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Why does Yahoo miss some mutual fund dividends/capital gains? | This looks more like an aggregation problem. The Dividends and Capital Gains are on quite a few occassions not on same day and hence the way Yahoo is aggregating could be an issue. There is a seperate page with Dividends and capital gains are shown seperately, however as these funds have not given payouts every year, it seems there is some bug in aggregating this info at yahoo's end. For FBMPX http://uk.finance.yahoo.com/q/hp?s=FBMPX&b=2&a=00&c=1987&e=17&d=01&f=2014&g=v https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/316390681 http://uk.finance.yahoo.com/q/pr?s=FBMPX |
What happens to bonds values when interest rates rise? [duplicate] | It depends a lot on your investment period and the quality of the bonds that you want to invest. For example, if you want to invest until the maturity of the bonds, and the bonds are very safe (i.e. they are not expected to default), it does not matter that the interest rate rise. That is because at the maturity of the bond it will converge to its maturity value which will be independent of the change of the interest rates (although on the middle of the life the price of the bond will go down, but the coupon should remain constant -unless is a floating coupon bond-). An option could be to invest in an ETF with short term bonds (e.g. 1 year) with AAA credit rating (high quality, so very low default rate). It won't yield much, but is more than 0% if you hold it until maturity. |
How to make use of EUR/USD fluctuations in my specific case? | Remember that converting from EU to USD and the other way around always costs you money, at least 0.5% per conversion. Additionally, savings accounts in EU and USA have different yields, you may want to compare which country offers you the best yields and move your money to the highest yielding account. |
Funding an ira or roth ira | And on the last sentence, it doesn't matter when or where the money was earned (money is fungible, so there's generally not even any way to tell), but you do have to have sufficient earned income (that's basically money you earn from working, not from dividends and interest or selling stock and the like) in the contribution year to cover the IRA contribution. |
Question about being a resident | I am assuming you are asking for Tax purposes. In Oregon, there is a distinction between Full-Year and Partial-Year residency for Tax purposes. You are most likely considered a Partial-Year resident since you moved into the state last year. However, there are also special conditions under which you might be considered a Full-Year resident, so check out the state's tax residency rules here |
If the put is more expensive than the call, what does it mean | What it means is that the stock has already moved down. Options and other derivatives follow the price of the underlying they are not a precursor to what the underlying is going to do. In other words, the price of a derivative is derived from the underlying. |
Personal credit card for business expenses | If you are just starting out, I would say there is no disadvantage to using a personal card for business expenses. In fact, the advantage of doing so is that the consumer protections are better on personal cards than on business cards. One possible advantage to business credit cards, is that many (but not all) will not show up on your personal credit report unless you default. This might help with average age of accounts if you have a thin credit file, but otherwise it won't make much difference. Issuers also expect higher charge volumes on business cards, so as your business grows might question a lot of heavy charges on a personal card. Whether this would ever happen is speculation, but it's worth being aware of it. |
Personal “Profit & Loss Statement” required for mortgage? | The bank is asking for a P & L because as a contractor you are in essence running your own business. Its kind of a technicality, all you need to do is look at any expenses that you paid out of pocket while working there that were job or "business" related. Write a list of those expenses such as "Gas", "Materials", "Legal Expenses", etc. and then show your total income from that job or "contract" subtract the expenses and show your total profit or loss hence Profit / Loss Statement. I realize that you may not have any real expenses tied to that job although I don't know and if you don't, then simply write in your income, say no expenses and show your "profit/pay" at the bottom of your P & L! Viola! Your Done! Good luck with the closing! |
value of guaranteeing a business loan | The standard goal of valuing anything is to seek the fair price for that thing in the open market. Depending on what is being valued, that may or may not be an easy task. eg: to value your home, get a real estate appraiser, who will look at recent market sales in your area, and adjust for nuances of your property. To value your loan guarantee, you would need to figure out what it is actually worth to the business, which may be difficult. In a perfect world, you would be able to ask the bank to tell you the interest rate you would have to pay, if the loan was not guaranteed. This would show you the value you are providing to the business by guaranteeing it. ie: if the interest would be $100k a year unguaranteed, but is only $40k a year guaranteed, you are saving the business $60k a year. If the loan is to last 5 years, that's a total of $300k. Of course, it is likely the bank simply won't offer you an unguaranteed loan at all. This makes the value quite difficult to determine, and highlights the underlying transaction you are considering: You are taking on personal risk of loan default, to profit the business. If you truly can't find an equitable way to value the guarantee, consider whether you understand the true risk of what you are doing. If you are able to determine an appropriate value for the loan, consider whether increasing your equity is fair compensation. There are other methods of compensation available, such as having the company pay you directly, or decrease the amount of capital you need to invest for this new set of equity. In the end, what is fair is what the other shareholders agree to. If you go to the shareholders with anything less than professional 3rd party advice (and stackexchange does not count as professional), then they may be wary of accepting your 'fee', no matter how reasonable. |
Why can Robin Hood offer trading without commissions? | It isn't the first initiative (see link below) and maybe this one will stick around. Time will be a good test. Here is an article on it.... http://www.investopedia.com/articles/active-trading/020515/how-robinhood-makes-money.asp They plan to make money off unused balances - so they hope to get the masses signed up using the 0$ fees. Also, no type of advanced trading, just limit and market orders. Think of it this way - even if someone puts in 100$ and buys a stock at 88$...that 12$ sits there. Multiply that by say....200,000 accounts and then do a basic 3% return on that. Also, they plan for margin accounts in the future. Time will tell.... sort of like I use Acorn right now (but it charges a fee to invest - a slightly higher than normal one). I signed up for fun and am just letting it ride. |
Calculate Estimated Tax on Hobby Business LLC | You are on the right track, for tax purposes its all ordinary income at the end of 2016. If the free lance "employer" will withhold fed,state and local tax, then that takes care of your estimated tax. If they can't or won't, you will need to make those estimates and make payments quarterly for the fed and state tax at your projected tax liability. Or, you can bump up withholding by your day job employer and cover your expected tax liability at year end without making estimated tax payments. |
Shares in Chinese startup company | Setting up an entity that is partially foreign owned is not that difficult. It takes an additional 1-1.5 months in total, and in this particular case, you guys would be formed as a Joint Venture. It will cost a bit more (about 3-5000). If you're serious about owning a part of a business in China, you should carefully examine what he means by 'more complicated'. From my point of view, I have set up my own WOFE in China, and examined the possibilities of a JV and even considered using a friend to set up the company under their personal name as a domestic company (which is what your supervisor is doing), any difference between the three are not really a big deal anymore, and comes down to the competency of the agencies you are using and the business partner themselves. It cost me 11,000 for a WOFE including the agency and government registration fees (only Chinese speaking). You should also consider the other shareholders who may be part of this venture as well. If there are other shareholders, and you are not providing further tangible contribution, you will end up replaced and penniless (unless of course you trust them too...), because they are actually paying money to be part of the business and you are not. They will not part with equity for you. I'm not a lawyer, but think you should not rely on any promises other than what it says on a company registration paper. Good luck! |
How do I adjust to a new social class? | Housing, eh? Housing costs are driven by salaries and land availability. Over in the Bay Area, $1500/mo for a nice 1-bedroom apartment is a good deal... but a decent software engineer with ~4 years' experience can get $120k, easily. The standard benchmark of affordability of housing is spending a third of your income on it a year: that guy can afford about $3,333/mo on housing. (If you don't fritter away the money and can keep your cost of living down and save money, you can really clean up, especially if you move elsewhere later.) So, to stop thinking about it in terms of dollar value, first try to think of it in terms of time: 33% of someone's salary or a third of their time at work going for housing is pretty nominal. Beyond that, think about it in terms of opportunity cost: If you saved that extra $20, what exactly would you use it for, and how much of that goal does it represent? |
How do I go about finding an honest & ethical financial advisor? | The other answers are good, but not UK-specific. You need to look for an Independent Financial Advisor (IFA). These are regulated by the FCA and you pay them a time-based fee for their services, they do not take commission on the products they recommend to you. The Government Money Advice Service page (hat tip to @AndyT in the comments on the question for the link) tells you how to go about finding one of these and what sort of questions to ask. Contrary to the note in the answer by @Harper, in the UK many IFAs do have perfectly nice offices, this is not a sign that should put you off. Personal recommendations for IFAs are usually the best way to go but failing that there are directories of them and many will have an initial conversation with you for free to ensure you are aligned with each other. |
First time home buyer. How to negotiate price? | Whether applying for a job or buying a house, Offer a more specific price like $72,500, which tells them you thought hard about the price. $70K is too 'round' of a number. Additionally, your financial ability/condition can be a factor too. If you have 20% down, and your Realtor assures the seller that your transaction will go down without a hitch, and you'll be approved for a mortgage, they may accept your offer of $72,500 over the other guys $78K offer if [s]he has less desirable finances. Good Luck! |
