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What do I need to do to form an LLC? | I know that there are a lot service on the internet helping to form an LLC online with a fee around $49. Is it neccessarry to pay them to have an LLC or I can do that myself? No, you can do it yourself. The $49 is for your convenience, but there's nothing they can do that you wouldn't be able to do on your own. What I need to know and what I need to do before forming an LLC? You need to know that LLC is a legal structure that is designed to provide legal protections. As such, it is prudent to talk to a legal adviser, i.e.: a Virginia-licensed attorney. Is it possible if I hire some employees who living in India? Is the salary for my employees a expense? Do I need to claim this expense? This, I guess, is entirely unrelated to your questions about LLC. Yes, it is possible. The salary you pay your employees is your expense. You need to claim it, otherwise you'd be inflating your earnings which in certain circumstances may constitute fraud. What I need to do to protect my company? For physical protection, you'd probably hire a security guard. If you're talking about legal protections, then again - talk to a lawyer. What can I do to reduce taxes? Vote for a politician that promises to reduce taxes. Most of them never deliver though. Otherwise you can do what everyone else is doing - tax planning. That is - plan ahead your expenses, time your invoices and utilize tax deferral programs etc. Talk to your tax adviser, who should be a EA or a CPA licensed in Virginia. What I need to know after forming an LLC? You'll need to learn what are the filing requirements in your State (annual reports, tax reports, business taxes, sales taxes, payroll taxes, etc). Most are the same for same proprietors and LLCs, so you probably will not be adding to much extra red-tape. Your attorney and tax adviser will help you with this, but you can also research yourself on the Virginia department of corporations/State department (whichever deals with LLCs). |
What is network marketing? | Network Marketing (also called multi-level marketing) isn't necessarily a skill that you learn in a course. It's a type of business model that's used by companies like Avon, Southern Living, Mary Kay, etc. It's also used in many scams (called pyramid schemes, but the aforementioned companies are using the pyramid structure, too). A lot. See here for a high-level explanation (pay attention to the pyramid scheme bit): http://www.entrepreneur.com/encyclopedia/network-marketing If you want to get into a Network Marketing venture, join a reputable company and start doing it. They will provide you with all of the training you need. Your "manager" will make money based on how well you do. If you can in turn recruit other individuals to start selling, then you make money off their sales, and you "manager" makes money off their sales. Hence the pyramid label. Reputable companies charge very little to join, you set your own schedule, and don't have any hard quotas to live up to. Do your research! If they make you a promise that sounds too good to be true, it is. |
How long can a company keep the money raised from IPO of its stocks? | Is it correct that there is no limit on the length of the time that the company can keep the money raised from IPO of its stocks, unlike for the debt of the company where there is a limit? Yes that is correct, there is no limit. But a company can buy back its shares any time it wants. Anyone else can also buy shares on the market whenever they want. |
What is the benefit of investing in retirement plan versus investing directly in stocks yourself? | In the US, the key to understanding the benefits of retirement accounts is to understand capital gains taxes and how they work. Retirement accounts are designed for making investments throughout your career, then after several decades of contributions, withdrawing that money to pay for your needs when your full-time employment has concluded. Normally when you invest money in a brokerage account, if the value of your investment increases, and you sell in less than a year, those investments are considered short-term gains and taxed as ordinary income. If you hold that same investment for over a year, the same investment is taxed at a lower capital gains rate (depending on which tax bracket you are in during that year, the amount due could be up to 20%, but much lower than your regular income tax rate). When you place your money in a retirement account, you are choosing to either pay the tax due on the income when you put it in the account, or put the money in tax free and pay the tax when you withdraw (these are called tax-deferred accounts). When you have money invested several decades, the raw dollar amount increases greatly, but inflation is also reducing the value of those dollars. Imagine you bought some bonds that payed 4% over 40 years, but inflation was 2% during those same years. When you sell those bonds 40 years later, you will owe capital gains on the entire gain even though half of the gain came from inflation. Retirement accounts allow you to buy and sell according to your investment needs and goals without any consideration about whether the gains are short-term or long-term, and they also allow you to pay taxes just once, either when you put it in, or when you take it out, with no worries about whether you're paying taxes on inflated gains. |
Are bonds really a recession proof investment? | You're mixing up two different concepts: low-risk and recession-proof. I'll assume I don't need to explain risk: there is always risk, regardless what form you keep your assets in. With bonds, the interest rate is supposed to reflect the risk. If a company offers bonds with too low an interest rate for the risk level, few people will buy them. While if a company offers bonds with too high an interest rate for the level of risk, they are gypping themselves. So a bond is a slightly more transparent investment from a risk assessment perspective, but that doesn't mean the risk is necessarily low: if you buy a bond with a 20% effective annual yield, that means there is quite a high risk that the underlying company will fold (unless inflation is in the double-digit range as well, in which case a 20% yield is not that much). Whereas with a stock, no parameter directly tells you anything about the risk. Recession-proof is not the same thing as low-risk. Recession-proof refers to investing in (or holding debt for) industries that perform better in a recession. http://www.investopedia.com/articles/stocks/08/industries-thrive-on-recession.asp. |
Why don't SPY, SPX, and the e-mini s&p 500 track perfectly with each other? | I thought the other answers had some good aspect but also some things that might not be completely correct, so I'll take a shot. As noted by others, there are three different types of entities in your question: The ETF SPY, the index SPX, and options contracts. First, let's deal with the options contracts. You can buy options on the ETF SPY or marked to the index SPX. Either way, options are about the price of the ETF / index at some future date, so the local min and max of the "underlying" symbol generally will not coincide with the min and max of the options. Of course, the closer the expiration date on the option, the more closely the option price tracks its underlying directly. Beyond the difference in how they are priced, the options market has different liquidity, and so it may not be able to track quick moves in the underlying. (Although there's a reasonably robust market for option on SPY and SPX specifically.) Second, let's ask what forces really make SPY and SPX move together as much as they do. It's one thing to say "SPY is tied to SPX," but how? There are several answers to this, but I'll argue that the most important factor is that there's a notion of "authorized participants" who are players in the market who can "create" shares of SPY at will. They do this by accumulating stock in the constituent companies and turning them into the market maker. There's also the corresponding notion of "redemption" by which an authorized participant will turn in a share of SPY to get stock in the constituent companies. (See http://www.spdrsmobile.com/content/how-etfs-are-created-and-redeemed and http://www.etf.com/etf-education-center/7540-what-is-the-etf-creationredemption-mechanism.html) Meanwhile, SPX is just computed from the prices of the constituent companies, so it's got no market forces directly on it. It just reflects what the prices of the companies in the index are doing. (Of course those companies are subject to market forces.) Key point: Creation / redemption is the real driver for keeping the price aligned. If it gets too far out of line, then it creates an arbitrage opportunity for an authorized participant. If the price of SPY gets "too high" compared to SPX (and therefore the constituent stocks), an authorized participant can simultaneously sell short SPY shares and buy the constituent companies' stocks. They can then use the redemption process to close their position at no risk. And vice versa if SPY gets "too low." Now that we understand why they move together, why don't they move together perfectly. To some extent information about fees, slight differences in composition between SPY and SPX over time, etc. do play. The bigger reasons are probably that (a) there are not a lot of authorized participants, (b) there are a relatively large number of companies represented in SPY, so there's some actual cost and risk involved in trying to quickly buy/sell the full set to capture the theoretical arbitrage that I described, and (c) redemption / creation units only come in pretty big blocks, which complicates the issues under point b. You asked about dividends, so let me comment briefly on that too. The dividend on SPY is (more or less) passing on the dividends from the constituent companies. (I think - not completely sure - that the market maker deducts its fees from this cash, so it's not a direct pass through.) But each company pays on its own schedule and SPY does not make a payment every time, so it's holding a corresponding amount of cash between its dividend payments. This is factored into the price through the creation / redemption process. I don't know how big of a factor it is though. |
Construction loan for new house replacing existing mortgaged house? | So let's assume some values to better explain this. For simplicity, all of these are in thousands: So in this example, you're going to destroy $250 in value, pay off the existing $150 loan and have to invest $300 in to build the new house and this example doesn't have enough equity to cover it. You typically can't get a loan for much more than the (anticipated) property value. Basically, you need to get a construction loan to cover paying off the existing loan plus whatever you want to spend to pay for the new house minus whatever you're planning to contribute from savings. This new loan will need to be for less than the new total market value. The only way this will work out this way is if you bring significant cash to closing, or you owe less than the lot value on the current property. Note, that this is in effect a simplification. You can spend less building a house than it's worth when you're done with it, etc., but this is the basic way it would work - or NOT work in most cases. |
Interactive Brokers: IOPTS and list of structured products | I think an IOPT is a Dutch warrant. Someone else might understand what this is. |
