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How do you measure the value of gold? | Gold may have some "intrinsic value" but it cannot be accurately determined by investors by any known valuation techniques. In fact, if you were to apply the dividend discount model of John Burr Williams - a variation of which is the basis of Discounted Cash Flow (DCF) analysis and the basis of most valuation techniques - gold would have zero intrinsic value because it produces no cash flow. Legendary focus investor Warren Buffett argues that investing in gold is pure speculation because of the reason mentioned above. As others have mentioned, gold prices are affected by supply and demand, but the bigger influence on the price of gold is how the economy is. Gold is seen as a store of value because, according to some, it does not "lose value" unlike paper currency during inflation. In inflationary times, demand increases so gold prices do go up, which is why gold behaves similar to a commodity but has far less uses. It is difficult to argue whether or not gold gains or loses value because we can't determine the intrinsic value of gold, and anyone who attempts to justify any given price is pulling blinders over your eyes. It is indisputable that, over history, gold represents wealth and that in the past century and the last decade, gold prices rise in inflationary conditions as people dump dollars for gold, and it has fallen when the purchasing power of currency increases. Many investors have talked about a "gold bubble" by arguing that gold prices are inflated because of inflation and the Fed's money policy and that once interest rates rise, the money supply will contract and gold will fall, but again, nobody can say with any reasonable accuracy what the fair value of gold at any given point is. This article on seeking alpha: http://seekingalpha.com/article/112794-the-intrinsic-value-of-gold gives a quick overview, but it is also vague because gold can't be accurately priced. I wouldn't say that gold has zero intrinsic value because gold is not a business so traditional models are inappropriate, but I would say that gold *certainly * doesn't have a value of $1,500 and it's propped so high only because of investor expectation. In conclusion, I do not believe you can accurately state whether gold is undervalued or overvalued - you must make judgments based on what you think about the future of the market and of monetary policy, but there are too many variables to be accurate consistently. |
What are the benefits of opening an IRA in an unstable/uncertain economy? | IRAs have huge tax-advantages. You'll pay taxes when you liquidate gold and silver. While volatile, "the stock market has never produced a loss during any rolling 15-year period (1926-2009)" [PDF]. This is perhaps the most convincing article for retirement accounts over at I Will Teach You To Be Rich. An IRA is just a container for your money and you may invest the money however you like (cash, stocks, funds, etc). A typical investment is the purchase of stocks, bonds, and/or funds containing either or both. Stocks may pay dividends and bonds pay yields. Transactions of these things trigger capital gains (or losses). This happens if you sell or if the fund manager sells pieces of the fund to buy something in its place (i.e. transactions happen without your decision and high turnover can result in huge capital gains). In a taxable account you will pay taxes on dividends and capital gains. In an IRA you don't ever pay taxes on dividends and capital gains. Over the life of the IRA (30+ years) this can be a huge ton of savings. A traditional IRA is funded with pre-tax money and you only pay tax on the withdrawal. Therefore you get more money upfront to invest and more money compounds into greater amounts faster. A Roth IRA you fund with after-tax dollars, but your withdrawals are tax free. Traditional versus Roth comparison calculator. Here are a bunch more IRA and 401k calculators. Take a look at the IRA tax savings for various amounts compared to the same money in a taxable account. Compounding over time will make you rich and there's your reason for starting young. Increases in the value of gold and silver will never touch compounded gains. So tax savings are a huge reason to stash your money in an IRA. You trade liquidity (having to wait until age 59.5) for a heck of a lot more money. Though isn't it nice to be assured that you will have money when you retire? If you aren't going to earn it then, you'll have to earn it now. If you are going to earn it now, you may as well put it in a place that earns you even more. A traditional IRA has penalties for withdrawing before retirement age. With a Roth you can withdraw the principal at anytime without penalty as long as the account has been open 5 years. A traditional IRA requires you take out a certain amount once you reach retirement. A Roth doesn't, which means you can leave money in the account to grow even more. A Roth can be passed on to a spouse after death, and after the spouse's death onto another beneficiary. more on IRA Required Minimum Distributions. |
Need something more basic than a financial advisor or planner | If you are living near a land-grant university, you might be able to find help from the university's Extension Service. In many land-grant universities (the land grants were given to universities formed for the purpose of improving "agricultural and mechanical arts"), the Extension Services have expanded beyond farm-related services to include horticulture, food and nutrition counseling, consumer finance, money management and budgeting advice etc. See, for example this site. |
How would bonds fare if interest rates rose? | 1. Interest rates What you should know is that the longer the "term" of a bond fund, the more it will be affected by interest rates. So a short-term bond fund will not be subject to large gains or losses due to rate changes, an intermediate-term bond fund will be subject to moderate gains or losses, and a long-term bond fund will be subject to the largest gains or losses. When a book or financial planner says to buy "bonds" with no other qualification, they almost always mean investment-grade intermediate-term bond funds (or for individual bonds, the equivalent would be a bond ladder averaging an intermediate term). If you want technical details, look at the "average duration" or "average maturity" of the bond fund; as a rough guide, if the duration is 10, then a 1% change in interest rates would be a 10% gain or loss on the fund. Another thing you can do is look at long-term (10 years or ideally longer) performance history on some short, intermediate, and long term bond index funds, and you can see how the long term funds bounced around more. Non-investment-grade bonds (aka junk bonds or high yield bonds) are more affected by factors other than interest rates, including some of the same factors (economic booms or recessions) that affect stocks. As a result, they aren't as good for diversifying a portfolio that otherwise consists of stocks. (Having stocks, investment grade bonds, and also a little bit in high-yield bonds can add diversification, though. Just don't replace your bond allocation with high-yield bonds.) A variety of "complicated" bonds exist (convertible bonds are an example) and these are tough to analyze. There are also "floating rate" bonds (bank loan funds), these have minimal interest rate sensitivity because the rate goes up to offset rate rises. These funds still have credit risks, in the credit crisis some of them lost a lot of money. 2. Diversification The purpose of diversification is risk control. Your non-bond funds will outperform in many years, but in other years (say the -37% S&P 500 drop in 2008) they may not. You will not know in advance which year you'll get. You get risk control in at least a few ways. There's also an academic Modern Portfolio Theory explanation for why you should diversify among risky assets (aka stocks), something like: for a given desired risk/return ratio, it's better to leverage up a diverse portfolio than to use a non-diverse portfolio, because risk that can be eliminated through diversification is not compensated by increased returns. The theory also goes that you should choose your diversification between risk assets and the risk-free asset according to your risk tolerance (i.e. select the highest return with tolerable risk). See http://en.wikipedia.org/wiki/Modern_portfolio_theory for excruciating detail. The translation of the MPT stuff to practical steps is typically, put as much in stock index funds as you can tolerate over your time horizon, and put the rest in (intermediate-term investment-grade) bond index funds. That's probably what your planner is asking you to do. My personal view, which is not the standard view, is that you should take as much risk as you need to take, not as much as you think you can tolerate: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ But almost everyone else will say to do the 80/20 if you have decades to retirement and feel you can tolerate the risk, so my view that 60/40 is the max desirable allocation to stocks is not mainstream. Your planner's 80/20 advice is the standard advice. Before doing 100% stocks I'd give you at least a couple cautions: See also: |
ESPP cost basis and taxes | If the $882 is reported on W2 as your income then it is added to your taxable income on W2 and is taxed as salary. Your basis then becomes $5882. If it is not reported on your W2 - you need to add it yourself. Its salary income. If its not properly reported on W2 it may have some issues with FICA, so I suggest talking to your salary department to verify it is. In any case, this is not short term capital gain. Your broker may or may not be aware of the reporting on W2, and if they report the basis as $5000 on your 1099, when you fill your tax form you can add a statement that it is ESPP reported on W2 and change the basis to correct one. H&R Block and TurboTax both support that (you need to chose the correct type of investment there). |
Was this a good deal on a mortgage? | I'm a visual person so the idea of a 30 year mortgage didn't make much sense to me until I could see it This isn't exact but it's pretty close. The green Interest lines represent the money you're giving to the bank as a "thank you" for lending you a large amount of cash up front. As you've already figured out, that's at least the same amount as the price of the home! As much down-payment as is reasonable. Keep one eye on beating the interest Best of luck! |
Any Tips on How to Get the Highest Returns Within 4 Months by Investing in Stocks? | What you're asking for is a short-term, large return investment. When looking for big returns in a short period of time, risk is inevitable. The more risk you are willing to assume, the higher your potential returns. Of course, the flip is is that the higher your risk, the higher the potential to lose all your money! Since this is an exercise for school (and not real money and not your life savings) your best bet is to "go big or go home". You can safely assume 100% risk! Don't look for value stocks, dividend stocks, or anything that pays a steady return over a long period of time. Instead, look for something risky that has the potential of going up, up, up in the next few months. Are you allowed to trade options in your fake portfolio? Options can have big risk and big reward potential. Penny stocks are super volatile, too. Do some research, look for a fad. In other words, you will most likely lose it all. But you get a little lucky, you could win this thing outright by making some risky investments. A 5% chance of winning $3000 vs 95% of going broke may be pretty good odds if everyone else is value investing for just a few months. You will need to get lucky. Go big or go home! |
My Brokerage statement shows “Adjusted due to previous wash sale disallowed loss” what does this mean? | Well it would appear that you had a wash sale that canceled out a loss position. Without seeing the entire report, I couldn't tell you exactly what was happening or how you triggered § 1091. But just from the excerpted images, it appears as though your purchase of stock was layered into multiple tranches - perhaps you acquired more of the stock in the 61-day period than you sold (possibly because of a prior holding). If in the 61-day period around the sale of stock (30 days before and 30 days after), you also acquire the same stock (including by contract or option), then it washes out your loss. If you held your stock for a while, then in a 61-day period bought more, and sold some, then any loss would be washed out by the acquisition. Of course it is also a wash sale if your purchase of the stock follows your sale, rather than precedes it. Your disallowed loss goes into the basis of your stock holding, so will be meaningful when you do have a true economic sale of that stock. From IRS Pub 550: A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you: Buy substantially identical stock or securities, Acquire substantially identical stock or securities in a fully taxable trade, Acquire a contract or option to buy substantially identical stock or securities, or Acquire substantially identical stock for your individual retirement account (IRA) or Roth IRA. If you sell stock and your spouse or a corporation you control buys substantially identical stock, you also have a wash sale. Looking at your excerpted account images, we can see a number of positions sold at a loss (sale proceeds less than basis) but each one is adjusted to a zero loss. I suspect the fuller picture of your account history and portfolio will show a more complicated and longer history with this particular stock. That is likely the source of the wash sale disallowed loss notations. You might be able to confirm that all the added numbers are appearing in your current basis in this stock (or were reflected upon your final exit from the stock). |
