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Why do gas stations charge different amounts in the same local area? | Location, Location, Location. The closer to the highway, the more they can charge. People want to go less than a mile from the exit to get gas. Therefore they save time, but spend more money. That is understandable, so the gas station takes advantage of the situation. |
Lost credit card replaced with new card and new numbers. Credit score affected? | This will have no effect on your credit score. Even though your credit card account number is changing, it is still the same account, so your history of payments and age of accounts will remain unchanged. |
Why is the fractional-reserve banking not a Ponzi scheme? | You are forgetting one crucial point regarding the money supply. The US Federal Reserve increases the money supply, meaning some of the money is not really loaned, it just appears out of nowhere. At first glance this seems even worse: over the short term, the Fed changes the money supply to help the economy in whatever way it sees fit. But over the long term, the money supply increases to reflect economic growth. As new technology is introduced, more can be accomplished with the same labor and resources, and thus the money supply needs to be increased. Money is really just a convenient replacement for the barter system, so if there are more things to barter "for" (goods and services) then there should also be more things to barter "with" (money). Also keep in mind inflation. The cost of goods and services goes up over time due to the inflation of currency, and so the money supply must also be increased so that those goods and services do not artificially increase in value, which would be very bad. |
Possible to purchase multiple securities on 1 transaction? | No you can't, as you would have to have a different order for each security. Usually the bigger the order the more the brokerage you would also pay. |
From Facebook's perspective, was the fall in price after IPO actually an indication that it went well? | You are right that Facebook really doesn't get impacted as they got their $38. However it would make it slightly more difficult for Facebook to raise more money in future as large investors would be more cautious. This can keep the price lowers than it actually needs to be. Quite a few companies try to list the IPO at lower price so that it keeps going up and have more positive effect overall there by making it easier for future borrowings. See related question Why would a company care about the price of its own shares in the stock market? |
Do I even need credit cards? | Like many things, there are pros and cons to using credit cards. The other folks on here have discussed the pros and length, so I'll just quickly summarize: Convenience of not having to carry cash. Delay paying your bills for a month with no penalty. Build your credit rating for a time when you need a big loan, like buying a house or starting a business. Provide easy access to credit for emergencies or special situations. Many credit cards provide "rewards" of various sorts that can effectively reduce the cost of what you buy. Protection against fraud. Extended warranty, often up to one year Damage warranty, covering breakage that might be explicitly excluded from normal warranty. But there are also disadvantages: One of the advantages of credit cards -- easy access to credit -- can also be a disadvantage. If you pay with cash, then when you run out of cash, you are forced to stop buying. But when you pay with credit, you can fall into the trap of buying things that you can't afford. You tell yourself that you'll pay for it when you get that next paycheck, but by the time the paycheck arrives, you have bought more things that you can't afford. Then you have to start paying interest on your credit card purchases, so now you have less money left over to pay off the bills. Many, many people have gotten into a death spiral where they keep piling up credit card debt until they are barely able to pay the interest every month, never mind pay off the original bill. And yes, it's easy to say, "Credit cards are great as long as you use them responsibly." That may well be true. But some people have great difficulty being responsible about it. If you find that having a credit card in your pocket leads you to just not worry about how much you buy or what it costs, because, hey, you'll just put it on the credit card, then you will likely end up in serious trouble. If, on the other hand, you are just as careful about what you buy whether you are paying cash or using credit, and you never put more on the credit card than you can pay off in full when the bill arrives, then you should be fine. |
Has the likelihood of getting a lower interest rate by calling & asking been reduced by recent credit card regulations? | I don't know that this can actually be answered objectively. Maybe it can with some serious research. (Read: data on what the issuers have been doing since the law went into affect.) Personally, I think the weak economy and general problems with easy credit are a bigger issue than the new rules. Supposedly, there is evidence that card issuers are trying to make up for the lost income due to the new regulations with higher fees. I believe that your credit rating and history with the issuer is a larger factor now. In other words, they may be less likely to lower your rate just to keep you as a customer or to attract new customers. According to The Motley Fool, issuers dropped their riskiest customers as a result of the new regulations. Some say that new laws simply motivated the issuers to find new ways to "gouge" their customers. Here are two NYTimes blog posts about the act: http://bucks.blogs.nytimes.com/2010/02/22/what-the-credit-card-act-means-for-you/ http://bucks.blogs.nytimes.com/2010/07/22/the-effects-of-the-credit-card-act/ As JohnFx states, it does not hurt to ask. |
How to measure the cost/value of an Asset in the Financial Statement | Does the friend fix your electrical wiring and the engine of your car? If you need a professional advice - ask a professional. In this case - an accountant (not necessarily a CPA, but at least an experienced bookkeeper). Financial Statements (official documents, that is) must be signed by a public accountant (CPA in the US) or the principle (you). I wouldn't take chances and would definitely have an accountant do that. You need to consider the asset useful life, and the depreciation. The fact that you use it for non-business purposes may be recorded in various ways. One that comes to mind is accounting as a supplement for depreciation: You depreciate the percentage that is used for business, and record as a distribution to owner the rest (which is accounting for the personal use). This way it would also match the tax reporting (in the US, at least). Bottom line: if you're preparing an official financial statement (that you're going to submit to anyone other than yourself) - get a professional advice. |
Deducting SEP-IRA contributions as a sole proprietor with no employees | SEP IRA deduction goes to line 28 of your 1040, which is above the line (i.e.: pre-AGI). It should not be included in your taxable income (AGI) for Federal purposes. |
Paying extra on a mortgage. How much can I save? [duplicate] | Can I pay $12,000 extra once a year or $1000 every month - which option is better? Depends when. If you mean 12K now vs 1K a month over the next 12 months, repeating this each year, now wins. If you mean saving 1K a month for 12 months then doing a lumpsum, the 1K a month wins. Basically, a sooner payment saves you more money than a later payment. The first option does sound better, but for a 30 year mortgage, is it that significant? Your number one issue is that you have a thirty year mortgage. The interest you pay on it is monstrous. For the 30 year term, you pay around 500K in interest. A 15-year mortgage is 300K cheaper (only 200K in interest will be paid). The monthly payment would be 1250 more. How much money and years on a mortgage can I save? When is the best time to pay? At the end of each year? You can knock off about a dozen years. Save I think ~250K. You can find mortgage calculators online or talk to your mortgage advisor to play around with the numbers. |
Making $100,000 USD per month, no idea what to do with it | I would be more than happy to find a good use for your money. ;-) Well, you have a bunch of money far in excess of your regular expenses. The standard things are usually: If you are very confused, it's probably worth spending some of your windfall to hire professional help. It beats you groping in the dark and possibly doing something stupid. But as you've seen, not all "professionals" are equal, and finding a good one is another can of worms. If you can find a good one, it's probably worth it. Even better would be for you to take the time and thoroughly educate yourself about investment (by reading books), and then make a knowledgeable decision. Being a casual investor (ie. not full time trader) you will likely arrive, like many do, at a portfolio that is mostly a mix of S&P ETFs and high grade (eg. govt and AAA corporate) bonds, with a small part (5% or so) in individual stock and other more complicated securities. A good financial advisor will likely recommend something similar (I've had good luck with the one at my credit union), and can guide you through the details and technicalities of it all. A word of caution: Since you remark about your car and house, be careful about upgrading your lifestyle. Business is good now and you can afford nicer things, but maybe next year it's not so good. What if you are by then too used to the high life to give it up, and end up under mountains of debt? Humans are naturally optimistic, but be wary of this tendency when making assumptions about what you will be able to afford in the future. That said, if you really have no idea, hey, take a nice vacation, get an art tutor for the kids, spend it (well, ideally not all of it) on something you won't regret. Investments are fickle, any asset can crash tomorrow and ruin your day. But often experiences are easier to judge, and less likely to lose value over time. |
Why are credit cards preferred in the US? | There are several reasons why credit cards are popular in the US: On the other hand, debit cards do not have any of these going for them. A debit card doesn't make much money for the bank unless you overdraw or something, so banks don't have incentive to push you to use them as much. As a result they don't offer rewards other benefits. Some people say the ability to spend more than you have is a downside of a credit card. But it's really an upside. The behavior of doing that when it isn't needed is bad, but that's not the card's fault, it's the users'. You can get a credit card with a very small limit if this is an issue for you. The question I find interesting is why debit cards are more popular in your home country. I can't think of any advantage they offer besides free cash back. But most people in the US don't use cash much either. I have to think in your home country the banks have a different revenue model or perhaps your country isn't as eager to offer tons of easy credit to everyone as the US is. |
How can a person protect his savings against a country default? | These have the potential to become "end-of-the-world" scenarios, so I'll keep this very clear. If you start to feel that any particular investment may suddenly become worthless then it is wise to liquidate that asset and transfer your wealth somewhere else. If your wealth happens to be invested in cash then transferring that wealth into something else is still valid. Digging a hole in the ground isn't useful and running for the border probably won't be necessary. Consider countries that have suffered actual currency collapse and debt default. Take Zimbabwe, for example. Even as inflation went into the millions of percent, the Zimbabwe stock exchange soared as investors were prepared to spend ever-more of their devaluing currency to buy stable stocks in a small number of locally listed companies. Even if the Euro were to suffer a critical fall, European companies would probably be ok. If you didn't panic and dig caches in the back garden over the fall of dotcom, there is no need to panic over the decline of certain currencies. Just diversify your risk and buy non-cash (or euro) assets. Update: A few ideas re diversification: The problem for Greece isn't really a euro problem; it is local. Local property, local companies ... these can be affected by default because no-one believes in the entirety of the Greek economy, not just the currency it happens to be using - so diversification really means buying things that are outside Greece. |
First time consultant, doubts on Taxation | This is how a consulting engagement in India works. If you are registered for Service Tax and have a service tax number, no tax is deducted at source and you have to pay 12.36% to service tax department during filing (once a quarter). If you do not have Service tax number i.e. not registered for service tax, the company is liable to deduct 10% at source and give the same to Income Tax Dept. and give you a Form-16 at the end of the financial year. If you fall in 10% tax bracket, no further tax liability, if you are in 30%, 20% more needs to be paid to Income Tax Dept.(calculate for 20% tax bracket). The tax slabs given above are fine. If you fail to pay the remainder tax (if applicable) Income Tax Dept. will send you a demand notice, politely asking you to pay at the end of the FY. I would suggest you talk to a CA, as there are implications of advance tax (on your consulting income) to be paid once a quarter. |
Why are “random” deposits bad? | Random deposits are a bit like playing the lotery - especially if one is frequently chasing "hot tips". You might make it big, but the odds are vastly against you. "Random" deposits into various investments won't be optimal, because such "random" decisions will not be properly diversified and balanced. Various investments have different rates of risk and return. "Random" deposits will not take this into account for an individual's personal situation. In addition to needing to research individual investments as they are made, investments also need to be considered as part of a whole financial picture. A few considerations for example: Simply put, random isn't a financial strategy. |
