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Scam or Real: A woman from Facebook apparently needs my bank account to send money | Absolute scam. Any time anyone asks you to open a bank account so they can send you money and then you have to send some portion of it back to them, it's a guarantee that it's a scam. What happens is that your dad will deposit the check and transfer it to this woman, then the check will bounce (or turn out to be fake altogether) and your dad will be on the hook for the money to the bank. These schemes are dependent on the fact that people want hope and believe in quick, easy money, and it works as long as the con artists are able to get the 'mark' (the person who deposits the check and sends them the money) to send the money before the check (always drawn on some obscure foreign bank) has a chance to clear. This is another variation of a long-running type of bank scam, and if you get involved, you'll regret it. I hope you can keep your dad from getting involved, because it will create a financial mess and affect his credit as well. The basic premise of this scam is this: In the interests of providing good customer service, most banks will make some or all of a deposit available right away, even though the check hasn't cleared. The scammer has you withdraw the money (either a cashier's check, have you send a wire transfer, etc) immediately and send it to them. Eventually the check is returned because it is The bank charges the check back against your account, often imposing pretty substantial penalties and fees, so you as the account holder are left without the money you sent the scammer and all of the fees. This is the easy version of events. You could end up in legal trouble, depending on the nature of the scam and what they determine your involvement to be. It will certainly badly affect your banking history (ChexSystems tracks how we all treat bank accounts, much like the credit agencies do with our credit), so you may have trouble opening bank accounts. So there are many consequences to this to think about, and it's why you JUST SAY NO!! Don't walk away from this -- RUN!!! |
What is a good service that will allow me to practice options trading with a pretend-money account? | Try https://sparkprofit.com/ You practice with real market prices, and it's free. Plus you can get real money pay outs if you do well. I earned 1 cent! hahaha I gave up trying to make money from it, but you get an idea of doing trades and how impossible it is to predict what the price will be. It has some tutorials and helpful things too. |
15 year mortgage vs 30 year paid off in 15 | All of the answers given so far are correct, but rather narrow. When you buy a 30-year-mortgage, you are buying the right to pay off the debt in as long as 30 years. What you pay depends on the interest rate and how long you actually take to pay it off (and principal and points and so on). Just as you are buying that right, the mortgager is selling you that right, and they usually charge something for it, typically a higher rate. After all, they, and not you, will be exposed to interest risk for 30 years. However, if some bank has an aneurism and is willing to give you a 30-year loan for the same price as or lower than any other bank is willing to go for a 15-year loan, hey, free flexibility. Might as well take it. If you want to pay the loan off in 15 year, or 10 or 20, you can go ahead and do so. |
Why would a company sell debt in order to buy back shares and/or pay dividends? | Businesses have bond ratings just like people have credit ratings. It has become common for businesses to issue low rate bonds to show that they are strong, and leave the door open for further borrowing if they see an opportunity, such as an acquisition. One of the reasons Microsoft might want to build a credit reputation, is that people become familiar with their bonds and will purchase at lower rates when they want to borrow larger amounts of money, rather than assuming they are having financial issues which would lead them to demand higher rates. |
How to have a small capital investment in US if I am out of the country? | For $100 you better just hold it in Mexico. The cost of opening an account could eat 10% or more of your capital easily, and that won't be able to buy enough shares of an ETF or similar investment to make it worthwhile. |
What's the point of Ford loosening financing requirements? | A repossessed automobile will have lost some value from sale price, but it's not valueless. They market "title loans" to people without good credit on this basis so its a reasonably well understood risk pool. |
Student loan payments and opportunity costs | As Mr. Money Money Mustache once said: IF YOU HAVE CREDIT CARD DEBT, YOU SHOULD FEEL LIKE YOUR HAIR IS ON FIRE Student loan debt is different than credit card debt. Rather than having spent the money on just about anything, it was invested in improving yourself and probably your financial future. This was probably a good decision. However, unlike most credit card debt, if you ever have to file for bankruptcy, your student loans will not be erased. They will follow you forever. Pay your debts off as quickly as you can. While it may be true that "long-term return on the stock market is about 7%", you cannot assume that this will always be the case, especially in the short term. What if you had made this assumption in 2007? To assume that your stocks will beat a 6.4% guaranteed return over the next few years is not really investing. It's gambling. |
Why do stock prices change? [duplicate] | None of that is filtered my way as a "part owner". Sure it is, it's just not always obvious. When a company makes money it either: Other then the fourth option, the first three all increase the total value of the company. If you owned 1% of a company that was worth X, and is now worth X+1, the value of that 1% ownership should go up as well. One model of the value of a share of stock is the present value of all future cash flows that the company produces for its shareholders, which would be either through dividends, earnings (provided that they are invested back into the company) or through liquidation (sale). So as earnings increase (or more accurately as projected future earnings increase), so does the value of a share of the company. Also note that the payment of dividends causes the price of a stock to go down when the dividend is paid, since that's equity (cash) that's leaving the company, reducing the value of the company by an equivalent amount. Of course, there's also something to be said for the behavioral aspect of investing, meaning that people sometimes invest in companies that they like, and sell stock of companies that they don't like or disagree with (e.g. Nordstrom's). |
Pros & cons of buying gold directly vs. investing in a gold ETF like GLD, IAU, SGOL? | If you want to speculate on gold price you should always buy an ETF/ETC (Exchange Traded Commodity). The reasons are simple: Easy to buy and sell (one mouse click) Cheap to buy and sell (small bank commission), compared to buy real gold (always 6 to 12% comission to the local shop when you buy and when you sell), see this one it's one cheap gold buy/sell shop I found on the internet But if you sometimes feel unsecure that you might one day loose everything due to a major economy collapse event (like an armageddon), or not to have enough money in bad periods or during retirment, and it makes you feel better to know you buried 999 Gold Sovereign in your house backyard (along with a rifle as suggested in comments), then just buy them and live an happy life (as long as you hide your gold in good ways and write a good treasury map). |
I'm in Australia. What should I look for in an online stock broker, for trading mostly on the ASX? | It depends what you want to do with them. If you are just simply going to drip-feed into pre-identified shares or ETFs every few months at the market price, you don't need fancy features: just go with whoever is cheaper. You can always open another account later if you need something more exotic. Some brokerages are associated with banks and that may give you a benefit if you already deal with that bank: faster transfers (anz-etrade), or zero brokerage (westpac brokerage on westpac structured products.) There's normally no account fee so you can shop around. |
What are your experiences with 'self directed' 401ks? | I have managed two IRA accounts; one I inherited from my wife's 401K and my own's 457B. I managed actively my wife's 401 at Tradestation which doesn't restrict on Options except level 5 as naked puts and calls. I moved half of my 457B funds to TDAmeritrade, the only broker authorized by my employer, to open a Self Directed account. However, my 457 plan disallows me from using a Cash-secured Puts, only Covered Calls. For those who does not know investing, I resent the contention that participants to these IRAs should not be messing around with their IRA funds. For years, I left my 401k/457B funds with my current fund custodian, Great West Financial. I checked it's current values once or twice a year. These last years, the market dived in the last 2 quarters of 2015 and another dive early January and February of 2016. I lost a total of $40K leaving my portfolio with my current custodian choosing all 30 products they offer, 90% of them are ETFs and the rest are bonds. If you don't know investing, better leave it with the pros - right? But no one can predict the future of the market. Even the pros are at the mercy of the market. So, I you know how to invest and choose your stocks, I don't think your plan administrator has to limit you on how you manage your funds. For example, if you are not allowed to place a Cash-Secured Puts and you just Buy the stocks or EFT at market or even limit order, you buy the securities at their market value. If you sell a Cash-secured puts against the stocks/ETF you are interested in buying, you will receive a credit in fraction of a dollar in a specific time frame. In average, your cost to owning a stock/ETF is lesser if you buy it at market or even a limit order. Most of the participants of the IRA funds rely too much on their portfolio manager because they don't know how to manage. If you try to educate yourself at a minimum, you will have a good understanding of how your IRA funds are tied up to the market. If you know how to trade in bear market compared to bull market, then you are good at managing your investments. When I started contributing to my employer's deferred comp account (457B) as a public employee, I have no idea of how my portfolio works. Year after year as I looked at my investment, I was happy because it continued to grow. Without scrutinizing how much it grew yearly, and my regular payroll contribution, I am happy even it only grew 2% per year. And at this age that I am ready to retire at 60, I started taking investment classes and attended pre-retirement seminars. Then I knew that it was not totally a good decision to leave your retirement funds in the hands of the portfolio manager since they don't really care if it tanked out on some years as long at overall it grew to a meager 1%-4% because they managers are pretty conservative on picking the equities they invest. You can generalize that maybe 90% of IRA investors don't know about investing and have poor decision making actions which securities/ETF to buy and hold. For those who would like to remain as one, that is fine. But for those who spent time and money to study and know how to invest, I don't think the plan manager can limit the participants ability to manage their own portfolio especially if the funds have no matching from the employer like mine. All I can say to all who have IRA or any retirement accounts, educate yourself early because if you leave it all to your portfolio managers, you lost a lot. Don't believe much in what those commercial fund managers also show in their presentation just to move your funds for them to manage. Be proactive. If you start learning how to invest now when you are young, JUST DO IT! |
Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan? | There is no interest outstanding, per se. There is only principal outstanding. Initially, principal outstanding is simply your initial loan amount. The first two sections discuss the math needed - just some arithmetic. The interest that you owe is typically calculated on a monthly basis. The interested owed formula is simply (p*I)/12, where p is the principal outstanding, I is your annual interest, and you're dividing by 12 to turn annual to monthly. With a monthly payment, take out interest owed. What you have left gets applied into lowering your principal outstanding. If your actual monthly payment is less than the interest owed, then you have negative amortization where your principal outstanding goes up instead of down. Regardless of how the monthly payment comes about (eg prepay, underpay, no payment), you just apply these two calculations above and you're set. The sections below will discuss these cases in differing payments in detail. For a standard 30 year fixed rate loan, the monthly payment is calculated to pay-off the entire loan in 30 years. If you pay exactly this amount every month, your loan will be paid off, including the principal, in 30 years. The breakdown of the initial payment will be almost all interest, as you have noticed. Of course, there is a little bit of principal in that payment or your principal outstanding would not decrease and you would never pay off the loan. If you pay any amount less than the monthly payment, you extend the duration of your loan to longer than 30 years. How much less than the monthly payment will determine how much longer you extend your loan. If it's a little less, you may extend your loan to 40 years. It's possible to extend the loan to any duration you like by paying less. Mathematically, this makes sense, but legally, the loan department will say you're in breach of your contract. Let's pay a little less and see what happens. If you pay exactly the interest owed = (p*I)/12, you would have an infinite duration loan where your principal outstanding would always be the same as your initial principal or the initial amount of your loan. If you pay less than the interest owed, you will actually owe more every month. In other words, your principal outstanding will increase every month!!! This is called negative amortization. Of course, this includes the case where you make zero payment. You will owe more money every month. Of course, for most loans, you cannot pay less than the required monthly payments. If you do, you are in default of the loan terms. If you pay more than the required monthly payment, you shorten the duration of your loan. Your principal outstanding will be less by the amount that you overpaid the required monthly payment by. For example, if your required monthly payment is $200 and you paid $300, $100 will go into reducing your principal outstanding (in addition to the bit in the $200 used to pay down your principal outstanding). Of course, if you hit the lottery and overpay by the entire principal outstanding amount, then you will have paid off the entire loan in one shot! When you get to non-standard contracts, a loan can be structured to have any kind of required monthly payments. They don't have to be fixed. For example, there are Balloon Loans where you have small monthly payments in the beginning and large monthly payments in the last year. Is the math any different? Not really - you still apply the one important formula, interest owed = (p*I)/12, on a monthly basis. Then you break down the amount you paid for the month into the interest owed you just calculated and principal. You apply that principal amount to lowering your principal outstanding for the next month. Supposing that what you have posted is