Avoid Capital Gains on Rental | Don't let the tax tail wag the investment dog. There is risk in exchanging this (known) property for another (unknown) property. That risk may be more than $9000 worth of risk. Tax considerations are important, but most important is that your investments make money. If you intend to continue as a landlord, you had better be sure you are finding a better deal elsewhere if you are going to trade this property up. I should also mention that you have a 5 year window in which you need to have lived in the home for 2 years. You have time and might be able to sell for a higher price if you wait a little longer. |
Is my mortgage more likely to be sold if I pre-pay principal? | There are two ways that mortgages are sold: The loan is collateralized and sold to investors. This allows the bank to free up money for more loans. Of course sometime the loan may be treated like in the game of hot potato nobody want s to be holding a shaky loan when it goes into default. The second way that a loan is sold is through the servicing of the loan. This is the company or bank that collects your monthly payments, and handles the disbursement of escrow funds. Some banks lenders never sell servicing, others never do the servicing themselves. Once the servicing is sold the first time there is no telling how many times it will be sold. The servicing of the loan is separate from the collateralization of the loan. When you applied for the loan you should have been given a Servicing Disclosure Statement Servicing Disclosure Statement. RESPA requires the lender or mortgage broker to tell you in writing, when you apply for a loan or within the next three business days, whether it expects that someone else will be servicing your loan (collecting your payments). The language is set by the US government: [We may assign, sell, or transfer the servicing of your loan while the loan is outstanding.] [or] [We do not service mortgage loans of the type for which you applied. We intend to assign, sell, or transfer the servicing of your mortgage loan before the first payment is due.] [or] [The loan for which you have applied will be serviced at this financial institution and we do not intend to sell, transfer, or assign the servicing of the loan.] [INSTRUCTIONS TO PREPARER: Insert the date and select the appropriate language under "Servicing Transfer Information." The model format may be annotated with further information that clarifies or enhances the model language.] |
What to do with an expensive, upside-down car loan? | You could do a voluntary repossession. While a repossession never looks good on your credit a voluntary repossession is slightly better. A good friend of mine had a situation like this about 11 years ago. She was in an accident didn't have replacement coverage insurance and was left with a large chunk of debt on a wrecked vehicle that she then rolled into a new car. In the end it came down to the simple fact that she could not afford a car loan on a vehicle that never was worth as much as she owed. Since the car was worth less than the loan she really couldn't sell it to fix the problem. She called and arranged a voluntary repossession. She stopped making payments, and parked the car till they came and picked it up. (Took about 4 months and 20 phone calls from her for them to come get it.) In the mean time, I purchased her a much older used but decent car for a couple thousand and she paid me back over the next year. The total she paid me back was less than the money she would have paid in the 4 months it took them to come get the car. In fact by the time they picked up the car she had paid back over half on the car I bought her. Yes the repossession did stay on her credit for seven years but during that time she was approved for a mortgage, cellphone plans, and credit cards etc. Therefore I don't know that it did that much damage to her credit. When her car was sold at auction by the repo company it sold for much less than the loan amount. Technically she was on the hook for the remaining amount. The outstanding balance on the loan was then sold several times to several different collection agencies. Over the years since then she has gotten letters every now and then demanding she pay the amount off, she ignores these. Most of these letters even included very favorable terms (full forgiveness for 20% of the amount) At this point the statute time has run out on the debt so there is no recourse for anyone to collect from her. The statute time limit varies from state to state. Some states it is as long as 10 years in others it is as short as 3 years. What this means is that counting from the date of the repossession, incurrance of debt, last payment, or agreement to pay whichever is later if the statute period has elapsed and the lender/collector has not filed a suit against you by the end of the period then they have effectively abandoned the debt and cannot collect. Find out what that period of time is in your state. If you can avoid the collection agencies till that period runs out you are scott free. You just have to make sure that you do not ever send them any money, or agree to pay them anything as this resets the calendar. If you do not want to wait for the calendar to run out if you wait long enough you will probably be offered favorable terms to pay only a fraction of the remaining amount, you just have to wait it out. Note, I normally would not endorse anyone not paying off their debts. However sometimes it is necessary and it is for this type of situation that we have things like this and bankruptcy. |
Is there a way to buy raw oil today and sell it in 1 year time? | Unless you have the storage and transportation facilities for it, or can come up with the money needed to rent or build those, no -- or not in any significant quantity. Buying oil futures is essentially an on-paper version of the same bet. Futures prices are already taking into account both expectations about price changes and the fact that there's cash tied up until they come due, but storage costs also adjust to follow those expectations. |
Should I invest or repay my debts? | Like azam pointed out, fundamentally you need to decide if the money invested elsewhere will grow faster than the Interest you are paying on the loan. In India, the safe returns from Fixed Deposits is around 8-9% currently. Factoring taxes, the real rate of return would be around 6-7%. This is less than what you are paying towards interest. The PPF gives around 9% with Tax break [if there are no other options] and tax free interest, the real return can be as high as 12-14%. There is a limit on how much you can invest in PPF. However this looks higher than your average interest. The stock markets in long term [7 Years] averages give you around 15% returns, but are not predictable year to year. So the suggest from azam is valid, you would need to see what are the high rate of interest loans and if they accept early repayment, you should complete it ASAP. If there are loans that are less than average, say in the range of 7-8%, you can keep it and pay as per schedule. |
Some stock's prices don't fluctuate widely - Is it an advantages? | Oracle specifically is paying a dividend with a current yield of about 1.4% annually and has appreciated nearly 50% over the last 5 years. Granted, the past doesn't guarantee the future but the company has paid a pretty steady dividend since 2009. If you're buying as part of an employee program you would presumably be holding the shares for a long time and the daily and even monthly movements aren't terribly relevant to a long term holding period. Additionally, you may be able to buy the shares at a discount to the market price as part of your employee program. You probably also won't pay any transaction fee. |
Offshore bank account with online International wire-transfer facility for Indians | All Indian Banks are offering USD accounts known as multicurrency account, where you can hold your fund, this account also permits you to book the USD to INR rates in advance if you require. You can keep your money in this account and also can remit the same back to source or other destination country. |
Why do P/E ratios for a particular industry tend to cluster around particular values? | This falls under value investing, and value investing has only recently picked up study by academia, say, at the turn of the millennium; therefore, there isn't much rigorous on value investing in academia, but it has started. However, we can describe valuations: In short, valuations are randomly distributed in a log-Variance Gamma fashion with some reason & nonsense mixed in. You can check for yourself on finviz. You can basically download the entire US market and then some, with many financial and technical characteristics all in one spreadsheet. Re Fisher: He was tied for the best monetary economist of the 20th century and created the best price index, but as for stocks, he said this famous quote 12 days before the 1929 crash: "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months." - Irving Fisher, Ph.D. in economics, Oct. 17, 1929 EDIT Value investing has almost always been ignored by academia. Irving Fisher and other proponents of it before it was codified by Graham in the mid 20th century certainly didn't help with comments like the above. It was almost always believed that it was a sucker's game, "the bigger sucker" game to be more precise because value investors get destroyed during recession/collapses. So even though a recessionless economy would allow value investors and everyone never to suffer spontaneous collapses, value investors are looked down upon by academia because of the inevitable yet nearly always transitory collapse. This expresses that sentiment perfectly. It didn't help that Benjamin Graham didn't care about money so never reached the heights of Buffett who frequently alternates with Bill Gates as the richest person on the planet. Buffett has given much credibility, and academia finally caught on around in 2000 or so after he was proven right about a pending tech collapse that nearly no one believed would happen; at least, that's where I begin seeing papers being published delving into value concepts. If one looks harder, academia's even taken the torch and discovered some very useful tools. Yes, investment firms and fellow value investors kept up the information publishing, but they are not academics. The days of professors throwing darts at the stock listings and beating active managers despite most active managers losing to the market anyways really held back this side of academia until Buffett entered the fray and embarrassed them all with his club's performance, culminating in the Superinvestors article which is still relatively ignored. Before that, it was the obsession with beta, the ratio of a security's variance to its covariance to the market, a now abandoned theory because it has been utterly discredited; the popularizers of beta have humorously embraced the P/B, not giving the satisfaction to Buffet by spurning the P/E. Tiny technology firms receive ridiculous valuations because a long-surviving tiny tech firm usually doesn't stay small for long thus will grow at huge rates. This is why any solvent and many insolvent tech firms receive large valuations: risk-adjusted, they should pay out huge on average. Still, most fall by the wayside dead, and those 100 P/S valuations quickly crumble. Valuations are influenced by growth. One can see this expressed more easily with a growing perpetuity: Where P is price, i is income, r is the rate of return, and g is the growth rate of i. Rearranging, r looks like: Here, one can see that a higher P relative to i will dull the expected rate of return while a higher g will boost it. It's fun for us value investor/traders to say that the market is totally inefficient. That's a stretch. It's not perfectly inefficient, but it's efficient. Valuations are clustered very tightly around the median, but there are mistakes that even us little guys can exploit and teach the smart money a lesson or two. If one were to look at a distribution of rs, one'd see that they're even more tightly packed. So while it looks like P/Es are all over the place industry to industry, rs are much more well clustered. Tech, finance, and discretionaries frequently have higher growth rates so higher P/Es yet average rs. Utilities and non-discretionaries have lower growth rates so lower P/Es yet average rs. |