Why is it rational to pay out a dividend? | Firstly, investors love dividend paying company as dividends are proof of making profit (sometimes dividend can be paid out of past profits too) Secondly, investor cash in hand is better than potential earnings by the company by way of interest. Investor feels good to redeploy received cash (dividend) on their own Thirdly, in some countries dividend are tax free income as tax on dividends has already been paid. As average tax on dividend is lower than maximum marginal tax; for some investor it generates extra post tax income Fourthly, dividend pay out ratio of most companies don't exceed 30% of available fund for paying (surplus cash) so it is seen as best of both the world Lastly, I trust by instinct a regular dividend paying company more than not paying one in same sector of industry |
Is This Money Laundering? | No, this is misbehavior of sales software that tries to automatically find the price point which maximizes profit. There have been much worse examples. Ignore it. The robot will eventually see that no sales occurred and try a more reasonable price. |
First time home buyer. How to negotiate price? | No offer is too low. You can always offer more but you can't offer less once you have made your first offer. And there is always another great deal just around the corner. The more enthusiastic you are about buying this property the less your negotiating power will be. The pproperty has already been on the market for a long while, so the vendor may be getting desperate to sell, so their negotiating power is already lessened. Know what the market is in the the area and offer at least 10% below the market. If it is a weak market then offer at least 20% below market. (Note: the list price is usually more than the market price). So offer as low as possible and you can always offer more if you think it is still a good price. Treat it like a game and have some fun, don't stress out if you miss out, there will always be a better deal just around the corner. |
Should I get an accountant for my taxes? | Let me offer an anecdote to this - I started helping a woman, widowed, retired, who had been paying $500/yr to get her taxes done. As I mentioned in my comment here, she got a checklist each year and provided the info requested. From where I sat, it seemed a clerk entered the info into tax software. As part of the transition to me helping her, I asked the prior guy (very nice guy, really) for a quick consult. She took the standard deduction, but also showed a nice annual donation. Didn't take advantage of the QCD, donate directly from an IRA (she was over 70-1/2) to save on the tax of this sum. That could have saved her $500. She was in the 15% bracket, with some room left for a Roth conversion. Converting just enough to 'fill' that bracket each year seemed a decent strategy as it would avoid the 25% rate as her RMDs rose each year and would push her to 25%. To both items the guy suggested that this was not his area, he was not a financial planner. Yes, I understand different expertise. With how simple her return was, I didn't understand the value he added. If you go with a professional, be sure you have an understanding of what he will and won't do for you. |
What taxes are assessed on distributions of an inherited IRA? | All transactions within an IRA are irrelevant as far as the taxation of the distributions from the IRA are concerned. You can only take cash from an IRA, and a (cash) distribution from a Traditional IRA is taxable as ordinary income (same as interest from a bank, say) without the advantage of any of the special tax rates for long-term capital gains or qualified dividends even if that cash was generated within the IRA from sales of stock etc. In short, just as with what is alleged to occur with respect to Las Vegas, what happens within the IRA stays within the IRA. Note: some IRA custodians are willing to make a distribution of stock or mutual fund shares to you, so that ownership of the 100 shares of GE, say, that you hold within your IRA is transferred to you in your personal (non-IRA) brokerage account. But, as far as the IRS is concerned, your IRA custodian sold the stock as the closing price on the day of the distribution, gave you the cash, and you promptly bought the 100 shares (at the closing price) in your personal brokerage account with the cash that you received from the IRA. It is just that your custodian saved the transaction fees involved in selling 100 shares of GE stock inside the IRA and you saved the transaction fee for buying 100 shares of GE stock in your personal brokerage account. Your basis in the 100 shares of GE stock is the "cash_ that you imputedly received as a distribution from the IRA, so that when you sell the shares at some future time, your capital gains (or losses) will be with respect to this basis. The capital gains that occurred within the IRA when the shares were imputedly sold by your IRA custodian remain within the IRA, and you don't get to pay taxes on that at capital gains rates. That being said, I would like to add to what NathanL told you in his answer. Your mother passed away in 2011 and you are now 60 years old (so 54 or 55 in 2011?). It is likely that your mother was over 70.5 years old when she passed away, and so she likely had started taking Required Minimum Distributions from her IRA before her death. So, You should have been taking RMDs from the Inherited IRA starting with Year 2012. (The RMD for 2011, if not taken already by your mother before she passed away, should have been taken by her estate, and distributed to her heirs in accordance with her will, or, if she died intestate, in accordance with state law and/or probate court directives). There would not have been any 10% penalty tax due on the RMDs taken by you on the grounds that you were not 59.5 years old as yet; that rule applies to owners (your mom in this case) and not to beneficiaries (you in this case). So, have you taken the RMDs for 2012-2016? Or were you waiting to turn 59.5 before taking distributions in the mistaken belief that you would have to pay a 10% penalty for early wthdrawal? The penalty for not taking a RMD is 50% of the amount not distributed; yes, 50%. If you didn't take RMDs from the Inherited IRA for years 2012-2016, I recommend that you consult a CPA with expertise in tax law. Ask the CPA if he/she is an Enrolled Agent with the IRS: Enrolled Agents have to pass an exam administered by the IRS to show that they really understand tax law and are not just blowing smoke, and can represent you in front of the IRS in cases of audit etc, |
How can small children contribute to the “family economy”? | Another suggestion I heard on the radio was to give the child the difference between the name brand they want, and the store brand they settle on. Then that money can be accumulated as savings. Saving money is as important a feature of the family economy as earning money. Be careful with what you have a child do for reward vs what you have them do as a responsibility. Don't set a dangerous precedent that certain work does not need to be done unless compensation is on the table. You might have a child who relies on external motivations only to do things, which can make school work and future employment hard. I would instead have my child do yard work, but while doing it explain opportunity costs of doing the work yourself vs hiring out. I would show my kid how saving money earns interest, and how that is essentially free money. |
What does the Fed do with the extra money it is printing? | Usually the FED uses newly printed money to buy US treasuries from Goldman Sachs, JP Morgan, etc.. These banks then lend out the new cash which expands the money supply. During the height of the crisis the FED printed over $1.0 Trillion and bought....well...almost anything the banks couldn't offload elsewhere. Mortgage Backed Securities, Credit Default Swaps, you name it - they bought it. Must be nice to always have a customer to sell your junk investments to. They also bought these securities at face value - not at market value. Chart from here. The FED announced in early November, 2010 that they will print another $600 billion and buy US Treasuries. They will be buying ALL the debt that will be sold by the US government for the next 8 months. This was admitted by the Dallas FED chairman in this article: For the next eight months, the nation’s central bank will be monetizing the federal debt. "Monetizing" is a fancy word for printing money. I think this was done because the US government ran out of customers for its debt. China has reduced its purchases of US debt and the Social Security Trust Fund is no longer buying US debt since it is running a deficit. |
Owing state tax Interest and a result of living in Maryland and working in Virginia | Ultimately, you are the one that is responsible for your tax filings and your payments (It's all linked to your SSN, after all). If this fee/interest is the result of a filing error, and you went through a preparing company which assumes liability for their own errors, then you should speak to them. They will likely correct this and pay the fees. On the other hand, if this is the result of not making quarterly payments, then you are responsible for it. (Source: Comptroller of Maryland Site) If you [...] do not have Maryland income taxes withheld by an employer, you can make quarterly estimated tax payments as part of a pay-as-you-go plan. If your employer does withhold Maryland taxes from your pay, you may still be required to make quarterly estimated income tax payments if you develop a tax liability that exceeds the amount withheld by your employer by more than $500. From this watered-down public-facing resource, it seems like you'll get hit with fees for not making quarterly payments if your tax liability exceeds $500 beyond what is withheld (currently: $0). |
Taxing GoFundMe Donations | From WePay (GoFundMe's payment processor) support. I received only gifts and donations. Will I receive a Form 1099-K? As of 2015, the IRS has clarified that WePay is not required to send a Form 1099-K with respect to payments that are made solely as gifts or donations. The purpose of Form 1099-K is to report payments for the provision of goods or services, which may be subject to tax. Gifts and donations typically are not reported as income by recipients, so it is not necessary to send them a Form 1099-K. https://support.wepay.com/hc/en-us/articles/203609483-Tax-Reporting |
Brokerage account for charity | If the charity accepts stock, you can avoid the tax on the long term cap gain when you donate it. e.g. I donate $10,000 in value of Apple. I write off $10,000 on my taxes, and benefit with a $2500 refund. If I sold it, I'd have nearly a $1500 tax bill (bought long enough ago, the basis is sub $100). Any trading along the way, and it's on you. Gains long or short are taxed on you. It's only the final donation that matters here. Edit - to address Anthony's comment on other answer - I sell my Apple, with a near $10,000 gain (it's really just $9900) and I am taxed $1500. Now I have $8500 cash I donate and get $2125 back in a tax refund. By donating the stock I am ahead nearly $375, and the charity, $1500. |
Why do financial institutions charge so much to convert currency? | Banks do of course incur costs on currency transactions. But they're not as high as the fee charged to the customer. Most banks in most places lose a lot of money on operating bank accounts for customers, and make the money back by charging more than their costs for services like currency exchange. If you don't choose to pay those fees, use an online service instead. But bear in mind that if everyone does so then banks will be forced to charge higher fees for current accounts. |
Which technical analysis indicators are considered leading stock market indicators? | Relative Strength Indicators are also trailing indicators. They are based on the number of recent upticks or downticks in an investment's price. (The size of a tick is quantized, and related to the investment's price.) By the time enough upticks have accumulated to generate a buy signal, the investment has already increased in price significantly. Similarly, by the time enough downticks have accumulated a to generate a sell signal, the investment has already dropped in price significantly. The theory of Relative Strength Indicators is based on the hope that moves found by these indicators are likely to continue after the signal is generated. But even if this is the case, someone who relies on these indicators will miss out on the first part of the move. Dorsey-Wright offers investment research based on the theory of Relative Strength Indicators. They offer investment vehicles based on this research. They also work with local investment advisors to develop custom back-tested strategies. They have published a white-paper, with references to others' research. |
Is it a good practice to keep salary account and savings account separate? | This seems like a risky setup. All it takes is one missed or delayed transfer for you to overdraw your "savings". There is a benefit to keeping your regular expenses and savings separate, and I can see some benefits in having multiple checking accounts depending on how you organize your finances, but I don't see a benefit to having a paycheck go to one account and all regular spending (and "savings") come from another. It requires some regular maintenance to transfer money over to use for regular spending. I suppose if you have a checking account that earns interest, but requires direct deposits, and a savings account that earns slightly higher interest you could squeeze out a bit, but it's probably not worth the effort these days unless you have a LOT of money going in and out. Also, it should not be easy to tap into savings, but your day-to-day spending should be very accessible. All those factors suggest (to me) that your paycheck should go into your regular spending account, and keep your savings separate. |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | The way you ask this is interesting, it implies (quite correctly) that for many, an annual bill for house insurance, property tax, etc, can turn into an emergency. My answer to the true emergency is a breakage that can't be foreseen (although you have to know the furnace isn't going to last forever) or a medical bill that's not covered (our dental is limited and the Mrs root canal can be $1000 out of pocket) |