Why are capital gains taxed at a lower rate than normal income? | I think this question is very nearly off-topic for this site, but I also believe that a basic understanding of the why the tax structure is what it is can help someone new to investing to understand their actual tax liability. The attempt at an answer I provide below is from a Canadian & US context, but should be similar to how this is viewed elsewhere in the world. First note that capital gains today are much more fluid in concept than even 100 years ago. When the personal income tax was first introduced [to pay for WWI], a capital gain was viewed as a very deliberate action; the permanent sale of property. Capital gains were not taxed at all initially [in Canada until 1971], under the view that income taxes would have been paid on income-earning assets all along [through interest, dividends, and rent], and therefore taxing capital gains would be a form of 'double-taxation'. This active, permanent sale was also viewed as an action that an investor would need to work for. Therefore it was seen as foolish to prevent investors from taking positive economic action [redistributing their capital in the most effective way], simply to avoid the tax. However today, because of favourable taxation on capital gains, many financial products attempt to package and sell capital gains to investors. For example, many Canadian mutual funds buy and sell investments to earn capital gains, and distribute those capital gains to the owners of the mutual fund. This is no longer an active action taken by the investor, it is simply a function of passive investing. The line between what is a dividend and what is a capital gain has been blurred by these and similar advanced financial products. To the casual investor, there is no practical difference between receiving dividends or capital gain distributions, except for the tax impact. The notional gain realized on the sale of property includes inflation. Consider a rental property bought in 1930 for $100,000, and sold in 1960 for $180,000, assuming inflation between 1930 and 1960 was 70%. In 1960 dollars, the property was effectively bought for 170k. This means the true gain after accounting for inflation is only $10k. But, the notional gain is $80k, meaning a tax on that capital gain would be almost entirely a tax on inflation. This is viewed by many as being unfair, as it does not actually represent true income. I will pause to note that any tax on any investment at all, taxes inflation; interest, for example, is taxed in full even though it can be almost entirely inflationary, depending on economic conditions. A tax on capital gains may restrict market liquidity. A key difference between capital gains and interest/rent/dividends, is that other forms of investment income are taxed annually. If you hold a bond, you get taxed on interest from that bond. You cannot gain value from a bond, deferring tax until the date it matures [at least in Canada, you are deemed to accrue bond interest annually, even if it is a 0 coupon bond]. However, what if interest rates have gone down, increasing the value of your bond, and you want to sell it to invest in a business? You may choose not to do this, to avoid tax on that capital gain. If it were taxed as much as regular income, you might be even more inclined to never sell any asset until you absolutely have to, thus restricting the flow of capital in the market. I will pause here again, to note that laws could be enacted to minimize capital gains tax, as long as the money is reinvested immediately, thus reducing this impact. Political inertia / lobbying from key interests has a significant impact on the tax structure for investments. The fact remains that the capital gains tax is most significantly an impact on those with accrued wealth. It would take significant public support to increase capital gain tax rates, for any political party to enact such laws. When you get right down to it, tax laws are complex, and hard to push in the public eye. The general public barely understands that their effective tax rate is far lower than their top marginal tax rate. Any tax increases at all are often viewed negatively, even by those who would never personally pay any of that tax due to lack of investment income. Therefore such changes are typically made quietly, and with some level of bi-partisan support. If you feel the capital gains tax rules are illogical, just add it to the pile of such tax laws that exist today. |
Is it a good idea to get an unsecured loan to pay off a credit card that won't lower a high rate? | I think it depends on how you're approaching paying off the credit card. If you're doing some sort of debt snowball and/or throw all available cash at the card, it's not likely to matter much. If you're paying a set amount close to the minimum each month then you're probably better off getting a loan, use it to pay off the card and cut up the card. Well, I'd do the latter in either case... Mathematically it would matter if the interest rate on the card is 10%-15% higher than the personal loan but if you're throwing every spare dime at the card and the some, it might not matter. Another option if you have the discipline to pay the debt off quickly is to see if you can find a card with a cheap balance transfer, move the balance over and close the inflexible card. |
Is it a wise decision to sell my ESPP stock based on this situation? | ESPP tax treatment is complicated. If you received a discount on the purchase of your stock, that discount is taxable as ordinary income when you sell the stock. Any profit about the market value when the stock was purchased is taxed based upon the holding period of the stock. If you have held the stock less than a year, the profit is taxed at your marginal tax rate (ie taxed as ordinary income). If the stock is held for more than a year, it is taxed at a special capital gains tax rate, which ranges from 0-20% depending on your marginal tax rate (most people pay 15%). |
What should I be aware of as a young investor? | I'm 39 and have been investing since my very early 20's, and the advice I'd like to go back and give myself is the following: 1) Time is your friend. Compounding interest is a powerful force and is probably the most important factor to how much money you are going to wind up with in the end. Save as much as you possibly can as early as you can. You have to run twice as hard to catch up if you start late, and you will still probably wind up with less in the end for the extra effort. 2) Don't invest 100% of your investment money It always bugged me to let my cash sit idle in an investment account because the niggling notion of inflation eating up my money and I felt I was wasting opportunity cost by not being fully invested in something. However, not having enough investable cash around to buy into the fire-sale dips in the market made me miss out on opportunities. 3) Diversify The dot.com bubble taught me this in a big, hairy painful way. I had this idea that as a technologist I really understood the tech bubble and fearlessly over-invested in Tech stocks. I just knew that I was on top of things as an "industry insider" and would know when to jump. Yeah. That didn't work out so well. I lost more than 6 figures, at least on paper. Diversification will attenuate the ups and downs somewhat and make the market a lot less scary in the long run. 4) Mind your expenses It took me years of paying huge full-service broker fees to realize that those clowns don't seem to do any better than anyone else at picking stocks. Even when they do, the transaction costs are a lead weight on your returns. The same holds true for mutual funds/ETFs. Shop for low expense ratios aggressively. It is really hard for a fund manager to consistently beat the indexes especially when you burden the returns with expense ratios that skim an extra 1% or so off the top. The expense ratio/broker fees are among the very few things that you can predict reliably when it comes to investments, take advantage of this knowledge. 5) Have an exit strategy for every investment People are emotional creatures. It is hard to be logical when you have skin in the game and most people aren't disciplined enough to just admit when they have a loser and bail out while they are in the red or conversely admit when they have a winner and take profits before the party is over. It helps to counteract this instinct to have an exit strategy for each investment you buy. That is, you will get out if it drops by x% or grows by y%. In fact, it is probably a good idea to just enter those sell limit orders right after you buy the investment so you don't have to convince yourself to press the eject button in the heat of a big move in the price of that investment. Don't try to predict tops or bottoms. They are extremely hard to guess and things often turn so fast that you can't act on them in time anyway. Get out of an investment when it has met your goal or is going to far in the wrong direction. If you find yourself saying "It has to come back eventually", slap yourself. When you are trying to decide whether to stay in the investment or bail, the most important question is "If I had the current cash value of the stock instead of shares, would I buy it today?" because essentially that is what you are doing when you stick with an investment. 6) Don't invest in fads When you are investing you become acutely sensitive to everyone's opinions on what investment is hot and what is not. If everyone is talking about a particular investment, avoid it. The more enthusiastic people are about it (even experts) the MORE you should avoid it. When everyone starts forming investment clubs at work and the stock market seems to be the preferred topic of conversation at every party you go to. Get out! I'm a big fan of contrarian investing. Take profits when it feels like all the momentum is going into the market, and buy in when everyone seems to be running for the doors. |
Dalbar: How can the average investor lose money? | I think you are mixing two different concepts here. The average investor, in the quoted reference, means an average single investor like you or like me. the average investor consistently under-performs the market. However, you then ask the question and you seem to refer to all investors as a group; individuals, institutions, investment banks, et al. since together, investors own 100% of the stock in every company? Every investor could match the performance of the market easily and at low fees by simply buying an S&P index fund and holding it. In fact, some investors can even beat the market with the addition of some stocks. Here is the ten-year chart of Berkshire-Hathaway B compared to the S&P 500. There are other examples. However, few of us have the discipline to do so. We read questions here every week about the coming turbulence in the market, about the next big trend, about the next bubble, etc. The average investor thinks he is smarter than the market and buys on a whim or sells likewise and misses out on the long, slow overall growth in the markets. Finally, the title of your question is “Dalbar: How can the average investor lose money?” I doubt that the average investor loses money in the past several years. Not making as much money as is easily possible is not at all the same as losing money. |
Where to categorize crypto-currencies | Forex. I will employ my skill for "suspension of disbelief" and answer with no visceral reaction to Bitcoin itself. The Euro is not an 'investment.' It's a currency. People trade currencies in order to capture relative movements between pairs of currencies. Unlike stocks, that have an underlying business and potential for growth (or failure, of course) a currency trade is a zero sum game, two people on opposite sides of a bet. Bitcoin has no underlying asset either, no stock, no commodity. It trades, de facto, like a currency, and for purposes of objective classification, it would be considered a currency, and held similar to any Forex position. |
Further Understanding of Wash Sale Rules | Once you own no shares for 31 days, it's game over. Even though the accounting has wash sales to consider, in the end, gains and losses all cancel to one net position of break even, gain or loss. It's when there are shares remaining at the end of a period of time that the wash sale rules really impact the numbers. |
Options on the E-mini S&P 500 Futures at the CME: when were EW3, the weekly Monday options and the weekly Wednesday options introduced? | Why do you care? In any case, you can easily Google the answer... Effective Sunday, April 2, 2017 for trade date Monday, April 3, 2017, and pending all relevant CFTC regulatory review periods, Chicago Mercantile Exchange Inc. (“CME” or “Exchange”) will list Monday Weekly Options on the E-mini Standard and Poor’s Stock Price Index Futures and Standard and Poor’s 500 Stock Price Index Futures contracts (collectively the “Contracts”) for trading on CME Globex and for submission for clearing via CME ClearPort as described in Appendix A below. Appendix B below provides the Exchange fee schedule for the Contracts. source |
How much money should I lock up in my savings account? | Lets imagine two scenarios: 1) You make 10.4k (40% of total income) yearly contributions to a savings account that earns 1% interest for 10 years. In this scenario, you put in 104k and earned 5.89k in interest, for a total of 109.9k. 2) You make the same 10.4k yearly contribution to an index fund that earns 7% on average for 10 years. In this scenario you put in the same 104k, but earned 49.7k in interest*, for a total of 153.7k. The main advantage is option 1) has more liquidity -- you can get the money out faster. Option 2) requires time to divest any stocks / bonds. So you need enough savings to get you through that divestment period. Imagine another two scenarios where you stop earning income: 1-b) You stop working and have only your 109.9k principal amount in a 1% savings account. If you withdraw 15.6k yearly for your current cost of living, you will run through your savings in 7 years. 2-b) You stop working and have only 20k (2 years of savings) in savings that earns 1% with 153.7k in stocks that earns 7%. If you withdraw your cost of living currently at 15.6k, you will run through your investments in 15 years and your savings in 2 years, for a total of 17 years. The two years of income in savings is extremely generous for how long it starts the divestment process. In summary, invest your money. It wasn't specified what currency we are talking about, but you can easily find access to an investment company no matter where you are in the world. Keep a small amount for a rainy day. |
Foreign Earned Income Exclusion - Service vs. Product? | As the name says, its for income earned in a Foreign country. If you have been paying US income tax on this while living in the US, nothing is going to change here. You should be informing yourself on how to avoid double taxation in your new country of residence. Passive income earned abroad (dividends, interest) also do not fall under this exemption. The purpose of the Foreign Earned Income Exclusion is to make it easy for expats who work abroad to avoid double income taxation without going through the complicated process of applying for tax credits. The US is the only industrial country that taxes its residents regardless of where they reside. That is also why it only goes to about $100,000 a year. If you are a high earner, they want to make it more difficult. Also as a side note, since you are going to be abroad for a year. I will point out that if you have more than $10,000 in foreign accounts at any point in the year you need to declare this in an FBAR form. This is not advertised as well as it should be and carries ridiculous penalties for non-compliance. I can't count the number of times I have heard a US expat say that they were unaware of this. |
