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Bonus issue - Increasing share capital | This is what is called "stock dividend". In essence the company is doing a split, the difference is in financial accounting and shouldn't concern you much as an individual investor. "Fully paid up", in this context, probably means "unconditioned", aka fully vested. |
How can a person with really bad credit history rent decent housing? | I saw where you said "I thought of co-signing is if a portion of child/spousal support goes directly to the landlord. I asked the Child Support Services (who deduct money from my paycheck monthly to pay support to my ex) and they told me that they are not authorized to do this." I know going back to court isn't a pleasant thought, but from the looks of things, your suggestion is the only way to accomplish this. It's ridiculous for anyone to suggest you keep up your payments and cosign, yet the ex has no obligation to use that income to actually pay her rent. From what you've said, she sounds irresponsible and self-destructive. As someone who has had bad tenants, I'd not go near her, even with a cosigner. It's just not worth the risk. |
How can I determine which stores are regarded as supermarkets for a rewards credit card? | Looks like a user-contributed list is the only good solution to this question, so I'll start one by making this answer community wiki, meaning anyone can edit it. We only aim to add major chain, not every mom&pop store (which probably don't qualify). The rewards details page looks like this: The lists are in alphabetical order. |
If I exercise underwater ISOs, can I claim a loss? | No, because you didn't lose anything. When you exercise ISO "at loss" you're buying stock without a discount, that's it. |
Sales Tax: Rounded Then Totaled or Totaled Then Rounded? | Taxes should not be calculated at the item level. Taxes should be aggregated by tax group at the summary level. The right way everywhere is LINE ITEMS SUMMARY PS:If you'd charge at the item level, it would be too easy to circumvent the law by splitting your items or services into 900 items at $0.01 (Which once rounded would mean no tax). This could happen in the banking or plastic pellets industry. |
How can a person protect his savings against a country default? | Since you are going to be experiencing a liquidity crisis that even owning physical gold wouldn't solve, may I suggest bitcoins? You will still be liquid and people anywhere will be able to trade it. This is different from precious metals, whereas even if you "invested" in gold you would waste considerable resources on storage, security and actually making it divisible for trade. You would be illiquid. Do note that the bitcoin currency is currently more volatile than a Greek government bond. |
Should I have a higher credit limit on my credit card? | I'm not sure that OP was asking if he/she personally should have more available credit, so I will answer the other interpretation: should that particular card have a higher limit? The answer is "no." The range varies vastly by issuer. Starting limits vary widely from issuer to issuer even with identical credit histories. Some issuers never automatically increase the limit, some periodically conduct account reviews to determine if an increase is warranted. Some like to see higher spending habits each month. Personally, my cards range from $500 to $25000, and the high and low extremes are the same age. You can search for tips on how often to request increases for your particular card, or what kind of spending habits the issuer prefers. An important note: You do not need to carry a balance to make the issuer happy. You never need to pay a cent in credit card interest. |
What evidence exists for claiming that you cannot beat the market? | Will the investor beat the benchmark for a given period will follow a Bernoulli distribution -- each period is a coin toss, and heads mean the investor beat the market for that period. I can't prove the negative that there is no investor ever whose probability function p = 1, but you can statistically expect a number of individual investors with p ~ 0.5 to have a sequence of many heads in a row, as a function of the total population. By example, my father explained investment scams and hot-hand theory to me this way when I was younger: Imagine an investor newsletter which mails out to a mailing list of 1024 prospects (or alternately, a field of 1024 amateur investor bloggers in a challenge). Half the letters or bloggers state AAPL will go up this week, half that AAPL will go down this week. In the newsletter case, next week ignore the people we got wrong. In the blogger case, they're losers, so we don't pay attention to them. Next week, similar split: half newsletters or bloggers claim GOOG go up, half GOOG go down. This continues for a 10 week cycle. Now, in week 10: the newsletter has a prospect they have hit correct 10x in a row: how much will he pay for a subscription? Or, one amateur investor blogger has been on a 10 week winning streak and wins the challenge, so of course let's give her a CNBC show after Jim Cramer. No matter what, next week, this newsletter or investor is shooting 50-50. How do you know this person is not the statistically expected instance backed up by a pyramid of 1023 Bernoulli distribution losers? Alternately, if you think you're going to be the winner, you've got a 1/1024 shot. |
Can an International student of F1 VISA accept money in her US bank account on behalf of someone else? | There might be a problem. Some reporting paperwork will have to be done for the IRS, obviously, but technically it will be business income zeroed out by business expense. Withholding requirements will shift to your friend, which is a mess. Talk to a licensed tax adviser (EA/CPA) about these. But the immigration may consider this arrangement as employment, which is in violation of the visa conditions. You need to talk to an immigration attorney. |
A friend wants to use my account for a wire transfer. Is this a scam or is it legitimate? | Just one further point to add to what everyone else has said. There are no oil rigs or platforms "off the shores of Liverpool". Liverpool is on the west coast of England, on the oil-free Irish Sea. The UK's oil industry is in the North Sea, to the north-east. Aberdeen would be the correct city. |
Is trading stocks easier than trading commodities? | Its the relative leverage available to retail traders between the two. In the US one can trade equities with 2:1 leverage while with commodities the leverage can go much higher. Combine this with the highly volatile nature of commodities, and it makes losing BIG too easy for the average trader. |
A University student wondering if investing in stocks is a good idea? | The power of compounding interest and returns is an amazing thing. Start educating yourself about investing, and do it -- there are great Q&As on this site, numerous books (I recommend "The Intelligent Investor", tools for small investors (like Sharebuilder.com) and other resources out there to get you started. Your portfolio doesn't need to include every dime you have either. But you do need to develop the discipline to save money -- even if that savings is $20 while you're in school. How you split between cash/deposit account savings and other investment vehicles is a decision that needs to make sense to you. |
Whether to prepay mortgage or invest in stocks | what other pieces of info should I consider If you don't have liquid case available for unexpected repairs, then you probably don't want to use this money for either option. The 7% return on the stocks is absolutely not guaranteed. There is a good amount of risk involved with any stock investment. Paying down the mortgage, by contrast, has a much lower risk. In the case of the mortgage, you know you'll get a 2.1% annual return until it adjusts, and then you can put some constraints on the return you'll get after it adjusts. In the case of stocks, it's reasonable to guess that it will return more than 2.1% annually if you hold it long enough. But there will be huge swings from month to month and from year to year. The sooner you need it, the more guaranteed you will want the return to be. If you have few or no stock (or bond)-like assets, then (nearly) all of your wealth is in your house, and that is independent of the remaining balance on your mortgage. If you are going to sell the house soon, then you will want to diversify your assets to protect you against a drop in home value. If you are going to stay in the house forever, then you will eventually need non-house assets to consume. Ultimately, neither option is inherently better; it really depends on what you need. |
LLC: Where should the funds for initial startup costs come from? | Like you said, it's important to keep your personal assets and company assets completely separate to maintain the liability protection of the LLC. I'd recommend getting the business bank account right from the beginning. My wife formed an LLC last year (also as a pass-through sole proprietorship for tax purposes), and we were able to get a small business checking account from Savings Institute and Trust that has no fees (at least for the relatively low quantity of transactions we'll be doing). We wrote it a personal check for startup capital, and since then, the LLC has paid all of its own bills out of its checking account (with associated debit card). Getting the account opened took less than an hour of sitting at the bank. Without knowing exactly where you are in Kentucky, I note that Googling "kentucky small business checking" and visiting a few banks' web sites provided several promising options for no-fee business checking. |
How does unemployment insurance work? | Unemployment insurance provides a temporary safety net to workers who lose their jobs by replacing a portion of their salary for certain periods. Each state administers its own unemployment insurance program so some rules may vary from state to state. To receive unemployment insurance payments, you must have lost your job through no fault of your own. If you quit your job or lost it because of poor performance or another justifiable reason, you are not eligible for unemployment insurance benefits. State unemployment insurance programs require claimants to have worked sufficiently before they can claim benefits. As soon as you apply for unemployment insurance, an agency with the state in which you live will verify that you were a victim of a layoff by contacting your previous employer and making sure you lost your job due to lack of work and not an action within your control. After the state verifies you were indeed the victim of a layoff, your weekly payment is calculated. Your payment will be a percentage of what you made in your previous job, generally between 20 percent and 50 percent, depending on your state. Unemployment insurance replaces only a portion of your previous pay because it is intended to pay only for the essentials of living such as food and utilities until you find new employment. Before you begin receiving benefits, you must complete a waiting period of typically one or two weeks. If you find a new job during this period, you will not be eligible for unemployment benefits, even if the job does not pay you as much as your previous job. After the waiting period, you will begin to receive your weekly payments. Employers pay for unemployment insurance through payroll taxes. So, while employees' work and earnings history are important to funding their unemployment benefits, the money does not come from their pay. Employer unemployment insurance contributions depend on several factors, including how many former employees have received benefits. Employers pay taxes on an employee's base wages, which vary by state. California, for example taxes employers on the first $7,000 of an employee's annual earnings, while neighboring Oregon taxes up to $32,000 of wages. Employers must set aside funds each payroll period and then report taxes and pay their states quarterly. States have several categories of tax rates they charge employers. New businesses and those first adding employees pay the "new rate," which is typically lower and geared toward small businesses. Established businesses who haven't paid their taxes recently or properly are usually assessed the "standard rate" --- the highest possible tax rate, which in 2010 ranged from 5.4 percent in several states including Georgia, Hawaii and Alaska to 13.56 percent in Pennsylvania. Businesses in good standing may receive discounts under the "experienced rate." Depending on the number of employees a business has and how many former employees have claimed unemployment, states can give sizable rate reductions. The fewer claims, the lower the rate a business pays in unemployment insurance taxes. As a result of the economic crisis legislation has been passed to extend Unemployment benefits. Regular unemployment benefits are paid for a maximum of 26 weeks in most states. However, additional weeks of extended unemployment benefits are available during times of high unemployment. The unemployment extension legislation passed by Congress in February 2012 changed the way the tiers of Emergency Unemployment Compensation (EUC) are structured. A tier of unemployment is an extension of a certain amount of weeks of unemployment benefits. There are currently four tiers of unemployment benefits. Each tier provides extra weeks of unemployment in addition to basic state unemployment benefits. Emergency Unemployment Compensation (EUC) Tiers June - August 2012: Source and further information can be found here - Unemployment Tiers - About.com Sources: Unemployment Insurance(UI) - US Dept. of Labor How Does Unemployment Insurance Work? - eHow Percentage of Pay That Goes to Unemployment Insurance - eHow Additional Info: You can file for UI over the internet here are some useful resources. OWS Links State Unemployment Offices - About.com How to Apply for Unemployment Over the Internet - eHow |
