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As a total beginner, how do I begin to understand finance & stocks?
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How I understand it is: supply/demand affect price of stock negatively/positively, respectively. Correct. Volume is the amount of buying/selling activity in these stocks (more volume = more fluctuation, right?). Sort of. Higher volume means higher liquidity. That is, a stock that is traded more is easier to trade. It doesn't necessarily mean more fluctuation and in the real world, it often means that these are well-understood stocks with a high amount of analyst coverage. This tends towards these stocks not being as volatile as smaller stocks with less liquidity. Company revenue (and profit) will help an investor predict company growth. That is one factor in a stock price. There are certain stocks that you would buy without them making a profit because their future revenue looks potentially explosive. However, these stocks are very risky and are bubble-prone. If you're starting out in the share market, it's generally a good idea to invest in index funds (I am not a broker, my advice should not be taken as financial advice). These funds aggregate risk by holding a lot of different companies. Also, statistics have shown that over time, buying and holding index funds long term tends to dramatically outperform other investment strategies, particularly for people with low amounts of capital.
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Applying for and receiving business credit
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Banks will usually look at 2 years worth of tax returns for issuing business credit. If those aren't available (for instance, for recently formed businesses), they will look at the personal returns of the owners. Unfortunately, it sounds like your friend is in the latter category. Bringing in another partner isn't necessarily going to help, either; with only two partners / owners, the bank would probably look at both owners' personal tax returns and credit histories. It may be necessary to offer collateral. I'm sorry I can't offer any better solutions, but alternative funding such as personal loans from family & friends could be necessary. Perhaps making them partners in exchange for capital.
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Are there “buy and hold” passively managed funds?
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They pretty much already have what you are looking for. They are called Unit Investment Trusts. The key behind these is (a) the trust starts out with a fixed pool of securities. It is completely unmanaged and there is no buying or selling of the securities, (b) they terminate after a fixed period of time, at which time all assets are distributed among the owners. According to Investment Company Institute, "securities in a UIT are professionally selected to meet a stated investment objective, such as growth, income, or capital appreciation." UITs sell a fixed number of units at one-time public offering. Securities in a UIT do not trade actively, rather, UITs use a strategy known as buy-and-hold. The UIT purchases a certain amount of securities and holds them until its termination date. Holdings rarely change throughout the life of the trust so unit holders know exactly what they're investing in, and the trust lists all securities in its prospectus. Unit trusts normally sell redeemable units - this obligates the trust to re-purchase investor's units at their net asset value at the investors request.
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What is the process of getting your first share?
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nan
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How to quantify differences in return with low expense ratio vs high expense ratio mutual funds?
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Yes you should take in the expenses being incurred by the mutual fund. This lists down the fees charged by the mutual fund and where expenses can be found in the annual statement of the fund. To calculate fees and expenses. As you might expect, fees and expenses vary from fund to fund. A fund with high costs must perform better than a low-cost fund to generate the same returns for you. Even small differences in fees can translate into large differences in returns over time. You don't pay expenses, so the money is taken from the assets of the fund. So you pay it indirectly. If the expenses are huge, that may point to something i.e. fund managers are enjoying at your expense, money is being used somewhere else rather than being paid as dividends. If the expenses are used in the growth of the fund, that is a positive sign. Else you can expect the fund to be downgraded or upgraded by the credit rating agencies, depending on how the credit rating agencies see the expenses of the fund and other factors. Generally comparison should be done with funds invested in the same sectors, same distribution of assets so that you have a homogeneous comparison to make. Else it would be unwise to compare between a fund invested in oil companies and other in computers. Yes the economy is inter twined, but that is not how a comparison should be done.
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What to do if the stock you brought are stopped trading
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The Indian regulator (SEBI) has banned trading in 300 shell companies that it views as being "Shady", including VB Industries. According to Money Control (.com): all these shady companies have started to rally and there was a complaint to SEBI that investors are getting SMSs from various brokerage firms to invest in them This suggests evidence of "pump and dump" style stock promotion. On the plus side, the SEBI will permit trading in these securities once a month : Trading in these securities shall be permitted once a month (First Monday of the month). Further, any upward price movement in these securities shall not be permitted beyond the last traded price and additional surveillance deposit of 200 percent of trade value shall be collected form the Buyers which shall be retained with Exchanges for a period of five months. This will give you an opportunity to exit your position, however, finding a buyer may be a problem and because of the severe restrictions placed on trading, any bid prices in the market are going to be a fraction of the last trade price.
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Is it a wise decision to sell my ESPP stock based on this situation?
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ESPP tax treatment is complicated. If you received a discount on the purchase of your stock, that discount is taxable as ordinary income when you sell the stock. Any profit about the market value when the stock was purchased is taxed based upon the holding period of the stock. If you have held the stock less than a year, the profit is taxed at your marginal tax rate (ie taxed as ordinary income). If the stock is held for more than a year, it is taxed at a special capital gains tax rate, which ranges from 0-20% depending on your marginal tax rate (most people pay 15%).
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How smart is it to really be 100% debt free?
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No matter what, it is never a bad decision to go 100% debt free. However, you can make debt work in your favor in some cases (investments, education, etc.), but you need to approach it with a plan and long term strategy. Interest, fees, and loss of value can quickly eat up any gains.
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Choose online stock trading companies
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This very informative link gives a clear and comprehensive comparison (pros and cons) of various popular brokers: https://www.nerdwallet.com/blog/investing/best-online-brokers-for-stock-trading/ (Best Online Brokers for Stock Trading 2016) There are indeed some significant cons for the super-low commission fee. Just for a quick example, the Interactive Broker requires a minimum of 10k account balance, as well as the frequent trading activity even on monthly basis (or the minimum $10 commission would be charged).
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Is it worth buying real estate just to safely invest money?
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Investment is very uncertain, so I believe that unless you have loads of money, you should not play around with houses for the sole purpose of investing. Here are the questions which I would consider to judge the situation. Note that this is based on the current situation in The Netherlands Income: Your income is 1800 a month nett, which means your gross annual income should be somewhere below 28500. Allowed mortgage amount: Your maximum morgage amount is then roughly 135000 Is it expensive?: Given your maximum morgage, buying a 200k appartment would consume pretty much all your cash. There is some cost of buying the appartment, so basically if you buy it, you will not have much cash to decorate or deal with unforseen maintenance. If you are conservative, I would say that buying a 175k appartment is financially much more relaxing in your situation. What will be the monthly expense?: Monthly mortgage payments will be about 450~500. So your cashflow will suffer a bit. The amount you actually 'burn' on interest in the early months is about 180 nett (assuming an interest rate just below 2% and tax deductions). There will be additional costs (more heating, long term maintenance etc.) so overall the amount of money you burn will be close to the amount of money you burn on rent. Of course over time there will be less interest, so this should go down. Value change: The value may go up or down, in the very long term I would bet on it going up, but on the short or medium term it is quite uncertain. If you may live there for less than a decade, value change is more of a risk than a benefit. Break even point: As you mention that you will buy a house for 200k, I will assume it is not in the heart of a major city, and that renting it out may not be very attractive. However, I will also assume that it is not the middle of nowhere, and that it will only take a reasonable amount of time to sell the house. So if you want to move out, you will probably sell it at a reasonable price. In this case a rule of thumb is that living in an affordable house is usually a good idea when you live there for more than 5 years. (Is it likely that you will find a partner in this period of time, and will you live at your place then, or somewhere else?) Buying a 200k appartment would leave you completely cashless after you move in, something I would not recommend unless you can depend on your parents for instance to 'bridge the gap' when your cashflow dries up. From a monthly expense point of view you are probably going to be OK, as long as you survive the short run. And financially it only makes sense if you are going to live there for a while, and are fairly confident in your position in the labour market. I would personally recommend you to think hard on your family situation, and only buy a house if it leaves you with some cash in your pocket.
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Using stop-loss as risk management: Is it safe?
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A stop-loss order becomes a market order when a trade has occurred at or below the trigger price you set when creating the order. This means that you could possibly end up selling some or all of your position at a price lower than your trigger price. For relatively illiquid securities your order may be split into transactions with several buyers at different prices and you could see a significant drop in price between the first part of the order and the last few shares. To mitigate this, brokers also offer a stop-limit order, where you set not only a trigger price, but also a minimum price that you are will to accept for your shares. This reduces the risk of selling at rock bottom prices, especially if you are selling a very large position. However, in the case of a flash crash where other sellers are driving the price below your limit, that part of your order may never execute and you could end up being stuck with a whole lot of shares that are worth less than both your stop loss trigger and limit price. For securities that are liquid and not very volatile, either option is a pretty safe way to cut your losses. For securities that are illiquid and/or very volatile a stop-limit order will prevent you from cashing out at bottom dollar and giving away a bargain to lurkers hanging out at the bottom of the market, but you may end up stuck with shares you don't want for longer than originally planned. It's up to you to decide which kind of risk you prefer.
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What to think of two at the money call options with different strike prices and premiums?
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Your scenario depicts 2 "in the money" options, not "at the money". The former is when the share price is higher than the option strike, the second is when share price is right at strike. I agree this is a highly unlikely scenario, because everyone pricing options knows what everyone else in that stock is doing. Much about an option has everything to do with the remaining time to expiration. Depending on how much more the buyer believes the stock will go up before hitting the expiration date, that could make a big difference in which option they would buy. I agree with the others that if you're seeing this as "real world" then there must be something going on behind the scenes that someone else knows and you don't. I would tread with caution in such a situation and do my homework before making any move. The other big factor that makes your question harder to answer more concisely is that you didn't tell us what the expiration dates on the options are. This makes a difference in how you evaluate them. We could probably be much more helpful to you if you could give us that information.
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Do people tend to spend less when using cash than credit cards?
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I'd like to know if there is any reliable research on the subject. Intuitively, this must be true, no? Is it? First, is it even possible to discover the correlation, if one exists? Dave Ramsey is a proponent of "Proven study that shows you will spend 10% more on a credit card than with cash." Of course, he suggests that the study came from an otherwise reliable source, Dun & Bradstreet. A fellow blogger at Get Rich Slowly researched and found - Nobody I know has been able to track down this mythical Dun and Bradstreet study. Even Dun and Bradstreet themselves have been unable to locate it. GRS reader Nicole (with the assistance of her trusty librarian Wendi) contacted the company and received this response: “After doing some research with D&B, it turns out that someone made up the statement, and also made up the part where D&B actually said that.” In other words, the most cited study is a Myth. In fact, there are studies which do conclude that card users spend more. I think that any study (on anything, not just this topic. Cigarette companies buy studies to show they don't cause cancer, Big Oil pays to disprove global warming, etc.) needs to be viewed with a critical eye. The studies I've seen nearly all contain one of 2 major flaws - My own observation - when I reviewed our budget over the course of a year, some of the largest charges include - I list the above, as these are items whose cost is pretty well fixed. We are not in the habit of "going for a drive," gas is bought when we need it. All other items I consider fixed, in that the real choice is to pay with the card or check, unlike the items some claim can be inflated. These add to about 80% of the annual card use. I don't see it possible for card use to impact these items, and therefore the "10% more" warning is overreaching. To conclude, I'll concede that even the pay-in-full group might not adhere to the food budget, and grab the $5 brownie near the checkout, or over tip on a restaurant meal. But those situations are not sufficient to assume that a responsible card user comes out behind over the year for having done so. A selection of the Studies I am referencing -
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Is it a good idea to get an unsecured loan to pay off a credit card that won't lower a high rate?
