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Question about MBS and how it pays
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A security is a class of financial instrument you can trade on the market. A share of stock is a kind of security, for example, as is a bond. In the case of your mortgage, what happens: You take out a loan for $180k. The loan has two components. a. The payment stream (meaning the principal and the interest) from the loan b. The servicing of the loan, meaning the company who is responsible for accepting payments, giving the resulting income to whomever owns it. Many originating banks, such as my initial lender, do neither of these things - they sell the payment stream to a large bank or consortium (often Fannie Mae) and they also sell the servicing of the loan to another company. The payment stream is the primary value here (the servicing is worth essentially a tip off the top). The originating bank lends $180k of their own money. Then they have something that is worth some amount - say $450k total value, $15k per year for 30 years - and they sell it for however much they can get for it. The actual value of $15k/year for 30 years is somewhere in between - less than $450k more than $180k - since there is risk involved, and the present value is far less. The originating bank has the benefit of selling that they can then originate more mortgages (and make money off the fees) plus they can reduce their risk exposure. Then a security is created by the bigger bank, where they take a bunch of mortgages of different risk levels and group them together to make something with a very predictable risk quotient. Very similar to insurance, really, except the other way around. One mortage will either default or not at some % chance, but it's a one off thing - any good statistician will tell you that you don't do statistics on n=1. One hundred mortgages, each with some risk level, will very consistently return a particular amount, within a certain error, and thus you have something that people are willing to pay money on the market for.
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Dividend yeild per unit
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$36 dividend/900 DJIA = 4% 5.5% bond yield = ($36 dividend/660 DJIA) Graham wrote this at a very different time in financial markets- interest rates were much higher, and the DJIA much lower. In addition, bonds were yielding more than stocks, unlike today when the DJIA % the 10yr Treasury yield 2.63% and 2.13% respectively. In addition, his "weigher of the odds" suggests waiting to invest until equity prices are lower (usually dividends aren't reduced), and therefore the DJIA dividend yield would rise relative to bond yields.
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How to handle Client Deposits in Xero (or any finance software, really)
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I haven't worked with Xero before, but can't you just set it up as accounts payable? Put in an accounts payable for the contract. When the client makes a payment, the accounts payable goes down and the cash goes up.
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How to transfer money to yourself internationally?
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It really depends on the amount of money - I currently have to pay my mortgage in the UK from the US until my house there is sold and my wife sends money from her (US) Paypal account to my UK Paypal account. As personal payments these don't attract the sort of fees you see for ebay payments et al. Compared to the fee-o-rama that a wire transfer turns into (I tried once from BofA to HSBC UK), it is noticeably cheaper for the amount of money we're sending. That said, a lot of the currency transfer services have support for monthly payments and you might get a decent exchange rate and fewer (or no) fees that way.
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Multi-user, non-US personal finance and budget software
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I know exactly what you are talking about. You may like
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Did basically all mutual funds have a significant crash in 2008?
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In 2008, the S&P was down 37%. I love charts that show sector performance by year, as it helps show that 2008 wasn't like the crash of 2000-01 which was more tech-centric. Funds that were more geared towards bonds would have been up as the 10 year Treasury was up 20%. I understand you have a low risk tolerance. Over the long term, this will cost you. The CAGR for the S&P from 1928-2011 was 9.23%, for treasuries, 5.14%. This difference adds up dramatically over time. These rates double your stock investments every 8 years on average vs nearly 14 years for bonds. See the MoneyChimp site to tinker with start/finish years to understand long term returns.
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Financing with two mortgages: a thing of the past?
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There are a few of ways to do this: Ask the seller if they will hold a Vendor Take-Back Mortgage or VTB. They essentially hold a second mortgage on the property for a shorter amortization (1 - 5 years) with a higher interest rate than the bank-held mortgage. The upside for the seller is he makes a little money on the second mortgage. The downsides for the seller are that he doesn't get the entire purchase price of the property up-front, and that if the buyer goes bankrupt, the vendor will be second in line behind the bank to get any money from the property when it's sold for amounts owing. Look for a seller that is willing to put together a lease-to-own deal. The buyer and seller agree to a purchase price set 5 years in the future. A monthly rent is calculated such that paying it for 5 years equals a 20% down payment. At the 5 year mark you decide if you want to buy or not. If you do not, the deal is nulled. If you do, the rent you paid is counted as the down payment for the property and the sale moves forward. Find a private lender for the down payment. This is known as a "hard money" lender for a reason: they know you can't get it anywhere else. Expect to pay higher rates than a VTB. Ask your mortgage broker and your real estate agent about these options.
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Hedging against Exchange Rate Risk
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How can I calculate my currency risk exposure? You own securities that are priced in dollars, so your currency risk is the amount (all else being equal) that your portfolio drops if the dollar depreciates relative to the Euro between now and the time that you plan to cash out your investments. Not all stocks, though, have a high correlation relative to the dollar. Many US companies (e.g. Apple) do a lot of business in foreign countries and do not necessarily move in line with the Dollar. Calculate the correlation (using Excel or other statistical programs) between the returns of your portfolio and the change in FX rate between the Dollar and Euro to see how well your portfolio correlated with that FX rate. That would tell you how much risk you need to mitigate. how can I hedge against it? There are various Currency ETFs that will track the USD/EUR exchange rate, so one option could be to buy some of those to offset your currency risk calculated above. Note that ETFs do have fees associated with them, although they should be fairly small (one I looked at had a 0.4% fee, which isn't terrible but isn't nothing). Also note that there are ETFs that employ currency risk mitigation internally - including one on the Nasdaq 100 . Note that this is NOT a recommendation for this ETF - just letting you know about alternative products that MIGHT meet your needs.
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How do I look for private limited partnership investment opportunities? (Or should I?)
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Investing in an existing company is almost like buying a house, or even becoming an "Angel investor" in a start-up. Before you start the process, decide how much you want to be involved in the day-to-day and which industries you would feel most comfortable in. The latter is an important consideration since you would have to know sufficient about the industry in order to evaluate the quality of your prospective investment. Searching for a suitable business is a time-consuming process: The guidance for evaluating any company has been answered in another question, so I'll simply link. Most business owners are looking to their businesses to provide them a pension, so they often look to sell around retirement age. Buying such a business is tricky - you may be assisting the next generation to finance the purchase which can have it's own struggles. Ideally you'll be looking for a young(ish) company with proven sales and which is looking to finance growth in an optimal way. Such a company may have many options for raising capital so you'll be competing to invest. As to whether or not it's a good idea... KFC only became a household name and global franchise after Pete Harman joined Harland Sanders as a partner. Richard and Maurice McDonald may have founded McDonald's but it was Ray Kroc who made it a success. New partners bring in new ideas and fresh energy which the original entrepreneurs may have lost during the difficulties of starting out. But that goes back to my first query; just how much do you want to get involved?
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What is a good 5-year plan for a college student with $15k in the bank?
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I disagree with the IRA suggestion. Why IRA? You're a student, so probably won't get much tax benefits, so why locking the money for 40 years? You can do the same investments through any broker account as in IRA, but be able to cash out in need. 5 years is long enough term to put in a mutual fund or ETF and expect reasonable (>1.25%) gains. You can use the online "analyst" tools that brokers like ETrade or Sharebuilder provide to decide on how to spread your portfolio, 15K is enough for diversifying over several areas. If you want to keep it as cash - check the on-line savings accounts (like Capitol One, for example, or Ally, ING Direct that will merge with Capitol One and others) for better rates, brick and mortar banks can not possible compete with what you can get online.
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Freehold and Leasehold for Pub/Bar?
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You should be aware that many pubs in the London (indeed, the UK as a whole) are sold as a leasehold with a beer tie. This typically means you pay less rent for the building and premises, but must enter a contract with the Pub Company to buy their beer and day-to-day supplies. You have the legal option to instead pay market rent for some (but not all) Pub Cos, under certain conditions. If you go with leasehold, the landlord can usually close your pub at their will. This is becoming a quite common occurrence in the booming real estate market of London. While your interest will be in running a pub, the Pub Co's interest will be in getting change of use planning permission and selling it to a real estate developer.
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Economics Books
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I followed Economics by Michael Parkin for my college level course. It does not involve very complicated mathematics (beyond simple arithmetic and interpreting plots/charts). I found it very enjoyable. Stocks, bonds, and other money market instruments are not covered under this subject usually. They are covered under finance. I normally recommend Hull to people but because you are not interested in mathematics I would recommend Stuart R Veale.
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Tax for Basket with Coupon containing two different VAT rates
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The vendor needs to do this using apportionment, according to the VAT rules for mixed supplies: If you make mixed supplies and the individual supplies are not liable to VAT at the same rate then you need to work out the tax value of each supply in order to calculate how much tax is due. If the tax value is based on the total price you charge (see paragraph 7.3) you do this by splitting that price between the supplies. This is called an apportionment ... There is no special method of apportionment ... However, your calculations must be fair and you must be able to justify them. It is usually best to use one of the methods shown in section 32. The section 32 referred to really relates to apportioning use between business and non-business purposes, but it implies that splitting up the total price in proportion to the original prices would probably be fair. So in your example the vendor might split the £5 discount equally between the spoon and the carrycot as they had the same gross cost, and pay VAT as if each had cost £7.50 gross. The vendor could also do it in proportion to their net (pre-VAT) prices and thus apportion a bit more of the discount to the carrycot than the spoon, but as this would lead to them paying slightly more tax overall they probably wouldn't choose to. However, none of this is likely to be too relevant to a consumer, since in the UK prices must be presented as the gross (VAT-inclusive) amounts and so the discounts will also apply to those amounts. It will of course affect how much of the purchase price the vendor ends up paying on to the government and thus might indirectly affect what discounts the vendor is willing to offer.
