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Are capitalization rate and net profit margin the same thing?
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Both of these terms do refer to your profit; they're just different ways of evaluating it. First, your definition of capitalization rate is flipped. As explained here, it should be: On the other hand, as explained here: So cap rate is like a reverse unit cost approach to comparing two investments. If house A costs $1M and you'll make $50K (profit) from it yearly, and house B costs $1.33M and you'll make $65K (profit) from it yearly, then you can compute cap rates to see that A is a more efficient investment from the point of view of income vs. amount-of-money-you-have-stuck-in-this-investment-and-unavailable-for-use-elsewhere. Profit margin, on the other hand, cares more about your ongoing expenses than about your total investment. If it costs less to maintain property B than it does to maintain property A, then you could have something like: So B is a more efficient investment from the point of view of the fraction of your revenue you actually get to keep each year. Certainly you could think of the property's value as an opportunity cost and factor that into the net profit margin equation to get a more robust estimate of exactly how efficient your investment is. You can keep piling more factors into the equation until you've accounted for every possible facet of your investment. This is what accountants and economists spend their days doing. :-)
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Is This Money Laundering?
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or is this a form of money laundering? May not be, generally the amounts involved in money laundering are much higher. So if there are quite a few such transactions then yes it could be money laundering. It could also be for circumventing taxes, depending on country regulations one may try to do this to get around gift taxes etc. In this specific case it looks more of link harvesting / SEO optimization. Take a low cost item that is often searched and link to other product. if you see the company link on Amazon; Cougar takes you to shoes. So maybe on its own Cougar shoes does not rank high, so link it with similar name brand in different segment and try to boost the link.
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Lowest Interest Options for Short-Term Loan
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Also talk to your bank(s) or credit union(s); first one of mine I looked at offers an unsecured loan at 7% variable, and a signature loan at 7.5% fixed, no hidden costs on either. You might do better. Also check store credit. Sears used to offer 1-year-0% financing on appliances if you signed up for the store's card at the time of purchase, and if you have the discipline to reliably pay it off before interest hits that's a hard deal to best. Other stores have offered something similar for major purchases of this sort; do some homework to find out who. (I bought my fridge that way, paying it in month 10.) The "catch" is that many people get distracted and do wind up paying interest, and the store hopes that having an account with them will encourage you to shop there more often.)
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How do you determine “excess cash” for Enterprise Value calculations from a balance sheet?
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Excess Cash = Cash & Equivalents + Long-Term Investments - Current Liabilities The problem this calculation of excess cash is that "long-term investments" can be illiquid things like real estate. Another flaw is that it gives no credit for Current Assets, like receivables, which can be used to offset Current Liabilities. The first thing I'd do is "net out" Current Assets and Current Liabilities, then add Cash back in. Excess Cash = Current Assets - Current Liabilities + Cash & Equivalents. It would be nice if GAAP would require Long-Term Investments to be broken out as a) liquid long-term investments (stocks, bonds) b) illiquid long-term investments (real estate, private equity, etc)
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Electric car lease or buy?
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The good news about maintenance is that there's much less scheduled maintenance because the cars are mechanically much simpler. See the official service schedule. Most of it is just "rotate tires / replace cabin air filter". The brake and suspension systems are very similar to those of a normal car and require comparable maintenance. The bad news is the battery will decay over time and is a major component of the cost of the car. From that link: In the UK, the LEAF’s standard battery capacity loss warranty is for 60,000 miles or five years So you should factor your warrantied battery lifetime into the depreciation calculation. I don't think there are going to be many ten- or twenty- year old electric cars from the current crop in 2030 or 2040 as they're still improving dramatically year-on-year. (Slightly too long for a comment, slightly too short for a proper answer)
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Buy index mutual fund or build my own?
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There are only three circumstances where building your own "index" portfolio make sense, in my opinion.
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When I sell an OTC stock, do I have to check the volume of my sale in order to avoid an NSCC illiquid charge?
