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Why would someone want to buy an option on the day of expiry | Market makers are required to buy options contracts as a condition of being a market maker. It is what keeps the markets functioning and liquid. As to whether or not your trade can be closed at a profit depends on many variables - how much you paid, what the underlying security is, etc CBOE Options expiration FAQs |
How can I avoid international wire fees or currency transfer fees? | Check global ATM alliance they are banks that use reciprocal benefits on each other in other countries without fees. For example the in the USA Bank of America and In France it is BNP Paribas. Both are banks in this alliance. I use this option between the United States and the Caribbean my banks of choice are Bank of America in the US and in the Caribbean I use Scotia Bankand since I have accounts in both weekends I can use both ATM cards on any of these two banks without any processing fees!!!! You should check the global ATM alliance to see if it is an option that you could use. |
30-year-old saved $30,000: what should I do with it? | First, two preliminaries, to address good points people made in comments. As AbraCadaver noted, before you move your $30k to something that might lose money, make sure you have enough cash to serve as an emergency fund in case you lose your income. Especially remember that big stock market crashes often go hand-in-hand with widespread layoffs. Also, you mentioned that you're maxed out in a 401k. As JoeTaxpayer hinted, this could very well already be invested in stocks, and, if it isn't, probably a big part of it should be. Regarding your $30k, you don't need to pay anybody. In general, fees and expenses can form a big drag on your investments, and it's good to avoid them as much as possible. In particular, especially with "only" $30k, it's unlikely that advisers can save you more than they cost. Also, all financial advisers have a cost: the "free" ones usually push you into investing in expensive funds that make them money at your expense. In that regard, keep in mind that, unlike a lawyer or a doctor, a financial adviser is not required by law to give advice that's in your best interest. When investing, there is a pretty short list of important considerations that you should keep in mind: (If anyone has any other points they think are similarly important, feel free to suggest an edit.) Practically speaking, I'd suggest investing in index funds. These are mutual funds that invest very broadly, in a "passive" way that doesn't spend a lot of effort (and money) trying to pick individual high-performing stocks or anything like that. Index funds provide a lot of diversification and tend to have low expense ratios. (Other, "actively managed" funds tend to be more expensive and often don't outperform index funds anyway.) If you're saving for retirement, there are even target date funds that are themselves composed of a small number of index funds (often domestic and international stocks and bonds), and will increase the proportion invested in bonds (safer) as they get closer to a target retirement date. See, for example the Vanguard Target Retirement 2045 fund. A fund like that one might be all you need if you are saving for retirement. Finally, you can invest online without paying any advisers. Not all companies are created equal, however; do your research. I personally highly recommend Vanguard, since they have a wide variety of no-load index funds and tend to have very low expense ratios. (No-load means you don't have to pay a fee to buy and sell.) Part of why they are inexpensive is that, unlike most financial companies, they are actually a cooperative owned by those who invest in their funds, so they don't need to try and milk a profit out of you. (Don't let that suggest that they're some "small-potatoes hippie firm", though: they're actually one of the largest.) I hope I helped. Keep posting if you have more questions! |
How much of a down payment for a car should I save before purchasing it? | If and only if by coincidence the car you were already considering from your research includes a 0% finance offer, go ahead a take the financing and save your cash. If however you are being tempted to a different car, or would spend more than you initially thought were wanted to, 0% financing is just another trick to get more of you money. Just be honest why you want the car: is it a good price, or does the financing seem like a good deal? Even if you are not paying interest, you are paying principal. |
Why does a long/purchased call option have a long position in the option itself? | It will be helpful to establish some definitions: Long "Long" is financial slang for "to have possession of an asset", legally, and "to debit an asset", financially. Short "Short" is financial slang for "to be liable for an asset", legally, and "to credit an asset", financially. Option "Option" is financial slang for "to have the right but not obligation to force the liable to perform action", legally. Without limits and when taken to absurdity, this can mean slavery. For equities, this means "to have the right but not the obligation to force the liable to buy/sell a specified asset at a specified price with a specified expiration for that right" for a call/put, respectively. By the above, a call option is "the right but not the obligation to force the liable to buy a specified asset at a specified price with a specified expiration for that right". By the definition of "long" above, a call option is actually not long the underlying. By the definitions above and with a narrower scope applied to equities & indexes, to be "long" the call means "to have the right but not the obligation to force the liable to buy a specified asset at a specified price with a specified expiration for that right" while to be "short" the call means "to have the obligation to be forced to sell a specified asset at a specified price with a specified expiration for that right". So, to be "long" a call means to simply own the call. |
Foreign national currently working in U.S. & investing in 401(k) plan: How will taxes apply? | The 401(k) contribution is Federal tax free, when you make the contribution, and most likely State too. I believe that is true for California, specifically. There was a court case some years ago about people making 401(k) or IRA contributions in New York, avoiding the New York state income tax. Then they moved to Florida (no income tax), and took the money out. New York sued, saying they had to pay the New York income tax that had been deferred, but the court said no. So you should be able to avoid California state income tax, and then later if you were to move to, for example, Texas (no income tax), have no state income tax liability. At the Federal level, you will have different problems. You won't have the money; it will be held by the 401(k) trustee. When you try to access the money (cash the account out), you will have to pay the deferred taxes. Effectively, when you remove the money it becomes income in the year it is removed. You can take the money out at any time, but if you are less than 59 1/2 at the time that you take it, there is a 10% penalty. The agreement is that the Feds let you defer paying the tax because it is going to finance your retirement, and they will tax it later. If you take it out before 59 1/2, they figure you are not retired yet, and are breaking your part of the agreement. Of course you can generally leave the money in the 401(k) plan with your old employer and let it grow until you are 59.5, or roll it over into another 401(k) with a new employer (if they let you), or into an IRA. But if you have returned to your own country, having an account in the U.S. would introduce both investment risk and currency risk. If you are in another country when you want the money, the question would be where your U.S. residence would be. If you live in California, then go to, say France, your U.S. residence would still be California, and you would still owe California income tax. If you move from California to Texas and then to France, your U.S. residence would be Texas. This is pretty vague, as you might have heard in the Rahm Emanual case -- was he a resident of Chicago or Washington, D.C.? Same problem with Howard Hughes who was born in Texas, but then spent most his life in California, then to Nevada, then to Nicaragua, and the Bahamas. When he died Texas, California and Nevada all claimed him as a resident, for estate taxes. The important thing is to be able to make a reasonable case that you are a resident of where ever you want to be -- driver's license, mailing address, living quarters, and so on. |
Why do people use mortgages, when they could just pay for the house in full? | The advantage of using a mortgage is that you pay for a house at TODAY's price, using TOMORROW's money. Your question suggests that you rightly observed that it was not a good idea around 2006 (the last peak in housing). That was when prices were at their maximum, and had nowhere to go but down. Some experts think that house prices STILL have further to go on the downside. Meanwhile, wages have been going nowhere during that time. This phenomenon seems to happen about every 40 years or so, the 1930s, the 1970s, and around 2010. At MOST other times, say the 1980s, houses are likely to go up for the "foreseeable" future. At those times, you want to buy the house at "today's" price, then pay for it in future dollars when you are earning more money. The irony is that what most people observe as teenagers is usually the wrong thing to do when they are, say, forty. In 2035, it will probably make sense to have a large mortgage in a bull housing market, which is the opposite of what you observed around 2010. So a better rule is to do at age 40 what made sense about the time you were born (in your case, perhaps the 1990s). Whereas the people born in the early 1970s that got "caught" recently, observed the bull market of the 1980s and 1990s in THEIR teens and twenties, rather than the bear market of the 1970s that took place about the time they were born. |
Anyone have experience with Brink's 5% savings account? | Down in the Fine Print are these points to consider for the limit: For an average daily balance up to but not exceeding $5,000.00, the interest rate for the Savings Account is 4.91% with an annual percentage yield (APY) of 5.00%. For that portion of the average daily balance of the Savings Account that is $5,000.01, or more, the interest rate is 0.49% with an annual percentage yield (APY) of 0.50%. The interest rates and APYs of each tier may change. The APYs were accurate as of March 1, 2014. These are promotional rates and may change without notice pursuant to applicable law. No minimum balance necessary to open Savings Account or obtain the yield(s). Because Savings Account funds are withdrawn through the Card Account (maximum 6 such transfers per calendar month), Card Account transaction fees could reduce the interest earned on the Savings Account. Card Account and Savings Account funds are FDIC-insured upon verification of Cardholder's identity. For purposes of FDIC coverage limit, all funds held on deposit by the Cardholder at BofI Federal Bank will be aggregated up to the coverage limit, currently $250,000.00. |
Are cashiers required to check a credit card for a signature in the U.S.? | The signature actually harks back to the days before every business checked every transaction online. When charge cards were introduced modems didn't exist. Nowadays, stolen credit cards are usually reported within 24 hours and the card won't work. Businesses that face low fraud rates don't bother checking. They probably figure that a certain percentage of charges get charged back because the cardholder claims that they didn't make them, and the credit card company usually just passes the cost on to the merchant, so it's really the merchant who should be worried about fraud since he or she is going to pay for it. The real question for the merchant is whether checking signatures actually reduces charge backs. If the credit card is stolen, how hard would it be for thieves to practice the signature on the card a few times until they can reproduce it well enough to fool someone? Businesses that face high fraud rates are often more careful. In New York City, try buying some Nikes on 34th Street, and you'll get your signature checked, your driver's license checked, and they'll call up your 5th grade social studies teacher. |
Reason for “qualified” buyer requirements to exercise stock options/rights spun off from parent company? | An option gives you the legal right to buy stock. However, you cannot exercise a stock option unless you have the ability to buy the stock. In the United States, securities not fully registered with the SEC for public sale cannot be purchased except by qualified investors. |
