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What can I do to remedy ISA cash/shares transfer latency? | One possibility you may consider is to keep all of your funds in the stocks and shares ISA while investing that proportion you wish to keep in cash into a tradeable "Money Market" ETF. A Money Market ETF will give you rates comparable to interest rates on cash and at the same time it will give you "instant access" subject to normal 3 day settlement of equities. This is not exactly a perfect solution. Most Money Market ETFs will pay monthly dividends, so depending on your timing, you may have to give up some interest. In the worst case, if you were to sell the day before going ex-dividend, then you would be giving up a months interest. In the best case, if you were to sell on the day of going ex-dividend, you would be giving up no interest. |
Finding a good small business CPA? | Ask for at least 10 references. Ask for 10 because it will be harder for them to refer you to ringer references like their family or friends. |
How to read a mutual fund spec sheet? | It says expense ratio of 0.14%. What does it mean? Essentially it means that they will take 0.14% of your money, regardless of the performance. This measures how much money the fund spends out of its assets on the regular management expenses. How much taxes will I be subject to This depends on your personal situation, not much to do with the fund (though investment/rebalancing policies may affect the taxable distributions). If you hold it in your IRA - there will be no taxes at all. However, some funds do have measures of non-taxable distributions vs dividends vs. capital gains. Not all the funds do that, and these are very rough estimates anyway. What is considered to be a reasonable expense ratio? That depends greatly on the investment policy. For passive index funds, 0.05-0.5% is a reasonable range, while for actively managed funds it can go up as much as 2% and higher. You need to compare to other funds with similar investment policies to see where your fund stands. |
What are the advantages of paying off a mortgage quickly? | The financial reasons, beyond simply owning your home outright, are: You're no longer paying interest. Yes, the interest is tax-deductible in the U.S. (though not in Canada), but the tax savings is a percentage of a percentage; if you paid, say, $8000 in interest last year, at the 25% marginal rate you effectively save $2000 off your taxes. But, if you paid off your home and had that $8000 in your pocket, you'd pay the $2000 in taxes but you'd have $6000 left over. Which is the better deal? In Canada, the decision gets even easier; you pay taxes on the interest money either way, so you're either spending the $8000 in interest, lost forever as cost of capital, or on other things. Whatever you're earning is going into your own pocket, not the bank's. Similar to the interest, but also including principal, a home you own outright is a mortgage payment you don't have to make. You can now use that money, principal and interest, for other things. Whether these advantages outweigh those of anything else you could do with a few hundred grand depends primarily on the rate of return. If you got in at the bottom of the mortgage crisis (which is pretty much right now) and got a rate in the 3-4% range, with no MIP or other payment on top, then almost anything you can do with the amount you'd need to pay off a mortgage principal would get you a better rate of return. However, you'll need some market savvy to avoid risks. In most cases when someone has pretty much any debt and a big wad of cash they're considering how to spend, I usually recommend paying off the debt, because that is, in effect, a risk-free way to increase the net rate of return on your total wealth and income. Balancing debt with investments always carries with it the risk that the investment will fail, leaving you stuck with the debt. Paying the debt on the other hand will guarantee that you don't have to pay interest on that outstanding amount anymore, so it's no longer offsetting whatever gains you are making in the market on your savings or future investments. |
15 year mortgage vs 30 year paid off in 15 | Consider the "opportunity cost" of the extra repayment on a 15 year loan. If you owe money at 30% p.a. and money at 4% p.a. then it is a no brainer that the 30% loan gets paid down first. Consider too that if the mortgage is not tax deductable and you pay income tax, that you do not pay tax on money you "save". (i.e. in the extreme $1 saved is $2 earned). Forward thinking is key, if you are paying for someone's college now, then you would want to pay out of an education plan for which contributions are tax deductable, money in, money out. In my country most mortgages, be they 15,25,30 years tend to last 6-8 years for the lender. People move or flip or re-finance. I would take the 15 for the interest rate but only if I could sustain the payments without hardship. Maybe a more modest home ? If you cannot afford the higher repayments you are probably sailing a bit close to the wind anyway. Another thing to consider is that tax benefits can be altered with the stroke of a pen, but you may still have to meet repayments. |
Why do people use mortgages, when they could just pay for the house in full? | Condensed to the essence: if you can reliably get more income from investing the cost of the house than the mortgage is costing you, this is the safest leveraged investment you'll ever make. There's some risk, of course, but there is risk in any financial decision. Taking the mortgage also leaves you with far greater flexibility than if you become "house- rich but cash-poor". (Note that you probably shouldn't be buying at all if you may need geographic flexibility in the next five years or so; that's another part of the liquidity issue.) Also, it doesn't have to be either/or. I borrowed half and paid the rest in cash, though I could have taken either extreme, because that was the balance of certainty vs.risk that I was comfortable with. I also took a shorter mortgage than I might have, again trading off risk and return; I decided I would rather have the house paid off at about the same time that I retire. |
Can stock brokerage firms fail? | Yes, the entire financial system is based on trust. As we have seen repeatedly, even the ratings agencies can be wrong and in collusion. You need to understand what products have any insurance/contingency/recourse if things don't go as planned. A lot of people were surprised when they found out SIPC didn't ensure futures when MF Global declared bankruptcy last fall. |
Deposit a cheque in an alternative name into a personal bank account (Australia) | You actually don't have to open a business account with your bank, you can have a personal account with the bank and have your business funds go into it, whether it be from cheques or from Eftpos\Credit Card Facilities. You just have to get your customers to make the cheque out under your name (the same name used for your bank account). If you are trading as a sole trader and you trade under a name other than your own name, then officially you are supposed to register that name with Fair Trading in your state. However, if you are trading using another name and it is not registered, Fair Trading will only become aware of it if someone (usually one of your customers) makes a compliant about you, and they will then ask you to either stop using that name as your trading name or have it registered (if not already registered by someone else). |
First time home buyer. How to negotiate price? | Well it all kind of depends. The Realtor is your pro, and you should communicate further with him. Is this a neighborhood on the decline? Is there a good reason to make such a low offer? Are you totally off base when you think 85K is fair, and if so why? Is he just working his tail off for you (a great thing)? One thing that is a key to this negotiation is financing. What does your financing status look like? A reasonable cash offer with no contingencies and a quick close might be less than 70K. A person with strong financing can get a better discount then a person that is questionable. It could be that the Realtor is testing the waters to find the bottom price. The home selling season is closed (typically the summer), and the home has been on the market for a bit. Offering 70K might mean a counter at 82K, so you can work on an offer between 80 and 82. To me, it sounds like this guy is working for you. You should thank him. It is pretty hard to find a realtor that is willing to negotiate his pay down in order to save you money. Also he can answer the closing cost question better than us as he is more familiar with your particular market. |
How to select a bank based on availability in two areas? | Asking a bank for which ATM/branch network it belongs to and where those networks are would be your best bet. |
I just made $50K from selling my house. How should I invest the proceeds? | First pay off all existing debt. Then set up at least 6 month emergency fund. Freelancing exposes you to way more risks than employment. Then buy GIC's to cover and match the maturity of your expected education fees. Only 'play' with what is left. Don't over think it. Buy a low-cost (less than 0.5%) passive large-index mutual fund covering either the S&P or TSX. |
Why liquidity implies tight spread and low slippage | You have just answered your question in the last sentence of your question: More volume just means more people are interested in the stock...i.e supply and demand are matched well. If the stock is illiquid there is more chance of the spread and slippage being larger. Even if the spread is small to start with, once a trade has been transacted, if no new buyers and sellers enter the market near the last transacted price, then you could get a large spread occurring between the bid and ask prices. Here is an example, MDG has a 50 day moving average volume of only 1200 share traded per day (obviously it does not trade every day). As you can see there is already an 86% spread from the bid price. If a new bid price is entered to match and take out the offer price at $0.039, then this spread would instantly increase to 614% from the bid price. |
Should you keep your stocks if you are too late to sell? | The stock price is not only based on the general market trend and the stock's current profitability and prospects, but is also based on prediction of how the stock's prospects might change in the future. In almost every case, there are professional investors analysing the stock's future prospects and considering whether it's over or under values for its current price. However even professionals can be totally wrong. If you feel like you have a good grasp on whether the stock will have improving or declining prospects over time, then you might be (if you're right) equipped to make a sensible decision on whether to hold the stock or not. If you don't think you have a good understanding about the stock, then an understanding of the general market direction might at least make stock in general worth holding. Otherwise, you are simply taking a punt. If you know of another stock that has better prospects, then ask yourself why you would hold onto the stock that you think will perform worse. But also bear in mind that (in my understanding) research has shown that, on average, people who try to pick stocks rarely do better than a random selection, and more stock trades means more brokerage (which thanks to brokerage losses would mean you will end up doing worse than average unless you really do know better than the market). |
What does APR mean I'm paying? | Banks have to disclose up front the Annual Percentage Rate or interest rate that will be charged if you have an outstanding balance on a credit card. However, the APR of 19.9% is not charged all at once. For example if you had a $100 dollar balance on your credit card you would not be charged 19.9% interest or 19.90 making your new balance 119.90. Instead you would be charged the periodic rate which is one month's interest. You can easily calculate the period rate by dividing the APR by 12. So, 19.9% equals 1.65833% per month. This means if you had a $100 balance you would be charged 1.65833% interest or 1.66 making your new balance 101.66. Ask the bank or look on the website for a document called "Cardholders Agreement". If you can't find a link ask them for a copy so you can read all the fine print ahead of time. |
2 401k's and a SEP-IRA | Please note that if you are self employed, then the profit sharing limit for both the SEP and Solo 401(k) is 20% of compensation, not 25%. There is no need for a SEP-IRA in this case. In addition to the 401(k) at work, you have a solo-401(k) for your consulting business. You can contribute $18,000 on the employee side across the two 401(k) plans however you wish. You can also contribute profit sharing up to 20% of compensation in your solo 401(k) plan. However, the profit sharing limit aggregates across all plans for your consulting business. If you max that out in your solo 401(k), then you cannot contribute to the SEP IRA. In other words, the solo 401(k) dominates the SEP IRA in terms of contributions and shares a limit on the profit-sharing contribution. If you have a solo 401(k), there is never a reason to have a SEP for the same company. Example reference: Can I Contribute to a solo 401(k) and SEP for the same company? |
