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New to investing — I have $20,000 cash saved, what should I do with it?
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I have questions for you - As the others have stated, now really isn't the time to do anything to turn short term liquidity into long term investments. I'll contradict that only for matched 401(k) deposits. The answers to these questions will prompt more/better responses.
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Is sales tax for online purchases based on billing- or shipping address?
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From Amazon's Site: "If an item is subject to sales tax in the state to which the order is shipped, tax is generally calculated on the total selling price of each individual item." I'm going to trust a company of this size has this correct. Shipping address.
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Travel expenses for an out-of-state rental
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While the question is very localized, I'll answer about the general principle. My main question is with how far away it is (over 1000 miles), how do I quantify the travel expenses? Generally, "necessary and ordinary" expenses are deductible. This is true for business and also true for rentals. But what is necessary and what is ordinary? Is it ordinary that a landlord will manage the property 1000 miles away by himself on a daily basis? Is it ordinary for people to drive 1000 miles every week? I'd say "no" to both. I'd say it would be cheaper for you to hire a local property manager, thus the travel expense would not be necessary. I would say it would be cheaper to fly (although I don't know if its true to the specific situation of the OP, but as I said - its too localized to deal with) rather than drive from Texas to Colorado. If the OP thinks that driving a thousand miles is indeed ordinary and necessary he'll have to justify it to the IRS examiner, as I'm sure it will be examined. 2 trips to the property a year will be a nearly 100% write-off (2000 miles, hotels, etc). From what I understood (and that is what I've been told by my CPA), IRS generally allows 1 (one) trip per year per property. If there's an exceptional situation - be prepared to justify it. Also, keep all the receipts (like gas, hotel, etc.... If you claim mileage but in reality you took a flight - you'll get hit hard by the IRS when audited). Also while I'm up there am I allowed to mix business with pleasure? You cannot deduct personal ("pleasure") expenses, at all. If the trip is mainly business, but you go out at the evening instead of staying at the hotel - that's fine. But if the trip is "business" trip where you spend a couple of hours at your property and then go around having fun for two days - the whole trip may be disallowed. If there's a reasonable portion dedicated to your business/rental, and the rest is pleasure - you'll have to split some of the costs and only deduct the portion attributed to the business activities. You'll have to analyze your specific situation, and see where it falls. Don't stretch the limits too much, it will cost you more on the long run after all the audits and penalties. Can I also write off all travel involved in the purchase of the property? Although, again, the "necessary and ordinary" justification of such a trip is arguable, lets assume it is necessary and ordinary and generally justified. It is reasonable to expect you to go and see the property with your own eyes before the closing (IMHO, of course, I'm not an authority). Such an expense can be either business or investment expense. If its a business expense - its deductible on schedule C. If its an investment expense (if you do buy the property), its added to the cost of the property (capitalized). I'm not a tax adviser or a tax professional, and this is not a tax advice. This answer was not written or intended to be used, and cannot be used, for the purpose of avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code. You should seek a professional consultation with a CPA/Attorney(tax) licensed in your State(s) or a Federally licensed Enrolled Agent (EA).
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“Infinite Banking” or “Be Your Own Bank” via Whole Life Insurance…where to start?
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Keep in mind that the only advantage that using a tax favored account gives you is tax-free growth of the cash value of the policy. This "Infinite Banking" spin isn't some sort of new revolution in money management, its just a repackaging of techniques that people have been using for years to manage tax liability with some breathless marketing spiel. Before you jump in, compute the following: Now comes the hard part: Life insurance is sold, never bought. The guy pushing this does seminars at hotels sponsored by life insurance agents. The purpose of the program is to generate sales of insurance. Be wary. If you actually have the significant amounts of money required to capitalize this, there are much better ways to get an income stream from that money -- you need a good financial advisor. And if you have a huge tax liability and a scheme like this somehow makes sense, find someone who does it for a living in your state who isn't a crook.
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How to check the paypal's current exchange rate?
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fx-rate.net offers a AUDUSD exchange rate comparison, which includes paypal: Currencyfair $1.14 Transferwise $ 2.29 Worldremit $ 3.50 Xendpay $ 3.71 Tranzfers $ 5.52 Ukforex $ 7.35 Skrill $ 15.13 Paypal $ 25.77 Kantox $ 27.76 http://fx-rate.net/currency-transfer/?c_input=AUD&cp_input=USD
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How to calculate how far a stock price can drop before a broker would issue a margin call?
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With your numbers, look at it this way - You borrowed $50. When the stock is $100, you are at 50% margin. What's most important, is that there's margin interest charged, so the amount owed will increase regardless of the stock price. When calculating your return or loss, the interest has to be accounted for or your numbers will be wrong. For a small investor, margin rates can run high, and often, will offset much of your potential gain. What good is a $100 gain if you paid $125 in margin interest?
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Why are we taxed on revenue and companies on profit?
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I pay taxes on revenue. You do have the ability to deduct expenses, though it's not as comprehensive as what companies can do: These figures apply to everybody, so those that earn more get taxed more on thee additional income in each bracket (meaning the first $100,000 of taxable income is taxed the same for everybody at one rate, the next $100,000 at a different rate, etc.) So you do get to deduct personal expenses and get taxed on "profit" - but since the vast majority of people don't keep detailed records of what they spend, it's much simpler just to use blanket deduction amounts for everyone. Companies have much more detailed systems in place to track and categorize expenses, so it's easier to just tax on net profit. Plus, the corporate tax rate is much higher than the average individual tax rate - would you trade more deductions for a higher tax rate?
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Applying student loan proceeds toward tuition?
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Your university should have a finance department which can help with payments. Speak with them and tell them you have interest in paying for at least part of your next semester in cash. From here they should be able to tell you the best method for this, though most likely cash/check will suffice. If there is no finance department, or you are still unsure, check with student services for more information.
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Is interest on a personal loan tax deductible?
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Can you deduct interest paid to your father on your personal income taxes? Interest paid on passive investments can be deducted from the amount earned by that investment as an investment expense as long as the amount earned is greater than the total paid for the interest expense. Also beware if the amount of interest paid is greater than the yearly gift tax exclusion, as the IRS might interpret this as a creative way of giving gifts to your father without paying gift tax. Do you pay taxes on the interest you pay? No, because is an expense, not income, you would not count interest paid to him as taxable income. Does your father owe taxes on the interest he collects from you? Yes, that is income to him. And the last question you didn't ask, but I expect it is implied: Do you owe taxes on the quarterly profits? Yes, that is income to you. The Forbes article How To Arrange A Loan Between Family Members is a bit dated, but still a good source of information. You really should write a formal note (signed by both you and your father) indicating the amount borrowed, the interest rate you are paying on that amount, and when the loan will be repaid. If your father has set the interest rate too low, this could also be considered a gift to you, though we would really be talking about large amounts of money to hit the gift tax limit on interest alone.
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Where do large corporations store their massive amounts of cash?
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For tax optimization, cash is stored mostly overseas, according to the New York Times. For Apple, everytime a song or an app is bought in Europe, Africa or Middle East, money flows to iTunes Sàrl, in Luxemburg. Royalties on patents flow internally from Apple in California to Apple in Ireland. Then profits flow to the Carribean. The problem is that cash cannot be brought back to the USA without huge taxes.
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What is the best and most optimal way to use margin
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This essentially depends on how you prefer to measure your performance. I will just give a few simple examples to start. Let me know if you're looking for something more. If you just want to achieve maximum $ return, then you should always use maximum margin, so long as your expected return (%) is higher than your cost to borrow. For example, suppose you can use margin to double your investment, and the cost to borrow is 7%. If you're investing in some security that expects to return 10%, then your annual return on an account opened with $100 is: (2 * $100 * 10% - $100 * 7%) / $100 = 13% So, you see the expected return, amount of leverage, and cost to borrow will all factor in to your return. Suppose you want to also account for the additional risk you're incurring. Then you could use the Sharpe Ratio. For example, suppose the same security has volatility of 20%, and the risk free rate is 5%. Then the Sharpe Ratio without leverage is: (10% - 5%) / 20% = 0.25 The Sharpe Ratio using maximum margin is then: (13% - 5%) / (2 * 20%) = 0.2, where the 13% comes from the above formula. So on a risk-adjusted basis, it's better not to utilize margin in this particular example.
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How could the 14th amendment relate to the US gov't debt ceiling crisis?
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It's a disturbing development -- someone is floating the idea that the executive has the ability to issue debt without the consent of congress to measure the public's reaction. Why disturbing? Because people are using language like this: The president, moreover, can move quickly, but court cases take time. “At the point at which the economy is melting down, who cares what the Supreme Court is going to say?” Professor Balkin said. “It’s the president’s duty to save the Republic.” The implication to your personal finances is that we continue to live in interesting times, and you need to be aware of the downside risks that your investments are exposed to. If your portfolio is built around the idea that US government obligations are risk-free, you need to rethink that.