Protecting savings from exceptional taxes | What EU wanted to force Cyprus to do is to break the insurance contract the government has with the bank depositors. The parliament rightfully refused, and it didn't pass. In the EU, and Cyprus as part of it, all bank deposits are insured up to 100,000EUR by the government. This is similar to the US FDIC insurance. Thus, requiring the "small" (up to 100K) depositors to participate in the bank reorganization means that the government breaks its word to people, and effectively defaults. That is exactly what the Cyprus government wanted to avoid, the default, so I can't understand why the idea even came up. Depositors of more than 100k are not guaranteed against bank failures, and indeed - in Cyprus these depositors will get "haircuts". But before them, first come shareholders and bondholders who would be completely wiped out. Thus, first and foremost, those who failed (the bank owners) will be the first to pay the price. However, governments can default. This happened in many places, for example in Russia in the 90's, in Argentina in 2000's (and in fact numerous times during the last century), the US in the 1930's, and many other examples - you can see a list in Wikipedia. When government defaults on its debts, it will not pay some or all of them, and its currency may also be devaluated. For example, in Russia in 1998 the currency lost 70% of its value against the USD within months, and much of the cash at hands of the public became worthless overnight. In the US in 1933 the President issued an executive order forbidding private citizens keeping gold and silver bullions and coins, which resulted in dollar devaluation by about 30% and investors in precious metals losing large amounts of money. The executive order requiring surrender of the Treasury gold certificates is in fact the government's failure to pay on these obligations. While the US or Russia control their own currency, European countries don't and cannot devaluate the currency as they wish in order to ease their debts. Thus in Euro-zone the devaluation solutions taken by Russia and the US are not possible. Cyprus cannot devaluate its currency, and even if it could - its external debt would not likely to be denominated in it (actually, Russian debt isn't denominated in Rubles, that's why they forced restructuring of their own debt, but devaluating the currency helped raising the money from the citizens similarly to the US seizing the gold in 1930's). Thus, in case of Cyprus or other Euro-zone countries, direct taxes is the only way to raise money from the citizens. So if you're in a country that controls its own currency (such as the US, Russia, Argentina, etc) and especially if the debt is denominated in that currency (mainly the US) - you should be worried more of inflation than taxes. But if you're in the Euro-zone and your country is in troubles (which is almost any country in the zone) - you can expect taxes. How to avoid that? Deal with your elected officials and have them fix your economy, but know that you can't just "erase" the debt through inflation as the Americans can (and will), someone will have to pay. |
Does it make sense to trade my GOOGL shares for GOOG and pocket the difference? | Too much fiddling with your portfolio if the difference is 3-4% or less (as it's become in recent months). Hands off is the better advice. As for buying shares, go for whichever is the cheapest (i.e. Goog rather than Googl) because the voting right with the latter is merely symbolic. And who attends shareholders' meetings, for Pete's sake? On the other hand, if your holdings in the company are way up in the triple (maybe even quadruple) figures, then it might make sense to do the math and take the time to squeeze an extra percentage point or two out of your Googl purchases. The idle rich occupying the exclusive club that includes only the top 1% of the population needs to have somethinng to do with its time. Meanwhile, the rest of us are scrambling to make a living--leaving only enough time to visit our portfolios as often as Buffett advises (about twice a year). |
Boyfriend is coowner of a house with his sister, he wants to sell but she doesn't | He needs to go see a lawyer to find out what all his options are, and the consequences of any of them. Then he needs to get help extricating himself from this situation, in whatever fashion he chooses: buyout, giveaway, what have you. This situation involves property, which involves money, so definitely get professional advice on this. Otherwise, 20 years from now, he could be hit with a bill for back taxes or what have you, if whatever he does, isn't done correctly and completely. The situation does stink, on ice. Either he's going to be the pissed-off party in this situation, or she is, or they both are...but there's money involved, and property involved, and at least one recalcitrant family member involved. Best case scenario, he writes up the story and sells the plot to Lifetime for a movie-of-the-week. (If I were in this situation, I would donate my half of the property to some charitable group, then have a lawyer send Sis a letter saying that it had been donated. Maybe even pick a charitable group aligned with Sis' interests, so that if Sis does want to try and negotiate with them to buy it out, she's giving the sales money to a group/cause that she believes in. But...then, it would No Longer Be My Problem. But that has consequences of its own, and your boyfriend needs to be aware of all of them, including any tax implications for him, before taking any such step.) |
Why ever use a market order? | What you are saying is a very valid concern. After the flash crash many institutions in the US replaced "true market orders" (where tag 40=1 and has no price) with deep in the money limit orders under the hood, after the CFTC-SEC joint advisory commission raised concerns about the use of market orders in the case of large HFT traders, and concerns on the lack of liquidity that caused market orders that found no limit orders to execute on the other side of the trade, driving the prices of blue chip stocks into the pennies. We also applaud the CFTC requesting comment regarding whether it is appropriate to restrict large order execution design that results in disruptive trading. In particular, we believe there are questions whether it is ever appropriate to permit large order algorithms that employ unlimited use of market orders or that permit executions at prices which are a dramatic percentage below the present market price without a pause for human review So although you still see a market order on the front end, it is transformed to a very aggressive limit in the back end. However, doing this change manually, by selling at price 0 or buying at 9999 may backfire since it may trigger fat finger checks and prevent your order from reaching the market. For example BATS Exchange rejects orders that are priced too aggressively and don't comply with the range of valid prices. If you want your trade to execute right now and you are willing to take slippage in order to get fast execution, sending a market order is still the best alternative. |
Cost is (maybe) part of basis for two assets | For accounting purposes, consider the costs of acquisition as part of the cost of the asset as opposed to expensing. This will be important to consider if you need to amortise the asset for reporting or tax purposes. Dr. Land $250,000 Dr. Building: $250,000 Cr. Cash $500,000 The acquisition of the land from previous owners. And Dr. Land $12,500 Dr. Building $12,500 Cr. Cash $25,000 Fees paid to auctioneer who helped acquire the land. The basis for dividing the cost should be done at appraised prices. These appraised prices will appear in the first entry and should help you along. |
What is a straddle? | A straddle is an options strategy in which one "buys" or "sells" options of the same maturity (expiry date) that allow the "buyer" or "seller" to profit based on how much the price of the underlying security moves, regardless of the direction of price movement. IE: A long straddle would be: You buy a call and a put at the same strike price and the same expiration date. Your profit would be if the underlying asset(the stock) moves far enough down or up(higher then the premiums you paid for the put + call options) (In case, one waits till expiry) Profit = Expiry Level - Strike Price - (Premium Paid for Bought Options) Straddle |
In the stock market, why is the “open” price value never the same as previous day's “close”? | Prices reflect all available information. (Efficient markets hypothesis) A lot can happen between the time a stock closes on one day and opens on another. Particularly in a heavily traded stock such as IBM. Basically, you have a different "information set" the following day, which implies a different price. The instances where you are most likely to have a stock where the price opens at the same price is at the previous close is a thinly traded stock on which you have little information, meaning that the "information set" changes less from day to day. |
How Should I Go About Buying a Car? (College Student) | So you want to buy a car but have no money saved up.... That's going to be hard!! I'd suggest you get a part-time job, save up and buy a used car. Even with the minimum wage pay in the U.S., if you are in the U.S., you could save up and buy a car in less than a month. This route would be the quickest way for you to get a car but it would also teach you the responsibility of having one since it appears you have never owned a car before. Now the car will most definitely not be fancy or look like the cars that your peer's parents bought but at least it will get you from point A to point B. I'd look on Craigslist or your local neighborhood for cars that have not moved in a while or have for sale signs. Bring a mechanically inclined friend with you and contact the owner and explain them your situation. There are nice people out there that would give you deep discounts based on the fact that you are a student trying to get by. Now you have to get registration and insurance. There are many insurance companies that give discounts to students as well who have good GPAs and driving records. If you happen to get a car for a good deal, take good car of it. Once you graduate and further your career, you can resell it for a profit. I also would not suggest you get any loans for a car given your situation. |
Insider Trading? | I am a flight attendant on a private jet and I hear a bank CEO discussing a merger or a buyout. I proceed to purchase that stock before the announcement. The CEO did not tell me to buy it, I just overheard him. If you are a flight attendant on a private jet that is operated by one of the principals, probably including a bank, attorney, consultant, broker, etc., in the merger or buyout, then you probably have a fiduciary duty to safeguard the information and are prohibited from trading. Please see: http://www.kiplinger.com/article/investing/T052-C008-S001-would-you-be-guilty-of-insider-trading.html You’re a janitor at a major company. You hear members of the company’s board convening outside the room you’re cleaning and decide to hide in the closet. The board okays a deal to sell the company for a fat premium to the current share price. You load up on the shares. Illegal insider trading? Definitely. This is not a public place, and “you’d be in a position to understand that confidential information was being disclosed, which changes the calculus,” says Andrew Stoltmann, a Chicago-based securities lawyer. Also see: http://meyersandheim.com/how-to-win-an-insider-trading-case/ However, between these two extremes of a bystander with no duty to the corporation and a corporate officer with a clear duty to the corporation stood a whole group of people such as printers, lawyers and others who were involved in non-public transactions that did not necessarily have a duty to the company whose securities they traded. To address this group of people the courts developed the misappropriation theory. The misappropriation theory covers people who posses inside information and who are prohibited from trading on such information because they owe a duty to a third party and not the corporation whose securities are traded. Yours is the perfect example. You owe a duty to your employer to operate in its best interests. As for the broader, more common example, where you overhear information in an elevator, restaurant, in line at the coffee shop, etc., trading on such information was found not to be insider trading in SEC v. Switzer: http://law.justia.com/cases/federal/district-courts/FSupp/590/756/2247092/ In this case, Mr. Switzer overheard information at a track meet and traded on it with profits. The court found: The information was inadvertently overheard by Switzer at the track meet. Rule 10b-5 does not bar trading on the basis of information inadvertently revealed by an insider. On the basis of the above findings of fact and conclusions of law, the court orders judgment in favor of defendants. |
