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What does inflation actually mean? [duplicate] | Inflation is good for the economy primarily because it is an incentive to invest. If inflation is occurring, then keeping your holdings in cash is a net loser; 5% inflation means that in a year, your $100 is now worth $95.24 (1/1.05), so unless you're getting really good interest, that's a bad thing. On the other hand, if you invested that $100 in a business, you can outgain inflation more easily since inflation should drive the business's profits. Deflation (negative inflation), on the other hand, is bad for investing because it encourages holding cash. If deflation of 5% occurs, then you can get a 5% ROI by simply holding onto twenty dollar bills; why would you invest in a business that was in a deflationary economy (and thus would likely earn less money)? Mild inflation also increases flexibility in the economy, because businesses make a little more money (in terms of denominated money); that allows them more flexibility in expansion. Salaries for some also go up, meaning that spending goes up, and often with more flexibility in how those salaries are spent; inflation doesn't hit all sectors exactly the same, so often this leaves significant portions of the middle class with more money to spend (and thus driving economic growth). More than salary growth, though, inflation seems to drive job creation. From the New York Times, this article quotes a paper by George Akerloff which shows that job creation tends to be more significant than rising salaries during periods of low inflation (ie, what we're talking about here). Salary increases will come here largely from job seeking rather than raises, because businesses don't tend to cut wages and thus are reticent to significantly raise salaries; they'd rather just hire more people, and then cut jobs when the economy weakens (or inflation drops). This is even more true in low wage jobs, such as minimum wage positions, where wages cannot be cut but salary increases have little real effect on job retention; it's easier to change the number of hours for PT employees, or the number of PT/FT employees. Deflation, on the other hand, leads to decreased flexibility, layoffs, and lower consumer spending. While it sounds good to say 'hey, prices are going down!' to your average consumer, you have to keep in mind that those prices are what keep the businesses going that drive our economy and pay your salary (either directly or indirectly). If your employer started making 5% less per year, do you think they'd keep you employed? Maybe not, and at the bottom (service industries, fast food restaurants, grocers, etc.) there would be significant cutbacks if deflation hit them. I would note that 5% inflation is probably a bit high; most economists like 2% to 3%, and the Federal Reserve has said that 2% is the right target. They're mostly concerned with avoiding deflation, as that's a big risk to the economy; the advantages of mild inflation are relatively minor, compared to the damages of deflation, and tend to be more correlations (you get mild inflation in a good economy, as much or more than you need mild inflation for a good economy). Most important, probably, is consistent inflation. Consumers and businesses can act rationally if the inflation rate is relatively stable and predictable. When inflation jumps or drops, it changes the potential outcomes for choices made by investors, consumers, and businesses, meaning choices they made in the past are now suboptimal; if the inflation rate is jumping around (1% one year, 4% another, -1% the next) investors, businesses, and consumers will be relatively conservative in their choices, which leads to a bad economy. |
Is it possible to influence a company's actions by buying stock? | Energy Transfer Partners, LP (stock symbol ETP) is the parent company of Dakota Access LLC, the developer of the Dakota Access Pipeline. Since ETP is a publicly traded company, it is certainly possible to purchase the stock. To answer your questions: Would it not be possible to buy their stocks, bring down the price of the stocks and keep it there until investors pull out because it is financially unwise to these investors? You cannot artificially bring the price of a stock down by buying the stock. Purchasing large enough amounts would theoretically cause the price to go up, not down. You could theoretically cause the stock to go down by shorting the stock (borrowing shares and then selling them), but it would take a lot of shares to do this, and may not be successful. If not successful, your losses are potentially unlimited. Would it alternatively be possible to buy enough stock to have a voice in the operations of the company? Yes, you could theoretically purchase enough of the stock to control the company. The market capitalization of ETP is currently $17.9 Billion; if you owned half of the stock, you would have complete control of the company. But buying that much stock would certainly influence the price of the stock, so it would cost you more than half of that amount to buy that much stock. You could get yourself a voice at the table for less without owning a full half of the stock, but you would not have full control, and would need support from others to get the outcome you want. Alternatively, someone determined to exert their influence could theoretically make an offer to purchase the Dakota Access subsidiary from ETP, which might be less costly than purchasing half of the entire corporation. Even if an extremely wealthy person were to try one of these options and destroy this company, it wouldn't necessarily stop another company from building something similar. The investors you purchased the company from would have billions of dollars to do so with. |
How much more than my mortgage should I charge for rent? | Agree with the previous posts the question is poorly worded. -but- Clark Howard does say you really need to be getting 90% back in the mortgage payment. Remember that what ever your paying in principle a month is adding to your net worth and every month that gets you a little more money than the last payment. Also this is a good hedge on inflation and at some point within a few years you will be at break even. |
Setting up general ledger/tax reporting for a Real Estate Rental LLC in GnuCash | No, GnuCash doesn't specifically provide a partner cash basis report/function. However, GnuCash reports are fairly easy to write. If the data was readily available in your accounts it shouldn't be too hard to create a cash basis report. The account setup is so flexible, you might actually be able to create accounts for each partner, and, using standard dual-entry accounting, always debit and credit these accounts so the actual cash basis of each partner is shown and updated with every transaction. I used GnuCash for many years to manage my personal finances and those of my business (sole proprietorship). It really shines for data integrity (I never lost data), customer management (decent UI for managing multiple clients and business partners) and customer invoice generation (they look pretty). I found the user interface ugly and cumbersome. GnuCash doesn't integrate cleanly with banks in the US. It's possible to import data, but the process is very clunky and error-prone. Apparently you can make bank transactions right from GnuCash if you live in Europe. Another very important limitation of GnuCash to be aware of: only one user at a time. Period. If this is important to you, don't use GnuCash. To really use GnuCash effectively, you probably have to be an actual accountant. I studied dual-entry accounting a bit while using GnuCash. Dual-entry accounting in GnuCash is a pain in the butt. Accurately recording certain types of transactions (like stock buys/sells) requires fiddling with complicated split transactions. I agree with Mariette: hire a pro. |
How do I factor dividends and yield into the performance of a security? | Instead of a price chart can use a performance chart, which is usually expressed as a percentage increase from the original purchase price. To factor in the dividends, you can either add in all of your dividends to the final price, or subtract the accumulated dividends from your cost basis (the initial price). |
Income Tax and Investments | Unless you make those investments inside a tax-deferred account, you will have to pay income-taxes on that money this year. Because you made that money through your own business, you will also have payroll taxes due on that money this year. |
What's the difference when asked for “debit or credit” by a store when using credit and debit cards? | Just to add about using debit card as "credit" vs "debit" way: In addition to the difference of having to enter the PIN when using "debit" mode (vs having to sign in "credit" mode), for stores that offer cash back (i.e. get cash out of your account at the same time as paying), you can only get cash back when using "debit" mode. |
Is this investment opportunity problematic? | Your Spidey senses are good. A good friend would not put you in such a position. It's simple, to skirt some issue (we'll get to that in a second) you are being asked to lie. All for a 15% return on your $$$$. <<< How much is that? You can easily lend him the money, and have a better paper trail. But the bank is not going to like that, and requires this money from friends or family to be a gift. I've heard mortgage guys at the bank say "It's just a formality, we need this paperwork to sell the loan to the investors." These bankers belong in jail, or at least fired and barred from the industry. They broke the economy in 2008, and should be stopped from doing it again. |
How much money do you have to make every year before you have to pay tax? | I'm not confident that the requirements for 2017 are up yet, but assuming they don't change much from those of 2016, then probably not if you have no other earnings this year. If you make $500 a month, then you will make $6,000 this year. This is below the filing requirements for most taxpayers, unless you are married but filing separately. At the end of 2017 you should tally up your earnings (including earnings from other sources) find which category you find yourself in on the table, and make a final determination of whether you'll need to file. |
Will one’s education loan application be rejected if one doesn't have a payslip providing collateral? | A bank can reject a loan if they feel you do not meet the eligibility criteria. You can talk to few banks and find out. |
What happens to options if a company is acquired / bought out? | A lot may depend on the nature of a buyout, sometimes it's is for stock and cash, sometimes just stock, or in the case of this google deal, all cash. Since that deal was used, we'll discuss what happens in a cash buyout. If the stock price goes high enough before the buyout date to put you in the money, pull the trigger before the settlement date (in some cases, it might be pulled for you, see below). Otherwise, once the buyout occurs you will either be done or may receive adjusted options in the stock of the company that did the buyout (not applicable in a cash buyout). Typically the price will approach but not exceed the buyout price as the time gets close to the buyout date. If the buyout price is above your option strike price, then you have some hope of being in the money at some point before the buyout; just be sure to exercise in time. You need to check the fine print on the option contract itself to see if it had some provision that determines what happens in the event of a buyout. That will tell you what happens with your particular options. For example Joe Taxpayer just amended his answer to include the standard language from CBOE on it's options, which if I read it right means if you have options via them you need to check with your broker to see what if any special exercise settlement procedures are being imposed by CBOE in this case. |
When a Company was expected and then made a profit of X $ then that X$ increased it's share price. or those the Sellers and Buyers [duplicate] | There are a few reason why share prices increase or decrease, the foremost is expectation of the investors that the company/economy will do well/not well, that is expectation of profit/intrinsic value growth over some time frame (1-4 qtrs.)there is also demand & supply mismatch over (usually) short time. If you really see, the actual 'value' of a company is it's net-worth (cash+asset+stock in trade+brand value+other intangibles+other incomes)/no of shares outstanding, which (in a way) is the book value, then all shares should trade at their book value, the actual number but it does not, the expectation of investors that a share would be purchased by another investor at a higher price because the outlook of the company over a long time is good. |
The Intelligent Investor: Northern Pacific Railway example | Two of the main ways that investors benefit financially from a stock are dividends and increases in the price of the stock. In the example as described, the benefits came primarily from dividends, leaving less benefits to be realized in terms of an increase in the value of the company. Another way to put that is that the company paid its profits to shareholders in the form of a dividend, instead of accumulating that as an increase in the value of the company. The company could have chosen to take those profits and reinvest them in growing the business, which would lead to lower dividends but (hopefully) an increase in the valuation of the stock, but they chose to pay dividends instead. This still rewards the investors, but share prices stay low. |