What is a “retail revolving account,” and does it improve my credit score? | In the other question, the OP had posted a screenshot (circa 2010) from Transunion with suggestions on how to improve the OP's credit score. One of these suggestions was to obtain "retail revolving accounts." By this, they are referring to credit accounts from a particular retail store. Stores have been offering credit accounts for many years, and today, this usually takes the form of a store credit card. The credit card does not have the Visa or MasterCard logo on it, and is only valid at that particular store. (For example, Target has their own credit card that only works at Target stores.) The "revolving" part simply means that it is an open account that you can continue to make new charges and pay off, as opposed to a fixed retail financing loan (such as you might get at a high-end furniture store, where you obtain a loan for a single piece of furniture, and when it is paid off, the account is closed). The formula for credit scores are proprietary secrets. However, I haven't read anything that indicates that a store credit card helps your credit score more than a standard credit card. I suspect that Transunion was offering this tip in an attempt to give the consumer more ideas of how to add credit cards to their account that the consumer might not have thought of. But it is possible that buried deep in the credit score formula, there is something in there that gives you a higher score if you have a store credit card. As an aside, the OP in the other question had a credit score of 766 and was trying to make it higher. In my opinion, this is pointless. Remember that the financial services industry has an incentive to sell you as much debt as possible, and so all of their advice will point to you getting more credit accounts and getting more in debt. |
Is it legal to sell my stock at any specified price to a specified person in US Market? | So I want to sell my 100 shares of AAPL to him at a price of 10 or even 1 US Dollar. Is that legal/allowed? Of course. It's your stocks - do with it what you want. if the two persons are not served by a same broker. You'll have to talk to your broker about the technicalities of the transaction. if the person who sell are US citizen and the person who buy are not, and and vice-versa Since you asked specifically about US citizenship, I'll assume you're in the US or the transaction is taking place in the US. Citizenship has nothing to do with it (except may be for economic sanctions against Russians or Iranians that may come into play). What is important is the tax residency status. Such a transfer is essentially a gift, and if you're a US tax resident (which doesn't correlate to your immigration status necessarily) - you'll have to deal with the gift tax consequences on the discount value. For example - you have 100 shares of AAPL which you sold to your friend for $1 each when the fair market value (FMV) was $501. So essentially, the friend got $50,100 value for $100. I.e.: $50K gift. Since this amount is above the annual $14K exemption - you'll have to deal with the gift tax and file gift tax return. There are also consequences for the capital gains tax for both you and your friend. I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State) about the specifics given your circumstances. If you (or the recipient) are also a foreign citizen/tax resident - then that country's laws also may affect your situation. |
Thrift Saving Plan (TSP) Share Price Charts | The recommended way to track TSP funds in online portfolio tools is to track the underlying index and know that the results are pretty close. Not a perfect solution: :( Source including suggested ETFs: http://finance.yahoo.com/news/breaking-down-tsp-investment-funds-194600393.html Related, but not exactly what you are looking for, Personal Capital will track your TSP holdings: http://themilitarywallet.com/manage-thrift-savings-plan/ |
How to compute for losses in an upside down trade-in of a financed car? | I think you are making this more complicated that it has to be. In the end you will end up with a car that you paid X, and is worth Y. Your numbers are a bit hard to follow. Hopefully I got this right. I am no accountant, this is how I would figure the deal: The payments made are irrelevant. The downpayment is irrelevant as it is still a reduction in net worth. Your current car has a asset value of <29,500>. That should make anyone pause a bit. In order to get into this new car you will have to finance the shortfall on the current car (29,500), the price of the vehicle (45,300), the immediate depreciation (say 7,000). In the end you will have a car worth 38K and owe 82K. So you will have a asset value of <44,000>. Obviously a much worse situation. To do this car deal it would cost the person 14,500 of net worth the day the deal was done. As time marched on, it would be more as the reduction in debt is unlikely to keep up with the depreciation. Additionally the new car purchase screen shows a payment of $609/month if you bought the car with zero down. Except you don't have zero down, you have -29,500 down. Making the car payment higher, I estamate 1005/month with 3.5%@84 months. So rather than having a hit to your cash flow of $567 for 69 more months, you would have a payment of about $1000 for 84 months if you could obtain the interest rate of 3.5%. Those are the two things I would focus on is the reduction in net worth and the cash flow liability. I understand you are trying to get a feel for things, but there are two things that make this very unrealistic. The first is financing. It is unlikely that financing could be obtained with this deal and if it could this would be considered a sub-prime loan. However, perhaps a relative could finance the deal. Secondly, there is no way even a moderately financially responsible spouse would approve this deal. That is provided there were not sigificant assets, like a few million. If that is the case why not just write a check? |
Where can publicly traded profits go but to shareholders via dividends? | Apart from investing in their own infrastructure, profits can be spent purchasing other companies, (Mergers and Acquisitions) investing in other securities, and frankly whatever they please. The idea here is that publicly traded companies have a fiduciary duty to their shareholders to make as much money as they can with the resources (including cash, but including so much more than that) available to the company. It happens that the majority of huge companies eventually stopped growing and figured out that they weren't good at making money outside their core discipline and started giving the money back through dividends, but that norm has been eroded by tech companies that have figured out how to keep growing and driving up share prices even after they become giants. Shareholders will pressure management to issue dividends if share prices don't keep going up, but until the growth slows down, most investors hang on and don't rock the boat. |
Assessed value of my house | I had the same thing happen to my house. I bought it in 2011 for 137,000, which was the same as the FHA appraised value (because FHA won't guarantee a loan for more than their appraiser thinks its worth). January of last year, I get the letter from the tax office and see that my house has been assessed at only 122,000. I was shocked too, until I read a similar document that Phil told you to read. The short of it is, no matter what the tax assessor calls their calculation, it is an assessment. It was mass-produced along with everyone else's in your neighborhood by looking at its specs on paper (acreage, house square footage, age, beds/baths) and by driving by your home to see its general condition. The fact that your lawn may be less well-kept than the last time they drove by could have affected the decision a little. It's very unlikely to have been a major determinant of the assessment. The assessment value affects taxes, and taxes only. It is, in most states, a matter of public record, and so it could be used by a potential buyer to negotiate a lower price. However, everyone in the housing business knows that the assessed value is not the market value, and the buyer's agent will be encouraging their client to make a more realistic bid. This "assessed value" is not an "appraisal value". An appraisal is done by someone actually walking into and through your home, inspecting the general condition inside and out, to try to make a fair evaluation of what the home is actually worth. That number is almost always going to be more than the assessment value, because it takes into account all the amenities of the home; the current fixtures, the well-kept (or recently-replaced) flooring, the energy-efficient HVAC and hot water system, etc etc. It also takes into account recent comparables; what have other houses, with the same general statistics, the same amenities, relatively close in location, sold for recently? That will still generally be different from the true market value of the home. That value is nothing more or less than what a potential buyer will pay to have it at the time you decide to sell it, and that in turn depends 100% on your potential buyers' myriad situations. Someone may lowball even the assessed value because they're looking for a deal and hoping you're desperate; you just reject the offer. Someone may be looking at comparables indicating the house is maybe overpriced by $10k. You can counter and try to come to an agreement. Or, your potential buyer could work five minutes from your house, and be willing to pay at or above your asking price because the next best possibility is another 10 miles away. Since you aren't looking to sell the home, none of this matters, except to determine any escrow payments you might be making towards property taxes. Just keep making your mortgage payment, and don't worry about it. If you really wanted to, you could petition the state for a second opinion, but you think the value should be higher; if they agree with you, they'll raise the assessed value and you'll pay more in taxes. Why in the world would you want to do that? |
What does pink-sheet mean related to stocks? | It's an over-the-counter stock quote system. Read all about it. Or visit it. |
Why would you ever turn down a raise in salary? | I recently rejected an offer at a different firm that would have provided a 14k yearly increase. The reason for the rejection was because I would have had to give up two work from home days, my commute would have been about an hour and half each way, I would have lost about 14 extra days of PTO and holiday pay, and the new company didn't match anything for 401k. |
Google free real-time stock quotes | Previously, Google had a delayed update for their stock prices (15 minutes I believe). That change enabled users of Google Finance to see updates to stock prices in real-time. |
How can one get their FICO/credit scores for free? (really free) | It appears that you already know this, but FICO credit scores (as controlled by Fair Isaac Corporation) are the real official credit scores, and FICO takes a cut on their production no matter which of the 3 major credit bureaus calculates the official score (all using slightly different methods). Be careful when obtaining a score for making a big decision that it is a FICO score, because relatively few lenders will lend based on a non-FICO score. That said, some non-FICO scores are easy to obtain and can be roughly translated to an approximation of your score. Barclays US/ Juniper Bank credit cards offer a free Transunion "TransRisk"(TM) score. The TransRisk score is a 900 point scale, while the FICO score is an 850 point scale. This is a simple ratio and you can calculate your approximate FICO score by the formula: |
Why futures has a mark to market concept that is not present in stocks | All margin is marked to market. Option longs do not post margin because long margin trading is forbidden. Equity longs must post margin if cash is borrowed to fund the purchase. Shorts of all kinds must post margin, and the rates are generally the same: a few standard deviations away from the mean daily change of the underlying. A currency futures trader, because of the involatility of most major monies, can get away with a few percentage points. Commodities can get to around 10%. Single equities are frequently around 20%, while indices can get back down to 10%. A future is a special case because both sides are technically short and long at the same time. The easiest example to perceive is a currency future. Which one is the buyer and which is the seller? Both and neither. Contracts may be denominated for one side as the seller and the other the buyer, but contractually, legally, and effectively, both are liable to the other, and both must take delivery. For non-currency assets, it only appears as if the cash seller is the buyer because cash is not considered an asset in the same way all other assets are, but the "long" is obligated to sell cash and buy the "asset". |
What is the most effective saving money method? | A trick that works for some folks: "Pay yourself first." Have part of your paycheck put directly into an account that you promise yourself you won't touch except for some specific purpose (eg retirement). If that money is gone before it gets to your pocket, it's much less likely to be spent. US-specific: Note that if your employer offers a 401k program with matching funds, and you aren't taking advantage of that, you are leaving free money on the table. That does put an additional barrier between you and the money until you retire, too. (In other countries, look for other possible matching fundsand/or tax-advantaged savings programs; for that matter there are some other possibilities in the US, from education savings plans to discounted stock purchase that you could sell immediately for a profit. I probably should be signed up for that last...) |