At what point do index funds become unreliable? | The argument you are making here is similar to the problem I have with the stronger forms of the efficient market hypothesis. That is if the market already has incorporated all of the information about the correct prices, then there's no reason to question any prices and then the prices never change. However, the mechanism through which the market incorporates this information is via the actors buying an selling based on what they see as the market being incorrect. The most basic concept of this problem (I think) starts with the idea that every investor is passive and they simply buy the market as one basket. So every paycheck, the index fund buys some more stock in the market in a completely static way. This means the demand for each stock is the same. No one is paying attention to the actual companies' performance so a poor performer's stock price never moves. The same for the high performer. The only thing moving prices is demand but that's always up at a more or less constant rate. This is a topic that has a lot of discussion lately in financial circles. Here are two articles about this topic but I'm not convinced the author is completely serious hence the "worst-case scenario" title. These are interesting reads but again, take this with a grain of salt. You should follow the links in the articles because they give a more nuanced understanding of each potential issue. One thing that's important is that the reality is nothing like what I outline above. One of the links in these articles that is interesting is the one that talks about how we now have more indexes than stocks on the US markets. The writer points to this as a problem in the first article, but think for a moment why that is. There are many different types of strategies that active managers follow in how they determine what goes in a fund based on different stock metrics. If a stocks P/E ratio drops below a critical level, for example, a number of indexes are going to sell it. Some might buy it. It's up to the investors (you and me) to pick which of these strategies we believe in. Another thing to consider is that active managers are losing their clients to the passive funds. They have a vested interest in attacking passive management. |
How should I pay off my private student loans that have a lot of restrictions? | The one thing that I saw in here that raised a big red flag is that you said you "overpaid" on your interest. ALWAYS make sure you tell them that any extra money should be applied to principal only, not to interest. You accrue interest based on your outstanding principal amount, so getting that lower reduces the overall amount of interest you end up paying. Paying the interest ahead saves you nothing. However, make sure you pay the current interest owed that month. They can capitalize past due interest - in affect, change that to be considered an addition to the loan principal amount and you end up paying interest on the interest. |
Tracking Gold and Silver (or any other commodity investment) in Quicken 2010? | If you don't need 100% accuracy then GLD and SLV will work fine. Over the long-term these converge quite nicely with the price of the metal. |
Restricting a check from being deposited via cell phone | I don't see any reason to worry about a check being deposited via cell phone. There isn't anything you can write on a check to make it physical deposit only or similar. If you really want to keep your check from being read electronically you could always smudge the numbers but you run the risk of the bank not cashing it and possibly getting a return check fee. |
Technical Analysis: the concepts of overbought / oversold don't make sense | You are right that every transaction involves a seller and a buyer. The difference is the level of willingness from both parties. Overbought and oversold, as I understand them (particularly in the context of stocks), describe prolonged price increase (overbought, people are more willing to buy than sell, driving price up) and price decrease (oversold, people are more willing to sell than buy, driving price down). |
What factors should I consider when evaluating index funds? | Your link is pointing to managed funds where the fees are higher, you should look at their exchange traded funds; you will note that the management fees are much lower and better reflect the index fund strategy. |
Over how much time should I dollar-cost-average my bonus from cash into mutual funds? | I'm staring at this chart and asking myself, How long a period is enough to have an average I'd be happy with regardless of the direction the market goes? 3 years? 4 years? Clearly, a lump sum investment risks a 2000 buy at 1500. Not good. Honestly, I love the question, and find it interesting, but there's likely no exact answer, just some back and forth analysis. You're investing about $40K/yr anyway. I'd suggest a 4 year timeframe is a good time to invest the new money as well. Other folk want to offer opinions? Edit - with the OP's additional info, he expects these bonuses to continue, my updated advice is to DCA quarterly if going into assets with a transaction fee or monthly if into a no-fee fund, over just a one year period. |
Is there a significant danger to market orders as opposed to limit orders? | The Key aspect is the risk of market orders; You should be worried about point 2 & 3 when you are doing market orders. |
Are precious metals/collectibles a viable emergency fund? | People normally hold precious metals as a protection against the whole system going down: massive inflation, lawlessness, etc. If our whole government and financial system broke completely and we returned to a barter economy, then holding silver would likely turn out to be a good thing. However, precious metals are not very good hedges against individual calamity, like losing your job. They are costly and inconvenient to sell and the price of these metals fluctuates wildly, so you could end up wanting to sell just when the metal isn't worth much. I'd say having some precious metal isn't unreasonable, but it should not make up a major portion of one's total net worth. If you want protection against normal problems, especially as a person of limited means, start with an emergency savings account and paying down debt. That way fixed costs will be less likely to turn an unfortunate turn of events into a personal catastrophe. |
Didn't apply for credit card but got an application denied letter? | It's marketing or SCAM tentative. Please check with extreme attention before clicking any link present in the communication. |
How to evaluate stocks? e.g. Whether some stock is cheap or expensive? | Its like anything else, you need to study and learn more about investing in general and the stocks you are looking at buying or selling. Magazines are a good start -- also check out the books recommended in another question. If you're looking at buying a stock for the mid/long term, look at things like this: Selling is more complicated and more frequently screwed up: |
Why would someone buy a way out-of-the-money call option that's expiring soon? | Out of the money options often have the biggest changes in value, when the stock moves upward. This person could also gain, by the implied (underlying) volatility of the stock rising if it moves erratically to either side. Still seems to be a very risky game, given only 4 days to expiry. |
Historic prices for currencies, commodities, | My guess it's a legal agreement between Yahoo and data provider on what data can be stored, displayed and for how long. Check out this list of data providers |
Advice for college student: Should I hire a financial adviser or just invest in index funds? | Exactly what you do with the money depends on various personal choices you'll have to make for yourself. Investing your money in Vanguard index funds such as the ones you mentioned is certainly one smart move. However, I think you're quite right to be suspicious of an advisor with a 1% fee. In many cases, such advisors are not worth their costs. The thing to remember is that, typically with that type of fee structure, you always pay the costs, even if the advisor turns out to be wrong and your money doesn't grow. One thing to check is whether the advisor you mentioned is paid only by the fees he charges (a "fee-only financial planner') , or whether he also makes money via the sales of financial products. Some advisors earn money by selling you financial products (such as mutual funds), which can create a conflict of interest. You can read about fee-only financial advisors and choosing a financial advisor on Investopedia. |
Do Fundamentals Matter Anymore in Stock Markets? | Are you implying that Amazon is a better investment than GE because Amazon's P/E is 175 while GE's is only 27? Or that GE is a better investment than Apple because Apple's P/E is just 13. There are a lot of other ratios to consider than P/E. I personally view high P/E numbers as a red flag. One way to think of a P/E ratio is the number of years it's expected for the company to earn its market cap. (Share price divided by annual earnings per share) It will take Amazon 175 years to earn $353 billion. If I was going to buy a dry cleaners, I would not pay the owner 175 years of earnings to take control of it, I'd never see my investment back. To your point. There is so much future growth seemingly built in to today's stock market that even when a company posts higher than expected earnings, the company's stock may take a hit because maybe future prospects are a little less bright than everyone thought yesterday. The point of fundamental analysis is that you want to look at a company's management style and financial strategies. How is it paying its debt? How is it accumulating the debt? How is it's return on assets? How is the return on assets trending? This way when you look at a few companies in the same market segment you may have a better shot at picking the winner over time. The company that piles on new debt for every new project is likely to continue that path in to oblivion, regardless of the P/E ratio. (or some other equally less forward thinking management practice that you uncover in your fundamental analysis efforts). And I'll add... No amount of historical good decision making from a company's management can prepare for a total market downturn, or lack of investor confidence in general. The market is the market; sometimes it's up irrationally, sometimes it's down irrationally. |
Tenant wants to pay rent with EFT | It's safe. You give people those numbers every time you write a check. If a check is forged, and doesn't have your signature on it, the bank has to return the money to you; they get it back from the other bank, who takes whatever action it deems necessary against the forger. They've been doing this for a few hundred years, remember. |
Hearing much about Dave Ramsey. Which of his works is best in describing his “philosophy” about money? | His books: The Total Money Makeover - This is a very step by step approach to what he teaches about how to handle money. Financial Peace - This is a more philosophical approach to the same topics. More idea and less application based. You can catch his radio show online for free - or an hour podcast each day in the itunes store - this is free. You can watch his TV show on Hulu. |
US sanctions against foreign citizens | Are most big US based financial institutions and banks in such a close relationship with USCIS (United States Citizenship And Immigration Services) so they can easily request the information about market traders? Yes. They must be in order to enforce the laws required by the sanctions. What online broker would you suggest that probably won't focus on that dual citizenship matter? "Dual" citizenship isn't actually relevant here. Nearly anyone in the world can invest in US banks except for those few countries that the US has imposed sanctions against. Since you are a citizen of one of those countries, you are ineligible to participate. The fact that you are also a US citizen isn't relevant in this case. I believe the reasoning behind this is that the US doesn't encourage dual citizenship: The U.S. Government does not encourage dual nationality. While recognizing the existence of dual nationality and permitting Americans to have other nationalities, the U.S. Government also recognizes the problems which it may cause. Claims of other countries upon U.S. dual-nationals often place them in situations where their obligations to one country are in conflict with the laws of the other. In addition, their dual nationality may hamper efforts of the U.S. Government to provide consular protection to them when they are abroad, especially when they are in the country of their second nationality. If I had to guess, I'd say the thinking there is that if you (and enough other people that are citizens of that country) want to participate in something in the US that sanctions forbid, you (collectively) could try to persuade that country's government to change its actions so that the sanctions are lifted. Alternatively, you could renounce your citizenship in the other country. Either of those actions would help further the cause that the US perceives to be correct. What it basically boils down to is that even though you are a US citizen, your rights can be limited due to having another citizenship in a country that is not favorable in the current political climate. Thus there are pros and cons to having dual citizenship. |
Steps and timing of the SEIS investment (in the UK) | You make the investment in Jan 2016. Assuming the SEIS certificate is issued before 5th April 2016, then you will enter the SEIS investment on your 2015-2016 tax return and claim the relief in that year. If the certificate is not issued in time then you will enter it in the 2016-2017 tax return and get the relief then. Note: I am assuming that the startup is already registered with the SEIS scheme by someone else - because if you are asking about how to go about that, I don't think that is an issue of personal finance. |
If a stock has only buyers and no sellers how does its price go up? | You are interpreting things wrong. Indian Infotech and Software Ltd (BOM:509051) clearly has volume and trades. The MoneyControl site says Your words like "Nobody is selling the stock" and "no trade going on" are completely unfounded. |
