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When does a pricing error become false advertising? | It's definitely annoying, but it's not necessarily false advertising. There is no rule or law that says they have to fix a pricing error at all, let alone within a certain period of time. Unfortunately they have no obligation to do business with you unless they take (and keep) your money. If they canceled the order and returned your money you have no binding agreement with them. On top of that, in the US... 'misleading advertising' usually refers to "Any advertising or promotion that misrepresents the nature, characteristics, qualities or geographic origin of goods, services or commercial activities" (Lanham Act, 15 U.S.C.A. § 1125(a)). The main criteria that they evaluate before taking legal action is whether or not someone has suffered harm or loss due to the reliance on the bad information. But you're in Europe. The EU ideas behind misleading advertising tend to focus a lot more on comparing one product to someone else's and making subjective claims or false promises. Pricing does come up, but still, you need to have an ability to prove that you suffered harm or a loss from the business' actions. Even if you were able to prove that, to force the business to change its price catalog, you would need to go through legal proceedings, demonstrate the harm that you've sustained, and then have a judge decide in your favor and order the supplier to comply. My guess is that it's just not worth it for you, but you haven't specified if this is just an annoying shoe-shopping experience or if you are regularly experiencing bait-and-switch tactics from a supplier that is a crucial part of a business operation. If it's the former, just like a physical shop reserves the right to kick you out if you're not behaving, (but usually doesn't because they'd like to keep you as a customer), an online shop can update its prices whenever they like. They can change their prices too, and cancel orders. If it's the latter, then start putting together some documentation on how many times this has happened and how it has damaged your business. But before you get on the warpath I would recommend you look for another place to buy whatever you have in mind, or else try a pound of sugar in your approach to this supplier... My own business experience has shown that can go a lot way in figuring out a mutually beneficial resolution. If you want to see a bit more... Here is the EU Justice Commission's website on false advertising, Here is a PDF leaflet from the UK Office of Fair Trading that spells out what is explicitly not allowed from a business by way of advertising & business practices. |
How to protect your parents if they never paid Social Security? | I am unsympathetic. His mother made a conscious choice to evade taxes that would have provided her with at least a minimal security when she was too old to work. First while as business owner she should have been paying self employment tax on the income they made through the restaurant and his other merchant activities. Second while working in her own career selling Mary Kay and side work she should have paid her taxes on her income from that. There is a part of me that says good on you for getting by with out getting caught. But her ultimate failure was to plan for her future. She should have known she would be ineligible for SSI and saved for her retirement. Instead she choose to spend her money while benefiting from the government services that the rest of us pay taxes for. Now we will provide her with medicaid as well as welfare benefits. She has placed her son in the unenviable situation of having to either provide for his mother because she failed to do the minimum planning for herself or turn his back on her. He might be able to find a sympathetic prosecutor who would prosecute her for tax evasion. The government would take care of her needs(food and housing) and she would get her medical care taken care of. He could also move to Alaska. The oil industry provide residents of Alaska with a stipend, there is lots of work for people willing to work hard, and the compensation for that work is pretty good and would likely put him in a position where he is able to provide care for his mother. |
What is a straddle? | A straddle is an options strategy in which one "buys" or "sells" options of the same maturity (expiry date) that allow the "buyer" or "seller" to profit based on how much the price of the underlying security moves, regardless of the direction of price movement. IE: A long straddle would be: You buy a call and a put at the same strike price and the same expiration date. Your profit would be if the underlying asset(the stock) moves far enough down or up(higher then the premiums you paid for the put + call options) (In case, one waits till expiry) Profit = Expiry Level - Strike Price - (Premium Paid for Bought Options) Straddle |
Deductible expenses paid with credit card: In which tax year would they fall? | According to this discussion, there was a Tax Court ruling that likened deductibility for charitable giving by credit card to business expenses incurred by businesses operating under cash-basis accounting. (The point is made by Larry Hess on that site.) Short answer: According to this argument, you can claim the deduction when the charge is incurred. You don't have to wait until you pay it back. (Again this is for cash basis.) Publication 538 states that "under the cash method of accounting, you generally deduct business expenses in the tax year you pay them." I think the ruling above was meant to clarify when the expense is "paid". In my totally unofficial opinion, I suppose this makes sense. If I go to Office Depot to buy a box of envelopes, I walk out with the envelopes at the same time regardless of whether I paid cash or swiped a credit card. I wouldn't walk out thinking: "HA! I haven't actually paid for these yet." If the shoplifting alarm went off at the door and I was asked if I had bought those, I'd say yes, right? If this doesn't convince you, you can always get professional tax advice. |
Does keeping 'long-term' safety net in bonds make sense? | I am understanding the OP to mean that this is for an emergency fund savings account meant to cover 3 to 6 months of living expenses, not a 3-6 month investment horizon. Assuming this is the case, I would recommend keeping these funds in a Money Market account and not in an investment-grade bond fund for three reasons: |
Why is the buy price different from the sell price of a stock? [duplicate] | This is called the Ask-Bid Spread. The difference varies based on the liquidly of the asset. The more liquid or the higher the volume of trades for the asset then the smaller the spread is. The spread goes to the broker to pay for some of the cost of the trade. My guess is that when there is a higher volume of shares being traded, brokers need to take less of a fee per share out of the transaction to cover their costs. This makes the spread is smaller. This is essentially the difference in price between the highest price that a buyer is willing to pay for an asset and the lowest price for which a seller is willing to sell it. The seller will get the bid price and the buyer will pay the ask and the broker keeps the spread. From http://www.investopedia.com/terms/b/bid-askspread.asp |
How much should a new graduate with new job put towards a car? | So many answers here are missing the mark. I have a $100k mortgage--because that isn't paid off, I can't buy a car? That's really misguided logic. You have a reasonably large amount of college debt and didn't mention any other debt-- It's a really big deal what kind of debt this is. Is it unsecured debt through a private lender? Is it a federal loan from the Department of Education? Let's assume the worst possible (reasonable) situation. You lose your job and spend the next year plus looking for work. This is the boat numerous people out of college are in (far far far FAR more than the unemployment rates indicate). Federal loans have somewhat reasonable (indentured servitude, but I digress) repayment strategies; you can base the payment on your current income through income-based and income-continent repayment plans. If you're through a private lender, they still expect payment. In both cases--because the US hit students with ridiculous lending practices, your interest rates are likely 5-10% or even higher. Given your take-home income is quite large and I don't know exactly the cost of living where you live--you have to make some reasonable decisions. You can afford a car note for basically any car you want. What's the worst that happens if you can't afford the car? They take it back. If you can afford to feed yourself, house yourself, pay your other monthly bills...you make so much more than the median income in the US that I really don't see any issues. What you should do is write out all your monthly costs and figure out how much unallocated money you have, but I'd imagine you have enough money coming in to finance any reasonable new or used car. Keep in mind new will have much higher insurance and costs, but if you pick a good car your headaches besides that will be minimal. |
Is being a landlord a good idea? Is there a lot of risk? | I have been a landlord in Texas for just over 3 years now. I still feel like a novice, but I will give you the benefit of my experience. If you are relying on rental properties for current income versus a long term return you are going to have to do a good job at shopping for bargains to get monthly cash flow versus equity growth that is locked up in the property until you sell it. If you want to pull a lot of cash out of a property on a regular basis you probably are going to have to get into flipping them, which is decidedly not passive investing. Also, it is easy to underestimate the expenses associated with rental properties. Texas is pretty landlord friendly legally, however it does have higher than usual property taxes, which will eat into your return. Also, you need to factor in maintenance, vacancy, tenant turnover costs, etc. It can add up to a lot more than you would expect. If you are handy and can do a lot of repairs yourself you can increase your return, but that makes it less of a passive investment. The two most common rules I have heard for initially evaluating whether an investment property is likely to be cash flow positive are the 1% and 50% rules. The 1% rule says the expected monthly rent needs to be 1% or greater of the purchase price of the house. So your hypothetical $150K/$10K scenario doesn't pass that test. Some people say this rule is 2% for new landlords, but in my experience you'd have to get lucky in Texas to find a house priced that competitively that didn't need a lot of work to get rents that high. The 50% rule says that the rent needs to be double your mortgage payment to account for expenses. You also have to factor in the hassle of dealing with tenants, the following are not going to happen when you own a mutual fund, but are almost inevitable if you are a landlord long enough: For whatever reason you have to go to court and evict a tenant. A tenant that probably lost their job, or had major medical issues. The nicest tenant you ever met with the cutest kids in the world that you are threatening to make homeless. Every fiber of your being wants to cut them some slack, but you have a mortgage to pay and can't set an expectation that paying the rent on time is a suggestion not a rule. or the tenant, who seemed nice at first, but now considers you "the man" decides to fight the eviction and won't move out. You have to go through a court process, then eventually get the Sheriff to come out and forcibly remove them from the property, which they are treating like crap because they are mad at you. All the while not paying rent or letting you re-let the place. The tenant isn't maintaining the lawn and the HOA is getting on your butt about it. Do you pay someone to mow the grass for them and then try to squeeze the money out of the tenant who "never agreed to pay for that"? You rent to a college kid who has never lived on their own and has adopted you as their new parent figure. "The light in the closet went out, can you come replace the bulb?" Tenants flat out lying to your face. "Of course I don't have any pets that I didn't pay the deposit for!" (Pics all over facebook of their kids playing with a dog in the "pet-free" house) |
Where I can find the exact time when a certain company's stock will be available in the secondary market? | Very often, the word secondary market is used synonymously with the stock market as we all know it. In this case, the primary market would be the "closed" world of VCs, business angels, etc to which stock market investors do not have access, e.g. the securities are not trading on a public stock market. |
