Question
stringlengths 14
166
| Answer
stringlengths 3
13.1k
|
|---|---|
Does a stay at home mom need term life insurance?
|
We asked the same question earlier this year as my wife is a SAHM with 2 young boys (5 and under). If something happened to her I'd have to quit work or change careers to stay home to raise them or something. We ended up getting a decent 20 year level TERM policy that will cover the care of both boys for many of their younger years. The cost is negligible but the piece of mind is priceless.
|
Why will the bank only loan us 80% of the value of our fully paid for home?
|
Banks and lenders have become a bit more conservative since the housing crisis. 80% is a typical limit. The reason is to minimize the lender's risk if declining property values would put the borrower upside-down on the loan. http://www.bankrate.com/finance/home-equity/how-much-equity-can-you-cash-out-of-home.aspx
|
ISA trading account options for US citizens living in the UK
|
This sounds like a FATCA issue. I will attempt to explain, but please confirm with your own research, as I am not a FATCA expert. If a foreign institution has made a policy decision not to accept US customers because of the Foreign Financial Institution (FFI) obligations under FATCA, then that will of course exclude you even if you are resident outside the US. The US government asserts the principle of universal tax jurisdiction over its citizens. The institution may have a publicly available FATCA policy statement or otherwise be covered in a new story, so you can confirm this is what has happened. Failing that, I would follow up and ask for clarification. You may be able to find an institution that accepts US citizens as investors. This requires some research, maybe some legwork. Renunciation of your citizenship is the most certain way to circumvent this issue, if you are prepared to take such a drastic step. Such a step would require thought and planning. Note that there would be an expatriation tax ("exit tax") that deems a disposition of all your assets (mark to market for all your assets) under IRC § 877. A less direct but far less extreme measure would be to use an intermediary, either one that has access or a foreign entity (i.e. non-US entity) that can gain access. A Non-Financial Foreign Entity (NFFE) is itself subject to withholding rules of FATCA, so it must withhold payments to you and any other US persons. But the investing institutions will not become FFIs by paying an NFFE; the obligation rests on the FFI. PWC Australia has a nice little writeup that explains some of the key terms and concepts of FATCA. Of course, the simplest solution is probably to use US institutions, where possible. Non-foreign entities do not have foreign obligations under FATCA.
|
How can I stop a merchant from charging a credit card processing fee?
|
I gather that, while it is not illegal for a merchant to pass their payment card processing fees on to their customers directly in the form of a surcharge, doing so is a violation of their merchant agreements with the payment card processor (at least for Visa/MC). It's not - surcharging has been permissible since 2013, as a result of a class action lawsuit against Visa and MC. It's still prohibited by state law in 9 states. If you're in one of those 9 states, you can contact your state Attorney General to report it. If you're not, you can check to see if the business is complying with the rules set forth by the card brands (which include signage at the point of sale, a separate line item for the surcharge on the receipt, a surcharge that doesn't exceed 4% of the transaction, etc.) and if they're in violation, contact the card company. However, some of those rules seem to matter to the card companies more than others, and it's entirely possible they won't do anything. In which case, there's nothing you can really do.
|
Why can it be a bad idea to buy stocks after hours?
|
Unless you want to be a short term day trader, then it is not foolish to be an end of day trader. If you are looking to be a medium to long term trader/investor then it is quite acceptable to put orders in after market close. Some would say it is even less risky, because you are not watching the price fluctuate up and down and letting your emotions getting the best of you.
|
Suitable Vanguard funds for a short-term goal (1-2 years)
|
If you want to invest in the stock market, whether over a shorter period of 1 to 2 years or over a longer period of 10 or 20 years or longer you need to take some precautions and have a written investment plan with a risk management strategy incorporated in your plan. Others have said that 1 to 2 years is too short to invest in the stock market as the stock market can have a correction and fall by 50%. But it doesn't matter if you invest for 1 year or if you invest for 50 years, the stock market can still fall by 50% just before you plan to withdraw your funds. What you need to figure out is a way to get out before the market falls by 40% to 50%. A simple way to do this is to use technical indicators to warn you when a market trend is starting to change and that it is time to get out of the market. Two simple indicators you can use on a market index are the Rate of Change (ROC) indicator and the 100 week Moving Average (MA). Below is a 10 year weekly chart of the S&P500 with these two indicators charted. They show good times to get into the market and good times to get out. If you are using the 100 week MA you would buy in when the price crosses above the MA line and sell when the price crosses below the MA line. If you are using the ROC indicator you would buy in when the ROC indicator crosses above the zero line and sell when the ROC indicator crosses below the zero line. So your investment plan could be to buy an Index ETF representing the S&P500 when the ROC moves above zero and sell when it crosses below zero. You can also place a trailing stop loss of 10% to protect you in case of a sudden fall over a couple of days. You can manage your investments in as little as 10 minutes per week by checking the chart once per week and adjusting your stop loss order. If you want to progressively add to your investment each month you could check the charts and only add any new funds if both the ROC is above zero and sloping upwards. Another option for adding new funds could be if the price is above the MA and moving further away from the MA. All these rules should be incorporated into your investment plan so that you are not basing your decisions based on emotions. There are many other Technical Analysis Indicators you could also learn about to make better educated decisions about your stock market investments. However, what I have provided here is enough for anyone to test over different indexes and time frames and do their own paper trading on to gain some confidence before placing any real money on the table.
|
In double entry book-keeping, how should I record writing of a check?
|
I have no idea what the traditional accounting way of dealing with this might be; but does your accounts package has the concept of subaccounts within a bank account? If so, to me it would make sense that when a cheque is written, you move money in the accounts package from the bank account to a subaccount named 'Cheques Written'; then when it is cashed, move money from that subaccount to the supplier. Then from a reporting perspective, when you want a report that will correspond to your actual bank statement, run a report that includes the subacconut; when you want a report that tells you how much you have available to spend, rune a report that excludes the subaccount.
|
How much should a new graduate with new job put towards a car?
|
As someone who has a very similar debt amount and environment (new grad, nice new paying job, want a car, etc), I'd like to share something with you. Life has unexpected costs. Luckily I didn't buy that new car the first few months out of college like I had planned to; I'm glad that I didn't because, as a fledgling "adult", despite having lived on my own while in college while working part-to-full time there are some things you just don't realize until it either happens or it happens to someone else. Here are some of those things: I could go on but I won't. $95K is good money and I would definitely recommend spending it a bit to enjoy yourself. But I would honestly tell you that taking your monthly expenses, adding a few hundred on top of that and then multiplying that sum by 3 would be a smart savings amount before picking up a car loan. Maybe that's an excessive savings but I've seen way too many people burn out over their cost-of-living and their failure to adjust appropriately when shit hits the fan. So instead of having to deal with the stab at your pride when having to lower the cost/quality of living that you'll probably grow accustomed to at a $95K salary, just prepare for the worst. Oh, and did I mention... A NEW JOB IS NOT A SECURE JOB Consider yourself to likely be the first asset dropped from the company if even the tiniest thing goes wrong. I know way too many people who were fresh hires at Intel, Boeing, and a few other big tech companies that pay around what you make and, despite being bad asses in college, they were dropped like a bad habit when their employers hit rough patches. To those even more experienced than me, please feel free to add to the list. I'd personally love to know them myself.
|
Some stock's prices don't fluctuate widely - Is it an advantages?
|
What is your investment goal? Many investors buy for the long haul, not short-term gain. If you're looking for long-term gain then daily fluctuations should be of no concern to you. If you want to day-trade and time the market (buy low and sell high with a short holding period) then yes less volatile stock can be less profitable, but they also carry less risk. In that case, though, transaction fees have more of an impact, and you usually have to trade in larger quantities to reduce the impact of transaction fees.
|
Are limit orders safe?
|
Limit orders are generally safer than market orders. Market orders take whatever most-favorable price is being offered. This can be especially dangerous in highly volatile stocks which have a significant spread between the bid and ask. That being said, you want to be very careful that you enter the price you intend into a limit order. It is better to be a bit slower at entering your orders than it is to make a terrible mistake like the one you mention in your question.
|
How to make money from a downward European market?
|
If you want to make money while European equities markets are crashing and the Euro itself is devaluing: None of these strategies are to be taken lightly. All involve risk. There are probably numerous ways that you can lose even though it seems like you should win. Transaction fees could eat your profits, especially if you have only a small amount of capital to invest with. The worst part is that they all involve timing. If you think the crash is coming next week, you could, say, buy a bunch of puts. But if the crash doesn't come for another 6 months, all of your puts are going to expire worthless and you've lost all of your capital. Even worse, if you sell short an index ETF this week in advance of next week's impending crash, and some rescue package arrives over the weekend, equity prices could spike at the beginning of the week and you'd be screwed.
|
Retirement planning: Pension or personal saving/investing?
|
You can never depend ONLY on pension. You must get financial education and invest your money. I recommend you to read The Intelligent Investor by Benjamin Graham...it's the bible of Warren Buffet. Besides, you don't need to be a Billionaire for retiring and be happy. I recommend you to get education in ETFs. I quote The Intelligent Investor by Benjamin Graham p. 131. According to Ibboston Associates, the leading financial research firm, if you had invested $12,000 in the Standard & Poor's 500-stock index at the beginning of september 1929, 10 years later you would have had only $7,223 left. But if you had started with a paltry $100 and simply invested another $100 every single month, then by August 1939, your money would have grown to $15,571! That's the power of disciplined buying-even in the face of the Great Depression and the worst bear market of all time. You are still young to make even bolder investments. But seriously you can never depend ONLY on pension. You won't regret learning how to invest your money, it doesn't matter if it's in the stock market, real state market, whatever market... Knowing what to do with your money is priceless. I hope this helps. Happy profits!
|
Which U.S. online discount broker is the best value for money?
|
I agree, Schwab representatives are easy to reach and very helpful. I also like Vanguard for their low mutual fund fees, so I do my retirement stuff with them, but it took forever to get in touch with a representative just to ask a simple question. Now that they are lowering their rates to 8.95 per trade (effective January 19th), the value for your money is even better.
|
Where can I lookup accurate current exchange rates for consumers?
|
What you see on XE, is the rate at which it is being traded in the market. What you receive from a broker is the rate minus a fee, for the service being provided. You can check what rates are available for visa and mastercard on the following websites. Visa rates Mastercard rates I want to shop in the currency that will be cheapest in CAD at any given time. This is a mirage and isn't going to help much. The prices you pay might be reflecting the exchange rates, difference in the product quality and other factors too. Rates are fixed for a day, so any FX movement you see in the market willn't be reflected in what you pay.
|
How do UK Gilts interest rates and repayments work?
