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How to evaluate an annuity | You need to see that prospectus. I just met with some potential new clients today that wanted me to take a look at their investments. Turns out they had two separate annuities. One was a variable annuity with Allianz. The other was with some company named Midland Insurance (can't remember the whole name). Turns out the Allianz VA has a 10 year surrender contract and the Midland has a 14 year contract. 14 years!!! They are currently in year 7 and if they need any money (I'm hoping they at least have a 10% free withdrawal) they will pay 6% surrender on the Allianz and a 15% surrender on the other. Ironically enough, they guy who sold this to them is now in jail. No joke. |
Best way for for soon to turn 18 to learn about money? | Excellent questions! Asking such questions indicates something special about yourself. The desire to learn and adjust your beliefs will increase your chance of success in your life. I would use a wide variety of authors to increase your education. Myself I prefer Dave Ramsey to Clark Howard, but I think Clark is very good. The first thing you should focus on is learning how to do and live by a budget. Often times, adults will assume that you are on a budget because you are broke. It happens with my friends and my youngest child is older than you. Nothing could be further from the truth. A budget is simply a plan on how you will spend your income so you don't run out of money before you run out of month. Along with budgeting I would also focus on goal setting. This is the type of "investing" you should be doing at your age. For example if your primary goal was to become an engineer, my recommendation is to hold off buying stocks/mutual funds and using your current income to get through school with little or no student loans. Another example might be to open your own HVAC business. Your best bet might be to learn the trade, working for someone else, and take night classes for business management. Most 18 year olds have very little earning power. Your focus at this point should be increasing your income and learning how to manage the income you have. Please keep in mind that most debt is bad. It robs you of your income which is your greatest wealth building tool. Car loans and credit card debt is just plain stupid. Often times a business case can be made for reasonable student loans. However, why not challenge yourself to take none. How much further ahead could you be if you graduate, with a degree, when your peers are strapped with a 40K loan? Keep up the good work and keep asking questions. |
Am I responsible for an annual fee on a credit card I never picked up? | Have you signed anything? If not - then tell them you don't know who they are and have not agreed to pay. If you did sign that piece of paper at the airport, then you have probably agreed to pay. Either way, it won't go away. As you've already discovered, ignoring things doesn't make them go away. You should make an effort, as hard as it may be, and call them. Notify them that you have never asked for this card, never activated it, and in fact never had it in your possession. You should stress out that it was issued without your authorization, which is probably illegal. And you wish the account to be closed and the charge reversed. Otherwise it will just grow and make your life miserable. |
As co-founder, does Steve Jobs still own enough Apple shares to control Apple Inc.? | Everyone that owns a share of stock in a company is part owner. Some just own more than others. According to Apple's latest proxy statement he owns 5.5 million shares of the 914 million shares outstanding. So he owns approximately 0.6% of the company. If he owned more than 50% of the company's outstanding stock he would effectively control the board of directors by being able to pick whoever he wanted. Then he would control the company. Very few publicly traded companies are that way. Most have sold off parts of the company to the public in order to raise cash for the company and make their investment more liquid. |
gift is taxable but is “loan” or “debt” taxable? | The difference is whether or not you have a contract that stipulates the payment plan, interest, and late payment penalties. If you have one then the IRS treats the transaction as a load/loan servicing. If not the IRS sees the money transfer as a gift. |
What is the best way to save money from inflation and currency devaluation? | Generally speaking, so-called "hard assets" (namely gold or foreign currency), durable goods, or property that produces income is valuable in a situation where a nation's money supply is threatened. Gold is the universal hard asset. If you have access to a decent market, you can buy gold as bullion, coins and jewelry. Small amounts are valuable and easy to conceal. The problem with gold is that it is often marked up alot... I'm not sure how practical it is in a poor developing nation. A substitute would be a "harder" currency. The best choice depends on where you live. Candidates would be the US Dollar, Euro, Australian Dollar, Yen, etc. The right choice depends on you, the law in your jurisdiction, your means and other factors. |
Why did I lose 2 cents more than the difference in the stock prices on my Robinhood trade? | There is a misunderstanding somewhere that your question didn't illuminate. You should have lost $0.04 as you say. Assuming the prices are correct the missing $0.02 aren't covered by a reasonable interpretations of the Robinhood fees schedule. For US-listed stocks: $0 plus SEC fees: 0.00221% of principal ($22.10 per $1,000,000 of principal) plus Trading Activity Fee: $0.000119/share rounded to nearest penny plus short/long term capital gains taxes The total fee rate is 0.002329% or 0.00002329*the price of the trade. With you trades totaling around $11, the fee would be ~0.000256 or ~1/40 of a penny. The answer is probably that they charge $0.01 for any fraction of a penny. It's difficult to explain as anything other than avarice, so I won't try. |
Why small retail stores ask for ID with a credit card while big don't | Probably because large chains can absorb the loss from fraud better than small stores do. Thus, small stores want to ensure that the person holding the card is the same as the name on the card. |
Why is the bid-ask spread considered a cost? | As an aside, on most securities with a spread of the minimum tick, there would be no bid ask spread if so-called "locked markets", where the price of the best bid on one exchange is equal to the price of the best ask on another, were permitted. It is currently forbidden for a security to have posted orders having the same price for both bid and ask even though they're on different exchanges. Option spreads would narrow as well as a result. |
Is Bitcoin a commodity or a currency [duplicate] | Its neither. Its a scam. there's no value underlying it, and it has proven to be the most speculative and untrustworthy investment there is. The scam works like a pyramid scam, so the more people come later on the more people who came in earlier on gain, so that is why you see so much hype around it encouraged and fueled by those early adopters who'll cash out at your expense. Imagine people who jumped on the bandwagon when each coin was worth a mere fraction of a dollar - they want you to "invest" at the current price of hundreds of dollars per unit so that they could cash out. You'd be better off with tulips, really. (And don't be discouraged by the downvotes on this answer, of course those scamers will try to shut me down. That will just prove the point.) |
How to calculate money needed for bills, by day | I think you might benefit from adopting a zero-sum budget, in which you plan where each dollar will be spent ahead of time, rather than simply track spending or worry about the next expense. Here's a pretty good article on the subject: How and Why to Use a Zero-Sum Budget. This is the philosophy behind a popular budgeting tool You Need a Budget, I am not advocating the tool, but I am a fan of the idea that a budget is less about tracking spending and more about planning spending. That said, to answer your specific question, one method for tracking your min-needed for upcoming expenses would be to record the date, expense, amount due, and amount paid as shown here: Then the formula to calculate the min-needed (entered in E1 and copied down) would be: As you populate amounts paid, the MinNeeded is adjusted for all subsequent rows. You could get fancier and only populate the MinNeeded field on dates where an expense is due using IF(). |
Do I make money in the stock market from other people losing money? | There is one other factor that I haven't seen mentioned here. It's easy to assume that if you buy a stock, then someone else (another stock owner) must have sold it to you. This is not true however, because there are people called "market makers" whose basic job is to always be available to buy shares from those who wish to sell, and sell shares to those who wish to buy. They could be selling you shares they just bought from someone else, but they also could simply be issuing shares from the company itself, that have never been bought before. This is a super oversimplified explanation, but hopefully it illustrates my point. |
Should I sell when my stocks are growing? | If you feel comfortable taking an 8% gain on your stocks, then yes, you should sell. It is generally a good idea to know when you want to sell (either a price or %) before you ever actually buy the stocks. That helps from getting emotional and making poor decisions. |
Why so much noise about USA's credit rating being lowered? | Dollar is the lingua franca of the financial industry and unluckily it is the US currency. It is till today considered the most safest investment bet, that is why you have China possesing $3 trillion of US debt, as an investment albiet a very safe one. Financial investors get in queue to by US bonds the moment they are put up for sale. Because of the AAA rating the investors consider it to be safe at a specific rate. Now when you lower the credit rating you are indirectly asking the US government that you want a higher return(yield) on your investments. When you ask for higher yields, it translates into higher interest rates (money US would get for bonds issued decreases and so more bonds are issued). So you basically start looking at a slowdown in consumer spendings households and businesses. With already defaults, repossesions and lesser spending, the slowdown would increase manifold. |
Multi-Account Budgeting Tools/Accounts/Services | I know of websites that do this, but I don't know of banks that do. Is there any reason you want to do this at a bank rather than use a service? My main concern with using a bank for this would be the risk of overdraft fees |
Sell or keep rental Property? | Sell the house, in the scenario you describe he is using the property as an investment with a $250 per month buy-in. This investment doesn't make a return right now and when you add in the cost of dealing with the tenant (even if he doesn't have those cost now, he will when they move out)he is out of more than $250 a month and he has no direct knowledge that the value will definitely increase. He would be better spent selling the house and putting the funds into an investment, even a risky investment. It will have less maintenance cost associated with the risky investment than the rental property. Besides sitting on the property for 10-15 years would cost him 30-45k plus the cost of re-renting the house when empty.Not to mention the inevitable increases in taxes over that time which will either increase his deficit or eat up the rent increase he is able to charge. Don't take the loss on the sale, just short sale it and take the money and invest! One last thought... An alternative is to creatively finance a sale (take payments from a buyer until they can buy outright) that will cover the FULL mortgage and get him the price he needs. You can look up owner financing to find out more on how to do this. Hope this helps! |
