Question stringlengths 14 166 | Answer stringlengths 3 17k |
|---|---|
Finance car with or with out a balloon payment | That interest rate (13%) is steep, and the balloon payment will have him paying more interest longer. Investing the difference is a risky proposition because past performance of an investment is no guarantee of future performance. Is taking that risk worth netting 2%? Not for me, but you must answer that last question for yourself. To your edit: How disruptive would losing the car and/or getting negative marks on your credit be? If you can quantify that in dollars then you have your answer. |
What are the common moving averages used in a “Golden Cross” stock evaluation? | Different moving averages work and not work for different indexes. I have seen simulations where during bull or bear markets the moving averages work differently. Here is an example: http://www.indexresult.com/MovingAverage/Exponential/200/SP500 |
I spend too much money. How can I get on the path to a frugal lifestyle? | Use software that calculates your net worth and track it over time. I track my personal finances in Mint, and I love checking my net worth every week. It's turned into a kind of competition with myself... It's like keeping track of how fast you run a 5k, or how many pounds of weight you've lost. It helps you determine if you are making progress, and if you, it's positive reinforcement that you are doing the right things. |
How should I pay off my private student loans that have a lot of restrictions? | You might try to refinance some of those loans. It sounds like you are serious about minimizing interest expense, if you think you will be able to pay those loans in full within five years you might also try a loan that is fixed for five years before becoming variable. If you do not think you can repay the loans in full before that time, you should probably stick with the fixed rates that you have. It may even be profitable to refinance those loans through another lender at the exact same fixed rate because it gets around their repayment tricks that effectively increase your interest on those two smaller loans. |
How can a person with really bad credit history rent decent housing? | I don't think you've mentioned which State you're in. Here in Ontario, a person who is financially incapable can have their financial responsibility and authority removed, and assigned to a trustee. The trustee might be a responsible next of kin (as her ex, you would appear unsuitable: that being a potential conflict of interest); otherwise, it can be the Public Guardian and Trustee. It that happens, then the trustee handles the money; and handles/makes any contracts on behalf of (in the name of) the incapable person. The incapable person might have income (e.g. spousal support payments) and money (e.g. bank accounts), which the trustee can document in order to demonstrate credit-worthiness (or at least solvency). For the time being, the kids see it as an adventure, but I suspect, it will get old very fast. I hope you have a counsellor to talk with about your personal relationships (I've had or tried several and at least one has been extraordinarily helpful). You're not actually expressing a worry about the children being abused or neglected. :/ Is your motive (for asking) that you want her to have a place, so that the children will like it (being there) better? As long as your kids see it as an adventure, perhaps you can be happy for them. Perhaps (I don't know: depending on the people) too it's a good (or at least a better) thing that they are visiting with friends and relatives; and, a better conversational topic with those people might be how they show your children a good time (instead of your ex's money). One possible way 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. Perhaps (I don't know) there is some way to do that, if you have your ex's cooperation and a lawyer (and perhaps a judge). You haven't said what portions of your payments are for Child support, versus Spousal support (nor, who has custody, etc). If a large part of the support is for the children, then perhaps the children can rent the place. (/wild idea) Note that, in Ontario, there are two trusteeship decisions to make: 1) financial; and 2) personal care, which includes housing and medical. Someone can retain their own 'self-care' authority even if they're judged financially incapable (or vice versa if there's a personal-care or medical decision which they cannot understand). The technical language is, "Mentally Incapable of Managing Property" This term applies to a person who is unable to understand information that is relevant to making a decision or is unable to appreciate the reasonably foreseeable consequences of a decision or lack of decision about his or her property. Processes for certifying an individual as being mentally incapable of managing property are prescribed in the SDA (Substitute Decisions Act), and in the Mental Health Act." The Mental Heath Act is for medical emergencies (only); but Ontario has a Substitute Decisions Act as well. An intent of the law is to protect vulnerable people. People may also acquire and/or name their own trustee and/or guardian voluntarily: via a power of attorney, a living will, etc. I don't know: how about offering the landlord a year's rent in advance, or in trust? I guess that 1) a court order can determine/override/guarantee the way in which the child support payments are directed 2) it's easier to get that order/agreement if you and your ex cooperate 3) there are housing specialists in your neighborhood: They can buy housing instead of renting it. Or be given (gifted) housing to live in. |
Can we compare peer-to-peer loans to savings accounts? | Peer to peer lending isn't FDIC insured. You can lose all your investment with peer to peer lending, whereas you will not lose your deposited money in a savings account, even if it doesn't grow very fast. |
How safe is a checking account? | If the checking account is in a FDIC insured bank or a NCUA insured Credit Union then you don't have to worry about what happens if the bank goes out of business. In the past the government has made sure that any disruption was minimal. The fraud issue can cause a bigger problem. If they get a hold of your debit card, they can drain your account. Yes the bank gives you fraud protection so that the most you can lose is $50 or $500; many even make your liability $0 if you report it in a timely manor. But there generally is a delay in getting the money put back in your account. One way to minimize the problem is to open a savings account,it also has the FDIC and NCUA coverage . The account may even earn a little interest. If you don't allow the bank to automatically provide an overdraft transfer from savings to checking account, then the most they can temporarily steal is your checking account balance. Getting a credit card can provide additional protection. It also limits your total losses if there is fraud. The bill is only paid once a month so if they steal the card or the number, they won't be able to drain the money in the bank account. The credit card, if used wisely can also start to build a positive credit file so that in a few years you can get a loan for a car or a place to live. Of course if they steal your entire wallet with both the credit and the debit card... |
Can PayPal transfer money automatically from my bank account if I link it in PayPal? | As the other answers stated: Yes PayPal will transfer money from your bankaccount automatically if your PayPal balance isn't sufficient. Let's add some proof to the story: (Note, I am in the EU, specifically the Netherlands, situation might be different in other parts of the world) If I login to PayPal and go to my wallet, I have a section that looks like this: If I click on it, I am presented with a screen with details about the connection. Note the "Direct debit instruction". If I click on the "view" link I am presented with the following text (emphasis mine): [snip some arbitrary personal details] This authorisation allows (A) PayPal to send instructions to your bank account and (B) your bank to debit your account in accordance with the instructions from PayPal. As part of your rights, you are entitled to a refund from your bank under the Terms and Conditions of your agreement with your bank. A refund must be claimed within 8 weeks starting from the date on which your account was debited. Your rights are explained in a statement that you can obtain from your bank. Below this text is a button to delete the authorization. |
Why buy insurance? | Insurance is bought for peace of mind and to divert disaster. Diverting disaster is a good/great thing. If your house burned down, if someone hit your car, or some other devastating event (think medical) happened that required a more allocation than you could afford the series of issues may snowball and cause you to lose a far greater amount of money than the initial incident. This could be in the form of losing work time, losing a job, having to buy transportation quickly paying a premium, having to incur high rate debt and so on. For the middle income and lower classes medical, house, and medical insurance certainly falls into these categories. Also why a lot of states have buyout options on auto insurance (some will let you drive without insurance by proving bonding up to 250K. Now the other insurance as I have alluded to is for peace of mind mainly. This is your laptop insurance, vacation insurance and so on. The premise of these insurances is that no matter what happens you can get back to "even" by paying just a little extra. However what other answers have failed to clarify is the idea of insurance. It is an agreement that you will pay a company money right now. And then if a certain set of events happen, you follow their guidelines, they are still in business, they still have the same protocols, and so on that you will get some benefit when something "disadvantageous" happens to you. We buy insurance because we think we can snap our fingers and life will be back to normal. For bigger things like medical, home, and auto there are more regulations but I could get 1000 comments on people getting screwed over by their insurance companies. For smaller things, almost all insurance is outsourced to a 3rd party not affiliated legally with a business. Therefore if the costs are too high they can simply go under, and if the costs are low they continue helping the consumer (that doesn't need help). So we buy insurance divert catastrophe or because we have fallen for the insurance sales pitch. And an easy way to get around the sales pitch - as the person selling you the insurance if you can have their name and info and they will be personally liable if the insurance company fails their end of the bargain. |
If I make over 120k a year, what are my options for retirement plans? | You can contribute to a Traditional IRA instead of a Roth. The main difference is a contribution to a Roth is made with after tax money but at retirement you can withdraw the money tax free. With a Traditional IRA your contribution is tax-deductible but at retirement the withdrawal is not tax free. This is why most people prefer a Roth if they can contribute. You can also contribute to your work's 401k plan assuming they have one. And you can always save for retirement in a regular account. |
How do you determine “excess cash” for Enterprise Value calculations from a balance sheet? | 20% is almost certainly too high. I agree with 2%, as a very rough rule. It will vary significantly depending on the industry. I generally calculate an average of the previous 2-3 years working capital, and deduct that from cash. Working capital is Current Assets less Current Liabilities. Current Assets is comprised of cash, prepaid expenses, and significantly, accounts receivable. This means that CA is likely to be much higher than just cash, which leaves more excess cash after liabilities are deducted. Which reduces EV, which makes the EV/EBITDA ratio look even more pricey, as Dimitri noted. But a balance sheet is just a snapshot of the final day of the quarter. As such, and because of seasonal effects, it's critical to smooth this by averaging several periods. After calculating this for a few companies, compare to revenue. Is it close to 2%? |
Is Cost of Living overstated? | after 30 years, you'd have a million dollar house vs a quarter million dollar house. You've captured three quarters of a million dollars in rent, given my napkin math hypothetical. As I figure the math, a 250,000 house appreciating to a million dollar house in 30 years requires a sustained ~4.9% appreciation every year--seems unrealistic. The historical rate of inflation, on average, has been closer to 3-3.5%; a 3% appreciation would give a final value of $589k. This also doesn't taken into account the idea that you may have bought a property during a housing bubble, and so then you wouldn't get 3% year-over-year returns. But also, in terms of "capturing rent", you are not factoring in necessary or possible costs that renting doesn't have: mortgage interest and insurance, maintenance, property tax, insurance, buying and selling associated fees, and, importantly, opportunity costs (in that the money not tied up in the house could be invested elsewhere). So it is not such a slam dunk as you make it out. Many use the NY Times buy/rent calculator to compare renting vs. buying. |
