Question stringlengths 14 166 | Answer stringlengths 3 13.1k |
|---|---|
Buying and selling the same stock | Sorry, no, any time you sell for a profit you owe tax. |
Using stop-loss as risk management: Is it safe? | A stop-loss order becomes a market order when a trade has occurred at or below the trigger price you set when creating the order. This means that you could possibly end up selling some or all of your position at a price lower than your trigger price. For relatively illiquid securities your order may be split into transactions with several buyers at different prices and you could see a significant drop in price between the first part of the order and the last few shares. To mitigate this, brokers also offer a stop-limit order, where you set not only a trigger price, but also a minimum price that you are will to accept for your shares. This reduces the risk of selling at rock bottom prices, especially if you are selling a very large position. However, in the case of a flash crash where other sellers are driving the price below your limit, that part of your order may never execute and you could end up being stuck with a whole lot of shares that are worth less than both your stop loss trigger and limit price. For securities that are liquid and not very volatile, either option is a pretty safe way to cut your losses. For securities that are illiquid and/or very volatile a stop-limit order will prevent you from cashing out at bottom dollar and giving away a bargain to lurkers hanging out at the bottom of the market, but you may end up stuck with shares you don't want for longer than originally planned. It's up to you to decide which kind of risk you prefer. |
Asset management after leaving the USA | Yes to all three. However, |
What's the appeal of dividends in investing? [duplicate] | As mentioned, dividends are a way of returning value to shareholders. It is a conduit of profit as companies don't legitimately control upward appreciation in their share prices. If you can't wrap your head around the risk to the reward, then this simply means you partially fit the description for a greater investment risk profile, so you need to put down Warren Buffett's books and Rich Dad Poor Dad and get an investment book that fits your risk profile. |
Why ADP does not accurately withhold state and federal income tax (even if W4 is correct)? | I see several interesting statement in your question. A. my only income is from my Employer B. I also receive employer stock (ESPP, RSU, NSO). However, employer withholds taxes for these stock transactions through my broker (I see them broken down on my W2). C. I have been subject to Alternative Minimum Tax. A implies a simple tax return. B and C tell the opposite story. In fact if B is not done correctly The amount withheld due to payroll may be perfect but the under withholding could be due to the ESPP's, RSUs and NSOs. The AMT can throw everything else out the window. If a person has a very simple tax situation: Income doesn't change a lot from paycheck to paycheck; they take the standard deduction; the number of exemptions equals the number of people in the family. Then the withholding is very close to perfect. The role of the exemptions on the W-4 is to compensate for situations that go above the standard deduction. The role of extra withholding is when the situation requires more withholding due to situations that will bring in extra income or if the AMT is involved. |
If I pay someone else's property taxes, can I use it as a deduction on my income tax return? | According to page 107 of the instructions for schedule A for form 1040 : Include taxes (state, local, or foreign) paid on real estate you own that was not used for business. ... If you want to make a business out of her property and be her agent in the management, you might be able to work with an accountant on this, but it won't be a valid personal deduction. |
What's the difference between a high yield dividend stock vs a growth stock? | The two are not incompatible. This is particularly true of Glaxo and Pfizer, two drug companies operating in roughly the same markets with similar products. Many "good" companies offer a combination of decent yields and growth. Glaxo and Pfizer are both among them. There is often (not always), a trade-off between high yield and high growth. All other things being equal, a company that pays out a larger percentage of its profits as dividends will exhibit lower growth. But a company may have a high yield because of a depressed price due to short term problems. When those problems are fixed, the company and stock grows again, giving you the best (or at least the better) of both worlds. |
How can I figure out how a stock's price would change after I buy shares? | It is unlikely that buying 100 shares will have any effect on a stock's price, unless the stock's average trading volume is incredibly low. That being said, no matter how many share you buy, there's no way to know what the impact on the price will be, because that's only one factor in how shares are priced. If anyone could figure out the answer to your question then they'd be extremely rich, because they'd simply watch for big share trades and then buy those stocks on the way up. The market makers who actually execute the trades are the ones who set the prices, and most stocks have multiple market makers trading the stock, so the bid/ask you see is the highest bid and lowest ask. The market makers set the price based on what the trend of the stock is. If, for instance, there's a large number of sell orders against a stock, the market makers will start dropping the bid prices as they fill execution orders, and as they see buy orders increase, they'll raise ask prices as they fill execution orders. The market makers earn the difference between what they paid to buy someone's stock who was selling and what they get from someone else who buys it. This is a simplified explanation, so pro traders, don't beat me up! (grin) So, basically, it takes quite a bit of share volume in one direction or another to affect a stock's price. I can guarantee a 100-share trade wouldn't even be noticed by market makers. I hope this helps. Good luck! |
Is there a mathematical formula to determine a stock's price at a given time? | Try to find the P/E ratio of the Company and then Multiply it with last E.P.S, this calculation gives the Fundamental Value of the share, anything higher than this Value is not acceptable and Vice versa. |
Why do stores and manufacturers use mail in rebates? A scam, or is there a way to use them effectively? | It's an effective way to achieve market segmentation without having to ask your customers how rich they are, and you get the benefit of finding out additional information like their address, email etc. The principle is similar to coupons on cereal boxes, anybody can get the rebate/discount if they go to the effort, but people who are cash rich/time poor are less likely to do so than those that really need the money. Joel Spolsky wrote about this and various other pricing mechanisms a while back, I like to reference the article every few weeks. It's well worth a read. Now, if you're retired and living off of social security, $7 an hour sounds pretty good, so you do it, but if you're a stock analyst at Merrill Lynch getting paid $12,000,000 a year to say nice things about piece-of-junk Internet companies, working for $7 an hour is a joke, and you're not going to clip coupons. Heck, in one hour you could issue "buy" recommendations on ten piece-of-junk Internet companies! So coupons are a way for consumer products companies to charge two different prices and effectively segment their market into two. Mail-in rebates are pretty much the same as coupons, with some other twists like the fact that they reveal your address, so you can be direct marketed to in the future. |
Double-entry bookkeeping: When selling an asset, does the money come from, Equity or Income? | Selling an asset is not earning income. You are basically moving value from one asset (the laptop) to another (your bank account.) So you reduce the equity that is "value of all my electronics" and you increase the asset that is your bank account. In your case, you never entered the laptop in some category called "value of all my electronics" so you don't have that to make a double-entry against. The temptation is high to call it income as a result. Depending on the reason for all this double-entry book-keeping for personal finances, that may be fine. Or, you can create a category for balancing and use that, and realize the (negative) value of that account doesn't mean much. |
What kind of trade is this? | A limit order is simply an order to buy at a maximum price or sell at a minimum price. For example, if the price is $100 and you want to sell if the price rises to $110, then you can simply put a limit order to sell at $110. The order will be placed in the market and when the price reaches $110 your order will be executed. If the price gaps at the open to $111, then you would end up selling for $111. In other words you will get a minimum of $110 per share. A stop limit order is where you put a stop loss order, which when it gets triggered, will place a limit order in the market for you. For example, you want to limit your losses by placing a stop loss order if the price drops to $90. If you chose a market order with your stop loss as soon as the price hits $90 your stop loss would be triggered and the shares would sell at the next available price, usually at $90, but could be less if the market gaps down past $90. If on the other hand you placed a limit order at $89.50 with your stop loss, when the stop loss order gets triggered at $90 your limit order will be placed into the market to sell at $89.50. So you would get a minimum of $89.50 per share, however, if the market gaps down below $89.50 your order will be placed onto the market but it won't sell, unless the price goes back to or above $89.50. Hope this helps. |
Any tax advantage for registering a residential house as a business? (I want to apply legal pressure to my landlord) | To the best of my knowledge, in California there's no such thing as registering a place as a business. There's zoning (residential/commercial/mixed/etc), and there's "a business registered at a place". But there's no "place registered as a business". So you better clarify what it is that you think your landlord did. It may be that the place is used for short term rentals, in which case the landlord may have to have registered a business of short term rentals there, depending on the local municipal or county rules. Specifically regarding the deposit, however, there's a very clear treatment in the California law. The landlord must provide itemized receipt for the amounts out of the deposit that were used, and the prices should be reasonable and based on the actual charges by the actual vendors. If you didn't get such a receipt, or the amounts are bogus and unsubstantiated - you have protection under the CA law. |