Dealership made me the secondary owner to my own car | Imagine that, a car dealership lied to someone trusting. Who would have thought. A big question is how well do you get along with your "ex"? Can you be in the same room without fighting? Can you agree on things that are mutually beneficial? The car will have to be paid off, and taken out of his name. The mechanics on how to do this is a bit tricky and you may want to see a lawyer about it. Having you being the sole owner of the car benefits him because he is no longer a cosigner on a loan. This will help him get additional loans if he chooses, or cosign on his next gf's car. And of course this benefits you as you "own" the car instead of both of you. You will probably have to refinance the car in your name only. Do you have sufficient credit? Once this happens can you pay off the car in like a year or so? If you search this site a similar questions is asked about once per month. Car loans are pretty terrible, in the future you should avoid them. Cosigning is even worse and you should never again participate in such a thing. Another option is to just sell the car and start over with your own car hopefully paid for in cash. |
Disputing Items to Improve Credit Report | Disputing the remark seems unlikely to move your score, since it is just that -- a remark. It's hard to say whether the scoring models can/do read the remarks and incorporate them (somehow) into the scoring metric itself. Disputing the revolving account that should be reported as closed is a different matter. The question there would be what the status of that account is/was. In other words, is it showing as an open collection or some other status which would indicate the creditor still has a pending claim? If so, disputing it might have some effect, although nobody would be able to tell you for certain or even how much your score might be affected. If, as you say, that account should have been part of the bankruptcy package then getting that corrected could be important enough to achieve what you're looking for. You can try it and see, but even if the effect is minor, you still want your credit report to be a true reflection of the facts. I hope this helps. Good luck! |
What is good growth? | There isn't a single hard and fast return to expect. Securities, like all things in a free market, compete for your money. As the Fed sets the tone for the market with their overnight Fed funds rate, you might want to use a multiple of the 'benchmark' 10-year T-note yeald. So let's suppose that a good multiple is four. The current yeald on the 10-year T-note is hovering around two. That would give a target yeald of eight. http://stockcharts.com/h-sc/ui?s=%24UST10Y&p=W&b=5&g=0&id=p47115669808 |
Why would a bank take a lower all cash offer versus a higher offer via conventional lending? | It's because financing can fall through, and then the time between offer and closing is wasted. Often buyers will include preapprovals and other evidence of financing eligibility with their offer for this reason. |
How can home buying be considered a sound investment with all of that interest that needs to be paid? | I'm going to start with your title question: How can home buying be considered a sound investment with all of that interest that needs to be paid? If taken literally, this is a loaded question because if you pay cash for a home, you don't pay any interest. Furthermore, if your interest rate is 3% for 10 years you won't pay nearly as much interest as you will if your rate is 10% for 30 years, so "all of that interest" is relative to your personal situation. Having said that, of course I understand what you mean. Most people pay interest, and interest is expensive, so how do you calculate if it's worth it? That question has been asked and answered, but for your particular situation, you really have two separate questions: I believe you should answer these questions independently. If you move far away, it's probably the case that you can save a lot of money by either renting or buying in that location. So you should first consider if it's worth it to move, and then if it is, decide if it's worth it to rent or buy. If you decide not to move far away, then decide if maybe you can save money by renting somewhere near your current home. Since it sounds like if you move you may have to become a landlord, living close by to your tenant may also make it easier to deal with problems when they arise. |
What's the difference, if any, between stock appreciation and compound interest? | Compounding is just the notion that the current period's growth (or loss) becomes the next period's principal. So, applied to stocks, your beginning value, plus growth (or loss) in value, plus any dividends, becomes the beginning value for the next period. Your value is compounded as you measure the performance of the investment over time. Dividends do not participate in the compounding unless you reinvest them. Compound interest is just the principle of compounding applied to an amount owed, either by you, or to you. You have a balance with which a certain percentage is calculated each period and is added to the balance. The new balance is used to calculate the next period's interest, which again adds to the balance, etc. Obviously, it's better to be on the receiving end of a compound interest calculation than on the paying end. Interest bearing investments, like bonds, pay simple interest. Like stock dividends, you would have to invest the interest in something else in order to get a compounding effect. When using a basic calculator tool for stocks, you would include the expected average annual growth rate plus the expected annual dividend rate as your "interest" rate. For bonds you would use the coupon rate plus the expected rate of return on whatever you put the interest into as the "interest" rate. Factoring in risk, you would just have to pick a different rate for a simple calculator, or use a more complex tool that allows for more variables over time. Believe it or not, this is where you would start seeing all that calculus homework pay off! |
How do I cash in physical stock certificates? (GM 1989) | which means the current total is $548,100. Is that correct? Yep Unfortunately the "current" GM stock is different than the GM stock of 1989. GM went bankrupt in 2011. It's original stock changed to Motors Liquidation Company (MTLQQ) and is essentially worthless today. There was no conversion from the old stock to the new stock. What do I do with these certificates? Can I bring them to my bank, or do I need to open an account with a stock company like Fidelity? See here for some instructions on cashing them in (or at least registering them electronically). I've never dealt with physical stocks, but I presume that a broker is going to charge you something for registering them vs. direct registration, though I have no idea how much that would be. I read somewhere that I only have to pay taxes when I cash out these stocks. But are these rules any different because I inherited the stocks? You will pay capital gains tax on the increase in value from the time your father died to the time you sell the shares. If that time is more than one year (and the stock has gone up in value) you will pay a 15% tax on the total increase. If you have held them less than one year, they will be short-term capital gains which will count as regular income, and you will pay whatever your marginal tax rate is. If you sell the stock at a loss, then you'll be able to deduct some or all of that loss from your income, and may be able to carry forward losses for a few years as well. I did not catch that the stock you mention was GM stock. GM went bankrupt in 2011, so it's likely that the stock you own is worthless. I have edited the first answer appropriately but left the other two since they apply more generally. In your case the best you get is a tax deduction for the loss in value from the date your father died. |
Why are wire transfers and other financial services in Canada so much more expensive than in Europe? | I don't believe there is any particular structural or financial reason that outgoing wire transfers cost so much in Canada, their costs are no higher than other countries (and lower than many). Wires seem to be an area where the Canadian banks have decided people don't comparison shop, so it's not a competitive advantage to offer a better price. The rates you quoted are on the low side: $80 for a largish international wire is not unusual, and HSBC charges up to $150! There are several alternative ways to transfer money domestically in Canada. If the recipient banks at the same bank, it's possible to go into a branch and transfer money directly from your own account to their account (I've never been charged for this). The transfer is immediate. But it couldn't be done online, last time I checked. For transfers where you don't know the recipients bank account, you can pay online with Interac E-Transfers, offered by most Canadian banks. It's basically e-mailing money. It usually costs $1 to $1.50 per transfer, and has limits on how much you can send per day/week. Each of the banks also have a bill-pay service, but unlike similar services in the US (where they mail a paper check if the recipient isn't on their system), each Canadian bank has a limited number of possible payees (mostly utilities, governments, major stores). |
If I donate depreciated stock to charity, can I deduct both the market value and the capital loss? | No, it doesn't work like this. Your charitable contribution is limited to the FMV. In your scenario your charitable contribution is limited by the FMV, i.e.: you can only deduct the worth of the stocks. It would be to your advantage to sell the stocks and donate cash. Had your stock appreciated, you may be required to either deduct the appreciation amount from the donation deduction or pay capital gains tax (increasing your basis to the FMV), depending on the nature of your donation. In many cases - you may be able to deduct the whole value of the appreciated stock without paying capital gains. Read the link below for more details and exceptions. In this scenario, it is probably more beneficial to donate the stock (even if required to pay the capital gains tax), instead of selling and donating cash (which will always trigger the capital gains tax). Exceptions. However, in certain situations, you must reduce the fair market value by any amount that would have been long-term capital gain if you had sold the property for its fair market value. Generally, this means reducing the fair market value to the property's cost or other basis. You must do this if: The property (other than qualified appreciated stock) is contributed to certain private nonoperating foundations, You choose the 50% limit instead of the special 30% limit for capital gain property, discussed later, The contributed property is intellectual property (as defined earlier under Patents and Other Intellectual Property ), The contributed property is certain taxidermy property as explained earlier, or The contributed property is tangible personal property (defined earlier) that: Is put to an unrelated use (defined later) by the charity, or Has a claimed value of more than $5,000 and is sold, traded, or otherwise disposed of by the qualified organization during the year in which you made the contribution, and the qualified organization has not made the required certification of exempt use (such as on Form 8282, Donee Information Return, Part IV). See also Recapture if no exempt use , later. See more here. |
Good book-keeping software? | You can try manager.io. It has a desktop, cloud and server edition that should fit your needs. |
Personal finance software for Mac that can track stocks and mutual funds? (Even manual updating of share prices will do.) | I currently use Moneydance on my Mac. Before that I had used Quicken on a PC until version 2007. It is pretty good, does most simple investment stuff just fine. It can automatically download prices for regular stocks. Mutual funds I have to input by hand. |
What options are available for a home loan with poor credit but a good rental history? | Take the long term view. Build up the cash. Once you have enough cash in the bank, you don't need a credit score. With 6 months living expenses in the bank after paying 20% down on a small house, he should have no issues getting a reasonably priced mortgage. However, if he waited just a bit longer he might buy the same house outright with cash. When I ran the computations for myself many years ago, it would have taken me half as long to save the money and pay cash for my home as it did for me to take a mortgage and pay it off. |
Tax planning for Indian TDS on international payments | Tax Deducted at source is applicable to Employee / Employer [contract employee] relations ... it was also made applicable for cases where an Indian company pays for software products [like MS Word etc] as the product is not sold, but is licensed and is treated as Royalty [unlike sale of a consumer product, that you have, say car] ... Hence it depends on how your contract is worded with your India clients, best is have it as a service agreement. Although services are also taxed, however your contract should clearly specify that any tax in India would be borne by your Indian Client ... Cross Country taxation is an advanced area, you will not find good advice free :) |