Does a market maker sell (buy) at a bid or ask price? | The answer posted by Kirill Fuchs is incorrect according to my series 65 text book and practice question answers. The everyday investor buys at the ask and sells at the bid but the market maker does the opposite. THE MARKET MAKER "BUYS AT THE BID AND SELLS AT THE ASK", he makes a profit form the spread. I have posted a quiz question and the answer created by the Financial Industry Regulatory Authority (FINRA). To fill a customer buy order for 800 WXYZ shares, your firm requests a quote from a market maker. The response is "bid 15, ask 15.25." If the order is placed, the market maker must sell: A) 800 shares at $15.25 per share. B) 800 shares at $15 per share. C) 100 shares at $15.25 per share. D) 800 shares at no more than $15 per share. Your answer, sell 800 shares at $15.25 per share., was correct!. A market maker is responsible for honoring a firm quote. If no size is requested by the inquiring trader, a quote is firm for 100 shares. In this example, the trader requested an 800-share quote, so the market maker is responsible for selling 8 round lots of 100 shares at the ask price of $15.25 per share. |
How best to grow my small amount of money starting at a young age? [duplicate] | (Congrats on earning/saving $3K and not wanting to blow it all on immediate gratification!) I currently have it invested in sector mutual funds but with the rise and fall of the stock market, is this really the best way to prepare long-term? Long-term? Yes! However... four years is not long term. It is, in fact, borderline short term. (When I was your age, that was incomprehensible too, but trust me: it's true.) The problem is that there's an inverse relationship between reward and risk: the higher the possible reward, the greater the risk that you'll lose a big chunk of it. I invest that middle-term money in a mix of junk high yield bond funds and "high" yield savings accounts at an online bank. My preferences are HYG purchased at Fidelity (EDIT: because it's commission-free and I buy a few hundred dollars worth every month), and Ally Bank. |
Options on the E-mini S&P 500 Futures at the CME: when were EW3, the weekly Monday options and the weekly Wednesday options introduced? | The traditional E-mini S&P500 options (introduced on 09/09/97) already expire on the 3rd Friday, so there's no need for another "weekly" option that expires at the same time. |
Is it true that more than 99% of active traders cannot beat the index? | What decision are you trying to make? Are you interested day trading stocks to make it rich? Or are you looking at your investment options and trying to decide between an actively managed mutual fund and an ETF? If the former, then precise statistics are hard to come by, but I believe that 99% of day traders would do better investing in an ETF. If the latter, then there are lots of studies that show that most actively managed funds do worse than index funds, so with most actively managed funds you are paying higher fees for worse performance. Here is a quote from the Bogleheads Guide to Investing: Index funds outperform approximately 80 percent of all actively managed funds over long periods of time. They do so for one simple reason: rock-bottom costs. In a random market, we don't know what future returns will be. However, we do know that an investor who keeps his or her costs low will earn a higher return than one who does not. That's the indexer's edge. Many people believe that your best option for investing is a diverse portfolio of ETFs, like this. This is what I do. |
Resources on Buying Rental Properties | The book HOLD: How to Find, Buy, and Rent Houses for Wealth by Chader et al. was one of the best I've read on the subject. It has all of the basics, explanations, examples, and gives you real-life assumptions for your inputs when you do your analysis. It does contain some less-relevant information now that was more realistic before 2007, but it's a worthwhile read (or listen). They have some good starter worksheets, as well, on their website to help you do your analysis, which I found useful despite already having my own. |
What does it mean for a company to have its market cap larger than the market size? | You are comparing two things that are not comparable. The "market size" would be the total annual revenue in one market, in this year. The "market caps" of a company is the number of shares multiplied by the share price. This should be equal to the total profit that the company is going to make through its life time, taking into account that you would get interest on an investment, so future profits have to be counted less accordingly. So if the "market size" is ten million dollars, and a company has four million revenue in that market with one million profit, and everyone thinks that company will continue making that profit for the next fifty years, then surely one million a year for the next 50 years is worth more than ten million. That's if the market stands still. If the "market size" is ten million, and we expect that market size to double for the next three years, then the market size is still ten million, but a company having a 40% share of a market growing at that speed is going to be worth a lot more! |
Is there any reason not to buy points when re-financing with intent not to sell for a while? | There is the opportunity cost. Let's say it cost you $1000 to buy 0.25% discount. Over N number of years that saves you let's say $2000 thus your profit is $1000. What if you took that $1000 and invested it? Would you have more than $2000 after N number of years? Obviously answering this question is not easy but you can make some educated guesses. For example, you can compare the return you'll likely get from investing in CD or treasury bond. A bit more risky is to invest in the stock market but an index fund should be fairly safe and you can easily find the average return over 5 - 10 year period. For example, if your loan is $200,000 at 0.25% per year you'll get $500 in savings. Over 10 years that's $5000 - $1000 to buy the point, you end up with $4000. Using the calculator on this site, I calculated that if you invested in the Dow Jones industrial average between 2007 and 2017 you total return would have been 111% (assuming dividends are reinvested) or you would've had a total of $2110. I'm not sure how accurate those numbers are but it seems likely that buying points is a pretty good investment if you stay in the house for 10 years or more. |
Lump sum annuity distribution — do I owe estate tax? | There can be Federal estate tax as well as State estate tax due on an estate, but it is not of direct concern to you. Estate taxes are paid by the estate of the decedent, not by the beneficiaries, and so you do not owe any estate tax. As a matter of fact, most estates in the US do not pay Federal estate tax at all because only the amount that exceeds the Federal exemption ($5.5M) is taxable, and most estates are smaller. State estate taxes might be a different matter because while many states exempt exactly what the Federal Government does, others exempt different (usually smaller) amounts. But in any case, estate taxes are not of concern to you except insofar as what you inherit is reduced because the estate had to pay estate tax before distributing the inheritances. As JoeTaxpayer's answer says more succinctly, what you inherit is net of estate tax, if any. What you receive as an inheritance is not taxable income to you either. If you receive stock shares or other property, your basis is the value of the property when you inherit it. Thus, if you sell at a later time, you will have to pay taxes only on the increase in the value of the property from the time you inherit it. The increase in value from the time the decedent acquired the property till the date of death is not taxable income to you. Exceptions to all these favorable rules to you is the treatment of Traditional IRAs, 401ks, pension plans etc that you inherit that contain money on which the decedent never paid income tax. Distributions from such inherited accounts are (mostly) taxable income to you; any part of post-tax money such as nondeductible contributions to Traditional IRAs that is included in the distribution is tax-free. Annuities present another source of complications. For annuities within IRAs, even the IRS throws up its hands at explaining things to mere mortals who are foolhardy enough to delve into Pub 950, saying in effect, talk to your tax advisor. For other annuities, questions arise such as is this a tax-deferred annuity and whether it was purchased with pre-tax money or with post-tax money, etc. One thing that you should check out is whether it is beneficial to take a lump sum distribution or just collect the money as it is distributed in monthly, quarterly, semi-annual, or annual payments. Annuities in particular have heavy surrender charges if they are terminated early and the money taken as a lump sum instead of over time as the insurance company issuing the annuity had planned on happening. So, taking a lump sum would mean more income tax immediately due not just on the lump sum but because the increase in AGI might reduce deductions for medical expenses as well as reduce the overall amount of itemized deductions that can be claimed, increase taxability of social security benefits, etc. You say that you have these angles sussed out, and so I will merely re-iterate Beware the surrender charges. |
Can paying down a mortgage be considered an “investment”? | I think there are a few facets to this, namely: Overall, I wouldn't concentrate on paying off the house if I didn't have any other money parked and invested, but I'd still try to get rid of the mortgage ASAP as it'll give you more money that you can invest, too. At the end of the day, if you save out paying $20k in interest, that's almost $20k you can invest. Yes, I realise there's a time component to this as well and you might well get a better return overall if you invested the $20k now that in 5 years' time. But I'd still rather pay off the house. |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | Extended illness/disability that prevents you from being able to work. Edit: Leigh Riffel: So, why should this be expected, and how should it be planned for? Some of us may be fortunate enough that this never happens, but I've known enough unlucky people to have seen that it can and does happen. Prepare for it with: |
How will the fall of the UK Pound impact purchasing my first property? | Just to get the ball rolling, here's an answer: it won't affect you in the slightest. The pound happened to be tumbling anyway. (If you read "in the papers" that Brexit is "making the pound fall", that's as valuable as anything else you've ever read in the papers.) Currencies go up and down drastically all the time, and there's nothing you can do about it. We by fluke once bought a house in Australia when that currency was very low; over the next couple years the currency basically doubled (I mean per the USD) and we happened to sell it; we made a 1/2 million measured in USD. Just a fluke. I've had the opposite happen on other occasions over the decades. But... Currency changes mean absolutely nothing if you're in that country. The example from (2) was only relevant because we happened to be moving in and out of Aus. My various Australian friends didn't even notice that their dollar went from .5 to 1 in terms of USD (how could it matter to them?) All sorts of things drastically affect the general economy of a given country. (Indeed, note that a falling currency is often seen as a very good thing for a given nation's economy: conspiracy theorists in the states are forever complaining that ) Nobody has the slightest clue if "Brexit" will be good bad or indifferent for the UK. Anything could happen. It could be the beginning of an incredible period of growth for the UK (after all, why does Brussels not want your country to leave - goodwill?) and your house could triple in value in a year. Or, your house price could tumble to half in a year. Nobody has the slightest clue, whatsoever about the effects on the "economy" of a country going forward, of various inputs. |
incorrect printed information on check stock | Probably a bad assumption, but I'm assuming your in the United States. Keep in mind, that the check number is printed in 2 places on the front of each check. First, in the upper right corner, and also along the bottom edge on of the check. Since the check number is scanned by the bank from the bottom edge of the check, covering or otherwise modifying the check number on the upper left corner will have no effect on the check number that is recorded when the check is processed. And, you can't modify or cover the numbers or place any marks in the area of the numbers along the bottom of the check as this will likely interfere with processing of checks. So, modifying the check numbers will not work. Your choices are basically to: The check numbers are not used in any way in clearing the check, the numbers are only for your convenience, so processing checks with duplicate numbers won't matter. The check numbers are recorded when processed at your bank so they can be shown on your printed and online statements. The only time the check number might be important is if you had to "stop payment" on a particular check, or otherwise inquire about a particular check. But this should not really be an issue because by the time you have used up the first batch of checks, and start using the checks with duplicate numbers, the first use of the early duplicate numbered checks will be sufficiently long ago that there should not be any chance of processing checks with duplicate numbers at the same time. You didn't mention how many checks you have with duplicate numbers, or how frequently you actually write checks so that may play a part in your decision. In my case, 100 checks will last me literally years, so it wouldn't be a problem for me. |