Smartest Place to Put Tax Refund | Welcome to Money.SE. Your question is similar to a number of others. The "How do I pay my debt down?" and "How do I invest extra money?" is a bit of a continuum since there's no consensus than one should pay off the last cent of debt before investing. Oversimplify it for me: the correct order of investing offers a good look at this. You see, Pete's answer on your question is perfectly fine, but, since you make no mention of, say, a matched 401(k), I'd suggest that any answer to a question like yours should first take a step back and evaluate the bigger picture. A dollar for dollar matched 401(k) beats paying off even an 18% credit card. Absent any tangents, any thought of investing, saving for anything else, etc, my answer is simple, line up the debt, highest interest rate to lowest. Keep in mind the post-tax rate, i.e. a 6% student loan you can deduct, is an effective 4.5% if you are in the 25% bracket. |
Why charge gross receipts taxes to the customer? | the state of New Mexico provides guidance in this exact situation. On page 4: Gross receipts DOES NOT include: Example: When the seller passes tax to the buyer, the seller should separate, or “back out”, that tax from the total income to arrive at "Gross Receipts," the amount reported in Column D of the CRS-1 Form. (Please see the example on page 48.) and on page 48: How do I separate (“back out”) gross receipts tax from total gross receipts? See the following examples of how to separate the gross receipts tax: 1) To separate (back out) tax from total receipts at the end of the report period, first subtract deductible and exempt receipts, and then divide total receipts including the tax for the report period by one plus the applicable gross receipts tax rate. For example, if your tax rate is 5.5% and your total receipts including tax are $1,055.00 with no deductions or exemptions, divide $1,055.00 by 1.055. The result is your gross receipts excluding tax (to enter in Column D of the CRS-1 Form) or $1,000. 2) If your tax rate is 5.5%, and your total gross receipts including tax are $1,055.00, and included in that figure are $60 in deductions and another $45 in exemptions: a) Subtract $105 (the sum of your deductions and exemptions) from $1,055. The remainder is $950. This figure still includes the tax you have recovered from your buyers. b) Divide $950 by 1.055 (1 plus the 5.5% tax rate). The result is $900.47. c) In Column D enter the sum of $900.47 plus $60 (the amount of deductible receipts)*, or $960.47. This figure is your gross receipts excluding tax. |
Margin when entered into a derivative contract | A derivative contract can be an option, and you can take a short (sell) position , much the same way you would in a stock. When BUYING options you risk only the money you put in. However when selling naked(you don't have the securities or cash to cover all potential losses) options, you are borrowing. Brokers force you to maintain a required amount of cash called, a maintenance requirement. When selling naked calls - theoretically you are able to lose an INFINITE amount of money, so in order to sell this type of options you have to maintain a certain level of cash in your account. If you fail to maintain this level you will enter into whats often referred to as a "margin-call". And yes they will call your phone and tell you :). Your broker has the right to liquidate your positions in order to meet requirements. PS: From experience my broker has never liquidated any of my holdings, but then again I've never been in a margin call for longer then a few days and never with a severe amount. The margin requirement for investors is regulated and brokers follow these regulations. |
Is it legal if I'm managing my family's entire wealth? | Assuming you and your family always get along and everyone is happy with the situation... Should you become ill, die, or go on government benefits for some catastrophe, the government will look at all those funds as YOURS, and now your wonderful family is hurt by the estate tax and/or expectations of how much of the bill you handle before support kicks in. Additionally, should you ever reach a point where you are married and then facing divorce (even if no fault of your own), all that investment is now up for grabs in equitable distribution. So your family's entire investment fund is at risk. |
What prevents interest rates from rising? | A lot of loans are taken out on a fixed rate basis, so the rate is part of the contract and is therefore covered by contract law. If the loan is taken out on a variable basis then in principle the rate can rise within the terms of the contract. If a particular lender tries to raise its rates out of line with the market then its customers will seek alternative, cheaper, loans and pay off their expensive loan if they can. If rates rise sharply in general due to unusual politico-economic circumstances then those with variable rate loans can find themselves in severe trouble. For example the base rate in the UK (and therefore variable mortgage rates closely tied to it) spiked sharply in the late 80s which caused severe stress to a lot of borrowers and undoubtedly pushed some into financial difficulties. |
Calculating Pre-Money Valuation for Startup | Since you have no sales, I'd likely question how well could you determine the value of the company's assets in a reasonable fashion. You may be better to estimate sales and discount that back to a current valuation. For example, insurance companies could determine that if you wanted to be paid $x/month for the rest of your life, the present day value of that is $y. There are similar mechanisms for businesses but this does get tricky as the estimates have to be somewhat conservative and you have to be prepared for some other scenarios. For example, if you got the $200,000 then would you really never have to ask for more external equity financing in the future or is it quite likely that you'd want another infusion down the road? While you can mark it at $1,000,000 there will be questions about why that value that you'd have to answer and saying, "Cause I like big round numbers," may not go over well. My suggestion is to consider what kind of sales will the company have over the next 5 years that you could work back to determine a current price. If you believe the company can have $5,000,000 in sales over the 5 years then it may make sense to place the current valuation of $1,000,000 on it. I wouldn't look too much into the money and time you've invested as that isn't likely to go over well with investors that just because you've put in what is worth $x, the business may or may not be worth that. The challenge is that without sales, it is quite difficult to get an idea of what is the company worth. If it makes billions, then it is worth a lot more than a company that never turns a profit. Another way to consider this is the question of what kind of economic output do you think you could do working here for the next 5 years? Could you do thousands of dollars of work, millions of dollars or just a few bucks? Consider how you want this to be seen where if you want some help look up episodes of TV shows like "Dragon's Den" or "Shark Tank" as these give valuations often as part of the pitch which is what you are doing. |
Pensions, annuities, and “retirement” | Pension in this instance seems to mean pension income (as opposed to pension pot). This money would be determined by whatever assets are being invested in. It may be fixed, it may be variable. Completely dependant on the underlying investments. An annuity is a product. In simple terms, you hnd over a lump sum of cash and receive an agreed annual income until you die. The underlying investment required to reach that income level is not your concern, it's the provider's worry. So there is a hige mount of security to the retiree in having an annuity. The downside of annuities is that the level of income may be too low for your liking. For instance, £400/£10,000 would mean £400 for every £10,000 given to the provider. That's 4% and would take 25 years to break even (ignoring inflation, opportunity cost of investing yourself). Therefore, the gamble is whether you 'outlive' the deal. You could hand over £50,000 to a provider and drop dead a year later. Your £50k got you, say, £2k and then you popped your clogs. Provider wins. Or you could like 40 years after retiring and then you end up costing the provider £80k. You win. Best way to think of an annuity is a route to guaranteed, agreed income. To secure that guarantee, there's a price to pay - and that is, a lower income rate than you might like. Hope that was the kind of reply you were hoping for. If not, edit your OP and ask again. Chris. PS. The explanation on the link you provided is pretty dire. Very confusing use of the term 'pension' and even if that were better, the explanation is still bad due to vagueness. THis is much better: http://www.bbc.co.uk/news/business-26186361 |
For very high-net worth individuals, does it make sense to not have insurance? | I'm going to take a very crude view of this: Suppose that you have an event that would cost $100,000 if it occurred. If there's a 10% chance that it'll happen to you and the insurance costs less than $10,000, you'll make a profit "on average." This is, of course, assuming that you could afford a $100,000 loss. If you can't, the actual loss could be much higher (or different). For example, if you couldn't afford surgery because you didn't have health insurance, it could be a lot more "costly" in a way that could be difficult to compare to the $100,000. Obviously, this is a very simplistic view of things. For example, making more than you paid on the premium typically isn't the only reason you'd buy insurance (even if you're high net worth). Just wanted to throw this out there for what it's worth though. |
Primerica: All it claims to be? | Probably not, though there are a few things to be said for understanding what you are doing here. Primerica acts as an independent financial services firm and thus has various partners that specialize in various financial instruments and thus there may exist other firms that Primerica doesn't use that could offer better products. Now, how much do you want to value your time as it could take more than a few months to go through every possible insurance firm and broker to see what rate you could get for the specific insurance you want. There is also the question of what constitutes best here. Is it paying the minimal premiums before getting a payout? That would be my interpretation though this requires some amazing guesswork to know when to start paying a policy to pay out so quickly that the insurance company takes a major loss on the policy. Similarly, there are thousands of mutual funds out there and it is incredibly difficult to determine which ones would be best for your situation. How much risk do you want to take? How often do you plan to add to it? What kind of accounts are you using for these investments, e.g. IRAs or just regular taxable accounts? Do tax implications of the investments matter? Thus, I'd likely want to suggest you consider this question: How much trust do you have that this company will work well for you in handling the duty of managing your investments and insurance needs? If you trust them, then buy what they suggest. If you don't, then buy somewhere else but be careful about what kind of price are you prepared to pay to find the mythical "best" as those usually only become clear in hindsight. When it comes to trusting a company in case, there are more than a few factors I'd likely use: Questions - How well do they answer your questions or concerns from your perspective? Do you feel that these are being treated with respect or do you get the feeling they want to say, "What the heck are you thinking for asking that?" in a kind of conceited perspective. Structure of meeting - Do you like to have an agenda and things all planned out or are you more of the spontaneous, "We'll figure it out" kind of person? This is about how well do they know you and set things up to suit you well. Tone of talk - Do you feel valued in having these conversations and working through various exercises with the representative? This is kind of like 1 though it would include requests they have for you. Employee turnover - How long has this person been with Primerica? Do they generally lose people frequently? Are you OK with your file being passed around like a hot potato? Not that it necessarily will but just consider the possibility here. Reputation can be a factor though I'd not really use it much as some people can find those bad apples that aren't there anymore and so it isn't an issue now. In some ways you are interviewing them as much as they are interviewing you. There are more than a few companies that want to get a piece of what you'll invest, buy, and use when it comes to financial products so it may be a good idea to shop around a little. |
What part of buying a house would make my net worth go down? | In general, buying a house will improve your net worth over the long haul, because unlike cars, houses don't suffer as much from depreciation. The problem with real property is that markets are very cyclic and aren't very liquid assets. Farmers with thousands of acres of valuable land are often cash poor for that very reason. A lot of people here are negative about housing ownership — this is illustrative of the fact that 2010 is a year where real estate is on the down-side of the cycle. |
First job: Renting vs get my parents to buy me a house | Personally, I started renting out because I couldn't afford to buy a place but now I'm quite comfortably past that point. My three main issues are: These views aren't for everyone but I find it hard to seriously contemplate dealing with 2 while 1 and 3 are issues. To be honest, I found that I learned a lot sharing a place for the first few years and still enjoying it now. I don't really think you should bring it down to a financial issue unless your decision is already made. |
Do I need a Like-Kind Exchange when selling a personal vehicle for a company car | You cannot do a like-kind (Sec. 1031) exchange for personal property, only for business/investment property. Since you said that you traded in your personal car - no like-kind exchange is possible. Also, since the new car doesn't belong to you - you didn't actually perform any exchange. You sold your old car, but you didn't buy a new one. If Turbo-Tax suggests you to fill the exchange form - you must have entered something wrong to make it think there was an exchange. Check your entries again, specifically - check if you entered that you purchased a new car instead of the old one, since you didn't. See an example of where to start looking here. |
