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How to account for startup costs for an LLC from personal money? | Typically you give a loan to the company from yourself as a private person, and when the company makes money the company pays it back to you. Then the company pays for all the expenses with the money from the loan. Even if you don't want a business account yet, you can probably ask your bank for a second account (mine in the UK did that without any problems). |
Does it make sense to buy an index ETF (e.g. S&P 500) when the index is at an all-time high? | The simple answer is: Where 'think' stands for "after your calculations, and guts/intuitions, and analysis", of course. |
What is “beta” for an investment or a portfolio, and how do I use it? | In addition to individual stocks, your entire portfolio will also have a beta. It would be equal to the weighted sum of the individual asset betas So a beta portfolio of 1 would have approximate risk equal to a market index. You would use this to construct a risk level that you were comfortable with, given the expected return of the individual assets. You are also interested in obtaining a high level of "alpha" which means that your portfolio is earning more than what would be expected, given it's level of risk. |
Investing for Dummys | Have a look at my answer to a similar question (asked by a 22 yo) ... Basically |
Something looks off about Mitsubishi financial data | All but certainly, Mitsubishi is selling so cheaply because of the fuel scandal. It has been providing false fuel efficiency data for decades. As a result, it may face significant penalties and may have lost the trust of consumers, who will now be less likely to purchase a Mitsubishi vehicle. Nissan is taking a controlling stake in Mitsubishi. This is important news for the company, too. The stock price reflects the consensus of investors on how significant these issues are. It's quite possible the stock will recover over the next few years, in which case it's a bargain at the moment. On the other hand, it's quite possible the company will never recover. |
Why is economic growth so important? | Wealth is not distributed equally in any economy. And, even if it were, differentiation between people would lead to different interests being expressed in different ways. As people either attempt to earn more (to improve their situation) or different people express those interests in different ways (saving money to go on a skiing holiday, or to put a downpayment on a house) people invite new products and services to be created to satisfy those demands. In addition, there is the problem of uncertainty. People save money today to cope with uncertainty tomorrow (healthcare, pensions, education, etc.). Those savings don't remain idle, but are lent to others who believe that they can make a return through investing in new businesses or ideas. The point being that any dynamic economy will experience change in the amount of goods available to the people within that economy. From an economic perspective "growth" is just another permutation. From a political perspective, "growth" implies that people are getting wealthier. If that growth is asymmetrically distributed (e.g. the poor don't experience it and the middle classes don't feel they get enough of it) then that is a problem for politicians. The emerging markets of the world are trying to raise millions of people out of poverty. Growth is a way of measuring how quickly they are achieving that end. Growth, in and of itself, is meaningless. There are some people who believe that "we" (as some proxy of society) have enough stuff and growth is unnecessary but that implies that everyone is satisfied. For as long as some people wish to have more wealth/stuff, and have the means to achieve this, there will be growth. And for as long as there is uncertainty growth will vary. |
I have savings and excess income. Is it time for me to find a financial advisor? | Is my financial status OK? You have money for emergencies in the bank, you spend less than you earn. Yes, your status is okay. You will have a good standard of living if nothing changes from your status quo. How can I improve it? You are probably paying more in taxes than you would if you made a few changes. If you max out tax advantaged retirement accounts that would reduce the up-front taxes you are paying on your savings. Is now a right time for me to see a financial advisor? The best time to see a financial advisor is any time that your situation changes. New job? Getting married? Having a child? Got a big promotion or raise? Suddenly thinking about buying a house? Is it worth the money? How would she/he help me? If you pick an advisor who has incentive to help you rather than just pad his/her own pockets with commissions, then the advice is usually worth the money. If there is someone whose time is already paid for, that may be better. For example, if you get an accountant to help you with your taxes and ask him/her how to best reduce your taxes the next year, the advice is already paid-for in the fee you for the tax help. An advisor should help you minimize the high taxes you are almost certainly paying as a single earner, and minimize the stealth taxes you are paying in inflation (on that $100k sitting in the bank). |
Why do some online stores not ask for the 3-digit code on the back of my credit card? | @Jeremy Using CVV doesn't decrease the transaction cost. I know this because I have quotes for CC transactions and the cost/transaction doesn't depend on using CVV. That said we don't plan to use CVV because we sell insurance and the likelihood that someone who steals CC will buy insurance is very low. |
What is the difference between a bad/bounced check and insufficient funds? | Insufficient funds will cause a check to bounce. If there is evidence that you "kited" the check deliberately, that's a potential fraud charge. If the vendor accepts that you were just stupid/careless, you'll probably just have to pay a penalty processing fee in addition to making good the payment. It is your responsibility to track your account balance and not write bad checks. If the timing could be bad, don't write the check yet. If you insist on paying with money you may not have, talk to your bank about setting up overdrafts to draw from another account, or automatic overdraft loans... or use a credit card rather than paying by check. |
Advantages of paying more of your mortgage while you know you won't continue to live there your whole life | I will add one thought on to this thread. This is a financial concept called "Net Present Value". In plain English, it means "What's the best use for your money right now?" So, let's say you have an extra €300/month which is not being spent on living expenses. If you leave that money under your pillow (or spend it on beer or fancy electronics!) instead of paying off your startersloan early, that is costing you 300*(0.04/12) per month, every month. So €1/month, or €12/year. This is cumulative for the life of your loan. So not paying €300 this month will ultimately cost you €120 assuming you keep the loan open for 10 years. If you're saying "pay my debts or spend the money on a snappy smartphone?" the answer is that you should pay your debts. Now, here's the important part. Let's suppose you have a better use for the money than beer or electronics. Let's suppose you have a mutual fund which will reliably provide you with a return of 10% a year. If you put that €300/month into a high-yield fund, and if the returns are consistent, you are STILL paying that €12/year (because you invested elsewhere and didn't pay your debts), but you are realizing profits of 300*(0.1/12)=€2.5/month on the invested money. €2.5-1=€1.5/month, which is a net gain. So, in some cases, paying off your debt may not be the best use of your money. There are a number of other questions involved which are related to your exposure to capital gains taxes, incentives or disincentives for holding debt, &c. &c. These are generally country specific. A poster above who seems to be familiar with Netherlands law did a good explanation of some of those incentives. I'm in the US, and our incentive and disincentive system is different. TL;DR: It depends. |
If stock price drops by the amount of dividend paid, what is the use of a dividend | There are many reasons for buying stock for dividends. You are right in the sense that in theory a stock's price will go down in value by the amount of the dividend. As the amount of dividend was adding to the value of the company, but now has been paid out to shareholder, so now the company is worth less by the value of the dividend. However, in real life this may or may not happen. Sometimes the price will drop by less than the value of the dividend. Sometimes the price will drop by more than the dividend. And other times the price will go up even though the stock has gone ex-dividend. We can say that if the price has dropped by exactly the amount of the dividend then there has been no change in the stockholders value, if the price has dropped by more than the value of the dividend then there has been a drop to the stockholder's value, and if the price has gone up or dropped by less than the value of the dividend then there has been a increase to the stockholder's value. Benefits of Buying Stocks with Good Dividends: What you shouldn't do however, is buy stocks solely due to the dividend. Be aware that if a company starts reducing its dividends, it could be an early warning sign that the company may be heading into financial troubles. That is why holding a stock that is dropping in price purely for its dividend can be a very dangerous practice. |
Converting annual interbank rates into monthly rates | The formula you're looking for is Thus, from 3% p.a. you get ca. 0.247% per month. However, as you see 0.25% is a good approximation (generally, small rates give good approximation). |
How to calculate how much a large stock position is really worth? | Something like cost = a × avg_spreadb + c × volatilityd × (order_size/avg_volume)e. Different brokers have different formulas, and different trading patterns will have different coefficients. |
Is it worth trying to find a better minimum down payment for a first time home buyer? | It's worthwhile to try and find a better minimum down-payment. When I bought my home, I got an FHA loan, which drastically reduced the minimum down-payment required (I think the minimum is 3% under FHA). Be aware that any down-payment percentage under 20% means that you'll have to pay for private mortgage insurance (PMI) as part of your monthly mortgage. Here's a good definition of it. Part of the challenge you're experiencing may be that banks are only now exercising the due diligence with borrowers for mortgages that they should have been all along. I hope you're successful in finding the right payment. Getting a mortgage to reduce your spending on housing relative to rent is a wise move. In addition to fixing your monthly costs at a consistent level (unlike rent, which can rise for reasons you don't control), the mortgage interest deduction makes for a rather helpful tax benefit. |
How do exchanges match limit orders? | The Limit Order are matched based on amount and time. The orders are listed Highest to Lowest on the Buy Side. The orders are listed Lowest to Highest on the Sell Side. If there are 2 Sell orders for same amount the order which is first in time [fractions of milliseconds] is first. The about is the example as to how the orders would look like on any exchange. Now the highest price the buyer is ready to pay is 20.21 and the lowest price a seller is ready to sell for is 20.25. Hence there is no trade. Now if a new Buy order comes in at 20.25, it matches with the sell and the deal is made. If a new Buy order comes in at 20.30, it still matches at 20.25. Similarly if a Sell order come in at 20.21, it matches and a deal is made. If a Sell order come in at 20.11, it still matches 20.21. Incase of market order, with the above example if there is a Buy order, it would match with the lowest sell order at 20.25, if there is not enough quantity , it would match the remaining quantity to the next highest at 20.31 and continue down. Similarly if there is a Sell market order, the it would match to the maximum a seller is ready to buy, ie 20.21, if there is not sufficient buy quantity at 20.21, it will match with next for 20.19 If say there are new buy order at 20.22 and sell orders at 20.24, these will sit first the the above queue to be matched. In your above example the Lowest Sell order was at 20.10 at time t1 and hence any buy order after time t1 for amount 20.10 or greater would match to this and the price would be 20.10. However if the Buy order was first ie at t1 there was a buy order for 20.21 and then at time later than t1, there is a sell order for say 20.10 [amount less than or equal to 20.21] it would match for 20.21. Essentially the market looks at who was the first to sell at lower price or who was the first to buy at higher price and then decide the trade. Edit [To Clarify xyz]: Say if there is an Sell order at $10 Qty 100. There is a buyer who is willing to pay Max $20 and is looking for Qty 500. Your key assumption that the Buyer does not know the current SELL price of $10 is incorrect. Now there are multiple things, the Buyer knows the lowest Sell order is at $10, he can put a matching Buy order at $10 Qty 100, and say $11 Qty 100 etc. This is painful. Second, lets say he puts a Buy order at $10 Qty 100, by the time the order hits the system someone else has put the trade at $10 and his order is fulfilled. So this buyer has to keep looking at booking and keep making adjustments, if its a large order, it would be extremely difficult and frustrating for this Buyer. Hence the logic of giving preference. The later Buy order says ... The Max I can pay is $20, match eveything at the current price and get the required shares. |