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nan
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What's a good personal finance management web app that I can use in Canada?
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Yodlee will also work. I asked a similar question (and provided answers) here. Thrive, so far, is the best in my opinion. Their tech support is top notch and their UI is far superior to Yodlee's (which provides the backend for Mint).
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Market Hours and Valuations
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Company values (and thus stock prices) rely on a much larger time frame than "a weekend". First, markets are not efficient enough to know what a companies sales were over the past 2-3 days (many companies do not even know that for several weeks). They look at performance over quarters and years to determine the "value" of a company. They also look forward, not backwards to determine value. Prior performance only gives a hint of what future performance may be. If a company shut its doors over a weekend and did no sales, it still would have value based on its future ability to earn profits.
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Is compounding interest on investments a myth?
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This post may be old anyhow here's my 2 cents. Real world...no. Compounding is overstated. I have 3 mutual funds, basically index funds, you can go look them up. vwinx, spmix, spfix in 11 years i've made a little over 12,000 on 50,000 invested. That averages 5%. That's $1,200 a year about. Not exactly getting rich on the compounding "myth?". You do the math. I would guess because overly optimistic compounding gains are based on a straight line gains. Real world...that aint gonna happen.
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Do real nappies (reusable / cloth diapers) really save money?
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I don't think they do. And here's why. If you don't want your child to get skin irritation, you need to watch closely and change the "nappy" right when it got wet. For newborns it means like every 2 hours. It creates a big pile of laundry, but the main thing — additional burden on mother. So, even if you save a little on diapers, you will spend that on water+electricity bill + comforting the mother more often than you would otherwise.
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Why would a company care about the price of its own shares in the stock market?
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Because it's a good indicator of how much their asset worth. In oversimplified example, wouldn't you care how much your house, car, laptop worth? Over the course of your life you might need to buy a bigger house, sell your car etc. to cope with your financial goal / situation. It's similar in company's case but with much more complexity.
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How do credit card banks detect fraudulent transactions without requiring a travel advisory?
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One bank is more willing to risk losses and customer hassle in exchange for lower processing costs than the other bank is. It's strictly a business decision. Regarding how they detect suspicious transactions: Patten detection based on your past usage history. I've gotten calls asking me to confirm that I just placed a large order with a company I'd never bought from before, or in a country that I haven't previously visited, or...
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Withdrawing cash from investment: take money from underperforming fund?
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It looks like the advice the rep is giving is based primarily on the sunk cost fallacy; advice based on a fallacy is poor advice. Bob has recognised this trap and is explicitly avoiding it. It is possible that the advice that the rep is trying to give is that Fund #1 is presently undervalued but, if so, that is a good investment irrespective if Bob has lost money there before or even if he has ever had funds in it.
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Why would you elect to apply a refund to next year's tax bill?
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If you have non-salary income, you might be required to file 1040ES estimated tax for the next year on a quarterly basis. You can instead pay some or all in advance from your previous year's refund. In theory, you lose the interest you might have made by holding that money for a few months. In practice it might be worth it to avoid needing to send forms and checks every quarter. For instance if you had a $1000 estimated tax requirement and the alternative was to get 1% taxable savings account interest for six months, you'd make about $3 from holding it for the year. I would choose to just pay in advance. If you had a very large estimation, or you could pay off a high-rate debt and get a different effective rate of return, the tradeoff may be different.
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Free/open source Unix software that pulls info from all my banks/brokers/credit cards?
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Moneydance is a commercial application that is cross-platform. Written in Java, they run and are supported on Windows, Mac and Linux. They integrate with many financial institutions and for those that it cannot, you can import a locally downloaded file. I have used it for several years on my Mac, but have no company affiliation. I'm not sure if by saying "Unix" software you meant FOSS of some kind, but good luck in any case.
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How to calculate my real earnings from hourly temp-to-hire moving to salaried employee?
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This arrangement is a scam to get around certain tax and benefits laws, both State and Federal. I know they can't get away with this with a person-as-contractor, but this "he's not a contractor, he's a business owner" may move it into a gray area. (I used to know this stuff cold, but I've been retired for a while.) The fact that they asked you to do this is at all is, IMNSHO, a Red Flag®. They think that this way they won't be paying 1/2 your FICA, your Workman's Comp, health insurance, overtime, sick leave or vacation time ... you will. A somewhat simplistic rule of thumb for setting contracting rates is to take your targeted annual salary as a full-time, full-benefits employee and double it. So $50,000 becomes $100,000 a year; $25/hour becomes $50/hour. You can tell them that driving to their workplace from your company's location is now a "site visit" and charge them your hourly rate for the one-way commute time. You could also tell them that your company charges 150% for hours worked over 40 hours/week, plus 150% on Saturdays and 200% on Sundays. Your company may also have a minimum 30 days notice of termination with a penalty kicker. Get it all in writing and signed by someone who has the authority to sign it. Also, Get A Lawyer. The most expensive contracts I've ever signed were ones I thought I was smart enough to draw up myself.
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How do you find out who the investors are in a U.S. stock? e.g. how ownership may be concentrated?
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Companies absolutely know who ALL their shareholders are. Ownership is filed on Form 3/4 and in 10-Q/Ks. Look there. Guidelines for required disclosure are as follows: 1) Individuals must disclose when their ownership exceeds 5%; 2) Non-individual legal entities (read: companies; e.g. a hedge fund) must disclose when their ownership exceeds 10% (Form 13-F); and 3) All Officers and Directors Notice the word "required." For example, a entity (individual/company) may file "confidentiality letter" (which allows them to delay disclosing ownership) with the SEC as they are building a position. So at any given point in time the information that is publicaly available may not be "up-to-date." And in all cases beneficial owner(ship).
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Malaysian real estate: How to know if the market is overheated or in a bubble?
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FYI...during the housing boom here in the US many people spoke about ever increasing home prices. Many thought home prices could never go down. Until they did. If it seems like it is impossible for home prices to continue to go up then they probably will stop going up at some point, although the rising prices can continue for a lot longer than you think possible. I'm wondering if Malaysia is feeling the effects of the US FED which flooded the market with US dollars after the crisis. The Malaysian central bank holds US dollars as its foreign exchange reserves. In order to keep the ringgit from rising against the dollar the Malaysian central bank will print up ringgit to purchase dollars which suppresses the value of the ringgit. This has the effect of artificially lowering interest rates as ringgits become readily available leading to a boom - the boom being in real estate. Just a hunch. Is the dinar in Kelantan getting much attention in Malaysia? This is starting to make a little news here.
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Why would a public company not initiate secondary stock offerings more often?
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What prevents a company from doing secondary public stock offerings on regular basis? The primary goal of a company doing secondary public offering is to raise more funds, that can be utilized for funding the business. If no funding is needed [i.e. company has sufficient funds, or no expansion plans], this funding creates a drag and existing shareholder including promoters loose value. For example with the current 100 invested, the company is able to generate say 125 [25 as profit]. If additional 100 is taken as secondary public offering, then with 200, the company should mark around 250, else it looses value. So if the company took additional 100 and did not / is not able to deploy in market, on 200 they still make 25 as profit, its bad. There are other reasons, i.e. to fight off hostile acquisition or dilute some of promoters shares etc. Thus the reasons for company to do a secondary PO are few and doing it often reduces the value for primary share holders as well as minority share holders.
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Consequences of buying/selling a large number of shares for a low volume stock?
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It's illegal and you can go to jail because it exploits the small companies and their investors who believe in the company.
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Discount Rate vs. IRR
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The IRR is the Discount Rate r* that makes Net Present Value NPV(r*)==0. What this boils down to is two ways of making the same kind of profitability calculation. You can choose a project with NPV(10%)>0, or you can choose based on IRR>10%, and the idea is you get to the same set of projects. That's if everything is well behaved mathematically. But that's not the end of this story of finance, math, and alphabet soup. For investments that have multiple positive and negative cash flows, finding that r* becomes solving for the roots of a polynomial in r*, so that there can be multiple roots. Usually people use the lowest positive root but really it only makes sense for projects where NPV(r)>0 for r<r* and NPV(r)<0 for r>r*. To try to help with your understanding, you can evaluate a real estate project with r=10%, find the sum future discounted cash flows, which is the NPV, and do the project if NPV>0. Or, you can take the future cash flows of a project, find the NPV as a function of the rate r, and find r* where NPV(r*)==0. That r* is the IRR. If IRR=r*>10% and the NPV function is well behaved as above, you can also do the project. When we don't have to worry about multiple roots, the preceding two paragraphs will select the same identical sets of projects as meeting the 10% return requirement.
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How can I find stocks with very active options chains?
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Just as a matter of research, apparently there is a way to find high option volumes such as a site here: https://www.barchart.com/options/volume-leaders/stocks However, that information is going to be heavily skewed by "underlying security that moved a lot more than expected and probably got a lot of positions filled incidentally today", but I think it is a good place to start building up a list of securities with a lot of option interest. There is also a tab there for ETFs. This will not tell you exactly that a particular stock always has high option volume, but most of the ones that show up there repeatedly and across multiple strike prices will meet your criteria.
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What's my risk of buying a house for a friend and sell back to him?
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Risks:
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How to exclude stock from mutual fund
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Mutual funds invest according to their prospectus. If they declare that they match the investments to a certain index - then that's what they should do. If you don't want to be invested in a company that is part of that index, then don't invest in that fund. Short-selling doesn't "exclude" your investment. You cannot sell your portion of the position in the fund to cover it. Bottom line is that money has no smell. But if you want to avoid investing in a certain company and it is important to you - you should also avoid the funds that invest in it, and companies that own portions of it, and also probably the companies that buy their products or services. Otherwise, its just "nice talk" bigotry.
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What should I do with my money?
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I don't think blanket answers are very helpful. You are asking the right question when you are young! You have a large number of investment options and Australia has the Superannuation system that you can extract significant tax value from. I've not attempted to grade these with regard to "risk", as different people will rate various things with different levels, depending on their experience and knowledge. Consider the following factors for you:-
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Mutual fund invests in mostly the same stuff as ETF, but has much higher expense ratio? (biotech sector)
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Index funds, like IBB, generally lack active management, which equates to lower expenses. This is simply because the target index, the NASDAQ Biotechnology Index in the case of IBB, is composed of known quantities. This means there won't be stock pickers or analysts constantly swapping holdings, increasing the turnover rate of the portfolio and increasing capital gains; costs that are offset by higher expense ratios in more actively managed funds.
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Consolidate my debt? Higher APR, but what does that actually mean?
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Your question indicates you really don't have a good grasp on personal finance. you might want to read a book or two. I'd recommend attending Financial Peace University, but my buddy Joe Taxpayer would throw an egg at me for that. Please take some sort of class. In the mean time, here is your plan: Pay this off do not borrow more.
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How can I legally and efficiently help my girlfriend build equity by helping with a mortgage?
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Equity means having ownership, and I think that's a REALLY bad idea in the scenario that you described. If you stay together, there's really no upside to either of you in this scheme. If you break-up then you'll have a terrible mess, especially if the break-up goes badly. If she's really building equity, you're going to be faced with several hard questions: If this went bad at the end, it might be worse than a divorce in some sense since at least in the divorce you have established law to sort out the issues. You'll be on your own here without a formal contract. (Marriage being a special case of a contract for our purposes here.) If she wants to share costs (which seems perfectly fair) then agree to rent and a split on utilities. If you really insist on going down the path that you described, I think that you'll need some sort of contract, which probably involves a lawyer. Anything short of that could not be considered having equity at all and will be completely unenforceable in the event of a bad break-up. (There is some notion of a verbal contract, but that's very hard to prove and subject to misunderstanding and misremembering.) Aside from all of these potential problems in event of a break-up, you would probably also be violating the terms of your mortgage, if you have one. From the bank's perspective, you are selling the property that is the collateral for that loan, which you're almost surely not allowed to do.