What does “interest rates”, without any further context, generically refer to? | Generically, interest rates being charged are driven in large part by the central bank's rate and competition tends to keep similar loans priced fairly close to each other. Interest rates being paid are driven by what's needed to get folks to lend you their money (deposit in bank, purchase bonds) so it's again related. There certainly isn't very direct coupling, but in general interest rates of all sorts do tend to swing (very) roughly in the same direction at (very) roughly the same time... so the concept that interest rates of all types are rising or falling at any given moment is a simplification but not wholly unreasonable. If you want to know which interest rates a particular person is citing to back up their claim you really need to ask them. |
How is unmarketable stock valued for tax purposes? | How you are taxed will depend on what kind of stock awards they are. The value will be determined by the company that issues it, and appropriate tax forms will be sent to you to include with your taxes. The way the value is determined is an accounting question that is off-topic here, but the value will be stated on your stock award paperwork. If you are awarded the stock directly then that value will be taxed as ordinary income. If you are awarded options, then you can purchase the stock to start the clock on long-term capital gains, but you will not incur any tax liability through the initial purchase. If the company is sold privately and you have held the stock for over 1 year, then yes, it will be taxed as a long-term capital gain. If you receive/exercise the stock less than 1 year before such an acquisition, then it will be considered a short-term capital gain and will be taxed as ordinary income. |
No-line-of-credit debit card? | I think what you are looking for is a secured credit card. They are mostly used by people who have ruined their credit and want to rebuild it, but it might also serve your purpose. Essentially you deposit some money in an account and the credit card can be used up to the amount left in the account. Each month when you pay the bill, it resets the balance that you can charge. Also, many credit card providers also offer "disposable" or "one use" credit card numbers for the express purpose of using it online. It still gets charged against your regular account, but you get a separate number that can only be used for up to X dollars of transactions. |
I'm thinking of getting a new car … why shouldn't I LEASE one? | It's a very simple equation. If we forget about the stress and limitations that come with the so-called "lease", and make the following assumptions: Then after 3 years of using this new car: I will never understand why people still "lease" a car. Even for very low income people who have to have a car, financing a per-owned decent car would do, but it's just "show off" seduction and lure that either unknowing minded or idiot teenagers fall for. |
What are the reasons to get more than one credit card? | There is almost no reason to get a second credit card - this is a very good arrangement for your creditor but not for you. Credit cards have high rates of interest which you have to pay unless you pay the credit off every month. Therefore, increasing your total credit capacity should not be your concern. Since internet technology lets you pay off your balance in minutes online, there is no reason to have multiple cards in order to avoid running out of a balance. If, on the other hand, you do not pay your existing card off every month, than getting another card can be even more dangerous, since you're increasing the amount of debt you take on. I'd say at most it would make sense for you to grab a basic VISA, since most places do not accept AMEX. I would also considering cancelling the AMEX if you get the VISA, for reasons above. |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | The most obvious one these days is unexpected and extended unemployment. If you are living paycheck to paycheck, you are asking for trouble in this economy. |
In the UK what are citizens legally obliged to do (in order to not be fined) | Edited to add an important one that I forgot, because I don't have a TV myself. You need to: That's really about it, unless you're employing people or running a business turning over more than £81,000 per year (or doing one of a number of relatively unlikely things that require specific paperwork, such as owning a horse or farm animal (but not a dog or cat or similar)). It's not a bureaucratic country. None of those things except the driving licence/car tax/MOT test/car insurance will be a police matter if omitted, but you could be fined for them (although it's vanishingly unlikely that you'd be fined for not registering to vote and for jury service). You don't need to understand the law before being on a jury, because it's the judge's job to ensure that the jury understand the law as it relates to the case in front of them. A few pieces of paperwork jargon for you: |
Stocks: do Good Till Cancelled orders get executed during after hours? | You'd have to check the rules for your broker to make sure that the term is being used in its usual sense, but the typical answer to your question is "no." A GTC will execute during market hours. You would need to explicitly specify extended hours if you want to execute outside of market hours (which your broker may or may not support). |
That “write your own mortgage” thing; how to learn about it | If an entity or individual has full rights to the land and land improvements, they can hold, transfer, delegate, or dispose of them on their terms. The only exception may be eminent domain. If the sovereignty meets the public necessity or public purpose tests they can assume or change the rights to your property in exchange for compensation. As others have said writing your own mortgage falls under the category of seller financing. A seller can write a mortgage with the help of a loan servicing company. Some loan service companies report to credit agencies, to help with buyer refinancing at a later point. Other forms of seller financing: Leasing Land contracts mineral contracts and more... Additionally, the seller can finance the minority of the property, called a junior mortgage. For example, the Bank finances 79% of the value, the seller finances 11%, and the buyer's 10% down payment covers the rest. If the buyer defaults, the superior mortgage (bank's) has collection priority. More commonly, the seller can option for a wrap-around mortgage or an 'all-inclusive mortgage'. The seller holds or refinances the existing mortgage and provides a junior mortgage in exchange for a secured promissory note and an all-inclusive trust deed. If the buyer defaults, the seller has foreclosure rights. It is not uncommon for entities or people to use financing strategies other than the traditional mortgage if they are unable to exclude the gain on sale. Check out section 1031 exchanges. In almost all cases I would tell people not to make decisions based on tax consequences alone, if your financial objective/goal for seller financing sounds like a 1031 exchange, take exception and carefully consider the tax consequences. |
In Canada, can a limited corporation be used as an income tax shelter? | This scheme doesn't work, because the combination of corporation tax, even the lower CCPC tax, plus the personal income tax doesn't give you a tax advantage, not on any realistic income I've ever worked it out on anyway. Prior to the 2014 tax year on lower incomes you could scrape a bit of an advantage but the 2013 budget changed the calculation for the tax credit on non-eligible dividends so there shouldn't be an advantage anymore. Moreover if you were to do it this way, by paying corporation tax instead of CPP you aren't eligible for CPP. If you sit with a calculator for long enough you may figure out a way of saving $200 or something small but it's a lot of paperwork for little if any benefit and you wouldn't get CPP. I understand the money multiplier effect described above, but the tax system is designed in a way that it makes more sense to take it as salary and put it in a tax deferred saving account, i.e. an RRSP - so there's no limit on the multiplier effect. Like I said, sit with a calculator - if you're earning a really large amount and are still under the small business limit it may make more sense to use a CCPC, but that is the case regardless of using it as a tax shelter because if you're earning a lot you're probably running a business of some size. The main benefit I think is that if you use a CCPC you can carry forward your losses, but you have to be aware of the definition of an "allowable business investment loss". |
My ex sold our car that still had money owed | This is not a finance issue, it is a legal one. You need to talk to a lawyer. To save your credit you can pay off the bank now and fight out the details with your ex later. The bank is still owed their money. |
How can people have such high credit card debts? | In the United States, when applying for credit cards, proof of income is on an honor system. You can make $15k a year and write on your application that you make $150k a year. They don't check that value other than to have their computer systems figure out risk and you get a yes or no. It was traditionally easy to attain credit, but that got tightened in 2008/2009 with the housing crisis. This is starting to change again and credit is flowing much more easily. |
What is the incentive for a bank to refinance a mortgage at a lower rate? | The reason is the same as with cell phones payment plans. As competition grows cell phone companies offer better payment plans for the same price or the same plans for lower price or both so that you stay with that cell operator. Banks also make better offers if the financial situation allows. Suppose several banks offer refinancing with better terms but prohibit refinancing loans from the same bank. Okay, you refinance from another bank and them maybe refinance the new loan again from the original bank - it's a new loan after the first refinance and prohibition no longer works. They just make you jump through more loops and it doesn't make sense neither for them nor for you |
Can someone explain a stock's “bid” vs. “ask” price relative to “current” price? | As others have stated, the current price is simply the last price at which the security traded. For any given tick, however, there are many bid-ask prices because securities can trade on multiple exchanges and between many agents on a single exchange. This is true for both types of exchanges that Chris mentioned in his answer. Chris' answer is pretty thorough in explaining how the two types of exchanges work, so I'll just add some minor details. In exchanges like NASDAQ, there are multiple market makers for most relatively liquid securities, which theoretically introduces competition between them and therefore lowers the bid-ask spreads that traders face. Although this results in the market makers earning less compensation for their risk, they hope to make up the difference by making the market for highly liquid securities. This could also result in your order filling, in pieces, at several different prices if your brokerage firm fills it through multiple market makers. Of course, if you place your order on an exchange where an electronic system fills it (the other type of exchange that Chris mentioned), this could happen anyway. In short, if you place a market order for 1000 shares, it could be filled at several different prices, depending on volume, multiple bid-ask prices, etc. If you place a sizable order, your broker may fill it in pieces regardless to prevent you from moving the market. This is rarely a problem for small-time investors trading securities with high volumes, but for investors with higher capital like institutional investors, mutual funds, etc. who place large orders relative to the average volume, this could conceivably be a burden, both in the price difference across time as the order is placed and the increased bookkeeping it demands. This is tangentially related, so I'll add it anyway. In cases like the one described above, all-or-none (AON) orders are one solution; these are orders that instruct the broker to only execute the order if it can be filled in a single transaction. Most brokers offer these, but there are some caveats that apply to them specifically. (I haven't been able to find some of this information, so some of this is from memory). All-or-none orders are only an option if the order is for more than a certain numbers of shares. I think the minimum size is 300 or 400 shares. Your order won't be placed until your broker places all other orders ahead of it that don't have special conditions attached to them. I believe all-or-none orders are day orders, which means that if there wasn't enough supply to fill the order during the day, the order is cancelled at market close. AON orders only apply to limit orders. If you want to replicate the behavior of a market order with AON characteristics, you can try setting a limit buy/sell order a few cents above/below the current market price. |
Complete Opposite Calculations and Opinions - Using Loan to Invest - Paying Monthly Installments with Monthly Income | The advice you were given in the other question was don't do it. The math is not the issue. The interest structure is not the issue. But there is a significant chance that you could lose money on the deal. If you invested your money in a NASDAQ heavy position in January 2000, you are still waiting to break even in November of 2013; Invest in almost anything in August 2001 and you will be down for a long time. Invest just before the housing collapse in 2007 and only now returning back to where you were. If you take money on a monthly basis and invest it you will be better off. If want to get the loan; then set up a stream of money into a bank account to make sure that when payments are due you have the cash to do so. When the two years are up you will have cash to repay the loan, and no need to sell the investments. Also if you are a bad judge of investments you won't have a problem repaying the loan. Using a loan to purchase stock reduces your gains and increases your losses. Use the power of Dollar cost averaging by making periodic purchases. |
