. If a debt collector contacts you about a debt, request this information in writing. I know that you said that the main problem was that your credit account was combined with another. But there might be a chance that identity theft was involved. If this is the case, and you can prove it, then you might have access to more tools to help you. For example, you can file a report with the FTC, and along with a police report, this can be a powerful tool in stopping these charges. Feel free to go to the identitytheft.gov website for more information. |
What is the incentive for a bank to refinance a mortgage at a lower rate? | The big one is to keep you from refinancing it with someone else to get a better rate. There may also be some funny-money reasons having to do with being able to count this as a new sale. |
Paying off a loan with a loan to get a better interest rate | Dude- my background is in banking specifically dealing with these scenarios. Take my advice-look for a balance transfer offer-credit card at 0%. Your cost of capital is your good credit, this is your leverage. Why pay 4.74% when you can pay 0%. Find a credit card company with a balance transfer option for 0%. Pay no interest, and own the car outright. Places to start; check the mail, or check your bank, or check local credit unions. Some credit unions are very relaxed for membership, and ask if they have zero percent balance transfers. Good Luck! |
Shorting Obvious Pump and Dump Penny Stocks | Shorting penny stocks is very risky. For example, read this investopedia article, which explains some of the problems. In general: If you have some sort of method for perfectly identifying Pump and Dump schemes, it's possible you could make money if you time things right, but that timing is going to be very difficult to identify. |
When do I sell a stock that I hold as a long-term position? | This answer relies on why you are holding shares of a company in the first place. So let's address that: So does this mean you would like to vote with your shares on the directions the company takes? If so, your reasons for selling would be different from the next speculator who only is interested in share price volatility. Regardless of your participation in potential voting rights associated with your share ownership, a different reason to sell is based on if your fundamental reasons for investing in the company have changed. Enhancements on this topic include: Trade management, how to deal with position sizes. Buying and selling partial positions based on price action while keeping a core long term position, but this is not something "long term investors" generally put too much effort in. Price targets, start your long term investment with a price target in mind, derived from a future market cap based on your initial fundamental analysis of the company's prospects. And finally, there are a lot of things you can do with a profitable investment in shares. |
“Infinite Banking” or “Be Your Own Bank” via Whole Life Insurance…where to start? | There are a lot of false claims around the internet about this concept - the fact of the matter is you are giving yourself the ability to have money in a tax favored environment with consistent, steady growth as well as the ability to access it whenever you want. Compare this to a 401k plan for example....money is completely at risk, you can't touch it, and you're penalized if you don't follow the government's rules. As far as commissions to the agent - an agent will cut his commission in half by selling you an "infinite banking" style policy as opposed to a traditional whole life policy. @duffbeer703 clearly doesn't understand life insurance in the slightest when he says that the first three years of your premium payements will go to the agents pocket. And as usual offers no alternative except "pick some high yielding dividen stocks and MLPs" - Someone needs to wake up from the Dave Ramsey coma and realize that there is no such thing as a 12% mutual fund....do your research on the stock market (crestmont research). don't just listen to dave ramseys disciples who still thinking getting 12-15% year in and year out is possible. It's frustrating to listen to people who are so uneducated on the subject - remember the internet has turned everyone into "experts" if you want real advice talk to a legitimate expert that understands life insurance and how it actually works. |
Why does selling and then rebuying stock not lead to free money? | The main thing you're missing is that while you bear all the costs of manipulating the market, you have no special ability to capture the profits yourself. You make money by buying low and selling high. But if you want to push the price up, you have to keep buying even though the price is getting high. So you are buying high. This gives everyone, including you, the opportunity to sell high and make money. But you will have no special ability to capture that -- others will see the price going up and will start selling within a tiny fraction of a second. You will have to keep buying all the shares they keep selling at the artificially inflated price. So as you keep trying to buy more and more to push the price up enough to make money, everyone else is selling their shares to you. You have to buy more and more shares at an inflated price as everyone else is selling while you are still buying. When you switch to selling, the price will drop instantly, since there's nobody to buy from you at the inflated price. The opportunity you created has already been taken -- by the very people you were trading with. Billions have been lost by people who thought this strategy would work. |