|
The name of the Gilt states the redemption date, but not the original issue date. A gilt with 8.75% yield and close to its redemption date may have been issued at a time when interest rates were indeed close to 8.75%. For example in the early 1990s, the UK inflation rate was about 8%. One reason for preferring high or low coupon gilts is the trade off between capital gains and income, and the different taxation rules for each. If you buy a gilt and hold it to its maturity date, you know in advance the exact price that it will be redeemed for (i.e. £100). You may prefer to take a high level of income now, knowing you will make a capital loss in future (which might offset some other predictable capital gain for tax purposes) or you may prefer not to take income that you don't need right now, and instead get a guaranteed capital gain in future (for example, when you plan to retire from work). Also, you can use the change in the market value of gilts as a gamble or a hedge against your expectation of interest rate changes in future, with the "government guaranteed" fallback position that if your predictions are wrong, you know exactly what return you will get if you hold the gilts to maturity. The same idea applies to other bond investments - but without the government guarantee, of course.
|
What is the effect of a high dollar on the Canadian economy, investors, and consumers?
|
It depends primarily on how the Canadian economy is designed i.e export oriented or import oriented. If you look at this, it shows more or less equal amount of exports and imports. For the specific case of Canada, the exports would become costlier, because of a costlier dollar, but at the same time imports would become cheaper. This is only a generalization, not specific goodswise, which would require a more detailed ananlysis. But investors have a different dilemma. Canadian investors would find it cheaper to invest abroad so may channel their investments abroad because they may find it costlier to invest in Canada. While foreign investors would find it costlier to invest in Canada and may wait for later or invest somehwre else. Then government may try to boost up investment and start lowering the interest rates, if it sees the rising dollar as detrimental for the Canadian economy and investments flowing abroad instead of Canada. But what would be the final outcome of the whole rigmarole is little difficult to predict, because something is arriving and something is departing and above all goverment is doing something or is going to do. But the basic gist is Canadian exporters will be sad and Canadian importers will be happy, but vice versa for foreign investors intending to invest in Canada.
|
How much (paper) cash should I keep on hand for an emergency?
|
It's also worth thinking about minor "emergencies" when the location of your cash may be more important than the amount. I keep a baggie of change and small bills in my glovebox for meters and tolls. I keep a ten dollar bill in my armband when I go out for a jog or bike. Those little stashes have saved me more than once. Zombie apocalypse money? I just have a couple hundred at home.
|
Income Tax form in India for freelancing
|
ITR1 or ITR2 needs to be filed. Declare the income through freelancing in the section "income from other sources"
|
Ex-dividend date and time zones
|
Ex-Date is a function of the exchange, as well as the dividend. Consider Deutsche Bank AG, DB on the NYSE, DKR on Xetra. For a given dividend, each exchange sets the ex-date for trades on that exchange. (See http://www.sec.gov/answers/dividen.htm for a description of how it works in the US; other exchanges/countries are similar.) This ex-date is normally based on the dividends record date, which is when you must be on the company's books as a shareholder to receive the dividend, and based on when trades for an exchange are settled. The ex-date is the first date for which trades on that date will not settle until after the record date. This means that the ex-date can be different for different exchanges. If you sell your shares on an exchange before the ex-date for that exchange, you will not get the dividend. If you sell your shares on or after the ex-date for the exchange, you do not get the dividend. So it depends on the time zone of the exchange. Most stock exchanges trade T+3, but this can still come into play if there are bank holidays in different countries at different times.
|
What should I consider when I try to invest my money today for a larger immediate income stream that will secure my retirement?
|
I don't understand the OP's desire " I'd love to have a few hundred dollars coming in each month until I really get the hang of things. " When growing your wealth so that it will be large enough in retirement to throw off enough profits to live on ... you must not touch the profits generated along the way. You must reinvest them to earn even more profits. The profits you earn need not show up as 'cash'. Most investments also grow in re-sale value. This growth is called capital gains, and is just-as/more important than cash flows like interest income or dividends. When evaluating investing choices, you think of your returns as a percent of your total savings at any time. So expecting $100/month equals $1,200/year would require a $12,000 investment to earn 10%/yr. From the sounds of it the OP's principal is not near that amount, and an average 10% should not be expected by an investment with reasonable risk. I would conclude that 'There is no free lunch'. You need to continually save and add to your principal. You must invest to expect a reasonable return (less than 10%) and you must reinvest all profits (whether cash or capital gains). Or else start a business - which cannot be compared to passive investing.
|
Why does BlackRock's XIN page show XIN as having only 1 holding?
|
EFA must be bought and sold in US dollars. XIN allows people to buy and sell EFA in Canadian dollars without exposing their investment to unpredictable swings in the USD/CAD ratio. This is what's known as a currency-hedged instrument. Now, why the chart sums up to over 100% is anyone's guess. Presumably it's the result of a couple hundred rounding errors from all the components. If you view their most recent report, it also sums up to over 100%, but at least the EFA component is (sensibly) under 100%. P.S. I'm not seeing where it says there's only one holding. There's the primary holding, plus over 100 other cash holdings to effect the currency-hedging.
|
What are my options to deal with Student Loan debt collectors?
|
Never speak to a debt collector. Ask them to stop calling you and STOP talking to them. Communicate only via postal mail. Do not react in an emotional way, do not use foul language, etc. If they call you and attempt to harass or intimidate you, note the date/time, name of the caller and nature of the call. Ask them to cease communications via phone and hang up. You're missing alot of detail here. You need to understand: The key to these things is to fully understand the situation you are in and find out what your legal obligations are.
|
Is it better to pay an insurance deductible, or get an upgrade?
|
I'm going to guess you're on Verizon and your wife has an iPhone. I just went through this exact same situation with my mom's phone last week. When you're off contract with Verizon you're saving $25/month on your plan (at least, I am), so staying off contract is big. If you do the monthly payment you're paying full retail over 2 years, without interest, so you do stay off contract at least. Here's the thing, as long as it's a 16GB iPhone 5 or better, you're going to be able to Craigslist it for the cost of the deductible, no problems. To me that makes the decision pretty easy to make. As long as you can Craigslist it for more than the deductible, get the insurance replacement. Then when you want a new phone you can sell your old one. Since you can sell the phone, I think that makes the comparison between the deductible and deciding to pay off the $100 now and start payments on the new phone less relevant. The real comparison I'd suggest looking at is the value of the phone and the deductible.
|
Should I set a stop loss for long term investments?
|
Stop loss orders are the exact opposite of what you should be doing if you are implementing a long term buy-and-hold strategy. The motivation of a buy-and-hold strategy is that in the long term, the market rises even despite the occasional crash or recession. Setting a stop loss simply increases the probability that you will sell for a low price in a temporary market downturn. Unless you are likely to need near-term liquidity (in which case you're not a long term investor), that makes no sense.
|
Best way to start investing, for a young person just starting their career?
|
I started my career over 10 years ago and I work in the financial sector. As a young person from a working class family with no rich uncles, I would prioritize my investments like this: It seems to be pretty popular on here to recommend trading individual stocks, granted you've read a book on it. I would thoroughly recommend against this, for a number of reasons. Odds are you will underestimate the risks you're taking, waste time at your job, stress yourself out, and fail to beat a passive index fund. It's seriously not worth it. Some additional out-of-the box ideas for building wealth: Self-serving bias is pervasive in the financial world so be careful about what others tell you about what they know (including me). Good luck.
|
What is the correct term to describe (shares owned * share value)?
|
This is typically referred to as the "market value" of your holdings--it is the revenue you would generate if you sold your holdings at that moment (less any transaction costs, of course)
|
What's are the differences between “defined contribution” and “defined benefit” pension plans?
|
As others have explained defined contribution is when you (or your employer) contributes a specified amount and you reap all the investment returns. Defined benefit is when your employer promises to pay you a specified amount (benefit) and is responsible for making the necessary investments to provide for it. Is one better than the other? We can argue this either way. Defined benefit would seem to be more predictable and assured. The problem being of course that it is entirely reliant upon the employer to have saved enough money to pay that amount. If the employer fails in that responsibility, then the only fallback is government guarantees. And of course the government has limitations on what it can guarantee. For example, from Wikipedia: The maximum pension benefit guaranteed by PBGC is set by law and adjusted yearly. For plans that end in 2016, workers who retire at age 65 can receive up to $5,011.36 per month (or $60,136 per year) under PBGC's insurance program for single-employer plans. Benefit payments starting at ages other than 65 are adjusted actuarially, which means the maximum guaranteed benefit is lower for those who retire early or when there is a benefit for a survivor, and higher for those who retire after age 65. Additionally, the PBGC will not fully guarantee benefit improvements that were adopted within the five-year period prior to a plan's termination or benefits that are not payable over a retiree's lifetime. Other limitations also apply to supplemental benefits in excess of normal retirement benefits, benefit increases within the last five years before a plan's termination, and benefits earned after a plan sponsor's bankruptcy. By contrast, people tend to control their own defined contribution accounts. So they control how much gets invested and where. Defined contribution accounts are always 100% funded. Defined benefit pension plans are often underfunded. They expect the employer to step forward and subsidize them when they run short. This allows the defined benefits to both be cheaper during the employment period and more generous in retirement. But it also means that employers have to subsidize the plans later, when they no longer get a benefit from the relationship with the employee. If you want someone else to make promises to you and aren't worried that they won't keep them, you probably prefer defined benefit. If you want to have personal control over the money, you probably prefer defined contribution. My personal opinion is that defined benefit plans are a curse. They encourage risky behavior and false promises. Defined contribution plans are more honest about what they provide and better match the production of employment with its compensation. Others see defined benefit plans as the gold standard of pensions.
|
Paying off mortgage or invest in annuity
|
There is no formula to answer the question. You have to balance return on investment with risk. There's also the question of whether you have any children or other heirs that you would like to leave money to. The mortgage is presumably a guaranteed thing: you know exactly how much the payments will be for the rest of the loan. I think most annuities have a fixed rate of return, but they terminate when you both die. There are annuities with a variable return, but usually with a guaranteed minimum. So if you got an annuity with a fixed 3.85% return, and you lived exactly 18 more years, then (ignoring tax implications), there'd be no practical difference between the two choices. If you lived longer than 18 years, the annuity would be better. If less, paying off the mortgage would be better. Another option to consider is doing neither, but keeping the money in the 401k or some other investment. This will usually give better than 3.85% return, and the principal will be available to leave to your heirs. The big drawback to this is risk: investments in the stock market and the like usually do better than 3 or 4%, but not always, and sometimes they lose money. Earlier I said "ignoring tax implications". Of course that can be a significant factor. Mortgages get special tax treatment, so the effective interest rate on a mortgage is less than the nominal rate. 401ks also get special tax treatment. So this complicates up calculations trying to compare. I can't give definitive numbers without knowing the returns you might get on an annuity and your tax situation.