Does this sound like a great idea regarding being a landlord and starting a real estate empire? | This is a well worn path and not a bad idea. There are quite a few pitfalls but there are a lot of resources to learn for other people's mistakes. Having a plan and doing your research should help you avoid most of them. Here is some general advice to help get you started on the right foot. Know the market you are investing in. The city should have more than one major employer. The population should be rising and hopefully there are other positive economic indicators. Check the city's and state's chamber of commerce for useful information. You do not want to be stuck holding a bunch of upside down property in Detroit. Accurately calculate expenses. Set aside money for repairs. budget 5% of the rent or 100 a month for repairs if no repairs happen that money goes into the repair fund for the future. Set aside money for capital expenditures if the roof has a 10 years of life left in 10 years you better be ready to replace it same with any major appliances. Your area should have a baseline vacancy rate 5-8% in my area. That says out of a year your property will be vacant for around 6% of the year or 21 days for turnover. You should build that cushion into the budget as well setting aside a portion of the rent to cover that lean period. Some property management will offer "eviction insurance" which is basically them enforcing that savings. Financing maybe difficult a lot of banks like to see 25% down payments on investments. You will also face higher interest rates for investment properties. Banks generally also like to see enough money to cover 6 months worth of expenses in your account for all property. Some banks will not give financing for investment property to someone without 1-2 years of landlord experience. All in all finding money will be hard when you gets started and your terms may be less than ideal. (hopefully make around 3 - 5k a year in profit) If that includes loan pay-down and is not just cash-flow you are probably in the right ballpark. I can find $100-$200 dollars cash-flow a month on single family home in my area. Once loan pay-down is included your numbers are close. It sounds like you have a good attitude and a good plan. A book that I really enjoyed and I think may be useful is "Start Small, Profit Big in Real Estate" by Jay DeCima. I think of it as required reading for do-it-yourself real estate investors. Good luck and happy investing |
What happens to 401(k) money that isn't used by the time the account holder dies? | It goes to the beneficiaries, not necessarily the heirs. Taxation is a bit complicated and depends also on the plan requirements, the new owners' decisions, and the last status of the deceased owner. You should really talk to a tax adviser with the specific details to get a reliable answer that would address your situation. You should also ask about State inheritance taxes for the deceased and the beneficiaries' states. Here's the NOLO article on the issue. |
How do credit card payments work? What ensures the retailer charges the right amount? | When you give your credit card number and authorize a merchant to charge your credit card, the merchant then gives the information to their merchant processor which in turns bills the bank that issued the card (it's a little more complex and it all happens instantly unless the merchant is using the very old fasion imprinting gizmos). It is possible for a merchant to attempt to charge you more than you authorized but if they do they risk a fine ($25-$50 for a chargeback) from their processor, the legitimate portion of the charge as well as increasing the processing fees charged by their processor or even the possibility of loosing their merchant account entirely and being permanently blacklisted by Visa/Mastercard. In short no legitimate business is going to intentionally over charge your credit card. There really isn't significant risk in using a reputable online retailer's order forms. There is the possibility that their database could be compromised but that risk is lower than the risk of having an employee steal your credit number when you give it to them in person. Besides in the US at least the most you can legally be held liable for is $50 assuming you notice the discrepancy within 60 days of statement the charge appears on and most banks limit liability to $0. Over the years I have had a number of different credit card numbers stolen and used fraudulently and I have never had to pay any fraudulent charges. |
How much house can a retired person afford | Consider property taxes (school, municipal, county, etc.) summing to 10% of the property value. So each year, another .02N is removed. Assume the property value rises with inflation. Allow for a 5% after inflation return on a 70/30 stock bond mix for N. After inflation return. Let's assume a 20% rate. And let's bump the .05N after inflation to .07N before inflation. Inflation is still taxable. Result Drop in value of investment funds due to purchase. Return after inflation. After-inflation return minus property taxes. Taxes are on the return including inflation, so we'll assume .06N and a 20% rate (may be lower than that, but better safe than sorry). Amount left. If no property, you would have .036N to live on after taxes. But with the property, that drops to .008N. Given the constraints of the problem, .008N could be anywhere from $8k to $80k. So if we ignore housing, can you live on $8k a year? If so, then no problem. If not, then you need to constrain N more or make do with less house. On the bright side, you don't have to pay rent out of the .008N. You still need housing out of the .036N without the house. These formulas should be considered examples. I don't know how much your property taxes might be. Nor do I know how much you'll pay in taxes. Heck, I don't know that you'll average a 5% return after inflation. You may have to put some of the money into cash equivalents with negligible return. But this should allow you to research more what your situation really is. If we set returns to 3.5% after inflation and 2.4% after inflation and taxes, that changes the numbers slightly but importantly. The "no house" number becomes .024N. The "with house" number becomes So that's $24,000 (which needs to include rent) versus -$800 (no rent needed). There is not enough money in that plan to have any remainder to live on in the "with house" option. Given the constraints for N and these assumptions about returns, you would be $800 to $8000 short every year. This continues to assume that property taxes are 10% of the property value annually. Lower property taxes would of course make this better. Higher property taxes would be even less feasible. When comparing to people with homes, remember the option of selling the home. If you sell your .2N home for .2N and buy a .08N condo instead, that's not just .12N more that is invested. You'll also have less tied up with property taxes. It's a lot easier to live on $20k than $8k. Or do a reverse mortgage where the lender pays the property taxes. You'll get some more savings up front, have a place to live while you're alive, and save money annually. There are options with a house that you don't have without one. |
What one bit of financial advice do you wish you could've given yourself five years ago? | I wish I had started contributing to the pension fund offered by my employer sooner than it became compulsory. That is, I started working when I was 23 but did not contribute to the pension fund until I was 30 (the age at which it is compulsory to do so). I lost a lot of productive years in mid to late 90s, when the stocks were doing well. :-( |
Purchasing first car out of college | The .9% looks great, but it's not as relevant as the cost of the car itself. There are those who believe that one should never own a new car, that the first X years/miles of a car's life are the most expensive. The real question is how your budget is allocated. Is the car payment a small sliver or a large slice? How big is the housing wedge? |
No-line-of-credit debit card? | We have a pre-paid mastercard. This will only allow the spending up to the amount already paid into the card account. Visa Electron is a bank account linked debit card that will not allow the account to go overdrawn but this card type is getting quite rare. |
Is it unreasonable to double your investment year over year? | Nobody has consistently doubled their investment year after year, not even the "greats" like George Soros and Warren Buffett. Mr. Buffett's average annual returns have been over 20% for over 50 years. That's about twice the American average of 10%-11% a year. So Mr. Buffett has been "twice as good as average" for his adult life. That's like having a 200 IQ. And in a poll taken in 2000, he was rated the greatest portfolio manager of all time. No lesser person could hope to do better. What has happened is that people may double their investment in ONE year, then "give some back" the following year. Or else go through several years of "average" 10%-15% returns. The reason is that they will have an investment style that works for one particular market, but not for all markets, so they will have to wait for their "best" market, to have their "best" year. |
How to learn about doing technical analysis? Any suggested programs or tools that teach it? | A great way to learn is by watching then doing. I run a very successful technical analysis blog, and the first thing I like to tell my readers is to find a trader online who you can connect with, then watch them trade. I particularly like Adam Hewison, Marketclub.com - This is a great website, and they offer a great deal of eduction for free, in video format. They also offer further video based education through their ino.tv partner which is paid. Here is a link that has their free daily technical analysis based stock market update in video format. Marketclub Daily Stock Market Update Corey Rosenblum, blog.afraidtotrade.com - Corey is a Chartered Market Technician, and runs a fantastic technical analysis blog the focuses on market internals and short term trades. John Lansing, Trending123.com - John is highly successful trader who uses a reliable set of indicators and patterns, and has the most amazing knack for knowing which direction the markets are headed. Many of his members are large account day traders, and you can learn tons from them as well. They have a live daily chat room that is VERY busy. The other option is to get a mentor. Just about any successful trader will be willing to teach someone who is really interested, motivated, and has the time to learn. The next thing to do once you have chosen a route of education is to start virtual trading. There are many platforms available for this, just do some research on Google. You need to develop a trading plan and methodology for dealing with the emotions of trading. While there is no replacement for making real trades, getting some up front practice can help reduce your mistakes, teach you a better traders mindset, and help you with the discipline necessary to be a successful trader. |
Dad paying for my new home in cash. How can I buy the house from him? | we have little money in cash for a down-payment This is a red flag to me. If you have little money in cash for a down-payment, how are you supposed to be a landlord too? You could try is to do a lease to own from your Dad. Get a renter into the other home for at least a year or more and then close on the house once your financial situation improves. You still have the same problem of being a landlord. Another option is to receive a gift letter from your Dad since he is gifting the money on the home. It might extend your closing a little bit so you can get an appraisal done and loan application. This to me is the most sane option. |
How aggressive should my personal portfolio be? | Its important to note that aggression, or better yet volatility, does not necessarily offer higher returns. One can find funds that have a high beta (measure of volatility) and lower performance then stock funds with a lower beta. Additionally, to Micheal's point, better performance could be undone by higher fees. Age is unimportant when deciding the acceptable volatility. Its more important as to when the money is to be available. If there might be an immediate need, or even less than a year, then stick to a savings account. Five years, some volatility can be accepted, if 10 years or more seek to maximize rate of return. For example assume a person is near retirement age. They are expected to have 50K per year expenses. If they have 250K wrapped up in CDs and savings, and another 250K in some conservative investments, they can, and should, be "aggressive" with any remaining money. On the contrary a person your age that is savings for a house intends to buy one in three years. Savings for the down payment should be pretty darn conservative. Something like 75% in savings accounts, and maybe 25% in some conservative investments. As the time to buy approaches they can pull the money out of the conservative investments at a optimal time. Also you should not be investing without an emergency fund in place. Get that done first, then look to invest. If your friend does not understand these basic concepts there is no point in paying for his advice. |