accurate, the most likely scenario is that you have a structured 5 year car loan where your monthly payments are smaller than the required fixed monthly payment for a 5 year loan, so even after 2 years, you owe as much or more than you did in the beginning! That means you have some large balloon payments towards the end of your loan. All of this is just part of the contract and has nothing to do with your prepay. Maybe I'm incorrect in my thinking, but I have a question about prepaying a loan. When you take out a mortgage on a home or a car loan, it is my understanding that for the first years of payment you are paying mostly interest. Correct. So, let's take a mortgage loan that allows prepayment without penalty. If I have a 30 year mortgage and I have paid it for 15 years, by the 16th year almost all the interest on the 30 year loan has been paid to the bank and I'm only paying primarily principle for the remainder of the loan. Incorrect. It seems counter-intuitive, but even in year 16, about 53% of your monthly payment still goes to interest!!! It is hard to see this unless you try to do the calculations yourself in a spreadsheet. If suddenly I come into a large sum of money and decide I want to pay off the mortgage in the 16th year, but the bank has already received all the interest computed for 30 years, shouldn't the bank recompute the interest for 16 years and then recalculate what's actually owed in effect on a 16 year loan not a 30 year loan? It is my understanding that the bank doesn't do this. What they do is just tell you the balance owed under the 30 year agreement and that's your payoff amount. Your last sentence is correct. The payoff amount is simply the principal outstanding plus any interest from (p*I)/12 that you owe. In your example of trying to payoff the rest of your 30 year loan in year 16, you will owe around 68% of your original loan amount. That seems unfair. Shouldn't the loan be recalculated as a 16 year loan, which it actually has become? In fact, you do have the equivalent of a 15 year loan (30-15=15) at about 68% of your initial loan amount. If you refinanced, that's exactly what you would see. In other words, for a 30y loan at 5% for $10,000, you have monthly payments of $53.68, which is exactly the same as a 15y loan at 5% for $6,788.39 (your principal outstanding after 15 years of payments), which would also have monthly payments of $53.68. A few years ago I had a 5 year car loan. I wanted to prepay it after 2 years and I asked this question to the lender. I expected a reduction in the interest attached to the car loan since it didn't go the full 5 years. They basically told me I was crazy and the balance owed was the full amount of the 5 year car loan. I didn't prepay it because of this. That is the wrong reason for not prepaying. I suspect you have misunderstood the terms of the loan - look at the Variable Monthly Payments section above for a discussion. The best thing to do with all loans is to read the terms carefully and do the calculations yourself in a spreadsheet. If you are able to get the cashflows spelled out in the contract, then you have understood the loan. |
Buying a house. I have the cash for the whole thing. Should I still get a mortgage to get the homeowner tax break? | Except for unusual tax situations your effective interest rate after taking into account the tax deduction will still be positive. It is simply reduced by your marginal rate. Therefore you will end up paying more if the house is financed than if it is bought straight out. Note this does not take into account other factors such as maintaining liquidity or the potential for earning a greater rate of return by investing the money that would otherwise be used to pay for the house |
Changing the price in a limit order | This depends on the stock exchange in question. Generally if you modify an existing order [including GTC], these are internally treated as Cancel/Replace Orders. Depending on the action, you may lose the time priority position and a new position would get assigned. More here. (f) Cancel/Replace Orders. Depending on how a quote or order is modified, the quote or order may change priority position as follows: (1) If the price is changed, the changed side loses position and is placed in a priority position behind all orders of the same type (i.e., customer or non-customer) at the same price. (2) If one side's quantity is changed, the unchanged side retains its priority position. (3) If the quantity of one side is decreased, that side retains its priority position. (4) If the quantity of one side is increased, that side loses its priority position and is placed behind all orders of the same type at the same price. |
How do 401k handle rate of return | Your employer sends the money that you choose to contribute, plus employer match if any, to the administrator of the 401k plan who invests the money as you have directed, choosing between the alternatives offered by the administrator. Typically, the alternatives are several different mutual funds with different investment styles, e.g. a S&P 500 index fund, a bond fund, a money-market fund, etc. Now, a statement such as "I see my 401k is up 10%" is meaningless unless you tell us how you are making the comparison. For example, if you have just started employment and $200 goes into your 401k each month and is invested in a money-market fund (these are paying close to 0% interest these days), then your 11th contribution increases your 401k from $2000 to $2200 and your 401k is "up 10%". More generally, suppose for simplicity that all the 401k investment is in just one (stock) mutual fund and that you own 100 shares of the fund as of right now. Suppose also that your next contribution will not occur for three weeks when you get your next paycheck, at which time additional shares of the mutual fund will be purchased Now, the value of the mutual fund shares (often referred to as net asset value or NAV) fluctuates as stock prices rise and fall, and so the 401k balance = number of shares times NAV changes in accordance with these fluctuations. So, if the NAV increases by 10% in the next two weeks, your 401k balance will have increased by 10%. But you still own only 100 shares of the mutual fund. You cannot use the 10% increase in value to buy more shares in the mutual fund because there is no money to pay for the additional shares you wish to purchase. Notice that there is no point selling some of the shares (at the 10% higher NAV) to get cash because you will be purchasing shares at the higher NAV too. You could, of course, sell shares of the stock mutual fund at the higher NAV and buy shares of some other fund available to you in the 401k plan. One advantage of doing this inside the 401k plan is that you don't have to pay taxes (now) on the 10% gain that you have made on the sale. Outside tax-deferred plans such as 401k and IRA plans, such gains would be taxable in the year of the sale. But note that selling the shares of the stock fund and buying something else indicates that you believe that the NAV of your stock mutual fund is unlikely to increase any further in the near future. A third possibility for your 401k being up by 10% is that the mutual fund paid a dividend or made a capital gains distribution in the two week period that we are discussing. The NAV falls when such events occur, but if you have chosen to reinvest the dividends and capital gains, then the number of shares that you own goes up. With the same example as before, the NAV goes up 10% in two weeks at which time a capital gains distribution occurs, and so the NAV falls back to where it was before. So, before the capital gains distribution, you owned 100 shares at $10 NAV which went up to $11 NAV (10% increase in NAV) for a net increase in 401k balance from $1000 to $1100. The mutual fund distributes capital gains in the amount of $1 per share sending the NAV back to $10, but you take the $100 distribution and plow it back into the mutual fund, purchasing 10 shares at the new $10 NAV. So now you own 110 shares at $10 NAV (no net change in price in two weeks) but your 401k balance is $1100, same as it was before the capital gains distribution and you are up 10%. Or, you could have chosen to invest the distributions into, say, a bond fund available in your 401k plan and still be up 10%, with no change in your stock fund holding, but a new investment of $100 in a bond fund. So, being up 10% can mean different things and does not necessarily mean that the "return" can be used to buy more shares. |
What rules govern when a new option series is issued? | The CBOE Rule Book, Section 5.5 explains exactly what programmes are available, how and when they will start listing and expire. The super-concise summary is: It's a per-underlying decision process, though there's some rules that may provide you with a minimum set of options (e.g. the quarterly programme on highly capitalised stocks trading for more than $75, etc.) For greater detail, for better or worse, you will have to scan the New Listings service regularly. |
Jointly filing taxes in 2 different states | Both states will want to tax you. Your tax home is where you maintain a domicile, are registered to vote, etc. and you will probably want to keep this as MA since you state that MA is your permanent residence and you are staying in a rented place in PA. But be careful about voter registration; that is one of the items that can be used to determine your state of residence. OK, so if you and your spouse are MA residents, you should file jointly as residents in MA and as nonresidents in PA. Do the calculations on the nonresident return first, and then the calculations on the resident return. Typically, on a nonresident tax return, the calculations are effectively the following: Report all your income (usually AGI from the Federal return). Call this $X. Compute the PA state tax due on $X. Note that you follow the rules for nonresidents in doing this, not the calculations used by PA residents. Call the amount of tax you computed as $Y. What part of the total income $X is attributable to PA sources? If this amount is $Z, then you owe PA $Y times (Z/X). On the resident return in MA, you will likely get some credit for the taxes paid to PA, and this will reduce your MA tax burden. Usually the maximum credit is limited to the lesser of actual tax paid to PA and what you would have had to pay MA for the same income. As far as withholding is concerned, your employer in PA will withhold PA taxes as if you are a PA resident, but you can adjust the amount via the PA equivalent of IRS Form W4 so as to account for any additional tax that might be due because you will be filing as a nonresident. Else you can pay estimated taxes via the PA equivalent of IRS Form 1040ES. Similarly, your wife can adjust her withholding to account for the MA taxes that you will owe on the joint income, or you can pay estimated taxes to MA too. Note that it is unlikely that your employer in Pennsylvania will withhold Massachusetts taxes (and send them to Massachusetts) for you, e.g. if it is a ma-and-pa store, but there may be special deals available if your employer does business in both states, i.e. is a MA-and-PA store. |
When are equal-weighted index funds / ETFs preferable to market-cap-weighted funds? | As Dheer pointed out, the top ten mega-cap corporations account for a huge part (20%) of your "S&P 500" portfolio when weighted proportionally. This is one of the reasons why I have personally avoided the index-fund/etf craze -- I don't really need another mechanism to buy ExxonMobil, IBM and Wal-Mart on my behalf. I like the equal-weight concept -- if I'm investing in a broad sector (Large Cap companies), I want diversification across the entire sector and avoid concentration. The downside to this approach is that there will be more portfolio turnover (and expense), since you're holding more shares of the lower tranches of the index where companies are more apt to churn. (ie. #500 on the index gets replaced by an up and comer). So you're likely to have a higher expense ratio, which matters to many folks. |
How much cash on hand should one have? | You seem to have a grasp of the basic principles involved, but your estimation of the risk you are taking seems a bit low. Your non-investment reserves are unlikely to cover your expenses for more than a month, so the chance that you would need to sell investments to cover additional expenses is high. You mention that I am flexible with the 'cash on hand' amount. For instance, for about three months I put a very tight spending/investing freeze on my life because I knew I'd be leaving jobs and moving (I already had the other job lined up). Those savings presumably went toward moving expenses, as your usual savings were insufficient. In the event that you are laid off suddenly, you might find yourself in the same position again, with added unplanned expenses like fees for breaking a lease. Your current plan involves selling investments to cover the gap. Based on your age you have probably only invested in a predominantly positive market, so the chance that you might need to sell investments for cash seems like a reasonable trade-off for the added potential gains. Your perception might change if the markets go south and you are forced to sell into a down market, possibly at a significant loss. You also don't indicate if your investments are currently sufficient to cover an extended period of unemployment. You are taking on a lot of risk under your current plan. Essentially you are trading possible investment gains for flexibility and time. By making small changes like saving at least enough to move as you did previously, you can give yourself time to react to job loss or other unexpected financial need. Rather than give the traditional emergency funds advice, I suggest you look at the broader picture. The total amount of savings/risk is up to you, but you should consider your current savings as insufficient to rely on as a safety net. |
My mother's name is on my car title, how can I protect my ownership of the car in the event of her death? | It's her car. Unlike what Ross said in the comments she can't sign it over to you--she doesn't own it yet. The best you'll be able to do is have her leave it to you in her will--but beware that you very well might need to refinance the loan at that point. |
Is it OK to use a credit card on zero-interest to pay some other credit cards with higher-interest? | good vs "bad" debt in the context of that post. At least in the UK this can be a good tactic to reduce the cost of credit card debt. Some things to consider |