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It's not enough just to check if your order doesn't exceed 10% of the 20 day average volume. I'll quote from my last answer about NSCC illiquid charges: You may still be assessed a fee for trading OTC stocks even if your account doesn't meet the criteria because these restrictions are applied at the level of the clearing firm, not the individual client. This means that if other investors with your broker, or even at another broker that happens to use the same clearing firm, purchase more than 5 million shares in an individual OTC stock at the same time, all of your accounts may face fees, even though individually, you don't exceed the limits. The NSCC issues a charge to the clearing firm if in aggregate, their orders exceed the limits, and the clearing firm usually passes these charges on to the broker(s) that placed the orders. Your broker may or may not pass the charges through to you; they may simply charge you significantly higher commissions for trading OTC securities and use those to cover the charges. Since checking how the volume of your orders compares to the average past volume, ask your broker about their policies on trading OTC stocks. They may tell you that you won't face illiquid charges because the higher cost of commissions covers these, or they may give you specifics on how to verify that your orders won't incur such charges. Only your broker can answer this with certainty.
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Why can't the Fed lower interest rates below zero?
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Keep in mind that the Federal Reserve Chairman needs to be very careful with his use of words. Here's what he said: It is arguable that interest rates are too high, that they are being constrained by the fact that interest rates can't go below zero. We have an economy where demand falls far short of the capacity of the economy to produce. We have an economy where the amount of investment in durable goods spending is far less than the capacity of the economy to produce. That suggests that interest rates in some sense should be lower rather than higher. We can't make interest rates lower, of course. (They) only can go down to zero. And again I would argue that a healthy economy with good returns is the best way to get returns to savers. So what does that mean? When he says that "we can't make interest rates lower", that doesn't mean that it isn't possible. He's saying that our demand for goods is lower than our ability to produce them. Negative interest would actually make that problem worse -- if I know that things will cost less in a month, I'm not going to buy anything. The Fed is incentivizing spending by lowering the cost of capital to zero. By continuing this policy, they are eventually going to bring on inflation, which will reduce the value of the currency -- which gives people and companies that are sitting on money an dis-incentive to continue hoarding it.
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How to protect your parents if they never paid Social Security?
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Wow. She really is in a pickle. Even though I can intellectualize that she ought have paid more attention to her family's finances, and assuming she wasn't complicit in her husband's obvious tax evasion, I can sympathize to some extent. This is a great demonstration of how dangerous it is to just let your spouse handle all the finances because they understand the money stuff. Even if they pay the bills you should have at least a fundamental understanding of the taxes being paid, estate and retirement plans. So here's some practical advice based on the hole she has dug for herself:
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Can a buy market order be matched with a sell market order in Forex trading?
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Based on my research while asking How are unmarketable market orders (other side of the order book is empty) matched with incoming orders? and the one answer there, it seems like there are a few things for certain: All of this of course depends on the exact algorithm specified by the given exchange - I don't think there's a standard here.
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Mexican Index Mutual Funds
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The recommendations you read were, very probably, talking about US listed funds in US dollars. The mexican Bolsa de Valores says that they list over 600 mutual funds so "Yes" you can invest in Mexico using Pesos if that is what you want. You need a Corredor de Bolsa or mexico broker. Here they are. Most international investors use exchange traded funds ETF because theirs fees are cheaper than mutual funds. The ETF are mostly listed and traded in us stock exchange. Here they are. US mutual funds are in dollars and, because you are living in Mexico, you will have a currency risk and probably taxes. Mexico mutual funds in Pesos do not carry any currency exposure unless the companies involved do business in the United States. You have to think about your currency exposure. B. Veo
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What to bear in mind when considering a rental home as an investment?
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Here would be the big two you don't mention: Time - How much of your own time are you prepared to commit to this? Are you going to find tenants, handle calls if something breaks down, and other possible miscellaneous issues that may arise with the property? Are you prepared to spend money on possible renovations and other maintenance on the property that may occur from time to time? Financial costs - You don't mention anything about insurance or taxes, as in property taxes since most municipalities need funds that would come from the owner of the home, that would be a couple of other costs to note in having real estate holdings as if something big happens are you expecting a government bailout automatically? If you chose to use a property management company for dealing with most issues then be aware of how much cash flow could be impacted here. Are you prepared to have an account to properly do the books for your company that will hold the property or would you be doing this as an individual without any corporate structure? Do you have lease agreements printed up or would you need someone to provide these for you?