Does it make sense to buy a house in my situation? | Short answer: NO. Do NOT buy a house. Houses are a "luxury" good (see Why is a house not an investment?). Although the experience of the early 2000s seemed to convince most people otherwise, houses are not an investment. Historically, it has usually been cheaper to rent, because owning a house has non-pecuniary benefits such as the ability to change things around to exactly the way you like them. Consult a rent vs. buy calculator for your area to see if your area is exceptional. I also would not rely on the mortgage interest deduction for the long term, as it seems increasingly likely the Federal government will do away with it at some point. The first thing you must do is eliminate your credit card and other debts. Try to delay paying your lawyers and anyone else who is not charging you interest (or threatening to harm you in other ways) as long as possible. Save enough money to maintain your current standard of living for 6 months should you lose your job, then put the rest in your 401(k). Another word of advice: learn to live with less. Your kids do not need separate bedrooms. Hopefully one day the time will come when you can afford a larger house, but it should not be your highest priority. You and your kids will all be worse off in the end should you have unexpected financial difficulties and you have overextended yourself to buy a house. Now that your credit score is up, see if you can renegotiate your credit card loans or negotiate a new loan with lower interest. |
I earn $75K, have $30K in savings, no debt, rent from my parents who are losing their home. Should I buy a home now or save? | For the vast majority, "buying" a house via a mortgage is not an investment. I use quotes around buying because from a technical perspective you don't own anything until you've paid it off; this is often an important point that people forget. It's highly unlikely you'll make more on it than the amount you put into it (interest, repairs, etc). Even with relatively low interest rates. The people who successfully invest in homes are those that use actual cash (not borrowed) to buy a home at well below market value. They then clean it up and make enough repairs to make it marketable and sell it shortly there after. Sometimes these people get hosed if the housing market tumbles to the point that the home is now worth less than the amount they put into it. This is especially problematic if they used bank loans to get the process going. They were actually the hardest hit when the housing bubble popped several years ago. Well, them and the people who bought on interest only loans or had balloon payments. Whereas the people who use a mortgage are essentially treating it like a bank account with a negative interest rate. For example, $180k loan on a 30 yr fixed at 4% will mean a total payout of around $310k, excluding normal repairs like roofs, carpet, etc. Due to how mortgage's work, most of the interest is collected during the first half of the loan period. So selling it within 2 to 5 years is usually problematic unless the local housing market has really skyrocketed. Housing markets move up and down all the time due to a hundred different things completely out of your control. It might be a regional depression, weather events, failed large businesses, failed city/local governments, etc. It could go up because businesses moved in, a new highway is built, state/local taxes decline, etc. My point is, homes are not long term investments. They can be short term ones, but only in limited circumstances and there is a high degree of risk involved. So don't let that be a driving point of your decision. Instead you need to focus on other factors. Such as: what is really going on with the house you are currently in? Why would they lose it? Can you help out, and, should you help out? If things are precarious, it might make more sense to sell that home now and everyone move into separate locations, possibly different rentals or apartments. If they are foreclosed on then they will be in a world of financial hurt for a long time. If we ignore your parents situation, then one piece of advice I would give you is this: Rent the cheapest apartment you can find that is still a "safe" place to live in. Put every dollar you can into some type of savings/investment that will actually grow. Stay there for 5+ years, then go pay cash for a nice home. Making $75k a year while single means that you don't need much to live on. In other words, live extremely cheap now so you can enjoy a fantastic living experience later that is free from financial fear. You should be able to put $30k+ per year aside going this route. edit: A bit of support data for those that somehow think buying a home on a mortgage is somehow a good investment: Robert Shiller, who won a Nobel prize in economics and who predicted the bursting of the housing bubble, has shown that a house is not a good investment. Why? First, home prices (adjusted for inflation) have been virtually unchanged for the past 100 years. (link 1, link 2) Second, after you add in the costs of maintenance alone then those costs plus what you've paid for the home will exceed what you get out of it. Adding in the cost of a mortgage could easily double or even triple the price you paid which makes things even worse. Maintenance costs include things like a new roof, carpet/flooring, water heater, appliances, etc. Yes, a home might cost you $100k and you might sell it for $200k after 15 years. However during that time you'll likely replace the roof ($10k to $20k), replace appliances ($2k to $5k), water heater ($1k), carpet/flooring ($5k to $20k), paint ($3k to $6k), and mortgage related costs (~$60k - assuming 30 yr fixed @4%). So your "costs" are between $180k and $200k just on those items. There are many more that could easily escalate the costs further. Like a fence ($5k+), air conditioner ($5k+), windows, etc. The above is assuming the home actually appreciates in value faster than inflation: which they historically haven't over the long term. So you have to consider all of the costs ultimately paid to purchase and maintain the home vs the costs of renting during the same time period. Point is: do your research and be realistic about it. Buying a home is a huge financial risk. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | No It's not a loan. It's an equity investment. Think of it as a business. The parents bought 75% of the equity with $115K, and are entitled to 75% of the sale proceeds, should you someday liquidate the business (i.e. selling the house). The $500 per month is just business revenue and is paid to your parents as a dividend. Imagine you rent it out to your self and charge a $666.66 rent - you take 25% of that back and give your parents the rest. Like any equity investment, the risk for them is that if the value of the house goes down, they will have to shoulder the loss. And you are right, there is no way to build equity. You already sold that to your parents. |
What can cause rent prices to fall? | In the US, the government effectively sets a price floor for rents with a concept called "prevailing rent" for government subsidy. Even the crappiest, minimally compliant hovel is ultimately worth whatever the government will issue housing vouchers for. Rent can and does fluctuate for the higher end of the market. Basically in most places the available, cheap credit has a negative impact on rent prices, and tighter, costlier credit increases demand and rents. Local economic events have an impact too. If the company closes in a company town, people leave. |
Why might a robo-advisor service like Betterment be preferable to just buying a single well-performing index fund like SPY? | Diversification and convenience: Is .15-0.35% fee worth it? It depends on your net worth, amount you invest and value of your time (if you have high net worth and low cost of your time the fee is highier then in case when you have low net worth but high cost of time - so Betterment seems to be a better option to young professional just after college then to someone already retired), your interest in finance, your willpower etc. Is Betterment allocation better then pure SPY? From what I understand about finance theory - yes. EDIT (as requested) I don't have any affiliation with any financial institution as far as I know. I opened it to get used to just investing as oppose to saving and ups and downs of market (and read up on the portfolio management, especially index funds) and I guess it worked well for me. I plan to move out entirely out of it once the cost of the account would be more then paying for a few coffees and move the account to Vanguard, Schwab or something similar. In other accounts (HSA/...) I use simpler portfolio then the Betterment one (US Total, Small Value, Developed, Emerging and Bonds) but there are people who use simpler (search for 3 fund portfolio). |
What's the fuss about Credit Score / History? | Credit Unions have long advocated their services based on the fact that they consider your "character." Unfortunately, they are then at a loss to explain how they determine the value of your character, other than to say that you're buddies & play pool together so they'll give you a loan. Your Credit History / Score is as accurate a representation of your character in business dealings as can be meaningfully quantified. It tracks your ability to effectively use and manage debt, and your propensity to pay it back responsibly or default on obligations. While it isn't perfect, it is certainly one of the best means currently available for determining someone's trustworthiness when it comes to financial matters. |
Is my stock gone forever from a reverse split / bought by another company? | You can't own fractional shares. If the Reverse Split resulted in you having less a full share (for example, if you had 500 shares, and they did a 1000:1 reverse split), your fractional share was cashed in (sold). That could be that 'money market' activity shown on the next day? It is your responsibility to be prepared for a reverse split, by either selling at your desired price, or buying more shares, so you end with an integer number of shares after the reverse split. |
Why does an option lose time value faster as it approaches expiry | NL7 is right and his B-S reference, a good one. Time decay happens to occur in a way that 2X the time gives an option 1.414X (the square root of 2) times the value, so half the time means about .707 of the value. This valuation model should help the trader decide on exactly how far out to go for a given trade. |
Why buy insurance? | There are several insurance products that I buy for legal reasons: Both of these protect me from lawsuits and fines. Many people buy similar products to protect their business operations. (e.g. medical malpractice insurance) There are some insurance products I buy for tax planning and financial planning purposes: I have a large amount of savings available, so I have several tricks to reduce my insurance costs, and I have several products that I avoid. Several of these reasons are mentioned in other answers, but I thought I would collect them into a single answer to demonstrate that there are reasons other than the rational calculation of what the payout will be for the insurance products vs. the premium paid. If I gain access to a tax advantaged Health savings account, that is a bigger benefit to me than avoiding the premium, especially when my employer is paying the majority of the premium. Perhaps it makes no sense to buy insurance given sufficient savings (like the products I listed that make no sense for me given my finances) but not everyone can self-insure; it does require a certain level of wealth. |
What do I do with a P11D Expenses & Benefits form? | The P11D is a record of the total benefits you've received in a tax year that haven't been taxed in another way, a bit like the P60 is a record of the total pay and tax you've paid in a tax year. Note that travel for business purposes shouldn't be taxable, and if that's what's being reported on the P11D you may need to make a claim for tax relief to HMRC to avoid having to pay the tax. I'm not sure whether it's normal for such expenses to be reported there. HMRC will normally collect that tax by adjusting your tax code after the P11D is issued, so that more tax is taken off your future income. So you don't need to do anything, as it'll be handled automatically. As to how you know it's accurate, if you have any doubts you'd need to contact your former employer and ask them to confirm the details. In general you ought to know what benefits you actually received so should at least be able to figure out if the number is plausible. If your "travel" was a flight to the USA, then probably it was. If it was a bus ticket, less so :-) If you fill in a tax return, you'll also have to report the amount there which will increase the tax you owe/reduce your refund. You won't be charged twice even if your tax code also changes, as the tax return accounts for the total amount of tax you've already paid. For travel benefits, the exact treatment in relation to tax/P11Ds is summarised here. |