What is an ideal number of stock positions that I should have in my portfolio? | I would just buy one ETF (index-fund) on the market you think will perform better. It will take care to buy the 5 most solid stock in this market and many other more to reduce the risk to the bear minimum. You will also spend only few bucks in comissions, definitely less than what you would spend buying multiple stocks (even just 5). It's hard enough to forecast which market will perform better, it's even harder to do stock picking unless you have the time and the knowledge to read into companies' balance sheets/economic incomes/budgets/market visions etc. And even if you are great in reading into companies balance sheets/economic incomes/budgets, the stock market usually behaves like a cows' drove, therefor even if you choosed the most valuable solid stocks, be prepared to see them run down even a 50% when all the market runs down a 50%. During the 2008 crisis the Europe market has lost a 70%, and even the most solid sectors/stocks like "Healthcare" and "Food & Beverage" lost a painful 40% to 50% (true that now these sectors recovered greatly compared to the rest of the market, but they still run down like cows during the crisis, and if you holded them you would have suffered a huge pain/stress). But obviously there's always some profet/wizard which will later tell you he was able to select the only 5 stocks among thousands that performed well. |
Average Price of a Stock | That metric is not very useful for anything other than very extremely long trading periods. Most strategies or concerned with price movement over much shorter time frames, 15 mins, 1 hr, 4 hr, daily, weekly, monthly. The MA or moving average is a trend following lagging indicator used to smooth out price fluctuations and more accurately reflect the price of trading instrument such as a stock (AAPL), commodity, or currency pair. Traders are generally concerned with current market trends and price action of the instrument they are trading. As such, an extremely long MA (average daily price, over a period of 365 days) are generally not that important. |
How to prevent myself from buying things I don't want | My approach won't work for everyone, but I keep a longer list of things I want in my head, preferably including higher value items. I then look at the cost of an item vs the amount of benefit it gets me (either enjoyment or ability to make more money or both). If I only had a few things I wanted, it would be easy to buy them even if the payback wasn't that great, but because I have a large list of things I'd like to be able to do, it's easier to play the comparison game in my head. Do I want this $50 thing now that will only give me a little bit of enjoyment and no income, or would I rather be able to get that $3000 digital cinema camera that I would enjoy having and could work on projects with and actually make money off of? (This is a RL example that I actually just bought last week after making sure I had solid leads on enough projects to pay myself back over time.) For me, it is much easier to compare with an alternative thing I'd enjoy, particularly since I enjoy hobbies that can pay for themselves, which is really the situation this strategy works best in. It might not work for everyone, but hobbies that pay for themselves can take many different forms. Mine tends to be very direct (get A/V tool, do projects that pay money), but it can also be indirect (get sports stuff, save on gym membership over time). If you can get things onto your list that can save you money in the long run, then this strategy can work pretty well, if not, you'll still have the overall saving problem, just with a longer wish list. That said, if you are good about saving already and simply want to make better use of your disposable income, then having a longer list may also work to let you seek out better deals for you. If you have funds that you know you can healthily spend on enjoyment, it is going to be difficult to choose nothing over something that gives enjoyment, even if it isn't a great return on the money. If you have alternatives that would give you better value, then it's easier to avoid the low value option. |
Why having large capital is advantageous to trading | Excess capital is the primary means of navigating around a trade which is moving against you. In a very basic case, consider a long position moving against you. With additional capital you could average in as the price drops or you could write options against your position. If you don't have the capital to handle when (not if) a trade move against you then you're at a significant disadvantage as your only option may be a liquidation. |
Are stocks always able to be bought and sold at market price? | As others have noted, your definition of "market price" is a bit loose. Really whatever price you get becomes the current market price. What you usually get quoted are the current best bid and ask with the last transaction price. For stocks that don't trade much, the last transaction price may not be representative of the current market value. Your question included regulation ("standards bureau"), and I don't think the current answers are addressing that. In the US, the Securities and Exchange Commission (SEC) provides some regulation regarding execution price. It goes by the designation Regulation NMS, and, very roughly, it says that each transaction has to take the best available price at the time that it is executed. There are some subtleties, but that's the gist of it. No regulation ensures that there will be a counterparty to any transaction that you want to make. It could happen, for example, that you have shares of some company that you're never able to sell because no one wants them. (BitCoin is the same in this regard. There is a currently a market for BitCoin, but there's no regulation that ensures there will be a market for it tomorrow.) Outside of the US, I don't know what regulation, if any, exists. |
Is Bogleheadism (index fund investing) dead? | From http://blog.ometer.com/2008/03/27/index-funds/ , Lots of sensible advisers will tell you to buy index funds, but importantly, the advice is not simply "buy index funds." There are at least two other critical details: 1) asset allocation across multiple well-chosen indexes, maintained through regular rebalancing, and 2) dollar cost averaging (or, much-more-complex-but-probably-slightly-better, value averaging). The advice is not to take your single lump sum and buy and hold a cap-weighted index forever. The advice is an investment discipline which involves action over time, and an initial choice among indexes. An index-fund-based strategy is not completely passive, it involves some active risk control through rebalancing and averaging. If you'd held a balanced portfolio over the last ten years and rebalanced, and even better if you'd dollar cost averaged, you'd have done fine. Your reaction to the last 10 years incidentally is why I don't believe an almost-all-stocks allocation makes sense for most people even if they're pretty young. More detail in this answer: How would bonds fare if interest rates rose? I think some index fund advocacy and books do people a disservice by focusing too much on the extra cost of active management and why index funds are a good deal. That point is true, but for most investors, asset allocation, rebalancing, and "autopilotness" of their setup are more important to outcome than the expense ratio. |
Are personal finance / money management classes taught in high school, anywhere? | It's not a full credit course but part time comic James Cunningham has speaking tour that promotes personal finance in high schools. |
What are the alternatives to compound interest for a Muslim? | There are lot of options. I personally avoid keeping money in bank accounts and invest in one of the funds. It's just my personal opinion, you can ask your Ulamas |
How do i get into investing stocks [duplicate] | Spend your first 50 euros on research materials. Warren Buffett got started as a boy by reading every book in the Library of Congress on investing and stock market analysis. You can research the company filings for Canadian companies at http://www.sedar.com, U.S companies at http://www.edgar.com, and European companies at https://www.gov.uk/government/organisations/companies-house. Find conflicting arguments and strategies and decide for yourself which ones are right. The Motley Fool http://www.fool.ca offers articles on good stocks to add to your portfolio and why, as well as why not. They provide a balanced judgement instead of just hype. They also sell advice through their newsletter. In Canada the Globe & Mail runs a daily column on screening stocks. Every day they present a different stock-picking strategy and the filters used to reach their end list. They then show how much that portfolio would have increased or decreased as well as talking about some of the good & bad points of the stocks in the list. It's interesting to see over time a very few stocks show up on multiple lists for different strategies. These ones in my opinion are the stocks to be investing in. While the Globe's stock picks focus on Canadian and US exchanges, you might find the strategies worthwhile. You can subscribe to the digital version at http://www.theglobeandmail.com Once you have your analytical tools ready, pick any bank or stock house that offers a free practice account. Use that account and their screening tools to try out your strategies and see if you can make money picking stocks. My personal stock-picking strategy is to look for companies with: - a long uninterrupted history of paying dividends, - that are regularly increased, - and do not exceed the net profit per share of the company - and whose share price has a long history of increasing These are called unicorn companies, because there are so very few of them. Another great read is, "Do Stocks Outperform Treasury Bills?" by Hendrik Bessembinder. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447 In this paper the author looks at the entire history of the U.S. stock universe and finds that less than 4% of stocks are responsible for 100% of the wealth creation in the U.S. stock market. He discusses his strategies for picking the winners, but it also suggests that if you don't want to do any research, you could pick pretty much any stock at random, short it, and wait. I avoid mutual funds because they are a winner only for the fellas selling them. A great description on why the mutual fund industry is skewed against the investor can be found in a book called "The RRSP Secret" by Greg Habstritt. "Unshakeable" by Tony Robbins also discusses why mutual funds are not the best way to invest in stocks. The investor puts up 100% of the money, takes 100% of the risk, and gets at best 30% of the return. Rich people don't invest like that. |
Invest in low cost small cap index funds when saving towards retirement? | You can simply stick with some index funds that tracks the S&P 500 and Ex-US world market. That should provide some good diversification. And of course, you should always have a portion of your money in short/mid term bond fund, rebalancing your stock/bond ratio all the way as deemed necessary. If you want to follow the The Über–Tuber portfolio, you'd better make sure that there's minimum overlapping among the underlying shares that they hold. |
What is a trade exchange and are they reputable or not? | I think this is off topic, but here is a stab: So these are cashless. It could be a way to smooth out the harsh reality of capitalism (I overproduced my product, I have more capacity than I can sell) and I can trade those good to other capitalists who similarly poorly planned production or capacity. Therefore the market for a system like is limited to businesses that do not plan well. Business that plan production or capacity to levels they can already sell for cash do not need a private system to offload goods. Alternatives to such a system include: (I don't know how many businesses are really in this over production / over capacity state. If my assumption that it isn't many is wrong, my answer is garbage.) This is a bartering system with a brokerage. I think we have historically found that common currencies create more trade and economic activity because the value of the note in your pocket, which is the same type of note in my pocket, is common and understood. Exchange rates typically slow down trade. (There are many other reasons to have different currency or notes on a global sale, but the exchange certainly is a hurdle to clear.) This brokerage is essentially adding a new currency (in a grand metaphor). And that new currency is only spendable on their brokerage, which is of limited use to society as a whole, assuming that society as a whole isn't a participating member of that brokerage. I can't really think of why this type of exchange is better than the current system we have now. I wouldn't invest in this as a business, or invest in this as a person looking for opportunity. |