Why do some stores have card-only self-checkouts? | There are a couple of advantages that I can think of. Since the machines are less complicated because they don't have to handle cash, they are less expensive and require less maintenance. Machines that handle cash require lots of moving parts. Cash machines require lots of employee interaction. The machines need to be stocked with cash each day, and at the end of the day the cash needs to be taken out and counted. With a cashless machine, the computer does all the work. |
Where should I park my money if I'm pessimistic about the economy and I think there will be high inflation? | Typically in a developed / developing economy if there is high overall inflation, then it means everything will rise including property/real estate. The cost of funds is low [too much money chasing too few goods causes inflation] which means more companies borrow money cheaply and more business florish and hence the stock market should also go up. So if you are looking at a situation where industry is doing badly and the inflation is high, then it means there are larger issues. The best bet would be Gold and parking the funds into other currency. |
At what age should I start or stop saving money? | There is no age-limit, in fact the sooner you start the better - the sooner the money starts to compound. |
Electric car lease or buy? | Electric does make a difference when considering whether to lease or buy. The make/model is something to consider. The state you live in also makes a difference. If you are purchasing a small electric compliance car (like the Fiat 500e), leasing is almost always a better deal. These cars are often only available in certain states (California and Oregon), and the lease deals available are very enticing. For example, the Fiat 500e is often available at well under $100/mo in a three-year lease with $0 down, while purchasing it would cost far more ($30k, minus credits/rebates = $20k), even when considering the residual value. If you want to own a Tesla Model S, I recommend purchasing a used car -- the market is somewhat flooded with used Teslas because some owners like to upgrade to the latest and greatest features and take a pretty big loss on their "old" Tesla. You can save a lot of money on a pre-owned Model S with relatively low miles, and the battery packs have been holding up well. If you have your heart set on a new Model S, I would treat it like any other vehicle and do the comparison of lease vs buy. One thing to keep in mind that buying a Model S before the end of 2016 will grandfather you into the free supercharging for life, which makes the car more valuable in the future. Right now (2016/2017) there is a $7500 federal tax credit when buying an electric vehicle. If you lease, the leasing company gets the credit, not you. The cost of the lease should indirectly reflect this credit, however. Some states have additional incentives. California has a $2500 rebate, for example, that you can receive even if you lease the vehicle. To summarize: a small compliance car often has very good reasons to lease. An expensive luxury car like the Tesla can be looked at like any other lease vs buy decision, and buying a used Model S may save the most money. |
Book Value vs Market Value of PWT.TO | Have you looked at what is in that book value? Are the assets easily liquidated to get that value or could there be trouble getting the fair market value as some assets may not be as easy to sell as you may think. The Motley Fool a few weeks ago noted a book value of $10 per share. I could wonder what is behind that which could be mispriced as some things may have fallen in value that aren't in updated financials yet. Another point from that link: After suffering through the last few months of constant cries from naysayers about the company’s impending bankruptcy, shareholders of Penn West Petroleum Ltd. (TSX:PWT)(NYSE:PWE) can finally look toward the future with a little optimism. Thus, I'd be inclined to double check what is on the company books. |
What mix of credit lines and loans is optimal for my credit score? | Over time, you'll have more loans, maybe a few store cards, mortgage, car loan, etc. I'm a fan of maximizing one's wealth, and the small rebate/reward adds up over time, so I'm not against the store cards, so long as you always pay the bill in full. As far as FICO is concerned, what they 'like' to see may not necessarily be optimum for you. I'd suggest you go about your business, and over time use the few cards that combine to give to the best benefit combination that works for you. |
Do market shares exhaust? | RonJohn is right, all shares are owned by someone. Depending on the company, they can be closely held so that nobody wants to sell at a given time. This can cause the price people are offering to rise until someone sells. That trade will cause an adjustment in the ticker price of that stock. Supply and demand at work. Berkshire Hathaway is an example of this. The number of shares is low, the demand for them is high, the price per share is high. |
How much is inflation? | There is a thing called the consumer price index (CPI) There is a basket of goods that the people who keep the index basically shop for. It is much more detailed for the sake of accuracy, but bottom line is they shop for the same stuff each year. They measure the difference from year to year and that gives you a pretty good idea of inflation from a regular person point of view. http://www.inflationdata.com/Inflation/Consumer_Price_Index/HistoricalCPI.aspx But it isn't without its faults, people bicker about the methodology and what constitutes the index. http://www.investopedia.com/articles/07/consumerpriceindex.asp?viewed=1 |
If I want to take cash from Portugal to the USA, should I exchange my money before leaving or after arriving? | I would just rely on the salary from my job in the US. If you don't have a job in the US, you're very unlikely to get a visa to move there and look for work, and so the question of how to take money there (except for a holiday) doesn't arise. (Unless you have dual Portuguese/American citizenship.) |
Dry cleaners lost $160 pants, what should I do? | Dude, it's your lucky day! You just won the lottery!! Do like this guy and sue them for $67 million :-) Pearson v. Chung, better known as the "pants lawsuit",1 is a civil case filed in 2005 by Roy L. Pearson, Jr., an administrative law judge in the District of Columbia in the United States, following a dispute with a dry cleaning company over a lost pair of trousers. Pearson filed suit against Soo Chung, Jin Nam Chung and Ki Y. Chung, the owners of Custom Cleaners in Washington, D.C., initially demanding $67 million for inconvenience, mental anguish and attorney's fees for representing himself, as a result of their failure, in Pearson's opinion, to live up to a "satisfaction guaranteed" sign that was displayed in the store. The case drew international attention[2][3] when it went to trial in 2007 and has been held up as an example of frivolous litigation and the need for tort reform in the United States. The entire story dragged on for years, with many appeals, and makes fascinating reading. |
How can I invest my $100? | There are websites out there that let people apply for micro-loans, and let other people fund those loans, and get a percent of the interest back as the loans are paid off. I have heard of people with spare cash "investing" in these sites. However, I don't think there is a guarantee of return of your money, and I have heard mixed reviews by people, so I will not link to any such sites here. |
Can I open a Demat account in India from abroad? | Yes NRIs are allowed to open a DEMAT account in India from abroad. Investments can be made under the Portfolio Investment NRI Scheme (PINS) either on repatriation or non-repatriation basis. As per,the guidelines of the Reserve Bank of India it is mandatory for NRIs to open a trading account with a designated institution authorized by the RBI. They must avail either a Non-Resident Ordinary (NRO) or Non-Resident External (NRE) account to route the various investments. |
Is this follow-up after a car crash a potential scam? | You wouldn't pay what the quote says, you would pay what the bill says. If the car is used as a taxi then either it's done illegally and not your problem, or they have proper insurance. One reason to go through your insurance is that they know how to handle all these things for you. If you have only their phone number: You owe them money, so they will contact you. |
Fund or ETF that simulates the investment goals of an options “straddle” strategy? | I am not aware of a single instrument that encapsulates what you are after; but the components do exist. At least in Canada, there are many Options traded on the Montreal Exchange that are based on Toronto ETFs. All the standard TSX ETFs are represented, as well as some of the more exotic. With a regular investment account approved for Options you should be able to do what you want. In a parallel vein, there are also double down and up ETFs. One such example are the Horizons BetaPro series of ETFs. They are designed to return double the market up or down on a daily basis and reset daily. They do need to be watched closely, however. Good Luck |
Can I do periodic rollovers from my low-perfoming 401k to an IRA? | You need to check with your employer. It is called an in-service rollover and it is up to your employer on whether or not it is allowed. There are a lot of articles on it but I would still talk to a professional before making the decision. And there are some new laws in place that put at least some responsibility on your employer to provide a 401k with reasonable options and fees. http://www.latimes.com/business/la-fi-court-edison-401k-fees-20150519-story.html We'll see if it has legs. |
Why might it be advisable to keep student debt vs. paying it off quickly? | Congratulations for achieving an important step in the road to financial freedom. Some view extending loan payment of loans that allow the deduction of interest as a good thing. Some view the hit on the credit score by prematurely paying off an installment loan as a bad thing. Determining the order of paying off multiple loans in conjunction with the reality of income, required monthly living expense, and the need to save for emergencies is highly individualized. Keeping an artificial debt seems to make little sense, it is an expensive insurance policy to chase a diminishing tax benefit and boost to a credit score. Keep in mind it is a deduction, not a credit, so how much you save depends on your tax bracket. It might make sense for somebody to extend the loan out for an extra year or two, but you can't just assume that that advice applies in your situation. Personally I paid off my student loan early, as soon as it made sense based on my income, and my situation. I am glad I did, but for others the opposite made more sense. |
Rolled over husband's 401(k) to IRA after his death. Can I deduct a loss since? | First: In most cases when you inherit stocks the cost basis is stepped up to the date of the death of the person you inherited them from. So the capital gain/loss is likely reset to zero. The rules vary a bit for joint accounts, but retirement accounts (401k/ROTH) are considered individual accounts by the IRS. The rules on this have changed a lot in recent history, so it may depend on when he died. Update: As JoeTaxpayer pointed out and I confirmed via this site , the gains are NOT stepped up for retirement accounts, so this is a moot point anyway. Further evidence that retirement accounts can be complicated and seeking professional guidance is a good idea. ...[T]here is no step-up in cost basis upon the death of the IRA owner. Most other assets owned by an individual receive a step-up in cost basis upon the death of the person, eliminating all capital gains on those assets up to that point in time. Second: Even if you can deduct an investment (capital) loss, you can only deduct it to offset capital gains on another investments. Also you can only do this up to $3k per year, though you can roll over excess capital losses into future years. Bottom line: I really doubt you are going to be able to claim a deduction. However, due to the complexity of the situation and the amount of money involved. I strongly suggest you talk to a qualified tax adviser and not rely solely on information you gather through this site. |
What one bit of financial advice do you wish you could've given yourself five years ago? | (more like 10 years ago, but that's beside the point) Save, save, save! Both in the notion of squeezing as much value as you can out of every purchase and the notion of putting money away in a savings account. |