What should a 21 year old do with £60,000 ($91,356 USD) inheritance? | What a lovely position to find yourself in! There's a lot of doors open to you now that may not have opened naturally for another decade. If I were in your shoes (benefiting from the hindsight of being 35 now) at 21 I'd look to do the following two things before doing anything else: 1- Put 6 months worth of living expenses in to a savings account - a rainy day fund. 2- If you have a pension, I'd be contributing enough of my salary to get the company match. Then I'd top up that figure to 15% of gross salary into Stocks & Shares ISAs - with a view to them also being retirement funds. Now for what to do with the rest... Some thoughts first... House: - If you don't want to live in it just yet, I'd think twice about buying. You wouldn't want a house to limit your career mobility. Or prove to not fit your lifestyle within 2 years, costing you money to move on. Travel: - Spending it all on travel would be excessive. Impromptu travel tends to be more interesting on a lower budget. That is, meeting people backpacking and riding trains and buses. Putting a resonable amount in an account to act as a natural budget for this might be wise. Wealth Managers: "approx. 12% gain over 6 years so far" equates to about 1.9% annual return. Not even beat inflation over that period - so guessing they had it in ultra-safe "cash" (a guaranteed way to lose money over the long term). Give them the money to 'look after' again? I'd sooner do it myself with a selection of low-cost vehicles and equal or beat their return with far lower costs. DECISIONS: A) If you decided not to use the money for big purchases for at least 4-5 years, then you could look to invest it in equities. As you mentioned, a broad basket of high-yielding shares would allow you to get an income and give opportunity for capital growth. -- The yield income could be used for your travel costs. -- Over a few years, you could fill your ISA allowance and realise any capital gains to stay under the annual exemption. Over 4 years or so, it'd all be tax-free. B) If you do want to get a property sooner, then the best bet would to seek out the best interest rates. Current accounts, fixed rate accounts, etc are offering the best interest rates at the moment. Usual places like MoneySavingExpert and SavingsChampion would help you identify them. -- There's nothing wrong with sitting on this money for a couple of years whilst you fid your way with it. It mightn't earn much but you'd likely keep pace with inflation. And you definitely wouldn't lose it or risk it unnecessarily. C) If you wanted to diversify your investment, you could look to buy-to-let (as the other post suggested). This would require a 25% deposit and likely would cost 10% of rental income to have it managed for you. There's room for the property to rise in value and the rent should cover a mortgage. But it may come with the headache of poor tenants or periods of emptiness - so it's not the buy-and-forget that many people assume. With some effort though, it may provide the best route to making the most of the money. D) Some mixture of all of the above at different stages... Your money, your choices. And a valid choice would be to sit on the cash until you learn more about your options and feel the direction your heart is pointing you. Hope that helps. I'm happy to elaborate if you wish. Chris. |
Are Certificates of Deposit worth it compared to investing in the stock market? | This all depends on your timeline and net worth. If you're short on time before you plan to start spending it or have a large net worth, parking some of your money in CDs is a good idea. If you have lots of time or not much net worth, then index funds are a better bet. Equity or dividend index funds are the way to go when you have 10+ years before you reach your goal. CDs major downside is that they don't beat inflation 1 - 3% a year. This is why you only use them when it's absolutely critical you hold onto every penny of the principal. The reason is because with CDs your 10k is actually losing its value (not the principal) the longer you leave it in CDs. I generally wouldn't recommend CDs unless you are in or approaching your 60s or have assets over 500k. Even still I would limit the use of CDs to no more than 20%. I would view them as catastrophic loss protection. |
stock for a particular brand | If you want to invest in the Windows Phone, then you go and find out who makes the Windows Phone i.e. Microsoft. Then you go and decide if Windows Phone is successful will the share price of Microsoft go up (own research/deduction) and if you think that the price of Microsoft has a positive correlation with the Windows Phone, then you could buy shares of Microsoft. There is no way to invest directly in individual products on stock exchanges, you are generally investing in the companies that produce them. You find the ticker of a company by googling. NASDAQ: MSFT |
Are there any catches with interest from banks? Is this interest “too good to be true”? | The 1.09% is per year, not per month, so you will be getting about 1K per year just for sitting around on your backside. Some important things. It is almost certain that you can earn a better interest rate elsewhere, if you are prepared to leave your 100K untouched. For example, even in Natwest you can earn 3.2% over the next year if you buy a fixed rate bond. For 100K that is certainly worth looking at. Or maybe put 90K in a fixed rate bond and leave 10K in an instant access account. Taxes should not be a problem since you can earn around 7K before you start paying taxes. However be aware that in the UK most bank accounts deduct tax at source. That means they send the tax they think you should have paid to the government, and you then have to claim it back from them. Accounts for young people may work differently. Ask your bank. |
How to calculate cost basis for stock bought before a company spinoff? (USA) | Your brokerage account statement should report the Questar cost basis adjusted for the spinoff (and would have done so starting the day the spinoff happened), shifting the portion of it over to your shiny new QEP stock based on the opening price. At what price did you buy into Questar? The Questar IR site also has a document with more detail. |
How is initial stock price (IPO) of a stock determined | Who determines company value at IPO? The Owners based on the advice from Lead Bankers and other Independent auditors who would determine the value of the company at the time of listing. At times instead of determining a fixed price a range is given [lower side and higher side]. The Market participants [FI / Institutional Investor Segments] then decide the price by bidding at an amount. There are multiple aspects in play that help stabalize the IPO and roles of various parties. A quick read of question with IPO tag is recommended Edits: Generally at a very broad level, one of the key purpose of the IPO is to either encash Owner equity [Owner wants some profits immediately] or Raise additional Capital. More often it is a mix of both. If the price is too low, one loose out on getting the true value, this would go to someone else. If the price is too high, then it may not attract enough buyers or even there are buyers, there is substantial -ve sentiment. This is not good for the company. Read the question From Facebook's perspective, was the fall in price after IPO actually an indication that it went well? This puts determining the price of IPO more in the realm of art than science. There are various mechanism [Lead bankers, Institutional Investors, Underwriters] the a company would put in place to ensure the IPO is success and that itself would moderate the price to realistic level. More often the price is kept slightly lower to create a positive buzz about the stock. |
Employer 401K thru Fidelity - Investment options | The target date investment will automatically reduce equity exposure and increase bond exposure as it approaches retirement date. If you are unlikely to make adjustments as you get older, you may be setting yourself up for more risk down the road. Only you can decide what level of risk you can tolerate as you chase higher gains. |
Mortgage vs. Cash for U.S. home buy now | Buying now with a mortgage gets you: Waiting to buy with all cash gets you: These are also some of the pros or cons for the rent or buy dilemma that Paul mentioned in comments to the OP. This is a very complex, multi-faceted question, that would not respond well to being put into any equation or financial model. Most people answer the question with "buy the home now with a mortgage" if they can pay for the down payment. This is why the mortgage industry exists. The people who would want to finance now rather than buy with all cash later would not only be analyzing the question in terms of financial health but also in terms of general well being. They might consider the tremendous pride that comes with home ownership and living under a roof of one's own. Who can say that those people are wrong? |
Best starting options to invest for retirement without a 401k | First, check out some of the answers on this question: Oversimplify it for me: the correct order of investing When you have determined that you are ready to invest for retirement, there are two things you need to consider: the investment and the account. These are separate items. The investment is what makes your money grow. The type of account provides tax advantages (and restrictions). Generally, these can be considered separately; for the most part, you can do any type of investment in any account. Briefly, here is an overview of some of the main options: In your situation, the Roth IRA is what I would recommend. This grows tax free, and if you need the funds for some reason, you can get out what you put in without penalty. You can invest up to $5500 in your Roth IRA each year. In addition to the above reasons, which are true for anybody, a Roth IRA would be especially beneficial for you for three reasons: For someone that is closer in age to retirement and in a higher tax bracket now, a Roth IRA is less attractive than it is for you. Inside your Roth IRA, there are lots of choices. You can invest in stocks, bonds, mutual funds (which are simply collections of stocks and bonds), bank accounts, precious metals, and many other things. Discussing all of these investments in one answer is too broad, but my recommendation is this: If you are investing for retirement, you should be investing in the stock market. However, picking individual stocks is too risky; you need to be diversified in a lot of stocks. Stock mutual funds are a great way to invest in the stock market. There are lots of different types of stock mutual funds with different strategies and expenses associated with them. Managed funds actively buy and sell different stocks inside them, but have high expenses to pay the managers. Index funds buy and hold a list of stocks, and have very low expenses. The conventional wisdom is that, in general, index funds perform better than managed funds when you take the expenses into account. I hope this overview and these recommendations were helpful. If you have any specific questions about any of these types of accounts or investments, feel free to ask another question. |
More money towards down payment versus long-term investments | I'd put the 20% down, close on the house, live in it for a year, and save the difference. If you find your cash flow is fine, run a calculation and start on a program of prepaying a bit of principal each month as an extra payment. If you study how amortization works, you'll understand that an extra payment of about 1/6 the amount due will knock off a full payment at the end. This is how a 30 year mortgage starts out. Meanwhile, you should keep in mind, it's easy to prepay the mortgage, but there's really no getting it back. So, before letting go of your money, I'd do a few things; I may be stating the obvious, but consider - No matter how low the payment on your mortgage, a payment is due each and every month until it's paid off. You put 80% down, take a 10 year mortgage, you still have payments for 10 years. You want to insure yourself against needing to sell in a hurry if you both lose your jobs, so whatever you put down, I'd recommend a healthy emergency account, 9-12 months worth of expenses. |