Track uninvoiced (pre-invoiced?) expected income in Quicken | You are right on track with your idea of setting up a separate account for invoiced income. Create a new account with the type other asset and call it "Receivables" (or something similar). Every time you invoice a client, enter a credit to this account with the amount of the invoice. Once the client pays and you deposit a check, enter a transfer from the "Receivables" account to the bank account. EDIT I overlooked that you wish to account for not-yet-invoiced income. I think that's a bad idea. It will become confusing and will give you the false sense that your financial condition is better than it really is. There are plenty of stories about businesses that have stellar sales, but fail because of lack of cash flow (the business' bills become due before it gets paid by its own customers). |
Is there a more flexible stock chart service, e.g. permitting choice of colours when comparing multiple stocks? | I don't think there are any web based tools that would allow you to do this. The efforts required to build vs the perceived benefit to users is less. All the web providers want the data display as simple as possible; giving more features at times confuses the average user. |
Is 6% too high to trade stocks on margin? | Yes, 6% is a waste of money, because some other brokers such as IB offer margin rates below 2%. Also, to borrow money for even less than any broker's margin interest rate, one can do an EFP transaction. This involves simultaneously shorting a stock and buying the SSF for the same stock. When the futures contract expires, you take delivery of the underlying stock to automatically close out your short position. Until then, you've effectively borrowed cash for the cost of borrowing the stock, which is typically less than 0.5% interest for widely traded ones. You also pay for the slight difference in price between the stock and the future, which is typically equivalent to another 0.5% interest or less. The total often comes to less than 1% interest. The only risk with this transaction is that the stock could become hard to borrow at some point, so then you would have to pay higher interest on it temporarily or maybe even have to close out your short early. But it is extremely rare for large, high-volume stocks to become hard-to-borrow. The borrowing cost of SPY has spiked above 5% on only a handful of days in the last decade. |
What could be the harm in sharing my American Express statements online? | American Express is great for this use case -- they have two user roles "Account Agent" and "Account Manager" which allow you to designate logins to review your account details or act on your behalf to pay bills or request service. This scheme is designed for exactly what you are doing and offers you more security and less hassle. More details here. |
Weekly budgets based on (a variable) monthly budget | Try reading about budgeting. Make a list of all income coming in and all expenses going out. Eliminate any unnecessary expenses and try to increase income, which could include a part-time second job. Try to always put a portion of the income away as savings - try 10%, but if this is too hard to start with try saving at least 5% of the income. |
Why would refinancing my mortgage increase my PMI, even though rates are lower? | Is that an FHA loan you have? And you're wanting to do one of those low cost FHA re-fi's, right? The answer is that in between when you first got that loan and now, the government's changed the rules on PMI for FHA loans. It more than doubled the amount of monthly PMI you have to pay. The new rates, efective April 18th, 2011, as as follows: It used to be 0.50% per year for the 30 year. So that's why the PMI would go up. There is another rule in play too, specific to that no-cost FHA refi -- the government requires that the combined (principal+interest+pmi) monthly payment after the refi is at least 4% lower than the current payment. Note that the no-cost refi does not require a new appraisal. Some options present themselves, but only if you can show some equity in a appraisal: 1) if an appraisal shows at least 10% equity, you can go refi to a standard mortgage. You might even be able to find one that doesn't require PMI at that level. If you have 20% equity, you're golden -- no pmi. 2) See what the monthly payment will be if you refi to the 15 year FHA mortgage. Between the much lower PMI, and the much lower interest rates (15 year is usually about 0.75% less than a 30 year), it might not be much more than what you're paying now. And you'd save a huge amount of money over time, and get out from that PMI much earlier (it stops when your principal drops below 80% of the loan amount). This would require that reappraisal. |
Can my accounting for Tax Basis differ from my broker's | No. If you didn't specify LIFO on account or sell by specifying the shares you wish sold, then the brokers method applies. From Publication 551 Identifying stock or bonds sold. If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stock or bonds. If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Pub. 550. The trick is to identify the stock lot prior to sale. |
Does a bid and ask price exist for indices like the S&P500? | You can trade an index by using a Contract For Difference, or CFD. Various brokers offer this method and the spreads are quite low. They tend to widen outside of market hours, and not all brokers offer the same spreads. I would look for a broker that offers the lowest spread on the index you are interested in. You should also do your due diligence and check they are regulated by the relevant authority pertaining to their territory, eg FSA for uk |
Comparing/reviewing personal health insurance plans for the self-employed | Health insurance is tough, as you know, because the offerings vary dramatically by State, and there is the added complication of the Affordable Care Act, which depending on where and who you are has had either a good or bad impact on the available options. If you are a sole proprietor or other business person, I'd advise talking to someone at a local chamber of commerce. Also, professional organizations like the IEEE or ACM (for IT professionals) often offer catastrophic medical or other health plans. Some employer plans give you the option to continue coverage at a higher cost when COBRA lapses as well. If you can't afford a comprehensive plan, make sure to get something to protect you against pre-existing conditions or hospitalization. |
Why do stock prices of retailers not surge during the holidays? | If you look at S&P 500's closing price for the first trading day on December and January for the last 20 years, you will see that for 10 of these years, stocks did better overall and for 10 others they did worse. Thus you can see that the price of stocks do no necessarily increase. You can play around with the data here |
Which set of earnings is used to work out the P/E of a stock | There are two common types of P/E ratio calculations: "trailing" and "forward" (and then there are various mixes of the two). Trailing P/E ratios are calculated as [current price] / [trailing 12-month EPS]. An alternative is the Forward P/E ratio, which is based on an estimate of earnings in the coming 12 months. The estimate used is usually called "consensus" and, to answer your question, is the average estimate of analysts who cover the stock. Any reputable organization will disclose how they calculate their financials. For example, Reuters uses a trailing ratio (indicated by "TTM") on their page for BHP. So, the first reason a PE ratio might not jump on an announcement is it might be forward looking and therefore not very sensitive to the realized earnings. The second reason is that if it is a trailing ratio, some of the annual EPS change is known prior to the annual announcement. For example, on 12/31 a company might report a large drop in annual earnings, but if the bulk of that loss was reported in a previous quarterly report, then the trailing EPS would account partially for it prior to the annual announcement. In this case, I think the first reason is the culprit. The Reuters P/E of nearly 12 is a trailing ratio, so if you see 8 I'd think it must be based on a forward-looking estimate. |
What is the incentive for a bank to refinance a mortgage at a lower rate? | Banks make money on load origination fees. The "points" you pay or closing costs are the primary benefit to the banks. A vast majority of the time risks associated with the mortgage are sold to another party. FYI, the same is true with investment banks. In general, the transaction costs (which are ignored by modern finance theory) are the main thing running the incentives for the industry. |
I file 83(b) election, but did't include a copy of it in that year’s tax return | It matters because that is the requirement for the 83(b) selection to be valid. Since the context is 83(b) election, I assume you got stocks/options as compensation and didn't pay for them the FMV, thus it should have been included in your income for that year. If you didn't include the election letter - I can only guess that you also didn't include the income. Hence - you lost your election. If you did include the income and paid the tax accordingly, or if no tax was due (you actually paid the FMV), you may try amending the return and attaching the letter, but I'd suggest talking to a professional before doing it on your own. Make sure to keep a proof (USPS certified mailing receipt) of mailing the letter within the 30 days window. |
Should I re-allocate my portfolio now or let it balance out over time? | This depends completely on your investing goals. Typically when saving for retirement younger investors aim for a more volatile and aggressive portfolio but diversify their portfolio with more cautious stocks/bonds as they near retirement. In other words, the volatility that owning a single stock brings may be in line with your goals if you can shoulder the risk. |
Can i have NRE accounts without OCI card? | No, you do not need an OCI card to continue to have an NRE or NRO account. You are now classified as a PIO -- Person of Indian Origin -- (and you don't need to have a PIO card issued by the Government of India to prove it) and are entitled to use NRE and NRO accounts just as you were when you were a NRI (NonResident Indian). But, you should inform the banks where you have NRE and NRO accounts that you have changed citizenship, and they may need to go through their KYC (Know Your Customer) process with you all over again. If you don't get an OCI Card, you will need to have an Indian visa stamped into your new US passport to visit India, and please do remember to send your Indian passport to the nearest Indian Consulate for cancellation. Keep the surrender certificate and cancelled passport in your safe deposit box forever; your grandchildren will need it to get visas to visit India. (My granddaughter just did). If you do get an OCI Card, you will need to have an OCI stamp put into your new US passport, and when you renew your US passport, you will need to get the new one stamped too (and pay the fee for that, of course). You cannot enter India with just an OCI Card and a US passport without the OCI stamp in it; that stamp is vital. If you move from one residential address in the US to another, you will need to get a new OCI Card issued because, unlike the US "green card", the OCI card has your residential address on it. Once again, a fee is involved. All these processes take many weeks because the whole paperwork has to go to the Ministry of External Affairs in New Delhi, and meanwhile, your passport is not available to you for a trip to Europe or Japan or Taiwan or China if you need to go there on business (or for pleasure). |
Is it impossible to get a home loan with a poor credit history after a divorce? | I am sorry for your troubles, but impressed with your problem solving skills. Keep going, things will get better. Your best hope is to find a place that does manual underwriting. If they do computer generated stuff, then you will be kicked for sure. If you can show 20% down, and have some savings, and have some history of paying bills, then you might be approved. Here in Florida, RP Funding still does manual underwriting. Another one that is mentioned is Church Hill mortgage. Also you might check with local credit unions. Of course your best bet to be approved is to be open and state upfront the challenges. You have to find someone that has the ability to think, has the ability to see passed the challenges, and has the authority to do so. |
Stock valuation - Volkswagen | The primary reason a scandal like this hurts the company is the "bottom line." Any legal action means defense costs. In this case the potential of massive fines became reality. And a buyback program. So, if any publicly traded company stacked up $10B in assets, doused it in diesel and set it on fire, their stock would take a dip too. Billions in revenue directed to the expense side of the ledger instead of the profit side. That money should have gone to building the company and dividends. |