Should I pay off a 0% car loan? | Pay it off. If you do so, you have the liberty to drop or reduce a portion of your collision auto insurance coverage (keeping uninsured motorist). This could potentially save you a lot more than 20 bucks over the next six months. |
Does a stock really dip in price on the ex-dividend date? And why would it do this? | The stock should fall by approximately the amount of the dividend as that is what is paid out. If you have a stock trading at $10/share and it pays a $1/share dividend, the price should drop to $9 as what was trading before the dividend was paid would be both the dividend and the stock itself. If the person bought just for the dividend then it would likely be neutral as there isn't anything extra to be gained. Consider if this wasn't the case. Wouldn't one be able to buy a stock a few days before the dividend and sell just after for a nice profit? That doesn't make sense and is the reason for the drop in price. Similarly, if a stock has a split or spin-off there may be changes in the price to reflect that adjustment in value of the company. If I give you 2 nickels for a dime, the overall value is still 10 cents though this would be 2 coins instead of one. Some charts may show a "Dividend adjusted" price to factor out these transactions so be careful of what prices are quoted. |
What is a Student Loan and does it allow you to cover a wide range of expenses relating to school? | Student loan is a class of unsecured loan. The characteristics that define a student loan are, primarily, that it is a loan that is intended to be used by someone who is currently a student. Beyond that, though, there are many variations. The different kinds of requirements usually have to do with who is eligible for the loan, and with what the loan is allowed to be used to pay. Some loans have other limitations, such as only being allowed to be directly paid to the institution. Some student loans are federally guaranteed (meaning the Federal Government will repay the bank if you default). Those have a lower interest rate, typically, and often have more stringent requirements, such as only full-time students being eligible, being need-based, and limitations on what the loan's funds can be used for. See studentaid.ed.gov for more information. Many private student loans have quite lax limitations. Some for example have nearly no limitation as to what they can fund; many are allowed to be taken out by part-time students and even non-degree-seeking students in some cases. Private loans usually have somewhat higher rates (as they're entirely unsecured) to go along with the lower restrictions and higher borrowing limits. You'd have to see the specific details of any particular loan to know what it's allowed to pay for, so if you choose this route, know what you plan to use it to pay for before you go looking. |
New to investing — I have $20,000 cash saved, what should I do with it? | As @mbhunter says, make sure you pay off any debt you have first. Then, it's a good idea to keep some or all of your savings as an emergency fund. If you use every last dime to pay for a house, you'll have no cushion available when something breaks down. The most common recommendation I've seen is to have 3-6 months worth of expenses as an emergency fund. Once you have that, then you can start saving for your down payment. As @Victor says, try to find the best interest rate you can for that money, but I wouldn't invest it in any kind of stock or bond product, because your need for it is too short term. Safety is more important than growth given your time frame. When you're ready to invest, make sure you learn all you can. You don't want to invest in something you don't understand, because that's how you get ripped off. You can be reading and talking to people while you're saving for your house so that, when the time comes, you'll have a pretty good idea of what you want to do for investments. |
How to change a large quantity of U.S. dollars into Euros? | Be careful of transferring through the large banks. They may say no/low fees, but they hide their cut in the spread, or worsen the exchange rate, to their favor. Try: - http://fxglobaltransfer.oanda.com/ |
Oversimplify it for me: the correct order of investing | Money is a tool. Here is an "oversimplified" order of investments: |
How should I begin investing real money as a student? | I think you have a really good idea, kudos to it. It will be difficult to break eve, and while you stressed the fact that you are ready to part with this money, it would be interesting for you not to part with this money just for the sake of trading. You will be frustrated because you are "winning" and breaking even or even losing money in the process. Think about that. For somebody with limited experience the derivatives market carries a very high risk also as everything in this matters carries high or very high yield. Trading futures on margin can actually work but I think you will need a bit more money. Check the mini contracts of infinity futures and calculate the commissions. You will be paying more for a contract, yes. you will need more money for your maintenance margin, yes, but if you day-trade and you have a cheapo broker this will be substantially lower. Gold contracts pay about 10 to 1 so a mini contract of 33 ounces will pay you 33 dollars per 1 dollar move. Your commissions will be about 4/5 usd in a discount broker and you will need to pay some exchange house fees, maybe about 15% of your trade will be fees. Check the contract specs and costs. As somebody said before, they wouldn't recommend trading on margin but with an account of that side I wouldn't know anything else. Trading physical gold on margin could also be an option. Just my 2 cents. |
How do you find reasonably priced, quality, long lasting clothing? | On the quality angle a big part of it is experience, but the biggest thing is careful observation. You have to take a close, critical look at any article of clothing. (This holds true for just about any purchase.) As far as finding them for reasonable prices it's the usual thing: sales and buying them second-hand. Finally, regarding maintenance: |
Can I pay estimated taxes based on last year's taxes if I anticipate more income this year? | You're interpreting this correctly. Furthermore, if your total tax liability is less than $1000, you can not pay estimates at all, just pay at the tax day. See this safe harbor rule in the IRS publication 17: General rule. In most cases, you must pay estimated tax for 2016 if both of the following apply. You expect to owe at least $1,000 in tax for 2016, after subtracting your withholding and refundable credits. You expect your withholding plus your refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2016 tax return, or 100% of the tax shown on your 2015 tax return (but see Special rules for farmers, fishermen, and higher income taxpayers , later). Your 2015 tax return must cover all 12 months. |
Do I have to explain the source of *all* income on my taxes? | Do I have to explain the source of all income on my taxes? "Yes, you do", say the ghosts of Ermenegildo and Mary Cesarini. https://turbotax.intuit.com/tax-tips/general/what-to-know-about-taxes-on-found-property/L9BfdKz7N The Cesarinis argued to the IRS that the money wasn’t income, and so it should not be taxed as such. The IRS wasn’t swayed by the couple’s argument. The case went to federal court, and the IRS won. “Found” property and money has been considered taxable income ever since. The IRS plainly states that taxpayers must report “all income from any source," even income earned in another country, unless it is explicitly exempt under the U.S. Tax Code. This covers a wide range of miscellaneous income, including gambling winnings. According to the Cesarini decision, money you find isn’t explicitly exempt. The tax impact won’t be significant if you find an item of property with a fair market value of only $500 and are in the 25% tax bracket. You’ll owe the IRS $125 ($500 x .25 = $125). However, if you are a finder and keeper of $10,000, your tax burden will be $2,500 ($10,000 x .25 = $2,500). |
Why do people buy insurance even if they have the means to overcome the loss? | Insurance is a funny product. As you said, it is a little like gambling. When I buy term life insurance, I'm essentially betting that I'm going to die within the next 20 years, and the insurance company is betting that I'm not. I'm hoping to lose that bet! Besides all of the reasons that other answers mentioned, I think part of the reason is psychological. As in my example, I'm setting up a kind of a win-win situation for myself here. Let's go with car insurance, a less-morbid example than my first example. If I don't get into a car accident, great! If I do get into a car accident, then the traumatic event is at least offset by the fact that the financial impact to me is minimal. Win-win. |
I cosigned for a friend who is not paying the payment | Without all the details it's hard to tell what options you may have, but none of them are good. When you cosign you are saying that, you believe the primary signer will make good on the loan, but that if he doesn't you will. You are 100% responsible for this debt. As such, there are some actions you can take. First, really try to stress to your friend, that they need to get you outta this loan. Urge them to re-finance with out you if they can. Next look for "better" ways of defaulting on the loan and take them. Depending on what the loan is for you could deed-in-lue or short sale. You may just have to admit default. If you work with the bank, and try not to drag out the process, you will likely end up in a better place down the line. Also of importance is ownership. If you pay the loan, do you get ownership of the thing the loan was secured against? Usually not, but working with an attorney and the bank, maybe. For example, if it's a car, can the "friend" sign over the car to you, then you sell it, and reduce your debt. Basically as a cosigner, you have some rights, but you have all the responsibilities. You need to talk to an attorney and possibly the bank, and see what your options are. At this point, if you think the friend is not that much of a friend anymore, it's time to make sure that any conversation you have with them is recorded in email, or on paper. |
How much does it cost to build a subdivision of houses on a large plot of land? | You can hire a builder to build for you on a lot that you would be happy to live on with utilities already connected. Subdividing a large piece of land gets a little more complicated. What easements exist, and what new easements would need to be created when connecting utilities? Would all of the lots already have street access, or do you need to dedicate some of the land to building a new road in the subdivision? Also, I edited your post because 83,000sqft is 1.9 acres. Building homes on .19 acre parcels (assuming no need for a road to take another 15% of the lot) reduces the value of the homes that you are building. You should run the numbers with 6 houses and see how attractive the math looks. Also, you should look for updated numbers on cost to build. Custom homes are likely closer to $275-$350 (where an architect is involved with drawing the plans). |
Should I fund a move by borrowing or selling other property assets? | It is a lot easier to make money when you are not in debt. If you can sell the apartment, get rid of your existing mortgage and buy the new house outright, that is probably the best course of action. |