How profitable is selling your customer base? | Yes, some companies sell personal data on their customers, but it almost always means a bad business due to reputation cost. The Financial Times even made a calculator to demonstrate how much personal information is worth: The sellers get pennies for the info, so that any decent business would earn more staying away from such dubious operations. |
Peer to Peer Lending Small notes Vs Large Notes | I started with lending club about a year ago. I love it. It has been insightful. Off topic, but I am in a loan to a guy who make 120K a year and is regularly late and has a pretty high interest rate. Crazy. You gain some economies of scale by going with a bigger note. I have $100 notes that I get hit for 2 or 3 cents for a fee, where $25 notes are always a penny. However, I don't think that should be your deciding factor. I scale my note purchases based on how much I like the status of the borrower. For example, I did $100 (which is currently my max) for a guy with a reasonable loan amount 16K, a stable work history (15+ years), a great credit history, and a great interest rate (16.9%). If one of those things were a bit out of "whack". I might go $50, two $25. I prefer 36 month notes, really 5 years to get out of debt? It is unlikely to happen IMHO. Keep in mind that if you invest $100 in a loan, then you get one $100 note. You can't break them up into 4 $25 notes. For that reason, if you are likely to want to sell the note prematurely, keep it at $25. The market is greater. I've had a lot of success using the trading account, buying further discounted notes for people who want out of lending club, or get spooked by a couple of late payments and a change in billing date. Another advantage of using the trading account is you start earning interest day 1. I've had new notes take a couple of weeks to go through. To summarize: There are some other things, but that is the main stuff I look at. |
What is the best way to determine if you should refinance a mortgage? | Yes, take the new rate, but instead of using the new 30 year term, calculate the payment as though the new mortgage were at the remaining term. 3 years into a 30? You calculate the payment as if the new mortgage were 27 years. This will tell you what you are really saving. Now, take that savings and divide into your closing costs if any. That will give you the break even. Will you be in the house that long? If you can find a no closing cost deal, it's worth it for even 1/8% savings. |
Why do stocks split? | Stock splits are typically done to increase the liquidity of stock merely by converting every stock of the company into multiple stocks of lower face value. For example, if the initial face value of the stock was $10 and the stock got split 10:1, the new face value of the stock would be $1 each. This has a proportional effect on the market value of the stock also. If the stock was trading at $50, after the split the stock should ideally adjust to $5. This is to ensure that despite the stock split, the market capitalization of the company should remain the same. Number of Shares * Stock Price = Market Capitalization = CONSTANT |
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. |
What emergencies could justify a highly liquid emergency fund? | Since no one else mentioned it, there are sometimes amazing deals that require being the first person to take advantage of them. I'm not talking about black Friday sales, I'm talking about the woman who decided to sell the Porsche (she had bought for her cheating husband) for $1000. You might not run into those types of deals often, but having liquid investments will allow you to take advantage of them instead of kicking yourself. I just bought some real estate with some of my emergency fund that needed several months before I could properly finance it due to some legal issues with the deed that needed to go through court because there was a deceased person on the title. I will make far more on the deal when it's done than I ever could have made with that money invested in the market. |
How can I help others plan their finances, without being a “conventional” financial planner? | I think it's great that you want to contribute. Course Instructor You may want to take a look at becoming an instructor for a course like Dave Ramsey's Financial Peace University. These are commonly offered through churches and other community venues for a fee. This may be a good fit if you want to focus on basic financial literacy, setting up and sticking to a budget, and getting their financial "house" in order. It may not be a good fit if you don't want to teach an existing curriculum, or if you find the tenets of the course too unpalatable. A significant number of the people in Dave's audience are close to or in the middle of a financial meltdown, and so his advice includes controversial ideas such as avoiding credit altogether, often because that's how they got into their current mess. Counselor If you want to run your own show, I know of several people who have built their own practice that is run along the lines of a counselor charging hourly rates, and they work with couples who are having money problems. Building a reputation and a network of referring counselors and professionals is key here, and definitely seems like it would require a full-time commitment. I would avoid "credit counseling" and the like. Most of these organizations are focused on restructuring credit card debt, not spending signficant time on behavioral change. You don't need a series 7, 63, 65 etc. or even a CFA. I've previously acquired a number of these and can confirm that they are investment credentials that are intended to help you get a job and/or get more business as a broker or conventional financial planner, i.e. salesperson of securities. The licensure process is necessary to protect consumers from advice that serves the investment sales force but is bad for the consumer, and because you must be licensed to provide investment advice. There is a class of fee-only financial planners, but they primarily deal with complex issues that allow them to make money, and often give away basic personal finance advice for free in the form of articles, podcasts, etc. Charity For part-time or free work, in my area there are also several charity organizations that help people do their taxes and provide basic budgeting and personal finance instruction, but this is very localized and may vary quite a bit depending on where you live. However, if there are none near you, you can always start one! Journalism If you have an interest in writing, there are also people who work as journalists and write columns, books, or newsletters, and it is much easier now to publish and build a network online, either on your own, through a blog or contributing to a website. Speaker at Community events There are also many opportunities to speak to a specific community such as a church or social organization. For example, where I live there are local organizations for Spanish speaking, Polish speaking, elderly, young professional, young mother and retiree groups for example, all of who might be interested in your advice on issues that specifically address their needs. Good luck! |
Why index funds have different prices? | Price, whether related to a stock or ETF, has little to do with anything. The fund or company has a total value and the value is distributed among the number of units or shares. Vanguard's S&P ETF has a unit price of $196 and Schwab's S&P mutual fund has a unit price of $35, it's essentially just a matter of the fund's total assets divided by number of units outstanding. Vanguard's VOO has assets of about $250 billion and Schwab's SWPPX has assets of about $25 billion. Additionally, Apple has a share price of $100, Google has a share price of $800, that doesn't mean Google is more valuable than Apple. Apple's market capitalization is about $630 billion while Google's is about $560 billion. Or on the extreme a single share of Berkshire's Class A stock is $216,000, and Berkshire's market cap is just $360 billion. It's all just a matter of value divided by shares/units. |
Where can publicly traded profits go but to shareholders via dividends? | If a company earns $1 Million in net profit (let's say all cash, which is not entirely realistic), it can do one of three things with it: On the balance sheet - profits that have not been distributed show up as "retained earnings". When dividends are paid, Retained Earnings and cash are reduced. None of the other options change the fact that it is still "profit" - they all just affect the balance sheet, not the income statement: Note that when a company issues dividends, it reduces its per-share value since cash is leaving the door with nothing in return. In Apple's case, since a significant amount of its profit was earned in other countries (where it was not taxed by the US), it would pay a significant amount in US corporate tax by bringing it back to the US by investing it or paying dividends. They are betting that at some point, the US will change the rules to make it more favorable to "repatriate" the money and reduce their tax significantly. |
Investing in low cost index fund — does the timing matter? | Yes timing does matter. Using a simple Rate of Change indicator over the past 100 days and smoothed out with a 50 day Moving Average, I have plotted the S&P 500 since the start of 2007. The idea is to buy when the ROC indicator crosses above the zero line and sell when the ROC indicator crosses below the zero line. I have compared the results below of timing the markets from the start of 2007 to dollar cost averaging starting from the start of 2007 and investing every 6 months. $80k is invested in both cases. For the timing the market option $80k was invested at the start of 2007, then the total figure was sold out when a sell signal was given, then the total amount reinvested when a new buy signal was given. For the DCA option $5000 was invested every 6 months starting from the start of 2007 until the last investment at the start of July 2014. The results are below: Timing the markets results in more than double the returns (not including dividends and brokerage). Edit It has been brought up that I haven't considered tax in my Timing the Market option. So I have updated my timing the market spread-sheet to take into account both long-term and short-term CGT in the USA for someone on the highest tax bracket. The results are below: The result is still almost a 2x higher returns for the timing the markets option. Also note that even with the DCA option you will have to sell one day and pay CGT on any profits there. However, the real danger with the DCA option is if you need to sell during a market downturn and not make any profits at all. |
Canadian personal finance software with ability to export historical credit card transactions? | Yodlee is the back-end which communicates with the banks, and Mint just provide a pretty layer on top. You can sign up for an account with Yodlee directly, which may give you the flexibility you need. |
How do I bring money overseas? | This page from TripAdvisor may be of interest. Look at what fees are charged on your ATM cards and credit cards, and consider overpaying your credit card so you have a credit balance that you can draw on for cash "advances" from ATMs that will dispense in local currency. Depending on what fees your bank charges, you may get a better rate than the forex cash traders at the airport. Edit: Cards may not always have the best rate. I recently heard from a traveler who was able to use a locally but not globally dominant currency to buy cash of a major currency at a shopping mall (with competitive forex traders) at rates even better than the mid-market rates posted at xe.com and similar places; I don't think you'll have that experience going from Australia to Malaysia (but another traveler reading this might have a different pair). In my experience the card rates are slightly worse than those and the airport forex traders significantly worse. |