Why do some companies report how well their EBITDA performed even if their overall net profit did equally well? | EBITDA is in my opinion not a useful measure for an investor looking to buy shares on the stock market. It is more useful for private businesses open to changing their structuring, or looking to sell significant parts of their business. One of the main benefits of reporting Earnings Before Interest, Taxes, Depreciation & Amortization, is that it presents the company as it would look to a potential buyer. Consider that net income, as a metric, includes interest costs, taxes, and depreciation. Interest costs are (to put it simply) a result of multiplying a business's debt by its interest rate. If you own a business, and personally guarantee the loan that the company has with the bank, your interest rates might be artificially low. If you have a policy of reaching high debt levels relative to your equity, in order to achieve high 'financial leveraging', your interest cost might be artificially high. Either way, if I bought your business, my debt structure could be completely different, and therefore your interest costs are not particularly relevant to me, a potential buyer. Instead, I should attempt to anticipate what my own interest costs would be, under my plans for your business. Taxes are a result of many factors, including the corporate structure of the business. If you run your business as a sole proprietorship (ie: no corporation), but I want to buy it under my corporation, then my tax rates could look nothing like yours. Or if we operated in multiple jurisdictions. etc. etc. Instead of using your taxes as an estimate for mine, I should anticipate my taxes based on my plans for your business. Depreciation / amortization is a measure that estimates how much of a business's "fixed assets" were "used up" during the year. ie: how much wear and tear occurred on your fleet of trucks? It is generally calculated as a % of your overall asset value. It is a (very loose) proxy for the cash costs which will ultimately be incurred to make repairs/replacements. D&A is also something which could significantly change if a business changes hands. If the value of your building is much higher now than when you bought it, I will have higher D&A costs than you [because I will be recording a % of total costs higher than yours], and therefore I should forecast my own D&A. Removing these costs from Net Income is not particularly relevant for a casual stock investor, because these costs will not change when you buy shares. Whatever IBM's interest cost is, reflects the debt structuring policy that the company currently has. Therefore when you buy a share in IBM, you should consider the impact that interest has on net income. Similarly for taxes and D&A - they reflect costs to the business that impact the company's ability to pay you a dividend, and therefore you should look at net income, which includes those costs. Why would a business with 'good net income' and 'good EBITDA' report EBITDA? Because EBITDA will always be higher than net income. Why say $10M net income, when you could say $50M EBITDA? The fact is, it's easy to report, and is generally well understood - so why not report it, when it also makes you look better, from a purely "big number = good" perspective? I'm not sure that reporting EBITDA implies any sort of manipulative reporting, but it would seem that Warren Buffet feels this is a risk. |
How do I calculate ownership percentage for shared home ownership? | You and your husband are fronting all the money upfront. I'm guessing this will cost you around 67,000 once closing costs and fees are included. So obviously you would be hundred percent owners at the beginning. You'll then pay 31% of the mortgage and have your sister pay the remaining 69%. This puts your total investment at the end at 67k + 74.4k + 31% of interest accrued, and your sisters total investment at 165.6k+69% of interest accrued. If you hold the full length of the mortgage, your sister will have invested much more than you( assuming 30 year fixed rate, and 3.75%, she'd pay 116.6k in interest as opposed to your 49.6k) She will have spent 282.2k and y'all will have spent 191k. However if you sell early, your percentage could be much higher. These calculations don't take into account the opportunity cost of fronting all the cash. It could be earning you more in the stock market or in a different investment property. Liability also could be an issue in the case of her not being able to pay. The bank can still come after you for the whole amount. Lastly and most importantly, this also doesn't include the fact that she will be living there and y'all will not. What kind of rent would she be paying to live in a similar home? If it is more than 1400, you will basically be subsidizing her living, as well as tying up funds, and increasing your risk exposure. If it is more than 1400, she shouldn't be any percent owner. |
How is stock price determined? | You can interpret prices in any way you wish, but the commonly quoted "price" is the last price traded. If your broker routes those orders, unlikely because they will be considered "unfair" and will probably be busted by the exchange, the only way to drive the price to the heights & lows in your example is to have an overwhelming amount of quantity relative to the order book. Your orders will hit the opposing limit orders until your quantity is exhausted, starting from the best price to the worst price. This is the functional equivalent to a market order. |
Why do some companies offer 401k retirement plans? | IRA is not always an option. There are income limits for IRA, that leave many employees (those with the higher salaries, but not exactly the "riches") out of it. Same for Roth IRA, though the MAGI limits are much higher. Also, the contribution limits on IRA are more than three times less than those on 401K (5K vs 16.5K). Per IRS Publication 590 (page 12) the income limit (AGI) goes away if the employer doesn't provide a 401(k) or similar plan (not if you don't participate, but if the employer doesn't provide). But deduction limits don't change, it's up to $5K (or 100% of the compensation, the lesser) even if you're not covered by the employers' pension plan. Employers are allowed to match the employees' 401K contributions, and this comes on top of the limits (i.e.: with the employers' matching, the employees can save more for their retirement and still have the tax benefits). That's the law. The companies offer the option of 401K because it allows employee retention (I would not work for a company without 401K), and it is part of the overall benefit package - it's an expense for the employer (including the matching). Why would the employer offer matching instead of a raise? Not all employers do. My current employer, for example, pays above average salaries, but doesn't offer 401K match. Some companies have very tight control over the 401K accounts, and until not so long ago were allowed to force employees to invest their retirement savings in the company (see the Enron affair). It is no longer an option, but by now 401K is a standard in some industries, and employers cannot allow themselves not to offer it (see my position above). |
How to execute a large stock purchase, relative to the order book? | I am able to place an 'all or none' order with my broker. But doing so reduces the number of potential sources to fulfill the order. As others have mentioned, try a limit order to get a specific price. |
Can I lose more on Forex than I deposit? | If you don't use leverage you can't lose more than you invested because you "play" with your own money. But even with leverage when you reach a certain limit (maintenance margin) you will receive a margin call from your broker to add more funds to your account. If you don't comply with this (meaning you don't add funds) the broker will liquidate some of the assets (in this case the currency) and it will restore the balance of the account to meet with his/her maintenance margin. At least, this is valid for assets like stocks and derivatives. Hope it helps! Edit: I should mention that |
Do market shares exhaust? | Stock trades are always between real buyers and real sellers. In thinly-traded small stocks, for example, you may not always be able to find a buyer when you want to sell. For most public companies, there is enough volume that individual investors can just about always fill their market orders. |
Why doesn't GnuCash auto-reconcile non-bank accounts? | The answer is just close your eyes and ignore it (in your words). I'm right there with you, the amount of detail that I track in my personal finances would be called obscene by some people. But as you look at these features in any accounting application, you need to ask the question "What does this information represent?" In the case of your bank and credit card accounts, the reconciliation marker represents that you have received documentation from the issuing institution which you have verified against your accounts. Marking them off confirms that you have reviewed the information, and that you checked for errors. These markers exist on all transactions, whichever end of the splits you are looking at. When reviewing the Expense side of the transaction, it might make less sense to see these reconciliation markers, because as you stated, nobody receives documentation related to their expenses. However, if you itemized your expenses and kept a separate log of certain transactions (like a notebook where you track gasoline and/or mileage on your car), it might be useful to 'reconcile' your records once a month. Checking off individual transactions, and verifying a new 'balance' in terms of gas consumed or miles driven, would allow you to identify any inconsistencies in your records. Not everyone would find such an activity useful, thus the reconciliation markers are present everywhere but required nowhere. |
Should I pay myself a dividend or a salary? | In cases like this you should be aware that tax treaties may exist and that countries are generally willing to enter into them. Their purpose is to help prevent double taxation. Tax treaties often times give you a better tax rate than even being a resident of the countries in question! (For instance, the Italy to US tax rate is lower than simply doing business in many United States) This should guide your google search, here is something I found for Germany/Spain http://tmagazine.ey.com/wp-content/uploads/2011/03/2011G_CM2300_Spain-Germany-sign-new-tax-treaty.pdf It appears that the dividend tax rate under that treaty is 5% , to my understanding, the income tax rates are often multiples higher! I read that spain's income tax rate is 18% So what I would do is see if there is the possibility of deferring taxes in the lower tax jurisidiction and then doing a large one time dividend when conveninet. But Germany isn't really known for its low taxes, being a Federal Republic, the taxes are levied by both the states and the federal government. Look to see if your business structure can avoid being taxed as the entity level: ie. your business' earnings are always distributed to the owners - which are not germany citizens or residents - as dividends. So this way you avoid Germany's 15% federal corporate tax, and you avoid Spain's 18% income tax, and instead get Spanish dividends at 5% tax. Anyway, contact a tax attorney to help interpret the use of the regulations, but this is the frame of mind you should be thinking in. Because it looks like spain is willing to do a tax credit if you pay taxes in germany, several options here to lower your tax footprint. |
When a stock price goes down, does the money just disappears into thin air? | Cash changes hands when you buy or sell the stock. While you own the stock, you own it, not cash, so there is no cash to go anywhere. You spent your money when you bought. The seller got that money. It's gone. You hope that when you sell the stock, someone will give you more money for it than you spent. But they may give you less. Money doesn't magically appear either way, it comes from the buyer. After selling, you have the money -- however much you sold for -- and no longer have the stock. NOTE that this means the current value of a share of stock is interesting, but not really very relevant, unless you are actively buying or selling. What your portfolio is worth on paper is nothing more than an approximate snapshot at the moment you retrieve the data. It is not a promise of what will actually happen when you do sell. |
Personal finance software for Mac that can track stocks and mutual funds? (Even manual updating of share prices will do.) | I'm using iBank on my Mac here and that definitely supports different currencies and is also supposed to be able to track investments (I haven't used it to track investments yet, hence the 'supposed to' caveat). |
How FTB and IRS find mistakes in amended tax returns? Are their processes reliable? | The FTB, as any government agency, is understaffed and underpaid. Even if someone took a glance and it wasn't just an automated letter - consider the situation: you filed as a LLC and then amended to file as a partnership. Unless someone really pays attention - the obvious assumption would be that you had a limited partnership. Yes, you'll need to call them and work with them on fixing this. They do have all the statements you've attached. However, there's a lot of automation and very little attention to details when it comes to matching errors, so don't get surprised if no-one even looked at these statements. Next time your elected government officials talk about "small government" and "cutting government expenses" - you can remind yourself how it looks in action with this experience. |
What would be the appropriate account for written off loans to friends and family? | A simple way to account debt forgiveness of your receivables is to utilize a "Bad Debt" expense account. Take the following two examples: If you are only forgiving a portion of the principle, another popular term used is Principle Reduction as the expense account. |