Why does selling and then rebuying stock not lead to free money? | You are misunderstanding what makes the price of a stock go up and down. Every time you sell a share of a stock, there is someone else that buys the stock. So it is not accurate to say that stock prices go down when large amounts of the stock are sold, and up when large amounts of the stock are bought. Every day, the amount of shares of a stock that are bought and sold are equal to each other, because in order to sell a share of stock, someone has to buy it. Let me try to explain what actually happens to the price of a stock when you want to sell it. Let's say that a particular stock is listed on the ticker at $100 a share currently. All this means is that the last transaction that took place was for $100; someone sold their share to a buyer for $100. Now let's say that you have a share of the stock you'd like to sell. You are hoping to get $100 for your share. There are 2 other people that also have a share that they want to sell. However, there is only 1 person that wants to buy a share of stock, and he only wants to pay $99 for a share. If none of you wants to sell lower than $100, then no shares get sold. But if one of you agrees to sell at $99, then the sale takes place. The ticker value of the stock is now $99 instead of $100. Now let's say that there are 3 new people that have decided they want to buy a share of the stock. They'd like to buy at $99, but you and the other person left with a share want to sell at $100. Either one of the sellers will come down to $99 or one of the buyers will go up to $100. This process will continue until everyone that wants to sell a share has sold, and everyone who wants to buy a share has bought. In general, though, when there are more people that want to sell than buy, the price goes down, and when there are more people that want to buy than sell, the price goes up. To answer your question, if your selling of the stock had caused the price to go down, it means that you would have gotten less money for your stock than if it had not gone down. Likewise, if your buying the stock had caused it to go up, it just means that it would have cost you more to buy the stock. It is just as likely that you would lose money doing this, rather than gain money. |
Is there a correlation between self-employment and wealth? | The key to becoming wealthy as a self-employed person is the drive to be successful. A driven person, who starts their own company (or companies, should they fail), will find success. Assuming that you define success as the accumulation of wealth, then yes, self-employment is correlated with wealth. But as matt mentions in the comments, there is no casual (in the statistical sense) relationship between self-employment and wealth. While I can't say for sure, I would argue that drive is more important that the employment situation. |
Are there cons to paying monthly bills with a rewards card and then paying it off monthly? | Pitfalls of paying plastic That being said, you can also find cards that have better than the 1% it looks like you are getting. I have a card that gives 2% cash back on Gas Stations, Utilities (including stuff like AT&T) and Food Stores (Walmart included). There are also limited time deals from cards - my fiance's discover has 5% cash back Oct/Nov/Dec on Online purchases. Make sure to remain diligent, keep your balances low and don't get hit with interest rates or fees (I had HORRIBLE credit and I refused to get a card with an annual fee). Why pay full price with cash, when you can get 2-5% cash back? |
What part of buying a house would make my net worth go down? | Houses depreciate. Period. Things break: the hot water heater explodes, the AC cuts out in August, the roof leaks, the basement floods, toilets back up, raccoons dig up the garden. Each time something breaks, the house loses value. Every year the paint fades a little, the house loses value. Every time GE comes out with a more efficient washing machine, the house loses value. The only reason a house appears to maintain its value over time is because the money you spend repairing and improving it offsets this unavoidable depreciation. Even then, over extended periods of time it will typically just track inflation--so you're treading water. Not that there's anything wrong with that. You need to live somewhere. |
What is the formula for determining estimated stock price when I only have an earning per share number? | What you need to do is go to yahoo finance and look at different stock's P/E ratios. You'll quickly see that the stocks can be sorted by this number. It would be an interesting exercise to get an idea of why P/E isn't a fixed number, how certain industries cluster around a certain number, but even this isn't precise. But, it will give you an idea as to why your question has no answer. "Annual earnings are $1. What is the share price?" "Question has no answer" |
How to read bond yield quotes? What do the time, coupon, price, yield, and time mean? | The 1 month and 1 year columns show the percentage change over that period. Coupon (coupon rate) is the amount of interest paid on the bond each period (as specified on the coupon itself. Price is the normalised price of the bond; the price of taking a position of $100 worth of the principal in the bond. Yield is the interest rate that you would receive by buying at that price (this is the inverse of the price). The time is the time of the quote presented. |
How come I can't sell short certain stocks? My broker says “no shares are available” | You can't short a stock unless there is someone willing and able to "lend" shares to you. And there are several reasons why that might not be the case. First, BSFT is a "new" stock, which means that NO ONE has held it very long. It's much easier to short IBM or Exxon Mobil, where there are some long-term holders who would like to earn a little extra money lending you THEIR shares. But if "everyone" involved is busy buying or selling the stock, there won't be many people to lend it. That's not manipulation, that's just the market. Another reason may be a large "short" interest. That is many OTHERS have shorted it before you. That's dangerous for you, because if some lenders want to pull their shares off the market, they can cause a "short squeeze" that will drive the price much higher. And stock shortages can be orchestrated by the company or large investors to artificially drive the price higher. Unless you have a lot of experience, don't try shorting small cap stocks. Try to gain some experience with large caps like IBM or Exxon Mobil first. Those are stocks that people at least can't "play games" with. YOu will win or lose based on the market itself. |
Repaying Debt and Saving - Difficult Situation | Just a thought, but have you considered approaching your sister about assuming the student loans or repaying your mother (even if it is a small amount/month) for financing her college education? If she is in her last year of college, in theory she should be earning at least some income within the next 2 years. Also, it doesn't seem like a lot to ask considering the sacrifices (both financial and otherwise) that a single mom probably made over the years. I'm sure your mom would be hesitant to ask as it seems like she prioritizes her children above herself by your description of the situation, but I bet if you could talk the sister into the mom would grudgingly accept it if she really is in such a tight financial situation. |
Using Loan to Invest - Paying Monthly Installments by Selling Originally Bought Shares | In addition to the answer from CQM, let me answer your 'am I missing anything?' question. Then I'll talk about how your approach of simplifying this is making it both harder and easier for you. Last I'll show what my model for this would look like, but if you aren't capable of stacking this up yourself, then you REALLY shouldn't be borrowing 10,000 to try to make money on the margin. Am I missing anything? YES. You're forgetting (1) taxes, specifically income tax, and (2) sales commissions//transaction fees. On the first: You have not considered anything in your financial model for taxes. You should include at least 25% of your expected returns going to taxes, because anything that you buy... and then sell within 12 months... is taxed as income. Not capital gains. On the second: you will incur sales commissions and/or transaction fees depending on the brokerage you are using for your plan. These tend to vary widely, but I would expect to spend at least $25 per sale. So if I were building out this model I would think that your break-even would have to at least cover: monthly interest + monthly principal payment income tax when sold commissions and broker's fees every time you sell holdings On over-simplifying: You have the right idea with thinking about both interest and principal in trying to sketch this out. But as I mentioned above, you're making this both harder and easier for yourself. You are making it harder because you are doing the math wrong. The actual payment for this loan (assuming it is a normal loan) can be found most easily with the PMT function in Excel: =PMT(rate,NPER,PV,FV)... =PMT(.003, 24, -10000, 0). That returns a monthly payment (of principal + interest) of 432.47. So you actually are over-calculating the payment by $14/month with your ballpark approach. However, you didn't actually have all the factors in the model to begin with, so that doesn't matter much. You are making it artificially easier because you have not thought about the impact of repaying principal. What I mean is this--in your question you indicate: I'm guessing the necessary profit is just the total interest on this loan = 0.30%($10000)(24) = $720 USD ? So I'll break even on this loan - if and only if - I make $720 from stocks over 24 months (so the rate of return is 720/(10000 + 720) = 6.716%). This sounds great-- all you need is a 6.716% total return across two years. But, assuming this is a normal loan and not an 'interest-only' loan, you have to get rid of your capital a little bit at a time to pay back the loan. In essence, you will pay back 1/3 of your principal the first year... and then you have to keep making the same Fixed interest + principal payments out of a smaller base of capital. So for the first few months you can cover the interest easily, but by the end you have to be making phenomenal returns to cover it. Here is how I would build a model for it (I actually did... and your breakeven is about 1.019% per month. At that outstanding 12.228% annual return you would be earning a whopping $4.) At least as far as the variables are concerned, you need to be considering: Your current capital balance (because month 1 you may have $10,000 but month 2 you have just 9,619 after paying back some principal). Your rate of return (if you do this in Excel you can play with it some, but you should save the time and just invest somewhere else.) Your actual return that month (rate of return * existing capital balance). Loan payment = 432 for the parameters you gave earlier. Income tax = (Actual Return) * (.25). With this kind of loan, you're not actually making enough to preserve the 10,000 capital and you're selling everything you've gained each month. Commission = ($25 per month) ... assuming that covers your trade fees and broker commissions. I guarantee you that this is not the deal breaker in the model, so don't get excited if you think I'm over-estimating this and you realize that Scottrade or somewhere will let you have trades at $7.95 each. Monthly ending balance == next month's starting capital balance. Stack it all up in Excel for 24 months and see for yourself if you like. The key thing you left out is that you're repaying each month out of capital that you'd like to use to invest with. This makes you need much higher returns. Even if your initial description wasn't clear and this is an interest-only loan, you're still looking at a rate of about 7.6% annually that you need to hit in order to just break even on the costs of holding the loan and transferring your gains into cash. |
I have around 60K $. Thinking about investing in Oil, how to proceed? | This is only a partial answer to your question #1. If you have a conservative approach to savings (and, actually, even if you don't), you should not invest all of your money in any single industry or product. If you want to invest some money in oil, okay, but don't overdo it. If your larger goal is to invest the money in a manner that is less risky but still more lucrative than a savings account, you should read up on personal finance and investing to get a sense of what options are available. A commonly-recommended option is to invest in low-cost index funds that mirror the performance of the stock market as a whole. The question of "how should I invest" is very broad, but you can find lots of starting points in other questions on this site, by googling, or by visiting your local library. |
