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Who can truly afford luxury cars?
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A while back I sold cars for a living. Over the course of 4 years I worked for 3 different dealerships. I sold new cars at 2 and used at the last one. When selling new cars I found that the majority of people buying the higher end cars honestly shouldn't have been - 80%+. They almost always came in owing more on their trades then they were worth, put down very little cash and were close to being financially strapped. From a financial perspective these deals were hard to close, not because the buyer was picky but rather because their finances were a mess. Fully half, and probably more, we had to switch from the car they initially wanted down to a much cheaper version or try to convert to a lease because it was the only way the bank would loan the money. We called them "$30,000 millionaires" because they didn't make a whole lot but tried to look like they did. As a salesman you knew you were in serious trouble when they didn't even try to negotiate. Around 2% of the deals I did were actual cash deals - meaning honest cash, not those who came in with a pre-approved loan from a bank. These were invariably for used cars about 3 to 4 years old and they never had a trade in. The people doing this always looked comfortable but never dressed up, you wouldn't even look at them twice. The negotiations were hard because they knew exactly how much that car should go for and wouldn't even pay that. It was obvious they knew the value of money. That said, I've been in the top 3% of wage earners for about 20 years and at no point have I considered myself in a position to "afford" a new "luxury" car. IMHO, there are far more important things you can do with that kind of money.
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Why do people buy new cars they can not afford?
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If everyone bought used cars, who would buy the new cars so that everyone else could buy them used? Rental car companies? Your rant expresses a misunderstanding of fundamental economics (as demand for used cars increases, so will prices) but economics is off-topic here, so let me explain why I bought a new car—that I am now in the 10th year of driving. When I bought the car I currently drive, I was single, I was working full-time, and I was going to school full-time. I bought a 2007 Toyota Corolla for about $16,500 cash out the door. I wanted a reliable car that was clean and attractive enough that I wouldn't be embarrassed in it if I took a girl out for dinner. I could have bought a much more expensive car, but I wanted to be real about myself and not give the wrong impression about my views on money. I've done all the maintenance, and the car is still very nice even after 105K miles. It will handle at least that many more miles barring any crashes. Could I have purchased a nice used car for less? Certainly, but because it was the last model year before a redesign, the dealer was clearly motivated to give me a good deal, so I didn't lose too much driving it off the lot. There are a lot of reasons why people buy new cars. I didn't want to look like a chump when out on a date. Real-estate agents often like to make a good impression as they are driving clients to see new homes. Some people can simply afford it and don't want to worry about what abuse a prior owner may have done. I don't feel defensive about my decision to buy a new car those years ago. The other car I've purchased in the last 10 years was a four year old used car, and it certainly does a good job for my wife who doesn't put too many miles on it. I will not rule out buying another new car in the future either. Some times the difference in price isn't significant enough that used is always the best choice.
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International (ex-US) ETFs with low exposure to financial sector?
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If you are looking for a European financials ETF to short, you could take a look at the iShares EURO STOXX Banks, which is traded on a a few German stock exchanges (Frankfurt etc.): iShares Euro Stoxx Banks Website You find its current holdings here: holdings.
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Should I pay cash or prefer a 0% interest loan for home furnishings?
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Remember that due to inflation you are paying back the loan with cheaper dollars in the future. If there are no gimmicks in the loan like early payment penalties, or must pay by a certain date or that the credit was for a store that sold the products at a higher price than you could get elsewhere then you are not just getting free money they are paying you to take the money.
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Does the P/E ratio not apply to bond ETFs?
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The simple answer is technically bonds don't have earnings, hence no P/E. What I think the OP is really asking how do I compare stock and bond ETFs. Some mature stocks exhibit very similar characteristics to bonds, so at the margin if you are considering investing between 2 such investments that provide stable income in the form of dividends, you might want to use the dividend/price ratio (D/P) of the stock and compare it to the dividend yield of the bond. If you go down to the basics, both the bond and the stock can be considered the present value of all future expected cashflows. The cash that accrues to the owner of the stock is future dividends and for the bond is the coupon payments. If a company were to pay out 100% of its earnings, then the dividend yield D/P would be conveniently E/P. For a company with P/E of 20 that paid out it's entire earnings, one would expect D/P = 1/20 = 5% This serves as a decent yard stick in the short term ~ 1 year to compare mature stock etfs with stable prospects vs bond funds since the former will have very little expected price growth (think utilities), hence they both compete on the cashflows they throw off to the investor. This comparison stops being useful for stock ETFs with higher growth prospects since expected future cashflows are much more volatile. This comparison is also not valid in the long term since bond ETFs are highly sensitive to the yield curve (interest rate risk) and they can move substantially from where they are now.
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Is it possible to make money by getting a mortgage?
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This answer is based on Australian tax, which is significantly different. I only offer it in case others want to compare situations. In Australia, a popular tax reduction technique is "Negative Gearing". Borrow from a bank, buy an investment property. If the income frome the new property is not enough to cover interest payments (plus maintenance etc) then the excess each year is a capital loss - which you claim each year, as an offset to your income (ie. pay less tax). By the time you reach retirement, the idea is to have paid off the mortgage. You then live off the revenue stream in retirement, or sell the property for a (taxed) lump sum.
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How can I determine if a debt consolidation offer is real or a scam?
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I think in such situations a good rule of thumb may be - if you are asked to pay significant sums of money upfront before anything is done, stop and ask yourself, what would you do if they don't do what they promised? They know who you are, but usually most you know is a company name and phone number. Both can disappear in a minute and what are you left with? If they said they'd pay off the debt and issue the new loan - fine, let them do it and then you pay them. If they insist on having money upfront without delivering anything - unless it's a very big and known and established company you probably better off not doing it. Either it's a scam or in the minuscule chance they are legit you still risking too much - you're giving money and not getting anything in return.
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NYSE vs. Nasdaq - can I tell what exchange a ticker traded on, based solely on the ticker?
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You cannot determine this solely by the ticker length. However, there are some conventions that may help steer you there. Nasdaq has 2-4 base letters BATS has 4 base letters NYSE equity securities have 1-4 base letters. NYSE Mkt (formerly Amex) have 1-4 base letters. NYSE Arca has 4 base letters OTC has 4 base letters. Security types other than equities may have additional letters added, and each exchange (and data vendors) have different conventions for how this is handled. So if you see "T" for a US-listed security it would be only be either NASDAQ, NYSE or NYSE Mkt. If you see "ANET" then you cannot tell which exchange it is listed on. (In this case, ANET Arista Networks is actually a NYSE stock). For some non-equity security types, such as hybrids, and debt instruments, some exchanges add "P" to the end for "preferreds" (Nasdaq and OTC) and NYSE/NYSE Mkt have a variety of methods (including not adding anything) to the ticker. Examples include NYSE:TFG, NYSEMkt:IPB, Nasdaaq: AGNCP, Nasdaq:OXLCN. It all becomes rather confusing given the changes in conventions over the years. Essentially, you require data that provides you with ticker, listing location and security type. The exchanges allocate security tickers in conjunction with the SEC so there are no overlaps. eg. The same ticker cannot represent two different securities. However, tickers can be re-used. For example, the ticker AB has been used by the following companies:
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Will I be paid dividends if I own shares?
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Yes, as long as you own the shares before the ex-dividend date you will get the dividends. Depending on your instructions to your broker, you can receive cash dividends or you can have the dividends reinvested in more shares of the company. There are specific Dividend ReInvestment Plans (or DRIPs) if you are after stock growth rather than income from dividend payments.
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Should I stockpile nickels?
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Trying to engage in arbitrage with the metal in nickels (which was actually worth more than a nickel already, last I checked) is cute but illegal, and would be more effective at an industrial scale anyway (I don't think you could make it cost-effective at an individual level). There are more effective inflation hedges than nickels and booze. Some of them even earn you interest. You could at least consider a more traditional commodities play - it's certainly a popular strategy these days. A lot of people shoot for gold, as it's a traditional hedge in a crisis, but there are concerns that particular market is overheated, so you might consider alternatives to that. Normal equities (i.e. the stock market) usually work out okay in an inflationary environment, and can earn you a return as they're doing so.... and it's not like commodities aren't volatile and subject to the whims of the world economy too. TIPs (inflation-indexed Treasury bonds) are another option with less risk, but also a weaker return (and still have interest rate risks involved, since those aren't directly tied to inflation either).
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I started some small businesses but need help figuring out taxes. Should I hire a CPA?
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The only professional designations for people allowed to provide tax advice are Attorney, EA or CPA. Attorney and CPA must be licensed in the State they practice in, EA's are licensed by the Federal government. Tax preparers are not allowed to provide any tax advice, unless they hold any of these designations. They are only allowed to prepare your tax forms for you. So no, tax preparer is not a solution. Yes, you need to talk to a tax adviser (EA/CPA licensed in your State, you probably don't need a tax attorney). You should do that before you start earning money - so that you can plan properly and understand what expenses you can incur and how they're handled with regards to your future income tax payments. You might also want to consider a bookkeeping service (many EA/CPA offices offer the bookkeeping as well). But that you can also do yourself, not all that complicated if you don't have tons of transactions and accounts.
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When should I walk away from my mortgage?