Why should one only contribute up to the employer's match in a 401(k)? | The matching funds are free money, so it is a very good idea to take that money off the table. Look at it as free 100% return: you deposit $1000, your employer matches that $1000, you now have $2000 in your 401(k). (Obviously, I'm keeping things simple. Vesting schedules mean that the employer match isn't yours to keep immediately, but rather after some time; usually in chunks.) Beyond the employer match, you need to consider what is available for investment in a 401(k). Typically, your options are more limited then in an IRA. The cost of the 401(k) should be considered, as it isn't trivial for most. (The specifics will of course vary, but in large IRA accounts are cheaper.) So, it's about the opportunity costs. Up to the employer match, it doesn't matter as much that your investment choices are more limited in a 401(k), because you're getting 100% return just on the matching funds. Once that is exhausted, you have more opportunity for returns, due to having more options available to you, by going with an account that provides more choices. The overall principle here is that you have to look at the whole picture. This is similar to the notion that you should pay-down your high interest debt before investing, because from the perspective of investing the interest you're paying represent a loss, or negative return on investment, since money is going out of your accounts. Specific to your question, you have to consider the various types of investment vehicles available to you. It is not just about 401(k) and IRA accounts. You may also consider a straight brokerage account, a savings account, CDs, etc. The costs and returns that you can typically expect are your guides through the available choices. |
Can I sell my home with owner financing when I still have an FHA loan? (and should I?) | You have to pay off the balance on the loan first. Also, FHA loans are not supposed to be used for rental properties. I don't know how you living there for a number of years changes things or how often is that rule enforced but you might need to refinance even if you rent it out. |
Finding a good small business CPA? | The first place to look for an accountant is the American Institute of Certified Public Accountants which has a directory of CPAs, accounting companies, and local accounting societies. I was also looking for one for my own small firm. It really helps. |
Additional credit card with different limit on same account? | Generally not. Since authorized user cards are the same account and the difference between the two (the original and the AU card) are minimal. Note, there's nothing technically stopping banks from offering this as a feature, two cards do have identifiers that indicate they're separate cards, but the banks concern for your needs stops at how much they can bleed from you, and "helping you control your spending" is not part of that. |
Can a company donate to a non-profit to pay for services arranged for before hand? | Can a company say "StackExchange" donate to a non-profit company say $5,000 in agreement that they will spend that on paying a designer for a new website? And most importantly is this donation still tax deductible? A non-profit would have to typically create a bucket for IT Services or Website design. As long as "StackExchange" specify they employ a profession service to get it done, there would be no issue. If "StackExchange" were to specify an individula/company it would be an issue. |
Remit money to India from balance transfer of credit card | Is this transaction legal Yes it is. Are there any tax implications in US? The interest is taxable in US. From what I understand, there are no tax implications in India. Yes this is right. The question you haven't asked is does this makes sense? So you are paying 3% upfront. Getting 8% at end of one year. You can making monthly repayments through the year. You have not factored in the Fx Rate and their fluctuations. For Example you would convert USD to INR and back to USD. Even if you do this the same day, you loose around 2% that is referred to as Fx Spread. Plus the rates for USD and INR get adjusted for inflation. This means that INR will loose value in a year. In long term it would be balance out [i.e. the gain in interest rate is offset by loss in Fx rate]. At times its ahead or behind due to local conditions. |
Personal finance software for Mac that can track stocks and mutual funds? (Even manual updating of share prices will do.) | I currently use Moneydance on my Mac. Before that I had used Quicken on a PC until version 2007. It is pretty good, does most simple investment stuff just fine. It can automatically download prices for regular stocks. Mutual funds I have to input by hand. |
Why do people buy stocks at higher price in merger? | There are kind of two answers here: the practical reason an acquirer has to pay more for shares than their current trading price and the economic justification for the increase in price. Why must the acquirer must pay a premium as a practical matter? Everyone has a different valuation of a company. The current trading price is the lowest price that any holder of the stock is willing to sell a little bit of stock for and the highest that anyone is willing to buy a little bit for. However, Microsoft needs to buy a controlling share. To do this on the open market they would need to buy all the shares from people who's personal valuation is low, and then a bunch from people whose valuation is higher and so on. The act of buying that much stock would push the price up by buying all the shares from people who are really willing to sell. Moreover, as they buy more and more, the remaining people increase their personal valuation so the price would really shoot up. Acquirers avoid this situation by offering to buy a ton of stock at a substantially higher, single price. Why is Linkedin suddenly worth more than it was yesterday? Microsoft is expecting to be able to use its own infrastructure and tools to make more money with Linkedin than Linkedin would have before. In other words, they believe that the Linkedin division of Microsoft after the merger will be worth more than Linkedin alone was before the merger. This synergistic idea is the theoretical foundation for mergers in general and the main reason people use to argue for a higher price. You could also argue that by expressing an interest in Linkedin, Microsoft may be telling us something it knows about Linkedin's value that maybe we didn't realize before because we aren't as smart and informed as the people on Microsoft's board. But since it's Microsoft that's doing the buying in this case, I'm going to go out on a limb and say this is not the main effect. Given Microsoft's history, the idea that they buy expensive things because they have money to burn is more compelling than the idea that they have an insight into a company's value that we don't. |
If a company I bought stock in was de-listed but is now listed again under a new symbol, what happened to my shares? | If the company went bankrupt, the issued public shares that were outstanding at the time most likely were voided, in which case your shares are most definitely gone. The company might have done a new stock issuance coming out of bankruptcy with a different symbol, and while it could be substantially the same company, it doesn't mean much for you. It's unfortunate this may be the case, but it is one of the risks of investing. |
Is it safer to send credit card number via unsecured website form or by e-mail? What safer options are there? | Buy a prepaid gift card, such as a MasterCard or Visa gift card. You can find them at the grocery store, a pharmacy, or your local bank. Provide this on their online form. If anyone steals your gift card information, you will have already used the funds for your purchase and there is no further risk to you. |
What should I do with $4,000 cash and High Interest Debt? | If we're including psychological considerations, then the question becomes much more complicated: will having a higher available credit increase the temptation to spend? Will eliminating 100% of a small debt provide more positive reinforcement than paying off 15% of a larger debt? Etc. If we're looking at the pure financial impact, the question is simpler. The only advantage I see to prioritizing the lower interest card is the float: when you buy something on a credit card, interest is often calculated for that purchase starting at the beginning of the next billing cycle, rather than immediately from the purchase date. I'm not clear on what policies credit card companies have on giving float for credit cards with a carried balance, so you should look into what your card's policy is. Other than than, paying off the higher interest rate card is better than paying off the lower interest rate. On top of that, you should look into whether you qualify for any of the following options (presented from best to worst): |
Can a high down-payment on a house offset the need for proof of income? | It's difficult to provide an exact answer as this will very much depend on the bank & the local regulatory scheme. However as a business owner you should be able to provide incorporation docs, some proof of ownership of the company and last years' financial statements or tax returns, many banks would accept this as a proof of income for the purposes of granting credit. In general in most jurisdictions I can think of, a high downpayment will not remove the need to verify income as the bank needs to feel comfortable that you have the ability to pay the remaining 25% (e.g. how do they know you're not a serially unemployed lottery winner) and if the downpayment is quite large they may want some assurance that you got the money legally (e.g. how do they make sure you're not a drug dealer). So probably regardless of how large a downpayment most banks would probably want some additional proofs of income however what proofs are needed may be more flexible than just a salary stub. I suggest taking a look at what sort of documents you may have on hand that can serve to validate your revenue in some way and contacting a few banks directly to see what options they can provide and whether some custom-tailored arrangement can be made. |
Is the Swiss stock market inversely correlated with the Swiss Franc like Japan today? | Roughly about 1 of 2 Swiss francs is won abroad. So, yes it is easier for Swiss companies to export when the Swiss franc is not "too high" as it has been those last years. The main export market for Switzerland is the UE. Some companies are doing most or all of their business on the Swiss market. Others are much more exposed to the the health of the global economy. When the Swiss franc appreciates, some companies suffer a lot from that and other less. It depends on their product portfolio, competitors, and other factors. The last decades have shown that how the Swiss Franc valuation is less and less correlated with the performance of the Swiss economy. The Swiss franc is used as a safe haven when the global economy goes bad or is uncertain. In those times, the Swiss franc can be overevaluated, at least as compared to the purchasing power. When the global economy is improving, the over-appreciation of the Swiss franc tends to disapear ; this is happening now (in Mid-2017). As a summary, the Swiss franc itself is not truly correlated with the competitiveness of the Swiss economy, but more about how people in the world are anxious. In this regard, it behaves a little bit like gold. |
Pattern Day Trade Rule | I would suggest following your quote and having a read of the web page supplied, that buys then sells or sells short then buys (the same security on the same day) four or more times in five business days, ... So it is a two way transaction that counts as 'one'. |
If I have a lot of debt and the housing market is rising, should I rent and slowly pay off my debt or buy and roll the debt into a mortgage? | What you propose is to convert unsecured debt into secured debt. Conversion of unsecured debt into secured debt is not generally a good idea (several reasons). The debt you currently owe does not have assets securing the debt, so the creditor knows they are exposed to risk, and may be more willing to negotiate or relax terms on the debt, should you encounter problems. When you provide an asset to secure debt, you lose freedom to sell that asset. When you incur debt their is usually a spending problem that needs to be corrected, which is typically not fixed when a refinance solution is used. You do not mention interest rate, which would be one benefit to conversion of unsecured to secured debt, so you probably are not gaining adequate benefit from the conversion strategy. This strategy is often contemplated using 'cash-out' refinancing to borrow against a home you already own, and the (claimed) benefit is often to lower the interest rate on the debt. Your scenario is more complicated in that you have not purchased the home (yet). Though it may be a good idea to purchase a home, that choice depends on a different set of considerations (children, job stability, rental vs. buy costs, lifestyle, expected appreciation, etc) from how to best handle a large debt (income vs. expenses, how to increase income or reduce expenses, lifestyle, priorities, etc). Another consideration is that you already have a problem with the large debt owed to one (set of) creditor(s), and you have a plan which would shift the risk/exposure to another (set of) creditor(s) who may have been less complicit in accruing the original debt. Was the debt incurred jointly during the marriage, and something you accepted responsibility to repay? You mention that you make great income, and you specify one expense (rent), but you neither provided the amount of income, total of all your expenses, nor your free cash flow amount, nor any indication of percentages spent on rent, essential expenses, lifestyle, nor amount available to retire debt. Since you did not provide specifics, we can take a look at three scenarios, scenario #1, $4000/month income scenario #1, $6000/month income scenario #1, $8000/month income Depending upon your income and choices, you might have < $500/month to pay towards debt, or as much as $3000/month to pay towards debt, and depending upon interest rate (which OP did not provide), this debt could take < 2 years to pay or > 5 years to pay. Have you accepted the responsibility for the debt? It will be a tough task to repay the debt. And you will learn that debt comes with a cost as you repay it. One problem people often encounter when they refinance debt is they have not changed the habits which produced the debt. So they often continue their spending habits and incur new unsecured debt, landing them back in the same problem position, but with the increased secured debt combined with additional new unsecured debt. Challenge yourself to repay a specific portion of the debt in a specific time, and consider ways to reduce your expenses (and/or increase your income) to provide more money to repay the debt quicker. As you also did not disclose your assets, it is hard to know whether you could repay a portion of the debt from assets you already own. It makes sense to sell assets that have a low (or zero) return to repay debt that has a high interest rate. Perhaps you have substantial assets that you are reluctant to sell, but that you could sell to repay a large part of the debt? |