Option on an option possible? (Have a LEAP, put to me?) | There are many stategies with options that you have listed. The one I use frequently is buy in the money calls and sell at the money staddles. Do this ONLY on stocks you do not mind owning because that is the worse thing that can happen and if you like the company you stand less of a chance of being scared out of the trade. It works well with high quality resonable dividend paying stocks. Cat, GE, Mrk, PM etc. Good luck |
Digital envelope system: a modern take | My wife and I use a digital form of the envelope system. We call it a budget; we record how much we want to allocate each month to spend--for each category of expense--in a spread sheet. Why use prepaid cards? Why not open a bunch of bank accounts and use debit cards from each if you want to separate the money? You could also keep a ledger for each account that you spend from on a smart phone or even in a physical ledger. The reason for the envelope method is that it psychologically hurts some people to physically part with cash. Once you digitize it in some factor, you lose what is the primary touted benefit, and it's no longer the envelope system. The secondary benefit that--once the budget for one category is gone, it's gone--is only as good as the discipline you have to not rob cash from another envelope; why is this any easier than the discipline of not debiting beyond the bottom of the ledger? So a budget IS a digital version of the envelope system; once the physical cash is removed from the equation, it's definitely not the envelope system. Sorry for the contrarian take on this question, but I've never been a fan of the envelope system for many of the reasons you have described. I guess I'm too young for the cash psychology to work for me. |
Should we buy a house, or wait? | Advantages of buying: With every mortgage payment you build equity, while with rent, once you sign the check the money is gone. Eventually you will own the house and can live there for free. You can redecorate or remodel to your own liking, rather than being stuck with what the landlord decides is attractive, cost-effective, etc. Here in the U.S. there are tax breaks for homeowners. I'm not sure if that's true in U.K. Advantages of renting: If you decide to move, you may be stuck paying out a lease, but the financial penalty is small. With a house, you may find it difficult to sell. You may be stuck accepting a big loss or having to pay a mortgage on the empty house while you are also paying for your new place. When there are maintenance issues, you call the landlord and it's up to him to fix it. You don't have to come up with the money to pay for repairs. You usually have less maintenance work to do: with a house you have to mow the lawn, clear snow from the driveway, etc. With a rental, usually the landlord does that for you. (Not always, depends on type of rental, but.) You can often buy a house for less than it would cost to rent an equivalent property, but this can be misleading. When you buy, you have to pay property taxes and pay for maintenance; when you rent, these things are included in the rent. How expensive a house you can afford to buy is not a question that can be answered objectively. Banks have formulas that limit how much they will loan you, but in my experience that's always been a rather high upper bound, much more than I would actually be comfortable borrowing. The biggest issue really is, How important is it to you to have a nice house? If your life-long dream is to have a big, luxurious, expensive house, then maybe it's worth it to you to pour every spare penny you have into the mortgage. Other people might prefer to spend less on their house so that they have spare cash for a nice car, concert tickets, video games, cocaine, whatever. Bear in mind that if you get a mortgage that you can just barely afford, what do you do if something goes wrong and you can't afford it any more? What if you lose your job and have to take a lower-paying job? What if some disaster strikes and you have some other huge expense? Etc. On the flip side, the burden of a mortgage usually goes down over time. Most people find that their incomes go up over time, between inflation and growing experience. But the amount of a mortgage is fixed, or if it varies it varies with interest rates, probably bouncing up and down rather than going steadily up like inflation. So it's likely -- not at all certain, but likely -- that if you can just barely afford the payment now, that in 5 or 10 years it won't be as big a burden. |
What are the tax implications of exercising options early? | The difference is whether your options qualify as incentive stock options (ISOs), or whether they are non-qualifying options. If your options meet all of the criteria for being ISOs (see here), then (a) you are not taxed when you exercise the options. You treat the sale of the underlying stock as a long term capital gain, with the basis being the exercise price (S). There is something about the alternative minimum tax (AMT) as they pertain to these kinds of options. Calculating your AMT basically means that your ISOs are treated as non-qualifying options. So if your exercise bumps you into AMT territory, too bad, so sad. If you exercise earlier, you do get a clock ticking, as you put it, because one of the caveats of having your options qualify as ISOs is that you hold the underlying stock (a) at least two years after you were granted the options and (b) at least one year after you exercise the options. |
Why would this kind of penny stock increase so much in value? | Disregarding the particular example and focusing on the actual questions: YES, definitely, the whole concept of "pump and dump scheme" refers to the many cases when this was intentionally done; Everything has a limit, but the limit can be quite high, especially if starting from a low value (a penny stock) and if the stock is low volume, then inflating ten or hundred times over a real value may be possible; and any value might be infinitely times overvalued for a company that turns out to have a value of zero. Yes, unless it's done very blatantly, you should expect that the "inflator" has much more experience in hiding the signs of inflation than the skill of average investor to notice them. |
Why does Bank of America sometimes refer to itself as Banc of America on some documents? | From https://secure.wikimedia.org/wikipedia/en/wiki/Banc: Banq (also Banc, banc-corp, bancorp, or bancorporation) is an intentionally erroneous spelling of the word bank, but pronounced the same way. It has been adopted by companies which are not banks but wish to appear as such, and satisfy legal restrictions on the usage of the word bank. ... For instance, if the original company is known as Bank of America, then the new investment banking entity may be known as Banc of America Securities LLC. If the original company is known as Bank of Manhattan, then its insurance business might be known as "Banc of Manhattan Insurance" and its holding company might be called "Manhattan Bancorp". This practice originates from legal necessity: Under the laws of most states, a corporation may only use the word "bank" in its name if it has obtained a banking charter under state or federal banking laws. So, "Banc of America" is the subsidiary of BoA that doesn't have appropriate licenses to be called "bank". Wonders of complex regulation :) |
Should I sell a 2nd home, or rent it out? | Another factor is, how far is your prospective rental property from where you live? vs. how comprehensive is your property management service? If you need to visit much or would simply like to keep an eye on it, a couple of hours drive could be a deal breaker. One more thought; would you be able to upgrade the property at a profit when it comes time to sell? If you have a realtor you trust he or she should be able to tell you if, say a $20k kitchen reno would reliably return more than $20k. It has a lot to do with the property's relative price position in the neighborhood. A cheaper home has more "upsell" room. |
Mortgage sold to yet another servicer. What are my options? | Are my mortgage terms locked in? Who oversees this? Yes your terms like rate, balance, penalties, due dates, are all covered in the mortgage documents. Those will not change. If the mortgage is an adjustable or has a balloon payment those terms will be followed by the new company. That being said, mistakes can be made. Double check everything. I had a transfer get messed up once, and all the terms were wrong. It took a few months but everything was worked out. In fact because they first tried to stonewall me I was able to negotiate some additional concessions out of them. Running your own escrow account is one thing you always want to do. That makes sure that the taxes and insurance are always paid by you, even if the servicing company has a glitch. Generally you have to have enough equity to not have PMI in order to get them to agree to the self-escrow option. If you have a problem with the servicing company then contact the Consumer Finance Protection Bureau a part of the US Government. They have only been a round a few years, thus I have no experience with them. Have an issue with a financial product or service? We'll forward your complaint to the company and work to get a response from them. The last few times I applied for a mortgage or refinanced a mortgage the lender had to reveal as part of the application stage the percentage of recent mortgages they still own/service. Check those numbers the next time you apply. |
Why doesn’t every company and individual use tax-havens to pay less taxes? | There are tax free bonds in the United States. They are for things like public housing and other urban projects. They are tax free for everyone but only rich people buy them. Why? The issue is that the tax free nature of the bond is included in its yield. So rather than yielding say a 5% return, they figure that the owner is getting 20% off due to not paying taxes. As a result, they only give a 4% return but are as risky as a 5% return investment. Net result, only rich people invest in tax free bonds. "Rich" is defined here to mean people paying a 20% tax on long term investment returns. Or take the State and Local Tax (SALT) deduction, which has been in the news recently. Again, it is technically open to everyone. But there is also a standard deduction that is open to everyone. For the typical family, state and local taxes might be 5% of income. So for a family making $100k a year, that's $5k. The same family can take a $13k or so standard deduction instead of itemizing. So why would they take the smaller deduction? As a practical matter, two groups take the SALT deduction. People rich enough to pay more than $13k in state and local taxes and people who also take the mortgage interest deduction. So it helps a lot of people who are rich quite a bit. And it helps a few middle class people some. But if you are lower middle class with a $30k mortgage on a tiny house and paying 4% interest, then that's only $1200 a year. Add in property taxes of $3000 and SALT of $2.8k and that's only $7k. Even if the person gives $3k to charity, the $13k deduction is a lot better and requires less paperwork. Contrast that with someone who has $500k mortgage at 3.6% interest. That's $18k in interest alone. Add in a SALT of $7k and property taxes of $50k, and there's $75k of itemized deductions, much better than $13k. Now a $7k donation to charity is entirely deductible. And even after the mortgage interest deduction goes away, the other $64k remains. |
My friend wants to put my name down for a house he's buying. What risks would I be taking? | The risk is that you will owe the bank the principal amount of the mortgage. Based on your question it would be foolish for you to sign. Anyone who describes a mortgage as "something" obviously has no idea what they are doing and should never sign a mortgage which is a promise to pay hundreds of thousands of dollars. You would be doubly foolish to sign the mortgage because if you are guaranteeing the loan, you own nothing. So, for example, if your friend sold the house, pocketed the money, then left the country you would owe the full amount of the mortgage. Since you are not on the deed there is no way you can prevent this from happening. He does not need your approval to sell the house. So, essentially what your "friend" is doing is asking you to assume all the risk of the mortgage with none of the benefits, since he gets the house, not you. If a "girlfriend" is involved, that just increases the risk you will have a problem. Also, although it is not clear, it appears this is a second house for him. If so, that disqualifies him from any mortgage assistance or relief, so the risk is even higher. Basically, it would foolish in the extreme to co-sign the loan. |