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Roth vs. Whole Insurance vs. Cash
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You're extremely fortunate to have $50k in CDs, no debt, and $3800 disposable after food and rent. Congrats. Here's how I would approach it. If you see yourself getting into a home in the next couple of years, stay safe and liquid. CDs (depending on the duration) fit that description. Because you have disposable income and you're young, you should be contributing to a Roth IRA. This will build in value and compound over your lifetime, so that when you're in your 70s you'll actually have a retirement. Financial planners love life insurance because that's how they make all their money. I have whole life insurance because its cash value will be part of my retirement. It may also cover my wife if I ever decide to get married. It may or may not make sense for you now depending on how soon you want to buy a home and home expensive they are in your zip code. Higher risk, higher reward- you can count on that. Keep the funds in the United States and don't try to get into any slick financial moves. If you have a school in town, see if you can take an Intro to Financial Planning class. It's extremely helpful for anyone with these kinds of questions.
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Personal credit card for business expenses
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You should be careful about mingling your personal money and that of the business, even if it is a sole prop right now. It is a good habit to keep separate business and personal bank/credit accounts just so that when you change to an LLC, it is simpler for you to separate what belongs to the company and what is yours personally. What you're doing makes it more difficult (although only marginally so) to itemize business deductions that were paid with an ostensibly personal credit account. The better habit to get into now is keeping that distinct separation between personal and business. That being said, there's nothing illegal in what you're doing, but it would make an accountant cringe, that's for sure. (chuckle) Hope this helps. Good luck!
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Is there a correlation between self-employment and wealth?
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In a well-managed company, employees bring more dollars to their employers than the employers pay the employees (salary and benefits). Employees trade potential reward for security (a regular paycheck). Employers take on the risk of needing to meet payroll and profit from the company's income, minus expenses. The potential rewards are much higher as an employer (self or otherwise), so the ones that do make it do quite well. But this is also consistent with your other statement that the reverse is not true; the risk of self-employment is high, and many self-employed people don't become millionaires.
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Is it common for a new car of about $16k to be worth only $4-6k after three years?
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It isn't common to lose that much value in 3 years, but it is possible. If you don't take care of small dents, scratches, etc., you can quickly reduce the value far beyond what you might expect looking at graphs. Another big factor is the trim level of the car that you purchase. If you spend $30,000 for the highest trim level of a car, instead of $22,000 for the lowest trim level, the higher trim car could lose 50% of it's value while the lower trim car loses only 35%. There's no way to know why the OP of your linked question had such a large loss, but again, that's not the usual experience. It is definitely a good idea to consider used though.
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Why do some expiration dates have more open interest for options?
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The third Friday of each month is an expiration for the monthly options on each stock. Stock with standardized options are in one of three "cycles" and have four open months at any give time. See http://www.investopedia.com/terms/o/optioncycle.asp In addition some stocks have weekly options now. Those generally have less interest because they are necessarily short-term. Anything expiring on April 8 and 22 (Fridays this year but not third Fridays of the month) are weeklies. The monthly options are open for longer periods of time so they attract more interest over the time that they are open. They also potentially attract a different type of investor due to their length of term, although, as it gets close to their expiration date they may start to behave more like weeklies.
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How are startup shares worth more than the total investment funding?
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The net worth is based on an estimate of how much he would get if he relinquished his stake. The total funding is based on how much he has relinquished thus far. Suppose I have a candy jar with 100 candies. I'm not sure how much these candies are worth, so I start off by selling 10% of the jar for $10. Now I have 90 candies and $10, a total value of $100. Then someone comes along offering $100 for another 10% (of the original jar, or 10 candies), which I accept. Now I have 80 candies and $110. Since I value each candy at $10 now, I calculate my worth as $910. Then I do another deal selling 10% for $1000. Now I have $1110 in cash and 70 candies valued at $100 each. My total worth is now $8110 (cash + remaining candies), while the candy jar has only received $1110 in funding. Replace candies with equity in The Facebook, Inc. and you get the idea.
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How do I find an ideal single fund to invest all my money in?
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Though a fan of ETFs (esp. high volume commission-free ones) recently a single, new fund VQT appeared on my radar of interest. It's based on dynamic hedging that has sort of build-in diversification and adapts to the market climate, pulling in and out varying amounts from cash, the S&P 500 and volatility futures based on VIX. I've been Long VQT and it's followed the S&P500 during good times, though not at far, but crucially disconnected with much milder losses when the general market was nose diving. You can lookup and compare to SPY at http://finance.google.com Not trying to give investment advice, in case that upsets some rules.
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Selling To Close
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Yes, if there is liquidity you can sell your option to someone else as a profit. This is what the majority of option trading volume is used for: speculative trading with leverage.
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In a competitive market, why is movie theater popcorn expensive?
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It's called extracting consumer surplus. Basically I have a bunch of movie goers (who have paid a lot for their tickets). Some of them don't like popcorn, and some do. Of the people in the latter group, there are some who are willing to pay a lot for it. That's partly because I have a select group (rich movie goers) and partly because some of these people would be willing to pay more for popcorn with a movie than without. If I were just selling "popcorn," I'd have to charge a competitive price. But I'm really selling movies, which have more than covered my costs (rent, heat, etc.) So my costs of selling popcorn are less than that of a non-movie popcorn seller, and I don't really "need" to sell it. Ironically, it means that I can "take my chances" and sell a relatively small amount at a high price, thereby maximizing my UNIT profit. I don't mind having people NOT buy popcorn because I've already made my profit from them with the movie. From the point of view of the consumer, most consumers see popcorn as an "afterthought." They will seldom think, "I can buy popcorn $2.00 cheaper at Theater A than Theater B, and there's a 20 percent chance that I will want to buy popcorn, so Theater A is 40 cents ($2.00*.20) cheaper than Theater B." Instead, most make the decision to buy the popcorn after they've arrived at Theater B, because it as "impulse item." And even if they do the "40 cents" calculation, Theater B might be selected because other factors (convenience, location, etc.) outweigh the 40 cent extra cost of popcorn (purchased "sometimes"). Put another way, the cost of popcorn is (usually) heavily discounted because of its "remoteness" to other facets of the decision.
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What makes a Company's Stock prices go up or down?
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Here are some significant factors affect the company stock price performance: Usually, profitability is known to the public through the financial statements; it won't be 100% accurate and people would also trade the stock with the price not matching to the true value of the firm. Still there are dozens of other various reasons exist. People are just not behaving as rational as what the textbook describes when they are trading and investing.
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How do Islamic Banking give loans for housing purposes?
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If the customer pays 20% of the payment in advance, then he is he owns 20% of the house and the bank owns 80%. Now they say he pays the rest of the amount and also the rent of the house until he becomes the sole owner of the house.
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What would the broker do about this naked call option?
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Yes, it can buy back the call, but much before stock hits the $30 mark. Let us say you got 1$ from selling the call. So the total money in your account is 4$ + 1 $ = 5 $. When stock hits 10$ (your strike), the maintenance margin is 5$. As soon as stock goes past 10, your maintenance margin is violated. So broker will buy back your call (at least IB does that, it does not wait for a margin call). Now if the stock gapped up from 8 to 30,then yes, broker will buy it back at 30, so your account will have a negative balance. Assume the call cost 20$ when stock hit 30, your balance is: 5 - (30-10) = -15. Depending on broker, I suppose they will ask you to bring your account balance back up to positive. If they don't do that, they risk going out of business.
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Is it legal for a landlord to report a large payment to a tenant using Form 1099?
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It is legal. They're probably going to give you a 1099-MISC, which is required of businesses for many cash payments over $600 in value to all sorts of counterparties. (Probably box 3 of 1099-MISC as is typical in "cash for keys" situations where one is paid to vacate early) A 1099-MISC is not necessarily pure income, but in this case, you do have money coming in. This money isn't a return of your security deposit or a gift. The payment could possibly be construed by you as a payment to make you whole, but the accounting for this would be on you. This is not a typical situation for IRS reporting. However, if you are uncomfortable with potentially explaining to the IRS how you implemented advice from strangers over the internet, the safest course is to report it all as income. Look at it this way: you did enter into a mutual contract, where you were paid consideration to release your leasehold interests in the property.
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Do dividend quotes for U.S. stocks include witheld taxes?
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The dividend quoted on a site like the one you linked to on Yahoo shows what 1 investor owning 1 share received from the company. It is not adjusted at all for taxes. (Actually some dividend quotes are adjusted but not for taxes... see below.) It is not adjusted because most dividends are taxed as ordinary income. This means different rates for different people, and so for simplicity's sake the quotes just show what an investor would be paid. You're responsible for calculating and paying your own taxes. From the IRS website: Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. They are paid out of earnings and profits and are ordinary income to you. This means they are not capital gains. You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. Now my disclaimer... what you see on a normal stock quote for dividend in Yahoo or Google Finance is adjusted. (Like here for GE.) Many corporations actually pay out quarterly dividends. So the number shown for a dividend will be the most recent quarterly dividend [times] 4 quarters. To find out what you would receive as an actual payment, you would need to divide GE's current $0.76 dividend by 4 quarters... $0.19. So you would receive that amount for each share of stock you owned in GE.