Less than a year at my first job out of college, what do I save for first? | I recommend saving for retirement first to leverage compound interest over a long time horizon. The historical real return on the stock market has been about 7%. Assuming returns stay at 7% in the future (big assumption, but don't have any better numbers to go off of), then $8,000 saved today will be worth $119,795 in 40 years (1.07^40*8000). Having a sizable retirement portfolio will give you peace of mind as you progress through life and make other expenditures. If you buy assets that pay you money and appreciate, you will be in a better financial position than if you buy assets that require significant cash outflows (i.e. property taxes, interest you pay to the bank, etc.) or assets that ultimately depreciate to zero (a car). As a young person, you are well positioned to pay yourself (not the bank or the car dealership) and leverage compound interest over a long time horizon. |
How does Big Money work? (i.e. stocks, Enron, net worth) | 1) You ignore dividends. You can hold your 10 million shares and never sell them and still get cash to live on if the security pays dividends. McDonalds stock pays 3% in dividends (a year). If you owned 10 million shares of McDonalds you would get 75,000 every three months. I am sure you could live on 25,000 a month. 2) Enron was an energy company. They sold energy and made a profit (or rather were supposed to). Enron didn't make their money by selling stock. McDonalds makes their money by selling hamburgers (and other food). The income of a company comes from their customers, not from selling stock. 3) IF you sold all of your 10 million shares within a short time frame it, likely, would drive the price of the stock down. But you do not need a billion dollars to live on. If you sold 1000 shares each month you would have plenty for buying cars and pizza. Selling 1000 shares may drive the price of the stock down for a minute or two. But the rest of the transactions, for that security made the same day, would quickly obscure the effect you had on the stock. 4) When you buy stock your money does not (usualy) go to the company. If I were to buy 100 shares of McDonalds, McDonalds would not get $11670.That money is (usually) paid to a 'Market Maker' who, in turn, will use the cash to buy MCD from other individual shareholders (presumably for less than 116.70 a share). |
Why are currency forwards needed? | What is the point of this? Can't I achieve the exact same effect and outcome by exchanging currency now and put that amount of USD in a bank account to gain some interest, then make the payment from one year from now? This is for companies, not individuals. Companies usually take loans, because they think they can make more money (e.g. 10%*) than the interest on the loan (e.g. 5%*). Putting money on a bank account to earn interest there would give them even less (e.g. 1%*). So with your option, instead of earning 10%* interest, they'd earn 1%* interest. If the cost of the currency forward is less than these 9%* difference, the forward saves them money. If they have excess cash and they don't know how to invest that money, your option may be preferable *Simple numbers chosen for simplicity, not accuracy. |
Finding a good small business CPA? | I have had better experiences with accountants in smaller towns. It seems they are used to working with small businesses and their reputation is very important to them. |
Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”? | One possibility is to lock in gains by selling, where a selling price can attempt to be optimized by initiating a trailing stop loss order. You'll have to look at the pros and cons of that kind of order to see if it is right for you. Another possibility is to begin hedging with options contracts, if that security is optionable. Puts with the appropriate delta will cost over time against future gains in the stock's price, but will protect your wealth if the stock price falls from this high point. These possibilities depend on what your investment goals are. For instance, if you are buying no matter what price because you like the forward guidance of the company, then it changes your capital growth and preservation decisions. |
Basic Info On Construction Loans | Construction loans are typically short term that then get rolled into conventional mortgages at the end of the construction period. Since the actual construction loan is short term, you cannot combine it with a long-term land loan as well. You could do the two separate loans up front to buy the land and finance the construction, then at the end roll both into a conventional mortgage to close out the land and construction loans. This option will only work if you do all three through the same lender. Trying to engage various lenders will require a whole new refinance process, which I very much doubt you would want to go through. These are sometimes called combo loans, since they aggregate several different loan products in one "transaction." Not a lot of places do land loans, so I would suggest first find a lender that will give you a land loan and set an appoint with a loan representative. Explain what you are trying to do and see what they can offer you. You might have better luck with credit unions as well instead of traditional banks. |
Acquiring first office clothes | Sounds like you're a man, so you're in luck. Our formalwear all looks similar enough that you can get by on a very short rotation. You can buy 1 pair of decent slacks in a versatile color like navy or grey with a pair of brown shoes with matching belt then have as little as 2 button down shirts (white and light blue). You can help keep the button downs clean by wearing an undershirt. This outfit can even overlap your interview outfit if you want to save more (especially if you want a good jacket/sport coat). The real key is to just not pick anything flashy and nobody will ever notice. You'll be running to the dry cleaners every single weekend, but you won't have much in terms of up-front costs. For women though I have no clue how they manage this stuff. |
Why is the price of my investment only updated once per day? | Mutual funds are a collection of other assets, such as stocks, bonds and property. Unless the fund is a type that is traded on an exchange, you will only be able to buy into the fund by applying for units with the fund manager and sell out by contacting the fund manager. These type of non-traded funds are usually updated at the end of the day once the closing prices of all the assets in it are known. |
Loan math problem | Lachlan has $600 cash and a car worth $500. That's $1,100. The new car is priced at $21,800. Lachlan needs a loan for $20,700. However, the finance company insists that the buyer must pay a 10% deposit, which is $2,180. Lachlan only has $1,100, so no loan. The car dealer wants to make a sale, so suggests some tricks. The car dealer could buy Lachlan's old banger for $1,500 instead of $500, and sell the new car for $22,800 instead of $21,800. Doesn't make a difference to the dealer, he gets the same amount of cash. Now Lachlan has $600 cash and $1,500 for his car or $2,100 in total. He needs 10% of $22,800 as deposit which is $2,280. That's not quite there but you see how the principle works. Lachlan is about $200 short. So the dealer adds $1,200 to both car prices. Lachlan has $600 cash and a car "worth" $1,700, total $2,300. The new car is sold for $23,000 requiring a $2,300 deposit which works out exactly. How could we have found the right amount without guessing? Lachlan had $1,100. The new car costs $21,800. The dealer increases both prices by x dollars. Lachlan has now $1,100 + x deposit. The car now costs $21,800 + x. The deposit should be 10%, so $1,100 + x = 10% of ($21,800 + x) = $2,180 + 0.1 x. $1,100 + x = $2,180 + 0.1 x : Subtract $1,100 x = $1,080 + 0.1 x : Subtract 0.1 x 0.9 x = $1,080 : Divide by 0.9 x = $1,080 / 0.9 = $1,200 The dealer inflates the cost of the new car and the value of the old car by $1,200. Now that's the theory. In practice I don't know how the finance company feels about this, and if they would be happy if they found out. |
Using multiple bank accounts | There is nothing conceptually wrong with it. If you like it that way, go ahead. The only thing to watch out for is bank policies that effectively penalize having many small accounts. For instance, some banks charge you a fee for checking accounts with a balance below a certain minimum, but will waive the fees for accounts with a higher balance. You may be able to avoid such fees by judicious management of your funds (or by switching to a different bank), but it's something to be aware of. (The interest rates on savings accounts also often vary with the balance, making many small balances less efficient than one big balance. However, right now, at least in the US, interest rates on savings accounts are so low that the difference here is likely to be minimal.) |
How to compute real return including expense ratio | Returns reported by mutual funds to shareholders, google, etc. are computed after all the funds' costs, including Therefore the returns you see on google finance are the returns you would actually have gotten. |
In a competitive market, why is movie theater popcorn expensive? | It's because true competition does not exist in the movie theater business. If you wanted to open up a competing theater whose competitive advantage was cheaper popcorn, you couldn't do it - the studios would never give you rights to screen popular new release movies. I know this because there are indie movie theaters that constantly struggle to acquire screening rights, because the Regals and AMCs of the world work hard to maintain their monopoly by having exclusive licensing deals with studios. Effectively, studios and a couple major theater chains have gotten together and agreed to fix the price of popcorn. So if you want cheaper popcorn, there are theaters where you'll find it - you just won't be watching Hollywood blockbuster new releases while you're eating it. |
Can I profit from anticipating a drop in value? | To summarize, there are three basic ways: (3) is the truly dangerous one. If there is a lot of short interest in a stock, but for some reason the stock goes up, suddenly a lot of people will be scrambling to buy that stock to cover their short position -- which will drive the price up even further, making the problem worse. Pretty soon, a bunch of smart rich guys will be poor guys who are suddenly very aware that they aren't as smart as they thought they were. Eight years ago, such a "short squeeze", as it's called, made the price of VW quadruple in two days. You could hear the Heinies howl from Hamburg to Haldenwanger. There are ways to protect yourself, of course. You can go short but also buy a call at a much higher price, thereby limiting your exposure, a strategy called a "straddle", but you also reduce your profit if you guessed right. It comes down to, as it always does, do you want to eat well, or to sleep well? |
How can foreign investor (residing outside US) invest in US company stocks? | (Note: out of my depth here, but in case this helps...) While not a direct answer to your question, I'll point out that in the inverse situation - a U.S. investor who wants to buy individual stocks of companies headquartered outside US - you would buy ADRs, which are $-denominated "wrapper" stocks. They can be listed with one or multiple brokerages. One alternative I'd offer the person in my example would be, "Are you really sure you want to directly buy individual stocks?" One less targeted approach available in the US is to buy ETFs targeted for a given country (or region). Maybe there's something similar there in Asia that would eliminate the (somewhat) higher fees associated with trading foreign stocks. |
Owing state tax Interest and a result of living in Maryland and working in Virginia | Ultimately, you are the one that is responsible for your tax filings and your payments (It's all linked to your SSN, after all). If this fee/interest is the result of a filing error, and you went through a preparing company which assumes liability for their own errors, then you should speak to them. They will likely correct this and pay the fees. On the other hand, if this is the result of not making quarterly payments, then you are responsible for it. (Source: Comptroller of Maryland Site) If you [...] do not have Maryland income taxes withheld by an employer, you can make quarterly estimated tax payments as part of a pay-as-you-go plan. If your employer does withhold Maryland taxes from your pay, you may still be required to make quarterly estimated income tax payments if you develop a tax liability that exceeds the amount withheld by your employer by more than $500. From this watered-down public-facing resource, it seems like you'll get hit with fees for not making quarterly payments if your tax liability exceeds $500 beyond what is withheld (currently: $0). |
Filing taxes on stocks | Generally stock trades will require an additional Capital Gains and Losses form included with a 1040, known as Schedule D (summary) and Schedule D-1 (itemized). That year I believe the maximum declarable Capital loss was $3000--the rest could carry over to future years. The purchase date/year only matters insofar as to rank the lot as short term or long term(a position held 365 days or longer), short term typically but depends on actual asset taxed then at 25%, long term 15%. The year a position was closed(eg. sold) tells you which year's filing it belongs in. The tiny $16.08 interest earned probably goes into Schedule B, typically a short form. The IRS actually has a hotline 800-829-1040 (Individuals) for quick questions such as advising which previous-year filing forms they'd expect from you. Be sure to explain the custodial situation and that it all recently came to your awareness etc. Disclaimer: I am no specialist. You'd need to verify everything I wrote; it was just from personal experience with the IRS and taxes. |