|
How does a public company issue new shares without diluting the value held by existing shareholders?
|
In simplest terms, when a company creates new shares and sells them, it's true that existing shareholders now own a smaller percentage of the company. However, as the company is now more valuable (since it made money by selling the new shares), the real dollar value of the previous shares is unchanged. That said, the decision to issue new shares can be interpreted by investors as a signal of the company's strategy and thereby alter the market price; this may well affect the real dollar value of the previous shares. But the simple act of creating new shares does not alter the value in and of itself.
|
Should I fund a move by borrowing or selling other property assets?
|
that would deprive me of the rental income from the property. Yes, but you'd gain by not paying the interest on your other mortgage. So your net loss (or gain) is the rental income minus the interest you're paying on your home. From a cash flow perspective, you'd gain the difference between the rental income and your total payment. Any excess proceeds from selling the flat and paying off the mortgage could be saved and use later to buy another rental for "retirement income". Or just invest in a retirement account and leave it alone. Selling the flat also gets rid of any extra time spent managing the property. If you keep the flat, you'll need a mortgage of 105K to 150K plus closing costs depending on the cost of the house you buy, so your mortgage payment will increase by 25%-100%. My fist choice would be to sell the flat and buy your new house debt-free (or with a very small mortgage). You're only making 6% on it, and your mortgage payment is going to be higher since you'll need to borrow about 160k if you want to keep the flat and buy a $450K house, so you're no longer cash-flow neutral. Then start saving like mad for a different rental property, or in non-real estate retirement investments.
|
Can I cover a short sale with the stock I already own?
|
Yes, you call the broker and tell him to use those shares to deliver to the short position.
|
Is it necessary to pay tax if someone lends me money to put into my mortgage?
|
A revocable trust? Else the title would be his...vs recieving a gift that large. Make it a business investment like a holding company. And use the trust as agreement to shares.
|
401k with paltry match or SPY ETF?
|
Switching to only 401k or only SPY? Both bad ideas. Read on. You need multiple savings vehicles. 401k, Roth IRA, emergency fund. You can/should add others for long term savings goals and wealth building. Though you could combine the non-tax-advantaged accounts and keep track of your minimum (representing the emergency fund). SPY is ETF version of SPDR index mutual fund tracking the S&P 500 index. Index funds buy weighted amounts of members of their index by an algorithm to ensure that the total holdings of the fund model the index that they track. They use market capitalization and share prices and other factors to automatically rebalance. Individual investors do not directly affect the composition or makeup of the S&P500, at least not visibly. Technically, very large trades might have a visible effect on the index makeup, but I suspect the size of the trade would be in the billions. An Electronically Traded Fund is sold by the share and represents one equal share of the underlying fund, as divided equally amongst all the shareholders. You put dollars into a fund, you buy shares of an ETF. In the case of an index ETF, it allows you to "buy" a fractional share of the underlying index such as the S&P 500. For SPY, 10 SPY shares represent one S&P basket. Targeted retirement plan funds combine asset allocation into one fund. They are a one stop shop for a diversified allocation. Beware the fees though. Always beware the fees. Fidelity offers a huge assortment of plans. You should look into what is available for you after you decide how you will proceed. More later. SPY is a ETF, think of it as a share of stock. You can go to a bank, broker, or what have you and set up an account and buy shares of it. Then you have x shares of SPY which is the ETF version of SPDR which is an index mutual fund. If the company is matching the first 10% of your income on a 1:1 basis, that would be the best I've heard of in the past two decades, even with the 10 year vesting requirement. If this is them matching 1 dollar in 10 that you contribute to 401k, it may be the worst I've ever heard of, especially with 10 year vesting. Typical is 3-5% match, 3-5 year vesting. Bottom line, that match is free money. And the tax advantage should not be ignored, even if there is no match. Research: I applaud your interest. The investments you make now will have the greatest impact on your retirement. Here's a scenario: If you can figure out how to live on 50% of your take home pay (100k * 0.90 * 0.60 * 0.5 / 12) (salary with first 10% in 401k at roughly 60% after taxes, social security, medicare, etc. halved and divided by 12 for a monthly amount), you'll have 2250 a month to live on. Since you're 28 and single, it's far easier for you to do than someone who is 50 and married with kids. That leaves you with 2250 a month to max out 401k and Roth and invest the rest in wealth building. After four or five years the amount your investments are earning will begin to be noticeable. After ten years or so, they will eclipse your contributions. At that point you could theoretically live of the income. This works with any percentage rate, and the higher your savings rate is, the lower your cost of living amount is, and the faster you'll hit an investment income rate that matches your cost of living amount. At least that's the early retirement concept. The key, as far as I can tell, is living frugally, identifying and negating wasteful spending, and getting the savings rate high without forcing yourself into cheap behavior. Reading financial independence blog posts tells me that once they learn to live frugally, they enjoy it. It's a lot of work, and planning, but if you want to be financially independent, you are definitely in a good position to consider it. Other notes:
|
Is it better to buy this used car from Craigslist or from a dealership?
|
I do not think you are missing much. One thing you have right is low cost cars depreciate almost nothing. One thing you are missing is your satisfaction index. Driving a 200K car for 4 years requires a bit of motivation when your friends are driving new cars. Typically you need a larger goal to keep you focused. That might be saving money, getting out of debt, or obtaining an education. Buying a car from a private party, Craigslist is only one source, can save both parties money as the "middle man" is cut out. If you have the ability to do so, one can save a lot of money by doing your own brakes. The info is up on youtube, and I typically "earn" between 100-300/hour doing this work myself. Most of the time warranties do not pay off. At the core, they are insurance and insurance companies are in the business to make money. If your car is likely to need repairs a policy may be unattainable or very high in price.
|
How can a 'saver' maintain or increase wealth in low interest rate economy?
|
Since the other answers have covered mutual funds/ETFs/stocks/combination, some other alternatives I like - though like everything else, they involve risk: Example of how these other "saving methods" can be quite effective: about ten years ago, I bought a 25lb bag of quinoa at $19 a bag. At the same company, quinoa is now over $132 for a 25lb bag (590%+ increase vs. the S&P 500s 73%+ increase over the same time period). Who knows what it will cost in ten years. Either way, working directly with the farmers, or planting it myself, may become even cheaper in the future, plus learning how to keep and store the seeds for the next season.
|
W8-BEN for an Indian Citizen
|
For filling out the W8-BEN form, please refer to the instructions in the document named: Instructions for Form W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting
|
Might I need a credit score to rent, or for any other non-borrowing finances?
|
Alas, institutions do not always act rationally, and being an outlier by never having debt may be bad enough. Therein is your problem. The question, then, is do you want to do business with institutions that are not acting rationally? While I cannot specifically speak to Canadian business practices, I have to imagine that in terms of credit history as a prerequisite to a lease, it can't be too different than America. It is possible to live without a credit score. This is typically done by those with enough resources that do not need to borrow money. To make transactions that commonly use credit scores, such as a lease, they will provide personal financial statements (balance sheets, personal income statements, bank statements, pay stubs, tax returns, etc...) to show that they are credit-worthy. References from prior landlords may also be beneficial. Again, the caveat is to elect to only conduct business with those individuals and institutions that are intelligent and rational enough to be able to analyze your financial position (and ability to pay) without a credit score. Therefore, you'll probably have better luck working with individual landlords, as opposed to corporate-owned rental complexes.
|
Why is day trading considered riskier than long-term trading?
|
Day trading is probably the most often tried and failed activity in the financial world. People think they can parlay $1,000 investment into $1,000,000 in a week with little or no knowledge on how to evaluate stocks and or companies. They think they can just look at where the line graphs' been and forecast where it's going to be next week. Unfortunately if it were that simple everyone would be making money hand over fist in the market. So in short, the reason day trading is considered a risky venture is because most of the people that attempt to do it are willfully ignorant. They intentionally choose not to read about day trading. They intentionally choose not to learn about how to read a company's financial report and they intentionally choose not to learn how to compare one stock to another. They also don't consider the fact that most of their data is 15 or more min old because of the shady rules brokers have worked into the system. Real everyday investors that make money in the market do it by careful evaluation of the purchase they are about to make. Guess what, even they lose time to time. That's the game!
|
Is it okay to be married, 30 years old and have no retirement?
|
First, I would recommend getting rid of this ridiculous debt, or remember this day and this answer, "you will be living this way for many years to come and maybe worse, no/not enough retirement". Hold off on any retirement savings right now so that the money can be used to crush this debt. Without knowing all of your specifics (health insurance deductions, etc.) and without any retirement contribution, given $190,000 you should probably be taking home around $12,000 per month total. Assuming a $2,000 mortgage payment (30 year term), that is $10,000 left per month. If you were serious about paying this off, you could easily live off of $3,000 per month (probably less) and have $7,000 left to throw at the student loan debt. This assumes that you haven't financed automobiles, especially expensive ones or have other significant debt payments. That's around 3 years until the entire $300,000 is paid! I have personally used and endorse the snowball method (pay off smallest to largest regardless of interest rate), though I did adjust it slightly to pay off some debts first that had a very high monthly payment so that I would then have this large payment to throw at the next debt. After the debt is gone, you now have the extra $7,000 per month (probably more if you get raises, bonuses etc.) to enjoy and start saving for retirement and kid's college. You may have 20-25 years to save for retirement; at $4,000 per month that's $1 million in just savings, not including the growth (with moderate growth this could easily double or more). You'll also have about 14 years to save for college for this one kid; at $1,500 per month that's $250,000 (not including investment growth). This is probably overkill for one kid, so adjust accordingly. Then there's at least $1,500 per month left to pay off the mortgage in less than half the time of the original term! So in this scenario, conservatively you might have: Obviously I don't know your financials or circumstances, so build a good budget and play with the numbers. If you sacrifice for a short time you'll be way better off, trust me from experience. As a side note: Assuming the loan debt is 50/50 you and your husband, you made a good investment and he made a poor one. Unless he is a public defender or charity attorney, why is he making $60,000 when you are both attorneys and both have huge student loan debt? If it were me, I would consider a job change. At least until the debt was cleaned up. If he can make $100,000 to $130,000 or more, then your debt may be gone in under 2 years! Then he can go back to the charity gig.
|
At what point should I go into credit card debt?
|
Credit cards are a reasonable if relatively expensive tool to gain liquidity. If you have $50k in liquid cash, you don't have a liquidity problem for credit to help you solve. You have 100 months of expenses in cash. I suppose you could see a balance as a motivational tool, but it's all stick and no carrot. Take the next part half seriously in the spirit of "what if" talking therapy: If you feel you need to be motivated to get back to work by the true risk of running out of cash, and take such advice from strangers on the internet, the traditional midlife crisis purchase is a sports car. At least have some fun in a (depreciating but resellable) asset instead of paying a financier's bonus in evaporated interest! If there is a luxury car tariff in your country, you may even be able to exploit a personal exemption if you drove in from the U.S. I suppose this advice could possibly get you booted from the family house as it'll probably come across as a seriously "ugly American" move though...