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Relation between inflation rates and interest rates
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Possibly but not necessarily, though that can happen if one looks at the US interest rates in the late 1970s which did end with really high rates in the early 1980s. Generally interest rates are raised when inflation picks up as a way to bring down inflation.
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Moving savings to Canada?
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The simplest, most convenient way I know of to "move your savings to Canada" is to purchase an exchange-traded fund like FXC, the CurrencyShares Canadian Dollar Trust, or a similar instrument. (I identify this fund because I know it exists, not because I particularly recommend it.) Your money will be in Canadian currency earning Canadian interest rates. You will pay a small portion of that interest in fees. Since US banks are already guaranteed by the FDIC up to $250,000 per account, I don't really think you avoid any risks associated with the failure of an individual bank, but you might fare better if the US currency is subject to inflation or unfavorable foreign-exchange movements - not that such a thing would be a direct risk of a bank failure, but it could happen as a result of actions taken by the Federal Reserve under the auspices of aiding the economy if the economy worsens in the wake of a financial crisis - or, for that matter, if it worsens as a result of something else, including legislative, regulatory, or executive policies. Read the prospectus to understand additional risks with this investment. One of them is foreign-exchange risk. If the US economy and currency strengthen relative to the Canadian economy and its currency, you may lose substantial amounts of purchasing power. Additionally, one of the possible results of a financial crisis is a "flight to safety"; the global financial markets still seem to think the US dollar is pretty safe, and they may bid it up as they have done in the past, resulting in losses to your position (at least in the short term). I do not personally recommend moving all your savings to Canada, especially if it deprives you of income from more profitable investments over the long term, but moving some of your savings to Canada at least isn't a stupid idea, and it may turn out to be somewhat profitable. Having some Canadian currency is also a good idea if you plan to spend the money that you are saving on Canadian goods in the intermediate future.
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When is the right time to buy a new/emerging technology?
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If you're looking for a purely financial answer (ignoring the social/environmental aspects) there are a few different ways you can look at it. For these types of improvements the simplest is a payback calculation. How long would it take you to recoup the initial costs? For example, if the entire installation cost $5,000 (including any tax credits), and you save $100 per month (I'm making both numbers up), you'll pay back your investment in 50 months, or about 4 years. (Note that if you borrow money to do the improvement, then your payback period is longer because you're reducing the amount that you're saving each month by paying interest.) If you're deciding between different uses for the money (like investing, or paying down other debt) then you can look at the return that you're getting. Using the same example, you are spending $5,000 and getting $100 per month back, for a 24% annual return ($1,200 / $5,000), which is better than you can get on almost anything but a 401(k) match (meaning don't stop your 401(k) contributions to do this either). The decision on whether or wait or not then becomes - will the price drop faster than the amount of savings you will realize. So if you will save $100 per month in your electric bill, is the price of the complete installation going down by more than $100 each month? If not, you'd be better off buying now and start paying back the investment sooner.
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Debt collector has wrong person and is contacting my employer
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From a page on consumerfinance.gov A debt collector generally may not contact your employer or other third-parties about the debt. Debt collectors may ask your employer to verify your employment, or ask for your address or telephone number. Note - they aren't even allowed to tell the employer that they are trying to collect a debt. So - even if you were the guilty party, this isn't allowed. They've already broken very clear laws and thus are probably not trustworthy, so (echoing what others have said) don't give them your own personal information. If they've done one day's research on the law governing their industry they know this is illegal. If they've actually gotten any money from your employer, it's theft. If they haven't then it's just attempted theft. Contact the police regardless. Also - contact a lawyer. You may well have the right to sue them. They've broken Federal laws in a way that causes you injury. Odds are they've broken state laws as well. One last point - do you even have proof that these are debt collectors collecting a real debt, rather than people trying to get you to give them your SSN? Perhaps their business plan is to look at company webpages and send bogus requests to the employers for some random employee and then see what information they get back (I'm not him, here's my personal information). Be very careful to not give any personally identifiable information (date of birth, address, SSN, mother's maiden name, etc). Anything they ask about you don't provide.
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Shorting stocks: Indicators that a stock will drop?
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First, it's much safer to be shorting stocks over $5 than stocks under $5. I use 3 indicators to show that a stock has topped out and about to drop. Key is the timing cause the initial drop is often the biggest. More close you get in at the top, the higher the risk. Using 1D Charts ONLY: - MACD Indicator: I use the histogram, when it reaches a peak height, and the next day it is down 1 "Step". If you wait til the MACD lines cross, you are pretty late IMHO. Need to get in earlier. Timing is everything. - RSI(15) - Needs to topped out and above 67 meaning, "Over bought" - Do not buy when RSI is high above 70. Often stocks go on a Run up when RSI is over 70! - I use Stoch RSI or CCI to confirm my status on RSI. I like to see that all 3 indicators agree. This gives me a 75% chance that the stock will drop. It may take a day or 2.. so you need patience.
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Getting over that financial unease? Budgeting advice
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Put your budget down on paper/spreadsheet/tool of choice (e.g Mint, YNAB, Excel). Track every cent for a few months. Seeing it written down makes The Financial Conversation easier. One simple trick is to pay yourself first. Take $100 and sock it away each month, or $25 per paycheck - send it to another account where you won't see it. Then live off the rest. For food - make a meal plan. Eggs are healthy and relatively cheap so you have breakfast covered. Oatmeal is about $2 for a silos' worth. Worst case you can live off of ramen noodles, peanut butter and tuna for a month while you catch up. Cut everything as some of the others have answered - you will be amazed how much you will not miss. Dave Ramsey's baby steps are great for getting started (I disagree with DR on a great many things so that's not advocating you sign up for anything). Ynab's methodology is actually what got me out of my mess - they have free classes in their website - where budgeting is about planning and not simply tracking. Good luck.
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Are those “auto-pilot” programs a scam or waste of time?
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Genuine (nearly) passive income can be had from some kinds of investing. Index funds are an example of a mostly self-managing investment. Of course investment involves some risk (the income is essentially paying you for taking that risk) and returns are reasonable but proportional to the risk -- IE, not spectacular unless the risk is high. If someone is claiming they can get you better than market rate of return, look carefully at what they are getting out of it and what the risks are. Fees subtract directly from your gains, and if they claim there is no additional risk, they need to prove that. You are giving someone your money. Be very sure you are going to get it back. If it isn't self-evident where the income comes from, it's probably a scam. If someone is using the term "auto-pilot", it is almost certainly a scam. If they are talking about website advertising and the like, it is far from autopilot if you want to make any noticable amount of money (though you may make money for them).
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Estimated Taxes after surge in income
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Well a definitive answer would require a lot of information. Instead of posting that kind of info online, you should take a look at the instructions for Form 2210 and in particular "Schedule AI -- Annualized Income Installment Method," which corrects the penalty for highly variable income. Using this form you will likely be able to avoid the penalty, but it is hard to know for sure.
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Effect on Bond asset allocation if Equity markets crash?
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what will happen to the valuation of Tom's bond holdings after the equity crash? This is primarily opinion based. What will happen is generally hard to predict. Bond Price Bump due to Demand: Is a possible outcome; this depends on the assumption that the bonds in the said country are still deemed safe. Recent Greece example, this may not be true. So if the investors don't believe that Bonds are safe, the money may move into Real Estate, into Bullion [Gold etc], or to other markets. In such a scenario; the price may not bump up. Bond Price Decline due to Rising Interest Rates: On a rising interest rates, the long-term bonds may loose in value while the short term bonds may hold their value. Related question How would bonds fare if interest rates rose?
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Apartment lease renewal - is this rate increase normal?
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Absolutely yes. Just because a lease provides an option for renewal does not mean that a tenant cannot try to re-negotiate for better terms. You should always negotiate the rent. And start this conversation as soon as possible. Offer to pay three months’ rent in advance (of course, if you have enough means).
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Why do people take out life insurance on their children? Should I take out a policy on my child?
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Adam Davis's answer is pretty good. However, I think he misses something with regard to the costs of a funeral. According to funeralplanning101.com, a traditional funeral can cost upwards of $15,000. Having just planned and paid for a funeral for an adult, I can assure you that this figure is low. I've heard "$10,000 - $30,000", and that seems a reasonable ball-park given my experience. Additionally, grief affects people differently. If your child died, would you be able to continue work afterwards? Most people can, but some people have to take extended leave (generally with no income) because of the emotional impact. Combined, these expenses can easily outstrip the savings for an average family. Almost by definition, insurance is not cost-effective; insurance companies profit by selling it to you, after all. But you may decide that it is appropriate to mitigate your risk by buying insurance. I do not have children and would likely not choose to insure them if I did. Nevertheless, other people may reasonably choose differently.
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What are investment options for young married couple with no debt that have maxed out retirement savings?