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The value of debt is that it allows you to profit from the return of equity beyond the amount of actual net equity you own. Of course, this only works if the cost of borrowing is less than your return on equity. Market timing matters a great deal but isn't accounted for in this view. For my answer I would like to hand-wave away market timing considerations. One plausible justification is that you could default on your current home and then immediately go buy one of equal value. If you buy a new home of a lesser value (due to lack of funds) and then prices appreciate, then you missed some opportunity cost but probably not $100k worth of it. Moving on, here are some helpful assumptions I'll make. I'll ignore performance of your portfolio after retirement and only seek to optimize F, which will be your net worth upon retirement. In either case, your current net worth is earning the R2 rate. We can convert this for both your current net worth and future savings using conversion formulas. Present to future value F = P (1+R2)^x Annual to future value F = S ( (1+R2)^x - 1 ) / R2 Adding these together is sufficient to obtain F in the case that you have no borrowing power. The case where you do not default and maintain your credit score is different due to an initial $100k penalty and the amortized value of borrowing power. In a completely theoretical sense, you get an effective (R2-R1) yield on all borrowed money. The future value will be the following: F = A1 (1+R2-R1)^x One step is missing, however, which is to convert this value (the value of having a good credit score) into present value to compare to value of your defaulting. P of borrowing power = F / (1+R2)^x = A1 { (1+R2-R1)/(1+R2) }^x Now, let's put some specific values in. Say that you can borrow $300k with your good credit history and this applies for the next 25 years, after which you retire. The borrowing rate is 7% and the time-value of money to you is 10%. I would then calculate: P of borrowing power = $58 k < $100 k This indicates that it would be more economical to default. Of course, some people might point out that it will be removed from your record after 7 years. If you plug 7 years instead of 25 years into the equation, almost no assumptions about rates will lead to the option of keeping your house being preferable. So in a nutshell, the value of your credit is probably less than $100k in a purely mathematical sense. But there are other factors too. If you don't have that borrowing ability maybe you wouldn't be able to borrow money to start the business of your dreams. If you are a rock star entrepreneur, then time-value of money to you could be 1,000% yield, sure, then maybe you could make the above numbers work (to favor keeping the house). I've also neglected ethics. As other people point out, it would be like stealing from the bank.
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How do I fold side-income into our budget so my husband doesn't know?
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Maybe you can just hang onto the cash and upgrade the things you buy for cash now a bit. Buy the better cut of meat, the nicer pair of shoes, etc. Since you have no trouble with bending the truth a bit.. if challenged, the shoes were "on sale". And no you must have lost the receipt. Not that I'm advocating it, but the only time I notice my better half's shoe habit is when a garbage bag of the old ones goes out the door.
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Is real (physical) money traded during online trading?
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When you buy a currency via FX market, really you are just exchanging one country's currency for another. So if it is permitted to hold one currency electronically, surely it must be permitted to hold a different country's currency electronically.
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Limited Liability Partnership capital calculation
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Retained earnings is different from partner capital accounts. You can draw the money however the partners agree. Unless money is specifically transferred to the capital funds, earnings will not show up there.
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How much is university projected to cost in Canada in 18 years?
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For a Canadian university education, an October 2009 article at Canada.com says: [...] The study estimates the total price tag of an undergraduate degree at a whopping $137,013 for students living away from home and $101,426 for those staying at home. [...]
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Where can one download or subscribe to end of day price data for Tokyo stocks?
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Google Finance certainly has data for Tokyo Stock Exchange (called TYO on Google) listings. You could create a "portfolio" consisting of the stocks you care about and then visit it once per day (or write a script to do so).
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I'm about to be offered equity by my employer. What should I expect?
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In my experience, any kind of equity you may be offered by the company is just a carrot. Your offer may be written in such a way that your potential ownership represents, say, 1% of the company today. But if the company goes for a round of financing your ownership percentage can get diluted. If this happens a couple of times and the terms of financing aren't very favorable then your percentage can go from that 1% down to 0.001%, making the equity worthless. I've known people who heard their company was being bought and thought they might get some kind of payoff. Come to find out the company hadn't done all that well and there wasn't anything to pay out after the main investors got some money back. (The main investors took a loss.) For obvious reasons, management wasn't keeping the staff up to date about the fact that they were operating in the red and their options were worthless. Some people grumbled about lawyers and filing lawsuits, but at the end of the day, there wasn't any money to be won. Keep this in mind. As to your question regarding what to look out for:
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What capital gains taxes do I owe on stock sales in India?
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Long term: Assuming you sold stock ABC through a registered stock exchange, e.g., the Bombay Stock Exchange or the National Stock Exchange of India, and you paid the Securities Transaction Tax (STT), you don't owe any other taxes on the long term capital gain of INR 100. If you buy stock BCD afterwards, this doesn't affect the long term capital gains from the sale of stock ABC. Short term: If you sell the BCD stock (or the ABC stock, or some combination therein) within one year of its purchase, you're required to pay short term capital gains on the net profit, in which case you pay the STT and the exchange fees and an additional flat rate of 15%. The Income Tax Department of India has a publication titled "How to Compute your Capital Gains," which goes into more detail about a variety of relevant situations.
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If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes?
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While you are required to do so as others have said, it's actually in your interest to do so. In a recent article at GlobeInvestor, Tim Cestnick discusses the benefits of filing tax returns for teens. This situation may or may not apply to you but the message is the same. The main benefits are (1) create RRSP contribution room and (2) be eligible for GST/HST credits and other possible one-shot credits (think oil royalty surplus cheques in Alberta). Excerpt: You see, when Lincoln was 14, he filed a tax return and reported $2,000 of income that year. He paid no tax thanks to the basic personal tax credit, but he created $360 of RRSP contribution room that year. Beginning in 2003, Lincoln started working part-time in his father's business. His father agreed to pay him $6,000 each summer to work in the business, to help save money for university. Lincoln didn't pay any tax on the money he earned in those summers because his basic personal tax credit was always higher than his earnings. In addition, Lincoln added to his RRSP contribution room simply by filing a tax return each year.
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Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”?
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Insofar as a 52 week high indicates a peak, yes. However, the truth is that "buying low and selling high" means "Act a Fool!" You see, when you buy low, you are perceived to be buying total garbage - throwing your money away and conversely when selling high you are perceived to be a total idiot - selling a winner. That's how people will see you when you are in fact buying low and/or selling high, right? It's those people that (mis)value the asset, right? An asset is worth what the people will pay for it, right? ...And don't forget that holding a loser is MUCH easier than holding a winner. Good luck!
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Evaluating an endowment policy for its fairness against other tax saving options in India such as PPF, EPF and even FDs
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Or am missing something? Yes. The rate of 8.53 is illustration. There is no guarantee that the rate will be applicable. My yearly premium is Rs. 26289. On this amount I will save tax of Rs. 7887. So net premium is Rs. 18402. The other way to look at this is invest Rs 26289 [or actually less of Eq Term Deposit premium]. If you invest into Eq Term Deposit [lock-in for 6 years] with tax benefits, your numbers are going to be very different and definitely better than LIC returns. Edits:
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Why do stock prices change? [duplicate]
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As I understand it, a company raises money by sharing parts of it ("ownership") to people who buy stocks from it. It's not "ownership" in quotes, it's ownership in a non-ironic way. You own part of the company. If the company has 100 million shares outstanding you own 1/100,000,000th of it per share, it's small but you're an owner. In most cases you also get to vote on company issues as a shareholder. (though non-voting shares are becoming a thing). After the initial share offer, you're not buying your shares from the company, you're buying your shares from an owner of the company. The company doesn't control the price of the shares or the shares themselves. I get that some stocks pay dividends, and that as these change the price of the stock may change accordingly. The company pays a dividend, not the stock. The company is distributing earnings to it's owners your proportion of the earnings are equal to your proportion of ownership. If you own a single share in the company referenced above you would get $1 in the case of a $100,000,000 dividend (1/100,000,000th of the dividend for your 1/100,000,000th ownership stake). I don't get why the price otherwise goes up or down (why demand changes) with earnings, and speculation on earnings. Companies are generally valued based on what they will be worth in the future. What do the prospects look like for this industry? A company that only makes typewriters probably became less valuable as computers became more prolific. Was a new law just passed that would hurt our ability to operate? Did a new competitor enter the industry to force us to change prices in order to stay competitive? If we have to charge less for our product, it stands to reason our earnings in the future will be similarly reduced. So what if the company's making more money now than it did when I bought the share? Presumably the company would then be more valuable. None of that is filtered my way as a "part owner". Yes it is, as a dividend; or in the case of a company not paying a dividend you're rewarded by an appreciating value. Why should the value of the shares change? A multitude of reasons generally revolving around the company's ability to profit in the future.
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Price/Time priority order matching - limit order starvation
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Market orders do not get priority over limit orders. Time is the only factor that matters in price/time order matching when the order price is the same. For example, suppose the current best available offer for AAPL is $100.01 and the best available bid is $100.00. Now a limit buy for $100.01 and a market buy arrive at around the same instant. The matching engine can only receive one order at a time, no matter how close together they arrive. Let's say that by chance the limit buy arrives first. The engine will check if there's a matching sell at $100.01 and indeed there is and a trade occurs. This all happens in an instant before the matching engine ever sees the market buy. Then it moves on to the market buy and processes it accordingly. On the other hand, let's say that by chance the market buy arrives first. The engine will match it with the best available sell (at $100.01) and a trade occurs. This all happens in an instant before the matching engine ever sees the limit buy. Then it moves on to the limit buy and processes it accordingly. So there's never a comparison between the two orders or their "priorities" because they never exist in the system at the same time. The first one to arrive is processed first; the second one to arrive is processed second.
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What would be a wise way to invest savings for a newly married couple?
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I agree with @Pete that you may be well-advised to pay off your loans first and go from there. Even though you may not be "required" to make payments on your own loan based on your income, that debt will play a large factor in your borrowing ability until it is gone, which hinders your ability to move toward home ownership. If you are in a fortunate enough position to totally pay off both your loan and hers from cash on hand then you should. It would still leave you with more than $112,000 and no debt, which is a big priority and advantage for a young couple. Mind you, this doesn't keep you from starting an investment plan with some portion of the remaining funds (the advice to keep six months' income in the bank is very wise) through perhaps a mutual fund if you don't want to directly manage the investments yourself. The advantage of mutual funds is the ability to choose the level of risk you're willing to take and let professionals manage how to achieve your goals for you. You can always make adjustments to your funds as your circumstances change. Again, I'd emphasize ridding yourself of the student loan debt as the first move, then looking at how to invest the remainder.
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Should I continue to invest in an S&P 500 index fund?