Can I save our credit with a quickie divorce? | My advice to you? Act like responsible adults and owe up to your financial commitments. When you bought your house and took out a loan from the bank, you made an agreement to pay it back. If you breach this agreement, you deserve to have your credit score trashed. What do you think will happen to the $100K+ if you decide to stiff the bank? The bank will make up for its loss by increasing the mortgage rates for others that are taking out loans, so responsible borrowers get to subsidize those that shirk their responsibilities. If you were in a true hardship situation, I would be inclined to take a different stance. But, as you've indicated, you are perfectly able to make the payments -- you just don't feel like it. Real estate fluctuates in value, just like any other asset. If a stock I bought drops in value, does the government come and bail me out? Of course not! What I find most problematic about your plan is that not only do you wish to breach your agreement, but you are also looking for ways to conceal your breach. Please think about this. Best of luck with your decision. |
Can the Standard Deduction still apply to a Traditional IRA early withdrawal? | IRA distributions are reported on line 15b on the standard form 1040. That is in the same Income section as most of your other income (including that 1099 income and W2 income, etc.). Its income is included in the Line 22 "Total Income", from which the Personal Exemption (calculated on 6d, subtracted from the total in line 42) and the Standard Deduction (line 40 - also Itemized Deduction total would be here) are later reduced to arrive at Line 43, "Taxable Income". As such, yes, he might owe only the 10% penalty (which is reported on line 59, and you do not reduce this by the deductions, as you surmised). |
Why do investors buy stock that had appreciated? | I understand you make money by buying low and selling high. You can also make money by buying high and selling higher, short selling high and buying back low, short selling low and buying back even lower. An important technique followed by many technical traders and investors is to alway trade with the trend - so if the shares are trending up you go long (buy to open and sell to close); if the shares are trending down you go short (sell to open and buy to close). "But even if the stock price goes up, why are we guaranteed that there is some demand for it?" There is never any guarantees in investing or trading. The only guarantee in life is death, but that's a different subject. There is always some demand for a share or else the share price would be zero or it would never sell, i.e zero liquidity. There are many reasons why there could be demand for a rising share price - fundamental analysis could indicated that the shares are valued much higher than the current price; technical analysis could indicate that the trend will continue; greed could get the better of peoples' emotion where they think all my freinds are making money from this stock so I should buy it too (just to name a few). "After all, it's more expensive now." What determines if a stock is expensive? As Joe mentioned, was Apple expensive at $100? People who bought it at $50 might think so, but people who bought at $600+ would think $100 is very cheap. On the other hand a penny stock may be expensive at $0.20. "It would make sense if we can sell the stock back into the company for our share of the earnings, but why would other investors want it when the price has gone up?" You don't sell your stocks back to the company for a share of the earnings (unless the company has a share-buy-back arrangement in place), you get a share of the earnings by getting the dividends the company distributes to shareholders. Other investor would want to buy the stock when the price has gone up because they think it will go up further and they can make some money out of it. Some of the reasons for this are explained above. |
Tenant wants to pay rent with EFT | The biggest disadvantage to you is that your tenant now knows your bank information, which means he can easily identify your source of money in the event he wins a lawsuit and wins a judgement. He will be able to have a court marshall freeze your account. However, if you deposit your tenant's check into your account as opposed to an EFT, then your tenant can basically still obtain your bank account information and freeze your account, it would just take him a bit longer to get that information. I am definitely anti-landlord in these situations because I've had to deal with so many bad ones here in NYC, but as a landlord, the best thing you can do is to create a "buffer" account for you to deposit tenant rent money into, then transfer the money from the buffer account to your regular account. This would prevent the tenant from knowing your personal bank information and greatly delay the tenant receiving his judgement from an assumed court win against you. My source: I had to take my landlord to court, and after obtaining a judgement, I got a court marshall to begin the process of closing access to her account (she couldn't access the money in that account). The process resulted in her sending me a check (assuming from her other account) for the judgement since her account was frozen and she couldn't access any of her money. |
Individual Client or Customer fining or charging a Company a penalty fee | What's the primary factor keeping a consumer from handing out fees as liberally as corporations or small businesses do? Power. Can an individual, or more appropriately, what keeps an individual from being able to charge, fine or penalize a Business? If it could be accomplished, but at a high cost, let's assume it's based on principal and not monetary gain. And have a legal entitlement to money back? No. You are of course welcome to send your doctor a letter stating that you would like $50 to make up for your two hour wait last time around, but there's no legal obligation for him to pay up, unless he signed a contract stating that he would do so. Corporations also cannot simply send you a fine or fee and expect you to pay it; you must have either agreed to pay it in the past, or now agree to pay it in exchange for something. In these cases, the corporations have the power: you have to agree to their rules to play ball. However, consumers do have a significant power as well, in well-competed markets: the power to do business with someone else. You don't like the restocking fee? Buy from Amazon, which offers free shipping on returns. You don't like paying a no-show fee from the doctor? Find a doctor without one (or with a more forgiving fee), or with a low enough caseload that you don't have to make appointments early. Your ability to fine them exists as your ability to not continue to patronize them. In some markets, though, consumers don't have a lot of power - for example, cable television (or other utilities). The FCC has a list of Customer Service Standards, which cable companies are required to meet, and many states have additional rules requiring penalties for missed or late appointments tougher than that. And, in the case of the doctor, if your doctor is late - find one that is. Or, try sending him a bill. It does, apparently, work from time to time - particularly if the doctor wants to keep your business. |
Are the AARP benefits and discounts worth the yearly membership cost? | It depends on you. If you're not an aggressive shopper and travel , you'll recoup your membership fee in hotel savings with one or two stays. Hilton brands, for example, give you a 10% discount. AARP discounts can sometimes be combined with other offers as well. From an insurance point of view, you should always shop around, but sometimes group plans like AARP's have underwriting standards that work to your advantage. |
Do I have to pay taxes on income from my website or profits? | You need to set your status as self-employed the day you started online work. If that date is a little ambiguous (as is usually the case with online business), you can start with the day you first made any money. Yes, you can deduct expenses from your revenue. But you have to be sure that the expenses were purely business related. This is how it goes: You inform HMRC about the day you started work. HMRC will assign you a UTR (Unique Tax Reference) number. Depending on how much you make you might or might not need to pay Class 2 NI contributions. You'll need to tell HMRC how much you expect to earn in the current tax year. Finally, you'll need to complete a Self-Assessment at the end of the tax year. I highly recommend setting up a business banking account. Here is a link that discusses being part-time self-employed in the UK. |
US Foreign-Owned LLC that owes no income tax - Do I have to file anything? | If you intend to do business "outside the country", why establish an LLC "here" at all? You should establish a business in your home country if you desire business organization for sequestering liabilities or something. With or without a business organization, you will presumably be taxed for domestic income "there", wherever that is. |
Formation of S-Corp for Gambling Trade | You probably don't need S-Corp. There's no difference between what you can deduct on your Schedule C and what you can deduct on 1120S, it will just cost you more money. Since you're gambling yourself, you don't need to worry about liability - but if you do, you should probably go LLC route, much cheaper and simpler. The "reasonable salary" trick to avoid FICA won't work. Don't even try. Schedule C for professional gamblers is a very accepted thing, nothing extraordinary about it. |
How often does a stock price change and where is this defined? | Stocks prices are determined whenever a buyer and seller agree to trade at a given price. The company (you use AAPL as an example) doesn't set its own stock price. Rather, the investors set the price every time it trades. There's no "official" price -- just the last trade. Likewise, you can offer to trade a stock at whatever price you want: that's the definition of a limit order. You might not find a willing buyer or seller at that price, but you can certainly open an order. Stock quotes that you get from your broker or a finance web site reflect the price as last traded. These quotes are updated throughout the trading day and the frequency and delay varies amongst quote providers. Like Knuckle-Dragger suggests in the comments, there are ways to get real-time quotes. It's often more helpful to think in terms of bid/ask instead of "official price". See this question for details. |
Methods for forecasting price? | It's not impossible to forecast the future price of a commodity. However, it's exactly that; an educated guess, much like the weather, and the further out that prediction is made, the higher the percentage error is expected. A lot of information is gathered by various instruments, spotters etc at a very high cost of time and money, to produce a prediction that starts breaking down after about five days and is no more than a wild guess after about ten. How accurately a price can be forecast depends on the commodity. There are seasonal and thus cyclical changes in many commodities, on top of which there is a general trend which is nearer term. A pretty decent prediction can thus be arrived at with a relatively simple seasonally-adjusted percentage change algorithm; take a moving average of the last few measurements, compute the percent change versus the same period last year (current minus last divided by last) and multiply it by last year's number for the current day or month to arrive at a pretty decent prediction for the current and near-future periods (up to about as far ahead as you have looked behind). Another thing you may need to do is normalize. Many price graphs are very jittery; the price of a stock may fluctuate many percentage points on a single day, and there's a lot of "noise" inherent in them. A common tool to normalize is a box-and-whisker plot, which for a given time period will aggregate all samples within that period, and give you a measurement of the lowest sample, highest sample, median, and quartiles (the range of each 25% of the full sample space). Box plots can also be plotted on the "interquartile range" or "middle fifty"; this throws away the very noisy outliers and constructs a much more regular plot from the inner part of the bell curve. You can reverse-engineer a best-fit line connecting the elements of each box, and the closer two lines are, the more likely the real future data will be around that area (because the quartile between those to lines is very dense; 25% of the values are in a very small range meaning many samples occurred there). Lastly, there are outside factors that are not included in simple percentage growth. Big news must be taken into account by introducing more subjective guesses about future data. If you see an active hurricane season coming (or a hurricane bearing down on Galveston/Houston) then it's reasonable to assume that the price of oil and/or refined oil products (like gas and jet fuel) will skyrocket. A cyclical growth model will not predict these events, but you can factor in the likelihood of a big change with a base onto which you add last year's numbers, and onto that you add regular growth. Conversely, when a huge spike happens due to a non-cyclical event like a natural disaster, you must smooth it out by reducing the readings to fit in the curve, otherwise your model for next year will expect the same anomaly at the same time and so it will be wrong. These adjustments are necessary, but the more of them you make, the less the graph reflects real history and the more it reflects what you think it should have been. |