How to gift money anonymously to an individual after collection thru a donation site? | You mention that "A great friend and couple's family" which makes me think this is a couple. For gift tax concerns, you can give a couple 2 x the gift tax exemption ($28,000 in 2015). Your example of $22k would fit in this amount. To give this money anonymously, I know that people have reached out to a pastor in the area who will deliver an envelope with the gift and not disclose the source. Talking to a pastor who has done this, he said the call came out of the blue and he was happy to be able to help. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | It's a little unusual, but I don't think the financial terms are completely unreasonable on their face. What you describe is similar to an interest-only loan, where you make payments that only cover the interest due each month, and the entire principal is due as a single "balloon payment" on a specified date (in this case, the date on which the condo is sold). Your monthly payment of $500 on a principal of $115K is equivalent to an annual interest rate of 5.22%, which at least is not completely usurious. With a traditional mortgage you might pay a rate as low as 3%, if you had sufficient income and excellent credit - but I don't know, from what you've said, whether that's the case. Did you make the current arrangement because you were unable to get a loan from a bank? The main difference here is that instead of the balloon payment being a fixed $115K, it's "75% of the gross proceeds of the sale". If the condo eventually sells for $155K, that would be $116,250, so that's slightly advantageous to them (assuming that "gross proceeds" means "before deducting commissions for either the buyers' or sellers' realtors or any other costs of the sale"), and thus slightly disadvantageous to you. If the condo appreciates in value, that's more of a win for them and more of a relative loss for you. But it's also possible that the value of the condo goes down, in which case this arrangement is better for you than a fixed balloon payment. So this deal does prevent you from getting a larger share of any gains in the value of the property, but it also helps insulate you from any losses. That's important to keep in mind. There's also the issue of needing their consent to sell. That's potentially problematic - usually in a joint ownership scheme, either owner has the right to demand to be bought out or to force a sale. I guess it depends on whether you think your parents would be likely to consent under reasonable circumstances, or to insist on holding the property against your best interests. It's true that you aren't building equity with this arrangement, and if you thought you were, you are mistaken or misled. But let's compare it with other options. If you would qualify for a traditional 30-year fixed mortgage at 3%, your monthly payment would be slightly lower ($484), and you would be building some equity because your payments would reduce the principal as well as paying the interest. But a 30-year loan builds equity very slowly at first - after 7 years you'd have only about $20,000 in principal paid down. If we assume that 5.2% represents the interest rate you'd otherwise pay based on your creditworthiness, then your monthly payment would be $631. So compared to that, you have an extra $130 per month that you can save or invest in whatever you want - you're not forced to invest it in your house. Note that in either case you'd still be paying the condo fees, property taxes, insurance, and maintenance yourself. So we might as well eliminate those from consideration. It might be a good idea to find out what other options you would have - perhaps try to get an interest rate quote on a traditional mortgage from a bank, based on your income and credit history. Then you can decide what to do, taking into account: your financial situation; how much of a monthly payment could you afford? your relationship with your parents; are they likely to be reasonable about renegotiating? Do they in general tend to respect your wishes? Would it harm your relationship if you tried to get out of the deal, and how important is that to you? To what extent do you actually want to pay for equity in this property? Do you really believe it's a good investment, and have evidence to support that? Your options include: Try to renegotiate the terms of the loan from your parents Try to "refinance" the loan, by getting a loan from a bank and paying off some agreed-upon amount of principal to your parents Try to force the sale of the condo and move to another house, financing it some other way Consult a lawyer as to whether your agreement with your parents is legally enforceable. For instance, do they have a lien on the property? |
How does a big lottery winner cash his huge check risk-free? | If the funds are deposited into a noninterest-bearing account, they will be covered by FDIC insurance regardless of the amount (However, this extended coverage may not be valid after Dec. 31, 2012): On November 9, 2010, the FDIC issued a Final Rule implementing section 343 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that provides for unlimited insurance coverage of noninterest-bearing transaction accounts. Beginning December 31, 2010, through December 31, 2012, all noninterest-bearing transaction accounts are fully insured, regardless of the balance of the account, at all FDIC-insured institutions. (Source: http://www.fdic.gov/deposit/deposits/changes.html) |
What's the difference between a high yield dividend stock vs a growth stock? | I think Fidelity has a very nice introduction to Growth vs Value investing that may give you the background you need. People love to put stocks in categories however the distinction is more of a range and can change over time. JB King makes a good point that for most people the two stocks you mentioned would both be considered value right now as they are both stable companies with a significant dividend. You are correct though Pfizer might be considered "more growth." A more drastic example would be the difference between Target and Amazon. Both are retail companies that sell a wide variety of products. Target is a value company: a established company with stable revenues that uses its income to give a fairly stable dividend. Amazon is a growth company: that is reinvesting its revenues back into the corporation to grow itself as fast as possible. The price of the Amazon stock reflects what people think will be future growth (future income) for the company. Whereas Target's price appears to be based on the idea that future income will be similar to current income. You can see why growth companies like Amazon might be more risky as that growth you paid a high price for may not be realized, but the payout may be much higher as well. |
Better to rent condo to daughter or put her on title? | By placing the property in her name, her share of it would also be considered an asset of hers should she ever be sued. If she gets married and later divorced, depending on if Michigan is a community property state or not (and a lot of other things), her ex might get 50% of her stake in the property. |
As an independent contractor, should I always charge the client the GST/HST? | Hourly rate is not the determinant. You could be selling widgets, not hours. Rather, there's a $30,000 annual revenue threshold for GST/HST. If your business's annual revenues fall below that amount, you don't need to register for GST/HST and in such case you don't charge your clients the tax. You could still choose to register for GST/HST if your revenues are below the threshold, in which case you must charge your clients the tax. Some businesses voluntarily enroll for GST/HST, even when below the threshold, so they can claim input tax credits. If your annual revenues exceed $30,000, you must register for GST/HST and you must charge your clients the tax. FWIW, certain kinds of supplies are exempt, but the kind of services you'd be offering as an independent contractor in Canada aren't likely to be. There's more to the GST/HST than this, so be sure to talk to a tax accountant. References: |
What are the best options for an RESP for my 2 year old kid? | Since your child is 2, he has a long time horizon for investment. Assuming the savings will be used at age 19, that's 17 years. So, I think your best bet is to invest primarily in equities (i.e. stock-based funds) and inside an RESP. Why equities? Historically, equities have outperformed debt and cash over longer time periods. But, equities can be volatile in the short term. So, do purchase some fixed-income investments (e.g. 30% government bonds and money market funds), and do also spread your equity money around as well -- e.g. buy some international funds in addition to Canadian funds. Rebalance every year, and as your child gets closer to university age, start shifting some assets out of equities and into fixed-income, to reduce risk. You don't want the portfolio torpedoed by an economic crisis the year before the money is required! Next, why inside an RESP? Finally... what if your kid doesn't attend post-secondary education? First, you should probably get a Family RESP, not a Group RESP. Group RESPs have strict rules and may forfeit contributions if your kid doesn't attend. Have a look at Choosing the Right RESP and Canadian Capitalist's post The Pros and Cons of Group RESP Plans. In a Family plan, if none of your kids end up attending post-secondary education, then you forfeit the government match money -- the feds get it back through a 20% surtax on withdrawals. But, you'll have the option of rolling over remaining funds into your RRSP, if you have room. |
Why are typical 401(k) plan fund choices so awful? | 401k choices are awful because: The best remedy I have found is to roll over to an IRA when changing jobs. |
What did John Templeton mean when he said that the four most dangerous words in investing are: ‘this time it’s different'? | This refers to the faulty idea that the stock market will behave differently than it has in the past. For example, in the late 1990s, internet stocks rose to ridiculous heights in price, to be followed soon after with the Dot-Com Bubble crash. In the future, it's likely that there will be another such bubble with another hot stock - we just don't know what kind. Saying that "this time it will be different" could mean that you expect this bubble not to burst when, historically, that is never the case. |
Are stock index fund likely to keep being a reliable long-term investment option? | A diversified portfolio (such as a 60% stocks / 40% bonds balanced fund) is much more predictable and reliable than an all-stocks portfolio, and the returns are perfectly adequate. The extra returns on 100% stocks vs. 60% are 1.2% per year (historically) according to https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations To get those average higher stock returns, you need to be thinking 20-30 years (even 10 years is too short-term). Over the 20-30 years, you must never panic and go to cash, or you will destroy the higher returns. You must never get discouraged and stop saving, or you will destroy the higher returns. You have to avoid the panic and discouragement despite the likelihood that some 10-year period in your 20-30 years the stock market will go nowhere. You also must never have an emergency or other reason to withdraw money early. If you look at "dry periods" in stocks, like 2000 to 2011, a 60/40 portfolio made significant money and stocks went nowhere. A diversified portfolio means that price volatility makes you money (due to rebalancing) while a 100% stocks portfolio means that price volatility is just a lot of stress with no benefit. It's somewhat possible, probably, to predict dry periods in stocks; if I remember the statistics, about 50% of the variability in the market price 10 years out can be explained by normalized market valuation (normalized = adjusted for business cycle and abnormal profit margins). Some funds such as http://hussmanfunds.com/ are completely based on this, though a lot of money managers consider it. With a balanced portfolio and rebalancing, though, you don't have to worry about it very much. In my view, the proper goal is not to beat the market, nor match the market, nor is it to earn the absolute highest possible returns. Instead, the goal is to have the highest chance of financing your non-financial goals (such as retirement, or buying a house). To maximize your chances of supporting your life goals with your financial decisions, predictability is more important than maximized returns. Your results are primarily determined by your savings rate - which realistic investment returns will never compensate for if it's too low. You can certainly make a 40-year projection in which 1.2% difference in returns makes a big difference. But you have to remember that a projection in which value steadily and predictably compounds is not the same as real life, where you could have emergency or emotional factors, where the market will move erratically and might have a big plunge at just the wrong time (end of the 40 years), and so on. If your plan "relies" on the extra 1.2% returns then it's not a reasonable plan anyhow, in my opinion, since you can't count on them. So why suffer the stress and extra risk created by an all-stocks portfolio? |
What does it mean to invest in potatoes? | comments discuss investing in potato futures. Learn / ready about commodity trading or commodity futures. An investopedia article How To Invest In Commodities is a good start. There are quite a few commodities offered for normal trade or as futures. Potatos may not be offered on quite a few exchanges. Found some here Investing in commodities is fraught with quite a bit of risk, some like you have already pointed out. Of course you can't eat all and have to sell. |
How much is my position worth after 5-1 stock split? | The average price would be $125 which would be used to compute your basis. You paid $12,500 for the stock that is now worth $4,500 which is a loss of $8,000 overall if you sell at this point. |
Does money made by a company on selling its shares show up in Balance sheet | Share sales & purchases are accounted only on the balance sheet & cash flow statement although their effects are seen on the income statement. Remember, the balance sheet is like a snapshot in time of all accrued accounts; it's like looking at a glass of water and noting the level. The cash flow and income statements are like looking at the amount of water, "actually" and "imaginary" respectively, pumped in and out of the glass. So, when a corporation starts, it sells shares to whomever. The amount of cash received is accounted for in the investing section of the cash flow statement under the subheading "issuance (retirement) of stock" or the like, so when shares are sold, it is "issuance"; when a company buys back their shares, it's called "retirement", as cash inflows and outflows respectively. If you had a balance sheet before the shares were sold, you'd see under the "equity" heading a subheading common stock with a nominal (irrelevant) par value (this is usually something obnoxiously low like $0.01 per share used for ease of counting the shares from the Dollar amount in the account) under the subaccount almost always called "common stock". If you looked at the balance sheet after the sale, you'd see the number of shares in a note to the side. When shares trade publicly, the corporation usually has very little to do with it unless if they are selling or buying new shares under whatever label such as IPO, secondary offering, share repurchase, etc, but the corporation's volume from such activity would still be far below the activity of the third parties: shares are trading almost exclusively between third parties. These share sales and purchases will only be seen on the income statement under earnings per share (EPS), as EPS will rise and fall with stock repurchases and sales assuming income is held constant. While not technically part of the income statement but printed with it, the "basic weighted average" and "diluted weighted average" number of shares are also printed which are the weighted average over the reporting period of shares actually issued and expected if all promises to issue shares with employee stock options, grants, convertibles were made kept. The income statement is the accrual accounts of the operations of the company. It has little detail on investing (depreciation & appreciation) or financing (interest expenses & preferred dividends). |