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Paying the mortgage down is no different than investing in a long term taxable fixed instrument. In this economy, 4.7% isn't bad, but longer term, the stock market should return higher. When you have the kid(s), is your wife planing to work? If not, I'd first suggest going pre-tax on the IRAs, and when she's not working, convert to Roth. I'd advise against starting the 529 accounts until your child(ren) is actually born. As far as managed funds are concerned, I hear "expenses." Why not learn about lower cost funds, index mutual funds or ETFs? I'd not do too much different aside from this, until the kids are born.
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How does delta of an option change with time if underlying price is constant?
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The question is always one of whether people think they can reliably predict that the option will be a good bet. The closer you get to its expiration, the easier it is to make that guess and the less risk there is. That may either increase or decrease the value of the option.
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Tax implications of restricted stock units
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With the Employee Stock Purchase Plan stock, if you sell it in less than 18 months from exercise, the discount you bought it at (normally 15%) becomes taxable income and included in your W-2.
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Does it make sense to buy an index ETF (e.g. S&P 500) when the index is at an all-time high?
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In 1929 the Dow Jones Industrial Average peaked at roughly 390 just prior to the Great Depression. It did not return to that level again until 25 years later in 1954. 25 years is a long time to go without any returns, especially if you are a retiree. There is no easy answer with investing. Trying to time the tops and bottoms is widely regarded as a foolhardy endeavor, but whenever you invest you expose yourself to the possibility of this scenario. The only thing I highly recommend is not to base your decision on the historical returns from 1975 to 2000 that the other answers have presented. These returns can be explained by policy changes that many are coming to understand are unsustainable. The growth of our debt, income inequality, and monetary manipulation by central banks are all reasons to be skeptical of future returns.
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American taxes if living outside the US and get paid by US company on a US bank account
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I agree with Joe, having the money deposited to the US bank account may land you in trouble. Technically, a US business paying a foreigner must withhold 30% of the payment, unless a tax treaty says otherwise. The US business should do that based on your W8-BEN/W8-ECI form that you should have given to the business before being paid. I'm guessing, that by paying to your US bank account, you (and your American counterpart) are trying to avoid this withholding. That may cause trouble for both of you. I would suggest you talking to a professional (EA/CPA licensed in the State where the business is located) and having the situation resolved ASAP. You may not be liable for the US taxes at all, but because of incorrectly reporting the income/expense - you and the US business may end up paying way more than the $0 you otherwise would have, in penalties.
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Should I make additional payments on a FHA loan, or save up for a refinance?
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You would have to do the specific math with your specific situation to be certain, but - generally speaking it would be smarter to use extra money to pay down the principle faster on the original loan. Your ability to refinance in the future at a more favorable rate is an unknowable uncertainty, subject to a number of conditions (only some of which you can control). But what is almost always a complete certainty is that paying off a debt is, on net, better than putting the same money into a low-yield savings account.
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How does the importance of a cash emergency fund change when you live in a country with nationalized healthcare?
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There are, of course, many possible financial emergencies. They range from large medical expenses to losing your job to being sued to major home or car repairs to who-knows-what. I suppose some people are in a position where the chances that they will face any sort of financial emergency are remote. If you live in a country with national health insurance and there is near-zero chance that you will have any need to go outside this system, you are living with your parents and they are equipped to handle any home repairs, you ride the bus or subway and don't own a car so that's not an issue, etc etc, maybe there just isn't any likely scenario where you'd suddenly need cash. I can think of all sorts of scenarios that might affect me. I'm trying to put my kids through college, so if I lost my job, even if unemployment benefits were adequate to live on, they wouldn't pay for college. I have terrible health insurance so big medical bills could cost me a lot. I have an old car so it could break down any time and need expensive repairs, or even have to be replaced. I might suddenly be charged with a crime that I didn't commit and need a lawyer to defend me. Etc. So in a very real sense, everyone's situation is different. On the other hand, no matter how carefully you think it out, it's always possible that you will get bitten by something that you didn't think of. By definition, you can't make a list of unforeseen problems that might affect you! So no matter how safe you think you are, it's always good to have some emergency fund, just in case. How much is very hard to say.
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What home improvements are tax deductible?
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In general, for a home you live in, there's maintenance, which is just that, you pay to keep your house in good repair. There's also real improvements. I spend $xxx to turn my poured cement basement into living space. Here, I keep my receipts and the cost (although not my labor) is added to the basis of my home when I sell. The couple things that may offer a deduction have to do with energy. When I insulated my basement, there was a state tax credit which I got back when I filed taxes. There are also credits for installing solar panels. What you've described in your question just sounds like one of the small joys of home ownership.
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Should I sell a 2nd home, or rent it out?
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Heres what you need to know: This can be prevented by what a previous renter did to us. This is a smart, kind of a jerky way to do it but its VERY SMART, as long as your property is worth it, raise the rent higher. You must have a very nice, clean, everything working, house. You must be willing to have anything fixed. this is all to make up the high rent. You don't want the rent way out of proportion but just a bit higher. This is because, more than likely, people who are going to pay for a higher rent don't usually leave a mess, (higher class families vs lower class people living alone..) What might also help from the risk of damage is create a fee (also what my renter did) of any painting needed done like finger prints on the wall, nails in the wall, carpet stains, etc when the tenant is ready to move out. I would suggest a required professional carpet cleaning as well when lease is up. My renter was very nice, but very strict and did all these things. He has a few properties that are very nice middle class houses. Your home sounds like it could easily pass for this kind of business depending on where you live. If the tenant leaves before his lease is up you could charge a 1-2 month's rent to be able to find a new tenant. Be proactive on finding a tenant before the lease is up. This would be a bit of work to first set up and usually maintain, but its a good thing to think about.
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CFD market makers: How is the price coupled to the underlying security?
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CFD providers typically offer CFDs to investors using either the direct market access (DMA) model or the market maker (MM) model. Direct Market Access The DMA model gives you access to trade the Underlying instrument on the relevant Exchange from which the CFD is then derived. All CFD Transactions under the DMA model have corresponding trades in the Underlying instrument. Under the DMA model, providers typically charge their clients Commission based on the notional contract value of the CFD. Market Maker The MM model uses the price of the Underlying instrument to derive the price of the CFD that is offered. Trading under the MM model does not necessarily mean that your CFD will be reflected by a corresponding trade in the Underlying instrument. Under the MM model each CFD Transaction creates a direct financial exposure for the provider, which may or may not be hedged in the Underlying instrument. Where the financial exposure is not hedged, the market risk may increase for the market maker. The MM model enables the provider to offer CFDs against synthetic assets, even if there is little Liquidity in the Underlying instrument, which can result in a wider range of products on offer than with the DMA model. Volatility and Illiquidity in the Underlying instrument can affect the pricing of MM CFDs. The MM model can charge its clients Commission based on the notional contract value or it can incorporate costs and fees in the dealing Spread, which represents the difference in price at which the issuer is prepared to Buy and Sell the CFD. What Do I use and why? I have traded with both DMA and MM models and prefer the MM. The big advantage with MM is that they will provide a market even when the underlying is very illiquid and only might have a few trades each day. Regarding the spread of the MM to the spread of the underlying, I have found the MM to be practically in line with the underlying spread about 95% of the time. The other 5% it may have been slightly wider than the spread of the underlying by usually 1c or 2c. Most MMs aim to give you the best spread they can because they want to keep your business. If they gave too wide a spread (compared to the underlying) it wouldn't be long before they had no customers.
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If I invest in a company that goes bankrupt, is that a gain or a loss?
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I'll give the credit to @Quid in the comments section of the question. You put out $10k, you got back $20k, that's a cash gain of $10k, how the asset was valued between your purchase and sale isn't relevant. From an accounting perspective, the company is the only party that is realizing the loss (as they have sold the asset for 40K less than par). You the buyer, only get to see the initial buy and sale of such capital asset. Example: A company purchases a car for $20,000 and after depreciation it is worth (book valued at) $2,000. It is then sold to a customer for $3,000. Does the customer realize a loss of $1,000? No. Does the company realize a gain of $1,000? Yes. Your bank analogy is flawed in two ways:
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S&P is consistently beating inflation?
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TL;DR: Because stocks represent added value from corporate profits, and not the price the goods themselves are sold at. This is actually a very complicated subject. But here's the simplest answer I can come up with. Stocks are a commodity, just like milk, eggs, and bread. The government only tracks certain commodities (consumables) as part of the Consumer Price Index (CPI). These are generally commodities that the typical person will consume on a daily or weekly basis, or need to survive (food, rent, etc.). These are present values. Stock prices, on the other hand, represent an educated guess (or bet) on a company's future performance. If Apple has historically performed well, and analysts expect it to continue to perform, then investors will pay more for a stock that they feel will continue pay good dividends in the future. Compound this with the fact that there is usually limited a supply of stock for a particular company (unless they issue more stock). If we go back to Apple as an example, they can raise their price they charge on an iPhone from $400 to $450 over the course of say a couple years. Some of this may be due to higher wage costs, but efficiencies in the marketplace actually tend to drive down costs to produce goods, so they will probably actually turn a higher profit by raising their price, even if they have to pay higher wages (or possibly even if they don't raise their price!). This, in economics, is termed value added. Finally, @Hart is absolutely correct in his comment about the stocks in the S&P 500 not being static. Additionally, the S&P 500 is a hand picked set of "winners", if you will. These are not run-of-the-mill penny stocks for companies that will be out of business in a week. These are companies that Standard & Poor's Financial Services LLC thinks will perform well.