How do I adjust to a new social class? | And specifically regarding prices of housing, what factors drive prices in that regard? I mean, the houses are roughly the same... but almost 3 times as expensive. Rent, like so many things, is tied to supply and demand. On the demand side, rent is tied to income. People tend to buy as much house as they can afford, given that mortgage interest is deductible and public schools, financed through property tax, performs better in valuable neighborhoods. Raise the minimum wage and economists expect rents to go up accordingly. When employers and pensions offer COLA adjustments, it feeds into a price loop. During the past ten years, there was also some "animal spirits" / irrational behavior present; people feared that if they didn't buy now, home prices would outpace their growth in income. So even though it didn't make sense at the time, they bought because it would make even less sense later (if you assume prices only go up). There's also the whole California has nicer weather angle to explain why people move to SF or LA. On the supply side, it's all about housing stock. In your old town, you could find vacant lots or farmland in less than 5 minute's drive from anywhere. There's far less room for growth in say, the SF Bay area or NYC. There's also building codes that restrict the growth in housing stock. I'm told Boulder, CO is one such place. You would think that high prices would discourage people from moving or working there, but between the university and the defense contractors triangle, they seem to have an iron grip on the market. (Have you ever seen a cartoon where a character gets a huge bill at a restaurant, and their eyes shoot out of their eye sockets and they faint? Yeah... that's how I felt looking at some of the places around here...) Remember, restaurants have to cover the same rent problem you do. And they have higher minimum wages, and taxes, etc. Moreover, food has to be imported from miles away to feed the city, likely even from out of state. In California, there's also food regulations that in effect raise the prices. If people are footing those higher bills, I wouldn't be surprised if they're racking up debt in the process, and dodging the collectors calling about their Lexus, or taking out home equity loans to cover their lifestyle. |
Why do people use mortgages, when they could just pay for the house in full? | A $100K house and $100K are not equivalent assets. Here's a hypothetical... You and I both work for the same company, and both get a $100K bonus (yes, I said it's hypothetical). You decide to use the $100K to pay off your house. I put the money in the bank. Six months later, our company lays both of us off. I have $100K in the bank. I can last for quite a while with that much money in the bank. You have a house, but you can't get a mortgage or home equity loan, because you don't have a job. The only way you can access the money is by selling the house, which requires you to pay money to a real estate agent and perhaps taxes, and leaves you looking for a place to live. That assumes there isn't something systemic going on - like the credit crash - and there is credit available for somebody else to buy your house. |
Would I qualify for a USDA loan? | If you even qualify for a no-down payment USDA loan, which I'm not sure you would. It would be extremely risky to take on a $250K house loan and have near-zero equity in the house for a good while. If property values drop at all you are going to be stuck in that house which likely has a pretty high monthly payment, insurance, taxes, HOA fees, maintenance costs, etc. My rule of thumb is that if you can't come up with a down payment, then you can't afford the house. Especially with that much debt hanging over your head already. If one major thing goes wrong with the house (roof, A/C, electrical, etc.) you are going to put yourself in a world of hurt with no clear path out of that financial trap. My suggestion: Keep renting until you have enough money for a downpayment, even if this means downsizing your price range for houses you are considering. |
F1 student and eBay selling tax | If you have income - it should appear on your tax return. If you are a non-resident, that would be 1040NR, with the eBay income appearing on line 21. Since this is unrelated to your studies, this income will not be covered by the tax treaties for most countries, and you'll pay full taxes on it. Keep in mind that the IRS may decide that you're actually having a business, in which case you'll be required to attach Schedule C to your tax return and maybe pay additional taxes (mainly self-employment). Also, the USCIS may decide that you're actually having a business, regardless of how the IRS sees it, in which case you may have issues with your green card. For low income from occasional sales, you shouldn't have any issues. But if it is something systematic that you spend significant time on and earn significant amounts of money - you may get into trouble. What's "systematic" and how much is "significant" is up to a lawyer to tell you. |
Do I have to explain the source of *all* income on my taxes? | @RonJohn's answer for pallet of $20's is right for the specific case. For the general case of all income, it depends on whether or not the the source of the income was potentially criminal. https://www.forbes.com/sites/timtodd/2015/11/16/a-win-for-the-5th-amendment-at-the-tax-court/ I am not a lawyer, but reading that article, one needs to provide the total amount, but not the source if there's a risk of self-incrimination. |
I can make a budget, but how can I get myself to consistently follow my budget? | Assuming what is taking you over budget are not essential costs such as fuel bills, food, mortgage etc. you could do the following. Work out your monthly disposable income after all essential base costs have been sutracted. Then simply keep a book of any additional spending. It will be very easy to see if you're at risk of overspending. In fact, even when one has no need to budget it's still an excellent idea to keep a book of all your spending. It's surprising how useful it can be. It's a great reference for dues dates, sizes of past bills and provides an excellent cross check of your bank statement. It's not often that you find an error on your bank statement (at least it shouldn't be!), but my books have helped me locate three such errors over the past 25 years, which I'm sure would have gone unnoticed by most people. So my advice is, keep a book of your spending. |
How Emini/Minifuture price is set against its underlaying instrument? | The market sets prices and the way JP Morgan or any other bank or organization determines the price it's willing to deal in would be proprietary business information. |
Should you always max out contributions to your 401k? | A terrific resource is this article. To summarize the points given: PROS: CONS: There is no generic yes or no answer as to whether you ought to max out your 401(k)s. If you are a sophisticated investor, then saving the income for investing could be a better alternative. Long term capital gains are taxed at 15% in the US, so if you buy and hold on to good companies that reinvest their earnings, then the share price keeps going up and you'll save a lot of money that would go in taxes. If you're not a very good investor, however, then 401(k)s make a lot of sense. If you're going to end up setting up some asset allocation and buying ETFs and rebalancing or having a manager rebalance for you every year or so, then you might as well take the 401(k) option and lower your taxable income. Point #1 is simply wrong, because companies that reinvest earnings and growing for a long time are essentially creating tax-free gains for you, which is even better than tax-deferred gains. Nonetheless, most people have neither the time nor the interest to research companies and for them, the 401(k) makes more sense. |
Events that cause major movement in forex? | It's impossible to determine which event will cause a major shift for a certain currency pair. However, this does not mean that it's not possible to identify events that are important to the overall market sentiment and direction. There are numerous sites that provide a calendar for upcoming and past events and their impact which is most of the time indicated as low, medium and high. Such sites are: Edit: I would like to add to that, that while these are major market movers, you cannot forget that they mainly provide a certain direction for the market but that it's not always clear in which direction the market will go. A recent and prime example of a major event that triggered opposite effects of what you would expect, is the ECB meeting that took place the 3rd of December. Due to the fact that the market already priced in further easing by the ECB the euro strengthened instead of weakening compared to the dollar. This strengthening happened even though the ECB did in fact adjust the deposit by 10 base points to -0.30 % and increased the duration of the QE. Taking above example into consideration it's important to always remember that fundamentals are hard to grasp and that it will take a while to make it a second nature and become truly successful in this line of trading. Lastly, fundamentals are only a part of the complete picture. Don't lose sight of support and resistance levels as well as price action to determine when and how to enter a trade. |
How do I find the mappings between sedol and isin codes? | There is a relatively straightforward transformation explained on the Wikipedia page here and on the links from that page. Note that this only applies to SEDOLs for instruments listed on the London Stock Exchange (LSE). To convert SEDOL to ISIN you pad leading zeroes onto the SEDOL until you have 9 digits. Then you add the two letter country code (as defined in ISO 3166-1) to the front. Then you add a final checksum digit to the end, again as defined in the algorithm on the Wikipedia page. To convert ISIN to SEDOL you do the reverse: remove the final digit, remove the two leading letters, and strip off any leading zeroes. Example: |
Investing in low cost index fund — does the timing matter? | When you start investing makes a very large difference to the outcome, but that is on the time scale of what generation you were born into, not what week you choose to open your 401(k). As you note in your last sentence, there is nothing that you can do about this, so there is no point in worrying about it. If you could successfully market time successfully, then that would make a difference even at smaller time scales. But you probably can't, so there is no point in worrying about that either. As BrenBarn points out, your statement about not regaining their net worth until 2013 applies to someone who invested a lump sum at the 2007 peak, not to someone who invested continuously throughout. By my calculation, if you started continuously investing in a broad market index at the peak (around Jun 4, 2007), you would have recovered your net worth (relative to investing in a safe instrument that merely kept up with inflation, a hard thing to find these days) around April 12, 2010. I've done the computation on each business day because that is easier, so it might be slightly worse if do the periodic investment on each payday which is much more realist for a 401(k). (And of course if you need to preserve/recover you net worth in 3 years, you shouldn't be in stocks in the first place) |
In which situations is it better to consider a loan instead of paying cash? | Your practice of waiting until you can pay cash is a good one. It will certainly prevent you from getting into debt! Now, to be clear, your question puts a credit card in the same category as a loan, but it doesn't have to be. You could use a credit card almost like cash, if you are careful. I'm not familiar with the system in France, but in the US, even if you are paying cash all the time, there are some benefits to getting a credit card and paying it off in full every month, instead of simply paying with cash. Some of those benefits are: One pretty big downside of having a credit card depends on your personality. Some people, once they have credit, end up spending beyond their means, and end up getting into debt. Please look into whether credit cards work the same way in France before considering the above advice. As for your question regarding getting a loan vs paying cash, that will usually be personal preference, since with a loan you can buy expensive items (such as a house or car) much sooner than you otherwise could if you waited until you saved the money. For example, it might take 10 years or more to build up enough money to purchase a house with cash, so if you don't want to wait that long, you'll need to finance it. |
Online resource to get expense ratios for mutual funds, index funds & ETFs? | If you want the answer from the horse's mouth, go to the website of the ETF or mutual find, and the expense ratio will be listed there, both on the "Important Information" part of the front page, as well as in the .pdf file that you click on to download the Prospectus. Oh wait, you don't want to go the fund's website at all, just to a query site where you type in something like VFINX. hit SEARCH, and out pops the expense ratio for the Vanguard S&P 500 Index Fund? Well, have you considered MorningStar? |