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How can I legally and efficiently help my girlfriend build equity by helping with a mortgage?
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There is no simple, legally reasonable, way for her to build equity by helping out with your mortgage, without her having a claim to your mortgage. The only 'equitable' thing she can do is rent from you. If you want her to be building equity, have her start and fund a brokerage account for herself. If you have an affinity for real estate, have her buy REITs in said investment account.
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Should a retail trader choose a broker with access to dark pools
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That's like a car dealer advertising their "huge access" to Chevrolet. All brokers utilize dark pools nowadays, either their own or one belonging to a larger financial institution. Why? Because that's a primary source of broker income. Example: Under current US regulations the broker is under no obligation to pass these orders to actual (a.k.a. lit) exchanges. Instead it can internalize them in its dark pool as long as it "improves the price". So: If a broker doesn't run its own dark pool, then it sends the orders to the dark pool run by a larger institution (JPMorgan, Credit Suisse, Getco, Knight Capital) and gets some fraction of the dark pool's profit in return. Are Mom and Pop negatively impacted by this? Not for most order types. They each even got a free penny out of the deal! But if there were no dark pools, that $1.00 difference between their trade prices would have gone half ($0.50) to Mom's counterparty and half ($0.50) to Pop's counterparty, who could be someone else's Mom and someone else's Pop. So ... that's why brokers all use dark pools, and why their advertisement of their dark pool access is silly. They're basically saying, "We're going to occasionally throw you a free penny while making 49 times that much from you"! (Note: Now apply the above math to a less liquid product than AAPL. Say, where the spread is not $0.01, but more like $0.05. Now Mom and Pop still might make a penny each, while the broker can make $4.98 on a 100 share trade!)
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Is it wise to have plenty of current accounts in different banks?
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The original poster indicates that he lives in the UK, but there are likely strong similarities with the US banking system that I am more familiar with: The result is that you are likely going to be unable to be approved for 10 checking accounts opened in rapid succession, at least in the US. Finally, in the US, there is no need to have checking accounts with a bank in order to open a credit card with them (although sometimes it can help if you have a low credit score).
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A calculator that takes into account portfolio rebalancing?
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My answer is Microsoft Excel. Google "VBA for dummies" (seriously) and find out if your brokerage offers an 'API'. With a brief understanding of coding you can get a spreadsheet that is live connected to your brokers data stream. Say you have a spreadsheet with the 1990 value of each in the first two columns (cells a1 and b1). Maybe this formula could be the third column, it'll tell you how much to buy or sell to rebalance them. then to iterate the rebalance, set both a2 and b2 to =C1 and drag the formula through row 25, one row for each year. It'll probably be a little more work than that, but you get the idea.
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What happens after a counterparty defaults on a derivative trade?
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The answer is in your question: derivatives are contracts so are enforced in the same way as any other contract. If the counterparty refuses to pay immediately they will, in the first instance be billed by any intermediary (Prime Broker etc.) that facilitated the contract. If they still refuse to pay the contract may stipulate that a broker can "net off" any outstanding payments against it or pay out using deposited cash or posted margins. The contract will usually include the broker as an interested party and so they can, but don't need to, report a default (such that this is) to credit agencies (in some jurisdictions they are required to by law). Any parties to the trade and the courts may use a debt collection agency to collect payments or seize assets to cover payment. If there is no broker or the counterparty still has not paid the bill then the parties involved (the party to the trade and any intermediaries) can sue for breach of contract. If they win (which would be expected) the counterparty will be made to pay by the legal system including, but not limited to, seizure of assets, enforced bankruptcy, and prison terms for any contempts of court rulings. All of this holds for governments who refuse to pay derivatives losses (as Argentina did in the early 20th century) but in that case it may escalate as far as war. It has never done so for derivatives contracts as far as I know but other breaches of contract between countries have resulted in armed conflict. As well as the "hard" results of failing to pay there are soft implications including a guaranteed fall in credit ratings that will result in parties refusing to do business with the counterparty and a separate loss of reputation that will reduce business even further. Potential employees and funders will be unwilling to become involved with such a party and suppliers will be unwilling to supply on credit. The end result in almost every way would be bankruptcy and prison sentences for the party or their senior employees. Most jurisdictions allow for board members at companies in material breach of contract to be banned from running any company for a set period as well. edit: netting off cash flows netting off is a process whereby all of a party's cash flows, positive and negative, are used to pay each other off so that only the net change is reflected in account balances, for example: company 1 cash flows netting off the total outgoings are 3M + 500k = 3.5M and total incomings are 1.2M + 1.1M + 1.2M = 3.5M so the incoming cash flows can be used to pay the outgoing cash flows leaving a net payment into company1's account of 0.
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Relationship between liquidity and an efficient market
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Liquidity is highly correlated to efficiency primarily because if an asset's price is not sampled during the time of a trade, it's price is unknown therefore inefficient. Past prices can be referenced, but they are not the price of the present. Prices of substitutes are even worse. SPY is extremely efficient for an equity. If permitted, it could easily trade with much lower ticks and still have potential for a locked market. Ideal exchange An ideal exchange has no public restrictions on trade. This is not to say that private restrictions would need to be put in place for various reasons, but one would only do that if it were responsible for its own survival instead of being too big to fail. In this market, trades would be approximately continuous for the largest securities and almost always locked because of continuous exchange fee competition with ever dropping minimum ticks. A market that can provide continuous locked orders with infinite precision is perfectly efficient from the point of view of the investor because the value of one's holdings are always known. EMH In terms of the theory the Efficient Market Hypothesis this is irrelevant to the rational investor. The rational investor will invest in the market at large of a given asset class, only increasing risk as wealth increases thus moving to more volatile asset classes when the volatility can be absorbed by excess wealth. Here, liquidity is also helpful, the "two heads are better than one" way of thinking. The more invested in an asset class, the lower the class's variance and vice versa. Bonds, the least variant, dwarf equities which dwarf options, all in order of the least variance. Believe it or not, there was a day when bonds were almost as risky as equities. For those concerned with EMH, liquidity is also believed to increase efficiency in some forms because liquidity is proportional to the number of individuals invested thus reducing the likelihood of an insufficient number of participants. External inefficiency In the case of ETFs that do not perfectly track their underlying index less costs at all times between index changes, this is because they are forbidden from directly trading in the market on their own behalf. If they were allowed and honest, the price would always be perfect and much more liquid than it otherwise should be since the combined frequency of all index members is much higher than any one alone. If one was dishonest, it would try to defraud with higher or lower numbers; however, if insider trading were permitted, both would fail due to the prisoner's dilemma that there is no honor among thieves. Here, the market would detect the problem much sooner because the insiders would arbitrage the false price away. Indirect internal efficiency Taking emerging market ETFs as an example, the markets that those are invested into are heavily restricted, so their ETF to underlying price inefficiencies are more pronounced even though the ETFs are actually working to make those underlying markets more efficient because a price for them altogether is known.
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Why does selling and then rebuying stock not lead to free money?
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There are several reasons. First, if you sell your stock "at any price", you may be selling it for less than you originally bought it for. Thus you will take a loss right at the beginning of your scheme. If you "rinse and repeat", the problem only gets worse. Every time you sell your stock, you will have to sell it at an even lower price in order to lower the price even more. Then you buy it back and. . . just resell it an even lower price? It should be clear that you are not making any money this way. Second, even if you don't sell it at an absolute loss, you must sell it at a relative loss in order to lower the price. In other words, if someone will currently buy your shares for $X, and you want to lower the price, you must sell them for less than $X. But you could have made more money by selling them for $X, since someone was already willing to buy them at that price. In order to bring the price down significantly, you have to sell the stock for less than people currently believe it is worth, which means you're incurring a loss relative to just selling it at the market rate. Of course, you can still make money if it goes back up again, but selling it at an extra loss this way just makes it harder to break even. Third, if you sell the stock at $X, whoever you sold it to is not going to sell it right back to you at $X, because then they would not make any money. You could in theory buy it from someone else, but the same principle holds: if the stock price has just gone down, people who have it may be waiting for it to go back up. This is doubly true if anyone suspects you have been trying to manipulate the stock price, because they will then suspect that the price drop is artificial and it will soon go back up. Fourth, even if someone did sell it right back to you at the price you sold it for, then what? You now hold the stock at a lower price, but you don't gain unless it goes back up. If it wasn't going up before until you took action, there is no reason to suppose it will go back up now. In fact, if you had enough shares to significantly influence the price, other people may have been fooled into thinking the value is actually lower now. The basic problem is that, in order for you to buy it at a low price, someone else has to sell it at that low price. It is easy to sell someone a stock for less than it's worth, but it will be hard to get people to sell it back to you for less than it's worth. If you engage in deceptive practices to get people to do this, you may be guilty of securities fraud.
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Pay off credit cards in one lump sum, or spread over a few months?
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I know you say you are aware of secured and unsecured debt and you've made your decision. Did you do the numbers? You will pay 44k over the life of the mortgage for that 24k (Based on 4.5% APR mortgage). Once you refinance your mortgage, do you plan on using credit for a while? Lots of Americans are hyperfocused on credit scores. The only times it affects your life are when you finance something, when you apply to rent a house or apartment, and sometimes when you apply for a job. Credit score should not be a factor in this decision. You're borrowing the money at a lower rate to pay off the high rate cards because you want to pay less in interest. Considering #1 is there any reason NOT to pay off the cards immediately, if not sooner?
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What's the least risky investment for people in Europe?