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What are the typical repayment plans for Credit Cards in the United States?
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In the U.S., when you receive your credit card bill each month there's a "minimum payment amount." That minimum payment is usually the greater of $25 or 1% of the new balance on the card plus new interest and fees. As long as you pay the minimum payment amount, you can pay as much as you want each month. Note, in your example, you would be required to pay more than $1000 to pay off the balance, as interest would accrue each month on the unpaid principal. How much more is dependent on the interest rate of the card.
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Can I pay off my credit card balance to free up available credit?
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Is it possible to pay off my balance more than once in a payment period in order to increase the amount I can spend in a payment period? Yes you can pay off the balance more than once even if its not due. This will get applied to outstanding and you will be able to spend again. If so, is there a reason not to do this? There is no harm. However note that it generally takes 2-3 days for the credit to be applied to the card. Hence factor this in before you make new purchases. I just got a credit card to start rebuilding my credit. Spending close to you credit limit does not help much; compared to spending less than 10% of your credit limit. So the sooner you get your limit on card increased the better.
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Can you recommend some good websites/brokers for buying/selling stocks in India?
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API wise there's just one at the retail level: Interactive Brokers (India). Brokerage is high though - 3.5 bps for F&O and 5 bps for cash. I've used Sharekhan (good, can get to 2 bps brokerage, trading client software, no API). Also used multiple other brokerages, and am advising a new one, Zerodha http://www.zerodha.com. API wise the brokers don't provide it easily to retail, though I've worked with direct access APIs at an institutional level.
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Can't the account information on my checks be easily used for fraud?
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The bottom line is to keep most of your money in accounts with no check privileges and to not give the account numbers for these accounts to anyone. Keep just enough in your checking account for the checks you are going to write.
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How do I interpret this analysis from Second Opinion?
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In Second Opinion's opinion, they say "Do not initiate new position." This means do not buy the stock if you do not already own it. Since they also say to hold if you do own it, this is a very "who knows what it will do" neutral position (IMO).
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Do I need to write the date on the back of a received check when depositing it?
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Changed to answer match the edited version of the question No, you do not need to write the date of your endorsement, but you can choose to do so if you want to. The bank stamp on the back will likely have the date and perhaps even the exact time when the check was deposited. The two lines are there in case you want to write something like "For deposit only to Acct# uvwxyz" above your signature (always a good idea if you are making the deposit by sending the paper check (with or without a deposit slip) by US mail or any other method that doesn't involve you handing the check to a bank teller). If you are wanting to get encash the check, that is, get cash in return for handing the check over to the bank instead of depositing the check in your account, then the rules are quite a bit different.
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What does Capital Surplus mean?
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Capital surplus is used to account for that amount which a firm raises in excess of the par value (nominal value) of the shares (common stock).. Investopedia has a much simpler answer. Somebody has tried to be smart on wikipedia and have done the calculations without much explanation. The portion of the surplus of a business arising from sources other than earnings : all surplus other than earned surplus usually including amounts received from sale or exchange of capital stock in excess of par or stated value, profits on resale of treasury stock, donations to capital by stockholders or others, or increment arising from revaluation of fixed or other assets The number of shares a company wants to issue is decided and agreed with the regulators. They decide the par value and then decide how much premium will be charged, extra money above the par value. Take out any RHP of an issue and you find all these details. Par Value = 1 Issue price(Price at which investors buy) = 10 Premium = 9 For a single share the capital surplus is 9, multiply it by the number of shares issued and you have the total capital surplus.
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Is there a widely recognized bond index?
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Multiple overlapping indices exist covering various investment universes. Almost all of the widely followed indices were originally created by Lehman Brothers and are now maintained by Barclays. The broadest U.S. dollar based bond index is known as the Universal. The Aggregate (often abbreviated Agg), which is historically the most popular index, more or less includes all bonds in the Universal rated investment grade. The direct analog to the S&P 500 would be the U.S. Corporate Investment Grade index, which is tracked by the ETF LQD, and contains exactly what it sounds like. Citigroup (formerly Salomon Brothers) also has a competitor index to the Aggregate known as Broad Investment Grade (BIG), and Merrill Lynch (now Bank of America) has the Domestic Master. Multiple other indices also exist covering other bond markets, such as international (non-USD) bonds, tax-exempts (municipal bonds), securitized products, floating rate, etc.
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Contract job (hourly rate) as a 1099: How much would I be making after taxes?
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There are way too many details missing to be able to give you an accurate answer, and it would be too localized in terms of time & location anyway -- the rules change every year, and your local taxes make the answer useless to other people. Instead, here's how to figure out the answer for yourself. Use a tax estimate calculator to get a ballpark figure. (And keep in mind that these only provide estimates, because there are still a lot of variables that are only considered when you're actually filling out your real tax return.) There are a number of calculators if you search for something like "tax estimator calculator", some are more sophisticated than others. (Fair warning: I used several of these and they told me a range of $2k - $25k worth of taxes owed for a situation like yours.) Here's an estimator from TurboTax -- it's handy because it lets you enter business income. When I plug in $140K ($70 * 40 hours * 50 weeks) for business income in 2010, married filing jointly, no spouse income, and 4 dependents, I get $30K owed in federal taxes. (That doesn't include local taxes, any itemized deductions you might be eligible for, IRA deductions, etc. You may also be able to claim some expenses as business deductions that will reduce your taxable business income.) So you'd net $110K after taxes, or about $55/hour ($110k / 50 / 40). Of course, you could get an answer from the calculator, and Congress could change the rules midway through the year -- you might come out better or worse, depending on the nature of the rule changes... that's why I stress that it's an estimate. If you take the job, don't forget to make estimated tax payments! Edit: (some additional info) If you plan on doing this on an ongoing basis (i.e. you are going into business as a contractor for this line of work), there are some tax shelters that you can take advantage of. Most of these won't be worth doing if you are only going to be doing contract work for a short period of time (1-2 years). These may or may not all be applicable to you. And do your research into these areas before diving in, I'm just scratching the surface in the notes below.
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Professional investment planning for small net-worth individual in bearish market
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You're going to have a hard time finding a legit investment planner that is willing to do things like take short-term positions in shorts, etc for a small investor. Doing so would put them at risk of getting sued by you for mismanagement and losing their license or affiliation with industry associations.
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How much does a landlord pay in taxes?
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I use a spreadsheet for that. I provide house value, land value, closing/fix-up costs, mortgage rate and years, tax bracket, city tax rate, insurance cost, and rental income. Sections of the spreadsheet compute (in obvious ways) the values used for the following tables: First I look at monthly cash flow (earnings/costs) and here are the columns: Next section looks at changes in taxable reported income caused by the house, And this too is monthly, even though it'll be x12 when you write your 1040. The third table is shows the monthly cash flow, forgetting about maintenance and assuming you adjust your quarterlies or paycheck exemptions to come out even: Maintenance is so much of a wildcard that I don't attempt to include it. My last table looks at paper (non-cash) equity gains: I was asked how I compute some of those intermediate values. My user inputs (adjusted for each property) are: My intermediate values are:
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Why would you elect to apply a refund to next year's tax bill?
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There actually are legitimate reasons, but they don't apply to most people. Here are a few that I know of: You're self-employed and have to pay quarterly estimated taxes. Rather than wait for the refund when you already have to pay 1/4 of next year's taxes at the same time, you just have the IRS apply to refund forward. (so you're not out the money you owe while waiting for your refund). You're filing an amended or late return, and so you're already into the next year, and have a similar situation as #1, where your next year's taxes have already come due. You're planning on declaring bankruptcy, and you're under the Tenth Circuit, those credits might be safe from creditors For almost any other situation, you're better off taking the money, and using it to pay down debt, or put it somewhere to make interest (although, at the current rates, that might not be very much).
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What exactly is a “bad,” “standard,” or “good” annual raise? If I am told a hard percentage and don't get it, should I look elsewhere?
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Any such number would depend on the country, the market, and the economic situation - especially inflation ratio. Generally, if you are not in a booming or a dying technology, getting a raise above the inflation ratio is 'good'; anything below is poor.
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What is Systematic about Systematic Investment Plan (SIP) and who invented it?
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According to https://en.wikipedia.org/wiki/Systematic_Investment_Plan it's nothing but a fancy term for plain old dollar cost averaging.