The Asset Allocation Paradox | Asset Allocation serves many purposes, not just mitigating risk via a diversification of asset classes, but also allowing you to take a level of risk that is appropriate for a given investor at a given time by how much is allocated to which asset classes. A younger investor with a longer timeframe, may wish to take a lot more risk, investing heavily in equities, and perhaps managed funds that are of the 'aggressive growth' variety, seeking better than market returns. Someone a little older may wish to pull back a bit, especially after a bull market has brought them substantial gains, and begin to 'take money off the table' perhaps by starting to establish some fixed income positions, or pulling back to slightly less risky index, 'value' or 'balanced' funds. An investor who is near or in retirement will generally want even less risk, going to a much more balanced approach with half or more of their investments in fixed income, and the remainder often in income producing 'blue chip' type stocks, or 'income funds'. This allows them to protect a good amount of their wealth from potential loss at a time when they have to be able to depend on it for a majority of their income. An institution such as Yale has very different concerns, and may always be in a more aggressive 'long term' mode since 'retirement' is not a factor for them. They are willing to invest mostly in very aggressive ways, using diversification to protect them from one of those choices 'tanking' but still overall taking a pretty high level of risk, much more so than might be appropriate for an individual who will generally need to seek safety and to preserve gains as they get older. For example look at the PDF that @JLDugger linked, and observe the overall risk level that Yale is taking, and in addition observe the large allocations they make to things like private equity with a 27%+ risk level compared to their very small amount of fixed income with a 10% risk level. Yale has a very long time horizon and invests in a way that is atypical of the needs and concerns of an individual investor. They also have as you pointed out, the economy of scale (with something like #17B in assets?) to afford to hire proven experts, and their own internal PHD level experts to watch over the whole thing, all of which very few individual investors have. For either class of investor, diversification, is a means to mitigate risk by not having all your eggs in one basket. Via having multiple different investments (such as picking multiple individual stocks, or aggressive funds with different approaches, or just an index fund to get multiple stocks) you are protected from being wiped out as might happen if a single choice might fail. For example imagine what would have happened if you had in 2005 put all your money into a single stock with a company that had been showing record profits such as Lehman Brothers, and left it there until 2008 when the stock tanked. or even faster collapses such as Enron, etc that all 'looked great' up until shortly after they failed utterly. Being allocated across multiple asset classes provides some diversification all on it's own, but you can also be diversified within a class. Yale uses the diversification across several asset classes to have lower risk than being invested in a single asset class such as private equity. But their allocation places much more of their funds in high risk classes and much less of their funds in the lowest risk classes such as fixed income. |
What is the effect of dividends on the futures price of an index | A futures contract is based upon a particular delivery date. In the case of a stock index futures contract is a cash settled futures contract based upon the stock index value at a particular point in time (i.e. this is when the final settlement is determined). In your example, the S&P 500 (SPX) is a price return index - that is, it is not affected by dividends and therefore dividends are not incorporated into the index value. Dividends will affect the price of the constituent stocks (not necessarily by the same amount as the dividend) so they do have influence on the stock index value. Since the dividends are known ahead of time (or at least can be estimated), this has already been factored into the futures price by the market. In terms of the impact of a dividend by AAPL, AAPL is approximaetely 3.6% of the index. Apple pays out dividends 4 times a year (currently paying out $0.52 dividends). Assuming the market is otherwise steady and AAPL drops by $0.52 due to the dividend and Apple is priced at around $105, this would result in a drop in the index of 0.0178% or around 0.35 points. Interesting fact: There are some futures contracts that are based upon Total Return indexes, such as the German DAX and the above logic would need to be reversed. |
Life insurance policy | From the details you have given it looks like you have "Unit Linked" insurance policy. In such policies a part of the premium goes towards the "Insurance", the balance is invested into "Mutual Funds / stock Market". It is generally not advisable to have "Unit Linked" policy compared to pure "Term" policy. Generally the amount of fees charged for "Unit Linked" policy is high and hence the returns to the end user are low. i.e. if you buy a "Term" insurance for the same sum insured and invest on your own the balance in any "Mutual Fund" you will end up making more that what you are getting now. Typically these policies have 3 years lock-in period. As you have purchased this in 2008, you can cancel the policy without any penalties. This will save you future premium and you can buy a term insurance and invest the difference yourself. Note the unit linked policy is useful for people who do not invest on their own and this is a good way to be forced into saving than nothing else. |
Paying Off Principal of Home vs. Investing In Mutual Fund | Other answers are already very good, but I'd like to add one step before taking the advice of the other answers... If you still can, switch to a 15 year mortgage, and figure out what percentage of your take-home pay the new payment is. This is the position taken by Dave Ramsey*, and I believe this will give you a better base from which to launch your other goals for two reasons: Since you are then paying it off faster at a base payment, you may then want to take MrChrister's advice but put all extra income toward investments, feeling secure that your house will be paid off much sooner anyway (and at a lower interest rate). * Dave's advice isn't for everyone, because he takes a very long-term view. However, in the long-term, it is great advice. See here for more. JoeTaxpayer is right, you will not see anything near guaranteed yearly rates in mutual funds, so make sure they are part of a long-term investing plan. You are not investing your time in learning the short-term stock game, so stay away from it. As long as you are continuing to learn in your own career, you should see very good short-term gains there anyway. |
Rental Properties: Is it good or bad that I can't find rental listings on that street? | Based on the information you gave, there are dozens if not hundreds of possible theories one could spin about the rental market. Sure, it's possible that there are no listings because rental units on this street are quickly snapped up. On the other hand, it's also possible that there are no listings because almost all the buildings on the street have been abandoned and, aside from this one property that someone is tying to sell you, the rest of the street is inhabited only by wild dogs and/or drug dealers. Or maybe the street is mostly owner-occupied, i.e. the properties are not being rented to anyone. Or maybe it's a commercial district. Or maybe craigslist isn't popular with people who own property on this street for whatever reason. Maybe Syracuse has a city ordinance that says property must be advertised in the newspaper and not on websites, for all I know. Or maybe you missed it because nobody in Syracuse calls it "housing for rent", they all call it "apartments for rent" or "houses for rent" or some local phrase. Or ... or ... or. Before I bought a property, I'd do more research than one search on one web site. Have you visited the property? I don't know how much you're preparing to invest, I have no idea what property prices are in Syracuse, but I'd guess it's at least tens of thousands of dollars. Surely worth making the drive to Syracuse to check it out before buying. |
Why would a company care about the price of its own shares in the stock market? | The main reason is that a public company is owned by its share holders, and share holders would care about the price of the stock they are owning, therefore the company would also care, because if the price go down too much, share holders become angry and may vote to oust the company's management. |
What is the best way to stay risk neutral when buying a house with a mortgage? | It is pretty simple to avoid risk in home ownership: Do those things and your risk of home ownership is about nil. |
Why would a bank take a lower all cash offer versus a higher offer via conventional lending? | Also keep in mind that with an all-cash offer, they get their money now and not spread over X-many years, which means they can reinvest it now rather than piece meal across the term of whatever the loan would be. (Presuming the bank would be financing the house themselves.) Additionally, with an all-cash offer, there end to be fewer lawyers at the table, fewer parties total, so the process can generally proceed faster. |
Is gold subject to inflation? [duplicate] | Gold isn't constant in value. If you look at the high price of $800 in January of 1980 and the low of $291 in 2001, you lost a lot of purchasing power, especially since money in 2001 was worth less than in 1980. People claim gold is a stable store of value but it isn't. |
Are credit cards not viewed as credit until you miss one payment? | This does not directly address the question, but how the Bank views your behaviour is not the same as a credit reporting bureau. If you do not "go deep" on your card at all, you may be deemed not to be exercising the facility, indeed they may ask you to reduce your credit limit. This is not the same as "missing a payment". At the same time, do not just make the minimum payment. Ideally you should clear it within 3 months. Think of it as a very short term line of credit. Not clearing the balance within three months (or turning it over) demonstrates a cash flow problem, as does clearing it from another card. Some banks call this "kite flying" after similar behaviour in older days with cheque accounts. If you use the credit and show you can pay it off, you should never need to ask for a credit increase, it will be offered. The Bureau will be informed of these offers. Also, depending upon how much the bank trusts you, the Bureau may see a "monthly" periodic credit review, which is good if you have no delinquencies. Amex does this as a rule. |
As an employee, when is it inappropriate to request to see your young/startup company's financial statements? | This is several questions wrapped together: How can I diplomatically see the company's financial information? How strong a claim does a stockholder or warrantholder have to see the company's financials? What information do I need to know about the company financials before deciding to buy in? I'll start with the easier second question (which is quasi implicit). Stockholders typically have inspection rights. For example, Delaware General Corporate Law § 220 gives stockholders the right to inspect and copy company financial information, subject to certain restrictions. Check the laws and corporate code of your company's state of incorporation to find the specific inspection right. If it is an LLC or partnership, then the operating agreement usually controls and there may be no inspection rights. If you have no corporate stock, then of course you have no statutory inspection rights. My (admittedly incomplete) understanding is that warrantholders generally have no inspection rights unless somehow contracted for. So if you vest as a corporate stockholder, it'll be your right to see the financials—which may make even a small purchase valuable to you as a continuing employee with the right to see the financials. Until then, this is probably a courtesy and not their obligation. The first question is not easy to answer, except to say that it's variable and highly personal for small companies. Some people interpret it as prying or accusatory, the implication being that the founders are either hiding something or that you need to examine really closely the mouth of their beautiful gift horse. Other people may be much cooler about the question, understanding that small companies are risky and you're being methodical. And in some smaller companies, they may believe giving you the expenses could make office life awkward. If you approach it professionally, directly, and briefly (do not over-explain yourself) with the responsible accountant or HR person (if any), then I imagine it should not be a problem for them to give some information. Conversely, you may feel comfortable enough to review a high-level summary sheet with a founder, or to find some other way of tactfully reviewing the right information. In any case, I would keep the request vague, simple, and direct, and see what information they show you. If your request is too specific, then you risk pushing them to show information A, which they refuse to do, but a vague request would've prompted them to show you information B. A too-specific request might get you information X when a vague request could have garnered XYZ. Vague requests are also less aggressive and may raise fewer objections. The third question is difficult to say. My personal understanding is some perspective of how venture capitalists look at the investment opportunity (you didn't say how new this startup is or what series/stage they are on, so I'll try to stay vague). The actual financials are less relevant for startups than they are for other investments because the situation will definitely change. Most venture capital firms like to look at the burn rate or amount of cash spent, usually at a monthly rate. A high burn rate relative to infusions of cash suggests the company is growing rapidly but may have a risk of toppling (i.e. failing before exit). Burn rate can change drastically during the early life of the startup. Of course burn rate needs the context of revenues and reserves (and latest valuation is helpful as a benchmark, but you may be able to calculate that from the restricted share offer made to you). High burn rate might not be bad, if the company is booming along towards a successful exit. You might also want to look at some sort of business plan or info sheet, rather than financials alone. You want to gauge the size of the market (most startups like to claim 9- or 10-figure markets, so even a few percentage points of market share will hit revenue into the 8-figures). You'll also have to have a sense for the business plan and model and whether it's a good investment or a ridiculous rehash ("it's Twitter for dogs meets Match.com for Russian Orthodox singles!"). In other words, appraise it like an investor or VC and figure out whether it's a prospect for decent return. Typical things like competition, customer acquisition costs, manufacturing costs are relevant depending on the type of business activity. Of course, I wouldn't ignore psychology (note that economists and finance people don't generally condone the following sort of emotional thinking). If you don't invest in the company and it goes big, you'll kick yourself. If it goes really big, other people will either assume you are rich or feel sad for you if you say you didn't get rich. If you invest but lose money, it may not be so painful as not investing and losing out the opportunity. So if you consider the emotional aspect of personal finance, it may be wise to invest at least a little, and hedge against "woulda-shoulda" syndrome. That's more like emotional advice than hard-nosed financial advice. So much of the answer really depends on your particular circumstances. Obviously you have other considerations like whether you can afford the investment, which will be on you to decide. And of course, the § 83(b) election is almost always recommended in these situations (which seems to be what you are saying) to convert ordinary income into capital gain. You may also need cash to pay any up-front taxes on the § 83(b) equity, depending on your circumstances. |