Is it safer to send credit card number via unsecured website form or by e-mail? What safer options are there? | Some (most) credit cards have a way to get a one-time use number. If that is an available option for one of your cards, that is probably the way to do the very risky transaction. These numbers can be good for only one purchase, or for multiple purchases with a single vendor. This will limit your exposure because they won't have access to your entire account. Also review your fraud protections with your credit card. With the single use number, it won't matter if you use the electronic form or the email. Just make sure you keep the confirmation email or a screen capture of the form. |
Put Option Pricing | Standard options are contracts for 100 shares. If the option is for $0.75/share and you are buying the contract for 100 shares the price would be $75 plus commission. Some brokers have mini options available which is a contract for 10 shares. I don't know if all brokers offer this option and it is not available on all stocks. The difference between the 1 week and 180 day price is based on anticipated price changes over the given time. Most people would expect more volatility over a 6 month period than a 1 week period thus the demand for a higher premium for the longer option. |
what is the best way of investment which gives returns forever? | What is the best way that I can invest money so that I can always get returns? Would it be to set up an FD in a bank, to buy land, to buy a rental house, to buy a field, or maybe to purchase gold? Forever is a long time. Of the options you listed, the only one guaranteed to generate returns is a bank account. The returns may well be very small, but (absent an economy-wide financial failure) you will get the stated return. Land doesn't always retain its value, nor do rental houses or fields. Gold clearly fluctuates. But you would be better served to think about goals and how you can attain them. What do you want to do with the "returns"? If you are trying to set yourself up for purchasing a home, paying for college, or retirement, then the small returns on a bank account may be insufficient. And in that case you might be better served by worrying more about the size of the returns you need than the certainty of them. There may be many "better investments" if you more clearly define what you expect to achieve by your investment. |
What are the benefits to underwriters in a secondary offering? | Your impression about banks and bankers is very wrong. Wall street banks can and often do lose in transactions. In fact, banks go bankrupt and/or require massive bailouts to survive because they sometimes lose a ton of money. The business of investment banking often involves bearing risk for customers, which, by definition, means they lose some of the time. Generally the risks they take on individual transactions are not large enough to bring the whole bank down, but sometimes they are. Banking is a job like any other, except that it has more risk than most. Anyway, to your point, how do underwriters make money on shares that fall in value before the sale? On the commission. The issuing company will normally pay the investment bank a percentage of the funds raised in the offering, regardless of the price. Of course, it's possible for the bank to still lose money if their contract stipulates a minimum price and they are not able to meet it. In that case, the bank may lose on that offering, contradicting your preconceived notion. By the way, one other question implicit in your post: Why was the secondary offering considered bad news? If the CEO and other insiders have private information that indicates that the stock is overvalued, then doing a secondary offering at the inflated price will greatly enrich them. Because this happens some times, investors are wary about secondary offerings. This makes companies that would otherwise do a secondary offering shy away from it, even if shares are not overpriced. Therefore if a company is doing a secondary offering, the market is likely to worry that the stock is overvalued even at a reduced price. |
In US, is it a good idea to hire a tax consultant for doing taxes? | Good tax people are expensive. If you are comfortable with numbers and computers, you can do it better yourself. |
How to take advantage of home appreciation | Even selling isn't riskless. Sure, your house has gained value-- but unless that's due to improvements you made to it, every other house in the neighborhood you might buy has gained value too, so moving might not result in extracting any net value. This is one of the reasons I keep reminding folks that a house is not an investment. It can be a business, if you're renting it out. But if you're occupying it, it is simply housing. If you are lucky you'll make a profit if and when you sell it, but don't count on that. It does store value, but except for taking loans against that it's had to access that value. And lower loan rates than you'd otherwise pay are not a huge value when you'd save more if you don't borrow at all. The only use I'm making of my house's value is that by taking a very-low-rate mortgage when I could have paid cash I was able to leave more money in my investments -- arguably the safest leveraged investment possible. |
How can I buy and sell the same stock on the same day? | Because it takes 3 business days for the actual transfer of stock to occur after you buy or sell to the next owner, your cash is tied up until that happens. This is called the settlement period. Therefore, brokers offer "margin", which is a form of credit, or loan, to allow you to keep trading while the settlement period occurs, and in other situations unrelated to the presented question. To do this you need a "margin account", you currently have a "cash account". The caveat of having a retail margin account (distinct from a professional margin account) is that there is a limited amount of same-day trades you can make if you have less than $25,000 in the account. This is called the Pattern Day Trader (PDT) rule. You don't need $25k to day trade, you will just wish you had it, as it is easy to get your account frozen or downgraded to a cash account. The way around THAT is to have multiple margin accounts at different brokerages. This will greatly increase the number of same day trades you can make. Many brokers that offer a "solution" to PDT to people that don't have 25k to invest, are offering professional trading accounts, which have additional fees for data, which is free for retail trading accounts. This problem has nothing to do with: So be careful of the advice you get on the internet. It is mostly white noise. Feel free to verify |
