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Why I cannot find a “Pure Cash” option in 401k investments? | This situation, wanting desperately to have access to an investment vehicle in a 401K, but it not being available reminds me of two suggestions some make regarding retirement investing: This allows you the maximum flexibility in your retirement investing. I have never, in almost 30 years of 401K investing, seen a pure cash investment, is was always something that was at its core very short term bonds. The exception is one company that once you had a few thousand in the 401K, you could transfer it to a brokerage account. I have no idea if there was a way to invest in a money market fund via the brokerage, but I guess it was possible. You may have to look and see if the company running the 401K has other investment options that your employer didn't select. Or you will have to see if other 401K custodians have these types of investments. Then push for changes next year. Regarding external IRA/Roth IRA: You can buy a CD with FDIC protection from funds in an IRA/Roth IRA. My credit union with NCUA protection currently has CDs and even bump up CDs, minimum balance is $500, and the periods are from 6 months to 3 years. |
Is there a general guideline for what percentage of a portfolio should be in gold? | I think most financial planners or advisors would allocate zero to a gold-only fund. That's probably the mainstream view. Metals investments have a lot of issues, more elaboration here: What would be the signs of a bubble in silver? Also consider that metals (and commodities, despite a recent drop) are on a big run-up and lots of random people are saying they're the thing to get in on. Usually this is a sign that you might want to wait a bit or at least buy gradually. The more mainstream way to go might be a commodities fund or all-asset fund. Some funds you could look at (just examples, not recommendations) might include several PIMCO funds including their commodity real return and all-asset; Hussman Strategic Total Return; diversified commodities index ETFs; stuff like that has a lot of the theoretical benefits of gold but isn't as dependent on gold specifically. Another idea for you might be international bonds (or stocks), if you feel US currency in particular is at risk. Oh, and REITs often come up as an inflation-resistant asset class. I personally use diversified funds rather than gold specifically, fwiw, mostly for the same reason I'd buy a fund instead of individual stocks. 10%-ish is probably about right to put into this kind of stuff, depending on your overall portfolio and goals. Pure commodities should probably be less than funds with some bonds, stocks, or REITs, because in principle commodities only track inflation over time, they don't make money. The only way you make money on them is rebalancing out of them some when there's a run up and back in when they're down. So a portfolio with mostly commodities would suck long term. Some people feel gold's virtue is tangibility rather than being a piece of paper, in an apocalypse-ish scenario, but if making that argument I think you need physical gold in your basement, not an ETF. Plus I'd argue for guns, ammo, and food over gold in that scenario. :-) |
How to evaluate stocks? e.g. Whether some stock is cheap or expensive? | nan |
How much money do you have to make every year before you have to pay tax? | I'm not confident that the requirements for 2017 are up yet, but assuming they don't change much from those of 2016, then probably not if you have no other earnings this year. If you make $500 a month, then you will make $6,000 this year. This is below the filing requirements for most taxpayers, unless you are married but filing separately. At the end of 2017 you should tally up your earnings (including earnings from other sources) find which category you find yourself in on the table, and make a final determination of whether you'll need to file. |
Form 1042-S for foreign resident and owner of trade account | As you have indicated, the 1042-S reflects no income or withholding. As such, you are not required to file a US tax return unless you have other income from the US. Gains on stocks are not reported until realized upon sale. FYI, your activity does not fit the requirements of being engaged in a trade or business activity. While the definition is documented in several places of the Code, I have attached Publication 519 which most accurately represents the application to your situation as you have described it. https://www.irs.gov/publications/p519/ch04.html#en_US_2016_publink1000222308 |
I cosigned for a friend who is not paying the payment | I think I'm reading that you cosigned a loan with a friend, and they've stopped paying on their loan. Not a whole lot of options here. You'll have to pay the loan off by yourself or allow the loan to go into collections in hopes that you'll get more money later and pay it off then. Small claims court is definitely an option at that point. Next time, perhaps try not to cosign loans with friends unless you really trust them and are confident that you can pay the loan off if they cannot. |
At what point should I begin paying off student loans? | All great answers. The only thing I didn't see mentioned was that student loans are not dischargable in a bankruptcy. So for example if you took money that could have gone to student loans and poured it into other debt, then for some reason declared bankruptcy later, your student load debt would remain while other debt would be discharged; essentially that money would have been better spent on the student loan. This isn't to advocate that you should pay down student loans with the intent of declaring bankruptcy, or that this makes it a better decision necessarily, just a factor that is sometimes forgotten. |
Why don't market indexes use aggregate market capitalization? | They do but you're missing some calculations needed to gain an understanding. Intro To Stock Index Weighting Methods notes in part: Market cap is the most common weighting method used by an index. Market cap or market capitalization is the standard way to measure the size of the company. You might have heard of large, mid, or small cap stocks? Large cap stocks carry a higher weighting in this index. And most of the major indices, like the S&P 500, use the market cap weighting method. Stocks are weighted by the proportion of their market cap to the total market cap of all the stocks in the index. As a stock’s price and market cap rises, it gains a bigger weighting in the index. In turn the opposite, lower stock price and market cap, pushes its weighting down in the index. Pros Proponents argue that large companies have a bigger effect on the economy and are more widely owned. So they should have a bigger representation when measuring the performance of the market. Which is true. Cons It doesn’t make sense as an investment strategy. According to a market cap weighted index, investors would buy more of a stock as its price rises and sell the stock as the price falls. This is the exact opposite of the buy low, sell high mentality investors should use. Eventually, you would have more money in overpriced stocks and less in underpriced stocks. Yet most index funds follow this weighting method. Thus, there was likely a point in time where the S & P 500's initial sum was equated to a specific value though this is the part you may be missing here. Also, how do you handle when constituents change over time? For example, suppose in the S & P 500 that a $100,000,000 company is taken out and replaced with a $10,000,000,000 company that shouldn't suddenly make the index jump by a bunch of points because the underlying security was swapped or would you be cool with there being jumps when companies change or shares outstanding are rebalanced? Consider carefully how you answer that question. In terms of histories, Dow Jones Industrial Average and S & P 500 Index would be covered on Wikipedia where from the latter link: The "Composite Index",[13] as the S&P 500 was first called when it introduced its first stock index in 1923, began tracking a small number of stocks. Three years later in 1926, the Composite Index expanded to 90 stocks and then in 1957 it expanded to its current 500.[13] Standard & Poor's, a company that doles out financial information and analysis, was founded in 1860 by Henry Varnum Poor. In 1941 Poor's Publishing (Henry Varnum Poor's original company) merged with Standard Statistics (founded in 1906 as the Standard Statistics Bureau) and therein assumed the name Standard and Poor's Corporation. The S&P 500 index in its present form began on March 4, 1957. Technology has allowed the index to be calculated and disseminated in real time. The S&P 500 is widely used as a measure of the general level of stock prices, as it includes both growth stocks and value stocks. In September 1962, Ultronic Systems Corp. entered into an agreement with Standard and Poor's. Under the terms of this agreement, Ultronics computed the S&P 500 Stock Composite Index, the 425 Stock Industrial Index, the 50 Stock Utility Index, and the 25 Stock Rail Index. Throughout the market day these statistics were furnished to Standard & Poor's. In addition, Ultronics also computed and reported the 94 S&P sub-indexes.[14] There are also articles like Business Insider that have this graphic that may be interesting: S & P changes over the years The makeup of the S&P 500 is constantly changing notes in part: "In most years 25 to 30 stocks in the S&P 500 are replaced," said David Blitzer, S&P's Chairman of the Index Committee. And while there are strict guidelines for what companies are added, the final decision and timing of that decision depends on what's going through the heads of a handful of people employed by Dow Jones. |
What is a Master Limited Partnership (MLP) & how is it different from plain stock? | MLP stands for master limited partnership. Investors who buy into one are limited partners, rather than shareholders, and have their taxable income reported on K-1s, rather than 1099s. MLPs are engaged in businesses (e.g. real estate, natural resources) that generate a lot of cash that doesn't need to be "reinvested," or put back into the company. Because of this feature, the IRS will exempt it from corporate tax if it pays out at least 95% of its income in the form of dividends. The advantage is that you avoid the "double taxation" common to most corporations, and get a higher yield as a result. The disadvantage is that the company can't retain earnings for growth, and needs to borrow money if it wants to grow. In this regard, an MLP is much like a utility (except that a utility has to pay corporate taxes, and is otherwise heavily regulated by the Federal and/or state governments). You can look upon an MLP as an unregulated utility. This means that MLPs are most suitable for utility type investors who are more interested in current income, than capital gains. Because they are unregulated, they are riskier than utilities. |
Help stuck in a bad first time loan! | I think the part of your question about not wanting to "mess up more" is the most important element. You say you know someone with good credit who is willing to co-sign for you, but let's be honest -- your credit isn't bad for no reason. Your credit's bad because you have a history of not paying on your obligations. Putting someone else's credit at risk, even though they may be willing to try and help, could be doing exactly what you said you're trying to avoid -- messing up more. This person's heart is in the right place, but you really have to ask yourself if you should put them in jeopardy by agreeing to guarantee your debts. So the vehicle you bought is older and has a lot of miles -- you knew that when you bought it. So you're paying a high interest rate because of your bad credit history -- you knew that when you bought it. Why you think the vehicle's only going to last another year is what confuses me. There are many vehicles out there with much higher mileage that are still on the road, and with proper preventative maintenance there's no reason your truck can't do the same. The fact is, you just don't like what you're paying or what you're driving (even though you were good with both when someone was willing to extend you credit), so now you see this other person's willingness to co-sign for you as your ticket out of a situation you no longer want to be in. My suggestion is that you stay with the loan you have, take care of the vehicle to make it last, and prove that you can pay your obligations. Hopping from loan to loan isn't going to do your credit any favors. One of the big factors for your credit score is the average age of accounts. Going and signing a new loan now will only drag that number down and hurt your score, not help it. And there's no guarantee the next car you buy with your friend's help is going to last the length of that loan either. I would be careful about this "grass is greener on the other side" attitude and just bear through your situation, if only to prove to yourself that you can do it. There's nothing saying your friend won't still be willing to co-sign for you later on down the line of something does happen to the truck, but you can show them that you're trying to be responsible in the meantime by following through on what you already agreed to. |