Is it worth buying real estate just to safely invest money? | No one has addressed the fact that your loan interest and property taxes are "deductible" on your taxes? So, for the first 2/3 years of your loan, you will should be able to deduct each year's mortgage payment off your gross income. This in turn reduces the income bracket for your tax calculation.... I have saved 1000's a year this way, while seeing my home value climb, and have never lost a down payment. I would consider trying to use 1/2 your savings to buy a property that is desirable to live in and being able to take the yearly deduction off your taxes. As far as home insurance, most people I know have renter's insurance, and homeowner's insurance is not that steep. Chances are a year from now if you change your mind and wish to sell, unless you're in a severely deflated area, you will reclaim at minimum your down payment. |
Can I pay off my credit card balance to free up available credit? | The card you have is one where you had to deposit an amount equivelent to your card limit -a secured limit credit card. Capital One is one if the primary cards of this type. The typical rules of credit card usage and building your credit, do not apply. So, yes, you want to use the card as much as possible and pay off your balance as often as is necessary to keep your limit freed up. You can actually pay the full balance plus 10%, and gain a little extra limit. Use your card as much as possible and call them and ask for a limit increase every three months. usually about 4 - 5 months in, they will increase your limit and do so without asking for a corresponding security deposit. This is really cool, because it means you are becoming credit-worthy. I know so much about this because I applied for this card for my son and am helping him in his attempt to repair his credit. His score increased by almost 200 points last year. |
Is it smarter to buy a small amount of an ETF every 2 or 3 months, instead of monthly? | I personally invest in 4 different ETFs. I have $1000 to invest every month. To save on transaction costs, I invest that sum in only one ETF each month, the one that is most underweight at the time. For example, I invest in XIC (30%), VTI (30%), VEA (30%), and VWO (10%). One month, I'll buy XIC, next month VTA, next month, VEA, then XIC again. Eventually I'll buy VWO when it's $1000 underweight. If one ETF tanks, I may buy it twice in a row to reach my target allocation, or if it shoots up, I may skip buying it for a while. My actual asset allocation never ends up looking exactly like the target, but it trends towards it. And I only pay one commission a month. If this is in a tax-sheltered account (main TFSA or RRSP), another option is to invest in no-load index mutual funds that match the ETFs each month (assuming there's no commission to buy them). Once they reach a certain amount, sell and buy the equivalent ETFs. This is not a good approach in a non-registered account because you will have to pay tax on any capital gains when selling the mutual funds. |
Is selling only shares you bought with margin on a margin/unsettled cash purchase free ride? | There is no free ride at most brokers. You will likely be charged a margin fee for that trade even though you only held the margin shares for part of one day. The margin fee would be the annual margin interest rate calculated down to a one day holding period,so it would be smaller. Check your broker's policies but most work like this. |
What happens if one brings more than 10,000 USD with them into the US? | The US Customs and Border Protection website states that there is no limit to the amount of currency that can be brought into or taken out of the US. There is no limit on the amount of money that can be taken out of or brought into the United States. However, if a person or persons traveling together and filing a joint declaration (CBP Form 6059-B) have $10,000 or more in currency or negotiable monetary instruments, they must fill out a "Report of International Transportation of Currency and Monetary Instruments" FinCEN 105 (former CF 4790). The CBP site also notes that failure to declare currency and monetary instruments in excess of $10,000 may result in its seizure. Further, the site states that the requirement to report currency on a FinCEN 105 does not apply to imports of gold bullion. However, the legal website The Law Dictionary includes details of how money laundering laws may come into play here : As part of the War on Terror and the War on Drugs, U.S. law enforcement agencies have significantly increased their vigilance over money laundering. To this effect, travelers who carry large amounts of cash without supporting documentation of its legitimate source may be subject to secondary inspections and seizure of funds. In some cases, law enforcement may confiscate cash in excess of $10,000 until supporting documents are produced. So far, I have described the "official" position. However, reading between the lines, I think it is fair to say that in the current climate if you show up at an entry point with a suitcase full of a large amount of cash you would face considerable scrutiny, regardless of any supporting documentation you may present. If you fail to present supporting documentation, then I think your cash would certainly be seized. If you are a US resident, then you would be given the opportunity to obtain satisfactory documentation. If you did present documentation, then I think your cash would be held for as long as it would take to verify the validity of the documentation. Failure to present valid documentation would result in money laundering charges being brought against you and the matter would rest before the courts. If you are not a US resident, then failing to produce supporting documentation would mean your cash being seized and entry into the US would almost certainly be denied. You would then have to deal with the situation from outside of the US. If you did produce supporting documentation, then again I suspect the cash would be held for as long as it takes to verify the validity of the documentation. Whether or not you were allowed to enter the US would depend on what other documentation you possess. |
When is the right time to buy a new/emerging technology? | When is the right time to buy a new/emerging technology? When it's trading at a discount that allows you to make your money back and then some. The way you presented it, it is of course impossible to say. You have to look at exactly how much cheaper and efficient it will be, and how long that will take. Time too has a cost, and being invested has opportunity cost, so the returns must not only arrive in expected quantity but also arrive on time. Since you tagged this investing, you should look at the financial forecasts of the business, likely future price trajectories, growth opportunity and so on, and buy if you expect a return commensurate with the risk, and if the risk is tolerable to you. If you are new to investment, I would say avoid Musk, there's too much hype and speculation and their valuations are off the charts. You can't make any sensible analysis with so much emotion running wild. Find a more obscure, boring company that has a sound business plan and a good product you think is worth a try. If you read about it on mainstream news every day you can be sure it's sucker bait. Also, my impression that these panels are actually really expensive and have a snowball's chance in Arizona (heh) in a free market. Recently the market has been manipulated through green energy subsidies of a government with a strong environmentalist voter base. This has recently changed, in case you haven't heard. So the future of solar panels is looking a bit uncertain. I am thinking about buying solar panels for my roof. That's not an investment question, it's a shopping question. Do you actually need a new roof? If no, I'd say don't bother. Last I checked the payoff is very small and it takes over a decade to break even, unless you live in a desert next to the Mexican border. Many places never break even. Electricity is cheap in the United States. If you need a new roof anyway, I suppose look at the difference. If it's about the same you might as well, although it's guaranteed to be more hassle for you with the panels. Waiting makes no sense if you need a new roof, because who knows how long that will take and you need a roof now. If a solar roof appeals to you and you would enjoy having one for the price available, go ahead and get one. Don't do it for the money because there's just too much uncertainty there, and it doesn't scale at all. If you do end up making money, good for you, but that's just a small, unexpected bonus on top of the utility of the product itself. |
Why would you sell your bonds? | Investment strategies abound. Bonds can be part of useful passive investment strategy but more active investors may develop a good number of reasons why buying and selling bonds on the short term. A few examples: Also, note that there is no guarantee in bonds as you imply by likening it to a "guaranteed stock dividend". Bond issuers can default, causing bond investors to lose part of all of their original investment. As such, if one believes the bond issuer may suffer financial distress, it would be ideal to sell-off the investment. |
Why buy insurance? | For big values the loss becomes negligible. Say you have a 10% chance to get 10 million $/€/Whatever, expected value 1m. You sell that chance for 990k, which loses you 10k of expected income. Why would you throw away 10k? Because in the face of getting almost 1m the 10k are insignificant, 1m and 990k will make you roughly equally rich. Also the richness increase from 1m to 10m is less than 10x since 1m gives you maybe 90% of the freedom that 10m does (depending on how well you can make 10m work for you, most people will just let it rot in the bank). Another way to look at it is to look at bankruptcy risk. Say I have 10k in the bank, which is nice. Those 10k cannot pay for a new house or 2 cars (mine and the one I hit), so I have a small risk of significant loss. If I buy an insurance I reduce my chance of going bankrupt from maybe 0.001% to 0% for a fairly small price. Usually you can buy insurance fairly cheap if you raise your deductible to maybe 5k (both for the house and the car) so that you shoulder the risk you can (shouldering risk = gaining money) and paying an insurance to shoulder the rest for you. That way you minimize the cost to remove the risk of bankruptcy. It makes sense to shoulder as much risk as you can (unless a fixed fee of the insurance makes in unfeasible) before paying others to do it for you so you can optimize your income while removing fatal risks. |
Why is Google's current nasdaq market cap almost twice the current share price * the No. of shares outstanding? | http://mobile.nytimes.com/blogs/economix/2014/04/02/the-many-classes-of-google-stock/ Are you counting both class A and other share classes? |
Equity - date of offer, or date of joining? | TL;DR: The date they were granted. (Usually, this follows both an offer and acceptance.) It's not uncommon for a new vesting clock to start when there's a new round of funding coming in, because the investors want to make sure the key people are going to be engaged and incentivized going forward from that point. They don't lower their expectations for how long they want folks engaged based on the person having started earlier. Non-institutional investors may have the same concerns as institutional investors here and use the same vesting strategy to address them. Primary recognition of the benefits from having had people start earlier or be there longer (so long as it correlates with having gotten more done) is embedded in the valuation (which affects how much founders' shares are diluted in the raise). |
What do Earnings Per Share tell potential shareholders? | Earnings per share is the company profit (or loss), divided by the number of outstanding shares. The number should always be compared to the share price, so for instance if the EPS is $1 and the share price is $10, the EPS is 10% of the share price. This means that if the company keeps up this earning you should expect to make 10% yearly on your investment, long term. The stock price may fluctuate, but if the company keeps on making money you will eventually do so too as investor. If the EPS is low it means that the market expects the earnings to rise in the future, either because the company has a low profit margin that can be vastly improved, or because the business is expected to grow. Especially the last case may be a risky investment as you will lose money if the company doesn't grow fast enough, even if it does make a healthy profit. Note that the listed EPS, like most key figures, is based on the last financial statement. Recent developments could mean that better or worse is generally expected. Also note that the earnings of some companies will fluctuate wildly, for instance companies that produce movies or video games will tend to have a huge income for a quarter or two following a new release, but may be in the negative in some periods. This is fine as long as they turn a profit long term, but you will have to look at data for a longer period in order to determine this. |
Will I be turned down for a car loan? | Considering I'm putting 30% down and having my father cosign is there any chance I would be turned down for a loan on a $100k car? According to BankRate, the average credit score needed to buy a new car is 714, but they also show average interest rates at 6.39% for new-car loans to people with credit scores in the 601-660 range. High income certainly helps offset credit score to some extent. Not every bank/dealership does things the same way. Being self-employed you'd most likely be required to show 2 years of tax returns, and they'd use those as a basis for your income rather than whatever you have made recently. If using a co-signer, their income matters. Another key factor is debt to income ratio, if too much of someone's income is already spoken for by other debts a lender will shy away. So, yes, there's a chance, given all the information we don't know and the variability with lender policies, that you could be turned down for a car loan. How should I go about this? If you're set on pursuing the car loan, just go talk to some lenders. You'll want to shop around for a good rate anyway, so no need to speculate just go find out. Include the dealership as a potential financing option, they can have great rates. Personally, I'd get a much cheaper car. Your insurance premium on a 100k car will be quite high due to your age. You might be rightly confident in your earning potential, but nothing is guaranteed, situations can change wildly in short order. A new car is not a good investment or a value-retaining asset, so why bother going into debt for one if you don't have to? If you buy something in cash now, you could upgrade in a few years without financing if your earning prediction holds and would save quite a bit in car insurance and interest over the years between. |