How much of a down payment for a car should I save before purchasing it? | Do you need the car, or is this an optional purchase for you? Do you currently have a car that is in good working order? If you can continue to save for the car instead of buying now, you'll be getting interest on what you've saved -- and that's a lot better than 0% financing. |
Why not pay in full upfront for a car? | There many car loans at zero percent interest. Finance the car at zero percent, then take your money and invest it. If you want to be super safe buy a CD the same length as the car loan. 5 years you will get 2%. If you still want safety and a better return take up a asset allocation strategy that moves your cash to risky assets when the market is performing well, then to cash, bonds, or cds when the market under-performs. Now you have your car with a zero percent loan and you are making the return on the money instead of the car company. |
What are the most efficient ways to bet on an individual stock beating the market? | You could buy options. I do not know what your time horizon is but it makes all the difference due to theta burn. There are weekly, monthly, quarterly, yearly and even longer duration options called leaps. You have decided how long of a time frame. You also have to see what the implied volatility is for the underlying because if you think hypothetically that the price of the spy is 100 dollars currently. Today is hypothetically a Thursday and you buy a weekly option expiring on Friday ( the next day) of strike 100.5 and the call option is priced at .55 cents and you buy it. This means that the underlying has to move .5 dollars in one day to be considered in the money but at time 0, the option should only be worth its intrinsic value which is the underlying, (Say the SPY moved 55 cents up from 100 to 100.55), (100.55) minus the strike (100.5) = 5 cents, so if you payed 55 cents and one day later at expiration its worth 5 cents ,you lost almost 91% of your money, rather with buying and holding you lose a lot less. The leverage is on a 10x scale typically. That is why timing is so important. Anyone can say x stock is going to go up in the future, but if you know ****when**** you can make a killing if it is not already priced into the market. Another thing you can do is figure out how much MSFT contributes to the SPX movement in terms of points. What does a 1% move in MSFT doto SPX. If you can calculate that and you think you know where MSFT is going, you can just trade the spy options synthetically as if it were microsoft. You could also buy msft stock on margin as a retail investor, but be careful. Like Rhaskett said, look into an etf that has microsoft. The nasdaq has a nasdaq-100 which microsoft is in called the triple Q. The ticker is qqq. PowerShares QQQ™, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", is an exchange-traded fund based on the Nasdaq-100 Index®. Best of luck and always understand what you are buying before you buy it, JL |
Why might a share price have not changed for several days? | It is because 17th was Friday, 18th-19th were weekends and 20th was a holiday on the Toronto Stock Exchange (Family Day). Just to confirm you could have picked up another stock trading on TMX and observed the price movements. |
Why don't people generally save more of their income? | A person who always saves and appropriately invests 20% of their income can expect to have a secure retirement. If you start early enough, you don't need anything close to 20%. Now, there are many good reasons to save for things other than just retirement, of course. You say that you can save 80% of your income, and you expect most people could save at least 50% without problems. That's just unrealistic for most people. Taxes, rent (or mortgage payments), utilities, food, and other such mandatory expenses take far more than 50% of your income. Most people simply don't have the ability to save (or invest) 50% of their income. Or even 25% of their income. |
Why would a long-term investor ever chose a Mutual Fund over an ETF? | First, it's not always the case that ETFs have lower expenses than the equivalent mutual funds. For example, in the Vanguard family of funds the expense ratio for the ETF version is the same as it is for the Admiral share class in the mutual fund version. With that in mind, the main advantages of a mutual fund over an equivalent ETF are: From a long-term investor's point of view, the main disadvantage of mutual funds relative to ETFs is the minimum account sizes. Especially if the fund has multiple share classes (i.e., where better classes get lower expense ratios), you might have to have quite a lot of money invested in the fund in order to get the same expense ratio as the ETF. There are some other differences that matter to more active investors (e.g., intraday trading, options, etc.), but for a passive investor the ones above are the major ones. Apart from those mutual funds and ETFs are pretty similar. Personally, I prefer mutual funds because I'm at a point where the fund minimums aren't really an issue, and I don't want to deal with the more fiddly aspects of ETFs. For investors just starting out the lower minimum investment for an ETF is a big win, as long as you can get commission-free trades (which is what I've assumed above.) |