Could one person with a card with no spending limit pay off everyone's debt? | The problem would not only be that of Kyle but also that of American Express. When Kyle pays by credit card, American Express pays the bills out of their pockets on his behalf and then forwards the bill to Kyle. The issuer of a credit card takes the risk that the holder of the card won't pay the credit card bill. In practice there are safeguards in place which prevent a company like AE to pay such huge sums in one day through an automated process. Credit card companies have sophisticated algorithms to determine unusual spending patterns and block any transactions which appear unusual. Also, after a few billions their bank will likely block them and prevent them from paying any more bills. But let's play along and pretend these safeguards wouldn't exist. That means after Kyle's spending spree, American Express will be trillions in debt, with their main debitor being a 10 year old boy who won't ever be able to pay. Kyle will have to declare personal bankruptcy. There are various variants of bakruptcy in the US, but they basically all boil down to him paying everything he can pay (not much considering that he is 10) and then defaulting on his debt. Afterwards he is debt-free. That means the debt is now that of American Express. American Express will not be able to pay that debt with their bank(s) either, so they will have to declare bankruptcy and default on their debt too. This domino effect passes the burden on to the banks which can not carry a trillion-level debt either. A bank going bankrupt is a serious issue because it means they can not pay back any of the money in the saving accounts hold by companies or private people with them. So the problem would return to those people Kyle wanted to help in the first place. Also, the collapse of one bank will often result in the collapse of further banks, resulting in a collapse spiral destroying the whole world-wide finance system. Nothing would be gained. |
Roth IRA - Vanguard or Fidelity? If a college student had to pick one? | Well, a couple things to keep in mind: Even if you have enough to meet the minimum initial amount, you need to have at least that much income in the year you make the contribution. You'll probably be best served saving up in a savings account so that by the time you have an income (and can thus make contributions), you have enough cash to meet the minimum initial contribution. |
Which USA Brokerage Firms can I transfer my India stocks to? | You might what to check out Interactive Brokers. If your India stock is NSE listed they might be able to do it since they support trading on that exchange. I would talk to a customer service rep there first. https://www.interactivebrokers.com/en/index.php?f=exchanges&p=asia |
Can a car company refuse to give me a copy of my contract or balance details? | The advice above is generally good, but the one catch I haven't seen addressed is which specific laws apply. You said that you are in Arkansas, but the dealer is in Texas. This means that the laws of at least two different states are in play, possibly three if the contract contains a clause stating that disputes will be handled in a certain jurisdiction, and you are going to have to do some research to figure out what actually applies. One thing that may significantly impact this issue is whether you were in TX or AR when you signed the contracts. If you borrowed the money in TX, and the lender is in TX, then it is almost certain that the laws of Texas will govern. However, if you were living in AR at the time you acquired the loan, particularly if you were in AR when you signed the papers, you have a decent case for claiming that the laws of Arkansas govern. I don't know enough about either state to know if one is more favorable to the consumer than the other, but it is a question you really want to have answered. That said, I would be shocked if any state did not have provisions requiring the lender to provide a copy of the terms and a detailed statement of the account and transaction history upon request. Spend some time on the web site of the Texas attorney general and/or legislator (because that is where the lender is, they are more likely to respect Texas law) to see if you can track down any specific laws or codes that you can reference. You might also look into the federal consumer protection laws, though I can't think of one off hand that would apply in the scenario you have described. Then work on putting together a letter asking them to provide a copy of the contract and a full history of the account. As others noted, make sure you send it certified/return receipt, or better yet use a private carrier such as fedex, and check the box about requiring a signature. Above all you need to get the dialog transferred to a written form. I can not stress this point enough. Everything you tell them or ask for from here out needs to be done in a written format. If they call you about anything, tell them you want to see their issue/offer in writing before you will consider it. You do not necessarily need a lawyer to do any of this, but you do need to know the applicable laws. Do the research to know what your legal standing is. Involve a lawyer if you feel you need to, but I have successfully battled several large utility companies and collection agencies into behaving without needing one. |
What options do I have at 26 years old, with 1.2 million USD? | Windfalls can disappear in a heartbeat if you're not used to managing large amounts of money. That said, if you can read a bank statement and can exercise a modicum of self control over spending, you do not need a money manager. (See: Leonard Cohen) First, spend $15 on J.L. Collins' book The Simple Path to Wealth. https://www.goodreads.com/book/show/30646587-the-simple-path-to-wealth. Plan to spend about 4% of your wealth annually (4% of $1.2 million = $48,000) Bottom line: ALWAYS live within your means. Own your own home free and clear. Don't buy an annuity unless you have absolutely no self control. If it feels like you're spending money too fast, you almost certainly are. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | The time to have looked into this is before you bought the condo, not now. You are presumably an adult. Your parents have apparently made it possible for you to have a roof of your own over your head for what is probably below rental rates (but I don't know your area, so can't say). From their point of view, they may have been doing you a favor, while giving themselves an investment opportunity. What would they be doing with that money otherwise, and at a higher or lower rate of return, and with greater or lesser risk? Where and how would you be living otherwise? More Importantly, if you can't talk to them about this you have bigger problems than money. |
Recent college grad. Down payment on a house or car? | As a car guy, I wouldn't spend 27 large on anything that wasn't "special" - you'll be looking at for at least the duration of the loan and for me it'll better be very special lest I get bored with it during that time. But that's just me. If you want a transport appliance - spend around $5k-$7k on a decent used vehicle, pay it off within a couple of years or less and keep throwing money at your downpayment. Now if you have any student loan debt, buy a $3k car, learn how to fix it if necessary and pay off the millstone, err, student loan ASAP. |
Should I include my hard assets as part of my net worth? | Net worth is interesting as it can have a different number assigned depending on your intent. The number I focus on is my total retirement account and any brokerage account. I purposely exclude the value of my house.* This tells me how much I'm able to invest. My heir would look at it a bit differently. She'd have the cash not only from the house, but from every bit of our possessions that can be sold. For my own purposes, knowing I have a piece of art that might sell for $xxx doesn't mean much, except for insurance purposes. In your case, if the coins are gold, and held for investment, count them. If they were your grandfather's and you plan to leave them to your own grandkids, I'd leave them out. * I make this point for two reasons - as someone with an eye toward retirement, the house doesn't get included in the 4% return math that I apply to the retirement and stock accounts. Also, in our situation, even when we downsize at retirement, the move isn't likely to pull much cash out of the house, it will be a lateral move. For those who plan to move from a McMansion in the suburbs of NY or Boston to a modest home in a lower cost of living elsewhere, that difference may be very important, and should be taken into account. This is simply how we handle this. |
What is the p/e ratio? | The price to earnings ratio is a measure of the company's current share price compared to the annual net earnings per share. The other way to think about this is the number of years a company would take to pay back the share price if the earnings stay constant. This ignores factors like inflation and can be used as an indicator of risk. During the internet bubble many companies had P/E above 24 and no possible means of earning back the share prices that were inflated largely due to speculation. Most tools like Google Finance will list the P/E for a particular quote. |
Buying insurance (extended warranty or guarantee) on everyday goods / appliances? | IMO it's usually not worth it and here's why. There's a statistical distribution of how likely a unit may fail depending on its age. Probability is high for a short period after the unit comes into use because there are parts that were not thoroughly tested and manufacturing defects. Then all those defective parts fail and get replaces and the unit likely functions without faults for years. Then it reaches it lifetime end and again probability becomes much higher - parts wear out and start failing one by one. Every unit comes with a manufacturer warranty of one to two years already and that warranty will likely cover any defect causes by materials and manufacturing defects - the period when fault probability is initially high. "Extended warranty" only covers the unit for two-to-five years and most units have lifetime of about ten years. This means that the "extended warranty" is in effect when it is least useful. |
What is the meaning of Equal Housing Lender? Do non-banks need to display it? | If a bank is evaluating a persons qualifications to qualify for a loan they have to follow the FDIC and HUD guidelines for equal opportunity credit. If they offer mortgages they will use the phrase equal housing. from the lending club website (fine print area): 2 This depiction is a summary of the processes for obtaining a loan or making an investment. Loans are issued by WebBank, an FDIC insured Utah-chartered industrial bank located in Salt Lake City, Utah, Equal Housing Lender. Investors do not invest directly in loans. Investors purchase Member Dependent Notes from Lending Club. Loans are not issued to borrowers in IA and ID. Individual borrowers must be a US citizen or permanent resident and at least 18 years old. Valid bank account and social security number/FEIN are required. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. LendingClub notes are issued pursuant to a Prospectus on file with the SEC. You should review the risks and uncertainties described in the Prospectus related to your possible investment in the notes. Currently only residents of the following states may invest in Lending Club notes: AR, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, ME, MN, MO, MS, MT, NE, NH, NV, NY, OK, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, or WY. Our mailing address is: Lending Club, 71 Stevenson, Suite 300, San Francisco, CA 94105. |
Making $100,000 USD per month, no idea what to do with it | You want CFP or CFA who is also a fiduciary, meaning that by law they have to put your interests ahead of their own. Financial planners who are not fiduciaries can, and often do, recommend investment vehicles that earn them the most commission with little regard of your financial goals. If you already have $500,000 to invest and racking up $100,000 a month you probably qualify for most institutions private client programs. That means that the firm/advisor will look at your financial situation and come up with a custom-tailored investment plan for you which should also include tax planning. I would start with whatever financial institutions you already work with - Schwab, your bank etc. Set up a meeting and see what they have to offer. Make sure you interrogate them about their fees, their licenses/certifications and above all if they are a fiduciary. |