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I would be very cautious about investing any more funds into the S&P500 at this stage. You are quite correct in your observation with the charts regarding the 2001 and 2008 crashes, and below is the chart of the S&P500 over the last 20 years with some indicators on it. The green line on the price chart is the 100 week Moving Average (MA) and the pink line below the price chart is the Moving Average of the Rate of Change (ROC) Indicator. In general the market is moving up if price is above the 100 week MA and the ROC is above 0%, and vise-versa the market is moving down if price is below the 100 week MA and the ROK is below 0%. Both times in 2001 and in 2008 when prices broke below the 100 week MA and then the ROC crossed below the zero line, well we all know what happened next. In 2001 prices kept falling and the ROC didn't cross back above zero for about 2.5 years, in 2008 much the same happened and the ROC didn't cross back above zero for over 20 months. Now as we are reaching the end of 2015 prices have once again broken below the 100 week MA and the ROC is just above the zero line quickly heading down towards it. If you have a 5 to 8 year time frame, and prices do continue to fall much further after the ROC crosses below the zero line, your current funds and any new funds you invest in this ETF will potentially see heavy losses for the next one to two years and then take another year to two years or more to recover to current levels. This means that your funds will potentially have no gains at all in 5 or 6 years time. A better option is to get out of the market once the ROC crosses below zero and then look to get back in once the recovery has started, when the ROC crosses back above the Zero line. You might be out of the market for a year or two, but once you get back in you can expect robust gains over the next 3 to 5 years. If you do get out and things reverse quite quickly you can easily just get back in. In mid-2010 and mid-2011 the price broke below the 100 week MA but the ROC remained above Zero and prices continued moving up after short corrections. In mid-2012 the ROC got very close to the Zero line but did not cross below it, and again prices continued to go up after a small correction. You should plan for the worst and be ready if it occurs. If you don't plan you're just hoping and hoping is what will keep you awake at night whist things are going against you.
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I received $1000 and was asked to send it back. How was this scam meant to work?
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Most answers have concentrated on this being a scam, however, it is possible this is an innocent mistake. Australian bank account numbers do not have redundant digits to be used to validate an account number; all of the numbers are data and uniquely identify a bank and branch (the BSB number) and an account (the Account number). Computer check digits are not part of bank account numbers because bank account numbers pre-date computers. It is entirely possible that someone entering an incorrect number can, by chance, hit upon an existing account. As the bank clearance system in Australia is entirely automatic there is no cross-checking of account numbers with account names. Internet banking in Australia is not a wire-transfer as is common in places like the USA (although these can be done): here you are effectively accessing your bank's "back office". Nor is it like the BPay service which is used primarily by B to C businesses as a way for their customers to pay their bills; when using this service the biller code will show you who you are paying and the customer number does have check digit validation. I run a business in Australia and it has happened to us on several occasions than an employee or supplier has given us incorrect numbers. Usually, it is not a real account and after a week or so the money makes its way back to us with a message like NO ACCOUNT or A/C CLOSED. Very occasionally, however, the wrong number hits a live account: when that happens the person who f*&ked up needs to contact their bank and try and get the transaction reversed. If there is money in the destination account this usually happens with little fuss, however, if the destination account has been closed or emptied things get problematic. Of course, taking money that isn't yours is stealing even if it happens to be sitting in your bank account. However, unless the sum involved is significant the police are usually not interested in diverting their attention away from "serious" crimes like homicide, armed robbery and terrorism so the aggrieved party is usually on their own. That said, this is probably a scam because they called you rather than your bank doing so. They cannot get your phone number from your account number: they have to know who you are and what your account number is. This is not as hard to do as it sounds since both your name and account number are prominently printed on your cheques and deposit books (possibly your phone number as well which saves them looking it up in the White Pages).
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Is there a good tool to view a stock portfolio's value as a graph?
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Google Finance will do all the bullet points in your list and a few more. The only drawback is that you have to enter ALL buy and sell manually. It has an import feature, but it does not work with all trading software. http://www.google.com/finance Let me know if it works. Also, yahoo.com/finance has a good tool, but I still like better Google's application.
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value of guaranteeing a business loan
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The standard goal of valuing anything is to seek the fair price for that thing in the open market. Depending on what is being valued, that may or may not be an easy task. eg: to value your home, get a real estate appraiser, who will look at recent market sales in your area, and adjust for nuances of your property. To value your loan guarantee, you would need to figure out what it is actually worth to the business, which may be difficult. In a perfect world, you would be able to ask the bank to tell you the interest rate you would have to pay, if the loan was not guaranteed. This would show you the value you are providing to the business by guaranteeing it. ie: if the interest would be $100k a year unguaranteed, but is only $40k a year guaranteed, you are saving the business $60k a year. If the loan is to last 5 years, that's a total of $300k. Of course, it is likely the bank simply won't offer you an unguaranteed loan at all. This makes the value quite difficult to determine, and highlights the underlying transaction you are considering: You are taking on personal risk of loan default, to profit the business. If you truly can't find an equitable way to value the guarantee, consider whether you understand the true risk of what you are doing. If you are able to determine an appropriate value for the loan, consider whether increasing your equity is fair compensation. There are other methods of compensation available, such as having the company pay you directly, or decrease the amount of capital you need to invest for this new set of equity. In the end, what is fair is what the other shareholders agree to. If you go to the shareholders with anything less than professional 3rd party advice (and stackexchange does not count as professional), then they may be wary of accepting your 'fee', no matter how reasonable.
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If the co-signer on my car loan dies, can the family take the car from me like they're threatening to?
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You're driving a car worth about $6000 which has a $12,000 loan against it. You're driving around in a nett debt of $6000. The best thing your grandfather could do for you, if possible, is to take your name off both the title and the loan, refinancing the car in his name only. If possible while still letting you drive the car. When he dies, you will be out of a car, but also out of a $12,000 debt which I'm sure you could do without. Okay, the best thing your grandfather could do, from your wallet's point of view, is paying off the loan for you and then taking his name off the title.
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How can I invest in gold without taking physical possession?
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In addition to the possibility of buying gold ETFs or tradable certificates, there are also firms specializing in providing "bank accounts" of sorts which are denominated in units of weight of precious metal. While these usually charge some fees, they do meet your criteria of being able to buy and sell precious metals without needing to store them yourself; also, these fees are likely lower than similar storage arranged by yourself. Depending on the specifics, they may also make buying small amounts practical (buying small amounts of physical precious metals usually comes with a large mark-up over the spot price, sometimes to the tune of a 50% or so immediate loss if you buy and then immediately sell). Do note that, as pointed out by John Bensin, buying gold gets you an amount of metal, the local currency value of which will vary over time, sometimes wildly, so it is not the same thing as depositing the original amount of money in a bank account. Since 2006, the price of an ounce (about 31.1 grams) of gold has gone from under $500 US to over $1800 US to under $1100 US. Few other investment classes are anywhere near this volatile. If you are interested in this type of service, you might want to check out BitGold (not the same thing at all as Bitcoin) or GoldMoney. (I am not affiliated with either.) Make sure to do your research thoroughly as these may or may not be covered by the same regulations as regular banks, particularly if you choose a company based outside of or a storage location outside of your own country.
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How do top investors pull out 20% ROI?
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First of all, the annual returns are an average, there are probably some years where their return was several thousand percent, this can make a decade of 2% a year become an average of 20% . Second of all, accredited investors are allowed to do many things that the majority of the population cannot do. Although this is mostly tied to net worth, less than 3% of the US population is registered as accredited investors. Accredited Investors are allowed to participate in private offerings of securities that do not have to be registered with the SEC, although theoretically riskier, these can have greater returns. Indeed a lot of companies that go public these days only do so after the majority of the growth potential is done. For example, a company like Facebook in the 90s would have gone public when it was a million dollar company, instead Facebook went public when it was already a 100 billion dollar company. The people that were privileged enough to be ALLOWED to invest in Facebook while it was private, experienced 10000% returns, public stock market investors from Facebook's IPO have experienced a nearly 100% return, in comparison. Third, there are even more rules that are simply different between the "underclass" and the "upperclass". Especially when it comes to leverage, the rules on margin in the stock market and options markets are simply different between classes of investors. The more capital you have, the less you actually have to use to open a trade. Imagine a situation where a retail investor can invest in a stock by only putting down 25% of the value of the stock's shares. Someone with the net worth of an accredited investor could put down 5% of the value of the shares. So if the stock goes up, the person that already has money would earn a greater percentage than the peon thats actually investing to earn money at all. Fourth, Warren Buffett's fund and George Soros' funds aren't just in stocks. George Soros' claim to fame was taking big bets in the foreign exchange market. The leverage in that market is much greater than one can experience in the stock market. Fifth, Options. Anyone can open an options contract, but getting someone else to be on the other side of it is harder. Someone with clout can negotiate a 10 year options contract for pretty cheap and gain greatly if their stock or other asset appreciates in value much greater. There are cultural limitations that prompt some people to make a distinction between investing and gambling, but others are not bound by those limitations and can take any kind of bet they like.
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What is the best way to learn investing techniques?
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All the things you suggest are good, but I think like everything else the key is practice. Study some topics, then try them out. There are many many sites out there that have free or cheap virtual trading.
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How to pay bills for one month while waiting for new job?
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This is just a partial answer, but I believe the following observations are relevant:
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How do I estimate my taxes when I have only 1099 income?
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So there are a lot of people that get into trouble in your type of self employment situation. This is what I do, and I use google drive so there are no cost for tools. However, having an accounting system is better. Getting in trouble with the IRS really sucks bad.
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What is the opposite of a sunk cost? A “sunk gain”?
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The complete opposite of "sunk cost" is the term "unrealized gain"; until you sell it, then it is a "realized gain". There is also a term "paper profit" to point out the ephemeral nature of some of these unrealized gains.
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If a country can just print money, is global debt between countries real?
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To understand this fully one would need to understand quite a few things. Not in scope here. In short, whenever China sells goods to US, it gets USD as most of the trades are in USD. China uses this money to buy other things it needs like Oil etc. After this they still have quite a bit of USD left with them. The money is left with them because US is buying more things from China and selling less things to China. This creates a surplus USD with China. So if US were to borrow money from China or any other country, it would be this excess money. Ofcourse how money gets created in first place is a different topic altogether.
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How do banks lose money on foreclosures?