Job Offer - Explain Stock Options [US] | There are a few other items that you should be aware of when getting options: The strike price is usually determined by an independent valuation of the common shares (called a 409a valuation). This should give you a sense on what the options are worth. Obviously you are hoping that the value becomes many multiple of that. There are two kinds in the US: Non-quals (NQO) and Incentive Stock Options (ISOs). The big difference is that when you exercise Non-quals, you have to pay the tax on the difference between the "fair" market value on the shares and what you paid for them (the strike price). This is important because if the company is private, you likely can not sell any shares until it is public. With ISOs, you don't pay any tax (except AMT tax) on the gain until you actually sell the shares. You should know what kind your getting. Some plans allow for early exercise, essentially allowing you to buy the shares early (and given back if you leave before they vest) which helps you establish capital gains treatment earlier as well as avoid AMT if you have ISOs. This is really complicated direction and you would want to talk to a tax professional. And always a good idea to know how many total shares outstanding in the Company. Very few people ask this question but it is helpful for you to understand the overall value of the options. |
What is the process of getting your first share? | nan |
How do insurance funds work? | What is a 403b? A 403(b) plan is a tax-advantaged retirement savings plan available for public education organizations, some non-profit employers (only US Tax Code 501(c)(3) organizations), cooperative hospital service organizations and self-employed ministers in the United States. Kind of a rare thing. A bit more here: http://www.sec.gov/investor/pubs/teacheroptions.htm under investment options Equity Indexed Annuities are a special type of contract between you and an insurance company. During the accumulation period — when you make either a lump sum payment or a series of payments — the insurance company credits you with a return that is based on changes in an equity index, such as the S&P 500 Composite Stock Price Index. The insurance company typically guarantees a minimum return. Guaranteed minimum return rates vary. After the accumulation period, the insurance company will make periodic payments to you under the terms of your contract, unless you choose to receive your contract value in a lump sum. For more information, please see our "Fast Answer" on Equity Indexed Annuities, and read FINRA's investor alert entitled Equity-Indexed Annuitiies — A Complex Choice. So perhaps "equity indexed annuities" is the more correct thing to search for and not "insurance funds"? |
Gigantic point amount on rewards card - what are potential consequences? | Of course, as a 'good' person (or maybe a 'stupid' person), I should call them, (wait 30 minutes in the queue), and then try to explain the issue to the service desk. I actually did that, and the guy thought I am nuts to even call, and told me to 'just use them they are yours now'. I don't feel like calling again and again until I get someone that believes it, just to return them their points. Calling generally does not solve this problem. You would need to write a letter using certified mail and send some reminders. Hopefully they should notice it, if not you at least have evidence that you have communicated. I could just toss the card and forget about it. However, I had quite some points on it that really belong to me, so that feels like I pay for their fault. There is no need. You can continue to use the card as usual. Use them and play stupid. This is not a good idea. They are clearly not yours. Somewhere in Terms and Conditions you will find some fine print about notifying Bank/Financial Institution about the errors. Best course, after intimating informing them via letters, keep using your card as normal and use your points as normal. You would roughly know your points balance. |
Online Foreign Exchange Brokerages: Which ones are good & reputable for smaller trades? | I used XE trade once several years ago. I found them quite easy to use after the slightly fiddly account setup process (needed for security/anti-money laundering I think). I trusted them because I'd been using their online FX rates for a long time. I can't really comment on the specific questions you ask though as this was a long time ago and I haven't needed one since. |
Should I charge my children interest when they borrow money? | Tell them you will not loan them any more money until their existing debts are paid off. This is closer to how the real world works and it won't come across as vengeful or like your changing your initial "contract". If they protest, lovingly tell them that your money is not their money, and that an interest free loan from their father is a privilege, not a right. As far as charging interest on your loans, go for it! Charge them 5% or something small. Just don't do it on the existing loans or that will come across as changing your initial "contract" again, and perhaps once they've proven themselves to be reliable borrowers they can once again earn the privilege to have an interest free loan. The book "The Millionaire Next Door" has really good thoughts on this in its section on Economic Outpatient Care. |
If gold's price implodes then what goes up? | It seems that you're interested in an asset which you can hold that would go up when the gold price went down. It seems like a good place to start would be an index fund, which invests in the general stock market. When the gold market falls, this would mainly affect gold mining companies. These do not make up a sizable portion of any index fund, which is invested broadly in the market. Unfortunately, in order to act on this, you would also have to believe that the stock market was a good investment. To test this theory, I looked at an ETF index fund which tracks the S&P 500, and compared it to an ETF which invests in gold. I found that the daily price movements of the stock market were positively correlated with the price of gold. This result was statistically significant. The weekly price movements of the stock market were also correlated with the price of gold. This result was also statistically significant. When the holding period was stretched to one month, there was still a positive relationship between the stock market's price moves and the price of gold. This result was not statistically significant. When the holding period was stretched to one year, there was a negative relationship between the price changes in the stock market and the price of gold. This result was not statistically significant, either. |
How to check the paypal's current exchange rate? | I cannot speak for Paypal specifically and I doubt anyone who doesn't actually work on their internal automated payment systems could. However, I can speak from experiencing in working on automated forex transaction systems and tell you what many institutions do and it is often NOT based on live rates. There is no law stating an institution must honor a specific market exchange rate. Institutions can determine their own rates how and when they want to. However, there is some useful information on their website: https://www.paypal.com/an/cgi-bin/webscr?cmd=p/sell/mc/mc_convert-outside "The most readily available information on currency exchange rates is based on interbank exchange rates. Interbank exchange rates are established in the course of currency trading among a global network of over 1,000 banks, and are not available through consumer or retail channels." This leads me to believe they pull exchange rates from either Oanda or XE periodically and then use these rates throughout the day to conduct business. Paypal does not disclose who they use to determine rates. And it's highly doubtful they do this for every transaction (using live rates). Even if they did, there would be no way for you to check and be certain of a particular exchange rate as paypal states: " Consumers may use these rates as a reference, but should not expect to use interbank rates in transactions that involve currency conversion. To obtain actual retail rates, contact your local financial institution or currency exchange, or check the rate displayed in your PayPal transaction." This is partly because rates can change by the second just like stock prices or anything else which is susceptible to the open market's variables of supply, demand news events etc. So, even if you check the rates on Oanda (which you can do here: http://www.oanda.com/currency/converter/) you are not going to get a 100% accurate representation of what you would get by doing an exchange immediately afterwards from Paypal or any other financial institution. However, if you want to estimate, using Oanda's currency converter will likely get you close in most scenarios. That is assuming Paypal doesn't charge a premium for the exchange, which they may. That is also assuming they use live rates, it's also possible they only update their rates based on market rates periodically and not for every transaction. You may want to test this by checking the exchange rate on your transaction and comparing that to the Oanda rates at the same time. |
Really have to use business credit card for personal expenses | I really have to use the business card for personal expenses, please assume that in your answer. This is very hard to believe. You must do that? Why not just have the company pay you $1600 each month? Then you can use that money for whatever you want. Why can't you do this? (I cannot think of a legitimate reason...) How to integrate the personal expenses in company? Anyway, to answer your question, what I've done when I accidentally used my corporate card for a personal expense is to code the expense as a payment to me similar to if a check had been written to me. If you aren't ever paying yourself, then you should just pay the company back the $1600 every month. As a side note, I highly recommend you don't do this. By doing this on a regular basis you are opening the door for piercing the corporate veil. This means that the financial protections provided by the LLC could potentially be stripped away since personal and corporate funds are being mixed. The unfortunate end result is that personal assets could end up being fair game too in a judgement against the company. Even if you aren't an owner, your relative could be considered to be "using business money for personal expenses", namely, letting a relative spend business funds for personal use. How to show more expenses and lessen the profit? If you're referring to the personal expenses, then you absolutely do not want to do this! That's illegal and worthy of stiff penalties, which possibly include jail time for tax evasion. Better to just have the company pay you and then the entire payment is deductible and reduces the profit of the company. |
Is gold really an investment or just a hedge against inflation? | Over on Quantitative Finance Stack Exchange, I asked and answered a more technical and broader version of this question, Should the average investor hold commodities as part of a broadly diversified portfolio? In short, I believe the answer to your question is that gold is neither an investment nor a hedge against inflation. Although many studies claim that commodities (such as gold) do offer some diversification benefit, the most credible academic study I have seen to date, Should Investors Include Commodities in Their Portfolios After All? New Evidence, shows that a mean-variance investor would not want to allocate any of their portfolio to commodities (this would include gold, presumably). Nevertheless, many asset managers, such as PIMCO, offer funds that are marketed as "real return" or "inflation-managed" and include commodities (including gold) in their portfolios. PIMCO has also commissioned some research, Strategic Asset Allocation and Commodities, claiming that holding some commodities offers both diversification and inflation hedging benefits. |
What would the broker do about this naked call option? | Yes, it can buy back the call, but much before stock hits the $30 mark. Let us say you got 1$ from selling the call. So the total money in your account is 4$ + 1 $ = 5 $. When stock hits 10$ (your strike), the maintenance margin is 5$. As soon as stock goes past 10, your maintenance margin is violated. So broker will buy back your call (at least IB does that, it does not wait for a margin call). Now if the stock gapped up from 8 to 30,then yes, broker will buy it back at 30, so your account will have a negative balance. Assume the call cost 20$ when stock hit 30, your balance is: 5 - (30-10) = -15. Depending on broker, I suppose they will ask you to bring your account balance back up to positive. If they don't do that, they risk going out of business. |
How risky are penny stocks? | Penny stocks are for the real gambler. Don't even think about holding them long. Buy a lot of shares and profit from a penny uptick. Rake a hundred dollars here and there a few times a week if you can. Don't fall in love with it. Trade for profit. Don't bet the farm. Only play what you can afford to lose at the Great Casino in the sky (the stock market). Sure, you will pick some losers, but you are not married to it, you don't have to keep it. A couple of good winners will erase some loses. Having lost thousands on the Blue Chips, and feeling I have wasted time waiting for an annual $100 gain on an ETF or mutual if I get lucky, has made me more risk tolerant for these "BAD" investments. The "GOOD" investments should do so well. |
Pay off car loan entirely or leave $1 until the end of the loan period? | In some states there are significantly higher automobile insurance costs and higher coverage requirements for vehicles that have a lien on them. I suspect this is not your scenario, or you probably would not be considering holding the loan open. But it is something to consider. If you live in a state where insurance coverage and costs depend on a clear title, I would certainly recommend closing the loan as soon as possible. |