Do large market players using HFT make it unsafe for individual investors to be in the stock market? | Obviously there are good answers about the alternatives to the stock market in the referenced question. HFT has been debated heavily over the past couple of years, and the Flash crash of May 6, 2010, has spurred regulators to rein in heavy automated trading. HFT takes advantage of churn and split second reactions to changing market trends, news and rumors. It is not wise for individual investors to fight the big boys in these games and you will likely lose money in day trading as a result. HFT's defender's may be right when they claim that it makes the market more liquid for you to get the listed price for a security, but the article points out that their actions more closely resemble the currently illegal practice of front-running than a negotiated trade where both parties feel that they've received a fair value. There are many factors including supply and demand which affect stock prices more than volume does. While market makers are generating the majority of volume with their HFT practices, volume is merely the number of shares bought and sold in a day. Volume shows how many shares people are interested in trading, not the actual underlying value of the security and its long term prospects. Extra volume doesn't affect most long term investments, so your long term investments aren't in any extra danger due to HFT. That said, the stock market is a risky place whether panicked people or poorly written programs are trading out of control. Most people are better off investing rather than merely trading. Long term investors don't need to get the absolute lowest price or the highest sell. They move into and out of positions based on overall value and long term prospects. They're diversified so bad apples like Enron, etc. won't destroy their portfolio. Investors long term view allows them to ignore the effects of churn, while working like the tortoise to win the race while the hare eventually gets swallowed by a bad bet. There are a lot of worrying and stressful uncertainties in the global economy. If it's a question of wisdom, focus on sound investments and work politically (as a citizen and shareholder) to fix problems you see in the system. |
Can I exchange rental property for REIT stock with 1031? | would buying the stock of a REIT qualify as a 'Like-Kind' exchange? Short answer, no. Long answer, a 1031 (Starker) exchange only applies to real estate. From the Wikipedia page on the topic: To qualify for Section 1031 of the Internal Revenue Code, the properties exchanged must be held for productive use in a trade or business, or for investment. Stocks, bonds, and other properties are listed as expressly excluded by Section 1031 of the Internal Revenue Code, although securitized properties are not excluded. A REIT, being stock in a real estate company, is excluded from Section 1031. |
can the government or debt collectors garnish money from any bank account to which the debtor has access? | I agree with the comments so far. Access doesn't equal ownership. There are also different levels of access. E.g. your financial advisor can have access to your retirement account via power of attorney, but only ability to add or change things, not withdraw. Another consideration is when a creditor tries to garnish wages / bank accounts, it needs to find the accounts first. This could be done by running a credit report via SSN. My guess is an account with access-only rights won't show up on such a report. I suppose the court could subpoena bank information. But I'm not an attorney so please check with a professional. |
Is it true that 90% of investors lose their money? | No, 90% of investors do not lose money. 90% or even larger percentage of "traders" lose money. Staying invested in stock market over the long term will almost always be profitable if you spread your investments across different companies or even the index but the key here is long term which is 10+ years in any emerging market and even longer in developed economies where yields will be a lot lower but their currencies will compensate over time if you are an international investor. |
Why is routing number called ABA/ABN number? | The ABA number you speak of is more accurately called the Routing Transit Number. http://en.wikipedia.org/wiki/Routing_transit_number A routing transit number (RTN) is a nine digit bank code, used in the United States, which appears on the bottom of negotiable instruments such as checks identifying the financial institution on which it was drawn. This code was designed to facilitate the sorting, bundling, and shipment of paper checks back to the drawer's (check writer's) account. The RTN is also used by Federal Reserve Banks to process Fedwire funds transfers, and by the Automated Clearing House to process direct deposits, bill payments, and other such automated transfers. The RTN number is derived from the bank's transit number originated by the American Bankers Association, which designed it in 1910.[1] I am going to assume that the euphemistic ABA Number has been shortened by whoever told you about it and called it the ABN. Perhaps American Bank Number. Either way, the technical term is RTN. Perhaps a comment or editor can straighten me out about the ABN. There is an international number known as the SWIFT number that serves the same purpose worldwide. http://en.wikipedia.org/wiki/ISO_9362 ISO 9362 (also known as SWIFT-BIC, BIC code, SWIFT ID or SWIFT code) defines a standard format of Business Identifier Codes approved by the International Organization for Standardization (ISO). It is a unique identification code for both financial and non-financial institutions.[1] The acronym SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication. When assigned to a non-financial institution, the code may also be known as a Business Entity Identifier or BEI. These codes are used when transferring money between banks, particularly for international wire transfers, and also for the exchange of other messages between banks. The codes can sometimes be found on account statements. |
Is it possible to sell a stock at a higher value than the market price? | You can ask for 305rs, but as long as shares are available at lower prices you won't sell. Only when your ask becomes the lowest available price will someone buy from you. See many past questions about how buyers and sellers are matched by the market. |
Consumer Loans vs Mortgages | Here's a good definition of a consumer loan: What is a Consumer Loan? As@Pete B. pointed out, there are some states (California loves to be the oddball, doesn't it?) that treat some loans in a more unconventional manner, but the gist of it is that a consumer loan is normally unsecured, meaning there's no collateral or lien associated with it. A signature loan would be a good example of a consumer loan. Many times, loans made by non-banks (finance companies that loan for consumer purchases, for instance) would be considered to be consumer loans. I hope this helps. Good luck! |
Over the long term, why invest in bonds? | Bonds provide protections against stock market crashes, diversity and returns as the other posters have said but the primary reason to invest in bonds is to receive relatively guaranteed income. By that I mean you receive regular payments as long as the debtor doesn't go bankrupt and stop paying. Even when this happens, bondholders are the first in line to get paid from the sale of the business's assets. This also makes them less risky. Stocks don't guarantee income and shareholders are last in line to get paid. When a stock goes to zero, you lose everything, where as a bondholder will get some face value redemption to the notes issue price and still keep all the previous income payments. In addition, you can use your bond income to buy more shares of stock and increase your gains there. |
Changes in Capital Gains Tax in the US - Going to 20% in 2011? | For the record, now that 2011 is here we know that the capital gains tax rate didn't change. Congress extended it for two more years. This shows the uncertainty in trying to maximize earnings based on future changes to the tax code. |
How Should I Start my Finance Life and Invest? | The best way to start out is to know that even the experts typically under-perform the market, so you have no chance. Your best bet is to invest in diversified funds, either through something like Betterment or something like Vanguard's ETFs that track the markets. Buying individual stocks isn't typically a winning strategy. |
Are stocks always able to be bought and sold at market price? | As others have noted, your definition of "market price" is a bit loose. Really whatever price you get becomes the current market price. What you usually get quoted are the current best bid and ask with the last transaction price. For stocks that don't trade much, the last transaction price may not be representative of the current market value. Your question included regulation ("standards bureau"), and I don't think the current answers are addressing that. In the US, the Securities and Exchange Commission (SEC) provides some regulation regarding execution price. It goes by the designation Regulation NMS, and, very roughly, it says that each transaction has to take the best available price at the time that it is executed. There are some subtleties, but that's the gist of it. No regulation ensures that there will be a counterparty to any transaction that you want to make. It could happen, for example, that you have shares of some company that you're never able to sell because no one wants them. (BitCoin is the same in this regard. There is a currently a market for BitCoin, but there's no regulation that ensures there will be a market for it tomorrow.) Outside of the US, I don't know what regulation, if any, exists. |
What options exist to make money in the US on a work-restricted visa? | Income generated from online sales is not considered "passive income", so you need to be authorized to work in the U.S. Those without work authorization can acquire passive income (through investments, lending, competition/contest earnings, etc.) In order to sell products on eBay (the description you've given leads me to believe that this is operated as a business), you need to be authorized to work in the U.S., and register a business. See: |
Diversification reduces risk, but does this base on the assumption that expected return of each asset is always in proportion to its risk? | if I have a asset A with expected return of 100% and risk(measured by standard deviation) 1%, and asset B with expected return of 1% and risk 100%, would it be rational to put asset B into the portfolio ? No, because Modern Portfolio Theory would say that if there is another asset (B2) with the same (or higher) return but less risk (which you already have in asset A), you should invest in that. If those are the only two assets you can choose from, you would invest completely in Asset A. The point of diversification is that, so long as two assets aren't perfectly positively correlated (meaning that if one moves up the other always moves up), then losses in one asset will sometimes be offset by gains in another, reducing the overall risk. |
Are there any banks with a command-line style user interface? | A bank is unlikely to provide a 'command line' interface because typical users consider a graphical interface easier to use than a command line interface. The extra effort in providing a command line interface for the remaining handful of people isn't worth it. It's the same reason that everything else in the world has a point and click interface. Command line-like features, such as easy repetition and keystroke shortcuts are also unlikely to implemented for the same reasons. They are hard to implement in a web interface, and most people aren't interested in them. Most people have only a few accounts and don't need to download multiple files on a frequent basis. They do typically provide link shortcuts to commonly used features. However all online banking works by implementing the HTTP protocol in some way. You should be able to deduce the HTTP transactions necessary to get the information you want, and implement your own 'command-line'style' interface, or any other interface you want. That won't be easy, especially since you will almost certainly have to implement the security protocols too, but it should be possible. |
Solicitation of a Security | ASSUMING THIS IS A QUESTION OF U.S. SECURITIES LAWS You didn't explain whether you're related to the mother and son, but I'll assume you are. If that's the case, this really wouldn't qualify as a solicited sale. It wasn't advertised publicly for sale, and there is already (I assume) a long-standing relationship between the parties. In such a case, this would be a perfectly legal and normal type of transaction, so I can't see any reason for concern. That being said, you would be wise to contact the state securities regulation agency where you live to ensure you're on firm ground. The law pertaining to the solicited sale of securities normally targets instances where people are trying to do private stock offerings and are seeking investors, in which case there are a number of different state and federal agencies and regulations that come into play. The situation you've described does not fall under these types of scenarios. Good luck! |