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The "just accounting" is how money market works these days. Lets look at this simplified example: The bank creates an asset - loan in the amount of X, secured by a house worth 1.25*X (assuming 20% downpayment). The bank also creates a liability in the amount of X to its depositors, because the money lent was the money first deposited into the bank by someone else (or borrowed by the bank from the Federal Reserve(*), which is, again, a liability). That liability is not secured. Now the person defaults on the loan in the amount of X, but at that time the prices dropped, and the house is now worth 0.8*X. The bank forecloses, sells the house, recovers 80% of the loan, and removes the asset of the loan, creating an asset of cash in the value of 0.8*X. But the liability in the amount of X didn't go anywhere. Bank still has to repay the X amount of money back to its depositors/Feds. The difference? 20% of X in our scenario - that's the bank's loss. (*) Federal Reserve is the US equivalent of a central bank.
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How to get information about historical stock option prices for a defunct company?
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Though you're looking to repeat this review with multiple securities and events at different times, I've taken liberty in assuming you are not looking to conduct backtests with hundreds of events. I've answered below assuming it's an ad hoc review for a single event pertaining to one security. Had the event occurred more recently, your full-service broker could often get it for you for free. Even some discount brokers will offer it so. If the stock and its options were actively traded, you can request "time and sales," or "TNS," data for the dates you have in mind. If not active, then request "time and quotes," or "TNQ" data. If the event happened long ago, as seems to be the case, then your choices become much more limited and possibly costly. Below are some suggestions: Wall Street Journal and Investors' Business Daily print copies have daily stock options trading data. They are best for trading data on actively traded options. Since the event sounds like it was a major one for the company, it may have been actively traded that day and hence reported in the papers' listings. Some of the print pages have been digitized; otherwise you'll need to review the archived printed copies. Bloomberg has these data and access to them will depend on whether the account you use has that particular subscription. I've used it to get detailed equity trading data on defunct and delisted companies on specific dates and times and for and futures trading data. If you don't have personal access to Bloomberg, as many do not, you can try to request access from a public, commercial or business school library. The stock options exchanges sell their data; some strictly to resellers and others to anyone willing to pay. If you know which exchange(s) the options traded on, you can contact the exchange's market data services department and request TNS and / or TNQ data and a list of resellers, as the resellers may be cheaper for single queries.
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How to transfer money to yourself internationally?
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Hmmm... As far as I know wire transfers are still the best option. If you make sure your US account accepts international wires for free (like TD Bank does) you'll have eliminated most of the costs (assuming your foreign bank doesn't charge too much for wiring the funds in the first place). Also, if your able to, you could consider wiring 6 or so months at the same time. I'm not familiar with XE.com but it seems it's not set up for transferring money so much as for trading currencies. While you could probably use it to transfer funds if you'd link both your accounts it seems a rather complicated way to go about things. Paypal could be an option if they'd allow you to set up an account in each country (or if you have a relative that could help out), but it gets more expensive than wire-transfers quickly. As for getting the best exchange rate... I've given up on that a long time ago and have accepted that as the cost of living internationally :).
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When to use geometric vs. arithmetic mean? Why is the former better for percentages?
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Simple. Say in 2012 you were up 50% (brilliant) but then in 2013 you were down 50% (sorry). i.e. if you started with $1000, you were up to $1500, then down to $750. You lost $250 overall. If you were to compute the mean of the percentages using each method, then: Arithmetic mean: The average of +50% and -50% (really 150% and 50% of each period's initial value) is zero, not up or down. Geometric mean: 1.5 * .5 = .75, i.e. you are down 25% over 2 years, or about 13.4% per year. It should be clear the Geometric makes more sense in such a case.
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Did the New York Stock Exchange ever close on a weekday so they could file paperwork?
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Yes, from June 1968 until December 1968, they closed the NYSE every Wednesday so they could catch up on paperwork representing billions of dollars in unprocessed transactions. Even after the NYSE re-opened on Wednesdays in January 1969, they still had to close it early at 2pm for seven more months. Forbes has a description of this: Not to be forgotten, though, is the Paperwork Crunch. In a day of email and the Cloud and trading completed in microseconds, the idea that Wall Street needed Wednesdays off in the late 1960′s to catch up on back-office tasks seems especially quaint. Yet, in 1968, the NYSE found itself sitting on more than $4 billion in unprocessed transactions. Trading had risen to 21 million shares daily; by contrast, even in the heavy volume days in 1929, trading never went above 16 million shares. Papers stacked on desks. A (now old) joke formed: If a fan blew the wrong way in a Wall Street office, visitors below could expect a ticker-tape parade. “Everybody agreed that the securities-processing system had virtually broken down, and the only major point of dispute was who was more responsible for the mess: the back offices of the brokerage firms of the stock-transfer agents,” Securities and Exchange Commission Commissioner Ray Garrett, Jr. said in 1974. Some 100 broker-dealers failed, crumbling under the pressure of fulfilling those back-orders. The fix: an organization akin to the FDIC, the Securities Investor Protection Corporation. Wall Street would stick to the shortened weeks from June to December; in January, Wednesday trading resumed, though it ended early at 2 for another seven months.
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First job: Renting vs get my parents to buy me a house
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There is a mathematical way to determine the answer, if you know all the variables. (And that's a big if.) For example, suppose you rent for 4 years and the price of rent never increases. The total amount you will have paid is: 600*48 = 28,800. If you currently have money sitting in the bank earning only a negligible amount of interest, and you can purchase the house for X, and then sell it for exactly what you paid 4 years from now, and you have 0 expenses otherwise, then purchasing it will save you 28,800 compared to renting. Obviously that makes some assumptions which are not possible. Now you need to calculate the variables: All of these variables can drastically effect the profit margin, and unfortunately they will vary greatly depending on your country, location, and the condition of the home. Once you estimate each of the variables, it's important to realize that if you purchase, your profit or loss can swing unexpectedly in either direction based on appreciation/depreciation which can be difficult to predict, in part because it is somewhat tied to the overall macro-economy of where you live (state or country). On the flip side, if you rent, it's pretty easy to calculate your cost as approximately 28,800 over 4 years. (Perhaps slightly more for modest rent increases.) Lastly, if you elect to purchase the house, realize that you're investing that money in real estate. You could just as easily rent and invest that money elsewhere, if you want to choose a more aggressive or conservative investment with your money.
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Should you always max out contributions to your 401k?
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First, the limit this year is $16,500, $22,000 for age 50 or older. Next, does the company give you any match? If so, how much? Some will match your deposits dollar for dollar up to a certain percent of your pay. If you make $50k and deposit say 6%, that's $3k matched by company, for example. This deposit/match is the first priority. Next, you should understand the expenses in the account. A bad 401(k) with high cost quickly negates any tax deferral benefit. The 401(k) options also may be limited, what are the choices of investments? Is your income high enough that you can save $21,500? One thought is to save enough to drop back out of the 25% bracket, and go Roth after that. This is a good balance for most. By the way, Fairmark is a great site to see what bracket you are in. If your return is simple, you can just find your standard deduction and exemption numbers and get to your taxable income very simply. The debate of of Roth vs Pretax (for both IRA and 401(k) accounts) can get pretty complex, but I found the majority of earners falling into the "live in the 15% bracket, tops" range.
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Legal restrictions for EU-foreigners to setup bank account in Czech republic
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It depends on what exactly do you mean by "seat of residence". That term has different meanings (legally) in different countries and different contexts. If you're foreigner (even from within the EU), any czech bank will most likely ask you to provide a residence permit. Here are some details: http://www.mvcr.cz/mvcren/article/third-country-nationals-long-term-residence.aspx http://www.czech.cz/en/Business/How-it-works-here/Making-business/How-to-open-a-bank-account-%E2%80%93-Part-1
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Repaying Debt and Saving - Difficult Situation
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Your mother has a problem that is typical for a woman with children. She is trying to help her children have a good life, by sacrificing to get them to a point where they can live comfortably on their own. Though she has a difficult situation now, much of the problems come from a very few choices by her and her children, and her situation can be fixed. Let me point out a few of the reasons why she has come to this point: My mother is a single mom... she is turning 50 this summer... she has about $60k in school loans from the college I attended... she has payments of $500/month ($10k) to my sisters college... she lives on her own in a 2 bedroom apartment... Mother's current 'income statement', Income Essentials (total $3131, 71%, too high, goal $2200) Lifestyle (total $150, low, she should have $500-900 to live her life) Financial (total $1350, 31%) Some observations and suggestions: Even though the $1625 rents seems high, your mom might enjoy her apartment and consider part of her rent ($300) a lifestyle choice (spending money for time), and the higher rent may make sense. But the rent is high for her income. Your mom should be spending more on food, and budget $200/month. Your mom should be saving money for investments and retirement. She should be putting 10% into savings ($440), plus any IRA/401K pretax savings. Your sister should be paying for her own college. She should take her own student loans, so that her mother can save for retirement. And since she only has $10K left, an alternative would be that you could loan her the money, and she could repay you when she graduates (you have money, as you loaned your mother $8K). You should be repaying the $500/month on the $60K student loan your mother took to help you get through college. You have benefited from the education, and the increased opportunity the college education has given you. Now is the time to accept responsibility and pay your debts. You could at least agree to split the expense with her, and were you paying even $300/month (leaving $200 for her), that would still fix her budget. Your mom should get a car that is paid for and reduce her transportation expenses, until the $350/month debt is resolved. She should resolve to spend no more than $300/month for a car, and with $100/month for insurance be under 10% for her vehicle. Since your mother lives in the US (NJ) she could avoid the $350/month debt payment though BK. But since there are other solutions she could exercise to resolve her problems, this is probably not needed. You mom could consider sharing her apartment to share expenses. Paying $1625 for an apartment for one person seems extravagant. She might enjoy sharing her apartment with a room-mate. That is about it. Once her children take responsibility for their lives, your mom will have a manageable budget, and less stress in her life. Mother's revised 'income statement', Income Essentials (total $2721, 62%, high, need to reduce by $500) Lifestyle (total $450, 10%, low) Financial (total $990, 23%) While you and your sister have these changes, Summary of changes: Some rent is lifestyle, reduced car loan by $200, sister pays her college $500, you pay your college $300, mom saves 10% of her income. Once your sister graduates and starts to repay you for your help with her college, you can take over paying the remainder of your loans, saving your mom an additional $200/month.