Possibility to buy index funds and individual funds in a Canadian TFSA | This page from the CRA website details the types of investments you can hold in a TFSA. You can hold individual shares, including ETFs, traded on any "designated stock exchange" in addition to the other types of investment you have listed. Here is a list of designated stock exchanges provided by the Department of Finance. As you can see, it includes pretty well every major stock exchange in the developed world. If your bank's TFSA only offers "mutual funds, GICs and saving deposits" then you need to open a TFSA with a different bank or a stock broking company with an execution only service that offers TFSA accounts. Almost all of the big banks will do this. I use Scotia iTrade, HSBC Invest Direct, and TD, though my TFSA's are all with HSBC currently. You will simply provide them with details of your bank account in order to facilitate money transfers/TFSA contributions. Since purchasing foreign shares involves changing your Canadian dollars into a foreign currency, one thing to watch out for when purchasing foreign shares is the potential for high foreign exchange spreads. They can be excessive in proportion to the investment being made. My experience is that HSBC offers by far the best spreads on FX, but you need to exchange a minimum of $10,000 in order to obtain a decent spread (typically between 0.25% and 0.5%). You may also wish to note that you can buy unhedged ETFs for the US and European markets on the Toronto exchange. This means you are paying next to nothing on the spread, though you obviously are still carrying the currency risk. For example, an unhedged S&P500 trades under the code ZSP (BMO unhedged) or XUS (iShares unhedged). In addition, it is important to consider that commissions for trades on foreign markets may be much higher than those on a Canadian exchange. This is not always the case. HSBC charge me a flat rate of $6.88 for both Toronto and New York trades, but for London they would charge up to 0.5% depending on the size of the trade. Some foreign exchanges carry additional trading costs. For example, London has a 0.5% stamp duty on purchases. EDIT One final thing worth mentioning is that, in my experience, holding US securities means that you will be required to register with the US tax authorities and with those US exchanges upon which you are trading. This just means fill out a number of different forms which will be provided by your stock broker. Exchange registrations can be done electronically, however US tax authority registration must be submitted in writing. Dividends you receive will be net of US withholding taxes. I am not aware of any capital gains reporting requirements to US authorities. |
Why do 10 year-old luxury cars lose so much value? | I think this can be answered by answering the question "Who buys 10 year old cars?". Generally speaking those buyers are very price conscious. They are looking to save money on transportation rather than following the herd of people participating in the car payments merry-go-round. The cost of parts, repairs, and gasoline for those cars do not go down over time. Remember that many of those cars require the use of premium gasoline. This drastically reduces demand for those vehicles, thus lowers the price. Luckily I have a really good and reasonable mechanic near me, and I can float repairs and the higher gas. I love driving my 1999 Mercedes and it is one of the least expensive cars that I have owned while also being one of the most comfortable. |
Are wash sale rules different for stocks and ETFs / Mutual Funds? | What JoeTaxpayer means is that you can sell one ETF and buy another that will perform substantially the same during the 30 day wash sale period without being considered substantially the same from a wash sale perspective more easily than you could with an individual stock. For example, you could sell an S&P 500 index ETF and then temporarily buy a DJIA index ETF. As these track different indexes, they are not considered to be substantially the same for wash sale purposes, but for a short term investing period, their performance should still be substantially the same. |
Margin account: how to calculate the stock price that might trigger a liquidation of positions? | Thanks to this youtube video I think I understood the required calculation. Based on following notation: then the formula to find x is: I found afterwards an example on IB site (click on the link 'How to Determine the Last Stock Price Before We Begin to Liquidate the Position') that corroborate the formula above. |
Should we prepay our private student loans, given our particular profile? | See my recent answer to a similar question on prepaying a mortgage versus investing in IRA. The issue here is similar: you want to compare the relative rates of funding your retirement account versus paying down your debt. If you can invest at a better rate than you are paying on your debt, with similar risk, then you should invest. Otherwise, pay down your debt. The big difference with your situation is that you have a variable rate loan, so there's a significant risk that the rate on it will go up. If I was in your shoes, I would do the following: But that's me. If you're more debt-averse, you may decide to prepay that fixed rate loan too. |
Will getting a new credit card and closing another affect my credit? | I once called Amex to cancel a card with an annual fee. Instead, they were able to give me a different card with no fee. They were happy to do it. Of course, Amex has fantastic customer service, while Capital One is not known for it. But, its worth a five minute call, and you will retain your good score. |
Should I take a personal loan for my postgraduate studies? | I would delay purchase of a condo or apartment until you have at a minimum, 6 months of living expenses including mortgage set aside in other investments that could be liquidated. If you lost your source of income though disability or layoff or an unexpected termination of a grant, you need to have that cushion or a significant other whose salary can sustain payments. You could lose a lot if you either cannot make the payments and/or the value to the apartment dips greatly. Many folks in the recent housing bubble and Great Recession learned this the hard way. Many lost their entire investment by not being able to make payments AND seeing their house lose 1/3 of its value. |
Using a Roth IRA instead of a college savings account | One problem with this plan is that the individual must have earned income to contribute to a Roth IRA. If you have an infant, unless she is the new Gerber baby or something like that, there is probably no legitimate way for her to earn income. If you own a business and have kids who are older, you can employ them to do work for you, but they must really do work and earn around the market rate for that work. Otherwise, it is unlikely that they will be able to earn enough to fund an IRA until they are teenagers. When they are old enough to work, you can "match" their earnings by contributing the same amount to a Roth IRA on their behalf, but this will not give you the amount of contributions and growth time that you were counting on. |
Does an employee have the right to pay the federal and state taxes themselves instead of having employer doing it? | No, even businesses pay taxes quarterly. So if you formed Nathan, LLC, or otherwise became self employed, you'd still have to file quarterly estimates and make tax payments. This would cause taxes to be a much more high touch part of your life. However, you should ensure that you're claiming the proper exemptions etc to avoid excessive withholding. |
Why do people use mortgages, when they could just pay for the house in full? | Good question. If a person has a choice, it is probably better to pay cash. But not always. If your large pile of cash can earn more being invested than cost of the interest to borrow a similar large pile of cash, it is beneficial to get a mortgage. Otherwise pay cash. EXAMPLE: A house costs $100,000. I have $100,000 in extra money. I can invest that at 5% per year, and I can borrow an additional $100,000 at 2% per year. Since I can make more on my pile of cash than it costs to borrow another pile of cash, borrowing is better. Compound interest is the most powerful force on the planet according to Albert Einstein (maybe). That isn't likely for most people though. Here is the results from some online financial calculators. http://www.calcxml.com/do/hom03 Borrowing $100,000 with 2% interest for 30 years will cost a total of $148.662. You get $100,000, but it cost you $48,662 to do it. http://www.calcxml.com/do/sav07 Saving $100,000 in a bank account with an interest rate of %5 will be worth $432,194 in 30 years. By not spending the money you will earn $332,194 over the course of 30 years. So if you can invest at 5% and borrow at 2% you will end up with $283,532 more than if you didn't. It is a pretty extreme example, and financial advisers make a lot of money figuring out the complex nature of money to make situations like that possible. |
Is it worth investing in Index Fund, Bond Index Fund and Gold at the same time? | Index funds can be a very good way to get into the stock market. It's a lot easier, and cheaper, to buy a few shares of an index fund than it is to buy a few shares in hundreds of different companies. An index fund will also generally charge lower fees than an "actively managed" mutual fund, where the manager tries to pick which stocks to invest for you. While the actively managed fund might give you better returns (by investing in good companies instead of every company in the index) that doesn't always work out, and the fees can eat away at that advantage. (Stocks, on average, are expected to yield an annual return of 4%, after inflation. Consider that when you see an expense ratio of 1%. Index funds should charge you more like 0.1%-0.3% or so, possibly more if it's an exotic index.) The question is what sort of index you're going to invest in. The Standard and Poor's 500 (S&P 500) is a major index, and if you see someone talking about the performance of a mutual fund or investment strategy, there's a good chance they'll compare it to the return of the S&P 500. Moreover, there are a variety of index funds and exchange-traded funds that offer very good expense ratios (e.g. Vanguard's ETF charges ~0.06%, very cheap!). You can also find some funds which try to get you exposure to the entire world stock market, e.g. Vanguard Total World Stock ETF, NYSE:VT). An index fund is probably the ideal way to start a portfolio - easy, and you get a lot of diversification. Later, when you have more money available, you can consider adding individual stocks or investing in specific sectors or regions. (Someone else suggested Brazil/Russia/Indo-China, or BRICs - having some money invested in that region isn't necessarily a bad idea, but putting all or most of your money in that region would be. If BRICs are more of your portfolio then they are of the world economy, your portfolio isn't balanced. Also, while these countries are experiencing a lot of economic growth, that doesn't always mean that the companies that you own stock in are the ones which will benefit; small businesses and new ventures may make up a significant part of that growth.) Bond funds are useful when you want to diversify your portfolio so that it's not all stocks. There's a bunch of portfolio theory built around asset allocation strategies. The idea is that you should try to maintain a target mix of assets, whatever the market's doing. The basic simplified guideline about investing for retirement says that your portfolio should have (your age)% in bonds (e.g. a 30-year-old should have 30% in bonds, a 50-year-old 50%.) This helps maintain a balance between the volatility of your portfolio (the stock market's ups and downs) and the rate of return: you want to earn money when you can, but when it's almost time to spend it, you don't want a sudden stock market crash to wipe it all out. Bonds help preserve that value (but don't have as nice of a return). The other idea behind asset allocation is that if the market changes - e.g. your stocks go up a lot while your bonds stagnate - you rebalance and buy more bonds. If the stock market subsequently crashes, you move some of your bond money back into stocks. This basically means that you buy low and sell high, just by maintaining your asset allocation. This is generally more reliable than trying to "time the market" and move into an asset class before it goes up (and move out before it goes down). Market-timing is just speculation. You get better returns if you guess right, but you get worse returns if you guess wrong. Commodity funds are useful as another way to diversify your portfolio, and can serve as a little bit of protection in case of crisis or inflation. You can buy gold, silver, platinum and palladium ETFs on the stock exchanges. Having a small amount of money in these funds isn't a bad idea, but commodities can be subject to violent price swings! Moreover, a bar of gold doesn't really earn any money (and owning a share of a precious-metals ETF will incur administrative, storage, and insurance costs to boot). A well-run business does earn money. Assuming you're saving for the long haul (retirement or something several decades off) my suggestion for you would be to start by investing most of your money* in index funds to match the total world stock market (with something like the aforementioned NYSE:VT, for instance), a small portion in bonds, and a smaller portion in commodity funds. (For all the negative stuff I've said about market-timing, it's pretty clear that the bond market is very expensive right now, and so are the commodities!) Then, as you do additional research and determine what sort investments are right for you, add new investment money in the places that you think are appropriate - stock funds, bond funds, commodity funds, individual stocks, sector-specific funds, actively managed mutual funds, et cetera - and try to maintain a reasonable asset allocation. Have fun. *(Most of your investment money. You should have a separate fund for emergencies, and don't invest money in stocks if you know you're going need it within the next few years). |