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Should I overpay to end a fixed-rate mortgage early? [duplicate]
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The simplest argument for overpayment is this: Let's suppose your fixed rate mortgage has an interest rate of 4.00%. Every £1 you can afford to overpay gives you a guaranteed effective return of 4.00% gross. Yes your monthly mortgage payment will stay the same; however, the proportion of it that's paying off interest every month will be less, and the amount that's actually going into acquiring the bricks and mortar of your home will be greater. So in a sense your returns are "inverted" i.e. because every £1 you overpay is £1 you don't need to keep paying 4% a year to continue borrowing. In your case this return will be locked away for a few more years, until you can remortgage the property. However, compared to some other things you could do with your excess £1s, this is a very generous and safe return that is well above the average rate of UK inflation for the past ten years. Let's compare that to some other options for your extra £1s: Cash savings: The most competitive rate I can currently find for instant access is 1.63% from ICICI. If you are prepared to lock your money away until March 2020, Melton Mowbray Building Society has a fixed rate bond that will pay you 2.60% gross. On these accounts you pay income tax at your marginal rate on any interest received. For a basic rate taxpayer that's 20%. If you're a higher rate taxpayer that means 40% of this interest is deducted as tax. In other words: assuming you pay income tax at one of these rates, to get an effective return of 4.00% on cash savings you'd have to find an account paying: Cash ISAs: these accounts are tax sheltered, so the income tax equation isn't an issue. However, the best rate I can find on a 4 year fixed rate cash ISA is 2.35% from Leeds Building Society. As you can see, it's a long way below the returns you can get from overpaying. To find returns such as that you would have to take a lot more risk with your money – for example: Stock market investments: For example, an index fund tracking the FTSE 100 (UK-listed blue chip companies) could have given you a total return of 3.62% over the last 3 years (past performance does not equal future returns). Over a longer time period this return should be better – historical performance suggests somewhere between 5 to 6% is the norm. But take a closer look and you'll see that over the last six months of 2015 this fund had a negative return of 6.11%, i.e. for a time you'd have been losing money. How would you feel about that kind of volatility? In conclusion: I understand your frustration at having locked in to a long term fixed rate (effectively insuring against rates going up), then seeing rates stay low for longer than most commentators thought. However, overpaying your mortgage is one way you can turn this situation into a pretty good deal for yourself – a 4% guaranteed return is one that most cash savers would envy. In response to comments, I've uploaded a spreadsheet that I hope will make the numbers clearer. I've used an example of owing £100k over 25 years at an unvarying 4% interest, and shown the scenarios with and without making a £100/month voluntary overpayment, assuming your lender allows this. Here's the sheet: https://www.scribd.com/doc/294640994/Mortgage-Amortization-Sheet-Mortgage-Overpayment-Comparison After one year you have made £1,200 in overpayments. You now owe £1,222.25 less than if you hadn't overpaid. After five years you owe £6,629 less on your mortgage, having overpaid in £6,000 so far. Should you remortgage at this point that £629 is your return so far, and you also have £6k more equity in the property. If you keep going: After 65 months you are paying more capital than interest out of your monthly payment. This takes until 93 months without overpayments. In total, if you keep up £100/month overpayment, you pay £15,533 less interest overall, and end your mortgage six years early. You can play with the spreadsheet inputs to see the effect of different overpayment amounts. Hope this helps.
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Facebook buying WhatsApp for 19 Billion. How are existing shareholders affected?