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incorrect printed information on check stock
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Even where national law might allow such a practice, the law in an individual province or state (either for issuing or receiving bank) might not; or if that does then the receiving bank may have its own regulations or compliance practice which may not permit them to accept an altered cheque. In any case, printed numbers are usually machine-readable, and a corrected cheque would not be. The question needs a specific answer which addresses the specific circumstances involved (which are not stated, at the time of writing this), but for the general question “Should I alter a printed cheque?” the answer must be no. Cheque numbers are used for identification of the cheque. In many cases, there is no verification of uniqueness and it would be perfectly acceptable simply to use cheques with duplicate numbers: a cheque is merely an order to the bank to make a payment. But you would not be able to identify a particular payment on your statement, and neither would the issuing bank if you wanted one stopped. Where the number is verified as unique, then clearing the payment may be refused or at best delayed in order to be queried. Making an obvious amendment to a cheque’s details is likely to raise a red flag. The receiving bank would not be able to tell if you did it, or the payee; they would not know why. They may suspect that it was done in order to render the cheque unidentifiable [even though the opposite is in fact the case] and refuse to accept it. They may refuse to accept it because it could not be read automatically. Any refusal would sour your relationship with your payees. Presumably your printing house (or your bank, if they printed them) has made the error: raise it with them and have them reprint the batch. Ask your bank what to do with the incorrect cheques: they may want them returned to the bank, or they may be happy for you to keep (and even use) them. If the latter, I suggest you shred them.
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Why is auto insurance ridiculously overpriced for those who drive few miles?
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First you have to understand that insurance is basically a social system, just with Shareholders. Insurance costs consist of 3 factors: Now, to encourage a low-risk behavior a separating factor is search in the vast amount of statistical data. Drivers experience, miles and type of car being the most common, but also other things like oldtimer-status etc. are possible. If it so happens that the 3-5000 miles driver do only in average have 80% of the damage-costs of a comparable group 5-8000 miles driver, you´ll get the 20% bonus on factor 1. So the answer is, it is not overpriced, there is just no linear relationship to mileage. You can´t divide your insureds in too many groups or you´ll miss the mutual aspect of insurance. If everybody just pays his own risk, he can just do so in his bank and save on overhead and profit.
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Hiring a teenager as a household employee
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First you need to ensure that you are not violating any Federal child labor laws. I would look at this: U.S. Dept of Labor, Wage & Hour Div., Standards for 14- and 15-Year Olds in Nonagricultural Employment. These were the items that pertained to Federal Law, for 14 year olds: 14 is the minimum age for employment in specified occupations outside of school hours for limited periods of time each day and each week. Fourteen- and 15-Year-Olds May Not Be Employed: There is a section on minimum allowed wage payment to young workers, and also a list of allowed types of work for 14 and 15 year old's. The type of household helper tasks described definitely fell within what was allowed for child labor. The same page details what sort of forms need to be filled out. I think this is something that is done quite commonly. Here are specifics in New York State for minimum wage for minors and for employing 14 year olds.
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Simple loan with a mortage as collateral
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Assuming United States; answer may be different elsewhere. The best instructions I have seen for this were on the webpage of one of the law firms making an organized business out of intra-family loans, but any lawyer who can deal with normal bank loans should be able to help you set this up and get it filed with the appropriate authorities to make it a legally binding mortgage. Shouldn't cost you much in legal time to do it. You will have to charge interest; your lawyer can tell you what the minimum and maximimum interest rates would be where you are. Your interest income will be taxable. The borrower may or may not be able to deduct the interest paid from their taxes. Of course if the borrower has any sense they'll want to get their own lawyer to review the terms of the agreement, and to tell them whether they can deduct it from taxes or not.
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Is there such a thing as a deposit-only bank account?
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Legally, no one else can withdraw from your account. If you suspect the direct-deposit websites are making withdrawals, you can monitor your account balance and dispute any transactions that were not made by you. But realistically, any company that did that would soon be out of business and in so much legal trouble that it wouldn't be worth the money they could get from you.
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What low-fee & liquid exchange-traded index funds / ETFs should I consider holding in a retirement portfolio?
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Here's a dump from what I use. Some are a bit more expensive than those that you posted. The second column is the expense ratio. The third column is the category I've assigned in my spreadsheet -- it's how I manage my rebalancing among different classes. "US-LC" is large cap, MC is mid cap, SC is small cap. "Intl-Dev" is international stocks from developed economies, "Emer" is emerging economies. These have some overlap. I don't have a specific way to handle this, I just keep an eye on the overall picture. (E.g. I don't overdo it on, say, BRIC + Brazil or SPY + S&P500 Growth.) The main reason for each selection is that they provide exposure to a certain batch of securities that I was looking for. In each type, I was also aiming for cheap and/or liquid like you. If there are substitutes I should be looking at for any of these that are cheaper and/or more liquid, a comment would be great. High Volume: Mid Volume (<1mil shares/day): Low Volume (<50k shares/day): These provide enough variety to cover the target allocation below. That allocation is just for retirement accounts; I don't consider any other savings when I rebalance against this allocation. When it's time to rebalance (i.e. a couple of times a year when I realize that I haven't done it in several months), I update quotes, look at the percentages assigned to each category, and if anything is off the target by more than 1% point I will buy/sell to adjust. (I.e. if US-LC is 23%, I sell enough to get back to 20%, then use the cash to buy more of something else that is under the target. But if US-MC is 7.2% I don't worry about it.) The 1% threshold prevents unnecessary trading costs; sometimes if everything is just over 1% off I'll let it slide. I generally try to stay away from timing, but I do use some of that extra cash when there's a panic (after Jan-Feb '09 I had very little cash in the retirement accounts). I don't have the source for this allocation any more, but it is the result of combining a half dozen or so sample allocations that I saw and tailoring it for my goals.
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Is there a law or regulation that governs the maximum allowable interest amount that can be charged on credit cards or in agreements where credit is extended?
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In the EU, you might be looking for Directive 2000/35/EC (Late Payment Directive). There was a statutory rate, 7% above the European Central Bank main rate. However, this Directive was recently repealed by Directive 2011/7/EU, which sets the statutory rate at ECB + 8%. (Under EU regulations, Directives must be turned into laws by national governments, which often takes several months. So in some EU countries the local laws may still reflect the old Directive. Also, the UK doesn't participate in the Euro, and doesn't follow the ECB rate)
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Advice on what to do with my equity?
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What to do with your equity? Leave it alone...
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Should I prioritize retirement savings inside of my HSA?
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You would want to prioritize Roth and retirement over HSA. As the HSA is only for health and dental expenses, which you will always have, overfunding it will put you in a bit of a pickle for all of the life involved. For example, even if you or a loved one develop a strange & expensive ailment, the HSA will only cover the medical costs, but not any travel to specialists, hotel stays, home alterations, special vehicles, or lifestyle alterations (food, clothing). However, you will eventually stop working even if you are healthy throughout your life. I would suggest that you treat the HSA as a part of your overall emergency fund, giving it a cap the same as you would normal non-retirement savings. Since you stated you have three young children, small and large medical expenses (such as braces, trips to the emergency room) are something that are almost guaranteed, thus having fairly large amount in the HSA would be very beneficial throughout their time with you. Once the children have left however, if you still have an overwhelming balance in your HSA, you may not want to add anymore to the HSA. Setting a cap for the HSA based off a certain number of years of deductible payments for medication would be a good place to start. Roth accounts, whether it be within your company's 401k plan or the IRAs for yourself and your spouse, are single-handedly the best location for your money for long-term savings. Roth money grows tax-free, is immune to Required Minimum Distribution provisions, and will avoid estate escrow when going to one's beneficiaries. Even if you tap into the funds prior to age 59 1/2, you would only pay taxes on any investment growth, in addition to the 10% early withdrawal penalty. If you have established Roth IRA accounts and have an AGI that disallows you to further contribute to them, there is still a provision to get Roth funds contributed via conversion through what is commonly called a "back door" Roth.
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How does on-demand insurance company Trov prevent insurance fraud or high prices?
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For example, it is not allowed to buy flood insurance at peak flood season and then cancel it when it is over. They are not offering this right now. So it would be interesting to see if they offer this and how they offer this. For example, you can insure your camera for a week when you are going on vacation. They call it on-demand insurance. They segment Trov is targeting consumer electronics. More often people don't take insurance in this segment as the insurance cost is high and benefits low. However if going on vacation, most are afraid of loosing / damaging equipments. Generally although we are afraid, most often nothing happens. It is this segment; you make the insurance cheap and easy to buy and create a new segment. Insurance fraud detection is an important part of insurance process such that insurance companies allocate a lot of resources to detect improper insurance claims. The website does not mention how they process claims. Although it looks easy, they may have a more stringent process. For example what is stopping me from buying an insurance after event; i.e. break my phone Monday, buy insurance on Monday and make a claim on Tuesday saying the phone broke on Tuesday.
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Options revisited: Gold fever
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You'll still lose a little bit if you buy a put option at the current price. No such thing as free hedging. Let's say you have 100 shares of IAU that you bought for exactly $12.50 per share. This is $1,250. Now let's say you bought a put option with a strike price of $13 that expires in April 2011. The current price for this option is $1.10 per share, or $110. You can sell your IAU for $1,300 any time before the expiration date, but this leaves $60 in time value. The price of the options will always have a time component that is a premium on the difference between the current price and the strike price. (Oh, forgot to add in commissions to this.)
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Optimal way to use a credit card to build better credit?
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In addition to the already good answers: I am assuming you are playing a long game and have no specific need for a high credit score in the next couple of years. This list is just good practice that will raise you score.
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First time homeowner and getting a mortgage?
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Check with you local bank where you have an account. Sometimes they can offer a discount that results in a good rate. I just refinanced a month ago with Bank Of America and their rates were very competitive. What set them aside from the rest was their low closing fees. Otherwise I would shop around on bankrate.com and it will show you results of both local and online mortgage brokers. It will list the rates and expected fees. The also list an average national rate so you can compare the rate you are considering and see if there could be a better deal elsewhere.