Asset protection: When should an individual seriously consider shielding their assets? | If your meaning of "asset protection" is buying gold and canned food in the name of a Nevada LLC because some radio guy said so, bad idea. For a person, if you have assets, buy appropriate liability limits with your homeowner/renter insurance policy or purchase an "umbrella" liability policy. This type of insurance is cheap. If you don't have assets, it may not be worth the cost of insuring yourself beyond the default limits on your renter's or homeowner's policy. If you have a business, you need to talk to your insurance agent about what coverage is appropriate for the business as a whole vs. you personally. You also need to talk to your attorney about how to conduct yourself so that your business interests are separated from your personal interests. |
Why does FlagStar Bank harass you about payments within grace period? | A quick Google search for FlagStar Bank shows that this is their standard practice. Quite a few people are complaining about the robo-calls they start receiving on the 5th of every month and FlagStar's response is usually something along the lines of "we're required to do so". First and foremost, confirm the terms of your mortgage. Based on your story and information provided so far, it sounds like you're legally in the clear to pay as you have been. It appears that they have an internal policy of firing off robo-caller on the 5th for anyone who hasn't paid their mortgage yet. With the number of individuals defaulting on loans over the past decade, this was probably a simple business decision to aid in reminding people to pay up. Your 3.5 choices as I see it are: 2a. A variation of #2: set up a phone number just for that bank using a service like Google Voice and filter your calls so you don't have to deal with them on your primary line. |
Selling To Close | Absolutely. There is no requirement that an option be in-the-money for you to close out a position. Remember that there are alwayes two sides to a trade - a buyer and a seller. When you bought your option, it's entirely possible that someone else was closing out their long position by selling it to you. |
devastated with our retirement money that we have left | I'm going to discuss this, in general, as specific investment advice isn't allowed here. What type of account is the $60K in now? I mean - Is it in a 401(k), IRA or regular account/CD/money market? You are still working? Does your company offer any kind of matched 401(k)? If so, take advantage of that right up the level they'll match. If not, are you currently depositing to pretax IRAs? You can't just deposit that $60K into an IRA if it isn't already, but you can put $11k/yr ($5 for you, $6K for hubby if you make $11K or more this year.) Now, disclaimer, I am anti-annuity. Like many who are pro or con on issues, this is my nature. The one type of annuity I actually like is the Immediate Annuity. The link is not for an end company, it shows quotes from many and is meant as an example. Today, a 65 yr old man can get $600/mo with a $100K purchase. This is 7.2%, in an economy in which rates are sub 3%. You give up principal in exchange for this higher annual return. This is a viable solution for the just-retired person whose money will run out when looking at a 4-5% withdrawal but 1% CD rate. In general, these products are no more complex that what I just described, unlike annuities sold to younger fold which combine high fees with returns that are so complex to describe that most agents can't keep their story straight. Aside from the immediate flavor, all other annuities are partial sold (there's a quote among finance folk - "annuities are sold, not bought") based on their tax deferral features. I don't suspect you are in a tax bracket where that feature has any value to you. At 48/54, with at least 10 years ahead of you, I'd research 'diversification' and 'asset allocation'. Even $60K is enough to proper invest these funds until you retire and then decide what's right for you. Beginners' Guide to Asset Allocation, Diversification, and Rebalancing is an interesting introduction, and it's written by the SEC, so your tax dollars paid for it. Some months ago, I wrote Diversifying to Reduce Risk, which falls short of a complete discussion of asset allocation, but it does illustrate the power of being in a stock/bond mix. The ups and downs were reduced significantly compared to the all stock portfolio. (for follow up or to help others reply to you, a bit more detail on the current investments, and how you are devastated, eg was there a huge loss from what you had a few years ago?) Edit - The original poster hasn't returned. Posted the question and left. It's unfortunate as this was someone who would benefit from the dialog, and the answers here can help others in a similar position, but I feel more discussion is in order for the OP. Last, I caught a downvote on my reply today. I take no offense, but curious which part of my answer the DVer disagreed with. |
What are the risks of Dividend-yielding stocks? | Yep, there just is no free lunch. So called high dividend stocks are usually from companies that have stable cash flows but relatively little or moderate growth potential. Utility companies come to mind, let's take telecommunications as an example. Such stocks, usually, indeed are considered more conservative. In a bull market, they won't make high jumps, and in a bear market they shouldn't experience deep falls. I mean, just because the stock market fell by 10%, you're not going to stop using your phone. The stock might suffer a bit but the divided is still yielding you the same. However, fundamental data can have a significant impact. Let's say a recession hits the country of the telco. People might not get the newest iPhone and lock in to an expensive contract anymore, they might use cheaper forms of communication, they might stop paying bills, go bankrupt etc. This will have a severe impact on the company's cash flow and thus hit the stock in a double whammy: One, the dividend is gone. Two, the price will fall even further. There are basically two scenarios after that. Either the recession is temporary and your stock became a regular growth stock that at some point might bounce back and re-establish at the previous levels. Or the economy has contracted permanently but regained stability in which case you will again have a stock with a high dividend yield but based on a lower price. In conclusion: High dividend stocks make sense in a portfolio. But never consider their income to be safe. Reduce your risk by diversifying. |
How can I stop wasting food? | Make a menu of 15 (or more) things you like to eat. Write a grocery list for what it takes. Divide that list into perishable and non-perishable. Put those items into a calendar and try to stick to it. Depending on the amount of storage space you have, once a week fulfill your perishable list. Use coupons and shop the sales to keep your prices down. On your way home, stop at the grocery store and buy only the perishables you will need that night for cooking. I personally chose recipes that didn't always need fresh stuff (like canned tomatoes being good enough.) You spend more on the nightly stuff, but you make up some savings with the long term shopping. Just count on going to the store for 10 minutes a night a part of your cooking routine. I used to just look at the wall, but with an app like Evernote this would be pretty easy. |
Interactive Brokers Margin Accounts | You have to call Interactive Brokers for this. This is what you should do, they might even have a web chat. These are very broker specific idiosyncrasies, because although margin rules are standardized to an extent, when they start charging you for interest and giving you margin until settlement may not be standardized. I mean, I can call them and tell you what they said for the 100 rep. |
Why should I trust investment banks' ratings? | If there's indeed no reason to trust GS, i.e. those are just guides then the question is: Why do investors seem to care? Because there's a reason to trust. You're just reading the bottom line - the target price range. More involved investors read the whole report, including the description of the current situation, the premises for the analysis, the expectations on the firm's performance and what these expectations are based on, the analysis of how the various scenarios might affect the valuation, and the evaluation of chances of these scenarios to occur. You don't have to trust everything and expect it to be 100% correct, analysts are not prophets. But you do have an option of reading their reports and critically analyzing their conclusions. What you suspect GS of doing ("I tend to believe those guys just want themselves a cheap buy price a few days before Q2 earnings release") is a criminal offence. |
Do you avoid tax when taking a home equity loan? | Why would someone invest in other instruments (e.g. stocks) to pay for childrens' college education when the capital gains on those are taxed, unlike a home equity loan? Many tax advantageous vehicles exist for the purpose of saving for college education such as 529 plans, Roth IRAs, Series EE and I bonds. Tax and penalty free distributions from a portfolio of stocks is possible if the distributions are for qualified education expenses and the account is in the form of a Roth IRA. A house is collateral for a home equity line of credit. A combination of unfortunate events could cause someone to default on the loan and loose their residence. Also, the tax advantages of 529 plans, and Roth IRAs are not applicable to purchase a motor boat. With respect, some people like to leave the home equity loan untapped for other uses. More Details: 529 plans are not taxed by on the Federal level when the withdraws are used for college. In many states, contributions to state sponsored 529 plans are deductible on the state level. These are not self directed so you can't trade stocks/bonds in a 529 plan, however, certain plans allow you to lock in the rate you pay for credit at today's prices. If you want a self directed (ability to trade stocks/bonds) vehicle with tax free disbursements for qualified education, consider a Roth IRA. There are yearly contribution limits, and penalty if the proceeds are not used for qualified educational expenses. Also I believe interest revenue from Series EE and I bonds is tax free if the bond is used for education. There are special conditions and situations to 529 plans, Roth IRAs, Series EE and I bonds, the purpose of this answer was to expand upon the tax advantageous vehicles for higher education. |
Advice on low-risk long-term strategy for extra cash? | Look at a mixture of low-fee index funds, low-fee bond funds, and CDs. The exact allocation has to be tailored to your appetite for risk. If you only want to park the money with essentially no risk of loss then you need FDIC insured products like CDs or a money market account (as opposed to a money market fund which is not FDIC insured). However as others have said, interest rates are awful now. Since you are in your early 30's, and expect to keep this investment for 10+ years, you can probably tolerate a bit of risk. Also considering speaking to a tax professional to determine the specific tax benefits/drawbacks of one investment strategy (funds and CDs) versus another (e.g. real estate). |
What is the difference between a bond and a debenture? | Some additional links which explain their differences. But mostly as @bstpierre says, both are very similar and in some cases the terms may be used inter changeably |
Can individuals day-trade stocks using High-Frequency Trading (HFT)? | The answer is to your question is somewhat complicated. You will be unable to compete with the firms traditionally associated with High Frequency Trading in any of their strategies. Most of these strategies which involve marketing making, latency arbitrage, and rebate collection. The amount of engineering required to build the infrastructure required to run this at scale makes it something which can only be undertaken by a team of highly skilled engineers. Indeed, the advantage of firms competing in this space such as TradeBot, TradeWorx, and Getco comes from this infrastructure as most of the strategies that are developed are necessarily simple due to the latency requirements. Now if you expand the definition of HFT to include all computerized automated trading you most certainly can build strategies that are profitable. It is not something that you probably want to tackle on your own but I know of a couple of people that did go it alone successfully for a couple of years before joining an established firm to run a book for them. In order to be successful you will most likely need to develop a unique strategies. The good news is because that you are trying to deploy a very tiny amount of capital you can engage in trades that larger firms would not because the strategies cannot hold enough capital relative to the firms capital base. I am the co-founder of a small trading firm that successfully trades the US Equities and Equity Derivatives markets. A couple of things to note is that if you want to do this you should consider building a real business. Having some more smart brains around you will help. You don't need exchange colocation for all strategies. Many firms, including ours, colocate in a data center that simply has proximity to the exchanges data centers. You will need to keep things simple to be effective. Don't except all the group think that this is impossible. It is possible although as a single individual it will be more difficult. It will require long, long hours as you climb the algorithmic trading learning curve. Good luck. |