|
Do I need to file a tax return as a student?
|
Should I go see a CPA? Not unless you are filing paperwork for a corporation. A CPA (Certified Public Accountant) is a certification required to file certain paperwork for a corporation. In any other situation, you don't need a CPA and can just use a regular accountant. You could conceivably go to a tax accountant, but unless you are doing something complicated (like your own business) or are rich enough that everything is complicated, you should not need to do so.
|
Are these really bond yields?
|
It's worth pointing out that a bulk of the bond market is institutional investors (read: large corporations and countries). For individuals, it's very easy to just put your cash in a checking account. Checking accounts are insured and non-volatile. But what happens when you're GE or Apple or Panama? You can't just flop a couple billion dollars in to a Chase checking account and call it a day. Although, you still need a safe place to store money that won't be terribly volatile. GE can buy a billion dollars of treasury bonds. Many companies need tremendous amounts of collateral on hand, amounts far in excess of the capacity of a checking account; those funds are stored in treasuries of some sort. Separately, a treasury bond is not a substitute investment for an S&P index fund. For individuals they are two totally different investments with totally different characteristics. The only reason an individual investor should compare the return of the S&P against the readily available yield of treasuries is to ensure the expected return of an equity investment can sufficiently pay for the additional risk.
|
What's an economic explanation for why greeting cards are so expensive?
|
I actually have a bit of experience with the supplier side of this. Having worked with other people attempting to get the business launched, I can shed a bit of insight. The primary reason for the pricing is that there simply isn't enough competition to warrant dropping the price any lower than it already is. Large companies such as Hallmark will typically buy card designs at 5% of the card's selling price. With their existing distribution network, this makes bringing in new and varied designs much easier for large companies that are already well established. Having talked with such designers in the past, someone working full time producing designs makes on average 30-60k annually from this, which is worth it to someone who doesn't want to jump through the hoops of actually getting into the business independently. The primary issue stifling competition is actually getting your product into stores. There are topics here that I cannot discuss due to NDA, but I can break down the overall outline for you: You need to start with a large number of designs, with enough variety that companies think could sell well. If you bring a handful of designs with you, no company is going to take your business venture seriously enough. You need to find a company that can stamp out a large production process for you. The company is going to need to be nice enough to take smaller purchase orders on the magnitude of several hundred cards, but also be capable of scaling that production to several hundreds of thousands of cards very quickly. For cards specifically, most companies want you to ship custom racks with your cards. Some companies may provide their own racks for stocking your product, but not all of them will. This will also cost a lot of money up front. You need to find a buyer for a company you want to sell your product to. This is important, and what killed our original business plans. Think Wal-Mart, Target, or even CVS Pharmacy. These big companies are going to have people who's entire job is to buy new products to put on their shelves. This is where networking is key, you need to find people with connections to these buyers if you're not already well established with them. You will also likely fail several times, either getting outright ignored, or through a broker that can't meet expectations. For example, we had a broker that introduced us to a buyer for a large store chain, and after several months of work we found out that this broker was just pulling our strings. Typically a company will want to test your product in a handful of stores to see if it will sell. For example, Target may want to test your product in 100-200 stores over 3 months and expect your product to sell at a minimum rate. Finally, you need to be able to scale your production. Suddenly you'll be asked to go from supplying 100 stores to supplying 1,800 stores with a deadline in 2 weeks. Buyers will even turn you down at this point if they don't think you can meet the production. All of this work takes at least a year, and typically takes several years to go from an initial product to having your product in every store. Without breaking the numbers down too much, we could make a profit of ~$1.60 for every $3 card that sold. That number doesn't cover the cost of racks and other overhead, that's just the per-card profit. Even then, people are more likely to go view the Hallmark or other big-name cards over your offering. Only when another company becomes a big powerhouse to be competitive will these companies be forced to drop their prices.
|
Everyone got a raise to them same amount, lost my higher pay than the newer employees
|
This question is largely opinion based but I wanted to balance out the people jumping on you. There are lots of factors that go into salary/pay, such as what you contribute to the company and whather you go above or beyond whats expected of you. I would say seniority is one factor, or at least there is a case to be made that it is important. If someone has worked 5 years for me, that is five years that I have not had to search, interview, and train a replacement. I am not a business owner but I do employ people and when someone quits its an extremely stressful process. Not having to go through that, again in my opinion, is worth a small bump in pay. I cant comment on if its fair or not. That is opinion. What is fact is that whenever a broad group of people are given a pay raise for arbitrary reasons and other employees arent, its creates discontent, it hurts morale, employees leave, and in severe cases the business becomes crippled. So Im not sure if its fair, but is it a bad idea? Generally. See here and I highly recommend going here for anyone who thinks dramatically raising pay 'because its the right thing to do' is a good idea
|
Gift card fraud: To whom to report? How to recover funds? Is the party which issued me the card liable?
|
Have you checked to see if anything else went missing? Walmart says that because I was not the original purchaser of the gift card, they could not help me directly Just to build on what @littleadv already gave you, my personal experience on this is that none of the companies that you'll likely be dealing with in a situation like this will be falling over themselves to help you out. Unless it also helps them for some reason, or if they're compelled by consumer laws. If you think you should be protected from this sort of thing happening, feel free to reference the FCRA to see if you might get any consumer protections. But just from what you've said here, it doesn't sound like you do. So if anything else went missing (or even if not), it might have been someone working for Citi, who may have had access to more of your personal information than just your card. ID theft is unfortunately common, as a fairly easy crime to commit, a hard one to protect yourself against, and a very hard one to prosecute. When did you last check your credit report?
|
How an ETF reinvests dividends
|
The shareholders can't all re-invest their dividends -- it's not possible. Paying a dividend doesn't issue any new shares, so unless some of the existing shareholders sell their shares instead of re-investing, there aren't any shares available for the shareholders to re-invest in.
|
Are forward curves useful tools for trading decisions and which informations can be gathered from them?
|
The forward curve for gold says little, in my opinion, about the expected price of gold. The Jan 16 price is 7.9% (or so) higher than the Jan 12 price. This reflects the current cost of money, today's low interest rates. When the short rates were 5%, the price 4 years out would be about 20% higher. No magic there. (The site you linked to was in German, so I looked and left. I'm certain if you pulled up the curve for platinum or silver, it would have the identical shape, that 7.9% rise over 4 years.) The yield curve, on the other hand, Is said to provide an indication of the direction of the economy, a steep curve forecasting positive growth.
|
Should I take a personal loan for my postgraduate studies?
|
If you are eligible for FEE-HELP then this is by far the cheapest way of financing higher education in Australia.
|
Working Capital Definition
|
As you say, if you delay paying your bills, your liabilities will increase. Like say your bills total $10,000 per month. If you normally pay after 30 days, then your short-term liabilities will be $10,000. If you stretch that out to pay after 60 days, then you will be carrying two months worth of bills as a short-term liability, or $20,000. Your liabilities go up. Assume you keep the same amount of cash on hand after you stretch out your payments like this as you did before. Now your liabilities are higher but your assets are the same, so your working capital goes down. For example, suppose you kept $25,000 in the bank before this change and you still keep $30,000 after. Then before your working capital was $25,000 minus $10,000, or $15,000. After it is $25,000 minus $20,000, or only $5,000. So how does this relate to cash flow? While presumably if the company has $10,000 per month in bills, and their bank balance remains at $25,000 month after month, then they must have $10,000 per month in income that's going to pay those bills, or the bank balance would be going down. So now if they DON'T pay that $10,000 in bills this month, but the bank account doesn't go up by $10,000, then they must have spent the $10,000 on something else. That is, they have converted that money from an on-going balance into cash flow. Note that this is a one-time trick. If you stretch out your payment time from 30 days to 60 days, then you are now carrying 2 months worth of bills on your books instead of 1. So the first month that you do this -- if you did it all at once for all your bills -- you would just not pay any bills that month. But then you would have to resume paying the bills the next month. It's not like you're adding $10,000 to your cash flow every month. You're adding $10,000 to your cash flow the month that you make the change. Then you return to equilibrium. To increase your cash flow every month this way, you would have to continually increase the time it takes you to pay your bills: 30 days this month, 45 days the next, 60 the next, then 75, 90, etc. Pretty soon your bills are 20 years past due and no one wants to do business with you any more. Normally people see an action like this as an emergency measure to get over a short-term cash crunch. Adopting it as a long-term policy seems very short-sighted to me, creating a long-term relationship problem with your suppliers in exchange for a one-shot gain. But then, I'm not a big corporate finance officer.
|
As an investing novice, what to do with my money?
|
I'd keep the risk inside the well-funded retirement accounts. Outside those accounts, I'd save to have a proper emergency fund, not based on today's expenses, but on expenses post house. The rest, I'd save toward the downpayment. 20% down, with a reserve for the spending that comes with a home purchase. It's my opinion that 3-5 years isn't enough to put this money at risk.
|
What risks are there acting as a broker between PayPal and electronic bank transfers?
|
Another reason to think it's a scam: fake paypal email notifications are a thing. I've seen one that was quite convincing (but it wasn't mine to properly analyse or report), so the intial payment may be a fake from another account belonging to the scammer, and you've just transferred money to the scammer. The fake email can include links to log in to a fake paypal website, which can be quite convincing as the mark will give the login details which can be used to scrape data. Links not going to where they say is the giveaway here.
|
Buy index mutual fund or build my own?
|
Go with a Vanguard ETF. I had a lengthy discussion with a successful broker who runs a firm in Chicago. He boiled all of finance down to Vanguard ETF and start saving with a roth IRA. 20 years of psychology research shows that there's a .01 correlation (that's 1/100 of 1%) of stock/mutual fund performance to prediction. That's effectively zero. You can read more about it in the book Thinking Fast and Slow. Investors have ignored this research for years. The truth is you'd be just as successful if you picked your mutual funds out of a hat. But I'll recommend you go with a broker's advice.
|
Why don't banks give access to all your transaction activity?
|
Well, I know why the Rabobank in the Netherlands does it. I can go back around one year and a half with my internet banking. But I can only go further back (upto 7 years) after contacting the bank and paying €5,- per transcript (one transcript holds around a month of activities). I needed a year worth of transcripts for my taxes and had to cough up more than €50. EDIT It seems they recently changed their policy in a way that you can request as many transcripts as you like for a maximum cost of €25,- so the trend to easier access is visible.
|
When will the U.K. convert to the Euro as an official currency?