“Inflation actually causes people not to spend”… could it be true? | We need to be careful what we are talking about here. Inflation on a economy-level scale at an expected rate will not change consumer habits because the price increase is manageable. You have to realize that prices are not increasing in isolation: wages will have to rise along too. High inflation that is expected will increase consumption of durable goods, as people attempt to 'get rid of their money' before the price changes on them. A good example of this was post-WWI germany, where hyperinflation was so bad that offices began to pay their employees twice daily, so they could adjust their wages, and so that their employees could go out during lunch and after work to buy something with the money before the price changed on them. Unexpected inflation may cause a temporary dip in spending until wages adjust, however consumers still need to buy, so they will likely push for higher wages, leading to consumption to stay about level. There is another effect to inflation as well: People who have savings will have their savings eroded over time if the economy is inflationary. To preserve their wealth, they will invest it. In a deflationary environment, money will increase in value simply by being hoarded, so they will be less willing to invest it. Deflation also increases the cost of interest on a loan, while inflation decreases it. So the overall effect is for an increase in spending under inflation, and a decrease under deflation. The person you have quoted is quite wrong. Price increases in a particular sector will cause consumer spending to decrease but this is a bad example, as it is not inflation, but rather a supply/demand problem of a particular consumer good. They are applying a micro-economic model (price increases of a single good) to a macroeconomic problem (price increases in the entire economy) when price increases at a global scale have the opposite effects. A good theoretical test of this is: what would happen if everyone in the US suddenly had twice as much money? (Ignoring international trade, of course). The answer: prices will double, and nothing else will change. The reason is, people will have more money to spend, but will require more money for their services, so in the end it all cancels out. |
Using a cash account can someone trade all day on it? | According to Regulation T, you can make as many day trade (round trip) stock purchases using a cash account as long as you have the funds to cover each and every round trip sale. However, the funds generated from the sales cannot be used again to purchase new stocks until the settlement period (T-2 or T-3) is over. For example, say you have $10000 dollars in your cash account and no securities. You buy 1000 shares of XYZ stock in the morning at one dollar per share and you sell the stock 30 minutes later because it went up say by 50 cents. According to Regulation T, you cannot use the money generated from the sale of your 1000 shares until after the settlement date. However, you can use the remaining $9000 dollars in your account to execute other trades just as the first trade. You can do this as many times as you want as long as you have funds available to pay for the transaction the same day it's executed. The only thing to worry about and that isn't clear, is, what happens if you perform this action more than 3 times in a week? Does it mean that your cash account now becomes a margin account subject to margin account rules because you executed more than three round trip trades in a five day rolling period? |
Primerica: All it claims to be? | I was a Primerica representative, left to be on my own, and then returned. Insurance is one matter that depends on the individual. Some do not need it. For example, when I was an independent agent with an independent marketing organization (IMO) (oh yes! multi-level is everywhere, dont kid yourself) I had an upline as well. We were pushed to sell final expense [burial insurance]. As an ethical agent, I believe this is a bad business practice. Primerica does not sell unneeded insurance to old people. How can you justify selling the elderly, insurance to cover them for $10,000, at almost 100 to 150 a month? I told my elderly potential clients, after seeing they live on a tight budget, that they were better off purchasing a cremation policy or funeral package than burial insurances as it would save them money in the long run. Primerica is right in saying they are the only ones out there catering to the Working Class and Middle-America. Where else can you start an Individual Retirement Account (IRA) with $25 a month? Nowhere! All the other insurance producers want more money. They don't want to spend their time with what they call "losers". I love showing Poor people how the Rich get richer. Poor people should know the truth. |
How come I can't sell short certain stocks? My broker says “no shares are available” | In finance, short selling (also known as shorting or going short) is the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to the lender. Remember your broker has to borrow it from somewhere, other clients or if they hold those specific stocks themselves. So if it isn't possible for them to lend you those stocks, they wouldn't. High P/E stocks would find more sellers than buyers, and if the broker has to deliver them, it would be a nightmare for him to deliver all those stocks, which he had lent you(others) back to whom he had borrowed from, as well as to people who had gone long(buy) when you went short(sell). And if every body is selling there is going to be a dearth of stocks to be borrowed from as everybody around is selling instead of buying. |
What US tax laws apply to a 13 year old game developer? | After doing a little research, I was actually surprised to find many internet resources on this topic (including sites from Intuit) gave entirely incorrect information. The information that follows is quoted directly from IRS Publication 929, rules for dependents First, I will assume that you are not living on your own, and are claimed as a "dependent" on someone else's tax return (such as a parent or guardian). If you were an "emancipated minor", that would be a completely different question and I will ignore this less-common case. So, how much money can you make, as a minor who is someone else's dependent? Well, the most commonly quoted number is $6,300 - but despite this numbers popularity, this is not true. This is how much you can earn in wages from regular employment without filing your own tax return, but this does not apply to your scenario. Selling your products online as an independent game developer would generally be considered self-employment income, and according to the IRS: A dependent must also file a tax return if he or she: Had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. So, your first $400 in earnings triggers absolutely no requirement to file a tax return - blast away, and good luck! After that, you do not necessarily owe much in taxes, however you will need to file a tax return even if you owe $0, as this was self-employment income. If you had, for instance, a job at a grocery store, you could earn up to $6,300 without filing a return, because the store would be informing the IRS about your employment anyway - as well as deducting Medicare and Social Security payments, etc. How much tax will you pay as your income grows beyond $400? Based upon the IRS pages for Self-Employment Tax and Family Businesses, while you will not likely have to pay income tax until you make $6,300 in a year, you will still have to pay Social Security and Medicare taxes after the first $400. Roughly this should be right about 16% of your income, so if you make $6000 you'll owe just under $1000 (and be keeping the other $5000). If your income grows even more, you may want to learn about business expense deductions. This would allow you to pay for things like advertisement, software, a new computer for development purposes, etc, and deduct the expenses out of your income so you pay less in taxes. But don't worry - having such things to wonder about would mean you were raking in thousands of dollars, and that's an awfully good problem to have as a young entrepreneur! So, should you keep your games free or try to make some money? Well, first of all realize that $400 can be a lot harder to make when you are first starting in business than it probably sounds. Second, don't be afraid of making too much money! Tax filing software - even totally free versions - make filing taxes much, much easier, and at your income level you would still be keeping the vast majority of the money you earn even without taking advantage of special business deductions. I'd recommend you not be a afraid of trying to make some money! I'd bet money it will help you learn a lot about game development, business, and finances, and will be a really valuable experience for you - whether you make money or not. Having made so much money you have to pay taxes is not something to be afraid of - it's just something adults like to complain about :) Good luck on your adventures, and you can always come back and ask questions about how to file taxes, what to do with any new found wealth, etc! |
First job: Renting vs get my parents to buy me a house | As everyone is saying, this depends on a lot of variables. However... I had my dad help me with the downpayment on my house. In my case, the cost of mortgage payment and all maintenance expenses is still lower than paying rent. If I sell my house and walk away from the closing office with just $1 then I've still come out ahead compared to renting. The New York Times has a fantastic tool figure out if it's a good idea to buy vs. rent. http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0 It's asks all the relevant questions, and then it tells you how cheap rent would have to be make it the better option. |
Why would a bank need to accept deposits from private clients if it can just borrow from the Federal Reserve? | Let's just focus on the "why would a bank need to accept deposits from private clients part" and forget the central bank for a moment. I'm a guy. I have a wife and two kids. They have this pesky habit of wanting to buy stuff. When I get paid, I could just get a check, cash it, stuff it under a mattress, and pull it out when I need it. Hey that worked for a long time didn't it? But sometimes it's nice to write checks. (Just kidding, that's so gauche...) I use my debit card. I use my credit cards, but they need to be paid somehow. My light and phone bills need to be paid too. If only there were someone out there who could facilitate this transfer of money between me, the private client and the merchants I'm forced to spend my money at. Now some of those merchants have plans. Light bills I can pay at my grocer if I choose. But most of the other's don't. Luckily I have a bank that's willing to do this, for a fee. So basically they do it because there's a void in the market if they don't. I don't know if it's true what they say about supply creating its own demand, but it certainly is true that demand creates supply! |
Why do Americans have to file taxes, even if their only source of income is from a regular job? | For two reasons: 1- People are entitled to deductions and credits that your employer cannot possibly know. Only you as an individual know about your personal situation and can therefore claim these deductions and credits by filing income tax returns. 2- Me telling you that you made $100,000 last year is not the same as telling you that you made $125,000 last year, but someone took $25,000 out of your pocket. Tax season is the one time of the year when citizens know exactly what chunk of their hard earned money was taken by the government, creating more collective awareness about taxation and giving politicians a harder time when they propose raising taxes. |
What is a good size distribution for buying gold? | Look at a broader diversification. Something like: For physical gold, I'd look at a mix of gold coins and bullion. Study the pricing model for coins -- you'll probably find that the spreads on small coins make them too expensive. There are a few levels of risk with storing in a vault -- the practical risk is that your government will close banks in the event of a panic, and your money will be inaccessible. You need to balance that risk with the risk to your personal security that comes with having lots of gold or cash in your home. My recommendation is to avoid wasting time on the "Mad Max" scenarios. If the world economy collapses into utter ruin, we're all screwed. A few gold coins won't do much for you. |
What's the difference between a high yield dividend stock vs a growth stock? | I think Fidelity has a very nice introduction to Growth vs Value investing that may give you the background you need. People love to put stocks in categories however the distinction is more of a range and can change over time. JB King makes a good point that for most people the two stocks you mentioned would both be considered value right now as they are both stable companies with a significant dividend. You are correct though Pfizer might be considered "more growth." A more drastic example would be the difference between Target and Amazon. Both are retail companies that sell a wide variety of products. Target is a value company: a established company with stable revenues that uses its income to give a fairly stable dividend. Amazon is a growth company: that is reinvesting its revenues back into the corporation to grow itself as fast as possible. The price of the Amazon stock reflects what people think will be future growth (future income) for the company. Whereas Target's price appears to be based on the idea that future income will be similar to current income. You can see why growth companies like Amazon might be more risky as that growth you paid a high price for may not be realized, but the payout may be much higher as well. |