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First of all, congratulations on saving some money. So many people these days do not even get that far. As far as investments, what is best for you depends heavily on your: Here is a quick summary of types of assets that are likely available to you, and my thoughts on why they may or may not be a good fit for your situation. Cash Equivalents Cash Equivalents are highly liquid, meaning you can get cash for them on fairly short notice. In particular, Money Markets and Certificates of Deposit (CDs) are also considered very safe when issued by a bank, as they are often insured against loss by the government up to a certain amount (this varies quite a lot by country within Europe, see the Wikipedia article here for additional detail. Please note that in the case of a CD, you are usually unable to get access to your money for the length of the investment period, which is usually a short period of time such as 3 months, 6 months, or 1 year. This is a good choice if you may need your money back on short notice, and your main goal is to preserve your principal. However, the returns tend to be very low and often do not keep pace with inflation, meaning that over several years, you may lose "real" purchasing power, even if you don't lose nominal value in your account. Special Note on Cash Equivalents If the money you want to invest is also your Emergency Fund, or you do not have an Emergency Fund, I would highly recommend Cash Equivalents. They will provide the highest level of Liquidity along with a short Time Horizon so that you can get your money as needed in the case of unforeseen expenses such as if your car breaks down. Debt Debt investments include government and corporate bonds. They are still considered relatively safe, as the issuer would need to default (usually this means they are in bankruptcy) in order for you not to be paid back. For example, German bonds have been considered safer than Greek bonds recently based on the underlying strength of the government. Unlike Cash Equivalents, these are not guaranteed against loss, which means that if the issuer defaults, you could lose up to 100% of your investment. Bonds have several new features you will need to consider. One is interest rate risk. One reason bonds perform better than cash equivalents is that you are taking on the risk that if interest rates rise, the fixed payments the bond promises will be worth less, and the face value of your bond will fall. While most bonds are still very Liquid, this means that if you need to sell the bond before it matures, you could lose money. As mentioned earlier, some bonds are riskier than others. Given that you are looking for a low-risk investment, you would want to select a bond that is considered "invesment grade" rather than a riskier "junk" bond. Debt investments are a good choice if you can afford to do without this money for a few years, and you want to balance safety with somewhat better returns than Cash Equivalents. Again though, I would not recommend investing in Debt until you have also built up a separate Emergency Fund. If you do choose to invest in bonds, I recommend that you diversify your risks by investing in a bond fund, rather than in just one company's or government's debt. This will reduce the likelihood that you will experience a catastrophic loss. Ownership Ownership assets includes stocks and other assets such as real estate and precious metals such as gold. While these investments can have high returns, in your situation I would strongly recommend that you not invest in these types of investments, for the following reasons: For these reasons, debt is considered a safer investment than equity for any particular company, government, or the market as a whole. Ownership assets are a good choice for people who have a high Risk Tolerance, long Time Horizon, low Liquidity needs, and will not be bothered by larger potential changes in the value of the investment at any given time. Special Note on Gold I would consider Gold a very risky investment and not a good fit for you at the moment based on what you've shared in your question. Gold is considered "safe" in the sense that people believe that if the economy goes into recession, depression, or collapses entirely, gold will continue to be valuable. In a post-apocalyptic world where paper money became worthless, it is still a good bet that gold will always be considered valuable within human society as a store of value. That being said, the price of gold fluctuates almost entirely based on how bad people think things are going to get. Think about the difference between gold and a company like Coca-Cola. Would you like to own 100% of Coca-Cola? Of course, because you know there is a very good chance that people will continue to spend money all over the world on their products. On the other hand, gold itself produces no products, no sales, no profits, and no cash flow. As such, if you buy gold, you are really making a speculative bet that gold will be in higher demand tomorrow than it is today. You are buying an asset (the gold) rather than part of a company's equity or debt that is designed to throw off payments to its investors in the form of bond payments or dividends. So, if people decide next year that things are improving, it is possible that gold could lose value, given that gold prices are at historically high levels. Gold could be a good choice for someone who has a large, well-diversified investment portfolio, and who is looking for a hedge to protect against inflation and other risks that they have taken on via their other investments. I hope that is helpful - best of luck in your choices. Let us know what you decide!
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Should I continue to invest in an S&P 500 index fund?
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Your 5-8 year time frame is interesting because it is actually a two windows. When people are savings for retirement, they tell us how many years or decades they have until they reach retirement age. But they also imply that they are planning on spending decades withdrawing the money. But you wanting the money for a house in 5-8 years are needing the money more like somebody who is saving college money for a teenager. In fact your plan is similar in time frame as a 13 year old has for their college fund; start in 5 years but only have a 4 year spending window. Take the California 529 program: Beneficiary Age 13-14: Beneficiary Age 18+: The funding agreement provides a minimum guaranteed rate of return on the >amounts allocated to it by the Investment Portfolio. The minimum effective >annual interest rate will be neither less than 1% nor greater than 3% at >any time. So you plan of investing 100% in the S&P with your window is way too risky. You should only invest a portion of your down payment in equities, and be prepared to only be in that mode for a few years. Any drop in the market now hurts you, but one just before you need the funds would be devastating.
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Getting over that financial unease? Budgeting advice
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You sound like you are budgeting too much for food. Try limiting yourself to $200 a month for food and take that out in cash. When it's up, it's up. It's a hard way to learn but if you can tackle that, then budgeting for other things gets easier. In terms of your fear of doing a financial bellyflop, which is valid, it sounds like you may need to both sit down and learn a little more about personal finance. Try mrmoneymustache.com or fivecentnickel, or any of the other frugal living blogs that are out there. There are whole communities that can help you and give you tips to do more with less, and learn budgeting and finance and how to handle your money and your future. And no worries, the fact you are concerned enough to look for direction now means you may be able to avoid your fear completely.
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Ticker symbols differences between Yahoo Finance and BestInvest
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It depends on what site you're looking on and what exchange they're pulling the data from. Even though funds and stocks are called the same thing, they have different ticker symbols in each country's exchange or could be traded as pink sheet stocks in the US. If a company or fund is based in another country (like Canada or the UK) they probably also trade on that country's exchange (Toronto or London) under a different symbol. This can cause a lot of confusion when researching these tickers.
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How are the $1 salaries that CEOs sometimes take considered legal?
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Part of your first link has this statement that I suspect you are missing: However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. Note that executive is in that list. As for the additional note: To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Generally which means, "in most cases; usually." is not a universal qualifier and thus exceptions can exist. I'd imagine that restricted stock could be a way around some of the rules as there would be a monetary value there in the case of the stock for companies of a particular size.
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Which practice to keep finances after getting married: joint, or separate?
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My wife and I maintain seperate accounts. We have the bills split between us so that certain bills are paid by one of us, and other bills by the other. This is not a perfect 50/50 split as we don't make the same amount of money, but comparable enough that neither feels like they're doing all the bills alone. Our investments are similar. That means we each have a pool of money that we can spend on toys or entertainment as we see fit without overspending. Once my bills are paid and my savings are paid for the month, if I want to go buy some DVDs and my wife wants to buy a new lens for the camera, we don't have to agree. We just use our own money and do it. For us that's led to minimal friction or arguments over what to spend money on, simply because we aren't using the same pool. Getting it work requires getting the split right AND having the mindset that the other person is just as entitled to spend their share of the money as you are to spend yours. It really helps to eliminate issues where she spent money that I expected to be able to spend before I could, which can happen in a joint account. (We have no joint accounts, only things like the mortgage are in both our names.) I've been told by more then one person that how we're doing it is "wrong", but it works a lot better for us then trying to combine finances ever did. I think it also helps that we're younger, and this seems far less common amongst older couples.
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Why are options created?
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In general economic theory, there are always two markets created based on a need for a good; a spot market (where people who need something now can go outbid other people who need the same thing), and a futures market (where people who know they will need something later can agree to buy it for a pre-approved price, even if the good in question doesn't exist yet, like a grain crop). Options exist as a natural extension of the futures market. In a traditional future, you're obligated, by buying the contract, to execute it, for good or ill. If it turns out that you could have gotten a lower price when buying, or a higher price when selling, that's tough; you gave up the ability to say no in return for knowing, a month or three months or even a year in advance, the price you'll get to buy or sell this good that you know you need. Futures thus give both sides the ability to plan based on a known price, but that's their only risk-reduction mechanism. Enter the option. You're the Coors Brewing Company, and you want to buy 50 tons of barley grain for delivery in December in order to brew up for the Super Bowl and other assorted sports parties. A co-op bellies up to close the deal. But, since you're Coors, you compete on price with Budweiser and Miller, and if you end up paying more than the grain's really worth, perhaps because of a mild wet fall and a bumper crop that the almanac predicts, then you're going to have a real bad time of it in January. You ask for the right to say "no" when the contract falls due, if the price you negotiate now is too high based on the spot price. The co-op now has a choice; for such a large shipment, if Coors decided to leave them holding the bag on the contract and instead bought it from them anyway on a depressed spot market, they could lose big if they were counting on getting the contract price and bought equipment or facilities on credit against it. To mitigate those losses, the co-op asks for an option price; basically, this is "insurance" on the contract, and the co-op will, in return for this fee (exactly how and when it's paid is also negotiable), agree to eat any future realized losses if Coors were to back out of the contract. Like any insurance premium, the option price is nominally based on an outwardly simple formula: the probability of Coors "exercising" their option, times the losses the co-op would incur if that happened. Long-term, if these two figures are accurate, the co-op will break even by offering this price and Coors either taking the contract or exercising the option. However, coming up with accurate predictions of these two figures, such that the co-op (or anyone offering such a position) would indeed break even at least, is the stuff that keeps actuaries in business (and awake at night).
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How splits and dividends affect option prices
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Investopedia explains how a stock split impacts the stock's options: Each option contract is typically in control of 100 shares of an underlying security at a predetermined strike price. To find the new coverage of the option, take the split ratio and multiply by the old coverage (normally 100 shares). To find the new strike price, take the old strike price and divide by the split ratio. Say, for example, you own a call for 100 shares of XYZ with a strike price of $75. Now, if XYZ had a stock split of 2 for 1, then the option would now be for 200 shares with a strike price of $37.50. If, on the other hand, the stock split was 3 for 2, then the option would be for 150 shares with a strike price of $50. So, yes, a 2 for 1 stock split would halve the option strike prices. Also, in case the Investopedia article isn't clear, after a split the options still control 100 shares per contract. Regarding how a dividend affects option prices, I found an article with a good explanation: As mentioned above, dividends payment could reduce the price of a stock due to reduction of the company's assets. It becomes intuitive to know that if a stock is expected to go down, its call options will drop in extrinsic value while its put options will gain in extrinsic value before it happens. Indeed, dividends deflate the extrinsic value of call options and inflate the extrinsic value of put options weeks or even months before an expected dividend payment. Extrinsic value of Call Options are deflated due to dividends not only because of an expected reduction in the price of the stock but also due to the fact that call options buyers do not get paid the dividends that the stock buyers do. This makes call options of dividend paying stocks less attractive to own than the stocks itself, thereby depressing its extrinsic value. How much the value of call options drop due to dividends is really a function of its moneyness. In the money call options with high delta would be expected to drop the most on ex-date while out of the money call options with lower delta would be least affected. If a stock is expected to drop by a certain amount, that drop would already have been priced into the extrinsic value of its put options way beforehand. This is what happens to put options of dividend paying stocks. This effect is again a function of options moneyness but this time, in the money put options raise in extrinsic value more than out of the money put options. This is because in the money put options with delta of close to -1 would gain almost dollar or dollar on the drop of a stock. As such, in the money put options would rise in extrinsic value almost as much as the dividend rate itself while out of the money put options may not experience any changes since the dividend effect may not be strong enough to bring the stock down to take those out of the money put options in the money. So, no, a dividend of $1 will not necessarily decrease an option's price by $1 on the ex-dividend date. It depends on whether it's a call or put option, and whether the option is "in the money" or "out of the money" and by how much.
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Real estate loans for repairs
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If you intend to flip this property, you might consider either a construction loan or private money. A construction loan allows you to borrow from a bank against the value of the finished house a little at a time. As each stage of the construction/repairs are completed, the bank releases more funds to you. Interest accrues during the construction, but no payments need to be made until the construction/repairs are complete. Private money works in a similar manner, but the full amount can be released to you at once so you can get the repairs done more quickly. The interest rate will be higher. If you are flipping, then this higher interest rate is simply a cost of doing business. Since it's a private loan, you ca structure the deal any way you want. Perhaps accruing interest until the property is sold and then paying it back as a single balloon payment on sale of the property. To find private money, contact a mortgage broker and tell them what you have in mind. If you're intending to keep the property for yourself, private money is still an option. Once the repairs are complete, have the bank reassess the property value and refinance based on the new amount. Pay back the private loan with equity pulled from the house and all the shiny new repairs.
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Is it worth buying real estate just to safely invest money?