Townhouse or stand-alone house for a first home? | I very much agree with what @Grade 'Eh' Bacon said about townhouses, but wanted to add a bit about HOA's, renting after moving on, and appreciation: HOA's HOA's can be restrictive, but they can also help protect property values, not all HOA's are created equal, some mean you have zero exterior maintenance, some don't. You'll be able to review the HOA financials to see where the money goes (and if they have healthy reserves). You'll see how much they spend on administration, I think ~10% is typical, and administration can be offset by the savings associated with doing everything in bulk. A well-run HOA should actually save you money over paying for all the things separately, but many people are happy to do some things themselves rather than pay for it, and would come out ahead if they didn't have an HOA. And of course, not all HOA's are well-run. Just do your best to get informed Transitioning to Rental If you are interested in trying your hand being a landlord after living there for a while, a townhouse typically exposes you to less rental risk than a single-family home, because the cost is typically lower and if the HOA maintains everything outside the house then you don't have to worry as much about tenants keeping a lawn in good shape, for example. Appreciation Appreciation varies wildly by market, some research by Trulia suggests in general condo's have outperformed single-family houses over the last 5 years by 10.5%. The same article notes that others disagree with Trulia's assessment and put condo's below single-family houses by 1.3% annually. My first townhouse has appreciated 41% over the last 3 years, while houses in the area are closer to 30% over the same period, but I believe that's a function of my local market more than a nationwide trend. I wouldn't plan around any appreciation forecasts. Source: Condos may be appreciating faster than single-family houses My adviceYou have to do your research on each potential property regardless of whether it's a condo/townhouse/single-family to find out what restrictions there are and what services are provided by the HOA (if any), your agent should be provided with most of the pertinent info, and you may not get to see HOA financials until you're under contract. Most importantly in my view, I wouldn't buy anywhere near the top of your budget. Being "house-poor" is no fun and will limit your options, don't count on appreciation or better income in the future to justify stretching yourself thin in the short-term. |
Is it normal to think of money in different “contexts”? | Here's how I think about money. There are only 3 categories / contexts (buckets) that my earned money falls into. Savings is my emergency fund. I keep 6 months of total expenses (expenses are anything in the consumption bucket). You can be as detailed as you want with this area but I tend to leave a fudge factor. In other words, if I estimate that I spend approximately $3,000 a month in consumption dollars then I'll save $3,500 times 6 in the bank. This money needs to be liquid. Some people use a HELOC, other people use their ROTH contributions. In any case, you need to put this money some place you can get access to it in case you go from accumulation (income exceed expenses) to decumulation mode (expenses exceed income). This money is distinct from consumption which I will cover in paragraph three. Investments are stocks, bonds, income producing real estate, small businesses, etc. These dollars require a strategy. The strategy can include some form of asset allocation but more importantly a timeline. These are the dollars that are working for you. Each dollar placed here will multiply over time. Once you put a dollar here it shouldn't be taken out unless there is some sort of catastrophe that your savings can't handle or your timeline has been achieved. Notice that rental real estate is included so liquidating stocks to purchase rental real estate is NOT considered removing investment dollars. Just reallocating based on your asset allocation. This bucket includes 401k's, IRAs, all tax-sheltered accounts, non-sheltered brokerage accounts, and rental real estate. In general your primary residence is not included in this bucket. Some people include the equity of their primary residence in the investment column but it can complicate the equation and I prefer to leave it out. The consumption bucket is the most important bucket and the one you spend the most time with. It requires a budget. This includes your $5 magazine and your $200 bottle of wine. Anything in this bucket is gone. You can recover a portion of it by selling it on ebay for $3 (these are earned dollars) but the original $5 is still considered spent. The reason your thought process in this area is distinct from the other two, the decisions made in this area will have the biggest impact on your personal finances. Warren Buffett was famous for skimping on haircuts because they are worth thousands of dollars down the road if they are invested instead. Remember this is a zero-sum game so every $1 not consumed is placed in one of the other buckets. Once your savings bucket is full every dollar not consumed is sent to investments. Remember to include everything that does not fit in the other two buckets. Most people forget their car insurance, life insurance, tax bill at the end of the year, accountant bill, etc. In conclusion, there are three buckets. Savings, which serve as your emergency bucket. This money should not be touched unless you switch from accumulation to decumulation. Investments, which are your dollars that are working for you over time. They require a strategy and a timeline. Consumption, which are your monthly expenses. These dollars keep you alive and contribute to your enjoyment. This is a short explanation of my use of money. It can get as complicated and detailed as you want it to be but as long as you tag your dollars correctly you'll be okay IMHO. HTH. |
Why does an option lose time value faster as it approaches expiry | Here's another attempt at explanation: it's basically because parabolas are flat at the bottom. Let me explain. As you might know, the variance of the log stock price in Black Scholes is vol^2 * T, in other words, variance of the log stock price is linear in time to expiry. Now, that means that the standard deviation of your log stock price is square root in time. This is consequential. For normally distributed random variables, in 68% of cases we end up within one standard deviation. So, basically, we expect our log stock price to be within something something times square root of T. So, if your stock has a vol of 16%, it'll be plus/minus 32% in 4 years, plus/minus 16% for one year, plus/minus 8% for 3m, plus/minus 4% for 3-ish weeks, and plus/minus 1% for a business day. As you see, the decay is slow at first, but much more rapid as we get closer. How does the square root function look? It's a sideways parabola. As we come closer to zero, the slope of the square root function goes to infinity. (That is related to the fact that Brownian motion is almost surely no-where differentiable - it just shoots off with infinite slope, returning immediately, of course :-) Another way of looking at it is the old traders rule of thumb that an at-the-money option is worth approximately S * 0.4 * vol * sqrt(T). (Just do a Taylor expansion of Black Scholes). Again, you have the square root of time to expiry in there, and as outlined above, as we get closer to zero, the square root drops slowly at first, and then precipitously. |
I earn $75K, have $30K in savings, no debt, rent from my parents who are losing their home. Should I buy a home now or save? | Plus, there's the feeling my parents want me to have a house in case we can't save the one we (my mom and brothers) all live in. First, you should not be forced to buy a home because your parents are telling you to. You should have your own life. Period. That said, while you are doing well from a salary perspective, your savings are somewhat borderline for a purchase if you ask me. Meaning your savings would essentially be the full downpayment & then your whole paycheck basically becomes payments on the mortgage. Not a good situation to be in. My advice would be that if you can invest in something smaller—like a small apartment for yourself—that is what you should purchase. That would allow you to invest in something but not be completely financially drained by the prospect. And then in a few years, you can sell that apartment & move onto something else. Perhaps a house at that stage? But right now, a full home purchase would be a fairly massive risk. |
Why Google Finance puts to two decimal places for the trading volumes? | Many brokerages offer automatic dividend reinvestment. It is very infrequent that these dividends are exactly a whole share. So, if you have signed up for automatic dividend reinvestment, many brokerages will reinvest your dividends and assign to you a fractional share. I can't speak for how these shares work with regards to voting, but I can say that the value of these fractional holdings does change with stock price as if one genuinely could hold a fraction of a share. |
It's possible to short a stock without paying interest? | It is possible and it depends on your strategy. As short selling interest rates are annual and levied monthly at a prorated rate. Interest rates are also low in general, with the exception of hard to borrow stocks. Therefore you can maintain a short position for weeks on end and notice nothing. Months even, if the position itself has already gained in your favor. There is no additional fee for opening the short position. Although some brokers have a "locate" fee, if it is hard to borrow the stock and they need to go find some shares to short. So you can do it as much as you like. |
What are the tax implications of lending to my own LLC? | It looks like you'd just be charging yourself interest and paying yourself back, because it's a pass-through entity, as I'm sure you know. (This assumes you're the only member of the LLC.) It all depends on how much money you want inside the protective cover of the LLC, and for how long. It doesn't seem to make much difference how you get the cash in or out, or how complicated or easy you make it for yourself. |
Merits of buying apartment houses and renting them | Insurance - get estimate from an insurance agent who works with policies for commercial real estate. See comments below regarding incorporation. Taxes - if this was basic income for a simple LLC, estimating 25-40% and adjusting over time might work. Rental property is a whole different prospect. Financial experts who specialize in rental properties would be a good source of advice, and worth the cost. See below regarding incorporating. Real estate appreciation - not something you can count on for developed property. Appreciation used to be almost guaranteed to at least keep up with inflation. Now property values are not even guaranteed to go up. Never have been but the general rule was improved real estate in good repair appreciated in price. Even if property values increase over time, rental properties depreciate. In fact, for rental properties, you can claim a certain rate of depreciation over time as an expense on taxes. This depreciation could mean selling for less than you paid for the property after a number of years, and owing capital gains taxes, since you would owe the difference between the depreciated value and the sale price. Related to taxes are local codes. Some areas require you to have a property management license to handle buildings with more than a certain number of units. If you are going to own rental properties, you should protect your private financial life by incorporating. Form a company. The company will own the property and hire any maintenance people or property managers or security staff or any similar employment activities. The company takes out the insurance and pays taxes. The company can pay you a salary. So, bottom line, you can have the company pay all the expenses and take all the risks. Then, assuming there's any money left after expenses, the company can pay you a manager's salary. That way if the worst happens and a tenant breaks their hip in the shower and sues you for ONE MILLION DOLLARS and wins, the company folds and you walk away. You might even consider two companies. One to own the property and lease it to a property management company. The property management company can then go bankrupt in case of some sort of liability issue, in which case you still keep the property, form a new management company, repaint and rename the property and move on. TL;DR: Get insurance advice from insurance agent before you buy. Same for taxes from an accountant. Get trained as a property manager if your local codes require it (might be a good idea anyway). Incorporate and have the company take all the risks. |
Is the BA Avios Visa airlines rewards card worth it? | I am a proud member of the BA frequent fliers' club (Executive Club). Their service is superb. Their avios (aka miles) are quite useful. However, that is if you're not flying with British Airways, because if you do - you'll pay enormous amounts as "taxes". I've used their avios on Air Berlin, American Airlines and Iberia - several times each, and their prices are very reasonable (including trans-Atlantic flights, although I mostly used it for domestic flights in the US and EU). If you only fly BA - their club charges ridiculous amounts for taxes and you would probably want to be in one of their partners' clubs. Depending on your traveling pattern - I'd suggest American Airlines (if you travel a lot in the US) or Qantas (if you travel to far East). I'm not familiar with other partners' clubs, so can't tell. So whether or not the 50K avios worth the investment is really up to you - it depends greatly on your traveling pattern and where you can use them. If only on BA - not sure if it is worth the trouble (although you do end up with about 50%-70% discount of the regular price when you buy miles tickets). |