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isn't it still a dilution of existing share holder stock value ? Whether this is dilution or benefit, only time will tell. The Existing value of Facebook is P, the anticipated value after Watsapp is P+Q ... it may go up or go down depending on whether it turns out to be the right decision. Plus if Facebook hadn't bought Watsapp and someone else may have bought and Facebook itself would have got diluted, just like Google Shadowed Microsoft and Facebook shadowed Google ... There are regulations in place to ensure that there is no diversion of funds and shady deals where only the management profits and others are at loss. Edit to littleadv's comments: If a company A is owned by 10 people for $ 10 with total value $100, each has 10% of the share in the said company. Now if a Company B is acquired again 10 ea with total value 100. In percentage terms everyone now owns 5% of the new combined company C. He still owns $10 worth. Just after this acquisition or some time later ...
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I gave an incorrect account number to pay my income taxes
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They will not send a bill, though there's a chance they will eventually send an accusatory letter. You must proactively pay your taxes. The simplest route is to send a check to each taxing authority with the respective full amounts due. I wouldn't bother calling them. You could also file amended returns with each containing the correct information. As a general rule, tax advisors tend to counsel against giving bank account information to the IRS for payment purposes (as opposed to refund purposes), both to protect the timing of payment and to make it slightly more difficult for them to seize or lien your account. If you choose to send a check, you can use Form 1040-V and NY Form IT-201-V. Please triple check your Social Security Number matches your tax return SSN, so they correctly credit you for payment. You may include an explanation of the closed account if you are feeling either fearful or contrite, but if the amount due is paid in full, then neither taxing authority should really care about your error.
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How can I determine how much my car insurance will cost me?
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Insurance rates are based on statistics manipulated by experts in actuarial "science". Actuaries look at how many times different makes and models get into accidents or are targeted by thieves, and how expensive it is to repair them. Many auto and finance sites will publish lists of the best and worst insurance risks. Family style cars like minivans and family sedans fair well, while sports cars get more expensive insurance. New models will get the risk of similar models until there is statistical data on them. One other take away from this discussion is that inexpensive insurance usually coincides with cheap repair costs, lowering your total cost of operation for your vehicle.
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Why won't my retirement account let me write a “covered put”?
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A broker does not have to allow the full trading suite the regulations permit. From brokersXpress: Do you allow equity and index options trading in brokersXpress IRAs? Yes, we allow trading of equity and index options in IRAs based on the trading level assigned to an investor. Trading in IRAs includes call buying, put buying, cash-secured put writing, spreads, and covered calls. I understand OptionsXpress.com offers the same level of trading. Disclosure - I have a Schwab account and am limited in what's permitted just as your broker does. The trade you want is no more risky that a limit (buy) order, only someone is paying you to extend that order for a fixed time. The real answer is to ask the broker. If you really want that level of trading, you might want to change to one that permits it.
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Are there any viable alternatives to Paypal for a small site?
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I found out about Google checkout today, it looks like it may meet my needs, but I'd still be interested to find out about other options.
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Opportunity to buy Illinois bonds that can never default?
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Can't declare bankruptcy isn't the same as "can't default". Bankruptcy is a specific legal process for discharging or restructuring debts. If Illinois can't declare bankruptcy, that means it will still owe you the money for the bonds no matter what, but it doesn't guarantee that it will actually pay you what it owes. If Illinois should run out of money to pay what's due on its bonds, then it will default. Unlike the federal government, Illinois can't print money to make the payments.
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Can I profit from anticipating a drop in value?
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Purchasing an option to sell the stock is probably the safest bet. This gives you reasonable leverage, and your risk is limited to the cost of the option. Say the stock currently sells for $100 per share. You think it will drop to $80 per share in the next two weeks and the market thinks the price will be stable. Now, consider an option to sell one share of that stock for $95 any time within the next two weeks. The market would consider that option nearly worthless, since in all likelihood, you would lose out by exercising it (since you could just sell the share on the market for a price expected to be higher than that). You might be able to acquire that option for $5. Now, say you're right and within two weeks, the price drops to $80. Now you can purchase a share for $80, exercise the option to sell it for $95, and pocket $15. That would make you a $10 profit on a $5 investment. If you're wrong, you just let the option lapse and are out $5. No problem. In reality, you would buy a number of such options. And you wouldn't actually buy a share and exercise the option, you would just sell the option back to its issuer for $15.