How do I get into investing in stocks? | That is a loaded question but I'll give it a shot. First things first you need to determine if you are ready to invest in stocks. If you have a lot of high interest debt you would be much better served paying that off before investing in stocks. Stocks return around 8%-10% in the long run, so you'd be better off paying off any debt you have that is higher than 8%-10%. Most people get their start investing in stocks through mutual funds in their 401k or a Roth IRA. If you want to invest in individual stocks instead of mutual funds then you will need to do a lot of reading and learning. You will need a brokerage account or if you have a stock in mind they might have a dividend reinvestment plan (DRIP) that you could invest in directly with the company. You will have to compare the different brokerage firms to determine which is best for you. Since you seem to be internet savvy, I suggest you use a discount brokerage that let's you buy stocks online with cheaper commissions. A good rule of thumb is to keep commissions below 1% of the amount invested. Once you have your online brokerage account open with money in there the process of actually buying the stock is fairly straightforward. Just place an order for the amount of shares you want. That order can be a market order which means the purchase will occur at the current market price. Or you can use a limit order where you control at what price your purchase will occur. There are lots of good books out there for beginners. Personally I learned from the Motley Fool. And last but not least is to have fun with it. Learn as much as you can and welcome to the club. |
ESPP taxes after relocating from Europe to the United States? | I would suggest to get an authoritative response from a CPA. In any case it would be for your own benefit to have at least the first couple of years of tax returns prepared by a professional. However, from my own personal experience, in your situation the income should not be regarded as "US income" but rather income in your home country. Thus it should not appear on the US tax forms because you were not resident when you had it, it was given to you by your employer (which is X(Europe), not X(USA)), and you should have paid local taxes in your home country on it. |
Tenant wants to pay rent with EFT | The biggest disadvantage to you is that your tenant now knows your bank information, which means he can easily identify your source of money in the event he wins a lawsuit and wins a judgement. He will be able to have a court marshall freeze your account. However, if you deposit your tenant's check into your account as opposed to an EFT, then your tenant can basically still obtain your bank account information and freeze your account, it would just take him a bit longer to get that information. I am definitely anti-landlord in these situations because I've had to deal with so many bad ones here in NYC, but as a landlord, the best thing you can do is to create a "buffer" account for you to deposit tenant rent money into, then transfer the money from the buffer account to your regular account. This would prevent the tenant from knowing your personal bank information and greatly delay the tenant receiving his judgement from an assumed court win against you. My source: I had to take my landlord to court, and after obtaining a judgement, I got a court marshall to begin the process of closing access to her account (she couldn't access the money in that account). The process resulted in her sending me a check (assuming from her other account) for the judgement since her account was frozen and she couldn't access any of her money. |
Nanny taxes and payroll service | Whether to employ a payroll service to handle the taxes (and possibly the payroll itself) is a matter that depends on how savvy you are with respect to your own taxes and with using computers in general. If you are comfortable using programs such as Excel, or Quicken, or TurboTax, or TaxAct etc, then taking care of payroll taxes on a nanny's wages all by yourself is not too hard. If you take a shoebox full of receipts and paystubs to your accountant each April to prepare your personal income tax returns and sign whatever the accountant puts in front of you as your tax return, then you do need to hire a payroll service. It will also cost you a bundle since there are no economies of scale to help you; there is only one employee to be paid. |
I need a car for 2 years. Buy or lease (or something else)? | Your short-term time frame makes buying used the best option, but it seems you already are aware of that. Look into a certified pre-owned model if you are concerned about lemons. You will usually get some sort of warranty. However, be aware that any car can be a headache with repairs. I would not recommend a lease because basically you are still paying for the depreciation on the car plus interest. Generally, this is the most expensive way to drive a car. You may find the numbers look good for a lease but beware of the 'gotchas' in the terms that can put you way over budget (over mileage, wear and tear, etc.). My best recommendation is to buy gently used with cash. This gives you the most flexibility and best resale value. If you finance a late-model vehicle, be aware that depreciation can leave you upside-down on your loan. That would put you in the position of having to shell out cash just to get rid of the car. |
How to protect myself against unauthorized recurring CC charges? | There is no way to stop any merchant from setting a recurring charge flag on a purchase. According to the following article, Mastercard and Visa encourages merchants to use this feature and even give them a better rate. I have found it impossible to stop these unauthorized transactions. The article sites that the merchant is allowed to march the charges across expired cards to find a good card that you might have as well as the article states they can cross banks to find you if you have the same type of card. Virtual account numbers will not protect you. Sorry but the only solution I have found is to close the account with the bank and move to a different type of card, mastercard to visa, or vice versa. This will only protect you for one move ,because if you have to do this again. Merchants that you thought were forgotten even years later will find you and post a charge legally. Virtual numbers from Mastercard or Visa won't stop them. I believe this is the number one reason for credit card fraud for consumers. There is no reason for a merchant to let anyone off the hook when the credit card company will side with them. The article below does state that Mastercard does have a "stop recurring payment" flag. Apparently no CSR tht I have talked to knows about it when I have asked to get a problem fixed. I have found that the only way to stop these charges from happening is to close all my visa and mastercard credit cards, pay with a check that you write and mail or a PayPal one time payment that is sent to pay for an invoice. Recurring Credit-Card Charges May Irk Consumers |
What risks are there acting as a broker between PayPal and electronic bank transfers? | This is definitely a scam. My husband was inquiring with a "company" that was offering him to be. Representative for them. He got the same job details but the company was called Ceneo. I did due diligence and found that the real Ceneo has no problems receiving money directly from buyers around the world. The fake company mirrored their website, posted jobs on the net,hoping to "employ" unsuspecting people in the U.S. This is their reply to my husband when he asked the job details. DO NOT GET SCAMMED and held accountable for money laundering. |
Calculating Future and Present value into mortgage comparisons | Keep in mind the number of months or years before you break even. You pay money to lower the interest rate, and lower the monthly cost. But it takes a number of months, using your numbers $7,000 to save $160 a month will take ~43 months. That is before figuring in the future or present value. If you sell or refinance the mortgage, the initial points to lower the rate is gone. |
Home Renovations are expensive.. Should I only pay cash for them? | Is it a safety thing? If the heat pump goes out you replace it immediately, if your floor looks bad but you aren't tripping, I would suggest saving. Use the extra time to find a great deal and educate yourself on your options. Maybe even take a class and learn to do it yourself. In these rough times, anything I can save for and pay cash I would. The exception is if you can finance with 0% interest for a period of time and you have enough money to pay that off. The last consideration I can think of is if you plan to sell the home soon? For that you might be getting more value than the loan and a real estate agent would be probably know best. |
Is there a way to monitor when executives or leaders in a company sell off large holdings? | SEC Form 3 and SEC Form 4 are filed when insiders make share/derivatives acquisitions, transfers, sells and buys There is a time limit AFTER the action where they can be filed, such as 12 business days, so this can be a substantial amount of time after the effect on the market, depending on your strategy. You can aggregate these forms from SEC sources or from third party websites and services. In some cases, types of insider trading are permissible at certain intervals, so if you learn about when certain shares become unlocked, you can try to predict what insider actions will be and share price movements around those times. |
Is my stock gone forever from a reverse split / bought by another company? | GT BIOPHARMA, INC. ANNOUNCES REVERSE STOCK SPILT AS PART OF OXIS-GEORGETOWN PLANNED MERGER LOS ANGELES, CA / ACCESSWIRE / August 21, 2017 / GT Biopharma Inc. (formerly known as Oxis International, Inc.) announced today a 1-for-300 reverse stock split. Shareholders of GT Biopharma Inc. (OTCQB: OXIS and Euronext Paris: OXI.PA) will be issued 1 share of common stock for every 300 shares common stock that they owned. If you owned fewer than 300 shares, they cashed you out. |
How do you measure the value of gold? | 1) Get some gold. 2) Walk around, yelling, "Hey, I have some gold, who wants to buy it?" 3) Once you have enough interested parties, hold an auction and see who will give you the most dollars for it. 4) Trade the gold for that many dollars. 5) You have just measured the value of your gold. |
Should I consider my investment in a total stock market fund “diverse”? | You are diversified within a particular type of security. Notably the stock market. A truly diversified portfolio not only has multiple types of holdings within a single type of security (what your broad market fund does) but between different types. You have partially succeeded in doing this with the international fund - that way your risk is spread between domestic and international stocks. But there are other holdings. Cash, bonds, commodities, real estate, etc. There are broad index funds/ETFs for those as well, which may reduce your risk when the stock market as a whole tanks - which it does on occasion. |
Pay down the student loan, or buy the car with cash? | Here's another way to look at this that might make the decision easier: Looking at it this way you can turn this into a financial arbitrage opportunity, returning 2.5% compared to paying cash for the vehicle and carrying the student loan. Of course you need to take other factors into account as well, such as your need for liquidity and credit. I hope this helps! |
How to correctly track a covered call write (sell to open) in double-entry accounting? | I skimmed the answer from mirage007, and it looked correct if you're going to set this up from scratch. Since you said you already have a system for tracking stocks, however, maybe you'd prefer to use that. It should handle almost everything you need: Note that only the last of these actually ties the option and the underlying together in your accounting system. Other than that case, the option behaves in your accounting system as if it were a stock. (It does not behave that way in the market, but you need to manage that risk profile outside of the double-entry accounting system.) |
What home improvements are tax deductible? | Home Improvements that improve the home's Energy Efficiency are currently eligible for federal tax credits. This includes renewable energy equipment (solar panels, etc.) and Nonbusiness Energy Property Tax Credit. The credit is 30% of the cost. From Intuit Turbo Tax: Energy Tax Credit: Equipment and materials can qualify for the Nonbusiness Energy Property Credit only if they meet technical efficiency standards set by the Department of Energy. The manufacturer can tell you whether a particular item meets those standards. For this credit, the IRS distinguishes between two kinds of upgrades. The first is "qualified energy efficiency improvements," and it includes the following: •Home insulation •Exterior doors •Exterior windows and skylights •Certain roofing materials The second category is "residential energy property costs." It includes: •Electric heat pumps •Electric heat pump water heaters •Central air conditioning systems •Natural gas, propane or oil waterheaters •Stoves that use biomass fuel •Natural gas, propane or oil furnaces •Natural gas, propane or oil hot water boilers •Advanced circulating fans for natural gas, propane or oil furnaces |