How do I calculate the dwelling coverage I need from the information I have? | This is where an insurance agent is very useful. They will help you choose appropriate coverage, based on local rebuilding costs, the build quality of your house (higher quality or historic/semi-historic construction requires a different type of coverage), etc. They can also help advise you on things like the need for flood insurance, etc. Local rules can vary, and the local agent will know about them. For example, we found out that my home was in a semi-historic district, which requires using higher-cost materials for reconstruction. Also, our city separately licenses tradespeople, who tend to be unionized and thus more expensive. Had I just picked default coverages, I would have been in a pickle in the event of a loss. |
Are real estate prices memory-less? | No, at least not with specific houses. When I bought my current house, our realtor looked at the previous selling price of this house, along with the prices at which it had been placed on the market. These values influenced the amount we offered for the house. I'm sure it also influenced the amount the house had been listed at. |
Are forward curves useful tools for trading decisions and which informations can be gathered from them? | The forward curve for gold says little, in my opinion, about the expected price of gold. The Jan 16 price is 7.9% (or so) higher than the Jan 12 price. This reflects the current cost of money, today's low interest rates. When the short rates were 5%, the price 4 years out would be about 20% higher. No magic there. (The site you linked to was in German, so I looked and left. I'm certain if you pulled up the curve for platinum or silver, it would have the identical shape, that 7.9% rise over 4 years.) The yield curve, on the other hand, Is said to provide an indication of the direction of the economy, a steep curve forecasting positive growth. |
How To Record Income As An Affiliate ( UK ) | Every bill you write counts as income (if the bill doesn't get paid, you would count that as an expense). In cases where you don't write bills, I think the payment you receive would count as income, but you might check that on the HMRC website. So to record your income, you can basically record the payments that you receive. Anything you pay out for your business is an expense. You keep a receipt for every expense - if you don't have a receipt, you can't count it as an expense, so keeping all the receipts is very, very important. An exception are investments, for example buying a computer that should last multiple years; there you can count a percentage of the investment as expense every year. All income, minus all expenses, is your profit. You pay tax and National Insurance contributions according to your profit. You can do whatever you like with the profit. Notice that I didn't mention any salary. Self employed means you have no salary, you have profits and do with them whatever you like. On the other hand, you pay taxes on these profits almost exactly as if they were income. If you have this blog but are also employed, you'll add the profits to your normal income statement. |
How can I set up a recurring payment to an individual (avoiding fees)? | A handful of well-known banks in the United States are part of the clearXchange network, which allows customers of those banks to move money amongst them. The clearXchange service is rebranded differently by each member bank. For example, Chase calls it QuickPay, while Wells Fargo calls it SurePay, and Capital One calls it P2P Payments. To use clearXchange, the sender's bank must be part of the network. The recipient isn't required to be in the network, though if they are it makes things easier, as no setup is required on the recipient's end in that case. Otherwise, they must sign up on the clearXchange site directly. From what I can tell, most payments are fee-free within the network. I have repeating payments set up with Chase's QuickPay, and they do not charge fees. |
Why do the 1 and 2 euro cent coins exist and why are they used? | While dealing with US pennies and not 1 and 2 cent euro pieces, you may find this Wikipedia article of interest and analogous: Penny debate in the United States This article briefly summarizes both the arguments for and against retaining the one cent piece. The arguments against include: Arguments for preservation include: Already a number of countries have removed their equivalents of the one and two cent coins, including New Zealand, Sweden, Australia, Israel, and Brazil (to name a few). |
Can my own corporation deduct my expenses even if I am a full time employee? | No, your business cannot deduct your non-business expenses. You can only deduct from your business income those reasonable expenses you paid in order to earn income for the business. Moreover, for there to be a tax benefit, your business generally has to have income (but I expect there are exceptions; HST input tax credits come to mind.) The employment income from your full-time job wouldn't count as business income for your corporation. The corporation has nothing to do with that income – it's earned personally, by you. With respect to restaurant bills: These fall under a category known as "meals & entertainment". Even if the expense can be considered reasonable and business-related (e.g. meeting customers or vendors) the Canada Revenue Agency decided that a business can only deduct half of those kinds of expenses for tax purposes. With respect to gasoline bills: You would need to keep a mileage and expense log. Only the portion of your automobile expenses that relate to the business can be deducted. Driving to and from your full-time job doesn't count. Of course, I'm not a tax professional. If you're going to have a corporation or side-business, you ought to consult with a tax professional. (A point on terminology: A business doesn't write off eligible business expenses — it deducts them from business income. Write off is an accounting term meaning to reduce the value of an asset to zero. e.g. If you damaged your car beyond repair, one could say "the car is a write-off.") |
What are the pros and cons of buying a house just to rent it out? | Lets consider what would happen if you invested $1500/mo plus $10k down in a property, or did the same in a low-cost index fund over the 30 year term that most mortgages take. The returns of either scenarios cannot be guaranteed, but there are long term analyses that shows the stock market can be expected to return about 7%, compounded yearly. This doesn't mean each year will return 7%, some years will be negative, and some will be much higher, but that over a long span, the average will reach 7%. Using a Time-Value-of-Money calculator, that down payment, monthly additions of $1,500, and a 7% annual return would be worth about $1.8M in 30 years. If 1.8M were invested, you could safely withdraw $6000/mo for the rest of your life. Do consider 30years of inflation makes this less than today's dollar. There are long term analyses that show real estate more-or-less keeps track with inflation at 2-4% annual returns. This doesn't consider real estate taxes, maintenance, insurance and the very individual and localized issues with your market and your particular house. Is land limited where you are, increasing your price? Will new development drive down your price? In 30 years, you'll own the house outright. You'll still need to pay property tax and insurance on it, and you'll be getting rental income. Over those 30 years, you can expect to replace a roof, 2-3 hot water heaters, concrete work, several trees, decades of snow shoveling, mowing grass and weeding, your HVAC system, windows and doors, and probably a kitchen and bathroom overhauls. You will have paid about 1.5x the initial price of the mortgage in interest along the way. So you'll have whatever the rental price for your house, monthly (probably almost impossible to predict for a single-family home) plus the market price of your house. (again, very difficult to predict, but could safely say it keeps pace with inflation) minus your expenses. There are scenarios where you could beat the stock market. There are ways to reduce the lifestyle burden of being a landlord. Along the way, should you want to purchase a house for yourself to live in, you'll have to prove the rental income is steady, to qualify for a loan. Having equity in a mortgage gives you something to borrow against, in a HELOC. Of course, you could easily end up owing more than your house is worth in that situation. Personally, I'd stick to investing that money in low-fee index funds. |
What is today's price of 15 000 Euro given 15 years ago? | With no written agreement in place, the "right" rate is whatever both parties can agree to. I could argue that I could have invested the money in S&P 500 index funds and made about 9% annually over the last 15 years and the 15,000 would have been over 40,000. The "fair" rate would be whatever rate of return could have been expected from whatever your father would have done with the money otherwise - keep it in a bank account, pay off debt, invest in the market, start a business, whatever. Your father has the benefit of hindsight to know what would have been a good use of the funds over 15 years. Using the rate of inflation results in effectively a zero-percent loan in real interest terms (meaning no profit was made, just accounting for the time value of money). Both parties need to either decide on an amount or equivalent rate, or decide if squeezing the other for a few thousand Euros is worth the strife. |
Using Loan to Invest - Paying Monthly Installments with Monthly Income | I hope I'm misunderstanding your plan... you want to invest in a way that will make SO MUCH that you pay back all of the loan payments with investment gains? Like the answer I gave on the preceding question, and like @littleadv's comment/mhoran's answers... don't do this. No good will come of it. This strategy requires higher returns, but does not necessarily give you a better return. But because you asked the question again, let me specify what you're missing... I do think that learning is a good thing. It boils down to two very significant problems that you haven't addressed: (1) Where are you getting your monthly "income" from? (2) Realistic vs. Daydreaming--How big do any gains have to be and does that exist in the real world in a way that you can capture? In a nutshell, if my answer to the last question showed that it's crazy to invest and pay back out of your capital and income... since you're trying to keep your capital and only pay back with monthly gains, this one will require even higher and thus more unrealistic gains. The model you're implying: If that's what you mean with this model, (which I think you do), then here are my two very key questions again: How are you getting your monthly income? Financial investments (i.e. stocks or bonds) will have two components of value. One component of value is the stream of payments, such as a monthly dividend from stocks that pay those, or the interest payment from a bond. The other is the ability to resell a security to another investor, receiving back your capital. So... you either have to find Bonds//Dividend stocks that pay >52% returns tax-free each year, and pay this loan off with the payments. (Or higher returns to cover taxes, but these kinds of investments do not exist for you.) OR you can try to invest in something, pray that it goes up ≥4.323% per month and so that you can sell it, pay back your loan payment with the proceeds, and use the capital to buy your next investment... that will go up 4.323% per month, to turn and sell it again. The pros that do model this type of speculation go into much more depth than you are capable of. They build models that incorporate probabilities for rates of return based on historical data. They have better information, and have specialized in calculating this all out. They even have access to better investment opportunities (like pre-IPO Twitter or private notes). You just won't find the opportunities to make this happen, each month, for 24 months. (Again, you won't find them. They do not exist for you in as an investor in securities) Realistic vs. Daydreaming So... clearly I hope that by now I have convinced you that these would be the required returns. They simply aren't available to you. If they were, you would still run into obstacles with converting 'book' returns into physical money that you could repay the loans with, and then continuing that growth. And while I appreciate the notion that 'if I could just make the payments each month, I'd have $10,000 after 24 months!' I guarantee you that you'll be better off finding another way to target that same investment. Along the lines of what mhoran said, if you aim for a basic 401K or other similar investment account and target it into the S&P500, you might see returns of anywhere from -25% to +25% over the next 24 months... but if things went like they tend to average for the S&P500, it's more like ~7% annually. Check out a "savings target calculator" like this one from Bankrate.com and put in the numbers... if you can save about $390 a month you'll be at $10K in 24 months. It's not as fun as the other, but you can actually expect to achieve that. You will not find consistent >50% returns on your money annually. |
Where can I find company filing information in Singapore? | If you are refering to company's financial reports and offerings, the required source for companies to disclose the information is the SGX website (www.sgx.com) under the Company Disclosure tab. This includes annual statements for the last 5 years, prospectus for any shares/debentures/buy back/etc which is being offered, IPO offers and shareholders meetings. You may also find it useful to check the Research section of the SGX website where some of the public listed companies have voluntarily allowed independent research firms to monitor their company for a couple of years and produce a research report. If you are referring to filings under the Companies Act, these can be found at the Accounting and Regulatory Authority (ACRA) website (www.acra.gov.sg) and you can also purchase extracts of specific filings under the ACRA iShop. To understand the Singapore public listing system and the steps to public listing, you may find it useful to purchase one of the resource documents available for Singapore law, finance, tax and corporate secretaryship which are sold by CCH (www.cch.com.sg). Specifically for public listing the Singapore Annotated Listing Manual may help. It is common practice for companies here to employ law firms and research firms to do the majority of this research instead of doing it themselves which I one of the reasons this information is online but perhaps not so visible. I hope I have understood your question correctly! |