Strategy for investing large amount of cash | I think a larger issue is that you're trying to do market timing. Whether you had a large or small amount of money to invest, no one wants to put the money in to watch it go down. You can't really predict if prices in a market or security will go up in six months (in which case you want to put all your cash in now), of if it will go down (in which case you'd want to wait until the bottom), or if it will skitter around (in which case you'd want to only buy at the bottoms). Of course, if you're magic enough to nail all of those market conditions, you're a master finance trader and will quickly make billions. If you're really concerned with protecting your money and want to take some long positions, I'd look into some put options. You'll of course pay the fees for those put options, but they'll protect your downside. Much of this depends on your time horizon: at the age of 35, someone can expect to see ~6 more recessions and perhaps ~30 more market corrections before retirement. With that big of a time range, it's best to avoid micro-optimizing since that tends to hurt your performance overall (because you won't be able to time the market correctly most of the time). One thing that's somewhat reasonable, if you have the stomach for it, is to not buy at somewhat-obvious market highs and wait for corrections. This isn't fool proof by any means, but as an example many people realized that US equities basically were on a ~5 year up run by December 2014. Many people cashed out those positions, expecting that a correction would be due. And around late summer of 2015, that correction came. For those with patience, they made ~15% with a few mouse clicks. Of course many others would have been waiting for that correction since 2010 and missed out on the market increases. Boiled down: |
How safe is a checking account? | While Rocky's answer is correct in the big picture there is another factor here to keep in mind: The disruption while you're waiting to resolve it. If a fraudster gets your card and drains your account you'll get your money back--but there will be a period while they are investigating that it won't be available. For this reason I avoid debit card transactions and only use credit cards. If the fraudster gets your credit card you might lose access while they investigate but you don't lose access to your bank account. |
Why are Rausch Coleman houses so cheap? Is it because they don't have gas? | The reason Rausch Coleman homes are generally cheaper, is because they are a high volume dealer. Their communities usually have 5 to 7 floor plan options only. They get exceptional deals on their materials because of the volume of material bought. They have it down to a science when it comes to the numbers. As far as the quality of their homes, I cant answer that. I have never been in one or known of anyone that has bought one. |
Offered a job: Should I go as consultant / independent contractor, or employee? | To be honest I don't know how any of this work in the US so my answer will be of very limited value to yourself, I suspect, but when it comes to the UK if you're going to get the same pay gross either way than being independent makes very little sense. Running your own business is hassle, is generally more risky (although possibly not in your case) and costs money. Some of the most obvious costs are the added NI, probably the need for an accountant, at around £1200 p/a for basic accountancy service, you are obliged by law to have liability insurance and you probably want professional indemnity insurance, this will be around £600 p/a minmum, and so on and so forth. On top of that, oficially anyway, as a contractor, you really shouldn't be getting any benefits from the client, and so health insurance, company car, even parking are all meant to be arranged by, and paid by, your company, and can't (or rather - shouldn't) be charged to the client. So - I would say - if you're seriously thinking about setting up a consultancy company, and this client is first of many - set up a company, but take into account the sums you need to earn. If you're really thinking about employment - be an employee. |
Medium-term money investment in Germany | Due to the zero percent interest rate on the Euro right now you won't find any investment giving you 5% which isn't equivalent to gambling. One of the few investment forms which still promises gains without unreasonable risks right now seems to be real estate, because real estate prices in German urban areas (not so in rural areas!) are growing a lot recently. One reason for that is in fact the low interest rate, because it makes it very cheap right now to take a loan and buy a home. This increased demand is driving up the prices. Note that you don't need to buy a property yourself to invest in real estate (20k in one of the larger cities of Germany will get you... maybe a cardboard box below a bridge?). You can invest your money in a real estate fund ("Immobilienfond"). You then don't own a specific property, you own a tiny fraction of a whole bunch of different properties. This spreads out the risk and allows you to invest exactly as much money as you want. However, most real estate funds do not allow you to sell in the first two years and require that you announce your sale one year in advance, so it's not a very liquid asset. Also, it is still a risky investment. Raising real estate prices might hint to a bubble which might burst eventually. Financial analysts have different opinions about this. But fact is, when the European Central Bank starts to take interest again, then the demand for real estate property will drop and so will the prices. When you are not sure what to do, ask your bank for investment advise. German banks are usually trustworthy in this regard. |