Is keeping track of your money and having a budget the same thing? | What you are doing is neither one. You are simply watching to make sure you don't overdraw, which itself suggests you might be living hand to mouth and not saving. Keeping track of your money and budgeting are useful tools which help people get on top of their money. Which tends to have the effect of allowing you to save. How much did you spend on groceries last month? Eating out? Gas? If you were "keeping track of your money", you could say immediately what you spent, and whether that is above or below average, and why. How much do you plan to spend in the next 3 months on gas, groceries, eating out? If you knew the answer to that question, then you would have a "budget". And if those months go by, and your budget proves to have been accurate, or educates you as to what went wrong so you can learn and fix it... then your budget is a functioning document that is helping you master your money. Certainly the more powerful of the two is the "keeping track", or accounting of what has happened to you so far. It's important that you keep track of every penny without letting stuff "slip through the cracks". Here you can use proper accounting techniques and maybe accounting software, just like businesses do where they reconcile their accounting against their bank statements and wallet cash. I shortcut that a little. I buy gift cards for McDonalds, Panera, Starbucks, etc. and buy my meals with those. That way, I only have one transaction to log, $40 - McDonalds gift card instead of a dozen little meals. It works perfectly fine since I know all that money went to fast food. A little more dangerous is that I treat wallet cash the same way, logging say two monthly entries of $100 to cash rather than 50 little transactions of left $1 tip at restaurant. This only works because cash is a tiny part of my overall expenditures - not worth accounting. If it added up to a significant part, I'd want accounting on that. |
To rebalance or not to rebalance | Yes E[x] is expected value of x. E[x|y] = expected value of x, given y. c, k are some constants Let E[s_{n+1}|s_n=c] = c, but if E[s_{n+1}|s_n,s_{n-1},...,s_{n-m}] ->some constant k as m->\infty (call this equation 1) then rebalancing makes sense. Notes: |
Federal taxes for nonresident alien whose only income in 2016 was a 2015 state tax return | I believe you have to file a tax return, because state tax refund is considered income effectively connected with US trade or business, and the 1040NR instructions section "Who Must File" includes people who were engaged in trade or business in the US and had a gross income. You won't end up having to pay any taxes as the income is less than your personal exemption of $4050. |
Growth rate plus dividend yieid total? | In my mind its not the same. If growth is stock value then this is incorrect because of compound interest in stock price. $100 stock price after one year would be $105 and a dividend would be $2 Next year the stock would be $110.20 (Compound Interest) and would the Dividend really go up in lock step with the stock price? Well probably not, but if it did then maybe you could call it the same. Even if the dollars are the same the growth rate is more variable than the dividends so its valuable to segregate the two. I am open to criticism, my answer is based on my personal experience and would love to hear contrary positions on this. |
How do you measure the value of gold? | 1) Get some gold. 2) Walk around, yelling, "Hey, I have some gold, who wants to buy it?" 3) Once you have enough interested parties, hold an auction and see who will give you the most dollars for it. 4) Trade the gold for that many dollars. 5) You have just measured the value of your gold. |
Giving kids annual tax free gift of $28,000 | From the IRS' website: How many annual exclusions are available? The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift. The annual exclusion for 2014, 2015, and 2016 is $14,000. What if my spouse and I want to give away property that we own together? You are each entitled to the annual exclusion amount on the gift. Together, you can give $22,000 to each donee (2002-2005) or $24,000 (2006-2008), $26,000 (2009-2012) and $28,000 on or after January 1, 2013 (including 2014, 2015, and 2016). https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes Basically, this means that it doesn't matter which person it specifically comes from as it's a "joint" gift. There is more complicated paperwork to fill out if the gift comes from a single check and needs to be "split" for taxes. Each parent would need to fill out a separate gift tax return form, essentially proving that both parents approve of the gift. It seems like it's easier if each parent writes a separate check, however it's not a requirement. |
Interest on Amount Exceeding CC Balance? | In the US, if your monthly statement was issued by the credit card company on January 1 and it showed a balance of $1000, then a payment must be made towards that balance by January 25 or so, not February 1 as you say, to keep the card in good standing. The minimum payment required to keep the card in good standing is specified in your monthly statement, and failure to meet this requirement can trigger various consequences such as an increase in the interest rate charged by the credit card company. With regard to interest charges, whether your purchase of $2000 on January 3 is charged interest or not depends entirely on what happened the previous two months. If you had paid both your monthly statements dated November 1 and December 1 of the previous year in full by the their respective due dates of November 25 and December 25, and the $1000 balance on the January 1 statement is entirely due to purchases (no cash advances) made in December, then you will not be charged interest on your January purchase of $2000 as long as you pay it off in full by February 25 (the charge will appear on your February 1 statement). But, if you had not paid your December 1 statement in full by December 25, then that $1000 billed to you on January 1 will include purchases made during December finance charges on the unpaid balance from the previous month plus finance charges on the purchases made during December. The finance charges will continue to accumulate during January until such time as you pay off the bill in full (these charges will appear on your February 1 statement), hopefully by the due date of January 25. But even if you pay off that $1000 in full on January 25, your charge of $2000 on January 3 will start to accumulate finance charges as of the day it hits the account and these finance charges will appear on your February 1 statement. If you paid off that $1000 on January 10, say, then maybe there will be no further finance charges on the $2000 purchase on January 3 after January 10 but now we are getting into the real fine print of what your credit card agreement says. Ditto for the case when you pay off that $1000 on January 2 and made the $2000 charge on January 3. You most likely will not be charged interest on that $2000 charge but again it depends on the fine print. For example, it might say that you will be charged interest on the average of the daily balances for January, but will not be charged interest on purchases during the February cycle (unless you miss the February 25 payment and the whole cycle starts all over again). As a general rule, it takes two monthly cycles of payment in full by the due date before one gets into the state of no finance charges for new purchases and effectively an "interest-free" loan of $2000 from January 3 (date of purchase) till February 25 (due date of payment). Matters become more complicated when cash advances are taken from a credit card which are charged interest from the day they are taken but don't trigger finance charges on new purchases or the so-called "zero percent balance transfer offers" are accepted. |
Does money made by a company on selling its shares show up in Balance sheet | First: the question is irrelevant for purchases on exchange, mostly. Majority of sales on stock exchanges is between shareholders. If however you buy directly from the company (in a IPO, or direct share purchase program of some kind, like ESPP), then it does end up showing in the company account ledgers one way or another. It then become part of company's total assets, and the newly sold shares add to the equity. |
How do financial services aimed at women differ from conventional services? | It is just marketing and market segmentation. We could all shop at WalMart, but some people prefer wider aisles and mood music so they shop at Macys. Other people are fine shopping at Target or online. Women face no different challenges. The challenges in investing depend on who you are, where you are in life and what your goals are. I think it is fine to target a certain demographic over another, but they are just trying to make a niche. I prefer to not think about worst case scenarios, and I view all financial advisors with a healthy skepticism, regardless of gender. |
What is the best approach to save money for College for three kids? | In your situation you will be using your normal savings to offset additional funding from student loans or similar financing. Also, sending your children to or moving to a jurisdiction that has lower education costs but ample opportunity should also be in your cards. That can be another state, or another country. |