Do people tend to spend less when using cash than credit cards? | First, let me answer the question the best way I can: I don't know if there are any studies other than those that have already been mentioned. Now, let's talk about something more interesting: You don't need to base your behavior on any study, even if it is scientific. Let's pretend, for example, that we could find a scientifically valid study that shows that people spend 25% more when using a credit card than they do when spending cash. This does not mean that if you use a credit card, you will spend 25% more. All it means is that the average person spending with a credit card spends more than the average person paying cash. But there are outliers. There are plenty of people who are being frugal while using a credit card, and there are others who spend too much cash. Everyone's situation is different. The idea that you will automatically spend less by using cash would not be proven by such a study. When hearing any type of advice like this, you need to look at your own situation and see if it applies to your own life. And that is what people are doing with the anecdotal comments. Some say, "Yep, I spend too much if I use a card." Others say, "Actually, I find that when I have cash in my wallet, I spend it on junk." And both are correct. It doesn't matter what the study says the average person does, because you are not average. Now, let's say that you are a financial counselor who helps people work through disastrous financial messes. Your client has $20,000 in credit card debt and is having trouble paying all his bills. He doesn't have a budget and never uses cash. Probably the best advice for this guy is to stop using his card and start paying cash. It doesn't take a scientific study to see that this guy needs to change his behavior. For what it is worth, I keep a strict budget, keeping track of my spending on the computer. The vast majority of my spending is electronic. I find tracking my cash spending difficult, and sometimes I find that when I have cash in my wallet, it seems to disappear without a trace. :) |
If a trendline or pattern breaks due to some bad news but it returns back what to do? | There is a technique called the Elliott wave which explains these 'shocks'. The reversal directions you are questioning are part of the pattern, it is known as corrections. The Elliott wave is an indicator based on psychology of investors. Think about it this way, if you see a huge up trend what are you most likely to do, sell and make profit or continue, this is why there is a shock before it continues. Many people will sell to be safe, especially after hearing the bad news they won't risk it. By learning the Elliott wave you'll be able to make an educated decision on whether or not to stay or leave. Here are websites on the Elliott wave: http://stockcharts.com/school/doku.php?id=chart_school:market_analysis:elliott_wave_theory http://www.swing-trade-stocks.com/elliott-wave.html The Elliott wave is helpful in any time frame and works well with momentum. Hope this helps. |
What can I replace Microsoft Money with, now that MS has abandoned it? | If you would like to use linux I suggest you to use KMyMoney http://kmymoney2.sourceforge.net/ It is based on gnucash but it is easier to use IMO |
Why do Americans have to file taxes, even if their only source of income is from a regular job? | A couple things. First of all, most people's MAIN source of income is from their job, but they have others, such as bank interest, stock dividends, etc. So that income has to be reported with their wage income. The second thing is that most people have deductions NOT connected with their job. These deductions reduce income (and generate refunds). So it's in their interest to file. |
What items are exempt from the VAT? [U.K.] | Some items are VAT Exempt or Reduced, but in short you will pay it on almost any all consumer goods. Assuming you are a visitor to the UK from a non-EU nation then Her Majesty will refund you with the appropriate paperwork |
What typically happens to unvested stock during an acquisition? | This is a great question. I've participated in a deal like that as an employee, and I also know of friends and family who have been involved during a buyout. In short: The updated part of your question is correct: There is no single typical treatment. What happens to unvested restricted stock units (RSUs), unvested employee stock options, etc. varies from case to case. Furthermore, what exactly will happen in your case ought to have been described in the grant documentation which you (hopefully) received when you were issued restricted stock in the first place. Anyway, here are the two cases I've seen happen before: Immediate vesting of all units. Immediate vesting is often the case with RSUs or options that are granted to executives or key employees. The grant documentation usually details the cases that will have immediate vesting. One of the cases is usually a Change in/of Control (CIC or COC) provision, triggered in a buyout. Other immediate vesting cases may be when the key employee is terminated without cause, or dies. The terms vary, and are often negotiated by shrewd key employees. Conversion of the units to a new schedule. If anything is more "typical" of regular employee-level grants, I think this one would be. Generally, such RSU or option grants will be converted, at the deal price, to a new schedule with identical dates and vesting percentages, but a new number of units and dollar amount or strike price, usually so the end result would have been the same as before the deal. I'm also curious if anybody else has been through a buyout, or knows anybody who has been through a buyout, and how they were treated. |
Starting a new online business | Most US states have rules that go something like this: You will almost certainly have to pay some registration fees, as noted above. Depending on how you organize, you may or may not need to file a separate tax return for the business. (If you're sole proprietor for tax purposes, then you file on Schedule C on your personal Form 1040.) Whether or not you pay taxes depends on whether you have net income. It's possible that some losses might also be deductible. (Note that you may have to file a return even if you don't have net income - Filing and needing to pay are not the same since your return may indicate no tax due.) In addition, at the state level, you may have to pay additional fees or taxes beyond income tax depending on what you sell and how you sell it. (Sales tax, for example, might come into play as might franchise taxes.) You'll need to check your own state law for that. As always, it could be wise to get professional tax and accounting advice that's tailored to your situation and your state. This is just an outline of some things that you'll need to consider. |
How to calculate tax amounts withheld on mixed pre-tax and Roth 401(k) contributions, and match? | Your 401k IRA will now have three different sub-accounts, the one holding your Traditional (pre-tax) 401k contributions, the one holding your Roth 401k contributions, and the one holding the employer match contributions (which, as has been pointed out to you, cannot be considered to be Roth 401k contributions). That is, it is not true that So my next month's check shows $500+$500 going to the regular 401k, and $82+$82 going to the Roth 401k. Your next month's paystub will show $500 going into the regular 401k, $100 going into the Roth 401k, and if employer matching contributions are listed on the paystub, it will still show $600 going into the employer match. If you have chosen to invest your 401k in mutual funds (or stocks), shares are purchased when the 401k administrator receives the money and are also segregated in the three subaccounts. If you are paid monthly, then you will know on a month-by-month basis how many shares you hold in the three separate subaccounts, and there is no end-of-year modification of how many shares were purchased with Roth 401k contributions versus how many were purchased with pretax contributions or with employer matching funds as you seem to think. |
Free brokerage vs paid - pros and cons | Emotion aside, you can calculate the cost of the funds you have tied up at the bank. If I can earn 5% in a CD, my "free" checking with minimum $5000 balance really costs me $250/yr. You have money tied up, I understand, but where would you place it otherwise, and at what return? The subject of frequent trading even at zero cost is worth addressing, but not the real subject of your question. So, I'll leave it for elsewhere. |
Tax brackets in the US | Yes, your tax bracket is 25%. However, that doesn't mean that your take home pay will be 75% of your salary. There is much more that goes into figuring out what your take home pay will be. First, you have payroll taxes. This is often listed on your pay stub as "FICA." The Social Security portion of this tax is 6.2% on the first $118,500 of your pay and the Medicare portion is another 1.45% on the first $200,000. (Your employer also has to pay additional tax that does not appear on your stub.) So 7.65% of your salary gets removed off the top. In addition to the federal income taxes that get withheld, you may also have state income taxes that get withheld. The amount varies with each state. Also, the 25% tax bracket does not mean that your tax is 25% of your entire salary. You step through the tax brackets as your income goes up. So part of your salary is taxed at 10%, part at 15%, and the remainder is at 25%. The amount of federal income tax that is withheld from your paycheck is really a rough estimate of how much tax you actually owe. There are lots of things that can reduce your tax liability (personal exemptions, deductions, credits) or increase your tax (investment income, penalties). When you do your tax return, you calculate the actual tax that you owe, and you either get a refund if too much was taken out of your check, or you need to send more money in if too little was taken out. |
What happens if stock purchased on margin plummets below what I have in the brokerage? | If the price had dropped to $4 from $50, and you had $5000 to start with on your account, you will be left with $400 in your account if you closed the position now. So you would not be in debt if this was the only possition you had open. |
How to determine how much to charge your business for rent (in your house)? | If you are talking about a home office, you don't "charge" the business anything. If the area is used exclusively as an office you pro-rate by square footage just the actual expenses. TurboTax recent published an article "Can I Take the Home Office Deduction?" which is a must read if you don't understand the process. (Note: I authored said article.) |
Relation between inflation rates and interest rates | Possibly but not necessarily, though that can happen if one looks at the US interest rates in the late 1970s which did end with really high rates in the early 1980s. Generally interest rates are raised when inflation picks up as a way to bring down inflation. |
Hourly rate negotiation tips for paid internship | They likely have an intern (job title) pay-scale that maxes out somewhere below $30/hr in order to meet the FLSA (that exempt vs non-exempt stuff you were seeing). As a PhD student, you could probably negotiate up into the ~$25/hr range, but from a benefits standpoint, they might not be able to pay you $35/hr without making you an exempt, full-time employee. |
How are derivatives different from bucket shops? | How are derivatives like covered warrants or CFDs different from the bucket shops that were made illegal in the US? After reading up a little on the topic, the core difference seems to be that bucket shops were basically running betting pools, with everyone betting against the operator, whereas CFDs and similar derivatives are traded between speculators and the operator merely provides a market and checks the liquidity of participants. A CW seems to be a different matter that I'm not fully sure I understand (at least the description of Wikipedia seems to contradict your statement about not trade being performed on the underlying security). Should I worry that some regulator decides that my "market maker" is an illegal gambling operation? Not really. Nations with a mature financial industry (like Japan) invariably have heavy regulations that mandate constant auditing of institutions that sell financial instruments. In Japan, the Financial Services Agency is in charge of this. It's almost impossible that they would let an institution operate and later decide that its basic business model is illegal. What is possible are mainly two scenarios: |