Buying a small amount (e.g. $50) of stock via eToro “Social Trading Network” using a “CFD”? | As Waldfee says, CFDs are a derivative (of the underlying stock in this case). If you are from the USA then they are prohibited in the USA as has also been mentioned. They are not prohibited, however, in many other countries including Australia. We can buy or short sell (on a limited number of securities) CFDs on Australian securities, USA securities and securities from many other countries, on FX, and different commodities. The reason you are paying much less than the actial stock price is worth is because you are buying on margin. When you go long you pay interest on overnight positions, and when you go short you recieve interest on overnight positions (that is if you hold the position open overnight). Most CFDs are over the counter, however in Australia (don't know about other countries) we also have exchange traded CFDs called ASX CFDs. I have tried both ASX CFDs and over the counter CFDs and prefer the over the counter CFDs because the broker provides a market which closely but not exactly follows the underlying prices. Wlth the exchange traded CFDs there was low liquidity due to being quite new so there was the potential to be gapped quite considerably. This might improve as the market grows. All in all, once you understand how they work and what is involved in trading them, they are much easier than options or futers. However, if you are going to trade anything first get yourself educated, have a trading plan and risk management strategy, and paper trade before putting real money on the table. And remember, if you are in the USA, you are actually prohibited from trading CFDs. Regarding the price of AAPL at $50, the price should be the same as that of the underlying stock, it is just that your initial outlay will be less than buying the stock directly because you are buying on margin. Your initial outlay may be as little as 5% or lower, depending on the underlying stock. |
Vanguard ETF vs mutual fund | Where are you planning on buying this ETF? I'm guessing it's directly through Vanguard? If so, that's likely your first reason - the majority of brokerage accounts charge a commission per trade for ETFs (and equities) but not for mutual funds. Another reason is that people who work in the financial industry (brokerages, mutual fund companies, etc) have to request permission for every trade before placing an order. This applies to equities and ETFs but does not apply to mutual funds. It's common for a request to be denied (if the brokerage has inside information due to other business lines they'll block trading, if a mutual fund company is trading the same security they'll block trading, etc) without an explanation. This can happen for months. For these folks it's typically easier to use mutual funds. So, if someone can open an account with Vanguard and doesn't work in the financial industry then I agree with your premise. The Vanguard Admiral shares have a much lower expense, typically very close to their ETFs. Source: worked for a brokerage and mutual fund company |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | TL/DR Yes, The David popularized the Debt Snowball. The method of paying low balance first. It's purely psychological. The reward or sense of accomplishment is a motivator to keep pushing to the next card. There's also the good feeling of following one you believe to be wise. The David is very charismatic, and speaks in a no-nonsense my way or the highway voice. History is riddled with religious leaders who offer advice which is followed without question. The good feeling, in theory, leads to a greater success rate. And really, it's easier to follow a plan that comes at a cost than to follow one that your guru takes issue with. In the end, when I produce a spreadsheet showing the cost difference, say $1000 over a 3 year period, the response is that it's worth the $1000 to actually succeed. My sole purpose is to simply point out the cost difference between the two methods. $100? Go with the one that makes you feel good. $2000? Just think about it first. If it's not clear, my issue is less with the fact that the low balance method is inferior and more with its proponents wishing to obfuscate the fact that the high interest method is not only valid but has some savings built in. When a woman called into The David's radio show and said her friend recommended the high rate first method, he dismissed it, and told her that low balance was the only way to go. The rest of this answer is tangent to the real issue, answered above. The battle reminds me of how people brag about getting a tax refund. With all due respect to the Tax Software people, the goal should be minimizing one's tax bill. Getting a high refund means you misplanned all year, and lent Uncle Sam money at zero interest(1). And yet you feel good about getting $3000 back in April. (Disclosure - when my father in law passed away, I took over my mother in law's finances. Her IRA RMD, and taxes. First year, I converted some money to Roth, and we had a $100 tax bill. Frowny face on mom. Since then, I have Schwab hold too much federal tax, and we always get about $100 back. This makes her happy, and I'll ignore the 27 cents lost interest.) (1) - I need to acknowledge that there are cases where the taxpayer has had zero dollars withheld, yet receives a 'tax refund.' The earned income tax credit (EITC) produces a refundable benefit, i.e. a payment that's not conditional on tax due. Obviously, those who benefit from this are not whom I am talking about. Also, in response to a comment below, the opportunity cost is not the sub-1% rate the bank would have paid you on the money had you held on to it. It's the 18% card you should be paying off. That $3000 refund likely cost over $400 in the interest paid over the prior year. |
Could capital gains from a stock sale impact my IRA eligibility? | Yes. Look at form 1040 AGI is line 37, and it comes well after you report your schedule D cap gains. I read this question as meaning you wish to contribute to a traditional IRA pretax. There is no income limit to contribute to an IRA and not take the deduction. |
Can I get a discount on merchandise by paying with cash instead of credit? | There are two fundamentally different reasons merchants will give cash discounts. One is that they will not have to pay interchange fees on cash (or pay much lower fees on no-reward debit cards). Gas stations in my home state of NJ already universally offer different cash and credit prices. Costco will not even take Visa and MasterCard credit cards (debit only) for this reason. The second reason, not often talked about but widely known amongst smaller merchants, is that they can fail to declare the sale (or claim a smaller portion of the sale) to the authorities in order to reduce their tax liability. Obviously the larger stores will not risk their jobs for this, but smaller owner-operated ("mom and pop") stores often will. This applies to both reduced sales tax liability and income tax liability. This used to be more limited per sale (but more widespread overall), since tax authorities would look closely for a mismatch between declared income and spending, but with an ever-larger proportion of customers paying by credit card, merchants can take a bigger chunk of their cash sales off the books without drawing too much suspicion. Both of the above are more applicable to TVs than cars, since (1) car salesmen make substantial money from offering financing and (2) all cars must be registered with the state, so alternative records of sales abound. Also, car prices tend to be at or near the credit limit of most cards, so it is not as common to pay for them in this way. |
FATCA compliance for small Foreign Company. What do I need to do? | Unless you started a bank or other kind of a financial institution (brokerage, merchant processor, etc etc), the page you linked to is irrelevant. That said, there's enough in the US tax code for you to reconsider your decision of not living in the US, or at least of being a shareholder of a foreign company. Your compliance costs are going to go through the roof. If you haven't broken any US tax laws yet (which is very unlikely), you may renounce your citizenship and save yourself a lot of money and trouble. But in the more likely case of you already being a criminal with regards the US tax law, you should probably get a proper tax advice from a US-licensed CPA/EA who's also proficient in the Japanese-American tax treaty and expats' compliance issues resolution. |
What's the point of a chargeback when they just ask the merchant whether they owe money to the buyer? | When you initiate a chargeback, the merchant has the right to dispute the chargeback. If they can provide proof that the purchase actually took place, the chargeback will fail. We don't know all the details of your situation, of course, but it appears from what you have said that the tax chain probably has documents that you signed agreeing to the charges. They prepared your return (even if they did a poor job), and so from their perspective, they have decided that they deserve to be paid. Whether or not they did a good job is a matter of opinion, of course; their position might be that they did it correctly, and the second business did it poorly. The chargeback is a powerful tool, but it is not a magic button that makes a charge disappear. If the merchant can show that a sale did indeed take place and show that the proper amount was charged, the chargeback will fail. For a service, it isn't enough usually to simply state that you were unsatisfied; if you received the service at the agreed-upon price, the charge is valid. A chargeback is sort of a nuclear option when it comes to getting a refund. There are negative ramifications and expenses every time a merchant gets a chargeback (even if they ultimately win), and so often they will be willing to work something out to avoid a chargeback. You should go to the merchant first, if you can, and ask for a refund before considering the chargeback option. If you file a chargeback without even giving them the opportunity to work it out with you, the merchant will usually want to fight back. |
How to invest in the Russian oil market? | The Russian ETFs may be broad, but a quick glance at ERUS and RBL's sector breakdown shows they're 45% and 47% energy sector, and their top holding is Gazprom comprising 9% and 14% of each ETF respectively, with plenty more oil and gas companies in their top 10 too. A harder question would be how to invest in Russia and avoid oil I think (and even then, the economy is thoroughly bound up in it). To rework a meme... In Soviet Russia, oil invest YOU! |
How can I find a report of dividend earned in a FY? | Log in to kotak securities demat account. THere, you can find statement of your sell purchase and dividend received. |
What is a “margin-call” and how are they enforced? | Simplest way to answer this is that on margin, one is using borrowed assets and thus there are strings that come with doing that. Thus, if the amount of equity left gets too low, the broker has a legal obligation to close the position which can be selling purchased shares or buying back borrowed shares depending on if this is a long or short position respectively. Investopedia has an example that they walk through as the call is where you are asked to either put in more money to the account or the position may be closed because the broker wants their money back. What is Maintenance Margin? A maintenance margin is the required amount of securities an investor must hold in his account if he either purchases shares on margin, or if he sells shares short. If an investor's margin balance falls below the set maintenance margin, the investor would then need to contribute additional funds to the account or liquidate stocks in the account to bring the account back to the initial margin requirement. This request is known as a margin call. As discussed previously, the Federal Reserve Board sets the initial margin requirement (currently at 50%). The Federal Reserve Board also sets the maintenance margin. The maintenance margin, the amount of equity an investor needs to hold in his account if he buys stock on margin or sells shares short, is 25%. Keep in mind, however, that this 25% level is the minimum level set, brokerage firms can increase, but not decrease this level as they desire. Example: Determining when a margin call would occur. Assume that an investor had purchased 500 shares of Newco's stock. The shares were trading at $50 when the transaction was executed. The initial margin requirement on the account was 70% and the maintenance margin is 30%. Assume no transaction costs. Determine the price at which the investor will receive a margin call. Answer: Calculate the price as follows: $50 (1- 0.70) = $21.43 1 - 0.30 A margin call would be received when the price of Newco's stock fell below $21.43 per share. At that time, the investor would either need to deposit additional funds or liquidate shares to satisfy the initial margin requirement. Most people don't want "Margin Calls" but stocks may move in unexpected ways and this is where there are mechanisms to limit losses, especially for the brokerage firm that wants to make as much money as possible. Cancel what trade? No, the broker will close the position if the requirement isn't kept. Basically think of this as a way for the broker to get their money back if necessary while following federal rules. This would be selling in a long position or buying in a short sale situation. The Margin Investor walks through an example where an e-mail would be sent and if the requirement isn't met then the position gets exited as per the law. |
Owner-Financed home sale or Land Contract — how to handle the transaction and the ongoing entity? | Great question, but I'm thinking you'll want to get a professional who can look at your specific situation and do it right. I wouldn't go solely on advice here. Having said that, though, my decidedly non-professional advice: The other alternative is to take a bit of a profit hit, and demand that the seller pay cash. Then the transaction becomes much easier and quicker. But again, I urge you to have a pro look at this! |