Interest charges on balance transfer when purchases are involved | Its called a "Grace Period" and you are not paying interest on the 0% BT, you are paying interest on the amount you spent in purchases If you do not pay your balance in full by the due date your grace period ends. This means that you have to pay interest on the purchased amount from the day it is made. This is why when you do a balance transfer the card should be put in the Sock Drawer until the BT is paid off. In order to restore the grace period you must pay the balance in full and the grace period will start during the Next Payment Cycle. Lets Assume: Statement cuts on the 1st and Due date is the 20th. you make the minimum payment of $10 Balance now is $100 Since you have a balance of $100 from the previous statement and a new purchase of $50.00, when the next statement cuts you will have to pay interest according to the terms on the $50.00 portion. In order to get the grace period back you will have to pay in full and wait for the next cycle In case I did not explain it well here is a quote from creditcards dot com website: The cost of carrying a balance This is because carrying a balance of any size into the next billing cycle means there is no grace period on your purchases during that cycle. The card company will begin charging interest on your purchases the day you make them. So leaving even $1 in unpaid balance on your card will cost you considerably more than the measly finance charges on that dollar. To see how this works let's consider an imaginary card user named Sally. She's so happy she got a new credit card that she charges $1,500 in purchases on the first day of her monthly billing cycle. After the cycle ends, Sally pays off the entire $1,500 by the due date, wiping her balance to zero. As a result, her purchases during the second month are also free of interest. She has used her grace period wisely to avoid finance charges. What happens if Sally leaves just $1 of her balance from the first month unpaid? That $1 begins to accrue interest starting the first day of the billing cycle. It's just $1, so the interest is not a big deal -- but because she used up her grace period without paying off her entire debt, her new purchases during the second month also start to get hit with interest charges immediately, starting the day of the transaction. Assuming she makes another $1,500 in purchases at the average annual interest rate of about 13 percent, that means $16 in finance charges for the month. If Sally repeats this pattern, the interest costs add up to $190 over the course of a year. |
What is the different between 2 :1 split and 1:1 split | I'm guessing you're conflating bonus share issuance with stock split. That seems very common to me, from a quick search; there's even some issues of terminology between the US and Europe, I think - it seems some Europeans may use Bonus Shares to mean Stock Split, as opposed to the more common meaning in the US of Stock Dividend. Sometimes a bonus share issuance is (incorrectly) called a stock split, like in this public announcement from STADA in 2004. It is a 1:1 bonus share issuance (meaning they issue one bonus share to everyone who has one share now), but it is in essence the same thing as a stock split (a 2:1 stock split, namely). They combined the 1:1 from bonus share with the wording 'split', causing the confusion. Bonus share issuance, also known as a stock dividend, is covered well in this question/answer on this site, or from a search online. It has no obvious effect initially - both involve doubling shares out there and halving the price - but it has a substantially different treatment in terms of accounting, both to the company and to your tax accountant. |
Large orders and market manipulation | If you own a stake large enough to do that, you became regulated - under Section 13(d) of the 1934 Act and Regulation (in case of US stock) and you became regulated. Restricting you from "shocking" market. Another thing is that your broker will probably not allow you to execute order like that - directed MKT order for such volume. And market is deeper than anyone could measure - darkpools and HFTs passively waiting for opportunities like that. |
Why are credit cards preferred in the US? | For me, it is mostly for the fraud protection. If I have a debit card and someone makes a fraudulent charge the money is removed from my bank account. From my understanding, I can then file a fraud complaint with the bank to recover my money. However, for some period of time, the money is missing from my bank account. I've heard conflicting stories of money being returned quickly while the complaint is undergoing investigation as well as money being tied up for several days/weeks. It may depend on the bank. With a credit card, it is the banks money that is tied up. |
What's the general principle behind choosing saving vs. paying off debt? | It has to do with return. I don't know if Canada has a matching feature on retirement accounts, but in the US many companies will match the first X% you put in. So for me, my first $5000 or so is matched 100%. I'll take that match over paying down any debt. Beyond that, of course it's a simple matter of rate of return. Why save in the bank at 2% when you owe at 10-18%? One can make this as simple or convoluted as they like. My mortgage is a tax deduction so my 5% mortgage costs me 3.6%. I've continued to invest rather than pay the mortgage too early, as my retirement account is with pre-tax dollars. So $72 will put $100 in that account. Even in this last decade, bad as it was, I got more than 3.6% return. |
Hourly rate negotiation tips for paid internship | They likely have an intern (job title) pay-scale that maxes out somewhere below $30/hr in order to meet the FLSA (that exempt vs non-exempt stuff you were seeing). As a PhD student, you could probably negotiate up into the ~$25/hr range, but from a benefits standpoint, they might not be able to pay you $35/hr without making you an exempt, full-time employee. |
Value of a call option spread | I think you're missing the fact that the trader bought the $40 call but wrote the $45 call -- i.e. someone else bought the $45 call from him. That's why you have to subtract 600-100. At expiration, the following happens: So $600 + -$100 = $500 total profit. Note: In reality he would probably use the shares he gets from the first call to satisfy the shares he owes on the second call, so the math is even simpler: |
What is a negotiable security and how are they related to derivatives? | The price for securities is negotiable. You totally have a right to make a lower offer when buying or ask for a higher price when selling. Securities don't trade at a fixed price, the price goes up and down throughout the day based on the price offers made by buyers and sellers and where they find agreement. If a stock last traded for $10, someone can put out an offer to buy the stock at $9.50, if they find someone who wants to sell and will accept that price, then a deal is made. unless something is falling rapidly in price however, an offer that far below the last price is not terribly likely to be accepted. Now if you want to be assured of making a sale or purchase, you generally trade 'at the market' and for small time players that is very much encouraged as it makes it easier for everyone. |
Company asking for card details to refund over email | If it is a well known company that wants to give you a refund, I would not worry about giving them your credit card number. However, I would never type my credit card number into an e-mail message. E-mail messages are very insecure, and can be read by many people along its way to the destination. They also can be archived in many places, meaning that your number will continue to be posted out there for someone to grab in the future. If you need to give this company your credit card number, do it over the phone. Having said that, ultimately you are not generally responsible for fraudulent charges if your card number is stolen and misused. I've had so many fraudulent charges, despite my being relatively careful with my number, that I don't really worry much anymore about losing my number. I just check my statement for false charges, and when they happen, the bank cancels the charge and issues me a new number. It has happened to either my wife or I maybe 5 times over the last two years. |
Is it ever a good idea to close credit cards? | The only good reason I find to close cards are: it's a card with an annual fee that you don't need. No point bleeding money each year. churning rewards. Open card to get bonus promotion such as "spend $500 in first 3 months, get $200 bonus". Close card and open a year later to do that same bonus again if available. Many cards don't allow you to do this. making room for newer cards at the same bank. Example, you have 5 Chase Cards and you want to apply for a 6th. Chase says you have maximized your credit they will extend you. You close one of your existing cards to get that new card. I have seen that many banks allow you to shift over some over your existing available credit to your new card without having to close them. |
Should you always max out contributions to your 401k? | My observations is that this seems like hardly enough to kill inflation. Is he right? Or are there better ways to invest? The tax deferral part of the equation isn't what dominates regarding whether your 401k beats 30 years of inflation; it is the return on investment. If your 401k account tanks due to a prolonged market crash just as you retire, then you might have been better off stashing the money in the bank. Remember, 401k money at now + 30 years is not a guaranteed return (though many speak as though it were). There is also the question as to whether fees will eat up some of your return and whether the funds your 401k invests in are good ones. I'm uneasy with the autopilot nature of the typical 401k non-strategy; it's too much the standard thing to do in the U.S., it's too unconscious, and strikes me as Ponzi-like. It has been a winning strategy for some already, sure, and maybe it will work for the next 30-100 years or more. I just don't know. There are also changes in policy or other unknowns that 30 years will bring, so it takes faith I don't have to lock away a large chunk of my savings in something I can't touch without hassle and penalty until then. For that reason, I have contributed very little to my 403b previously, contribute nothing now (though employer does, automatically. I have no match.) and have built up a sizable cash savings, some of which may be used to start a business or buy a house with a small or no mortgage (thereby guaranteeing at least not paying mortgage interest). I am open to changing my mind about all this, but am glad I've been able to at least save a chunk to give me some options that I can exercise in the next 5-10 years if I want, instead of having to wait 25 or more. |
Why do some stores have card-only self-checkouts? | There are a couple of advantages that I can think of. Since the machines are less complicated because they don't have to handle cash, they are less expensive and require less maintenance. Machines that handle cash require lots of moving parts. Cash machines require lots of employee interaction. The machines need to be stocked with cash each day, and at the end of the day the cash needs to be taken out and counted. With a cashless machine, the computer does all the work. |
Is Weiss Research, Inc. a legitimate financial research company? | It is a scam organization praying on fear of the simple minded. The facts Edelson presents are not accurate - http://www.sec.gov/litigation/admin/2006/ia-2525.pdf |
How to prevent myself from buying things I don't want | Make a deal with yourself. You can buy the things that you want, but only after you've read three books on behavioral economics. You should probably start first with Dan Ariely's Predictably Irrational, which will help you understand why the discount makes you covet the products even more than you would without it. Then find and read two more high-quality books from the same genre. If you gain self-awareness from this, you will begin to understand why you are conflicted (hint: you really don't want the things you think you do). And you probably won't purchase anything in spite of the fact that you kept the first part of the bargain. |
Is investing in housing considered an adequate hedge against inflation? | Even if the price of your home did match inflation or better — and that's a question I'll let the other answers address — I propose that owning a home, by itself, is not a sufficient hedge against inflation. Consider: Inflation will inflate your living expenses. If you're lucky, they'll inflate at the average. If you're unlucky, a change in your spending patterns (perhaps age-related) could result in your expenses rising faster than inflation. (Look at the sub-indexes of the CPI.) Without income also rising with inflation (or better), how will you cope with rising living expenses? Each passing year, advancing living expenses risk eclipsing a static income. Your home is an illiquid asset. Generally speaking, it neither generates income for you, nor can you sell only a portion. At best, owning your principal residence helps you avoid a rent expense and inflation in rents — but rent is only one of many living expenses. Some consider a reverse-mortgage an option to tap home equity, but it has a high cost. In other words: If you don't want to be forced to liquidate [sell] your home, you'll also need to look at ways to ensure your income sources rise with inflation. i.e. look at your cash flow, not just your net worth. Hence: investing in housing, as in your own principal residence, is not an adequate hedge against inflation. If you owned additional properties to generate rental income, and you retained pricing power so you could increase the rent charged at least in line with inflation, your situation would be somewhat improved — except you would, perhaps, be adopting another problem: Too high a concentration in a single asset class. Consequently, I would look at ways other than housing to hedge against inflation. Consider other kinds of investments. "Safe as houses" may be a cliché, but it is no guarantee. |