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House prices do not go up. Land prices in countries with growing economies tend to go up. The price of the house on the land generally depreciates as it wears out. Houses require money; they are called money pits for a reason. You have to replace HVAC periodically, roofs, repairs, rot, foundation problems, leaks, electrical repair; and all of that just reduces the rate at which the house (not the land) loses value. To maintain value (of the house proper), you need to regularly rebuild parts of the house. People expect different things in Kitchens, bathrooms, dining rooms, doors, bedrooms today than they do in the past, and wear on flooring and fixtures accumulate over time. The price of land and is going to be highly determined by the current interest rates. Interest rates are currently near zero; if they go up by even a few percent, we can expect land prices to stop growing and start shrinking, even if the economy continues to grow. So the assumption that land+house prices go up is predicated on the last 35 years of constant rigorous economic growth mixed with interest rate decreases. This is a common illusion, that people assume the recent economic past is somehow the way things are "naturally". But we cannot decrease interest rates further, and rigorous economic growth is far from guaranteed. This is because people price land based on their carrying cost; the cost you have to spend out of your income to have ownership of it. And that is a function of interest rates. Throw in no longer expecting land values to constantly grow and second-order effects that boost land value also go away. Depending on the juristiction, a mortgage is a hugely leveraged investment. It is akin to taking 10,000$, borrowing 40,000$ and buying stock. If the stock goes up, you make almost 5x as much money; if it goes down, you lose 5x as much. And you owe a constant stream of money to service the debt on top of that. If you want to be risk free, work out how you'd deal with the value of your house dropping by 50% together with losing your job, getting a job paying half as much after a period of 6 months unemployment. The new job requires a 1.5 hour commute from your house. Interest rates going up to 12% and your mortgage is up for renewal (in 15 years - they climbed gradually over the time, say), optionally. That is a medium-bad situation (not a great depression scale problem), but is a realistic "bad luck" event that could happen to you. Not likely, but possible. Can you weather it? If so, the risk is within your bounds. Note that going bankrupt may be a reasonable plan to such a bit of bad luck. However, note that had you not purchased the house, you wouldn't be bankrupt in that situation. It is reasonably likely that house prices will, after you spend ~3% of the construction cost of the house per year, pay the mortgage on the land+house, grow at a rate sufficient to offset the cost of renting and generate an economically reasonable level of profit. It is not a risk-free investment. If someone tries to sell you a risk-free investment, they are almost certainly wrong.
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Are services provided to Google employees taxed as income or in any way?
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These services and other employee perks are referred to as fringe benefits. An employee "fringe benefit" is a form of pay other than money for the performance of services by employees. Any fringe benefit provided to an employee is taxable income for that person unless the tax law specifically excludes it from taxation. One example of taxable fringe benefit is award/prize money (to prevent someone from "winning" most of their salary tax-free.) Cash awards are taxable unless given to charity. Non-cash awards are taxable unless nominal in value or given to charity. A less intuitive example is clothing. Clothing given to employees that is suitable for street wear is a taxable fringe benefit. Your example possibly fits under de minims (low-cost) fringe benefits such as low-value birthday or holiday gifts, event tickets, traditional awards (such as a retirement gift), other special occasion gifts, and coffee and soft drinks working condition fringe benefits--that is, property and services provided to an employee so that the employee can perform his or her job. Note that "cafeteria plans" in the source don't refer to cafeteria but allow employee choice between benefit options available.
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Is this trick enough to totally prevent bankrupcy in a case of a crash?
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Your strategy fails to control risk. Your "inversed crash" is called a rally. And These kind of things often turn into bigger rallies because of short squeezes, when all the people that are shorting a stock are forced to close their stock because of margin calls - its not that shorts "scramble" to close their position, the broker AUTOMATICALLY closes your short positions with market orders and you are stuck with the loss. So no, your "trick" is not enough. There are better ways to profit from a bearish outlook.
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Are variable rate loans ever a good idea?
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Fixed You are confirming the amount you are going t pay over the term of the loan. Variable: 3.79% over 82mo. The total difference over the life of the loan comes to around $1200 That is the wrong way to calculate the variable portion. The variable is primarily set with a margin over a certain benchmark i.e. Fed rate. Assuming the Fed rate doesn't change over or only goes lower the variable rate is the one to go. If it rises then your payment will increase. And the margin they take over the benchmark rate may increase, so the total amount you pay might increase too. I would assume a read through the T&Cs should clarify that for you. Is it ever a good idea to choose a variable rate loan? Only if you think we are in a low interest rate environment i.e. the economy is in doldrums and the Feds are trying to simulate the economy by decreasing the benchmark rates. And you are sure that the lender isn't going to increase his margins if the rate remains low for quite a substantial amount of time. And I might assume there will be penalties for paying off a loan quicker.
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Vanguard ETF vs mutual fund
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See my comment for some discussion of why one might choose an identical fund over an ETF. As to why someone would choose the higher cost fund in this instance ... The Admiral Shares version of the fund (VFIAX) has the same expense ratio as the ETF but has a minimum investment of $10K. Some investors may want to eventually own the Admiral Shares fund but do not yet have $10K. If they begin with the Investor Shares now and then convert to Admiral later, that conversion will be a non-taxable event. If, however, they start with ETF shares now and then sell them later to buy the fund, that sale will be a taxable event. Vanguard ETFs are only commission-free to Vanguard clients using Vanguard Brokerage Services. Some investors using other brokers may face all sorts of penalties for purchasing third-party ETFs. Some retirement plan participants (either at Vanguard or another broker) may not even be allowed to purchase ETFs.
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Problems with Enterprise Value and better valuation techniques
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This is a tough question SFun28. Let's try and debug the metric. First, let's expand upon the notion share price is determined in an efficient market where prospective buyers and sellers have access to info on an enterprises' cash balance and they may weigh that into their decision making. Therefore, a desirable/undesirable cash balance may raise or lower the share price, to what extent, we do not know. We must ask How significant is cash/debt balance in determining the market price of a stock? As you noted, we have limited info, which may decrease the weight of these account balances in our decision process. Using a materiality level of 5% of net income of operations, cash/debt may be immaterial or not considered by an investor. investors oftentimes interpret the same information differently (e.g. Microsoft's large cash balance may show they no longer have innovative ideas worth investing in, or they are well positioned to acquire innovative companies, or weather a contraction in the sector) My guess is a math mind would ignore the affect of account balances on the equity portion of the enterprise value calculation because it may not be a factor, or because the affect is subjective.
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What is a 401(k) Loan Provision?
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Congratulations on the job offer! That type of matching sounds good if you plan to stay at a company for more than a year. My experience has been that 401k matching can range from 2% up to 8% for your typical starting job, so a total of 6% is good. You would definitely want to contribute at least 5% to take advantage of the "Free" money. Loan provision could mean that loans from 401k are allowed. I did some research and found that not all company 401ks allow for you to take a loan out of your 401k. Typically this is bad practice since you are robbing your 401k of it's major advantage - tax free compound interest. Source
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Does girlfriend have too much savings, time to invest?
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It's time she look into what employer provided retirement plan she can use. She's at the point where she should think about investing for the long term, with retirement in mind.
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How do you save money on clothes and shoes for your family?
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I speak as a person without kids, but I'll give this a shot anyway, using my memory of the perspective I had when I was a kid. My advice is, if the kids are young enough to not care much, don't be afraid of the thrift store. My parents got a bunch of clothes from the thrift store as I was growing up (around elementary school age) and I didn't care at all. When I got to be older, (middle school age) shopping at Target and K-mart didn't seem bad either. By the time the kids are old enough to really care beyond, they are probably old enough to get their own part-time jobs and get their own clothing. I however, am probably naive, as I still care little for such things, and judging from popular culture, most care about them a great deal.
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Why do gas stations charge different amounts in the same local area?
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I'll echo: many factors. Brand: There are generally two levels of pricing: "major brand" and "discount brand". You can generally expect the "discount brand" to cost about 5-10 cents less per gallon in the same neighborhood as "major brand" gas. This is for a number of sub-factors; chief among them is that not all gasolines are created equal. A lot of the major brands (Shell, Texaco, Chevron, BP, Exxon) have proprietary detergents and cleaning agents that the discount brands do not. They're also generally closer to the real octane rating of the gas, have less ethanol (you'll see the sign that says "contains up to 10% ethanol"; the bargain brands are right up at that limit while the top-tier brands keep it lower) and have stricter requirements about storage tank maintenance. Anyone who tells you that all gas is the same, send em my way; I tried to save a few bux buying the cheaper stuff and now my car needs an engine overhaul because of fouling causing premature wear. A couple of my co-workers got a fuel system overhaul free from the local supermarket because the storage tank wasn't properly purged, and they got water into their gas tanks. Market Price: Yes, this is of course a factor. Generally, gas prices at the pump rise very quickly when the market price of crude or gasoline goes up, then fall more slowly than the market price, because the margins on gas sales for a C-store are very slim. When prices change, the C-stores lose either way; when prices rise they have to pay more than they got from the last tankful to buy the next one, and when prices fall they don't recoup the cost of their current tank. By quickly increasing the price to match commodities market prices, then gradually lowering them over time even if the market collapses, they mitigate the losses both ways. Overhead: A gas station right next to a highway probably had to pay more for that land, both to buy/lease it and in property taxes. Nicer (newer, cleaner) stations generally have to pay more to stay that way. The higher your operating costs, the more you'll have to charge for your gas. You can usually do so because the nicer station will attract customers willing to pay a few cents more for the nicer facilities. Taxation: Most States charge a tax on gasoline, in addition to a Federal tax on gas. That revenue either goes into the State's general fund, or is earmarked for transportation costs like road maintenance. California's gas prices are sky-high across the state, because they have the highest gas tax. I'm not sure Colorado, Wyoming and Montana have gas taxes at all. Proximity to other stations: No matter what you have to pay for the land and facilities, if there's another station across the street, you have to be within a penny of their price or people will vote with their feet. While "predatory pricing" (taking a loss on sales in one area, buffered by profits elsewhere, in order to drive out competition) is technically illegal, you see it all the time in the C-store industry and it is very difficult to prove. This is a primary cause of neighborhood-to-neighborhood changes; a C-store will look around the other stations on their street corner, and the ones down the road a block or two each direction, when determining what they can sell gas for that day. The guy five blocks down has a completely different pool of competing stations. Population Distribution: With a lot of people in a particular area, there's a big "pie" of customer dollars for C-stores to compete for. This generally leads to increased prices because the stations don't have to be AS cutthroat; regardless of how good your price is, you have only so many pumps, and at some point people will pay more to use the open pump than wait for the cheaper one. The reverse is true in rural areas; with only two stations in an entire small town, those two stations will become extremely cutthroat. However, rural prices also vary more; with only one station in easy walking distance from where you ran out of gas, they can charge you $6 to fill that gallon gas can if they want, and you'll pay it because the next gas station's another 20 miles down the road and probably has even higher prices. This, along with overhead, is generally why the Rockies states have the lowest average prices; land's cheap and people are scarce in Wyoming. But, the "price-gouging" can be seen in the rural Southwest, where there's a LOT of ground to cover between gas stations, and so the "last chance gas" along major highways just outside of town, each a nickel to a dime more than the previous station, is a common stereotype. Transportation costs: Prices are higher on the East and West Coasts than in the Gulf States for a very simple reason; the bulk of the U.S. refinery capacity is along the Gulf Coast between Galveston and the Florida border. The further you are from there, the more it costs to get the fuel from the refinery to the gas station, and that cost is reflected at the pump. In fact, the East Coast imports gasoline by tanker even though the United States is now a net exporter of gasoline, because it's cheaper to buy it from foreign sources than it would be to watch it drip through the limited pipeline capacity that exists between the Gulf states and the Eastern Seaboard.