Is inflation a good or bad thing? Why do governments want some inflation? | In general the consensus is that a small amount of inflation (usually 1.5-2% per year) is desirable. That is why the Federal Reserve sets its inflation target in that range. The reasons why are quite complex though. One reason is "wage stickiness" - ie., the observed phenomenon that employers don't like to cut wages. Having a small rate of inflation means that when wages are steady in nominal terms, they are actually falling in real terms. This gives employers more flexibility. |
30% share in business | Keep in mind a good lawyer will have the contract cover the five D's: Its really best to lay these things out ahead of time. I watched, first hand, two friends start a business. When they were broke and struggling the worked very well together. Then the money started rolling in. Despite exceeding their dreams they were constantly at each other's throats fighting and bickering over stupid stuff. In the end, because they had decent legal docs, they both were able to pull money out of the business. Had that not been worked out they would have destroyed the business so that no one would have profited. |
Is it wise to invest small amounts of money short-term? | You can expect about a 7% return when investing in the general market if your horizon is ten years or more. The market fluctuates, which means that you should be absolutely fine with losing 10% or more of your invested money during this period. You say yourself that: I have been setting aside money (...) into a savings account earmarked for that purpose (repairs/maintenance) so that I don't have to take out loans. It's obvious from your question that the purpose of this money is not savings, this is money that you are already investing, not in stocks or bonds but in your house. While this money sits around, of course you could put it into the market and hope that it grows. It all depends on your horizon, which in your case sounds like about 1 year. Is that long enough to be fairly sure you will make a profit? From what I've written so far, hopefully you can gather that the answer is no. If you choose to invest $6,000 but you need that money back in one year, you need to be aware of the risk that you'll instead end up with $5,400 or even less. Your options are then to: If you're asking for personal advice, my opinion would be this: you're already investing in your house. The housing market, like most markets, fluctuate. Whether you like it or not, you're already a victim (or benefactor) of this value fluctuation. The difference is that a house is something you'll live in for a long time (probably), that will give you daily joy in a way stocks and bonds won't. Of course, saving up money and investing them is always a good idea anyway. You should still save a small amount every month and put it into low/medium risk bonds, in my opinion. |
Who could afford a higher annual deductible who couldn't afford a higher monthly payment? | Your title question, Who could afford a higher premium who couldn't afford a higher monthly payment?, contrasts premium with monthly payment, but those are the same thing. In the body of your question, you list monthly payment and deductible, which is entirely different. The deductible is paid only if you need that much medical care in any one year. Most years a person in good health pays little because of the deductible. Thus, the higher deductible options offer catastrophic health insurance without giving much in the way of reimbursement for regular medical expenses. Note - the original question has been edited since. |
How much is an asset producing $X/month is worth? | The simplest way is just to compute how much money you'd have to have invested elsewhere to provide a comparable return. For example, if you assume a safe interest rate of 2.3% per year, you would need to have about $520,000 to get $1,000/month. |
Can I transfer self-employed income into LLC? | An LLC is a very flexible company when it comes to taxation. You have three basic tax options: There are other good reasons to create an LLC (mainly to protect your personal assets) so even if you decide that you don't want to deal with the complications of an S-Corp LLC, you should still consider creating a sole proprietorship LLC. |
What's the best application, software or tool that can be used to track time? | There are tonnes, and tonnes of things out there, but you have to be careful what you search for. Be specific about what you want. If you search for "time sheet" for example, you'll just get a bucket of stuff having to do with stylesheets, because there's more of that around. The most common type of small tool for tracking time is usually a timer-type thing that runs as a widget, gadget, or System Tray tool. You have to click it on, then off again, and the nice ones produce a usable output file. CSV, or XLS, or some such. There are tools that track what documents you have open, when you opened them, and when you closed them, and you can sort it out from there. They're a bit resource-heavy, so be careful if you have a low power system. Quickbooks has a little utility that will make file which can be imported into your accounting. Quickbooks is NOT for the average business person. You almost have to be a bookkeeper to get the most out of it. On the other hand, you can have a bookkeeper set it up for you, and at the end of the year your taxes are a one button affair. For Windows software I like to use the site snapfiles.com. It's always been reliable, the rating systems are pretty accurate, they mostly maintain their own copies of the software, they test for viruses, and the let you specify a "freeware only" search ;-) For Mac software I like versiontracker.com. If you're a massive freeware user, like me, sign up for an account, so you can receive alerts regarding updates, and such. Currently I do most of my computer-based organization on a Mac with piece of software by CircusPonies.com called NoteBook. There's a command to insert the time, date, or both, and I just use that when I have a need to record elapsed time. I have even run across (and I forget the name) a piece of software for tracking time on Windows, which had multiple timers which you could set so either they were allowed to run concurrently (lawyers), or only one would run at a time. Anyway… Personally I think freeware is fun, but be careful. It's still the wild frickin west out there. If you don't trust the site you're downloading from, scan it with your anti-virus software before you install it, create a Restore Point, do a full, offsite backup of all your hard drives, unplug your computer from the Internet, send your wife to her mother's, lock the kids in the basement, cross your fingers, and phone the local bishop for a dispensation (http://en.wikipedia.org/wiki/Dispensation_(Catholic_Church)). |
How should I begin investing real money as a student? | I think you have a really good idea, kudos to it. It will be difficult to break eve, and while you stressed the fact that you are ready to part with this money, it would be interesting for you not to part with this money just for the sake of trading. You will be frustrated because you are "winning" and breaking even or even losing money in the process. Think about that. For somebody with limited experience the derivatives market carries a very high risk also as everything in this matters carries high or very high yield. Trading futures on margin can actually work but I think you will need a bit more money. Check the mini contracts of infinity futures and calculate the commissions. You will be paying more for a contract, yes. you will need more money for your maintenance margin, yes, but if you day-trade and you have a cheapo broker this will be substantially lower. Gold contracts pay about 10 to 1 so a mini contract of 33 ounces will pay you 33 dollars per 1 dollar move. Your commissions will be about 4/5 usd in a discount broker and you will need to pay some exchange house fees, maybe about 15% of your trade will be fees. Check the contract specs and costs. As somebody said before, they wouldn't recommend trading on margin but with an account of that side I wouldn't know anything else. Trading physical gold on margin could also be an option. Just my 2 cents. |
How to decide on split between large/mid/small cap on 401(k) and how often rebalance | I really like keshlam's answer. Your age is also a consideration. If you make your own target fund by matching the allocations of whatever Vanguard offers, I'd suggest re-balancing every year or every other year. But if you're just going to match the allocations of their target fund, you might as well just invest in the target fund itself. Most (not all, just most) target funds do not charge an additional management fee. So you just pay the fees of the underlying funds, same as if you mirrored the target fund yourself. (Check the prospectus to see if an additional fee is charged or not.) You may want to consider a more aggressive approach than the target funds. You can accomplish this by selecting a target fund later than your actual retirement age, or by picking your own allocations. The target funds become more conservative as you approach retirement age, so selecting a later target is a way of moving the risk/reward ratio. (I'm not saying target funds are necessarily the best choice, you should get professional advice, etc etc.) |
I would like to publicly share the details of my investment portfolio. What websites add value in this regard? | This is going to be a bit of a shameless plug, but I've build a portfolio tracking website to track your portfolio and be able to share it (in read-only mode) as well. It is at http://frano.carelessmusings.com and currently in beta. Most portfolio trackers are behind a login wall and thus will lack the sharing function you are looking for. Examples of these are: Yahoo Finance, Google Finance, Reuters Portfolios, MorningStart Portfolios, and many others. Another very quick and easy solution (if you are not trading too often) is a shared google docs spreadsheet. Gdocs has integration with google finance and can retrieve prices for stocks by symbol. A spreadsheet can contain the following: Symbol, Quantity, Avg. Buy Price, Price, P/L, P/L% and so on. The current price and P/L data can be functions that use the google finance API. Hope this helps, and if you check out my site please let me know what you think and what I could change. |
Is it better to buy US stocks on US stock exchanges as a European? | No, there are neither advantages nor disadvantages. I'll take on this question from an accounting standpoint. Financial statements, the tools at which the market determines (amongst other things) the value of a stock, are converted at year end to the home currency (see 1.1.3).If Company A has revenue of 100,000 USD and the conversion to EUR is .89, revenue in the European market will be reported as 89,000 EUR. These valuations, along with ratios, analysis, and "expert" opinions determine if a person should own shares in Company A. Now, if we're talking about comparing markets this is a entirely different question. Example: Should I buy stock of Company A, who is in the American market (as an European)? Should I buy stock of Company B, who is in the European market (as an American)? I would recommend this as additional level of diversification of your portfolio to inlcude possible large inflation of either the currency. The possible gains of this foreign exchange may be greater if one or the other currency becomes weak. |
I have $10,000 sitting in an account making around $1 per month interest, what are some better options? | I disagree with most of the answers here so far because they are either too risky or too conservative and don't take taxes and retirement into consideration. OP, keep in mind the higher the potential return, the greater the risk. You haven't stated your risk tolerance, but consider the following: Pick a certain percentage of your $10k to invest for the long term. Pick a low-cost index fund like the S&P500 Index. Historically this investment does well in the long run, and it gets you started in investing. Keep the balance, the money you will need for the short term, right where it is not earning much interest. Have you started saving for retirement? Consider starting a Roth IRA (if you are in the USA) with some of the money for tax advantages. It's up to you to decide how much you should invest and how much you need to keep on hand for emergencies or short-term needs. There are plenty related questions on this forum you can browse. |
Why is being “upside down” on a mortgage so bad? | The problem comes when the borrower cannot afford his home. If a borrower buys more home than they can afford, as long as he can sell the house for more than he owes, he's not in a disastrous situation. He can sell the house, pay off the mortgage, and choose more affordable housing instead. If he is upside-down on his home, he doesn't have that option. He's stuck in his home. If he sells it, he will have to come up with extra money to pay off the mortgage (which he doesn't have, because he is in a home he can't afford). It used to be commonplace for banks to issue mortgages for 100% of the value of the home. As long as the home keeps appreciating, everybody is happy. But if the house drops in value and the homeowner finds himself unable to make house payments, both the homeowner and the bank are at risk. Recent regulations in the U.S. have made no-down-payment mortgages less common. |
Can a shareholder be liable in case of bankruptcy of one of the companies he invested in? | Not normally, for a limited liability company anyway. In extreme circumstances a court may "lift the veil" of incorporation and treat shareholders as if they were partners. If you are an office bearer or a director that is found to have breached duties/responsibiities then that is another matter. Dim views can be taken of shonky arrangents for companies formed for activites not of a bona fide business nature too. |
What is the true value, i.e. advantages or benefits, of building up equity in your home? | A person can finance housing expenses in one of two ways. You can pay rent to a landlord. Or you can buy a house with a mortgage. In essence, you become your own landlord. That is, insta the "renter" pays an amount equal to the mortgage to insta the "landlord," who pays it to the bank to reduce the mortgage. Ideally, your monthly debt servicing payments (minus tax saving on interest) should approximate the rent on the house. If they are a "lot" more, you may have overpaid for the house and mortgage. The advantage is that your "rent" is applied to building up equity (by reducing the mortgage) in your house. (And mortgage payments are tax deductible to the extent of interest expense.) At the end of 30 years, or whatever the mortgage term, you have "portable equity" in the form a fully paid house, that you can sell to move another house in Florida, or wherever you want to retire. Sometimes, you will "get lucky" if the value of the house skyrockets in a short time. Then you can borrow against your appreciation. But be careful, because "sky rockets" (in housing and elsewhere) often fall to earth. But this does represent another way to build up equity by owning a house. |