Is accident insurance worth it for my kids who play sports | The general answer to any "is it worth it" insurance question is "no," because the insurance company is making a profit on the insurance.* To decide if you want the insurance, you need to figure out how much you can afford to pay if something happens, how much they cover, and how badly you want to transfer your risk to them. If you won't have trouble coming up with the $4000 deductible should you need to, then don't get this extra insurance. * I did not mean to imply that insurance is always a bad idea or that insurance companies are cheating their customers. Please let me explain further. When you buy any product from a business, that business is making a profit. And there is nothing wrong with that at all. They are providing a service and should be compensated for their efforts. Insurance companies also provide a service, but unlike other types of businesses, their product is monetary. You pay them money now, and they might pay you money later. If they pay you more money then you spent, you came out ahead, and if you spend more money then they give you, it was a loss for you. In order for the insurance company to make a profit, they need to bring in more money than they pay out. In fact, they need to bring in a lot more money then they pay out, because in addition to their profit, they have all the overhead of running a business. As a result, on average, you will come out behind when you purchase insurance. This means that when you are on the fence about whether or not to purchase any insurance product, the default choice should be "no." On average, you are financially better off without insurance. Now, that doesn't mean you should never buy insurance. As mentioned by commenter @xiaomy, insurance companies spread risk across all of their customers. If I am in a situation where I have a risk of financial ruin in a certain circumstance, I can eliminate that risk by purchasing insurance. For example, I have term life insurance, because if I were to pass away, it would be financially catastrophic for my family. (I'm hoping that the insurance company makes 100% profit on that deal!) I also continue to buy expensive health insurance because an unexpected medical event would be financially devastating. However, I always decline the extended warranty when I buy a $300 appliance, because I don't have any trouble coming up with another $300 in the unlikely event that it breaks, and I would rather keep the money than contribute to the profits of an insurance company unnecessarily. In my original answer above, I pointed out how you would determine whether or not to purchase this particular insurance product. This product pays out a bunch of relatively small amounts for certain events, up to a limit of $4000. Would this $4000 be hard for you to come up with if you needed to? If so, get the insurance. But if you are like me and have an emergency fund in place to handle things like this, then you are financially better off declining this policy. |
1099 Misc for taking care of foreign exchange students | According to Intuit, you cannot claim the $50 charitable contribution, so the entire $2000 / month will be taxable instead of $1900. That's only an extra $35 if your combined tax rate is 35%. As TTT mentioned, do this for the experience, not for the money. My wife and I have been hosting international students for 10 years now. https://ttlc.intuit.com/questions/3152069-i-received-a-1099-misc-employee-compensation-for-hosting-a-foreign-exchange-student-can-i-complete-a-schedule-c-for-the-expenses |
What are dividends, when are they paid, and how do they affect my position? | Dividends are declared by the board of directors of a corporation on date A, to stock holders of record on date B (a later date). These stockholders then receive the declared dividend on date C, the so-called payment date. All of these dates are announced on the first (declaration) date. If there is no announcement, no dividend will be paid. The stock typically goes down in price by approximately the amount of the dividend on the date it "goes ex," but then moves in price to reflect other developments, including the possibility of another declaration/payment, three months hence. Dividends are important to some investors, especially those who live on the income. They are less important to investors who are out for capital gains (and who may prefer that the company reinvest its money to seek such gains instead of paying dividends). In actual fact, dividends are one component of "total" or overall return. The other component is capital gains, and the sum of the two represents your return. |
If a startup can always issue new shares, what value is there to stocks/options? | The short answer, probably not much. Unless you have a controlling interest in the company. If at least 50%+1 of the shareholder votes are in favor of the dilution then it can be done. There are some SEC rules that should protect against corporate looting and theft like what the Severin side is trying to make it appear as happened. However it would appear that Severin did something stupid. He signed away all of his voting right to someone who would use them to make his rights basically worthless. Had he kept his head in the game he could probably have saved himself. But he didn't. If your average startup started issuing lots of stock and devaluing existing shares significantly then I would expect it would be harder to find investors willing to watch as their investment dwindled. But if you are issuing a limited amount stock to get leverage to grow bigger then it is worth it. In the .com bubble there were quite a few companies that just issued stock to buy other companies. Eventually most of these companies got delisted because they diluted them selves to much when they were overvalued. Any company not just a startup can dilute its shares. Many if not most major companies issue stock to raise capital. This capital is then generally used to build the business further and increase the value of all shares. Most of the time this dilution is very minor (<.1%) and has little if any impact on the stock. There are rules that have to be followed as listed companies are regulated by the SEC. There are less regulations with private corporations. It looks like the dilution was combined with the buyout of the Florida company which probably contributed to the legality of the dilution. With options they are generally issued at a set price. This may be higher or lower than the reported sell price of the stock when the option is issued. The idea is over time the stock will increase in value so that those people who hold on to their options can buy the stock for the price listed on the option. I worked at an ISP start up in the 90's that made it pretty well. I left before the options were issued but I had friends still there that were issued an option at $16 a share the value of the stock at the time of the issue of the option was about 12. Well the company diluted the shares and used them to acquire more ISP's unfortunately this was about the time that DSL And cable internet took off so the dial up market tanked. The value eventually fell to .10 they did a reverse split and when they did the called in all options. The options did not have a positive cash value at any time. Had RMI ever made it big then the options could have been worth millions. There are some people from MS and Yahoo that were in early that made millions off of their options. This became a popular way for startups to attract great talent paying peanuts. They invested their time in the business hoping to strike gold. A lot of IT people got burned so this is less popular among top talent as the primary compensation anymore. |
Is giving my girlfriend money for her mortgage closing costs and down payment considered fraud? | There is not any fraud involved. Anybody can gift money to another person. |
Why do banks finance shared construction as mortgages instead of financing it directly and selling the apartments in a building? | Assumption - you live in a country like Australia, which has "recourse" mortgages. If you buy the apartment and take out a mortgage, the bank doesn't care too much if your apartment gets built or not. If the construction fails, you still owe the bank the money. |
How to map stock ticker symbols to ISIN (International Securities Identification Number)? | It is possible to make a REST API call providing the ISIN to get the ticker in the response: Python code for getting ticker for ISIN=US4592001014: import requests url = 'https://api.openfigi.com/v1/mapping' headers = {'Content-Type':'text/json', 'X-OPENFIGI-APIKEY':'myKey' } payload = '[ {"idType":"ID_ISIN","idValue":"US4592001014"}]' r = requests.post(url, data=payload, headers=headers) |
When are payroll taxes due in the US? | It depends on the size of the payroll, not on the number of employees. Probably you need to file Form 941 quarterly under this scenario. You may or may not need to deposit taxes more frequently. If you must deposit, then you need to do it electronically. I excerpted this from the instructions for Form 941: If your total taxes (line 10) are less than $2,500 for the current quarter or the preceding quarter, and you did not incur a $100,000 next-day deposit obligation during the current quarter. You do not have to make a deposit. To avoid a penalty, you must pay the amount in full with a timely filed return or you must deposit the amount timely. ... If you are not sure your total tax liability for the current quarter will be less than $2,500 (and your liability for the preceding quarter was not less than $2,500), make deposits using the semiweekly or monthly rules so you won't be subject to failure to deposit penalties. If your total taxes (line 10) are $2,500 or more for the current quarter and the preceding quarter. You must make deposits according to your deposit schedule. See section 11 of Pub. 15 (Circular E) for information and rules about federal tax deposits. I would say that probably for two employees, you need to deposit by the 15th of each month for the prior month, but you really need to check the limits above and the deposit schedule in Pub 15 (as referenced above) based on your actual payroll size. Note that if you have a requirement to deposit, that must be done either through EFTPS or by wire-transfer. The former is free but requires registration in advance of your first payment (they snail-mail you a PIN that you need to log-in) and it requires that you get your payment in by the night before. The latter does not incur a charge from the IRS, but your bank will likely charge you a fee. You can do the wire-transfer on the due date, however, so it's handy if don't get into ETFPS in time. This is all for federal. You may also need to deposit for your state, and then you'll need to check the state's rules. |
Visitor Shopping in the US: Would I get tax refund? Would I have to pay anything upon departure? | Tax Refund: The US generally does not refund tax like other countries. For larger sales, you might want to try state tax refunds, check here: https://help.cbp.gov/app/answers/detail/a_id/373/~/how-to-obtain-a-refund-of-sales-tax-paid-while-visiting-the-united-states US Customs: You never pay US customs when you leave, they don't care about what you take out of the country. You might have to pay customs in your arrival country afterwards, and the rules depend on the country you arrive in. Most countries have a limit on how much you can bring for free, typically in the range of 500 $, but that varies a lot. Also, some countries do not count used articles, so if you wear your new clothing once, it does not count against the limit anymore. |
What one bit of financial advice do you wish you could've given yourself five years ago? | Do your homework on all types bonds and other lower-risk instruments, including bond funds and ETFs. I left too much money sitting around as cash over the last 5 years. |
Can stock brokerage firms fail? | Brokerages are supposed to keep your money separate from theirs. So, even if they fail as a company, your money and investments are still there, and can be transferred to another brokerage. It doesn't matter if it's an IRA or taxable account. Of course, as is the case with MF Global, if illegally take their client's money (i.e., steal), it may be a different story. In such cases, SIPC covers up to $500K, of which $250K can be cash, as JoeTaxpayer said. You may be interested in the following news item from the SEC. It's about some proposed changes, but to frame the proposal they lay out the way it is now: http://www.sec.gov/news/press/2011/2011-128.htm The most relevant quote: The Customer Protection Rule (Rule 15c3-3). This SEC rule requires a broker-dealer to segregate customer securities and cash from the firm’s proprietary business activities. If the broker-dealer fails, these customer assets should be readily available to be returned to customers. |
Will I be liable for taxes if I work for my co. in India for 3 months while I am with my husband in UK | For information about the UK situation, check the government website at http://www.hmrc.gov.uk/incometax/tax-arrive-uk.htm It all depends on the time. If I read it right (but you should check yourself) you can stay almost six months at a time, but at most 3 months on average over 4 years. Above this limit, you should either avoid the situation, or get professional advice, because things will be complicated. |
Is Cost of Living overstated? | I'm not convinced that cost of living is related to ensuring greater appreciation of assets over time, especially over a 30 year window. The importance of regional differences in cost of living to anyone's decision-making should be weighted by the percentage of their income spent on indexed items. That is, for people who spend 35%, or even 50% of their salary on indexed items, regional variances in cost of living are far more important than for people who spend 10% of their salaries on these items. Essentially, as income goes up, the significance of cost of living goes down. See http://macromon.wordpress.com/2011/02/02/how-u-s-income-groups-get-squeezed-by-food-prices/ for a pretty picture of the relevance of cost of living across income groups (for food & gas, which are often not included in indexes due to volatility). So, if you are wondering whether cost of living is overstated, perhaps it's because you are in an income group that doesn't need to worry about it as much. Whether it's overstated or not will depend on how much one makes and spends. |