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W2 vs 1099 Employee status
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Another thing to consider, however, is the deductibility of business expenses. Let's assume that the employer can legitimately hire you as a 1099 contractor. (Would you be able to telecommute? Would you have a high degree of control over when you worked and when you didn't? These factors also affect whether you're a true independent 1099 contractor or not.) As a legit 1099 contractor, you're able to deduct certain business expenses directly from your income. (You can find a list of the rules at irs.gov.) As a W2 employee, by contrast, can deduct only business expenses that exceed 2% of the your AGI (adjusted gross income). So, you also have to consider your personal circumstances in making the calculus and comparing whether a legitimate 1099 contractor job is or is not good for you. It's not just a comparison of what they'd pay W2 employees versus what they'd pay 1099 contractors.
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Investment options
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Option 1 is out. There are no "safe returns" that make much money. Besides, if a correction does come along how will you know when to invest? There is no signal that says when the bottom is reached, and you emotions could keep you from acting. Option 2 (dollar cost averaging) is prudent and comforting. There are always some bargains about. You could start with an energy ETF or a few "big oil" company stocks right now.
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Are services provided to Google employees taxed as income or in any way?
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Others have pointed out that many benefits offered by employers "for free" are actually taxed; the employee must pay taxes on the value of what they're receiving (usually services of some kind). This is called imputed income. Also pointed out was that healthcare is an exception; a specifically protected class of benefits that aren't taxed. But sometimes they are. Many companies now offer domestic partner health coverage as well, regardless of whether the couple is in any kind of civil union or other arrangement. The costs to the employee vary, but it's often that they simply pay double of what their individual coverage contribution would be. Independent of the employee's direct contribution for their domestic partner, they must also pay taxes on the value of the employer's cost of the coverage. This can be significant, as typically the employer is paying the lion's share of the healthcare cost.
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Who sets the prices on government bonds?
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Who sets the prices? Effectively the market does, like basically all openly traded things. The Greek government could well have said "5% is as high as we will go". As a result, investors may not have chosen to buy the securities. The global bond market is highly liquid, and investors who have a choice could well then choose to go elsewhere. The reasons could well be varied, but primary among them would be that investors view Greek investments as more than 5% risky. If I can get 5% from a country that I deem less risky than from Greece, my choice is clear. Therefore to be compensated for loaning them my money, I am expecting a return of 7% because there is the possibility that they will default. As for not selling them at all, if they could avoid issuing bonds, most governments would. They may not have had much of a choice. If they just print more money, that does other potentially bad things to the economy. The government needs funds to operate, if they are not collecting enough in taxes, for example, and do not want to print money as I mentioned, then bonds are one other common way to raise cash. Notwithstanding that in your example you are referring to the interest rate, not the price, the principal is the same.
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Premium classification when selling covered calls in a traditional IRA?
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If you hold stock in a traditional IRA and sell a covered call against that stock, the premium received for writing that call belongs to the IRA just as would any other gain, dividend, or interest. It is not a contribution but simply adds to the balance in the IRA. The nature of the gain (capital or ordinary) is not relevant since all parts of the IRA balance are treated the same when funds are (eventually) withdrawn.
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How exactly does dealing in stock make me money?
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This is a very good question! The biggest difference is that when you put money in a savings bank you are a lender that is protected by the government, and when you buy stocks you become an owner. As a lender, whether the bank makes or loses money on the loans it makes, they still maintain your balance and pay you interest, and your principal balance is guaranteed by the government (in the USA). The bank is the party that is primarily at risk if their business does not perform well. As an owner, you participate fully in the company's gains and losses, but you also put your money at risk, since if the company loses money, you do too. Because of this, many people prefer to buy funds made up of many stocks, so they are not at risk of one company performing very poorly or going bankrupt. When you buy stock you become a part owner and share in the profitability of the company, often through a dividend. You should also be aware that stocks often have years where they do very poorly as well as years when they do very well. However, over a long period of time (10 years or more), they have historically done better in outpacing inflation than any other type of investment. For this reason, I would recommend that you only invest in the stock market if you expect to be able to leave the money there for 10 years or more, ideally, and for 5 years at the very least. Otherwise, you may need to take the money out at a bad time. I would also recommend that you only invest in stocks if you already have an emergency fund, and don't have consumer debt. There isn't much point in putting your money at risk to get a return if you can get a risk-free return by paying off debt, or if you would have to pull your money back out if your car broke down or you lost your job.
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Questions about government bonds that have already matured
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I am assuming that you are talking about US Savings Bonds: Here is a page that talks about maturity dates of US Savings bonds. If They aren'tSavings bonds but are another type ofUS Government Bond Assuming they are Savings bonds, here is information regarding redeeming of bonds. How do I redeem my EE/E Bonds? Electronic bonds: Log in to Treasury Direct and follow the directions there. The cash amount can be credited to your checking or savings account within one business day of the redemption date. Paper bonds You can cash paper EE/E Bonds at many local financial institutions. We don't keep a list of banks that redeem bonds, so check with banks in your area. What will I need to redeem a paper bond? Before taking in the bonds to redeem them, it's usually a good idea to check with the financial institution to find out what identification and other documents you'll need. When you present your paper bonds, you'll be asked to show your identity. You can do this by being a customer with an active account open for at least 6 months at the financial institution that will be paying the bonds, or presenting acceptable identification such as a valid driver's license if the >redemption value of the bonds is less than $1,000. If you are not listed as the owner or co-owner on the bond, you'll have to show that you >are entitled to cash in the bond. The treasury direct website also discusses converting bonds, rules regarding using them for education, how often they are credited with interest
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Is being a landlord a good idea? Is there a lot of risk?
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If you are able to buy a 150K home for 50K now that would be a good deal! However, you can't you have to borrow 100K in order to make this deal happen. This dramatically increases the risk of any investment, and I would no longer classify it as passive income. The mortgage on a 150K place would be about 710/month (30 year fixed). Reasonably I would expect no more than 1200/month in rent, or 14,400. A good rule of thumb is to assume that half of rental revenue can be counted as profit before debt service. So in your case 7200, but you would have a mortgage payment of 473/month. Leaving you a profit of 1524 after debt service. This is suspiciously like 2K per year. Things, in the financial world, tend to move toward an equilibrium. The benefit of rental property you can make a lot more than the numbers suggest. For example the home could increase in value, and you can have fewer than expected repairs. So you have two ways to profit: rental revenue and asset appreciation. However, you said that you needed passive income. What happens if you have a vacancy or the tenant does not pay? What happens if you have greater than expected repairs? What happens if you get a fine from the HOA or a special assessment? Not only will you have dip into your pocket to cover the payment, you might also have to dip into your pocket to cover the actual event! In a way this would be no different than if you borrowed 100K to buy dividend paying stocks. If the fund/company does not pay out that month you would still have to make the loan payment. Where does the money come from? Your pocket. At least dividend paying companies don't collect money from their shareholders. Yes you can make more money, but you can also lose more. Leverage is a two edged sword and rental properties can be great if you are financial able to absorb the shocks that are normal with ownership.
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What happens if I just don't pay my student loans?
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Collection agencies will eventually find you if you work for an employer that uses the credit bureaus for pre-employment screening, or you sign up for utilities or services that check your credit, or you enter into public record any other way (getting arrested, buying land, etc.). Such inquiries will put you on the grid where the collection agencies can find you and/or sue you. Two years out is about the point where they're looking for blood. The next time your friend applies for an apartment, utilities or cell phone service, she's going to get some calls.
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After consulting HR Block, are you actually obligated to file your taxes with them, if they've found ways to save you money?
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The obligation is contractual, so you need to read the contract to answer your question. However, since you paid for the service provided, I see no way they can force you buy any other service from them. They cannot file your tax returns without your explicit consent (on a form dedicated to that, dated and having the numbers matching the return filed - not something you can sign before the actual return is ready). Worst case they can claim you owe them more money, but since you paid for the services provided, I can't see how they can have that stand in court as well. Bottom line - even if the contract has such an obligation, I cannot see how it can be enforced. As to the mistake they noted... I wouldn't rely on H&R Block advice in any matter. Very likely, the person you were talking to was not even licensed to provide tax advice. You're lucky if the person has passed CRTP exams (in California they're legally required), but I seriously doubt their clerks are EAs or CPAs (the only designations other than a lawyer legally allowed to provide tax advice). Tax preparers (CRTPs included) are only allowed to provide advice pertaining to the preparation of the tax return they're currently engaged to prepare. Claiming income is sourced or not sourced in NY is borderline, IMHO. If they got it wrong (and to me it sounds as they did) you can sue them for damages. If your situation is tricky and it is too late to get an appointment with a proper adviser - file an extension (form 4868) and deal with it after the April busy season.
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Short Selling Specific to India
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In India the Short is what is called in other markets call as "Naked Short" [I think I got the right term]. It means that you can only short sell intra day and by the end of the day you have to buy back the shares [at whatever price, if you don't; the exchange will do it by force the next day]. In other markets the Intra day shorts are not allowed and one can short for several days by borrowing shares from someone else [arranged by broker] India has a futures market, so you can sell/buy something today with the execution date of one month. This is typically a fixed day of the month [I think last Thursday]
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Why do investors buy stock that had appreciated?
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People buy stocks with the intention of making money. They either expect the price to continue to rise or that they will get dividends and the price will not drop (enough) to wipe out their dividend earnings.
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Sell your home and invest in growth stock mutual fund
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The 20%+ returns you have observed in the mutual funds are not free money. They are compensation for the risk associated with owning those funds. Given the extraordinarily high returns you are seeing I would expect extremely high risk. This means there is a good possibility of extreme losses at some point. By putting a lot of money in those mutual funds you are taking a gamble that may or may not pay off. Assuming what your friend is paying you for rent is fair, you are not losing money on your house relative to the market. You are earning less because you are invested in a less risky asset. If you want a higher return, you should borrow some money (or sell your house) and invest in the market. You may make more money that way. But if you do that, you will have a larger chance of losing a lot of money at some point. That's the way risk works. No one can promise a 20% return on a risky asset, they can only hint that it may do in the future what it did in the past. A reasonable approach to investment is to get invested in lots of different things: stocks, bonds, real estate. If you are afraid of risk and willing to earn less, keep more money in safe assets. If you are willing to take big risks in exchange for the possibility of high returns, move more assets into risky stuff. If you want extreme returns and are willing to take extreme risk, borrow and use the money to invest in risky assets. As you look over investment options, remember that anything that pays high returns most likely has high risk as well.
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How to incentivize a real-estate broker to find me a cheap house
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Having just gone through this process as a buyer via broker in Israel, here are my thoughts: Tl;dr: An incentive such as you are suggesting would not be particularly helpful. In this case, your best option is to spend your efforts shopping for a broker that you can trust. The rest: Your main concern is that the broker will find you a place at the top of your budget and will not negotiate aggressively. The main person responsible for negotiation is YOU. You are paying for the property, and you are putting in bids: not your agent. The agent should advise you, but in the end should pass along your bids directly. The real problem is that you, as the buyer, generally do not have as close a feel for the pulse of the market as the broker, who should be quite aware of recent closings in the neighborhood. Therefore, there are a few things that you can do to help arm yourself: At the end of the day, if you have decided to use a broker, you are making a large financial commitment to hire someone to find you the best place, and therefore it may be more important at this point to spend your efforts shopping around for the best broker, rather than trying to figure out how to outsmart her. You are correct: buyers' agents DO have incentives to sell you on places that may not be right or good for you. For example: Although your scheme may help a bit with the first concern, it will not help at all with the other two, which I assume to be much more likely problems in any event. Instead, find recommendations for brokers from others. Have the broker show you a few properties and put in some low bids to get a feel for how she handles them. Discuss the properties together and try to assess if they really have your interests in mind. You are paying a lot for their service, and you should make sure, as much as possible, that they really are working honestly and in your best interest. A good broker who knows his market and is trying to help you can be a great asset in the opaque, cutthroat real estate market. הבל הבלים, הכל הבל. סוף דבר הכל נשמע, את האלוהים יירא ואת מצוותיו שמור כי זה כל האדם. Good luck!