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Where can I get a list of all Stocks that were acquired or went bankrupt
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Where can I download all stock symbols of all companies "currently listed" and "delisted" as of today? That's incredibly similar . You can also do it with a Bloomberg terminal but there's no need to pay to do this because he data changes so slowly.
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How to dollar-cost-average with a large amount of money in a savings account?
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I up voted JoeTaxpayer but i would like add a couple of things. Dollar Cost averaging over a 5 day period is in no way practical. If you get a 1% swing in that time that would be quite a lot. Personally I think 5 years is way to long. When markets go down they go down fast. I would suggest 1 to 2 years investing quarterly. I would hate seeing you miss out on market gains for a 5 year period on the last of your money. The whole point of Dollar Cost averaging instead of market timing is the mantra "Its about time in the market not timing the market" So if you have money on the sidelines for years you are missing out on your time in the market.
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What is the incentive for a bank to refinance a mortgage at a lower rate?
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The big one is to keep you from refinancing it with someone else to get a better rate. There may also be some funny-money reasons having to do with being able to count this as a new sale.
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How many days does Bank of America need to clear a bill pay check
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I just had this happen to me with Chase and speaking with my executive support contact, they will not return the funds unless you request them back. Which I find appalling and just one more reason that I don't like working with Chase!
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Is this investment opportunity problematic?
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Every time I have loaned money to family members I have never gotten the money back. If they can't make the down payment, they should not be taking out the loan. It's a bad idea to loan money to friends, because when they can't pay you back (which might be forever) they avoid you. So, you lose both your money and your friends.
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In a reverse split, what happens to odd lots?
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Usually five shares and some cash.
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Why could rental costs for apartments/houses rise while buying prices can go up and down?
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Average rent rates will typically rise and fall, and are market-dependent just like real estate. In the short term, a collapse in housing like the one we saw in 2008 can induce a spike in rental costs as people walk away or get foreclosed on, and move back into apartments. That then tends to self-adjust, as the people who had been in the apartments find a deal on a foreclosed house and move out. However, one thing I've seen to be near-constant in the apartment business is that a landlord will offer you a deal to get in, then increase the rent on you from year to year until you get fed up and move. This is a big reason I didn't have the same address for two years in a row until I bought my house. The landlord is basically betting that you won't want to deal with the hassle of moving, and so will pay the higher rent rate, even if, when you do the math, it makes more sense to move even to maintain the same rent rate. Eventually though, you do get fed up, look around, find the next good deal, and move, "resetting" your rent rate. I have never, not once in my life, seen or heard of any landlord offering a drop in rent as a "loyalty" move to keep you from going somewhere else. It's considered part of the game; retailers will price match, but most service providers (landlords, but also utility providers) expect a large amount of "churn" in their customer base as people shop around. It averages out.
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What should I be aware of as a young investor?
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Just don't buy any kind of paper and you will be fine :-) And don't forget most of these 'blue-chip companies' sell marketing garbage which have no real market. Finally, make all decissions slooooowly and after extensive research.
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Restricted Stock Grants - How to prepare tax return when you sell to cover taxes
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You don't. When you sell them - your cost basis would be the price of the stock at which you sold the stocks to cover the taxes, and the difference is your regular capital gain.
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How does compounding of annual interest work?
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Here's how I have worked it out. Different answer to the one expected. Pretty sure it's right though.
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What kind of trade is this?
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A limit order is simply an order to buy at a maximum price or sell at a minimum price. For example, if the price is $100 and you want to sell if the price rises to $110, then you can simply put a limit order to sell at $110. The order will be placed in the market and when the price reaches $110 your order will be executed. If the price gaps at the open to $111, then you would end up selling for $111. In other words you will get a minimum of $110 per share. A stop limit order is where you put a stop loss order, which when it gets triggered, will place a limit order in the market for you. For example, you want to limit your losses by placing a stop loss order if the price drops to $90. If you chose a market order with your stop loss as soon as the price hits $90 your stop loss would be triggered and the shares would sell at the next available price, usually at $90, but could be less if the market gaps down past $90. If on the other hand you placed a limit order at $89.50 with your stop loss, when the stop loss order gets triggered at $90 your limit order will be placed into the market to sell at $89.50. So you would get a minimum of $89.50 per share, however, if the market gaps down below $89.50 your order will be placed onto the market but it won't sell, unless the price goes back to or above $89.50. Hope this helps.
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Which US services allow small/micro-payments using a credit card?
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I don't know of any and it is unlikely that you will be able to find one. Most credit card processors charge a flat fee plus percentage. The flat fee is typically in the 35 cent range making the cost of doing business, in the manner you are suggesting, astronomical. Also what you are suggesting is contrary to best practices as hosting services, and many other industries, offer deep discounts when making a single payment for an extended period of time. This is not very helpful, but I think it is unrealistic to find what you are suggesting.
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What are the tax implications of dividends that I receive from stocks (equity) that I hold?
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Note the above is only for shares. There are different rules for other assets like House, Jewellery, Mutual Funds, Debt Funds. Refer to the Income Tax guide for more details.
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What can I expect to pay when meeting my first financial planner?
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My suggestion would be to ask the planner as an initial question as there could be a couple possible explanations for a free meeting: Initial consultation - Within some industries there will be that first meeting which is free to see how well do two people work together. In Canada there are some lawyers that will give a half-hour of their time and I'd imagine some financial planners may have a similar practice. This would be where that first meeting is a half-hour or hour to see what is your situation and what expertise do you want that the planner would have. Straight commission - There is also the possibility that the planner is compensated by the products you purchase through him. In this case, the mutual fund companies, insurance companies and other institutions that he recommends will be handling his compensation. While this does present a conflict of interest, you have to decide whether you want a fee-only planner which wouldn't have this issue though you'd have to pay out of pocket. Something to consider is what are you bringing to this meeting and how long is it intended to be. If you are bringing a lot of paperwork then it is definitely worth asking upfront while if it is an informal chat for a half hour then things may be different.
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Deferring claim of significant purchase of RRSPs
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You can't defer reporting of the RRSP purchases. The financial institution will report those purchases to CRA, and the CRA expects to see you report those purchases on your return. If they don't match, expect to be audited and to pay penalties. However, you can defer the tax deduction of those purchases until later years. That means you but you must have the RRSP contribution room available in the year you make the purchase. So if you have $50 000 of contribution room, you can contribute $50 000 all at once and deduct $16 667 in the next 3 years. However, if you only have $20 000 of contribution room, CRA will make your life very unhappy if you contribute $50 000 all at once. In that case, your best bet is to contribute enough to use all your contribution room and repeat each year as you get more contribution room. Also, you have a $2000 lifetime overcontribution limit. That means whatever contribution room you have, you can contribute $2000 more. But you won't be able to deduct that amount, and you don't get more overcontribution space each year.
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Pay off car loan entirely or leave $1 until the end of the loan period?
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what you aim to do is a great idea and it will work in your favor for a number of reasons. First, paying down your loan early will save you lots in interest, no brainer. Second, keeping the account open will improve your credit score by 1) increases the number of installment trade lines you have open, 2)adds to your positive payment history and 3) varies your credit mix. If your paid your car off you will see a DROP in your credit score because now you have one less trade line. To address other issues as far as credit scoring, it does not matter(much) for your score if you have a $1000 car loan or a $100,000 car loan. what matters is whether or not you pay on time, and what your balance is compared to the original loan amount. So the quicker you pay DOWN the loans or mortgages the better. Pay them down, not off! As far how the extra payments will report, one of two things will happen. Either they will report every month paid as agreed (most likely), or they wont report anything for a few years until your next payment is due(unlikely, this wont hurt you but wont help you either). Someone posted they would lower the amount you paid every month on your report and thus lower your score. This is not true. even if they reported you paid $1/ month the scoring calculations do not care. All they care is whether or not you're on time, and in your case you would be months AHEAD of time(even though your report cant reflect this fact either) HOWEVER, if you are applying for a mortgage the lower monthly payment WOULD affect you in the sense that now you qualify for a BIGGER loan because now your debt to income ratio has improved. People will argue to just pay it off and be debt free, however being debt free does NOT help your credit. And being that you own a home and a car you see the benefits of good credit. You can have a million dollars in the bank but you will be denied a loan if you have NO or bad credit. Nothing wrong with living on cash, I've done it for years, but good luck trying to rent a car, or getting the best insurance rates, and ANYTHING in life with poor credit. Yeah it sucks but you have to play the game. I would not pay down do $1 though because like someone else said they may just close the account. Pay it down to 10 or 20 percent and you will see the most impact on your credit and invest the rest of your cash elsewhere.
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Choose online stock trading companies
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That all depends on you. The cheaper places are certainly going to cost less, but when it comes to comparing value that is a subjective decision that only you can make. Maybe the more expensive one has an easier to user website, friendlier customer service, or something else you value enough to pay more for trades.