Are you preparing for a possible dollar (USD) collapse? (How?) | Depends what kind of expenses you intend to use this money for. If you plan to buy housing in the future (eg you're saving a deposit), then you need to ensure that the value doesn't deteriorate relative to the value of the housing you are likely to buy - so you could buy a Residential REIT, or buy some investment property. If you expect to use this money for food, then you should buy suitable assets (eg Wheat futures, etc). Link the current asset to the future expense, and you will be fine. If you buy Gold, then you are making a bet that Gold will retain its value compared to the thing you want to purchase in future. It doesn't matter what the price of Gold does in $US. |
What is the correct answer for percent change when the start amount is zero dollars $0? | There are some assumptions which can be made in terms of the flexibility you have - I will start with the least flexible assumption and then move to more flexible assumptions. If you must put down a number 1, your go-to for this("Change the start period to 1"), is pretty good, and it's used frequently for other divide-by-zero calculations like kda in a video game. The problem I have with '1' is that it doesn't allow you to handle various scales. Some problems are dealt with in thousands, some in fractions, and some in hundreds of millions. Therefore, you should change the start period to the smallest significantly measurable number you could reasonably have. Here, that would take your example 0 and 896 and give you an increase of 89,500%. It's not a great result, but it's the best you can hope for if you have to put down a number, and it allows you to keep some of the "meaning in the change." If you absolutely must put something This is the assumption that most answers have taken - you can put down a symbol, a number with a notation, empty space, etc, but there is going to be a label somewhere called 'Growth' that will exist. I generally agree with what I've seen, particularly the answers from Benjamin Cuninghma and Nath. For the sake of preservation - those answers can be summarized as putting 'N/A' or '-', possibly with a footnote and asterisk. If you can avoid the measurement entirely The root of your question is "What do my manager and investors expect to see?" I think it's valuable to dig even further to "What do my manager and investors really want to know?". They want to know the state of their investment. Growth is often a good measurement of that state, but in cases where you are starting from zero or negative, it just doesn't tell you the right information. In these situations, you should avoid % growth, and instead talk in absolute terms which mention the time frame or starting state. For example: |
Why would you elect to apply a refund to next year's tax bill? | It is a bad deal. It saves the government from processing your refund as a check or an ACH deposit, and lets them keep your money -- money that they overwithheld! -- interest-free for another year. Get it back. :) |
What purchases, not counting real estate, will help me increase my cash flow? | Brownbag your lunch and make coffee at home. If your current lifestyle includes daily takeout lunches and/or barista-made drinks, a rough estimate is you have a negative cash flow of $8-20 per day, $40-100 per week, $2080-5200 per year. If you have daily smoothies, buy a blender. If you have daily lattes buy an espresso maker. I recently got myself a sodastream and it's been worth it. Until you have a six figure portfolio, you aren't going to swing a comparable annual return differential based on asset allocation. |
What should I do with my $10K windfall, given these options? | Have you looked at DIY roof repair? Caulking with tar adhesive, and shingle replacement isn't that hard, if you're in good health. Totally depends on how bad your roof is/what the demands on it are going to be. If you can squeak another year out of it, with minimal investment, you'll have a year's worth of, say car-debt (at what percent interest?) to put into your roof fund. |
Should I set a stop loss for long term investments? | My broker offers the following types of sell orders: I have a strategy to sell-half of my position once the accrued value has doubled. I take into account market price, dividends, and taxes (Both LTgain and taxes on dividends). Once the market price exceeds the magic trigger price by 10%, I enter a "trailing stop %" order at 10%. Ideally what happens is that the stock keeps going up, and the trailing stop % keeps following it, and that goes on long enough that accrued dividends end up paying for the stock. What happens in reality is that the stock goes up some, goes down some, then the order gets cancelled because the company announces dividends or something dumb like that. THEN I get into trouble trying to figure out how to re-enter the order, maintaining the unrealized gain in the history of the trailing stop order. I screwed up and entered the wrong type of order once and sold stock I didn't want to. Lets look at an example. a number of years ago, I bought some JNJ -- a hundred shares at 62.18. - Accumulated dividends are 2127.75 - My spreadsheet tells me the "double price" is 104.54, and double + 10% is 116.16. - So a while ago, JNJ exceeded 118.23, and I entered a Trailing Stop 10% order to sell 50 shares of JNJ. The activation price was 106.41. - since then, the price has gone up and down... it reached a high of 126.07, setting the activation price at 113.45. - Then, JNJ announced a dividend, and my broker cancelled the trailing stop order. I've re-entered a "Stop market" order at 113.45. I've also entered an alert for $126.07 -- if the alert gets triggered, I'll cancel the Market Stop and enter a new trailing stop. |
Convention for adding ishares (ETFs) into personal accounts | What account you put it in depends on why you have those different accounts. First, if you have them due to regulatory requirements, then you of course must follow said regulations. I doubt that's the case here. Otherwise, you might be splitting based on how they trade (ETFs trade as stocks) or you could be splitting based on how you build a portfolio out of them. When you build a non-speculative stock portfolio, you typically want to limit your holdings in a single stock to a fairly small portion of your portfolio (say, 3%) to limit your exposure to bad stuff happening to a single company. That doesn't apply nearly a much to mutual funds, especially index funds. ETFs are much more like mutual funds here. You can also, of course, create an ETF account and put them there. You also say you have a market index account, what is that used for? |
When (if) I should consider cashing in (selling) shares to realize capital gains? | In a perfect world of random stock returns (with a drift) there is no reason to "take profit" by exiting a position because there is no reason to think price appreciation will be followed by decline. In our imperfect world, there are many rules of thumb that occasionally work but if any one of them works consistently over a long period of time, everyone starts to practice that rule and then it stops working. Therefore, there are no such rules of thumb that work reliably and consistently over long periods of time and are expected to continue doing so. Finding such a rule is and always has been a moving target. The rational, consistently sensible reasons to sell a stock are: These rules are very different from my interpretation of the "walk with your chips" behavior mentioned in your question. |
From Facebook's perspective, was the fall in price after IPO actually an indication that it went well? | @Joe.E, I disagree with your logic. The IPO clearly didn't go well--not relative to other IPOs. Were it not for the stocks underwriters stepping in late in the trading day, Facebook would likely have closed below their opening price. This story and others indicate that institution investors were given negative information by an analyst for the underwriters that other investors didn't have. This inside knowledge is certainly contributing to the drop in the stock. It's fair to argue that many individual investors were suckered into buying the stock at the IPO price because of this incomplete disclosure. It wouldn't surprise if what's happens has a negative impact on future trading volume, and creates reluctance to invest in the firm--which would certainly be an additional negative outcome beyond the dropping stock price. Edit: Dilip mentioned a lawsuit. Here's a link to an article about it. |
How can I deposit a check made out to my business into my personal account? | Depending on where you are, you may be able to get away with filing a "Doing Business As" document with your local government, and then having the bank call the county seat to verify this. There is generally a fee for processing/recording/filing the DBA form, of course. But it's useful for more purposes than just this one. (I still need to file a DBA for my hobby work-for-pay, for exactly this reason.) |
Who are the sellers for the new public stocks? | In an IPO the seller is the Company selling new shares. Some of the IPOs also include something called "secondary" sales which are existing holders selling at the same time at the IPO price. But that is a but more unusual. And as someone noted, the $68 is the price paid for the people who bought at the IPO (the aggregate group usually called the syndicate). The $85 is the price that it is trading at once there is trading in the open market. People that are able to get into the syndicate to buy the stock at $68 sometimes quickly sell if the price is much higher when trading starts. This is called "flipping" the stock. Hedge funds do this much more often than institutional buyers like Fidelity. |
Is the Yale/Swenson Asset Allocation Too Conservative for a 20 Something? | I think Swenson's insight was that the traditional recommendation of 60% stocks plus 40% bonds has two serious flaws: 1) You are exposed to way too much risk by having a portfolio that is so strongly tied to US equities (especially in the way it has historically been recommend). 2) You have too little reward by investing so much of your portfolio in bonds. If you can mix a decent number of asset classes that all have equity-like returns, and those asset classes have a low correlation with each other, then you can achieve equity-like returns without the equity-like risk. This improvement can be explicitly measured in the Sharpe ratio of you portfolio. (The Vanguard Risk Factor looks pretty squishy and lame to me.) The book the "The Ivy Portfolio" does a great job at covering the Swenson model and explains how to reasonably replicate it yourself using low fee ETFs. |
Is it better to pay an insurance deductible, or get an upgrade? | I'm going to guess you're on Verizon and your wife has an iPhone. I just went through this exact same situation with my mom's phone last week. When you're off contract with Verizon you're saving $25/month on your plan (at least, I am), so staying off contract is big. If you do the monthly payment you're paying full retail over 2 years, without interest, so you do stay off contract at least. Here's the thing, as long as it's a 16GB iPhone 5 or better, you're going to be able to Craigslist it for the cost of the deductible, no problems. To me that makes the decision pretty easy to make. As long as you can Craigslist it for more than the deductible, get the insurance replacement. Then when you want a new phone you can sell your old one. Since you can sell the phone, I think that makes the comparison between the deductible and deciding to pay off the $100 now and start payments on the new phone less relevant. The real comparison I'd suggest looking at is the value of the phone and the deductible. |
How do I find a legitimate, premium credit repair service? | If the bad credit items are accurate, disputing the accuracy of the items seems at best, unethical. If the bad credit items are inaccurate, the resolution process provided by each of the 3 credit bureaus, while time consuming, seems the way to go. |
Mortgage or not? | Better in terms of what? less taxes paid? or more money to save for retirement? In terms of retirement, it would be better for you to keep the condo you currently have for at least two reasons: You wouldn't incur the penalties and fees from buying and selling a home. Selling and buying a home comes with a multitude of fees and expenses that aren't included in your estimation. You aren't saddled with a mortgage payment again. You aren't paying a mortgage payment right now. If you set aside the amount you would be paying towards that, it more than covers your taxes, with plenty left over to put towards retirement. |
Is there a law or regulation that governs the maximum allowable interest amount that can be charged on credit cards or in agreements where credit is extended? | The word you're looking for is usury - the crime of lending money at rates above an amount set by law. |