What laws/regulations are there regardings gifts in the form of large sums of money? | This depends on the country(ies) involved. US citizen/resident giving gifts is required to pay a gift tax. The recipient of the gift, however, pays nothing. The value of the gift at the time of the gift-giving is used to determine the tax, and an exclusion of $14000 per person per year (as of 2013) is available to allow smaller gifts to be given without too much of a red tape. There's also a lifetime exemption which is shared between the gift tax and the estate tax. This exemption is $5.25M in 2013. The reason the gift tax exists in the US is because the US tax code is very aggressive. This is basically double taxation, similarly to estate tax. Gifts/estates are after-tax money, i.e.: income tax has been paid on them, yet the government taxes them again. Why? The excuse is to disallow shifting of income: if one person has high income tax brackets, he may give some of his income-producing property to another person with lesser brackets who would then pay less income taxes (for example, parents would transfer property to children). Similarly capital gains could be shifted. Generation-skipping tax is yet another complication to disallow people use gifts to avoid estate taxes: a grandparent would gift stuff to grandchildren, thus skipping a level of estate taxes (the parents in between). In other countries the tax codes may be less aggressive, and not tax gifts/inheritance as this money has been taxed before. This is a more fair situation, IMHO, yet it means that wealth moves from generation to generation without the "general public" benefiting from it. So if you're a US person and considering giving or receiving a gift - you need to consult with a tax adviser about the consequences. Similarly with other countries, if you are subject to their tax laws. |
Is the “Bank on Yourself” a legitimate investment strategy, or a scam? | I haven't read the book and have no intention of reading it. This definitely looks like a forced savings plan with "Whole Life Insurance" as the theme – which is pretty bad for someone who is able to take care of his finances. It would be good for someone who is not very good with his finances and wants to be forced into savings, but then even for those people it would only help a little; there are enough clauses that would make things more bad for him. i.e. one can choose to take a loan, pay only interest etc. No book is going to help you build a savings habit. One has to realize and spend what is essential (it means not buying or doing tons of things) and putting quite a bit away for a rainy day. After this, comes investing wisely... |
I'm 23 and was given $50k. What should I do? | I would be realistic and recognize that however you invest this money, it is unlikely to be a life-changing sum. It is not going to provide an income which significantly affects your monthly budget, nor is it going to grow to some large amount which will allow you to live rent-free or similar. Therefore my advice is quite different to every other answer so far. If I was you, I would: I reckon this might get you through half the money. Take the other $25,000 and go travelling. Plan a trip to Europe, South America, Asia or Australia. Ask your job for 3 or 6 months off, and quit it they won't give it you. Find a few places which you would really like to visit, and schedule around them a lot of time to go where you want. Book your flights in advance, or book one way, and put aside enough money for the return when you know where you'll be coming back from. Stay in hostels, a tent or cheap AirBnB. Make sure you have a chance to meet other people, especially other people who are travelling around. Figure out in advance how much it will cost you a day to live basically, and budget for a few beers/restaurants/cinema/concert tickets/drugs/whatever you do to have fun. It's really easy nowadays to go all sorts of places, and be very spontaneous about what you want to do next. You will find that everywhere in the world is different, all people have something unusual about them, and everywhere is interesting. You will meet some great people and probably become both more independent and better at making friends with strangers. Your friends in other countries could stay friends for life. The first time you see Rome, the Great Barrier Reef, the Panama canal or the Tokyo fish market will be with you forever. You have plenty of years to fill up your 401K. You won't have the energy, fearlessness and openmindedness of a 23 year old forever. Go for it. |
Are bonds really a recession proof investment? | That depends on how you're investing in them. Trading bonds is (arguably) riskier than trading stocks (because it has a lot of the same risks associated with stocks plus interest rate and inflation risk). That's true whether it's a recession or not. Holding bonds to maturity may or may not be recession-proof (or, perhaps more accurately, "low risk" as argued by @DepressedDaniel), depending on what kind of bonds they are. If you own bonds in stable governments (e.g. U.S. or German bonds or bonds in certain states or municipalities) or highly stable corporations, there's a very low risk of default even in a recession. (You didn't see companies like Microsoft, Google, or Apple going under during the 2008 crash). That's absolutely not the case for all kinds of bonds, though, especially if you're concerned about systemic risk. Just because a bond looks risk-free doesn't mean that it actually is - look how many AAA-rated securities went under during the 2008 recession. And many companies (CIT, Lehman Brothers) went bankrupt outright. To assess your exposure to risk, you have to look at a lot of factors, such as the credit-worthiness of the business, how "recession-proof" their product is, what kind of security or insurance you're being offered, etc. You can't even assume that bond insurance is an absolute guarantee against systemic risk - that's what got AIG into trouble, in fact. They were writing Credit Default Swaps (CDS), which are analogous to insurance on loans - basically, the seller of the CDS "insures" the debt (promises some kind of payment if a particular borrower defaults). When the entire credit market seized up, people naturally started asking AIG to make good on their agreement and compensate them for the loans that went bad; unfortunately, AIG didn't have the money and couldn't borrow it themselves (hence the government bailout). To address the whole issue of a company going bankrupt: it's not necessarily the case that your bonds would be completely worthless (so I disagree with the people who implied that this would be the case). They'd probably be worth a lot less than you paid for them originally, though (possibly as bad as pennies on the dollar depending on how much under water the company was). Also, depending on how long it takes to work out a deal that everyone could agree to, my understanding is that it could take a long time before you see any of your money. I think it's also possible that you'll get some of the money as equity (rather than cash) - in fact, that's how the U.S. government ended up owning a lot of Chrysler (they were Chrysler's largest lender when they went bankrupt, so the government ended up getting a lot of equity in the business as part of the settlement). Incidentally, there is a market for securities in bankrupt companies for people that don't have time to wait for the bankruptcy settlement. Naturally, people who buy securities that are in that much trouble generally expect a steep discount. To summarize: |
Should I buy my house from my landlord? | Can he legally break your lease if he sells the place? If not I would just keep renting. It doesn't sound like you love the house and you plan on moving or would prefer a different type of place long term. Unless you yourself plan on getting involved in being a renting it out to others in the future - just rent and move on at some point. If he can break your lease upon sale of the property then I'd be casually keeping an eye out for another place to rent if that happens. |
What are the tax liabilities or impact for selling gold? | Gold is classified as a collectible so the gain rates are as follows: So you'd report a gain of $100 or $1,000 , depending on which coin you sold. |
I've got $100K to invest over the next 2 to 7 years. What are some good options? | Well, a proper answer needs a few more details: 1) What's your marginal tax bracket? (A CD is just plain silly for someone in a high tax bracket and in a high tax state) 2) What's your state of residence? 3) Do you have a 401k to draw on for a house loan in case of badly timed volatility? 4) What does will the rest of our investment portfolio look like in case of a sudden rise in interest rates? Depending on the answers to those questions, the mix of investments could be anywhere from: Tell me more about bracket/state/other investment mix and I can suggest something. |
Stock grant, taxes, and the IRS | I went through this too. There's a safe-harbor provision. If you prepay as estimated tax payments, 110% of your previous year's tax liability, there's no penalty for underpayment of the big liquidity-event tax liability. https://www.irs.gov/publications/p17/ch04.html That's with the feds. Your state may have different rules. You would be very wise indeed to hire an accountant to prepare your return this year. If I were you I'd ask your company's CFO or finance chief to suggest somebody. Congratulations, by the way. |
When do companies typically announce stock splits? | In 2005, Apple announced a split on Feb 11... CUPERTINO, California — February 11, 2005 — Apple® announced today that its Board of Directors has approved a two-for-one split of the Company’s common stock and a proportional increase in the number of Apple common shares authorized from 900 million to 1.8 billion. Each shareholder of record at the close of business on February 18, 2005 will receive one additional share for every outstanding share held on the record date, and trading will begin on a split-adjusted basis on February 28, 2005. ...one month after announcing earnings. CUPERTINO, California—January 12, 2005—Apple® today announced financial results for its fiscal 2005 first quarter ended December 25, 2004. For the quarter, the Company posted a net profit of $295 million, or $.70 per diluted share. These results compare to a net profit of $63 million, or $.17 per diluted share, in the year-ago quarter. Revenue for the quarter was $3.49 billion, up 74 percent from the year-ago quarter. Gross margin was 28.5 percent, up from 26.7 percent in the year-ago quarter. International sales accounted for 41 percent of the quarter’s revenue. I wouldn't expect Apple to offer another split, as it's become somewhat fashionable among tech companies to have high stock prices (see GOOG or NFLX or even BRK-A/BRK-B). Additionally, as a split does nothing to the underlying value of the company, it shouldn't affect your decision to purchase AAPL. (That said, it may change the perception of a stock as "cheap" or "expensive" per human psychology). So, to answer your question: companies will usually announce a stock split after releasing their financial results for the preceding fiscal year. Regardless of results, though, splits happen when the board decides it is advantageous to the company to split its stocks. |
The doctor didn't charge the health insurance in time, am I liable? | This has a straightforward answer. It's likely that your doctor and the hospital have no responsibility to ensure that your insurance claim is filed in a timely manner. They bill you whether you or they get reimbursed by insurance, or not. The insurance company is more than happy not to pay you any way they can. Sorry if this is harsh, but it's up to you to follow through. See also here. |
I'm an American in my mid 20's. Is there something I should be doing to secure myself financially? | First of all, make sure you have an emergency fund. Ideally this should be at least 6 months of living expenses in an easily accessible place. Do you have any credit card debt, school debt, or other debt? Work towards becoming debt free, especially of higher interest debt and debt on things that are only depreciating (cars, for example). If you have extra income, consider putting it towards debt. If you currently have access to a 403b, you should begin investing immediately. If not, look into a Roth IRA. The community has provided suggestions for good places to get one. With a Roth IRA you take post-tax income money and invest it into this retirement account and when you reach retirement age you get it and all the interest as tax-free income. You can't withdraw the principal until retirement age. You should put up to the legal limit into a retirement account - if you can't do this at first work towards this goal. After an emergency fund, becoming debt free, and fully funding your retirement, save for goals such as a house or other things you are working towards. The exact order of doing these things might vary, but in general you need the emergency fund first. |
Why can't you just have someone invest for you and split the profits (and losses) with him? | The issue is the time frame. With a one year investment horizon the only way for a fund manager to be confident that they are not going to lose their shirt is to invest your money in ultra conservative low volatility investments. Otherwise a year like 2008 in the US stock market would break them. Note if you are willing to expand your payback time period to multiple years then you are essentially looking at an annuity and it's market loss rider. Of course those contacts are always structured such that the insurance company is extremely confident that they will be able to make more in the market than they are promising to pay back (multiple decade time horizons). |