|
A lot of smaller (and/or weaker) countries did not have much choice when Germany and France decided to rename the German Mark as the Euro, as most of their trade was already in Marks. It was even common for their population to have their savings in Marks. So the question was. Do we wish to have to use the Euro with or without a seat on the board? It was a no brainer for them at the time... The UK has a lot of trade with the USA and other countries outside of the Euro zone, so we are unlikely to have to join the Euro. So in the end it comes down to this point - if the British voters trust a UK government they elected more or less than an EEC government mostly elected by people in the other EEC countries. I don’t think the UK will be joining the Euro anytime soon, but everything can (and will) change with the passage of time. (After all the USA used to be part of the pound trading zone and please can you pay us all the back dated tax you stop paying after a little tea party!) Update: Given what has just happen to Grease and Spain and the Conservative Party has the most seats in the UK parliament, I don’t think the UK will not be joining the Euro for the next 5 years at least
|
0% APR first 12 months on new credit card. Can I exceed that 30% rule of thumb and not hurt my credit score?
|
Your utilization ratio history is irrelevant to its impact on your credit score. If you run up 80% of your utilization In January, then pay it back to 10% in March, your score in March will reflect the new reduced ratio with no memory of the 80% utilization last month. With that said, don't go around overspending just because you have 0% apr for a little bit. Spend what you would spend with cash.
|
Resources to begin trading from home?
|
Since then I had gotten a job at a supermarket stocking shelves, but recently got fired because I kept zoning out at work This is not a good sign for day trading, where you spend all day monitoring investments. If you start focusing on the interesting math problem and ignoring your portfolio, you can easily lose money. Not so big a problem for missed buy opportunities, but this could be fatal for missed sale opportunities. Realize that in day trading, if you miss the uptick, you can get caught in a stock that is now going down. And I agree with those who say that you aren't capitalized well enough to get started. You need significantly more capital so that you can buy a diversified portfolio (diversification is your limitation, not hedging). Let's say that you make money on two out of three stocks on average. What are the chances that you will lose money on three stocks in a row? One in twenty-seven. What if that happens on your first three stocks? What if your odds at starting are really one in three to make money? Then you'll lose money more than half the time on each of your first three stocks. The odds don't favor you. If you really think that finance would interest you, consider signing up for an internship at an investment management firm or hedge fund. Rather than being the person who monitors stocks for changes, you would be the person doing mathematical analysis on stock information. Focusing on the math problem over other things is then what you are supposed to be doing. If you are good at that, you should be able to turn that into a permanent job. If not, then go back to school somewhere. You may not like your schooling options, but they may be better than your work options at this time. Note that most internships will be easier to get if you imply that you are only taking a break from schooling. Avoid outright lying, but saying things like needing to find the right fit should work. You may even want to start applying to schools now. Then you can truthfully say that you are involved in the application process. Be open about your interest in the mathematics of finance. Serious math minds can be difficult to find at those firms. Given your finances, it is not practical to become a day trader. If you want proof, pick a stock that is less than $100. Found it? Write down its current price and the date and time. You just bought that stock. Now sell it for a profit. Ignore historical data. Just monitor the current price. Missed the uptick? Too bad. That's reality. Once you've sold it, pick another stock that you can afford. Don't forget to mark your price down for the trading commission. A quick search suggests that $7 a trade is a cheap price. Realize that you make two trades on each stock (buy and sell), so that's $14 that you need to make on every stock. Keep doing that until you've run out of money. Realize that that is what you are proposing to do. If you can make enough money doing that to replace a minimum wage job, then we're all wrong. Borrow a $100 from your mom and go to town. But as others have said, it is far more realistic to do this with a starting stake of $100,000 where you can invest in multiple stocks at once and spread your $7 trading fee over a hundred shares. Starting with $100, you are more likely to run out of money within ten stocks.
|
Cheapest way to wire or withdraw money from US account while living in Europe
|
I prefer to use a Foreign Exchange transfer service. You will get a good exchange rate (better than from Paypal or from your bank) and it is possible to set it up with no transfer fees on both ends. You can use an ACH transfer from your US bank account to the FX's bank account and then a SEPA transfer in Europe to get the funds into your bank account. Transfers can also go in the opposite direction (Europe to USA). I've used XE's service (www.xe.com) and US Forex's service (www.usforex.com). Transferwise (www.transferwise.com) is another popular service. US Forex's service calls you to confirm each transfer. They also charge a $5 fee on transfers under $1000. XE's service is more convenient: they do not charge fees for small transfers and do not call you to confirm the tramsfer. However, they will not let you set up a free ACH transfer from US bank accounts if you set up your XE account outside the US. In both cases, the transfer takes a few business days to complete. EDIT: In my recent (Summer 2015) experience, US Forex has offered slightly better rates than XE. I've also checked out Transferwise, and for transfers from the US it seems to be a bit of a gimmick with a fee added late in the process. For reference, I just got quotes from the three sites for converting 5000 USD to EUR:
|
How to work around the Owner Occupancy Affidavit to buy another home in less than a year?
|
Danger. The affidavit is a legal document. Understand the risk of getting caught. If you are planning on using the condo to generate income the chances that you default on the loan are higher than an owner occupied property. That is why they demand more down payment (20%+) and charge a higher rate. The document isn't about making sure you spend 183+ nights a year in the property, it is making sure that it isn't a business, and you aren't letting a 3rd party live in the property. If you within the first year tell the mortgage company to send the bill to a new address, or you change how the property is insured, they will suspect that it is now a rental property. What can they do? Undo the loan; ask for penalty fee; limit your ability to get a mortgage in the future; or a percentage of the profits How likely is it? The exact penalty will be in the packet of documents you receive. It will depend on which government agency is involved in the loan, and the lenders plan to sell it on the secondary market. It can also depend on the program involved in the sale of the property. HUD and sister agencies lock out investors during the initial selling period, They don't want somebody to represent themselves as homeowner, but is actually an investor. Note: some local governments are interested not just in non-investors but in properties being occupied. Therefore they may offer tax discounts to residents living in their homes. Then they will be looking at the number of nights that you occupy the house in a year. If they detect that you aren't really a resident living in the house, that has tax penalties. Suggestion: If you don't want to wait a year buy the condo and let the loan officer know what your plan is. You will have to meet the down payment and interest rate requirements for an investment property. Your question implies that you will have enough money to pay the required 20% down payment. Then when you are ready buy the bigger house and move in. If you try and buy the condo with a non-investment loan you will have to wait a year. If you try and pay cash now, and then get a home equity loan later you will have to admit it is a rental. And still have to meet the investor requirements.
|
how does one start an investing club (as a company)?
|
As for the letting the "wise" people only make the decisions, I guess that would be a bit odd in the long run. Especially when you get more experienced or when you don't agree with their decision. What you could do, is make an agreement that always 3/4 (+/-) of the partners must agree with an investment. This promotes your involvement in the investments and it will also make the debate about where to invest more alive, fun and educational). As for the taxes I can't give you any good advice as I don't know how tax / business stuff works in the US. Here in The Netherlands we have several business forms that each have their own tax savings. The savings mostly depend on the amount of money that is involved. Some forms are better for small earnings (80k or less), other forms only get interesting with large amounts of money (100k or more). Apart from the tax savings, there could also be some legal / technical reasons to choose a specific form. Again, I don't know the situation in your country, so maybe some other folks can help. A final tip if your also doing this for fun, try to use this investment company to learn from. This might come in handy later.
|
In the event of a corporate spin-off, how can I calculate the correct cost basis for each company's shares?
|
From my understanding: Original Holding: Siemens - 10,000 units at 80 Euros/unit Cost = 800,000 euros Spin-off: Every 10 Siemens get 1 OSRAM On July 5th, 2013: Siemens closing - 78 Euros On Monday, July 8th: Ex-date (opening) - 75 Euros Hence: Market value for:- 1. Siemens: 75 * 10,000 = 750,000 euros 2. OSRAM: (10,000 / 10) * (78 - 75) = 3,000 euros Total Market value = 780,000 + 3,000 = 753,000 euros Ratio for: 1. Siemens = 750,000 / 753,000 = 0.996015936 2. OSRAM = 3,000 / 753,000 = 0.003984063 Cost for: 1. Siemens = 800,000 * 0.996015936 = 796,812.75 2. OSRAM = 3,187.25
|
New 1099 employee with Cobra insurance
|
For the first four months of the year, when you were an employee, the health insurance premiums were paid for with pre-tax money. When you receive your W-2 at the end of the year, the amount in Box 1 of the W-2 will be reduced by the amount you paid for health insurance. You can't deduct it on your tax return because it has already been deducted for you. Now that you are a 1099 independent contractor, you are self-employed and eligible for the self-employed health insurance deduction. However, as you noted, the COBRA premiums are likely not eligible for this deduction, because the policy is in your old employer's name. See this question for details, but keep in mind that there are conflicting answers on that question.
|
Have my parents been bilked? If so, what to do?
|
If they made deposits 20 years ago, and none since, the S&P is up over 300% since then. i.e. a return of $40,000 on $10,000 invested. We wouldn't expect to see that full return, as a prudent mix of stock and bonds (or any treasury bills/CDs, etc) would lower the overall return during this period. Advice "Transfer the money, directly to an IRA at a broker, Fidelity, Schwab, Vanguard, etc." For most people, going after the advisor isn't worth it, unless the sums are large and the poor management, pretty clear. The lesson for readers here - monitor your investments. Ask questions. It's not about "beating the market" which can actually create more risk, but about understanding the returns you see, and the fees you are spending. The mistake didn't occur at the time the money was invested, but every year it wasn't monitored.
|
Why are there so many stock exchanges in the world?
|
Nearly every country has its own exchange because so many countries have their own currency, and currency permeates every part of an exchange's business. Generally, an exchange will support transaction and settlement only in local currency. Securities (except those that explicitly enable FX trading) are denominated and will trade in a single currency-- you can only buy a share of IBM in U.S. dollars. Securities trading always seeks to be a clean, frictionless, scalable process, and adding cross-currency translation to the mix would just complicate things. So it's one exchange, one currency. In most countries, citizens and even businesses are largely restricted to having bank accounts in local currency. There are various political reasons for this, but there it is: it is difficult or impossible to open a domestic bank account in a foreign-denominated currency. A public company headquartered in a given country will be required to publish financial statements in local currency, will be more likely to do business with the local citizenry and businesses in that currency, and so will likely look for investors from that same pool-- which generally means listing in local currency, which means on an exchange in that country. There are exceptions, of course. Big multinationals do business all over the world, and many seek investors all over the world as well. Mechanisms have been created to permit this (American Depositary Receipts or ADRs, for example). But once again, cross-currency translation makes things more complicated, so ADRs and their like are only practical for very big international players. As to why there may be many exchanges in a single country, IMO Nick R has it right. Read "Flash Boys"; many market makers profit from trading between exchanges, and so have an interest in there being many of them. And in the U.S., regulators have expressed an interest in "innovation" in the exchange space, and so permit them. There is also an argument to be made against having a single "Too Big To Fail" exchange just like the argument for banks, but I wouldn't call that a "reason" for the current state of affairs.