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Roth vs. Whole Insurance vs. Cash
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Cash/CD's for a house downpayment = Good. Resist the urge to invest this money unless you're not planning on the house for at least 5 years. Roth IRA - Good. Amounts contributed are able to be withdrawn without tax penalties, though you would really need to be in a crisis for this to be a good idea. It's your long-term, retirement money. The earlier you start, the better. Use your 401K at work, if it's offered. Contribute to the Roth as much as you can, as well. Whole life ("Cash value") life insurance: Be careful... Cash-value life insurance (Whole, Universal, Variable Universal) must be watched more closely as you age. Once they reach that "magical" point of being self-sustaining, you cannot relax. The annual cost of insurance is taken from the cash value, which your premium payments replenish. If you stop making premium payments, eventually the cost of insurance (which goes up every year) will erode your cash value down to nothing, at which point more premium must be paid to keep the policy in force. This often happens in your old age, when you can least afford the surprise, and costs are highest. Some advisors get messed up in their priorities when they start depending on the 8-10% commissions they are paid on insurance policies. Since premiums for cash-value policies are far higher than for term policies, you might get some insight into your advisor if they ignore your attempts to consider a term policy. Because of the insurance costs' effects on your cash value, these types of policies are some of the most inefficient and expensive ways to invest. You are better off not investing via a life insurance policy. You don't need life insurance unless someone depends on your financial contribution to their life (spouse and children, for example). Some people just like the peace of mind it brings, and some people want a lump sum to leave as a gift to their loved ones (which is an expensive way to leave a gift). You can have these "feel-good" benefits with a term policy for much less money, if you must have them. Unless you expect to become uninsurable at some point in the future, you should consider using term insurance to meet your life insurance needs until it is no longer needed.
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Are index trackers subject to insolvency risk?
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The Financial Services Compensation Scheme says: Investments FSCS provides protection if an authorised investment firm is unable to pay claims against it. For example: for loss arising from bad investment advice, poor investment management or misrepresentation; when an authorised investment firm goes out of business and cannot return investments or money. Investments covered include: stocks and shares; unit trusts; futures and options; personal pension plans and long-term investments such as mortgage endowments. An index-tracking fund provided by an authorised investment firm would seem to qualify in the cases where: The critical points here then are: I can't find anything easily to hand about FSCS on Blackrock's website, so I would imagine that you'd need to consult the documentation on your investment product to be sure.
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Do I need a business credit card?
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I would try to avoid mixing business expenditure with personal expenditure so a second credit card might be a good idea. That said, I did get a business credit card for my company in the UK as I didn't want to be personally liable for the money that was spent on the business card (even though I owned 100% of the business) in case things went horribly wrong. As I didn't fancy signing a personal guarantee, this meant that the limit was quite low but it was good enough in most cases.
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How does delta of an option change with time if underlying price is constant?
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As the option approaches expiry, the delta will approach zero or one, depending on whether you're in or out of the money. This might be easiest to conceptualise if you look at the option value as a function of the stock price, and then realise that the delta is the slope of that curve. Now, as we get closer to expiry, time value fades away, and we get closer and closer to the intrinsic value, which looks like this hockey stick: __/ As you see, close to expiry, if you're out of the money, you have nothing (with delta zero), while if you're in the money, you have a forward (with delta one).
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What were the main causes of the spike and drop of DRYS's stock price?
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Because it's a declining company and used as an institutional sized pump and dump with a new toxic financing every week. Look up Kalani Investments - they're behind it all.
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Warrant shares/UNIT
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A warrant is similar to a call option (the right to buy stock at a certain price), with the difference that warrants are filled by the issuing company with new shares, diluting the existing shareholders' ownership. The language is a bit confusing, but how I interpret it is: So your 9,000 shares will get you 3,000 shares and 3,000 warrants (the right to buy shares at a maximum price of 0.27 between April 2, 2018 and April 30, 2018. I think the phrase "The subscription price is SEK 0.27 per Unit" means that you can buy each unit for 0.27 SKE (which gets you one share and one option to buy another share.
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Debit cards as bad as credit cards?
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This sounds more like a behavioral than a debit card issue to me TBH. Did you put the money you're putting away into a separate savings account that you (mentally) labelled 'for investment'? That's pretty much what I do (and I have a couple of savings accounts for exactly that reason) and even though I know I've got $x in the savings accounts, the debit card I carry only lets me spend money from my main bank account. By the time I've transferred the money, the urge to spend has usually gone away, even though it often only takes seconds to make the transfer.
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Do the tax consequences make it worth it for me to hold ESPP stock?
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Your gain is $1408. The difference between 32% of your gain and 15% of your gain is $236.36 or $1.60 per share. If you sell now, you have $3957.44 after taxes. Forget about the ESPP for a moment. Are you be willing to wager $4000 on the proposition that your company's stock price won't go down more than $1.60 or so over the next 18 months? I've never felt it was worth it. Also, I never thought it made much sense to own any of my employer's stock. If their business does poorly, I'd prefer not to have both my job and my money at risk. If you sell now: Now assuming you hold for 18 months, pay 15% capital gains tax, and the stock price drops by $1.60 to $23.40:
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what's the best option to save money on everyday expenses?
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There is a saying in business: what gets measured gets done. Track every expense you make. Later, look over what you have learned. If 5% of your total budget is going to something frivolous, maybe you could halve it? If 1% or 0.1% is going to that frivolous expense, there's not much to be gained even by eliminating it. If you spend $200/mo on coffees, dropping those will help. If you spend $10/mo on coffees, you need to look elsewhere for your big savings. Have a target: I want to put $X into savings each month. Therefore I can only spend $Y. What do you have to change about last month's spending patterns to get down to $Y? Where are the easy targets for you? They will be different than the easy targets for me. What absolutely cannot change for you? Once you know the costs of what you're doing, you will know where it's possible to save, and where it's "worth it" to economize.
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Should I use a credit repair agency?
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So you are in IT, that is great news because you can earn a fabulous income. The part time is not great, but you can use this to your advantage. You can get another job or three to boost your income in the short term. In the long term you should be able to find a better paying job fairly easily. There is one way to never deal with creditors again: never borrow money again. Its pretty damn simple and from the suggestions of your post you don't seem to be very good at handling credit. This would make you fairly normal. 78% of US households don't have $1000 saved. How are they going to handle a brake job/broken dryer/emergency room visit? Those things happen. Cut your lifestyle to nothing, earn money and save it. Say you have 2000 saved up. Then a creditor calls saying you owe 5K. Tell me you are willing to settle for the 2K you have saved. If they don't, hang up. If they are willing getting it writing and pay by a method that insulates you from further charges. Boom one out of the way and keep going. You will be 1099'd for some income, but it is a easy way to "earn" extra money. This will all work if you commit yourself to never again borrowing money.
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How can I determine which stores are regarded as supermarkets for a rewards credit card?
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Credit card companies organize types of businesses into different categories. (They charge different types of businesses different fees.) When a business first sets up their credit card processing merchant account, they need to specify the category. Here is a list of categories that Visa uses. Grocery stores and supermarkets are category number 5411. Other types of businesses, such as the examples you provided in your question, have a different category number. American Express simply looks at the merchant category code for each of your transactions and only gives you rewards for the ones in the grocery store category. It's all automated. They likely don't have a list of every grocery store in the US, and even if they did, they would probably not provide it to the public, for proprietary reasons. If you are in doubt about whether or not a particular store is in the grocery category, you'll just have to charge it to your card and see what happens. Often, the category of transaction will be shown for each transaction on your credit card's website.
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Pay off car or use money for down payment
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The best thing to do is pay off the car. Adding more variables to a negotiation with a car dealer (in this case, a trade in), is always going to go in their favor. This is why people recommend negotiating a price down first, before ever mentioning to the dealer you want to do a trade in or financing.
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Prices go up and salary doesn't: where goes delta?
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Purchasing commodities (whose prices are increasing rapidly), improving corporate profitability, buying imports (the US dollar is weaker than it was, so the price of everything imported has gone up), paying down corporate debt, etc.
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Getting live data from Yahoo! Finance for the National Stock Exchange of India (NSE)?
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I wouldn't think so. If you read the list of features listed on the page you referred to, notice: Track Stocks It looks like it is restricted to the major U.S. stock markets. No mention of India's NSE.
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What are the advantages and disadvantages of leasing out a property or part of a property (such as a basement apartment)?
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Complexity has mentioned some good points. I'd also like to add on the downsides: It's not that easy to get rid of a tenant! Imagine if your tenant passed your background check with flying colors but then turned out to be the tenant from hell... How would you resolve the situation? If the thought of that kind of situation stresses you (it would stress me!), I would consider carefully whether you really want to be a landlord.
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How much life insurance do I need?
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One simple calculation to determine your life insurance need: D.I.M.E. method D: Debt All your car loan balances, credit card balances, student loans, business loans, etc. I: Income Your annual income times 10 (for 10 years of income replacement). M: Mortgage Your home mortgage balance. E: Education Your children's education expenses. You add up all these items, and you'll come up with a proper amount of life insurance coverage. This should be sufficient model for a majority of people. Yes, your life insurance needs will change as you move through life. Therefore you should sit down with your life insurance agent to review your policy every year and adjust it accordingly.