Calculate how much interest I will pay given a creditcard balance and a monthly payment? | At the end of each period, add the interest, in this case an easy 1%, and then subtract the payment. With less than 4 months to payoff, the interest here is about $21. Instead of trying to find credit card calculators, just use the more common mortgage calculator. The math is the same until the final month, when the credit card may handle accrued interest slightly differently. Edit - A finance calculator indicates 3.407 payments, or total payment of $1022.12, $22.12 is interest. (from my initial guess of $21 above) |
What is the fair value of a stock given the bid and ask prices? Is there such a relationship? | Fair value can mean many different things depending on the context. And it has nothing to do with the price at which your market order would be executed. For example if you buy market, you could get executed below 101 if there are hidden orders, at 101 if that sell order is large enough and it is still there when your order reaches the market, or at a higher price otherwise. |
How to Explain “efficient frontier” to child? | I know you really like bananas, but don't you think you would get tired of them after a while? Better stock up on some kiwi and mango just to mix it up a bit. I wouldn't want to risk eating only banana sandwiches, banana ice cream and banana bread for the rest of my life. I have don't think I could take it. Same goes for mango and kiwi, but I think if I had all three I could probably get along just fine. |
I'm an American in my mid 20's. Is there something I should be doing to secure myself financially? | Buy this book. It is a short, simple crash course on personal finance, geared at someone in their 20s just starting out their career. You can easily finish it in a weekend. The book is a little dated at this point (pre housing bubble), but it is still valid. I personally feel it is the best intro to personal finance out there. 99% of the financial advice you read online will be a variation of what is already in this book. If you do what the book says, you should be in a solid position financially. You won't be an investment guru or anything, but you will at least have the fundamentals. There are various "protips" for personal finance that go beyond the book, but I would advise against paying too much attention to them until you have the basics down. |
IRR vs. Interest Rates | Yes, assuming that your cash flow is constantly of size 5 and initial investment is 100, the following applies: IRR of 5% over 3 years: Value of CashFlows: 4.7619 + 4.5351 + 4.3192 = 13.6162 NPV: 100 - 13.6162 = 86.3838 Continuous compounding: 86.3838 * (1.05^3) = 100 |
Shorting: What if you can't find lenders? | You at least have some understanding of the pitfalls of shorting. You might not be able to borrow stock. You might not be able to buy it back when the time comes. You're moves are monitored, so you can't "run away" because the rules are enforced. (You don't want to find out how, personally.) "Shorting" is a tough, risky business. To answer your implicit question, if you have to ask about it on a public forum like this, you're not good enough to do it. |
Should I pay off my credit card online immediately or wait for the bill? | It probably doesn't matter since your credit and your checking are at the same institution, but I don't like to let my credit auto draft my checking. I always do it the other way around (and keep them at different places) I feel like there is more control when my money is gone that way. |
Health Insurance and Disability Question | Sorry to hear about your spouse's health issues. May he have a speedy and, as far as possible, full recovery. The Patient Protectection and Affordable Care Act (PPACA, aka Obamacare) is now the law of the land. Among its many provisions are that insurers may no longer deny coverage for pre-existing conditions, they may not put lifetime caps on benefits, and they may not charge different premiums based on any criteria except age cohort and geographic area (i.e. rates may be higher for 50 year olds than 30 year olds, but sick and healthy 50 year olds living in the same area pay the same). If he gets government health coverage because he's on disability, this may not matter. On the other hand, you might find it better to put him on your employer's policy, because you like the coverage better, the employer covers part of the dependent premium, or some other reason. In any case, they can't discriminate against him or you based on his condition. ETA: Rates may vary by geography as well as age. |
For the first time in my life, I'm going to be making real money…what should I do with it? | Your attitude is great, but be careful to temper your (awesome) ambition with a dose of reality. Saving is investing is great, the earlier the better, and seeing retirement at a young age with smooth lots of life's troubles; saving is smart and we all know it. But as a college junior, be honest with yourself. Don't you want to screw around and play with some of that money? Your first time with real income, don't you want to blow it on a big TV, vacation, or computer? Budget out those items with realistic costs. See the pros and cons of spending that money keeping in mind the opportunity cost. For example, when I was in college, getting a new laptop for $2000 (!) was easily more important to me than retirement. I don't regret that. I do regret buying my new truck too soon and borrowing money to do it. These are judgment calls. Here is the classic recipe: Adjust the numbers or businesses to your personal preferences. I threw out suggestions so you can research them and get an idea of what to compare. And most importantly of all. DO NOT GET INTO CREDIT CARD DEBT. Use credit if you wish, but do not carry a balance. |