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Is the Chrysler extended warranty coverage worth it?
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I haven't looked at that warranty in detail, but generally speaking this should help. What is GAP insurance? In the case of a total loss/write off gap insurance covers the outstanding finance after your regular insurance pay out. The two won't match up usually because of the depreciation right after you buy the car. For example, if you take out $20,000 finance and buy a car, then write it off after six months, your insurance company may only value it at $16,000 but it's unlikely you will have cleared $4,000 from your finance. Gap insurance will pay out the difference and settle the debt. Will Chrysler change the engine, if it comes to bhore? Yes, unless they identify misuse or deliberate damage. For instance, if you do 1000 miles and the engine explodes, it's a mechanical fault that the warranty would cover. If they open up the engine/look at diagnostics and find it's been thrashed to within an inch of it's life, they may claim it was your driving which has destroyed the engine and you would have to prove it was an underlying fault and would have blown either way. Will car dents be covered with this bumper to bumper insurance? Not likely, as I mentioned in the last point, if it's your fault it wouldn't be covered. I think you may be confusing the terms insurance and warranty at this point. Insurance would cover your dents but a warranty only covers the manufacturer's faults, even in the case of extended warranties. What does basic mean in terms of warranty? Sounds obvious, but whatever Chrysler want it to mean! There's no legal definition of 'basic' so you would need to check the documents thoroughly or ask them to explain exactly what is and isn't covered. If they're reluctant, it's probably because 'basic' covers very little...
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Working on a tax free island to make money?
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The Cayman Islands has an income tax enacted, it is just currently 0%. It raises revenues from its tourism, import duties, and business registration. It is part of the UK commonwealth and therefore enjoys the military protection of that federation, but doesn't have to spend on it. But unlike the US, the UK does not have an umbrella federal income tax on its overseas territories, so the Cayman Islands doesn't have to pass that down to its citizens nor do its citizens/residents have to be encumbered by one. It was not taxed by the King when it was first incorporated (hm, might need to fact check that). They also didn't go to war with the king over some small tax, so they got treated differently than some other North American colonies you might think of. The Cayman Islands is not the only government that raises revenues this way. Delaware also has a 0% income tax and raises the majority of its revenues on business registration (and perpetual franchise taxes on those businesses), allowing it to spare its citizens from passive income taxes. But unlike a US state, a citizen or business in a UK overseas territory does not have federal regulatory overhead, making it more attractive as a worldwide financial center.
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Investments other than CDs?
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You're losing money. And a lot of it. Consider this: the inflation is 2-4% a year (officially, depending on your spending pattern your own rate might be quite higher). You earn about 1/2%. I.e.: You're losing 3% a year. Guaranteed. You can do much better without any additional risk. 0.1% on savings account? Why not 0.9%? On-line savings account (Ally, CapitalOne-360, American Express, E*Trade, etc) give much higher rates than what you have. Current Ally rates are 0.9% on a regular savings account. 9 times more than what you have, with no additional risk: its a FDIC insured deposit. You can get a slightly higher rate with CDs (0.97% at the same bank for 12 months deposit). IRA - why is it in CD's? Its the longest term investment you have, that's where you can and should take risks, to maximize your compounding returns. Not doing that is actually more risky to you because you're guaranteeing compounding loss, of the said 3% a year. On average, more volatile stock investments have shown to be not losing money over periods of decades, even if they do lose money over shorter periods. Rental - if you can buy a property that you would pay the same amount of money for as for a comparable rental - you should definitely buy. Your debt will be secured by the property, and since you're paying the same amount or less - you're earning the equity. There's no risk here, just benefits, which again you chose to forgo. In the worst case if you default and walk away from the property you lost exactly (or less) what you would have paid for a rental anyway. 14 years old car may be cheaper than 4 years old to buy, but consider the maintenance, licensing and repairs - will it not some up to more than the difference? In my experience - it is likely to. Bottom line - you think you're risk averse, but you're exactly the opposite of that.
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How to prevent myself from buying things I don't want
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Remember where they said "Life, liberty and the pursuit of happiness? That is the essence of this problem. You have freedom including freedom to mess up. On the practical side, it's a matter of structuring your money so it's not available to you for impulse buying, and make it automatic. Have you fully funded your key necessities? You should have an 8-month emergency fund in reserve, in a different savings account. Are you fully maxing out your 401K, 403B, Roth IRA and the like? This single act is so powerful that you're crazy not to - every $1 you save will multiply to $10-100 in retirement. I know a guy who tours the country in an RV with pop-outs and tows a Jeep. He was career Air Force, so clearly not a millionaire; he saved. Money seems so trite to the young, but Seriously. THIS. Have auto-deposits into savings or an investment account. Carry a credit card you are reluctant to use for impulse buys. Make your weekly ATM withdrawal for a fixed amount of cash, and spend only that. When your $100 has to make it through Friday, you think twice about that impulse buy. What about online purchases? Those are a nightmare to manage. If you spend $40 online, reduce your ATM cash withdrawal by $40 the next week, is the best I can think of. Keep in mind, many of these systems are designed to be hard to resist. That's what 1-click ordering is about; they want you to not think about the bill. That's what the "discount codes" are about; those are a fake artifice. Actually they have marked up the regular price so they are only "discounting" to the fair price. You gotta see the scam, unsubscribe and/or tune out. They are preying on you. Get angry about that! Very good people to follow regularly are Suze Orman or Dave Ramsey, depending on your tastes. As for the ontological... freedom is a hard problem. Once food and shelter needs are met, then what? How does a free person deny his own freedom to structure his activities for a loftier goal? Sadly, most people pitching solutions are scammers - churches, gurus, etc. - after your money or your mind. So anyone who is making an effort to get seen by you and promise to help you is probably not a good guy. Though, Napoleon Hill managed to pry some remarkable knowledge from Andrew Carnegie in his book "Think and Grow Rich". Tony Robbins is brilliant, but he lets his staff sell expensive seminars and kit, which make him look like just another shyster. Don't buy that stuff, you don't need it and he doesn't need you to buy it.
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Is having a 'startup fund' a good idea?
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I am asking because startups are super risky and 99% of the times you fail and lose the money. First of all, that 99% number is exaggerated. Only 96% of companies fail within ten years. But starting your own business is not a pure game of chance. It mostly depends on how good your business idea is and if you have the necessary skills and resources to succeed with it. Yes, there is luck involved, but a smart businessman can calculate the risks and possible rewards and then decide if a certain business idea is a good or a bad gamble. Also, a business failing does not necessarily mean that the business owner failed. A good business owner knows when to fold. A business might be profitable at first, but market circumstances might change at any time making it unprofitable. A smart business owner notices that early, liquidates the unprofitable business as quickly as possible and refocuses on their next business idea. Only those who can not let go of an unprofitable business or take too long to notice that it is failing are those who get dragged down with it. So should you have a "startup fund"? Saving your disposable income is never a mistake. If you never end up starting a business, it will eventually serve you as a retirement fund. So yes, you should save a part of your money each month. But should you start a company with it? That depends on whether or not you have a business idea where you know you will succeed. How do you know that? When you answered yes to all of these questions, then you might want to consider it.
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Filing taxes on stocks
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Generally stock trades will require an additional Capital Gains and Losses form included with a 1040, known as Schedule D (summary) and Schedule D-1 (itemized). That year I believe the maximum declarable Capital loss was $3000--the rest could carry over to future years. The purchase date/year only matters insofar as to rank the lot as short term or long term(a position held 365 days or longer), short term typically but depends on actual asset taxed then at 25%, long term 15%. The year a position was closed(eg. sold) tells you which year's filing it belongs in. The tiny $16.08 interest earned probably goes into Schedule B, typically a short form. The IRS actually has a hotline 800-829-1040 (Individuals) for quick questions such as advising which previous-year filing forms they'd expect from you. Be sure to explain the custodial situation and that it all recently came to your awareness etc. Disclaimer: I am no specialist. You'd need to verify everything I wrote; it was just from personal experience with the IRS and taxes.
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Do I owe taxes if my deductions are higher than my income?
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There's one factor the previous posters apparently missed here: You say "self-employment tax"--in other words, at least some of that $16k is from self employment. In a normal employment situation the FICA tax is taken out of your paycheck, it's normally spot on and generally doesn't show up on your tax return. However, for the self-employed it's another matter. You pay the whole 15.3% from the first dollar and this does show up on your tax return. If it's all self employment money you would have about $2.5k in tax from this.
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Anonymous CC: Does “Entropay” really not hand my personal data over to a company - are there alternatives?
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Do you guys know any options that are accessible to any global citizen? Prepaid and stored value cards are anonymous. For an arbitrary reason, the really anonymous ones only allow you to load $500 but there is no regulation that dictates this amount. In the USA, these cards are exempt from being declared at border crossings. Not because they look like credit cards, but because they are exempt by the US Treasury and Customs. The cons is that there are generally fees to use them. US DOJ has done research showing that some groups take advantage of the exemption moving upwards of $50,000 a day between borders, but Congress is fine with this exemption and the burden is always on the government to determine "illicit origin". Stigmatizing how money is moved is only a 30 year old phenomenon, but many free nations do not really have capital controls, they only care that you pay taxes and that the integrity of their stock markets are upheld. Aside from that there are no qualms about anonymity, except from your neighbors but they dont matter for a global citizen. In theory, the UK should have more flexibility in anonymity options, such as stored value cards with higher limits.
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Is this reply promising a money order and cashier check a scam?
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It's a scam. The cashier's check will be forged. Craigslist has a warning about it here (item #3). What kind of payment do you think is not fakable? Or at least not likely to be used in scams? When on craigslist - deal only locally and in person. You can ask to see the person's ID if you're being paid by check When being paid by check, how can seeing his/her ID help? In case the check isn't cashable, I can find that person by keeping record of his/her ID? If you're paid by check, the payers details should be printed on the check. By checking the ID you can verify that the details match (name/address), so you can find the payer later. Of course the ID can be faked too, but there's so much you can do to protect yourself. You'll get better protection (including verified escrow service) by selling on eBay. Is being paid by cash the safest way currently, although cash can be faked too, but it is the least common thing that is faked currently? Do you recommend to first deposit the cash into a bank (so that let the bank verify if the cash is faked), before delivering the good? For Craigslist, use cash and meet locally. That rules out most scams as a seller. What payment methods do you think are relatively safe currently? Then getting checks must be the least favorite way of being paid. Do you think cash is better than money order or cashier order? You should only accept cash. If it is a large transaction, you can meet them at your bank, have them get cash, and you receive the cash from the bank. Back to the quoted scam, how will they later manipulate me? Are they interested in my stuffs on moving sale, or in my money? They will probably "accidentally" overpay you and ask for a refund of some portion of the overpayment. In that case you will be out the entire amount that you send back to them and possibly some fees from your bank for cashing a bad check.