How can I deposit a check made out to my business into my personal account? | If you're a sole proprietor there's no reason to have a separate business account, as long as you keep adequate records, as you are one and the same for tax purposes. My husband and I already have 5 accounts and a mortgage with one bank. I don't see the need to open up yet another account. As a contracted accountant, I don't need to write business checks, and my expenses are minimal. As long as I have an present my assumed business name certificate and ID, there's no reason for a bank not to deposit into my personal account. |
Some U.S. Tax Questions (CPA Concerns) | He has included this on Schedule D line 1a, but I don't see any details on the actual transaction. It is reported on form 8949. However, if it is fully reported in 1099-B (with cost basis), then you don't have to actually detail every position. Turbotax asked me to fill in individual stock sales with proceeds and cost basis information. ... Again, it seems to be documented on Schedule D in boxes 1a and 8a. See above. I received a 1099-Q for a 529 distribution for a family member. It was used for qualified expenses, so should not be taxable. Then there's nothing to report. I believe I paid the correct amounts based on my (possibly flawed) understanding of estimated taxes. His initial draft had me paying a penalty. I explained my situation for the year, and his next draft had the penalties removed, with no documentation or explanation. IRS assesses the penalty. If you volunteer to pay the penalty, you can calculate it yourself and pay with the taxes due. Otherwise - leave it to the IRS to calculate and assess the penalty they deem right and send you a bill. You can then argue with the IRS about that assessment. Many times they don't even bother, if the amounts are small, so I'd suggest going with what the CPA did. |
Cheapest way to “wire” money in an Australian bank account to a person in England, while I'm in Laos? | I've been doing a bunch of Googling and reading since I first posed this question on travel.SE and I've found an article on a site called "thefinancebuff.com" with a very good comparison of costs as of September 2013: Get the Best Exchange Rate: Bank Wire, Xoom, XE Trade, Western Union, USForex, CurrencyFair by Harry Sit It compares the following methods: Their examples are for sending US$10,000 from the US to Canada and converting to Canadian dollars. CurrencyFair worked out the cheapest. |
Why is day trading considered riskier than long-term trading? | Day trading is probably the most often tried and failed activity in the financial world. People think they can parlay $1,000 investment into $1,000,000 in a week with little or no knowledge on how to evaluate stocks and or companies. They think they can just look at where the line graphs' been and forecast where it's going to be next week. Unfortunately if it were that simple everyone would be making money hand over fist in the market. So in short, the reason day trading is considered a risky venture is because most of the people that attempt to do it are willfully ignorant. They intentionally choose not to read about day trading. They intentionally choose not to learn about how to read a company's financial report and they intentionally choose not to learn how to compare one stock to another. They also don't consider the fact that most of their data is 15 or more min old because of the shady rules brokers have worked into the system. Real everyday investors that make money in the market do it by careful evaluation of the purchase they are about to make. Guess what, even they lose time to time. That's the game! |
How Does A Special Memorandum Account Work | Here is another explanation of an SMA. SMA refers to the Special Memorandum Account which represents neither equity nor cash but rather a line of credit created when the market value of securities in a Reg. T margin account increase in value. For example, assume the market value of securities purchased at a cost of $10,000 on margin (at 50%) increase in value to $12,000. This $2,000 increase in market value would create SMA of $1,000, which provides the account holder the ability to either: 1) buy additional securities valued at $2,000 (assuming a 50% margin rate) without depositing up additional funds; or 2) withdraw $2,000 in cash, which may be financed by increasing the debit balance if the account holds no cash. It should be noted that while an increase in market value over original cost creates SMA, a subsequent decline in market value has no effect on SMA. SMA will only decline if used to purchase securities or withdraw cash and the only restriction with respect to its use is that the additional purchases or withdrawals do not bring the account below the maintenance margin requirement. SMA will also increase on a dollar for dollar basis in the event of cash deposits or dividends. More details at http://ibkb.interactivebrokers.com/article/66 |
Is it wise for an independent contractor to avoid corporation tax by planning to only break even each year? | IANAL (and nor am I an accountant), so I can't give a definitive answer as to legality, but AFAIK, what you propose is legal. But what's the benefit? Avoiding corporation tax? It's simplistic – and costly – to think in terms like that. You need to run the numbers for different scenarios, and make a plan. You can end up ahead of the game precisely by choosing to pay some corporate tax each year. Really! Read on. One of the many reasons that self-employed Canadians sometimes opt for a corporate structure over being a sole proprietor is to be able to not pay themselves everything the company earns each year. This is especially important when a business has some really good years, and others, meh. Using the corporation to retain earnings can be more tax effective. Example: Imagine your corporation earns, net of accounting & other non-tax costs except for your draws, $120,000/year for 5 years, and $0 in year 6. Assume the business is your only source of income for those 6 years. Would you rather: Pay yourself the entire $120,000/yr in years 1-5, then $0 in year 6 (living off personal savings you hopefully accumulated earlier), subjecting the $120,000/yr to personal income tax only, leaving nothing in the corporation to be taxed? Very roughly speaking, assuming tax rates & brackets are level from year to year, and using this calculator (which simplifies certain things), then in Ontario, then you'd net ~$84,878/yr for years 1-5, and $0 in year 6. Overall, you realized $424,390. Drawing the income in this manner, the average tax rate on the $600,000 was 29.26%. vs. Pay yourself only $100,000/yr in years 1-5, leaving $20,000/yr subject to corporation tax. Assuming a 15.5% combined federal/provincial corporate tax rate (includes the small business deduction), then the corp. is left with $16,900/yr to add to retained earnings in years 1-5. In year 6, the corp. has $84,500 in retained earnings to be distributed to you, the sole owner, as a dividend (of the non-eligible kind.) Again, very roughly speaking, you'd personally net $73,560/yr in years 1-5, and then on the $84,500 dividend in year 6, you'd net $73,658. Overall, you realized $441,458. Drawing the income in this manner, the average tax rate on the $600K was 26.42%. i.e. Scenario 2, which spreads the income out over the six years, saved 2.84% in tax, or $14,400. Smoothing out your income is also a prudent thing to do. Would you rather find yourself in year 6, having no clients and no revenue, with nothing left to draw on? Or would you rather the company had saved money from the good years to pay you in the lean one? |
Where to park money low-risk on interactivebrokers account? | I would refrain from commenting on market timing strategy, but please don't park extra AUD cash in IB. Park cash in your local bank high interest savings, and get a Margin account at IB. When you want to pull the trigger, use margin loan to buy stocks immediately, then transfer cash from local bank to IB afterwards. |
How converted stock is taxed due to an acquisition | I don't think its a taxable event since no income has been constructively received (talking about the RSU shareholders here). I believe you're right with the IRC 1033, and the basis of the RSU is the basis of the original stock option (probably zero). Edit: see below. However, once the stock becomes vested - then it is a taxable event (not when the cash is received, but when the chance of forfeiture diminishes, even if the employee doesn't sell the stock), and is an ordinary income, not capital. That is my understanding of the situation, do not consider it as a tax advice in any way. I gave it a bit more though and I don't think IRC 1033 is relevant. You're not doing any exchange or conversion here, because you didn't have anything to convert to begin with, and don't have anything after the "conversion". Your ISO's are forfeited and no longer available, basically - you treat them as you've never had them. What happened is that you've received RSU's, and you treat them as a regular RSU grant, based on its vesting schedule. The tax consequences are exactly as I described in my original response: you recognize ordinary income on the vested stocks, as they vest. Your basis is zero (i.e.: the whole FMV of the stock at the time of vesting is your ordinary income). It should also be reflected in your W2 accordingly. |
Buying an option in the money, at the money, or out of the money | 1 reason is Leverage.... If you are buying out of the money options you get much more bang for your buck if the stock moves in your favor. The flipside is it is much more likely that you would lose all of your investment. |
What is a normal amount of money to spend per week on food/entertainment/clothing? | I'll start with a question... Is the 63K before or after taxes? The short answer to your question on how much is reasonable is: "It depends." It depends on a lot more than where you live, it depends on what you want... do you want to pay down debt? Do you want to save? Are you trying to buy a house? Those will influence how much you "can" (should let yourselves) spend. It also depends on your actual salary... just because I spend 5% of my salary on something doesn't mean bonkers to you if you're making 63,000 and I'm only making 10,000. I also have a lot of respect for you trying to take this on. It's never easy. But I would also recommend you start by trying to see what you can do to track how much you are actually spending. That can be hard, especially if you mostly use cash. Once you're tracking what you spend, I still think you're coming at this a bit backwards though... rather than ask 'how much is reasonable' to spend on those other expenses, you basically need to rule out the bigger items first. This means things like taxes, your housing, food, transportation, and kid-related expenses. (I've got 2.5 kids of my own.) I would guess that you're listing your pre-tax salaries on here... so start first with whatever it costs you to pay taxes. I'm a US citizen living in Berlin, haven't filed UK taxes, but uktaxcalculators.co.uk says that on 63,000 a year with 3 deductions your net earnings will actually be 43,500. That's 3,625/month. Then what does it cost you each month for rent/utilities/etc. to put a house over your family's head? The rule of thumb they taught in my home-economics class was 35-40%, but that's not for Europe... you'll know what it costs. Let's say its 1,450 a month (40%) for rent and utilities and maybe insurance. That leaves 2,175. The next necessity after housing is food. My current food budget is about 5-6% of my after-tax salary. But that may not compare... the cost to feed a family of 3 is a fairly fixed number, and our salaries aren't the same. As I said, I am a US expat living in Berlin, so I looked at this cost of living calculator, and it looks like groceries are about 7-10% higher there around Cardiff than here in Germany. Still, I spend about 120 € per week on food. That has a fair margin in it for splurging on ice cream and a couple brewskies. It feeds me (I'm almost 2m and about 100 kilos) and my family of four. Let's say you spend 100£ a week on groceries. For budgeting, that's 433£ a month. (52 weeks / 12 months == 4.333 weeks/month) But let's call it 500£. That leaves 1,675. From here, you'll have to figure out the details of where your own money is going--that's why I said you should really start tracking your expenses somehow... even just for a short time. But for the purposes of completing the answers to your questions, the next step is to look at saving before you try spending anything else. A nice target is to aim for 10% of your after-tax pay going into a savings account... this is apart from any other investments. Let's say you do that, you'll be putting away 363£ per month. That leaves 1,300£. As far as other expenses... you need some money for transport. You haven't mentioned car(s) but let's say you're spending another 500£ there. That would be about enough to cover one with the petrol you need to get around town. That leaves 800£ As far as a clothing budget and entertainment, I usually match my grocery budget with what I call "mad money". That's basically money that goes towards other stuff that I would love to categorize, but that my wife gets annoyed with my efforts to drill into on a regular basis. That's another 500£, which leaves 300£. You mentioned debts... assuming that's a credit card at around 20% interest, you probably pay 133£ a month just in interest... (20% = 0.20 / 12 = 0.01667 x 8,000 = 133) plus some nominal payment towards principal. So let's call it 175£. That leaves you with 125£ of wiggle room, assuming I have even caught all of your expenses. And depending on how they're timed, you are probably feeling a serious squeeze in between paychecks. I recognize that you're asking specific questions, but I think that just based on the questions you need a bit more careful backing into the budget. And you REALLY need to track what you're spending for the time being, until you can say... right, we usually spend about this much on X... how can we cut it out? From there the basics of getting your financial house in order are splattered across the interwebs. Make a budget... stick to it... pay down debts... save. Develop goals and mini incentives/rewards as a way to make sure your change your psyche about following a budget. |
Single investment across multiple accounts… good, bad, indifferent? | The main restrictions you see with IRA's involve contributions, and not the actual investments themselves. I would be indifferent to having a single investment across multiple accounts. It might be a bit trickier to manage, especially if your strategy involves some specific asset allocation. Other than account management though, there's no big issue. |
Why does financial investor bother to buy derivatives and then hedge the position? | I don't know why a financial investor or a retail trader would do this. But I can guess why a market maker in options would do this. Let us say you buy an option from an option market maker and the market maker sold the option to you. He made a small profit in the bid-ask spread but now he is holding a short position in the option with unlimited risk exposure. So to protect himself, he will take an offsetting position in the underlying and become delta neutral, so that his position is not affected by the moves in the underlying. In the end, he can do this because he is not in the market to make money by betting on direction, unlike the rest of us poor mortals. He is making money from the bid-ask spread. So to ensure that his profits are not eroded by an adverse move in the underlying, he will continuously seek to be delta neutral. But once again, this is for a market maker. For market takers like us, I still don't understand why we would need to delta hedge. |
Short term parking of a large inheritance? | Safe short term and "pay almost nothing" go hand in hand. Anything that is safe for the short term will not pay much in interest/appreciation. If you don't know what to do, putting it in a savings account is the safest thing. The purpose of that isn't to earn money, it's just to store the money while you figure out where to move it to earn money. |