Conservative ways to save for retirement? | It has been hinted at in some other answers, but I want to say it explicitly: Volatility is not risk. Volatility is how much an investment goes up and down, risk is the chance that you will lose money. For example, stocks have relatively high volatility, but the risk that you will lose money over a 40 year period is virtually zero (in particular if you invest in index funds). Bonds, on the other hand, have basically no volatility (their cash flow is totally predictable if you trust the future of your government), but there is a significant risk that they will perform worse than stocks over a longer period. So, volatility equals risk only if you are day trading. A 401(k) is literally the opposite of that. For further reading: Never confuse risk and volatility Also, investing is not gambling. Gambling is bad because the odds are stacked against you. You need more than average luck to actually win and the longer you play, the more you will lose. Investing means buying productive capital that will produce further value. The odds are in your favor. Even if you do a moderately bad job at investing, the longer you stay, the more you will win. |
Looking for advice on rental property | You say that one property is 65% of the value of the two properties and the other is 35%. But how much of that do the two of you actually own? If you have co-signed mortgages on both properties, then your equity is going to be lower. If you sold both properties, then your take away would be just half of that equity. And while the 35% property may be less valuable, if you bought it first, it may actually have more equity. It's the equity that matters here, not the value of the property. With a mortgage, the bank is more of an owner than you are until you've paid down most of the loan. You may find that the bank won't agree to a single-owner refinance. A co-signed mortgage is a lot easier for them to collect, as they can hold either of you responsible for the entire loan. If you sell the 65% property, then you can pay off any mortgage on that property and use the equity payout from that to buy out your relative on the 35% property. If you currently have no mortgage, you'd even have cash back. This is your fewest strings option. Let's say that you have no mortgage now. So this mortgage would be the only mortgage on the property. It's not so much, as 15:65 is 3:13 or 18.75% of the value of the property. That's more of a home equity loan than a mortgage. You should be able to get a good rate. It might reduce your short term profit, but it should be survivable if you have other income. If you don't have other income, then seriously consider selling the 65% property and diversifying the payout into something else. E.g. stocks and bonds. Perhaps your relative would be willing to float you the loan. That would save you bank fees and closing costs. Write up a contract and agree to take assignment of the title at payoff. You'll need to pay a lawyer to write up the contract (paying a modest amount now to cover the various future possibilities), but that should still be cheaper. There's a certain amount of trust required on both sides, but this gives you some separation. And of course it takes your relative out of the day-to-day management entirely. Perhaps the steady flow of cash would provide what they need. If your relative is willing to remain that involved, that can work. Note that they may not want to do this, so don't get too attached to the idea. Be prepared for a no. This would be a great option for you, as you pretty much get everything you have now. They get back the time meeting with you to make decisions, but they also give up control over those decisions. Some people would not like that tradeoff. The one time I was involved with a professional managing a property for me, the fee was around 7% of the rent. If that fits your area, you might reasonably charge 5%. That gives a discount for family and not being a professional. There's a relatively easy way to find out what fits your area. Look around and see what companies offer multiple listings. Call until you find a couple that will do management for you. Get quotes for managing your properties. Now you'll know the amounts. The big failing though is that this may not describe the issue that your relative has. If the real problem is that the two of you have different approaches to property management, then making you the only decision maker may be the wrong direction. This is certainly financially feasible, but it still may not be the right solution for your relationship. If you get a no on this, I'd recommend moving on to other solutions immediately. This may simply be too favorable to you. |
What is the PEG ratio? How is the PEG ratio calculated? How is the PEG ratio useful for stock investing? | PEG is Price/Earnings to Growth. It is calculated as Price/Earnings/Annual EPS Growth. It represents how good a stock is to buy, factoring in growth of earnings, which P/E does not. Obviously when PEG is lower, a stock is more undervalued, which means that it is a better buy, and more likely to go up. Additional References: |
How can I save on closing costs when buying a home? | Do I need to pay for an inspection, or am I likely to save enough money from skipping it to cover potential problems that they would have caught? A home inspection costs hundreds of dollars. The average is $315. Inspections regularly catch things that cost tens of thousands of dollars to fix, e.g. a new roof or a cracked foundation. You also might find that a home inspection is required for your mortgage. do I need a realtor, or can I do their job myself? Unless you are a licensed realtor or you buy directly from a seller without a realtor, the fee (charged to the seller) will be the same regardless of whether you have a realtor. The seller's realtor will share the fee with your realtor if you have one. So you can do the work yourself (perhaps not as well), but you won't save money by doing so. If you have a lot of flexibility in when you purchase, you could look for especially cheap properties with motivated sellers. Arrange financing ahead of time (before you find a house), so you can close quickly. Some sellers will give you a discounted price to finish the sale quickly. Even small savings on the price of a house will outweigh most savings on closing costs. |
How to deposit a cheque issued to an associate in my business into my business account? | Just have the associate sign the back and then deposit it. It's called a third party cheque and is perfectly legal. I wouldn't be surprised if it has a longer hold period and, as always, you don't get the money if the cheque doesn't clear. Now, you may have problems if it's a large amount or you're not very well known at the bank. In that case you can have the associate go to the bank and endorse it in front of the teller with some ID. You don't even technically have to be there. Anybody can deposit money to your account if they have the account number. He could also just deposit it in his account and write a cheque to the business. |
How to sell a worthless option | Sounds like an illiquid option, if there are actually some bidders, market makers, then sell the option at market price (market sell order). If there are not market makers then place a really low limit sell order so that you can sit at the ask in the order book. A lot of time there is off-book liquidity, so there may be a party looking for buy liquidity. You can also exercise the option to book the loss (immediately selling the shares when they get delivered to you), if this is an American style option. But if the option is worthless then it is probably significantly underwater, and you'd end up losing a lot more as you'd buy the stock at the strike price but only be able to sell at its current market value. The loss could also be increased further if there are even MORE liquidity issues in the stock. |
Can we compare peer-to-peer loans to savings accounts? | I don't think you can compare savings accounts and peer-to-peer lending. The former is a liquid way of stashing some money away (IOW you can get at it pretty much any time you want) whereas the latter is extremely illiquid (you only get your money back if and when the loan has been repaid). Also, as mentioned by the other posters, there is a risk attached to p2p lending, even if the borrowers are vetted by the p2p lending platform. You're essentially taking the same risks that a bank would take when writing a couple of personal loans, and that's quite far removed from a safe haven for your cash. If you have enough money to invest (not save, invest) then it might be worth putting a small amount into p2p lending, but it's anything but an alternative to a savings account. |
How do I find the mappings between sedol and isin codes? | You can get this information through Bloomberg, but it's a paid service. |
How best to grow my small amount of money starting at a young age? [duplicate] | Congrats! That's a solid accomplishment for someone who is not even in college yet. I graduated college 3 years ago and I wish I was able to save more in college than I did. The rule of thumb with saving: the earlier the better. My personal portfolio for retirement is comprised of four areas: Roth IRA contributions, 401k contributions, HSA contributions, Stock Market One of the greatest things about the college I attended was its co-op program. I had 3 internships - each were full time positions for 6 months. I strongly recommend, if its available, finding an internship for whatever major you are looking into. It will not only convince you that the career path you chose is what you want to do, but there are added benefits specifically in regards to retirement and savings. In all three of my co-ops I was able to apply 8% of my paycheck to my company's 401k plan. They also had matching available. As a result, my 401k had a pretty substantial savings amount by the time I graduated college. To circle back to your question, I would recommend investing the money into a Roth IRA or the stock market. I personally have yet to invest a significant amount of money in the stock market. Instead, I have been maxing out my retirement for the last three years. That means I'm adding 18k to my 401k, 5.5k to my Roth, and adding ~3k to my HSA (there are limits to each of these and you can find them online). Compounded interest is amazing (I'm just going to leave this here... https://www.moneyunder30.com/power-of-compound-interest). |
Can you explain “time value of money” and “compound interest” and provide examples of each? | I will just explain the time value of money in general, descriptive terms and save the math for someone else. Imagine: You have half a million dollars. I'd like to borrow it all from you. I'll pay it all back, every penny, but no more. And I'll pay it back in about, oh, thirty years or so. (Imagine also that you can be 100% sure that I'll pay it back.) Does this sound like a good deal? Not really. Why not? Well, you could do something with that sort of money. With that sort of money, you could do a lot of things for 30 years. You could buy a nice house and live in it for 30 years and save yourself from spending a lot of money on rent during that time (or save money on interest by paying off a mortgage early) even if the price of the house goes nowhere. If you already had a house, you could do some home improvement, like insulate the place better (to save on heating bills) or even just on something that you're going to enjoy for part of those 30 years (a patio in the back yard). If you were feeling entrepreneurial, you could take that money and start a business. Or you could invest that money in the stock market, and get a lot more back.... and if that's too risky for you, just start a savings account and earn interest. And finally, in 30 years, the value of the dollar will be lower because of inflation, so it won't buy as much now as it will then. That's the time value of money. It's the opportunity cost of the best of the things that you could have done with that money during the time it was gone. When you take out a loan, your interest payments will depend in part on the time value of the money you're borrowing: the people making the loan could be investing that money somewhere else, like government bonds. (It will also depend on factors like the risk of default on the loan - this is why credit card debt is more expensive than debt like a mortgage that's backed by a big fat asset like a house which can be seized and sold if you happen to default.) This is how the Federal Reserve can affect interest rates across the economy by just buying or selling government bonds. |
What does bank do with “Repaid Principal”? | Does it add to their lending reserves or is it utilized in other ways? It depends on how the economy and the bank in particular are doing. To simplify things greatly, banks get deposits and lend (or otherwise invest) the majority of those deposits. They must keep some percentage in reserve in case depositors want to make withdrawals, and if they get a high percentage of withdrawals (pushing them to be undercapitalized) then they may sell their loans to other banks. Whether they lend the money to someone else or use the money for something else will depend completely on how many reserves they have from depositors and whether they have people lined up to take profitable loans from them. I wrote this answer for the benefit of CQM, I'd vote to close this question if I had 49 more reputation points, since it's not really about personal finance. |
Why could rental costs for apartments/houses rise while buying prices can go up and down? | Economically, you would say that purchased and rented real estate are not perfect substitutes--they are largely separate markets. Only a few people are able to easily switch from one to the other and that choice is sticky--for example, once you buy a house, prices would have to rise a lot for it to be worth it to sell it and move into an apartment. In both markets there is a supply and demand curve, but the slope of the demand curve for houses to purchase is much steeper than the demand curve for rentals. The market for new housing fluctuates rapidly because it requires a large change in housing prices to change the number of people looking to buy a house. Most decisions to buy a house are not driven by the state of the housing market. This describes a supply/demand graph with a very steep demand curve. Additionally, because of the leverage provided by mortgages, the demand for houses depends critically on relatively small changes in the interest rate and availability of loans. Thus the steep demand curve shifts all over the place as borrowing conditions change. On the other hand, apartment prices are more stable because people easily move from one apartment to another and people living in their parent's basements easily move into apartments if prices change. A small change in the price or quantity of rentals brings about reasonable response in quantity demanded. This is the situation where the demand curve is shallow. In addition, rentals are not tied to interest rates tightly, nor are they as strongly tied to economic conditions (in a recession, people avoid buying but renters continue to rent). |