Foreign currency conversion for international visitors to ecommerce web site? | You probably can get away with only updating the exchange rates once a day and specify that any prices quoted in units other than your home currency are estimates only. If you're planning to accept more than one currency as payment, I'd (a) see about whatever regulations there are for doing so, and (b) build in a nice spread for yourself if you're allowed to, since it is a service you're providing to your customers. If you Google currency converter the first result is just that: a currency converter. |
Is it a good idea to get an unsecured loan to pay off a credit card that won't lower a high rate? | nan |
How Does A Special Memorandum Account Work | The Margin Account holds the funds that are MUST for any margin trades. Any funds excess of the MUST for margin trades are kept in the SMA account. These funds can be used for further Margin trades in new securities [funds get transfered into the Margin Account]. They cannot be used to met the Shortfall due to margin calls on existing trades. New funds need to be arranged. More at http://en.wikipedia.org/wiki/Special_memorandum_account |
Clarify on some Stocks Terminology | Yep, you have it pretty much right. The volume is the number of shares traded that day. The ticker is giving you the number of shares bought at that price in a given transaction, the arrow meaning whether the stock is up or down on the day at that price. Institutional can also refer to pensions, mutuals funds, corporates; generally any shareholder that isn't an individual person. |
Do I have to pay taxes in the US if my online store sells to US customers even though I don't live in the US? | You're not physically present in the US, you're not a US citizen, you're not a green card holder, and you don't have a business that is registered in the US - US laws do not apply to you. You're not in any way under the US jurisdiction. Effectively connected income is income effectively connected to your business in the US. You're not in the US, so there's nothing to effectively connect your income to. Quote from the link: You usually are considered to be engaged in a U.S. trade or business when you perform personal services in the United States. You ask: If I form an LLC or C corp am I liable for this withholding tax? If you form a legal entity in a US jurisdiction - then that entity becomes subjected to that jurisdiction. If you're physically present in the US - then ECI may become an issue, and you also may become a resident based on the length of your stay. |
What should I consider when I try to invest my money today for a larger immediate income stream that will secure my retirement? | I don't think you should mix the two notions. Not starting out with at least. It takes so much money, time and expertise to invest for income that, starting out at least, you should view it as a goal, not a starting point. Save your money in the lowest cost investments you can find. If you are like me, you can't pick a stock from a bond, so put your money into a target retirement fund. Let the experts manage the risk and portfolio. Start early and save often! At only 35 you have lots of time. Perhaps you are really into finance, in which case you might somebody manage your own portfolio. Great, but for now, let an expert do the heavy lifting. You are an app developer. Your best bet to increase your income stream with via your knowledge and expertise. While you are still so young, you should use labor to make money, and then save that money for retirement. I am going to make an assumption that where you are will software development means you can become a great developer long before you can become a great financier. Play to your strengths. I am also afraid you are over estimating how comfortable you are with risk. Any "investment" that has the kinds of returns you are looking for is going to be wildly risky. I would say those types of opportunities are more "speculation" rather than "investments." There isn't necessarily anything wrong with speculations, but know the difference in risk. Are you really willing to gamble your retirement? |
What's the best application, software or tool that can be used to track time? | The best one I've found is TimeSnapper, I have the worst memory but this basically allows me to visually play back the day. It has a bunch of reporting functionality too. |
How can home buying be considered a sound investment with all of that interest that needs to be paid? | Your question isn't great, but I will attempt to answer this piece as it seems really the root of your personal finance question: I want to convince my wife to make this move because it will save us at least 800 month, but she fails to see how buying a second home is financially sound because we have to lose our savings and we have to pay interest on our second home. And... Her logic is it will take almost 5 years to get back our down payment and we have to pay interest as well. So how can this move help our family financially in the long run? ... Is she right? She is mostly wrong. First, consider that there is no "ROI" really on your down payment. Assuming you are paying what your home would sell for the next day, then your "RIO" is already yours (minus realtor fees). She is talking about cash on hand, not ROI. I will use an example without taking into account risk of home markets going down or other risks to ownership. Example: Let's say you pay $2800 a month in mortgage interest+principle at 5.5% apr and $200 a month in taxes+insurance on a $360k loan ($400k house). In this example let's say the same house if you were to rent it is $3800 a month. Understand the Opportunity Cost of renting (the marginal amount it costs you to NOT buy). So far, your opportunity cost is $800 a month. The principle of your house will be increasing with each payment. In our example, it's about $400 for the first payment, and will increase with each payment made while decreasing the interest payment (Suggest you look at an amortization table for your specific mortgage example). So, you're real number is now $1200 a month opportunity cost. Consider also the fact that the $400 a month is sitting in a savings account of sorts. While most savings accounts give you less than 1% in returns and then charge taxes on that gain, your home may (or may not be) much higher than that and won't charge you taxes on the gains when you sell it (If you live in it for a period of time as defined by the IRS.) Let's assume a conservative long term appreciation rate of 3%. That's $12k a year on a $400k house. So, now you're at $2200 a month opportunity cost. In this example I didn't touch on your tax savings of ownership. I also didn't touch on the maintenance cost of ownership or the maintenance cost of renting (your deposit + other fees) which all should be considered. You may have other costs involved in renting. For instance: The cost of not being able to fully utilize your rental as your own house. This may be an even simpler and more convincing way to explain it: On the $2800 mortgage example, you will be paying around $19k in interest and $2400 on taxes, insurance = $23k per year (number could be way different in your example). That is basically throw away money you're never getting back. On the rental, 100% of your rent at $3800 a month is throw away money you're never getting back. That's $45,600 a year. |
How to increase my credit score | It's probably important to understand what a credit score is. A credit score is your history of accruing debt and paying it back. It is supplemented by your age, time at current residence, time at previous residences, time at your job, etc. A person with zero debt history can still have a decent score - provided they are well established, a little older and have a good job. The top scores are reserved for those that manage what creditors consider an "appropriate" amount of debt and are well established. In other words, you're good with money and likely have long term roots in the community. After all, creditors don't normally like being the first one you try out... Being young and having recently moved you are basically a "flight risk". Meaning someone who is more likely to just pick up and move when the debt becomes too much. So, you have a couple options. The first is to simply wait. Keep going to work, keep living where you are, etc. As you establish yourself you become less of a risk. The second is to start incurring debt. Personally, I am not a fan of this one. Some people do well by getting a small credit card, using some portion of it each month and paying it off immediately. Others don't know how to control that very well and end up having a few months where they roll balances over etc which becomes a trap that costs them far more than before. If I were in your position, I'd likely do one of two things. Either buy the phone outright and sign up for a regular mobile plan OR take the cheaper phone for a couple years. |
Buying a more expensive house as a tax shelter (larger interest deduction)? | Depending on the state you live in paying interest on a mortgage opens up other tax deduction options: Real estate taxes, Car tax, donations. See schedule A http://www.irs.gov/pub/irs-pdf/f1040sa.pdf The shocking bottom line is that it never works to your advantage in the short term. Owning your house: But there are big risks, ask anybody stuck with a house they can't sell. But it doesn't scale. You spend 10K more to save 2.5K in taxes. Buy because you want to, not to reduce taxes. |
No-line-of-credit debit card? | Having worked at a financial institution, this is a somewhat simple, two-part solution. 1) The lendor/vendor/financial institution simply turns off the overdraft protection in all its forms. If no funds are available at a pin-presented transaction, the payment is simply declined. No fee, no overdraft, no mess. 2) This sticking point for a recurring transaction, is that merchants such as Netflix, Gold's Gym etc, CHOOSE to allow payments like this, BECAUSE they are assured they are going to get paid by the financial institution. It prevents them from having issues. Only a gift card will not cost you more money than you put in, BUT I know of several institutions, that too many non-payment periods can cause them to cease doing business with you in the future. TL:DR/IMO If you don't want to pay more than you have, gift cards are the way to go. You can re-charge them whenever you choose, and should you run into a problem, simply buy a new card and start over. |
I spend too much money. How can I get on the path to a frugal lifestyle? | There's plenty of advice out there about how to set up a budget or track your expenses or "pay yourself first". This is all great advice but sometimes the hardest part is just getting in the right frugal mindset. Here's a couple tricks on how I did it. Put yourself through a "budget fire drill" If you've never set a budget for yourself, you don't necessarily need to do that here... just live as though you had lost your job and savings through some imaginary catastrophe and live on the bare minimum for at least a month. Treat every dollar as though you only had a few left. Clip coupons, stop dining out, eat rice and beans, bike or car pool to work... whatever means possible to cut costs. If you're really into it, you can cancel your cable/Netflix/wine of the month bills and see how much you really miss them. This exercise will get you used to resisting impulse buys and train you to live through an actual financial disaster. There's also a bit of a game element here in that you can shoot for a "high score"... the difference between the monthly expenditures for your fire drill and the previous month. Understand the power of compound interest. Sit down with Excel and run some numbers for how your net worth will change long term if you saved more and paid down debt sooner. It will give you some realistic sense of the power of compound interest in terms that relate to your specific situation. Start simple... pick your top 10 recent non-essential purchases and calculate how much that would be worth if you had invested that money in the stock market earning 8% over the next thirty years. Then visualize your present self sneaking up to your future self and stealing that much money right out of your own wallet. When I did that, it really resonated with me and made me think about how every dollar I spent on something non-essential was a kick to the crotch of poor old future me. |
Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? | You can receive money directly into your savings bank account. It is perfectly legal. FYI the Bank as part of regulation would report this to RBI. As the funds are received for the services you have rendered, You are liable to pay tax on the income. The income is taxed as professional income similar to the income of Doctors, Lawyers, Accountants etc. If you are paying your colleagues, it would be treated as expense. Not only this, you can also treat any phone calls you make, or equipment your purchase [laptop, desk etc] as expense. The difference become your actual income and you would be taxed as per the rate for individuals. It's advisable you contact an accountant who would advise you better for a nominal fee [few thousand rupees] and help you pay the tax and file the returns. With or without accountant It is very important for you to record all payments and expenses in a book of accounts. |
Can I open a Demat account in India from abroad? | Yes NRIs are allowed to open a DEMAT account in India from abroad. Investments can be made under the Portfolio Investment NRI Scheme (PINS) either on repatriation or non-repatriation basis. As per,the guidelines of the Reserve Bank of India it is mandatory for NRIs to open a trading account with a designated institution authorized by the RBI. They must avail either a Non-Resident Ordinary (NRO) or Non-Resident External (NRE) account to route the various investments. |