At what point is it most advantageous to cease depositing into a 401k? | It's probably advantageous to stop depositing into a 401(k) when one is no longer receiving payroll deductions into them. Other than that, why would you want to give up the benefits? Remember, 401(k) is just the kind of account. Most offer a variety of investment options within them, and let you move money between those, so you can rebalance to suit your currently preferred risk/return tradeoffs without having to break them open. You might sometimes want to reduce your contribution for a while, if you have immediate cashflow needs elsewhere... but try to avoid doing that. Compound returns are a good thing, and the earlier the money goes in the more you get back from it. |
Are there any investment strategies which take advantage of an in-the-money option price that incorporates no “time value”? | It depends on the volatility of the underlying stock. But for "normal" levels of volatility, the real value of that option is probably $3.50! Rough estimates of the value of the option depending on volatility levels: Bottom line: unless this is a super volatile stock, it is trading at $3.50 for a reason. More generally: it is extremely rare to find obvious arbitrage opportunities in the market. |
Where should I park my rainy-day / emergency fund? | First off, you generally want to park your emergency fund somewhere that is "safe", meaning something that is not subject to market fluctuations. Your emergency fund is something you need to be able to count on when times are tough! That rules out things like stock market investments. Secondly, you need to think about how quickly you will need access to the money. If you have an emergency, odds are you don't want to be waiting around for weeks/months/years for the money to become available. This rules out most fixed-term investments (Bonds, traditional CDs, etc). If you are concerned that you will need near-instant access to your emergency money, then you probably want to keep it in a Savings or Money Market Account at the same bank as your checking account. Most banks will let you transfer money between local accounts instantly. Unfortunately, your local bank probably has pitiful interest rates for the Savings/MMA, far below the inflation rate. This means your money will slowly lose value over time. Be prepared to keep contributing to it! For most people, being able to draw the cash from your fund within a few days (<1 week) is sufficient. Worst case, you charge something on your credit card, and then pay down the card when the emergency fund withdrawal arrives. If "money within a few days" is okay for you, there are a few options: Money Market (Mutual) Funds (not to be confused with a Money Market Account) - This is the traditional place to keep an emergency fund. These are investment funds you can buy with a brokerage account. An example of such a fund would be Fidelity Cash Reserves. MMFs are not FDIC insured, so they are not exactly zero risk. However, they are considered extremely safe. They almost never go down in value (only a few times in the past few decades), and when they have, the fund manager or the Federal Govt stepped in to restore the value. They usually offer slightly better return than a local savings account, and are available in taxable and non-taxable varieties. Online High-Yield Savings or Money Market Account - These are a relatively new invention. It's basically a the same thing as what your local bank offers, but it's online-only. No local branch means low overhead, so they offer higher interest rates (2.0% vs 0.5% for your local bank). Some of them used to be over 5% before the economy tanked. Like your local bank, it is FDIC insured. One bit of caution: Some of these accounts have become "gimmicky" lately. They have started to do things like promo rates for a few months, only offering the high interest rate on the first few $K deposited, limiting the amount that can be withdrawn, etc. Be sure to read the details before you open an account! No-Penalty CDs - Certificates of Deposit usually offer a better rate than a Savings Account, but your money is locked up until the CD term is up (e.g. 36 months). If you need to cash out before then, you pay a penalty. Some banks have begun to offer CDs that you can cash out with no penalty at all. These can offer better rates than the savings account. Make sure it really is no-penalty though. Also watch what your options are for slowly adding money over time. This can be an issue if you want to deposit $100 from every paycheck. Rewards Checking Accounts - These are checking accounts that will pay a relatively high interest rate (3% or more) provided you generate enough activity. Most of them will have requirements like you must have direct deposit setup with them, and you must do a minimum number of debit card transactions from the account per month. If you can stay on top of the requirements, these can be a great deal. If you don't stay on top of it, your interest rate usually drops back to something pitiful, though. Personally, we use the Online High-Yield Savings Account for our emergency fund. I'm not going to make a specific recommendation as to which bank to use. The best deal changes almost week to week. Instead, I will say to check out Bankrate.com for a list of savings accounts and CDs that you can sort. The Bank Deals blog is a good place to follow rate changes. |
F1 student and eBay selling tax | If you have income - it should appear on your tax return. If you are a non-resident, that would be 1040NR, with the eBay income appearing on line 21. Since this is unrelated to your studies, this income will not be covered by the tax treaties for most countries, and you'll pay full taxes on it. Keep in mind that the IRS may decide that you're actually having a business, in which case you'll be required to attach Schedule C to your tax return and maybe pay additional taxes (mainly self-employment). Also, the USCIS may decide that you're actually having a business, regardless of how the IRS sees it, in which case you may have issues with your green card. For low income from occasional sales, you shouldn't have any issues. But if it is something systematic that you spend significant time on and earn significant amounts of money - you may get into trouble. What's "systematic" and how much is "significant" is up to a lawyer to tell you. |
How can I calculate the volatility(standard deviation) of a stock price? and/or ROI (return on investment) of a stock? | Use the Black-Scholes formula. If you know the current price, an options strike price, time until expiration, and risk-free interest rate, then knowing the market price of the option will tell you what the market's estimation of the volatility is. This does rely on a few assumptions, such as Gaussian random walk, but those are reasonable assumptions for most stocks. You can also get a list of past stock prices, put them in Excel, and ask Excel to calculate the standard deviation with stdev.s(), but that gives you the past volatility. The market's estimate of future volatility is more relevant. |
Is it accurate to say that if I was to trade something, my probability of success can't be worse than random? | In theory, in a perfect world, what you state is almost true. Apart from transaction fees, if you assume that the market is perfectly efficient (ie: public information is immediately reflected in a perfect reflection of future share value, in all share prices when the information becomes available), then in theory any transaction you would choose to take is opposed by a reasonable person who is not taking advantage of you, just moving their position around. This would make any and all transactions completely reasonable from a cost-benefit perspective. ie: if the future value of all dividends to be paid by Apple [ie: the value of holding a share in Apple] exactly matches Apple's share price of $1,000, then buying a share for $1,000 is an even trade. Selling a share for $1,000 is also an even trade. Now in a perfectly efficient market, which we have assumed, then there is no edge to valuing a company using your own methods. If you take Apple's financial statements / press releases / reported information, and if you apply modern financial theory to evaluate the future dividends from Apple, you should get the same $1,000 share price that the market has already arrived at. So in this example, why wouldn't you just throw darts at a printout of the S&P 500 and invest in whatever it lands on? Because, even if the 'perfectly efficient market' agrees on the true value of something, different investments have different characteristics. As an example, consider a simple comparison of corporate bonds: Corporations make bond offerings to the public, allowing individual investors to effectively lend money to the corporation, for a future benefit. For simplicity, assume a bond with a 'face value' (the amount to be repaid to the investor on maturity) of $1,000 has these 3 defining characteristics: (1) The price [What the investor pays to acquire it]; (2) Interest payments [how much, if any, the corporation will pay to the investor before maturity, and when those payments will be made]; and (3) a bond rating [which is a third party assessment of how risky the bond is, based on the 'health' of the corporation]. Now if the bond rating agency is perfect in its risk assessment, and if the price of all bond's is fair, then why does it matter who you loan your money to? It matters because different people want different things out of their investments. If you are waiting to make a down payment on a house next year, then you don't want risk - you want to be certain that you will get your cash back, even if it means lower returns. So, even though a high-risk bond may be perfectly priced, it should only be bought by someone willing to bear that risk. If you are retired, and you need your bonds to pay you interest regularly as your sole source of income, then of course a zero-coupon bond [one that pays no interest] is not helpful to you. If you are young, and have a long time to invest, then you may want risk, because you have time to overcome losses and you want to get the most return possible. In addition, taxes are not universal between all investors. Some people benefit from things that would be tax-heavy to their neighbors. For example in Canada, there is a 'dividend tax credit' which reduces the taxes owing on dividends received by a corporation. This credit exists to prevent 'double-taxation', because otherwise the corporation would pay its ~30% of tax, and then a wealthy investor would pay another ~45% of tax. Due to the mechanics of how the credit is calculated, however, someone who makes less money, gets an even lower tax bill than they normally would. This means that someone making under the top tax bracket in Canada, has a tax benefit by receiving dividends. This means that while 2 stocks may be both fairly priced, if one pays dividends and the other doesn't [ie: if the other company instead reinvests more heavily in future projects, creating even more value for shareholders down the road], then someone in the bottom tax brackets may want the dividend paying stock more than the other. In conclusion: Picking investments yourself does require some knowledge to prevent yourself from making a 'bad buy'; this is because the market is not perfectly efficient. As well, specific market mechanics make some trades more costly than they should be in theory; consider for example transaction fees and tax mechanics. Finally, even if you assume that all of the above is irrelevant as a theoretical idea, different investors still have different needs. Just because $1,000,000 is the 'fair' price for a factory in your home town, doesn't mean you might as well convert your retirement savings to buy it as your sole asset. |
Why don't banks print their own paper money / bank notes? | In Scotland, each bank issues its own separate notes. It's not uncommon to see identical-valued £10 notes, for example, from three different banks in one's wallet. |
Should I sell and rebuy stocks before the end of the year to trigger a gain and offset capital losses? | You have multiple issues buried within this question. First, we don't know your tax bracket. For my answer, I'll assume 25%. This simply means that in 2016, you'll have a taxable $37,650 or higher. The interesting thing is that losses and gains are treated differently. A 25%er's long term gain is taxed at 15%, yet losses, up to $3000, can offset ordinary income. This sets the stage for strategic tax loss harvesting. In the linked article, I offered a look at how the strategy would have resulted in the awful 2000-2009 decade producing a slight gain (1%, not great, of course) vs the near 10% loss the S&P suffered over that time. This was by taking losses in down years, and capturing long term gains when positive (and not using a carried loss). Back to you - a 15%er's long term gain tax is zero. So using a gain to offset a loss makes little sense. Just as creating a loss to offset the gain. The bottom line? Enjoy the loss, up to $3000 against your income, and only take gains when there's no loss. This advice is all superseded by my rule "Don't let the tax tail wag the investing dog." For individual stocks, I would never suggest a transaction for tax purposes. You keep good stocks, you sell bad ones. Sell a stock to take a short term loss only to have it recover in the 30 day waiting period just once, and you'll learn that lesson. Learn it here for free, don't make that mistake at your own expense. |
Advice for a college student interested in investment opportunities. | Over a period of time most mutual funds do not perform better that an index fund. Picking and buying individual stock can be a great learning experience. |