Which banks have cash-deposit machines in Germany? | In my experience Sparkasse or VR Bank have them quite often. They stick out in my mind because when you make a withdrawal you have to reach in to get your money instead of it spitting it out. I'm always afraid its going to chop my hand off. |
How big of a mortgage can I realistically afford? | You're biting off a lot. Let's say you can swing 5% for a down payment: $13k. A 30-year loan on $247k at the rate you quote gives you a payment of $1,270 per month. This does not include taxes, insurance, or private mortgage insurance (which you'll pay because you have a down payment less than 20%). The PMI will run you about $150-$200 per month, I think, until your loan-to-value ratio falls below 80%. Plus your HOA fee, utilities, your 401(k) loan payment, etc., you're pushing $2k/month. You have a roommate in mind, and that will help, but the roommate can go, and you still own the property. Then you get the whole payment all to yourself. If I had the option, I'd rent a little longer. Save up for a decent down payment, and shop around for someone who is desperate to sell. |
What does it mean for a company to have its market cap larger than the market size? | First read mhoran's answer, Then this - If the company sold nothing but refrigerators, and had 40% market share, that's $4M/yr in sales. If they have a 30% profit margin, $1.2M in profit each year. A P/E of 10 would give a stock value totaling $12M, more than the market size. The numbers are related, of course, but one isn't the maximum of the other. |
If accepting more than $10K in cash for a used boat, should I worry about counterfeiting? | The only issue I can see is that the stranger is looking to undervalue their purchase to save money on taxes/registration (if applicable in your state). Buying items with cash such as cars, boats, etc in the used market isn't all that uncommon* - I've done it several times (though not at the 10k mark, more along about half of that). As to the counterfeit issue, there are a couple avenues you can pursue to verify the money is real: *it's the preferred means of payment advocated by some prominent personal financial folks, including Dave Ramsey |
Using simple moving average in Equity | One of the most obvious uses of SMAs is the detection of a trend reversal. A trend reversal happens when a short term SMA crosses over a longer term SMA. For example, if a 20 day moving average was, previously, above a 200 day moving average, but has crossed over the 200 day and is currently below the 200 day then the security has performed a 'death cross' and the trend is for lower and lower prices. Stockcharts.com has excellent 'chart school' for the beginning chart user. They also provide excellent charts. Here is a link: http://stockcharts.com/school/doku.php?id=chart_school I like to use a 20 day SMA, a 200 day SMA, and a 21 day EMA. |
Any reason to keep around my account with my old, 'big' bank? | From my experience, payments from banks and other financial entities, such as loyalty programs, generally aren't as large as payments that go the other direction from consumer to bank. Thus, keeping a bank account open simply for some reward/loyalty points may just be changing your behavior for the wrong reasons. The more important scenario is whether or not you have any automated ACH payments or whether your bank account is linked to other services. Perhaps the biggest tell that you're in the clear is when those transactions start occurring from your credit union account. For example: If you had a direct deposit to your BMO bank account, make sure you see deposits start to appear in the credit union account. If you're making automatic withdraws to an online savings or brokerage account, make sure those transfers are stopped and that you instead see them coming out of your new credit union account. You shouldn't need to move the auto loan, but you will need to make sure you can pay it from the new account. Some financial advisors, such as in this BankRate article titled, Lenders can tap bank account for mortgage, even recommend keeping liabilities and assets at different locations. If for whatever reason your financial situation turned bleak, it would be more difficult for the bank to help itself to what's in your checking account. To avoid getting nickel and dimed to death by "payment processing fees", I tend to pay insurance bills yearly or semi-annually. Thus, consider if there is anything that may be coming due in the next 6 months. If so, you might want to get your new account hooked up while you still have all the routing numbers and account numbers in your head. It's a pain to dig this stuff up while also rushing to not be late. If all that is in order, close the account. |
Does an index have a currency? | In practice, most (maybe all) stock indices are constructed by taking a weighted average of stock prices denominated in a single currency, and so the index implicitly does have that currency - as you suggest, US dollars for the S&P 500. In principle you can buy one "unit" of the S&P 500 for $2,132.98 or whatever by buying an appropriate quantity of each of its constituent stocks. Also, in a more realistic scenario where you buy an index via a tracker fund, you would typically need to buy using the underlying currency of the index and your returns will be relative to that currency - if the index goes up by 10%, your original investment in dollars is up by 10%. |
Since many brokers disallow investors from shorting sub-$5 stocks, why don't all companies split their stock until it is sub-$5 | Vitalik has mentioned this in a comment but I think it ought to be expanded upon: Companies that aren't already penny stocks really don't stand to gain anything from trying to prevent short interest. Short selling does not inherently lower the stock price - not any more so than any other kind of selling. When somebody shorts a stock, it's simply borrowed from another investor's margin; as long as it's not a naked short resulting in an FTD (Failure To Deliver) then it does not add any "artificial" selling pressure. In fact, shorting can actually drive the price up in the long term due to stops and margin calls. Not a guarantee, of course, but if a rally occurs then a high short interest can cause a cascade effect from the short "squeeze", resulting in an even bigger rally than what would have occurred with zero short interest. Many investors actually treat a high short interest as a bullish signal. Compare with margin buying - essentially the opposite of short selling - which has the opposite effect. If investors buy stocks on margin, then if the value of that stock decreases too rapidly they will be forced to sell, which can cause the exact same cascade effect as a short interest but in the opposite direction. Shorting is (in a sense) evening out the odds by inflating the buying pressure at lower stock prices when the borrowers decide to cover and take profits. Bottom line is that, aside from (illegal) insider trading, it doesn't do businesses any good to try to manipulate their stock price or any trading activity. Yes, a company can raise capital by selling additional common shares, but a split really has no effect on the amount of capital they'd be able to raise because it doesn't change the actual market cap, and a dilution is a dilution regardless of the current stock price. If a company's market cap is $1 billion then it doesn't matter if they issue 1 million shares at $50.00 each or 10 million shares at $5.00 each; either way it nets them $50 million from the sale and causes a 5% dilution, to which the market will react accordingly. They don't do it because there'd be no point. |
Hiring freelancers and taxes | You need to clarify with Bob what your agreement is. If you and Bob are working together on these jobs as partners, you should get a written partnership agreement done by a lawyer who works with software industry entity formation. You can legally be considered a partnership if you are operating a business together, even if there is nothing in writing. The partnership will have its own tax return, and you each will be allocated 50% of the profits/losses (if that's what you agree to). This amount will be reported on your own individual 1040 as self-employment income. Since you have now lost all the expense deductions you would have taken on your Schedule C, and any home office deduction, it's a good idea to put language in the partnership agreement stating that the partnership will reimburse partners for their out-of-pocket expenses. If Bob is just hiring you as a contractor, you give him your SSN, and he issues you a 1099, like any other client. This should be a situation where you invoice him for the amount you are charging. Same thing with Joe - figure out if you're hiring him as an independent contractor, or if you have a partnership. Either way, you will owe income and self-employment tax on your profits. In the case of a partnership, the amount will be on the K-1 from the partnership return. For an independent contractor who's operating as a sole proprietor, you report the income you invoiced for and received, and deduct your expenses, including independent contractors that you hired, on your Schedule C. Talk to your tax guy about quarterly estimated payments. If you don't have a tax guy, go get one. Find somebody people in your city working in your industry recommend. A good tax person will save you more money than they cost. IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law. |
How to protect your parents if they never paid Social Security? | I am unsympathetic. His mother made a conscious choice to evade taxes that would have provided her with at least a minimal security when she was too old to work. First while as business owner she should have been paying self employment tax on the income they made through the restaurant and his other merchant activities. Second while working in her own career selling Mary Kay and side work she should have paid her taxes on her income from that. There is a part of me that says good on you for getting by with out getting caught. But her ultimate failure was to plan for her future. She should have known she would be ineligible for SSI and saved for her retirement. Instead she choose to spend her money while benefiting from the government services that the rest of us pay taxes for. Now we will provide her with medicaid as well as welfare benefits. She has placed her son in the unenviable situation of having to either provide for his mother because she failed to do the minimum planning for herself or turn his back on her. He might be able to find a sympathetic prosecutor who would prosecute her for tax evasion. The government would take care of her needs(food and housing) and she would get her medical care taken care of. He could also move to Alaska. The oil industry provide residents of Alaska with a stipend, there is lots of work for people willing to work hard, and the compensation for that work is pretty good and would likely put him in a position where he is able to provide care for his mother. |
What is the “Short sale circuit breaker rule”? | Summary: The phrase "short sale circuit breaker" rule normally refers to the SEC's recent adoption of a new version of the uptick rule. The new uptick rule triggers a ban on short selling when the stock drops a certain amount. The SEC defines the process like this: The "circuit breaker" is triggered for a security any day the price declines by 10% or more from the prior day's closing price The alternative uptick rule, which permits short selling only "if the price of the security is above the current national best bid."1 The rule applies "to short sale orders in that security for the remainder of the day as well as the following day." In general, the rule applies to all equities. 1) The national best bid is usually the bid price that you see in Level 1 data. Example: If a stock closed at $100/share on Monday, the "circuit breaker" would be triggered if the stock traded at or below $90/share during Tuesday's session. Short-selling would be disallowed until the start of trading on Thursday unless the short-sell price is above the national best bid, i.e. on an uptick. Purpose: The stated purpose of this rule is promote market stability and preserve investor confidence by restricting potentially abusive short selling from driving prices farther downward during periods of increased volatility and downward price pressure. Whether or not such rules succeed is a matter of some debate, and the SEC removed similar uptick rules in 2006 because "they modestly reduce liquidity and do not appear necessary to prevent manipulation." Exceptions: There are a few exceptions to the uptick rule that mainly revolve around when the short sell order was placed or when the securities will be delivered. |
I received $1000 and was asked to send it back. How was this scam meant to work? | Most answers have concentrated on this being a scam, however, it is possible this is an innocent mistake. Australian bank account numbers do not have redundant digits to be used to validate an account number; all of the numbers are data and uniquely identify a bank and branch (the BSB number) and an account (the Account number). Computer check digits are not part of bank account numbers because bank account numbers pre-date computers. It is entirely possible that someone entering an incorrect number can, by chance, hit upon an existing account. As the bank clearance system in Australia is entirely automatic there is no cross-checking of account numbers with account names. Internet banking in Australia is not a wire-transfer as is common in places like the USA (although these can be done): here you are effectively accessing your bank's "back office". Nor is it like the BPay service which is used primarily by B to C businesses as a way for their customers to pay their bills; when using this service the biller code will show you who you are paying and the customer number does have check digit validation. I run a business in Australia and it has happened to us on several occasions than an employee or supplier has given us incorrect numbers. Usually, it is not a real account and after a week or so the money makes its way back to us with a message like NO ACCOUNT or A/C CLOSED. Very occasionally, however, the wrong number hits a live account: when that happens the person who f*&ked up needs to contact their bank and try and get the transaction reversed. If there is money in the destination account this usually happens with little fuss, however, if the destination account has been closed or emptied things get problematic. Of course, taking money that isn't yours is stealing even if it happens to be sitting in your bank account. However, unless the sum involved is significant the police are usually not interested in diverting their attention away from "serious" crimes like homicide, armed robbery and terrorism so the aggrieved party is usually on their own. That said, this is probably a scam because they called you rather than your bank doing so. They cannot get your phone number from your account number: they have to know who you are and what your account number is. This is not as hard to do as it sounds since both your name and account number are prominently printed on your cheques and deposit books (possibly your phone number as well which saves them looking it up in the White Pages). |
How do I explain why debt on debt is bad to my brother? | The key idea he should focus on is that every debt includes interest - the money he didn't borrow, but now owes. The interest goes straight to the lender pocket and the debtor has to get money somewhere for that interest. That's the key reason of why getting another loan only increases pressure on the debtor - with the new loan he owes new interest in addition to what he already owed. |