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Is 'days to cover' a useful metric in identifying the potential for a short squeeze?
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SeekingAlpha has an article about short squeezes that states: The higher the number of days to cover means the possibility for a short squeeze is greater, and the potential size of the short squeeze is also greater Logically, this makes sense. A short squeeze occurs when a lack of supply meets excess demand for a stock, so the potential for a squeeze increases when supply and demand begin to get out of equilibrium. Think of two things that would cause the days to cover to increase and what effect they would have on supply and demand. The current short interest (numerator) increases. This implies that if some event triggers short sellers to cover their position, there are a higher number of short sellers who will need to do so. This heightens the chances that demand will exceed supply. The average daily volume (denominator) decreases. This implies that fewer investors are trading the stock, so if an event triggers short sellers to cover their positions, there might not be enough traders in the market willing to sell their shares. (Obviously, if a short-squeeze occurs, volume may increase because traders who were unwilling to sell their shares become willing).
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Should a retail trader bother about reading SEC filings
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I use 10-K and 10-Qs to understand to read the disclosed risk factors related to a business. Sometimes they are very comical. But when you see that risk factor materializing you can understand how it will effect the company. For example, one microlending company's risk factor stated that if Elizabeth Warren becomes head of the Consumer Financial Protection Bureau we will have a hard time... so we are expanding in Mexico and taking our politically unfavorable lending practices there. I like seeing how many authorized shares there are or if there are plans to issue more. An example was where I heard from former employees of a company how gullible the other employees at that company were and how they all thought they were going to get rich or were being told so by upper management. Poor/Quirky/Questionable/Misleading management is one of my favorite things to look for in a company so I started digging into their SEC filings and saw that they were going to do a reverse split which would make the share prices trade higher (while experiencing no change in market cap), but then digging further I saw that they were only changing the already issued shares, but keeping the authorized shares at the much larger amount of shares, and that they planned to do financing by issuing more of the authorized shares. I exclaimed that this would mean the share prices would drop by 90%-99% after the reverse split and you mean to tell me that nobody realizes this (employees or the broad market). I was almost tempted to stand outside their office and ask employees if I could borrow their shares to short, because there wasn't enough liquidity on the stock market! This was almost the perfect short but it wasn't liquid or have any options so not perfect after all. It traded from $20 after the reverse split to $1.27 I like understanding how much debt a company is in and the structure of that debt, like if a loan shark has large payments coming up soon. This is generally what I use those particular forms for. But they contain a lot of information A lot of companies are able to act they way they do because people do not read.
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For very high-net worth individuals, does it make sense to not have insurance?
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Yes, and the math that tells you when is called the Kelly Criterion. The Kelly Criterion is on its face about how much you should bet on a positive-sum game. Imagine you have a game where you flip a coin, and if heads you are given 3 times your bet, and if tails you lose your bet. Naively you'd think "great, I should play, and bet every dollar I have!" -- after all, it has a 50% average return on investment. You get back on average 1.5$ for every dollar you bet, so every dollar you don't bet is a 0.5$ loss. But if you do this and you play every day for 10 years, you'll almost always end up bankrupt. Funny that. On the other hand, if you bet nothing, you are losing out on a great investment. So under certain assumptions, you neither want to bet everything, nor do you want to bet nothing (assuming you can repeat the bet almost indefinitely). The question then becomes, what percentage of your bankroll should you bet? Kelly Criterion answers this question. The typical Kelly Criterion case is where we are making a bet with positive returns, not an insurance against loss; but with a bit of mathematical trickery, we can use it to determine how much you should spend on insuring against loss. An "easy" way to undertand the Kelly Criterion is that you want to maximize the logarithm of your worth in a given period. Such a maximization results in the largest long-term value in some sense. Let us give it a try in an insurance case. Suppose you have a 1 million dollar asset. It has a 1% chance per year of being destroyed by some random event (flood, fire, taxes, pitchforks). You can buy insurance against this for 2% of its value per year. It even covers pitchforks. On its face this looks like a bad deal. Your expected loss is only 1%, but the cost to hide the loss is 2%? If this is your only asset, then the loss makes your net worth 0. The log of zero is negative infinity. Under Kelly, any insurance (no matter how inefficient) is worth it. This is a bit of an extreme case, and we'll cover why it doesn't apply even when it seems like it does elsewhere. Now suppose you have 1 million dollars in other assets. In the insured case, we always end the year with 1.98 million dollars, regardless of if the disaster happens. In the non-insured case, 99% of the time we have 2 million dollars, and 1% of the time we have 1 million dollars. We want to maximize the expected log value of our worth. We have log(2 million - 20,000) (the insured case) vs 1% * log(1 million) + 99% * log(2 million). Or 13.7953 vs 14.49. The Kelly Criterion says insurance is worth it; note that you could "afford" to replace your home, but because it makes up so much of your net worth, Kelly says the "hit it too painful" and you should just pay for insurance. Now suppose you are worth 1 billion. We have log(1 billion - 20k) on the insured side, and 1%*log(999 million) + 99% * log(1 billion) on the uninsured side. The logs of each side are 21.42 vs 20.72. (Note that the base of the logarithm doesn't matter; so long as you use the same base on each side). According to Kelly, we have found a case where insurance isn't worth it. The Kelly Criterion roughly tells you "if I took this bet every (period of time), would I be on average richer after (many repeats of this bet) than if I didn't take this bet?" When the answer is "no", it implies self-insurance is more efficient than using external insurance. The answer is going to be sensitive to the profit margin of the insurance product you are buying, and the size of the asset relative to your total wealth. Now, the Kelly Criterion can easily be misapplied. Being worth financially zero in current assets can easily ignore non-financial assets (like your ability to work, or friends, or whatever). And it presumes repeat to infinity, and people tend not to live that long. But it is a good starting spot. Note that the option of bankruptcy can easily make insurance not "worth it" for people far poorer; this is one of the reasons why banks insist you have insurance on your proprety. You can use Kelly to calculate how much insurance you should purchase at a given profit margin for the insurance company given your net worth and the risk involved. This can be used in Finance to work out how much you should hedge your bets in an investment as well; in effect, it quantifies how having money makes it easier to make money.
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Getting financial advice: Accountant vs. Investment Adviser vs. Internet/self-taught?
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Do I need an Investment Adviser? No, but you may want to explore the idea of having one. Is he going to tell me anything that my accountant can't? Probably. How much expertise are you expecting from your accountant here? Do you think your accountant knows everything within the realms of money from taxes, insurance products, investments and all your choices and what would work or wouldn't? Seems like it could be a tall order to my mind. My accountant did say to come to him for advice on investment/business issues. So, he is willing, but is he able? Not asking about his competence, but rather "is there something that only an Investment Adviser can provide, by law, that an accountant can't"? Not that I know though don't forget how much expertise are you expecting here from one person. Is this person intended to answer all your money questions? But isn't that something that my accountant could/should do? Perhaps though how well are you expecting one person to be aware of so much stuff? I want you to know all the tax law so I can minimize taxes, maximize my investment returns, cover me with adequate insurance, and protect my savings seems like a bit much to put on one entity. Do I need either of them? Won't the Internet and sites like this one suffice? Need no. However, how much time are you prepared to spend learning the basics of strategies that work for you? How much money are you prepared to put into things to learn what works and doesn't? While it is your decision, consider how to what extent do you diagnose your medical issues through the internet versus going to see a doctor? Be careful of how much of a do it yourself approach you want to go here and recognize that there are multiple approaches that may work. The question is which trade-offs are OK for you.
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Long term saving: Shares, Savings Account or Fund
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RED FLAG. You should not be invested in 1 share. You should buy a diversified ETF which can have fees of 0.06% per year. This has SIGNIFICANTLY less volatility for the same statistical expectation. Left tail risk is MUCH lower (probability of gigantic losses) since losses will tend to cancel out gains in diversified portfolios. Moreover, your view that "you believe these will continue" is fallacious. Stocks of developed countries are efficient to the extent that retail investors cannot predict price evolution in the future. Countless academic studies show that individual investors forecast in the incorrect direction on average. I would be quite right to objectively classify you as a incorrect if you continued to hold the philosophy that owning 1 stock instead of the entire market is a superior stategy. ALL the evidence favours holding the market. In addition, do not invest in active managers. Academic evidence demonstrates that they perform worse than holding a passive market-tracking portfolio after fees, and on average (and plz don't try to select managers that you think can outperform -- you can't do this, even the best in the field can't do this). Direct answer: It depends on your investment horizon. If you do not need the money until you are 60 then you should invest in very aggressive assets with high expected return and high volatility. These assets SHOULD mainly be stocks (through ETFs or mutual funds) but could also include US-REIT or global-REIT ETFs, private equity and a handful of other asset classes (no gold, please.) ... or perhaps wealth management products which pool many retail investors' funds together and create a diversified portfolio (but I'm unconvinced that their fees are worth the added diversification). If you need the money in 2-3 years time then you should invest in safe assets -- fixed income and term deposits. Why is investment horizon so important? If you are holding to 60 years old then it doesn't matter if we have a massive financial crisis in 5 years time, since the stock market will rebound (unless it's a nuclear bomb in New York or something) and by the time you are 60 you will be laughing all the way to the bank. Gains on risky assets overtake losses in the long run such that over a 20-30 year horizon they WILL do much better than a deposit account. As you approach 45-50, you should slowly reduce your allocation to risky assets and put it in safe haven assets such as fixed income and cash. This is because your investment horizon is now SHORTER so you need a less risky portfolio so you don't have to keep working until 65/70 if the market tanks just before retirement. VERY IMPORTANT. If you may need the savings to avoid defaulting on your home loan if you lose your job or something, then the above does not apply. Decisions in these context are more vague and ambiguous.