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Can we amend last year's Schedule C to indicate reduced income due to a customer refund this year for a product we sold last year?
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I am not an accountant, but I have a light accounting background, despite being primarily an engineer. I also have a tiny schedule C business which has both better and worse years. I am also in the United States and pay US taxes. I assume you are referring to the US Form 1040 tax return, with the attached Schedule C. However little I know about US taxes, I know nothing about foreign taxes. You are a cash-basis taxpayer, so the transactions that happen in each tax year are based on the cash paid and cash received in that year. You were paid last year, you computed your schedule C based on last year's actual transactions, and you paid taxes on that income. You can not recompute last years schedule C based on the warranty claim. You might want to switch to an accrual accounting method, where you can book allowances for warranty claims. It is more complex, and if your business is spotty and low volume, it may be more trouble than it is worth. At this point, you have two months to look for ways to shift expenses into next year or being income into this year, both of which help offset this loss. Perhaps a really aggressive accountant would advise otherwise (and remember, I am not an accountant), but I would take the lumps and move on. This article on LegalZoom (link here) discusses how to apply a significant net operating loss (NOL) in this year to the previous two years, and potentially carry it forward to the next two years. This does involve filing amended returns for the prior two years, showing this year's NOL. For this to be relevant, your schedule C loss this year must exceed your other W2 and self-employment income this year, with other tests also applied. Perhaps a really aggressive accountant would advise otherwise (and remember, I am not an accountant), but I would take the lumps and move on.
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Most common types of financial scams an individual investor should beware of?
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Investing in a business can be daunting and risky, so it is not for everyone. The most common pitfalls are mentioned here: Beyond that: It all sounds a bit like "Don't trust anyone" and sadly, this is true when there's a lot of money involved. So be prepared and do your homework, this sometimes will save you more money than you gain with your investments :) Good luck!
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Why do banks finance shared construction as mortgages instead of financing it directly and selling the apartments in a building?
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The most succinct answer is "Banks are in the Money business". Not construction, not real estate, not any of the other things they may find find themselves sometimes being dragged (foreclosure) or tempted (construction) into. "Money" is their core competence, and as good business people they recognize that straying outside that just dilutes their focus.
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How do I add my income to my personal finance balance?
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I don't think you need double-entry bookkeeping. To quote Robert Kiyosaki (roughly): Income is when money enters you pocket, and expenses are when money leaves your pocket. Income is an addition; expenses are subtractions. But if you want double-entry accounting, I'm not qualified to answer that. :)
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Investment options
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Option 1 is out. There are no "safe returns" that make much money. Besides, if a correction does come along how will you know when to invest? There is no signal that says when the bottom is reached, and you emotions could keep you from acting. Option 2 (dollar cost averaging) is prudent and comforting. There are always some bargains about. You could start with an energy ETF or a few "big oil" company stocks right now.
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Option trading: High dollar value stock option and equity exposure
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You're forgetting the fundamental issue, that you never have to actually exercise the options you buy. You can either sell them to someone else or, if they're out of the money, let them expire and take the loss. It isn't uncommon at all for people to buy both a put and call option (this is a "straddle" when the strike price of both the put and call are the same). From Investopedia.com: A straddle is an options strategy in which the investor holds a position in both a call and put with the same strike price and expiration date, paying both premiums. This strategy allows the investor to make a profit regardless of whether the price of the security goes up or down, assuming the stock price changes somewhat significantly. Read more: Straddle http://www.investopedia.com/terms/s/straddle.asp#ixzz4ZYytV0pT
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How and why does the exchange rate of a currency change almost everyday?
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It's simply supply and demand. First, demand: If you're an importer trying to buy from overseas, you'll need foreign currency, maybe Euros. Or if you want to make a trip to Europe you'll need to buy Euros. Or if you're a speculator and think the USD will fall in value, you'll probably buy Euros. Unless there's someone willing to sell you Euros for dollars, you can't get any. There are millions of people trying to exchange currency all over the world. If more want to buy USD, than that demand will positively influence the price of the USD (as measured in Euros). If more people want to buy Euros, well, vice versa. There are so many of these transactions globally, and the number of people and the nature of these transactions change so continuously, that the prices (exchange rates) for these currencies fluctuate continuously and smoothly. Demand is also impacted by what people want to buy and how much they want to buy it. If people generally want to invest their savings in stocks instead of dollars, i.e., if lots of people are attempting to buy stocks (by exchanging their dollars for stock), then the demand for the dollar is lower and the demand for stocks is higher. When the stock market crashes, you'll often see a spike in the exchange rate for the dollar, because people are trying to exchange stocks for dollars (this represents a lot of demand for dollars). Then there's "Supply:" It may seem like there are a fixed number of bills out there, or that supply only changes when Bernanke prints money, but there's actually a lot more to it than that. If you're coming from Europe and want to buy some USD from the bank, well, how much USD does the bank "have" and what does it mean for them to have money? The bank gets money from depositors, or from lenders. If one person puts money in a deposit account, and then the bank borrows that money from the account and lends it to a home buyer in the form of a mortgage, the same dollar is being used by two people. The home buyer might use that money to hire a carpenter, and the carpenter might put the dollar back into a bank account, and the same dollar might get lent out again. In economics this is called the "multiplier effect." The full supply of money being used ends up becoming harder to calculate with this kind of debt and re-lending. Since money is something used and needed for conducting of transactions, the number of transactions being conducted (sometimes on credit) affects the "supply" of money. Demand and supply blur a bit when you consider people who hoard cash. If I fear the stock market, I might keep all my money in dollars. This takes cash away from companies who could invest it, takes the cash out of the pool of money being used for transactions, and leaves it waiting under my mattress. You could think of my hoarding as a type of demand for currency, or you could think of it as a reduction in the supply of currency available to conduct transactions. The full picture can be a bit more complicated, if you look at every way currencies are used globally, with swaps and various exchange contracts and futures, but this gives the basic story of where prices come from, that they are not set by some price fixer but are driven by market forces. The bank just facilitates transactions. If the last price (exchange rate) is 1.2 Dollars per Euro, and the bank gets more requests to buy USD for Euros than Euros for USD, it adjusts the rate downwards until the buying pressure is even. If the USD gets more expensive, at some point fewer people will want to buy it (or want to buy products from the US that cost USD). The bank maintains a spread (like buy for 1.19 and sell for 1.21) so it can take a profit. You should think of currency like any other commodity, and consider purchases for currency as a form of barter. The value of currency is merely a convention, but it works. The currency is needed in transactions, so it maintains value in this global market of bartering goods/services and other currencies. As supply and demand for this and other commodities/goods/services fluctuate, so does the quantity of any particular currency necessary to conduct any of these transactions. A official "basket of goods" and the price of those goods is used to determine consumer price indexes / inflation etc. The official price of this particular basket of goods is not a fundamental driver of exchange rates on a day to day basis.
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what is difference between stock and dividend?
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stocks represent ownership in a company. their price can go up or down depending on how much profit the company makes (or is expected to make). stocks owners are sometimes paid money by the company if the company has extra cash. these payments are called dividends. bonds represent a debt that a company owes. when you buy a bond, then the company owes that debt to you. typically, the company will pay a small amount of money on a regular basis to the bond owner, then a large lump some at some point in the future. assuming the company does not file bankrupcy, and you keep the bond until it becomes worthless, then you know exactly how much money you will get from buying a bond. because bonds have a fixed payout (assuming no bankrupcy), they tend to have lower average returns. on the other hand, while stocks have a higher average return, some stocks never return any money. in the usa, stocks and bonds can be purchased through a brokerage account. examples are etrade, tradeking, or robinhood.com. before purchasing stocks or bonds, you should probably learn a great deal more about other investment concepts such as: diversification, volatility, interest rates, inflation risk, capital gains taxes, (in the usa: ira's, 401k's, the mortgage interest deduction). at the very least, you will need to decide if you want to buy stocks inside an ira or in a regular brokerage account. you will also probably want to buy a low-expense ration etf (e.g. an index fund etf) unless you feel confident in some other choice.
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How to calculate stock price (value) based on given values for equity and debt?
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I'll give you my quick and dirty way to value a company: A quick and dirty valuation could be: equity + 10 times profit. This quick way protects you from investing in companies in debt, or losing money. To go more in-depth you need to assess future profit, etc. I recommend the book from Mary Buffett about Warren Buffett's investing style.
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Does doing your “research”/“homework” on stocks make any sense?
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In fact markets are not efficient and participants are not rational. That is why we have booms and busts in markets. Emotions and psychology play a role when investors and/or traders make decisions, sometimes causing them to behave in unpredictable or irrational ways. That is why stocks can be undervalued or overvalued compared to their true value. Also, different market participants may put a different true value on a stock (depending on their methods of analysis and the information they use to base their analysis on). This is why there are always many opportunities to profit (or lose your money) in liquid markets. Doing your research, homework, or analysis can be related to fundamental analysis, technical analysis, or a combination of the two. For example, you could use fundamental analysis to determine what to buy and then use technical analysis to determine when to buy. To me, doing your homework means to get yourself educated, to have a plan, to do your analysis (both FA and TA), to invest or trade according to your plan and to have a risk management strategy in place. Most people are too lazy to do their homework so will pay someone else to do it for them or they will just speculate (on the latest hot tip) and lose most of their money.