What are the fundamental levels that makes a Stock Ideal? (either to sell or buy) | I look at the following ratios and how these ratios developed over time, for instance how did valuation come down in a recession, what was the trough multiple during the Lehman crisis in 2008, how did a recession or good economy affect profitability of the company. Valuation metrics: Enterprise value / EBIT (EBIT = operating income) Enterprise value / sales (for fast growing companies as their operating profit is expected to be realized later in time) and P/E Profitability: Operating margin, which is EBIT / sales Cashflow / sales Business model stability and news flow |
How to fix Finance::Quote to pull quotes in GnuCash | The Yahoo Finance API is no longer available, so Finance::Quote needs to point at something else. Recent versions of Finance::Quote can use AlphaVantage as a replacement for the Yahoo Finance API, but individual users need to acquire and input an AlphaVantage API key. Pretty decent documentation for how to this is available at the GnuCash wiki. Once you've followed the directions on the wiki and set the API key, you still need to tell each individual security to use AlphaVantage rather than Yahoo Finance: As a warning, I've been having intermittent trouble with AlphaVantage. From the GnuCash wiki: Be patient. Alphavantage does not have the resources that Yahoo! did and it is common for quote requests to time out, which GnuCash will present as "unknown error". I've certainly been experiencing those errors, though not always. |
How to motivate young people to save money | Teach them that money can help solve most (if not all the problems) in life. If they truly appreciate the value of saving every single penny, eventually they will come to realize that if you don't touch your money (waste it on useless things you don't need such as eating out) that it can grow. Also teach them the value of compounding interest, even a TFSA/high interest savings account with a modest 3-4% annual ROI can be big with yearly additions and no withdrawals for a lifetime. Tell them to take Johnny Appleseed for example. Johnny starts up his TFSA with help from mom and dad at the age of 15, let's say they put in $5000 all together. Now let's say he adds in a modest $2500 to his TFSA every year until he is 55 years old. If the TFSA has an interest rate of 4%, then when he's 55 he'll have over half a million dollars in the bank and he really didn't have to do much besides not touch it. |
Paid cash for a car, but dealer wants to change price | On the surface this sounds ridiculous, which makes me suspect that there might be something that the dealer intends to cling on to; otherwise it sounds like the dealer should be ashamed to even call your son about its own incompetence. I'd recommend politely refusing the request since said mistake didn't happen on your end, and wait to see if the dealer comes back with some sort of argument. |
What's the difference when asked for “debit or credit” by a store when using credit and debit cards? | Just to add about using debit card as "credit" vs "debit" way: In addition to the difference of having to enter the PIN when using "debit" mode (vs having to sign in "credit" mode), for stores that offer cash back (i.e. get cash out of your account at the same time as paying), you can only get cash back when using "debit" mode. |
Are long-term bonds risky assets? | In the quoted passage, the bonds are "risky" because you CAN lose money. Money markets can be insured by the FDIC, and thus are without risk in many instances. In general, there are a few categories of risks that affect bonds. These include: The most obvious general risk with long-term bonds versus short-term bonds today is that rates are historically low. |
Buy or sell futures contracts | Futures contracts are a member of a larger class of financial assets called derivatives. Derivatives are called such because their payoffs depend on the price of other assets (financial or real). Other kinds of derivatives are call options, put options. Fixed income assets that mimic the behavior of derivatives are callable bonds, puttable bonds etc. A futures contract is a contract that specifies the following: Just like with any other contract, there are two parties involved. One party commits to delivering the underlying asset to the other party on expiration date in exchange for the futures price. The other party commits to paying the futures price in exchange for the asset. There is no price that any of the two parties pay upfront to engage in the contract. The language used is so that the agent committing to receiving the delivery of the underlying asset is said to have bought the contract. The agent that commits to make the delivery is said to have sold the contract. So answer your question, buying on June 1 a futures contract at the futures price of $100, with a maturity date on August 1 means you commit to paying $100 for the underlying asset on August 1. You don't have to pay anything upfront. Futures price is simply what the contract prescribes the underlying asset will exchange hands for. |
Lifetime ISA: What are the chances of a reputable Bank offering it? | The Skipton Building Society has recently announced that it is offering a cash LISA. According to the papers it is the first to offer a cash LISA. Skipton is the UK's 4th largest UK Building Society and has been in existence since 1853. There are other providers of LISAs such as Hargreaves Landsdown. Hargreaves Lansdown is listed on the FTSE 100 i.e. it's one of the largest 100 companies with a UK stock market listing. Stocks and Shares and Cash LISAs are quite different so you need to decide which type you want before deciding where you want to get one from. You can switch from one to another at a later date if you so wish but you may need to switch providers to do so. |
If a mutual fund did really well last year, then statistically speaking, is it likely going to do bad this year? | From a mathematical point of view the stats do not change depending on past performance. Just because a fund is lucky one year doesn't mean that it will be unlucky the next. Consider tossing a coin, the chance of heads is 50%. If you have just thrown 3 heads, the chance of heads is still 50%. It doesn't go down. If you throw 10 heads in a row the chance of a heads is still 50%, in fact you many suspect there is something odd about the coin, if it was an unfair coin then the chance of a heads would be higher than 50%. It could be the fund is better run, but there could be other reasons, including random chance. Some funds will randomly do better and some will randomly do worse What you do know is that if they did better than average other funds have done worse, at least for last year. |
What is the meaning of “Closed Short” ,“Opened Long” ,“Scaled Out” and “Scaled In”? | Opened Long - is when you open a long position. Long means that you buy to open the position, so you are trying to profit as the price rises. So if you were closing a long position you would sell it. Closed Short - is when you close out a short position. Short means that you sell to open and buy back to close. With a short position you are trying to profit as the price falls. Scaled Out - means you get out of a position in increments as the price climbs (for long positions). Scaled In - means you set a target price and then invest in increments as the stock falls below that price (for long positions). |
Safe and cheap way to send money from Canada to South America | The catch with any exchange service is that you're going to involve some sort of business and they're going to want to get paid for their service. These services all come with their own exchange rates, fees, waiting periods, or requirements to even use said service. Commonly, pros towards one of those comes at the cost of another— e.g. fast transfers have higher fees or worse exchange rates. Over the past few months I needed a service and ended up using USForex. Since you're going from CAD to USD, you'd likely need to use CanadianForex. Pros: Cons: Overall, this option was far better than the $97.00 I was quoted from WesternUnion; or the $25.00-45.00 I was quoted from BMO Harris, which would have required I open a saving account with them. I wasn't provided a clean exchange rate between these two to know how all three compared. The only bit of advice I can say with any service is compare exchange rates. If you're transferring more than a few hundred dollars, the exchange rate can be seen as a "hidden" fee when it's unreasonably low. I'm not affiliated with or accommodated by any of the exchange services mentioned. |
Are stories of turning a few thousands into millions by trading stocks real? | Consider this thought experiment: Take 10 million people and give them each $3,000. Every day they each purchase a random stock with all of their money. The next day they flip a coin and if it's heads they do nothing, and if it's tails they sell it and purchase another random stock. Repeat everyday for 5 years. After 5 years, you'll probably have many people that lost all of their money due to the fees they paid for each trade they made. A lot of people will have lost a little or won a little. Some people will have doubled or tripled their money, or even better. A very small number of people will have made "millions". Some of those small number of people that made millions will likely go on to write books and sell seminars on how to make money in the stock market. |
What should one look for when opening a business bank account? | From my experience, I opened a business account to handle my LLC which owns a rental property. The account process and features were similar to shopping for a personal checking account. There would be fees for falling below a minimum balance, and for wanting a paper statement. In my case, keeping $2000 avoids the fee, and I pull the statements online and save the PDFs. Once open for a certain amount of time, you might be able to get credit extended based on the money that flows through that account. The online access is similar to my personal checking, as is the sending of payments electronically. |
How exactly does a country devalue its currency? | Does some official tell the Foreign Exchange the the new exchange rate for the yuan is 0.98 * the current exchange rate? For China (and other countries with fixed/controlled exchange rates) - that's exactly how it happens. Does it just print more? This is the way to go for fully convertible currencies (like the USD, EUR, GBP, and handful of others, there're about 20 in the world). Flood the market and as with any commodity - flooding the market leads to a price drop. Obviously "just print more" is much harder to do than picking up the phone and saying "Now you're buying/selling dollars at this price and if you don't I'll have you executed". |