Should you co-sign a personal loan for a friend/family member? Why/why not? | Yes, there are times when co-signing is the right choice. One is when you know more about the person than the loan issuer does. Consider a young person who has just started working in a volatile field, the kind of job where you can be told on Friday that you only get one shift next week but things might pick up the week after, and who makes maybe $12 an hour in that job. You've done the math and with 40 hour weeks they can easily afford the loan. Furthermore, you know this person well and you know that after a few weeks of not enough shifts, they've got the gumption to go out and find a second job or a different job that will give them 40 hours or more a week. And you know that they have some savings they could use to ensure that no payments will be missed even on low-wage weeks. You can cosign for this person, say for a car loan to get them a car they can drive to that job, knowing that they aren't going to walk away and just stop making the payments. The loan issuer doesn't know any of that. Or consider a young person with poor credit but good income who has recently decided to get smart about money, has written out a budget and a plan to rehabilitate their credit, and who you know will work passionately to make every payment and get the credit score up to a place where they can buy a house or whatever their goal is. Again, you can cosign for this person to make that happen, because you know something the lender doesn't. Or consider a middle aged person who's had some very hard knocks: laid off in a plant closing perhaps, marriage failure, lost all their house equity when the market collapsed, that sort of thing. They have a chance to start over again somewhere else and you have a chance to help. Again you know this isn't someone who is going to mismanage their money and walk away from the payments and leave you holding the bag. If you would give the person the money anyway (say, a car for your newly graduated child) then cosigning instead gives them more of a sense of accomplishment, since they paid for it, and gives them a great credit rating too. If you would not give the person the entire loan amount, but would make their payments for many months or even a year (say, your brother's mortgage for the house where he lives with a sick wife and 3 small children), then cosigning is only making official what you would have done anyway. Arrange with the borrower that if they can't make their payments any more, you will backstop them AND the item (car, house, whatever) is going up for sale to cover your losses. If you don't think you could enforce that just from the strength of the relationship, reconsider co-signing. Then sign what you need to sign and step away from it. It's their loan, not yours. You want them to pay it and to manage it and to leave you out of it until it's all paid off and they thank you for your help. If things go south, you will have to pay, and it may take a while for you to sell the item or otherwise stop the paying, so you do need to be very confident that the borrower is going to make every single payment on time. My point is just that you can have that confidence, based on personal knowledge of character, employment situation, savings and other resources, in a way that a lender really cannot. |
File Taxes: US Expat, now married to foreign national | Per the IRS instructions on filing as Head of Household as a Citizen Living Abroad, if you choose to file only your own taxes, and you qualify for Head of Household without them, the IRS does not consider you married: If you are a U.S. citizen married to a nonresident alien you may qualify to use the head of household tax rates. You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien. However, your spouse is not a qualifying person for head of household purposes. You must have another qualifying person and meet the other tests to be eligible to file as a head of household. As such, you could file as Married Filing Separately (if you have no children) or Head of Household (if you have one or more children, a parent, etc. for whom you paid more than half of their upkeep - see the document for more information). You also may choose to file as Married Filing Jointly, if it benefits you to do so (it may, if she earns much less than you). See the IRS document Nonresident Spouse Treated As Resident for more information. If you choose to treat her as a resident, then you must declare her worldwide income. In some circumstances this will be beneficial for you, if you earn substantially more than her and it lowers your tax rate overall to do so. Married Filing Separately severely limits your ability to take some deductions and credits, so it's well worth seeing which is better. |
How can I make $250,000.00 from trading/investing/business within 5 years? | The answer to your question is Forex trading. You can get to 250K quicker than any other "investment" scheme. You'll just need to start with at least 500K. |
Distribution rules LLC vs. S-Corp | It's actually the other way around. Distributions in an LLC are usually based on each member's equity share, although the operating agreement can specify how often such distributions are made. Shareholders in a corporation can receive dividends, but those are determined by the corporation's board and can vary depending on the class of stock each shareholder owns. Preferred-class shareholders, who may hold a smaller overall fraction of the company's outstanding shares than the common stock shareholders, may receive disproportionately larger dividends per share than common stock shareholders, which is one of the (many) reasons that preferred stock is a better choice when it is available. Take, for instance, what Berkshire Class "A" shareholders receive in dividends per year compared to Class "B" shareholders. Here's a good link from LegalZoom that can explain what you're asking about: Explanation of LLC distributions I hope this helps. Good luck! |
Offer Price for my stock not shown on quote and a subsequent sale higher than my offer | There are a few things you are missing here. These appear to be penny stocks or subpenny stocks. Buying these are easy.... selling is a total different ball game. Buying commissions are low and selling commissions are outrageous. Another thing you are missing in this order is... some trading platform may assume the "AON" sale. That is All Or None. There was an offer of 10k shares @ .63. The buyer only wanted 10k what was the broker to do with the other 20k? Did you inform the broker that partial sales where acceptable? You may want to contact your broker and explain this to them. The ALL OR NONE order has made plenty of investor a little unhappy, which seems to be your new learning experience for the day. Sorry, school of hard knocks is not always fun. |
I cosigned for a friend who is not paying the payment | The point of co-signing for a friend is that they're your friend. You signed for them in the belief that your friendship would ensure they didn't burn you. If your friend has hung you out to dry, basically they aren't your friend any more. Before you lawyer up, how's about talking to your friend as a friend? Sure he may have moved away from the area, but Facebook is still a thing, right? It's possible he doesn't even realise you're taking the fall for him. And presumably you have mutual friends too. If he's blanking you then he does know you're taking the fall and doesn't care. So call/message them too and let them know the situation. Chances are he doesn't want all his other friends cutting him off because they can see he'd treat them the same way he's treating you. And chances are they'll give you his number and new address, because they don't want to be in the middle. If this fails, look at the loan. If it's a loan secured against something of his (e.g. a car), let it go. The bank will repossess it, and that's job done. Of course it will look bad on your credit for a while, but you're basically stuck with that. |
Does a company's stock price give any indication to or affect their revenue? | No. Revenue is the company's gross income. The stock price has no contribution to the company's income. The stock price may be affected when the company's income deviates from what it was expected to be. |
I own a mutual fund that owns voting shares, who gets the vote? | You will not get a vote on any issues of the underlying stock. The mutual fund owner/manager will do the voting. In 2004, the Securities and Exchange Commission (SEC) required that fund companies disclose proxy votes, voting guidelines and conflicts of interest in the voting process. All funds must make these disclosures to the SEC through an N-PX filing, which must either be available to shareholders on the fund company's websites or upon request by telephone. You can also find your fund's N-PX filing on the SEC website. -- http://www.investopedia.com/articles/mutualfund/08/acting-in-interest.asp |
What is market capitalization? [duplicate] | Market capitalization is one way to represent the value of the company. So if a company has 10 million shares, which are each worth $100, then the company's market capitalization is 1 billion. Large cap companies tend to be larger and more stable. Small cap companies are smaller, which indicates higher volatility. So if you want more aggressive investments then you may want to invest in small cap companies while if you lean on the side of caution then big cap companies may be your friend. |
What is the purpose of endorsing a check? | Paper trail of who did the deposit. Less significant for a personal account, but a bigger deal for accounts that are used by multiple people (e.g. a corporate checking account). |
What do I need to start trading in the NSE (National Stock Exchange)? | To start trading at a minimum you need 3 things; Bank Account: This again is not must, but most preferred to transact. Quite a few broker would insist on this. Demat Account: This is must as all shares on NSE are held electronically. The custodians are CSDL or NSDL both Government entities. These don't offer services directly to customer, but via other financial institutions like Banks and Large Brokers. Broker Account: This is required to buy or sell securities. If you are only buying in IPO, this is not required as one can directly participate in IPO and Broker is not involved. However if you want to buy and sell on NSE you would need a broker account. Quite a few financial institutes offer all 3 services or 2 services [Demat/Broker]. The fee structure and online service etc are differentiators. You can take a look at options and decide the best one to use. |
Smart to buy a house in college? | NORMALLY, you don't want to buy in a bad neighborhood. The one exception is "gentrification," that is middle class people are moving in because of a good location (which you seem to have). The other important thing to do is to cover your mortgage. Four "guys" at $500 a month will do for an $1800 mortgage. The nice thing is that you are your own tenant for two years and can watch the place. The downside of the neighborhood may be that you can't rent the place to four "girls" or two girls and two guys even after you leave; it will always have to be "guys." I'd advise most people to pass. With your financial standing and entrepreneurial background, you might just be able to take this risk, and learn from it for your future dealings if it doesn't pan out. (Donald Trump "cut his teeth" on a slum complex in Cincinnati.) Hear what I (and others) have to say, then do what "feels right," based on your best judgment, of which you probably have plenty. |
Looking at Options Liquidity: what makes some stocks so attractive for options traders? | Option liquidity and underlying liquidity tend to go hand in hand. According to regulation, what kinds of issues can have options even trading are restricted by volume and cost due to registration with the authorities. Studies have shown that the introduction of option trading causes a spike in underlying trading. Market makers and the like can provide more option liquidity if there is more underlying and option liquidity, a reflexive relationship. The cost to provide liquidity is directly related to the cost for liquidity providers to hedge, as evidenced by the bid ask spread. Liquidity providers in option markets prefer to hedge mostly with other options, hedging residual greeks with other assets such as the underlying, volatility, time, interest rates, etc because trading costs are lower since the two offsetting options hedge most of each other out, requiring less trading in the other assets. |
Why is RSU tax basis based on remaining shares after shares are witheld? | Here is how it should look: 100 shares of restricted stock (RSU) vest. 25 shares sold to pay for taxes. W2 (and probably paycheck) shows your income going up by 100 shares worth and your taxes withheld going up by 25 shares worth. Now you own 75 shares with after-tax money. If you stop here, there would be no stock sale and no tax issues. You'd have just earned W2 income and withheld taxes through your W2 job. Now, when you sell those 75 shares whether it is the same day or years later, the basis for those 75 shares is adjusted by the amount that went in to your W2. So if they were bought for $20, your adjusted basis would be 75*$20. |