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Why do people take out life insurance on their children? Should I take out a policy on my child?
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A $10,000 life insurance policy on a child only makes sense for a family that: Thus, it could make sense: Many families are in this financial situation. A family in the combination of this financial situation and this emotional situation might be well served to seek religious counsel. If they find ways to remember loved ones without expensive funerals, they could save money on insurance. Ironically, a much larger life insurance policy for a child might make more sense. Look at it this way: What is the replacement cost of a child? A family that has only one son (and any number of daughters), or a family that has only one daughter (and any number of sons), stands to lose an obvious part of their genetic and cultural legacy if they lose that son or daughter. It is expensive to conceive, bear, and raise a child to a particular age. This cost increases as the child ages. The number of years of child-raising cost obviously increases. Also, the cost of conceiving another child can go from very small to very large (especially if fertility treatment or sterilization-reversal surgery is required). Unfortunately, most life insurance companies do not think of things this way. I am not aware of any 100,000 - 250,000 dollar children's life insurance policies on the market.
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Is there data and proof that a diversified portfolio can generate higher returns than the S&P 500 Index?
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Stocks, Bonds, Bills, and Lottery Tickets notes the work of Fama and French who researched the idea of a small-cap premium along with a value premium that may be useful to note in terms of what has outperformed if one looks from 1926 to present. Slice and dice would also be another article about an approach that over weights the small-cap and value sides of things if you want another resource here.
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Where should I park my rainy-day / emergency fund?
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I am using ING for my emergency savings, but sometime last year I discovered SmartyPig. As of 4/24/2010 they offer 2.1%, which is even better than the 1 year CDs at most banks. I've switched two small accounts to SmartyPig and plan to switch my emergency savings. Their accounts are geared around monthly contributions, but you don't have to use that feature.
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Why do people buy insurance even if they have the means to overcome the loss?
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Your basic point is correct; the savvy move is to use insurance only to cover losses that would be painful or catastrophic for you. Otherwise, self-insure. In the specific example of car insurance, you may be missing that it doesn't only cover replacement of the car, it also covers liability, which is a hundreds-of-thousands-of-dollars risk. The liability coverage may well be legally required; it may also be required as a base layer if you want to get a separate umbrella policy up to millions in liability. So you have to be very rich before this insurance stops making sense. In the US at least you can certainly buy car insurance that doesn't cover loss of the car, or that has a high deductible. And in fact, if you can afford to self-insure up to a high deductible, on average as you say that should be a good idea. Same is true of most kinds of insurance, a high deductible is best as long as you can afford it, unless you know you'll probably file a claim. (Health insurance in particular is weird in many ways, and one is that you often can estimate whether you'll have claims.) On our auto policy, the liability and uninsured motorist coverage is about 60% of the cost while damage to the car coverage is 40%. I'm sure this varies a lot depending on the value of your cars and how much you drive and driving record, etc. On an aging car the coverage for the car itself should get cheaper and cheaper since the car is worth less, while liability coverage would not necessarily get cheaper.
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If a country can just print money, is global debt between countries real?
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Debt can be denominated either in a currency the country controls or a currency the country doesn't control. If the debt is denominated in a currency the country controls then they have the option of "printing their way out of it". That option doesn't come for free, it will devalue their currency on the global market and hurt savers in their country but it is an option. If the debt is denominated in a currency the country does not control then they don't have that option. As I understand it the US debt is in the first category. It's denominated in US dollars so the US government could if they so wished print their way out of it. On the other hand greece's debt is denominated in euros putting them at the mercy of european bankers.
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Why don't people generally save more of their income?
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This question is likely to be voted closed as opinion-based. That said - In general people have become accustomed to instant gratification. They also have the media showing them luxury and are enticed every day to buy things they don't need. In the US, the savings rate is awfully low, but it's not just the lower 50%, it's 75% of people who aren't saving what they should. see http://web.stanford.edu/group/scspi/_media/working_papers/pfeffer-danziger-schoeni_wealth-levels.pdf for an interesting article on the topic of accumulated wealth.
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Starting with Stocks or Forex?
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I took a course in forex trading for 3 months. I also studied financial markets in the Uni. I have been saving in order to start investing but I face the same question. I have gathered some advantages and disadventages that I would like to know your opinion. Forex market is more liquid, its more easy to identify what makes the currency change and to "predict" it. For small investors its an intraday trading. The risk is huge but the return can be also huge. Stocks are for long term investements. Its difficult to have a bigger return unless you know something that others dont. Its more difficult to predict price change since its easier to anyone influence it. The risk is less.
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Working remotely from Canada for a US company. How to get paid?
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I'm no lawyer and no expert, so take my remarks as entertainment only. Also see this question. If you have a U.S. SSN which is eligible for work, they may be able to pay you on 1099 basis with your SSN as a sole proprietor, unless they have some personal reason for avoiding that. So perhaps try asking about that specifically. HR policies can be weird and tricky, maybe a nudge in the right direction will help. Not What You Asked: regardless, I might recommend you register as an LLC and get an EIN (sort of SSN for companies) for a variety of reasons. It's called a "limited liability" company for a reason. You may also have an easier time reaping various business-related rewards, like writing off expenses. If you do so, consider a state with no income tax like Wyoming. (Or, for convenience sake, WA if you live in BC, or maybe NH if you live in Ontario.. etc.)
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Has anyone compared an in-person Tax Advisor to software like Turbo Tax?
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I've done my taxes using turbotax for years and they were not simple, Schedule C (self-employed), rental properties, ESPP, stock options, you name it. It's a lot of work and occasionally i did find bugs in TurboTax. ESPP were the biggest pain surprisingly. The hardest part is to get all the paperwork together and you'd have to do it when you hire an accountant anyway. That said this year i am using an accountant as i incorporated and it's a whole new area for me that i don't have time to research. Also in case of an audit i'd rather be represented by a pro. I think the chance of getting audited is smaller when a CPA prepares your return.
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Can Professional Certifications be written off in taxes?
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There are a number of federal tax deductions and credits available for education expenses. They are too numerous to describe here, but the place to get full details is IRS Pub 970. Note that many, but not all, of them require that you be enrolled in a degree program; since this does not seem to be the case for you, you would not be eligible for those programs. None of them is as simple / generous as "deduct the full amount of your tuition with no limits". Also note that there are restrictions on using more than one of these deductions or credits in any given tax year. You might pay special attention to Chapter 12, "Business Deduction for Work-Related Education". In particular, this program allows you to deduct transportation expenses under some conditions, which does not seem to be the case for the other programs. But also note carefully the restrictions. In particular, "Education that is part of a program of study that will qualify you for a new trade or business is not qualifying work-related education." So if you are not already working in the field of IT, you may not be eligible for this deduction.
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Why do people buy insurance even if they have the means to overcome the loss?
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There are a couple of reasons that a person might choose to use insurance even if they could handle the financial loss if something went wrong. They know their risk better than the insurance company. While it might seem odd at first glance that an individual can be better at assessing risk than a large company with thousands of actuaries. There are limits to the amount of knowledge that an insurance company can have or use to price their insurance products. For instance if you were a very aggressive driver but didn't have any recent tickets or accidents because you were in college and didn't have a car on a regular basis, but now you have a job and drive 30 miles to work every day. You know your risk is relatively high but the insurance company sees you as relatively low risk and aren't able to price that extra risk into your premium. Just because a person can survive financial after losing something like a car or a house doesn't mean it isn't desirable to pay a small price to mitigate that risk. If you are using your savings to pay for an emergency then that money needs to be semi liquid in case you need it limiting your investment options. Where as if you purchase insurance you pay a small amount of money to be able to invest the rest of your money. Liquidity is a big deal particularly if you are a small business and investing into your business where your money can make your more money but you may or may not be able to access that money very easily.
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Should I use a TSP loan?
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I don't have experience with TSP in particular, but they look to be roughly the same as 401(k) loans. If the "G Fund rate" is equal to the yield of government bonds, then your main risk is the risk that yields increase, which means the interest you're paying is less than what you would have earned on the investments. Here are some other things to consider: For any car loan, I would borrow as little as possible with as short a term as possible. To me, the interest savings and additional risks from borrowing from your retirement isn't worth it.
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How long can I convert 401(k) to Roth 401(k)?
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Conversions must be done during the calendar year. This would apply to both IRA and 401(k) accounts. For IRAs, deposits may be made until 4/15, and the same holds for Solo 401(k) accounts. For conversions, the IRA permits a recharacterization, basically, a do-over, which reverses the conversion, any or all, in case you have any reason it should not have been done. That has a deadline of 10/15, i.e. 4/15 plus 6 month extension. The 401(k) conversion has no such provision. Simple answer 12/31 of the given year.