How do you report S-corporation Shareholder loans / capital contributions? | As the owner of the S-corp, it is far easier for you to move money in/out of the company as contributions and distributions rather than making loans to the company. Loans require interest payments, 1099-INT forms, and have tax consequences, whereas the distributions don't need to be reported because you pay taxes on net profits regardless of whether the money was distributed. If you were paid interest, disregard this answer. I don't know if or how you could re-categorize the loan once there's a 1099-INT involved. If no interest was ever paid, you just need to account for it properly: If the company didn't pay you any interest and never issued you a 1099-INT form (i.e. you wrote a check to the company, no promissory note, no tax forms, no payments, no interest, etc.) then you can categorize that money as a capital contribution. You can likewise take that money back out of the company as a capital distribution and neither of these events are taxable nor do they need to be reported to the IRS. In Quickbooks, create the following Equity accounts -- one for each shareholder making capital contributions and distributions: When putting money into the company, deposit into your corporate bank account and use the Capital Contribution equity account. When taking money out of the company, write yourself a check and use the Distributions account. At the end of every tax year, you can close out your Contributions and Distributions to Retained Earnings by making a general journal entry. For example, debit retained earnings and credit distributions on Dec 31 every year to zero-out the distributions account. For contributions, do the reverse and credit retained earnings. There are other ways of recording these transactions -- for example I think some people just use a Member Capital equity account instead of separate accounts for contributions and distributions -- and QB might warn you about posting journal entries to the special Retained Earnings account at the end of the year. In any case, this is how my CPA set up my books and it's been working well enough for many years. Still, never a bad idea to get a second opinion from your CPA. Be sure to pay yourself a reasonable salary, you can't get out of payroll taxes and just distribute profits -- that's a big red flag that can trigger an audit. If you're simply distributing back the money you already put into the company, that should be fine. |
What is the effect of options expiration on equity pricing? | If the strike price closest to the underlying has high open interest, the options expiration is a bigger event. For instance: stock is at $20 w/ average volume of 100,000 shares per day. 20 strike has 1000 open interest. In this example the stock will "most likely" pin at 20 if we were expiring tomorrow. As u prob know, long calls at 19.90 close, turn into stock....long puts at 20.10 turn into short stock. Option pros (high % of volume) dont want to be short or long after expiration. Long call holders will sell above 20 to hedge, and long put holders will buy below 20. 1000 open interest is equivalent to 100,000 shares. That's the same amount as the average volume. Stock can't really move until after expiration. If I am long 10 $20 calls, and short 1000 shares I am flat going into expiration.....unless the stock gets smoked and now I am synthetically long a put....Short stock + long call= Long Put Then watch out cause it was artificially locked down. |
How do I explain why debt on debt is bad to my brother? | I'm not good at persuasion, and I'm not an expert at any of this, but here's what I've been thinking. Rather than telling him that he shouldn't rack up more debt, I'd ask him whether he's planning for his debt levels to increase, remain static, or decrease over the next five years. Try to make it feel like he's the one reaching the conclusion that he should be decreasing his debt load. If he says that he's fine with his debt levels remaining static or increasing, then I don't have any further advice. If he says he's trying to decrease his debt level, but it's actually increasing, then maybe he's in denial. |
New car price was negotiated as a “cash deal”. Will the price change if I finance instead? | So there are a few angles to this. The previous answers are correct in saying that cash is different than financing and, therefore, the dealer can rescind the offer. As for financing, the bank or finance company can give the dealership a "kickback" or charge a "fee" based on the customer's credit score. So everyone saying that the dealers want you to finance....well yes, so long as you have good credit. The dealership will make the most money off of someone with good credit. The bank charges a fee to the dealership for the loan to a customer with bad credit. Use that tactic with good credit...no problem. Use that tactic with bad credit.....problem. |
Is there any truth to the saying '99% of the world's millionaires have become rich by doing real estate'? | 78.84% of statistics are made up on the spot. |
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? | The ex-dividend date, prevents this, but people are still able to do this and this is an investment strategy. There are some illiquid and immature markets where prices don't adjust. In the options market people are able to find mispriced deep in the money calls to take advantage of the ex-dividend date. It is called dividend capture using covered calls. |
What are the differences between an investment mortgage and a personal mortgage? | According to my wife who used to work in the industry, since an investment mortgage is more likely to fail (they are just riskier) there are higher loan to value requirements and higher interest rates. They are just different products for different situations. |
Where to Park Proceeds from House Sale for 2-5 Years? | Your objectives are contradictory and/or not possible. Eliminating the non-taxable objective: You could divide the $100K in 5 increments, making a "CD ladder" $25K in 3mo CD (or savings a/c) $25K in 6 mo CD $25K in 9mo CD $25K in 1 yr CD or similar structure (6mo also works well) Every maturing CD you are able to access cash and/or invest in another longest maturity CD, and earn a higher rate of interest. This plan also works well to plan for future interest rates hikes. If you are forced to access (sell CD's) ALL the $$$ at any time, you will only lose accrued interest, none of the principal. All FDIC guaranteed. If non-taxable is the highest priority, "invest" in a tax-free money market fund....see Vanguard Funds. You will not have FDIC guarantee. |
Why would someone want to sell call options? | I do this often with shares that I own - mostly as a learning/experience-building exercise, since I don't own enough individual stocks to make me rich (and don't risk enough to make me broke). Suppose I own 1,000 shares of X. I don't expect my shares to go down, but I want to be compensated in case they do go down. Sure, I could put in a stop-loss order, but another option is to sell a call above where the stock is now (out-of-the-money). So I get the premium regardless of what happens. From there three things can happen: So a covered call essentially lets you give up some upside for some compensation against downward moves. Mathematically it's roughly equivalent to selling a put option - you make a little money (from the premium) if the stock goes up but can lose a lot if the stock plummets. So you would sell call options if: |
Execute or trade an options contract? | Your math shows that you bought an 'at the money' option for .35 and when the stock is $1 above the strike, your $35 (options trade as a contract for 100 shares) is now worth $100. You knew this, just spelling it out for future readers. 1 - Yes 2 - An execute/sell may not be nesesary, the ooption will have time value right until expiration, and most ofter the bid/ask will favor selling the option. You should ask the broker what the margin requirement is for an execute/sell. Keep in mind this usually cannot be done on line, if I recall, when I wanted to execute, it was a (n expensive) manual order. 3 - I think I answered in (2), but in general they are not identical, the bid/ask on options can get crazy. Just look at some thinly traded strikes and you'll see what I mean. |
logistical details of interest and dividend payments on assets traded on the secondary market? | To Many question and they are all treated differently. I was wondering how the logistics of interest and dividend payments are handled on assets , such as mortgages, bonds, stocks, What if the owner is some high-frequency algorithm that buys and sells bonds and stocks in fractions of a second? When the company decides to pay dividends, does it literally track down every single owner of that stock and deposit x cents per share in that person's bank account? (This sounds absolutely absurd and seems like it would be a logistical nightmare). In Stocks, the dividends are issued periodically. The dividend date is declared well in advance. As on end of the day on Dividend date, the list of individuals [or entities] who own the stock is available with the Stock-Exchange / Registrar of the companies. To this list the dividends are credited in next few days / weeks via banking channel. Most of this is automated. What if the owner is some high-frequency algorithm that buys and sells bonds and stocks in fractions of a second? On bonds, things work slightly differently. An Bond is initially issued for say 95 [discount of 5%] and payment of 100 after say 5 years. So when the person sells it after an year, he would logically look to get a price of 96. Of course there are other factors that could fetch him a price of 94.50 or 95.50. So every change in ownership factors in the logical rate of interest. The person who submits in on maturity gets 100. For the homeowner, I'm assuming he / she still makes mortgage payments to the initial bank they got the mortgage from, even if the bank no longer "owns" the mortgage. In this case, does the trader on the secondary market who owns the mortgage also come back to that bank to collect his interest payment? This depends on how the original financial institution sells the mortgage to new institutions. Generally the homeowner would keep paying initial financial institution and they would then take a margin and pay the secondary investor. If this was collateral-ized as Mortgage backed security, it is a very different story. |
Data source for historical intra-day bid/ask price data for stocks? | Check the answers to this Stackoverflow question https://stackoverflow.com/questions/754593/source-of-historical-stock-data a number of potential sources are listed |
Abundance of Cash - What should I do? | People have asked a lot of good questions about your broader situation, tolerance for risk, etc, but I'm going to say the one-size-fits-most answer is: split some of your monthly savings (half?) into the VEU Vanguard FTSE All-World ex-US ETF and some into VTI Vanguard Total Stock Market ETF. This can be as automatic and hassle-free as the money market deposit and gives a possibility of getting a better return, with low costs and low avoidable risk. |
How can I make a profit by selling a stock short? | How so? If i sell short, then i make a profit only if the price goes down so i can buy back at a lower price. Yes, but if the price is going up then you would go long instead. Shorting a stock (or any other asset) allows you to profit when the price is going down. Going long allows you to profit when the price is going up. In the opposite cases, you lose money. In order to make a profit in either of those situations, you have to accurately assess which way the price will trade over the period of time you are dealing with. If you make the wrong judgment, then you lose money because you'll either sell for a lower price than you bought (if you went long), or have to buy back at a higher price than you sold for (if you went short). In either case, unless the trader can live with making a short-term loss and recouperating it later, one needs a good stop-loss strategy. |