How prudent would it be to invest (stocks/equity) in businesses that are based on Cash transactions? | If they're hiding their profits from the government, what makes you think they wouldn't hide their profits from their shareholders? |
Is it easier for brokers to find shares to short in premarket? | The shares available to short are a portion of those shares held by the longs. This number is actually much easier to determine outside of active trading hours, but either way doesn't really impact the matter at hand since computers are pretty good at counting things. If your broker is putting up obstacles to your issuing sell short limit orders in the pre-market then there is likely some other reason (maybe they reserve that function to "premium" account holders?) |
Frequency of investments to maximise returns (and minimise fees) | Okay, I think I managed to find the precise answer to this problem! It involves solving a non-linear exponential equation, but I also found a good approximate solution using the truncated Taylor series. See below for a spreadsheet you can use. Let's start by defining the growth factors per period, for money in the bank and money invested: Now, let S be the amount ready to be invested after n+1 periods; so the first of that money has earned interest for n periods. That is, The key step to solve the problem was to fix the total number of periods considered. So let's introduce a new variable: t = the total number of time periods elapsed So if money is ready to invest every n+1 periods, there will be t/(n+1) separate investments, and the future value of the investments will be: This formula is exact in the case of integer t and n, and a good approximation when t and n are not integers. Substituting S, we get the version of the formula which explicitly depends on n: Fortunately, only a couple of terms in FV depend on n, so we can find the derivative after some effort: Equating the derivative to zero, we can remove the denominator, and assuming t is greater than zero, we can divide by the constant ( 1-G t ): To simplify the equation, we can define some extra constants: Then, we can define a function f(n) and write the equation as: Note that α, β, γ, G, and R are all constant. From here there are two options: Use Newton's method or another numerical method for finding the positive root of f(n). This can be done in a number of software packages like MATLAB, Octave, etc, or by using a graphics calculator. Solve approximately using a truncated Taylor series polynomial. I will use this method here. The Taylor series of f(n), centred around n=0, is: Truncating the series to the first three terms, we get a quadratic polynomial (with constant coefficients): Using R, G, α, β and γ defined above, let c0, c1 and c2 be the coefficients of the truncated Taylor series for f(n): Then, n should be rounded to the nearest whole number. To be certain, check the values above and below n using the formula for FV. Using the example from the question: For example, I might put aside $100 every week to invest into a stock with an expected growth of 9% p.a., but brokerage fees are $10/trade. For how many weeks should I accumulate the $100 before investing, if I can put it in my high-interest bank account at 4% p.a. until then? Using Newton's method to find roots of f(n) above, we get n = 14.004. Using the closed-form approximate solution, we get n = 14.082. Checking this against the FV with t = 1680 (evenly divisible by each n + 1 tested): Therefore, you should wait for n = 14 periods, keeping that money in the bank, investing it together with the money in the next period (so you will make an investment every 14 + 1 = 15 weeks.) Here's one way to implement the above solution with a spreadsheet. StackExchange doesn't allow tables in their syntax at this time, so I'll show a screenshot of the formulae and columns you can copy and paste: Formulae: Copy and paste column A: Copy and paste column B: Results: Remember, n is the number of periods to accumulate money in the bank. So you will want to invest every n+1 weeks; in this case, every 15 weeks. |
Why do new car loans, used car loans, and refinanced loans have different rates and terms? | New car loans, used car loans, and refinances have different rates because they have different risks associated with them, different levels of ability to recoup losses if there is a default, and different customer profiles. (I'm assuming third party lender for all of these questions, not financing the dealer arranges, as that has other considerations built into it.) A new car loan is both safer to some extent (as the car is a "known" risk, having no risk of damage/etc. prior to purchase), but also harder to recoup losses (because new cars immediately devalue significantly, while used cars keep more of their value). Thus the APRs are a little different; in general for the same amount a new car will be a bit lower APR, but of course used car loans are typically lower amounts. Refinance is also different; customer profile wise, the customer who is refinancing in these times is likely someone who is a higher risk (as why are they asking for a loan when they're mostly paid off their car?). Otherwise it's fairly similar to a used car, though probably a bit newer than the average used car. |
Can Professional Certifications be written off in taxes? | There are a number of federal tax deductions and credits available for education expenses. They are too numerous to describe here, but the place to get full details is IRS Pub 970. Note that many, but not all, of them require that you be enrolled in a degree program; since this does not seem to be the case for you, you would not be eligible for those programs. None of them is as simple / generous as "deduct the full amount of your tuition with no limits". Also note that there are restrictions on using more than one of these deductions or credits in any given tax year. You might pay special attention to Chapter 12, "Business Deduction for Work-Related Education". In particular, this program allows you to deduct transportation expenses under some conditions, which does not seem to be the case for the other programs. But also note carefully the restrictions. In particular, "Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education." So if you are not already working in the field of IT, you may not be eligible for this deduction. |
How to calculate how much house I can afford? | There is no simple way to calculate how much house any given person can afford. In the answer keshlam gave, several handy rules of thumb are mentioned that are used as common screening devices to reject loans, but in every case further review is required to approve any loan. The 28% rule is the gold standard for estimating how much you can afford, but it is only an estimate; all the details (that you don't want to provide) are required to give you anything better than an estimate. In the spirit of JoeTaxpayer's answer I'm going to give you a number that you can multiply your gross income by for a good estimate, but my estimate is based on a 15 year mortgage. Assuming a 15 year mortgage with a 3% interest rate, it will cost $690.58 per $100,000 borrowed. So to take those numbers and wrap it up in a bow, you can multiply your income by 3.38 and have the amount of mortgage that most people can afford. If you have a down-payment saved add it to the number above for the total price of the home you can buy after closing costs are added in. Property taxes and insurance rates vary widely, and those are often rolled into the mortgage payment to be paid from an escrow account, banks may consider all of these factors in their calculators but they may not be transparent. If you can't afford to pay it in 15 years, you really can't afford it. Compare the same $100k loan: In 30 years at 4% you pay about $477/month with a total of about $72k in interest over the life of the loan. In 15 years at 3% you pay about $691/month but the total interest is only $24k, and you are out of the loan in half of the time. The equity earned in the first 5 years is also signficantly different with 28.5% for the 15 year loan vs. 9.5% on the 30 year loan. Without straying too far into general economics, 15 year loans would also have averted the mortgage crisis of 2008, because more people would have had enough equity that they wouldn't have walked out on their homes when there was a price correction. |
Why companies appear in several stock exchanges? | If I buy the one from NSY, is it the "real" Sinopec? No - you are buying an American Depository Receipt. Essentially some American bank or other entity holds a bunch of Sinopec stock and issues certificates to the American exchange that American investors can trade. This insulates the American investors from the cost of international transactions. The price of these ADRs should mimic the price of the underlying stock (including changes the currency exchange rate) otherwise an arbitrage opportunity would exist. Other than that, the main difference between holding the ADR and the actual stock is that ADRs do not have voting rights. So if that is not important to you then for all intents and purposes trading the ADR would be the same as trading the underlying stock. |
Is it a good idea to rebalance without withdrawing money? | There will quickly come a time when buying to rebalance is impractical. Consider, you save 10%, and at some point, you have 5x your income saved. (you earn $50K and have accumulated $250K). A simple allocation, 50/50, so $125K stock, $125K bonds. Now, in a year the market is up much over 4%, your $5K deposit will not be enough to balance. Earlier on, the method may work just fine, later on, not so much. Edit - The above is an example, to show that there will come a time when deposits are not enough to rebalance. The above single year produces a 52/48 split, and the rebalance deposits more than 2 years. If the market continues to rise a reasonable amount, 2 years later you are even more out of balance, perhaps 56/44. I chose reasonable numbers as a starting point, just 5X income saved, and a 10% annual deposit. In the end, you can waive off any divergence from your target. That's your choice. |
Why do people always talk about stocks that pay high dividends? | Dividends telegraph that management has a longer term focus than just the end of quarter share price. There is a committment to at least maintain (if not periodically increase) the dividend payout year over year. Management understands that cutting or pausing dividends will cause dividend investors in market to dump shares driving down the stock price. Dividends can have preferential tax treatment in some jurisdictions, either for an individual compared to capital gains or compared to the corporation paying taxes themselves. For example, REITs (real estate investment trusts) are a type of corporation that in order to not pay corporate income tax are required to pay out 95% of income as dividends each year. These are not the only type, MLP (master limited partnerships) and other "Partnership" structures will always have high dividend rates by design. Dividends provide cash flow and trade market volatility for actual cash. Not every investor needs cash flow, but for certain investors, it reduces the risks of a liquidity crisis, such as in retirement. The alternative for an investor who seeks to use the sale of shares would be to maintain a sufficient cash reserve for typical market recessions. |
How should one refuse to father in law (Chinese) when he wants to borrow money? | In these situations, one solution is to use the "I was just about to ask you the same thing..." response. This is kind of a famous way to deal with people asking you for money, whether it's someone asking to borrow "$10 at lunch time" or "$3000 for a car" or the like. So: Person X asks you for money, say $2000. Your reply: Ah, that's bad luck, I was just about to ask you the same thing... Follow this immediately - just keep talking - by launching in to a really incredibly detailed discussion of why you need to borrow money (pick a slightly larger amount, slet's ay $3500). Just "keep talking" and don't let the other person get a word in. Go in to great detail about just what you need the $3500 for and why. It's a good trick. |
How to manage 20 residential apartments | There are many property management companies are available in India. You can easily find trusted companies just searching on the google. They manage all these things legally. You just try this |
UK Resident exploring freelance work for a Swiss Company | You will need to register as self-employed aka sole trader (that's the whole point: pay taxes on income that you're not getting as wages from an employer, who would arrange PAYE/NI contributions), or set up a limited company (in the last case you would have the option of either getting paid as wages or as dividends — which one is better is a complex issue which varies from year to year). You'll find lots of advice on the HMRC website. |