Paying tax for freelance work while travelling | Having freelanced myself in South America I could give you a sound advice BUT you would first need to answer some questions. 1) How long do you plan on being in South America? At the end of 2017 will you be back in Ireland or still being in South America? In other words was is your country of residence for tax purposes on Dec. 31 2017 ? That is the key element to consider. Link 2) In latin America you can freelance with a legal working permit BUT in all these countries more than 50% of the economy is under the table. In all these countries expatriate work under the table. The question you need to answer is then: Who will be your employer, a company or the owner of this company? Working undeclared in Latin America is very common, what are the risks? The legal risks depend on the country and their laws. In which country will you travel? How long will you stay there? You will have a tourist visa or a working visa? 3) An important detail, your health. Check how long you can be out of Ireland without loosing your social health benefits in Ireland? In my country, if I am abroad for more than 180 days, I loose my national health coverage. Evaluate the amount of days you will be out of Ireland and where you want to be on Dec. 31th. That could change a lot of things in your life. |
What is a good way to save money on car expenses? | Can you tell I'm having fun with this question? Here's another great list, from Finally Frugal, which includes the above items, but also these gems: Avoid idling. Now, this just annoys me. Walking past a line of idling cars at the transit center waiting for their human 'pickup', makes me crazy! It makes me want to knock on the window, shake my finger, and give 'em a piece of my mind. I don't do it, because I don't have a death wish. Turn the car off when you're not driving it. Combine trips. I used to be one of those people who would run to Target, go home, remember something I needed at the grocery store and go out for that, come home again, then run out to the library. All of these places are within a two mile radius of my house. Making lists before leaving the house has helped me to group my errands within one trip, meaning fewer back and forth trips. Slow down. Your parents were right. Slow is better. Not only is it safer to drive the speed limit, you'll be increasing your car's efficiency and reducing the amount of fuel your vehicle uses. |
What is the formula for determining estimated stock price when I only have an earning per share number? | See this link...I was also looking an answer to the same questions. This site explains with an example http://www.independent-stock-investing.com/PE-Ratio.html |
Strategies for saving and investing in multiple foreign currencies | The bad news is that foreign exchange is ultimately somewhat unpredictable, and analyzing the risk of these things is not particularly straightforward. I'm afraid I don't know what tools exist to analyze these, aside from suggesting you look at textbooks for financial analysis classes. The good news is that there are other people who deal with multiple currencies (international businesses, for instance) who worry about the same thing. As such, you can take a look at foreign exchange rate futures and related instruments to estimate what the market as a whole currently expects the values to do. The prices of these futures could be a useful starting point. |
Trading when you work for a market participant | There is normally a policy at the organisation that would restrict trades or allow trades under certain conditions. This would be in accordance with the current regulations as well as Institutions own ethical standards. Typical I have seen is that Technology roles are to extent not considered sensitive, ie the employees in this job function normally do not access sensitive data [unless your role is analyst or production support]. An employee in exempt roles are allowed to trade in securities directly with other broker or invest in broad based Mutual Funds or engage a portfolio management services from a reputed organisation. It is irrelevant that your company only deals with amounts > 1 Million, infact if you were to know what stock the one million is going into, you may buy it slightly earlier and when the company places the large order, the stock typically moves upwards slightly, enough for you to make some good money. That is Not allowed. But its best you get hold of a document that would layout the do' and don't in your organisation. All such organisation are mandated to have a written policy in this regard. |
How to deal with the credit card debt from family member that has passed away? | First off, very sorry for your loss. I lost my father a few years ago and I know it can be tough. My father also had a lot of credit card debt. They attempted to collect the debt from my mother, who was no longer on the account (for over a decade). It was just an attempt to recoup as much money as they could before dealing with a probate court. As others have said, it depends on your state law. You will want to talk to a lawyer, figure out who is going to be the executor of the estate, and determine the next steps in starting to settle debts that your father had. If you want to take possession of the house, then you will likely need to work with the executor and perhaps purchase the house from the estate (which would then use the money to pay off debts). |
Pay off car loan entirely or leave $1 until the end of the loan period? | If I were you, I would pay off the car loan today. You already have an excellent credit score. Practically speaking, there is no difference between a 750 score and an 850 score; you are already eligible for the best loan rates. The fact that you are continuing to use 5 credit cards and that you still have a mortgage tells me that this car loan will have a negligible impact on your score (and your life). By the way, if you had told me that your score was low, I would still tell you to pay off the loan, but for a different reason. In that case, I would tell you to stop worrying about your score, and start getting your financial life in order by eliminating debt. Take care of your finances by reducing the amount of debt in your life, and the score will take care of itself. I realize that the financial industry stresses the importance of a high score, but they are also the ones that sell you the debt necessary to obtain the high score. |
Do I pay a zero % loan before another to clear both loans faster? | Wow, you guys get really cheap finance. here a mortage is 5.5 - 9% and car loans about 15 - 20%. Anyway back to the question. The rule is reduce the largest interest rate first ("the most expensive money"). For 0% loans, you should try to never pay it off, it's literally "free money" so just pay only the absolute minimum on 0% loans. Pass it to your estate, and try to get your kids to do the same. In fact if you have 11,000 and a $20,000 @ 0% loan and you have the option, you're better to put the 11,000 into a safe investment system that returns > 0% and just use the interest to pay off the $20k. The method of paying off the numerically smallest debt first, called "snowballing", is generally aimed at the general public, and for when you can't make much progress wekk to week. Thus it is best to get the lowest hanging fruit that shows progress, than to try and have years worth of hard discipline just to make a tiny progress. It's called snowballing, because after paying off that first debt, you keep your lifestyle the same and put the freed up money on as extra payments to the next target. Generally this is only worth while if (1) you have poor discipline, (2) the interest gap isn't too disparate (eg 5% and 25%, it is far better to pay off the 25%, (3) you don't go out and immediately renew the lower debt. Also as mentioned, snowballing is aimed at small regular payments. You can do it with a lump sum, but honestly for a lump sum you can get better return taking it off the most expensive interest rate first (as the discipline issue doesn't apply). Another consideration is put it off the most renewable finance. Paying off your car... so your car's paid off. If you have an emergency, redrawing on that asset means a new loan. But if you put it off the house (conditional on interest rates not being to dissimilar) it means you can often redraw some or all of the money if you have an emergency. This can often be better than paying down the car, and then having to pay application fees to get a new unsecured loan. Many modern banks actually use "mortgage offsetting" which allows them to do this - you can keep your lump sum in a standard (or even fixed term) and the value of it is deducted "as if" you'd paid it off your mortgage. So you get the benefit without the commitment. The bank is contracted for the length of the mortgage to a third party financier, so they really don't want you to change your end of the arrangement. And there is the hope you might spend it to ;) giving them a few more dollars. But this can be very helpful arragement, especially if you're financing stuff, because it keeps the mortgage costs down, but makes you look liquid for your investment borrowing. |
What does Capital Surplus mean? | Capital surplus is used to account for that amount which a firm raises in excess of the par value (nominal value) of the shares (common stock).. Investopedia has a much simpler answer. Somebody has tried to be smart on wikipedia and have done the calculations without much explanation. The portion of the surplus of a business arising from sources other than earnings : all surplus other than earned surplus usually including amounts received from sale or exchange of capital stock in excess of par or stated value, profits on resale of treasury stock, donations to capital by stockholders or others, or increment arising from revaluation of fixed or other assets The number of shares a company wants to issue is decided and agreed with the regulators. They decide the par value and then decide how much premium will be charged, extra money above the par value. Take out any RHP of an issue and you find all these details. Par Value = 1 Issue price(Price at which investors buy) = 10 Premium = 9 For a single share the capital surplus is 9, multiply it by the number of shares issued and you have the total capital surplus. |
Why real estate investments are compared via “cap rate”? | Cap rate includes any interest on the mortgage and not the repayments of the mortgage. Cap rate represents the net income which is the gross rent minus all costs, including the interest on the loan. Mortgage repayments form part of your cash flow calculations not your return calculations. ROI is a calculation which works out your net income over the initial investment you made, which is you downpayment plus costs and not the value of the property. |
Can you depreciate assets differently between Federal, State, and Local? | In general, you most definitely can. In some cases you must. However for each State you'll have to check whether you can choose how to depreciate. Many States require you to take the same depreciation as on the Federal schedule, including Sec. 179, others won't allow Sec. 179 at all. Specifically to PA, I haven't found any current guidance, but the rules from 2012 put PA in the bucket that requires you to take the same Sec. 179 on the State return as appears on your Federal return. If you elect to expense Section 179 Property for FIT purposes, you are required to expense the property for PIT purposes. However PA limit for Sec. 179 is $25K, so if your Federal deduction is larger - you can depreciate the rest. Check with a PA-licensed CPA or EA for a more reliable opinion, since I'm not a tax adviser. Just googled it. |
Analyze stock value | A Bloomberg terminal connected to Excel provides the value correcting splits, dividends, etc. Problem is it cost around $25,000. Another one which is free and I think that takes care of corporate action is "quandl.com". See an example here. |
I have $100,000 in play money… what to do? | If you want a concrete investment tip, precious metals (e.g. gold, silver) are on a pretty good run these days, personally I still think they have ways to go as there are just too many problems with modern monetary policy of an almost existential nature, and gold and silver are better stores of value than fiat money. Silver is particularly hot right now, but keep in mind that the increased volatility means increased risk. If the Fed keeps its foot on the pedals of the dollar printing press and we get QE3 this summer, that will most likely mean more people piling into the PMs to hedge against inflation. If the Fed starts to tighten it's policy then that's probably bad news for both equities and bonds and so PMs could be seen as a safe haven investment. These are the main reasons why PMs take up a good portion of my portfolio and will continue to do so untill I see how the global economy plays out over the next couple of years. |
Should I get a personal loan to pay on my mortgage to go “above water” to qualify for a refinance? | Let's say you owe $200K (since you didn't mention balance. If you do, I'd edit my response), and can get 4.5%. You'd save 1.5% or about $3K/yr the first few years. If a $12K paydown is all that's between you and and refi I'd figure out a way. There are banks that are offering refi's under the HARP program if your current mortgage is owned by FNMA or FMAC which permit even if under water. So, the first step is research to see if you can refi exactly what's owed, failing that, shop around. A 401(k) loan will not appear as a loan on your credit report, that may be one way to raise the $12K. The best thing you can do is put all the savings into the 401(k) to really get it going. |