|
Why should I trust investment banks' ratings?
|
In theory, GS has a Chinese Wall between the department which issued the advice and any departments which may profit from such advice. This would take away some of your distrust, except for the fact that GS did violate these rules in the past (see the answer from user10665). You're wondering about the timing, prior to the release of figures by Tesla itself. This is quite normal. Predicting the past is not that useful ;) The price range indeed is wide, but that too is a meaningful opinion. It says that GS thinks Tesla's share price strongly depends on factors which are hard to predict. In comparison, Coca Cola's targets will be in a much smaller range because its costs and sales are very stable.
|
How does shorting ETFs work? What are the costs and tax implications?
|
No, the expense ratio would be something you wouldn't be charged. If you bought shares of the ETF long, then the dividends are usually reduced by the expense ratio if you wanted to know where to find that charge in general. You would have to make up for any dividends the underlying stocks as part of general shorting since the idea is that once you buy to put back the shares, it has to appear as if they weren't missing in the first place. No, the authorized participant would handle changes to the underlying structure if needed.
|
When is the right time to buy a new/emerging technology?
|
The short answer is that it's never the right time to buy an emerging technology. As long as the technology is emerging, you should expect that newer revisions will be both better and less expensive. With solar, specifically, there are some tax credits to help the early adopters that may help you on the cost/benefit analysis, but in the end, you still have to decide whether the benefits outweigh the costs now, and if not, whether that will change in the near future. For me, part of the solar benefit is the ability to generate electricity when the power goes out. That option does require local battery storage, however. One of the benefits of using Musk's solar tiles instead of actual slate is the weight of the quartz tiles which is much lower than the weight of real slate. In many cases a slate roof is heavy enough to require major reinforcement of the roof trusses before installation. The lower weight also saves significantly on shipping costs. This is where Musk can lower costs enough to be competitive to some of the materials he hope to compete with.
|
What type of investments should be in a TFSA, given its tax-free growth and withdrawal benefits?
|
I think "optimal" is a term that needs to be better qualified - what's optimal investment for one person is not necessary optimal for another, as it depends on the investor's time horizon, risk tolerance, and investment knowledge. I would personally put fix-income (or products that generates incomes that CRA considers as "interest") products in the TFSA so the gains aren't taxed at all. I would consider putting preferred shares in this account as well, since dividend incomes are taxed higher than capital gain and preferred shares don't usually change in price unless the company's ability to pay the dividends are in-doubt. I don't want to put common equities in TFSA as that would take away your ability to leverage past losses to reduce future capital gains. If you are using TFSA as a way to accelerate saving for a near-term purchase, then you definitely want to employ fix-income products as the underlying saving vehicle, since market volatility would be your enemy (unless you are feeling very lucky). If you are using TFSA as a way to supplement your registered retirement saving account, then you can treat it the same way you would invest in your RRSP.
|
Making $100,000 USD per month, no idea what to do with it
|
What I would do, in this order: Get your taxes in order. Don't worry about fancy tricks to screw the tax man over; you've already admitted that you're literally making more money than you know what to do with, and a lot of that is supported, one way or another, by infrastructure that's supported by tax money. Besides, your first priority is to establish basic security for yourself and your family. Making sure you won't be subjected to stressful audits is an important part of that! Pay off any and all outstanding debts you may have. This establishes a certain baseline standard of living for you: no matter what unexpected tragedies may come up, at least you won't have to deal with them while also keeping the wolves at bay at the same time! Max out a checking account. I believe the FDIC maximum insured value is $250,000. Fill 'er up, get a debit card, and just sit on it. This is a rainy day fund, highly liquid and immediately usable in case you lose your income. Put at least half of it into an IRA or other safe investments. Bonds and reliable dividend-paying stocks are strongly preferred: having money is good but having income is much better, especially in retirement! Quality of life. Splurge a little. (Emphasis on a little!) Look around your life. There are a few things that it would be nice if you just had, but you've never gotten around to getting. Pick up a few of them, but don't go overboard. Spending too much too quickly is a good way to end up with no money and no idea what happened to it. Also, note that this isn't just for you; family members deserve some love too! Charitable giving. If you have more money than you know what to do with, there are plenty of people out there who know exactly what to do--try to go on living and build a basic life for themselves--but have no money with which to do so. Do your research. Scam charities abound, as do more-or-less legitimate ones who actually do help those in need, but also end up sucking up a surprisingly high percentage of donations for "administrative costs". Try and avoid these and send your money where it will actually do some good in the world. Reinvest in yourself. You're running a business. Make sure you have the best tools and training you can afford, now that you can afford more!
|
What tax rules apply to selling of digital goods, specifically in-game currencies?
|
Believe it or not, unless you directly contact an accountant with experience in this field or a lawyer, you may have a tough time getting a direct answer from a reputable source. The reason is two fold. First, legally defining in-game assets is exceptionally difficult from a legal/taxation stand point. Who really owns this data? You or the company that has built the MMO and manages the servers containing all of the data? You can buy-and-sell what is effectively "data" on their servers but the truth is, they own the code, the servers, the data, your access rights, etc. and at any point in time could terminate everything within their systems. This would render the value of your accounts worthless! As such, most countries have overwhelmingly avoided the taxation of in-game "inventory" because it's not really definable. Instead, in game goods are only taxed when they are exchanged for local currency. This is considered a general sale. There may be tax codes in your region for the sale of "digital goods". Otherwise, it should be taxed as sale a standard good with no special stipulations. The bottom line is that you shouldn't expect to find much reliable information on this topic, on the internet. Law's haven't been welled defined, regarding in-game content worth and taxing of sales and if you want to know how you should pay your taxes on these transactions, you need to talk to a good accountant, a lawyer or both.
|
Why diversify stocks/investments?
|
Diversifying is the first advice given to beginner in order to avoid big loss. For example in 2014 the company Theranos was really appealing before it fail in 2016. So a beginner could have invest ALL his money and lose it. But if he has deverified he wouldn't lost everything. As an investor goes from beginner to experience some still Diversify and other concentrate. Mostly it depends how much confident you are about an investement. If you have 20 years of experience, now everything about the company and you are sure there will be profit you can concentrate. If you are not 100% sure there will be a profit, it is better to Diversify. Diversifying can also be profitating when you loose money: because you will pay tax when you earn money, if you diversify you can choose to loose money in some stock (usually in december) and in this way cut your taxes.
|
What is inflation?
|
I've seen a lot of long and complicated answers here so here is my simple and short answer: Let's say the economy consists of: 10 apples and 10$. Then an apple costs 1$. If you print 10$ more you have: 10 apples and 20$. Then an apple costs 2$. That is it! It's not what Kenshin said: Over time, prices go up! However I would like to add something more on the topic: inflation is theft! If I hack the bank and steal 10% from each account it's obvious that it is theft. It's a bit less obvious when the government prints out money and people loose 10% of the value in their bank accounts but the end result is the same. Final note: some may disagree but I do not consider inflation when 5 of the apples rot and you have: 5 apples and 10$ and an apple now costs 2$. This is a drop in supply and if the demand stays the same prices will rise.
|
How do I find a good mutual fund to invest 5K in with a moderately high amount of risk?
|
Just find a low cost S&P 500 index fund, and spend your time reading The Great Mutual Fund Trap instead of wasting your time and money picking actively managed funds.
|
Insurance company sent me huge check instead of pharmacy. Now what?
|
Checks are awesome things in that, even if it gets lost the money doesn't change hands until the check is cashed. I would highly recommend NOT signing a check over and putting it in the mail though. Essentially putting your signature on it is saying yes, pay to whomever. Theoretically acceptable, rarely a good idea. Call the insurance company and have them cancel current check to reissue to the correct people. Don't forget to write VOID (in huge letters) on the check before throwing away and/or tearing it up.
|
What's the catch in investing in real estate for rent?
|
Several, actually: Maintenance costs. As landlord, you are liable for maintaining the basic systems of the dwelling - structure, electrical, plumbing, HVAC. On top of that, you typically also have to maintain anything that comes with the space, so if you're including appliances like a W/D or fridge, if they crap out you could spend a months' rent or more replacing them. You are also required to keep the property up to city codes as far as groundskeeping unless you specifically assign those responsibilities to your tenant (and in some states you are not allowed to do so, and in many cases renters expect groundskeeping to come out of their rent one way or the other). Failure to do these things can put you in danger of giving your tenant a free out on the lease contract, and even expose you to civil and criminal penalties if you're running a real slum. Escrow payments. The combination of property tax and homeowner's insurance usually doubles the monthly housing payment over principal and interest, and that's if you got a mortgage for 20% down. Also, because this is not your primary residence, it's ineligible for Homestead Act exemptions (where available; states like Texas are considering extending Homestead exemptions to landlords, with the expectation it will trickle down to renters), however mortgage interest and state taxes do count as "rental expenses" and can be deducted on Schedule C as ordinary business expenses offsetting revenues. Income tax. The money you make in rent on this property is taxable as self-employment income tax; you're effectively running a sole proprietorship real-estate management company, so not only does any profit (you are allowed to deduct maintenance and administrative costs from the rent revenues) get added to whatever you make in salary at your day job, you're also liable for the full employee and employer portions of Medicare/Medicaid/SS taxes. You are, however, also allowed to depreciate the property over its expected life and deduct depreciation; the life of a house is pretty long, and if you depreciate more than the house's actual loss of value, you take a huge hit if/when you sell because any amount of the sale price above the depreciated price of the house is a capital gain (though, it can work to your advantage by depreciating the maximum allowable to reduce ordinary income, then paying lower capital gains rates on the sale). Legal costs. The rental agreement typically has to be drafted by a lawyer in order to avoid things that can cause the entire contract to be thrown out (though there are boilerplate contracts available from state landlords' associations). This will cost you a few hundred dollars up front and to update it every few years. It is deductible as an ordinary expense. Advertising. Putting up a "For Rent" sign out front is typically just the tip of the iceberg. Online and print ads, an ad agency, these things cost money. It's deductible as an ordinary expense. Add this all up and you may end up losing money in the first year you rent the property, when legal, advertising, initial maintenance/purchases to get the place tenant-ready, etc are first spent; deduct it properly and it'll save you some taxes, but you better have the nest egg to cover these things on top of everything your lender will expect you to bring to closing (assuming you don't have $100k+ lying around to buy the house in cash).