What are some ways to mitigate the risks of covered calls? | Two ways to mitigate this risk are to buy a put at a lower premium to the written call, or manage your trade by buying back your call if you see the underlying price going against you - a bit similar to having a stop loss. |
How do third-party banks issue car loans? | I have gotten a letter of credit from my credit union stating the maximum amount I can finance. Of course I don't show the dealer the letter until after we have finalized the deal. I Then return in 3 business days with a cashiers check for the purchase price. In one case since the letter was for an amount greater then the purchase price I was able drive the car off the lot without having to make a deposit. In another case they insisted on a $100 deposit before I drove the car off the lot. I have also had them insist on me applying for their in-house loan, which was cancelled when I returned with the cashiers check. The procedure was similar regardless If I was getting a loan from the credit union, or paying for the car without the use of a loan. The letter didn't say how much was loan, and how much was my money. Unless you know the exact amount, including all taxes and fees,in advance you can't get a check in advance. If you are using a loan the bank/credit Union will want the car title in their name. |
Is stock trading based more on luck than poker playing? | This depends strongly on what you mean by "stock trading". It isn't a single game, but a huge number of games grouped under a single name. You can invest in individual stocks. If you're willing to make the (large) effort needed to research the companies and their current position and potentialities, this can yield large returns at high risk, or moderate returns at moderate risk. You need to diversify across multiple stocks, and multiple kinds of stocks (and probably bonds and other investment vehicles as well) to manage that risk. Or you can invest in managed mutual funds, where someone picks and balances the stocks for you. They charge a fee for that service, which has to be subtracted from their stated returns. You need to decide how much you trust them. You will usually need to diversify across multiple funds to get the balance of risk you're looking for, with a few exceptions like Target Date funds. Or you can invest in index funds, which automate the stock-picking process to take a wide view of the market and count on the fact that, over time, the market as a whole moves upward. These may not produce the same returns on paper, but their fees are MUCH lower -- enough so that the actual returns to the investor can be as good as, or better than, managed funds. The same point about diversification remains true, with the same exceptions. Or you can invest in a mixture of these, plus bonds and other investment vehicles, to suit your own level of confidence in your abilities, confidence in the market as a whole, risk tolerance, and so on. Having said all that, there's also a huge difference between "trading" and "investing", at least as I use the terms. Stock trading on a short-term basis is much closer to pure gambling -- unless you do the work to deeply research the stocks in question so you know their value better than other people do, and you're playing against pros. You know the rule about poker: If you look around the table and don't see the sucker, he's sitting in your seat... well, that's true to some degree in short-term trading too. This isn't quite a zero-sum game, but it takes more work to play well than I consider worth the effort. Investing for the long term -- defining a balanced mixture of investments and maintaining that mixture for years, with purchases and sales chosen to keep things balanced -- is a positive sum game, since the market does drift upward over time at a long-term average of about 8%/year. If you're sufficiently diversified (which is one reason I like index funds), you're basically riding that rise. This puts you in the position of betting with the pros rather than against them, which is a lower-risk position. Of course the potential returns are reduced too, but I've found that "market rate of return" has been entirely adequate, though not exciting. Of course there's risk here too, if the market dips for some reason, such as the "great recession" we just went through -- but if you're planning for the long term you can usually ride out such dips, and perhaps even see them as opportunities to buy at a discount. Others can tell you more about the details of each of these, and may disagree with my characterizations ... but that's the approach I've taken, based on advice I trust. I could probably increase my returns if I was willing to invest more time and effort in doing so, but I don't especially like playing games for money, and I'm getting quite enough for my purposes and spending near-zero effort on it, which is exactly what I want. |
Are Certificates of Deposit worth it compared to investing in the stock market? | Of course CDs are worth it compared to the stock market. In fact, most institutional investors are envious of the CDs you have access to as an individual investor that are unavailable to them. You just need to be competent enough to shop around for the best rates and understand your time horizon. There are several concepts to understand here: Banks give out CDs with competitive rates projecting future interest rates. So while the Federal funds rate is currently extremely low, banks know that in order to get any takers on their CDs they have to factor in the public expectation that rates will rise, so if you lock in a longer term CD you get a competitive rate. Institutional investors do not have access to FDIC insured CDs and the closest analog they participate in are the auctions and secondary markets of US Treasuries. These two types of assets have equivalent default (non-)risk if held to maturity: backed by the full faith and credit of the U.S. Here are the current rates (as of question's date) taken from Vanguard that I can get on CDs versus Treasuries (as an individual investor). Notice that CDs outperform Treasuries across any maturity timescale! For fixed-income and bond allocations, institutional investors are lining up for buying treasuries. And yet here you are saying "CDs are not worth it." Might want to rethink that. Now going into the stock market as an investor with expectations of those high returns you quote, means you're willing to stay there for the long-term (at least a decade) and stay the course during volatility to actually have any hope of coming up with the average rate of return. Even then, there's the potential downside of risk that you still lose principal after that duration. So given that assumption, it's only fair to compare against >= 10 year CDs which are currently rated at 2 percent APY. In addition, CDs can be laddered -- allowing you to lock-in newer (and potentially higher) rates as they become available. You essentially stagger your buyin into these investments, and either reinvest upon the stilted maturity dates or use as income. Also keep in mind that while personal emergencies requiring quick access to cash can happen at any time, the most common scenario is during the sudden change from a bull market into a recession -- the time when stocks plummet. If you need money right away, selling your stocks at these times would lock in severe losses, whereas with CDs you still won't lose principal with an early exit and the only penalty is usually a sacrifice of a few months of potential interest. It's easy to think of the high yields during a protracted bull market (such as now), but personal finance has a huge behavioral component to it that is largely ignored until it's too late. One risk that isn't taken care of by either CDs or Treasuries is inflation risk. All the rates here and in the original question are nominal rates, and the real return will depend on inflation (or deflation). There are other options here besides CDs, Treasuries, and the stock market to outpace inflation if you'd like to hedge that risk with inflation protection: Series I Savings Bonds and TIPS. |
Is losing money in my 401K normal? | While historical performance is not necessarily indicative of future performance, I like to look at the historical performance of the markets for context. Vanguard's portfolio allocation models is one source for this data. Twenty years is a long term timeline. If you're well diversified in passively managed index funds, you should be positioned well for the future. You've lost nothing until it's realized or you sell. Meanwhile, you still own an asset that has value. As Warren Buffet says, buy low and sell high. |
First job: Renting vs get my parents to buy me a house | There is a mathematical way to determine the answer, if you know all the variables. (And that's a big if.) For example, suppose you rent for 4 years and the price of rent never increases. The total amount you will have paid is: 600*48 = 28,800. If you currently have money sitting in the bank earning only a negligible amount of interest, and you can purchase the house for X, and then sell it for exactly what you paid 4 years from now, and you have 0 expenses otherwise, then purchasing it will save you 28,800 compared to renting. Obviously that makes some assumptions which are not possible. Now you need to calculate the variables: All of these variables can drastically effect the profit margin, and unfortunately they will vary greatly depending on your country, location, and the condition of the home. Once you estimate each of the variables, it's important to realize that if you purchase, your profit or loss can swing unexpectedly in either direction based on appreciation/depreciation which can be difficult to predict, in part because it is somewhat tied to the overall macro-economy of where you live (state or country). On the flip side, if you rent, it's pretty easy to calculate your cost as approximately 28,800 over 4 years. (Perhaps slightly more for modest rent increases.) Lastly, if you elect to purchase the house, realize that you're investing that money in real estate. You could just as easily rent and invest that money elsewhere, if you want to choose a more aggressive or conservative investment with your money. |
Typical discount for cash purchase on $1+ million homes? | I don't have a solid data-backed answer, but this is too lengthy for a comment. I've read that on average, about 1-2% is what you can get as a cash discount on a home purchase, all else being equal, but no hard data to back that. In certain situations it makes sense for a cash discount to be much greater than that, for instance, if the seller is in a hurry to close and your cash offer has no inspection clause. Similarly, if a house has been re-listed after a sale fell through you might get a greater cash-discount, or if an owner just over-values the advantages of a cash-offer. Anecdotally, I had a neighbor take a cash offer 5% below asking and they had multiple offers at asking, they took the cash offer so they could close faster (15 days). Also, I've lost out to a cash offer, also at 5% below asking, and they also had a short-closing period and no-inspection, my offer was over asking on that one, so total cash discount > 5%. There can be more volatility in the luxury home market, but I wouldn't guess that changes the cash vs financed evaluation much. Would love to see if anyone finds a good source, but even if they do, an average is only so helpful. |
Why buy insurance? | Apart from legal requirements to have insurance, e.g. 3rd party car that other answers have covered well. We can think of all insurance as protecting our “usable” income, as we can use cashflow to pay the costs of a loan to replace whatever we decided not to insure. So for example, if I don’t insure my house contents, I can replace them on my credit card if needed. Therefore we are paying for insurance out of our income, so as to protect our income, knowing that the cost of the protection is on average more than the benefit we get from it. But we all know that having an income of $50K is less than double the value of having an income of $25K. (E.g. being able to eat and remain warm is more important to us then being able to go on anther holiday.) This is way when someone has a higher income; it requires more money to effect their actions. Loss aversion is another factor; we are people not logistical machines. |
Can I default on my private student loans if I was an international student? | You signed a contract to pay the loan. You owe the money. Stories of people being arrested over defaulted student loans are usually based in contempt of court warrants when the person failed to appear in court when the collection agency filed suit against them. Explore student loan forgiveness program. Research collections and bankruptcy and how to deal with collection agencies. There are pitfalls in communicating with them which restart the clock on bad debt aging off the credit report, and which can be used to say that you agreed to pay a debt. For instance, if you make any sort of payment on any debt, a case can be made that you have assumed the debt. Once you are aware of the pitfalls, contact the collection agency (in writing) and dispute the debt. Force them to prove that it is your debt. Force them to prove that they have the right to collect it. Force them to prove the amount. Dispute the fairness of the amount. Doubling your principal in 6 years is a bit flagrant. So, work with the collectors, establish that the debt is valid and negotiate a settlement. Or let it stay in default. Your credit report in the US is shot. It will be a long time before the default ages off your report. This is important if you try to open a bank account, rent an apartment, or get a job in the US. These activities do not always require a credit report, but they often do. You will not be able to borrow money or establish a credit card in the US. Here's a decent informational site regarding what they can do to collect the loan. Pay special attention to Administrative Wage Garnishment. They can likely hit you with that one. You might be unreachable for a court summons, but AWG only requires that the collectors be able to confirm that you work for a company that is subject to US laws. Update: I am informed that federally funded student loans are not available to international students. AWG is only possible for debts to the federal government. Private companies must go through the courts to force settlement of debt. OP is safe from AWG. |