Investment Options for 14-year old? | As you are 14, you cannot legally buy premium bonds yourself. Your parents could buy them and hold them for you, mind you. That said, I'm not a fan of premium bonds. They are a rather weird combination of a savings account and a lottery. Most likely, you'll receive far less than the standard interest rate you'd get from a savings account. Sure, they may pay off, but they probably won't. What I would suggest, given that you expect to need the money in five years, is simply place it in a savings account. Shop around for the best interest rate you can find. This article lists interest rates, though you'll want to confirm that it is up to date. There are other investment options. You could invest in a mutual fund which tracks the stock market or the bond market, for example. On average, that'll give you a higher rate of return. But there's more risk, and as you want the money in five years, I'd be uncomfortable recommending that at this time. If you were looking at investing for 25 years, that'd be a no-brainer. But it's a bit risky for 5 years. Your investment may go down, and that's not something I'd have been happy with when I was 14. There may be some other options specific to the UK which I don't know about. If so, hopefully someone else will chime in. |
Why was S&P 500 PE Ratio so high on May 2009 | Asking why the p/e was so high is best answered "because reported earnings were so low". Recall that the S&P500 bottomed in early March 2009 when the panic of the financial crisis reached exhaustion. As noted on the page you have linked, the reported p/e ratios are computed using reported earnings from the trailing twelve months. During those twelve months the banks were writing down all of the bad debt associated with the mortgage backed securities that has lost so much value. This meant that the banks were reporting negative earnings. Since the financial sector is a large part of the S&P500, this alone had an enormous effect on the index p/e. However, the problem was compounded by a general collapse in earnings across the economy as consumers reacted to the resulting uncertainty. The same site reports earnings for the previous years at $17.11 for the S&P500, compared to $76.17 for the year prior to 2008. That is a collapse of about 78% in earnings. Although the S&P500 has suffered badly during this time, stock market investors being forward looking were starting to price in improved earnings by May 2009. Indeed, the S&P500 was up about 33% in just two months, from its low in March2009 to mid May2009. Thus, by May of 2009 prices were not suffering to the same extent as reported trailing earnings. This would account for the anomalous p/e value reporting in May2009. |
Early Retirement Options (UK) | It's highly unlikely that you will be able to achieve 8% and would consider myself lucky to get 4% in the current interest rate environment. You might want to read some reviews of peer-to-peer lending and even try it out some yourself. Give yourself something like 2000 Euros/Dollars and a year. If you truly need 8% to retire, then you are not ready to retire. Here in the US it increases the complexity of your tax forms. I did an experiment with lending club. Here is what I found: After 18 months of giving it a try, I decided to abandon this strategy. My money will receive better and safer returns in a dividend focused mutual fund. However, I encourage you to give it a try yourself. |
Historical company performance data | Morningstar has that 10 history at http://financials.morningstar.com/ratios/r.html?t=JNJ®ion=usa&culture=en-US |
Did I get screwed in taxes on a mutual fund dividend payment? | How is that possible?? The mutual fund doesn't pay taxes and passes along the tax bill to shareholders via distributions would be the short answer. Your basis likely changed as now you have bought more shares. But I gained absolutely nothing from my dividend, so how is it taxable? The fund has either realized capital gains, dividends, interest or some other form of income that it has to pass along to shareholders as the fund doesn't pay taxes itself. Did I get screwed the first year because I bought into the fund too late in the year? Perhaps if you don't notice that your cost basis has changed here so that you'll have lower taxes when you sell your shares. Is anyone familiar with what causes this kind of situation of receiving a "taxable dividend" that doesn't actually increase the account balance? Yes, I am rather familiar with this. The point to understand is that the fund doesn't pay taxes itself but passes this along. The shareholders that hold funds in tax-advantaged accounts like 401ks and IRAs still get the distribution but are shielded from paying taxes on those gains at that point at time. Is it because I bought too late in the year? No, it is because you didn't know the fund would have a distribution of that size that year. Some funds can have negative returns yet still have a capital gains distribution if the fund experiences enough redemptions that the fund had to sell appreciated shares in a security. This is part of the risk in having stock funds in taxable accounts. Or is it because the fund had a negative return that year? No, it is because you don't understand how mutual funds and taxes work along with what distribution schedule the fund had. Do I wait until after the distribution date this year to buy? I'd likely consider it for taxable accounts yes. However, if you are buying in a tax-advantaged account then there isn't that same issue. |
Student loan payments and opportunity costs | I bought a house when I was 22, I also had $10k in student load debt. After the down payment, I had $1,500 to my name and $82k worth of debt. All the advice pointed to "pay the minimum payment and invest the rest." I discarded the advice and scrimped and put everything extra to those bills. I paid it all off by the time I was 31, and now at 34 I'm self employed, have about $110,000 saved up, a house worth $105,000, 2 cars worth a total of $8,000 and no debt. Keep in mind most of those years I was making $24-$30k a year I might have lost out on a couple years of investments, but right now there are no money worries... wouldn't you rather be like that instead of worrying if you might lose your job? |
If I were to get into a life situation where I would not be able to make regular payments, do lenders typically provide options other than default? | I would say generally, the answer is No. There might be some short term relief to people in certain situations, but generally speaking you sign a contract to borrow money and you are responsible to pay. This is why home loans offer better terms then auto loans, and auto loans better than credit cards or things like furniture. The better terms offer less risk to the lender because there are assets that can be repossessed. Homes retain values better than autos, autos better than furniture, and credit cards are not secured at all. People are not as helpless as your question suggests. Sure a person might lose their high paying job, but could they still make a mortgage payment if they worked really hard at it? This might mean taking several part time jobs. Now if a person buys a home that has a very large mortgage payment this might not be possible. However, wise people don't buy every bit of house they can afford. People should also be wise about the kinds of mortgages they use to buy a home. Many people lost their homes due to missing a payment on their interest only loan. Penalty rates and fees jacked up their payment, that was way beyond their means. If they had a fixed rate loan the chance to catch up would have not been impossible. Perhaps an injury might prevent a person from working. This is why long term disability insurance is a must for most people. You can buy quite a bit of coverage for not very much money. Typical US households have quite a bit of debt. Car payments, phone payments, and either a mortgage or rent, and of course credit cards. If income is drastically reduced making all of those payments becomes next to impossible. Which one gets paid first. Just this last week, I attempted to help a client in just this situation. They foolishly chose to pay the credit card first, and were going to pay the house payment last (if there was anything left over). There wasn't, and they are risking eviction (renters). People finding themselves in crisis, generally do a poor job of paying the most important things first. Basic food first, housing and utilities second, etc... Let the credit card slip if need be no matter how often one is threatened by creditors. They do this to maintain their credit score, how foolish. I feel like you have a sense of bondage associated with debt. It is there and real despite many people noticing it. There is also the fact that compounding interest is working against you and with your labor you are enriching the bank. This is a great reason to have the goal of living a debt free life. I can tell you it is quite liberating. |
How can I find a list of self-select stocks & shares ISA providers? | Try fool.co.uk for getting more information about ISAs: Everything You Need To Know About ISAs |
how derivatives transfer risk from one entity to another | When you buy a call option, you transfer the risk to the owner of the asset. They are risking losing out on gains that may accumulate in addition to the strike price and paid premium. For example, if you buy a $25 call option on stock XYZ for $1 per contract, then any additional gain above $26 per share of XYZ is missed out on by the owner of the stock and solely benefits the option holder. |
How will I pay for college? | You sound like you're well educated, well spoken, and resourceful, so I'm going to assume that you are somewhere in the neighborhood of top 5% material. That means you can pretty much do anything you want to if you put enough effort into it. There are two types of people in this world: those who run the world and those who live comfortably in it (and, of course, everyone else, but they are irrelevant to the discussion). Who do you want to be? I've been around a lot of wildly successful people, and they have two consistent traits: connections and freedom. First, everyone always told me that "it's not what you know, it's who you know", but I never appreciated it until after college. The world runs on connections. The more connections you have, and the more successful they are, the more successful you will be. Second, the more freedom you have, the more opportunity you will have to take chances, which is how you become wildly successful. Freedom comes from not being in debt (first) and having money (second). Why do you think Harvard grads are the guys that end up having so much money and power? It's probably because they grew up in a rich family which provided them money (freedom) and a wide social circle of rich people (connections). So you're not rich. What to do? Well, the easiest way to get into that group is to go to college with them. And that means you need to get into Harvard or another Ivy League. Stanford if you want to be an engineer. College will be where you will make your most intense and long-lasting friendships. That roommate at Harvard that you went on the crazy four-day road trip with may someday be CEO of a company... and when he needs a CIO, you can be damn sure you'll be at the top of the list if you're qualified. But Harvard costs a lot of money...which means you'll be in debt, a lot, when you get out of college. You'll have lots of rich, important friends(connections), but you'll be deeply in debt (no freedom). Most of these type of people end up becoming consultants at big firms because they pay well. You'll live a comfortable life and pay off your student loans in five or 10 years. Then you'll continue to live comfortably, but at that point you'll be too old to take huge chances and too comfortable to change things (or perhaps you'll have a big mortgage = no freedom). With a heavy debt load, it's almost impossible to, say, join an early stage startup and really be able to take huge chances. You can do it, maybe. Or, as an alternate option, you can do what I did. Go to a cheap state school and graduate with no debt. That puts you on the other side of the fence: freedom, but no connections. Then, in order to be successful, you have to figure out how to get connections. Goldman Sachs won't hire you, and everyone you meet is going to automatically assume you're mediocre because of where you went to college. At this point, your only option is to take big chances. Move to New York or San Francisco, offer to work for free as an intern somewhere or something. It can be done, and it's really not too hard, you just have to have lots of spending restraint because the little money you have has to go a long way. So what are the other options? Well, some people are recommending that you think about not going to college at all. That will certainly save you money and give you a four year head start on whatever you decide to do (freedom), but you'll forever be branded as that guy without a college degree. Think my second option above but just two or three times worse. You won't even get that free internship, and you'll be that weird guy at dinner parties who can"t answer the first question "So, where did you go to college?". It doesn't matter if you're self-taught; life isn't a meritocracy. If you're very good, you'll end up getting a nice cushy job pushing ones and zeros. A nice cushy golden handcuff job. Well, you could go to community college. They're certainly cheap. You can spend very little money so you'll end up with fairly good freedom. I might add, though, that community colleges teach trades, and not high-level things like management and complex architecture. You'll be behind technically, but not as bad as if you didn't go at all. How about connections? Your fellow students will probably lack ambition, money, and connections. They'll be candidates for entry-level wage slave jobs at Fortune 500 companies after they graduate. If they get lucky, they'll work up to middle management. There's no alumni association, and there's certainly no "DeVry Club" in downtown Boston. At New York and Silicon Valley dinner parties, having a community college degree is almost as bad as having nothing at all. Indeed, the entire value of the community college degree will be what you learn, and you'll be learning at the speed and level of your classmates. My advice? If you get into an Ivy League school, go and hope you get some grants to help you out. The debt will suck, but you'll be well positioned for the future. Otherwise, go to a cheap second-tier school where you can get a large scholarship. There are also lots of third-party scholarships that are out there on the Internet you can get. I got a couple from local organizations. Don't work during college. Focus on expanding your network instead; the future value of a minimum wage job while you're trying to go through school is practically zero. |