Why does my bank suddenly need to know where my money comes from? | Banks have a financial, and regulational duty called "Know your customer", established to avoid a number of historical problems occurring again, such as money laundering, terrorism financing, fraud, etc. Thanks to the scale, and scope of the problem (millions of customers, billions of transactions a day), the way they're handling this usually involves fuzzy logics matching, looking for irregular patterns, problem escalation, and other warning signs. When exceeding some pre-set limit, these signal clues are then filtered, and passed on for human inspection. Needless to say, these algorithms are not perfect, although, thanks to financial pressure, they are improving. In order to understand why your trading account has been suspended, it's useful to look at the incentives: false positives -suspending your trade, and assuming you guilty until proven otherwise- could cost them merely your LTV (lifetime value of customer -how much your business brings in as profit); while false negatives -not catching you while engaging in activities listed above- might cost them multi-month investigations, penalties, and court. Ultimately, this isn't against you. I've been with the bank for 15 years and the money in the accounts has been very slowly accumulated via direct-deposit paychecks over that time. From this I gather the most likely explanation, is that you've hit somekind of account threshold, that the average credit-happy customers usually do not exceed, which triggered a routine checkup. How do you deal with it? Practice puppetry! There is only one way to survive angry customers emotionally: you have to realize that they’re not angry at you; they’re angry at your business, and you just happen to be a convenient representative of that business. And since they’re treating you like a puppet, an iconic stand-in for the real business, you need to treat yourself as a puppet, too. Pretend you’re a puppeteer. The customer is yelling at the puppet. They’re not yelling at you. They’re angry with the puppet. Your job is to figure out, “gosh, what can I make the puppet say that will make this person a happy customer?” In an investigation case, go with boredom: The puppet doesn't care, have no feelings, and is eternally patient. Figure out what are the most likely words that will have the matter "mentally resolved" from the investigator's point of view, tell them what they have to hear, and you'll have case closed in no time. Hope this helps. |
eBay Account and SIM cards sent to my address | In your mother's position, I would do two things: Get a copy of her credit report. Money Advice Service has a useful page on how to do this - it is cheap (£2) or free to do and will immediately tell you if someone else is using her address for anything untoward. Check with the Post Office whether anyone has set up a redirect on mail to your Mum's address. You can redirect by individual names, so if Joe Bloggs buys a bunch of stuff and has it sent to him at your Mum's address, he could set up a redirect at the Post Office so any post for Joe Bloggs at that address gets redirected to Joe Blogg's real address. There is a page about this on the Post Office website, I don't know exactly how to check if someone else has set this up but I'm sure the Post Office would help you find out. Additionally, I would consider visiting the address (the same house number in the "Road" where hers is in the "Avenue") and see whether the occupants have anything useful to say about this. I would just say you'd had some mis-delivered post, and want to check what their names are so that you can pass on anything that is intended for them that comes to your address (and ask them to do likewise for you). Depending on how that goes you could also ask about the ebay store and see whether it really is them that set it up. |
How can one get their FICO/credit scores for free? (really free) | I visited annualcreditreport.com to get my annual credit report. It is only the report, not the score or FICO score. This is the only outlet I know of that allows you to get your report for free, without a bunch of strings attached or crap to sign up for and cancel later. It was very easy. I was wary of putting in my private information, but how else can they possibly pull you up? Read the instructions carefully. You go to each bureau to fetch your report, and they dutifully give you a free report, but they push hard to try and sell you a score or a report service. It is easy to avoid these if you read carefully. Once you get a report, you have print it out or you can't see it again for another year. Each bureau has a different site, with different rules, and different identity checks to get in. Again, read the instructions and it isn't hard. Instead of printing, I just saved the page as HTML. You get one html file and a folder with all the images and other stuff. This suits me but you might like to print. After you get each report, you have to click a link to back to the annualcreditreport.com site. From there you go to the next bureau. Regarding a score. Everybody does it differently. Free Issac does FICO, but anybody who pulls your credit can generate a score however they like, so getting a score isn't anywhere near as important as making sure your report is accurate. You can use credit.com to simulate a score from one of the bureaus (I can't easily see which one at the moment). It is as easy as annualcreditreport.com and I have no issue getting a simulated score and report card. |
What are these fees attached to mutual fund FSEMX? | Annual-report expense ratios reflect the actual fees charged during a particular fiscal year. Prospectus Expense Ratio (net) shows expenses the fund company anticipates will actually be borne by the fund's shareholders in the upcoming fiscal year less any expense waivers, offsets or reimbursements. Prospectus Gross Expense Ratio is the percentage of fund assets used to pay for operating expenses and management fees, including 12b-1 fees, administrative fees, and all other asset-based costs incurred by the fund, except brokerage costs. Fund expenses are reflected in the fund's NAV. Sales charges are not included in the expense ratio. All of these ratios are gathered from a fund's prospectus. |
Basic finance: what should everyone know? | The statement "Finance is something all adults need to deal with but almost nobody learns in school." hurts me. However I have to disagree, as a finance student, I feel like everyone around me is sound in finance and competition in the finance market is so stiff that I have a hard time even finding a paid internship right now. I think its all about perspective from your circumstances, but back to the question. Personally, I feel that there is no one-size-fits-all financial planning rules. It is very subjective and is absolutely up to an individual regarding his financial goals. The number 1 rule I have of my own is - Do not ever spend what I do not have. Your reflected point is "Always pay off your credit card at the end of each month.", to which I ask, why not spend out of your savings? plan your grocery monies, necessary monthly expenditures, before spending on your "wants" should you have any leftovers. That way, you would not even have to pay credit every month because you don't owe any. Secondly, when you can get the above in check, then you start thinking about saving for the rainy days (i.e. Emergency fund). This is absolutely according to each individual's circumstance and could be regarded as say - 6 months * monthly income. Start saving a portion of your monthly income until you have set up a strong emergency fund you think you will require. After you have done than, and only after, should you start thinking about investments. Personally, health > wealth any time you ask. I always advise my friends/family to secure a minimum health insurance before venturing into investments for returns. You can choose not to and start investing straight away, but should any adverse health conditions hit you, all your returns would be wiped out into paying for treatments unless you are earning disgusting amounts in investment returns. This risk increases when you are handling the bills of your family. When you stick your money into an index ETF, the most powerful tool as a retail investor would be dollar-cost-averaging and I strongly recommend you read up on it. Also, because I am not from the western part of the world, I do not have the cultural mindset that I have to move out and get into a world of debt to live on my own when I reached 18. I have to say I could not be more glad that the culture does not exist in Asian countries. I find that there is absolutely nothing wrong with living with your parents and I still am at age 24. The pressure that culture puts on teenagers is uncalled for and there are no obvious benefits to it, only unmanageable mortgage/rent payments arise from it with the entry level pay that a normal 18 year old could get. |
Paying taxes on dividends even though your capital gains were $0? | I'd agree that this can seem a little unfair, but it's an unavoidable consequence of the necessary practicality of paying out dividends periodically (rather than continuously), and differential taxation of income and capital gains. To see more clearly what's going on here, consider buying stock in a company with extremely simple economics: it generates a certain, constant earnings stream equivalent to $10 per share per annum, and redistributes all of that profit as periodic dividends (let's say once annually). Assume there's no intrinsic growth, and that the firm's instrinsic value (which we'll say is $90 per share) is completely neutral to any other market factors. Under these economics, this stock price will show a "sawtooth" evolution, accruing from $90 to $100 over the course of a year, and resetting back down to $90 after each dividend payment. Now, if I am invested in this stock for some period of time, the fair outcome would be that I receive an appropriately time-weighted share of the $10 annual earnings per share, less my tax. If I am invested for an exact calendar year, this works as I'd expect: the stock price on any given day in the year will be the same as it was exactly one year earlier, so I'll realise zero capital gain, but I'll have collected a $10 taxed dividend along the way. On the other hand, what if I am invested for exactly half a year, spanning a dividend payment? I receive a dividend payment of $10 less tax, but I make a capital loss of -$5. Overall, pre-tax, I'm up $5 per share as expected. However, the respective tax treatment of the dividend payment (which is classed as income) and the capital gains is likely to be different. In particular, to benefit from the "negative" taxation of the capital loss I need to have some positive capital gain elsewhere to offset it - if I can't do that, I'm much worse off compared to half the full-year return. Further, even if I can offset against a gain elsewhere the effective taxation rates are likely to be different - but note that this could work for or against me (if my capital gains rate is greater than my income tax rate I'd actually benefit). And if I'm invested for half a year, but not spanning a dividend, I make $5 of pure capital gains, and realise a different effective taxation rate again. In an ideal world I'd agree that the effective taxation rate wouldn't depend on the exact timing of my transactions like this, but in reality it's unavoidable in the interests of practicality. And so long as the rules are clear, I wouldn't say it's unfair per se, it just adds a bit of complexity. |
IRR vs. Interest Rates | Yes, if your IRR is 5% per annum after three years then the total return (I prefer total rather than your use of actual) over those three years is 15.76%. Note that if you have other cashflows in and out, it gets a bit more complicated (e.g. using the XIRR function in Excel), but the idea is to find an effective annual percentage return that you're getting for your money. |
Fundamentals of creating a diversified portfolio based on numbers? | Your question is a complex one because knowledge of the investor's beliefs about the market is required. For almost any quantitative portfolio, one must have a good estimate of the expected return vector and covariance matrix of the assets in question. The expected return vector, in particular, is far from estimable. No one agrees on it and there is no way to know who is right and who is wrong. In a world satisfying the conditions of the CAPM, you can bypass this problem because the main implication of the CAPM is that the market weights are optimal. In that case the answer to your question is that you should determine the market weights of the various assets and use those along with saving in a risk-free account or borrowing, depending on your risk tolerance. This portfolio has the added benefit that you don't need to rebalance much...the weights in your portfolio adjust at the same rate as the market weights. Any portfolio that has something besides this also includes some notion of expected return aside from CAPM fair pricing. The question for you, then, is whether you have such a notion. If you do, you can mix your information with the market weights to come up with a portfolio. This is what the Black-Litterman method does, for example: get the expected return vector implied by market weights and the covariance matrix, mix with your expected return vector, then use mean-variance optimization to come up with your final weights. |
Effect of Job Change on In-Progress Mortgage Application | I just closed on a refi last week Thursday. The app went to the lender mid to late May. The lender called my employer for an employment verification on the Monday before closing. I would wait till after the loan funds to change jobs. FWIW, we signed on Thursday afternoon, escrow had to FedEx the originals to the lender on Friday, lender should have received it on Monday, we are still waiting to fund. I expect the loan to fund no later than tomorrow. |