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What happens when they run out of letters?
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The 3-letter tickers are from a different era.... Nowadays the usage of tickers is more of a "legacy" tradition rather than a current necessity. As such they're no longer limited to 3 characters. And the characters don't have to be related to the actual name. For example a company named Alphabet is trading on NASDAQ under the ticker "GOOGL". It has 5 characters, not 3, and (almost) none of them appear in the name of the company (used to, but not anymore).
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Why are options created?
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Do you need to buy car insurance? If you do, you are buying to open a put option.
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Does lender care what I use the money for?
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When you borrow from a bank, there are secured loans, as with a mortgage, or unsecured lines of credit, usually a more reasonable amount of money, but also based on income. You just asked about a private loan. It depends on the person and your relationship. If you need money to pay the rent, you might not be the best person to lend money to. If you ask a friend or relative, they may lend you money without asking its purpose.
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Why invest for the long-term rather than buy and sell for quick, big gains?
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If they return to their earlier prices Assuming I don't make too many poor choices That's your problem right there: you have no guarantee that stocks, will in fact return to their earlier prices rather than go down some more after the time you buy them. Your strategy only looks good and easy in hindsight when you know the exact point in time when stocks stopped going down and started going up. But to implement it, you need to predict that time, and that's impossible. I would adopt a guideline of "sell when you've made X%, even if it looks like it might go higher." Congratulations, you've come up with the concept of technical analysis. Now go and read the hundreds of books that have been written about it, then think about why the people who wrote them waste time doing so rather than getting rich by using that knowledge.
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Would investing equally in all 30 companies which comprise the DJIA net the same performance as the DJIA?
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MD-Tech's answer is correct. Let me only point out that there are easier ways to invest in the DJIA index without having to buy individual stocks. You can buy a mutual fund or ETF that will track the index and your return will be almost identical to the performance of the underlying index. It's "almost" identical because the fund will take a small management fee, you will have to pay annual taxes on capital gains (if you hold the investment in a taxable account), and because the fund has to actually invest in the underlying stocks, there will be small differences due to rounding and timing of the fund's trades. You also ask: Assuming that I calculated those numbers correctly, is this gain approximately better, equal to, or worse than an average investment for that timespan? While people argue about the numbers, index funds tend to do better than average (depends on what you call "average", of course). They do better than most actively managed funds, too. And since they have low management fees, index funds are often considered to be an important part of a long-term investment portfolio because they require very little activity on your part other than buying and holding.
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F-1 Visa expired - Unable to repay private student loan. What to do?
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I would contact your loan servicing company explain the situation and see if you can renegotiate terms. They may be able to drop the interest rate or lengthen the schedule to reduce the payment amount. I wouldn't default on the loan as that would likely hinder coming to/working in the US in the future. Not knowing your financial situation or country, could you attempt to obtain financing in your own country in order to pay off the US based loan? I would at least attempt to make some sort of payment while you attempt renegotiation, refinancing or pursue a job in the US, even if it technically puts or keeps you in default of the loan. Making any payment at least shows the willingness to pay back the loan, and you're not intentionally defaulting on your obligation.
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The Big Short - shorting vs CDS
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To be able to truly short something you technically need to be able to borrow the security so you can sell it. There needs to be a system for borrowing in place to be able to do this which is very robust for large U.S. stocks but doesn't exist for CDOs mainly due to the complex legal structures around them. However, the word "short" is commonly used in finance to mean profiting from a loss of value of something. So the use in the movie title, though a bit confusing, was fine. Credit Default Swaps are not technically insurance as you don't need own the thing you are "insuring" (and for a few other reasons). However, I agree with the movie that thinking of them as insurance is a pretty good way to understand them. As you are playing a monthly premium to for a contract that pays out when something goes very wrong. However, the movie was a little fast a loose as CDS of various types were regularly traded well before the bubble even started. Though maybe not that particular type of CDS. So while they may have been "expensive" it was the easiest route and reasonable idea.
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Can PayPal transfer money automatically from my bank account if I link it in PayPal?
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Practically, as an ebay buyer I have never seen any way to keep a balance in paypal and top it off from my bank account under my own control. It is all automated, and as I seem to recall linking with a bank account or credit card was necessary to get some kind of "confirmed address" status out of Paypal so that eBay sellers would be more willing to trust me as a buyer and know that my shipping address was legitimate. As a seller, I can keep a balance at paypal from eBay sales and ask for it back in my checking account instead of keeping it in paypal to purchase items later. In terms of advice, in my opinion the paypal transfer limits or how to set them is not the answer needed to protect one's finances in this situation. In an error or cyberattack scenario, you have to consider the possibility that any limits are exceeded. When your online activity of any kind is linked to a bank account, any amount in that linked bank account is probably at risk. It doesn't really matter if it is paypal, or a server rental account, or amazon. If it can be abused, and it is linked to your bank account, then someone might abuse it and leave you with a bill. That you might be ultimately victorious is of little consequence if someone steals money you really needed right now and the devotion of time and energy to "work the bureaucracy" to get your money back will distract from performance at work or school. So the next step up in protection is to firewall the bank account you use for online purchases from your other bank accounts where your salary is received. The best way to do it is with different banks instead of merely different accounts, but that is also the most inconvenient for filling the account back up. Nowadays -- at least in the USA -- at several banks you can open a "free" checking account for a minimum deposit like $500 or $1000 that must stay in the account to be fee free at the end of each month. Whatever balance you keep in the account you use for your "risky" online transactions will be the maximum that can disappear in an incident, downside being you have to feed the account from time to time to keep it above the minimum as you make purchases.
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What does it mean to invest in potatoes?
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comments discuss investing in potato futures. Learn / ready about commodity trading or commodity futures. An investopedia article How To Invest In Commodities is a good start. There are quite a few commodities offered for normal trade or as futures. Potatos may not be offered on quite a few exchanges. Found some here Investing in commodities is fraught with quite a bit of risk, some like you have already pointed out. Of course you can't eat all and have to sell.
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Options profit calculation and cash settlement
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Depending on the day and even time, you'd get your $2 profit less the $5 commission. Jack's warning is correct, but more so for thinly traded options, either due to the options having little open interest or the stock not quite so popular. In your case you have a just-in-the-money strike for a highly traded stock near expiration. That makes for about the best liquidity one can ask for. One warning is in order - Sometime friday afternoon, there will be a negative time premium. i.e. the bid might seem lower than in the money value. At exactly $110, why would I buy the option? Only if I can buy it, exercise, and sell the stock, all for a profit, even if just pennies.
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P/E (or similar) for index funds?
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ycharts.com has "Weighted Average PE Ratio" and a bunch of other metrics that are meant to correspond to well known stock metrics. Other websites will have similar ratios.
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Does keeping 'long-term' safety net in bonds make sense?
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I am understanding the OP to mean that this is for an emergency fund savings account meant to cover 3 to 6 months of living expenses, not a 3-6 month investment horizon. Assuming this is the case, I would recommend keeping these funds in a Money Market account and not in an investment-grade bond fund for three reasons:
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Under what circumstance will the IRS charge you a late-payment penalty for taxes?
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I just got hit with the late payment penalty due to a bug in the H&R Block tax program. The underpayment was only $2 and the penalty was a whopping 1 cent. The letter that informed me of the error also said that they did not consider the $2.01 worth collecting, the amount owed had been zeroed.
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Theory/Strategy for pricing by volume
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Actually, the rate of change could be more or less constant, but you might have a minimum price that represents your fixed costs. So you might sell a milligram for $1 (which is ridiculous in terms of per-unit pricing) to cover fixed costs, and add $0.50/lb for each step in size to cover variable costs (cost of raw materials and packaging), so a 2lb bag would be $2, a 5lb bag would be $3.50, a ton would be $1,001, etc. At the end of the day, you want the marginal revenue (the price that you charge for each additional pound) to be more than the marginal cost (the price per pound it takes to produce the bag). Any amount over that goes towards your fixed costs - the cost you'd incur if you sold zero product (rent, utilities, overhead, etc.) It's not an exact science, and there are many variables that go into pricing.
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Online Return Policies
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If you paid by credit card, file a dispute with the credit card company. They will credit you the money immediately while they investigate. The burden of proof will then be on the merchant. Keep your documents handy in case you need them: USPS receipt, proof of delivery, copies of all correspondance, etc. File the credit card chargeback now, because there are time limits. The FTC has more information.
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What name is given to a value such as this?
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This is called "change" or "movement" - the change (in points or percentage) from the last closing value. You can read more about the ticker tape on Investopedia, the format you're referring to comes from there.
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“Inflation actually causes people not to spend”… could it be true?