Ballpark salary equivalent today of “healthcare benefits” in the US? | While the other answers try to quantify the value of health care the question you ask is about employee vs contractor. The delta between those regarding benefits goes way beyond health care. In fact because almost every full time employee must have health care offered by their employer the option of "you can have X with healthcare, or Y with no healthcare" is no longer an option. I have seen situations in the last few years where employees who had no need for healthcare coverage (retired military) were offered additional vacation days to compensate for their lower cost to the employer. For employee vs contractor what is different isn't just healthcare. It also includes holidays, vacation days, sick days, employer portion of social security, education benefits, and 401k. Insurance benefits include not just healthcare but also dental, vision, short term and long term disability, and life insurance. The rule of thumb to cover all these benefits that are lost when you are a contractor is an amount equal to your income. Of course some of these benefits depend on single vs married and kids or not. But unless the rate they are paying the contractors is approaching twice the rate they are paying employees the contractor will be hard pressed to cover the missing benefits. |
When does it make sense for the money paid for equity to go to the corporation? | BigCo is selling new shares and receives the money from Venturo. If Venturo is offering $250k for 25% of the company, then the valuation that they are agreeing on is a value of $1m for the company after the new investment is made. If Jack is the sole owner of one million shares before the new investment, then BigCo sells 333,333 shares to Venturo for $250k. The new total number of shares of BigCo is 1,333,333; Venturo holds 25%, and Jack holds 75%. The amount that Jack originally invested in the company is irrelevant. At the moment of the sale, the Venturo and Jack agree that Jack's stake is worth $750k. The value of Jack's stake may have gone up, but he owes no capital gains tax, because he hasn't realized any of his gains yet. Jack hasn't sold any of his stake. You might think that he has, because he used to hold 100% and now he holds 75%. However, the difference is that the company is worth more than was before the sale. So the value of his stake was unchanged immediately before and after the sale. Jack agrees to this because the company needs this additional capital in order to meet its potential. (See "Why is stock dilution legal?") For further explanation and another example of this, see the question "If a startup receives investment money, does the startup founder/owner actually gain anything?" Your other scenario, where Venturo purchases existing shares directly from Jack, is not practical in this situation. If Jack sells his existing shares, you are correct that the company does not gain any additional capital. An investor would not want to invest in the company this way, because the company is struggling and needs new capital. |
Does bull/bear market actually make a difference? | Who are the losers going to be? If you can tell me for certain which firms will do worst in a bear market and can time it so that this information is not already priced into the market then you can make money. If not don't try. In a bull market stocks tend to act "normally" with established patterns such as correlations acting as expected and stocks more or less pricing to their fundamentals. In a bear market fear tends to overrule all of those things. You get large drops on relatively minor bad news and modest rallies on even the best news which results in stocks being undervalued against their fundamentals. In the crash itself it is quite easy to make money shorting. In an environment where stocks are undervalued, such as a bear market, you run the risk that your short, no matter how sure you are that the stock will fall, is seen as being undervalued and will rise. In fact your selling of a "losing" stock might cause it to hit levels where value investors already have limits set. This could bring a LOT of buyers into the market. Due to the fact that correlations break down creating portfolios with the correct risk level, which is what funds are required to do not only by their contracts but also by law to an extent, is extremely difficult. Risk management (keeping all kinds to within certain bounds) is one of the most difficult parts of a manager's job and is even difficult in abnormal market conditions. In the long run (definitions may vary) stock prices in general go up (for those companies who aren't bankrupted at least) so shorting in a bear market is not a long term strategy either and will not produce long term returns on capital. In addition to this risk you run the risk that your counterparty (such as Lehman brothers?) will file for bankruptcy and you won't be able to cover the position before the lender wants you to repay their stock to them landing you in even more problems. |
Settling before T+3? | The T+3 settlement date only affects cash accounts. In a cash account, you need to wait until the T+3 settlement date for your funds to be available to make your next trade. But if you convert your cash account into a margin account, then you do not need to wait until the T+3 settlement date for your next trade - your broker will allow you to make another trade immediately. |
What are the benefits of investing to IRA/Roth IRA, 401(k) in comparison to investing in long term CDs? | For the period 1950 to 2009, if you adjust the S&P 500 for inflation and account for dividends, the average annual return comes out to exactly 7.0%. Source. Currently inflation is around 2%. So your 2% APY is a 0% real return where the stock market return is 7%. I.e. on average, stocks have a return that is higher by 7. If you mix in bonds, 70% stocks to 30% bonds, your real returns will drop to around 5.5%, but you are safer in individual years (bonds often have good years when stocks have bad years). We're making a bit of a false dichotomy here. We're talking about returns on stocks in retirement accounts versus returns on CDs in regular accounts. You can buy stocks in regular accounts and it is legally possible to have a CD in a retirement account. So you can get bankruptcy protection and tax advantages with a CD. |
Upward Spike in US Treasuries despite S&P Downgrade in August 2011 | US government bonds are where money goes when the markets are turbulent and investors are fleeing from risk, and that applies even if the risk is a downgrade of the US credit rating, because there's simply nowhere else to put your money if you're in search of safety. Most AAA-rated governments have good credit ratings because they don't borrow much money (and most of them also have fairly small economies compared with the US), meaning that there's poor liquidity in their scarce bonds. |
Is there a rule that a merchant must identify themself when making a charge | In some case the customer wants the name to be cryptic or misleading. They don't want to advertise the true nature of the business they visited. In other cases the transaction may be reported through another business. A few years ago the local PTA was having a silent auction as a fundraiser. A local business allowed the PTA to use their credit card reader to process transactions over a certain amount. Of course when the credit card statement arrived it looked like you spent $500 at the florist. I have seen PayPal listed when donating to some small charities. I have noted another case where confusion can occur. I used a debit card to buy a soda from a vending machine: the name and location were the name of the vending machine company and the location of their main office. It didn't say soda machine city A. It said Joe's vending company city B. In most cases the business and the credit card company want to make it easy to identify the transactions to keep the cost of research and charge backs to a minimum. |
How does one typically exit (close out) a large, in-the-money long put option position? | The question is, how do I exit? I can't really sell the puts because there isn't enough open interest in them now that they are so far out of the money. I have about $150K of funds outside of this position that I could use, but I'm confused by the rules of exercising a put. Do I have to start shorting the stock? You certainly don't want to give your broker any instructions to short the stock! Shorting the stock at this point would actually be increasing your bet that the stock is going to go down more. Worse, a short position in the stock also puts you in a situation of unlimited risk on the stock's upside – a risk you avoided in the first place by using puts. The puts limited your potential loss to only your cost for the options. There is a scenario where a short position could come into play indirectly, if you aren't careful. If your broker were to permit you to exercise your puts without you having first bought enough underlying shares, then yes, you would end up with a short position in the stock. I say "permit you" because most brokers don't allow clients to take on short positions unless they've applied and been approved for short positions in their account. In any case, since you are interested in closing out your position and taking your profit, exercising only and thus ending up with a resulting open short position in the underlying is not the right approach. It's not really a correct intermediate step, either. Rather, you have two typical ways out: Sell the puts. @quantycuenta has pointed out in his answer that you should be able to sell for no less than the intrinsic value, although you may be leaving a small amount of time value on the table if you aren't careful. My suggestion is to consider using limit orders and test various prices approaching the intrinsic value of the put. Don't use market orders where you'll take any price offered, or you might be sorry. If you have multiple put contracts, you don't need to sell them all at once. With the kind of profit you're talking about, don't sweat paying a few extra transactions worth of commission. Exercise the puts. Remember that at the other end of your long put position is one (or more) trader who wrote (created) the put contract in the first place. This trader is obligated to buy your stock from you at the contract price should you choose to exercise your option. But, in order for you to fulfill your end of the contract when you choose to exercise, you're obligated to deliver the underlying shares in exchange for receiving the option strike price. So, you would first need to buy underlying shares sufficient to exercise at least one of the contracts. Again, you don't need to do this all at once. @PeterGum's answer has described an approach. (Note that you'll lose any remaining time value in the option if you choose to exercise.) Finally, I'll suggest that you ought to discuss the timing and apportioning of closing out your position with a qualified tax professional. There are tax implications and, being near the end of the year, there may be an opportunity* to shift some/all of the income into the following tax year to minimize and defer tax due. * Be careful if your options are near expiry! Options typically expire on the 3rd Friday of the month. |
What is the difference between a check and a paycheck? | A paycheck is simply a check for your salary. It's just like a rent check, or a birthday check, or a grocery check... I've had "paychecks" that were personal checks from the owner of the business, I've had ones that are printed in the office I worked in and signed right there, and I've had paychecks that are printed through a third party company and mailed to me (my favorite, of course, is to forgo the "paycheck" entirely and get direct deposit :) ). Really, they're all just checks. Although that's a little disingenuous, because banks are often slightly more trusting of paychecks. However, this has little to do with it being a "paycheck," per se, and more to do with the fact that they see you getting the same check for (roughly) the same amount on a regular basis; having seen you get a paycheck for the same amount from the same company for the last 12 months, there is less risk of the check bouncing or being returned unpaid, so you can often get banks to waive their hold policy and just give you the money. |
Process for dissolving a recently-opened Colorado LLC? | Forms for the Colorado LLCs are online. You can find the link to the dissolution form here, and instructions here. IRS instructions are here. That's what they want: To close your business account, send us a letter that includes the complete legal name of the entity, the EIN, the business address and the reason you wish to close your account. If you have a copy of the EIN Assignment Notice that was issued when your EIN was assigned, include that when you write to us at: Internal Revenue Service Cincinnati, Ohio 45999 Everything is pretty straight forward. Note that you might be required to file a initial/final tax return if you had any transactions. |
Get financial reports on Canadian companies | www.sedar.com is the official site that provides access to most public securities documents and information filed by public companies and investment funds with the Canadian Securities Administrators (CSA) in the SEDAR filing system. Now, I'm guessing - I think the doc is MDA - Management’s Discussion and Analysis of Financial Condition and Results of Operations. At least this is what appears listed for many companies. |