Why don't banks give access to all your transaction activity? | A big issue for historical data in banking is that they don't/can't reside within a single system. Archives of typical bank will include dozen(s) of different archives made by different companies on different, incompatible systems. For example, see http://www.motherjones.com/files/images/big-bank-theory-chart-large.jpg as an illustration of bank mergers and acquisitions, and AFAIK that doesn't include many smaller deals. For any given account, it's 10-year history might be on some different system. Often, when integrating such systems, a compromise is made - if bank A acquires bank B that has earlier acquired bank C, then if the acquisition of C was a few years ago, then you can skip integrating the archives of C in your online systems, keep them separate, and use them only when/if needed (and minimize that need by hefty fees). Since the price list and services are supposed to be equal for everyone, then no matter how your accounts originated, if 10% of archives are an expensive enough problem to integrate, then it makes financial sense to restrict access to 100% of archives older than some arbitrary threshold. |
How to find cheaper alternatives to a traditional home telephone line? | Cheapest is one thing. You can absolutely shop in the market and find the lowest possible price. I can think of three places to shop, each with an up and downside. I would think that what you really mean is the best price for the service. Just like shopping for a car you have to decide what you need vs what is nice to have. Decide what features you need. Do you need long distance? Do you need caller id? Do you need to call technophobic friends and family? Find out what you have available to you through associations. Often schools, work or a club you belong to have deals for service discounts. Look at your insurance plan or AAA membership for the crazy discounts. Decide what kinds of service will meet your needs. Buy the cheapest service. DO NOT ENTER A CONTRACT. Even if the price is slightly lower. At least not at first. If you try out your service and love it, enter the contract if and only if the total price measured over length of the contract is less. With cell phones especially, it is absolutely possible to save money buying month to month vs a 2 year contract. Even when you buy equipment for full price up front. Ask for the bare minimum service from your local phone company. Because phone companies are often regulated monopolies, they might have a bare minimum level of service they are required to offer by the municipality. They probably don't advertise it or push it, but it might exist if you call and ask. You basically get a dial tone. http://www.fcc.gov/guides/local-local-toll-and-long-distance-calling Price is dictated by a government board, so you don't have to worry about shopping for deals Not the cheapest possible solution This is popular plan the youth oriented market, but more and more people of all demographics are using their cellphones only. There are downsides (911, etc) and shopping for the best cell phone plan can be a full time job, but it does offer a way to save money by simply not having home phone service. Might be possible to score organizational discounts through work or groups you belong to Cellphones require batteries, and can go dead (not good for emergencies) Voice over Internet Protocol uses your existing Internet connection. You can buy a cheap regular phone and plug it into the VOIP box and use it like any other phone. VOIP can either be very inexpensive for all the features you get, or just plain inexpensive. There are providers who sell a monthly service, yearly service or no service plan at all. (You buy a device and get service as long as you own the device.) Taxes to the government are always due, so nothing is ever free. Sometimes the provider is just computer software, so a minimalist would like that. Emergency services are more reliable than cellular (if you follow extra steps to set them up) Can be confusing to buy. Some require contracts, some special devices, some require a bit of technical know how to setup. Be sure to evaluate the total cost of ownership when comparing prices |
What's the best way to make money from a market correction? | If you are sure you are right, you should sell stock short. Then, after the market drop occurs, close out your position and buy stock, selling it once the stock has risen to the level you expect. Be warned, though. Short selling has a lot of risk. If you are wrong, you could quite easily lose all $80,000 or even substantially more. Consider, for example, this story of a person who had $37,000 and ended up losing all of that and still owing over $100,000. If you mistime your investment, you could quite easily lose your entire investment and end up hundreds of thousands of dollars in debt. |
Pensions, annuities, and “retirement” | With an annuity, you invest directly into an annuity with money you have earned as wages/salary/etc. You pay for it, and trade your payments into the annuity for guaranteed payments from the annuity issuer in the future. The more you pay in before the annuity payments begin, the more you will receive for your annuity payment. With a pension, most often you invest implicitly, rather than directly, into the pension. Rather than making a cash contribution on a regular basis, it is likely that your employer has periodically invested into the pension fund for you, using monies that would otherwise have been paid to you if there were no pension system. This is why your pension benefits are often determined based on years of service, your rate of pay, and similar factors. |
Would you withdraw your money from your bank if you thought it was going under? | I probably would not take it out, since I have enough layers of backstops: Maybe if I could find a better rate. :) |
Is the money you get from shorting a stock free to use for going long on other stocks? | You will be charged a stock borrow fee, which is inversely related to the relative supply of the stock you are shorting. IB claims to pay a rebate on the short proceeds, which would offset part or all of that fee, but it doesn't appear relevant in your case because: It is a bit strange to me that IB would not require you to keep the cash in your account, as they need the cash to collateralize the stock borrow with the lending institution. In fact, per Regulation T, the short position requires an initial margin of 150%, which includes the short proceeds. As described by Investopedia: In the first table of Figure 1, a short sale is initiated for 1,000 shares at a price of $50. The proceeds of the short sale are $50,000, and this amount is deposited into the short sale margin account. Along with the proceeds of the sale, an additional 50% margin amount of $25,000 must be deposited in the account, bringing the total margin requirement to $75,000. At this time, the proceeds of the short sale must remain in the account; they cannot be removed or used to purchase other securities. Here is a good answer to your question from The Street: Even though you might see a balance in your brokerage account after shorting a stock, you're actually looking at a false credit, according to one big brokerage firm. That money is acting as collateral for the short position. So, you won't have use of these funds for investment purposes and won't earn interest on it. And there are indeed costs associated with shorting a stock. The broker has to find stock to loan to you. That might come out of a broker's own inventory or might be borrowed from another stock lender. |
Should I charge my children interest when they borrow money? | In terms of preserving good relationships one approach is to charge a nominal rate of interest. maybe a few percent of the total and agree a time when it should be paid back. This may actually make them feel better about borrowing them money, especially, especially if it is something like business loan or buying a house or car. If they need the money for a real crisis and they have no clear strategy for paying it back then it may just be better all around if you make it clear that it is a gift. What you don't want to do is set up a situation where you are creating unnecessary problems down the road and that will very much depend on your individual relationship and how seriously you take the loan. Here it is important that you are completely open and honest about the arrangement so take the time to make sure that both parties understand exactly what they expect from each other. |
Why should one only contribute up to the employer's match in a 401(k)? | The matching funds are free money, so it is a very good idea to take that money off the table. Look at it as free 100% return: you deposit $1000, your employer matches that $1000, you now have $2000 in your 401(k). (Obviously, I'm keeping things simple. Vesting schedules mean that the employer match isn't yours to keep immediately, but rather after some time; usually in chunks.) Beyond the employer match, you need to consider what is available for investment in a 401(k). Typically, your options are more limited then in an IRA. The cost of the 401(k) should be considered, as it isn't trivial for most. (The specifics will of course vary, but in large IRA accounts are cheaper.) So, it's about the opportunity costs. Up to the employer match, it doesn't matter as much that your investment choices are more limited in a 401(k), because you're getting 100% return just on the matching funds. Once that is exhausted, you have more opportunity for returns, due to having more options available to you, by going with an account that provides more choices. The overall principle here is that you have to look at the whole picture. This is similar to the notion that you should pay-down your high interest debt before investing, because from the perspective of investing the interest you're paying represent a loss, or negative return on investment, since money is going out of your accounts. Specific to your question, you have to consider the various types of investment vehicles available to you. It is not just about 401(k) and IRA accounts. You may also consider a straight brokerage account, a savings account, CDs, etc. The costs and returns that you can typically expect are your guides through the available choices. |
What's the difference between Term and Whole Life insurance? | Just to add to @duffbeer703 comment, additionally, the cash value is NOT part of the death benefit. The policy is intended to grow the cash value to the point where it matches the death benefit and then it 'matures' and you get the cash. My point being, is that since they don't give you both, you are really transferring the reponsiblity from them to you over time, your savings (that you lose) becomes part of the death benefit and they supliment it with less and less over the years so that it would equal the death benefit. @duffbeer703 nailed it right on the head, buy term and invest the difference and once you've got your savings built, really the need for insurance isn't there any longer (if you've got 1/2 million saved, do you really need insurance?) |
Shorting versus selling to hedge risk | It's not quite identical, due to fees, stock rights, and reporting & tax obligations. But the primary difference is that a person could have voting rights in a company while maintaining zero economic exposure to the company, sometimes known as empty voting. As an abstract matter, it's identical in that you reduce your financial exposure whether you sell your stock or short it. So the essence of your question is fundamentally true. But the details make it different. Of course there are fee differences in how your broker will handle it, and also margin requirements for shorting. Somebody playing games with overlapping features of ownership, sales, and purchases, may have tax and reporting obligations for straddles, wash sales, and related issues. A straight sale is generally less complicated for tax reporting purposes, and a loss is more likely to be respected than someone playing games with sales and purchases. But the empty voting issue is an important difference. You could buy stock with rights such as voting, engage in other behavior such as forwards, shorts, or options to negate your economic exposure to the stock, while maintaining the right to vote. Of course in some cases this may have to be disclosed or may be covered by contract, and most people engaging in stock trades are unlikely to have meaningful voting power in a public company. But the principle is still there. As explained in the article by Henry Hu and Bernie Black: Hedge funds have been especially creative in decoupling voting rights from economic ownership. Sometimes they hold more votes than economic ownership - a pattern we call empty voting. In an extreme situation, a vote holder can have a negative economic interest and, thus, an incentive to vote in ways that reduce the company's share price. Sometimes investors hold more economic ownership than votes, though often with morphable voting rights - the de facto ability to acquire the votes if needed. We call this situation hidden (morphable) ownership because the economic ownership and (de facto) voting ownership are often not disclosed. |