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Not always. You always consider economic factors in conjunction with each other rather than in isolation, which leads to weird assumptions. People spending isn't what you should look at always. When inflation is high, means government is spending. Government is spending on public projects, creating employment, increasing salaries, doling out loans. So you are putting money into the economy and into people's hands. Everybody will be spending, so it will also drive demand(Demand Pull inflation). But there are differences among economists regarding Cost push inflation, which is a dangerous phenomena. At the same time the interest rates, which are a monetary tool for central banks to increase(decrease) the money flow in the economy, are low. Under low interest rate conditions, businesses take loans to invest in projects. Because interest rates are low, people find it logical to spend now than spend later. As interest rates are low, there is an expectation that they cannot earn more in savings than investing in products which will generate benefits in the near term. These all goes on in cycles and after a period of inflation, you will see government taking action to rein in inflation. It will increase interest rates to suck money out of the economy. This is when people will curb spending, because they know they will earn a higher return while saving rather than investing.
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How to trade “exotic” currencies?
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Use a currency ETF. there are many. Specific to your question there is WisdomTree Dreyfus Brazilian Real Fund (BZF) I don't happen to find a currency ETF for Thailand, so the closest you could come to a Thai currency fund would be something that's an Index fund ETF that is based on an index in the Thai Market such as: MSCI Thailand Investable Market Index Fund Because that fund is investing in an index of stocks that trade on the Thai market, you are in effect investing in something denominated in Baht. This is spelled out in the prospectus where it discusses 'currency risk'. The problem is that you are however not investing in just the currency, but rather a broad index of stocks denominated in that currency. Still to the extent the market holds fairly steady, you get much the same effect of investing in just the currency. to the extent the market is moving, you get the net effect of what the thai market does, plus how the bhat trades relative to the dollar.
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Effect of country default on house prices?
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It could be a a way to preserve the value of your money, but depends upon various factors. If a country defaults, and it leads to hyper-inflation, by definition that means that money loses its purchasing power. In even simpler terms, it cannot buy as much tomorrow as I could today. Therefore people can be incented to either hoard physical goods, or other non-perishable items. Real-estate may well be such an item. If you are resident in the country, you have to live somewhere. It is possible that a landlord might try to raise rent beyond what your job is willing to pay. Of course, in a house, you might have a similar situation with utilities like electricity... Assuming some kind of re-stabilization of the economy and currency, even with several more zeros on the end, it is conceivable that the house would subsequently sell for an appropriately inflation adjusted amount, as other in-demand physical goods may. Lots of variables. Good Luck.
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Foreign Earned Income Exclusion - Service vs. Product?
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Fear tactics posted above, likely by IRS agents. Yes, you qualify based on the residence test. You perform your work outside the US. You gather business data in a foreign country. The income is excluded.
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Making your first million… is easy! (??)
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It is difficult to become a millionaire in the short term (a few years) working at a 9-to-5 job, unless you get lucky (win the lottery, inheritance, gambling at a casino, etc). However, if you max out your employer's Retirement Plan (401k, 403b) for the next 30 years, and you average a 5% rate of return on your investment, you will reach millionaire status. Many people would consider this "easy" and "automatic". Of course, this assumes you are able to max our your retirement savings at the start of your career, and keep it going. The idea is that if you get in the habit of saving early in your career and live modestly, it becomes an automatic thing. Unfortunately, the value of $1 million after 30 years of inflation will be eroded somewhat. (Sorry.) If you don't want to wait 30 years, then you need to look at a different strategy. Work harder or take risks. Some options:
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Are there Cashflow Positive Investment Properties in the USA?
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Americans are snapping, like crazy. And not only Americans, I know a lot of people from out of country are snapping as well, similarly to your Australian friend. The market is crazy hot. I'm not familiar with Cleveland, but I am familiar with Phoenix - the prices are up at least 20-30% from what they were a couple of years ago, and the trend is not changing. However, these are not something "everyone" can buy. It is very hard to get these properties financed. I found it impossible (as mentioned, I bought in Phoenix). That means you have to pay cash. Not everyone has tens or hundreds of thousands of dollars in cash available for a real estate investment. For many Americans, 30-60K needed to buy a property in these markets is an amount they cannot afford to invest, even if they have it at hand. Also, keep in mind that investing in rental property requires being able to support it - pay taxes and expenses even if it is not rented, pay to property managers, utility bills, gardeners and plumbers, insurance and property taxes - all these can amount to quite a lot. So its not just the initial investment. Many times "advertised" rents are not the actual rents paid. If he indeed has it rented at $900 - then its good. But if he was told "hey, buy it and you'll be able to rent it out at $900" - wouldn't count on that. I know many foreigners who fell in these traps. Do your market research and see what the costs are at these neighborhoods. Keep in mind, that these are distressed neighborhoods, with a lot of foreclosed houses and a lot of unemployment. It is likely that there are houses empty as people are moving out being out of job. It may be tough to find a renter, and the renters you find may not be able to pay the rent. But all that said - yes, those who can - are snapping.
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How does a dividend announcement affect a option straddle position
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When dividend is announced the stock and option price may react to that news, but the actual payout of the dividend on the ex-dividend date is what you probably are referring to. The dividend payout affects the stock price on the ex-dividend date as the stock price will drop by the amount of paid out dividend (not taking into account other factors). This in turn drives the prices of all options. The amount of change in the option price for this event is not only dependent the dividend payout, but also on how far these are in our out of the money and what there time to expiration is. The price of a call option that is far out of the money would react less than the price of a put that would be far in the money. Therefore I would argue that these two will not necessarily offset each other.
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Micro-investing: How to effectively invest frequent small amounts of money in equities?
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Compound interest is your friend. For such a low amount of cash, just pop it into savings accounts or deposits. When you reach about 1.500€ buy one very defensive stock that pays high dividends. With deposits, you don't risk anything, with one stock, you can lose 100% of the investment. That's why it's important to buy defensive stock (food, pharma, ...). Every time you hit 1.500€ after, buy another stock until you have about 10 different stock in different sectors, in different countries. Then buy more stock of the ones you have in portfolio. You're own strategy is pretty good also.
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Which is the better strategy for buying stocks monthly?
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You will invest 1000£ each month and the transaction fee is 10£ per trade, so buying a bunch of stocks each month would not be wise. If you buy 5 stocks, then transaction costs will eat up 5% of your investment. So if you insist on taking this approach, you should probably only buy one or two stocks a month. It sounds like you're interested in active investing & would like a diversified portfolio, so maybe the best approach for you is Core & Satellite Portfolio Management. Start by creating a well diversified portfolio "core" with index funds. Once you have a solid core, make some active investment decisions with the "satellite" portion of the portfolio. You can dollar cost average into the core and make active bets when the opportunity arises, so you're not killed by transaction fees.
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How to start investing for an immigrant?
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For starting with zero knowledge you certainly did a great job on research as you hit on most of the important points with your question. It seems like you have already saved up around six months of expenses in savings so it is a great time to look into investing. The hardest part of your question is actually one of the most important details. Investing in a way that minimizes your taxes is generally more important, in the end, than what assets you actually invest in (as long as you invest even semi-reasonably). The problem is that the interaction between your home country's tax system and the U.S. tax system can be complex. It's probably (likely?) still worth maxing out your 401(k) (IRA, SEP, 529 accounts if you qualify) to avoid taxes, but like this question from an Indian investor it may be worth seeing an investment professional about this. If you do, see a fee-based professional preferably one familiar with your country. If tax-advantaged accounts are not a good deal for you or if you max them out, a discount broker is probably a good second option for someone willing to do a bit of research like you. With this money investing in broadly-diversified, low fee, index mutual funds or exchange traded funds is generally recommended. Among other benefits, diversified funds make sure that if any particular company fails you don't feel too much pain. The advantages of low fees are fairly obvious and one very good reason why so many people recommend Vanguard on this site. A common mix for someone your age is mostly stocks (local and international) and some bonds. Though with how you talk about risk you may prefer more bonds. Some people recommend spicing this up a bit with a small amount of real estate (REITs), sometimes even other assets. The right portfolio of the above can change a lot given the person. The above mentioned adviser and/or more research can help here. If, in the future, you start to believe you will go back to your home country soon that may throw much of this advice out the window and you should definitely reevaluate then. Also, if you are interested in the math/stats behind the above advice "A Random Walk Down Wall Street" is a light read and a good place to start. Investing makes for a very interesting and reasonably profitable math/stats problem.
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privacy concerns when receiving money from paypal from strangers?
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You'll need to check PayPal's terms of service for that first question. I would imagine you could, as my wife and I both have personal PayPal accounts listed at the same address. When you receive money, the senders will only see the (full) name on your account, the amount, and the transaction ID. If you set up a business account, the name on your account will be replaced with the company name. Your mailing address will not be made visible. Yes, PayPal provides an export option of your transaction history. For reference: If your volume greater than $20,000 across 200 or more transactions, then they'll be issuing a 1099-K form, anyway. That depends on the payment method. Bank transfers are instant, where cards require a settlement delay. PayPal provides buyer protection, so I'd be very dutiful in logging all of your work done to provide proof of completion, in case someone disputes a payment. Disputes can take place up to 45 days from the date of the transaction. Chargebacks can take place 120 days or more after the transaction (depends on the card network).
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Why did the stock chart for Facebook's first trading day show an initial price of $42 when the IPO price was $38?