What is the opposite of a hedge? | The opposite of a hedge is leverage (aka gearing). A hedge is where you spend money to reduce your exposure. Leverage is where you spend money to increase your exposure. Spread bets are a form of leverage - that's what makes them such an effective way to lose all your money, quickly. |
As a 22-year-old, how risky should I be with my 401(k) investments? | Whatever you do, don't take your retirement savings to Vegas. Second, you should also consider investment expenses. Your investments profit after the managers pay themselves. Get the lowest expense ratio mutual funds you can. Third, most active managers do not beat the market. Index funds are your friends. They also tend to have the lower expense ratios. |
Expecting to move in five years; how to lock mortgage rates? | You could consider turning your current place into a Rental Property. This is more easily done with a fixed rate loan, and you said you have an ARM. The way it would work: If you can charge enough rent to cover your current mortgage plus the interest-difference on your new mortgage, then the income from your rental property can effectively lower the interest rate on your new home. By keeping your current low rate, month-after-month, you'll pay the market rate on your new home, but you'll also receive rental income from your previous home to offset the increased cost. Granted, a lot of your value will be locked up in equity in your former home, and not be easily accessible (except through a HELOC or similar), but if you can afford it, it is a good possibility. |
Consequences of not closing an open short sell position? | 2 things may happen. Either your positions are closed by the broker and the loss or profit is credited to your account. Else it is carried over to the next day and you pay interest on the stocks lent to you. What happens will be decided by the agreement signed between you and your broker. |
What are the marks of poor investment advice? | If you see something that looks like a sales pitch, be skeptical, even if they sound informed, say things which resonate with your concerns and promise to alleviate your problems. Watch out in particular for people who pontificate about matters which are tangentially related to the investment (e.g. populist anti-Wall-Street sentiment). Beware limited-time opportunities, offers, and discounts. I'm specifically talking about your email pitches, Motley Fool. They're shameful. Remember you're allowed to change your mind and go back on something that you've said a few minutes ago. If anyone tries to trick you into agreeing to go along with them by taking what something you've said and manipulating it, or uses logic to demonstrate that you must buy something based on things you've said, tell them you're not comfortable, head for the door and don't look back. Don't be afraid of embarrassment or anything like that. (You can investigate whether your position is in fact logically consistent later.) Run away from anyone who resents or deprecates the notion of a second opinion. Don't ever go along with anything that seems shady: it may be shadier than you know. Some people thought Bernie Maddoff was doing some front-running on the side; turns out it was a Ponzi scheme. (Likewise the Ponzi scheme that devastated Albania's economy was widely suspected of being dirty, but people suspected more of a black-market angle.) Beware of anyone who is promising stability and protection. Insurance companies can sell you products (especially annuities) which can deliver it, but they're very expensive for what you get. Don't buy it unless you seriously need it. |
First time homeowner and getting a mortgage? | Make sure you shop around and ask a lot of places for a good faith estimate. Last I knew, the good faith document is the same everywhere and long form that makes it easy enough to compare the hard numbers from place to place. I have gotten several estimates for various scenarios and I have had them hand written and printed. (I discounted the hand written ones because that broker seemed pretty disorganized in general) Learn the terms online, and start comparing. Use the good faiths as a negotiation tool to get lower rates or lower costs from other brokers. See how accurate the person is at listening to you and filling out the paperwork. See how responsive they are to you when you call with questions and want some changes. Check with at least four places. The more places you shop, the better idea you will have of what fees are high and what interest rates are low. I might pay a higher fee to get a lower interest rate, so there are lots of trade offs to consider. |
I have $10,000 sitting in an account making around $1 per month interest, what are some better options? | Based on your question, I am going to assume your criterion are: Based on these, I believe you'd be interested in a different savings account, a CD, or money market account. Savings account can get you up to 1.3% and money market accounts can get up to 1.5%. CDs can get you a little more, but they're a little trickier. For example, a 5 year CD could get up to 2%. However, now you're money is locked away for the next few years, so this is not a good option if this money is your emergency fund or you want to use it soon. Also, if interest rates increase then your money market and savings accounts' interest rates will increase but your CD's interest rate misses out. Conversely, if interest rates drop, you're still locked into a higher rate. |
Are 'no interest if paid in in x months' credit cards worth it? | You can't buy it outright. You can't take the time to save up. if the remaining choice is between a card that charges from day one, and a card with this kind of grace period, the grace card is the better choice. Plan wisely, pay it in full before that rate starts to be charged. One additional note - There are two groups of people, the pay-in-fullers and the balance carriers. I believe that one should pay in full, and never pay interest. A zero rate offer can be used by the balance carrier to feel great for 12 months, but have even more debt after the rate kicks in. As a pay-in-full user, I've used the zero rate to throw $20K at the 5.25% mortgage, and planned a refinance to 3.5% just as it ended. a $750 savings (after the tax effect) well worth the bit of effort. The fees should be in the fine print. My zero rate had a transfer fee, $50 max, which was nothing in comparison to the savings. |
How do I account for 100 percent vendor discounts in GnuCash 2.6.5 | I am no expert on the situation nor do I pretend to act like one, but, as a business owner, allow me to give you my personal opinion. Option 3 is closest to what you want. Why? Well: This way, you have both the record of everything that was done, and also IRS can see exactly what happened. Another suggestion would be to ask the GnuCash maintainers and community directly. You can have a chat with them on their IRC channel #gnucash, send them an email, maybe find the answer in the documentation or wiki. Popular software apps usually have both support people and a helpful community, so if the above method is in any way inconvenient for you, you can give this one a try. Hope this helps! Robert |
I'm upside down on my car loan and need a different car, what can I do? | There are a few things you should keep in mind when getting another vehicle: DON'T use dealership financing. Get an idea of the price range you're looking for, and go to your local bank or find a local credit union and get a pre-approval for a loan amount (that will also let you know what kind of interest rates you'll get). Your credit score is high enough that you shouldn't have any problems securing a decent APR. Check your financing institution's rules on financing beyond the vehicle's value. The CU that refinanced my car noted that between 100% and 120% of the vehicle's value means an additional 2% APR for the life of the loan. Value between 120% and 130% incurred an additional 3% APR. Your goal here is to have the total amount of the loan less than or equal to the value of the car through the sale / trade-in of your current vehicle, and paying off whatever's left out of pocket (either as a down-payment, or simply paying off the existing loan). If you can't manage that, then you're looking at immediately being upside-down on the new vehicle, with a potential APR penalty. |
Do property taxes get deducted 100% from the Annual Tax Return or only a fraction of them? | In 2012, the standard deduction is $5950 for a single person. Let's assume you are very charitable, and by coincidence you donate exactly $5950 to charity. Everything that falls under itemized deductions would then be deductible. So, if your property tax is $6000, in your example - Other adjustments come into play, including an exemption of $3850, I am just showing the effect of the property tax. The bottom line is that deductions come off income, not off your tax bill. The saving from a deduction is $$ x your tax bracket. |
Is there an advantage to a traditional but non-deductable IRA over a taxable account? [duplicate] | This is ideal placement for your allocation to income investments or those with nonqualified dividends: bonds, REITS, MLPS, other partnerships, and so forth. These are all taxed at income rate, generally throw off more income than capital gains, so you get the deferment without losing the cap gains rate. |
Is it commonly possible to buy an “Option for a Mortgage at a specific Interest Rate”? | I think the answer to this is just "no." It's not commonly available to have the option to obtain a mortgage at a fixed amount and fixed rate, especially over a timeframe like the 5 yrs you mentioned in your question. There would be several practical problems with such a thing, including but not limited to: As was noted in a comment to your question, it is common to be able to "lock" a rate over a period of days to weeks. This isn't the same as what you asked though, because it's much shorter term and it's typically tied to having an offer accepted on a specific house. |
Can you explain why these items are considered negatives on my credit report? | Creditworthiness is proven over time. The longer your track record of making payments on time, the more probable you will stick to credit agreements in future (or so the reasoning goes). Conversely, someone who has only just started applying for credit could be someone whose finances were previously stable but have now started to get into difficulty. Obviously this is not necessarily the case but it is one possible inference. This inference is strengthened when same person applies for further credit in a short space of time. Ultimately, what is considered positive is a stable credit record over a reasonable period of time, because it indicates you stick to payment schedules and don't suddenly need credit due to money problems. Credit card accounts are considered a good indicator of credit status because they imply what kind of borrower you are. Whereas many credit arrangements present a straightforward case of arrears / no arrears (e.g. think of a mobile phone account – either you pay your bill or you don't), with credit cards there is an element of flexibility in how much you borrow, and how much of that you repay. If you run up four figure monthly balances but clear them in full each month without fail, that is a good sign. If your average balance is increasing and you are paying on time but just the minimum amount, that is a potential flag. In other words, credit cards are of particular interest because they paint a more nuanced picture. Provided you use one responsibly, getting and using a credit card may improve your status with credit reference agencies. |
Latest China devaluation (24/08/2015) and the affect on house prices in UK | No. There is no indication that the recent decline will have an impact on the house market in the UK. The reason(s) for the downward move these last few weeks are mainly due to: The last two points caused the Chinese government to decide to devaluate the Yuan. This in turn triggered an unforeseen panic attack among investors and speculators around the globe starting with the Chinese that are trading on borrowed money (not only on margin but also by using loans). The UK house prices are not influenced by the above factors, not even indirectly. The most important factors for house prices are in general: If you keep the above points in mind you should be able to decide whether now is the right time to buy a house in your area. Given that a lot of central banks (incl. BoE) are maintaining a low interest rate policy (except fed soon), now is a good time to take a mortgage. Sources used: I know interest rates are determined by the BoE which looks at the global picture to determine these rates but the main directive of a central bank is to maintain an inflation close to but not exactly 2 % as to spur on economic growth. As such, the value of a company as valuated on the stock market is not or barely taken into account. The negligible impact is the reason why I stated that the crash in the summer of 2015 doesn't even have an indirect impact. Also such a crash is very short lived. It's more the underlying reason for the fears that could cause issues if they drag on. |
what does “private equity structures” mean? | Private equity firms have a unique structure: The general partners (GP's) of the firm create funds and manage the investments of those funds. Limited partners (LP's) contribute the capital to the funds, pay fees to the GP's, and then make money when the funds' assets grow. I believe the article is saying that ultra high net worth individuals participate in the real estate market by hiring someone to act as a general partner and manage the real estate assets. They and their friends contribute the cash and get shares in the resulting fund. Usually this GP/LP structure is used when the funds purchase or invest in private companies, which is why it is referred to as "private equity structure," but the same structure can be used to purchase and manage pools of real estate or any other investment asset. |