How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? | This is fine, just have a plan before you go into it. Look up a co-ownership agreement contract off LegalZoom, they are like $15, or get a lawyer if you want. Decide if you want to be "Joint tenants" or "Tenants in common". You probably want to be joint tenants so that if one of you dies the property goes to the other person. Go through the agreement, make any changes you want, and then both sign it. These documents outline what happens if someone dies, or if you break up, or if you are allowed to sell your ownership, and anything else. Keep a record of who has paid what % of equity towards the house. Also look into tax laws, if the mortgage or house is only truly in 1 person's name they may get a tax break that the other person will not get. The co-ownership agreement is essentially the same agreement that happens when you're married, the only difference is that it happens automatically and implicitly when you're married. It's interesting that some people are saying this is a horrible idea when it's practically the same as the agreement you'd have if you were married. Whether you're single or married, if you own a house with another person and you break up, it's going to be a bit complicated. Get a contract in place beforehand so that things go as smoothly as possible. If you are both rational adults you shouldn't have any problems. |
Is it possible to influence a company's actions by buying stock? | You can execute block trades on the options market and get exercised for shares to create a very large position in Energy Transfer Partners LP without moving the stock market. You can then place limit sell orders, after selling directly into the market and keep an overhang of low priced shares (the technical analysis traders won't know what you specifically are doing, and will call this 'resistance'). If you hit nice even numbers (multiples of 5, multiples of 10) with your sell orders, you can exacerbate selling as many market participants will have their own stop loss orders at those numbers, causing other people to sell at lower and lower prices automatically, and simultaneously keep your massive ask in effect. If your position is bigger than the demand then you can keep a stock lower. The secondary market doesn't inherently affect a company in any way. But many companies have borrowed against the price of their shares, and if you get the share price low enough they can get suddenly margin called and be unable to service their existing debt. You will also lose a lot of money doing this, so you can also buy puts along the way or attempt to execute a collar to lower your own losses. The collar strategy is nice because it is unlikely that other traders and analysts will notice what you are doing, since there are calls, puts and share orders involved in creating it. One person may notice the block trade for the calls initially, but nobody will notice it is part of a larger strategy with multiple legs. With the share position, you may also be able to vote on some things, but that solely depends on the conditions of the shares. |
What can I take from learning that a company's directors are buying or selling shares? | It is not clear when you mean "company's directors" are they also majority owners. There are several reasons for Buy; Similarly there are enough reasons for sell; Quite often the exact reasons for Buy or Sell are not known and hence blindly following that strategy is not useful. It can be one of the inputs to make a decision. |
Where Can The Fully Diluted Outstanding Shares Of A Company Be Found? | You can calculate the fully diluted shares by comparing EPS vs diluted (adjusted) EPS as reported in 10K. I don't believe they report the number directly, but it is a trivial math exercise to reach it. The do report outstanding common stock (basis for EPS). |
Why doesn't Japan just divide the Yen by 100? | So their programmers don't have to deal with floating point arithmetic. This is why they're so far ahead in technology! |
Why would you ever turn down a raise in salary? | It would make sense to refuse a raise when it pushes your effective marginal 'tax' (including reduced benefits) above 100%. The working poor (family of 4, 20K-40K in the US) often face marginal rates above 100% when you consider the phase out of various government benefits (EITC, insurance, housing,etc.) You can see the research here and here. |
How much should a new graduate with new job put towards a car? | You are currently $30k in debt. I realize it is tempting to purchase a new car with your new job, but increasing your debt right now is heading in the wrong direction. Adding a new monthly payment into your budget would be a mistake, in my opinion. Here is what I would suggest. Since you have $7k in the bank, spend up to $6k on a nice used car. This will keep $1k in the bank for emergencies, and give you transportation without adding debt and a monthly payment. Then you can focus on knocking out the student loans. Won't it be nice when those student loans are gone? By not going further into debt, you will be much closer to that day. New cars are a luxury that you aren't in a position to splurge on yet. |
What laws/regulations are there regardings gifts in the form of large sums of money? | This forum is not intended to be a discussion group, but I would like to add a different perspective, especially for @MrChrister, on @littleadv's rhetorical question "... estates are after-tax money, i.e.: income tax has been paid on them, yet the government taxes them again. Why?" For the cash in an estate, yes, that is after-tax money, but consider other assets such as stocks and real estate. Suppose a rich man bought stock in a small computer start-up company at $10 a share about 35 years ago, and that stock is now worth $500 a share. The man dies and his will bequeaths the shares to his son. According to US tax law, the son's basis in the shares is $500 per share, that is, if the son sells the shares, his capital gains are computed as if he had purchased the shares for $500 each. The son pays no taxes on the inheritance he receives. The deceased father's last income tax return (filed by the executor of the father's will) does not list the $490/share gain as a capital gain since the father did not sell the stock (the gain is what is called an unrealized gain), and so there is no income tax due from the father on the $490/share. Now, if there is no estate tax whatsoever, the father's estate tax return pays no tax on that gain of $490 per share either. Would this be considered an equitable system? Should the government not tax the gain at all? It is worth noting that it would be possible for a government to eliminate estate taxes entirely, but instead have tax laws that say that unrealized gains on the deceased's property would be taxed (as capital gains) on the deceased's final tax return. |
How does spot-futures arbitrage work in the gold market? | As proposed: Buy 100 oz of gold at $1240 spot = -$124,000 Sell 1 Aug 2014 Future for $1256 = $125,600 Profit $1,600 Alternative Risk-Free Investment: 1 year CD @ 1% would earn $1240 on $124,000 investment. Rate from ads on www.bankrate.com "Real" Profit All you are really being paid for this trade is the difference between the profit $1,600 and the opportunity for $1240 in risk free earnings. That's only $360 or around 0.3%/year. Pitfalls of trying to do this: Many retail futures brokers are set up for speculative traders and do not want to deal with customers selling contracts against delivery, or buying for delivery. If you are a trader you have to keep margin money on deposit. This can be a T-note at some brokerages, but currently T-notes pay almost 0%. If the price of gold rises and you are short a future in gold, then you need to deposit more margin money. If gold went back up to $1500/oz, that could be $24,400. If you need to borrow this money, the interest will eat into a very slim profit margin over the risk free rate. Since you can't deliver, the trades have to be reversed. Although futures trades have cheap commissions ~$5/trade, the bid/ask spread, even at 1 grid, is not so minimal. Also there is often noisy jitter in the price. The spot market in physical gold may have a higher bid/ask spread. You might be able to eliminate some of these issues by trading as a hedger or for delivery. Good luck finding a broker to let you do this... but the issue here for gold is that you'd need to trade in depository receipts for gold that is acceptable for delivery, instead of trading physical gold. To deliver physical gold it would likely have to be tested and certified, which costs money. By the time you've researched this, you'll either discover some more costs associated with it or could have spent your time making more money elsewhere. |
Ways to save for child's college education where one need not commit to set contributions? [duplicate] | Since this post was migrated from Parenting, my reply was in the context where it appeared to be misrepresenting facts to make a point. I've edited it to be more concise to my main point. In my opinion, the best way to save for your childs future is to get rid of as much of your own debt as possible. Starting today. For the average American, a car is 6-10%. Most people have at least a couple credit cards, ranging from 10-25% (no crap). College loans can be all over the map (5-15%) as can be signature (8-15%) or secured bank loans (4-8%). Try to stop living within your credit and live within your means. Yeah it will suck to not go to movies or shop for cute things at Kohl's, but only today. First, incur no more debt. Then, the easiest way I found to pay things off is to use your tax returns and reduce your cable service (both potentially $Ks per year) to pay off a big debt like a car or student loan. You just gave yourself an immediate raise of whatever your payment is. If you think long term (we're talking about long-term savings for a childs college) there are things you can do to pay off debt and save money without having to take up a 2nd job... but you have to think in terms of years, not months. Is this kind of thing pie in the sky? Yes and no, but it takes a plan and diligence. For example, we have no TV service (internet only service redirected an additional $100/mo to the wifes lone credit card) and we used '12 taxes to pay off the last 4k on the car. We did the same thing on our van last year. It takes willpower to not cheat, but that's only really necessary for the first year-ish... well before that point you'll be used to the Atkins Diet on your wallet and will have no desire to cheat. It doesn't really hurt your quality of life (do you really NEED 5 HBO channels?) and it sets everyone up for success down the line. The moral of the story is that by paying down your debt today, you're taking steps to reduce long haul expenditures. A stable household economy is a tremendous foundation for raising children and can set you up to be more able to deal with the costs of higher ed. |
Why do 10 year-old luxury cars lose so much value? | They are overpriced to begin with. One reason is the fact that they are luxury cars. A second, related reason, is that they tend to push the technology envelope. All cars depreciate drastically the minute they are driven off the lot. This a good argument for buying a car that is 1-2 years old. The higher you are, the more you can fall. Repairs and maintenance are typically still expensive on these cars, due to relative rarity and the lack of necessary expertise. Here is where that advanced technology bites you. This is a reason that a 5 year old Civic may be worth more than than a 10 year old Benz. It may simply not be worth the hassle of maintaining/repairing a luxury car. This is especially true for an aging luxury car. There are some people that only buy domestic, precisely because of the maintenance costs. Also, a 10 year old car is still a 10 year old car, regardless of the make. (There are a few notable exceptions, like the NSX.) Hondas and Toyotas have a great reputation for reliability and (long-term) total cost of ownership. "Better" is a subjective issue, that depends on a variety of variables. A Civic is certainly not better in terms of technology, comfort, etc. But, it is likely better in terms of maintenance, reliability, etc. Which "better" you focus on, is up to you. |
Other than being able to borrow to invest, how is a margin trading account different from a cash account? | Two more esoteric differences, related to the same cause... When you have an outstanding debit balance in a margin the broker may lend out your securities to short sellers. (They may well be able to lend them out even if there's no debit balance -- check your account agreement and relevant regulations). You'll never know this (there's no indication in your account of it) unless you ask, and maybe not even then. If the securities pay out dividends while lent out, you don't get the dividends (directly). The dividends go to the person who bought them from the short-seller. The short-seller has to pay the dividend amount to his broker who pays them to your broker who pays them to you. If the dividends that were paid out by the security were qualified dividends (15% max rate) the qualified-ness goes to the person who bought the security from the short-seller. What you received weren't dividends at all, but a payment-in-lieu of dividends and qualified dividend treatment isn't available for them. Some (many? all?) brokers will pay you a gross-up payment to compensate you for the extra tax you had to pay due to your qualified dividends on that security not actually being qualified. A similar thing happens if there's a shareholder vote. If the stock was lent out on the record date to establish voting eligibility, the person eligible to vote is the person who bought them from the short-seller, not you. So if for some reason you really want/need to vote in a shareholder vote, call your broker and ask them to journal the shares in question over to the cash side of your account before the record date for determining voting eligibility. |