Should I finance a used car or pay cash? | One additional reason to pay with cash rather than financing is that you will be able to completely shut down the dealership from haggling over finance terms and get right to the point of haggling over the cost of the car (which you should always do). |
international student tax deduction while trading | So, my question is what is the limit below which I don't have to pay taxes while trading. I just invested $10. Do I have to pay taxes for this too? what are the slabs? Any income is subject to tax. That said, investing $10 will probably not generate much of income, even at the discount brokers most of it will be wasted on commissions... I am also having an assistantship. So is holding two sources of income legitimate? Thanks You can have as many sources of income as you want. Working is what is restricted when you're on a student visa. As long as you don't open a business as a day trader or start working for someone trading stocks - you're fine. |
How to quantify differences in return with low expense ratio vs high expense ratio mutual funds? | Yes you should take in the expenses being incurred by the mutual fund. This lists down the fees charged by the mutual fund and where expenses can be found in the annual statement of the fund. To calculate fees and expenses. As you might expect, fees and expenses vary from fund to fund. A fund with high costs must perform better than a low-cost fund to generate the same returns for you. Even small differences in fees can translate into large differences in returns over time. You don't pay expenses, so the money is taken from the assets of the fund. So you pay it indirectly. If the expenses are huge, that may point to something i.e. fund managers are enjoying at your expense, money is being used somewhere else rather than being paid as dividends. If the expenses are used in the growth of the fund, that is a positive sign. Else you can expect the fund to be downgraded or upgraded by the credit rating agencies, depending on how the credit rating agencies see the expenses of the fund and other factors. Generally comparison should be done with funds invested in the same sectors, same distribution of assets so that you have a homogeneous comparison to make. Else it would be unwise to compare between a fund invested in oil companies and other in computers. Yes the economy is inter twined, but that is not how a comparison should be done. |
How much of my home loan is coming from a bank, how much it goes back? | When you get a loan (car, home, student) the lending company (bank) give the (auto dealer, previous home owner, school) money. You as the borrow promise to pay this money back with interest. So in your case the 100,000 you borrow requires a payment for principal and interest of ~965 per month. After 240 payments you will have paid the bank ~231,605. So who got the ~131,000 in interest. The bank did. It was used to pay interest to the people who made deposits into the bank. It was also used to pay the expenses of the bank: salaries, retirement, rent, electricity, computers, etc. If the bank is a company with investors they may have to pay dividends to them to. Of course not all loans are successfully paid back, so some of the payment goes to cover the loans that are in default. In many cases loans are also refinanced, or the house is sold long before the 20-30 year term is up. In these cases the amount of interest received for that loan is much less than anticipated, but the good news is that it can be loaned out again. |
What's the difference between Market Cap and NAV? | At any given moment, one can tally the numbers used for NAV. It's math, and little more. The Market Cap, which as you understand is a result of share value. Share value (stock price) is what the market will pay today for the shares. It's not only based on NAV today, but on future expectations. And expectations aren't the same for each of us. Which is why there are always sellers for the buyers of a stock, and vice-versa. From your question, we agree that NAV can be measured, it's the result of adding up things that are all known. (For now, let's ignore things such as "goodwill.") Rarely is a stock price simply equal to the NAV divided by the number of shares. Often, it's quite higher. The simplest way to look at it is that the stock price not only reflects the NAV, but investors' expectations looking into the future. If you look for two companies with identical NAV per share but quite different share prices, you'll see that the companies differ in that one might be a high growth company, the other, a solid one but with a market that's not in such a growth mode. |
Lump sum annuity distribution — do I owe estate tax? | The page you linked shows "Federal changes eliminated Florida's estate tax after December 31, 2004" but no, estates are settled by the decedent's executor in the decedent's state. You receive an inheritance net of estate tax if any was due. |
What traditionally happens to bonds when the stock market crashes? | The short answer is if you own a representative index of global bonds (say AGG) and global stocks (say ACWI) the bonds will generally only suffer minimally in even the medium large market crashes you describe. However, there are some caveats. Not all bonds will tend to react the same way. Bonds that are considered higher-yield (say BBB rated and below) tend to drop significantly in stock market crashes though not as much as stock markets themselves. Emerging market bonds can drop even more as weaker foreign currencies can drop in global crashes as well. Also, if a local market crash is caused by rampant inflation as in the US during the 70s-80s, bonds can crash at the same time as markets. There hasn't been a global crash caused by inflation after countries left the gold standard, but that doesn't mean it can't happen. Still, I don't mean to scare you away from adding bond exposure to a stock portfolio as bonds tend to have low correlations with stocks and significant returns. Just be aware that these correlations can change over time (sometimes quickly) and depend on which stocks/bonds you invest in. |
Why is the dominant investing advice for individuals to use mutual funds, exchanged traded funds (ETFs), etc | Why is that? With all the successful investors (including myself on a not-infrequent basis) going for individual companies directly, wouldn't it make more sense to suggest that new investors learn how to analyse companies and then make their best guess after taking into account those factors? I have a different perspective here than the other answers. I recently started investing in a Roth IRA for retirement. I do not have interest in micromanaging individual company research (I don't find this enjoyable at all) but I know I want to save for retirement. Could I learn all the details? Probably, as an engineer/software person I suspect I could. But I really don't want to. But here's the thing: For anyone else in a similar situation to me, the net return on investing into a mutual fund type arrangement (even if it returns only 4%) is still likely considerably higher than the return on trying to invest in stocks (which likely results in $0 invested, and a return of 0%). I suspect the overwhelming majority of people in the world are more similar to me than you - in that they have minimal interest in spending hours managing their money. For us, mutual funds or ETFs are perfect for this. |
Double-entry bookkeeping: When selling an asset, does the money come from, Equity or Income? | It's better to use the accounting equation concept: Asset + Expenses = Capital + Liabilities + Income If you purchase an asset: Suppose you purchased a laptop of $ 500, then its journal will be: If you sell the same Laptop for $ 500, then its entry will be: |
Should you always max out contributions to your 401k? | The compound interest argument is a good one. While you are young, it is important to save, since time is on your side for compounding of interest. I think the 401K is a good idea, but not for all of your savings. Think about saving a percentage of your income, but put it in a couple places. Your Roth is also a great thing, since you'll be able to remove money without paying tax again. The 401k (tax deferred) is a good idea if your company matches any of it (FREE MONEY!), and because it lowers your taxable income now, and it's taken out of your check before you see it, so you don't miss it. It's still important to save other money that you can have for ready cash (unexpected dead car, for example, or medical bills, or what have you.) I find that I don't want to be managing my investments from minute to minute, or doing my own trades (I'd rather do other things), so I have a mix (Roth, 401k, cash savings) of automated contributions for savings, and I think hard before buying new stuff. The point is to save, and if possible, try to save at least 10% of your income. |
Why is it important to research a stock before buying it? | The following is only an overview and does not contain all of the in-depth reasons why you should look more deeply. When you look at a stock's financials in depth you are looking for warning signs. These may warn of many things but one important thing to look for is ratio and growth rate manipulation. Using several different accounting methods it is possible to make a final report reflect a PE ratio (or any other ratio) that is inconsistent with the realities of the company's position. Earnings manipulation (in the way that Enron in particular manipulated them) is more widespread than you might think as "earnings smoothing" is a common way of keeping earnings in line (or smooth) in a recession or a boom. The reason that PE ratio looks so good could well be because professional investors have avoided the stock as there appear to be "interesting" (but legal) accounting decisions that are of concern. Another issue that you don't consider is growth. earnings may look good in the current reporting period but may have been stagnant or falling when considered over multiple periods. The low price may indicate falling revenues, earnings and market share that you would not be aware of when taking only your criteria into account. Understanding a firm will also give you an insight into how future news might affect the company. If the company has a lot of debt and market interest rates rise or fall how will that effect their debt, if another company brings out a competing product next week how will it effect the company? How will it effect their bottom line? How much do they rely on a single product line? How likely is it that their flagship product will become obsolete? How would that effect the company? Looking deeply into a company's financial statements will allow you to see any issues in their accounting practices and give you a feel for how they are preforming over time, it will also let you look into their cost of capital and investment decisions. Looking deeply into their products, company structure and how news will effect them will give you an understanding of potential issues that could threaten your investment before they occur. When looking for value you shouldn't just look at part of the value of the company; you wouldn't just look at sales of a single T-shirt range at Wallmart when deciding whether to invest in them. It is exactly the same argument for why you should look at the whole of the company's state when choosing to invest rather than a few small metrics. |
Investment for young expatriate professionals | That's a broad question, but I can throw some thoughts at you from personal experience. I'm actually an Australian who has worked in a couple of companies but across multiple countries and I've found out first hand that you have a wealth of opportunities that other people don't have, but you also have a lot of problems that other people won't have. First up, asset classes. Real estate is a popular asset class, but unless you plan on being in each of these countries for a minimum of one to two years, it would be seriously risky to invest in rental residential or commercial real estate. This is because it takes a long time to figure out each country's particular set of laws around real estate, plus it will take a long time to get credit from the local bank institutions and to understand the local markets well enough to select a good location. This leaves you with the classics of stocks and bonds. You can buy stocks and bonds in any country typically. So you could have some stocks in a German company, a bond fund in France and maybe a mutual fund in Japan. This makes for interesting diversification, so if one country tanks, you can potentially be hedged in another. You also get to both benefit and be punished by foreign exchange movements. You might have made a killing on that stock you bought in Tokyo, but it turns out the Yen just fell by 15%. Doh. And to top this off, you are almost certainly going to end up filling out tax returns in each country you have made money in. This can get horribly complicated, very quickly. As a person who has been dealing with the US tax system, I can tell you that this is painful and the US in particular tries to get a cut of your worldwide income. That said, keep in mind each country has different tax rates, so you could potentially benefit from that as well. My advice? Choose one country you suspect you'll spend most of your life in and keep most of your assets there. Make a few purchases in other places, but minimize it. Ultimately most ex-pats move back to their country of origin as friends, family and shared culture bring them home. |