Can I force him to pay? | Its best to seek a lawyer, but it is unlikely you can force him to pay. You probably know couples, that are in some part of the divorce process, that have trouble obtaining court ordered payments. In your case you have less of a legal standing (exception: if you have children together). As far as the house goes, the two of you entered into some sort of business arrangement and it will be difficult to "force" him to pay. One thing that works for you is that he has excellent credit. If he is interested in keeping a high credit rating he will ensure that no payments are late on the home. Your question suggests that the two of you are not getting along very well right now, and that needs to stop. The best financial decision you can make right now is to get along with him. It seems that the two of you have not officially broken up. If you do decide to depart ways, do so as amicably as possible. You will have to work to get the home in your name only, and him off the deed. This benefits both of you as you will have sole control of the house and this ill advised business decision can end. He will have the home off his credit and will not be responsible if you miss a payment and can also buy a home or whatever of his own. Good luck and do your best to work this out. Seeking peace will cost you a lot less money in the long run. Fighting in court cost a lot of money. Giving in to semi-reasonable demands are far cheaper then fighting. Here is an example. Lets say he normally contributes $500 to the mortgage, and he decides to move out. I would ask him to contribute $200 until you can get his name off the loan, say 6 months at the most. After that you will put the house up for sale if you cannot obtain a mortgage in your own name and will split any profits. |
How do I estimate my taxes when I have only 1099 income? | As long as you paid 100% of your last year's tax liability (overall tax liability, the total tax to pay on your 1040) or 90% of the total tax liability this year, or your underpayment is no more than $1000, you won't be penalized as long as you pay the difference by April 15th. That's per the IRS. I don't know where the "10% of my income" came from, I'm not aware of any such rule. |
Obtaining Pound Sterling Cheque in US to pay for family history records from England? | Most US banks don't allow you the ability to draft a foreign currency check from USD. Though, I know Canadian banks are more workable. For instance, TD allows you to do this from CAD to many other currencies for a small fee. I believe even as a US Citizen you can quite easily open a TD Trust account and you'd be good to go. Also, at one time Zions bank was one of the few which lets US customers do this add-hoc. And there is a fee associated. Even as a business, you can't usually do this without jumping thru hoops and proving your business dealings in foreign countries. Most businesses who do this often will opt to using a payment processor service from a 3rd party which cuts checks in foreign currencies at a monthly and per check base. Your other option, which may be more feasible if you're planning on doing this often, would be to open a British bank account. But this can be difficult if not impossible due to the strict money laundering anti-fraud regulations. Many banks simply won't do it. But, you might try a few of the newer British banks like Tesco, Virgin and Metro. |
Why is the fractional-reserve banking not a Ponzi scheme? | The fundamental underlying difference between a bank and a Ponzi scheme: When a bank lends money and charges interest, people can do things with that borrowed money which are worth it. (Building factories, starting businesses, or just enjoying the comfort and warmth of a single-family home instead of paying rent). This is why fractional-reserve banking is able to work. People may also do things which do not necessarily turn a financial profit (financing large purchases on a credit card) but are worth it in terms of an expenditure. They may also do stupid things (financing useless purchases on a credit card and wasting their money) or otherwise dispose of the money poorly (the new business fails, the home's value plummets, etc). A Ponzi scheme never really bothered to do useful things with the money. Social Security has been mentioned. Part of social security's setup involves the current population of workers paying the current population of retirees; their own retirements will have to be financed by the next generation. This design is not intrinsically a Ponzi scheme: both the population and the economy ought to remain growing for the intermediate future, so there will be at least as much money (and probably much more) for them to pay those bills. Unlike a Ponzi scheme, the idea that it will continue to attract new money to pay out existing claims is a realistic one. The real questions of its sustainability are a matter of specifics: is it collecting enough money to remain functional in the future, or is it outpacing the growth of the economy and the population? |
How long should I keep an uncleared transaction in my checkbook? | Typically I'll carry the charge for quite awhile, up to a year. If it hasn't cleared by then, I contact the institution that should have received the money to see what they want to do about it. If they tell me not to worry about it, then I change the payee to be "Overdraft Protection", and consider it as having been spent. That way I build up (slowly) a cushion in my checking account. |
Pros/Cons of Buying Discounted Company Stock | Some other answers mention the ability to sell at grant. This is very important. If you have that ability, think about your guaranteed return. In my case, I get a 15% discount on the lowest 6 month window price from the last two years. If you do the math, the worst case return can be calculated: 1) Money that from the beginning of the window, I make 15% for 6 months (30% annual return guaranteed) 2) Money at the end of the window (say the last month) is 15% for one month (180% annual return guaranteed) In the end, your average holding window for your money is about 3 months (you can calculate it exactly). At that rate, you have a guaranteed 60% annual return. You can't beat that anywhere, with a significant upside if your company stock is increasing. So, if your company has an instant sell at grant option, you have to be brain dead not to do it. If it takes time to get your shares, then you need to look at the volatility of the stock to see how big the chance of losing money is. To generalize to a formula (if that's what you want): WM = purchase window (in months); D = Discount Percentage; GR = Guaranteed Return GR = 12/(WM/2) * D = 6*D/WM One last thing, If you are going to participate in ESPP, make you that you understand how to do your taxes yourself. I haven't found a tax person yet who does ESPP correctly (including an ex IRS agent), so I always have to do my taxes myself to make sure they get done correctly. |
Is there a limit on the dollar amount of a personal check? | Because of the way checks are processed, you can't write a check for $100 million or more: http://www.bankingquestions.com/checksyoureceived/q_limitfunds.html The field used for 'amount' has 10 digits, so anything at/above 10^10 cents (which would require 11 digits) can't be processed, at least not by normal means. |
Is keeping track of your money and having a budget the same thing? | The two are closely related. A budget is a detailed plan for how to spend. Expense tracking is a tool to analyze your previous spending performance. Creating a plan for how to spend your money without any record of your previous spending--is an empty promise to yourself that you will never follow up on. Did I stay within my budget? Doesn't matter, I didn't track the spending anyway. Even if you do plan to track your performance, if you have not previously done so, you won't have a good basis for how much to expect in each category. Most people have a general idea of how much they have spent and many budgets are formed based on that general intuition, but they are often surprised when they track how every penny is spent and look at the totals from month to month and over years. By actually seeing how much has been spent it's easier to pick the big financial drains and target them for reduction, if your desire is more savings, for example. I know people who keep a close eye on what they spend each month, but they don't allocate money in categories for the next month. They don't perform as well on reducing spending, but they often don't care. They feel like they make enough and they save enough, so why worry? I also know people who create an unrealistic budget each month because they haven't done a good job tracking their previous spending. They know what the monthly bills are, but they don't account well for variable or cyclical expenses like repairs, Christmas, etc. Both tools are essential for maximizing your own personal finance. |
Buying and selling the same stock | Elaborating on kelsham's answer: You buy 100 shares XYZ at $1, for a total cost of $100 plus commissions. You sell 100 shares XYZ at $2, for a total income of $200 minus commissions. Exclusive of commissions, your capital gain is $100 for this trade, and you will pay taxes on that. Even if you proceed to buy 200 shares XYZ at $1, reinvesting all your income from the sale, you still owe taxes on that $100 gain. The IRS has met this trick before. |
What is the preferred way to set up personal finances? | simplicity and roi are often at odds. the simplest plan that also supports a reasonable investment return would have 3 accounts: if you want to get better returns on your investments, things can get much more complicated. here are some optional accounts to consider: besides the mechanics of money flowing between accounts, a budget helps you understand and control your spending. while there are many methods for this (e.g. envelopes of cash, separate accounts for various types of expenses), the simplest might be using mint.com. just be sure to put all your spending on a credit or debit card, and you can see your spending by category when you log into mint. it can take a bit to get it set up, and your bank needs to be compatible, but it can give you a really good picture of where your money is going. once you know that, you can start making decisions like "i should spend less on coffee", or "i should go to the zoo more", based on how much things cost vs how much you enjoy them. if you feel like your spending is out of control, then you can set yourself hard limits on certain kinds of spending, but usually just watching and influencing your own choices is enough. notes: if you have a spouse or partner, you should each maintain your own separate accounts. there are many reasons for this including simplicity and roi, besides the obvious. if you feel you must have a joint account, be sure to clearly define how it should be used (e.g. only for paying the utilities) and funded (x$ per month each). particularly with your house, do not do joint ownership. one of you should be a renter and the other a landlord. some of these statements assume you are in the usa. on a personal note, i have about 20 credit cards, 2 checking accounts, 2 ira's, 2 brokerage accounts, and 3 401k's. but i consider myself a personal finance hobbyist, and spend an absurd amount of time chasing financial deals and tax breaks. |
Why does Warren Buffett say his fund performance, relatively, is likely to be better in a bear market than in a bull market? | From the letter you link: Our performance, relatively, is likely to be better in a bear market than in a bull market so that deductions made from the above results should be tempered by the fact that it was the type of year when we should have done relatively well. In a year when the general market had a substantial advance I would be well satisfied to match the advance of the Averages. Putting those two sentences together, the word relatively means that his funds perform better than the market in bear markets and perform about the same as the overall market in bull markets. It does not mean that absolute performance is better in bear markets than bull markets. Later on he states This policy should lead to superior results in bear markets and average performance in bull markets. |
Advice for college student: Should I hire a financial adviser or just invest in index funds? | Exactly what you do with the money depends on various personal choices you'll have to make for yourself. Investing your money in Vanguard index funds such as the ones you mentioned is certainly one smart move. However, I think you're quite right to be suspicious of an advisor with a 1% fee. In many cases, such advisors are not worth their costs. The thing to remember is that, typically with that type of fee structure, you always pay the costs, even if the advisor turns out to be wrong and your money doesn't grow. One thing to check is whether the advisor you mentioned is paid only by the fees he charges (a "fee-only financial planner') , or whether he also makes money via the sales of financial products. Some advisors earn money by selling you financial products (such as mutual funds), which can create a conflict of interest. You can read about fee-only financial advisors and choosing a financial advisor on Investopedia. |
Is candlestick charting an effective trading tool in timing the markets? | Candlesticks and TA are a relic of pre-computer trading, period. Market makers use sophisticated algorithms not for trading, but manipulations. |
Can a Roth IRA be used as a savings account? | (To be clear, IRA accounts are just wrappers, and can contain a large variety of investments. I'm restricting myself to the usual setup of investment in the stock market.) So, let's say you have $5000 in savings, as an emergency fund. Of the top of my head, putting some of it into a Roth IRA could backfire in the following ways: The basic principle here is that the stock market is not a good place for storing your emergency cash, which needs to be secured against loss and immediately accessible. Once you're happy with your level of emergency cash, however, tax-advantaged investment accounts are a reasonable next step. |