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Is buying a home a good idea?
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Buying a house may save you money compared with renting, depending on the area and specifics of the transaction (including the purchase price, interest rates, comparable rent, etc.). In addition, buying a house may provide you with intangibles that fit your lifestyle goals (permanence in a community, ability to renovate, pride of ownership, etc.). These factors have been discussed in other answers here and in other questions. However there is one other way I think potential home buyers should consider the financial impact of home ownership: Buying a house provides you with a natural 'hedge' against possible future changes in your cost of living. Assume the following: If these two items are true, then buying a home allows you to guarantee today that your monthly living expenses will be mostly* fixed, as long as you live in that community. In 2 years, if there is an explosion of new residents in your community and housing costs skyrocket - doesn't affect you, your mortgage payment [or if you paid cash, the lack of mortgage payment] is fixed. In 3 years, if there are 20 new apartment buildings built beside you and housing costs plummet - doesn't affect you, your mortgage payment is fixed. If you know that you want to live in a particular place 20 years from now, then buying a house in that area today may be a way of ensuring that you can afford to live there in the future. *Remember that while your mortgage payment will be fixed, other costs of home ownership will be variable. See below. You may or may not save money compared with rent over the period you live in your house, but by putting your money into a house, you have protected yourself against catastrophic rent increases. What is the cost of hedging yourself against this risk? (A) The known costs of ownership [closing costs on purchase, mortgage interest, property tax, condo fees, home insurance, etc.]; (B) The unknown costs of ownership [annual and periodic maintenance, closing costs on a future sale, etc.]; (C) The potential earnings lost on your down payment / mortgage principal payments [whether it is low-risk interest or higher risk equity]; (D) You may have reduced savings for a long period of time which would limit your ability to cover emergencies (such as medical costs, unexpected unemployment, etc.) (E) You may have a reduced ability to look for a better job based on being locked into a particular location (though I have assumed above that you want to live in a particular community for an extended period of time, that desire may change); and (F) You can't reap the benefits of a rental market that decreases in real dollars, if that happens in your market over time. In short, purchasing a home should be a lifestyle-motivated decision. It financially reduces some the fluctuation in your long-term living costs, with the trade-off of committed principal dollars and additional ownership risks including limited mobility.
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How should residents of smaller economies allocate their portfolio between domestic and foreign assets?
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We face the same issue here in Switzerland. My background: Institutional investment management, currency risk management. My thoughs are: Home Bias is the core concept of your quesiton. You will find many research papers on this topic. The main problems with a high home bias is that the investment universe in your small local investment market is usually geared toward your coutries large corporations. Lack of diversification: In your case: the ASX top 4 are all financials, actually banks, making up almost 25% of the index. I would expect the bond market to be similarly concentrated but I dont know. In a portfolio context, this is certainly a negative. Liquidity: A smaller economy obviously has less large corporations when compared globally (check wikipedia / List_of_public_corporations_by_market_capitalization) thereby offering lower liquidity and a smaller investment universe. Currency Risk: I like your point on not taking a stance on FX. This simplifies the task to find a hedge ratio that minimises portfolio volatility when investing internationally and dealing with currencies. For equities, you would usually find that a hedge ratio anywhere from 0-30% is effective and for bonds one that ranges from 80-100%. The reason is that in an equity portfolio, currency risk contributes less to overall volatility than in a bond portfolio. Therefore you will need to hedge less to achieve the lowest possible risk. Interestingly, from a global perspective, we find, that the AUD is a special case whereby, if you hedge the AUD you actually increase total portfolio risk. Maybe it has to do with the AUD being used in carry trades a lot, but that is a wild guess. Hedged share classes: You could buy the currency hedged shared classes of investment funds to invest globally without taking currency risks. Be careful to read exactly what and how the share class implements its currency hedging though.
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What is the difference between a check and a paycheck?