How to know which companies enter the stock market? | For months prior to going public a company has to file financial documents with the SEC. These are available to the public at www.sec.gov on their Edgar database. For instance, Eagleline is listed as potentially IPOing next week. You can find out all the details of any IPO including correspondence between the company and the SEC on Edgar. Here's the link for Eagleline (disclaimer, I have not investigated this company. It is an example only) https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001675776&owner=exclude&count=40 The most important, complex, and thorough document is the initial registration statement, usually an S-1, and subsequent amendments that occur as a result of new information or SEC questions. You can often get insight into a new public company by looking at the changes that have occurred in amendments since their initial filings. I highly advise people starting out to first look at the filings of companies they work for or know the industry intimately. This will help you to better understand the filings from companies you may not be so familiar with. A word of caution. Markets and company filings are followed by very large numbers of smart people experienced in each business area so don't assume there is fast and easy money to be made. Still, you will be a bit ahead if you learn to read and understand the filings public companies are required to make. |
My investment account is increasingly and significantly underperforming vs. the S&P 500. What should I do? | You say: To clarify, my account is with BlackRock and the fund is titled "MID CAP GROWTH EQUITY-CLASS A" if that helps. Not totally sure what that means. You should understand what you're investing in. The fund you have could be a fine investment, or a lousy one. If you don't know, then I don't know. The fund has a prospectus that describes what equities the fund has a position in. It will also explain the charter of the fund, which will explain why it's mid-cap growth rather than small-cap value, for example. You should read that a bit. It's almost a sure thing that your father had to acknowledge that he read it before he purchased the shares! Again: Understand your investments. |
2 houses 450k each or one 800k? | Because it appears you have in the neighborhood of 30 years remianing on your mortgage for the first house, If you can sell it you will likely be better off in the end. While renting has the potential for greater income it is a business. And like any business there are risks, expenses, and work required to make it successful. There will be times where you can not find a renter immediately and will be responsible for making both payments, maintaining both houses, the insurance(which for an owner is higher for a rental property than a domicile), and paying the applicable taxes. You need to look at your best and worst case numbers. If your best case numbers leave you in the hole 300/month then that is not the sort of business you want to run. Your investment should build your savings and retirement funds not deplete them. Further you are more likely to fall between your best and worst case scenerios. So you need to be able to thrive at that level. If something in the middle is going to take you into bankruptcy then sell the property. If you are not willing to put the time into your business that it will need (My rental home took about 10-30 hours a month despite renters being responsible for basic upkeep and maintenance. Finally your plan B: A home with 800k value will have higher costs and higer expenses and maintenance. If the 800k home is the home you and your family needs then by all means go for it. But if it can do just as well in the 450k Home then go there. Pay the home off early by making the payments you would be making for the 800k home. In this way you pay less in total cost of the home and set your self up for the greatest chance of success. Once that home is paid off the break even point for renting goes way down as well. So the rental option could be in the future. I would just aviod it now if possible. |
Is dividend included in EPS | Not quite. The EPS is noted as ttm, which means trailing twelve months --- so the earnings are taken from known values over the previous year. The number you quote as the dividend is actually the Forward Annual Dividend Rate, which is an estimate of the future year's dividends. This means that PFE is paying out more in the coming year (per share) than it made in the previous year (per share). |
why do I need an emergency fund if I already have investments? | Emergency funds have a very specific and obvious benefit; you'll have money sitting around in case you need it. A lot of people think a big car repair or some unexpected home repair is an emergency, and that's fine. Emergency also expands up to "I lost my job four months ago and we're a year in to a recession, the stock market is down 30% and I need to pay my rent or mortgage." Sure, you could just sell some of your stocks that have lost 30% and pay your rent. I know nobody likes to think about it, but the stock market can go down. I know nobody likes to think about it, but the economy can slink in to a recession. In fact, here's a small list of recent U.S. recessions: No competent investment adviser would advise that your emergency funds should be subject to market volatility because that completely defeats the purpose of an emergency fund. It's possible that this manager wants you to indicate a separate emergency fund to allocate a portion of your account to a low volatility US Treasury fund or something of the like, this would be materially different than investing in a broad market/large cap fund like VOO or VTI. The effects of inflation are not so bad that you should put your emergency money in the market. Who cares what inflation was if you have to sell an asset at a loss to pay rent? One last point. Index fund ETFs are not "safe." Investing in diversified funds is safER than buying individual company stocks. |
Has anyone compared an in-person Tax Advisor to software like Turbo Tax? | I've done my taxes using turbotax for years and they were not simple, Schedule C (self-employed), rental properties, ESPP, stock options, you name it. It's a lot of work and occasionally i did find bugs in TurboTax. ESPP were the biggest pain surprisingly. The hardest part is to get all the paperwork together and you'd have to do it when you hire an accountant anyway. That said this year i am using an accountant as i incorporated and it's a whole new area for me that i don't have time to research. Also in case of an audit i'd rather be represented by a pro. I think the chance of getting audited is smaller when a CPA prepares your return. |
Do common stocks and preferred stocks have any differences in terms of percentage of the company per unit they represent? | Preferred stocks are, err... Preferred. The whole point of preferred stocks is that they have some preference over other classes of stocks (there may be more than 2, by the way). It can be more voting rights, more dividends or priority on dividends' distribution (common with VC investments), or priority on liquidations (in bankruptcy, preferred stock holders are ranked higher than common). Many times initial or critical investments are made on preferred terms, and the stocks are converted to common when certain thresholds are met. Obviously all these benefits require a premium on the price. |
How much power does a CEO have over a public company? | The shareholders elect the board of directors who in turn appoint a CEO. The CEO is responsible for the overall running of the company. To answer your specific questions: Yes, Steve Jobs could make decisions that are harmful to the well-being of the company. However, it's the responsibility of the board of directors to keep his decisions and behavior in check. They will remove him from his position if they feel he could be a danger to the company. |
Could an ex-employee of a company find themself stranded with shares they cannot sell (and a tax bill)? | It would take an unusual situation. They exercise certain types of option, which come in as regular income rather than capital gains, and are holding the stock "long" (perhaps they are not allowed to sell because of an insider-trading freeze window; like right before earnings announcements). And then the stock tanks. Their company is acquired. They get stock options in their unicorn at $1/share, which blows up to $1000/share right as HugeFirm buys it. Options are swapped dollar-for-dollar for HugeFirm stock (at $250/share) so 4 shares for 1. I heard this happened a lot in the 1999-2000 boom/bust. And the problem was, this type of stock-option had historically only been offered to $20-million salary CEOs and CFO's, who retained professional legal and financial counsel and knew how to deal with the pitfalls and traps of this type of option. During the dot-com boom, it was also offered to rank-and-file $50k salary tech employees who didn't even know the difference between a 401K and a Roth. And it exploded in their faces, making a big mess for everyone including the IRS -- now struggling to justify to Congressmen why they were collecting $400,000 in taxes on entirely phantom, never-realized income from a 24 year old tech guy earning $29k at a startup and eating ramen. When that poor guy never had a chance of understanding the financial rocks and shoals, and even if he did, couldn't have done anything about it (since he wasn't a high executive involved in the decisions). And even the company who gave him the package didn't intend to inflict this on him. It was a mistake. Even the IRS dislikes no-win situations. Some laws got changed, some practices got changed, etc. etc., and the problem isn't what it used to be. |
If you want to trade an equity that reflects changes in VIX, what is a good proxy for it? | If you want to trade to gain from short-term volatility, you can use Derivative-based ETFs that try to track the inverse of a broad index like the S&P 500. Note that these ETFs only track the index over a 1 day period, so you shouldn't hold these. If you're looking for a longer-term investment strategy, look at low-beta stocks, which often do well or produce dividend income during volatile times. Examples include McDonald's Corp and utilities like Consolidated Edison. |
How can I increase my hourly pay as a software developer? | Most full time developer jobs in the US are paid on a salary basis rather than hourly unless you are a contractor. Also, the pay varies widely by region in the US with the West and East coast typically paying the most, but also having the highest cost of living. A site I really like for getting salary data by region and keyword for technical jobs is indeed.com. Here is a link to a chart on that site comparing salary trends for PHP and Joomla. |
How can my dad (grandpa) transfer shares to my 2 year old son? | A UTMA may or may not fit your situation. The main drawbacks to a UTMA account is that it will count against your child for financial aid (it counts as the child's asset). The second thing to consider is that taxes aren't deferred like in a 529 plan. The last problem of course is that when he turns 18 he gets control of the account and can spend the money on random junk (which may or may not be important to you). A 529 plan has a few advantages over a UTMA account. The grandparents can open the account with your son as the beneficiary and the money doesn't show up on financial aid for college (under current law which could change of course). Earnings grow tax free which will net you more total growth. You can also contribute substantially more without triggering the gift tax ~$60k. Also many states provide a state tax break for contributing to the state sponsored 529 plan. The account owner would be the grandparents so junior can't spend the money on teenage junk. The big downside to the 529 is the 10% penalty if the money isn't used for higher education. The flip side is that if the money is left for 20 years you will also have additional growth from the 20 years of tax free growth which may be a wash depending on your tax bracket and the tax rates in effect over those 20 years. |
Is real (physical) money traded during online trading? | When you buy a currency via FX market, really you are just exchanging one country's currency for another. So if it is permitted to hold one currency electronically, surely it must be permitted to hold a different country's currency electronically. |