How safe is a checking account? | In addition to @mhoran_psprep answer, and inspired by @wayne's comment. If the bank won't let you block automatic transfers between accounts, drop the bank like a hot potato They've utterly failed basic account security principles, and shouldn't be trusted with anyone's money. It's not the bank's money, and you're the only one that can authorize any kind of transfer out. I limit possible losses through debit and credit cards very simply. I keep only a small amount on each (~$500), and manually transfer more on an as needed basis. Because there is no automatic transfers to these cards, I can't lose everything in the checking account, even temporarily. |
Is my employee stock purchase plan a risk free investment? | It's a risk free investment only if you have 100% warranty that you will be able to sell these stocks for a better price than what you've paid. And that's virtually impossible. I don't think there is any "risk free investment" when stocks are involved. You can try to minimize the risks and consider them low, but IMO it's dangerous. |
Is it a good practice to keep salary account and savings account separate? | There are a lot of good answers, but I will share my experience. First, a savings account needs to be for savings. If your in the US you have "Regulation D" to deal with and that will bite you on the rear if you go over those limits. Specially easy to do if your purchasing from a savings account. Next having an "Income" account and a "Spending" account can be a very good tool to build a nest egg. So for example you get $1500 into your income account and then move $1000 to your spending account then budget based on that $1000. This is an amazing thing to do, so long as you have the discipline to never transfer that extra $500, and pretend your broke when you run out of the $1000. That being said there is no reason that you can't do that in one account. It's all preference. My wife and I use YNAB (an envelope budgeting system) to do just that. We don't need the separate accounts. We are no more likely to "not spend" in one account then we are to "not spend" in two accounts. It's all just self discipline and what you need to do. This does lead to the situation we call YNAB broke. It's when we have to start choosing between "going hungry" or getting that new DVD, even though our bank account has $5,000 in it. It's even harder when you choose "go hungry" and have to follow through with it, even though you have enough to buy a used car in your bank account. But rather it's "YNAB broke" or your spending account is empty and your income account it full, the result is the same. It's up to "you" to have the self discipline not to spend. Rather that's in one account or two makes little difference. |
Should I keep most of my banking, credit, and investment accounts at the same bank? | I've had all my account with the same bank for all my life. Generally, the disadvantage is that if I want some kind of product like a credit extension or a mortgage, I have the one bank to go to and if they don't want to help me I'm out of luck. However, occasionally there are also perks like the bank spontaneously offering you increased credit or even a whole line of credit. They can do this because they have your whole history and trust you. |
Why don't more people run up their credit cards and skip the country? | I take it the premise of the question is that we're assuming the person isn't worried about the morals. He's a criminal out for a quick buck. And I guess we're assuming that wherever you go, they wouldn't arrest you and extradite you back to the U.S. As others have noted, you can't just walk into a bank the day you graduate high school or get out of prison or whatever and get a credit line of $100,000. You have to build up to that with an income and a pattern of responsible behavior over a period of many years. I don't have the statistics handy but I'd guess most people never reach a credit limit on credit cards of $100,000. Maybe many people could get that on a home equity line of credit, but again, you'd have to build up that equity in your house first, and that would take many years. Then, while $100,000 sounds like a lot of money, how long could you really live on that? Even in a country with low cost of living, it's not like you could live in luxury for the rest of your life. If you can get that kind of credit limit, you probably are used to living on a healthy income. Sure, you could get a similar lifestyle for less in some other countries, but not for THAT much less. If you know a place where for $10,000 a year you can live a life that would cost $100,000 per year in the U.S., I'd like to know about it. Even living a relatively frugal life, I doubt the money would last more than 4 or 5 years. And then what are you going to do? If you come back to the U.S. you'd presumably be promptly arrested. You could get a job in your new country, but you could have done that without first stealing $100,000. Frankly, if you're the sort of person who can get a $100,000 credit limit, you probably can live a lot better in the U.S. by continuing to work and play by the rules than you could by stealing $100,000 and fleeing to Haiti or Eritrea. You might say, okay, $100,000 isn't really enough. What if I could get a $1 million credit limit? But if you have the income and credit rating to get a $1 million credit limit, you probably are making at least several hundred thousand per year, probably a million or more, and again, you're better off to continue to play by the rules. The only way that I see that a scam like this would really work is if you could get a credit limit way out of proportion to any income you could earn legitimately. Like somehow if you could convince the bank to give you a credit limit of $1 million even though you only make $15,000 a year. But that would be a scam in itself. That's why I think the only time you do hear of people trying something like this is when they USED to make a lot of money but have lost it. Like someone has a multi-million dollar business that goes broke, he now has nothing, so before the bank figures it out he maxes out all his credit and runs off. |