What is a bond fund? | A mutual fund that purchases bonds is a bond fund. Bond funds are considered to be less risk than a traditional stock mutual fund. The cost of this less risk is that they have earned (on average) less than mutual funds investing in stocks. Sometimes, bonds have different tax consequences than stocks. |
Visitor Shopping in the US: Would I get tax refund? Would I have to pay anything upon departure? | Yes, you get a refund but only in a couple of states. If you are visiting Louisiana (e.g. New Orleans), there is sales tax refund on tangible items purchased at tax-free stores and permanently removed from the United States (http://www.louisianataxfree.com) . Clothes, shoes, makeup.. these are all items you can claim a tax refund for. Alas, I believe only Louisiana and Texas (http://taxfreetexas.com/) have this, it might be good to know if you are going there. In some states (Alaska, Delaware, Montana, New Hampshire and Oregon I believe) there is no sales tax at all. You do not pay anything at customs for gifts purchased when you leave the United States. |
My boss wants to buy me a gift. How do I account for taxes for this? | The way I have seen this done in the past is the business will withhold taxes on the amount of the gift. Very much like receiving a bonus. There are probably other ways to do it where taxes are avoided like you boss could buy the gift for you personally. Not sure about all the legal ways to avoid taxes on this. |
Is there any chance for a layperson to gain from stock exchange? [duplicate] | Currencies are a zero-sum game. If you make money, someone else will lose it. Because bank notes sitting in a pile don't create anything useful. But shares in companies are different, because companies actually do useful things and make money, so it's possible for all investors to make money. The best way to benefit is generally to put your money into a low-cost index fund and then forget about it for at least five years. |
How do I find the mappings between sedol and isin codes? | There is a relatively straightforward transformation explained on the Wikipedia page here and on the links from that page. Note that this only applies to SEDOLs for instruments listed on the London Stock Exchange (LSE). To convert SEDOL to ISIN you pad leading zeroes onto the SEDOL until you have 9 digits. Then you add the two letter country code (as defined in ISO 3166-1) to the front. Then you add a final checksum digit to the end, again as defined in the algorithm on the Wikipedia page. To convert ISIN to SEDOL you do the reverse: remove the final digit, remove the two leading letters, and strip off any leading zeroes. Example: |
Why do requirements after a margin call vary? | I believe the reasons: |
Should I Use an Investment Professional? | Even if we accept these claims as being true, neither the fact that their clients are more confident, nor the fact that people who use an investment professional have a higher net worth tells you anything about the value of the service that such professionals provide. Judging a service provider is a complex matter where you take into account multiple variables but the main ones are the cost and quality of the service, the cost and quality of doing it yourself and the value you assign to your time and effort. I think it's highly likely that professional gardeners will on average maintain larger gardens than those who do their own garden work. And any professional will have more experience at his profession than an average member of the public. But to determine if hiring a professional is objectively "better" requires defining what that word means. Finance is a bit weird in that respect since we actually do have objective ways of measuring results by looking at performance over time. But since the quotes you give here don't address that at all, we can simply conclude that they do not make the case for anything related to financial performance. |
Tax implications of ESPP shares when company is bought out | When the deal closes, will it be as if I sold all of my ESPP shares with regards to taxes? Probably. If the deal is for cash and not stock exchange, then once the deal is approved and closed all the existing shareholders will sell their shares to the buyer for cash. Is there any way to mitigate this? Unlikely. You need to understand that ESPP is just a specific way to purchase shares, it doesn't give you any special rights or protections that other shareholders don't have. |
What happens to people without any retirement savings? | This is a good question and you seemed troubled by this and this person's choices in life. And that is the rub, they are choices. They know how to make them, they know the consequences, and they know how to work around them. Its a skill you probably don't have (and don't want to have). In the end they will survive. If you go to a fast food store in a popular retirement location you will see plenty of elderly people working. They might live in low income housing, receive some financial assistance, and utilize other charities such a food banks. They might depend on family and friends. There is also the ugly, it is not a fairy tale that some supplement their diets with pet food. There is of course social security. The amount is very low for most workers, but the amount is almost inconsequential. They would spend it all anyway and still be short despite the predictability of the income and a time frame with predictable expenses. Budgeting is a skill. So I have a friend that deals with this himself, and is helping an elder relation. He and his wife provide some help, but when it started there was a endless stream of requests. His policy now is: No more help unless he works out a budget with the person requesting help. I've used his ideas myself, and by using this it becomes clear on who is in actual need and who is just looking for the next handout. You can feel good about yourself for helping an actual needy person or guiltless say no. |
The life cycle of money | Echoing JohnF, and assuming you mean the physical, rather than abstract meaning of money? The abstract concept obviously isn't replaced (unless the currency is discredited, or like the creation of the Euro which saw local currencies abandoned). The actual bits of paper are regularly collected, shredded (into itty-bitty-bits) and destroyed. Coinage tends to last a lot longer, but it also collected and melted down eventually. Depends on the country, though. No doubt, many people who took a gap year to go travelling in points diverse came across countries where the money is a sort of brown-grey smudge you hold with care in thick wadges. The more modern economies replace paper money on a dedicated cycle (around three years according to Wikipedia, anyway). |
Must a company have a specific number of employees to do an IPO? | While there is no legal reason to have a minimum number of employees, there can be a practical reason. They want to look like a good solid investment so that investors will give them money, which is what an IPO is, really. Hiring lots of people is part of that. Once the investors are committed, they can cut expenses by firing people again. I have no idea how common this is, but it is a possibility. However, if it were really common, investors wouldn't be fooled anymore. Also, they risk being sued for fraud over this. Even if your friend's worry is probably unfounded, you should be aware that working for a startup is always risky. They very often go bankrupt even if they try their best. They can misjudge their intended market. They can get higher expenses than expected. There can be another company with same idea being launched at the same time. Other things can go wrong. Working for a startup is a risk, but it beats being unemployed, right? |
Can one get a house mortgage without buying a house? | First, many banks do not keep the loan. Even if they send you a payment notice and process the monthly payment, there's still a good chance the loan itself was packed up and sold to investors. Collateralizing mortgages, in and of itself, is not inherently dangerous. But the loan definitely needs a house behind it. If you found a bank that keeps its loans, it would be a tough sell. You'd be asking them to trust that you've chosen the right number to match up with the house you intend to buy. And then they'd need to have another round of processing to turn this into a loan with normal collateral (i.e. put a lien on the house and tie them together.) |
Best way to day trade with under $25,000 | The T+3 "rule" relates only to accounting and not to trading. It does not prevent you from day trading. It simply means that the postings in you cash account will not appear until three business days after you have executed a trade. When you execute a trade and the order has been filled, you have all of the information you need to know the cash amounts that will hit your account three business days later. In a cash account, cash postings that arise from trading are treated as unsettled (for three days), but this does not mean that these funds are available for further trading. If you have $25,000 in your account on day 1, this does not mean that you will be able to trade more than $25,000 because your cash account has not yet been debited. Most cash accounts will include an item detailing "Cash available for trading". This will net out any unsettled business transacted. For example, if you have a cash account balance of $25,000 on day one, and on the same day you purchase $10,000 worth of shares, then pending settlement in your cash account you will only have $15,000 "Cash available for trading". Similarly, if you have a cash balance of $25,000 on day one, and on the same day you "day trade", purchasing $15,000 and selling $10,000 worth of shares, then you will have the net of $20,000 "Cash available for trading" ($20,000 = $25,000 - $15,000 + $10,000). If by "prop account" you mean an account where you give discretion to a broker to trade on your behalf, then I think the issues of accounting will be the least of your worries. You will need to be worried about not being fleeced out of your hard earned savings by someone far more interested in lining their own pockets than making money for you. |
US citizen sometimes residing in spain, wanting to offer consulting services in Europe, TAXES? | With something this complicated you are going to want to consult professionals. Either a professional with international experience, who will tell you the best tax arrangement overall but might come expensive, or one professional in each country who will optimize for that country. You will have to pay US taxes, and depending on your residency probably some in Spain. Double tax agreements should kick in to prevent you paying tax on the same money twice. You do not have to pay separate 'European' taxes. If you do substantial business in another country you might have to pay there, but one of your professionals should sort it out. |
Trouble sticking to a budget when using credit cards for day to day transactions? | Discipline. If you have to have a hard limit on your account that prevents you from spending - credit cards are not for you. If you can discipline yourself not to make purchases in excess of your budget even if the plastic technically allows it - then you can go on using the credit card. Make sure to stay on top of your spendings by frequently checking your current activity on the card (on line, don't wait for statements), and making sure you're below the limit you have set for your budget. Mint.com visualizes your spendings and shows where you are with regards to your preset budgets on various types of spendings, you should consider using it as an aid. |
How are unmarketable market orders (other side of the order book is empty) matched with incoming orders? [duplicate] | I don't have all the answers. On a illiquid stock, such situations do arise and there are specific mechanisms used by exchanges to match the order. It is generally not advisable to use market order on illiquid stock. There are lots of different variations here. I guess this comes down to specifications for individual exchanges, but I'm wondering if there's a standard here or a way to approach it from basic rules that clears up all these situations. There are quite a few variations and different treatments. Market order that are placed when the market is closed or just around market opening are traded at Market Open price that each exchange has a formulae to calculate. In the process Market Buy are matched to Market Sell at the Exchange calculated price. Not all order get matched and there could be spill over's. These are then matched to limit orders. Is this determined based on which sell order came first, or based on which would result in the best deal for the incoming buyer? Generally Market orders have highest priority of execution. |
Placing bid in market price | Market price is just the bid or offer price of the last sell or buy order in the market. The price that you actually receive or pay will be the price that the person buying the stock off you or selling it to you will accept. If there are no other participants in the market to make up the other side of your order (i.e. to buy off you if you are selling or to sell to you if you are buying) the exchange pays large banks to be "market makers"; they fulfil your order using stocks that they don't want to either buy or sell just so that you get your order filled. When you place an order outside of market hours the order is kept on the broker's order books until the market reopens and then, at market opening time there is an opening "auction" at which orders are matched to opposing orders (i.e. each buy order will be matched with a sell) at a price determined by auction. You will not know what price the order was filled at until it has been filled. If you want to guarantee a price you can do so by placing a limit order that says not to pay more than a certain price for any unit of the stock. |