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The IPO price is set between the underwriters and the specialist in the NASDAQ. There are a lot of complexities on how to get to this price, everyone is trying to pull to their own side. In the Facebook example, the price was $38 for all IPO participants. Then, once the IPO went to the secondary market, the bid/ask drove the pricing. At the secondary market the price is driven by the demand and offer of the stock. That is, people who wanted to buy right after the IPO likely drove the initial price up.
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How can I figure out how a stock's price would change after I buy shares?
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It is unlikely that buying 100 shares will have any effect on a stock's price, unless the stock's average trading volume is incredibly low. That being said, no matter how many share you buy, there's no way to know what the impact on the price will be, because that's only one factor in how shares are priced. If anyone could figure out the answer to your question then they'd be extremely rich, because they'd simply watch for big share trades and then buy those stocks on the way up. The market makers who actually execute the trades are the ones who set the prices, and most stocks have multiple market makers trading the stock, so the bid/ask you see is the highest bid and lowest ask. The market makers set the price based on what the trend of the stock is. If, for instance, there's a large number of sell orders against a stock, the market makers will start dropping the bid prices as they fill execution orders, and as they see buy orders increase, they'll raise ask prices as they fill execution orders. The market makers earn the difference between what they paid to buy someone's stock who was selling and what they get from someone else who buys it. This is a simplified explanation, so pro traders, don't beat me up! (grin) So, basically, it takes quite a bit of share volume in one direction or another to affect a stock's price. I can guarantee a 100-share trade wouldn't even be noticed by market makers. I hope this helps. Good luck!
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How do I bring money overseas?
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I'm an Australian who just got back from a trip to Malaysia for two weeks over the New Year, so this feels a bit like dejavu! I set up a 28 Degrees credit card (my first ever!) because of their low exchange rate and lack of fees on credit card transactions. People say it's the best card for travel and I was ready for it. However, since Malaysia is largely a cash economy (especially in the non-city areas), I found myself mostly just withdrawing money from my credit card and thus getting hit with a cash advance fee ($4) and instant application of the high interest rate (22%) on the money. Since I was there already and had no other alternatives, I made five withdrawals over the two weeks and ended up paying about $21 in fees. Not great! But last time I travelled I had a Commonwealth Bank Travel Money Card (not a great idea), and if I'd used that instead on this trip and given up fees for a higher exchange rate, I would have been charged an extra $60! Presumably my Commonwealth debit card would have been the same. This isn't even including mandatory ATM fees. If I've learned anything from this experience and these envelope calculations I'm doing now, it's these:
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Ongoing things to do and read to improve knowledge of finance?
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I've found Pragmatic Capitalism very helpful.
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What types of receipts do I need to keep for itemized tax deductions?
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Businesses are only required to keep receipts over $751. However for individuals, I would throw them all in a shoebox and not worry about organizing them. There's a small chance you'll need to go through them during an audit, and you can worry about reconciling all of them and putting them in order at that point. Just write 2010 on the box and keep it somewhere easy, and at the end of the year throw it in your basement (or get a scanner, and scan and trash the original).
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Is refinancing my auto loan just to avoid dealing with the lender that issued it a crazy idea?
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What are the fees associated with changing the new loan? Are those fees worth the peace of mind? If so, than it is not "crazy". The decision really boils down to that: is it worth the money that you will spend refinancing the loan to not have to deal with the original bank that financed your loan, assuming that you find an institution that will be more amenable to your financial expectations.
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Transfering money from NRE to saving account is taxable or not
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Meagrely transferring money within your own accounts doesn't result in any tax, however legally once you are an NRI you cannot operate a savings account at all as per Reserve Bank Guidelines found here One option is for you to transfer to a joint account held by a close relative of yours with you and this would be tax free in India.
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Sage Instant Accounts or Quickbooks?
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Note: Specific to UK. I can't recommend anything higher than Crunch - they act as your accountant and have their own cloud accounting software, so it's more expensive than just using cloud accounting software, but if you use an accountant to do your year-end anyway, then they cost about the same as using cloud accounting software plus using an accountant to do your year-end. The thing I like (as a software development contractor) is that I don't have to know or worry about different ledger accounts, or journal entries, or any of the other weird accounting things, etc. Most cloud accounting software claim to simplify accounting "so that you can concentrate on running your business" whereas the reality is that you still have to spend ages learning how to be an accountant just to fill it in correctly. With Crunch that's actually true, it does actually make it simple. I've used Crunch, Sage, and Xero, so my sample-set isn't very big - just thought I'd share my experiences. If you value your time and get annoyed by having to create multiple internal transfers between different ledgers just to do something simple, it's for you. This probably sounds like a sales pitch, but I have nothing to do with them and nothing to gain by recommending them. The only reason I'm so passionate is I started a new business to do an online shop and tried to use Crunch, but they don't do retail businesses. Only contractors/freelancers or simple service-based businesses (their software is geared up specifically for that which I guess is why it's more simple than the others). Anyway, so now I'm annoyed at having to use the more complicated ones.
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Is being a landlord a good idea? Is there a lot of risk?
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I have been a landlord in Texas for just over 3 years now. I still feel like a novice, but I will give you the benefit of my experience. If you are relying on rental properties for current income versus a long term return you are going to have to do a good job at shopping for bargains to get monthly cash flow versus equity growth that is locked up in the property until you sell it. If you want to pull a lot of cash out of a property on a regular basis you probably are going to have to get into flipping them, which is decidedly not passive investing. Also, it is easy to underestimate the expenses associated with rental properties. Texas is pretty landlord friendly legally, however it does have higher than usual property taxes, which will eat into your return. Also, you need to factor in maintenance, vacancy, tenant turnover costs, etc. It can add up to a lot more than you would expect. If you are handy and can do a lot of repairs yourself you can increase your return, but that makes it less of a passive investment. The two most common rules I have heard for initially evaluating whether an investment property is likely to be cash flow positive are the 1% and 50% rules. The 1% rule says the expected monthly rent needs to be 1% or greater of the purchase price of the house. So your hypothetical $150K/$10K scenario doesn't pass that test. Some people say this rule is 2% for new landlords, but in my experience you'd have to get lucky in Texas to find a house priced that competitively that didn't need a lot of work to get rents that high. The 50% rule says that the rent needs to be double your mortgage payment to account for expenses. You also have to factor in the hassle of dealing with tenants, the following are not going to happen when you own a mutual fund, but are almost inevitable if you are a landlord long enough: For whatever reason you have to go to court and evict a tenant. A tenant that probably lost their job, or had major medical issues. The nicest tenant you ever met with the cutest kids in the world that you are threatening to make homeless. Every fiber of your being wants to cut them some slack, but you have a mortgage to pay and can't set an expectation that paying the rent on time is a suggestion not a rule. or the tenant, who seemed nice at first, but now considers you "the man" decides to fight the eviction and won't move out. You have to go through a court process, then eventually get the Sheriff to come out and forcibly remove them from the property, which they are treating like crap because they are mad at you. All the while not paying rent or letting you re-let the place. The tenant isn't maintaining the lawn and the HOA is getting on your butt about it. Do you pay someone to mow the grass for them and then try to squeeze the money out of the tenant who "never agreed to pay for that"? You rent to a college kid who has never lived on their own and has adopted you as their new parent figure. "The light in the closet went out, can you come replace the bulb?" Tenants flat out lying to your face. "Of course I don't have any pets that I didn't pay the deposit for!" (Pics all over facebook of their kids playing with a dog in the "pet-free" house)
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Financing Education through Credit Card or Student Loans
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If you are very sure, say 90%, that you'll pay the zero percent card off before paying interest, that would be my choice. Less certainty than that, I think the 6.8% over a longer term is less of a cash flow issue, and you can still pay it in full upon getting the job bonus.
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What one bit of financial advice do you wish you could've given yourself five years ago?
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When I was contracting I wish I had joined a tax efficient umbrella organisation rather than just work as a sole trader. I also wish I had put money aside to pay my taxes rather than just spend it all. :(
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How to Deduct Family Health Care Premiums Under Side Business
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No, not on schedule C, better. Its an "above the line" deduction (line 29 on your 1040). Here's the turbo tax article on it. The instructions for this line set certain limitations that you must take into the account, and yes - it is limited to the net profit from the business. One of the following statements must be true. You were self-employed and had a net profit for the year. You were a partner with net earnings from self-employment. You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. You received wages in 2011 from an S corporation in which you were a more-than-2% shareholder. Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2. The insurance plan must be established under your business. Your personal services must have been a material income-producing factor in the business. If you are filing Schedule C, C-EZ, or F, the policy can be either in your name or in the name of the business.
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5/1 ARM: Lifetime cap, First Adjustment Cap, Margin, and Annual Cap?
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Interest rates are at a record low and the government is printing money. You can get a fixed rate loan at a rate equal to inflation in a healthy economy. Unless you know that you are moving in < 5 years, why would you expose yourself to interest rate risk when rates are about as close to zero as they can be? If your thought with respect to mitigating interest rate risk is: "What's the big deal, I'll just refinance!", think again, because in a market where rates are climbing, you may not be able to affordably refinance at the LTV that you'll have in 5-7 years. From 1974-1991, 30 year mortgages never fell below 9%, and were over 12% from 1979 to 1985. Think about what those kinds of rates -- which reduce a new homeowner's buying power by over 40%, would do to your homes value.