As an employee, when is it inappropriate to request to see your young/startup company's financial statements? | I think you need to realize that regardless of whether they are "shady" or not, owners/founders are by and large in it for themselves. You as an employee as just a resource - why should they divulge their finances to you? You won't offend them if you pry and ask for it, but they simply are not going to give you the straight up. They will give you a bare minimum or some song and dance that beats around the bush without actually telling you what you need to know. In regards to whether you should buy the restricted shares: why not? Startups are a gamble anyway. So simply decide how much you're willing to gamble, and spend that much buying some shares. I mean, you're already taking the gamble by accepting a lower salary in exchange for equity which, in all likelihood, will never be worth anything anyway. |
What is the compound annual growth rate of the major markets? | Under construction, but here's what I have so far: Schwab Data from 1970-2012: About.com data from 1980-2012: |
If I have AD&D through my employer, should I STILL purchase term life insurance? | Most likely, yes. AD&D is insurance against a specific type of peril. Life insurance is, too, but there are fewer exceptions to payout. I'd imagine that you'd have to die by accident, or be dismembered but not die, for it to pay out. The exceptions in the policy are what you need to be concerned about. If loss of you (and your income) would be of financial hardship to your wife and your goals for your family, then you should consider life insurance. (If you do, consider having your wife buy the policy on you, and make sure it's clear that her funds were paying for it. It may be possible to avoid having the payout go into your estate that way.) |
How can a freelancer get a credit card? (India) | Typically Banks look for a steady source of income or savings based on which they issue a credit card. If you can't show that build a cash balance and show it. For Example if you have an PPF account with say SBI, they issue you a card with a limit of around 50% of the balance in PPF. No other documentation is required. Similarly if you have Fixed Deposits for a large amount quite a few Banks would give you a Credit Card. My wife has a credit card because she had a good balance [around 100,000 INR] for around a year, the Bank kept calling her and offered her a card. |
How to know if I can have NOL (U.S. tax)? | Individuals most definitely can have NOL. This is covered in the IRS publication 536. What is the difference between NOL and capital loss? NOL is Net Operating Loss. I.e.: a situation where your (allowable) expenses and deductions exceed your gross income. Basically it means that you have negative income for that year, for tax purposes. Capital loss occurs when the total amount of your capital gains reported on Schedule D is negative. What are their relations then? Not all expenses and deductions that you usually put on your tax return are allowed for NOL calculation. For example, capital loss is not allowed. I.e.: if you earned $2000 and you lost in stocks $3000 - you do not get a $1K NOL. Capital losses are excluded from NOL calculation and in this scenario you still have non-negative income for NOL purposes even though it is offset in full by capital loss deduction and your "taxable income" line is negative. The $1K that was not allowed - gets carried forward to the next year using the Capital Loss Carryover Worksheet in the instructions to Schedule D. You calculate your NOL using form 1045 schedule A. You can use the form 1045 to apply the NOL to prior 2 years, or you can elect to apply it only to future years (up to 20 years). In what cases, capital loss can be NOL? Never. |
How can one protect oneself from a dividend stock with decreasing price? | Your question reminds me of a Will Rogers quote: buy some good stock, and hold it till it goes up, then sell it. If it don’t go up, don’t buy it. There's no way to prevent yourself from buying a stock that goes down. In fact all stocks go down at some times. The way to protect your long term investment is to diversify, which increases the chances that you have more stocks that go up than go down. So many advisors will encourage index funds, which have a low cost (which eats away at returns) and low rick (because of diversification). If you want to experiment with your criteria that's great, and I wish you luck, but Note that historically, very few managed funds (meaning funds that actively buy and sell stocks based on some set of criteria) outperform the market over long periods. So don't be afraid of some of your stocks losing - if you diversify enough, then statistically you should have more winners than losers. It's like playing blackjack. The goal is not to win every hand. The goal is to have more winning hands than losing hands. |
Credit card statement dates follow pattern? | My guess: they are giving you a constant number of days between when the bill is sent and when it is due. Due dates are usually set either: same date each month IE the 3rd of each month. same day IE first thursday of the month. Note: due date might vary based on weekends. Number of days in the month - date on bill should be pretty constant if due date option #1 is being used. Note how Feb dates were usually earlier, since it is a shorter month. |
For very high-net worth individuals, does it make sense to not have insurance? | Let's face it: most people pay more in insurance premiums than they "get back" in claims. I put "get back" in quotes because, with very few exceptions, the money paid out in claims does not go to the insured, but to others, such as doctors and hospitals. But even if you ignore the question who does the money actually go to, it's a losing proposition for most people. The exceptions are those who have a major loss, greater than what they put in over the years. But never forget: these are exceptions. The return on your money, on the average, is only a little better than playing the lottery. The usual counter-argument to the above is, but what if you are one of the exceptions? I for one refuse to let my life be dictated by worries of unlikely events that might happen. If you're the sort who obsesses on what could (but probably won't) happen, then maybe you should have insurance. Just don't tell me I need to do the same. When I lived in California, they had a program where you could deposit $25,000 with the State, and then you could drive, legally, without insurance. I did this for a while, didn't have any accidents, and exited the system (when I moved out of state) a few years later with more money (interest) than I put in. You don't accomplish that with insurance. But let's get back to rich people. Unless you get into an accident with you at fault and the other guy needing a head transplant as a result (joke), you could probably absorb the cost of an accident without blinking an eye. Those in the upper-middle-class might do well with high-deductible insurance that only pays out if there's an extreme accident. Then again if you have to borrow to buy something expensive (making monthly payments), they will usually demand you buy insurance with it. This is a way for the lender to protect himself at your expense, and if you refuse, good luck getting a loan somewhere else. I hate the idea of insurance so much I would make an act of insurance punishable by law. |
What are the scenarios if mining company around 4c decides to halt stock trading due to capital raising? | It appears that the company in question is raising money to invest in expanding its operations (specifically lithium production but that is off topic for here). The stock price was rising on the back of (perceived) increases in demand for the company's products but in order to fulfil demand they need to either invest in higher production or increase prices. They chose to increase production by investing. To invest they needed to raise capital and so are going through the motions to do that. The key question as to what will happen with their stock price after this is broken down into two parts: short term and long term: In the short term the price is driven by the expectation of future profits (see below) and the behavioural expectations from an increase in interest in the stock caused by the fact that it is in the news. People who had never heard of the stock or thought of investing in the company have suddenly discovered it and been told that it is doing well and so "want a piece of it". This will exacerbate the effect of the news (broadly positive or negative) and will drive the price in the short run. The effect of extra leverage (assuming that they raise capital by writing bonds) also immediately increases the total value of the company so will increase the price somewhat. The short term price changes usually pare back after a few months as the shine goes off and people take profits. For investing in the long run you need to consider how the increase in capital will be used and how demand and supply will change. Since the company is using the money to invest in factors of production (i.e. making more product) it is the return on capital (or investment) employed (ROCE) that will inform the fundamentals underlying the stock price. The higher the ROCE, the more valuable the capital raised is in the future and the more profits and the company as a whole will grow. A questing to ask yourself is whether they can employ the extra capital at the same ROCE as they currently produce. It is possible that by investing in new, more productive equipment they can raise their ROCE but also possible that, because the lithium mines (or whatever) can only get so big and can only get so much access to the seams extra capital will not be as productive as existing capital so ROCE will fall for the new capital. |
Free “Rich Dad” education, with “free gift”: Is it legitimate, or is it a sales ploy? | Kiyosaki says his methods of actions are not suitable for the average investor. They are meant for those wanting to excel at investing, and are willing to work for it. Personally, I wouldn't want to own ten apartments, because it sounds like a terrible headache. I would much rather have a huge portfolio of index funds. I believe that Kiyosaki's method allegedly perform better than the passive 'invest-diversify-hold' strategy, but would require a new mindset and dedication, and are risky unless you are willing to invest a lot of time learning the fine details. I prefer to dedicate my time elsewhere. |
Can everyday people profit from unexpected world events? | The NYSE is not the only exchange in the world (or even the only one in the USA). Amazingly, the London stock exchange works on London time, the Shanghai exchange works on Shanghai time and the Australian stock exchange works on Sydney time. In addition futures exchanges work overnight. |
Are personal finance / money management classes taught in high school, anywhere? | In Houston, Texas USA where I went to a private high school they had a half-semester class in personal finance, but it was optional and didn't give you any credits towards graduation. You are right though, it should be a standard class. After all, who doesn't need that information in their adult lives, and not everyone goes to college. |
Why would a company issue a scrip dividend and how will this issue affect me? | Am I correct in understanding that a Scrip Dividend involves the issue of new shares instead of the purchase of existing shares? Yes. Instead of paying a cash dividend to shareholders, the company grants existing shareholders new shares at a previously determined price. This allows shareholders who join the program to obtain new shares without incurring transaction costs that would normally occur if they purchased these shares in the market. Does this mean that if I don't join this program, my existing shares will be diluted every time a Scrip Dividend is paid? Yes, because the number of shares has increased, so the relative percentage of shares in the company you hold will decrease if you opt-out of the program. The price of the existing shares will adjust so that the value of the company is essentially unchanged (similar to a stock split), but the number of outstanding shares has increased, so the relative weight of your shares declines if you opt out of the program. What is the benefit to the company of issuing Scrip Dividends? Companies may do this to conserve their cash reserves. Also, by issuing a scrip dividend, corporations could avoid the Advanced Corporation Tax (ACT) that they would normally pre-pay on their distributions. Since the abolition of the ACT in 1999, preserving cash reserves is the primary reason for a company to issue scrip dividends, as far as I know. Whether or not scrip dividends are actually a beneficial strategy for a company is debatable (this looks like a neat study, even though I've only skimmed it). The issue may be beneficial to you, however, because you might receive a tax benefit. You can sell the scrip dividend in the market; the capital gain from this sale may fall below the annual tax-free allowance for capital gains, in which case you don't pay any capital gains tax on that amount. For a cash dividend, however, there isn't a minimum taxable amount, so you would owe dividend tax on the entire dividend (and may therefore pay more taxes on a cash dividend). |