What assets would be valuable in a post-apocalyptic scenario? | Bullets, canned goods, and farm supplies that don't need gas (e.g. seed, feed, plows). |
How might trading volume affect future share price? | There is no direct relationship between volume and stock price. High volume indicates how much stock is changing hands. That can be because people are enthusiastically buying OR enthusiastically selling... and their reasons for doing so may not agree with your own sense of the future value of the stock. Higher volume may mean that the price is more likely to change during the day, but it can be in either direction -- or in no direction at all if there isn't a general agreement on how to react to some piece of news. It's a possibly interesting datum, but it means nothing in isolation. |
How do I go about finding an honest & ethical financial advisor? | Most individuals do not need a personal financial advisor. If you are soon entering the world of work, your discretionary investments should be focused on index funds that you commit to over the long run. Indeed, the best advice I would give to anyone just starting out would be: For most average young workers, a financial advisor will just give you some version of the information above, but will change you for it. I would not recommend a financial advisor as a necessity until you have seriously complicated taxes. Your taxes will not be complicated. Save your money. |
MasterCard won't disclose who leaked my credit card details | File a John Doe lawsuit, "plaintiff to be determined", and then subpoena the relevant information from Mastercard. John Doe doesn't countersue, so you're pretty safe doing this. But it probably won't work. Mastercard would quash your subpoena. They will claim that you lack standing to sue anyone because you did not take a loss (which is a fair point). They are after the people doing the hacking, and the security gaps which make the hacking possible. And how those gaps arise among businesses just trying to do their best. It's a hard problem. And I've done the abuse wars professionally. OpSec is a big deal. You simply cannot reveal your methods or even much of your findings, because that will expose too much of your detection method. The ugly fact is, the bad guys are not that far from winning, and catching them depends on them unwisely using the same known techniques over and over. When you get a truly novel technique, it costs a fortune in engineering time to unravel what they did and build defenses against it. If maybe 1% of attacks are this, it is manageable, but if it were 10%, you simply cannot staff an enforcement arm big enough - the trained staff don't exist to hire (unless you steal them from Visa, Amex, etc.) So as much as you'd like to tell the public, believe me, I'd like to get some credit for what I've done -- they just can't say much or they educate the bad guys, and then have a much tougher problem later. Sorry! I know how frustrating it is! The credit card companies hammered out PCI-DSS (Payment Card Industry Data Security Standards). This is a basic set of security rules and practices which should make hacking unlikely. Compliance is achievable (not easy), and if you do it, you're off the hook. That is one way Amy can be entirely not at fault. Example deleted for length, but as a small business, you just can't be a PCI security expert. You rely on the commitments of others to do a good job, like your bank and merchant account salesman. There are so many ways this can go wrong that just aren't your fault. As to the notion of saying "it affected Amy's customers but it was Doofus the contractor's fault", that doesn't work, the Internet lynch mob won't hear the details and will kill Amy's business. Then she's suing Mastercard for false light, a type of defamtion there the facts are true but are framed falsely. And defamation has much more serious consequences in Europe. Anyway, even a business not at fault has to pay for a PCI-DSS audit. A business at fault has lots more problems, at the very least paying $50-90 per customer to replace their cards. The simple fact is 80% of businesses in this situation go bankrupt at this point. Usually fraudsters make automated attacks using scripts they got from others. Only a few dozen attacks (on sites) succeed, and then they use other scripts to intercept payment data, which is all they want. They are cookie cutter scripts, and aren't customized for each site, and can't go after whatever personal data is particular to that site. So in most cases all they get is payment data. It's also likely that primary data, like a cloud drive, photo collection or medical records, are kept in completely separate systems with separate security, unlikely to hack both at once even if the hacker is willing to put lots and lots of engineering effort into it. Most hackers are script kiddies, able to run scripts others provided but unable to hack on their own. So it's likely that "none was leaked" is the reason they didn't give notification of private information leakage. Lastly, they can't get what you didn't upload. Site hacking is a well known phenomenon. A person who is concerned with privacy is cautious to not put things online that are too risky. It's also possible that this is blind guesswork on the part of Visa/MC, and they haven't positively identified any particular merchant, but are replacing your cards out of an abundance of caution. |
Friend was brainwashed by MLM-/ponzi investment scam. What can I do? | Chances are high your friend isn't in it for the money, but the community or some vague dream of having a future income-generating side business because he can't get a loan for a 7-11 franchise. I run a few successful online businesses and had an import/export so naturally I run into these guys looking for advice on selling their MLM wares easier. I always point out they can make a lot of money cutting out the middle man MLM distributor and buy the same products from eBay or the same local supplier the MLM uses for a fraction of costs...then collect all the profit sans kickbacks to their host MLM goon/sponsor/father. I've never had anyone that bailed on the MLM, but I could see their eyes gloss over after they realized their own middle man is holding them back from making a lot of money (assuming they could offload that stuff). People actually in it for the money tend to bail (better sales job exist, MLM dreams don't pay rent, etc.) so you'll probably just need to isolate your friend from these losers somehow. You could investigate his sponsor and find out how much money he's actually making....if he tells your friend he's rich, but you find out he lives in the slums with his mom, your friend might bail on friendship/association with the group out of sheer disgust. It's the friends, not the logic you need to attack. His MLM friends would consider it a betrayal if he left them so you need to show him it's the MLM group that's betrayed his friendship. Point out all the long-term members driving junky cars to events who brag about their $$$. Laugh at the piss poor finance credentials of the local group leaders....ask where the investor perks are and suggest the sponsor/leaders are just hording them. Point out that he's a success and the fellow team members are just milking him to prop up their failing investments/sales/recruitment numbers. Nobody wants to let a team down....but the team isn't good enough for him. Deep down he knows the logic is questionable or at least risky/improbable, but his faith in the good intentions of his MLM cohorts is high.....crush that faith and all he's left with is bad finance tips or cheap protein shakes. |
Is the Investopedia simulator an accurate representation of real stock trading? | Using any simulator will never be exactly the same as real trading. One reason is that a simulator will always execute your trades at the exact price you want, but that may not always happen in real life. For example, if you place a limit order to buy 1000 shares of a stock at 10.50, and the price drops down to exactly 10.50, then the simulator will execute your trade and you will have 1000 shares at 10.50. But in real life, the price of the stock may drop to 10.50, but other people may have buy orders ahead of you. If the price of the stock drops to 10.50 but then starts going up again, you may not get all the shares that you wanted (or you may not even get any shares at all) due to the fact that people were ahead of you. In real trading there is also slippage, which you don't see in a simulator. For example, if you have a stop order to sell 1000 shares of a stock if it drops to 7.50, then the simulator will sell all 1000 shares at 7.50 if the price drops to 7.50. But in real trading, if the price drops to 7.50, then you may not be able to sell all 1000 shares at 7.50 if there's not enough liquidity or the market is moving very fast. You may end up selling 100 shares at 7.50, 100 shares at 7.49, 100 shares at 7.48, 50 shares at 7.47, 50 shares at 7.46, 200 shares at 7.45, and 400 shares at 7.44. Another thing is that you don't experience the emotional aspect of trading with a simulator. If you buy a stock in a simulator and it goes down, it's not real money, so you may be more willing to hold it and wait for it to come back up. But if you are trading real money and the stock goes down, you may not be so willing to hold if it goes down. You may be more apt to sell the stock for a small loss before the loss gets too big. |
A-B-C Class Shares: What's the difference? | Classes of shares are not necessarily standardized. Some share classes have preference above others in the event of a liquidation. Some share classes represent a different proportion of ownership interest. Any time you see multiple share classes, you need to research what is different for that specific corporation. |
How will a limit order be executed when the stock market opens if there is a large change from the price of the day before? | The next day the market opens trading at 10.50, You haven't specified whether you limit order for $10.10 is to buy or sell. When the trading opens next day, it follows the same process of matching the orders. So if you have put a limit order to buy at $10.10 and there is no sell order at that price, your trade will not go through. If you have placed a limit sell order at $10.10 and there is a buyer at or higher price, it would go through. The Open price is the price of the first trade of the day. |
Snowball debt or pay off a large amount? | My advice: IMO, all things being somewhat equal, you should always try to retire debts as quickly as possible in most cases, so start with the small cases. The method of calculating credit card interest is written on the statement. Usually it is "average daily balance method". Don't sweat the details. Just pay the things off. |
Offered a job: Should I go as consultant / independent contractor, or employee? | Your comment to James is telling and can help us lead you in the right direction: My work and lifestyle will be the same either way, as I said. This is all about how it goes "on the books." [emphasis mine] As an independent consultant myself, when I hear something like "the work will be the same either way", I think: "Here thar be dragons!". Let me explain: If you go the independent contractor route, then you better act like one. The IRS (and the CRA, for Canadians) doesn't take lightly to people claiming to be independent contractors when they operate in fact like employees. Since you're not going to be behaving any different whether you are an employee or a contractor, (and assuming you'll be acting more like an employee, i.e. exclusive, etc.), then the IRS may later make a determination that you are in fact an employee, even if you choose to go "on the books" as an independent contractor. If that happens, then you may find yourself retroactively denied many tax benefits you'd have claimed; and owe penalties and interest too. Furthermore, your employer may be liable for additional withholding taxes, benefits, etc. after such a finding. So for those reasons, you should consider being an employee. You will avoid the potential headache I outlined above, as well as the additional paperwork etc. of being a contractor. If on the other hand you had said you wanted to maintain some flexibility to moonlight with other clients, build your own product on the side, choose what projects you work on (or don't), maybe hire subcontractors, etc. then I'd have supported the independent contractor idea. But, just on the basis of the tax characteristics only I'd say forget about it. On the financial side, I can tell you that I wouldn't have become a consultant if not for the ability to make more money in gross terms (i.e. before tax and expenses.) That is: your top line revenues ought to be higher in order to be able to offset many of the additional expenses you'd incur as an independent. IMHO, the tax benefits alone wouldn't make up for the difference. One final thing to look at is Form SS-8 mentioned at the IRS link below. If you're not sure what status to choose, the IRS can actually help you. But be prepared to wait... and wait... :-/ Additional Resources: |
Including the region where you live in your investment portfolio? | The problem is aggregating information from so many sources, countries, and economies. You are probably more aware of local laws, local tax changes, local economic performance, etc, so it makes sense that you'd be more in tune with your own country. If your intent is to be fully diversified, then buy a total world fund. A lot of hedge funds do what you are suggesting, but I think it requires either some serious math or some serious research. Note: I'm invested in emerging markets (EEM) for exactly the reason you suggest... diversification. |
High credit utilization, some high interest - but credit score not overly bad. How to attack debt in this situation? | While paying off your debt quickly is obviously desirable it is simply not going to be possible. Even with tight budgeting I think you will struggle to put more than £500 or so per month towards your debt. I would keep trying to move the highest interest debt onto something cheaper, be it a loan, a balance transfer credit card ( http://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards#nofees ) etc. It is also worth looking at your current credit cards more carefully. Sometimes you may be able to get a balance transfer deal on an existing card by talking to the card issuer, then shuffle your debt around to take advantage of it ( http://www.moneysavingexpert.com/credit-cards/cut-credit-card-interest ) Some think it's taboo but in your position I would also be seriously considering if you have any friends and family who can lend you money at a less crippling interest rate. |
How to file income tax returns for profits from ESPP stock? | Consult a professional CA. For shares sold outside the Indian Stock Exchanges, these will be treated as normal Long Term Capital Gains if held more than one year. The rate would be 10% without Indexation and 20% with Indexation. If the stocks are held for less than 1 years, it will be short term gains and taxed according you to tax bracket. |
why would someone buy or sell just a few shares in stocks | I buy or sell a few shares whenever I have a small amount of money to transfer into out of my mutual funds. Since I'm not paying transaction fees, there is no reason not to, when that is what makes sense. If you are paying a fee for each transaction, of course it makes sense to try to wait until you have a larger amount to move so the overhead per share is lower. |
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