What is the rationale behind stock markets retreating due to S&P having a negative outlook on the USA? | When people (even people in the media) say: "The stock market is up because of X" or "The stock market is down because of Y", they are often engaging in what Nicolas Taleb calls the narrative falacy. They see the market has moved in one direction or another, they open their newspaper, pick a headline that provides a plausible reason for the market to move, and say: "Oh, that is why the stock market is down". Very rarely do statements like this actually come from research, asking people why they bought or sold that day. Sometimes they may be right, but it is usually just story telling. In terms of old fashioned logic this is called the "post hoc, ergo proper hoc" fallacy. Now all the points people have raised about the US deficit may be valid, and there are plenty of reasons for worrying about the future of the world economy, but they were all known before the S&P report, which didn't really provide the markets with much new information. Note also that the actual bond market didn't move much after hearing the same report, in fact the price of 10 year US Treasury bonds actually rose a tiny bit. Take these simple statements about what makes the market go up or down on any given day with several fistfuls of salt. |
What does a well diversified self-managed investment portfolio look like? | I would like to first point out that there is nothing special about a self-managed investment portfolio as compared to one managed by someone else. With some exceptions, you can put together exactly the same investment portfolio yourself as a professional investor could put together for you. Not uncommonly, too, at a lower cost (and remember that cost is among the, if not the, best indicator(s) of how your investment portfolio will perform over time). Diversification is the concept of not "putting all your eggs in one basket". The idea here is that there are things that happen together because they have a common cause, and by spreading your investments in ways such that not all of your investments have the same underlying risks, you reduce your overall risk. The technical term for risk is generally volatility, meaning how much (in this case the price of) something fluctuates over a given period of time. A stock that falls 30% one month and then climbs 40% the next month is more volatile than one that falls 3% the first month and climbs 4% the second month. The former is riskier because if for some reason you need to sell when it is down, you lose a larger portion of your original investment with the former stock than with the latter. Diversification, thus, is reducing commonality between your investments, generally but not necessarily in an attempt to reduce the risk of all investments moving in the same direction by the same amount at the same time. You can diversify in various ways: Do you see where I am going with this? A well-diversed portfolio will tend to have a mix of equity in your own country and a variety of other countries, spread out over different types of equity (company stock, corporate bonds, government bonds, ...), in different sectors of the economy, in countries with differing growth patterns. It may contain uncommon classes of investments such as precious metals. A poorly diversified portfolio will likely be restricted to either some particular geographical area, type of equity or investment, focus on some particular sector of the economy (such as medicine or vehicle manufacturers), or so on. The poorly diversified portfolio can do better in the short term, if you time it just right and happen to pick exactly the right thing to buy or sell. This is incredibly hard to do, as you are basically working against everyone who gets paid to do that kind of work full time, plus computer-algorithm-based trading which is programmed to look for any exploitable patterns. It is virtually impossible to do for any real length of time. Thus, the well-diversified portfolio tends to do better over time. |
What is a “convertible note”? | Source, see if you have access to it Convertible notes are often used by angel investors who wish to fund businesses without establishing an explicit valuation of the company in which they are investing. When an investor purchases equity in a startup, the purchase price of the equity implies a company valuation. For example, if an investor purchases a 10 per cent ownership stake in a company, and pay $1m for that stake, this implies that the company is worth $10m. Some early stage investors may wish to avoid placing a value on the company in this way, because this in turn will affect the terms under which later-stage investors will invest in the company. Convertible notes are structured as loans at the time the investment is made. The outstanding balance of the loan is automatically converted to equity when a later equity investor appears, under terms that are governed by the terms set by the later-stage equity investor. An equity investor is someone who purchases equity in a company. Example:- Suppose an angel investor invests $100,000 using a convertible note. Later, an equity investor invests $1m and receives 10% of the company's shares. In the simplest possible case, the initial angel investor's convertible note would convert to 1/10th of the equity investor's claim. Depending on the exact structure of the convertible note, however, the angel investor may also receive extra shares to compensate them for the additional risk associated with being an earlier investor The worst-case scenario would be if the issuing company initially performed well, meaning that the debt would be converted into shares, and subsequently went bankrupt. The converted shares would become worthless, but the holder of the note would no longer have any recourse. Will twitter have to sell their offices and liquidate staff to close this debt? This depends on the seniority(priority) of the debt. Debt is serviced according to seniority. The higher seniority debts will be paid off first and then only the lower seniority debts be serviced. This will all be in the agreements when you enter into a transaction. When you say liquidate staff you mean sell off their assets and not sell their staff into slavery. |
Cost is (maybe) part of basis for two assets | For accounting purposes, consider the costs of acquisition as part of the cost of the asset as opposed to expensing. This will be important to consider if you need to amortise the asset for reporting or tax purposes. Dr. Land $250,000 Dr. Building: $250,000 Cr. Cash $500,000 The acquisition of the land from previous owners. And Dr. Land $12,500 Dr. Building $12,500 Cr. Cash $25,000 Fees paid to auctioneer who helped acquire the land. The basis for dividing the cost should be done at appraised prices. These appraised prices will appear in the first entry and should help you along. |
What does it mean for a company to have its market cap larger than the market size? | First read mhoran's answer, Then this - If the company sold nothing but refrigerators, and had 40% market share, that's $4M/yr in sales. If they have a 30% profit margin, $1.2M in profit each year. A P/E of 10 would give a stock value totaling $12M, more than the market size. The numbers are related, of course, but one isn't the maximum of the other. |
Is the need to issue bonds a telltale sign that the company would have a hard time paying coupons? | One more scenario is when the company already has maturing debt. e.g Company took out a debt of 2 billion in 2010 and is maturing 2016. It has paid back say 500 million but has to pay back the debtors the remaining 1.5 billion. It will again go to the debt markets to fund this 1.5 billion maybe at better terms than the 2010 issue based on market conditions and its business. The debt is to keep the business running or grow it. The people issuing debt will do complete research before issuing the debt. It can always sell stock but that results in dilution and affects shareholders. Debt also affects shareholders but when interest rates are lower, companies tend to go to debt markets. Although sometimes they can just do a secondary and be done with it if the float is low. |
When does selling (writing) options count for tax purposes? | If you take the profit or loss next year, it counts on next year's taxes. There's no profit or loss until that happens. |
Swiss-style Monetary Policy | This is what is called "weasel words". They're trying to put some authority into their ad, but since they don't have any - they're putting meaningless words that sound important. Monetary policy is the state/central bank policy to control the supply of the available currency. Cannot think of a way to connect it to private investments. |
Can my employer limit my maximum 401k contribution amount (below the IRS limit)? | Companies are required BY THE IRS to try to get everybody to contribute minimal amounts to the 401K's. In the past, there were abuses and only the execs could contribute and the low paid workers were starving while the execs contributed huge amounts. On a year-by-year basis, if the low-paid employees don't contribute, the IRS punishes the high paid employees. Therefore, most employers provide a matching program to incentivize low-paid employees to contribute. This 9% limitation could happen in any year and it could have happened even before you got your pay raise, what matters is what the low-paid employees were doing at your company LAST YEAR. |
Get free option quotes | A number of sites provide delayed option chains online. Yahoo Finance is one example: I linked to Apple's chain, but to get one yourself, put the ticker you want in the search box, then click the "options" link in the sidebar that I called out in the image. |
Paying off loans early, or is there some way to reduce extortionate interest charges? | My husband made a similar car loan decision when he was younger and didn't have an established credit history / favourable credit rating. As a result, he ended up paying triple what the car was worth, because of the interest. When we consolidated our finances, this ugly loan was first on our list of priorities to change, convert, eliminate, but unfortunately, in our case, the terms of the loan were such that only the lender benefited. There was no incentive to pay off the loan early, in fact, we would have to have paid all the future interest at once, without saving a penny. So check the terms of your loan - hopefully you're better off than we were. In our case, the only upside we could figure was the lesson of "live and learn"! |
Sanity check on choosing the term for a mortgage refinance | One thing you didn't mention is whether the 401(k) offers a match. If it does, this is a slam-dunk. The $303 ($303, right?) is $3636/yr that will be doubled on deposit. It's typical for the first 5% of one's salary to capture the match, so this is right there. In 15 years, you'll still owe $76,519. But 15 * $7272 is $109,080 in your 401(k) even without taking any growth into account. The likely value of that 401(k) is closer to $210K, using 8% over that 15 years, (At 6%, it drops to 'only' $176K, but as I stated, the value of the match is so great that I'd jump right on that.) If you don't get a match of any kind, I need to edit / completely rip my answer. It morphs into whether you feel that 15 years (Really 30) the market will exceed the 4% cost of that money. Odds are, it will. The worst 15 year period this past century 2000-2014 still had a CAGR of 4.2%. |