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What factors of a stock help determine its potential
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Knowing the answer to this question is generally not as useful as it may seem. The stock's current price is the consensus of thousands of people who are looking at the many relevant factors (dividend rate, growth prospects, volatility, risk, industry, etc.) that determine its value. A stock's price is the market's valuation of the cash flows it entitles you to in the future. Researching a stock's value means trying to figure out if there is something relevant to these cash flows that the market doesn't know about or has misjudged. Pretty much anything we can list for you here that will affect a stock's price is something the market knows about, so it's not likely to help you know if something is mispriced. Therefore it's not useful to you. If you are not a true expert on how important the relevant factors are and how the market is reacting to them currently (and often even if you are), then you are essentially guessing. How likely are you to catch something that the thousands of other investors have missed and how likely are you to miss something that other investors have understood? I don't view gambling as inherently evil, but you should be clear and honest with yourself about what you are doing if you are trying to outperform the market. As people become knowledgeable about and experienced with finance, they try less and less to be the one to find an undervalued stock in their personal portfolio. Instead they seek to hold a fully diversified portfolio with low transactions costs and build wealth in the long term without wasting time and money on the guessing game. My suggestion for you is to transition as quickly as you can to behave like someone who knows a lot about finance.
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What kind of traditional IRA should I use to hold funds from old employer 401K plans?
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Magazines like SmartMoney often have an annual issue that reviews brokers. One broker may have a wider variety of no-fee mutual funds, and if that's your priority, then the stock commissions may be a moot issue for you. In general, you can't go wrong with a Fidelity or Schwab, and to choose investments within the accounts with an eye toward low expenses.
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Who are the sellers for the new public stocks?
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In an IPO the seller is the Company selling new shares. Some of the IPOs also include something called "secondary" sales which are existing holders selling at the same time at the IPO price. But that is a but more unusual. And as someone noted, the $68 is the price paid for the people who bought at the IPO (the aggregate group usually called the syndicate). The $85 is the price that it is trading at once there is trading in the open market. People that are able to get into the syndicate to buy the stock at $68 sometimes quickly sell if the price is much higher when trading starts. This is called "flipping" the stock. Hedge funds do this much more often than institutional buyers like Fidelity.
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Risk to Reward Ratio Calculation
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If you plan to take profit at $1.00 then your profit will be $40. Then, if you set your stop at $0.88 then your loss if you get stopped will be $20. So your Reward : Risk = 2:1. Note, that this does not take into account brokerage in and out and any slippage from the price gapping past your stop loss.
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Do Americans really use checks that often?
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I receive checks from my tenant. Also, from our medical reimbursement account. I'm sure there's an option somewhere to get that direct deposited, just haven't yet. My wife will write checks for school functions. Funny, they haven't cashed one since february, and this is the one item to look for every time I reconcile her account. A few select others don't take credit or debit cards. Our tailor (losing weight, needed pants pulled in), among others. The number of checks is surely down an order of magnitude over the years, but still not zero.
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Is the average true range a better measure of volatility than historical volatility
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ATR really looks at the volatility within the day -- So you would be able to see if the stock is becoming more or less volatile in daily trading. This is often useful for charting and finding entry and exit locations. Traditional historic volatility (as you cited) will give you a look at the long term volatility of the security. The example of this is that there could be trends up or down but the same daily volatility (same ATR) There are methods that try to incorporate both intraday information along with historic volatility. As for which is a better measure of volatility-- it depends on what you are using the measure for.
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Why does quantitative easing negatively affect stocks?
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Can you isolate the market impact to just the Fed's quantitative easing? Can you rule out the future economic predictions of low growth and that there are reasons why the Fed has kept rates low and is trying its best to stimulate the economy? Just something to consider here. The key is to understand what is the greater picture here as well as the question of which stock market index are you looking at that has done so badly. Some stocks may be down and others may be up so it isn't necessarily bad for all equally.
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Changing Mailing Adress
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If you call them, you can make sure they'll use the new address, but if you want to do it online, there is some risk that the update is delayed. Note also that an address change with an immediate request for a replacement debit card smells very fishy - this what a hacker / thief would do to get your money. Calling seems to be the better approach, as you can verify your identity further. Otherwise, you might well run into an automated block.
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Credit card issued against my express refusal; What action can I take?
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You can always cancel the card and close this account. Consider switching to a bank that has better customer service. Closing accounts typically gets a lot of attention and it's fairly likely they will contact you to reconsider and so you'll have a chance to air your grievances. Whether they have anything to offer that would cause you to stay is for you to decide.
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Do I make money in the stock market from other people losing money?
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Do I make money in the stock market from other people losing money? Not normally.* The stock market as a whole, on average, increases in value over time. So if we make the claim that the market is a zero-sum game, and you only make money if other people lose money, that idea is not sustainable. There aren't that many people that would keep investing in something only to continue to lose money to the "winners." The stock market, and the companies inside it, grow in value as the economy grows. And the economy grows as workers add value with their work. Here's an analogy: I can buy a tree seed for very little and plant it in the ground. If I do nothing more, it probably won't grow, and it will be worth nothing. However, by taking the time to water it, fertilize it, weed it, prune it, and harvest it, I can sell the produce for much more than I purchased that seed for. No one lost money when I sell it; I increased the value by adding my effort. If I sell that tree to a sawmill, they can cut the tree into usable lumber, and sell that lumber at a profit. They added their efforts and increased the value. A carpenter can increase the value even further by making something useful (a door, for example). A retail store can make that door more useful by transporting it to a location with a buyer, and a builder can make it even more useful by installing it on a house. No one lost any money in any of these transactions. They bought something valuable, and made it more valuable by adding their effort. Companies in the stock market grow in value the same way. A company will grow in value as its employees produce things. An investor provides capital that the company uses to be able to produce things**, and as the company grows, it increases in value. As the population increases and more workers and customers are born, and as more useful things are invented, the economy will continue to grow as a whole. * Certainly, it is possible, even common, to profit from someone else's loss. People lose money in the stock market all the time. But it doesn't have to be this way. The stock market goes up, on average, over the long term, and so long term investors can continue to make money in the market even without profiting from others' failures. ** An investor that purchases a share from another investor does not directly provide capital to the company. However, this second investor is rewarding the first investor who did provide capital to the company. This is the reason that the first investor purchased in the first place; without the second investor, the first would have had no reason to invest and provide the capital. Relating it to our tree analogy: Did the builder who installed the door help out the tree farmer? After all, the tree farmer already sold the tree to the sawmill and doesn't care what happens to it after that. However, if the builder had not needed a door, the sawmill would have had no reason to buy the tree.
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I got my bank account closed abruptly how do I get money out?
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Coming from someone who has worked a in the account servicing department of an actual bank in the US, other answers are right, this is probably a scam, the phone number on the letter is probably ringing to a fraudulent call center (these are very well managed and sound professional), and you must independently locate and dial the true contact number to US Bank. NOW. Tell them what happened. Reporting is critical. Securing your money is critical. Every piece of information you provided "the bank" when you called needs to be changed or worked around. Account numbers, passwords, usernames, card numbers get changed. Tax ID numbers get de-prioritized as an authentication mechanism even if the government won't change them. The true bank probably won't transfer you to the branch. If the front-line call center says they will, ask the person on the phone what the branch can do that they cannot. Information is your friend. They will probably transfer you to a special department that handles these reports. Apparently Union Bank's call center transfers you to the branch then has the branch make this transfer. Maybe their front-line call center team is empowered to handle it like I was. Either way, plug your phone in; if the call takes less than 5 minutes they didn't actually do everything. 5 to 8 minutes per department is more likely, plus hold time. There's a lot of forms they're filling out. What if that office is closed because of time differences? Go online and ask for an ATM limit increase. Start doing cash advances at local banks if your card allows it. Just get that money out of that account before it's in a fraudsters account. Keep receipts, even if the machine declines the transaction. Either way, get cash on hand while you wait for a new debit card and checks for the new account you're going to open. What if this was fraud, you draw your US Bank account down to zero $800 at a time, and you don't close it or change passwords? Is it over? No. Then your account WILL get closed, and you will owe EVERYTHING that the fraudsters rack up (these charges can put your account terrifyingly far in the negative) from this point forward. This is called "participation in a scam" in your depository agreement, because you fell victim to it, didn't report, and the info used was voluntarily given. You will also lose any of your money that they spend. What if US Bank really is closing your account? Then they owe you every penny you had in it. (Minus any fees allowed in the depository agreement). This closure can happen several days after the date on the warning, so being able to withdraw doesn't mean you're safe. Banks usually ship an official check shipped to the last known address they had for you. Why would a bank within the United States close my account when it's not below the minimum balance? Probably because your non-resident alien registration from when you were in school has expired and federal law prohibits them from doing business with you now. These need renewed at least every three years. Renewing federally is not enough; the bank must be aware of the updated expiration date. How do I find out why my account is being closed? You ask the real US Bank. They might find that it's not being closed. Good news! Follow the scam reporting procedure, open a new account (with US Bank if you want, or elsewhere) and close the old one. If it IS being closed by the bank, they'll tell you why, and they'll tell you what your next options are. Ask what can be done. Other commenters are right that bitcoin activity may have flagged it. That activity might actually be against your depository agreement. Or it set off a detection system. Or many other reasons. The bank who services your account is the only place that knows for sure. If I offer them $500 per year will they likely keep the account opened? Otherwise I got to go to singapore open another account Legitimate financial institutions in the United States don't work this way. If there is a legal problem with your tax status in the US, money to the bank won't solve it. Let's call the folks you've talked to "FraudBank" and the real USBank "RealBank," because until RealBank confirms, we have no reason to believe that the letter is real. FraudBank will ask for money. Don't give it. Don't give them any further information. Gather up as much information from them as possible instead. Where to send it, for example. Then report that to RealBank. RealBank won't have a way to charge $500/year to you only. If they offer a type of account to everyone that costs $500, ask for the "Truth in Savings Act disclosures." Banks are legally required to provide these upon request. Then read them. Don't put or keep your money anywhere you don't understand.
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Employer options when setting up 401k for employees
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If you were looking to maximize your ability to save in a qualified plan, why not setup a 401K plan in Company A and keep the SEP in B? Setup the 401K in A such that any employee can contribute 100% of their salary. Then take a salary for around 19K/year (assuming under age 50), so you can contribute and have enough to cover SS taxes. Then continue to move dividends to Company A, and continue the SEP in B. This way if you are below age 50, you can contribute 54K (SEP limit) + 18K (IRA limit) + 5500 (ROTH income dependent) to a qualified plan.
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What is a “fiat” currency? Are there other types of currency?