What makes an actual share valuable? [duplicate] | What benefit do I get from buying a share The value of any financial asset is its ability to generate cash in the future, and thus the "value" of a share is heavily influenced by the dividends it pays and the equity value. The equity value can be calculated different ways. Two common ways are to just take "book" value, meaning assets - liabilities, or you can look at the projected free cash flows of the company discounted back to the present time. Voting rights don't typically influence a share price except in hostile takeover scenarios (meaning someone buys up a lot of shares to have more influence in company decisions) |
ETFs mirroring consistently outperforming companies? | What you may be looking for are multi-manager ETFs; these invest in a basket of diversified funds to get the best out of all of the funds. The problem with multi-manager funds is, of course, that you pay fees twice; once to the fund itself and once to each of the funds in the fund. The low fees on ETFs mean that it is not very profitable to actively maintain one so there are not many around (Googling returns very few). Noting that historic success doesn't guarantee future success and that fees are being applied to fees these funds only really benefit from diversification of manager performance risk. partial source of information and an example of a (non-outperforming) Multi-manager ETF: http://www.etfstrategy.co.uk/advisorshares-sets-date-for-multi-manager-etf-with-charitable-twist-give-53126/ |
Analysis of Valuation-Informed Indexing? | My reaction to this is that your observation @D.W. is spot on correct: It sounds like long-term market timing: trying to do a better job than the rest of the market at predicting, based upon a simple formula, whether the market is over-priced or under-priced. I read the post by the founder of Valuation Informed Indexing, Rob Bennet. Glance at the comments section. Rob clearly states that he doesn't even use his own strategy, and has not owned, nor traded, any stocks since 1996! As another commenter summarizes it, addressing Rob: This is 2011. You’ve been 100% out of stocks — including indexes — since 1996? That’s 15 years of taking whatever the bond market, CDs or TIPS will yield (often and currently less than 2%)... I’m curious how you defend not following your own program even as you recommend it for others? Rob basically says that stocks haven't shown the right signals for buying since 1996, so he's stuck with bonds, CD's and fixed-income instead. This is a VERY long-term horizon point of view (a bit of sarcasm edges in from me). Answering your more general question, what do I think of this particular Price/ Earnings based ratio as a way to signal asset allocation change i.e. Valuation Informed Investing? I don't like it much. |
In the event of a corporate spin-off, how can I calculate the correct cost basis for each company's shares? | I was doing my taxes in the US (called Form 1040) and wanted to find out how to figure out the cost basis for the $3.006 that I received for each Siemens ADR that I hold in July 2013. I found that the cost-basis allocation ratio is as follows: Thus for the original poster the cost-basis is: Hope this helps someone. |
What does “check payable to” mean? | It is your name, or the fictitious name under which you operate. For example, if your freelance front end is called "Zolani the 13th, LLC", then that's the name you want to appear on the check, and not "Mr. John Zolani Doe" that is written in your birth certificate. |
Responsible investing - just a marketing trick? | You are correct that, barring an equity capital raise, your money doesn't actually end up in the company. However, interest in their stock can help a company in other ways; Management/board members hopefully own shares or options themselves, thus knowing that "green" policies are favorable for the stock price (as your fund might buy shares) can be quite an incentive for them to go green(er). Companies with above average company share performance are also often viewed as financially healthy and so creditors tend to charge lower interest for companies with good share performance. Lastly, a high share price makes a company difficult to take over (as all those shares have to be acquired) and at the same time makes it easier for the company to perform takeovers themselves as they can finance such acquisitions by issuing more of their own shares. There is also the implication that money flowing towards such green companies is money flowing out of/away from polluting companies, for these "dirty" companies the inverse of the previous points can hold true. Of course on the other hand there is quite an argument to be made that large enough "green" funds should actually buy substantial positions in companies with poor environmental records and steer the company towards greener policies but that might be a hard sell to investors. |
What is the difference between a bond and a debenture? | Investopedia has definitions for both: Debenture: A type of debt instrument that is not secured by physical asset or collateral. Bond: A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Wikipedia's entry for debenture says: In some countries [debenture] is used interchangeably with bond, loan stock or note. Seems to me that there's not much difference. |
Tax considerations for outsourcing freelance work to foreign country | If a person is not a U.S. citizen and they live and work outside the U.S., then any income they make from a U.S. company or person for services provided does not qualify as "U.S. Source income" according to the IRS. Therefore you wouldn't need to worry about withholding or providing tax forms for them for U.S. taxes. See the IRS Publication 519 U.S. Tax Guide for Aliens. |
How do you invest in real estate without using money? | I know this is broad, but this isn't a scam -- it's a workshop/educational thing about teaching people of investing in the real estate market, and how to profit The scam is that the free or cheap class doesn't give you enough info to make money; so they sell you a more advanced and expensive class that gets you almost enough info; but the goal of the 2nd class is to get you to pay for the specialized seminar and coaching sessions that either fail to materialize or are so basic they aren't worth the money. |
Company is late in paying my corporate credit card statement - will it hurt my credit? | According to an article on Bankrate.com from 2011, yes, it can hurt your credit: With individual liability accounts, the employee holds all responsibility for the charges, even if the company pays the issuer directly. Joint liability means the company and employee share the responsibility for payments, says Mahendra Gupta, author of the RPMG survey. In both cases, if the card isn't paid and the account becomes delinquent, it will pop up on the employee's credit report and dent his or her credit score, says Barry Paperno, consumer affairs manager at myFICO.com. It doesn't matter if the company was supposed to make the payment; the repercussions fall on the employee. "It will impact your score no differently than if you were late on one of your own accounts," Paperno says. Usually, with corporate credit cards, the employee is liable along with the employer for charges on the card. The intent is to provide the employee with an incentive not to misuse the card. However, this can be a problem if your company is late in paying bills. In the distant past, I had a corporate credit card. I was not supposed to have to pay the bill, but I did receive a bill in the mail every month. And occasionally, the payment was late. In my case, these late payments never showed up on my credit report. I can't remember now whether or not this card was reported on my credit report at all. And I remember being told when I got the card that I was jointly responsible for the card with the company. However, your experience may be different. Do the on-time payments show up on your credit report? If so, that may be an indication that a late payment might appear. |
Bucketing investments to track individual growths | Some personal finance packages can track basis cost of individual purchase lots or fractions thereof. I believe Quicken does, for example. And the mutual funds I'm invested in tell me this when I redeem shares. I can't vouch for who/what would make this visible at times other than sale; I've never had that need. For that matter I'm not sure what value the info would have unless you're going to try to explicitly sell specific lots rather than doing FIFO or Average accounting. |
Understanding the Nasdaq insider trading information | Usually insiders are in a better position than you to understand their business, but that doesn't mean they will know the future with perfect accuracy. Sometimes they are wrong, sometimes life events force them to liquidate an otherwise promising investment, sometimes their minds change. So while it is indeed valuable information, as everything in fundamental analysis it must be taken with a grain of salt. Automatic Sell I think these refer to how the sell occurred. Often the employees don't get actual shares but options or warrants that can be converted to shares. Or there may be special predetermined arrangements regarding when and how the shares may be traded. Since the decision to sell here has nothing to do with the prospects of the business, but has to do with the personal situation of the employee, it's not quite the same as outright selling due to market concerns. Some people, for instance, are not interested in holding stock. Part of their compensation is given in stock, so they immediately sell the stock to avoid the headache of watching an investment. This obviously doesn't indicate that they expect the company will go south. I think automatic sell refers to these sorts of situations, but your broker should provide a more detailed definition. Disposition (Non Open Market) These days people trade through a broker, but there's nothing stopping you from taking the physical shares and giving them to someone in exchange for say a stack of cash. With a broker, you only "sell" without considering who is buying. The broker then finds buyers for you according to their own system. If selling without a broker you can also be choosy with who is buying, and it's not like anybody can just call up the CEO and ask to buy some stock, so it's a non-open market. Ultimately though it's still the insider selling. Just on a different exchange. So I would treat this as any insider sell - if they are selling, they may be expecting the stock to become less valuable. indirect ownership I think this refers to owning an entity that in turn owns the asset. For instance CEO of XYZ owns stock in ACME, but ACME holds shares of XYZ. This is a somewhat complicated situation, it comes down to whether you think they sold ACME because of the exposure to XYZ or because of some other risk that applies only to ACME and not XYZ. Generally speaking, I don't think you would find a rule like "if insider transactions of so and so kinds > X then buy" that provides guaranteed success. If such a rule was possible it would have been exploited already by the professionals. The more sensible option is to consider all data available to you and try to make a holistic evaluation. All of these insider activities can be bullish or bearish depending on many other factors. |
Ghana scam and direct deposit scam? | Sadly, people with millions of dollars rarely give it away to complete strangers that they found at random on the Internet in exchange for trivial efforts. Anyone who claims to be willing to give you millions of dollars for just about nothing in return is almost certainly pulling a scam. It doesn't matter if you can't figure out how they're going to cheat you. They have plan. Just because your father has no money doesn't mean he can't be robbed. The scammer is almost surely planning to move some money around, and leave your father with a debt that he will be legally obligated to pay. She'll then take off with the money. (Of course you figured out that the picture is fake. It may not even be a pretty young girl -- that may well just be a persona the scammer created to appeal to your father. It might really be a fat, balding old man.) Your father would be smarter to sit in his back yard and wait for money to fall from the sky. |
I'm about to be offered equity by my employer. What should I expect? | Yes, what they said. You don't mention where you are on the totem pole. Are you reporting to the top dog, or are you 3 levels down? Not to be a downer, but until you know your cut, I'd not get too excited either way. 1000 shares/options of a LinkedIn turned to nearly $100K. Nothing to sneeze at, to be sure, but not enough to retire, nor bother contacting a lawyer. The details of the equity should be spelled out clearly, nothing against Lawyers, but it's likely to be wasted money. |