In the UK, can authors split a single advance on a book over multiple tax returns? | HMRC calls it: Averaging for creators of literary or artistic works, and it is the averaging of your profits for 2 successive years. It's helpful in situations like you describe, where income can fluctuate wildly from year to year, the linked article has the full detail, but some of the requirements are: You can use averaging if: you’re self-employed or in a partnership, and the business started before 6 April 2014 and didn’t end in the 2015 to 2016 tax year your profits are wholly or mainly from literary, dramatic, musical or artistic works or from designs you or your business partner (if you’re in a partnership) created the works personally. Additionally: Check that your profit for the poorer year, minus any adjusted amounts, is less than 75% of the figure for your better year. If it is, you can use averaging. Then, check if the difference between your profits for the 2 years is more than 30% of your profit for the better year. If it is, work out the average by adding together the profits for the 2 years, and divide the total by 2. |
Investment strategy for a 20 year old with about 30k in bank account | Thank you for your service. My first suggestion since your car is a planned for the near future is keep that amount in savings and just pay cash. There are plenty of attractive offers to entice you to finance your vehicle but there really is no compelling reason to do it considering the savings you have. Second I would keep an additional portion of savings as a rainy day emergency fund. How much is based mostly on what you feel comfortable with. The number of possible emergencies that can come up is limited and your expenses are limited which is normal given your age. This fund might be for something such as emergency travel for a sick family member, cover a deductible for an auto accident, whatever unforseen event might occur (hence the name emergency fund). What investments you are comfortable with will be determined by risk tolerance. While in the military individual stocks that are aggressive risky investments may not be a good idea because of the extra attention they require and you can't really babysit a portfolio while deployed but there are many good low or no cost mutual funds or ETFs that you could get into. I would look into setting up a recurring purchase with a set dollar amount monthly so you will continue to accumulate whatever option you are investing in regularly even if you are deployed. Which fund or ETF you pick will depend on your goals and risk tolerance but you could very easily pick several for diversity. Good luck and thank you again for your service. |
Borrow from 401k for down payment on rental property? | the most important information that you provided was "I'm 25 years old". You have a few years to save for a rental property. Taking a loan against your 401k only invites a lot of paperwork and a good deal of risk. Not only the "if I lose my job I have to pay it back (in 60 days)", but it effectively locks you into your current job because changing jobs also causes the same repayment consequences. Do you really love your job that much that you would stick with it for the loan you have? (rhetorical) One could argue that real estate is a good way to diversify away from the stock market (assuming you have your 401k invested in stocks). Another way to get the same diversification is to invest in REITs through your 401k. Owning rental property isn't something to rush into. You really have to like it.The returns and headaches that accompany it can be a drag and it's harder to get out of then stocks. |
How can people have such high credit card debts? | I'm not sure if the rules in Canada and the US are the same. I'm as amazed as you are by the amounts of debts people have, but I can see how this credit can be extended. Generally, with good credit history and above average pay - it is not unheard of to get about $100K credit limit with a bunch of credit cards. What you do with that after that depends on your own ability to manage your finances and discipline. Good credit history is defined by paying your credit cards on time with at least minimum payment amount (which is way lower than the actual statement amount). Above average pay is $60K+. So you can easily have tons of debt, yet be considered "low risk" with good credit history. And that's the most lucrative market for the credit card issuers - people who do not default, but also have debt and pay interest. |
If banksimple.com is not a bank, what is it? | I don't see how this concept takes off. First and foremost, BankSimple is NOT a bank but a tech company masquerading as one. BankSimple leaves industry regulation and treasury management -- the CORE of banking, to outside parties. Call me old fashioned, but I prefer to have as few stops between me and my money as possible. If not for a fear of losing it in a robbery and inability to earn interest, I'd shove it under a mattress. So why would I want to bank with an intermediary, who admittently doesn't understand how the process works? How is that "looking out for my interests"? And how is your security better than other institutions that offer 128-bit encryption and multiple security questions to test a customer's identity? I'd like to add that not charging overdraft fees and providing lines of credit to help customers out in the event they spend more than they have is nice in concept, but what happens when those same customers do not make deposits to cover their shortfalls? When it comes to money, people will take advantage of any opportunities they have to circumvent the system. Especially if funds are tight. |
What reason would a person have to use checks in stores? | It's because they're used to it and it works for them. Everything other reason is meh. Used to, you could float a check to payday... have no money in the account, yet write a check a couple days before payday because you know that's how long it takes for the check to get to your bank and when it does, you'll have the money. But most (if not all) business that still accept checks (a dying subset, for sure) electronically present the check now. They take it from your hand, run it through a machine at the register, and it immediately clears the bank, just like a debit card would. We're nearing the end of the check era, atleast on personal accounts. Kids growing up now won't even know what a check is, aside from it's namesake on a type of bank account. |
When would one actually want to use a market order instead of a limit order? | If you have $10000 and wish to buy 1000 shares of a $10 stock, you risk borrowing on margin if you go over a bit. For some people, that's a non-issue. Some folk with an account worth say, $250K don't mind going over now and then or even let the margin account run $100K on a regular basis. But your question is about market orders. A limit order above the market price will fast-fill at the market anyway. When I buy a stock, it's longer term usually. A dime on a $30 share price won't affect my buy decision, so market is ok for me. |
How to use a stop and limit order together? | You need to use one of each, so a single order wouldn't cover this: The stop-loss order could be placed to handle triggering a sell market order if the stock trades at $95 or lower. If you want, you could use a stop-limit order if you have an exit price in mind should the stock price drop to $95 though that requires setting a price for the stop to execute and then another price for the sell order to execute. The limit sell order could be placed to handle triggering a sell if the stock rises above $105. On the bright side, once either is done the other could be canceled as it isn't applicable anymore. |
Do retailers ever stock goods just to make other goods sell better? | That happens all the time. The best situation for this to happen is when you have several products, each a bit better and a bit more expensive than the other, and you add a new product which is the cheapest. That gets people into the store to look at the cheapest product, and then you show the the next more expensive which is so much better for only a little more money, and the next more expensive which is again so much better... You might not sell any of the cheapest product but it helps you sell the others. Also happens the other way round: You add a really expensive item, unaffordable for most customers, that is really, really nice. Then customers look at it and you show them that for half the price they can have something that is almost as nice. The expensive product increases the amount that customers think is "the right price" for that kind of product. A customer might think that $2,000 for a diamond ring is an awful lot of money, but if you show them another ring for $5,000 then suddenly the $2,000 doesn't look that expensive anymore. And if it is almost as nice as the $5,000 ring, you sell a lot of rings for $2,000 because you had the more expensive ring in the store. |
What is the lifespan of a series of currency? | US currency doesn't expire, it is always legal tender. I can see some trouble if you tried to spend a $10,000 bill (you'd be foolish to do so, since they are worth considerably more). Maybe some stores raise eyebrows at old-style $100's (many stores don't take $100 bills at all), but you could swap them for new style at a bank if having trouble with a particular store. Old-series currency can be an issue when trying to exchange US bills in other countries, just because it doesn't expire here, doesn't mean you can't run into issues elsewhere. Other countries have different policies, for example, over the last year the UK phased in a new five pound note, and as of last month (5/5/2017) the old fiver is no longer considered legal tender (can still swap out old fivers at the bank for now at least). Edit: I mistook which currency you took where, and focused on US currency instead of Canadian, but it looks like it's the same story there. |
Calculating the cost of waiting longer for money | The cost of an extra 30 days is $1459.80 |
How far do I go with a mortgage approval process when shopping around? | As per my comments, I think this is up to you and how much work you want to put forth. I do not feel it is trivial to provide documentation even with 90% of it will be the same among lenders. See this question: First answer, third and fourth paragraphs. You need to go as far as understanding the total cost of the loan, you probably need a good faith estimate. I would also compare a minimum of three lenders. |
What is 'consolidating' debt and why do people do it? | With the scenario that you laid out (ie. 5% and 10% loans), it makes no sense at all. The problem is, when you're in trouble the rates are never 5% or 10%. Getting behind on credit cards sucks and is really hard to recover from. The problem with multiple accounts is that as the banks tack on fees and raise your interest rate to the default rate (usually 30%) when you give them any excuse (late payment, over the limit, etc). The banks will also cut your credit lines as you make payments, making it more likely that you will bump over the limit and be back in "default" status. One payment, even at a slightly higher rate is preferable when you're deep in the hole because you can actually pay enough to hit principal. If you have assets like a house, you'll get a much better rate as well. In a scenario where you're paying 22-25% interest, your minimum payment will be $150-200 a month, and that is mostly interest and penalty. "One big loan" will usually result in a smaller payment, and you don't end up in a situation where the banks are jockeying for position so they get paid first. The danger of consolidation is that you'll stop triggering defaults and keep making your payments, so your credit score will improve. Then the vultures will start circling and offering you more credit cards. EDIT: Mea Culpa. I wrote this based on experiences of close friends whom I've helped out over the years, not realizing how the law changed in 2009. Back around 2004, a single late payment would trigger universal default on most cards, jacking all rates up to 30% and slashing credit lines, resulting in over the limit and other fees. Credit card banks generally apply payments (in order, to interest on penalties, penalties, interest on principal, principal) in a way that makes it very difficult to pay down principal for people deep in debt. They would also offer "payment plans" to entice you to pay Bank B vs. Bank A, which would trigger overlimit fees from Bank A. Another change is that minimum payments were generally 2% of statement balance, which often didn't cover the monthly finance charge. The new law changed that, resulting in a payment of 1% of balance + accrued interest. Under the old regime, consolidation made it less likely that various circumstances would trigger default, and gave the struggling debtor one throat to choke. With the new rules, there are definitely a smaller number of scenarios where consolidation actually makes sense. |