hardship withdrawal | Gaining traction is your first priority. WARNING: as @JosephZambrano explains in his answer the tax penalty for withdrawing from a 401(k) can easily exceed the APR of the credit card making it a very bad strategy. Consult in-depth with a financial advisor to see before taking that path. As @JoeTaxpayer has noted a loan is another alternative. The 401k is no good to you if you can't have shelter or comfort in the mean time. The idea is to look at all the money as a single thing and balance it together. There is no credit and retirement, just a single target that you can hit by moving the good money to clear the bad. Consolidating the credit card debt somehow would be very wise if you can. Assuming it is 30% APR shrinking that quickly is the first priority. You may be able to justify a hardship withdrawal to finance the reduction/consolidation of the credit card. It may be worth considering negotiating a closure arrangement with a reduced principal. Credit card companies can be quite open to this as it gets their money back. You may also be able to negotiate a lower interest rate. You may be able to negotiate a non-credit-affecting debt consolidation with a debt consolidator. They want to make money and a 25K loan to a person with sound credit is a pretty good bet. Moving, buying a house, or any of that may just relocate the problem. You may be able to withdraw $25K from your 401k under hardship, pay the credit card, and come up with a payment plan for the medical debt. It's a retirement setback for sure, but retirement is an illusion with that credit card shark eating all of your hard-earned money. You gotta slay that beast quick. Again, be sure to fully analyze whether the penalty on the 401(k) withdrawal exceeds the APR of the credit card. |
How does GST on PayPal payments work for Australian Taxation? | Regardless of wether or not you are registered for GST, you are legally required to include a GST total on every invoice sent to an Australian customer. This GST total must be 10% of the payment amount if you are registered for GST, or it must be $0.00 if you are not registered for GST. Since all GST transactions with the government are in Australian dollars, this amount on the invoice also needs to be in AUD, or else it's impossible for you and your customer to both be working off the same GST amount. This means you need to transfer your money from USD to AUD in PayPal's "Manage Currencies" area before you can send a tax invoice to the customer, so that you can provide the correct amount in AUD based on the actual exchange rate for the day (and you are required to send invoices promptly). Alternatively, you can collect payments in AUD using PayPal or use a different payment service that collects payments in USD but immediately converts them to AUD for sending an invoice (australian paypal competitors often provide this service). |
Is it sensible to redirect retirement contributions from 401(k) towards becoming a landlord? | Here are the issues, as I see them - It's not that I don't trust banks, but I just feel like throwing all of our money into intangible investments is unwise. Banks have virtually nothing to do with this. And intangible assets has a different meaning than you assume. You don't have to like the market, but try to understand it, and dislike it for a good reason. (Which I won't offer here). Do your 401(k) accounts offer company match? When people start with "we'd like to reduce our deposits" that's the first thing we need to know. Last - you plan to gain "a few hundred dollars a month." I bet it's closer to zero or a loss. I'll return to edit, we have recent posts here that reviewed the expenses to consider, and I'd bet that if you review the numbers, you've ignored some of them. "A few hundred" - say it's $300. Or $4000/yr. It would take far less work and risk to simply save $100K in your retirement accounts to produce this sum each year. The investment may very well be excellent. I'm just offering the flip side, things you might have missed. Edit - please read the discussion at How much more than my mortgage should I charge for rent? The answers offer a good look at the list of expenses you need to consider. In my opinion, this is one of the most important things. I've seen too many new RE investors "forget" about so many expenses, a projected monthly income reverts to annual losses. |
Should I Use an Investment Professional? | Ask yourself the same question for furniture making. Would you feel more comfortable sitting in a chair that you made yourself versus one that you bought from a furniture store? How about one that you bought from IKEA and assembled? For an experienced, competent furniture maker, you might be able to make an equivalent chair for less money and be highly confident. For a "DIY" builder, you might be less confident but be willing to take more of a risk with the possibility of making a good chair for less money (and gain experience on what not to do next time). The same applies to investing - if you are highly confident in your own abilities, DIY investing may work better for you. For the "general population", however, relying on experts to do the hard work (and paying a little more for their services) is probably a better option and gives you more confidence. As for the second quote, I'm note sure there's a causality there. If anything, I think it's the other way around - people who have more money saved for retirement are more likely to use investment advisors. |
End-of-season car sales? | It completely varies by manufacturer, dealer, and time of year, but in general yes, you can get a (sometimes significant) discount on brand new last year models. In general though, it comes down to supply and demand. As an example, in April 2016 I was looking at a brand new 2016 in which the 2017 model had come out that week (I thought April was a little early for next year's model but sometimes that's a marketing tool). The sticker price of the 2017 was only $100 more than the 2016, but the 2016 was selling for $3K under MSRP, and the 2017 was selling at exactly MSRP since they only had 2 in stock. |
2 401k's and a SEP-IRA | question #2 - yes, 25% of your 1099 income. Good idea. It adds up quickly and is a good way to reduce taxable income. |
How long does it take for money to transfer into a mastercard? | In a nutshell, as long as they (Sparkasse) choose to. I work with banks where it happens the moment I submit the transaction (so the next screen already shows the new totals), and I work with banks that make it take 3 days. In the past, Sparkasse and Raifeissenkassen were especially famous to take a looong time ('Wir nehmen mehr als Geld und Zinsen...' - they supposedly work with the money inbetween, as it is gone from the source account but not arrived in the target account yet); that might have changed (or not). Probably Sparkasse has a statement in their fineprint on how long they make it take. I would expect one business day in today's environment, but I didn't look it up. |
Is it better to wait for a market downturn to do a Roth conversion? | On average, the market will be down 1 year out of 4. 26 of the last 100 years on the S&P were negative. The Roth conversion offers a unique opportunity to convert early in the year, and decide at tax time next year whether you are happy with the result. Of course, if your fund or stock is up, you are likely better off, paying the $1250 tax on the $5000 conversion that's now worth $6000 or more. If it's down, you can recharacterize. The volatility of the market helps makes this process more attractive. If my converted shares dropped quite a bit, the recharacterization is far more desirable than a small drop or no drop at all. Of course we don't wish for that drop, any more than we wish for our house to burn down to make our insurance pay off. To be clear, you'll benefit from a conversion she the market goes up. The downturn only lets you reverse the bad move. |
Transfer money from a real estate sale in India to the US | How would I go about doing this? Assuming you had purchased the house by funding from your NRE account, you can easily move back the 30K into NRE Account and out of India from NRI Account. The 30K profit would be taxed in India as per capital gains and can only be moved into NRO account. A CA would need to certify that appropriate taxes have been withheld before the bank will release the funds for repatriation out of India. There is also a limit [large 1 million USD] on how much funds can be moved out of India. Consult a CA who would help you with the formalities. If you have not funded the purchase from NRE account, the entire proceeds should be into NRO account and then move funds from there. |
What happens if a Financial Services Company/Stockbroker goes into administration in the UK? | Although I posted this question more than a year ago, I subsequently read information which may be of use as an answer, specifically regarding Pritchard Stockbrokers in the UK several years ago, in which the FSCS stepped in to compensate investors, as detailed in the following: http://www.fscs.org.uk/what-we-cover/questions-and-answers/qas-about-pritchard-stock-6n940n01k/ http://www.ft.com/cms/s/0/89957c56-21e4-11e3-9b55-00144feab7de.html#axzz3crZYbGZ9 For reference, in case the links above are at some point in future taken offline, the FSCS FAQ states: Q: I had “deposited” money with Pritchard so can I expect £85,000 compensation from FSCS? A: No. Pritchard was not a deposit-taker so the money held does not qualify under regulatory rules as a deposit. The money will be treated as an investment, which carries maximum FSCS compensation of £50,000 per person. FSCS has no discretion to pay any more. Q: What happens if my losses are over the FSCS maximum of £50,000 and I accept the FSCS’s compensation? A: If you choose to accept compensation from FSCS, you will be required to assign (or legally transfer) to FSCS all of your rights to claim in the Administration. FSCS will then claim in the Administration standing “in your shoes” and will claim for the whole of your loss, even if it was over £50,000. When FSCS receives the dividends in your place it will then pay to you any amounts recovered to ensure that you do not suffer a disadvantage for having accepted FSCS compensation first. Example 1: Loss = £80,000 FSCS compensation = £50,000 Dividend of 50p/£ received by FSCS = £40,000 FSCS pays £30,000 to claimant so he is fully compensated (total £80,000), and retains £10,000 recovery for itself Example 2: Loss = £100,000 FSCS compensation = £50,000 Dividend of 50p/£ received by FSCS = £50,000 FSCS pays £50,000 to claimant so he is fully compensated (total £100,000), and retains nothing for itself FSCS does not have to have make a full recovery of its £50,000 before it starts paying its dividend recovery on to claimants. Claimants are not compelled to claim from FSCS, or to accept the FSCS offer of compensation. If a person does not want to transfer his legal rights to claim in the Administration to FSCS in return for accepting the payment of compensation, then s/he can decline our compensation and continue his claim in the Administration. After s/he has received the dividend(s), s/he can then return to FSCS to claim for any remaining shortfall. Therefore, the answer provided by @DumbCoder was correct, but in circumstances where fraudulent activity would mean otherwise, the FSCS was willing to intervene on the behalf of investors. |
Is it better to use DRIP or invest when stock drops before ex-date? | The benefit of a dividend reinvestment program is you, generally, don't pay transaction costs or commissions and you don't have to remember to do it. Whether or not you may be able to eek out a little more by managing this yourself is a crapshoot and the equivalent of timing the market. If you're so good at timing the market you shouldn't even be holding the stock, you should be buying and selling as the price fluctuates. |
Where to find Vanguard Index Funds? | You cannot actually buy an index in the true sense of the word. An index is created and maintained by a company like Standard and Poor's who licenses the use of the index to firms like Vanguard. The S&P 500 is an example of an index. The S&P 500 "index includes 500 leading companies", many finical companies sell products which track to this index. The two most popular products which track to indexes are Mutual Funds (as called Index Funds and Index Mutual Funds) and Exchange Traded Funds (as called ETFs). Each Index Mutual Fund or ETF has an index which it tracks against, meaning they hold securities which make up a sample of the index (some indexes like bond indexes are very hard to hold everything that makes them up). Looking at the Vanguard S&P 500 Index Mutual Fund (ticker VFINX) we see that it tracks against the S&P 500 index. Looking at its holdings we see the 500-ish stocks that it holds along with a small amount of bonds and cash to handle cash flow for people buying and sell shares. If we look at the Vanguard S&P 500 ETF (ticker VOO) we see that it also tracks against the S&P 500 index. Looking at its holdings we see they are very similar to the similar Index Mutual Fund. Other companies like T. Rowe Price have similar offering. Look at the T. Rowe Price Equity Index 500 Fund (ticker PREIX) its holdings in stocks are the same as the similar Vanguard fund and like the Vanguard fund it also holds a small amount of bonds and cash to handle cash flow. The only real difference between different products which track against the same index is in the expense ratio (fees for managing the fund) and in the small differences in the execution of the funds. For the most part execution of the funds do not really matter to most people (it has a very small effect), what matters is the expense (the fees paid to own the fund). If we just compare the expense ratio of the Vanguard and T. Rowe Price funds we see (as of 27 Feb 2016) Vanguard has an expense ratio of 0.17% for it Index Mutual Fund and 0.05% for its ETF, while T. Rowe Price has an expense ratio of 0.27%. These are just the fees for the funds themselves, there are also account maintenance fees (which normally go down as the amount of money you have invested at a firm go up) and in the case of ETFs execution cost (cost to trade the shares along with the difference between the bid and ask on the shares). If you are just starting out I would say going with the Index Mutual Fund would easier and most likely would cost less over-all if you are buying a small amount of shares every month. When choosing a company look at the expense ratio on the funds and the account maintenance fees (along with the account minimals). Vanguard is well known for having low fees and they in fact were the first to offer Index Mutual Funds. For more info on the S&P 500 index see also this Investopedia entry on the S&P 500 index. Do not worry if this is all a bit confusing it is to most people (myself included) at first. |