Where can I buy stocks if I only want to invest a little bit at a time, and not really be involved in trading? | There's a few options you may want to look into. First, I'm writing from an US point of view, I do not know if these are available in Russia. First look into DRIPS (Dividend Reinvestment Plans). These seem tailor made for your request. They are plans set up by companies that pay dividends. If you own at least one share (costing no more than say $100 often less), then these companies will take the dividends paid on these shares and automatically buy more shares as the income from the dividends pile up. This is a low cost of entry way of getting in on many high quality stocks. Stalwart stocks such as GE and many utility and real estate stocks (REITs) offer this. Check out these links: Secondly you can look at brokerages that specialize in buying smaller amount of stocks on a regular basis to simulate a DRIP, ShareBuilder will allow you to invest say $50 or $100 a month into one or more stocks. However, at smaller amounts, their commission fees can eat in to your returns. Folio investing does the same thing as Sharebuilder. It's worth looking at them both and comparing their commissions and other features |
How do day-traders or frequent traders handle their taxes? | You need to track every buy and sell to track your gains, or more likely, losses. Yes, you report each and every transactions. Pages of schedule D. |
Is there any benefit to investing in an index fund? | Beatrice does a good job of summarizing things. Tracking the index yourself is expensive (transaction costs) and tedious (number of transactions, keeping up with the changes, etc.) One of the points of using an index fund is to reduce your workload. Diversification is another point, though that depends on the indexes that you decide to use. That said, even with a relatively narrow index you diversify in that segment of the market. A point I'd like to add is that the management which occurs for an index fund is not exactly "active." The decisions on which stocks to select are already made by the maintainers of the index. Thus, the only management that has to occur involves the trades required to mimic the index. |
How to transfer personal auto lease to business auto lease? | I'd approach the lender that you're getting the lease from, but be prepared for them either saying 'no' to putting the lease into the name of an LLC without any proven track record (because it hasn't been around for a while) or require you to sign a personal guarantee, which partially defeats the purpose of putting the car lease into the LLC. I'd also talk to an accountant to see if you can't just charge the business the mileage on your vehicle as that might be the simplest solution, especially if the lender gets stroppy. Of course the mileage rate might not cover the expense for the lease as that one is designed to cover the steepest part of the depreciation curve. Does your LLC generate the revenue needed so it can take on the lease in the first place? If it's a new business you might not need or want the drain on your finances that a lease can be. |
Why do I get a much better price for options with a limit order than the ask price? | There are people whose strategy revolves around putting orders at the bid and ask and making money off people who cross the spread. If you put an order in between the current bid/ask, people running that type of strategy will usually pick it off, viewing it as a discount to the orders that they already have on the bid/ask. Often these people are trading by computer, so your limit order may get hit so quickly that it appears instantaneous to you. In reality, you were probably hit by a limit order placed specifically to fill against yours. |
How can a Canadian establish US credit score | Sorry. As far as I know, a person's SS is the only way to establish credit. This is the first thing they ask whenever you apply for any service in the US. |
How can I find out what factors are making a stock's price rise? | When you look at the charts in Google Finance, they put the news on the right hand side. The time stamp for each news item is indicated with a letter in the chart. This often shows what news the market is reacting to. In your example: Clicking on the letter F leads to this Reuters story: http://www.reuters.com/article/2011/02/04/usa-housing-s-idUSWAT01486120110204 |
When are equal-weighted index funds / ETFs preferable to market-cap-weighted funds? | Equal-weight ETFs remove the large cap bias found in most popular indexes. What results behaves very much like a small-cap or mid-cap index. Observe RSP vs IJR over a 5 year period: IJR (iShares S&P SmallCap 600 ETF) vs RSP (Rydex S&P Equal Weight ETF) I'm not sure if equal-weighting is worth the reduced efficiency. Mid-cap and small-cap funds have lower expenses (%0.20 for IJR vs %0.40 for RSP) and appear to do better over the long run. We don't know if that pattern will continue, but expense is one of the strongest long-term predictors of performance. |
Should I charge my children interest when they borrow money? | This is not really the focus of your question, but it's worth noting that if you live in the United States (which your profile says you do), there are tax implications for you (but not for your children), depending on whether or not you charge your children (enough) interest. If you charge less interest than the appropriate Applicable Federal Rate (for May 2016, at least 0.67%), you must pay taxes on the interest payments you would have received from the debtor if you had charged the AFR, provided that the loan is for $10,001 or more (p. 7). This is referred to as "imputed" income. |
Want to buy above market price? | Buy and sell orders always include the price at which you buy/sell. That's how the market prices for stocks are determines. So if you want to place a buy order at 106, you can do that. When that order was fulfilled and you have the stock, you can place a sell order at 107. It will be processed as soon as someone places a buy order at 107. Theoretically you can even place sell orders for stocks you haven't even bought yet. That's called short selling. You do that when you expect a stock to go down in the future. But this is a very risky operation, because when you mispredict the market you might end up owing more money than you invested. No responsible banker will even discuss this with you when you can not prove you know what you are doing. |
Why companies appear in several stock exchanges? | If I buy the one from NSY, is it the "real" Sinopec? No - you are buying an American Depository Receipt. Essentially some American bank or other entity holds a bunch of Sinopec stock and issues certificates to the American exchange that American investors can trade. This insulates the American investors from the cost of international transactions. The price of these ADRs should mimic the price of the underlying stock (including changes the currency exchange rate) otherwise an arbitrage opportunity would exist. Other than that, the main difference between holding the ADR and the actual stock is that ADRs do not have voting rights. So if that is not important to you then for all intents and purposes trading the ADR would be the same as trading the underlying stock. |
Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”? | Selling as well as buying a stock are part science and part art form. I remember once selling a stock at its 52 week high too. That particular stock "quadrupled" in value over the next 52 weeks. Mind you I made 50% ROI on the stock but my point is that none of us have a crystal ball on whether a particular stock will ever stop or start going up or stop or start going down. If someone had those answers they wouldn't be telling you they would be practicing them to make more money! Make up your mind what you want to make and stick by your decisions. Bulls make money when stocks go up and Bears make money when they go down but pigs don't make money. -RobF |
How can I save on closing costs when buying a home? | Good answers here. I would like to add one more (less obvious) way to save - look for houses that are For Sale By Owner (FSBO). Owner's who are selling without an agent do not have to pay a seller's agent fee. The closing cost savings here are actually on the seller's side of the transaction. However, since you know the seller is saving money, you may be able to negotiate a lower overall selling price with them (or it may be priced lower than comps already) because of this factor. FSBO houses maybe trickier to find than those listed by an agent, because they will not appear on the national MLS used by realtors to find/advertise houses that aren't being sold by their own clients. You may need to physically walk the streets of the neighborhood you're interested in moving to, to look for FSBO yard signs. FSBO sellers may also advertise in local newspapers. |
Is it better to wait for a market downturn to do a Roth conversion? | On average, the market will be down 1 year out of 4. 26 of the last 100 years on the S&P were negative. The Roth conversion offers a unique opportunity to convert early in the year, and decide at tax time next year whether you are happy with the result. Of course, if your fund or stock is up, you are likely better off, paying the $1250 tax on the $5000 conversion that's now worth $6000 or more. If it's down, you can recharacterize. The volatility of the market helps makes this process more attractive. If my converted shares dropped quite a bit, the recharacterization is far more desirable than a small drop or no drop at all. Of course we don't wish for that drop, any more than we wish for our house to burn down to make our insurance pay off. To be clear, you'll benefit from a conversion she the market goes up. The downturn only lets you reverse the bad move. |
Is investing exlusively in a small-cap index fund a wise investment? | In a word, no. Diversification is the first rule of investing. Your plan has poor diversification because it ignores most of the economy (large cap stocks). This means for the expected return your portfolio would get, you would bear an unnecessarily large amount of risk. Large cap and small cap stocks take turns outperforming each other. If you hold both, you have a safer portfolio because one will perform well while the other performs poorly. You will also likely want some exposure to the bond market. A simple and diversified portfolio would be a total market index fund and a total bond market fund. Something like 60% in the equity and 40% in the bonds would be reasonable. You may also want international exposure and maybe exposure to real estate via a REIT fund. You have expressed some risk-aversion in your post. The way to handle that is to take some of your money and keep it in your cash account and the rest into the diversified portfolio. Remember, when people add more and more asset classes (large cap, international, bonds, etc.) they are not increasing the risk of their portfolio, they are reducing it via diversification. The way to reduce it even more (after you have diversified) is to keep a larger proportion of it in a savings account or other guaranteed investment. BTW, your P2P lender investment seems like a great idea to me, but 60% of your money in it sounds like a lot. |
What's are the differences between “defined contribution” and “defined benefit” pension plans? | As others have explained defined contribution is when you (or your employer) contributes a specified amount and you reap all the investment returns. Defined benefit is when your employer promises to pay you a specified amount (benefit) and is responsible for making the necessary investments to provide for it. Is one better than the other? We can argue this either way. Defined benefit would seem to be more predictable and assured. The problem being of course that it is entirely reliant upon the employer to have saved enough money to pay that amount. If the employer fails in that responsibility, then the only fallback is government guarantees. And of course the government has limitations on what it can guarantee. For example, from Wikipedia: The maximum pension benefit guaranteed by PBGC is set by law and adjusted yearly. For plans that end in 2016, workers who retire at age 65 can receive up to $5,011.36 per month (or $60,136 per year) under PBGC's insurance program for single-employer plans. Benefit payments starting at ages other than 65 are adjusted actuarially, which means the maximum guaranteed benefit is lower for those who retire early or when there is a benefit for a survivor, and higher for those who retire after age 65. Additionally, the PBGC will not fully guarantee benefit improvements that were adopted within the five-year period prior to a plan's termination or benefits that are not payable over a retiree's lifetime. Other limitations also apply to supplemental benefits in excess of normal retirement benefits, benefit increases within the last five years before a plan's termination, and benefits earned after a plan sponsor's bankruptcy. By contrast, people tend to control their own defined contribution accounts. So they control how much gets invested and where. Defined contribution accounts are always 100% funded. Defined benefit pension plans are often underfunded. They expect the employer to step forward and subsidize them when they run short. This allows the defined benefits to both be cheaper during the employment period and more generous in retirement. But it also means that employers have to subsidize the plans later, when they no longer get a benefit from the relationship with the employee. If you want someone else to make promises to you and aren't worried that they won't keep them, you probably prefer defined benefit. If you want to have personal control over the money, you probably prefer defined contribution. My personal opinion is that defined benefit plans are a curse. They encourage risky behavior and false promises. Defined contribution plans are more honest about what they provide and better match the production of employment with its compensation. Others see defined benefit plans as the gold standard of pensions. |