Why do gas stations charge different amounts in the same local area? | I only have anecdotal evidence here as members of my family used to own a grocery store / gas station, but they were often time charged much more to have the gasoline delivered to than many gas stations which were just a mile or two away (up to 15% more). Also depending upon the branding of the gas station, they are required to use certain distributors (i.e. if you are an Exxon gas station you can only use a few select vendors) which gave them less control of their final cost. All in all the gasoline often had smaller margins than items in the grocery store, which are already extremely low. |
Does an employee have the right to pay the federal and state taxes themselves instead of having employer doing it? | No, even businesses pay taxes quarterly. So if you formed Nathan, LLC, or otherwise became self employed, you'd still have to file quarterly estimates and make tax payments. This would cause taxes to be a much more high touch part of your life. However, you should ensure that you're claiming the proper exemptions etc to avoid excessive withholding. |
Beyond RRSP deductions, how does a high income earner save on taxes? | That's not especially high income, and while I can't speak for Canadians, most of us south of the border just pay the tax. There are tax-advantged retirement savings plans, and charitable donations are often offset by a tax credit, and there are some tax incentives for mortgages, and so on.. but generally the right answer is to just accept that the income tax money was never yours to begin with. |
Can I use same stock broker to buy stocks from different stock markets? | Most stock brokers are "full service" brokers. That is to say that you can so the same broker to buy different types of stocks, bonds, options, etc. in different markets. Some brokers are very specialized and won't allow you to do that. But those are probably brokers you don't want to use. |
What are the implications of lending money to my sole member S-corp? | You can make a capital contribution, not a loan. It's not a taxable event, no interest, and you can take a distribution later when the business has the money to pay you back. So yes, transfer the money. If you use software like Quickbooks, make use of unique accounts for tracking the contribution |
Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan? | You are expecting, that if you pay off a 30 mortgage after 16 years, you should be charged the same amount of interest as someone who had a 16 year mortgage for the same amount and with the same interest rate. This isn't correct, and here's why: the person with the 16 year mortgage paid it off faster than you. They paid more each month and the size of their loan shrunk faster than yours. After 15 years they had paid off a LOT more than you. You paid a lump sum after 16 years, but at this point, the extra money which they had paid had been in the banks hands for a long time. You caught up with them then, but you had been behind them for all of the previous years. On the other hand, you owed the same amount in each of those years as the person who took out a 30 year mortgage and didn't prepay. Therefore you paid the same amount of interest as this person, not the first person. If you could arrange in advance a loan where you made the same payment as you did for 16 years, then paid the balance in a lump sum, then you would have paid exactly what you did. |
Should one invest in smaller valued shares in higher amounts, or higher valued shares in smaller amounts? | Short answer: No, it only matters if you want to use covered calls strategies. The price of a share is not important. Some companies make stock splits from time to time so that the price of their shares is more affordable to small investors. It is a decision of the company's board to keep the price high or low. More important is the capitalization for these shares. If you have lots of money to invest, the best is to divide and invest a fixed pourcentage of your portfolio in each company you choose. The only difference is if you eventually decide to use covered call strategies. To have a buy write on Google will cost you a lot of money and you will only be able to sell 1 option for every 100 shares. Bottom line: the price is not important, capitalization and estimated earnings are. Hope this answers your question. |
Why are prices in EUR for consumer items often the same number as original USD price, but the GBP price applies the actual exchange rate? | It's mostly VAT (value added tax or sales tax). For example an US IPad is $499 without tax, and a German IPad is EUR 499 including 17% VAT. The base price is actually only EUR 417. In addition to that, cost of business is a little higher in Europe because of tax structures and because smaller countries cause higher overheads. |
Will a credit card issuer cancel an account if it never incurs interest? | I've got a card that I've had for about 25 years now. The only time they charged me interest I showed it was their goof (the automatic payment failed because of their mistake) and they haven't cancelled it. No annual fee, a bit of cash back. The only cards I've ever had an issuer close are ones I didn't use. |
Paid cash for a car, but dealer wants to change price | The sales manager and/or finance manager applied a rebate that did not apply. It's their fault. They have internal accounts to handle these situations as they do come up from time to time. The deal is done. They have no legal ground. |
Where do online stock brokers get their real-time data from? | As another answer started, this information comes straight from an exchange and generally costs a fortune . . . However things change: IEX, a new exchange, recently opened and they are offering real time bid/ask data for free. Here's the API description: https://www.iextrading.com/developer/ This data should be good for active securities, but for securities less actively traded the numbers might be stale. |
Questioning my Realtor | even though they're only asking for 1/2 the money and have excellent credit that the mortgage company may not lend it to them if I'm over priced Yes. If the house's value, as determined by the appraisal, is less than the sale price, the bank will not finance the loan. Appraisals and the appraisal process have become much tighter since the Frannie and Freddie debacle. This fact is true regardless of amounts or credit history. Though this is happens somewhat rarely; typically if a seller and buyer agree to a price, this price is a reasonable value -- after all, that is nearly the definition of "market value". So, yes, it is true (and always true, for any financed purchase), but that shouldn't really affect your decision. If you try to sell for more than the appraisal, you will just lower the price to the appraised amount. |
What are the advantages of a Swiss bank account? | A lot of Americans have used Swiss bank accounts to avoid paying taxes. However recently several large Swiss banks have started disclosing the details on some of their customers to the IRS. There isn't much security in Swiss banking at this point in time. |
How do I estimate my taxes when I have only 1099 income? | So there are a lot of people that get into trouble in your type of self employment situation. This is what I do, and I use google drive so there are no cost for tools. However, having an accounting system is better. Getting in trouble with the IRS really sucks bad. |
Where do I invest my Roth IRA besides stock market and mutual funds? | You're technically 'allowed' to do other investments with your Roth, but you get taken to the cleaners by the financial 'services' community who wants to take a slice. Non-securities investments from a Roth typically require a 'custodian' or other intermediary to handle your investment, e.g. buying silver coins and paying someone else to hold them. Buy these with cash and hold them yourself, assuming you trust yourself more than some stranger. |
Options strategy - When stocks go opposite of your purchase? | I would make a change to the answer from olchauvin: If you buy a call, that's because you expect that the value of call options will go up. So if you still think that options prices will go up, then a sell-off in the stock may be a good point to buy more calls for cheaper. It would be your call at that point (no pun intended). Here is some theory which may help. An options trader in a bank would say that the value of a call option can go up for two reasons: The VIX index is a measure of the levels of implied volatility, so you could intuitively say that when you trade options you are taking a view on two components: the underlying stock, and the level of the VIX index. Importantly, as you get closer to the expiry date this second effect diminishes: big jumps up in the VIX will produce smaller increases in the value of the call option. Taking this point to its limit, at maturity the value of the call option is only dependent on the price of the underlying stock. An options trader would say that the vega of a call option decreases as it gets closer to expiry. A consequence of this is that if pure options traders are naturally less inclined to buy and hold to expiry (because otherwise they would really just be taking a view on the stock price rather than the stock price & the implied volatility surface). Trading options without thinking too much about implied volatities is of course a valid strategy -- maybe you just use them because you will automatically have a mechanism which limits losses on your positions. But I am just trying to give you an impression of the bigger picture. |
Using stop-loss as risk management: Is it safe? | A stop-loss order becomes a market order when a trade has occurred at or below the trigger price you set when creating the order. This means that you could possibly end up selling some or all of your position at a price lower than your trigger price. For relatively illiquid securities your order may be split into transactions with several buyers at different prices and you could see a significant drop in price between the first part of the order and the last few shares. To mitigate this, brokers also offer a stop-limit order, where you set not only a trigger price, but also a minimum price that you are will to accept for your shares. This reduces the risk of selling at rock bottom prices, especially if you are selling a very large position. However, in the case of a flash crash where other sellers are driving the price below your limit, that part of your order may never execute and you could end up being stuck with a whole lot of shares that are worth less than both your stop loss trigger and limit price. For securities that are liquid and not very volatile, either option is a pretty safe way to cut your losses. For securities that are illiquid and/or very volatile a stop-limit order will prevent you from cashing out at bottom dollar and giving away a bargain to lurkers hanging out at the bottom of the market, but you may end up stuck with shares you don't want for longer than originally planned. It's up to you to decide which kind of risk you prefer. |
offshoring work and tax dilemma | Generally for tax questions you should talk to a tax adviser. Don't consider anything I write here as a tax advice, and the answer was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. Does IRS like one payment method over other or they simply don't care as long as she can show the receipts? They don't care as long as she withholds the taxes (30%, unless specific arrangements are made for otherwise). She should withhold 30% of the payment and send it to the IRS. The recipient should claim refund, if the actual tax liability is lower. It's only consulting work at the moment, so most of the communication is done over phone. Should they start engaging in written communication to keep records of the work done? Yes, if she wants it to be a business expense. Is it okay to pay in one go to save money-transferring fees? Can she pay in advance? Again, she can do whatever she wants, but if she wants to account for it on her tax returns she should do it the same way she would pay any other vendor in her business. She cannot use different accounting methods for different vendors. Basically, she has not outsourced work in previous years, and she wants to avoid any red flags. Then she should start by calling on her tax adviser, and not an anonymous Internet forum. |