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How much lump sum investment in stocks would be needed to yield a target stable monthly income?
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If your requirements are hard (must have $1000/month, must have the same or bigger in capital at the end), stocks are a poor choice of investment. However, in many cases, people are willing to tolerate some level of risk to achieve the expected returns. You also do not mention inflation, which can take quite a lot out of your portfolio over the course of ten years. If we make some simplifying assumptions, you want to generate $12,000 a year. You can realistically expect the (whole) stock market, long term (i.e. over time periods substantially longer than 10 years), to return approximately 4 - 5% after factoring in inflation. That means an investment of $240,000 - $300,000 (the math is simplified somewhat here). If you don't care about inflation, you can up the percentage rather somewhat. According to this article, the S&P 500 returned an average of 11.31% from 1928 through 2010 (not factoring in inflation), which would require an investment of approximately $106,100. But! This opens you up to substantial risk. The stock market may go down 30% this year! According to the above article, the S&P returned only 3.54% from 2001 to 2010. Long-term, it goes up, but your investment case is really unsuited to investing in an index to the entire stock market given your requirements. You may be better suited investing primarily in stable bonds, or perhaps a mix of bonds and stocks. Alternatively, you may want to consider even more stable investments such as treasury notes. Treasury notes are all but guaranteed, but with a lousy rate of return. Heck, you could consider a GIC (that may be Canada-only) or even a savings account. There's also the possibility of purchasing an annuity, though almost everyone will advise against such. Personally, I'd go for a mutual fund which invested approximately 70% bonds and the rest in stocks over such a time period. Something like ING Direct's Streetwise Balanced Income Portfolio, if you were in Canada. It substantially lowers your expected return but also lowers your risk. I can't honestly say what the expected return there is; at this point, it's returned 4% per year (before inflation), but has been around only since the beginning of 2008. And to be clear, this is absolutely not free of risk.
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Why does my checking/savings account offer a higher interest rate than a standalone savings account?
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The key is that you need to use your debit card to earn the higher interest rate. The bank can offer a higher interest rate on accounts connected with a debit card because: They earn additional income through debit card fees charged towards account holders, among other things. They offer the higher interest rate specifically to encourage people to use their debit cards. By offering a joint checking/savings account that requires you to use your debit card, the bank is assuming that you'll keep more money in your account than you would in a standard checking-only account. Your higher balance translates into more money the bank can loan out or invest, which usually leads to higher profit for them. Businesses pay fees to the bank to accept debit cards. These fees represent another source of profit for the bank. The more you use your debit card, the more the bank earns in fees, so the bank encourages you to use your debit card more frequently through incentives like a higher interest rate or waiving fees on your account if you use your card enough. Plus, since it's likely that an individual who maintains a fairly high balance in an account linked to a debit card is going to spend more (simply because they can spend more), banks will sometimes waive fees on the consumer side for balances over a certain amount.
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Are long-term bonds risky assets?
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Bonds have multiple points of risk: This is part of the time value of money chapter in any finance course. Disclaimer - Duff's answer popped up as I was still doing the bond calculations. Similar to mine but less nerdy.
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How does Yahoo finance adjust stock data for splits and dividends?
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For stock splits, let's say stock XYZ closed at 100 on February 5. Then on February 6, it undergoes a 2-for-1 split and closes the day at 51. In Yahoo's historical prices for XYZ, you will see that it closed at 51 on Feb 6, but all of the closing prices for the previous days will be divided by 2. So for Feb 5, it will say the closing price was 50 instead of 100. For dividends, let's say stock ABC closed at 200 on December 18. Then on December 19, the stock increases in price by $2 but it pays out a $1 dividend. In Yahoo's historical prices for XYZ, you will see that it closed at 200 on Dec 18 and 201 on Dec 19. Yahoo adjusts the closing price for Dec 19 to factor in the dividend.
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Does Reuters provide the 4pm London Spot rate for currencies?
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The interpretation is correct. The Reuters may give you the London 4PM rates if you query after the close for the day. The close rate is treated as the rate. http://uk.reuters.com/business/currencies/quote?srcAmt=1&srcCurr=GBP&destAmt=&destCurr=USD The London 4PM rate may be obtained from Bank of England at the link below; http://www.bankofengland.co.uk/mfsd/iadb/index.asp?Travel=NIxSTxTIx&levels=1&XNotes=Y&XNotes2=Y&Nodes=X3790X3791X3873X33940&SectionRequired=I&HideNums=-1&ExtraInfo=false&A3836XBMX3790X3791.x=4&A3836XBMX3790X3791.y=3 Or any other Bank that provides such data
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Optimal balence of 401K and charitable savings
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Two things I would recommend doing: I would save a minimum of 15% into retirement. By young I will assume that you are under 30. 15K/year + company match will grow into a sick amount of money by the time you are in your 60s. So you have a net worth that is north of 5 million. What kind of charitable giving can you do then? Answer: What ever you want! Also it could be quite a bit more then that. Get a will. It will cost a little bit of money, but for someone like you it is important to have your wishes known.
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Why is it possible to just take out a ton of credit cards, max them out and default in 7 years?
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The U.S. bankruptcy laws no longer make it simple to discharge credit card debt, so you can't simply run up a massive tab on credit cards and then just walk away from them anymore. That used to be the case, but that particular loophole no longer exists the way it once did. Further, you could face fraud charges if it can be proven you acted deliberately with the intent to commit fraud. Finally, you won't be able to rack up a ton of new cards as quickly as you might think, so your ability to amass enough to make your plan worth the risk is not as great as you seem to believe. As a closing note, don't do it. All you do is make it more expensive for the rest of us to carry credit cards. After all, the banks aren't going to eat the losses. They'll just pass them along in the form of higher fees and rates to the rest of us.
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Calculating the value of an investors inventory
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Is it just -34*4.58= -$155.72 for CCC and -11*0.41= -$4.51 for DDD? Yes it needs to be recorded as negative because at some point in time, the investor will have to spend money to buy these shares [cover the short sell and return the borrowed shares]. Whether the investor made profit or loss will not be reflected as you are only reflecting the current share inventory.
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My employer doesn't provide an electronic pay stub and I need one to get a car loan
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You have a few options and sometimes challenges help us improve our situation. First, you can not borrow to buy a car. Reducing the massive depreciation that cars undergo will help you be wealthier. It is hard to find a good use car that you can buy for cash, but it will play out best for your finances in the long run. If your heart is set on borrowing, I would encourage you to go to the bank/credit union where you have your checking account. They will see your history of deposits and may grant you a loan based on that. Also you are likely to get a better deal from the bank than from the car dealer. Thirdly, you can simply go to your employer's HR department and ask them. Surely someone has applied for a loan during the company's history. What did they do for them?
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Did an additional $32 billion necessarily get invested into Amazon.com stock on October 26th, 2017?
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No. The market cap has no relation to actual money that flowed anywhere, it is simple the number of shares multiplied by the current price, and the current price is what potential buyers are (were) willing to pay for the share. So any news that increases or decreases interest in shares changes potentially the share price, and with that the market cap. No money needs to flow.
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Tax rules for United States citizens living in the US but being paid from outside the US
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You can and are supposed to report self-employment income on Schedule C (or C-EZ if eligible, which a programmer likely is) even when the payer isn't required to give you 1099-MISC (or 1099-K for a payment network now). From there, after deducting permitted expenses, it flows to 1040 (for income tax) and Schedule SE (for self-employment tax). See https://www.irs.gov/individuals/self-employed for some basics and lots of useful links. If this income is large enough your tax on it will be more than $1000, you may need to make quarterly estimated payments (OR if you also have a 'day job' have that employer increase your withholding) to avoid an underpayment penalty. But if this is the first year you have significant self-employment income (or other taxable but unwithheld income like realized capital gains) and your economic/tax situation is otherwise unchanged -- i.e. you have the same (or more) payroll income with the same (or more) withholding -- then there is a 'safe harbor': if your withholding plus estimated payments this year is too low to pay this year's tax but it is enough to pay last year's tax you escape the penalty. (You still need to pay the tax due, of course, so keep the funds available for that.) At the end of the first year when you prepare your return you will see how the numbers work out and can more easily do a good estimate for the following year(s). A single-member LLC or 'S' corp is usually disregarded for tax purposes, although you can elect otherwise, while a (traditional) 'C' corp is more complicated and AIUI out-of-scope for this Stack; see https://www.irs.gov/businesses/small-businesses-self-employed/business-structures for more.
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Why can't you just have someone invest for you and split the profits (and losses) with him?
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A 'indexed guaranteed income certificate' (Market Growth GIC) fits the criteria defined in the OP. The "guaranteed" part of the name means that, if the market falls, your capital is guaranteed (they cover the loss and return all your capital to you); and the "index linked" or "market growth" means that instead of the ROI being fixed/determined when you buy the GIC, the ROI depends on (is linked to) the market growth, e.g. an index (so you get a fraction of profit, which you share with the fund manager). The upside is that you can't 'lose' (lose capital). The fund manager doesn't just share the losses with you, they take/cover all the losses. The downside is that you only make a fraction of whatever profit you might make by investing directly in the market (e.g. in an index fund). Another caveat is that you buy a GIC over some fixed term, e.g. you have to give them you money for a year or more, two years.