What do these options trading terms mean? | With stocks, you can buy or sell. If you sell first, that's called 'shorting.' As in "I think linkedin is too high, I'm going to short it." With options, the terminology is different, the normal process is to buy to open/sell to close, but if you were shorting the option itself, you would first sell to open, i.e you are selling a position to start it, effectively selling it short. Eventually, you may close it out, by buying to close. Options trading is not for the amateur. If you plan to trade, study first and be very cautious. |
How can I transfer and consolidate my 401k's and other options? | You should ask your broker of choice for paperwork to move funds to them. You can't move into an account that doesn't exist, so when I wanted to move my money from an old pension plan to an IRA I set up the IRA with the broker first. When I told them it was to receive this money, they weren't asking for any initial deposit. You then have a broker and account number to give the old company to set up the move. |
Why would a car company lend me money at a very low interest rate? | This is "incentive financing". Simply put, the car company isn't in the business of making money by buying government bonds. They're in the business of making money by selling cars. If you are "qualified" from a credit standpoint, and want to buy a $20k car on any given Sunday, you'll typically be offered a loan of between 6% and 9%. Let's say this loan is for three years and you can offer $4000 down payment and/or trade. The required monthly payment on the remaining $16k at the high end of 9% is $508.80, which over 3 years means you'll pay $2,316.64 in interest. Now, that may sound like a good chunk of change, and for the ordinary individual, it is, possibly enough that you decide not to buy today. Now, let's say, all other things being equal, that the company is offering 0.9% incentive financing. Same price, same down payment, same loan term. Your payments over 3 years decrease to $450.64, and over the same loan term you would only pay $222.97 in interest. You save over $2,093.67 in interest over three years, which for you is again a decent chunk of change. Theoretically, the car company's losing that same $2,093.67 in interest by offering this deal, and depending on how it's getting the money it lends you (most financial companies are middlemen, getting money from bond-buying investors who expect a rate of return), that could be a real loss and not just opportunity cost. But, that incentive got you to walk in their door, and not their competitor's. It helped convince you to buy the $20,000 car. The gross margin on that car (price minus direct costs) is typically 20% for the dealer, plus another 20% for the manufacturer, so by giving up the $2,000 on the financing side, the dealer and manufacturer just earned themselves 4 times that much. On top of that, by buying that car, you're committing to buy the parts for the car, a side business with even higher margins, of which the car company gets a pretty big chunk. You may even be required to use dealer service while the car's under warranty in order to keep the warranty valid, another cha-ching. When you get right down to it, the loss from the incentive financing is drowned in the gross profits they make from selling the car to you. Now, in reality, it's a fine balance. The percentages I mentioned are gross margins (EBITDASG&A - Earnings Before Interest, Taxes, Depreciation, Amortization, Sales, General and Administrative costs; basically, just revenue minus direct cost of goods sold). Add in all these side costs and you get a net margin of only about 3.5% of revenue, so your $20k car purchase may only make the car company's stakeholders $700 on the sale, plus slightly higher net margins on parts and service over the life of the car. Because incentive financing is typically only offered through the company's own financing subsidiary, the loss isn't in the form of a cost paid, but simply a revenue not realized, but it can still move a car company from net positive to net negative earnings if the program is too successful. This is why not everyone does it, and not all at the same time; if you're selling enough cars without it, why give away money? Typically, these incentives are offered for two reasons; to clear out old cars or excess inventory, or to maintain ground against a competitor's stronger sales numbers. Keeping cars on a lot ready to sell is expensive, and so is not having your brand driving around on the street turning heads and imprinting their name on the minds of potential customers. |
S&P is consistently beating inflation? | TL;DR: Because stocks represent added value from corporate profits, and not the price the goods themselves are sold at. This is actually a very complicated subject. But here's the simplest answer I can come up with. Stocks are a commodity, just like milk, eggs, and bread. The government only tracks certain commodities (consumables) as part of the Consumer Price Index (CPI). These are generally commodities that the typical person will consume on a daily or weekly basis, or need to survive (food, rent, etc.). These are present values. Stock prices, on the other hand, represent an educated guess (or bet) on a company's future performance. If Apple has historically performed well, and analysts expect it to continue to perform, then investors will pay more for a stock that they feel will continue pay good dividends in the future. Compound this with the fact that there is usually limited a supply of stock for a particular company (unless they issue more stock). If we go back to Apple as an example, they can raise their price they charge on an iPhone from $400 to $450 over the course of say a couple years. Some of this may be due to higher wage costs, but efficiencies in the marketplace actually tend to drive down costs to produce goods, so they will probably actually turn a higher profit by raising their price, even if they have to pay higher wages (or possibly even if they don't raise their price!). This, in economics, is termed value added. Finally, @Hart is absolutely correct in his comment about the stocks in the S&P 500 not being static. Additionally, the S&P 500 is a hand picked set of "winners", if you will. These are not run-of-the-mill penny stocks for companies that will be out of business in a week. These are companies that Standard & Poor's Financial Services LLC thinks will perform well. |
Do classes have to pay sales tax on materials used? | In most jurisdictions, both the goods (raw materials) and the service (class) are being "sold" to the customer, who is the end user and thus the sale is subject to sales tax. So, when your friend charges for the class, that $100 is subject to all applicable sales taxes for the jurisdiction and all parent jurisdictions (usually city, county and state). The teacher should not have to pay sales tax when they buy the flowers from the wholesaler; most jurisdictions charge sales tax on end-user purchases only. However, they are required to have some proof of sales tax exemption for the purchase, which normally comes part and parcel with the DBA or other business entity registration paperwork in most cities/states. Wholesalers deal with non-end-user sales (exempt from sales tax) all the time, but your average Michael's or Hobby Lobby may not be able to deal with this and may have to charge your friend the sales tax at POS. Depending on the jurisdiction, if this happens, your friend may be able to reduce the amount the customer is paying that is subject to sales tax by the pre-tax value of the materials the customer has paid for, which your friend already paid the tax on. |
What happens if a bank loses your safe deposit box? | Unfortunately assets placed in a safety deposit box are not covered under the Federal Deposit Insurance Program (FDIC). Unless the bank is found to be negligent in the way it handled or protected your safety deposit box, neither them nor their private insurance company will reimburse you for the loss. Find out if in the duration you had your box with them, they moved, transitioned or merged with another entity. In this specific situation, you may be able to demonstrate negligence on the part of the banks as they have seemingly misplaced your box during their transition phase, and depending upon the value of the items placed in your safety deposit box, you may be entitled to some form of recovery. Some homeowner's insurance policies may also cover the loss, but if you didn't document what you kept in the box, you have difficulty verifying proof of the value. Valuables are often lost but documents can often be reconstructed. You can get stock and bonds by paying a fee for new certificates. For wills and trusts, you can reach out to the lawyer that prepared them for a copy. You should always keep 3 copies of such documents. When you put stuff in the box, always videotape it (photographs can be challenged) but if the video shows it was put in there, although it can still be taken out by you after you turn off the camera, yields more weight in establishing content and potential value. Also know the value of the items and check with your homeowner policy to make sure the default amount covers it, if not then you may need to include a rider to add the difference in value and the video, receipts, appraisals and such will serve you well in the future in such unfortunate circumstances. If the contents of a safety deposit box are lost because you didn't pay the fee, then depending on the state you are in the time frame might vary (3 years on average), but none the less they are sent to the State's unclaimed property/funds department. You can search for these online often times or by contacting the state. It would help for you to find out which scenario you are in, their fault or yours, and proceed accordingly. Good luck. |
Is there any chance for a layperson to gain from stock exchange? [duplicate] | No. As long as you are sensible, an average person can make money on the stock market. A number of my investments (in Investment trusts) over the last 10 yeas have achieved over 200%. You're not going to turn $1000 into a million but you can beat cash. I suggest reading the intelligent investor by Graham - he was Warren Buffet's mentor |
Warren and it's investments [duplicate] | If I were in your shoes I would concentrate now on investing in yourself. Your greatest wealth building tool is your income. Going to school is great, make sure you can finish. Also is there additional coursework you can obtain that might help boost your salary? I would look for course in the following areas that might be outside your core competency: After that I would concentrate on some books that will help you in your journey. However, I would not start investing until you have a well paying full time job: That will get you started. |
Is it possible to trade CFD without leverage? | Generally not, however some brokers may allow it. My previous CFD Broker - CMC Markets, used to allow you to adjust the leverage from the maximum allowed for that stock (say 5%) to 100% of your own money before you place a trade. So obviously if you set it at 100% you pay no interest on holding open long positions overnight. If you can't find a broker that allows this (as I don't think there would be too many around), you can always trade within your account size. For example, if you have an account size of $20,000 then you only take out trades that have a face value up to the $20,000. When you become more experienced and confident you can increase this to 2 or 3 time your account size. Maybe, if you are just starting out, you should first open a virtual account to test your strategies out and get used to using leverage. You should put together a trading plan with position sizing and risk management before starting real trading, and you can test these in your virtual trading before putting real money on the table. Also, if you want to avoid leverage when first starting out, you could always start trading the underlying without any leverage, but you should still have a trading plan in place first. |
Does a US LLC need to file taxes if owned by a foreign citizen? | There is no such thing as double taxation. If you pay tax in the US, you CAN claim tax credits from India tax authority. For example, if you pay 100 tax in USA and your tax liability in India is 200, then you will only pay 100 (200 India tax liability minus 100 tax credits on foreign tax paid in the USA). This is always true and not depending on any treaty. If there is a treaty, the tax rate in the United States is set on the treaty and you CAN claim that final tax rate based upon that treaty. If you operate an LLC, and the income is NOT derived from United States and you have no ties with the US and that LLC is register to a foreign person (not company but a real human) then you will not have to submit tax return in the US... I advice you to read this: http://www.irs.gov/businesses/small/article/0,,id=98277,00.html |