Should withheld income tax be included as income? | This very topic was the subject of a question on workplace SE https://workplace.stackexchange.com/questions/8996/what-can-relocation-assistance-entail TL/DR; From tax publication 521 - Moving expenses table regarding how to report IF your Form W-2 shows... your entire reimbursement reported as wages in box 1 AND you have... moving expenses THEN... file Form 3903 showing all allowable expenses,* but do not show any reimbursements. There are tax implications Covered in tax publication 521 - Moving expenses and Employers tax guide to Fringe Benefits related to moving expenses. From the Employers View: Moving Expense Reimbursements This exclusion applies to any amount you directly or indirectly give to an employee, (including services furnished in kind) as payment for, or reimbursement of, moving expenses. You must make the reimbursement under rules similar to those described in chapter 11 of Publication 535 for reimbursement of expenses for travel, meals, and entertainment under accountable plans. The exclusion applies only to reimbursement of moving expenses that the employee could deduct if he or she had paid or incurred them without reimbursement. However, it does not apply if the employee actually deducted the expenses in a previous year. Deductible moving expenses. Deductible moving expenses include only the reasonable expenses of: Moving household goods and personal effects from the former home to the new home, and Traveling (including lodging) from the former home to the new home. Deductible moving expenses do not include any expenses for meals and must meet both the distance test and the time test. The distance test is met if the new job location is at least 50 miles farther from the employee's old home than the old job location was. The time test is met if the employee works at least 39 weeks during the first 12 months after arriving in the general area of the new job location. For more information on deductible moving expenses, see Publication 521, Moving Expenses. Employee. For this exclusion, treat the following individuals as employees. A current employee. A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Exception for S corporation shareholders. Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Exclusion from wages. Generally, you can exclude qualifying moving expense reimbursement you provide to an employee from the employee's wages. If you paid the reimbursement directly to the employee, report the amount in box 12 of Form W-2 with the code “P.” Do not report payments to a third party for the employee's moving expenses or the value of moving services you provided in kind. From the employees view: The not be included as income the expenses must be from an accountable plan: Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Your expenses must have a business connection – that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Two examples of this are the reasonable expenses of moving your possessions from your former home to your new home, and traveling from your former home to your new home. You must adequately account to your employer for these expenses within a reasonable period of time. You must return any excess reimbursement or allowance within a reasonable period of time. Also what is interesting is the table regarding how to report IF your Form W-2 shows... your entire reimbursement reported as wages in box 1 AND you have... moving expenses THEN... file Form 3903 showing all allowable expenses,* but do not show any reimbursements. |
How to calculate the number of months until a loan is paid off (given principal, APR and payment amount)? | The formula for determining the number of payments (months) you'll need to make on your loan is: where i=monthly interest rate (annual rate / 12), A=loan amount (principal), and P=monthly payment. To determine the total interest that you will pay, you can use the following formula: where P=monthly payment, N=number of payments (from above formula), and A=loan amount (principal). A quick example: using the numbers in the screenshot above ($10,000 loan, $500 monthly payment, 10% APR), the number of payments ends up to be 21.97 (which means that payment number 22 is slightly less than the rest). In the second formula, you take that number times your $500 payment and determine that you have paid $10,984.81 over the course of the entire loan period. Subtracting the principal, you have paid $984.81 in total interest. On your spreadsheet, the function you are looking for is NPER: NPER(rate, payment_amount, present_value, [future_value, end_or_beginning]) rate - The interest rate. (This should be the monthly rate, or the annual rate divided by 12.) payment_amount - The amount of each payment made. (For a loan payment, this should be a negative number.) present_value - The current value of the annuity. (The initial principal of the loan) future_value - [ OPTIONAL ] - The future value remaining after the final payment has been made. (This should be 0, the default if omitted.) end_or_beginning - [ OPTIONAL - 0 by default ] - Whether payments are due at the end (0) or beginning (1) of each period. |
Is it a good practice to keep salary account and savings account separate? | There is no "should", but I am strongly of the view that if you have savings of several months' salary or more, they should not only be in a separate account, but with a separate financial institution, or even split between two others. A fraction of a percent of extra interest is scant reward for massively increased personal risk. The reason for this is buried in the T&Cs. There is almost always a "right of set off": if one account is overdrawn, the bank reserves the right to take money from your other accounts. Which sounds fair enough, until you consider the imbalance of power. Maybe your salary account gets hacked? Maybe that's the bank's fault? Maybe the bank has made an accounting error? Maybe the bank has gone bust? Maybe you need to employ a lawyer to act on your behalf? Oh dear, you no longer have any savings. (*) This cannot happen if your savings are with a completely separate institution. Then, the only way that the salary account bank can touch your savings is by winning in the courts. If you split the savings two ways, you have also given yourself the reassurance that in the worst case only half your savings have been affected. "Don't put all your eggs in one basket" is proverbial. And there's a folk song that's lodged in my memory... "As through this world I wander, I've met all kinds of funny men. Some rob you with a six-gun, some with a fountain pen. Yet as far as I have wandered, as far as I have roamed, I've never seen an outlaw drive a family from their home". I've never been in this sort of trouble and the UK's laws tend to favour the banks' customers. I don't even hate bankers. Yet even so, why take this risk when it can so easily be reduced? (*) If this sounds far-fetched, read the news, for example https://www.theguardian.com/business/2017/feb/02/hbos-manager-and-other-city-financiers-jailed-over-245m-loans-scam |
Which credit card is friendliest to merchants? | Merchants that accept American Express should have decided that the extra costs are worth the increased business (many business travelers only have an Amex Corporate Card). To complain about people actually using it after they've explicitly decided to accept it is a sign that they made the wrong decision, or that they are very short-sighted. No one is forcing them to take a particular card. |
Must a company have a specific number of employees to do an IPO? | While there is no legal reason to have a minimum number of employees, there can be a practical reason. They want to look like a good solid investment so that investors will give them money, which is what an IPO is, really. Hiring lots of people is part of that. Once the investors are committed, they can cut expenses by firing people again. I have no idea how common this is, but it is a possibility. However, if it were really common, investors wouldn't be fooled anymore. Also, they risk being sued for fraud over this. Even if your friend's worry is probably unfounded, you should be aware that working for a startup is always risky. They very often go bankrupt even if they try their best. They can misjudge their intended market. They can get higher expenses than expected. There can be another company with same idea being launched at the same time. Other things can go wrong. Working for a startup is a risk, but it beats being unemployed, right? |
What is the principle of forming an arbitrage strategy? | Well, arbitrage is a simple mean reversion strategy which states that any two similar commodity with some price difference (usually not much) will converge. So either you can bet on difference in prices in different exchanges or also you can bet on difference in futures value. For example if current price of stock is 14$ and if futures price is 10$. Then you can buy one futures contract and short one stock at the market price. This would lock in a profit of 4$ per share. |
What should I invest in to hedge against a serious crash or calamity? | Different risks require different hedges. You won't find a single hedge that will protect you against any risk. The best way to think about this is who would benefit if those events occurred? Those are the people you want to invest in. So if a war broke out, who would benefit? Defense contractors. Security companies. You get the idea. You also need to think about if you really need to hedge against those things now or not. For example, I wouldn't bother to hedge against global warming or peak oil. It's not like one morning you're going to wake up, turn on CNNfn and see that the stock market is down 500 points because global warming or peak oil just hit. These are things that happen gradually and you can react to them gradually as they happen. |
Should I set a stop loss for long term investments? | Patience is the key to success. If you hold strong without falling to temptations like seeing a small surge in the price. If it goes down it comes up after a period of time. Just invest on the share when it reaches low bottom and you could see you money multiplying year after year |
What is the purpose of property tax? | Governments only have a few ways to get income: tax income, tax consumption, tax property (cars & boats), tax real estate, or tax services (hotel & meals). The National, state, county, city, and town taxing authorities determine what is taxed and what the rate will be to get enough money to run their share of the government. In general the taxing of real estate is done by the local government, but the ability to tax real estate is granted to them by the state. In the United States the local government decides, generally through a public hearing, what the rate will be. You can usually determine the current rate and tax value of the home prior to purchase. Though some jurisdictions limit the annual growth of value of the property, and then catch it up when the property is sold. That information is also in public records. All taxes are used to build roads, pay for public safety, schools, libraries, parks.. the list is very long. Failure to pay the tax will result in a lien on the property, which can result in your losing the property in a tax sale. Most of the time the bank or mortgage company insists that your monthly payment to them includes the monthly portion of the estimated property tax, and the fire insurance on the property. This is called escrow. This makes sure the money is available when the tax is due. In some places is is paid yearly, on other places every six months. With an escrow account the bank will send the money to the government or insurance company. Here is the big secret: you have been indirectly paying property tax. The owner of the apartment , townhouse, or home you have been renting has been paying the tax from your monthly payment to them. |
Why is everyone saying how desperately we need to save money “in this economy”? | Saving some money for the future is a good idea. But how much to save is a tough question. I retired with a small fraction of what the experts said I would need. Three years later, I can confidently say I did not even need what I had saved. |
I can make a budget, but how can I get myself to consistently follow my budget? | To me, this question is really about setting and meeting goals. The process is the same, whether it's about exercising regularly, or saving, or whatever. You need to have clear, personally-relevant reasons for doing something. Write down: Exactly why you want to save. It may seem trivial, but if you can't visualize the prize it's hard to stay motivated. How much can you afford to save? Use something like Mint.com to find out your real monthly expenses, as opposed to what you think you're spending. Also, don't get overzealous... leave yourself some money for small luxuries and unexpected expenses so you don't feel like a miser. Saving should be a joy, not torture. Automate the saving process. Set up an automatic transfer to move the amount you figured out in step 2 to your savings account on the same date you get paid. This is very important. By saving early you ensure there will be enough money to save. If you wait until the end of the month, there will usually not be anything left. Don't you dare touch your savings! (Except in a real emergency) If you must dip into your savings, immediately create a plan to put it back as soon as possible. Also, get into the habit of reading personal finance books, blogs, sites, etc. I recommend authors like Robert Kiyosaki, and Suze Orman. Good luck! |
How risky is it to keep my emergency fund in stocks? | I do this very thing, but with asset allocation and risk parity in mind. I disagree with the cash or bust answers above, but many of the aforementioned facts are valuable and I don't mean to undermine them in anyway. That said, let's look at two examples: Option 1: All-in For the sake of argument let's say you had $100k invested in the SPY (S&P 500 ETF) in early 2007, and you kept it there until today. Your lowest balance would have been about $51k, and at this point the possibility of you losing your job was probably at a peak. Today you would be left with $170k assuming no withdrawal. Option 2: Risk Parity BUT if you balanced your investments with a risk parity approach, using negatively correlated asset classes you avoid this dilemma. If you had invested 50% in XLP (Consumer Staples Sector ETF) and 50% in TLT ( Long Term Treasury ETF) your investments low point would have been $88k, and your lowest annual return would be +0.69%. Today you would be left with $214k assuming no withdrawals. I chose option #2 and it hasn't failed me yet, even in 2016 so far the results are steady and reliably given the reward. My general opinion is simple: when you have money always grow it. Just be sure to cover your ass and prepare for rain. Backtesting for this was done at portfoliovisualizer.com, the one caveat to this approach is that inflation and a lack of international exposure are a risk here. |