Options strategy - When stocks go opposite of your purchase? | If you buy a call, that's because you expect that the stock will go up. If it does not go up, then forget about buying more calls as your initial idea seems to be wrong. And I don't think that buying a put to make up for the loss will work either, the only thing that is sure is that you will pay another premium (on a stock that could stay where it is). Even if you are 100% sure that the stock will go up again, don't do anything, as John Maynard Keynes stated: "Markets can remain irrational longer than you can remain solvent". My idea is: wait until the expiration date. The good things about options is that you won't lose more than the premium that you paid for it and that until it reaches its maturity you can still make money if the market turns around. More generally, when you are purely speculating, adding to a position when it goes against you is called "averaging down". I sincerely discourage you to do that : If the stocks goes in the wrong direction, that means that your initial idea was wrong in the first place (or you were not right at the right moment). In my opinion, adding up to a wrong idea is not the right thing to do. When you are losing, just take your loss and don't add up to your position based on your emotions. On the other hand, adding to your position more when the stock goes in your direction is called "pyramiding" and is, in my opinion, a better way of doing things (you bought, you were right, let's buy more). But at some point you will have to take your profits. There are plenty of other stocks on which you can try to invest and the market will still be here tomorrow, there will be other opportunities to make profits. Rushing things by constantly trying to have a position is not a good idea. Not doing anything is also a strategy. |
Why is there some latency between the time a check deposit was processed and when one can withdraw the money on Fidelity CMAs? | Every bank and credit union in the US has a Deposit Agreement and Disclosures document, Bank of America is no different. Our general policy is to make funds from your cash and check deposits available to you no later than the first business day after the day of your deposit. However, in some cases we place a hold on funds that you deposit by check. A hold results in a delay in the availability of these funds. that sounds great but ... For determining the availability of your deposits, every day is a business day, except Saturdays, Sundays, and federal holidays. If you make a deposit on a business day that we are open at one of our financial centers before 2:00 p.m. local time, or at one of our ATMs before 5:00 p.m. local time in the state where we maintain your account, we consider that day to be the day of your deposit. However, if you make a deposit after such times, or on a day when we are not open or that is not a business day, we consider that the deposit was made on the next business day we are open. Some locations have different cutoff times. so if you deposit a check on Friday afternoon, the funds are generally available on Tuesday. but not always... In some cases, we will not make all of the funds that you deposit by check available to you by the first business day after the day of your deposit. Depending on the type of check that you deposit, funds may not be available until the second business day after the day of your deposit. The first $200 of your deposits, however, may be available no later than the first business day after the day of your deposit. If we are not going to make all of the funds from your deposit available by the first business day after the day of your deposit, we generally notify you at the time you make your deposit. We also tell you when the funds will be available. Ok what happens when the funds are available... In many cases, we make funds from your deposited checks available to you sooner than we are able to collect the checks. This means that, from time to time, a deposited check may be returned unpaid after we made the funds available to you. Please keep in mind that even though we make funds from a deposited check available to you and you withdraw the funds, you are still responsible for problems with the deposit. If a check you deposited is returned to us unpaid for any reason, you will have to repay us and we may charge your account for the amount of the check, even if doing so overdraws your account. Fidelity has a similar document: Each check deposited is promptly credited to your account. However, the money may not be available until up to six business days later, and we may decline to honor any debit that is applied against the money before the deposited check has cleared. If a deposited check does not clear, the deposit will be removed from your account, and you are responsible for returning any interest you received on it. I would think that the longer holding period for Fidelity is due to the fact that they want to wait long enough to make sure that the number of times they have to undo investments due to the funds not clearing is nearly zero. |
What does Chapter 11 Bankruptcy mean to an investor holding shares of a Chapter 11 Company? | I held shares in BIND Therapeutics, a small biotechnology company on the NASDAQ that was liquidated on the chapter 11 auction block in 2016. There were sufficient proceeds to pay the debts and return some cash to shareholders, with payments in 2016 and 2017. (Some payments have yet to occur.) The whole process is counter-intuitive and full of landmines, both for tax preparation & planning and receiving payments: Landmine 0: Some shareholders will sell in a panic as soon as the chapter 11 is announced. This would have been a huge mistake in the case of BIND, because the eventual liquidation payments were worth 3 or so times as much as the share price after chapter 11. The amount of the liquidation payments wasn't immediately calculable, because the company's intellectual property had to be auctioned. Landmine 1: The large brokerages (Vanguard, Fidelity, TDA, and others) mischaracterized the distributions to shareholders on form 1099, distributed to both shareholders and the IRS. The bankruptcy trustee considered this to be their responsibility. According to the tax code and to the IRS website, the liquidation is taxed like a sale of stock, rather than a dividend. "On the shareholder level, a complete liquidation can be thought of as a sale of all outstanding corporate stock held by the shareholders in exchange for all of the assets in that corporation. Like any sale of stock, the shareholder receives capital gain treatment on the difference between the amount received by the shareholder in the distribution and the cost or other basis of the stock." Mischaracterizing the distributions as dividends makes them wrongly ineligible to be wiped out by the enormous capital loss on the stock. Vanguard's error appeared on my own 1099, and the others were mentioned in an investor discussion on stocktwits. However, Geoffrey L Berman, the bankruptcy trustee stated on twitter that while the payments are NOT dividends, the 1099s were the brokers' responsibility. Landmine 2: Many shareholders will wrongly attempt to claim the capital loss for tax year 2016, or they may have failed to understand the law in time for proper tax planning for tax year 2016. It does not matter that the company's BINDQ shares were cancelled in 2016. According to the IRS website "When a shareholder receives a series of distributions in liquidation, gain is recognized once all of the shareholder's stock basis is recovered. A loss, however, will not be recognized until the final distribution is received." In particular, shareholders who receive the 2017 payment will not be able to take a capital loss for tax year 2016 because the liquidation wasn't complete. Late discovery of this timing issue no doubt resulted in an end-of-year underestimation of 2016 overall capital gains for many, causing a failure to preemptively realize available capital losses elsewhere. I'm not going to carefully consider the following issues, which may or may not have some effect on the timing of the capital loss: Landmine 3: Surprisingly, it appears that some shareholders who sold their shares in 2016 still may not claim the capital loss for tax year 2016, because they will receive a liquidation distribution in 2017. Taken at face value, the IRS website's statement "A loss, however, will not be recognized until the final distribution is received" appears to apply to shareholders of record of August 30, 2016, who receive the payouts, even if they sold the shares after the record date. However, to know for sure it might be worth carefully parsing the relevant tax code and treasury regs. Landmine 4: Some shareholders are completely cut out of the bankruptcy distribution. The bankruptcy plan only provides distributions for shareholders of record Aug 30, 2016. Those who bought shares of BINDQ afterwards are out of luck. Landmine 5: According to the discussion on stocktwits, many shareholders have yet to receive or even learn of the existence of a form [more secure link showing brokers served here] required to accept 2017 payments. To add to confusion there is apparently ongoing legal wrangling over whether the trustee is able to require this form. Worse, shareholders report difficulty getting brokers' required cooperation in submitting this form. Landmine 6: Hopefully there are no more landmines. Boom. DISCLAIMER: I am not a tax professional. Consult the tax code/treasury regulations/IRS publications when preparing your taxes. They are more trustworthy than accountants, or at least more trustworthy than good ones. |
How to estimate a reasonable amount for a signing bonus? | Signing bonuses are probably the most variable of all, as there is a general understanding that more personal factors are taken into account. As a result, HR isn't under a huge obligation to explain away the differences. In comparison, for salary there's the wide expectation that same job = same pay. Since there's so variable, but also fairly rare, "budget" isn't a main concern for many HR departments. And they certainly won't have a finely grained budget breakdown. "This year we'll pay $250.000 for headhunters, $50000 for relocation payments, $100,000 for pension transfers, $150.000 for stock option losses...". It's generally tossed on one big heap, "cost of hiring". So, what can you ask for? That's really a market question. What's your value to the company? How much of that is already reflected in salary and other benefits? The main downside to signing bonuses is that a company won't know how long you'd stay. Your value to the company is probably your monthly work. Therefore they cannot amortize that bonus over a fixed amount of months. What if you leave after 3 months? For that reason, a "conditional" signing bonus is a reasonable offer from your side. E.g. ask for one month salary, conditional on you staying for 24 months, and otherwise you'll repay them from your last salary. |
Is the MBA an overrated degree/qualification? | The quality of the MBA is really what decides if it's worth it. You have to make sure the school where you are going to is highly regarded or even prestigious. There is a big difference between what you find prestigious and others find prestigious. The student believing it is an awesome school is not enough, the companies and recruiters must believe it too. Make sure you do your homework on the ranking of the MBA program. Additionally, your undergraduate plays a role how well your MBA is perceived. A decent undergraduate degree complemented with an MBA from a highly ranked school will put you in a trajectory for a high salary and a management position. |
How can a Canadian establish US credit score | Sorry. As far as I know, a person's SS is the only way to establish credit. This is the first thing they ask whenever you apply for any service in the US. |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | While it is true that homeowners insurance will cover emergencies, it is very important to check and make sure that your policy is covering everything that it needs to. A great example is what happened to all of those without flood insurance in Tennessee last year. You may opt not to get additional coverage, but then you should make sure that you are setting aside funds for such a catastrophe. |