When does a pricing error become false advertising? | It's definitely annoying, but it's not necessarily false advertising. There is no rule or law that says they have to fix a pricing error at all, let alone within a certain period of time. Unfortunately they have no obligation to do business with you unless they take (and keep) your money. If they canceled the order and returned your money you have no binding agreement with them. On top of that, in the US... 'misleading advertising' usually refers to "Any advertising or promotion that misrepresents the nature, characteristics, qualities or geographic origin of goods, services or commercial activities" (Lanham Act, 15 U.S.C.A. § 1125(a)). The main criteria that they evaluate before taking legal action is whether or not someone has suffered harm or loss due to the reliance on the bad information. But you're in Europe. The EU ideas behind misleading advertising tend to focus a lot more on comparing one product to someone else's and making subjective claims or false promises. Pricing does come up, but still, you need to have an ability to prove that you suffered harm or a loss from the business' actions. Even if you were able to prove that, to force the business to change its price catalog, you would need to go through legal proceedings, demonstrate the harm that you've sustained, and then have a judge decide in your favor and order the supplier to comply. My guess is that it's just not worth it for you, but you haven't specified if this is just an annoying shoe-shopping experience or if you are regularly experiencing bait-and-switch tactics from a supplier that is a crucial part of a business operation. If it's the former, just like a physical shop reserves the right to kick you out if you're not behaving, (but usually doesn't because they'd like to keep you as a customer), an online shop can update its prices whenever they like. They can change their prices too, and cancel orders. If it's the latter, then start putting together some documentation on how many times this has happened and how it has damaged your business. But before you get on the warpath I would recommend you look for another place to buy whatever you have in mind, or else try a pound of sugar in your approach to this supplier... My own business experience has shown that can go a lot way in figuring out a mutually beneficial resolution. If you want to see a bit more... Here is the EU Justice Commission's website on false advertising, Here is a PDF leaflet from the UK Office of Fair Trading that spells out what is explicitly not allowed from a business by way of advertising & business practices. |
Does a stay at home mom need term life insurance? | Another source of insurance can be through the working spouses employment. Some companies do provide free or low cost coverage for spouses without a need for a physical exam. The risk is that it might not be available at the amount you want, and that if the main spouse switches companies it might not be available with the new employer. A plus is that if there is a cost it is only a one year commitment. Term insurance is the way to go. It is simple to purchase, and not complex to understand. Sizing is key. You may need to provide some level of coverage until the youngest child is in high school or college. Of course the youngest child might not have been born yet. The longer the term, the higher the cost to account for the inflation during the period of the insurance. If the term expires, but the need still exists, it is possible to get another policy but the cost of the new term policy will be higher because the insured is older. If there are special needs children involved the amount and length may need to be increased due to the increased costs and duration of need. Don't forget to periodically review the insurance situation to make sure your need haven't changed so much a new level of insurance would be needed. |
As an employer, how do I start a 401k or traditional IRA plan? | OK, so first of all, employers don't set up IRAs. IRA stands for Individual Retirement Account. You can set up a personal IRA for yourself, but not for employees. If that is what you're after, then just set one up for yourself - no special rules there for self employment. As far as setting up a 401(k), I'd suggest checking with benefits management companies. If you're small, you probably don't have an HR department, so managing a 401(k) yourself would likely be overly burdensome. Outsourcing this to a company which handles HR for you (maybe running payroll, etc. also), would be the best option. Barring that, I'd try calling a large financial institution (Schwab, Fidelity, etc.) for clear guidance. |
Why buy bonds in a no-arbitrage market? | For safety. If something catastrophic happens to your bank and your money is in there you will lose any not covered by FDIC. So if you have a very large amount of money you will store it in bonds as its much less likely that the US treasury will go bankrupt than your bank. I also literally just posted this in another thread: Certain rules and regulations penalize companies or institutions for holding cash, so they are shifting to bonds and bills. Fidelity, for example, is completely converting its $100 billion dollar cash fund to short term bills. Its estimated that over $2 trillion that is now in cash may be converted to bills, and that will obviously put upward preasure on the price of them. The treasury is trying to issue more short term debt to balance out the demand. read more here: http://www.wsj.com/articles/money-funds-clamor-for-short-term-treasurys-1445300813 |
Given a certain yearly savings, how much can I spend on a capital improvement? NPV of future cash flow | This investment does not have a payback period as the net present value of your investment is negative. Your investment requires an initial cash outlay of $40,000 followed by annual savings of $2060 for the next 20 years. Your discount rate is 5% at which the NPV is $-14327.85 as calculated below by using this JavaScript financial functions library tadJS that is based on a popular tadXL add-in for Excel 2007, 2010 and 2013. |
Should I exclude bonds from our retirement investment portfolio if our time horizon is still long enough? | I've had the same thoughts recently and after reading Investing at Level 3 by James Cloonan I believe his thesis that for the passive investor you're giving up too much if you're not 100% in equities. He is clear to point out that you need to be well aware of your withdrawal horizons and has specific tactics for shifting the portfolio when you know you must have the money in the next five years and wouldn't want to pull money out when you're at a market low. The kicker for me was shifting your thought to a plotting a straight line of reasonable expectations on your return. Then you don't worry about how far down you are from your high (or up from your low) but you measure yourself against the expected return and you'll find some real grounding. You're investing for the long term so you're going to see 2-3 bear markets. That isn't the the time to get cold feet and react. Stay put and it will come back. The market gets back to the reasonable expectations very quickly as he confirms in all the bear markets and recessions of any note. He gives guidelines for a passive investing strategy to leverage this mentality and talks about venturing into an active strategy but doesn't go into great depth. So if you're looking to invest more passively this book may be enough to get you rolling with thinking differently than the traditional 70/30 split. |
Can I use FOREX markets to exchange cash? | As far as I understand, OP seems to be literally asking: "why, regarding the various contracts on various exchanges (CBE, etc), is it that in some cases they are 'cash settled' and in some 'physically settled' -?" The answer is only that "the exchange in question happens to offer it that way." Note that it's utterly commonplace for contracts to be settled out physically, and happens in the billions as a daily matter. Conversely zillions in "cash settled" contracts play out each day. Both are totally commonplace. Different businesses or entities or traders would use the two "varieties" for sundry reasons. The different exchanges offer the different varieties, ultimately I guess because they happen to think that niche will be profitable. There's no "galactic council" or something that enforces which mode of settlement is available on a given offering - ! Recall that "a given futures contracts market" is nothing more than a product offered by a certain exchange company (just like Burger King sells different products). I believe in another aspect of the question, OP is asking basically: "Why is there not, a futures contract, of the mini or micro variety for extremely small amounts, of currency futures, which, is 'physically' settled rather than cash settled ..?" If that's the question the answer is just "whatever, nobody's done it yet". (Or, it may well exist. But it seems extremely unlikely? "physically" settled currencies futures are for entities operating in the zillions.) Sorry if the question was misunderstood. |
Deceived by car salesman | The only thing that is important here is the documentation you and your daughter signed. If that documentation states that you were a co-signer and that your daughter was the primary on the loan, and then if the loan is not being reported in your daughter's name, you have a cause for action. If, however, the documentation says the loan is entirely in your name, the mistake is yours. Even in that case, though, your daughter may be able to take over the loan, or she may be able to take out a loan from a separate institution and use that to pay off the current loan. Obviously, this may be difficult if she does not have a credit history, which is what got you here in the first place. :( |
Is there a measure that uses both cost of living plus income? | The key term you're looking for is "purchasing power parity", which considers the local prices of goods and services when making comparisons between countries. For example, you can look up the GDP by PPP per capita to get a sense of much people on average incomes can buy in each country. Of course, average incomes may not be too relevant to your own specific circumstances, but nonetheless you can look at the PPP data itself to figure out how to translate specific numbers between two currencies. However, note that the "basket" of goods used to calculate this measure itself has a significant impact on the results. Comparing prices of food and electronic equipment respectively will often give very different answers. |
Are Chase credit cards commonly accepted for purchases? | If you read the fine print in the Pricing & Terms section of that card, you'll see: By becoming a Visa Business Card cardmember, you agree that the card is being used only for business purposes and that the card is being issued to a public or private company including a sole proprietor or employees or contractors of an organization. So that card is a Chase-branded Visa card, and should be accepted anywhere other Visa cards are. Credit cards are normally either MasterCard or Visa, although many of them make that rather inconspicuous. The only major exceptions I know of are American Express and Discover. (And store cards that are only good at one particular store.) |