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There is little difference. A paycheck is a type of check used to pay wages. These days many people opt for direct deposit. So, the term paycheck can also refer to the payment itself: 1: a check in payment of wages or salary 2: wages, salary http://www.merriam-webster.com/dictionary/paycheck
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What is the name of inverse of synergy? (finance)
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You could call it "multiple streams of income" a la Robert Allen and others. Or you could call it "Do once, sell many" or something like that.
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When should you use an actively managed mutual fund in a 401k?
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By definition, actively managed funds will underperform passive index funds as a whole. Or more specifically: The aggregate performance of all actively managed portfolio of publicly-tradable assets will have equal performance to those of passively managed portfolios. Which taken with premise two: Actively managed funds will charge higher fees than passively managed funds Results in: In general, lower-fee investment vehicles (e.g. passive index investments) with broad enough diversification to the desired risk exposure will outperform higher-fee options But don't take my wonkish approach, from a more practical perspective consider:
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Ghana scam and direct deposit scam?
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The scammer is definitely up to something fishy. He (it's certain that the she is a he) may deposit some money into your father's account to gain his trust. After which, he will propose to come meet your dad. That's where the scamming begins. He will come up with a story about flight, VISA issues, or a problem he has to solve before coming over. Another is that he can use your dad's empty account to receive monies he scammed off people. That way there's no direct link with him and his other victim.
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Why do some people say a house “not an investment”?
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When I purchased my house I struggled with this same idea. I felt sick to my stomach signing a contract stating how much money I now owe a bank. However, the lawyer I was using put it in terms that eased the nausea a little (I still hate owing that much money - but it's a little more palatable). His words, paraphrased: At the end of the day, you have to have a place to stay. Your mortgage payment is replacing your rent except in this case, you're paying yourself instead of someone else. You lose a little flexibility in being able to up and move with relative ease. However, you've lived in apartments, you know that rent almost only goes up. Your mortgage will not. He wrote out some numbers and basically showed that everything evened out except mortgage payments will give you property as opposed to paying for someone else's property. To answer your question though - others have already stated - you'll get a better return in the stock market (usually). But unless you're really really bad at real estate evaluation - you should make some money off your house when you decide to sell.
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When I ask a broker to buy stock, what does the broker do?
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My answer isn't a full one, but that's because I think the answer depends on, at minimum, the country your broker is in, the type of order you place (limit, market, algo, etc.,) and the size of your order. For example, I can tell from watching live rates on regular lot limit orders I place with my UK-based broker that they hold limit orders internally until they see a crossing rate on the exchange my requested stock is trading on, then they submit a limit order to that exchange. I only get filled from that one exchange and this happens noticeably after I see my limit price print, and my fills are always better than my limit price. Whereas with my US-based broker, I can see my regular lotsize limit order in the order book (depth of book data) prior to any fills. I will routinely be notified of a fill before I see the limit price print. And my fills come from any number of US exchanges (NYSE, ARCA, BATS, etc.) even for the same stock. I should point out that the "NBBO" rule in the US, under SEC regulation NMS, probably causes more complications in handling of market and limit orders than you're likely to find in most countries.
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Under specific conditions can I write off Spotify or other streaming audio services?
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Nice try. No. If you were in the music industry, you might have a case. Depending on the exact job, certain things related to music would be a business expense. I don't see how this would pass an audit as it really is unrelated to the work you do.
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What is the difference between “good debt” vs. “bad debt”?
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Here's what Suze Orman has to say about it: Good debt is money you borrow to purchase an asset, such as a home you can afford. History shows that home values generally rise in step with the inflation rate, so a mortgage is good debt. Student loans are, too, because they're an investment in the future. Census data pegs the average lifetime earnings of a high school graduate at a million dollars below that of someone with a bachelor's degree. Bad debt is money you borrow to buy a depreciating asset or to finance a "want" rather than a "need." A car is a depreciating asset; from the day you drive it off the lot, it starts losing value. Credit card balances or a home equity line of credit that's used to pay for indulgences—vacations, shopping, spa days—is bad debt.
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The spread goes to the market maker, is the market maker the exchange?