NYSE & NASDAQ: Mkt Cap: $1 billion+ | Try Google Finance Screener ; you will be able to filter for NASDAQ and NYSE exchanges. |
How do I invest and buy/sell stocks? What does “use a broker” mean? | There are 2 main types of brokers, full service and online (or discount). Basically the full service can provide you with advice in the form of recommendations on what to buy and sell and when, you call them up when you want to put an order in and the commissions are usually higher. Whilst an online broker usually doesn't provide advice (unless you ask for it at a specified fee), you place your orders online through the brokers website or trading platform and the commissions are usually much lower. The best thing to do when starting off is to go to your country's stock exchange, for example, The ASX in Sydney Australia, and they should have a list of available brokers. Some of the online brokers may have a practice or simulation account you can practice on, and they usually provide good educational material to help you get started. If you went with an online broker and wanted to buy Facebook on the secondary market (that is on the stock exchange after the IPO closes), you would log onto your brokers website or platform and go to the orders section. You would place a new order to buy say 100 Facebook shares at a certain price. You can use a market order, meaning the order will be immediately executed at the current market price and you will own the shares, or a limit price order where you select a price below the current market price and wait for the price to come down and hit your limit price before your order is executed and you get your shares. There are other types of orders available with different brokers which you will learn about when you log onto their website. You also need to be careful that you have the funds available to pay for the share at settlement, which is 3 business days after your order was executed. Some brokers may require you to have the funds deposited into an account which is linked to your trading account with them. To sell your shares you do the same thing, except this time you choose a sell order instead of a buy order. It becomes quite simple once you have done it a couple of times. The best thing is to do some research and get started. Good Luck. |
Understanding how this interpretation of kelly criterion helps the trader | The goal of the kelly criterion strategy is to find a balance between preservation of starting capital and returns. One of extreme you could bet the entirety of your account on one trade, which would maximize your returns if you win, but leave you unable to further invest if you lose. On the other extreme, you could bet the smallest amount of capital possible over the course of several trades to increase the probability that you'll even out to 70% accuracy over time. But this method would be extremely slow. So for your case, investing 40% each time is one way to find an optimal balance between these two extremes. Use this as a rule of thumb though, because your own situation and investing goals may differ from the goal of optimal growth. |
Comparison between buying a stock and selling a naked put | Option prices are computed by determining the cost of obtaining the option returns using a strategy that trades the underlying asset continuously. It sounds like what you are describing is rapidly trading the option in order to obtain returns similar to those of the stock. The equality goes both ways. If the option is appropriately priced, then a strategy that replicates stock returns using the option will cost the same as buying the stock. Because you can't trade continuously, you won't actually be able to replicate the stock return, and it may seem like you are making arbitrage profit (puts may seem abnormally expensive), but you do so by bearing tail risk (i.e., selling puts loses more money than owning the associated stock if an unusually bad event occurs). |
I can't understand candlestick shadows | Each candlestick in a candlestick chart represents the open, close, high and low for a period of time. If you are looking at a daily chart it represents the open price, close price, high price and low price for that day. If you are looking at an hourly chart, then a single candlestick represents the open, close, high and low prices for an hour. If looking at a weekly chart, then a single candlestick will represent the opening price on Monday morning, the closing price on Friday afternoon, and the highest and lowest price for that week. The diagram below represents the two main types of candle sticks. When the price closes higher than they open for the period of the candlestick it is called a bullish candle and the main body is usually represented in green. When the price closes lower than they open for the period of the candlestick it is called a bearish candle and the main body is usually represented in red. In a bullish candle with a large real body and small shadows or wicks, where prices open near the low of the period and close near the top of the period, it represents a very bullish period (especially if volume is high). An example of this situation could be when good news is released to the market and most market participants want to buy the shares driving prices higher during the period. An example of a bullish candle with a small real body and a large upper shadow or wick could be when market participants start buying early during the period, then some negative news comes out or prices reach a major resistance level, then prices drop from their highs but still close higher than the open. The large upper shadow represents some indecision in prices moving higher. In a bearish candle with a large real body and small shadows or wicks, where prices open near the high of the period and close near the low of the period, it represents a very bearish period (especially if volume is high). An example of this situation could be when bad news is released to the market and most market participants want to sell the shares driving prices lower during the period. An example of a bearish candle with a small real body and a large lower shadow or wick could be when market participants start selling early during the period, then some positive news comes out or prices reach a major support level, then prices move up from their lows but still close lower than the open. The large lower shadow represents some indecision in prices moving lower. These are just some examples of what can be derived from looking at candlestick charts. There are plenty more and too much to include in this answer. Another type of candle is the Doji, represented in the diagram below. The Doji Candle represents indecision in the market. Prices open then move up to the high of the period then start falling past the open before reversing again and closing either at the open or very close to the open. The market participants can't decide whether the price should move up or down, so prices end up closing very close to where they opened. A doji Candle close to a market high or low could represent a turning point in the short term trend and could mean that over the next period or two prices could reverse and go in the opposite direction. There are many more definitions for candlestick charts, and I would recommend an introductory book on candlestick charting, like one from the "Dummies" series. The main things to keep in mind as a beginner it that a strong bullish candle with small shadows and large real body could represent further price movement upwards, a strong bearish candle with small shadows and large real body could represent further movement downwards, and any candle with large shadows could represent indecision and a reversal from the direction of the large shadow. |
Paying off a loan with a loan to get a better interest rate | Your current loan is for a new car. Your refinanced loan would probably be for a used car. They have different underwriting standards and used car loan rates are usually higher because of the higher risks associated with the loans. (People with better credit will tend to buy new cars.) This doesn't mean that you can't come out ahead after refinancing but you'll probably have to do a bit of searching. I think you should take a step back though. 5% isn't that much money and five years is a long time. Nobody can predict the future but my experience tells me that the **** is going to hit the fan at least once over any five year period, and it's going to be a really big dump at least once over any ten year period. Do you have savings to cover it or would you have to take a credit card advance at a much higher interest rate? Are you even sure that's an option - a lot of people who planned to use their credit card advances as emergency savings found their credit limits slashed before they could act. I understand the desire to reduce what you pay in interest but BTDT and now I don't hesitate to give savings priority when I have some excess cash. There's no one size fits all answer but should have at least one or two months of income saved up before you start considering anything like loan prepayments. |
How can I deposit a check made out to my business into my personal account? | I have checked with Bank of America, and they say the ONLY way to cash (or deposit, or otherwise get access to the funds represented by a check made out to my business) is to open a business account. They tell me this is a Federal regulation, and every bank will say the same thing. To do this, I need a state-issued "dba" certificate (from the county clerk's office) as well as an Employer ID Number (EIN) issued by the IRS. AND their CHEAPEST business banking account costs $15 / month. I think I can go to the bank that the check is drawn upon, and they will cash it, assuming I have documentation showing that I am the sole proprietor. But I'm not sure.... What a racket!! |
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? | House as investment is not a good idea. Besides the obvious calculations don't forget the property tax, home maintenance costs and time, insurance costs, etc. There are a lot of hidden drains on the investment value of the house; most especially the time that you have to invest in maintaining it. On the other hand, if you plan on staying in the area, having children, pets or like do home improvements, landscaping, gardening, auto repair, wood/metal shopping then a house might be useful to you. Also consider the housing market where you are. This gets a bit more difficult to calculate but if you have a high-demand rental market then the house might make sense as an investment if you can rent it out for more than your monthly cost (including all of those factors above). But being a landlord is not for everyone. Again more of your time invested into the house, you have to be prepared to go months without renting it, you may have to deal with crazy people that will totally trash your house and threaten you if you complain, and you may need to part with some of the rent to a management company if you need their skills or time. It sounds like you are just not that interested right now. That's fine. Don't rush. Invest your money some other way (i.e.: the stock market). More than likely when you are ready for a house, or to bail your family out of trouble (if that's what you choose to do), you'll have even more assets to do either with. |
Can I buy IPO stock during the pre-market trading on the day of IPO? | The first moment of trading usually occurs even later than that. It may take a few hours to balance the current buy/sell orders and open the stock. Watch CNBC when a hot IPO is about to open and you'll see the process in real time. If you miss it, look at a one day Yahoo chart to see when the open occurred. |
How to spend more? (AKA, how to avoid being a miser) | People who choose "good enough" (satisficers) tend to be happier than people who choose "the best" (maximizers), see link. So decide you want to be a satisficer for most decisions, and then work at it: deliberately limit the amount of time you spend on a small decision, and celebrate a non-optimal decision. Decide to be good to yourself, and say it out loud. Practice the skill. |
How common are stock/scrip dividends (as opposed to cash dividends) in US equity markets? | Check out the NASDAQ and NYSE websites(the exchange in which the stock is listed) for detailed information. Most of the websites which collate dividend payments generally have cash payments history only e.g. Dividata. And because a company has given stock dividends in the past doesn't guarantee such in the future, I believe you already know that. |
What are pros and cons of UK Building Societies compared to banks? | they may be willing to issue mortgages with smaller deposits, but may take longer to make a decision That cannot be farther from the truth. If you are getting a mortgage on a smaller deposit, you will be paying a higher interest rate. Time to take a decision depends very much on your credit situation, earnings, spending and the amount of loan you want to avail of. advantages and disadvantages compared to banks today Nothing specifically that is obvious. You deposits are guaranteed by FSCS, which is primarily everybody's biggest concern. One thing I did observe was they generally have saving accounts which pay better than the big banks, but that is for one to compare and find out. In ownership structure you own a part of the building society because you are a member by having an account(bank/mortgage) with them. Not the case with a big bank though unless you own any shares. You can make a case for the difference of the big bank's multiple business as compared to a building society. |