Why do governments borrow money instead of printing it? | Governments borrowing money doesn't create new money. When banks "borrow" money (i.e. take deposits), it does effectively create money because the depositor expects to be able to get the money back at any time, but the bank assumes that most won't actually do this and lends out most of the money to other people. If everyone did actually ask for their money back at once, the illusion of the extra money created by this process would collapse, and the bank would go bust. In contrast when governments borrow money, the loan isn't repayable on demand, it has a fixed maturity and the money is only repaid at the end of that period (plus interest at defined points during the period). So holders of government debt don't have money they can spend (they can turn it into money they can spend but only by finding someone else to buy it). So government debt doesn't create inflation in itself. If they printed money, then they'd be devaluing the money of everyone who had saved or invested, whereas if they borrow money and use taxes to repay it, the burden falls more evenly across the economy and doesn't disproportionately penalise certain sets of people. |
How does a brokerage firm work? | Brokerages offer you the convenience of buying and selling financial products. They are usually not exchanges themselves, but they can be. Typically there is an exchange and the broker sends orders to that exchange. The main benefit that brokers offer is a simpler commission structure. Not all brokers have their own liquidity, but brokers can have their own allotment of shares of a stock, for example, that they will sell you when you make an order, so that you get what you want faster. Regarding accounts at the exchanges to track actual ownership and transfer of assets, it is not safe to assume thats how that works. There are a lot of shortcomings in how the actual exchange works, since the settlement time is 1 - 3 business days, depending on the product (so upwards of 5 to 6 actual days). In a fast market, the asset can change hands many many times making the accounting completely incorrect for extended time periods. Better to not worry about that part, but if you'd like to read more about how that is regulated look up "Failure To Deliver" regulations on short selling to get a better understanding of market microstructure. It is a very antiquated system. |
Calculate investment's interest rate to break-even insurance cost [duplicate] | You are comparing a risk-free cost with a risky return. If you can tolerate that level of risk (the ups and downs of the investment) for the chance that you'll come out ahead in the long-run, then sure, you could do that. So the parameters to your equation would be: If you assume that the risky returns are normally distributed, then you can use normal probability tables to determine what risk level you can tolerate. To put some real numbers to it, take the average S&P 500 return of 10% and standard deviation of 18%. Using standard normal functions, we can calculate the probability that you earn more than various interest rates: so even with a low 3% interest rate, there's roughly a 1 in 3 chance that you'll actually be worse off (the gains on your investments will be less than the interest you pay). In any case there's a 3 in 10 chance that your investments will lose money. |
Steps to buying a home | At this stage, I would think about education. You can attend open houses, and often times real estate agents and bankers put on seminars for first time home buyers. Borrow books from the library and I would watch some HGTV. Many of the shows are entertaining and quite educational. Secondly you may want to get your finances in order. Make and stick to a budget. Start building a down payment and emergency fund. Pay down consumer debt/student loans. Picking up side work or overtime will help. You will look far more attractive to a lender if you go in with a large down payment and an emergency fund then someone with better credit scores and 100% financing. That is if the lender does manual underwriting. If not, then use a different lender. Once you get a budget figured out, how much of a down payment and emergency fund you need, and how much consumer debt to pay off, you can then predict when you will hit your goals. Then you will know when you are ready to buy. If it seems too far off, cut spending and work more if it is that important to you! You can make a prioritized list about what is most important features to you and your wife. I would wait on doing this until after you view some homes. Open houses are a great way to do this, but be careful not to get "house fever" and rush into a decision. You will get some encouragement to do so by the selling agents. After viewing some homes, and developing your list you can get an idea as of what the home will cost. This will further refine your budget, goals, and timeline. I think that is a lot of work to start. |
How come we can find stocks with a Price-to-Book ratio less than 1? | The VDE fund is an energy fund so this is a function of recent price changes in oil (and gas, coal, &c). For example. Lets say last year when oil was $100 per barrel a bunch of companies saw a good return and put $ 100 million into a bunch of leases, boreholes, pumps, &c to return $10 million per year, and the market says yeah, they're all together worth 100M. Now oil is less, maybe $40 per the link. These exploration companies don't have a lot of labor or variable costs; they are operationally profitable, may have "use it or lose it" leases or minimum pumping requirements for contract or engineering reasons. Lets say the cash flow is 7M so the market values them at 70M. They still have about 100M book value so here we are at .7 and I believe the scenario in the question. Nobody would invest in new capacity at this oil price. The well equipment could be repurposed but not the borehole or lease, so the best use is to continue pumping and value it on cash flow. If an individual well runs negative long enough and goes bust, either a different pumper will pay the minimum price that gives profitable cash flow, or that borehole that cost millions to dig is shut off and rendered valueless. The CNBC article says some explorers are playing games with debt to maintain yield, so there is that too. In the ETF, your bet is that the market is wrong and oil will go up, increasing future cash flows (or you like the current yield, taking on the risk that some of these oil explorers could go bust). |
At what age should I start or stop saving money? | Are you working? Does your employer offer a 401(k) and if so, is there any match? Saving should be taught to kids at the same time they are old enough to get an allowance. There are many numbers tossed around, but 10% is a start for any new saver. If a college graduate can start by saving even 15%, better still. If you find that the 10% is too much, just start with what you can spare, and work to build that up over time, perhaps by splitting any future raises, half going toward savings, half to spending. Good luck. Edit - my 12 yr old made good money this summer baby sitting. I'm opening a Roth IRA for her. A 10 yr head start on her retirement savings. Edit (Jan-2013) - she's 14 now, 3 deposits to the Roth total $6000, and she's planning to up the number this year. Her goal is to have $50K saved in her Roth by the time she graduates college. Edit, by request (July-2017) 18, and off to college next month. Just under $24K, all invested in an S&P low cost index. We are planning to continue deposits of $4-$5K/yr, so the $50K is still a good goal. |
Unmarried couple buying home, what are the options in our case? | Personally I would advise only buying what you can afford without borrowing money, even if it means living in a tent. Financially, that is the best move. If you are determined to borrow money to buy a house, the person with income should buy it as sole owner. Split ownership will create a nightmare if any problems develop in the relationship. Split ownership has the advantage that it doubles the tax-free appreciation deduction from $250,000 to $500,000, but in your case my sense is that that is not a sufficient reason to risk dual ownership. Do not charge your "partner" rent. That is crazy. |
Do I just let an options conversion/reversal trade go to expiration? | To Chris' comment, find out if the assignment commission is the same as the commission for an executed trade. If that does affect the profit, just let it expire. I've had spreads (buy a call, sell a higher strike call, same dates) so deep in the money, I just made sense to let both exercise at expiration. Don't panic if all legs ofthe trade don't show until Sunday or even Monday morning. |
I might use a credit card convenience check. What should I consider? | Well, you might take a minor hit to your credit score. This is snapshot of my credit utilization written for an article on my site. The point there was that zero card use actually dinged the score, but for you, going over the 20% level is the risk. It's not too large a hit, depending how high the utilization goes. I'd not lose sleep over it. Kind of you to help. |
At what age should I start or stop saving money? | You've never saved money? Have you ever bought anything? There probably was a small window of time that you had to pool some cash to buy something. In my experience, if you make it more interesting by 'allocating money for specific purposes' you'll have better results than just arbitrarily saving for a rainy day. Allocate your money for different things (ie- new car, emergency, travel, or starting a new business) by isolating your money into different places. Ex- your new car allocation could be in a savings account at your bank. Your emergency allocation can be in cash under your bed. Your new business allocation could be in an investment vehicle like a stocks where it could potentially see significant gains by the time you are ready to use it. The traditional concept of savings is gone. There is very little money to be earned in a savings account and any gains will be most certainly wiped out by inflation anyway. Allocate your money, allocate more with new income, and then use it to buy real things and fund new adventures when the time is right. |
When a stock price goes down, does the money just disappears into thin air? | In short, thanks to the answers and comments posted so far. No actual money is magically disappeared when the stock price goes down but the value is lost. The value changes of a stock is similar to the value changes of a house. The following is the long answer I came up with based on the previous answers and comments alone with my own understandings. Any experts who find any of the following is 200% out of place and wrong, feel free to edit it or make comments. Everything below only applies if the following are true: The stock price is only decreasing since the IPO because the company has been spending the money but not making profits after the IPO. The devaluation of the stock is not the result of any bad news related to the company but a direct translation of the money the company has lost by spending on whatever the company is doing. The actual money don’t just disappear into the thin air when the stock price goes down. All the money involved in trading this stock has already distributed to the sellers of this stock before the price went down. There is no actual money that is literally disappeared, it was shifted from one hand to another, but again this already happened before the price went down. For example, I bought some stocks for $100, then the price went down to $80. The $100 has already shifted from my hand to the seller before the price went down. I got the stock with less value, but the actual money $100 did not just go down to $80, it’s in the hand of the seller who sold the stock to me. Now if I sell the stock to the same seller who sold the stock to me, then I lost $20, where did the $20 go? it went to the seller who sold the stock to me and then bought it back at a lower price. The seller ended up with the same amount of the stocks and the $20 from me. Did the seller made $20? Yes, but did the seller’s total assets increased? No, it’s still $100, $80 from the stocks, and $20 in cash. Did anyone made an extra $20? No. Although I did lost $20, but the total cash involved is still there, I have the $80 , the seller who sold the stock to me and then bought it back has the $20. The total cash value is still $100. Directly, I did lost $20 to the guy who sold me the stock when the stock has higher value and then bought it back at a lower price. But that guy did not increased his total assets by $20. The value of the stock is decreased, the total money $100 did not disappear, it ended up from one person holding it to 2 people holding it. I lost $20 and nobody gained $20, how is that possible? Assume the company of the stock never made any profit since it’s IPO, the company just keeps spending the money, to really track down where the $20 I lost is going, it is the company has indirectly spent that money. So who got that $20 I lost? It could be the company spent $20 for a birthday cake, the $20 went to the cake maker. The company never did anything to make that $20 back, so that $20 is lost. Again, assume the stock price only goes down after its IPO, then buying this stock is similar to the buying a sport car example from JoeTaxpayer (in one of the answers), and buying an apple example from BrenBarn(in one of the comments from JoeTaxpayer’s answer). Go back to the question, does the money disappears into the thin air when the value of the stock goes down? No, the money did not disappear, it switched hands. It went from the buyer of the stock to the company, and the company has spent that money. Then what happens when the stock price goes down because bad news about the company? I believe the actual money still did not just disappear. If the bad news turn out to be true that the company had indeed lost this much money, the money did not disappear, it’s been spent/lost by the company. If the bad news turn out to be false, the stock price will eventually go up again, the money is still in the hand of the company. As a summary, the money itself did not disappear no matter what happens, it just went from one wallet to another wallet in many different ways through the things people created that has a value. |