How can a 'saver' maintain or increase wealth in low interest rate economy? | Personally, I invest in mutual funds. Quite a bit in index funds, some in capital growth & international. |
Creating S-Corp: Should I Name My Wife as a Director/Shareholder? | There are many aspects to consider in deciding what sort of company you want to form. Instead of an S-corporation, you should determine whether it would be better to form a Limited Liability Company (LLC), Limited Partnership (LP) or even a professional company (PC). Littleadv is correct: There is minimal benefit in forming an S-corp with you and your wife as the shareholders, if you will be the only contributor-worker. There are costs associated with an S-corporation, or any corporation, that might outweigh benefits from more favorable tax treatment, or personal protection from liability: Filing fees and disclosure rules vary from state to state. For example, my father was a cardiologist who had no employees, other than my grandmother (she worked for free), in a state with income taxes (NM). He was advised that a PC was best in New Mexico, while an S-Corp was better in Florida (there are no personal income taxes in Florida). The only way to know what to do requires that you consult an accountant, a good one, for guidance. |
Would cross holding make market capitalization apparently more? | Initially, Each company has 10k shares. Company B has $500k money and possibly other assets. Every company has stated purpose. It can't randomly buy shares in some other firm. Company A issued 5k new shares, which gives it $500k money. Listed companies can't make private placements without regulatory approvals. They have to put this in open market via Public issue or rights issue. Company B does the same thing, issuing 5k shares for $500k money. Company A bought those 5k shares using the $500k it just got There is no logical reason for shareholder of Company B to raise 5K from Company A for the said consideration. This would have to increase. |
LLC Partnership Earned Income vs. Partnership Share | It would appear that you are not actually "equal" partners. You have differently valued interests and those values fluctuate based on individual performance. The TurboTax advice is simplified for entities that don't track interests relative to partner inputs. IRC § 704(a), partner's distributive share is set by the partnership agreement, and § 704(b), failing an allocation by the agreement it is set by the partner's interest in the partnership. But note § 704(b)(2), which prevents blatant tax-rigging in the partnership agreement. |
Why did gold dip in 2011 | The cause of the increase in 2006-2011 was the financial crisis, where, if you recall, the global banking system came close to collapse for reasons that are well documented. Rightly or wrongly, gold is seen as a safe haven asset in times of crisis. The price of gold began to decline in 2011 when the markets decided that the risk of a global banking system collapse had passed without further incident. In the period leading up to 2006, the price of gold was in a flat-to-down trend because there was little net buying interest in gold and large gold sales had been executed by various central banks around the world who felt that gold no longer had a place in central bank reserves. In modern economies gold is seen as a "fringe" asset. It has no role to play. The recent financial crisis may have dented that perception, but those dents are now being forgotten and the price of gold is returning to its long-term downward trend. When the next financial/banking crisis is upon us, the price of gold will again (probably) rally. The extent of the rally will depend on the extent of the crisis. |
In Australia, how to battle credit card debt? | Short-term, getting a balance transfer will help. It'll reduce the interest you pay. You can also reduce the interest you pay on your cars if you are able to consolidate your debt into a personal loan. To your question about debt consolidation companies, as far as I know, that's all they do. However, long-term, there's only two ways to stay on top of debt: increase your income, or reduce your spending. Basically, if you can't or won't get a raise or a job that pays more (or a second job), you need to cut back on your spending. You might need to do something radical, like move somewhere with cheaper rent (as long as increased travel costs doesn't offset the saving). But you'll be much better off in the long run if you step back and take a look at your situation now, and make adjustments accordingly. |
How will going from 75% Credit Utilization to 0% Credit Utilization affect my credit score? | You really don't know how credit scoring works. Let's think about the purpose of a credit score: to assess whether you're a high default risk. A lender wants to know, in this order: Utilization factors into the solvency assessment. If you are at 100% utilization of your unsecured credit, you're insolvent -- you can't pay your bills. If you are at 0%, you're as solvent as you can be. Most people who use credit cards are somewhere in the middle. When a bank underwrites a large loan like a mortgage or car loan, they use your credit score an application information like income and employment history to figure out what kind of loan you qualify for. Credit cards are called "revolving" accounts for a reason -- you're supposed to use them to buy crap and pay your bill in full at the end of the month. My advice to you: |
Is the Swiss stock market inversely correlated with the Swiss Franc like Japan today? | Roughly about 1 of 2 Swiss francs is won abroad. So, yes it is easier for Swiss companies to export when the Swiss franc is not "too high" as it has been those last years. The main export market for Switzerland is the UE. Some companies are doing most or all of their business on the Swiss market. Others are much more exposed to the the health of the global economy. When the Swiss franc appreciates, some companies suffer a lot from that and other less. It depends on their product portfolio, competitors, and other factors. The last decades have shown that how the Swiss Franc valuation is less and less correlated with the performance of the Swiss economy. The Swiss franc is used as a safe haven when the global economy goes bad or is uncertain. In those times, the Swiss franc can be overevaluated, at least as compared to the purchasing power. When the global economy is improving, the over-appreciation of the Swiss franc tends to disapear ; this is happening now (in Mid-2017). As a summary, the Swiss franc itself is not truly correlated with the competitiveness of the Swiss economy, but more about how people in the world are anxious. In this regard, it behaves a little bit like gold. |
Shared groceries expenses between roommates to be divided as per specific consumption ratio and attendance | The solution to this problem is somewhat like grading on a curve. Use the consumption ratio multiplied by the attendance (which is also a ratio, out of 100 days) to calculate how much each person owes. This will leave you short. Then add together all of the shares in a category, determine the % increase required to get to the actual cost of that category, and increase all the shares by that %. |
Malaysian real estate: How to know if the market is overheated or in a bubble? | I don't buy the "house prices will always increase due to the increased cost of raw materials" argument. In a lot of countries you will find that the cost of (re)building a property is substantially lower than its perceived sale value. If it wasn't, there would be no incentive for developers to take the risk of buying the land and building houses on it. Say the cost of building the house is 50% of the sale price (which might already be generous). Materials probably account for half of the building cost so you've got 25% tail wagging 75% dog? I'd start to worry if people buy property as a get rich quick scheme, which seems to be what you're describing. |
What is the difference between a structured collar and a normal collar in finance? | Let's start with a definition: A Collar is a protective strategy for a position in the underlying instrument created by purchasing a put and selling a call to partially pay for the put option purchased or vice versa. Based on that definition, there are two different types of collars. Each is a combination of two simpler strategies: References Multi-Leg Options Orders |
What are some good books for learning stocks, bonds, derivatives e.t.c for beginner with a math background? | My personal favorites are Options, Futures, and Other Derivatives by John C Hull Thinking Fast and Slow - Daniel Kahneman Expected Returns - Antti Ilmanen [check out the video : How to Think About Expected Returns] It is a 600 page book … A summary of it: Without a rational expectation of expected returns, investing can lead to severe disappointment and disillusionment. Making a good model to forecast expected returns is so difficult. Near-term expectation is almost impossible. The key is very very much about focusing on the long-term, and on getting returns that are feasible, not outlandish. There are three pillars that are central: Practically, the work of an investment manager today involves finding many different sources of returns, and diversifying effectively between them, and finally being humble about what returns we can expect today. |
Should I fund a move by borrowing or selling other property assets? | When you compare the costs of paying your current mortgage with the rental income from the flat, you're not really comparing like with like. Firstly, the mortgage payments are covering both interest and capital repayments, so some of the 8k is money that is adding to your net worth. Secondly, the value of the flat (130k) is much more than the outstanding mortgage (80k) so if you did sell the flat and pay off the mortgage, you'd have 50k left in cash that could be invested to provide an income. The right way to compare the two options is to look at the different costs in each scenario. Let's assume the bigger house will cost 425k as it makes the figures work out nicely. If you buy the bigger house with a bigger mortgage, you will need to borrow 50k more so will end up with a mortgage of 130k, and you will still have the 8k/year from the flat. Depending on your other income, you might have to pay tax on the 8k/year - e.g. at 40% if you're a higher-rate taxpayer, leaving you with 4.8k/year. If you sell the flat, you'll have no mortgage repayments to make and no income from the flat. You'll be able to exactly buy the new house outright with the 50k left over after you repay the mortgage, on top of your old house. You'd also have to pay some costs to sell the flat that you wouldn't have to with the bigger mortgage, but you'd save on the costs of getting a new mortgage. They probably aren't the same, but let's simplify and assume they are. If anything the costs of selling the flat are likely to be higher than the mortgage costs. Viewed like that, you should look at the actual costs to you of having a 130k mortgage, and how much of that would be interest. Given that you'll be remortgaging, at current mortgage rates, I'd expect interest would only be 2-3%, i.e around 2.5k - 4k, so significantly less than the income from the flat even after tax. The total payment would be more because of capital repayment, but you could easily afford the cashflow difference. You can vary the term of the mortgage to control how much the capital repayment is, and you should easily be able to get a 130k mortgage on a 425k house with a very good deal. So if your figure of 8k rent is accurate (considering void periods, costs of upkeep etc), then I think it easily makes sense to get the bigger house with the bigger mortgage. Given the tax impact (which was pointed out in a comment), a third strategy may be even better: keep the flat, but take out a mortgage on it in exchange for a reduced mortgage on your main house. The reason for doing it that way is that you get some tax relief on the mortgage costs on an investment property as long as the income from that property is higher than the costs, whereas you don't on your primary residence. The tax relief used to just be at the same tax rate you were paying on the rental income, i.e. you could subtract the mortgage costs from the rental income when calculating tax. It's gradually being reduced so it's just basic rate tax relief (20%) even if you pay higher-rate tax, but it still could save you some money. You'd need to look at the different mortgage costs carefully, as "buy-to-let" mortgages often have higher interest rates. |