How to exclude stock from mutual fund | Owning a stock via a fund and selling it short simultaneously should have the same net financial effect as not owning the stock. This should work both for your personal finances as well as the impact of (not) owning the shares has on the stock's price. To use an extreme example, suppose there are 4 million outstanding shares of Evil Oil Company. Suppose a group of concerned index fund investors owns 25% of the stock and sells short the same amount. They've borrowed someone else's 25% of the company and sold it to a third party. It should have the same effect as selling their own shares of the company, which they can't otherwise do. Now when 25% of the company's stock becomes available for purchase at market price, what happens to the stock? It falls, of course. Regarding how it affects your own finances, suppose the stock price rises and the investors have to return the shares to the lender. They buy 1 million shares at market price, pushing the stock price up, give them back, and then sell another million shares short, subsequently pushing the stock price back down. If enough people do this to effect the share price of a stock or asset class, the managers at the companies might be forced into behaving in a way that satisfies the investors. In your case, perhaps the company could issue a press release and fire the employee that tried to extort money from your wife's estate in order to win your investment business back. Okay, well maybe that's a stretch. |
How does cash ISA & share ISA mix together | There are two different types of ISA; the "Cash ISA" for cash savings, and the "Stocks and Shares ISA" for stock market investing. You can transfer funds between these two different types of ISA. If your current cash ISA provider does not provide stocks and shares ISAs, then there may be a fee involved when transferring funds between two different providers. If I am reading your notation correctly, you have contributed the full allowance of GBP15,240 in both the current tax year and the previous tax year. Each year you can contribute GBP15,240 (currently) to your ISAs and this can be done in any combination of cash ISA and stocks and shares ISA. For example, you could put GBP5,240 into your cash ISA and GBP10,000 into your stocks and shares ISA. Regarding your questions : It is also important to understand that once you withdraw money from an ISA, it does not affect your previous contributions or allowances. For example, if you have used your full contribution allowance for the current year and chose to withdraw some funds, then you have still used your full contribution allowance and so you cannot redeposit these funds. |
Is the stock market a zero-sum game? | Suppose everybody stopped all economic activity right now. No more work for others, no payments, no trade in kind or otherwise. Would average wealth stay the same? Of course not. Economic activity is not a zero sum game. Most of our economic activity is organized in the form of companies. If the companies manage to make more profits by doing useful things more efficiently, or when they find new useful things to do for profit, then not only the company's value grows but also the sum total of all useful things produced in the economy. That means it's not zero sum. When stock prices go up, that is often because the companies really have become more valueable. |
investing - where to trade online? (Greek citizen) | You will likely need to open an account in another EU country, like a broker operating out of France, Britain or Germany, to get the best options. If you are comfortable using an english language site and interface, I highly recommend Interactive Brokers as they let you trade in many markets simultaneously, have simple currency conversion, and great tools. But, they are geared toward active traders so you might be better with a more retail oriented broker if you are new to trading stocks. There are many options. Here is a list to start with: |
How to pay bills for one month while waiting for new job? | This is just a partial answer, but I believe the following observations are relevant: |
What are the marks of poor investment advice? | If you see something that looks like a sales pitch, be skeptical, even if they sound informed, say things which resonate with your concerns and promise to alleviate your problems. Watch out in particular for people who pontificate about matters which are tangentially related to the investment (e.g. populist anti-Wall-Street sentiment). Beware limited-time opportunities, offers, and discounts. I'm specifically talking about your email pitches, Motley Fool. They're shameful. Remember you're allowed to change your mind and go back on something that you've said a few minutes ago. If anyone tries to trick you into agreeing to go along with them by taking what something you've said and manipulating it, or uses logic to demonstrate that you must buy something based on things you've said, tell them you're not comfortable, head for the door and don't look back. Don't be afraid of embarrassment or anything like that. (You can investigate whether your position is in fact logically consistent later.) Run away from anyone who resents or deprecates the notion of a second opinion. Don't ever go along with anything that seems shady: it may be shadier than you know. Some people thought Bernie Maddoff was doing some front-running on the side; turns out it was a Ponzi scheme. (Likewise the Ponzi scheme that devastated Albania's economy was widely suspected of being dirty, but people suspected more of a black-market angle.) Beware of anyone who is promising stability and protection. Insurance companies can sell you products (especially annuities) which can deliver it, but they're very expensive for what you get. Don't buy it unless you seriously need it. |
Can capital expenses for volunteer purposes be deducted from income? | To be safe you should donate the printer to the charity. Or even better, have the charity purchase it and you donate a equivalent number of dollars directed towards purchasing the equipment. Once your wife no longer volunteers with the charity it should be returned to the charity because they own it. |
As a total beginner, how do I begin to understand finance & stocks? | Your questions seek answers to specifics, but I feel that you may need more general help. There are two things, I feel, that you need to learn about in the general category of personal finance. Your asking questions about investing, but it is not as important, IMHO, as how you manage your day-to-day operations. For example, you should first learn to budget. In personal finance often times "living on a budget" equates to poor, or low income. That is hardly the case. A budget is a plan on how to spend money. It should be refreshed each and every month and your income should equal your expenses. You might have in your budget a $1200 trip into the city to see a concert, hardly what a low income person should have in theirs. Secondly you need to be deliberate about debt management. For some, they feel that having a car payment and having student loans are a necessary part of life and argue that paying them off is foolish as you can earn more from investments. Others argue for zero debt. I fall in the later. Using and carrying a balance on high interest CCs and having high leases or car payments are just dumb. They are also easy to wander into unless you are deliberate. Third you need to prepare for emergencies. Engineers still get laid off and hurt where they are unable to work. They get sued. Having the proper insurance and sufficient reserves in the bank help prevent debt. Now you can start looking into investments. Start off slow and deliberate with investing. Put some in your company 401K or open some mutual funds on the side. You can read about them and talk with advisers, for free, at Fidelity and Vanguard. Read books from the library. Most of all don't get caught up in too much hype. Things like Forex, options, life insurance, gold/silver, are not investments. They are tools for sales people to make fat commissions off the ignorant. You are fortunate in that Engineers are very likely to retire wealthy. They are part of the second largest demographic of first generation rich. The first is small business owners. To start out I would read Millionaire Next Door and Stop Acting Rich. For a debt free approach to life, check out Financial Peace University (FPU) by Dave Ramsey (video course). His lesson on insurance is excellent. I am an engineer, and my wife a project manager we found FPU life changing and regretted not getting on board sooner. Along these lines we have had some turmoil, recently, that became little more than an inconvenience because we were prepared. |
Can I buy a new house before selling my current house? | There's also the option to put most of your stuff into storage and rent an apartment or go to an extended stay hotel. Some apartments have month-by-month options at a higher rate, though you may need to ask around. I've known some people to use this as their primary plan because it was easier for them to keep the house clean and ready to show when it's empty. Basically, this option is to sell your current house then buy the new house with a (hopefully fairly short) transition time in the middle. |
Why would you not want to rollover a previous employer's 401(k) when changing jobs? | I've changed jobs several times and I chose to rollover my 401k from the previous employer into an IRA instead of the new employer's 401k plan. The biggest reason not to rollover the 401k into the new employer's 401k plan was due to the limited investments offered by 401k plans. I found it better to roll the 401k into an IRA where I can invest in any stock or fund. |
Mutual Funds Definition and Role | Mutual funds buy (and sell) shares in companies in accordance with the policies set forth in their prospectus, not according to the individual needs of an investor, that is, when you invest money in (or withdraw money from) a mutual fund, the manager buys or sells whatever shares that, in the manager's judgement, will be the most appropriate ones (consistent with the investment policies). Thus, a large-cap mutual fund manager will not buy the latest hot small-cap stock that will likely be hugely profitable; he/she must choose only between various large capitalization companies. Some exchange-traded funds are fixed baskets of stocks. Suppose you will not invest in a company X as a matter of principle. Unless a mutual fund prospectus says that it will not invest in X, you may well end up having an investment in X at some time because the fund manager bought shares in X. With such an ETF, you know what is in the basket, and if the basket does not include stock in X now, it will not own stock in X at a later date. Some exchange-traded funds are constructed based on some index and track the index as a matter of policy. Thus, you will not be investing in X unless X becomes part of the index because Standard or Poor or Russell or somebody changed their minds, and the ETF buys X in order to track the index. Finally, some ETFs are exactly like general mutual funds except that you can buy or sell ETF shares at any time at the price at the instant that your order is executed whereas with mutual funds, the price of the mutual fund shares that you have bought or sold is the NAV of the mutual fund shares for that day, which is established based on the closing prices at the end of the trading day of the stocks, bonds etc that the fund owns. So, you might end up owning stock in X at any time based on what the fund manager thinks about X. |
What dictates the costs of creating an options contract? (Commissions breakdown) | I'm not positive my answer is complete, but from information on my broker's website, the following fees apply to a US option trade (which I assume you're concerned with given fee in dollars and the mention of the Options Clearing Corporation): They have more detail for other countries -- see https://www.interactivebrokers.co.uk/en/index.php?f=commission&p=options1 for North America. Use the sub-menu near the top of the page to pick Europe or Asia. The brokerage-charged commission for this broker is as low as $0.25 per contract with a $1.00 minimum. Though I've been charged less than $1 to STO an options position, as well as less than $1 to BTC an options position, so not sure about that minimum. Regarding what I read as your overall underlying question (why are option fees so high), in my research this broker has one of the cheapest commission rates on options I've ever seen. When I participate in certain discussions, I'm routinely told that these fees are unbelievable and that $5.95, $7.95, or even $9.95 are considered low fees. I've heard this so much, and discussed commissions with enough people who've refused to switch brokers, that I conclude there just isn't enough competition to drive prices lower. If most people won't switch brokers to go from $9.95 to $1 per trade, there simply isn't a reason to lower rates. |
How credible is Stansberry's video “End of America”? | Others have covered this pretty well, but as someone who once worked for the company that allows Stansberry to publish, let me confirm that their business is about getting you to buy into the financial worldview they promote so that they can sell you more and more "newsletters" and "services". Nothing else. It's a marketing company, and Stansberry is nothing more than a copywriter. |
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