Over how much time should I dollar-cost-average my bonus from cash into mutual funds? | Canadian Couch Potato has an article which is somewhat related. Ask the Spud: Can You Time the Markets? The argument roughly boils down to the following: That said, I didn't follow the advice. I inherited a sum of money, more than I had dealt with before, and I did not feel I was emotionally capable of immediately dumping it into my portfolio (Canadian stocks, US stocks, world stocks, Canadian bonds, all passive indexed mutual funds), and so I decided to add the money into my portfolio over the course of a year, twice a month. The money that I had not yet invested, I put into a money market account. That worked for me because I was purchasing mutual funds with no transaction costs. If you are buying ETFs, this strategy makes less sense. In hindsight, this was not financially prudent; I'd have been financially better off to buy all the mutual funds right at the beginning. But I was satisfied with the tradeoff, knowing that I did not have hindsight and I would have been emotionally hurt had the stock market crashed. There must be research that would prove, based on past performance, the statistically optimal time frame for dollar-cost averaging. However, I strongly suppose that the time frame is rather small, and so I would advise that you either invest the money immediately, or dollar-cost average your investment over the course of the year. This answer is not an ideal answer to your question because it is lacking such a citation. |
How to start investing for an immigrant? | I am in a similar situation (sw developer, immigrant waiting for green card, no debt, healthy, not sure if I will stay here forever, only son of aging parents). I am contributing to my 401k to max my employer contribution (which is 3.5%, you should find that out from your HR). I don't have any specific financial goal in my mind, so beside an emergency fund (I was recommended to have at least 6 months worth of salary in cash) I am stashing away 10% of my income which I invest with a notorious robot-adviser. The rate is 80% stocks, 20% bonds, as I don't plan to use those funds anytime soon. Should I go back to my country, I will bring with me (or transfer) the cash, and leave my investments here. The 401K will keep growing and so the investments, and perhaps I will be able to retire earlier than expected. It's quite vague I know, but in the situation we are, it's hard to make definite plans. |
Why does it look like my 401k loan default was not paid by my 401k account balance? | When you leave an employer, 401(k) loans are immediately due (or within 30 days or 60 days). So maybe they are waiting to see if you will pay off your loan. If you wanted to transfer the loan as well, you need to talk to your new 401(k) plan administrator to find out if this even possible. If they say No and you don't pay off the loan, it will count as a premature distribution from your old 401(k) plan and possibly be subject to excise tax in addition to income tax. |
What gives non-dividend stocks value to purchasers? [duplicate] | A Company start with say $100. Lets say the max it can borrow from bank is $100 @ $10 a year as Interest. After a years say, On the $200 the company made a profit of $110. So it now has total $310 Option 1: Company pays back the Bank $100 + $10. It further gave away the $100 back to shareholders as dividends. The Balance with company $100. It can again start the second year, borrow from Bank $100 @ 10 interest and restart. Option 2: Company pays back the Bank $100 + $10. It now has $200. It can now borrow $200 from Bank @ $20. After a year it makes a profit of $250. [Economics of scale result $30 more] Quite a few companies in growth phase use Option 2 as they can grow faster, achieve economies of scale, keep competition at bay, etc Now if I had a share of this company say 1 @ $1, by end of first year its value would be $2, at the end of year 2 it would be $3.3. Now there is someone else who wants to buy this share at end of year 1. I would say this share gives me 100% returns every year, so I will not sell at $2. Give me $3 at the end of first year. The buyer would think well, if I buy this at $3, first year I would notionally get $.3 and from then on $1 every year. Not bad. This is still better than other stocks and better than Bank CD etc ... So as long as the company is doing well and expected to do well in future its price keeps on increasing as there is someone who want to buy. Why would someone want to sell and not hold one: 1. Needs cash for buying house or other purposes, close to retirement etc 2. Is balancing the portfolio to make is less risk based 3. Quite a few similar reasons Why would someone feel its right to buy: 1. Has cash and is young is open to small risk 2. Believes the value will still go up further 3. Quite a few similar reasons |
Dividend yield for multiple years? | I've recently discovered that Morningstar provides 5yr avgs of a few numbers, including dividend yield, for free. For example, see the right-hand column in the 'Current Valuation' section, 5th row down for the 5yr avg dividend yield for PG: http://financials.morningstar.com/valuation/price-ratio.html?t=PG®ion=usa&culture=en-US Another site that probably has this, and alot more, is YCharts. But that is a membership site so you'll need to join (and pay a membership fee I believe.) YCharts is supposedly pretty good for long-term statistical information and trend graphs for comparing and tracking stocks. |
Is Amazon's offer of a $50 gift card a scam? | The 'store card' that Amazon offers gives 5% back on Amazon purchases. Some time ago, when I realized how much of my spending was going through Amazon, I chose that card over this one. If you want the card, that's fine, but if you are going to play the reward game, there are far higher bonuses available for card signups. No, it's not a scam. Many stores will offer a discount at the register the day you sign up for there card. In general, the store cards should also give a discount when used at that store, or airline for that matter. |
How to save money for future expenses | how can I save money for the future The fact that you are worrying is good. This is the first step. Follow this up with a plan. One way is first get hold of your income [its fixed you know the salary]. Maintain expenses, then see which costs can be cut down. Create individual goals and start investing for these. The best way for first timer is to invest into a Recurring Deposits or SIP in mutual fund, i.e. kind of forced saving so that you don't spend what is available in bank Account. |
Should I invest in real estate to rent, real estate to live in, or just stocks and bonds to earn 10-15%? | You are in your mid 30's and have 250,000 to put aside for investments- that is a fantastic position to be in. First, let's evaluate all the options you listed. Option 1 I could buy two studio apartments in the center of a European capital city and rent out one apartment on short-term rental and live in the other. Occasionally I could Airbnb the apartment I live in to allow me to travel more (one of my life goals). To say "European capital city" is such a massive generalization, I would disregard this point based on that alone. Athens is a European capital city and so is Berlin but they have very different economies at this point. Let's put that aside for now. You have to beware of the following costs when using property as an investment (this list is non-exhaustive): The positive: you have someone paying the mortgage or allowing you to recoup what you paid for the apartment. But can you guarantee an ROI of 10-15% ? Far from it. If investing in real estate yielded guaranteed results, everyone would do it. This is where we go back to my initial point about "European capital city" being a massive generalization. Option 2 Take a loan at very low interest rate (probably 2-2.5% fixed for 15 years) and buy something a little nicer and bigger. This would be incase I decide to have a family in say, 5 years time. I would need to service the loan at up to EUR 800 / USD 1100 per month. If your life plan is taking you down the path of having a family and needed the larger space for your family, then you need the space to live in and you shouldn't be looking at it as an investment that will give you at least 10% returns. Buying property you intend to live in is as much a life choice as it is an investment. You will treat the property much different from the way something you rent out gets treated. It means you'll be in a better position when you decide to sell but don't go in to this because you think a return is guaranteed. Do it if you think it is what you need to achieve your life goals. Option 3 Buy bonds and shares. But I haven't the faintest idea about how to do that and/or manage a portfolio. If I was to go down that route how do I proceed with some confidence I won't lose all the money? Let's say you are 35 years old. The general rule is that 100 minus your age is what you should put in to equities and the rest in something more conservative. Consider this: This strategy is long term and the finer details are beyond the scope of an answer like this. You have quite some money to invest so you would get preferential treatment at many financial institutions. I want to address your point of having a goal of 10-15% return. Since you mentioned Europe, take a look at this chart for FTSE 100 (one of the more prominent indexes in Europe). You can do the math- the return is no where close to your goals. My objective in mentioning this: your goals might warrant going to much riskier markets (emerging markets). Again, it is beyond the scope of this answer. |
What is the difference between fixed-income duration and equity duration? | A bond has a duration that can be easily calculated. It's the time weighted average of all the payments you'll receive and helpful to understand the effect a change in rates will have on that instrument. The duration of a stock, on the other hand, is a forced construct to then use in other equations to help calculate, say, the summation of a dividend stream. I can calculate the duration of a bond and come up with an answer that's not up for discussion or dispute. The duration of a stock, on the other hand, isn't such a number. Will J&J last 50 more years? Will Apple? Who knows? |
Why do employer contributions count against HSA limits? | It's going to be quite a challenge to give a definitive answer to any "Why" question about law, and especially so for a question about tax law. One would need to try to dig up statements made by the legislators (and/or their aides) crafting and debating the law. As it is, tax law is already inconsistent in many ways. (Why are there people who can't contribute to a Roth IRA directly but can contribute to a Traditional and then immediately convert it to Roth? Why are maximum limits for 401(k) plans and IRAs separate rather than being one combined "retirement" savings maximum?) In the absence of some specific legislative statements saying that it was set up this way for some specific purpose, one must assume that it was written with the some goals as all tax law: As a compromise between various ideas, trying to accomplish some specific purpose. Feel free to add in some level of inefficiency and it being hard to completely understand the entirely of the tax law, which leads to things perhaps not being as "tidy" as one might hope for. But there's no reason to think that the people crafting the tax advantages for HSA plans had any reason to use 401(k) plans as a template, or wanted them to accomplish the same goals. |
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