Is it better to use DRIP or invest when stock drops before ex-date? | Unless you suffer from the illusion that you can time the market, it honestly doesn't matter much; the difference is lost in the noise. That may be true even if you do suffer from that illusion. Also, as discussed here previously, the drop in a stock's price right after the dividend has been paid just reflects the fact that you aren't about to get an immediate refund in the form of a dividend. If you look at the real cost per share, it's meaningless and can/should be ignored. Buying after the dividend is paid may save you a tiny fraction of a cent of short-term income tax, but that's meaningless in real terms. |
How to explain an income discrepancy to the IRS? | The IRS doesn't tax "increased wealth" They tax Revenue -- income. If this money or property came to you as a gift, you would owe no tax on it but the giver probably would owe gift tax. If it came to you as a loan, you would owe no tax on it but the lender would owe tax on any interest you pay (and must charge at least minimal interest, though they could give that to you as a gift and possibly not have it be taxable). But if came as payment for goods or services or investment or anything of that sort, and you aren't demonstrably tax-exempt, it is income and you are responsible for declaring it as such and paying tax on it. |
Basic Algorithmic Trading Strategy | This strategy is called trading the 'Golden Cross' if the 50 day SMA moves above the 200 day, or the 'Death Cross' when the 50 day SMA moves below the 200 day SMA. Long-term indicators carry more weight than shorter-term indicators, and this cross, in a positive direction signals a change in momentum of the stock. You will not catch the very bottom using this method, but there is a better chance that you will catch a move near the beginning of a longer-term trend. Golden Cross Information - Zacks |
How should minor children be listed as IRA beneficiaries? | I would like to bring up some slightly different points than the ones raised in the excellent answers from JoeTaxpayer and littleadv. The estate can be the beneficiary of an IRA -- indeed, as has been pointed out, this is the default beneficiary if the owner does not specify a beneficiary -- but a testamentary trust cannot be the designated beneficiary of an IRA. A testamentary trust that meets the requirements laid out on page 36 of Publication 590 is essentially a pass-through entity that takes distributions from the IRA and passes them on to the beneficiaries. For the case being considered here of minor beneficiaries, the distributions from the IRA that pass through the trust must be sent to the legal guardians (or other custodians) of the minors' UTMA accounts, and said guardians must invest these sums for the benefit of the minors and hand the monies over when the minors reach adulthood. Minors are not responsible for their support, and so these monies cannot be used by the legal guardian for oaying the minors' living expenses except as provided for in the UTMA regulations. When the minors become adults, they get all the accumulated value on their UTMA accounts, and can start taking the RMDs personally after that, and blowing them on motorcycles if they wish. Thus, the advantage of the testamentary trust is essentially that it lets the trustee of the trust to decide how much money (over and above the RMD) gets distributed each year. The minors and soon-to-be young adults cannot take the entire IRA in a lump sum etc but must abide by the testamentary trustee's ideas of whether extra money (over and above the RMD) should be taken out in any given year. How much discretion is allowed to the trustee is also something to be thought through carefully. But at least the RMD must be taken from the IRA and distributed to the minors' UTMA accounts (or to the persons as they reach adulthood) each year. Regardless of whether the Traditional IRA goes to beneficiaries directly or through a testamentary trust, its value (as of the date of death) is still included in the estate, and estate tax might be due. However, beneficiaries can deduct the portion of estate tax paid by the estate from the income tax that they have to pay on the IRA withdrawals. Estate planning is very tricky business, and even lawyers very competent in estate and trust issues fall far short in their understanding of tax law, especially income tax law. |
Finding a good small business CPA? | Check your local better business bureau. They can tell you who is in business, who's bonded, and who has had a lot of complaints levied against them for shoddy practices. |
Why doesn’t every company and individual use tax-havens to pay less taxes? | And yet, the same law that these individuals and companies use to lower their taxes applies for every citizen and company of the country. Thus, in principle, every individual and company could make use of these methods. Clearly, they do not. Why? Misconception number 1. How did you conclude they do not? Because NY Times didn't spend time doing an expose' on your plumber? The Panama Papers and the Paradise Papers contain the files from merely three companies that help in this large industry. This is a story about poor IT policies of three companies. A potential reason could be the price charged to set up and maintain these services. This is a significant deterrent. The costs of forming offshore entities are perpetuated by the expensive lawyers, registered agents and incompetent government representatives in these tiny jurisdictions. (For what its worth, even most United States are pretty incompetent at these administrative processes. Really only a few financial centers and a few exceptions have it all streamlined.) These are scale problems primarily. The incompetence of different nation/state's public sectors will make you realize everything you take for granted. The main message emerging from Panama Papers, Paradise Papers, and the like, is that it is the rich, powerful and famous who make use of and benefit from tax havens. But not exclusively for tax purposes. Newspapers, and even the organization leaking this information, is driving clicks to a gullible and impressionable public. I've talked with ICIJ (who release and push the discussion on the Panama/Paradise Papers), they really do believe in their "tax expose'" angle, but lack any consideration of how business work. 'Tax Haven'. These are sovereign nations with due process with democratically elected legislatures who looked at their budget and realized they don't need to fund their government via passive taxes. Their governments offer a good and service that people want, and it provides enough revenues to their governments. Many of these jurisdictions have well evolved corporate laws for fast evolving business models. For example, The Segregated Portfolio Company in the British Virgin Islands is more well defined and supported by clearer case law and is more useful entity than a Series LLC in the few United States that support it. There are at least a dozen reasons why someone would use a "tax haven", where only one of them is "tax". |
Short term parking of a large inheritance? | What are the options available for safe, short-term parking of funds? Savings accounts are the go-to option for safely depositing funds in a way that they remain accessible in the short-term. There are many options available, and any recommendations on a specific account from a specific institution depend greatly on the current state of banks. As you're in the US, If you choose to save funds in a savings account, it's important that you verify that the account (or accounts) you use are FDIC insured. Also be aware that the insurance limit is $250,000, so for larger volumes of money you may need to either break up your savings into multiple accounts, or consult a Accredited Investment Fiduciary (AIF) rather than random strangers on the internet. I received an inheritance check... Money is a token we exchange for favors from other people. As their last act, someone decided to give you a portion of their unused favors. You should feel honored that they held you in such esteem. I have no debt at all and aside from a few deferred expenses You're wise to bring up debt. As a general answer not geared toward your specific circumstances: Paying down debt is a good choice, if you have any. Investment accounts have an unknown interest rate, whereas reducing debt is guaranteed to earn you the interest rate that you would have otherwise paid. Creating new debt is a bad choice. It's common for people who receive large windfalls to spend so much that they put themselves in financial trouble. Lottery winners tend to go bankrupt. The best way to double your money is to fold it in half and put it back in your pocket. I am not at all savvy about finances... The vast majority of people are not savvy about finances. It's a good sign that you acknowledge your inability and are willing to defer to others. ...and have had a few bad experiences when trying to hire someone to help me Find an AIF, preferably one from a largish investment firm. You don't want to be their most important client. You just want them to treat you with courtesy and give you simple, and sound investment advice. Don't be afraid to shop around a bit. I am interested in options for safe, short "parking" of these funds until I figure out what I want to do. Apart from savings accounts, some money market accounts and mutual funds may be appropriate for parking funds before investing elsewhere. They come with their own tradeoffs and are quite likely higher risk than you're willing to take while you're just deciding what to do with the funds. My personal recommendation* for your specific circumstances at this specific time is to put your money in an Aspiration Summit Account purely because it has 1% APY (which is the highest interest rate I'm currently aware of) and is FDIC insured. I am not affiliated with Aspiration. I would then suggest talking to someone at Vanguard or Fidelity about your investment options. Be clear about your expectations and don't be afraid to simply walk away if you don't like the advice you receive. I am not affiliated with Vanguard or Fidelity. * I am not a lawyer, fiduciary, or even a person with a degree in finances. For all you know I'm a dog on the internet. |
How to learn about doing technical analysis? Any suggested programs or tools that teach it? | A great way to learn is by watching then doing. I run a very successful technical analysis blog, and the first thing I like to tell my readers is to find a trader online who you can connect with, then watch them trade. I particularly like Adam Hewison, Marketclub.com - This is a great website, and they offer a great deal of eduction for free, in video format. They also offer further video based education through their ino.tv partner which is paid. Here is a link that has their free daily technical analysis based stock market update in video format. Marketclub Daily Stock Market Update Corey Rosenblum, blog.afraidtotrade.com - Corey is a Chartered Market Technician, and runs a fantastic technical analysis blog the focuses on market internals and short term trades. John Lansing, Trending123.com - John is highly successful trader who uses a reliable set of indicators and patterns, and has the most amazing knack for knowing which direction the markets are headed. Many of his members are large account day traders, and you can learn tons from them as well. They have a live daily chat room that is VERY busy. The other option is to get a mentor. Just about any successful trader will be willing to teach someone who is really interested, motivated, and has the time to learn. The next thing to do once you have chosen a route of education is to start virtual trading. There are many platforms available for this, just do some research on Google. You need to develop a trading plan and methodology for dealing with the emotions of trading. While there is no replacement for making real trades, getting some up front practice can help reduce your mistakes, teach you a better traders mindset, and help you with the discipline necessary to be a successful trader. |
Buy stock in Canadian dollars or US? | From a purely financial standpoint, you should invest using whatever dollars get you the best rate. The general rule of thumb that I've come across is that if you are making another person/company change your money into another nation's currency, they will likely charge a higher exchange rate than you could get yourself. However, it really depends on your situation, how easy it is for you to exchange money, what your exchange rate is, and what your broker is charging you to exchange to USD (if on the off chance this is truly nothing, then stick with CAD). Don't worry about the strength of the USD to CAD too much because converting your money before you make purchases doesn't allow you to buy more shares. For the vast majority of people, trying to work with national currency exchange rates makes things unnecessarily complex. |
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