(Theoretical) Paying credit cards with other credit cards | A "balance transfer" is paying one credit card with another. You probably get offers in the mail to do this all of the time. As other posters have noted, however, this usually comes with finance fees rather than the rewards that you get for normal purchases because it's written into your credit card agreement as a different class of transaction with different rules. I'm not sure if it's urban legend or true, but I have heard stories that suggest there were some "loop holes" in the earliest credit card reward plans that allowed for something like what you want. I doubt that any plan ever allowed exactly what you've written, but I've heard stories about people buying gift cards from merchants and then using the gift cards to pay their bill. This loop hole (if it ever existed) is closed now, but it would have allowed for essentially infinite generation of rewards at no cost to the cardholder. The banks and credit card companies have a lot of years of experience at this sort of thing now, so the threshold for you finding something that works and conforms with the cardholder agreement is pretty small. |
At what percentage drop should you buy to average down | Only average down super blue chips with a long history or better still, ETFs or index type funds. I do it with income producing funds as I'm a retiree. Other people may have much shorter horizins. |
How are various types of income taxed differently in the USA? | Many individual states, counties, and cities have their own income taxes, payroll taxes, sales taxes, property taxes, etc., you will need to consult your state and local government websites for information about additional taxes that apply based on your locale. Wages, Salaries, Tips, Cash bonuses and other taxable employee pay, Strike benefits, Long-term disability, Earnings from self employment Earned income is subject to payroll taxes such as: Earned income is also subject to income taxes which are progressively higher depending on the amount earned minus tax credits, exemptions, and/or deductions depending on how you file. There are 7 tax rates that get progressively larger as your income rises but only applies to the income in each bracket. 10% for the first 18,650 (2017) through 39.6% for any income above 470,700. The full list of rates is in the above linked article about payroll taxes. Earned income is required for contributions to an IRA. You cannot contribute more to an IRA than you have earned in a given year. Interest, Ordinary Dividends, Short-term Capital Gains, Retirement income (pensions, distributions from tax deferred accounts, social security), Unemployment benefits, Worker's Compensation, Alimony/Child support, Income earned while in prison, Non-taxable military pay, most rental income, and S-Corp passthrough income Ordinary income is taxed the same as earned income with the exception that social security taxes do not apply. This is the "pure taxable income" referred to in the other linked question. Dividends paid by US Corporations and qualified foreign corporations to stock-holders (that are held for a certain period of time before the dividend is paid) are taxed at the Long-term Capital Gains rate explained below. Ordinary dividends like the interest earned in your bank account are included with ordinary income. Stocks, Bonds, Real estate, Carried interest -- Held for more than a year Income from assets that increase in value while being held for over a year. Long term capital gains justified by the idea that they encourage people to hold stock and make long term investments rather than buying and then quickly reselling for a short-term profit. The lower tax rates also reflect the fact that many of these assets are already taxed as they are appreciating in value. Real-estate is usually taxed through local property taxes. Equity in US corporations realized by rising stock prices and dividends that are returned to stock holders reflect earnings from a corporation that are already taxed at the 35% Corporate tax rate. Taxing Capital gains as ordinary income would be a second tax on those same profits. Another problem with Long-term capital gains tax is that a big portion of the gains for assets held for multiple decades are not real gains. Inflation increases the price of assets held for longer periods, but you are still taxed on the full gain even if it would be a loss when inflation is calculated. Capital gains are also taxed differently depending on your income level. If you are in the 10% or 15% brackets then Long-term capital gains are assessed at 0%. If you are in the 25%, 28%, 33%, or 35% brackets, they are assessed at 15%. Only those in the 39.6% bracket pay 20%. Capital assets sold at a profit held for less than a year Income from buying and selling any assets such as real-estate, stock, bonds, etc., that you hold for less than a year before selling. After adding up all gains and losses during the year, the net gain is taxed as ordinary income. Collectibles held for more than a year are not considered capital assets and are still taxed at ordinary income rates. |
Comparing/reviewing personal health insurance plans for the self-employed | I was in your situation a few years ago and I discovered something that worked perfectly for me - a local health insurance broker. I met with her, discussed my needs, reviewed the options with her, then acted. She received a commission from the insurer, so it cost me nothing. I would certainly follow a similar approach again. |
Why does the calculation for percentage profit vary based on whether a position is short vs. long? | The problem with rate of return calculation on short positions is, that the commonly used approach assumes an initial investment creating a cash outflow. If we want to apply this approach to short selling, we should look at the trade from another perspective. We buy money and pay for this money with stock. Our investment to buy 50$ in your example is 1 share. When closing the short position, we effectively sell back our money (50$) and receive 2 shares. Our profit on this position is obviously 1 share. Setting this in relation to our investment of 1 share yields a performance of 100% in reality, we do not sell back the entire cash but only the amount needed to get back our investment of 1 share. This is actually comparable to a purchase of stock which we only partially close to get back our invested cash amount and keep the remaining shares as our profit |
What forms of payment am I compelled to accept? | When you're selling something through a provider, like Craig's List or newspapers, the only thing that may limit your choices is the provider. They may refuse your post if it's against their rules or the law. But luckily they usually don't limit or enforce certain payment choices. These private business providers have the right to do so if they want. You don't need to be their customer. They may state their terms for using the service and even refuse service (before any payment is made). The fun part is that you may do so as well. Just remember to state your terms in your post so the prospective buyers are aware of them. I've found it best to put payment and delivery terms in separate lines so that they are easily noticeable, for example: Nice victorian handbasket with gold embroidery, only used once. Signed by the original author. Comes with a certificate of authenticity. No delivery, only cash payments. |
Will depositing $10k+ checks each month raise red flags with the IRS? | You're getting confused between several different things. 10K - cash transactions over $10,000 are reported to FinCEN under BSA. This is to prevent money laundering. IRS - IRS wants to see your tax return with all your income reported there. They don't see your bank deposits unless they audit you. 1 and 2 are not related at all. |
Dollar-cost averaging: How often should one use it? What criteria to use when choosing stocks to apply it to? | Dollar cost averaging can be done in a retirement plan, and can be done for individual stock purchases, as this will increase your returns by reducing your risk, especially if you are buying a particular stock for the first time. How many time have I purchased a stock, bottom fishing, thinking I was buying at the low, only to find out there was a new low. Sitting with a thousand shares that are now down $3-$4K. I have a choice to sell at a loss, hold what I've got or double down. I usually add more shares if I'm thinking I'll recover, but at that time I'd wished I'd eased into my investment. That way I would have owned more shares at a smaller cost basis. Anything can happen in the market, not knowing whether the price will increase or decrease. In the example above a $3,000 loss is equal to the brokerage cost of about 300 trades, so trading cost should not be a factor. Now I'm not saying to slowly get into the market and miss the bull, like we're having today with Trump, but get into individual stocks slowly, being fully invested in the market. Also DCA means you do not buy equal number of shares per period, say monthly, but that you buy with the same amount of money a different number of shares, reducing your total costs. Let's say you spend $2000 on a stock trading at $10 (200 shares), if the stock rose to $20 you would spend $2000 and buy 100 shares, and if the stock dropped to $5 you would spend $2000 and buy 400 shares, by now having amassed 700 shares for $6,000. On the other hand and in contrast to DCA had you purchased 200 shares for $2000 at $10/share, then 200 shares for $4000 at $20/share, and finally 200 more shares for $1000 at $5/share, you would have amassed only 600 shares for $7000 investment. |
How does the person lending shares to the short selller protect themselves if the short sellers are correct? | It is true, as farnsy noted, that you generally do not know when stock that you're holding has been loaned by your broker to someone for a short sale, that you generally consent to that when you sign up somewhere in the small print, and that the person who borrows has to make repay and dividends. The broker is on the hook to make sure that your stock is available for you to sell when you want, so there's limited risk there. There are some risks to having your stock loaned though. The main one is that you don't actually get the dividend. Formally, you get a "Substitute Payment in Lieu of Dividends." The payment in lieu will be taxed differently. Whereas qualified dividends get reported on Form 1099-DIV and get special tax treatment, substitute payments get reported on Form 1099-MISC. (Box 8 is just for this purpose.) Substitute payments get taxed as regular income, not at the preferred rate for dividends. The broker may or may not give you additional money beyond the dividend to compensate you for the extra tax. Whether or not this tax difference matters, depends on how much you're getting in dividends, your tax bracket, and to some extent your general perspective. If you want to vote your shares and exercise your ownership rights, then there are also some risks. The company only issues ballots for the number of shares issued by them. On the broker's books, however, the short sale may result in more long positions than there are total shares of stock. Financially the "extra" longs are offset by shorts, but for voting this does not balance. (I'm unclear how this is resolved - I've read that the the brokers essentially depend on shareholder apathy, but I'd guess there's more to it than that.) If you want to prevent your broker from loaning out your shares, you have some options: |
GBP savings, what to do with them if leaving the U.K. in about 2 years time? | In general, to someone in a similar circumstance I might suggest that the lowest-risk option is to immediately convert your excess currency into the currency you will be spending. Note that 'risk' here refers only to the variance in possible outcomes. By converting to EUR now (assuming you are moving to an EU country using the EUR), you eliminate the chance that the GBP will weaken. But you also eliminate the chance that the GBP will strengthen. Thus, you have reduced the variance in possible outcomes so that you have a 'known' amount of EUR. To put money in a different currency than what you will be using is a form of investing, and it is one that can be considered high risk. Invest in a UK company while you plan on staying in the UK, and you take on the risk of stock ownership only. But invest in a German company while you plan on staying in the UK, you take on the risk of stock ownership + the risk of currency volatility. If you are prepared for this type of risk and understand it, you may want to take on this type of risk - but you really must understand what you're getting into before you do this. For most people, I think it's fair to say that fx investing is more accurately called gambling [See more comments on the risk of fx trading here: https://money.stackexchange.com/a/76482/44232]. However, this risk reduction only truly applies if you are certain that you will be moving to an EUR country. If you invest in EUR but then move to the US, you have not 'solved' your currency volatility problem, you have simply replaced your GBP risk with EUR risk. If you had your plane ticket in hand and nothing could stop you, then you know what your currency needs will be in 2 years. But if you have any doubt, then exchanging currency now may not be reducing your risk at all. What if you exchange for EUR today, and in a year you decide (for all the various reasons that circumstances in life may change) that you will stay in the UK after all. And during that time, what if the GBP strengthened again? You will have taken on risk unnecessarily. So, if you lack full confidence in your move, you may want to avoid fully trading your GBP today. Perhaps you could put away some amount every month into EUR (if you plan on moving to an EUR country), and leave some/most in GBP. This would not fully eliminate your currency risk if you move, but it would also not fully expose yourself to risk if you end up not moving. Just remember that doing this is not a guarantee that the EUR will strengthen and the GBP will weaken. |
Entering the stock market in a poor economy | Buy low and sell high. Right now stocks are cheap (or at least cheapish). If you wait for better forecasts, the price will be higher. They might go down still farther, but no one knows for sure when that will happen, or where the bottom is -- despite what the talking heads on TV say. Remember that what you really care about is sell price minus purchase price (plus dividends, but I'll ignore that). What happens between the time you buy and the time you sell is irrelevant financially, but can be important psychologically. If it was me, and you are sure you won't need the money for at least 10 years, or better still 15-20, I would buy some index funds. Pick something that you are comfortable with (some are more aggressive/risky than others), and then only look at it a few times a year, if that much. Only do this as long as you are sure that you won't sell if the market drops further. That is a guaranteed way to lose money. This is what I've been doing for my retirement funds for 15 years, and its worked well so far. |