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Health insurance lapsed due to employer fraud. How to get medications while in transition?
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Check with the manufacturer of the name brand medication. Most of them have programs to help people who need their medication but can not afford it. They may be able to send you coupons for discounted or free medication. You can go to a free clinic. If your income is low enough the free clinic will provide medicine until you can get back on insurance. You can do what alot of people who work hard and do not have insurance do and pay for it outof pocket. You can talk to your doctor and see if there is an alternative to the expensive medicine that your insurance used to pay for. It may not be as effective or may have other side affects but many people are forced to go with these alternatives. You situation is certianly unfortunate but also not terribly uncommon. You probably also have recourse against the former employer but if they commited fraud, and faked your insurance there probably is not alot of money to recoup. If it was a person who commited fraud then you may be able to get a judgement against them that would survive bankruptcy and the business but it will probably be at least 5 years before you can recoup anything possibly much longer and your attorney will probably not take it on contingency.
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Bid/ask spreads for index funds
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First, what structure does your index fund have? If it is an open-end mutual fund, there are no bid/ask spread as the structure of this security is that it is priced once a day and transactions are done with that price. If it is an exchange-traded fund, then the question becomes how well are authorized participants taking advantage of the spread to make the fund track the index well? This is where you have to get into the Creation and Redemption unit construct of the exchange-traded fund where there are "in-kind" transactions done to either create new shares of the fund or redeem out shares of the fund. In either case, you are making some serious assumptions about the structure of the fund that don't make sense given how these are built. Index funds have lower expense ratios and are thus cheaper than other mutual funds that may take on more costs. If you want suggested reading on this, look at the investing books of John C. Bogle who studied some of this rather extensively, in addition to being one of the first to create an index fund that became known as "Bogle's Folly," where a couple of key ones would be "Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor" and "Bogle on Mutual Funds: New Perspectives for the Intelligent Investor." In the case of an open-end fund, there has to be a portion of the fund in cash to handle transaction costs of running the fund as there are management fees to come from running the fund in addition to dividends from the stocks that have to be carefully re-invested and other matters that make this quite easy to note. Vanguard 500 Index Investor portfolio(VFINX) has .38% in cash as an example here where you could look at any open-end mutual fund's portfolio and notice that there may well be some in cash as part of how the fund is managed. It’s the Execution, Stupid would be one of a few articles that looks at the idea of "tracking error" or how well does an index fund actually track the index where it can be noted that in some cases, there can be a little bit of active management in the fund. Just as a minor side note, when I lived in the US I did invest in index funds and found them to be a good investment. I'd still recommend them though I'd argue that while some want to see these as really simple investments, there can be details that make them quite interesting to my mind. How is its price set then? The price is computed by taking the sum value of all the assets of the fund minus the liabilities and divided by the number of outstanding shares. The price of the assets would include the closing price on the stock rather than a bid or ask, similar pricing for bonds held by the fund, derivatives and cash equivalents. Similarly, the liabilities would be costs a fund has to pay that may not have been paid yet such as management fees, brokerage costs, etc. Is it a weighted average of all the underlying stock spreads, or does it stand on its own and stems from the usual supply & demand laws ? There isn't any spread used in determining the "Net Asset Value" for the fund. The fund prices are determined after the market is closed and so a closing price can be used for stocks. The liabilities could include the costs to run the fund as part of the accounting in the fund, that most items have to come down to either being an asset, something with a positive value, or a liability, something with a negative value. Something to consider also is the size of the fund. With over $7,000,000,000 in assets, a .01% amount is still $700,000 which is quite a large amount in some ways.
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What are some good ways to control costs for groceries?
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For a while I tried shopping multiple grocery stores, checking fliers each week from three different stores and then making the trip to all three stores to save ten cents on each item. After a couple months, I decided it just wasn't worth it. So, I picked my favorite store. I shop once a week, after reviewing the flier and making a list. I clip coupons and try to only buy what's on my list. (I confess that coupons sometimes get me to buy a brand or item I wouldn't have otherwise... it's my weakness!) The biggest place that we save money though, is by paying attention to meat prices. I know that chicken and pork go on sale for $1.99/lb every 4 to 6 weeks at my grocery store. When it does, I buy a enough to last until the next sale, and freeze it in single-meal portions. Steak and fish are special treats, but on the rare occasion that they're less than $4/lb, I'll buy those. We also try to limit our meat consumption to every-other-day. It's not worth it for me to obsess over the price of ketchup that I buy twice a year, but on expensive items like meat, and items we use daily, I become familiar with their regular prices and sale prices, and buy extra when it's on sale. If, like me, you don't have room in your brain to keep track of the prices of everything, stick with the things you spend the most on, either because they're expensive, or you buy a lot.
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Online tool to connect to my bank account and tell me what I spend in different categories?
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I use Banktivity. It's very much not free, but it automatically downloads all my bank and credit card activity and has excellent reporting options.
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Why invest in IRA while a low-cost index fund is much simpler?
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Is that basically it? Trading off between withdrawing-anytime vs paying-capital-gain-tax? No. Another significant factor is dividends. In an IRA they incur no immediate tax and can be reinvested. This causes the account value to compound over the years. Historically, this compounding of dividends provides about half of the total return on investments. In a non-IRA account you have to pay taxes each year on all dividends received, whether you reinvest them or not. So outside of an IRA you have a tax drag on both capital gains and dividends.
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What are the typical repayment plans for Credit Cards in the United States?
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It is called "Credit card installments" or "Equal pay installments", and I am not aware of them being widely used in the USA. While in other countries they are supported by banks directly (right?), in US you may find this option only in some big stores like home improvement stores, car dealerships, cell phone operators (so that you can buy a new phone) etc. Some stores allow 0% financing for, say, 12 months which is not exactly the same as installments but close, if you have discipline to pay $250 each month and not wait for 12 months to end. Splitting the big payment in parts means that the seller gets money in parts as well, and it adds risks of customer default, introduces debt collection possibility etc. That's why it's usually up to the merchants to support it - bank does not care in this case, from the bank point of view the store just charges the same card another $250 every month. In other countries banks support this option directly, I think, taking over or dividing the risk with the merchants. This has not happened in US. There is a company SplitIt which automates installments if stores want to support it but again, it means stores need to agree to it. Here is a simple article describing how credit cards work: https://www.usbank.com/credit-cards/how-credit-cards-work.html In general, if you move to US, you are unlikely to be able to get a regular credit card because you will not have any "credit history" which is a system designed to track each customer ability to get & pay off debt. The easiest way to build the history - request "secured credit card", which means you have to give the bank money up front and then they will give you a credit card with a credit limit equal to that amount. It's like a "practice credit card". You use it for 6-12 months and the bank will report your usage to credit bureaus, establishing your "credit score". After that you should be able to get your money back and convert your secured card into a regular credit card. Credit history can be also built by paying rent and utilities but that requires companies who collect money to report the payments to credit bureaus and very few do that. As anything else in US, there are some businesses which help to solve this problem for extra money.
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Should I get an accountant for my taxes?
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I don't know if I would go so far as to hire an accountant. None of those things you listed really complicates your taxes all that much. If you were self-employed, started a business, got a big inheritance, or are claiming unusually large deductions, etc. then maybe. The only thing new from your post seems to be the house and a raise. The 3rd kid doesn't substantially change things on your taxes from the 2nd. I'd suggest just using tax preparation software, or if you are especially nervous a tax-preparation service. An accountant just seems like overkill for an individual.
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Why is being “upside down” on a mortgage so bad?
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The largest problem and source of anxiety / ruin for homeowners during the housing market collapse was caused by the inability to refinance. Many people had bought homes which they were stretched to afford, by using variable-rate mortgages. These would typically offer a very attractive initial rate, with an annual cap on the potential increase of rate. Many of these people intended to refinance their variable-rate to a fixed rate once terms were more favorable. If their house won't appraise for the value needed to obtain a new loan, they are stuck in their current contract with potentially unfavorable rates in the later years (9.9% above prime was not unheard of.) Also, many people, especially those in areas of high inflation in the housing market, used a financial device known as a Balloon Mortgage, which essentially forced you to get a new loan after some number of years (2, 5, 10) when the entire note became due. Some of those loans offered payments less than Principal + Interest! So, say you move near Los Angeles and can't afford the $1.2M for the 3-bedroom ranch in which you wish to live. You might work out a deal with your mortgage broker/banker in which you agree contractually to only pay $500/month, with a balloon payment of $1.4M due in 5 years, which seemed like a good deal since you (and everyone else,) actually expect the house to be 'worth' $1.5M in 5 years. This type of thing was done all the time back in the day. Now, imagine the housing bubble bursts and your $1.2M home is suddenly only valued at, perhaps, $750k. You still owe $1.4M sometime in the next several years (maybe very soon, depending on timing,) and can only get approved financing for the current $750k value -- so you're basically anticipating becoming homeless and bankrupt within the same year. That is a source of much anxiety about being upside-down on a loan. See this question for an unfortunate example.
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