End-of-season car sales? | Manufacturers sometimes give incentives to car dealers to ensure that the prior year models are sold out before the year is up. However, dealers are usually pretty smart on only ordering the cars they know they can sell before this happens. Also, manufacturers are usually pretty good about only producing enough vehicles to cover demand. Honestly, you aren't likely to see these incentives materialize unless the manufacturer really screwed up. If that happens then three things occur. First is that manufacturers give a hidden incentive to the dealers. Dealers won't publicize this, even internally. If the cars are still not moving after a month, then the dealers will tell the salespeople that those cars have a specific "bonus" on them. If those cars still don't sell, then the bonus inflates quite a bit and dealers begin advertising that car at a deep discount on the radio. It's pretty much guaranteed to sell at that point. Barring those circumstances, the deal you get on a brand new car, late in the model year, is likely to be the same you could have gotten early in the model year. Honestly, if you want the best deal possible, look at the date of the inspection sticker on the car. If it is close to the 3 month mark then the dealer will bend over backwards to sell the car as the finance costs are racking up on it. They'll often sell that one at heavy discounts. |
Why does Charles Schwab have a Mandatory Settlement Period after selling stocks? | Simple Schwaab does not have actually your securities they have leased them out and have to borrow them back. all assets are linked with derivatives now. They show on the balance sheet but have to be untangled. Thats why the market drops disproportionally fast to the actual number of shares sold. |
Can you buy gift cards at grocery store to receive a higher reward rate? | Understand that buying a Starbucks gift card at the grocery store to receive 6% back on your coffee rather than 6% back on your groceries is an exploit of a flaw in the benefits program, not a feature. It's definitely not a blanket yes or no answer, the only way to find out is to try. Separately, I don't know why you would find this "concerning." This will vary greatly between merchants and cards. There will always be new points churning exploits, they don't last forever and you can't expect every customer service rep to be well versed in methods employed to juice cardmember programs. Hell, a number of years ago one person figured out that he could buy rolls of $1 coins from the US treasury with free shipping and no additional fees. This guy was literally buying thousands of dollars of cash each month to deposit and pay his credit card bill; completely against the terms of the treasury program for distributing the $1 coins. A number of people had their cards and points/cash back revoked for that one. |
I am turning 18 and I am a Student, I need strategies on building great credit soon. Where should I start? | Your goals are excellent. I really admire your thoughts and plans, and I hold you in high esteem. Good credit is indeed an important thing to have, and starting young is THE smart idea with respect to this. I see that you have as a goal the purchase of a home. Indeed, another fine ambition. (Wow, you are a different breed from what I normally encounter on the internet; that's for sure !) Since this won't happen overnight, I would encourage you to think about another option. At this point in your life you have what few people have: options, and you have lots of them. The option I would like to suggest you consider is the debt free life. This does NOT mean life without a credit card, nor does it mean living with ones parents all their days. In its simplest form, it means that you don't owe anybody anything today. An adapted form of that; with the reality of leases and so on, is that you have more immediate cash in the bank than you have contractual responsibilities to pay others. e.g., if the rent on a place is X, and the lease is 12 months, then you don't sign until you have 12X in the bank. That's the idea. If there is anything good that these past 10 years of recession and financial disasters have provided us as a nation, it is a clear picture presented to our young people that a house is not a guaranteed way to riches. Indeed, I just learned this week of another couple, forced out by foreclosure again. Yes, in the 1970s and 1980s the formula which anyone could follow was to take a mortgage on a single family house; just about any house in any community; and ten years later double your money, while (during those ten years) paying about the same (and in a few years, actually less) amount of money as you would for an apartment with about half the space. Those days were then, not now, and I seriously doubt that I will ever see them again in my lifetime. You might, at your age, one day. In the mean time, I would like to suggest that you think about that word options again; something that you have that I don't. If your mind is made up for certain that a house is the one and only thing you want, okay; this does not apply. During this time of building your credit (we're talking more than a year) I would like to encourage you to look at some of the other options that are out there waiting for you; such as... I also encourage you to take a calculator and a spreadsheet (I would be surprised if there is no freeware out there to do this with a few clicks) and compare the past 30 years of various investments. For example... It is especially educational if you can see line charts, with the ups and downs along the way. One last thing; about the stock market, you have an option (I love that word when people your age are actually thinking) called "dollar cost averaging". If you are not aware of this concept, just ask and I will edit this post (although I'm confident it has been explained by others far better than myself on this very site). Hit just about any solid stock market investment (plain old mutual fund, even with a load, and it will still work) and I believe you'll see what I'm trying to get across. Still, yes, you need a roof, and a young person should clearly plan on leaving parents in a healthy and happy way; so again, if the house is the one and only goal, then go for it kid (uhm, "kid", if you're still under 18). All the best. Do remember that you will be fixing the pipes, not the maintenance guy. |
Who can truly afford luxury cars? | In addition to those who are wealthy (not the same as high income), there are also a certain number of people whose professional livelihood is enhanced by projecting wealth/income they may or may not have. For example, some consultants, lawyers, financial advisors or other salespeople. The same is true of luxury homes for industries where entertaining clients and associates is expected. These people are essentially making an educated bet that the additional sales they expect to make will outweigh the additional expense of the luxury items, similar to purchasing advertising. But in many cases, people are either living beyond their current income, or living beyond their long-term income by failing to save for when they are too old/sick to work. Additionally, many car brands that we traditionally associate with luxury have created mid-priced lines in the $30-40K range recently, so it is possible that some of the cars you are seeing are not as expensive as you might expect. |
Homeowners: How can you protect yourself from a financial worst-case scenario? | I am lucky enough to have chosen a flexible mortgage that allows me to change payment amounts at certain, very lenient intervals (to a minimum amount). So when I was laid off, the first thing I did was call my bank to lower my payments to a level that allowed me some breathing room, at my new, lower income. If and when my family's income increases, I'll re-adjust my payments to a higher amount. But if you're concerned about the "what if"s in this economy, I'd definitely choose a mortgage that allows for flexibility so that you don't lose your house if you don't have to, particularly if your situation is temporary. |
My ex sold our car that still had money owed | It is a legal issue for two reasons. In the United States if both names were on the title both people would have had to sign the paperwork in order to transfer the title. If the car was collateral for the loan, then the bank would have had to be involved in the transaction. The portion of the check need to repay the loan would have had to have been made out to the bank. If the car was sold to a dealership, then paperwork must have been forged. If the car was sold to a person then it is possible that they were too naive to know what paperwork was required, but it is likely still fraud. You need legal advice to protect your money, and your credit score. They should also be able to tell you who needs to be contacted: DMV, the police, the dealership, the bank. |
why would someone buy or sell just a few shares in stocks | I buy or sell a few shares whenever I have a small amount of money to transfer into out of my mutual funds. Since I'm not paying transaction fees, there is no reason not to, when that is what makes sense. If you are paying a fee for each transaction, of course it makes sense to try to wait until you have a larger amount to move so the overhead per share is lower. |
Can Mutual Funds Invest In the Start Up Market? | Bloomberg suggests that two Fidelity funds hold preferred shares of Snapchat Inc.. Preferred shares hold more in common with bonds than with ordinary stock as they pay a fixed dividend, have lower liquidity, and don't have voting rights. Because of this lower liquidity they are not usually offered for sale on the market. Whether these funds are allowed to hold such illiquid assets is more a question for their strategy document than the law; it is completely legal for a company to hold a non-marketable interest in another, even if the company is privately held as Snapchat is. The strategy documents governing what the fund is permitted to hold, however, may restrict ownership either banning non-market holdings or restricting the percentage of assets held in illiquid instruments. Since IPO is very costly, funds like these who look to invest in new companies who have not been through IPO yet are a very good way of taking a diversified position in start-ups. Since they look to invest directly rather than through the market they are an attractive, low cost way for start-ups to generate funds to grow. The fund deals directly with the owners of the company to buy its shares. The markdown of the stock value reflects the accounting principle of marking to market (MTM) financial assets that do not have a trade price so as to reflect their fair value. This markdown implies that Fidelity believe that the total NPV of the company's net assets is lower than they had previously calculated. This probably reflects a lack of revenue streams coming into the business in the case of Snapchat. edit: by the way, since there is no market for start-up "stocks" pre-IPO my heart sinks a little every time I read the title of this question. I'm going to be sad all day now :(. |
How to Create Personal Balance Sheet and Budget Plan for Several Accounts | As your financial situation becomes more complex, it becomes increasingly more difficult to keep track of everything with a simple spreadsheet. It is much easier to work with software that is specifically designed for personal finances. A good program will allow you to keep track of as many accounts as you want. A great program will completely separate the different account balances (location of the money) from the budget category balances (purpose of the money). Let me explain: When you set up the software, you will enter in all of your different bank accounts with their balances. Perhaps you have three savings accounts and two checking accounts. It doesn't matter. When you are done entering those, the software will total them up, and the next job you have is assigning this money into different budget categories: your spending plan. For example, you might put some of it into a grocery category, some into an entertainment category, some will be assigned to pay your next car insurance bill, and some will be an emergency fund. (These categories are completely customizable, and your budget can be as broad or as detailed as you wish.) When you deposit your paycheck, you assign that new income into budget categories as well. It doesn't matter at this point which accounts your money are located in; the only thing that matters is that you own this money and you have access to it. Now, you might want to use a certain account for a certain budget category, but you are not required to do so. (For example, your grocery category money will probably be in your checking account, since you will be spending from it regularly. Your emergency fund will hopefully be in an account that earns a little higher interest.) Once you take this approach, you might find you don't need as many bank accounts as you thought you did, because the software does the job of separating your money into different "accounts" for different purposes. I've written before about the different categories of personal finance software. YNAB, Mvelopes, and EveryDollar are three examples of software that will take this approach of separating the concepts of the bank account and the budget category. |