Auto insurance on new car | Auto insurance is a highly personalized item, so depending on your driving record and other factors, $600 a month for full coverage may be as good as you can get. Look at the premium for each category, and consider raising the deductible if you have some savings that could be used in the event that you have a claim. Also, you're not only buying insurance to cover the other person's damage and medical expenses, you're paying for insurance for your car. Brand-new cars are more expensive to replace (and thus insure) than used cars. Leasing is effectively renting a car for a long period of time. While the payments are less, when the lease expires you're going to have to decide whether to give up the car or buying it, usually at a price much higher than market value. I'm glad you discovered that the insurance would break your budget before it's too late. My suggestion would be to look for a 1-2 year old car that's less expensive to buy and to insure. |
Is it necessary to pay tax if someone lends me money to put into my mortgage? | This answer is specifically for the UK, but one building society has an account set up specifically for this. You actually refer your friend/family member to set up an account and then it can be linked to your mortgage. They don't get any interest for their account as it's all offset against your mortgage. If you then happen to give them a cash gift (up to £250 or possibly £3000 per year, I can't work out which is the reliable number, as of 2015) then it's all completely above board. |
What is the preferred way to set up personal finances? | There's a lot of personal preference and personal circumstance that goes into these decisions. I think that for a person starting out, what's below is a good system. People with greater needs probably aren't reading this question looking for an answer. How many bank accounts should I have and what kinds, and how much (percentage-wise) of my income should I put into each one? You should probably have one checking account and one savings / money market account. If you're total savings are too low to avoid fees on two accounts, then just the checking account at the beginning. Keep the checking account balance high enough to cover your actual debits plus a little buffer. Put the rest in savings. Multiple bank accounts beyond the basics or using multiple banks can be appropriate for some people in some circumstances. Those people, for the most part, will have a specific reason for needing them and maybe enough experience at that point to know how many and where to get them. (Else they ask specific questions in the context of their situation.) I did see a comment about partners - If you're married / in long-term relationship, you might replicate the above for each side of the marriage / partnership. That's a personal decision between you and your partner that's more about your philosophy in the relationship then about finance specifically. Then from there, how do I portion them out into budgets and savings? I personally don't believe that there is any generic answer for this question. Others may post answers with their own rules of thumb. You need to budget based on a realistic assessment of your own income and necessary costs. Then if you have money some savings. Include a minimal level of entertainment in "necessary costs" because most people cannot work constantly. Beyond that minimal level, additional entertainment comes after necessary costs and basic savings. Savings should be tied to your long term goals in addition to you current constraints. Should I use credit cards for spending to reap benefits? No. Use credit cards for the convenience of them, if you want, but pay the full balance each month and don't overdo it. If you lack discipline on your spending, then you might consider avoiding credit cards completely. |
Understanding option commission costs | From what I see, it is more like .70 per contract, with a $1 minimum (for options that trade over a dime.) IB does not provide any help, at all, so you have to know what you are doing. I use tradeking, which charges about $6 for a contract, but you can call them for help if needed. There looks to be other fees for IB, like when you cancel an order, but that can be offset by other trades. It is one of the reason the Motley Fool Stock Adviser service has recommended IB for an investment. |
Is the stock market a zero-sum game? | No. Share are equity in companies that usually have revenue streams and/or potential for creating them. That revenue can be used to pay out dividends to the shareholders or to grow the company and increase its value. Most companies get their revenue from their customers, and customers rarely give their money to a company without getting some good or service in exchange. |
Why do investors buy stock that had appreciated? | I understand you make money by buying low and selling high. You can also make money by buying high and selling higher, short selling high and buying back low, short selling low and buying back even lower. An important technique followed by many technical traders and investors is to alway trade with the trend - so if the shares are trending up you go long (buy to open and sell to close); if the shares are trending down you go short (sell to open and buy to close). "But even if the stock price goes up, why are we guaranteed that there is some demand for it?" There is never any guarantees in investing or trading. The only guarantee in life is death, but that's a different subject. There is always some demand for a share or else the share price would be zero or it would never sell, i.e zero liquidity. There are many reasons why there could be demand for a rising share price - fundamental analysis could indicated that the shares are valued much higher than the current price; technical analysis could indicate that the trend will continue; greed could get the better of peoples' emotion where they think all my freinds are making money from this stock so I should buy it too (just to name a few). "After all, it's more expensive now." What determines if a stock is expensive? As Joe mentioned, was Apple expensive at $100? People who bought it at $50 might think so, but people who bought at $600+ would think $100 is very cheap. On the other hand a penny stock may be expensive at $0.20. "It would make sense if we can sell the stock back into the company for our share of the earnings, but why would other investors want it when the price has gone up?" You don't sell your stocks back to the company for a share of the earnings (unless the company has a share-buy-back arrangement in place), you get a share of the earnings by getting the dividends the company distributes to shareholders. Other investor would want to buy the stock when the price has gone up because they think it will go up further and they can make some money out of it. Some of the reasons for this are explained above. |
In which country can I set up a small company so that I pay a lower rate of corporate tax? | There are countries out there that are known as tax havens, where they offer companies low or no taxes on earned revenue. I haven't looked into this in over a decade, but recall that countries like the Cayman Islands, Switzerland, Ireland, and Nauru, to name a few fit that tag. But like bstpierre stated, there's a reason why the IBM's of the world can pull that off easier then us mere mortals. They have the financial clout to make sure they have accountants that dot every i, cross every t, and close every loophole that would give an "in" to the folks at the IRS, CRA, Inland Revenue, or who have you. |
Idea for getting rich using computers to track stocks | I (and probably most considering trading) had a similar thought as you. I thought if I just skimmed the peaks and sold before the troughs, perhaps aided by computer, I'd be able to make a 2% here, 2% there, and that would add up quickly to a nice amount of money. It almost did seem "foolproof". Then I realized that sometimes a stock just slides...down...and there is no peak higher than what I bought it for. "That's OK," I'd think, "I'm sure it will recover and surpass the price I bought it for...so now I play the waiting game." But then it continues sliding, and my $10k is now worth $7k. Do I sell? Did I build a stop loss point into my computer program? If so, what is the right place to put that stop? What if there is a freak dip down and it triggers the stop loss but THEN my stock recovers? I just lost $14,000 like this last week--luckily, only virtually! The point is, your idea only has half a chance to work when there is a mildly volatile stock that stays around some stable baseline, and even then it is not easy. And then you factor in fees as others mentioned... People do make money doing this (day traders), and some claim you can use technical analysis to time orders well, so if you want to try that, read about technical analysis on this site or elsewhere. |
I file 83(b) election, but did't include a copy of it in that year’s tax return | I've consulted with 5-6 accountants and people who've had the issue before. The advice I received boils down to: "If you do not attach your 83b with your personal tax return it is not effective. However you can still correct the requirement to file it along with your tax return, because you are within the 3 year window of when the return was originally due." So you can amend your return/file it late within a certain window and things should be OK. The accountants that have confirmed this are Vanessa Kruze, Wray Rives and Augie Rakow - all of them corporate and credible accountants. You also need to keep onto the confirmation the IRS sent you in case of an audit. There is nothing on IRS.gov about attaching your 83b on a filed late or amended return but those accountants are people who say they've seen it happen frequently, have consulted with the IRS for solutions and that's the one they'd advise one to do in such situation. disclaimer: I am not a CPA |
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? | You have to be the owner of record before the ex-dividend date, which is not the same day as the date the dividend is paid. This also implies that if you sell on or after the ex-dividend date, you'll still get the dividend, even if you no longer own the stock. Keep in mind, also, that the quoted price of the stock (and on any open orders that are not specifically marked as "do not reduce") on its ex-dividend date is dropped by the amount of the dividend, first thing in the morning before trading starts. If you happen to be the first order of the day, before market forces cause the price to move, you'll end up with zero gain, since the dividend is built into the price, and you got the same value out of it -- the dividend in cash, and the remaining value in stock. As pointed out in the comments (Thanks @Brick), you'll still get a market price for your trade, but the price reduction will have had some impact on the first trade of the day. Source: NYSE Rule 118.30 Also, remember that the dividend yield is expressed in annualized terms. So a 3% yield can only be fully realized by receiving all of the dividend payments made by the company for the year. You can, of course, forget about individual companies and just look for dividends to create your own effective yield over time. But, see the final point... Finally, if you keep buying and selling just to play games with the dividends, you're going to pay far more in transaction fees than you will earn in dividends. And, depending on your individual circumstances, you may end up paying more in capital gains taxes. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | First, I don't think your parents are ripping you off, but you should get your agreement in writing. The fact that you never own more than 25% doesn't matter. If the condo's value is increasing, you are in fact building equity. Your share of the equity just doesn't increase, but it doesn't decrease either. For example, if the condo is worth $300,000 now, you have $75,000 in equity. Of course if the value is decreasing, so is your equity. If you are paying $500/month in interest (as OP clarified above), and you don't have a written agreement, you are probably unable to claim that payment as mortgage interest if you itemize your deductions on U.S. federal or state tax returns, thus you may be losing out on a legal tax deduction (assuming you earn enough to itemize). They will need to give you each year the proper IRS form for mortgage interest (Form 1098). And, they have to claim the $500/month as interest income on their tax returns. Having a written and signed contract eliminates confusion and potential for heartbreaking misunderstanding the future--and it sounds like you are already experiencing some doubt and confusion now. Your rate seems within market rates for an interest-only loan. Let's say you wanted to buy out your parents' share of the condo right now. Would you pay $115,000 or would you have to get an appraisal to find out what the condo is worth now? If you can't answer that question, you need to get that in writing so that you won't have an argument over it someday. If the condo has appreciated significantly and all you have to pay is the $115,000, then that's a sweet deal for you, because you'd be buying out a much more valuable property for much less than it's worth. If that is the agreement, and the property is appreciating (no guarantee, especially with condos), then you are essentially building equity. If the property is declining in value and you do wish to sell it, then you won't have to pay $115,000; they'll just end up with their 75% share, which will be less than the $115K they invested. Both of you would lose some of your investment, but you would have had all the benefits of living in a nice condo all those years and they wouldn't. They are definitely taking more risk than you are. Second, if you had $40,000 cash saved up, your parents probably raised you with some good financial sense and work ethic, so I'm optimistic they have good intentions for your future. Operate from that frame of mind when you go to ask for a written agreement. Next, read up about Equity Share Agreements. There are many models that will help inform your decisions. But, you should engage a real estate lawyer to help you draw up a fair agreement for both parties. I was in an equity share agreement for my first townhouse. It's a common practice, and it won't cost all that much to get one created. It's worth the money to get it done properly. |