Why buy insurance? | This is just an addition to base64's answer. In order to maximize your overall wealth (and wellbeing) in a long run, it is not enough to look only at the expected value (EV). In his example of always keeping $9850 or having $10000 99% of the time, EV in the second case is greater ($9900 > $9850) and if you are Bill Gates than you should not take an insurance in this case. But if your wealth is a lot less than that you should take an insurance. Take a look at Kelly criterion and utility functions. If I offer you to take 100 million dollars (no strings attached) or to take a risk to get 200 million dollars 60% of the time (and $0 40% of the time), would you take that risk? You shouldn't but Bill Gates should take that risk because that would be a very good investment for him. Utility functions can help you choose if you want an insurance or not. Maybe you want to insure your house because the value of the house is a large percentage of your wealth but on the other hand you don't need to insure your car if it is very easy for you to afford another one (but not easy to afford another house). Lets calculate what your wealth should be in order not to take this $150 insurance on a $10000 item. If you pay $150 for an insurance you have guaranteed $9850. But choosing not to take an insurance is the same as betting $9850 in order to gain $150 99% of the time. By using Kelly criterion formula fraction of the wealth needed to make this bet is: [p*(b+1)-1]/b = [0.99*(150/9850+1) -1]/ (150/9850) = 1/3. That means that if your wealth greater than $29950 you don't need an insurance. But if you want to be sure it is advised to use fractional Kelly betting (for example you could multiply fraction by 1/2) and in that case if your wealth is more than $59900 you don't need an insurance for this item. |
Tax ID for an international student investing in U.S stocks | You need an ITIN. Follow the instructions on the IRS page to apply. You might be better off getting an on-campus employment authorization and getting an SSN, though, as the ITIN process is not really convenient. |
Why have U.S. bank interest rates been so low for the past few years? | I've wondered the same thing. And, after reading the above replies, I think there is a simpler explanation. It goes like this. When the bank goes to make a loan they need capital to do it. So, they can get it from the federal reserve, another bank, or us. Well, if the federal reserve will loan it to them for lets say 0.05%, what do you think they are going to be willing to pay us? Id say maybe 0.04%. Anyway, I could be wrong, but this makes sense to me. |
Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? | You can receive money directly into your savings bank account. It is perfectly legal. FYI the Bank as part of regulation would report this to RBI. As the funds are received for the services you have rendered, You are liable to pay tax on the income. The income is taxed as professional income similar to the income of Doctors, Lawyers, Accountants etc. If you are paying your colleagues, it would be treated as expense. Not only this, you can also treat any phone calls you make, or equipment your purchase [laptop, desk etc] as expense. The difference become your actual income and you would be taxed as per the rate for individuals. It's advisable you contact an accountant who would advise you better for a nominal fee [few thousand rupees] and help you pay the tax and file the returns. With or without accountant It is very important for you to record all payments and expenses in a book of accounts. |
Are buyouts always for higher than the market value of a stock? | Buyouts are usually for more than the ORIGINAL value of a stock. That's because the price "premium" represents an incentive for holders to "tender" their shares to the would-be buyer. Sometimes in these situations, the stock price rises above the proposed buyout price, in anticipation of a higher takeover bid from a SECOND party (that may or may not materialize). To answer the other part of the question, does a bidder have a chance of taking over a dying company for less than the market price? That is a strategy sometimes referred to as a "take under," and it has not been a notably successful strategy. That's because it goes against "human nature" (of the seller). "Where there is life, there is hope." They would seldom accept a lower price for "sure" survival, when the market is telling them that they are worth a higher price. Very few people realize that the market may disappear tomorrow. Think of all the homeowners who won't cut their price, but insist on bids that meet recent "comps." And if the company is really dying, the prospective buyer may be best served by waiting until it does, and then pick up the individual pieces at auction. |
Why is a home loan (mortgage) cheaper than gold loan? | Why is a home loan (mortgage) cheaper than gold loan? It has to do with risk. Lending money secured by gold is inherently riskier than a loan secure by your home. Increased risk means the lender must charge more. That's why home loans are cheap compared to loans for other purposes. Home loans are secured by the house. Houses are assets that hold and usually retain some value. Houses are easy to track down (they can't be hidden or moved) in the event that you don't repay your loan. Houses are reasonably liquid, they can be resold to pay off a defaulted loan. |
15 year mortgage vs 30 year paid off in 15 | Besides the reason in @rhaskett's answer, it is important to consider that paying off a 30-year mortgage as if it was a 15-year is much more inconvenient than just paying the regular payments of a 15-year mortgage. When you pay extra on your mortgage, some lenders do not know what to do with the extra payment, and need to be told explicitly that the extra needs to be applied toward the principal. You might need to do this every month with every payment. In addition, some lenders won't allow you to set up an automatic payment for more than the mortgage payment, so you might need to explicitly submit your payment with instructions for the lender each month, and then follow up each month to make sure that your payment was credited properly. Some lenders are better about this type of thing than others, and you won't really know how much of a hassle it will be with your lender until you start making payments. If you intend to pay it off in 15 years, then just get the 15-year mortgage. |
Is a fixed-price natural gas or electricity contract likely to save money? | I can only speak to natural gas but I imagine the answer for electricity is the same. In general, yes, it is better to lock into a fixed price contract as in the long run, natural gas prices increase over time. However, if you locked (signed a fixed price contract) in prior to the economic downturn, most likely you were better off not doing so but the key is long-term. http://en.wikipedia.org/wiki/Natural_gas_prices However, do your research as fixed priced contracts vary considerably from company to company. http://www.energyshop.com/ I think it's a good time to sign a fixed-term contract right now as I don't see prices coming down much further with global economies are now recovering from the downturn. HTH |
Is it true that more than 99% of active traders cannot beat the index? | That is such a vague statement, I highly recommend disregarding it entirely, as it is impossible to know what they meant. Their goal is to convince you that index funds are the way to go, but depending on what they consider an 'active trader', they may be supporting their claim with irrelevant data Their definition of 'active trader' could mean any one or more of the following: 1) retail investor 2) day trader 3) mutual fund 4) professional investor 5) fund continuously changing its position 6) hedge fund. I will go through all of these. 1) Most retail traders lose money. There are many reasons for this. Some rely on technical strategies that are largely unproven. Some buy rumors on penny stocks in hopes of making a quick buck. Some follow scammers on twitter who sell newsletters full of bogus stock tips. Some cant get around the psychology of trading, and thus close out losing positions late and winning positions early (or never at all) [I myself use to do this!!]. I am certain 99% of retail traders cant beat the market, because most of them, to be frank, put less effort into deciding what to trade than in deciding what to have for lunch. Even though your pension funds presentation is correct with respect to retail traders, it is largely irrelevant as professionals managing your money should not fall into any of these traps. 2) I call day traders active traders, but its likely not what your pension fund was referring to. Day trading is an entirely different animal to long or medium term investing, and thus I also think the typical performance is irrelevant, as they are not going to manage your money like a day trader anyway. 3,4,5) So the important question becomes, do active funds lose 99% of the time compared to index funds. NO! No no no. According to the WSJ, actively managed funds outperformed passive funds in 2007, 2009, 2013, 2015. 2010 was basically a tie. So 5 out of 9 years. I dont have a calculator on me but I believe that is less than 99%! Whats interesting is that this false belief that index funds are always better has become so pervasive that you can see active funds have huge outflows and passive have huge inflows. It is becoming a crowded trade. I will spare you the proverb about large crowds and small doors. Also, index funds are so heavily weighted towards a handful of stocks, that you end up becoming a stockpicker anyway. The S&P is almost indistinguishable from AAPL. Earlier this year, only 6 stocks were responsible for over 100% of gains in the NASDAQ index. Dont think FB has a good long term business model, or that Gilead and AMZN are a cheap buy? Well too bad if you bought QQQ, because those 3 stocks are your workhorses now. See here 6) That graphic is for mutual funds but your pension fund may have also been including hedge funds in their 99% figure. While many dont beat their own benchmark, its less than 99%. And there are reasons for it. Many have investors that are impatient. Fortress just had to close one of its funds, whose bets may actually pay off years from now, but too many people wanted their money out. Some hedge funds also have rules, eg long only, which can really limit your performance. While important to be aware of this, that placing your money with a hedge fund may not beat a benchmark, that does not automatically mean you should go with an index fund. So when are index funds useful? When you dont want to do any thinking. When you dont want to follow market news, at all. Then they are appropriate. |
What's a normal personal debt / equity ratio for a highly educated person? | The problem with having no debt at all and relying totally on your income from working is that if you lose your job you'll have no income. Now there are 2 types of debt: good debt and bad debt. You should stay away from bad debt. But good debt is good — it should produce an income higher than the interest payments on the debt. Good debt will help you supplement your income from work and eventually replace your income from work. I have over $2M in good debt, have been semi-retired since 42, and sleep very well at night. By the way I also have zero bad debt. As Joe says, you have to be at a level you are comfortable with, can sleep at night, and try to limit your bad debt by showing some delayed gratification when you are starting off. |