|
Recommendation on Options Back Testing tool please
|
Power Options is one such example of what you seek, not cheap, but one good trade will recover a year's fee. There's a lot you can do with the stock price alone as most options pricing will follow Black Scholes. Keep in mind, this is a niche, these questions, while interesting to me, generate little response here.
|
Auto loan and student loan balance
|
I don't understand the calculations in the comments by the OP. He says My monthly savings after mandatory expense is around USD 2000. This includes rent, expenses, emergency fund savings, and the monthly required payment of my auto loan. (emphasis added) He has $2000 USD left over after monthly expenses (which includes rent, food, utilities etc, contribution towards emergency funds, and the required monthly payment on the auto loan). He claims that by applying the $2000 USD per month towards reducing the debt, it would take him 30-36 months to be debt-free. But is it not the case that applying the $2000 to the student loan of $18K+ (while continuing to make the auto loan payments) will pay the student loan off in less than 10 months? If no payments are made on that $18K+ student loan, the accrued interest of about $2K in 10 months (this is (18.25*13.7%*)(10/12) for a total of $20K+). In actuality, with the loan being paid down, the interest will be much less. Once the student loan is paid off, the extra $2000 can go towards what is left of the $10K auto loan each month and pay it off in another 4 or 5 months or so. So we are talking of 15 months max instead of 30-36 months. Of course, as Carlos Briebiescas points out, the car is more valuable as an asset than can be sold in case of job loss creating a need for cash etc, and so paying it off first might be better, but that is a different calculation.
|
Uni-Select (UNS.TO) Market Cap Incorrect?
|
Note that your link shows the shares as of March 31, 2016 while http://uniselect.com/content/files/Press-release/Press-Release-Q1-2016-Final.pdf notes a 2-for-1 stock split so thus you have to double the shares to get the proper number is what you are missing. The stock split occurred in May and thus is after the deadline that you quoted.
|
Can you sell on the settlement date?
|
Yes, on the settlement the stock is yours to sell with no risk of freeride or day trading applying.
|
Do performers pay taxes on comped meals and hotels?
|
My number one piece of advice is to see a tax professional who can guide you through the process, especially if you're new to the process. Second, keep detailed records. That being said, I found two articles, [1] and [2] that give some relevant details that you might find helpful. The articles state that: Many artists end up with a combination of income types: income from regular wages and income from self-employment. Income from wages involves a regular paycheck with all appropriate taxes, social security, and Medicare withheld. Income from self-employment may be in the form of cash, check, or goods, with no withholding of any kind. They provide a breakdown for expenses and deductions based on the type of income you receive. If you get a regular paycheck: If you've got a gig lasting more than a few weeks, chances are you will get paid regular wages with all taxes withheld. At the end of the year, your employer will issue you a form W-2. If this regular paycheck is for entertainment-related work (and not just for waiting tables to keep the rent paid), you will deduct related expenses on a Schedule A, under "Unreimbursed Employee business expenses," or on Form 2106, which will give you a total to carry to the schedule A. The type of expenses that go here are: If you are considered an independent contractor (I presume this includes the value of goods, based on the first quoted paragraph above): Independent contractors get paid by cash or check with no withholding of any kind. This means that you are responsible for all of the Social Security and Medicare normally paid or withheld by your employer; this is called Self-Employment Tax. In order to take your deductions, you will need to complete a Schedule C, which breaks down expenses into even more detail. In addition to the items listed above, you will probably have items in the following categories: Ideally, you should receive a 1099 MISC from whatever employer(s) paid you as an independent contractor. Keep in mind that some states have a non-resident entertainers' tax, which is A state tax levied against performers whose legal residence is outside of the state where the performance is given. The tax requires that a certain percentage of any gross earnings from the performance be withheld for the state. Seriously, keep all of your receipts, pay stubs, W2's, 1099 forms, contracts written on the backs of napkins, etc. and go see a tax professional.
|
Are online mortgage lenders as good as local brick-and-mortar ones?
|
I had a pretty good experience with Lending Tree, although they are a mortgage broker, not a lender themselves.
|
Why are capital gains taxed at a lower rate than normal income?
|
Consider inflation. If you invest $10,000 today, you need to make a few hundred dollars interest just to make up for inflation - if there is 3% inflation then a change from $10,000 to $10,300 means you didn't actually make any money.
|
What items are exempt from the VAT? [U.K.]
|
Some items are VAT Exempt or Reduced, but in short you will pay it on almost any all consumer goods. Assuming you are a visitor to the UK from a non-EU nation then Her Majesty will refund you with the appropriate paperwork
|
How to transfer personal auto lease to business auto lease?
|
I'd approach the lender that you're getting the lease from, but be prepared for them either saying 'no' to putting the lease into the name of an LLC without any proven track record (because it hasn't been around for a while) or require you to sign a personal guarantee, which partially defeats the purpose of putting the car lease into the LLC. I'd also talk to an accountant to see if you can't just charge the business the mileage on your vehicle as that might be the simplest solution, especially if the lender gets stroppy. Of course the mileage rate might not cover the expense for the lease as that one is designed to cover the steepest part of the depreciation curve. Does your LLC generate the revenue needed so it can take on the lease in the first place? If it's a new business you might not need or want the drain on your finances that a lease can be.
|
What do the points in a stock market index epresent?
|
The All Ords Index consists of the 500 largest companies by market capitalisation listed on the Australia Stock Exchange. Each stock in the All Ords. Index is given a weighting based on its market capitalisation. As the price of the stocks within the All Ords. Index change, so does the points on the index itself. The Index is more sensitive to changes in the larger capitalised stocks due to their larger weighting in the Index. Example: If a company has a weighting of 10% and its price goes up by 10%, and all other stocks in the Index don't go up or down, then this will cause the All Ords Index to go up by 1% (10% of 10%).
|
How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap!
|
Look for discounts from a health insurance provider, price club, professional memberships or credit cards. That goes for a lot of things besides health memberships. My wife is in a professional woman's association for networking at work. A side benefit is an affiliate network they offer for discounts of lots of things, including gym memberships.
|
Can dividends be exploited?
|
The moment the dividend is announced, especially from a company that doesn't normally pay dividends, the dividend is factored into everybody's analysis. In the absence of any other news the price of apple would be expected to drop once the dividend in locked in. Why would I buy shares from you at full price one day after the dividend is paid, if I will have to wait for the next dividend? Also keep in mind the dividend was announced on July 24th, and is given to shareholders of record on August 13th. You are way behind the curve.
|
Why is short-selling considered more “advanced” than a simple buy?
|
In addition to the higher risk as pointed out by @JamesRoth, you also need to consider that there are regulations against 'naked shorting' so you generally need to either own the security, or have someone that is willing to 'loan' the security to you in order to sell short. If you own a stock you are shorting, the IRS could view the transaction as a Sell followed by a buy taking place in a less than 30 day period and you could be subject to wash-sale rules. This added complexity (most often the finding of someone to loan you the security you are shorting) is another reason such trades are considered more advanced. You should also be aware that there are currently a number of proposals to re-instate the 'uptick rule' or some circuit-breaker variant. Designed to prevent short-sellers from driving down the price of a stock (and conducting 'bear raids etc) the first requires that a stock trade at the same or higher price as prior trades before you can submit a short. In the latter shorting would be prohibited after a stock price had fallen a given percentage in a given amount of time. In either case, should such a rule be (re)established then you could face limitations attempting to execute a short which you would not need to worry about doing simple buys or sells. As to vehicles that would do this kind of thing (if you are convinced we are in a bear market and willing to take the risk) there are a number of ETF's classified as 'Inverse Exchange Traded Funds (ETF's) for a variety of markets that via various means seek to deliver a return similar to that of 'shorting the market' in question. One such example for a common broad market is ticker SH the ProShares Short S&P500 ETF, which seeks to deliver a return that is the inverse of the S&P500 (and as would be predicted based on the roughly +15% performance of the S&P500 over the last 12 months, SH is down roughly -15% over the same period). The Wikipedia article on inverse ETF's lists a number of other such funds covering various markets. I think it should be noted that using such a vehicle is a pretty 'aggressive bet' to take in reaction to the belief that a bear market is imminent. A more conservative approach would be to simply take money out of the market and place it in something like CD's or Treasury instruments. In that case, you preserve your capital, regardless of what happens in the market. Using an inverse ETF OTOH means that if the market went bull instead of bear, you would lose money instead of merely holding your position.
|
Real Estate: Please review my recent investment (with numbers from recent purchase)
|
You question is a bit scary to me. You show $2100 rent, and let's even assume that's 100%, i.e. never a vacancy. (Rule of thumb is 10% vacancy. Depending on area, a tenant may stay a year, but when they leave, you might need to have a bit of maintenance and miss 2 months rent) You count the mortgage and taxes, and are left with $500/mo. Where is the list of ongoing expenses? I suggest you put that $500/mo into a separate account and let us know a year from now if anything is left. To Anthony's point. I agree 100%, no one can tell you everything you need to know. But, whatever my answer, or his, other members with experience (similar or different) will add to this, and in the end you'll have a great overview. The truth is that it's easy for me to sit here and see what you may be missing. By the way, if you look at the 'rules of thumb' they will make your head spin. There are those who say the target is for the rent to be 2% of the value of the house. But, there are markets where this will never happen. There's another rule that says the expenses (besides mort/tax) should be planned at 50% of the rent, i.e. you should put aside $1000/mo for expenses over the long term. The new house will be lower of course, but in years past year 10 or so, this number will start to look reasonable.
|
Why and why would/wouldn't a company split their stock?
|
The reason to do a stock split is to get the price of the stock down to an affordable range. If your stock costs $100,000 per share, you are seriously cutting in to the number of people who can afford to buy it. I can think of two reasons NOT to do a stock split. The biggest is, Why bother? If your stock is trading at a reasonable price, why change anything? It takes time and effort, which equals money, to do a stock split. If this serves no purpose, you're just wasting that effort. The other reason is that you don't want to drive your stock price down too low. Low prices are normally associated with highly speculative start-up companies, and so can give a wrong impression of your company. Also, low prices make it difficult for the price to reflect small changes. If your stock is trading at $10.00, a 1/2 of 1% change is 5 cents. But if it's trading at $1.50, a 1/2 of 1% change is a fraction of a penny. Does it go up by that penny or not? You've turned a smooth scale into a series of hurdles.
|
ETFs mirroring consistently outperforming companies?
|
What you may be looking for are multi-manager ETFs; these invest in a basket of diversified funds to get the best out of all of the funds. The problem with multi-manager funds is, of course, that you pay fees twice; once to the fund itself and once to each of the funds in the fund. The low fees on ETFs mean that it is not very profitable to actively maintain one so there are not many around (Googling returns very few). Noting that historic success doesn't guarantee future success and that fees are being applied to fees these funds only really benefit from diversification of manager performance risk. partial source of information and an example of a (non-outperforming) Multi-manager ETF: http://www.etfstrategy.co.uk/advisorshares-sets-date-for-multi-manager-etf-with-charitable-twist-give-53126/
|
What is the difference between speculating and investing?