How do I determine ownership split on a franchise model? | There is no right and wrong answer to this question. What you and your business partner perceive as Fair is the best way to split the ownership of the new venture. First, regarding the two issues you have raised: Capital Contributions: The fact that you are contributing 90% of initial capital does not necessarily translate to 90% of equity. In my opinion, what is fair is that you transform your contributions into a loan for the company. The securitization of your contribution into a loan will make it easier to calculate your fair contribution and also compensate you for your risk by choosing whatever combination of interest income and equity you see suitable. For example, you might decide to split the company in half and consider your contributions a loan with 20%, 50% or 200% annual interest. Salary: It is common that co-founders of start-ups forgo their wages at the start of the company. I do not recommend that this forgone salary be compensated through equity because it is impossible to determine the suitable amount of equity to be paid. I suggest the translation of forgone wages into loans or preferred stocks in similar fashion to capital contribution Also, consider the following in deciding the best way to allocate equity between both of you and your partner Whose idea was it? Talk with you business partner how both of you value the inventor of the concept. In general, execution is more important but talking about how you both feel about it is good. Full-time vs. part-time: A person who works full time at the new venture should have more equity than the partner who is only a part-time helper. Control: It is important to talk about control and decision making of the company. You can separate the control and decision making of important decisions from ownership. You can also check the following article about this topic at http://www.forbes.com/sites/dailymuse/2012/04/05/what-every-founder-needs-to-know-about-equity/#726842f3668a |
How will a limit order be executed when the stock market opens if there is a large change from the price of the day before? | The next day the market opens trading at 10.50, You haven't specified whether you limit order for $10.10 is to buy or sell. When the trading opens next day, it follows the same process of matching the orders. So if you have put a limit order to buy at $10.10 and there is no sell order at that price, your trade will not go through. If you have placed a limit sell order at $10.10 and there is a buyer at or higher price, it would go through. The Open price is the price of the first trade of the day. |
How do I find a legitimate, premium credit repair service? | If the bad credit items are accurate, disputing the accuracy of the items seems at best, unethical. If the bad credit items are inaccurate, the resolution process provided by each of the 3 credit bureaus, while time consuming, seems the way to go. |
What intrinsic, non-monetary value does gold have as a commodity? | This was answered wonderfully in a recent Planet Money podcast: Why Gold?. Here are some higlights of gold: If listening to podcasts isn't your thing, read this summary. |
How expensive is it to keep minimal cash at a brokerage? | Losses at a brokerage firm due to fraud are insured up to $500,000 per account for securities by the SIPC (Securities Investors' Protection Corporation), which is the stock market version of the FDIC (that insures deposits). The protection amount for cash is $250,000. That's small comfort to "big" players in MF Global. But it does protect "small" investors like you. |
Are there any viable alternatives to Paypal for a small site? | While I've never used the service, there's also Amazon Flexible Payments Services (AFPS): (emphasis below is mine) Amazon Flexible Payments ServiceTM (Amazon FPS) is the first payments service designed from the ground up for developers. It is built on top of Amazon’s reliable and scalable payments infrastructure and provides developers with a convenient way to charge Amazon’s tens of millions of customers (with their permission, of course!). Amazon customers can pay using the same login credentials, shipping address and payment information they already have on file with Amazon. [...] Considering Amazon.com is an e-commerce heavyweight, it might be worth a look. |
Is unrealized gain part of asset? | Stocks, as an asset, represent the sum of the current market value of all of your holdings. If your portfolio is showing unrealized gains and losses, then that net amount is inherently reflected in the current market value of your holdings. That's not to say cost basis is not important. Any closed trades, realized gains or losses, will of course have an impact on your taxable income. So, it couldn't hurt to keep track of your cost basis from a tax standpoint, but understand that the term "asset" refers to the current market values and does not consider base amounts. Taxes do. Perhaps consider making separate cells for cost basis, but also bear in mind that most if not all of the major online discount brokers will provide transferring of cost basis information electronically to the major online tax service providers. |
Could one person with a card with no spending limit pay off everyone's debt? | The problem would not only be that of Kyle but also that of American Express. When Kyle pays by credit card, American Express pays the bills out of their pockets on his behalf and then forwards the bill to Kyle. The issuer of a credit card takes the risk that the holder of the card won't pay the credit card bill. In practice there are safeguards in place which prevent a company like AE to pay such huge sums in one day through an automated process. Credit card companies have sophisticated algorithms to determine unusual spending patterns and block any transactions which appear unusual. Also, after a few billions their bank will likely block them and prevent them from paying any more bills. But let's play along and pretend these safeguards wouldn't exist. That means after Kyle's spending spree, American Express will be trillions in debt, with their main debitor being a 10 year old boy who won't ever be able to pay. Kyle will have to declare personal bankruptcy. There are various variants of bakruptcy in the US, but they basically all boil down to him paying everything he can pay (not much considering that he is 10) and then defaulting on his debt. Afterwards he is debt-free. That means the debt is now that of American Express. American Express will not be able to pay that debt with their bank(s) either, so they will have to declare bankruptcy and default on their debt too. This domino effect passes the burden on to the banks which can not carry a trillion-level debt either. A bank going bankrupt is a serious issue because it means they can not pay back any of the money in the saving accounts hold by companies or private people with them. So the problem would return to those people Kyle wanted to help in the first place. Also, the collapse of one bank will often result in the collapse of further banks, resulting in a collapse spiral destroying the whole world-wide finance system. Nothing would be gained. |
Better rate for investment between CD or savings | Excel has two functions you can use: Your question has the CD with a APR and the savings account that mentions both APR and APY. So convert them both to APY to compare them. The savings account (2.27 APY) will return more money based on the numbers in your question (2.27% vs 1.56%) The previous part was the math part of the answer. The following takes into other considerations. For this case the Savings account will return a larger amount of money if the conditions don't change. The CD rate is guaranteed, but the savings account could change every business day. The savings rate could go up, or down. If you expect the savings account rate to rain higher than the CD you might not want to lock into the CD. If you expect the savings rate will drop then get the CD. Of course there are penalties if you cash in the CD early. |
Why do investors buy stock that had appreciated? | You seem to prefer to trade like I do: "Buy low, sell high." But there are some people that prefer a different way: "Buy high, sell higher." A stock that has "just appreciated" is "in motion." That is a "promise" (not always kept) that it will continue to go higher. Some people want stocks that not only go higher, but also SOON. The disadvantage of "buy low, sell high" is that the stock can stay low for some time. So that's a strategy for patient investors like you and me. |
CD interest rate US vs abroad, is there a catch? | I think your approach of looking exclusively at USD deposits is a prudent one. Here are my responses to your questions. 1) It is highly unlikely that a USD deposit abroad be converted to local currency upon withdrawal. The reason for offering a deposit in a particular currency in the first place is that the bank wants to attract funds in this currency. 2) Interest rate is a function of various risks mostly supply and demand, central bank policy, perceived risk etc. In recent years low-interest rate policy as led by U.S., European and Japanese central banks has led particularly low yields in certain countries disregarding their level of risk, which can vary substantially (thus e.g. Eastern Europe has very low yields at the moment in spite of its perceived higher risk). Some countries offer depository insurance. 3) I would focus on banks which are among the largest in the country and boast good corporate governance i.e. their ownership is clean and transparent and they are true to their business purpose. Thus, ownership is key, then come financials. Country depository insurance, low external threat (low war risk) is also important. Most banks require a personal visit in order to open the account, thus I wouldn't split much further than 2-3 banks, assuming these are good quality. |
In Australia, how to battle credit card debt? | Victor addressed the card issue with an excellent answer, I'd like to take a stab at the budget and income side. Your question clearly stated "I am left with no extra money" each month. Whenever I read such an assertion, I ask the person, "but surely, X% of people in your country get by on a salary that's 95% of yours." In other words, there's the juggling of the debt itself, which as Victor's math shows, is one piece of the puzzle. The next piece is to sift through your budget and find $100/mo you spend that could be better spent reducing your debt. Turn down the temperature in the winter, up in the summer, etc. Take lunch to work. No Lattes. Really look at the budget and do something. On the income side. There are countless ways to earn a bit of extra money. I knew a blogger who started a site called "Deliver away Debt." He told a story of delivering pizza every Friday and Saturday night. The guy had a great day job, in high tech, but it didn't lend itself to overtime, and he had the time available those two evenings to make money to kill off the debt he and his wife had. Our minimum wage is currently just over $7, but I happened to see a sign in a pizza shop window offering this exact position. $10/hr plus gas money. They wanted about 8 hours a weekend and said in general, tips pushed the rate to well over $15/hr. (They assumed I was asking for the job, and I said I was asking for a friend). This is just one idea. Next, and last. I knew a gal with a three bedroom small house. Tight budget. I suggested she find a roommate. She got so many responses, she took in two people, and the rents paid her mortgage bill in full. Out of debt in just over a year, instead of 4+. And in her case, no extra hours at all. There are sites with literally 100's of ideas. It takes one to match your time, interest, and skill. When you are at $0 extra, even finding $250/mo will change your life. |
How does the U.S. wash sale replacement stock rule work? | Edited: Pub 550 says 30 days before or after so the example is ok - but still a gain by average share basis. On sale your basis is likely defaulted to "average price" (in the example 9.67 so there was a gain selling at 10), but can be named shares at your election to your brokerage, and supported by record keeping. A Pub 550 wash might be buy 2000 @ 10 with basis 20000, sell 1000 @9 (nominally a loss of 1000 for now and remaining basis 10000), buy 1000 @ 8 within 30 days. Because of the wash sale rule the basis is 10000+8000 paid + 1000 disallowed loss from wash sale with a final position of 2000 shares at 19000 basis. I think I have the link at the example: http://www.irs.gov/publications/p550/ch04.html#en_US_2014_publink100010601 |
Do brokers execute every trade on the exchange? | There are two terms that are related, but separate here: Broker and Market Maker. The former is who goes and finds a buyer/seller to buy/sell shares from/to you. The latter (Market Maker) is a company which will agree to partner with you to complete the sale at a set price (typically the market price, often by definition as the market maker often is the one who determines the market price in a relatively low volumne listing). A market maker will have as you say a 'pool' of relatively common stock (and even relatively uncommon, up to a point) for this purpose. A broker can be a market maker (or work for one), also, in which case he would sell you directly the shares from the market maker reservoir. This may be a bad idea for you - the broker (while obligated to act in your interest, in theory) may push you towards stocks that the brokerage acts as a market maker for. |
Car dealer saying that they cannot see any credit information for my co-applicant. Could this be a scam? | Its not a scam. The car dealership does not care how you pay for the car, just that you pay. If you come to them for a loan they will try and service you. If you come with cash, they will sell you a car and not try to talk you into financing. If you come with a check from another bank, they will happily accept it. I would try to work with Equifax or a local credit union to figure out what is going on. Somehow she probably had her credit frozen. Here are some really good things to mitigate this situation: Oh and make sure you do #1 and forget about financing cars ever again. I mean if you want to build wealth. |
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