Can a company control its stock through contracts with stockholders? | Your first scenario, involving shareholders in a private corp being limited by a contractual agreement, is common in practice. Frequent clauses include methods of valuing the shares if someone wants to sell, first right of refusal [you have to attempt to sell to the other shareholders, before you can sell to a 3rd party], and many others. These clauses are governed by contract law [ie: some clauses may be illegal in contract law, and therefore couldn't be applied here]. A Universal Shareholders' Agreement is just the same as the above, but applied to more people. You would never get an already public company to convert to a universal shareholders' agreement - because even 1 share voting 'no' would block it [due to corporate law limiting the power of a corporation from abusing minority shareholder value]. In practice, these agreements universally exist at the start of incorporation, or at least at the first moment shares become available. An example is the Canadian mega-construction company PCL*, which is employee-owned. When the original owner transferred the corporation to his employees, there was a USA in place which still today governs how the corporation operates. In theory you could have a 'public company' where most shares are already owned by the founders, and 100% of remaining shares are owned by a specific group of individuals, in which case you may be able to get a USA signed. But it wouldn't really happen in practice. *[Note that while PCL is broadly owned by a large group of employees, it is not a 'public company' because any random schmuck can't simply buy a share on the Toronto Stock Exchange. I assume most exchanges would prevent corporations from being listed if they had ownership restrictions like this]. |
Why should one only contribute up to the employer's match in a 401(k)? | If you exceed the income limit for deducting a traditional IRA (which is very low if you are covered by a 401(k) ), then your IRA options are basically limited to a Roth IRA. The Cramer person probably meant to compare 401(k) and IRA from the same pre-/post-tax-ness, so i.e. Traditional 401(k) vs. Traditional IRA, or Roth 401(k) vs. Roth IRA. Comparing a Roth investment against a Traditional investment goes into a whole other topic that only confuses what is being discussed here. So if deducting a traditional IRA is ruled out, then I don't think Cramer's advice can be as simply applied regarding a Traditional 401(k). (However, by that logic, and since most people on 401(k) have Traditional 401(k), and if you are covered by a 401(k) then you cannot deduct a Traditional IRA unless you are super low income, that would mean Cramer's advice is not applicable in most situations. So I don't really know what to think here.) |
Should I be worried that I won't be given a receipt if I pay with cash? | If this is because he wants to avoid paying taxes, will I get in trouble if I agree to have him work on my vehicle? You should check your state and local sales tax laws to be certain, but in my state you have no liability if he does not pay his taxes. That's his problem, not yours. The biggest risk for you is if something goes wrong, you have no proof that the work was ever done, so it's possible he could deny that any transaction ever took place and refuse to correct it or refund your money. So at worst you're out what you paid for the service, plus what it would cost you to fix it if you needed to and chose to do so. If you don't want to take that risk, then insist on a receipt or take you business elsewhere, but there's no criminal liability for you if he chooses not to report the income. EDIT Be aware, though that state tax is levied at the state and local level, so the laws of your individual state or city may be different. |
What options do I have at 26 years old, with 1.2 million USD? | If you can still work, I think a very good course of action would be to invest the majority of the money in low-cost index funds for many years. The reason is that you are young and have plenty of time to build a sizable retirement fund. How you go about this course of action depends on your comfort level with managing your money, taxes, retirement accounts, etc. At a minimum, open an investment account at any of the major firms (Schwab, Fidelity, for example). They will provide you with a free financial advisor. Ideally s/he would recommend something like: Open a retirement account and invest as much as you can tax-free or tax-deferred. Since you already received the money tax-free, a Roth IRA seems like a no-brainer. Pick some low-fee equity funds, like an S&P 500 Index fund, for a large chunk of the money. Avoid individual stocks if you aren't comfortable with them. Alternatively, get a recommendation for a fixed-fee financial planner that can help you plan for your future. Above all, don't spend beyond your means! You have an opportunity to fund a very nice future for yourself, especially if you are able to work while you are still so young! |
When to trade in a relatively new car for maximum value | I don't disagree with the current answers, but I feel like no one really answered your question directly. Seems to me like what you were asking is when to trade in your car in relation to when/whether your loan is paid off? Assuming you are committed to trading your car in (and not selling it privately as has been suggested), whether the car is paid off should have no impact on what you get for a trade-in. The car is worth what it's worth, and what you owe on it should not affect the transaction. |
Is there any US bank that does not charge for incoming wire transfers? | Being into Business since years and having clients worldwide I receive a lot of payments via wire transfers. Some in business and some in personal checking accounts. I have never been charged by my bank for any incoming wire. And by the way I bank with HSBC and BoA in the US. Actually the charges on the account depends on the type of account you are opening/holding with the bank. With a tight competition in the finance and banking industry you can always demand the bank for the services you want and the pricing you want. The best thing to do is ask your bank if they can wave those incoming wire charges for you and if not you have a whole bunch of options. |
Why diversify stocks/investments? | Any investor can make a bad bet, even Buffett. Even if you have done every bit of research on an investment possible you are exposed to random external events.. acts of god, and outright fraud. |
Good book-keeping software? | I'm not directly affiliated with the company (I work for one of the add-on partners) but I can wholeheartedly recommend Xero for both personal and business finances. Their basis is to make accounting simple and clean, without sacrificing any of the power behind having the figures there in the first place. |
What does “a stock pays a dividend of 3%” mean? | It means a 3% return on the value of the stock. If a stock has a $10 share price, the dividend would be $0.30. Normally though, the dividends are announced as a fixed amount per share, because the share price fluctuates. If a percentage were announced, then the final cost would not be known as the share priced could change radically before the dividend date. |
Is CLM a stock or an ETF? | I find the reg, at last. https://www.sec.gov/cgi-bin/browse-edgar?company=Cornerstone+Strategic+Value+Fund&owner=exclude&action=getcompany Yes, its a common stock. |
How to spend more? (AKA, how to avoid being a miser) | Unless your stinginess has reach truly compulsive levels, it should be enough to consciously remind yourself of the value of your time when you make purchase decisions or find yourself chasing minor savings. Another way might be to deliberately give yourself a monthly or weekly budget that you're allowed to "waste" on luxuries and conveniences without worrying. |
Explain the details and benefits of rebalancing a retirement portfolio? | Rebalancing a portfolio helps you reduce risk, sell high, and buy low. I'll use international stocks and large cap US stocks. They both have ups and downs, and they don't always track with each other (international might be up while large cap US stocks are down and vice-versa) If you started with 50% international and 50% large cap stocks and 1 year later you have 75% international and 25% large cap stocks that means that international stocks are doing (relatively) well to large cap stocks. Comparing only those two categories, large cap stocks are "on sale" relative to international stocks. Now move so you have 50% in each category and you've realized some of the gains from your international investment (sell high) and added to your large cap stocks (buy low). The reason to rebalance is to lower risk. You are spreading your investments across multiple categories to manage risk. If you don't rebalance, you could end up with 95% in one category and 5% in another which means 95% of your portfolio is tied to the performance of a single asset category. I try to rebalance every 12 months and usually get it done by every 18 months. I like being a hands-off long term investor and this has proven often enough to beat the S&P500. |
What are the common moving averages used in a “Golden Cross” stock evaluation? | Different moving averages work and not work for different indexes. I have seen simulations where during bull or bear markets the moving averages work differently. Here is an example: http://www.indexresult.com/MovingAverage/Exponential/200/SP500 |
Does a US LLC owned by a non-resident alien have to pay US taxes if it operates exclusively online? | As you said, in the US LLC is (usually, unless you elect otherwise) not a separate tax entity. As such, the question "Does a US LLC owned by a non-resident alien have to pay US taxes" has no meaning. A US LLC, regardless of who owns it, doesn't pay US income taxes. States are different. Some States do tax LLCs (for example, California), so if you intend to operate in such a State - you need to verify that the extra tax the LLC would pay on top of your personal tax is worth it for you. As I mentioned in the comment, you need to check your decision making very carefully. LLC you create in the US may or may not be recognized as a separate legal/tax entity in your home country. So while you neither gain nor lose anything in the US (since the LLC is transparent tax wise), you may get hit by extra taxes at home if they see the LLC as a non-transparent corporate entity. Also, keep in mind that the liability protection by the LLC usually doesn't cover your own misdeeds. So if you sell products of your own work, the LLC may end up being completely worthless and will only add complexity to your business. I suggest you check all these with a reputable attorney. Not one whose business is to set up LLCs, these are going to tell you anything you want to hear as long as you hire them to do their thing. Talk to one who will not benefit from your decision either way and can provide an unbiased advice. |
What is 'consolidating' debt and why do people do it? | Debt consolidation is basically getting all your debt into one loan. This is possibly more convenient, and lets you close the other accounts (in the case of credit cards, preventing you from incurring any more debt). Ideally, your consolidated debt will have a better interest rate, so it saves you money as well. If you're defaulting on your debt already, you're likely combining this process with some negotiation with your existing creditors. |
Auto Loan and Balance Transfer | This is what your car loan would look like if you paid it off in 14 months at the existing 2.94% rate: You'll pay a total of about $277 in interest. If you do a balance transfer of the $10,000 at 3% it'll cost you $300 up front, and your payment on the remaining $5,000 will be $363.74 to pay it off in the 14 month period. Your total monthly payment will be $1,099.45; $5,000 amortized at 2.94% for 14 months plus $10,300 divided by 14. ($363.74 + 735.71). Your interest will be about $392, $300 from the balance transfer and $92 from the remaining $5,000 on the car loan at 2.94%. Even if your lender doesn't credit your additional payment to principal and instead simply credits future payments, you'd still be done in 15 months with a total interest expense of about $447. So this additional administration and additional loan will save you maybe about $55 over 14 or 15 months. |
Do I need to write the date on the back of a received check when depositing it? | You do not need to write anything on the second line. There are a variety of helpful things that you can add, e.g.: For Deposit Only. This tells the bank to deposit the check into your account and ignore other signatures. Your account number. Especially useful when added to "For Deposit Only". A countersignature. This tells the bank to pay the check to someone other than you. Countersigned checks used to be much more common than they are now. Someone who didn't have a bank account might ask someone who did to cash a check for them. See also: Four ways to endorse a check which gives the correct format for endorsing a check in these ways. |