What's the catch with biweekly mortgage payments? | Pete and Noah addressed the math, showing how this is, in effect, converting a 30yr to a ~23yr mortgage, at a cost, plus payment about 8% higher (1 extra payment per year). No magic there. The real issue, as I see it, is whether this is the best use of the money. Keep in mind, once you pay extra principal, which in effect is exactly what this is, it's not easy to get it back. As long as you have any mortgage at all, you have the need for liquidity, enough to pay your mortgage, tax, utilities, etc, if you find yourself between jobs or to get through any short term crisis. I've seen people choose the "sure thing" prepayment VS the "risky" 401(k) deposit. Ignoring a match is passing up a 50% or 100% return in most cases. Too good to pass up. 2 points to add - I avoided the further tangent of the tax benefit of IRA/401(k) deposits. It's too long a discussion, today's rate for the money saved, vs the rate on withdrawal. Worth considering, but not part of my answer. The other discussion I avoid is Nicholas' thoughts on the long term market return of 10% vs today's ~4% mortgage rate. This has been debated elsewhere and morphs into a "pre-pay vs invest" question. |
Purchasing options between the bid and ask prices, or even at the bid price or below? | People must simply be willing to match your orders if they know about it. You can sniff orders out if you can see them or predict them. For instance, you can look at an order book and decide who you want to get filled at, especially if you are looking at different quotes from different exchanges. So you can get a "better" fill just by looking at what someone is willing to pay to enter/exit their order as well as what exchange they placed their order through, and send an order to that specific exchange to match them. You (or a program) can just watch the level 2's and place an order as soon as you see one you like. The orders on the level2's do not reveal ALL interested market participants. Also many brokers have difficulty updating options quotes. Finally, options & market volatility can inflate or decrease the price of options by large percentages very quickly. |
Is it true that the price of diamonds is based on a monopoly? | diamonds are intrinsically worthless this is simply wrong. (1) Diamonds that are sold for anything less than, oh, let's say $5000 at original retail - are indeed utterly, totally, completely worthless. It is simply "one of the great scams". Their real "price" is maybe "five bucks". End of story. There is no secondary market. Literally - "end of story". If you buy a "diamond" lol for "$2000" to impress your loved one, you can not then "sell it" for any amount of money. It is: worthless. Once again: simple, undeniable fact. the diamond you bought for 2 grand cannot be resold. Ir's worthless. (OK, maybe you can get 100 bucks for it, something like that. Or, you can scam someone clueless, and get 200 bucks.) (2) However actual "investment" stones do in fact have a value - if somewhat fragile. Example, a few years ago I sold a stone for 30 thousand. That was a "real" price and it was quite liquid - I was within days able to find a buyer. (A dealer - he would have then sold it on for 35 or whatever.) I have never dealt in stones over six figures, but I'm fairly certain those are "real" valuable objects: just like paintings by name artists. (However: yes, the line between "laughable diamonds" and actual investment stones, is indeed moving ever upwards.) (Note - the "elephant in the room" with diamonds is that GE's industrial process for simply making utterly flawless diamonds, starting with carbon, is getting better every decade.) (A second overwheleming point that nobody has mentioned: diamonds get beat-up. Regarding "engagement ring diamonds", a used one is exactly as useless as a used car. It's crap. Just as with $200,000 picassos, this concept does not apply to "actual investment stones".) Note that many of the comments/arguments on this page are very confused because: people are not distinguishing between the (ROFL) "engagement ring scam market" and the rarefied "investment gem market". The two things are utterly different. Yes, "engagement ring diamonds" are an utter scam, and are simply: "worthless". The fundamental, basic, overwhelming scam in today's business/social universe is: "engagement diamonds". Yes, the price is only due to marketing/monopolies etc. Elephant in the room A: GE's technology can - end of story - manufacture diamonds. (Starting with "pencil leads".) End of story. It's all over. Elephant in the room B: folks forget that diamonds get beat-up, they are just like used cars. Regarding "engagement-ring diamonds", nobody has ever, or will ever, bought a used one. Simple, utterly undeniable fact: regarding "engagement ring diamonds". they have: zero value. You cannot resell them. End of story. If you buy a house, you can resell it. If you buy a car, you can resell it (at a spectacular loss). If you buy a picasso, you can resell it (almost always making a huge profit). If you buy an "engagement ring diamond", it is worth: nothing. Zero. Nada. strictly regarding investment stones, which is a distinctly utterly different market. This market has no connection, in any way, at all, even vaguely, it is utterly unrelated, to "engagement ring diamonds". You can in fact buy and sell these items - very much like say "art" or "mid century antiques", and make money. This market just has utterly no connection to the whole "engagement ring diamonds" scam system. Say you buy wine at the supermarket, for 5 to 100 bucks a bottle. If you think that the "wine" thus bought, has a secondary market, or you can invest in it or something: you have lost your mind. In total contrast: Yes, although totally flakey, there is indeed an "investment wine market" which is real and reasonable. I for example have made some money in that. (I have a great anecdote even - I had one cellar of wine in burgundy, which could have been sold for, say, 30 grand - but we drank it :) ) Again, the (somewhat bizarre) actual market in investment wine, just has to "buying wine in the supermarket". To further the analogy: wine prices in the supermarket / your (ROFL) wine dealer, from 5 to 100 bucks, are just: utterly laughable. Utterly. Laughable. Much as folks sit around, and decide on "label designs", they sit around, and decide on "price points". There is, utterly, no difference between $5 and $100 grape juice rofl "wine". The price difference is simply a marketing decision: at best, you can think of it as a Velbin good. ... exactly the same applies to "engagement ring diamonds". |
Dividend yeild per unit | $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. |
How late is Roth (rather than pretax) still likely to help? | My simplest approach is to suggest that people go Roth when in the 15% bracket, and use pre-tax to avoid 25%. I outlined that strategy in my article The 15% solution. The monkey wrench that gets thrown in to this is the distortion of the other smooth marginal tax curve caused by the taxation of social security. For those who can afford to, it makes the case to lean toward Roth as much as possible. I'd suggest always depositing pretax, and using conversions to better control the process. Two major benefits to this. It's less a question of too late than of what strategy to use. |
How to spend more? (AKA, how to avoid being a miser) | Unless your stinginess has reach truly compulsive levels, it should be enough to consciously remind yourself of the value of your time when you make purchase decisions or find yourself chasing minor savings. Another way might be to deliberately give yourself a monthly or weekly budget that you're allowed to "waste" on luxuries and conveniences without worrying. |
How to share income after marriage and kids? | I haven't seen this addressed anywhere else, so I'll make a small answer to add on to the great ones already here. Money isn't the only way a person can contribute to a relationship. Time and effort are valuable contributions. Who runs the household? Who cooks, cleans, does laundry? How will you share these duties? My husband and I have a couple of rules. One of which is that we don't keep count. "I did dishes, so you do laundry". "I made coffee last time, so now it's your turn". "I paid this, so you pay that". That's not allowed. I happen to make ~4x as much as my husband, but I work 4x the hours (he's part time at the moment). So, he does the dishes, he cooks, he does laundry, he runs the household. Do I value him less? No! I value him more, because he is part of the team, and he feeds me coffee while I work (we have our own business). Even though I make so much more than him, we still split everything down the middle. Because his contribution to this relationship, to this household, is so much more than just money. And I value him. I value his contribution. At the end of the day, you are a team - and if you split hairs over finances, you'll find yourself splitting hairs over everything. |
Is it possible that for shares to be reinvested in a stock you already sold? | I believe this depends on the broker's policies. For example, here is Vanguard's policy (from https://personal.vanguard.com/us/whatweoffer/stocksbondscds/brokeragedividendprogram): Does selling shares affect a distribution? If you sell the entire position two days or more before the dividend-payable date, your distribution will be paid in cash. If, however, you sell an entire position within the two day time frame of the security's payable date, the dividend will be reinvested, resulting in additional shares. Selling these subsequent shares will require another sell order, which will incur additional commission charges. Dividends which would have been reinvested into less than one whole share will be automatically liquidated into cash. If you want to guarantee you receive no fractional shares, I'd call your broker and ask whether selling stock ABC on a particular date will result in the dividend being paid in shares. |
Should I move my money market funds into bonds? | Your only real alternative is something like T-Bills via your broker or TreasuryDirect or short-term bond funds like the Vanguard Short-Term Investment-Grade Fund. The problem with this strategy is that these options are different animals than a money market. You're either going to subject yourself to principal risk or lose the flexibility of withdrawing the money. A better strategy IMO is to look at your overall portfolio and what you actually want. If you have $100k in a money market, and you are not going to need $100k in cash for the forseeable future -- you are "paying" (via the low yield) for flexibility that you don't need. If get your money into an appropriately diversified portfolio, you'll end up with a more optimal return. If the money involved is relatively small, doing nothing is a real option as well. $5,000 at 0.5% yields $25, and a 5% return yields only $250. If you need that money soon to pay tuition, use for living expenses, etc, it's not worth the trouble. |
Good books for learning about tax strategy/planning | J.K. Lasser's Your Income Tax is, remarkably, a great read. It's a line by line review of the tax forms, and offers commentary and examples for every scenario. Of course, it's updated every year to reflect new rules and numbers. I actually read it from cover to cover the first year I started working. It's not going to offer convoluted strategies to use, but, you'll understand your tax return well enough to respond to the advice you encounter elsewhere. To mhoran's point - "Don't let the tax tail wag the investing dog." Taxes are important, but should take a back step to earning and investing. Those who didn't sell at the height of the dotcon bubble "to avoid the big tax bill" only saw in hindsight that paying taxes is part of success not failure. |
Financing a vehicle a few months before I expect to apply for a mortgage? | If your debt will all be less than 25% gross (yes, I see you said take home) you are in great shape. I'd get the car and not worry. The well written mortgage is 20% down, with a housing payment (which of course includes prop tax and insurance, as noted by mhoran, below) under 28% and total debt under 36%. You are well within the limits, not even close. That's great. |
Is it practical to take actual delivery on a futures contract, and what is the process? | Here's a good link that can answer your question: How to take delivery of a futures contract The relevant part states: Prior to delivery day, they inform customers who have open long positions that they must either close out the position or prepare to take delivery and pay the full value of the underlying contract. By the same token traders with short positions are informed that they must close out their trades or prepare to deliver the underlying commodity. In this case, they must have the required quantity and quality of the deliverable commodity on hand. On the few occasions that a buyer accepts delivery against his futures contract, he is usually not given the underlying commodity itself (except in the case of financials), but rather a receipt entitling him to fetch the hogs, wheat, or corn from warehouses or distribution points. I hope this helps. Good luck! |
When a stock price goes down, does the money just disappears into thin air? | Yes and no. There is no actual money involved - just assumed value. Imagine you own a picture that you painted yourself, and all your friends agree it is worth 1000 $. You feel like you have a 1000 $-picture. Now a guy with some more knowledge visits you, and tells you that it is really only worth about a 100 $. Did you just lose 900 $? If yes, where did the money go? |
Does dollar cost averaging really work? | Dollar cost averaging works if the stuff you're buying goes up within your time horizon. It won't protect you from losing money if it doesn't. Also consider that the person (or company, or industry) that suggests dollar-cost averaging might want you to start up a regular investment program and put it on auto-pilot, which subsequently increases the chance that you won't give due attention to the fact that you're sending them money every paycheck to buy an investment that make them money regardless of whether you make money or not. |
Is there data and proof that a diversified portfolio can generate higher returns than the S&P 500 Index? | Yes, a diversified portfolio can generate greater returns than the S&P 500 by going OUTSIDE it. For instance, small stocks (on average) generate higher returns than the "large caps" found in the S&P 500. So if you own a diversified portfolio of stocks, some of which are smaller (in market cap) than the typical S&P 500 stock, you have a chance to outperform. You might also outperform by owning other asset classes than stocks such as gold, real estate, and timber (among others) at appropriate times. (You may also be able to get the relevant exposure by owning gold and timber stocks and REITS.) This was a lesson that David Swensen of the Yale endowment taught us. |
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