Can a stop loss order be triggered by random price? | Typically this isn't a random order- having a small volume just means it's not showing on the chart, but it is a vlid price point. Same thing would've happened if it would've been a very large order that shows on the chart. Consider also that this could have been the first one of many transactions that go far below your stop point - would you not have wanted it to be executed then, at this time, as it did? Would you expect the system to look into future and decide that this is a one time dip, and not sell; versus it is a crash, and sell? Either way, the system cannot look in the future, so it has no way to know if a crash is coming, or if it was a short dip; therefore the instrcutions are executed as given - sell if any transfer happens below the limit. To avoid that (or at least reduce the chance for it), you can either leave more distance (and risk a higher loss when it crashes), or trade higher volumes, so the short small dip won't execute your order; also, very liquid stocks will not show such small transaction dips. |
Can I invest in gold through Vanguard (Or another instrument that should perform well in financial crisis)? | In 2008, 10 year treasuries were up 20.1%, to gold's 4.96%. Respectfully, if I were certain if a market drop, I'd just short the market, easily done by shorting SPY or other index ETFs. If you wish to buy gold, the easiest and least expensive way is to buy an ETF, GLD to be specific. It trades like a stock, for what that's worth. There are those who would suggest this is not like buying gold, it's just 'paper'. I believe otherwise. It's a non leveraged, fully backed ETF. I try not to question other's political or religious beliefs or as it pertains to this ETF, their conspiracy theories. |
Question about dividends and giant companies [duplicate] | I see a false assumption that you are making. (Almost always) When you buy stock the cash you spend does not go to the company. Instead it goes to someone else who is selling their shares. The exception to this is when you buy shares in an IPO. Those of us who have saved all our lives for retirement want income producing investments once we retire. (Hopefully) We have saved up quite a bit of money. To have us purchase their stock companies have to offer us dividends. |
Why would you elect to apply a refund to next year's tax bill? | It is a bad deal. It saves the government from processing your refund as a check or an ACH deposit, and lets them keep your money -- money that they overwithheld! -- interest-free for another year. Get it back. :) |
Prices go up and salary doesn't: where goes delta? | I expected a word or two on the price elasticity of demand here :) Andrey, Your question needs slight revision in its current form. Rising prices actually do not mean increased profitability for a company. The quantity they sell also pays a huge part and actually is correlated to the price at which they sell the goods (and other factors such as the price at which their competitor sells the goods etc., but we will ignore it for simplicity). The net profit of sales for any firm is equal to (Qty x Sale Price) - COGS - SG&A - taxes - other expenses where, COGS means cost of goods sold SG&A means sales, general and admin costs (e.g., cleaning the inventory storage area daily so that the goods stay fresh etc.) other expenses include any miscellaneous other costs that the firm incurs to make the sale. Now, if everything in that equation remains same (COGS, SG&A, taxes, and other expenditures), rising prices will only translate into a higher profit if the quantity does not fall by the same margin. Prices may also rise simply as a response to risking COGS, SG&A or other expenditures --the latter may be observed in inflationary environments. In such a case, the supplying firm can end up losing its profit margin if the quantity falls by more than the price rise. |
Should I wait a few days to sell ESPP Stock? | An instant 15% profit sounds good to me, so you can't go wrong selling as soon as you are able. Here are a couple other considerations: Tax implications: When you sell the stock, you have to pay taxes on the profit (including that 15% discount). The tax rate you pay is based on how long you wait to sell it. If you wait a certain amount of time (usually 2 years, but it will depend on your specific tax codes) before you sell, you could be subject to lower tax rates on that profit. See here for a more detailed description. This might only apply if you're in the US. Since you work for the company, you may be privy to a bit more information about how the company is run and how likely it is to grow. As such, if you feel like the company is headed in the right direction, you may want to hold on the the stock for a while. I am generally wary of being significantly invested in the company you work for. If the company goes south, then the stock price will obviously drop, but you'll also be at risk to be laid off. As such you're exposed much more risk than investing in other companies. This is a good argument to sell the stock and take the 15% profit.* * - I realize your question wasn't really about whether to sell the stock, but more for when, but I felt this was relevant nonetheless. |
How can I cash out a check internationally? | I've been a landlord and also a tenant. I have been able to deposit money in an account, where I have the account number, and/or a deposit slip. In a foreign bank you can deposit by a machine if in the bank or someone is there for you and knows the account number. With regards to cashing a check in another country, it is up to the bank and the time is at least 14 to 21 business days, with a fee is added. As of a winning check, since its in your name, if you are in another country sign the check, for deposit only with a deposit slip and send it to your out of country bank by FedEx - you will have a tracking number, where as regular mail it might get there in 3 months. I hope by now you came to your solution. |
If I'm going to start doing my own taxes soon, do I need to start keeping receipts for everything? | You need receipts only if you claim deductions in the itemized deductions section based on them. You itemize deductions only if your claims exceed the standard deduction (which for a single person was $5,800 last year). Even then, you need receipts for everything only if you claim sales tax as the deduction (you have to buy really a lot to pass $5K with sales tax...). I would expect people to pay more in state income taxes than sales taxes (you can claim either this or that, not both). For food - there are no taxes (at least here in California), so nothing to deduct anyway. In any case, you can always scan your receipts and keep them in the computer, for just in case, but IMHO it's waste of time, pixels and gigabytes. Here's a question which deals with the same issue, read the answers there as well. |
Are stock index fund likely to keep being a reliable long-term investment option? | For index funds to be a poor investment, they would have to perform worse than your alternative investments. In this case, we'll assume the alternative to be the individual stocks. Obviously, it must be possible to pick just the winning stocks and avoid the losing stocks, raising your rate of return... however, several studies have shown that individuals are horrible at picking winners. We let our emotions, are biases, and are suppositions get in the way. You could literally throw a dart, but then you either win big or lose big. Picking the fund evens that out for you, so you don't win or lose big, but just get a consistently boring (yet consistently good) return. If you have a lot of time to put into the research, and are confident in your ability to pick winning stocks, then you can do better than the index funds. Otherwise, sticking with the index fund is probably a smart choice. |
Pay down on second mortage when underwater? | You're welcome to throw in the towel and stop paying any time you want. You'll just suffer the consequences of doing so. It sounds like you're concerned about losing your job "in the next few years." What are you doing to stem this off? Are you building up a side income? Are you building up portable skills -- ones that can be used anywhere? If you think you have a few years left, use them. Build something up. You may be able to recover more quickly, or last longer until you find a new job. Some of my blogging friends have been at it about as long as I have, and they're in high-five, low-six figures now. For blogging. Some did it even faster. All it takes is time. Your expenses for starting a blog are $10/month plus cutting out two hours of TV / drinking / anything else consumer-ish to learn more about your favorite interest, write about it, and interact with the online community. That's just one idea. Season to taste or choose a different meal altogether. Are you frugal? Are you looking for ways to cut expenses? If you can find extra money to save a little bit more and knock out just one of those debts (say, the car), you'll be able to throw that payment at the student loan. Then they'll both be gone, and you can save up a cushion for yourself faster. I just think it's a little weak to give up when you're not really in trouble yet. You're tight, but you can get through that. |
Dividends - Why the push to reinvest? | Three major advantages that I can think of (and some of these have been pointed out in comments): |
How to manage 20 residential apartments | If he can't manage, best is he sells it off. Its easier to manage cash. Not sure what tax you are talking about. He should have already paid tax on fair market value of the 20 flats. If the intention of Mr X is to gift to son by way of death, then yes the tax will be less. Else whenever Mr X sells there will be tax. how to manage these 20 apartments? Hire a broker. He may front run quite a few things like showing the place etc. There is a risk if he is given a free hand, he may not get good quality tenant. There are quite a few shark brokers [its unregulated] who may arm twist seeing the opportunity of an old man with 20 flats. See if you can do long term lease with companies looking for guest house etc, or certain companies who run guest house. They would like the scale, generally 3-5 years contracts are done. The rent is good and overall less hassle. The risk is most would ask to invest more in furnishing and contracts can be terminated in months notice. If the property is in large metro [Delhi/Bangalore/Chennai/etc] These places have good property management companies. Ensure that you have independent lawyer; there are certain aspects of law that may need to be studied. |
Is Weiss Research, Inc. a legitimate financial research company? | This company was a reputable rating agency for many years. See Weiss Research website, ratings section for a very different perspective on Martin Weiss's work than the websites with which he is now associated. I checked both links provided, and agree with the questioner in every way: These appear to be highly questionable investment research websites. I use such strong terms based on the fact that the website actually uses the distasteful pop-up ploy, "Are you SURE you want to leave this site?" Clearly, something changed between what Weiss Ratings was in the past (per company history since 1971) and what Martin Weiss is doing now. Larry Edelson seems to have been associated exclusively with questionable websites and high pressure investment advice since 2007. From 1996 through the present, he worked as either an employee or contractor of Weiss Research. Let's answer each of your questions. On June 22, 2006, the Commission instituted settled administrative proceedings against Weiss Research, Inc., Martin Weiss, and Lawrence Edelson (collectively, “Respondents”) for violations of the Investment Advisers Act of 1940 in connection with their operation of an unregistered investment adviser and the production and distribution of materially false and misleading marketing materials. Full details about Weiss Ratings operations, including its history from 1996 through 2001, when it operated in compliance with securities laws, then from 2001 through 2005, which was when the SEC filed charges for regulatory violations, are available from the June 2006 U.S. SEC court documents PDF. Finally, this quantitative assessment, "Safe With Martin Weiss? (December 2010) by CXO Advisory (providers of "objective research and reviews to aid investing decisions") for its readers concluded the following: In summary, the performance of Martin Weiss’ premium services in aggregate over the past year is unimpressive. The study methodology was good, but I recommend reading the article (I posted the URL) to fully understand what caveats and assumptions were done to reach that conclusion. |
Other than being able to borrow to invest, how is a margin trading account different from a cash account? | With margin accounts you will be able to use the proceeds from a closed trade INSTANTLY. Without margin accounts this is the time you close the trade + 3 business days for clearing. In practice this means 4-5 days if there is a weekend or holiday involved between those 3 business days. This ties up your capital for an unfavorable amount of time, where as a margin account lets you continue to use the capital over and over again for more opportunities. You CANNOT sell to open a position in cash accounts. This means no short selling. This means no covered calls or spreads and MANY other strategies. These are the real differences you'll notice in a margin account vs a cash account. Then there are the myriad of regulations that dictate how much cash you should keep in your account for any margin position. |