How does a bank make money on an interest free secured loan? | Very good answers as to how 0% loans are typically done. In addition, many are either tied to a specific large item purchase, or credit cards with a no interest period. On credit card transactions the bank is getting a fee from the retailer, who in turn is giving you a hidden charge to cover that fee. In the case of a large purchase item like a car, the retailer is again quite likely paying a fee to cover what would be that interest, something they are willing to do to make the sale. They will typically be less prone to deal as low a price in negotiation if you were not making that deal, or at times they may offer either a rebate or special low to zero finance rates, but you don't get both. |
How do I apply for a mortgage after a cash closing on a property? | Is she correct in that you generally can't even apply until the cash transaction is complete? Probably. How can you commit to mortgage something you do not own? Makes sense for them to wait not even until the transaction is complete - but until the transaction is recorded. Is 45 days reasonable to complete the financing? Yes. |
When are equal-weighted index funds / ETFs preferable to market-cap-weighted funds? | Equal weighted indexes are not theoretically meant to be less volatile or less risky; they're just a different way to weigh stocks in an index. If you had a problem that hurt small caps more than large caps, an equal weighted index will be hurt more than a market-cap weighted one. On the other hand, if you consider that second rung companies have come up to replace the top layer, it makes sense to weigh them on par. History changes on a per-country basis - in India, for instance, the market's so small at the lower-cap end that big money chases only the large caps, which go up more in a liquidity driven move. But in a more secular period (like the last 18 months) we see that smaller caps have outperformed. |
How to deal with the credit card debt from family member that has passed away? | Don't pay it, see a lawyer. Given your comment, it will depend on the jurisdiction on the passing of the house and the presence of a will or lack thereof. In some states all the assets will be inherited by your mom. Debts cannot be inherited; however, assets can be made to stand for debts. This is a tricky situation that is state dependent. In the end, with few assets and large credit card debt, the credit card companies are often left without payment. I would not pay the debt unless your lawyer specifically told you to do so. Sorry for your loss. |
Evidence for timing market in the short run? | The study of technical analysis is generally used (sometimes successfully) to time the markets. There are many aspects to technical analysis, but the simplest form is to look for uptrends and downtrends in the charts. Generally higher highs and higher lows is considered an uptrend. And lower lows and lower highs is considered a downtrend. A trend follower would go with the trend, for example see a dip to the trend-line and buy on the rebound. Whilst a bottom fisher would wait until a break in the downtrend line and buy after confirmation of a higher high (as this could be the start of a new uptrend). There are many more strategies dealing with the study of technical analysis, and if you are interested you would need to find and learn about ones that suit your investment styles and your appetite for risk. |
Does a company's stock price give any indication to or affect their revenue? | No. Revenue is the company's gross income. The stock price has no contribution to the company's income. The stock price may be affected when the company's income deviates from what it was expected to be. |
1.4 million cash. What do I do? | First--congratulations! I certainly wish I could create something worth buying for $1.4 million. In addition to what @duffbeer703 recommended, consider putting some of the money in Treasury Inflation-Protected Securities (TIPS). I second the advice on staying away from annuities as well. @littleadv is right about certified financial planners. A good one will put those funds in a mix of investments that minimize your potential tax exposure. They will also look at whether you're properly insured. Research what is FDIC-insured (and what isn't) here. Since you're still making a six-figure income in your salaried job, be sure not to neglect things like contributing to your 401(k)--especially if it's a matching one. At your salary level, I think you're still eligible to contribute to a Roth IRA (taxable income goes in, so withdrawals are tax-free). A good adviser will know which options are best. |
Conservative ways to save for retirement? | A 401(k) is just a container. Like real-world containers (those that are usually made out of metal), you can put (almost) anything you want in it. Signing up for your employer's match is a great thing to do. Getting into the habit of saving a significant portion of your take-home pay early in your career is even better; doing so will put you lightyears ahead of lots of people by the time you approach retirement age. Even if you love your job, that will give you options you otherwise wouldn't have. There is no real reason why you can't start out by putting your retirement money in a short-term money-market fund within that 401(k). By doing so you will only earn a pittance, probably not even enough to keep up with inflation in today's economic environment, but at this point in your (savings and investment) career, that doesn't really matter much. What really matters is getting into the habit of setting that money aside every single time you get paid and not thinking much of it. And that's a lot easier if you start out early, especially at a time when you likely have received a significant net pay increase (salaried job vs college student). I know, everyone says to get the best return you can. But if you are just starting out, and feel the need to be conservative, then don't be afraid to at least start out that way. You can always rebalance into investment classes that have the potential for higher return -- and correspondingly higher volatility -- in a few years. In the meantime, you will have built a pretty nice capital that you can move into the stock market eventually. The exact rate of return you get in the first decade matters a lot less than how much money you set aside regularly and that you keep contributing. See for example Your Investment Plan Means Nothing If You Don’t Do This by Matt Becker (no affiliation), which illustrates how it takes 14 years for saving 5% at a consistent 10% return to beat saving 10% at a consistent 0% return. So look through what's being offered in terms of low-risk investments within that 401(k). Go ahead and pick a money-market fund or a bond fund if you want to start out easy. If it gets you into the habit of saving and sticking with it, then the overall return will beat the daylights out of the return you would get from a good stock market fund if you stop contributing after a year or two. Especially (but not only) if you do pick an interest-bearing investment, do make sure to pick one that has as low fees as you can possibly find for what you want, because otherwise the fees are going to eat a lot into your potential returns, benefiting the bank or investment house rather than yourself. Just keep an open mind, and very strongly consider shifting at least some of your investments into the stock market as you grow more comfortable over the next several years. You can always keep a portion of your money in various interest-bearing investments to act as a cushion in case the market slumps. |
Average Price of a Stock | I would have to disagree with the other responders. In technical analysis of stock charts, various short and long term moving averages are used to give an indication of the trend of the stock in the short and long term, as compared to the current price. I would prefer to use the term moving average (MA) rather than average as the MA is recalculated every day (or at appropriate frequencies for your data) on the period you are using. I would also expand on the term "moving average". There are two that are commonly used Going back to the question, of the value of this number, For example if the current price is above the 200 day EWMA and also above the 30 day EWMA, then the stock is broadly trending upwards. Conversely if current price is below the 200 day EWMA and also below the 30 day EWMA, then the stock is broadly trending downwards. These numbers are chosen on the basis of the market you are trading in, the volatility and other factors. For another example of how a number of moving averages are used together, please have a read of Daryl Guppy's Multiple Moving Average, though this does not use moving averages as large as 200 days. |
How do you write a check with cents? | In the US, Section 3.114 of the Uniform Commercial Code sets the rules for how any confusion in checks or other business transactions is handled: “If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.” If there was any ambiguity in the way you wrote out the amount, the institution will compare the two fields (the written words and the courtesy box (digits)) to see if the ambiguity can be resolved. The reality is that the busy tellers and ATM operators typically are going to look at the numeric digits first. So even if they happen to notice the traditional "and..." missing, it seems highly unlikely that such an omission would cause enough ambiguity between these the two fields to reject the payment. Common sense dictates here. I wouldn't worry about it. |
Responsible investing - just a marketing trick? | A share is just a part ownership of a company. If you buy a share of a green stock in the open market, you now just own part of a green company. Just like if you buy a house, the money you paid moves to the former owner, but what you are getting is a clear asset in return that you now own. Via mutual funds/indexes this can get a little more complicated (voting rights etc tend to go to the mutual/indexing company rather than the holders of the fund), but is approximately the same thing: the fund buys assets on the open market, then holds them, buys more, or sells them on behalf of the fund investors. |
Do my kids need to file a tax return? | If the gift was stock that they have owned for years there can be one hitch: The basis of the stock doesn't reset when it is gifted. For example if grandparents have owned stock that is currently worth $10,000 today, but they bought it decades ago when it only cost them $1,000; then if the new owner sells it today they will have a gain of $9,000. The clock to determine short term/long term also doesn't reset; which is good. The basis needs to be determined now so that the gain can be accurately calculated in the future. This information should be stored in a safe place. Gains for dividends are investment income and the rules regarding the kiddie tax need to be followed. |
How to chose index funds, mutual funds from a plethora of options (TD Ameritrade) | One thing to be aware of when choosing mutual funds and index ETFs is the total fees and costs. The TD Ameritrade site almost certainly had links that would let you see the total fees (as an annual percentage) for each of the funds. Within a category, the lowest fees percentage is best, since that is directly subtracted from your performance. As an aside, your allocation seems overly conservative to me for someone that is 25 years old. You will likely work for 40 or so years and the average stock market cycle is about 7 years. So you will likely see 5 or so complete cycles. Worrying about stability of principal too young will really cut into your returns. My daughter is your age and I have advised her to be 100% in equities and then to start dialing that back in about 25 years or so. |