If I make over 120k a year, what are my options for retirement plans? | First off, high five on the paycheck. There are a few retirement issues to deal with. 401k issues - At that income level, you will probably fall into the "Highly Compensated Employee" category, which means things get a little more complicated, both for you and your employer. (Wikipedia link) IRA issues - As you already realized, you make too much to directly open and contribute to a Roth IRA. You can open a Traditional IRA, however. Your income is already over the limit for Traditional IRA deduction (bummer), so it would seem there is little point to opening an IRA at all. However, there is a way to take advantage of a Roth IRA, even at your income level. It is possible to convert a Traditional IRA into a Roth IRA. There used to be income limits on the ability to do the conversion, which would have normally made this off limits to you. Starting in 2010, the income limit is removed, so you can do this. Basically, you open a Traditional IRA, max it out, then convert it to a Roth. Since there was no income deduction, you shouldn't have to pay any more taxes. (link) Disclaimer: I've never tried this, nor do I know anyone who has, so you might want to research it a bit more before you try it yourself. |
Will I get taxed on withdrawals from Real Cash Economy games? | Income from a hobby is tax exempt under Dutch law. To consider whether it's hobby, a few rules are applied such as: How much time do you spend on the activity? And is the hourly wage low? Obviously, having a boss is a sure sign of it not being a hobby. The typical example is making dolls and selling them on a crafts fair. If you travel the country and sell each weekend on a different fair, that's a lot of time. If you only sell them on the fair in your home town, it's a hobby. Situation 3 is the most difficult. If you just happened to luck out, it's still a hobby. If you spent significant time to improve the value of your holdings, e.g. by trading in-game, then it might be seen as work. In the latter case, you simply file it as "income from other sources, not yet taxed". For the purpose of determining income from a hobby, you may deduct actual expenses. So, in your case they'd look at the net income of $-1000, which is not unusual for a hobby. It wouldn't be any different if you took up horse riding, decided that you didn't like it, and sell your horse at a loss. |
What is the most effective saving money method? | First pay yourself. When you get salary, send some parts of that (for example 10%) to your saving account. Step by step you'll save nice money ;) |
How to choose a company for an IRA? | The fees for Vanguard and Fidelity IRA housing cannot be lower, because they are zero. Depending on the fund you invest in, one or the other will have pretty low fees and are often the lowest in the industry. I don't qualify for TIAA-CREF, but my mother does and she loves them. She can call up and get some advice for free. I would not qualify it as the best advice in the world, but it certainly isn't horrible. So it really depends on what you are looking for. If you want a little investment advice, I would go with TIAA-CREF. If you are a do it yourself-er go with Vanguard. |
What did John Templeton mean when he said that the four most dangerous words in investing are: ‘this time it’s different'? | A brief review of the financial collapses in the last 30 years will show that the following events take place in a fairly typical cycle: Overuse of that innovation (resulting in inadequate supply to meet demand, in most cases) Inadequate capacity in regulatory oversight for the new volume of demand, resulting in significant unregulated activity, and non-observance of regulations to a greater extent than normal Confusion regarding shifting standards and regulations, leading to inadequate regulatory reviews and/or lenient sanctions for infractions, in turn resulting in a more aggressive industry "Gaming" of investment vehicles, markets and/or buyers to generate additional demand once the market is saturated "Chickens coming home to roost" - A breakdown in financial stability, operational accuracy, or legality of the actions of one or more significant players in the market, leading to one or more investigations A reduction in demand due to the tarnished reputation of the instrument and/or market players, leading to an anticipation of a glut of excess product in the market "Cold feet" - Existing customers seeking to dump assets, and refusing to buy additional product in the pipeline, resulting in a glut of excess product "Wasteland" - Illiquid markets of product at collapsed prices, cratering of associated portfolio values, retirees living below subsistence incomes Such investment bubbles are not limited to the last 30 years, of course; there was a bubble in silver prices (a 700% increase through one year, 1979) when the Hunt brothers attempted to corner the market, followed by a collapse on Silver Thursday in 1980. The "poster child" of investment bubbles is the Tulip Mania that gripped the Netherlands in the early 1600's, in which a single tulip bulb was reported to command a price 16 times the annual salary of a skilled worker. The same cycle of events took place in each of these bubbles as well. Templeton's caution is intended to alert new (especially younger) players in the market that these patterns are doomed to repeat, and that market cycles cannot be prevented or eradicated; they are an intrinsic effect of the cycles of supply and demand that are not in synch, and in which one or both are being influenced by intermediaries. Such influences have beneficial effects on short-term profits for the players, but adverse effects on the long-term viability of the market's profitability for investors who are ill-equipped to shed the investments before the trouble starts. |
Are investor's preference for dividends justified? | Some investors (pension funds or insurance companies) need to pay out a certain amount of money to their clients. They need cash on a periodical basis, and thus prefer dividend paying stock more. |
What is the best way to stay risk neutral when buying a house with a mortgage? | To avoid risk from rising interest rates, get a fixed rate mortgage. For the life of the mortgage your principal and interest payments will remain the same. Keep in mind that the taxes and insurance portion of your monthly payment may still go up. Because you own the property, the costs to maintain the property are your responsibility. If you rented this would be the responsibility of the owner of the property; if the cost to repair and maintain goes up so does the rent. Because you are the owner your annual costs to repair and maintain may go up over time. The way to eliminate risk of loss of value is to never move, until the mortgage is paid off. You will know exactly what principal and interest will cost you over the life of the loan. When you sell that will be essentially return on your payments. You don't know if the loss of value is due to world, national, regional, local or individual circumstances. so hedging is tough. If the fact that the mortgage is 95% is what makes you nervous, your biggest risk is risk of being upside down. That risk is greatly reduced by increasing the amount of the down payment. That decreases the risk that the value will be below the mortgage amount if due to unforeseen circumstances you have to sell immediately. The money will still be lost due to decrease in value, but you aren't forced to bring cash to the settlement table if you need to sell. |
Is the “Bank on Yourself” a legitimate investment strategy, or a scam? | I haven't read the book and have no intention of reading it. This definitely looks like a forced savings plan with "Whole Life Insurance" as the theme – which is pretty bad for someone who is able to take care of his finances. It would be good for someone who is not very good with his finances and wants to be forced into savings, but then even for those people it would only help a little; there are enough clauses that would make things more bad for him. i.e. one can choose to take a loan, pay only interest etc. No book is going to help you build a savings habit. One has to realize and spend what is essential (it means not buying or doing tons of things) and putting quite a bit away for a rainy day. After this, comes investing wisely... |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | I'll take an alternate route: honesty + humor. Say something like this with a smile and a laugh, like you know they're crazy, but they maybe don't know it yet. "Are you crazy? Co-signing a loan can put us both in a lot of potential danger. First, you shouldn't get a loan that you can't afford/attain on your own, and second, I'd be crazy to agree to be liable for a loan that someone else can't get on their own. You want something bad enough, you get your credit rating in order, or you save up the money - that's how I bought (my car/house/trip to Geneva). I'd be happy to point you in the right direction if you want to put a plan together." You're offering help, but not the kind that puts you in danger. Declining to co-sign a loan can't damage your relationship with this person as much as failure to pay will. |
Why don't banks give access to all your transaction activity? | Things are the way they are because they got that way. - Gerald Weinberg Banks have been in business for a very long time. Yet, much of what we take for granted in terms of technology (capabilities, capacity, and cost) are relatively recent developments. Banks are often stuck on older platforms (mainframe, for instance) where the cost of redundant online storage far exceeds the commodity price consumers take for granted. Similarly, software enhancements that require back-end changes can be more complicated. Moreover, unless there's a buck (or billion) to be made, banks just tend to move slowly compared to the rest of the business world. Overcoming "but we've always done it that way" is an incredible hurdle in a large, established organization like a bank — and so things don't generally improve without great effort. I've had friends who've worked inside technology divisions at big banks tell me as much. A smaller bank with less historical technical debt and organizational overhead might be more likely to fix a problem like this, but I doubt the biggest banks lose any sleep over it. |
Is there a “reverse wash sale” rule? | Yes, the newly bought shares will have a long-term holding period, regardless of when you sell them. In addition, it's only a wash sale if you sold the first shares for a loss; it's not a wash sale if you sold them for a gain. Wikipedia mentions this: When a wash sale occurs, the holding period for the replacement stock includes the period you held the stock you sold. Example: You've held shares of XYZ for 10 years. You sell it at a loss but then buy it back within the wash sale period. When you sell the replacement stock, your gain or loss will be long-term — no matter how soon you sell it. Charles Schwab also mentions this: Here's a quick example of a wash sale. On 9/30/XX, you buy 500 shares of ABC at $10 per share. One year later the stock price starts to drop, and you sell all your shares at $9 per share on 10/4/XY. Two days later, on 10/6, ABC bottoms out at $8 and you buy 500 shares again. This series of trades triggers a wash sale. The holding period of the original shares will be added to the holding period of the replacement shares, effectively leaving you with a long-term position. |
Investing/business with other people's money: How does it work? | You can either borrow money... credit card, line of credit, re-finance your home, home equity line of credit, loan, mortgage, etc. Or you have other invest in your company as equity. They will contribute $X to get Y% of your company and get Z% of the profits. Note amount of profits does not necessarily have to equate to percentage owned. This makes sense if they are a passive investor, where they just come up with the money and you do all the work. Also voting rights in a company does not have to equate to percentage owned either. You can also have a combination of equity and debt. If you have investors, you would need to figure out whether the investor will personally guarantee the debt of your company - recourse vs non-recourse. If they have more risk, they will want more of a return. One last way to do it is crowdfunding, similar to what people do on Kickstarter. Supporters/customers come up with the money, then you deliver the product. Consulting practices do something similar with the concept of retainers. Best of luck. |