What should I do with the stock from my Employee Stock Purchase Plan? | Since you work there, you may have some home bias. You should treat that as any other stock. I sell my ESPP stocks periodically to reduce the over allocation of my portfolio while I keep my ESOP for longer periods. |
Will getting a new credit card and closing another affect my credit? | I once called Amex to cancel a card with an annual fee. Instead, they were able to give me a different card with no fee. They were happy to do it. Of course, Amex has fantastic customer service, while Capital One is not known for it. But, its worth a five minute call, and you will retain your good score. |
Is there a benefit, long term, to life insurance for a youngish, debt, and dependent free person? | There are a few questions that need qualification, and a bit on the understanding of what is being 'purchased'. There are two axioms that require re-iteraton, Death, and Taxes. Now, The First is eventually inevitable, as most people will eventually die. It depends what is happening now, that determines what will happen tomorrow, and the concept of certainty. The Second Is a pay as you go plan. If you are contemplating what will heppen tomorrow, you have to look at what types of "Insurance" are available, and why they were invented in the first place. The High seas can be a rough travelling ground, and Not every shipment of goods and passengers arrived on time, and one piece. This was the origin of "insurance", when speculators would gamble on the safe arrival of a ship laden with goods, at the destination, and for this they received a 'cut' on the value of the goods shipped. Thus the concept of 'Underwriting', and the VALUE associated with the cargo, and the method of transport. Based on an example gallion of good repair and a well seasoned Captain and crew, a lower rate of 'insurance' was deemed needed, prior to shipment, than some other 'rating agency - or underwriter'. Now, I bring this up, because, it depends on the Underwriter that you choose as to the payout, and the associated Guarantee of Funds, that you will receive if you happen to need to 'collect' on the 'Insurance Contract'. In the case of 'Death Benefit' insurance, You will never see the benefit, at the end, however, while the policy is in force (The Term), it IS an Asset, that would be considered in any 'Estate Planning' exercise. First, you have to consider, your Occupation, and the incidence of death due to occupational hazards. Generally this is considered in your employment negotiations, and is either reflected in the salary, or if it is a state sponsored Employer funded, it is determined by your occupational risk, and assessed to the employer, and forms part of the 'Cost-of-doing-business', in that this component or 'Occupational Insurance' is covered by that program. The problem, is 'disability' and what is deemed the same by the experience of the particular 'Underwriter', in your location. For Death Benefits, Where there is an Accident, for Motor Vehicle Accidents (and 50,000 People in the US die annually) these are covered by Motor Vehicle Policy contracts, and vary from State to State. Check the Registrar of State Insurance Co's for your state to see who are the market leaders and the claim /payout ratios, compared to insurance in force. Depending on the particular, 'Underwiriter' there may be significant differences, and different results in premium, depending on your employer. (Warren Buffet did not Invest in GEICO, because of his benevolence to those who purchase Insurance Policies with GEICO). The original Poster mentions some paramaters such as Age, Smoking, and other 'Risk factors'.... , but does not mention the 'Soft Factors' that are not mentioned. They are, 'Risk Factors' such, as Incidence of Murder, in the region you live, the Zip Code, you live at, and the endeavours that you enjoy when you are not in your occupation. From the Time you get up in the morning, till the time you fall asleep (And then some), you are 'AT Risk' , not from a event standpoint, but from a 'Fianancial risk' standpoint. This is the reason that all of the insurance contracts, stipulate exclusions, and limits on when they will pay out. This is what is meant by the 'Soft Risk Factors', and need to be ascertained. IF you are in an occupation that has a limited exposure to getting killed 'on the job', then you will be paying a lower premium, than someone who has a high risk occupation. IT used to be that 'SkySkraper Iron Workers', had a high incidence of injury and death , but over the last 50 years, this has changed. The US Bureau of Labor Statistics lists these 10 jobs as the highest for death (per 100,000 workers). The scales tilt the other way for these occupations: (In Canada, the Cheapest Rate for Occupational Insurance is Lawyer, and Politician) So, for the rest in Sales, management etc, the national average is 3 to 3.5 depending on the region, of deaths per 100,000 employed in that occupation. So, for a 30 year old bank worker, the premium is more like a 'forced savings plan', in the sense that you are paying towards something in the future. The 'Risk of Payout' in Less than 6 months is slim. For a Logging Worker or Fisher(Men&Women) , the risk is very high that they might not return from that voyage for fish and seafood. If you partake in 'Extreme Sports' or similar risk factors, then consider getting 'Whole Term- Life' , where the premium is spread out over your working lifetime, and once you hit retirement (55 or 65) then the occupational risk is less, and the plan will payout at the age of 65, if you make it that far, and you get a partial benefit. IF you have a 'Pension Plan', then that also needs to be factored in, and be part of a compreshensive thinking on where you want to be 5 years from today. |