|
I consider speculation to be a security purchase where the point is to sell it to someone for a higher price. Day-trading is completely speculative. I consider Investment to be a purchase you make for its underlying value. You are buying it at that price because you believe the present value of the future payments is higher than the price you are paying. I may sell an investment if a higher price is offered than I think it's worth, or if the business situation changes, but I don't plan on it. Hedging is a third type of security purchase, where you are decreasing your overall risk. If you are a hog farmer, selling hog futures on the CME is hedging, because it locks in the amount you get per hog, regardless of what the price of hogs does. Commodities markets only have hedgers and speculators. Investors don't make sense, it doesn't have an underlying value.
|
Why does gold have value?
|
Most of the answers here reflect a misunderstanding of what gold actually is from a financial perspective. I'll answer your question by asking two questions, and I do challenge you to stop and think about what we mean when we say "cash" or "unit of exchange" because without understanding those, you will completely miss this answer. In 1971, the DXY was 110. For people who don't know, the DXY is the US Dollar Index - it weighs the strength of the US Dollar relative to other currencies. Hey look, it's a pretty graph of the DXY's history. In 1971, gold was $35 an ounce. The DXY is 97 today. Gold is $1170 an ounce today. Now the questions: If shares of Company A in 1971 were $10 a share, but now are $100 a share and some of this is because the company has grown, but some of it is because of inflation and the DXY losing value, what would the value of the company be if it was held in grams of gold and not dollars? Benjamin Graham, who influenced Warren Buffett, is a "supposed" critic of gold, yet what percent of his life were we not on a gold standard? In his day, the dollar was backed by gold - why would you buy gold if every dollar represented gold. Finally, consider how many US Dollars exist, and how few metric tonnes of gold exist (165,000). Even Paul Volcker admitted that a new gold standard would be impossible because the value of gold, if we did it today, would put gold in the $5000-$10000 range - which is absurd: To get on a gold standard technically now, an old fashioned gold standard, and you had to replace all the dollars out there in foreign hands with gold, God the price, you buy gold, because the price of gold would have to be enormous. So, you're all left hoping the Federal Reserve figures how to get us all out of this mess without causing trouble, otherwise, let me just kindly say, you WILL realize the value of gold then. As the old saying goes, "A fool and his money are soon parted." I could be wrong, but I'd say that those who've been buying gold since 1971 for their "cash holdings" (not index funds) aren't the suckers.
|
When transferring money between two parties, under what circumstances is it considered taxable income?
|
A loan is not a taxable income. Neither is a gift. Loans are repaid with interest. The interest is taxable income to the lender, and may or may not be deductible to the borrower, depending on how the loan proceeds were used. Gifts are taxable to the donor (the person giving the gift) under the gift tax, they're not a taxable income to the recipient. Some gifts are exempt or excluded from gift tax (there's the annual exemption limit, lifetime exclusion which is correlated to the estate tax, various specific purpose gifts or transfers between spouses are exempt in general). If you trade for something of equal value, is that considered income? Yes. Sale proceeds are taxable income, however your basis in the item sold is deductible from it. If you borrow a small amount of money for a short time, is that considered income? See above. Loan proceeds are not income. does the friend have to pay taxes when they get back their $10? No, repayment of the loan is not taxable income. Interest on it is. Do you have to pay taxes if you are paid back in a different format than originally paid? Form of payment doesn't matter. Barter trade doesn't affect the tax liability. The friend sold you lunches and you paid for them. The friend can deduct the cost of the lunches from the proceeds. What's left - is taxable income. Everything is translated to the functional currency at the fair market value at the time of the trade. you are required to pay taxes on the gross amount Very rarely taxes apply to gross income. Definitely not the US Federal Income taxes for individuals. An example of an exception would be the California LLC taxes. The State of California taxes LLCs under its jurisdiction on gross proceeds, regardless of the actual net income. This is very uncommon. However, the IRC (the US Federal Tax Code) is basically "everything is taxable except what's not", and the cost of generating income is one of the "what's not". That is why you can deduct the basis of the asset from your gross proceeds when you sell stuff and only pay taxes on the net difference.
|
How come the government can value a home more than was paid for the house?
|
The property tax valuation and the fair market price are NOT one and the same. They track each other, correlate to each other, but are almost NEVER the same number. In some parts of the USA, a municipality has to re-assess property tax values every ten years. In these places, the tax value of a property is on something like a 10-year moving average, NOT on the volatile daily market price. EDIT: It is easy to fall into the "trap" of thinking that property tax valuation is intended to represent fair market value. It's INTENT is to provide an accurate (or, as accurate as possible) RELATIVE VALUATION of your property compared to the other properties in the municipality. The sum of all the property values is the tax base of the municipality. When the town budget (which is paid in part via property taxes) is set, the town simply divides the tax base into the budget total to arrive at the ratio of tax-to-collect, to the tax base, also called the "tax rate per thousand dollars of valuation." i.e. if the town tax base is US$10,000,000, and the town budget is US$500,000, then the ratio is 0.05, or $50 per thousand dollars of valuation. If your property is assessed at US$100,000, then you would pay 100 x $50, or $5000 in property taxes that year. Since this is the goal of the property tax valuation, NOT deciding what your house is worth on the open market, then we are left with the question of "why use the market value of a house for property assessment?" and the answer is that of all the various schemes and algorithms you can try, "fair market value" is the easiest and most accurate...IF TIME FLUCUTATIONS ARE TAKEN OUT. For example, if I buy a house in a development for $250,000 today, and next summer the housing market crashes, and you buy the identical house next door to me for $150,000, it does NOT stand to reason that you should pay less taxes than me, because your house is "worth" $100,000 less. In fact, BOTH our houses are worth $100,000 less. What matters most in property tax valuation isn't the actual number, but rather, is YOUR valuation the same as other essentially similar properties in your tax base? Getting the RELATIVE ratio of value between you and your neighbors correct is the goal of property tax valuation.
|
Paying off a loan with a loan to get a better interest rate
|
Before we were married my wife financed a car at a terrible rate. I think it was around 20%. When trying to refinance it the remaining loan was much larger than the value of the car, so no one was interested in refinancing. I was able to do a balance transfer to a credit card around 10%. This did take on a bit of risk, which almost came up when the car was totaled in an accident. Fortunately the remaining balance was now less than the value of the car, otherwise I would have been stuck with a credit card payment and no vehicle.
|
Why would you ever turn down a raise in salary?
|
This would never apply for tax "brackets". It's not as though making an extra dollar will put you into an entire separate bracket, the IRS isn't that bad. They bump up the "brackets" every $50, so you will never turn down a raise because it would cause you to lose income. However if your raise would preclude you from contributing to your IRA because it pushes you over $110,000 then yes, you could turn it down or explain to your boss that it would need to be just a little bit higher to cover your IRA contribution loss.
|
Can gold prices vary between two places or country at the same time?
|
Most of the gold prices at international markets are USD denominated. Hence the prices would be same in international markets where large players are buying and selling. However this does not mean that the prices to the individuals in local markets is same. The difference is due to multiple things like cost of physical delivery, warehousing, local taxation, conversion of Local currency to USD etc. So in essence the price of Gold is similar to price of Crude Oil. The price of Oil is more or less same on all the markets exchanges, though there is small difference this is because of the cost of delivery/shipment which is borne by the buyer. However the cost of Oil to retail individual varies from country to country.
|
Why doesn’t every company and individual use tax-havens to pay less taxes?
|
However, if you are employed by a company that exists in a tax haven and your services are provided to an employer by that tax haven company, it is the tax haven company that gets paid, not you. Under various schemes that company need not pay you at all. For example it may make you a loan which is not taxed (ie you don't pay tax on a loan, just as you don't pay tax on the money lent you by a mortgage company). You are bound by the terms of the loan agreement to repay that loan at a rate that the company finds acceptable. Indeed the company may find eventually that it is simply convenient to write off the loan as unrecoverable. if the owners/officers of he company write off your loans, how much tax will you have paid on the money you have had as loans? The taxman can of course state that this was simply set up to avoid tax (which is illegal) so you should have a balancing scheme to show that that the loans were taken to supplement income,just as one might take a bank loan / mortgage, not replace it entirely as a tax scam. Hiring tax counsel to provide this adequate proof to HMRC has a price. Frequently this kind of loophole exists because the number of people using it were sufficiently low not to warrant policing ( if the policing costs more than the tax recovered, then it is more efficient to ignore it) or because at some stage the scheme has been perfectly legal (as in the old offshore'education' trust recommended by the government a few decades ago). When Gordon Brown set out a 75% tax rate (for his possibly ideological reasons rather than financially based ones)for those who had these accounts , he encountered opposition from MPs who were going to be caught up paying high tax bills for what was effctively retrospective taxation, so there was a built in 'loophole' to allow the funds to be returned without undue penalty. If you think that is morally wrong, consider what the response would be if a future Chancellor was to declare all IAs the work of the devil and claim that retrospective tax would need to be paid on all ISA transactions over the last few decades.eg: tot up all the dividends and capital gains made on an ISA in any year and pay 40% tax on all of them, even if that took the ISA into negative territory because the value today was low/ underperfoming. Yet this has been sggested as a way of filling in the hole in the budget on the grounds that anyone with an ISA can be represented as 'rich' to a selected party of voters.
|
What intrinsic, non-monetary value does gold have as a commodity?
|
This site shows a list of (mostly) industrial uses of gold: http://geology.com/minerals/gold/uses-of-gold.shtml If you ignore the first two uses, jewelry and coinage, there remains aerospace, computers, electronics, dentistry and medicine. It's worth noting that gold comes in the same chemical family as both copper and silver, meaning that gold can serve most of their uses, although not as well.
|
Is it advisable to go for an auto loan if I can make the full payment for a new car?
|
Full payment is always better than auto-loan if you are prudent with finances. I.E if you take a loan, you are factoring the EMI hence your savings will remain as is. However if you manage well, you can buy the car with cash and at the same time put aside the notional EMI as savings and investments. The other factor to consider is what return your cash is giving. If this more than auto-loan interest rate post taxes, you should opt for loan. For example if auto-loan is 10% and you are getting a return of 15% after taxes on investment then loan is better. Company Car lease depends on terms. More often you get break on taxes on the EMI component. But you have to buy at the end of lease period and re-register the car in your name, so there is additional cost. Some companies give lease at very favourable rates. Plus if you leave the job lease has to be broken and it becomes more expensive.
|
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.