Why do 10 year Treasury bond yields affect mortgage interest rates? | Different bonds (and securitized mortgages are bonds) that have similar average lives tend to have similar yields (or at least trade at predictable yield spreads from one another). So, why does a 30 year mortgage not trade in lock-step with 30-year Treasuries? First a little introduction: Mortgages are pooled together into bundles and securitized by the Federal Agencies: Fannie Mae, Freddie Mac, and Ginnie Mae. Investors make assumptions about the prepayments expected for the mortgages in those pools. As explained below: those assumptions show that mortgages tend to have an average life similar to 10-year Treasury Notes. 100% PSA, a so-called average rate of prepayment, means that the prepayment increases linearly from 0% to 6% over the first 30 months of the mortgage. After the first 30 months, mortgages are assumed to prepay at 6% per year. This assumption comes from the fact that people are relatively unlikely to prepay their mortgage in the first 2 1/2 years of the mortgage's life. See the graph below. The faster the repayments the shorter the average life of the mortgage. With 150% PSA a mortgage has an average life of nine years. On average your investment will be returned within 9 years. Some of it will be returned earlier, and some of it later. This return of interest and principal is shown in the graph below: The typical investor in a mortgage receives 100% of this investment back within approximately 10 years, therefore mortgages trade in step with 10 year Treasury Notes. Average life is defined here: The length of time the principal of a debt issue is expected to be outstanding. Average life is an average period before a debt is repaid through amortization or sinking fund payments. To calculate the average life, multiply the date of each payment (expressed as a fraction of years or months) by the percentage of total principal that has been paid by that date, summing the results and dividing by the total issue size. |
Can a self-employed person have a Health Savings Account? | IRS Publication 969 gives all the details about HSA accounts and High Deductible plans: According to your question you are covered by a plan that can have an HSA. There a few points of interest for you: Contributions to an HSA Any eligible individual can contribute to an HSA. For an employee's HSA, the employee, the employee's employer, or both may contribute to the employee's HSA in the same year. For an HSA established by a self-employed (or unemployed) individual, the individual can contribute. Family members or any other person may also make contributions on behalf of an eligible individual. Contributions to an HSA must be made in cash. Contributions of stock or property are not allowed. That means that yes you could make a contribution to the HSA. Or if in the future you were the provider of the insurance you could have a HSA. Limit on Contributions For 2015, if you have self-only HDHP coverage, you can contribute up to $3,350. If you have family HDHP coverage you can contribute up to $6,650. It sounds like you have a family plan. Additional contribution. If you are an eligible individual who is age 55 or older at the end of your tax year, your contribution limit is increased by $1,000. Rules for married people. If either spouse has family HDHP coverage, both spouses are treated as having family HDHP coverage. If each spouse has family coverage under a separate plan, the contribution limit for 2014 is $6,550. You must reduce the limit on contributions, before taking into account any additional contributions, by the amount contributed to both spouses' Archer MSAs. After that reduction, the contribution limit is split equally between the spouses unless you agree on a different division. The rules for married people apply only if both spouses are eligible individuals. If both spouses are 55 or older and not enrolled in Medicare, each spouse's contribution limit is increased by the additional contribution. If both spouses meet the age requirement, the total contributions under family coverage cannot be more than $8,550. Each spouse must make the additional contribution to his or her own HSA. Note: most of the document was written with 2014 numbers, but sometimes they mention 2015 numbers. If both are covered under a single plan it should be funded by the person that has the plan. They may get money from their employer. They may be able to have the employer cover the monthly fee that most HSA administrators charge. The non employee can make contributions to the account but care must be taken to make ure the annual limits aren't exceeded. HSA contributions from the employees paycheck may reduce the social security tax paid by the employee. If the non-employee is self employed you will have to see how the contribution impacts the social security situation for the couple. If the non-employee is 55 or older it can make sense to throw in that extra $1000. The employer may not allow it to come from the paycheck contributions because they wouldn't necessarily know the age of the spouse, they may put a maximum limit based on the age of the employee. |
What things should I consider when getting a joint-mortgage? | Your lack of numbers makes the question a difficult read. What I'm hearing is "I want a house requiring a mortgage 8X my income." This alone is enough to suggest it's a bad deal. On a personal note, when my wife and I bought our house, it was 2.5X our income. 20% down, so the mortgage was exactly 2X income. And my wife was convinced we were in over our heads. The use of a partner who will take a portion of the profit is interesting, but doesn't change the fact that you are proposing to live in a house that costs far too much for you. If you are determined to buy such a house, I'd suggest you do it with the plan to rent out a room or two to roommates. If you are living in an area where the cost of buying is so high, the demand for rentals is likely high as well. Absent a plan to bring ion more income, I see no good coming from this. Heed the warnings posted in the other two answers as well. |
What are the best software tools for personal finance? | For iPhone: iExpenseIt |
What's a normal personal debt / equity ratio for a highly educated person? | Curious, are you asking about average, or the good numbers? The median family doesn't have $2500 to address an emergency. We are a nation of debtors, and spenders. A young couple at .8 is doing well. It means they saved 20% for a down payment, and just bought a house. Not too tough to buy with 5% down, have no other savings, and a student loan to put the debt to equity over 100%. Older people should be shooting for zero. I semi-retired at 50, and my mortgage is at about 8% of my net worth. 50% would be too high. Others 50+ should have at least 50% equity in their home and nearly half their "number," the amount needed to retire. So, a target is 25% maximum. These numbers shouldn't impact you at all. You should plan wisely, spend frugally, and prioritize your goals. There are 'zero debt' people out there who make me look reckless, and others who invest in rentals with a goal of keeping them highly leveraged. Neither group is wrong, what's right for you is what lets you sleep at night. |
Who gets how many shares when an IPO is oversubscribed? | A broker will only get so many shares for any IPO. They will give their highest profit customers priority, but try to keep the smaller ones happy as well. So where my TWTR order today was for 1000 shares, I actually was granted 100. In the dotcon* bubble of the late 90's, there were some stocks I saw as many as 1000 hit my account. (*not a typo, this is the title of a book on that period, the making of a bubble and irrational doings on Wall Street. |
Can I invest in the housing market via the stock exchange? | Have you considered a self-directed IRA to invest, rather than the stock market or publicly traded assets? Your IRA can actually own direct title to real estate, loan money via secured or unsecured promissory notes much like a hard money loan or invest into shares of an entity that invests in real estate. The only nuance is that the IRA holder is responsible for finding and deciding upon the investment vehicle. Just an option outside of the normal parameters, if you have an existing IRA or old 401(k) or other qualified plan, this might be an option for you. |
Investing in income stocks for dividends - worth it? | is it worth it? You state the average yield on a stock as 2-3%, but seem to have come up with this by looking at the yield of an S&P500 index. Not every stock in that index is paying a dividend and many of them that are paying have such a low yield that a dividend investor would not even consider them. Unless you plan to buy the index itself, you are distorting the possible income by averaging in all these "duds". You are also assuming your income is directly proportional to the amount of yield you could buy right now. But that's a false measure because you are talking about building up your investment by contributing $2k-$3k/month. No matter what asset you choose to invest in, it's going to take some time to build up to asset(s) producing $20k/year income at that rate. Investments today will have time in market to grow in multiple ways. Given you have some time, immediate yield is not what you should be measuring dividends, or other investments, on in my opinion. Income investors usually focus on YOC (Yield On Cost), a measure of income to be received this year based on the purchase price of the asset producing that income. If you do go with dividend investing AND your investments grow the dividends themselves on a regular basis, it's not unheard of for YOC to be north of 6% in 10 years. The same can be true of rental property given that rents can rise. Achieving that with dividends has alot to do with picking the right companies, but you've said you are not opposed to working hard to invest correctly, so I assume researching and teaching yourself how to lower the risk of picking the wrong companies isn't something you'd be opposed to. I know more about dividend growth investing than I do property investing, so I can only provide an example of a dividend growth entry strategy: Many dividend growth investors have goals of not entering a new position unless the current yield is over 3%, and only then when the company has a long, consistent, track record of growing EPS and dividends at a good rate, a low debt/cashflow ratio to reduce risk of dividend cuts, and a good moat to preserve competitiveness of the company relative to its peers. (Amongst many other possible measures.) They then buy only on dips, or downtrends, where the price causes a higher yield and lower than normal P/E at the same time that they have faith that they've valued the company correctly for a 3+ year, or longer, hold time. There are those who self-report that they've managed to build up a $20k+ dividend payment portfolio in less than 10 years. Check out Dividend Growth Investor's blog for an example. There's a whole world of Dividend Growth Investing strategies and writings out there and the commenters on his blog will lead to links for many of them. I want to point out that income is not just for those who are old. Some people planned, and have achieved, the ability to retire young purely because they've built up an income portfolio that covers their expenses. Assuming you want that, the question is whether stock assets that pay dividends is the type of investment process that resonates with you, or if something else fits you better. I believe the OP says they'd prefer long hold times, with few activities once the investment decisions are made, and isn't dissuaded by significant work to identify his investments. Both real estate and stocks fit the latter, but the subtypes of dividend growth stocks and hands-off property investing (which I assume means paying for a property manager) are a better fit for the former. In my opinion, the biggest additional factor differentiating these two is liquidity concerns. Post-tax stock accounts are going to be much easier to turn into emergency cash than a real estate portfolio. Whether that's an important factor depends on personal situation though. |
Can PayPal transfer money automatically from my bank account if I link it in PayPal? | See this help article from Paypal about payment methods for purchases. When you don’t have a PayPal balance or don’t have enough in your PayPal balance, we’ll use your bank account as the default payment method unless you select a different way to pay. So yes, Paypal will automatically deduct from your bank account when you make a purchase, unless you link another payment method and make that your default. |
What is the maximum number of options I can buy if the price is $0.01? | Options trading at $.01 have the same position limits as other options. Self regulatory organizations set the position limits for options which can be 250,000 contracts on one side of the book, as an example. Weeklies that are expiring soon have lots of liquidity while trading at $0.01, you can see this in Bank of America stock if interested |
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