Is it OK to use a credit card on zero-interest to pay some other credit cards with higher-interest? | I am sure everyone is different, but it has helped me a great deal. I have had several card balances go up and the interest on those per month was more than $200 in just interest combined. I transferred the balances over to 0% for 15 months – with a fee, so the upfront cost was about $300. However, over the next 15 months at 0% I'm saving over $200 each month. Now I have the money to pay everything off at 14 months. I will not be paying any interest after that, and I cut up all of my cards so I won't rack up the bills with interest on them anymore. Now, if I can't buy it with a debit card or cash, I don't get it. My cards went up so high after remodeling a home so they were justified. It wasn't because I didn't pay attention to what I could afford. My brother, on the other hand, has trouble using credit cards properly and this doesn't work for him. |
My friend wants to put my name down for a house he's buying. What risks would I be taking? | That "something" you are signing means you are liable for the mortgage payments - yes, all of them - if he can't or won't pay at any point. The limit on what the bank will lend him based on his salary is there for a reason - they don't expect him to be able to keep up repayments if they lend him more (or more precisely, there's a big risk that he won't). Don't forget that even if he swears up and down to you that he can afford them, interest rates can rise; this is a 25 or 30 year commitment you would be making. Interest rates are at a historic low and the only way from here is up; in my living memory rates have been 12% or even 15%. As a very rough rule of thumb, for every £100k borrowed, every additional 1% on the interest rates costs an additional £100 on your monthly payment. Also, the "Transitional Arrangement" is not without its own fees and the bank won't let him simply take you off the mortgage unless they are convinced he can keep up the repayments on his own, which they clearly aren't. Also thanks to @Kat for the additional good point that being on the hook for your friend's mortgage will prevent you from being able to get a mortgage yourself while the liability still exists, or at least severely limit your options. No matter how many times you protest "but I'm not paying any money for that!" - it won't help. Another point: there are various schemes available to help first time buyers. By signing up for this, you would exclude yourself from any of those schemes in the future. |
Should I purchase a whole life insurance policy? (I am close to retirement) | There's nothing new about Whole Life Insurance. The agent stands to earn a pretty hefty commission if he can sell it to you. I don't think your assets warrant using it for avoiding the taxes that would be due on a larger estate. I don't see a compelling reason to buy it. |
Looking to buy a property that's 12-14x my income. How can it be done? | You need a cosigner. Someone prepared to repay the mortgager if you should fail to. Needless to say this is going to have to be someone who knows you and trusts you very much. One way is to find someone prepared to share a house with you. Buy a bigger house than you would otherwise need. You would own half each, and the sharing agreement would specify that if one of you defaulted on their payments the other would get a larger share according to how much extra they end up paying. The other way is to find a silent partner, who doesn't live there. They put up no money unless you actually default. They would almost certainly have to be part owners, but you can structure the agreement so that you end up with the whole house if you succeed in paying off the mortgage, or miss no payments until you sell. Parents sometimes do this for their kids. |
How can I live outside of the rat race of American life with 300k? | The title of your question is quite different then the content. The term "Rat Race" was coined in the 70's and refers to the endless cycle of working hard to consume more. Fortunately it is very easy not to participate in the cycle and probably will lead to more happiness. Just because one "works" does not mean they are participating in the "rat race", and I would recommend the following: When I think of "rat race" I picture a a bumper-to-bumper freeway of people struggling to get to work. For others it might be different, but that kind of rat race is easily avoided by the multitude of remote work opportunities. Some jobs allow you to work anywhere in the world. Avoiding the rugged consumerism also helps avoid the feelings of being a rat on the wheel. Sure one can like nice things, but do we have to have everything that Madison Ave is trying to sell us? No. Pick some nice things and pay cash. Debt, especially consumer debt, causes a person (in effect) to work for a bank. Avoiding debt will remove those feelings. Saving and investing also helps avoid those feelings. There is profound satisfaction in watching ones account balances grow. Once you see that your investment earnings can outpace your expenses, and then your salary you really feel like you are getting ahead. Above all else giving is a paramount and often overlooked part of a person's financial life. It causes one to be humble and recognize that most people, in this world, are less fortunate that us. It avoids runaway provide that justifies purchases that we cannot afford. So yea you can avoid the "Rat Race" and still work. |
Should I use an NRE or NRO account to transfer money from India to the US? Any reports needed? | Deposits into NRE account can only be done from funds outside India. So your brother cannot deposit into your NRE account. He can deposit in NRO account or directly wire transfer the funds. Both these require some paper work depending on the amount. |
What are the reasons to get more than one credit card? | Another reason is that the amount of unused credit you have is a positive factor on your credit score. It's generally easier to open several different accounts for $X dollars each with different banks than to get your current bank to raise your limit severalfold in a single go. Your current bank has to worry about why you suddenly are asking for a large additional amount of credit; while other banks will be willing to offer you smaller amounts of credit in the hope that you transfer your business from your current bank to them. |
I'm only spending roughly half of what I earn; should I spend more? | Aside from what everyone else has said about your money (saving, investing, etc.), I'd like to comment on what else you could spend it on: Spend it all on small/stupid things that, while stupid, would make me happier. For example take taxis more often, eat often in nice restaurants, buy designer clothes, etc. I'll be young only one time. You could also put the money towards something more... productive? Like a home project. Convert a room in your living space into an office or a theater-like room. Install hardwood floors yourself. Renovate a bathroom. Plant a garden of things you would enjoy eating later. Something that you would enjoy having or doing and can look back at and be proud of putting your money towards something that you accomplished. |
How does one determine the width of a candlestick bar? | There's no rule of thumb but the purpose of candlesticks of any kind (fixed, volume weighted etc.) is to display the intra-period price action. So if you'd fit 3 years worth of 1 minute bars on a chart, candlesticks become useless and you might as well use a line chart. |
How to prevent myself from buying things I don't want | To me, your question emphasizes something I've heard many times before: personal finance is as much or more about behavior than it is about mathematics or "head knowledge". Sure, you know you shouldn't be wasting a lot of money on something you will use very infrequently, but how do you make this behavior stick? Here are a few tricks that might help: The other aspects of your question really touch more on psychology than finance. But getting yourself into a discipline habit with money will help. And realizing the full cash price of items in relation to how much your disposable income is will help you get control of your impulses, as you review your budget monthly, and keep limit yourself using the envelope system. But honestly, everybody wants stuff they don't have, it's human nature. The key is finding ways to put physical limits and guards on yourself to keep you from obeying the self-destructive impulses. |
Please explain: What exactly is a CDS or “Credit Default Swap”? | A Credit Default Swap (CDS) is a contract between two parties. A useful analogy is insurance (but by no means exact). I pay a quarterly premium in order to insure myself against another event. In this case, it might be that I own some IBM Bonds. I am happy to own those bonds, and like the "coupon" that they pay me. But I am a little worried about IBM going bankrupt. So I can find someone willing to sell me a CDS. So long as I keep up my "premium" payments, if IBM goes into default on their bonds, I get a payout. This analogy does break down at a couple of levels. Firstly there is no requirement that I have to own the IBM bond in the first place. I can in effect then "take a view" on IBM going into default by purchasing a CDS without owning the underlying asset. Also in the real insurance world, there are various capital requirements that the companies have to adhere to, while CDS market, being essentially unregulated has none. So to summarize, and while The Pedia has a pretty good article, they are good both to hedge your bet (i.e. protect your actual owned asset) or as a speculative tool to take a "view" on the likelihood of a company to go bankrupt. |
Which kind of investment seems feasible to have more cashflow every week or month? | I'll mirror what the others have said in that your expectations for returns are wildly out of line with reality. If you could achieve that with only moderate risk hopefully you can see that you could ladder those returns by re-investing them and become a billionaire in short order. You may have noticed that there are a lot of really financially savvy people who are not billionaires. So the math for your plan falls apart somewhere, obviously. However, in the spirit of being helpful, and with the caveat that super high returns involve super high risk I'll try and point you in the direction where this is theoretically possible, even if the odds would be better buying lottery tickets. One way to get more leverage from your money than just buying stocks is to buy options. With an options strategy your return/loss will be magnified greatly compared to buying stocks. That is, you can lose or gain a much higher multiplier of your original investment. That said, I don't advise doing that with any money that you can't afford to lose every penny of, because you likely will. |