Layman's guide to getting started with Forex (foreign exchange trading)? | Starting with the Dummy Forex account is a wise move for every new forex trader. Do forex trading with a dummy account at least for a year. Startling directly with real money is a terribly costly move. Therefore, it is wise to have a solid trading strategy to execute. Make sure that your strategy is realistic and practical. Most importantly, using your dummy forex account, it is must for you to make at least one or two profits in a year. At last, be sure to invest money that you can recover without any tension. |
Why diversify stocks/investments? | Diversifying is the first advice given to beginner in order to avoid big loss. For example in 2014 the company Theranos was really appealing before it fail in 2016. So a beginner could have invest ALL his money and lose it. But if he has deverified he wouldn't lost everything. As an investor goes from beginner to experience some still Diversify and other concentrate. Mostly it depends how much confident you are about an investement. If you have 20 years of experience, now everything about the company and you are sure there will be profit you can concentrate. If you are not 100% sure there will be a profit, it is better to Diversify. Diversifying can also be profitating when you loose money: because you will pay tax when you earn money, if you diversify you can choose to loose money in some stock (usually in december) and in this way cut your taxes. |
Can I default on my private student loans if I was an international student? | What are the consequences if I ignore the emails? If you ignore the emails they will try harder to collect the money from you until they give up. Unlike what some other people here say, defaulting on a loan is NOT a crime and is NOT the same as stealing. There is a large number of reasons that can make someone unable to pay off a loan. Lenders are aware of the risk associated with default; they will try to collect the debt but at the end of the day if you don't have money/assets there is not much they can do. As far as immigration goes, there is nothing on a DS-160 form that asks you about bankruptcies or unpaid obligations. I doubt the consular officer will know of this situation, but it is possible. It is not grounds for visa ineligibility however, so you will be fine if everything else is fine. The only scenario in which unpaid student loans can come up relevant in immigration to the US is if and when you apply for US Citizenship. One of the requirements for Citizenship is having good moral character. Having a large amount of unpaid debt constitutes evidence of a poor moral character. But it is very unlikely you'd be denied Citizenship on grounds of that alone. I got a social security number when I took up on campus jobs at the school and I do have a credit score. Can they get a hold of this and report to the credit bureaus even though I don't live in America? Yes, they probably already have. How would this affect me if I visit America often? Does this mean I would not ever be able to live in America? No. See above. You will have a hard time borrowing again. Will they know when I come to America and arrest me at the border or can they take away my passport? No. Unpaid debt is no grounds for inadmissibility, so even if the CBP agent knows of it he will not do anything. And again, unpaid debt is not a crime so you will not be arrested. |
Does this sound like a great idea regarding being a landlord and starting a real estate empire? | This can be done, and there have been many good suggestions on things to do and watch out for. But to my shock I don't see anyone offering any words of caution about property managers! Whatever you do, don't assume they have your best interests at heart. Do not assume that "no news is good news" and that if you aren't hearing of problems and are just collecting rent checks, everything must be fine. You can easily end up with tenants you would never have allowed yourself, or tenants with pets that you would not have allowed, etc. Especially if the manager doesn't want you to have a vacancy and potentially lose you as a client, they may very well lower their standards just to get the place occupied. And a year or two or three later, you may find yourself looking at a very large repair bill and wonder how on earth it could have happened when you supposedly had someone looking out for your property! There are quality, ethical property managers out there. They are not all bad to be certain. But whatever you do, check up on them. And with multiple properties - especially if in multiple areas/states etc. - this can be nearly a full time job in itself. As the saying goes, "Trust, but verify". I have never found this to apply more than with rental properties and property management. Don't leave anything significant to them 100%. You can't even assume that a rule like "all expenses over $50 must be cleared by me first", as that can simply mean that they don't bother to come to you for certain kinds of repairs that would cost more than that, or that they just get them "taken care of" by their own person (done poorly, illegally, etc.) and never tell you. Never trust their choice of tenants blindly. Visit the place yourself at least every few months - a quick driveby at a minimum or better if you can, arrange a reason to walk through the house personally. Check the back yard, never assume that the front yard is indicative of anything else. Never assume that a "no pets" rule will be followed, or that tenants wouldn't lie to the management about having pets. Never assume that the tenants won't move additional people into the property as well. Always expect a bare minimum of 1 month vacancy every year, and an additional minimum of 1 month's rental revenue in unexpected maintenance/repairs every year. This is at a minimum! You might do much better than this, and have a high quality tenant in place for years who costs next to nothing in extra maintenance. But do not count on it. Rental real estate investing looks so simple on paper, where it's just numbers. But reality has a very rude habit of surprising you when you least expect it. After all, no one expects the Spanish Inquisition! Good luck! |
Can a US bank prevent you from making early payments to the principal on a home mortgage? | Are there any known laws explicitly allowing or preventing this behavior? It's not the laws, it's what's in the note - the mortgage contract. I read my mortgage contracts very carefully to ensure that there's no prepayment penalty and that extra funds are applied to the principal. However, it doesn't have to be like that, and in older mortgages - many times it's not like that. Banks don't have to allow things that are not explicitly agreed upon in the contract. To the best of my knowledge there's no law requiring banks to allow what your friend wants. |
How to split stock earnings? | Let's suppose your friend gave your $100 and you invested all of it (plus your own money, $500) into one stock. Therefore, the total investment becomes $100 + $500 = $600. After few months, when you want to sell the stock or give back the money to your friend, check the percentage of profit/loss. So, let's assume you get 10% return on total investment of $600. Now, you have two choices. Either you exit the stock entirely, OR you just sell his portion. If you want to exit, sell everything and go home with $600 + 10% of 600 = $660. Out of $660, give you friend his initial capital + 10% of initial capital. Therefore, your friend will get $100 + 10% of $100 = $110. If you choose the later, to sell his portion, then you'll need to work everything opposite. Take his initial capital and add 10% of initial capital to it; which is $100 + 10% of $100 = $110. Sell the stocks that would be worth equivalent to that money and that's it. Similarly, you can apply the same logic if you broke his $100 into parts. Do the maths. |
What cost basis do I report on the 1099? | You wouldn't fill out a 1099, your employer would or possibly whoever manages the stock account. The 1099-B imported from E-Trade says I had a transaction with sell price ~$4,500. Yes. You sold ~$4500 of stock to pay income taxes. Both the cost basis and the sale price would probably be ~$4500, so no capital gain. This is because you received and sold the stock at the same time. If they waited a little, you could have had a small gain or loss. The remainder of the stock has a cost basis of ~$5500. There are at least two transactions here. In the future you may sell the remaining stock. It has a cost basis of ~$5500. Sale price of course unknown until then. You may break that into different pieces. So you might sell $500 of cost basis for $1000 with a ~$500 capital gain. Then later sell the remainder for $15,000 for a capital gain of ~$10,000. |
New or Used Car Advice for Recent College Grad | Never buy a new car if cost is an issue. A big chunk of the price will disappear to depreciation as you drive it off the lot. If you want a shiny new car with the latest equipment (and if you can afford it!), buy a lightly-used car. Normally I would recommend a 1-3 year old car. 95% of the value, with a big cost savings. But this depends on your financial situation. Given that you just need a commuter car for mostly highway driving, in a place where the weather is easier on cars, you could be fine with a 5-6 year old import. Camry's, Accords, Civics, etc are all well-built, reliable, and affordable due to their numbers. As for financing, shop around. Don't blindly use dealer financing. Check with banks and especially local credit unions and see what rate they can offer you. Then, when you are ready to go, get pre-approved (this is when they pull your credit) and get the car. |
Why are estimated taxes due “early” for the 2nd and 3rd quarters only? | nan |
VAT in UK, case of cultural industry and overseas invoices | Your answer will need loads of information and clarification, so I will ask you to visit the VAT and have a peruse. 1) Obligation is for you to find out the correct rate of VAT, charge and pay tax accordingly. You can call up the HMRC VAT helpline for help, which they will be happy to oblige. Normally everybody pays VAT every 3 months or you can pay once in a year. 2) Depends on your annual turnover, including VAT. Less than £150000 you join the Flat rate scheme. There are schemes for cultural activities. Might be good to check here on GOV.UK. 3) If you pay VAT in EU countries, you can reclaim VAT in UK. You need to reclaim VAT while filing in your VAT returns. But be careful about your receipts, which can be checked to verify you are not defrauding HMRC. The basic rule is that B2B services are, as the name suggests, supplies from one business to another. And, subject to some exceptions, are treated as made where the customer belongs. No VAT is chargeable on B2B supplies to an overseas customer. But where you make a B2C supply, VAT depends on where your customer is located: 1) if they are outside the EU, you don’t need to charge VAT 2) if they are located in an EU country, then you must charge VAT. Source All in all keep all records of VAT charged and paid to satisfy the taxman. If the rules get complicated, get an accountant to help you out. Don' take chances of interpreting the law yourself, the fines you might pay for wrong interpretation might be a deal breaker. |
Theory/Strategy for pricing by volume | Actually, the rate of change could be more or less constant, but you might have a minimum price that represents your fixed costs. So you might sell a milligram for $1 (which is ridiculous in terms of per-unit pricing) to cover fixed costs, and add $0.50/lb for each step in size to cover variable costs (cost of raw materials and packaging), so a 2lb bag would be $2, a 5lb bag would be $3.50, a ton would be $1,001, etc. At the end of the day, you want the marginal revenue (the price that you charge for each additional pound) to be more than the marginal cost (the price per pound it takes to produce the bag). Any amount over that goes towards your fixed costs - the cost you'd incur if you sold zero product (rent, utilities, overhead, etc.) It's not an exact science, and there are many variables that go into pricing. |
A University student wondering if investing in stocks is a good idea? | You can start investing with any amount. You can use the ShareBuilder account to purchase "partial" stocks through their automatic investment plan. Usually brokers don't sell parts of stock, and ShareBuilder is the only one allowing it IMHO using its own tricks. What they do basically is buy a stock and then divide it internally among several investors who bought it, while each of the investors doesn't really own it directly. That's perfect for investing small amounts and making first steps in investing. |
How important is disability insurance, e.g. long-term, LTD? Employer offers none | (My wife works for an insurance broker in the US, so take that grain of salt with my answer) Disability insurance covers your income should you be unable to work. Some disability will be paid before social security (so you get both incomes) and some will be paid after (so your insurance will fill whatever gap SS leaves) Everybody in the US gets Social Security, which has a disability provision you can use. The additional disability insurance is a good idea for people with a family who will rely on your income for the future, or even for yourself should you work in a dangerous position. My family has it, and we consider it essential for our well being, but I consider insurance on many things a necessity not a luxury. (except pet insurance, I find that to be a luxury.) |
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