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I cosigned for a friend who is not paying the payment
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I came across such a situation and I am still facing it. My friend borrowed my credit card for his expenses as he had misplaced his debit card and for the time being had asked for my credit card to handle the expenses he does. He paid for initial 2 months and then was not able to make payments, mainly due to not being able to arrange money or if it was a contri party, he would collect cash from friends but again spend the same. Months passes by... the bill had come upto 65k and calls from bank and other respective organizations Finally my dad came into picture and slowly the issue is resolving he has paid 50K remaining is still pending. So basically, the reason I shared this part of story was he is my Best friend and in order to not spoil our friendship I did not want to take any such step which would later on affect our friendship. This completely depends on the individuals how they react to the situation. Keeping Ego, superiority, favour sort of feelings and words apart things can be resolved between friends. You do not know what is the situation on the other side. Probably you can connect with him ask him to explain you why is not able to pay the debts and take action accordingly. If he is not able to provide a proper reason then you may take some actions like mentioned in initial answers, run after the assets he own or anything else.Stay Calm and patient. Do not take any such step which you would regret later on...!
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How do you access an OFX server?
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This page, under the "OFX" section, has pointers to an OFX 2.0 spec (pdf). You're looking for the info starting at page 18, section 1.2.1: Clients use the HTTP POST command to send a request to the previously acquired Uniform Resource Locator (URL) for the desired financial institution. The URL presumably identifies a Common Gateway Interface (CGI) or other process on an FI server that can accept Open Financial Exchange requests and produce a response. and then shows some examples. The first page linked above also has some python scripts for downloading OFX data from your bank.
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When's the best time to sell the stock of a company that is being acquired/sold?
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I believe firmly that a bird in the hand is worth two in the bush. Cash your gains out and be happy with your profit.
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Why would I pick a specific ETF over an equivalent Mutual Fund?
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Something to consider is how do you want to handle fractional shares. Most open-end funds can easily go to fractional shares to that if you want to invest $500 in a fund each month, it is a relatively easy transaction where some shares will be fractional and handled easily. An ETF may not always work that way unless you go through something like Sharebuilder that would allow the fractional shares as if the ETF is trading at $150/share, you could buy 3 shares but still have $50 that you want to invest but can't as stocks trade in whole share numbers usually. This is without adding brokerage commissions. Depending on the broker, re-investing dividends may or may not be that simple as fractional shares could be a problem since those 3 shares aren't likely to have enough of a dividend to equal another share being bought with the proceeds. If you want the flexibility of stop and limit orders then the ETF may make more sense while the open-end fund is simply to invest whole dollar amounts that then lead to fractional shares. Don't forget to factor in minimums and other stuff as VFIAX may have a bit of a minimum to it as well as possible fees that could be annoying as I remember VFINX having some account maintenance fees that were a bit irksome back in the day that may still be around in some cases so be sure to read the fine print on things.
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Why is a “long put” called long if you have a higher net position if the price decreases?
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Long here does not mean you wish for the underlying stock to increase in value, in fact, as the chart shows, just the opposite is true. "Long means you bought the derivative, and you own the option. The guy that sold it to you is at your mercy, he is short the put, and it's your decision to put the stock to him should it fall in value. The value of the put itself rises with the falling stock price, you are long the put and want the put, itself, to rise in value.
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Freelancing and getting taxes taken out up front instead of end of year?
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It seems that you think you are freelancing, and they think you are an employee. What's bad for you, the tax office will also think you are an employee if they withhold tax for you. Alternatively, they think you are stupid, and they keep the money, but are actually not paying it to the tax office at all, in which case you will have a bad surprise when you do your tax returns. First, I'd ask them for proof that they are indeed paying these taxes into some account related to you. I'd then ask a tax adviser for some serious advice. If they are acting out of incompetence and not out of malice, then you should be mostly fine, but your work there will count as employment. Heaven knows why they treat you as an employee. Check your contract with them; whether it is between you and them or your company and them. It maybe that they never hired a contractor and believe that they have to pay employment tax. They don't. If your company sends them a bill, then they need to pay that bill, 100% of it, and that's it. Taxes are fully your business and your responsibility. As "quid" said, if they say they are withholding tax, then at the very least there must be a paystub that proves they have actually been paying these taxes. If they withhold taxes, and there is no paystub, then this looks like a criminal attempt to cheat you. If they have actually paid taxes properly into your account, then they are merely creating a mess that can hopefully be fixed. But it is probably complicated enough that you need a tax advisor, even if you had none before, since instead of paying to your company, they paid some money to the company, and some to you personally.
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Cannot get a mortgage because I work through a recruiter
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To a mortgage lender, it appears that you have a temporary contract (perhaps extending for nine more months) with a agency that supplies workers to companies that need temporary help. You have been placed currently with a company and are making good money, but that job might disappear soon and then you will have no income while your recruiter tries to find you another assignment. How will you make your mortgage payments then? The recruiter agency's contract with your current company probably has clauses to the effect that the company agrees to not offer you a permanent job unless it pays a head-hunter's fee to the recruiter agency. Your contract with the recruiter agency also likely has clauses to the effect that if the company where you have been placed offers you a permanent job, you must pay the recruiter company a fee (typically one or two months of salary) to the recruiter agency as compensation for releasing you from your current contract (unless the company hiring you pays the head-hunter's fee). This is why the company where you are working right now wants to wait until after your contract with the recruiter company ends before making you an offer of permanent employment. Be aware that sometimes such clauses extend out to three months after the ending date of your contract with the recruiter company. As far as the condo is concerned, unless there is a specific one that you absolutely must have because it has an ocean view or other desirable properties, you may well find that another condo in the same complex is available some months from now. If you are lucky, it may well have an acceptable ocean view. If you are even luckier, it may be the condo that you absolutely must have which has remained unsold all that time -- as you said, the economy is crappy -- and you will be able to buy it for a lower price from an owner getting desperate to make a sale. To answer your question: is there any way around this? My recommendation is to simply wait out the end of your recruiter agency contract and get a permanent job with the company where you have been placed. Then there are no issues. If not, get your company to make a written offer of a permanent job starting nine months from now and hope that this (together with your current employment) impresses your bank into lending you money. This might not work, though. In the early 1970s, one of my friends was offered a job at a large aerospace company which lost a major contract in the interim period between offer and joining. My friend showed up for work on the day he was supposed to start, and instead of being processed through HR etc, his job was terminated on the spot, he was paid one day's salary, and shown the door. Times were crappy then too. If this does not work, get your company to offer you a permanent job right away, pay off the recruiter company yourself, and then go to the bank.
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Why invest for the long-term rather than buy and sell for quick, big gains?
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The price of a shares reflects the expected future returns of that company. If it does not someone will notice and buy until it does. Look at this chart http://www.finanzen.net/chart/Arcandor (click on max), that's a former DAX company, so one of the largest german companys. Now it's bankrupt. Why do you think you are the only one who is going to notice? There are millions of people and even more computers, some a going to be smarter than you. Of course that does not happen to everyone but who knows. Is Volkswagen going to survive the current crisis? Probably. Is it coming back to former glory in the next half year? Who knows? Here comes the obvious solution: Don't buy single stocks, spread it out over many companies, some will shine, some will plument and you get the average. Oh that's an index, how convinent. Now if there were a way to save on all these transaction costs you're incurring...
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Why is there such disparity of max contribution limits between 401K accounts and regular IRA accounts?
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The 401k was not written with the specific intent of enabling retirement savings. Why do tax advantages favor employees of large employers... It seems that large businesses have been more effective at influencing legislators despite that there are more people are employed by small than large businesses.
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How are the $1 salaries that CEOs sometimes take considered legal?
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Taxable fringe benefits are included in taxable wages for the purpose of FLSA. So when those executives get to use company cars or company jets that value is "wage" even if it isn't salary.
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Query regarding international transaction between governments
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Buyer A didn't send money to the US government, Buyer A sent money to Seller B, a US resident. I think the most common way to facilitate a transaction like this is a regular old international wire transfer. Buyer A in India goes to their bank to exchange X INR to $1mm USD. $1mm USD is then wire transferred to Seller B's bank account. The USD was sold to Buyer A, either by funds held by Buyer A's bank, or foreign exchange markets, or possibly the US government. Seller B may owe taxes on the gain derived from the sale of this thing to Buyer A, but that taxation would arise regardless of who the buyer was. Buyer A may owe an import tax in India upon importing whatever they bought. I don't think it's common to tax imported money in this sort of transactional setting though.
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Conservative ways to save for retirement?
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Buy gold, real coins not paper. And do not keep it in a bank.
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What does an x% inflation rate actually mean?
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Individual product prices do not necessarily rise at inflation rates. What inflation means is that the purchasing power of one unit of currency decreases by x% in a year, which is typically measured by looking at a broad spectrum of products in an economy and extrapolating to "all products". So for all products across an economy, the aggregate price of all goods will, on average, be X% higher that they were this time last year. Some products will be cheaper, some will be more expensive, but on average their prices will rise with inflation rates. For the other part of your question, inflation is an annualized percentage, so an inflation rate of 12% means prices are 12% higher than they were a year ago, so if you extrapolate that linear trend, prices will rise (again, on average) 1% in a month.
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