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Definitions of leverage and of leverage factor
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Levarge in simple terms is how of your own money to how much of borrowed money. So in 2008 Typical leverage ratios were Investment Banks 30:1 means that for every 1 Unit of Banks money [shareholders capital/ long term debts] there was 30 Units of borrowed money [from deposits/for other institutions/etc]. This is a very unstable situation as typically say you lent out 31 to someone else, half way through repayments, the depositors and other lends are asking you 30 back. You are sunk. Now lets say if you lent 31 to some one, but 30 was your moeny and 1 was from deposits/etc. Then you can anytime more easily pay back the 1 to the depositor. In day trading, usually one squares away the position the same day or within a short period. Hence say you want to buy something worth 1000 in the morning and are selling it say the same day. You are expecting the price to by 1005 and a gain 5. Now when you buy via your broker/trader, you may not be required to pay 1000. Normally one just needs to pay a margin money, typically 10% [varies from market to market, country to country]. So in the first case if you put 1000 and get by 5, you made a profit of 0.5%. However if you were to pay only 10 as margin money [rest 990 is assumed loan from your broker]. You sell at 1005, the broker deducts his 990, and you get 15. So technically on 10 you have made 5 more, ie 50% returns. So this is leveraging of 10:1. If say your broker allowed only 5% margin money, then you just need to pay 5 for the 1000 trade, get back 5. You have made a 100% profit, but the leveraging is 20:1. Now lets say at this high leveraging when you are selling you get only 990. So you still owe the broker 5, if you can't pay-up and if lot of other such people can't pay-up, then the broker will also go bankrupt and there is a huge risk. Hence although leveraging helps in quite a few cases, there is always an associated risk when things go wrong badly.
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When a stock price goes down, does the money just disappears into thin air?
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Price and value are two different things. Price is determined by supply and demand. Value does affect the demand. People are willing to pay more if they value the item more but value is not price.
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For young (lower-mid class) investors what percentage should be in individual stocks?
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The short answer: zero. dg99's answer gives some good reasons why. You will basically never be able to achieve diversification with individual stocks that is anywhere close to what you can get with mutual funds. Owning individual stocks exposes you to much greater risk in that random one-off events that happen to affect one of the companies you own can have a disproportionate effect on your assets. (For instance, some sort of scandal involving a particular company can cause its stock to tank.) There are only two reasons I can see to invest in individual stocks: a. You have some unique opportunity to acquire stock that other people might not be able to get (or get at that price). This can be the case if you work for a privately-held company that allows you to buy stock (or options), or allows you to participate in its IPO. Even then, you should not go too crazy, since having too much stock in the company you work for can double your pain if the company falls on hard times (you may lose your job and your investment). b. For fun. If you like tracking stocks and trying to beat the market, you may want to test your skills at this by using a small proportion of your investable cash (no more than 10%). In this case you're not so much hoping to increase your returns as to just enjoy investing more. This can also have a psychological benefit in that it allows you to "blow off steam" and indulge your desire to make decisions, while allowing your passive investments (index funds) to shoulder the load of actually gaining value.
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What is the effect of dividends on the futures price of an index
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A futures contract is based upon a particular delivery date. In the case of a stock index futures contract is a cash settled futures contract based upon the stock index value at a particular point in time (i.e. this is when the final settlement is determined). In your example, the S&P 500 (SPX) is a price return index - that is, it is not affected by dividends and therefore dividends are not incorporated into the index value. Dividends will affect the price of the constituent stocks (not necessarily by the same amount as the dividend) so they do have influence on the stock index value. Since the dividends are known ahead of time (or at least can be estimated), this has already been factored into the futures price by the market. In terms of the impact of a dividend by AAPL, AAPL is approximaetely 3.6% of the index. Apple pays out dividends 4 times a year (currently paying out $0.52 dividends). Assuming the market is otherwise steady and AAPL drops by $0.52 due to the dividend and Apple is priced at around $105, this would result in a drop in the index of 0.0178% or around 0.35 points. Interesting fact: There are some futures contracts that are based upon Total Return indexes, such as the German DAX and the above logic would need to be reversed.
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If my put option reaches expiration on etrade and I don't log in to the site will it automatically exercise if it's in the money or be a total loss?
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There are a number of choices: I prefer Dilip's response "Have you tried asking etrade?" No offense, but questions about how a particular broker handles certain situations are best asked of the broker. Last - one should never enter into any trade (especially options trades) without understanding the process in advance. I hope you are asking this before trading.
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“No taxes to be paid with owning Berkshire”
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It depends on your investment profile but basically, dividends increase your taxable income. Anyone making an income will effectively get 'lower returns' on their investments due to this effect. If you had the choice between identical shares that either give a dividend or don't, you'll find that stock that pays a dividend has a lower price, and increases in value more slowly than stock that doesn't. (all other things being equal) There's a whole bunch of economic theory behind this but in short, the current stock price is a measure of how much the company is worth combined with an estimation of how much it will be worth in the future (NPV of all future dividends is the basic model). When the company makes profit, it can keep those profits, and invest in new projects or distribute a portion of those profits to shareholders (aka dividends). Distributing the value to shareholders reduces the value of the company somewhat, but the shareholders get the money now. If the company doesn't give dividends, it has a higher value which will be reflected in a higher stock price. So basically, all other things being equal (which they rarely are, but I digress) the price and growth difference reflects the fact that dividends are paying out now. (In other words, if you wanted non-dividend shares you could get them by buying dividend shares and re-investing the dividend as new shares every time there was a payout, and you could get dividend-share like properties by selling a percentage of non-dividend shares periodically). Dividend income is taxable as part of your income right away, however taxes on capital gains only happen when you sell the asset in question, and also has a lower tax rate. If you buy and hold Berkshire Hatheway, you will not have to pay taxes on the gains you get until you decide to sell the shares, and even then the tax rate will be lower. If you are investing for retirement, this is great, since your income from other sources will be lower, so you can afford to be taxed then. In many jurisdictions, income from capital gains is subject to a different tax rate than the rest of your income, for example in the US for most people with money to invest it's either 15% or 20%, which will be lower than normal income tax would be (since most people with money to invest would be making enough to be in a higher bracket). Say, for example, your income now is within the 25% bracket. Any dividend you get will be taxed at that rate, so let's say that the dividend is about 2% and the growth of the stock is about 4%. So, your effective growth rate after taxation is 5.5% -- you lose 0.5% from the 25% tax on the dividend. If, instead, you had stock with the same growth but no dividend it would grow at a rate of 6%. If you never withdrew the money, after 20 years, $1 in the dividend stock would be worth ~$2.92 (1.055^20), whereas $1 in the non-dividend stock would be worth ~$3.21 (1.06^20). You're talking about a difference of 30 cents per dollar invested, which doesn't seem huge but multiply it by 100,000 and you've got yourself enough money to renovate your house purely out of money that would have gone to the government instead. The advantage here is if you are saving up for retirement, when you retire you won't have much income so the tax on the gains (even ignoring the capital gains effect above) will definitely be less then when you were working, however if you had a dividend stock you would have been paying taxes on the dividend, at a higher rate, throughout the lifetime of the investment. So, there you go, that's what Mohnish Pabrai is talking about. There are some caveats to this. If the amount you are investing isn't large, and you are in a lower tax bracket, and the stock pays out relatively low dividends you won't really feel the difference much, even though it's there. Also, dividend vs. no dividend is hardly the highest priority when deciding what company to invest in, and you'll practically never be able to find identical companies that differ only on dividend/no dividend, so if you find a great buy you may not have a choice in the matter. Also, there has been a trend in recent years to also make capital gains tax progressive, so people who have a higher income will also pay more in capital gains, which negates part of the benefit of non-dividend stocks (but doesn't change the growth rate effects before the sale). There are also some theoretical arguments that dividend-paying companies should have stronger shareholders (since the company has less capital, it has to 'play nice' to get money either from new shares or from banks, which leads to less risky behavior) but it's not so cut-and-dried in real life.
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find stock composition of a publicly traded fund
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The big websites, Yahoo and the like, only give the 10 biggest positions of any fund. Download the annual report of the fund, go to page 18, you will find the positions on the 31st of December. However the actual positions could be different. The same applies to all funds. You need the annual report.
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When's the best time to sell the stock of a company that is being acquired/sold?
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I believe firmly that a bird in the hand is worth two in the bush. Cash your gains out and be happy with your profit.
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Is there a good rule of thumb for how much I should have set aside as emergency cash?
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If you are still paying off debt, then you should have about $1000 in savings and put all you can towards non-mortgage debt. If you don't have any debt besides your mortgage, then add up all of your monthly expenses including food, gas, utilities and keep 3-6 months in liquid savings. Whether you keep 3 or 6 months depends on how safe your income is. If you have a steady safe job, you might be safe with 3 months. But, if your employer is cutting back or you are in a commission based job or self employed - then lean more towards 6 months expenses. Congrats on your new home!
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Transfering funds from India to the US
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Can I transfer funds from India to USA which I have borrowed in India. Funds borrowed in India may not be transferred outside of India as per Foreign Exchange Management Act. Loans in rupees to non-residents against security of shares or immovable property in India:- Subject to the directions issued by the Reserve Bank from time to time in this regard, an authorised dealer in India may grant loan to a non-resident Indian, e) the loan amount shall not be remitted outside India;
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US Banks offering Security Tokens in 2012
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I'm looking for another one right now. Here's what I've found: Los Alamos National Bank (www.lanb.com) has tokens ($5?), but I think they only open accounts for New Mexico residents. I've had one for several years. USAA Savings Bank (usaa.com) has tokens ($5 or free, I don't remember). I'm pretty sure you do NOT need to be a USAA member to open an account. I've had one for a couple of years. Several banks (Frost Bank, American National Bank of Texas, Amegy Bank, and probably many, many more) offer them as part of their Treasury Management accounts, meant for big businesses and charged for accordingly. Happy State Bank (in, where else, Happy, Texas) has a web page saying they have them but their services charges were more than I wanted to pay. ClearSky Bank (an Internet bank started by Chesapeake Bank) claims on their web page to have them but I haven't verified that yet. Still looking...
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Keeping our current home (second property) as a rental. Will it interfere with purchasing a third home?
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Even after the real estate crash, there are banks that lend money outside of the rules I'll share. A fully qualified mortgage is typically run at debt to income ratios of 28/36, where 28% of your gross monthly income can apply to the mortgage, property tax, and insurance, and the 36% is the total monthly debt (including the mortgage, etc) plus car loan student loan, etc. It's less about the total loan on the potential than about these ratios. The bank may allow for 75% of monthly rent so until rentals are running at a profit, they may seem a loss, even while just breaking even. This is just an overview, each bank may vary a bit.
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Why does a stock price drop as soon an I purchase several thousand shares at market price?
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You say: Every time it seems the share price dips. Does it? Have you collected the data? It may just be that you are remembering the events that seem most painful at the time. To move the market with your trade you need to be dealing in a large amount of shares. Unless the stock is illiquid (e.g most VCT in the UK), I don’t think you are dealing in that large a number; if you were then you would likely have access to a real time feed of the order book and could see what was going on.
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Is it possible to make money by getting a mortgage?
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I came up with a real way. I saw once the market be so dumb as to allow this to work. Inflation rate = 2.5%. Home interest rate = 3%. Tax deduction = 1%. Money spent on inflation-adjusted I bonds (at the time these paid 0% net, that is 2.5% gross). Result, .5% profit after accounting for inflation. The kicker: Uncle Sam's I bonds are tax free. Sure it's not possible today, but the rates occasionally drop low enough.
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