Anonymous CC: Does “Entropay” really not hand my personal data over to a company - are there alternatives? | Do you guys know any options that are accessible to any global citizen? Prepaid and stored value cards are anonymous. For an arbitrary reason, the really anonymous ones only allow you to load $500 but there is no regulation that dictates this amount. In the USA, these cards are exempt from being declared at border crossings. Not because they look like credit cards, but because they are exempt by the US Treasury and Customs. The cons is that there are generally fees to use them. US DOJ has done research showing that some groups take advantage of the exemption moving upwards of $50,000 a day between borders, but Congress is fine with this exemption and the burden is always on the government to determine "illicit origin". Stigmatizing how money is moved is only a 30 year old phenomenon, but many free nations do not really have capital controls, they only care that you pay taxes and that the integrity of their stock markets are upheld. Aside from that there are no qualms about anonymity, except from your neighbors but they dont matter for a global citizen. In theory, the UK should have more flexibility in anonymity options, such as stored value cards with higher limits. |
Hiring freelancers and taxes | I am not a lawyer or a tax accountant, but from the description provided it sounds to me like you have created two partnerships: one in which you share 50% of Bob's revenue, and another in which you share 50% of the revenue from the first partnership. If this is the case, then each partnership would need to file form K-1 and issue a copy to the partners of that partnership. I think, but I'm not sure, that each partnership would need an Employer Identification Number (EIN; you can apply for and receive these online with the IRS). You would only pay tax on the portion of profits that are assigned to you on the K-1. (If you've accidentally created a partnership without thinking through all the ramifications, you probably want to straighten this out. You can be held liable for the actions of your partners.) On the other hand, if your contract with Bob explicitly makes you a contractor and not a partner, then Bob should probably be issuing a 1099 to you. Similarly for you and Joe -- if your contract with Joe makes him a subcontractor, then you may need to get an EIN and issue him a 1099 at the end of the year. The money you pay to Joe is a business expense, and would be deducted from the profits you show on your Schedule C. In my opinion, it would be worth the $200 fee paid to a good CPA to make sure you get this right. |
Looking to buy a house in 1-2 years. Does starting a Roth IRA now make sense? | First, look at the local housing market, and the price to rent ratios. If you are comfortable that a house can be had for near to the cost of renting, and are not still dropping is price, then focus on the down-payment. I don't imagine housing prices to start picking up any time soon, so you don't be too rushed. If you feel like you have a longer time to save before you want to buy, I would focus as much money as I can into a retirement account while still saving for a down payment. Since you are young, you really want your retirement accounts working for you as soon as possible. You should not be investing in 3% stable funds, but the stock market index funds. Retirement is for 40 years in the future. Using funds for a down-payment from a retirement account should be a last resort. Remember this money is to provide you security later in life, not to get you into a house. When you take out money and put it into a house, it will not be appreciating nearly as fast. It is easy to say you will save later, but the money you save early in life will make up 50% or more of your funds when you retire. That is why it is critical to save for retirement as soon as possible. |
Optimal Asset Allocation | There are a couple of reasons to diversify your assets. First, since we cannot predict which of our investments will perform best, we want to "cast our net" broadly enough to have something invested in what's going to be performing well. Second, diversification isn't intended to provide the highest returns, but rather it is used to soften the effects of market volatility. By softening the downsides and lowering the overall volatility among our assets, returns are more consistent. If a model does not address future downside risk it is only telling you part of the story. (Past performance does not guarantee... you get the picture) |
How do I receive payment from the USA to my current account in India | There is nothing called best; Depending on the amounts there are several options and each will cost some money. If your business is still small customers are individuals try PayPal it will be easy for everyone. The other options are accepting Credit Card, you would need to set-up card gateway on your website etc Simple wire transfer, it will cost more both for your customers and to you. |
Are personal finance / money management classes taught in high school, anywhere? | In the UK there is a School Rewards System used in many schools to teach kids and teens about finance and economy. In the UK there is a framework for schools called "Every Child Matters" in which ‘achieving economic well-being’ is an important element. I think is important to offer to offer a real-life vehicle for financial learning beyond the theory. |
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