Sleazy Bait and Switch Marketing — Is this legal? | But.. what I really want to know.... is it illegal, particularly the clause REQUIRING a trade in to qualify for the advertised price? The price is always net of all the parts of the deal. As an example they gave the price if you have $4000 trade in. If you have no trade in, or a trade in worth less than 4K, your final price for the new car will be more. Of course how do you know that the trade in value they are giving you is fair. It could be worth 6K but they are only giving you a credit of 4K. If you are going to trade in a vehicle while buying another vehicle the trade in should be a separate transaction. I always get a price quote for selling the old car before visiting the new car dealer. I do that to have a price point that I can judge while the pressure is on at the dealership.. Buying a car is a complex deal. The price, interest rate, length of loan, and the value of the trade in are all moving parts. It is even more complex if a lease is involved. They want to adjust the parts to be the highest profit that you are willing to agree to, while you think that you are getting a good deal. This is the fine print: All advertised amounts include all Hyundai incentives/rebates, dealer discounts and $2500 additional down from your trade in value. +0% APR for 72 months on select models subject to credit approval through HMF. *No payments or 90 days subject to credit approval. Value will be added to end of loan balance. 15MY Sonata - Price excludes tax, title, license, doc, and dealer fees. MSRP $22085- $2036 Dealer Discount - $500 HMA Lease Cash - $500 HMA Value Owner Coupon - $1000 HMA Retail Bonus Cash - $500 HMA Military Rebate - $500 HMA Competitive Owner Coupon - $400 HMA College Grad Rebate - $500 HMA Boost Program - $4000 Trade Allowance = Net Price $12149. On approved credit. Certain qualifications apply to each rebate. See dealer for details. Payment is 36 month lease with $0 due at signing. No security deposit required. All payment and prices include HMA College Grad Rebate, HMA Military Rebate, HMA Competitive Owner Coupon and HMA Valued Owner Coupon. Must be active military or spouse of same to qualify for HMA Military Rebate. Must graduate college in the next 6 months or within the last 2 years to qualify for HMA College Grad rebate. Must own currently registered Hyundai to qualify for HMA Valued Owner Coupon. Must own qualifying competitive vehicle to qualify for HMA Competitive Owner Coupon. |
Precedent and models for 100% equity available via initial offering? | Founder makes available 100% equity, but uses a reasonable amount of the proceeds to pay him/herself a salary (or wage) and from that salary invests in the same initial offering to acquire shares for him/herself. I see several problems. What is a reasonable salary? Also, this leaves the door open to the following scam: Founders say that they are going to follow this plan. However, instead of buying shares, they simply quit after being paid the salary. They use knowledge gained from this business to start a competitor. Investors are left holding an empty company. Tax consequences. The founder would pay income tax on the salary. By contrast, if the founder instead sells shares, that would be capital gains tax, which is lower in many countries (e.g. the United States). Why would I want to invest in a business where the founders don't believe in it enough to take a significant equity stake? Consider the Amazon.com example. Jeff Bezos makes a minimal salary, around $80,000 a year, less than many of his employees. But he has a substantial ownership position. If the company doesn't make money, he won't. Would investors really value the stocks with a P/E of 232.10 in 2016 if they didn't trust him to make the right long term decisions? It's also worth noting that most initial public offerings (IPOs) are not made when the founder is the only employee. A single employee company instead looks for private investors, often called angel investors. Companies generally don't go public until they are established in some way, often making money. Negotiating with angel investors is different from negotiating with the public. They can personally review the books and once invested tend to have input on how the money is spent. In other words, this is mostly solving the wrong problem if you talk about IPOs. This might make more sense with a crowdfunded venture, as that replaces a few angel investors with many individuals. But most crowdfunded ventures tend to approach things from the opposite direction. Instead of looking for investors, they look for customers. If they offer a useful product, they will get customers. If not, they never get the money. Beyond all this, if a founder is only going to get a fair salary some of the time, then why put in any sweat equity? This works fine if the company looks valuable after a year. What if it doesn't? The founder is out a year of sweat equity and has nothing in return. That happens now too, but the possibility of the big return offsets it. You're taking out the big return. I don't think that this is good for either founders or investors. The founder trades a potentially good or even great return for a mediocre return. The investors trade a situation where both they and the founder benefit from a successful company to one where they benefit a lot more than the founder. That's not good for either side. |
Can a broker refuse to place my limit-orders? | Ethereum trades are not subject to the same rules as securities are. Thats the primary flaw in your assessment. Yes, cryptocurrency is a free trading arena where you can actually take advantage of market inefficiencies yourself 24 hours a day, 7 days a week, at massive profits. The equity securities markets are not like that, and can't be used as a comparison. If you have a preference for flexibility, then it is already clear which markets work better for you. Market makers can make stub quotes, brokers can easily block their retail customers from doing it themselves. Even the dubious market manipulation excuse is reference to a sanction exclusive to the equity markets. The idea that it went through a week earlier probably triggered the compliance review. Yes, a broker can refuse to place your limit order. |
How to avoid getting back into debt? | Get someone in your family to pay for it. If that's not an option, you have no choice but to make do with what you can do, and either get a job or a loan. I'd advise a job unless you're studying something with a really strong possibility of getting you a high paid job. |
United Kingdom: Where to save money for a property deposit | The chancellor announced an ISA in this week's budget intended for people saving to buy their first home. For every £200 put in the government will add £50 to the account so I would strongly encourage you to put the money into that as it is also tax free. |
What do people mean when they talk about the central bank providing “cheap money”? What are the implications for the stock market? | There are a couple of different things that could be referenced by "cheap money": The money supply itself - This is the Federal Reserve printing more money which could devalue the existing US dollars and thus make the dollars even cheaper since there would be more of them. Interest rates - Currently in the US interest rates are rather low which means that borrowers could possibly get good rates on that money thus making it relatively cheap. Compare current interest rates to the early 1980s and there is a major difference. In terms of implications on the stock market, there are a couple that come to my mind: Investment options - With low interest rates, cash and bonds aren't necessarily yielding that much and thus some people may be more likely to invest elsewhere with stocks being an option. Thus, there may be some people that would rather invest in stocks than hold their investments in lower-yielding options. Corporate spending - If rates stay low, then for companies with good financial track records, they could borrow money to expand operations rather than sell more stock and thus there may be companies that borrow to grow so that they take advantage of these interest rates. |
Do I just let an options conversion/reversal trade go to expiration? | This depends on a combination of factors: What are you charged (call it margin interest) to hold the position? How does this reduce your buying power and what are the opportunity costs? What are the transaction costs alternative ways to close the position? What are your risks (exposure while legging out) for alternative ways to close? Finally, where is the asset closing relative to the strike? Generally, If asset price is below the put strike then the call expires worthless and you need to exercise the put. If asset is above the call strike then put expires worthless and you'll likely get assigned. Given this framework: If margin interest is eating up your profit faster than you're earning theta (a convenient way to represent the time value) then you have some urgency and you need to exit that position before expiry. I would not exit the stock until the call is covered. Keep minimal risk at all times. If you are limited by the position's impact on your buying power and probable value of available opportunities is greater than the time decay you're earning then once again, you have some urgency about closing instead of unwinding at expiry. Same as above. Cover that call, before you ditch your hedge in the long stock. Playing the tradeoff game of expiration/exercise cost against open market transactions is tough. You need sub-penny commissions on stock (and I would say a lot of leverage) and most importantly you need options charges much lower than IB to make that kind of trading work. IB is the cheapest in the retail brokerage game, but those commissions aren't even close to what the traders are getting who are more than likely on the other side of your options trades. |
401(k) not fully vested at time of acquisition | Probably not. If you were at a small company and asked such a question, you'd get advice and links to erisa or other case law, etc. it's safe to say that a Fortune 500 company such as IBM is going to have their facts in order, and not going to run afoul of the rules in these cases (vesting rules and takeover of other company). I was in a company that cancelled its pension program. Those of us with the required years got the option of a lump sum payout, those with less than 5 years had no vested value and got nothing. One month longer employment, in the case of a particular coworker, would have given him a lump sum worth nearly 6 months pay. |
How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap! | Shop around for Gym January is a great time to look because that's when most people join and the gyms are competing for your business. Also, look beyond the monthly dues. Many gyms will give free personal training sessions when you sign up - a necessity if you are serious about getting in shape! My gym offered a one time fee for 3 years. It cost around $600 which comes out to under $17 a month. Not bad for a new modern state of the art gym. |
Where are Bogleheadian World ETFs or Index funds? | Half VTI (Vanguard Total Stock Market ETF) and half VEU (Vanguard FTSE All-World ex-US ETF), and stop futzing. The US is roughly half the world market cap so this is like a total world equity index. Very low costs. VTI Expense ratio is 0.04% as of 04/27/2017. I don't know what you mean by RSG, but it could be either a waste processor or a gold miner. Either way it seems kind of speculative to hold even 10% of your wealth. |
What happens to my savings if my country defaults or restructures its debt? | The biggest risk you have when a country defaults on its currency is a major devaluation of the currency. Since the EURO is a fiat currency, like almost all developed nations, its "promise" comes from the expectation that its union and system will endure. The EURO is a basket of countries and as such could probably handle bailing out countries or possibly letting some default on their sovereign debt without killing the EURO itself. A similar reality happens in the United States with some level of regularity with state and municipal debt being considered riskier than Federal debt (it isn't uncommon for cities to default). The biggest reason the EURO will probably lose a LOT of value initially is if any nation defaults there isn't a track record as to how the EU member body will respond. Will some countries attempt to break out of the EU? If the member countries fracture then the EURO collapses rendering any and all EURO notes useless. It is that political stability that underlies the value of the EURO. If you are seriously concerned about the risk of a falling EURO and its long term stability then you'd do best buying a hedge currency or devising a basket of hedge currencies to diversify risk. Many will recommend you buy Gold or other precious metals, but I think the idea is silly at best. It is not only hard to buy precious metals at a "fair" value it is even harder to sell them at a fair value. Whatever currency you hold needs to be able to be used in transactions with ease. Doesn't do you any good having $20K in gold coins and no one willing to buy them (as the seller at the store will usually want currency and not gold coins). If you want to go the easy route you can follow the same line of reasoning Central Banks do. Buy USD and hold it. It is probably the world's safest currency to hold over a long period of time. Current US policy is inflationary so that won't help you gain value, but that depends on how the EU responds to a sovereign debt crisis; if one matures. |
Electric car lease or buy? | I have coworker who reported that he leased a Nissan Leaf from 2013-2016 and was offered $4000 off the contracted purchase price at the end of the lease due to a glut of other lessees turning in for a lease on the newest model with greater range. It's not clear that this experience will be repeated by others three years from now, but there is enough uncertainty in the future electric car market that it's quite possible to have faster depreciation on a new vehicle than you might otherwise expect based on experience with conventional internal combustion powered vehicles. Leasing will remove that uncertainty. Purchasing a lease-return can also offer great value. I looked at the price for a lease return + a new battery with the extended range, and it was still significantly cheaper than buying a completely new vehicle. |
Automatic transaction on credit card to stay active | Putting money into your Amazon gift card balance is also a very convenient option, but I like these recurring Red Cross and Wikipedia ideas also. |
401k compound interest vs other compound interest | 1a. It isn't. Compound interest is compound interest. It works no different within a 401(k). 1b. Yes. 401(k)'s are made up of the same underlying assets that you could invest in with a regular brokerage account. |
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