Can a company have a credit rating better than that of the country where it is located? | In one personal finance book I read that if a company is located in a country with credit rating X it can't have credit rating better (lower - i.e. further from AAA level) than X. This is simply wrong. Real world evidence proves it wrong. Automatic Data Processing (ADP), Exxon Mobile (XOM), Johnson & Johnson (JNJ), and Microsoft (MSFT) all have a triple-A rating today, even though the United States doesn't. Toyota (TM) remained triple-A for many years even after Japanese debt was downgraded. The explanation was the following: country has rating X because risk of doing business with it is X and so risk of doing business with any company located in that country automatically can't be better than X. When reading financial literature, you should always be critical. Let's evaluate this statement. First off, a credit rating is not the "risk of doing business." That is way too generic. Specifically, a credit rating attempts to define an individual or company's ability to repay it's obligations. Buying treasuries constitutes as doing business with the gov't, but you can argue that buying stamps at USPS is also doing business with the gov't, and a credit rating won't affect the latter too much. So a credit rating reflects the ability of an entity to repay it's obligations. What does the ability of a government to repay have to do with the ability of companies in that country to repay? Not much. Certainly, if a company keeps it's surplus cash all in treasuries, then downgrading the government will affect the company, but in general, the credit rating of a company determines the company's ability to pay. |
Can someone recommend a book that discusses the differences between types of financial statements? | I would recommend "How to Read a Financial Report : For Managers, Entrepreneurs, Lenders, Lawyers, and Investors" by John A. Tracy for the following reasons: I also think the book would bridge the gap nicely between a broad understanding of finance and a more serious technical know-how. |
Should I lease, buy new, or buy used? | I think you're dancing with the line here, this question is hard to back up without opinions and could really be three different questions. I'm going to push aside the part about quality and reliability, that could be an emotional subject. So from a price standpoint, there's virtually no disagrement that it makes financial sense to buy a used car instead of a new car. The majority of new cars lose the majority of their resale value within the first year or two. If you purchase said car after someone else has used it for the first two years, you just avoided all of that depreciation yourself, and you're still going to be purchasing a perfectly reliable car as long as you are diligent in the buying process. |
How do I resolve Free Fillable Tax Form error F1040-524-01? | Buried on the IRS web site is the "Fillable Forms Error Search Tool". Rather than including an explanation of errors in the rejection email itself, you're expected to copy and paste the error email into this form, which gives more details about what's wrong. (Don't blame me; I didn't design it.) If I copy your error message in, here's the response I get: There is an error with the “primary taxpayer’s Date of Birth” in Step 2 Section 4. The date of birth that was entered does not match IRS records. Make sure you enter the correct birth date, in the correct format, in the correct space. Scroll down, and enter the current date (“Today’s date”). Today’s date is the day you intend to e-file the return again. Also, if you are making an electronic payment you must re-date that section. E-File your return. You say that you've already checked your birthday, so I don't know as this is particularly helpful. If you're confident that it's correct and in the right place, I think your next step needs to be contacting the IRS directly. They have a link at the bottom of the error lookup response on how to contact them specifically about their solution not working, or you could try contacting your local IRS office or giving them a call. |
Is there a standard check format in the USA? | Nope, anything is that has the required information is fine. At a minimum you need to have the routing number, account number, amount, "pay to" line and a signature. The only laws are that it can't be written on anything illegal, like human skin, and it has to be portable, not carved on the side of a building ( for example) https://www.theguardian.com/notesandqueries/query/0,5753,-20434,00.html http://www.todayifoundout.com/index.php/2013/12/people-actually-cash-big-novelty-checks-even-possible/ That said, the MICR line and standard sizes will make things eaiser for they bank, but are hardly required. You could write your check on notebook paper so long as it had the right information, and the bank would have to "cash it". Keep in mind that a check is an order to the bank to give your money to a person and nothing more. You could write it out in sentence form. "Give Bill $2 from account 12344221 routing number 123121133111 signed _________" and it would be valid. In practice though, it would be a fight. Mostly the bank would try to urge you to use a standard check, or could hold the funds because it looks odd, till they received the ok from "the other bank". But.... If you rant to fight that fight.... |
Does investing in a company support it? | Would you consider the owner of a company to be supporting the company? If you buy stock in the company you own a small part of that company. Your purchase also increases the share price, and thus the value of the company. Increased value allows the company to borrow more money to say expand operations. The affect that most individuals might have on share price is very very small. That doesn't mean it isn't the right thing for you to do if it is something you believe in. After all if enough people followed those same convictions it could have an impact on the company. |
Is it better to wait for a market downturn to do a Roth conversion? | On average, the market will be down 1 year out of 4. 26 of the last 100 years on the S&P were negative. The Roth conversion offers a unique opportunity to convert early in the year, and decide at tax time next year whether you are happy with the result. Of course, if your fund or stock is up, you are likely better off, paying the $1250 tax on the $5000 conversion that's now worth $6000 or more. If it's down, you can recharacterize. The volatility of the market helps makes this process more attractive. If my converted shares dropped quite a bit, the recharacterization is far more desirable than a small drop or no drop at all. Of course we don't wish for that drop, any more than we wish for our house to burn down to make our insurance pay off. To be clear, you'll benefit from a conversion she the market goes up. The downturn only lets you reverse the bad move. |
Is it normal that US Treasury bills(0.07%) yield smaller than interest rate(0.25%)? | Maybe someone will have more details, but a couple of things come to mind immediately: |
Advice on low-risk long-term strategy for extra cash? | You can buy dividend stocks, just buy and hold. you will get cash or extra stock every quarter. You can also sell covered calls on your dividend stocks, this will give you even more cash. you can also... actually this rabbit hole goes very deep. just stick with my first sentence. |
Mortgage interest income tax deduction during year with a principal residence change | http://www.irs.gov/publications/p936/ar02.html#en_US_2010_publink1000229891 If you still own it, you get to deduct all of it. In my taxes I did online with TaxAct, it asked if I lived there or not and it just mattered which form it filed for me. With having tenants it was a 'business' form and I assume it would be a standard schedule A for personal. Either way the deductions are still mine to take. |
Does anyone know what Bank of NY Mellon's EB DLs are? | ACWI refers to a fund that tracks the MSCI All Country World Index, which is A market capitalization weighted index designed to provide a broad measure of equity-market performance throughout the world. The MSCI ACWI is maintained by Morgan Stanley Capital International, and is comprised of stocks from both developed and emerging markets. The ex-US in the name implies exactly what it sounds; this fund probably invests in stock markets (or stock market indexes) of the countries in the index, except the US. Brd Mkt refers to a Broad Market index, which, in the US, means that the fund attempts to track the performance of a wide swath of the US stock market (wider than just the S&P 500, for example). The Dow Jones U.S. Total Stock Market Index, the Wilshire 5000 index, the Russell 2000 index, the MSCI US Broad Market Index, and the CRSP US Total Market Index are all examples of such an index. This could also refer to a fund similar to the one above in that it tracks a broad swath of the several stock markets across the world. I spoke with BNY Mellon about the rest, and they told me this: EB - Employee Benefit (a bank collective fund for ERISA qualified assets) DL - Daily Liquid (provides for daily trading of fund shares) SL - Securities Lending (fund engages in the BNY Mellon securities lending program) Non-SL - Non-Securities Lending (fund does not engage in the BNY Mellon securities lending program) I'll add more detail. EB (Employee Benefit) refers to plans that fall under the Employee Retirement Income Security Act, which are a set a laws that govern employee pensions and retirement plans. This is simply BNY Mellon's designation for funds that are offered through 401(k)'s and other retirement vehicles. As I said before, DL refers to Daily Liquidity, which means that you can buy into and sell out of the fund on a daily basis. There may be fees for this in your plan, however. SL (Securities Lending) often refers to institutional funds that loan out their long positions to investment banks or brokers so that the clients of those banks/brokerages can sell the shares short. This SeekingAlpha article has a good explanation of how this procedure works in practice for ETF's, and the procedure is identical for mutual funds: An exchange-traded fund lends out shares of its holdings to another party and charges a rental fee. Running a securities-lending program is another way for an ETF provider to wring more return out of a fund's holdings. Revenue from these programs is used to offset a fund's expenses, which allows the provider to charge a lower expense ratio and/or tighten the performance gap between an ETF and its benchmark. |
If an option's price is 100% made up of its intrinsic value, is there a way to guarantee a non-loss while having a chance at a profit? | The strategy looks good on paper but in reality, the 150 call will have some time value particularly if it has got some time to mature. Let us say this time value is 0.50 , so the call costs 3.50. If the stock stays above 150 (actually above 149.50) , by the expiration of the call, you will lose this 0.50 . Then you need to keep buying calls over and over and hope one day a big down move will more than make up for all this lost premium. It is possible, but not entirely predictable. You may get lucky, but it may take many months to produce a significant move to make up for all the lost premium. If a big down move were to happen and the market had any indication of that in advance, that would be priced into the call already, so the 150 call may cost 4$ or 4.50$ if the market had wind of a big move. (a.k.a high implied volatility) |
How can a person protect his savings against a country default? | Since you are going to be experiencing a liquidity crisis that even owning physical gold wouldn't solve, may I suggest bitcoins? You will still be liquid and people anywhere will be able to trade it. This is different from precious metals, whereas even if you "invested" in gold you would waste considerable resources on storage, security and actually making it divisible for trade. You would be illiquid. Do note that the bitcoin currency is currently more volatile than a Greek government bond. |
What is the opposite of a sunk cost? A “sunk gain”? | liquid asset A sunk cost may turn out to be a loss or it may make you a profit, but what makes it "sunk" is: you can't get it back. The opposite is a cost that you can later redeem, which makes it "liquid". |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.