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In short. A fiat currency is money that has value only because (usually) a government says it does. A counter example (non-fiat currency) is a gold coin that has intrinsic value usually because it is made of valuable materials that people would trade goods/services. That is the value comes from what you are holding more than what it represents.
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Paypal website donations without being a charity
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An answer from PayPal stated that donations may be turned on only for Business PayPal accounts that are verified for its non-profit status. Such PayPal Business account must be opened in the name of non-profit organization (not a single person) and go through verification process. One must provide the following information: That would mean that one cannot ask for donations as a private person, at least in Croatia, and probably in Europe.
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What type of returns Vanguard is quoting?
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From the Vanguard page - This seemed the easiest one as S&P data is simple to find. I use MoneyChimp to get - which confirms that Vanguard's page is offering CAGR, not arithmetic Average. Note: Vanguard states "For U.S. stock market returns, we use the Standard & Poor's 90 from 1926 through March 3, 1957," while the Chimp uses data from Nobel Prize winner, Robert Shiller's site.
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How is it possible that a preauth sticks to a credit card for 30 days, even though the goods have already been delivered?
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Open a dispute for the preauth. It is effectively a double charge, since you have already paid for the item. You can provide evidence of the other transaction. This forces them to go through some hassle and waste some time on the issue.
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What is the best way to short the San Francisco real estate market?
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You could short home builders who do a lot of their business in Northern California. (Not just San Francisco, Silicon Valley, or even the Bay Area.) Home prices in Sacramento and the northern San Joaquin Valley are correlated with Bay Area home prices. Many of these builders went broke during the last bust, so you might have trouble finding a publicly traded home builder that is concentrated in just one market.
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How to determine how much to charge your business for rent (in your house)?
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In the UK it all comes down to what HMRC will allow you to charge without taxing you on the "rent profit" and not hitting capital gain tax when you sell the house, it may not all count as your "main home" if some is rented out. (http://www.accountingweb.co.uk/ is a good place to ask this type of questions in the uk)
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Why don't some places require a credit card receipt signature, and some do?
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This is basically done to reduce costs and overhead, with agreement of the credit card issuers. When the card is physically present and the charge is low, the burden of keeping the signed receipts and of additional delays at the cash register is not worth the potential risk of fraud. Depending on the location and the specific charge-back history of the business, the limit above which signature is required differs. In one supermarket in the area I live they require signatures only on charges above $50. In another, 10 miles away from the first one, they require signatures on charges above $25.
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When do I sell a stock that I hold as a long-term position?
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If you are already invested in a particular stock, I like JoeTaxpayer's answer. Think about it as if you are re-buying the stocks you own every day you decide to keep them and don't set emotional anchor points about what you paid for them or what they might be worth tomorrow. These lead to two major logical fallacies that investor's commonly fall prey to, Loss Aversion and Sunk Cost, both of which can be bad for your portfolio in the long run. To avert these natural tendencies, I suggest having a game plan before you purchase a stock based on on your investment goals for that stock. For example a combination of one or more of the following: I'm investing for the long term and I expect this stock to appreciate and will hold it until (specific event/time) at which point I will (sell it all/sell it gradually over a fixed time period) right around the time I need the money. I'm going to bail on this stock if it falls more than X % from my purchase price. I'm going to cash out (all/half/some) of this investment if it gains more than x % from my purchase price to lock in my returns. The important thing is to arrive at a strategy before you are invested and are likely to be more emotional than rational. Otherwise, it can be very hard to sell a "hot" stock that has suddenly jumped in price 25% because "it has momentum" (gambler's fallacy). Conversely it can be hard to sell a stock when it drops by 25% because "I know it will bounce back eventually" (Sunk Cost/Loss Aversion Fallacy). Also, remember that there is opportunity cost from sticking with a losing investment because your brain is saying "I really haven't lost money until I give up and sell it." When logically you should be thinking, "If I move my money to a more promising investment I could get a better return than I am likely to on what I'm holding."
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How does a typical vesting timeline work with respect to employer contributions?
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There are two dates that matter for vesting in this situation: If you left the company on 12/31/16, you would be entitled to none of the company contributions. If you left on 1/1/17, you would be entitled to all $20k. This is sometimes known as a cliff vesting schedule. Some companies do a stair step - 20% after year 1, 40% after year 2, etc. This is known as graded vesting. But, that is not the case based on the language here.
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Is there any circumstance in which it is necessary to mark extra payments on a loan as going to “principal and not interest”?
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I would always presume that given a choice of doing what is in its own self interest verses in the customer's interest, a bank will ALWAYS do the former rather than the latter. Banks are in the business of making money, always presume that their policies, processes and contractual terms will be slanted to maximize their ability to make money. It's not being evil or anything, it's just business, they are under no obligation to be altruistic or do what's best for you at the expense of their profits. So, especially since it's not exactly a hardship, I would always make extra principal payments using a separate check and clearly mark it as an extra principal payment.
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Why would a long-term investor ever chose a Mutual Fund over an ETF?
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First, it's not always the case that ETFs have lower expenses than the equivalent mutual funds. For example, in the Vanguard family of funds the expense ratio for the ETF version is the same as it is for the Admiral share class in the mutual fund version. With that in mind, the main advantages of a mutual fund over an equivalent ETF are: From a long-term investor's point of view, the main disadvantage of mutual funds relative to ETFs is the minimum account sizes. Especially if the fund has multiple share classes (i.e., where better classes get lower expense ratios), you might have to have quite a lot of money invested in the fund in order to get the same expense ratio as the ETF. There are some other differences that matter to more active investors (e.g., intraday trading, options, etc.), but for a passive investor the ones above are the major ones. Apart from those mutual funds and ETFs are pretty similar. Personally, I prefer mutual funds because I'm at a point where the fund minimums aren't really an issue, and I don't want to deal with the more fiddly aspects of ETFs. For investors just starting out the lower minimum investment for an ETF is a big win, as long as you can get commission-free trades (which is what I've assumed above.)
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When to sell stock losers
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I found the answer I was looking for. Even though I don't have any capital gains to offset, I can deduct up to $3,000 of that loss against other kinds of income, including salary.
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Value of a collateralized asset
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You're not missing any concepts! It sounds like you are contributing a piece of collateral to the business, and you want to know a fair way to value how much this contribution of collateral is worth. Technically the economic answer would be the difference in interest between a secured loan and an unsecured loan. So for example suppose that the business could get a loan at 17% without the collateral (maybe just on a credit card) but with the duplex as collateral it is able to get the loan at 10.5%. In principle, the value of this collateral is (17% - 10.5%) or 6.5%, because it has allowed the business to pay 6.5% less interest on its loan.
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When buying a call option, is the financial stability of the option writer relevant?
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In the case of regulated, exchange-traded options, the writer of an options contract is obliged to maintain a margin with their broker, and the broker is obliged to maintain a margin with the clearing house. (Institutional writers of options will deal directly with the clearing house.) In the event that the writer is unable to make a daily margin call, the broker (or clearing house) may automatically close out (all of) their positions using existing margin held. If there was a shortfall, the broker (or clearing house) would be left to persue the client (writer) to make good on their obligations. None of this effects the position of the original buyer of the options contract. Effectively, the buyer's counterparty is their broker's clearing house account.
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Selling put and call Loss Scenario Examples
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The question you are asking concerns the exercise of a short option position. The other replies do not appear to address this situation. Suppose that Apple is trading at $96 and you sell a put option with a strike price of $95 for some future delivery date - say August 2016. The option contract is for 100 shares and you sell the contract for a premium of $3.20. When you sell the option your account will be credited with the premium and debited with the broker commission. The premium you receive will be $320 = 100 x $3.20. The commission you pay will depend on you broker. Now suppose that the price of Apple drops to $90 and your option is exercised, either on expiry or prior to expiry. Then you would be obliged to take delivery of 100 Apple shares at the contracted option strike price of $95 costing you $9,500 plus broker commission. If you immediately sell the Apple shares you have purchased under your contract obligations, then assuming you sell the shares at the current market price of $90 you would realise a loss of $500 ( = 100x($95-$90) )plus commission. Since you received a premium of $320 when you sold the put option, your net loss would be $500-$320 = $180 plus any commissions paid to your broker. Now let's look at the case of selling a call option. Again assume that the price of Apple is $96 and you sell a call option for 100 shares with a strike price of $97 for a premium of $3.60. The premium you receive would be $360 = 100 x $3.60. You would also be debited for commission by your broker. Now suppose that the price of Apple shares rises to $101 and your option is exercised. Then you would be obliged to deliver 100 Apple shares to the party exercising the option at the contracted strike price of $97. If you did not own the shares to effect delivery, then you would need to purchase those shares in the market at the current market price of $101, and then sell them to the party exercising the option at the strike price of $97. This would realise an immediate loss of $400 = 100 x ($101-$97) plus any commission payable. If you did own the shares, then you would simply deliver them and possibly pay some commission or a delivery fee to your broker. Since you received $360 when you sold the option, your net loss would be $40 = $400-$360 plus any commission and fees payable to the broker. It is important to understand that in addition to these accounting items, short option positions carry with them a "margin" requirement. You will need to maintain a margin deposit to show "good faith" so long as the short option position is open. If the option you have sold moves against you, then you will be called upon to put up extra margin to cover any potential losses.
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How prudent would it be to invest (stocks/equity) in businesses that are based on Cash transactions?
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Every listed company needs to maintain book of accounts, when you are investing in companies you would have to look at what is stated in the books and along with other info decide to invest in it.
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Would you withdraw your money from your bank if you thought it was going under?
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I have two different thoughts on this subject.
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Is it a good idea to put everything in the S&P500?
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At a very high-level, the answer is yes, that's a good idea. For money that you want to invest on the scale of decades, putting money into a broad, market-based fund has historically given the best returns. Something like the Vanguard S&P 500 automatically gives you a diverse portfolio, with super low expenses. As it sounds like you understand, the near-term returns are volatile, and if you really think you might want this money in the next few years, then the stock market might not be the best choice. As a final note, as one of the comments mentioned, it makes sense to hold a broad, market-based fund for your IRA as well, if possible.
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