I'm in the U.S. What are vehicles to invest in international stocks? | Interactive Brokers offers many foreign markets (19 countries) for US based investors. You can trade all these local markets within one universal account which is very convenient in my view. IB offering |
How does the purchase of shares on the secondary market benefit the issuing company? | Stock trading (as opposed to IPO) doesn't directly benefit the company. But it affects their ability to raise additional funds; if they're valued higher, they don't need to sell as many shares to raise a given amount of money. And the stockholders are part owners of the company; their votes in annual corporate meetings and the like can add up to a substantial influence on the company's policies, so the company has an interest in keeping them (reasonably) happy. Dividends (distributing part of the company's profits to the stockholders) are one way of doing so. You're still investing in the company. The fact that you're buying someone else's share just means you're doing so indirectly, and they're dis-investing at the same time. |
Curious about Liverpool FC situation | AFAIK gillet and hicks received massive loans to fund their purchase and they have not been keeping up the repayments so now the creditors own the club. Its like getting a car on the never never, or a mortgage, i fyou don't keep up repayments the credit company take back the car or the bank repossess your house. I am sure it is a bit more complicated than that in this case, but tbh I would be surprised if it was fundamentally different. thats why RBS and the mill fininance are involved, they provided the loans, and are probably desperately keen to sell before going into administation, which would dock liverpool 9 points and reduce the value even more. |
Should I finance a new home theater at 0% even though I have the cash for it? | I would never consider such an offer. As has already been mentioned, there are likely to be hidden costs and the future is never certain. If you feel that you are missing out, then negociate a lower purchase price now. People often forget that something is only worth what someone is willing to pay for it. With any significant purchase it's always worth bargaining. |
Car financed at 24.90% — what can I do? | If you are a subprime borrower, that may not be an unreasonable rate given the risk they are accepting. In any case, it's what you agreed to. As others have said, you could/should have shopped elsewhere for the loan. In fact, you can still shop elsewhere for a loan to refinance that vehicle and thus lower the rate, unless the existing loan has equally obnoxious rules about that. |
Collecting Dividends while insulating volatility through options? | The strategy is right. As pointed out by you, will the " volatility cause the premium on the price of the options to be too high to make this worthwhile" ... this is subjective and depends on how the markets feels about the volatility and the trend ... ie if the market believes that the stock will go up, the option at 45 would cost quite a bit less. However if the market believes the stock would go down, the option at 45 would be quite high [and may not even be available]. There is no generic right or wrong, the strategy is right [with out without putting dividend into equation] it depends what options are available at what prices. |
Military Separation | Welcome to Money.SE, and thank you for your service. In general, buying a house is wise if (a) the overall cost of ownership is less than the ongoing cost to rent in the area, and (b) you plan to stay in that area for some time, usually 7+ years. The VA loan is a unique opportunity and I'd recommend you make the most of it. In my area, I've seen bank owned properties that had an "owner occupied" restriction. 3 family homes that were beautiful, and when the numbers were scrubbed, the owner would see enough rent on two units to pay the mortgage, taxes, and still have money for maintenance. Each situation is unique, but some "too good to be true" deals are still out there. |
Tips for insurance coverage for one-man-teams | While the OP disses the health insurance coverage offered through his wife's employer as a complete rip-off, one advantage of such coverage is that, if set up right (by the employer), the premiums can be paid for through pre-tax dollars instead of post-tax dollars. On the other hand, Health insurance premiums cannot be deducted on Schedule C by self-employed persons. So the self-employed person has to pay both the employer's share as well as the employee's share of Social Security and Medicare taxes on that money. Health insurance premiums can be deducted on Line 29 of Form 1040 but only for those months during which the Schedule C filer is neither covered nor eligible to be covered by a subsidized health insurance plan maintained by an employer of the self-employed person (whose self-employment might be a sideline) or the self-employed person's spouse. In other words, just having the plan coverage available through the wife's employment, even though one disdains taking it, is sufficient to make a Line 29 deduction impermissible. So, AGI is increased. Health insurance premiums can be deducted on Schedule A but only to the extent that they (together with other medical costs) exceed 10% of AGI. For many people in good health, this means no deduction there either. Thus, when comparing the premiums of health insurance policies, one should pay some attention to the tax issues too. Health insurance through a spouse's employment might not be that bad a deal after all. |
Fund or ETF that simulates the investment goals of an options “straddle” strategy? | Why bother with the ETF? Just trade the options -- at least you have the ability to know what you actually are doing. The "exotic" ETFs the let you "double long" or short indexes aren't options contracts -- they are just collections of unregulated swaps with no transparency. Most of the short/double long ETFs also only attempt to track the security over the course of one day -- you are supposed to trade them daily. Also, you have no guarantee that the ETFs will perform as desired -- even during the course of a single day. IMO, the simplicity of the ETF approach is deceiving. |
Day trading definition | If I buy 10 stocks on Monday and sell the same on Tuesday (different trading day) would I be considered a day trader? No. It is only counting if you buy something and then sell that same something during the same trading session. And that counter only lasts for 5 days, things that happened outside of that time period get removed from the counter. If the counter reaches a number (three to five, depending on the broker), then you are labelled as a pattern day trader, and will have your trading capabilities severely restricted unless you have an account size greater than $25,000 |
Can I make my savings keep in check with or beat inflation over a long time period via index funds? | For your base question, yes. (Barring some major collapse-of-civilization event, but in that case you're screwed anyway :-)) On the individual points: 1) Depends on whether you choose to invest in index-type funds (where profit is mainly expected from price appreciation), or more value-based investing. But either or a mix of the two (my own choice) should show returns above inflation, over the long term. 2) Yes, in the US anyway. You can invest a few hundred dollars at a time, and (with good companies like Vanguard & T. Rowe Price) there are no transaction fees, either for investing or for redeeming. 3) Long-term, it's crash-proof IF you have the self-discipline not to panic-sell at market lows. In my case, my total fund valuation dropped around 40% in '08. I didn't sell anything (and in fact tried to cut spending and invest more), and now I have nearly double what I had before the crash. Bottom line is that it has worked for me. After ~30 years of investing this way without being fanatic about it, I have enough that I could live moderately without working for the rest of my life. Not - and this is where I part company with MMM and most of the FIRE community - that I'd ever want to actually retire. But my modest financial independence gives me the freedom to work at things I like, rather than because I'm worrying about paying bills. |
Where to Park Proceeds from House Sale for 2-5 Years? | Individual municipal bonds (not a fund) that will come to term in 2017 from your state. This satisfies 1, 2, 4 and 5. It doesn't satisfy #2. These are not insured, and there can be details in each state about whether the municipal bonds are backed up by state general revenues in the event of a municipal bankruptcy; there are two general kinds, "general obligation" backed by the political will to raise taxes if needed; and "revenue bonds" backed by cash flow such as toll revenue, water utility bills and so forth. Municipal bankruptcies are rare but not impossible. http://www.bankrate.com/finance/investing/avoid-municipal-bonds-that-default-2.aspx |
Why is the stock market price for a share always higher than the earnings per share? | Imagine a stock where the share price equals the earnings per share. You pay say $100 for a share. In the next year, the company makes $100 per share. They can pay a $100 dividend, so now you have your money back, and you still own the share. Next year, they make $100 per share, pay a $100 dividend, so now you have your money back, plus $100 in your pocket, plus you own the share. Wow. What an incredible investment. |
Why does Warren Buffett say his fund performance, relatively, is likely to be better in a bear market than in a bull market? | To understand his comments about bear-market performance it's important to take them in context. (My research method was Crtl+F: bear; read around the highlights. This is not a complete survey of 60+ years of letters.) In his earlier letters, statements about bull market performance are always made in reference to Buffet's belief that many of BH's current holdings are in undervalued securities. Ex: To the extent possible, therefore, I am attempting to create my own work-outs by acquiring large positions in several undervalued securities. Such a policy should lead to the fulfillment of my earlier forecast – an above average performance in a bear market. It is on this basis that I hope to be judged (p 6; emphasis mine). Similar statements are made throughout the earlier letters, along with this interesting note: In a year when the general market had a substantial advance I would be well satisfied to match the advance of the Averages (p 6). So to your question of why BH fund performance is likely to be better in a bear market than in a bull market, I believe the implicit assertion is that undervalued securities are more resilient in a bear market (presumably because they don't have as far to fall, and are also less likely to be subject to a bubble). Buffet is also explicitly asserting that when facing a choice to either (a) position BH to weather a possible downturn or (b) position BH to enjoy a bullish stock that is outpacing the market, he would choose the former over the later. As to your assertion that he always says this, I can find no reference to bear market's in the letters past 1960. |
Do I still need to pay capital gains taxes when I profit from a stock in a foreign currency? | I'll break it down into steps. Total gain/ loss for the whole thing is 5 CAD. You only have to worry about these calculations if you keep some USD and convert it at your leisure. Or if you have a US dollar in your wallet from your last vacation. Don't forget to subtract commissions (converted to CAD of course). *Some people just use an average exchange rate for the whole year, which you can also get from the BoC. ^There's $200 of tax free gains allowed for pure currency transactions. This allows small gains to be ignored. |
Help: Being charged interest on a loan for which I received no statements telling me of this debt for the past 15 years. Surprise! | Investigate the statute of limitations in your area. 15 years sounds like in most places it is past the allowable time a debt collector can legally collect or report it on your credit report. The statute of limitations means you still owe the debt, but they collector can no longer use the court system to collect it from you. They can file a lawsuit, they will just lose. Please read up on how to handle yourself with a debt that is past the SoL, so that you don't accidentally reset the clock. What I don't know for sure is how that applies to a business, and I cannot remember ever hearing a difference between personal vs business debt, but it is best to consult a lawyer regarding it. References: |
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