How often do typical investors really lose money? | I'll just add this: In the best hedge funds and proprietary trading funds, stock selection is approached very scientifically in order to minimize losses/maximize gains. Researchers think of a trading idea and carefully test it to see which methods of stock selection work and how well, and finally they combine them. Every day researchers update their models based on the past performance of each indicator. All this is just too much work to be done manually. Firms use machine learning methods to understand markets. They try to figure out what is normal, what did not happen correctly at a specific time, what will happen in future. For instance, they use deep learning networks to look at unlabeled data, and figure out what is normal and what is not. These networks can analyze an unstructured haystack of noise, and separate out the signal. This is very relevant to finance and markets because finding the patterns and anomalies in market data has been the bread and butter of traders for decades. Deep learning networks give us applications like feature learning. By 'features,' I'm referring to certain attributes in data that indicate an event. By anticipating them, we can help predict future price movements. New technology is allowing us to break new ground in managing risk, to be a-typical and manage risk in ever-improving ways. It's the responsibility of every trader, whether working for themselves or others, to take advantage of this technology to improve the collective investing experience. I care very deeply about this. I have many close friends, in the finance world and without, who have lost large amounts of money to poor trade tools and lack of transparency. |
Buying a foreclosed property | Like most other things, this is "sometimes," but not always true. Sometimes banks will be willing to sell at a discount, sometimes they will hold out for "full price." But if you want a discount, this is a good place to "look." |
Should I continue to invest in an S&P 500 index fund? | You have a good thing going. One of the luxuries of being invested in an index fund for the long term is that you don't have to sweat the inevitable short term dips in the market. Instead, look at the opportunity that presents itself on market dips: now your monthly investment is getting in at a lower price. "Buy low, sell high." "Don't lose money." These are common mantras for long term investment mentality. 5-8 years is plenty of time -- I'd call it "medium-term". As you get closer to your goals (~2-3 years out) you should start slowly moving money out of your index fund and start dollar cost averaging out into cash or short-term bonds (but that's another question). Keep putting money in, wait, and sell high. If it's not high, wait another year or two to buy the house. A lot of people do the opposite for their entire lives: buying high, panic selling on the dips, then buying again when it goes up. That's bad! I recommend a search on "dollar cost averaging", which is exactly what you are doing right now with your monthly investments. |
Now that Microsoft Money is gone, what can I do? [duplicate] | Mint.com is a fantastic free personal finance software that can assist you with managing your money, planning budgets and setting financial goals. I've found the features to be more than adequate with keeping me informed of my financial situation. The advantage with Mint over Microsoft Money is that all of your debit/credit transactions are automatically imported and categorized (imperfectly but good enough). Mint is capable of handling bank accounts, credit card accounts, loans, and assets (such as cars, houses, etc). The downsides are: |
ETF S&P 500 with Reinvested Dividend | The problem there is that there's a tax due on that dividend. So, if you wish, you can buy the ETF and specify to reinvest dividends, but you'll have to pay a bit of tax on them, and keep track of your basis, if the account isn't a retirement account. |
Why does short selling require borrowing? | It's actually quite simple. You're actually confusing two concept. Which are taking a short position and short selling itself. Basically when taking a short position is by believing that the stock is going to drop and you sell it. You can or not buy it back later depending on the believe it grows again or not. So basically you didn't make any profit with the drop in the price's value but you didn't lose money either. Ok but what if you believe the market or specific company is going to drop and you want to profit on it while it's dropping. You can't do this by buying stock because you would be going long right? So back to the basics. To obtain any type of profit I need to buy low and sell high, right? This is natural for use in long positions. Well, now knowing that you can sell high at the current moment and buy low in the future what do you do? You can't sell what you don't have. So acquire it. Ask someone to lend it to you for some time and sell it. So selling high, check. Now buying low? You promised the person you would return him his stock, as it's intangible he won't even notice it's a different unit, so you buy low and return the lender his stock. Thus you bought low and sold high, meaning having a profit. So technically short selling is a type of short position. If you have multiple portfolios and lend yourself (i.e. maintaining a long-term long position while making some money with a short term short-term strategy) you're actually short selling with your own stock. This happens often in hedge funds where multiple strategies are used and to optimise the transaction costs and borrowing fees, they have algorithms that clear (match) long and short coming in from different traders, algorithms, etc. Keep in mind that you while have a opportunities risk associated. So basically, yes, you need to always 'borrow' a product to be able to short sell it. What can happen is that you lend yourself but this only makes sense if: |
18 year old making $60k a year; how should I invest? Traditional or Roth IRA? | 1) Usually, the choice between Traditional vs. Roth is whether you believe that your tax rate will be higher or lower in the future than it is now. Your income is probably in the 25% bracket now. It's hard to say whether that should be considered "high" or "low". Some people advocate Roth only for 15% bracket; but your income would probably go into higher brackets in the future, so Roth may be preferable from this point of view. Roth IRA also has another advantage that the principal of contributions can be taken out at any time without tax or penalty, so it can serve as an emergency fund just as well as money in taxable accounts. Given that you may not have a lot of money saved up right now, this is useful. 2) In a sense, it's nice to have a mix of Traditional and Roth when you withdraw to hedge against uncertainty in future tax rates and have the option of choosing whichever one is advantageous to withdraw when you need to withdraw. That said, you will likely have many years of access to a 401k and high income in your future working years, in which you can contribute to a Traditional 401k (or if no access to 401k, then Traditional IRA), so a mix will almost certainly happen even if you go all Roth IRA now. 3) I think that depends on you, whether you are a hands-on or hands-off kind of investor. |
How can I live outside of the rat race of American life with 300k? | Consider buying a legal "mother daughter" property, rent out the top part, and live in the "mother" component. |
What percent of my salary should I save? | I disagree with the selected answer. There's no one rule of thumb and certainly not simple ones like "20 cents of every dollar if you're 35". You've made a good start by making a budget of your expected expenses. If you read the Mr. Money Mustache blogpost titled The Shockingly Simple Math Behind Early Retirement, you will understand that it is usually a mistake to think of your expenses as a fixed percentage of your income. In most cases, it makes more sense to keep your expenses as low as possible, regardless of your actual income. In the financial independence community, it is a common principle that one typically needs 25-30 times one's annual spending to have enough money to sustain oneself forever off the investment returns that those savings generate (this is based on the assumption of a 7% average annual return, 4% after inflation). So the real answer to your question is this: UPDATE Keats brought to my attention that this formula doesn't work that well when the savings rates are low (20% range). This is because it assumes that money you save earns no returns for the entire period that you are saving. This is obviously not true; investment returns should also count toward your 25-times annual spending goal. For that reason, it's probably better to refer to the blog post that I linked to in the answer above for precise calculations. That's where I got the "37 years at 20% savings rate" figure from. Depending on how large and small x and y are, you could have enough saved up to retire in 7 years (at a 75% savings rate), 17 years (at a 50% savings rate), or 37 years! (at the suggested 20% savings rate for 35-year olds). As you go through life, your expenses may increase (eg. starting a family, starting a new business, unexpected health event etc) or decrease (kid wins full scholarship to college). So could your income. However, in general, you should negotiate the highest salary possible (if you are salaried), use the 25x rule, and consider your life and career goals to decide how much you want to save. And stop thinking of expenses as a percentage of income. |
Can LLC legally lend money to a friend? | Legally, I can't find any reason that the LLC could not lend money to an individual. However, I believe the simplest course of action is to first distribute money from your company to your personal account, and then make it a personal loan. Whether the loan is done through the business or personally, financially I don't think there is much difference as to which bucket the interest income goes into, since your business and personal income will all get lumped together anyway with a single person LLC. Even if your friend defaults on the loan, either the business or you personally will have the same burden of proof to meet that the loan was not a gift to begin with, and if that burden is met, the deduction can be taken from either side. If a debt goes bad the debtor may be required to report the debt as income. |
Wash sale rules in India (NSE/BSE) | I sold it at 609.25 and buy again at 608.75 in the same day If you Sold and bought the same day, it would be considered as intra-day trade. Profit will be due and would be taxed at normal tax brackets. Edits Best Consult a CA. This is covered under Indian Accounting Standard AG51 The following examples illustrate the application of the derecognition principles of this Standard. (e) Wash sale transaction. The repurchase of a financial asset shortly after it has been sold is sometimes referred to as a wash sale. Such a repurchase does not preclude derecognition provided that the original transaction met the derecognition requirements. However, if an agreement to sell a financial asset is entered into concurrently with an agreement to repurchase the same asset at a fixed price or the sale price plus a lender's return, then the asset is not derecognised. This is more relevant now for shares/stocks as Long Term Capital Gains are tax free, Long Term Capital Loss cannot be adjusted against anything. Short Term Gains are taxed differentially. Hence the transaction can be interpreted as tax evasion, professional advise is recommended. A simple way to avoid this situation; sell on a given day and buy it next or few days later. |
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