Tips for insurance coverage for one-man-teams | Like most forms of insurance, health insurance is regulated at the state level. So what is available to you will depend greatly upon which state you live in. You can probably find a list of insurance companies from your state's official website. Many states now provide "insurance of last resort" for individuals who can't get insurance through private insurance companies. You can try looking into professional and trade associations. Some offer group insurance plans comparable with COBRA coverage, meaning you'd get a group discount and benefits but without the benefit of an employer paying 30-80% of your premiums. As a software developer you may qualify for membership in the IEEE or ACM, which both offer several forms of insurance to members. The ASP also offers insurance, though they don't provide much information about it on the public portions of their website. These organization offer other benefits besides insurance so you may want to take that in to consideration. The National Federation of Independent Business also offers insurance to members. You may find other associations in your specific area. Credit Unions, Coops and the local chamber of commerce are all possible avenues of finding lower cost insurance options. If you are religious there are even some faith based non-insurance organizations that provide medical cost sharing services. They depend upon the generosity and sense of fairness and obligation of their members to share the burden of medical expenses so their definitely not for everyone. |
Will my current employer find out if I have a sole proprietarship/corporation? | Tell your employer during your initial contract Terms of Service discussions. Ordinarily, this is boilerplate but you should ask for a rider in your contract which says - in some form - I already have IP, I will continue to work on this IP in my own time, and any benefit or opportunity derived from this IP will continue to be entirely mine. I requested exactly such a rider when I took up a new job just over a year ago and my employer was extremely accommodating. That I already had a company in which that IP could reside actually made the process easier. As @JohnFX has already mentioned, not telling your employer is both unethical as well as storing up potential legal hassles for you in the futre. |
property owned 50/50 between my brother and me | ASSUMING you're talking about a property in the United States, the answer generally would be "no". You aren't actually paying any of the expenses for the property and yet you want to take the deductions for doing so? That's a rather cheeky move, I'd say! (grin) It probably would lead to some real strife with your brother, since he would have proper claim to those credit on the basis he's the one footing the bills for the property. Before you do anything like what you're talking about, it might be best to speak with him, because both of you are running the very real risk of an audit, and if that happens then I can guarantee the IRS will slap the daylights out of you for it. Your brother, I'm sure, is already claiming all of the deductions he can for what he's putting into the property, and on top of that you want to file for your half. What half are you referring to, when your out-of-pocket is zero? So what you're saying is, you think that between you and your brother you should be able to take a credit of 150% of the actual deductions...Sounds like a recipe for disaster to me. I strongly encourage you to talk to a tax professional, but if you get a different answer to this than what I've already given then I'd be stunned. I hope this helps. Good luck! |
What percentage of my portfolio should be in individual stocks? | If you are comfortable with the risk etc, then the main thing to worry about is diversity. For some folks, picking stocks is beyond them, or they have no interest in it. But if it's working for you, and you want to keep doing it, more power to you. If you are comfortable with the risk, you could just as well have ALL your equity position in individual stocks. I would offer only two pieces of advice in that respect. 1) no more than 4% of your total in any one stock. That's a good way to force diversity (provided the stocks are not clustered in a very few sectors like say 'financials'), and make yourself take some of the 'winnings off the table' if a stock has done well for you. 2) Pay Strong attention to Taxes! You can't predict most things, but you CAN predict what you'll have to pay in taxes, it's one of the few known quantities. Be smart and trade so you pay as little in taxes as possible 2A)If you live someplace where taxes on Long term gains are lower than short term (like the USA) then try really really hard to hold 'winners' till they are long term. Even if the price falls a little, you might be up in the net compared to paying out an extra 10% or more in taxes on your gains. Obviously there's a balancing act there between when you feel something is 'done' and the time till it's long term.. but if you've held something for 11 months, or 11 months and 2 weeks, odds are you'd be better off to hold till the one year point and then sell it. 2B) Capture Losses when you have them by selling and buying a similar stock for a month or something. (beware the wash sale rule) to use to offset gains. |
which types of investments should be choosen for 401k at early 20's? | The question you should be asking yourself is this: "Why am I putting money into a 401(k)?" For many people, the answer is to grow a (large) nest egg and save for future retirement expenses. Investors are balancing risk and potential reward, so the asset categories you're putting your 401(k) contribution towards will be a reflection on how much risk you're willing to take. Per a US News & World Report article: Ultimately, investors would do well to remember one of the key tenants of investing: diversify. The narrower you are with your investments, the greater your risk, says Vanguard's Bruno: "[Diversification] doesn't ensure against a loss, but it does help lessen a significant loss." Generally, investing in your employer's stock in your 401(k) is considered very risk. In fact, one Forbes columnist recommends not putting any money into company stock. FINRA notes: Simply stated, if you put too many eggs in one basket, you can expose yourself to significant risk. In financial terms, you are under-diversified: you have too much of your holdings tied to a single investment—your company's stock. Investing heavily in company stock may seem like a good thing when your company and its stock are doing well. But many companies experience fluctuations in both operational performance and stock price. Not only do you expose yourself to the risk that the stock market as a whole could flounder, but you take on a lot of company risk, the risk that an individual firm—your company—will falter or fail. In simpler terms, if you invest a large portion of your 401(k) funds into company stock, if your company runs into trouble, you could lose both your job AND your retirement investments. For the other investment assets/vehicles, you should review a few things: Personally, I prefer to keep my portfolio simple and just pick just a few options based on my own risk tolerance. From your fund examples, without knowing specifics about your financial situation and risk tolerance, I would have created a portfolio that looks like this when I was in my 20's: I avoided the bond and income/money market funds because the growth potential is too low for my investing horizon. Like some of the other answers have noted, the Target Date funds invest in other funds and add some additional fee overhead, which I'm trying to avoid by investing primarily in index funds. Again, your risk tolerance and personal preference might result in a completely different portfolio mix. |
Wisest option to pay for second career education | Tl;dr by anecdata I paid for my master's degree from investments/savings with a HELOC backstop It appears you don't have the 62k cash needed for tuition and living expenses so your decision is between financing a degree by selling your investments or a loan. Ultimately this comes down to the yes/no sell decision on the investments. Some things to consider: |
Using Fibonacci Extensions to set profit targets? | fibonacci levels (retracements,expansions, arcs) are all arbitrary numbers with no statistical significance. that said thousands of traders world over use, view and depend on fib numbers in their trading ranging from forex, stock commodities etc the point is if it's traded a fibonacci number has been used on it, because of this unanimity on their significance & application the fibonacci's thus act as valid anchors since so many traders are looking at the same levels (self-fulfilling prophecy). the values of the fib numbers are all equally significant i.e the 23.6. 38.2, 50, or 61.8 are statistically all equally likely to occur. you just have to be vigilant as your trade approaches the fib levels. |
Friend was brainwashed by MLM-/ponzi investment scam. What can I do? | So here's the sad truth. He might actually be making a return on his investment. Not because it's right or because the system works, but in all these schemes there are a range of people that actually do make money. In addition to that, there is that fact that he "believes" that he is doing a good thing, and is unwilling to discuss it. So, if he is making, even a tiny return, and really believes that he is making a large return, or that that large return is just around the bend, your never going to convince him otherwise. You have two real options; If he will listen, go though and look at money in v.s. money out. If money out is larger then money in, your screwed. Make sure to point out that he should look at real money in (left a bank account) and real money out (deposited to a bank account). Again be prepared for the fact that he is actually making money. Some people in the pyramid will make money, it's just never as much, or as many people as they make it out to be. Don't attack the system, attack other aspects. Try and argue liquidity, or FDIC insurance. Again not trying to show why the system is bad, but why a investment in foo instead may be better. If nothing else, go with diversify. Never put all your money in one spot, even if it's a really good spot. At least in that case he will have some money left over in the end. That said, your friend may not go for it. May just put on blinders, and may just stick finger in ears. Move to option two. Respect his wishes, and set boundaries. "Ok, I hear you, you like system X, I won't bring it up again. Do me a favor, don't you bring it up again either. Let's just leave this with religion and politics." If he continues to bring it up, then when he does, just point out you agreed not to discuss the issue, and if he continues to push it, rethink your friendship. If you both respect one another, you should be able to respect each others' decisions. If you can't then, sadly, you may need to stop spending time with one another. |
What is the tax treatment of scrip dividends in the UK? | The HMRC website says: Stock dividends are treated as income by virtue of CTA10/S1049, and taxable as savings income under Chapter 5 of Part 4 of ITTOIA05 (sections 409 to 414). ITTOIA05 is the Income Tax (Trading and Other Income) Act 2005, and says: 409 Charge to tax on stock dividend income (1) Income tax is charged on stock dividend income. (2) In this Chapter “stock dividend income” means the income that is treated as arising under section 410. 411 Income charged (1) Tax is charged under this Chapter on the amount of stock dividend income treated for income tax purposes as arising in the tax year. (2) That amount is the cash equivalent of the share capital on the issue of which the stock dividend income arises (see section 412), grossed up by reference to the dividend ordinary rate for the tax year. |
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