Diversify across multiple brokers? | You should ensure that your broker is a member of the Securities Investor Protection Corporation (SIPC). SIPC protects the cash and securities in your brokerage account much like the Federal Deposit Insurance Corporation (FDIC) protects bank deposits. Securities are protected with a limit of $500,000 USD. Cash is protected with a limit of $250,000 USD. It should be noted that SIPC does not protect investors against loss of value or bad advice. As far as having multiple brokerage accounts for security, I personally don’t think it’s necessary to have multiple accounts for that reason. Depending on account or transaction fees, it might not hurt to have multiple accounts. It can actually be beneficial to have multiple accounts so long as each account serves a purpose in your overall financial plan. For example, I have three brokerage accounts, each of which serves a specific purpose. One provides low cost stock and bond transactions, another provides superior market data, and the third provides low cost mutual fund transactions. If you’re worried about asset security, there are a few things you can do to protect yourself. I would recommend you begin by consulting a qualified financial advisor about your risk profile. You stated that a considerable portion of your total assets are in securities. Depending on your risk profile and the amount of your net worth held in securities, you might be better served by moving your money into lower risk asset classes. I’m not an attorney or a financial advisor. This is not legal advice or financial advice. You can and should consult your own attorney and financial advisor. |
Does the IRS reprieve those who have to commute for work? | You cannot deduct commute expenses. Regarding your specific example, something to consider is that if the standard of living is higher in San Francisco, presumably the wages are higher too. Therefore, you must make a choice to trade "time and some money for commuting costs" for "even more money" in the form of higher wages. For example, if you can make $50K working 2 hours away from SF, or $80K working in SF, and it costs you $5K extra per year in commute costs, you still come out ahead by $25K (minus taxes). If it ends up costing $20K more to live in SF (due to higher rent/mortgage/food/etc), some people choose to trade 4 extra hours of commuting time to put that extra $20K in their pocket. It's sort of like having an extra part time job, except you get paid to read/watch tv/sleep on the job (assuming you can take a train to work). |
How to execute a large stock purchase, relative to the order book? | I normally just do a buy limit at the price I want to buy it at. Then it executes when it's that price or lower, but there's still a chance you might purchase some shares at a larger price. But since we're small fry and using brokerages, there's not much we can do about it. |
What name is given to a value such as this? | This is called "change" or "movement" - the change (in points or percentage) from the last closing value. You can read more about the ticker tape on Investopedia, the format you're referring to comes from there. |
Are low commission trading sites safe? | I have used TradeKing for a couple of years now and love it. It really is a great site. They hold an IRA trading account for me and have been helpful in rolling money into that account, and with answering the occasional question. Previously I have used Scottrade and found that TradeKing is a much better value. |
What special considerations need to be made for a US citizen who wishes to purchase a house in Canada? | About deducting mortgage interest: No, you can not deduct it unless it is qualified mortgage interest. "Qualified mortgage interest is interest and points you pay on a loan secured by your main home or a second home." (Tax Topic 505). According to the IRS, "if you rent out the residence, you must use it for more than 14 days or more than 10% of the number of days you rent it out, whichever is longer." Regarding being taxed on income received from the property, if you claim the foreign tax credit you will not be double taxed. According to the IRS, "The foreign tax credit intends to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the United States and the foreign country from which the income is derived." (from IRS Topic 856 - Foreign Tax Credit) About property taxes: From my understanding, these cannot be claimed for the foreign tax credit but can be deducted as business expenses. There are various exceptions and stipulations based on your circumstance, so you need to read the official publications and get professional tax advice. Here's an excerpt from Publication 856 - Foreign Tax Credit for Individuals: "In most cases, only foreign income taxes qualify for the foreign tax credit. Other taxes, such as foreign real and personal property taxes, do not qualify. But you may be able to deduct these other taxes even if you claim the foreign tax credit for foreign income taxes. In most cases, you can deduct these other taxes only if they are expenses incurred in a trade or business or in the production of income. However, you can deduct foreign real property taxes that are not trade or business expenses as an itemized deduction on Schedule A (Form 1040)." Note and disclaimer: Sources: IRS Tax Topic 505 Interest Expense, IRS Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses) , IRS Topic 514 Foreign Tax Credit , and Publication 856 Foreign Tax Credit for Individuals |
Is person-person lending/borrowing protected by law? | Yes, it is, under some circumstances (basically, a piece of paper saying "John Doe borrowed Josh Shoe 100 USD" is not enough). Usually, the paper should include: This is the case for Czech Republic, I believe it's similar for other countries as well. Remember that without the repair date, you have very complicated position forcing the person to give you the money back. As well, there's a withdrawal of rights, i.e. after X years after the "repair date", you cannot force the person to give you the money. You have to send the case to the court in some period after the "repair date", if you don't have the money yet. |
As an investor what are side effects of Quantitative Easing in US and in EU? | Well if your looking to explain inflation to children, I would use this example. Take two fruits they like IE: Apples and Oranges. Give them both 2 of each. Ask them how many of your apples would you give for 1 orange and how many apples would you want to get 1 orange(most likely they will say 1). Now give them 5 more apples each. Then ask them the same question. In economics and finance many things can not be proven, so to tell you what QE will do for a fact can't be said, you can only be told theories. There are to many variables. |
Is Bogleheadism (index fund investing) dead? | I think you can do better than the straight indexes. For instance Vanguard's High Yield Tax Exempt Fund has made 4.19% over the past 5 years. The S&P 500 Index has lost -2.25% in the same period. I think good mutual funds will continue to outperform the markets because you have skilled managers taking care of your money. The index is just a bet on the whole market. That said, whatever you do, you should diversify. List of Vanguard Funds |
How should I handle taxes for Minecraft server donations? | Its is considered a "hobby" income, and you should be reporting it on the 1040 as taxable income. The expenses (what you pay) are hobby expenses, and you report them on Schedule A (if you itemize). You can only deduct the hobby expenses to the extent of your hobby income, and they're subject to the 2% AGI threshold. |
Credit Card Approval | Banks use quite a few parameters to arrive at the decision for card approval. The credit score is just one input. There are multiple other inputs it would source, for example total years in job, the number of years in current job, income streams, etc ... the exact formula is a trade secret and varies from Bank to Bank |
How do I account for 100 percent vendor discounts in GnuCash 2.6.5 | I am no expert on the situation nor do I pretend to act like one, but, as a business owner, allow me to give you my personal opinion. Option 3 is closest to what you want. Why? Well: This way, you have both the record of everything that was done, and also IRS can see exactly what happened. Another suggestion would be to ask the GnuCash maintainers and community directly. You can have a chat with them on their IRC channel #gnucash, send them an email, maybe find the answer in the documentation or wiki. Popular software apps usually have both support people and a helpful community, so if the above method is in any way inconvenient for you, you can give this one a try. Hope this helps! Robert |
Is buying a home a good idea? | IF the price of the property (1) increases A LOT, you will just break even, on the huge expenses of home owning. IF the price of the property (2) increases A HUGE AMOUNT, you will make lots of money, due to the leverage. IF the price of the property (3) stays even, you will LOSE a tremendous amount of money. It's much like owning a car - constant expenses. That's all there is to it. It's well worth bearing in mind that property prices for your area / your property need to be constantly increasing for you to merely break even. Note that over long periods of time prices tend to go up (most anywhere - but not everywhere). Many people basically base their thinking on that. It will be OK "in the long run". Which is fair enough. I believe one huge factor is that it is enforced saving. That is the number one advantage for most. Note too that in most/all jurisdictions, there are tremendous tax advantages, even if it turns out to be situation (1) (i.e. a waste of time, you only break-even). Note finally that there are, indeed, tremendous social/financial advantages to having the equity: it gets incredibly easy to get other loans (for business or the like) once you own a house; this is undeniably an advantage (perhaps press your husband on that one). |
How to record business income tax paid, in QuickBooks? | Federal income taxes are indeed expenses, they're just not DEDUCTIBLE expenses on your 1120. Federal Income Tax Expense is usually a subcategory under Taxes. This is one of the items that will be a book-to-tax difference on Schedule M-1. I am presuming you are talking about a C corporation, as an S corporation is not likely to be paying federal taxes itself, but would pass the liability through to the members. If you're paying your personal 1040 taxes out of an S-corporation bank account, that's an owner's draw just like paying any of your personal non-business expenses. I would encourage you to get a tax professional to prepare your corporate tax returns. It's not quite as simple as TurboTax Business makes it out to be. ;) Mariette IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law. |
Does exposure to financials in corporate bond funds make sense? | One reason a lot of bond ETFs like Financials are because of how financial companies work. They usually have amazing cash flows due to deposits and fees and therefore have little risk associated with paying their debts in the short term. The rest of VCSH contains companies with low default risk and good cash flow generation as well: This is of course the objective of VCSH: Banks themselves issue a lot of bonds to raise cash to lend for other purposes. Banks are intermediary and help make funds liquid for investors and spenders. Hope that helped answer your question. If not comment below and I'll try to adjust the answer to be more complete. |
Vanguard Mutual Funds — Diversification vs Share Class | If I were in your shoes I'd probably take the Vanguard Total Market fund with Admiral shares, then worry about further diversification when there is more in the account. Many times when you "diversify" in to multiple funds you end up with a lot of specific security overlap. A lot of the big S&P 500 constituents will be in all of them, etc. So while the 10 or so basis points difference in expense ratio doesn't seem like enough of a reason NOT to spread in to multiple funds, once you split up the money between Large, Mid, Small cap funds and Growth, Value, Dividend funds you'll probably have a collection of holdings that looks substantially similar to a total market fund anyway. Unless you're looking for international or some specific industry segment exposure and all of the money is going to equities anyway, an inexpensive total market fund makes a lot of sense. |
Are bond ETF capital gains taxed similar to stock or stock funds if held for more than 1 year? | Yes, that's correct. |
How much more than my mortgage should I charge for rent? | I just wanted to add one factor to the other answers. The cost of maintenance etc. is not a fraction of the cost of financing - it is more likely a fraction of the value of the house, and a function of its age. If you say you need to replace a roof every 25 years, and that costs $10,000 (depends on the size of the house, obviously), then you need to set aside $400 a year for roof repair. Other costs (painting, flooring, kitchen, bathrooms, water heaters, heating, AC, yard upkeep etc) can be roughly estimated in the same way. A rule of thumb is 1% of the value of the house per year to cover all big-ticket maintenance. If you pay 4% mortgage, that would increase the reserve by 25%; but if interest rates rise, the fraction may be smaller (I remember paying over 10% mortgage...). In general, whether keeping a property for long term rental income (with the potential for appreciation - but prices can go up and down) is a good idea will largely depend on your ability to predict future costs and value. If you have a variable mortgage, that will be harder to do. |
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