Why do card processing companies discourage “cash advance” activities | I thought this was because credit card companies charge the retailer a fee to accept credit card payments. If you spend $100, the retailer pays $1 (or whatever percentage they have negotiated) to the credit card provider. Handing over $100 cash and paying $1 fee to Visa means a loss to the retailer. The same transaction on $100 worth of product means the loss is accepted out of the profit margin which the retailer accepts to attract custom. |
If stock price drops by the amount of dividend paid, what is the use of a dividend | The stock will slowly gain that $1 during the year. Suppose we have the highly theoretical situation that a company's stock is worth exactly $10 right after it paid its dividend, its dividend is always $1 per stock, and the company and everything else is so stable that its value never changes. Then the stock value right before the next dividend is paid will be close to $11 -- after all, it's worth a certain $1 dividend the next day, plus the $10 stock. And in between, half a year after the dividend was paid, it will be in between, say $10.50, or actually slightly less than that (because people like to buy in late so they can make money some other way with the money first). But the point holds -- the price decrease on the day that dividend is paid had been building up the whole period before that decrease. So stock dividends do make you money. |
Does FHA goes hand in hand with PMI ? | FHA insured loans must 'go hand in hand' with PMI, because the FHA element is the insurance itself. The FHA isn't actually giving you a loan, that's coming from a lender; instead, the FHA is insuring the loan, at some cost to you - but allowing a loan to folks who may not be able to afford it normally (lower down payment requirements and a somewhat cheaper PMI). FHA-insured loans may be lower rates in some cases than non-FHA insured loans because of this backing; that's because they make it easier for people of poorer credit histories with smaller down payments to get a house in the first place. Those people would tend to have a harder time getting a loan, and be charged sometimes usurious rates to get it. Low down payment and mediocre credit history (think 580-620) mean higher risk, even beyond the risk directly coming from the poor loan to value ratio. Comparing this table of Freddie Mac rates to this table of FHA-backed loan rates, the loan rates seem comparable (though somewhat lagging in changes in some cases). FHA loans are not nearly the size or complexity of loan population as Freddie Mac, so be wary of making direct comparisons. Looking into this in more detail, pre-collapse (before 12/07), FHA rates were a bit lower - average rate was about .5 points lower - but starting with 12/07, FHA average rates were usually higher than Freddie Mac rates for 30 year fixed loans: in 1/2009 for example they were almost a point higher. As of the last data I see (5/13) the rates were within 0.1 points most months. This may be in part because Freddie Mac had looser requirements to get a loan pre-collapse, then tightened significantly, then started to loosen some (also around June 2013, rates climbed significantly due to some signals from the Fed, although they're almost back to their lows thanks to the Fed again). These are averages across all loans, so you get some noise as a result. Loan interest rates are very personal, in general: they depend on your credit, your house and down payment, and your bank (which varies by your location). The best thing to do is to shop around yourself and just see what you get, and ask your lender any questions you have: if you pick a local lender with a good service history and who is willing to talk to you in person (ie, has a direct phone number), you'll have no trouble getting answers. |
Online sites for real time bond prices | FINRA lets you view recent trades, but as stated in the other answer bonds are illiquid and often do not trade frequently. Therefore recent trades prices are only a rough estimate of the current price that would be accepted. http://finra-markets.morningstar.com/BondCenter/Default.jsp |
What kind of life insurance is cheaper? I'm not sure about term vs. whole vs. universal, etc | TL;DR: Only term is pure insurance and is the cheapest. The rest are mixtures of insurance and savings/investment. Typically the mixtures are not as efficient as doing it yourself, except that there can be tax advantages as well as the ability to borrow from your policy in some cases. |
Why can't I short a stock that sells for less than $5? Is there another way to “go short” on them? | A bit of poking around brought me to this thread on the Motley Fool, asking the same basic question: I think the problem is the stock price. For a stock to be sold short, it has to be marginable which means it has to trade over $ 5.00. The broker, therefore, can't borrow the stock for you to sell short because it isn't held in their clients' margin accounts. My guess is that Etrade, along with other brokers, simply exclude these stocks for short selling. Ivestopedia has an explanation of non-marginable securities. Specific to stocks under $5: Other securities, such as stocks with share prices under $5 or with extremely high betas, may be excluded at the discretion of the broker itself. |
Why do Americans have to file taxes, even if their only source of income is from a regular job? | One significant reason it makes sense for filing to be the default is home ownership rates. I think far more so than investment income, Americans own homes: as there is a significant mortgage interest deduction, between that and investments a large number of Americans would have to file (about a third of Americans get the mortgage interest tax deduction, and a large chunk of the richest don't qualify but would have to file for investments anyway). We also have a very complicated tax code, with nearly everyone getting some kind of deduction. Earned Income Tax Credit for the working poor (folks making, say, $30k for a family of 4 with a full-time job get several thousand dollars in refundable credits, for example), the Student Loan interest deduction, the above mortgage deduction, almost everyone gets something. Finally, your employer may not know about your family situation. As we have tax credits and deductions for families based on number of children, for example, it's possible your employer doesn't know about those (if you don't get health insurance on their behalf, they may well not know). Start reporting things like that separately... and you end up with about as much work as filing is now. |
Methods for forecasting price? | It's not impossible to forecast the future price of a commodity. However, it's exactly that; an educated guess, much like the weather, and the further out that prediction is made, the higher the percentage error is expected. A lot of information is gathered by various instruments, spotters etc at a very high cost of time and money, to produce a prediction that starts breaking down after about five days and is no more than a wild guess after about ten. How accurately a price can be forecast depends on the commodity. There are seasonal and thus cyclical changes in many commodities, on top of which there is a general trend which is nearer term. A pretty decent prediction can thus be arrived at with a relatively simple seasonally-adjusted percentage change algorithm; take a moving average of the last few measurements, compute the percent change versus the same period last year (current minus last divided by last) and multiply it by last year's number for the current day or month to arrive at a pretty decent prediction for the current and near-future periods (up to about as far ahead as you have looked behind). Another thing you may need to do is normalize. Many price graphs are very jittery; the price of a stock may fluctuate many percentage points on a single day, and there's a lot of "noise" inherent in them. A common tool to normalize is a box-and-whisker plot, which for a given time period will aggregate all samples within that period, and give you a measurement of the lowest sample, highest sample, median, and quartiles (the range of each 25% of the full sample space). Box plots can also be plotted on the "interquartile range" or "middle fifty"; this throws away the very noisy outliers and constructs a much more regular plot from the inner part of the bell curve. You can reverse-engineer a best-fit line connecting the elements of each box, and the closer two lines are, the more likely the real future data will be around that area (because the quartile between those to lines is very dense; 25% of the values are in a very small range meaning many samples occurred there). Lastly, there are outside factors that are not included in simple percentage growth. Big news must be taken into account by introducing more subjective guesses about future data. If you see an active hurricane season coming (or a hurricane bearing down on Galveston/Houston) then it's reasonable to assume that the price of oil and/or refined oil products (like gas and jet fuel) will skyrocket. A cyclical growth model will not predict these events, but you can factor in the likelihood of a big change with a base onto which you add last year's numbers, and onto that you add regular growth. Conversely, when a huge spike happens due to a non-cyclical event like a natural disaster, you must smooth it out by reducing the readings to fit in the curve, otherwise your model for next year will expect the same anomaly at the same time and so it will be wrong. These adjustments are necessary, but the more of them you make, the less the graph reflects real history and the more it reflects what you think it should have been. |
If stock price drops by the amount of dividend paid, what is the use of a dividend | There are many reasons for buying stock for dividends. You are right in the sense that in theory a stock's price will go down in value by the amount of the dividend. As the amount of dividend was adding to the value of the company, but now has been paid out to shareholder, so now the company is worth less by the value of the dividend. However, in real life this may or may not happen. Sometimes the price will drop by less than the value of the dividend. Sometimes the price will drop by more than the dividend. And other times the price will go up even though the stock has gone ex-dividend. We can say that if the price has dropped by exactly the amount of the dividend then there has been no change in the stockholders value, if the price has dropped by more than the value of the dividend then there has been a drop to the stockholder's value, and if the price has gone up or dropped by less than the value of the dividend then there has been a increase to the stockholder's value. Benefits of Buying Stocks with Good Dividends: What you shouldn't do however, is buy stocks solely due to the dividend. Be aware that if a company starts reducing its dividends, it could be an early warning sign that the company may be heading into financial troubles. That is why holding a stock that is dropping in price purely for its dividend can be a very dangerous practice. |
Ideal investments for a recent college grad with very high risk tolerance? | Congratulations on being in this position. Your problem - which I think that you identified - is that you don't know much about investing. My recommendation is that you start with three goals: The Motley Fool (www.fool.com) has a lot of good information on their site. Their approach may or may not align with what you want to do; I've subscribed to their newsletters for quite a while and have found them useful. I'm what is known as a value investor; I like to make investments and hold them for a long time. Others have different philosophies. For the second goal, it's very important to follow the money and ask how people get paid in the investment business. The real money in Wall Street is made not by investment, but by charging money to those who are in the investment business. There are numerous people in line for some of your money in return for service or advice; fees for buying/selling stocks, fees for telling you which stocks to buy/sell, fees for managing your money, etc. You can invest without spending too much on fees if you understand how the system works. For the third goal, I recommend choosing a few stocks, and creating a virtual portfolio. You can then then get used to watching and tracking your investments. If you want a place to put your money while you do this, I'd start with an S&P 500 index fund with a low expense ratio, and I'd buy it through a discount broker (I use Scottrade but there are a number of choices). Hope that helps. |
Is it okay to be married, 30 years old and have no retirement? | You aren't in trouble yet, but you are certainly on a trajectory to be later. The longer you wait the more painful it will be because you won't have the benefit of time for your money to grow. You may think you will have more disposable income at some point later when things are paid off, but trust me you wont. When college tuition kicks in for that kid, you are going to LAUGH at those student loan amounts as paltry. The wording of your question was confusing because you say in one place that you have no savings, but in another you claim to be putting away around $5k/year. The important point is how much you have saved at this point and how much you are putting in going forward. Some rules of thumb from Fidelity: (Based on your scenario) Take a look at your retirement account. Are you on track for that? It doesn't sound like it. Can you get away with your current plan? Sure, lots of people do, but unless you die young, hit the jackpot in the stock market or lottery, you are probably going to have to live WELL below your current standard of living to make that happen. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.