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A "market maker" is someone that is contractually bound, by the exchange, to provide both bid and ask prices for a given volume (e.g. 5000 shares). A single market maker usually covers many stocks, and a single stock is usually covered by many market makers. The NYSE has "specialists" that are market makers that also performed a few other roles in the management of trading for a stock, and usually a single issue on the NYSE is covered by only one market maker. Market makers are often middlemen between brokers (ignoring stuff like dark pools, and the fact that brokers will often trade stocks internally among their own clients before going to the exchange). Historically, the market makers gave up buy/sell discretion in exchange for being the "go-to guys" for anyone wanting to trade in that stock. When you told your broker to buy a stock for you, he didn't hook you up with another retail investor; he went to the market maker. Market makers would also sometimes find investors willing to step in when more liquidity was needed for a security. They were like other floor traders; they hung out on the exchange floors and interacted with traders to buy and sell stocks. Traders came to them when they wanted to buy one of the specialist's issues. There was no public order book; just ticker tape and a quote. It was up to the market maker to maintain that order book. Since they are effectively forbidden from being one-sided traders in a security, their profit comes from the bid-ask spread. Being the counter-party to almost every trade, they'd make profit from always selling above where they were buying. (Except when the price moved quickly -- the downside to this arrangement.) "The spread goes to the market maker" is just stating that the profit implicit in the spread gets consumed by the market maker. With the switch to ECNs, the role of the market maker has changed. For example, ForEx trading firms tend to act as market makers to their customers. On ECNs, the invisible, anonymous guy at the other end of most trades is often a market maker, still performing his traditional role. Yet brokers can interact directly with each other now, rather than relying on the market maker's book. With modern online investing and public order books, retail investors might even be trading directly with each other. Market makers are still out there; in part, they perform a service sold by an Exchange to the companies that choose to be listed on that exchange. That service has changed to helping tamp volatility during normal high-volatility periods (such as at open and close).
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How to acquire assets without buying them?
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Your question seems to be premised on your personal understanding of economics, and asking that people present to you an explanation of business transactions that is consistent with your own personal worldview. But your premises are flawed, so an accurate answer should not accept them. The basics of trade is that something is worth more to one person than another; a wheat farmer has more wheat that they could possibly eat, and so it has no value other than what they can get by selling it, while an accountant will starve if they do not have any food and thus is willing to pay what the market demands. The two parties can both be better off by having a transaction. The other motivation for transactions is that parties may disagree as to what something is worth; even if one party will lose from the transaction, they may both believe they will profit.
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How to approach building credit without a credit card
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One possible route is to try to have no credit. This is different than bad credit. If you build up a good downpayment (20%), a number of banks would do manual underwriting for you.
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Can I prove having savings without giving out the account number?
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Have you been rejected from a rental for a specific reason (leading to this question)? Landlords are in the business of exchanging space for regular payments with no drama. Anything they ask in an application should be something to minimize the risk of drama. The "happy path" optimistic goal is that you pay your rent by the due date every month. If your income is not sufficient for this, demonstrating you have assets and would be able to pay for the full term of the lease is part of the decision to enter into the lease with you. In the non-happy-path, say you fall off the face of the earth before ending the lease. The landlord could be owed several months of rent, and could pursue a legal judgment on your assets. With a court order, they can make the bank pay out what is owed; having bank information reduces the landlord's cost and research efforts in the event the story has degenerated to this point (in the jargon of landlording, this means the tenant is "collectable"). While of course you could have zeroed out your accounts or moved money to a bank you didn't tell the landlord in the meantime, if you are not the bad actor in this story, you probably wouldn't have. If you get any kind of "spidey-sense" about a landlord or property at all there is probably a better rental situation in your city. You also want to minimize drama. If the landlord is operating like a business, they're not in this to perform identity theft. If the landlord is sloppy, or has sloppy office workers, that would be different. In the event sharing your asset information truly bothers you, and the money is for rental expense anyway, you could offer to negotiate a 1 year prepaid rental (of course knock another 5%-10% off for time value of money and lower risk to landlord) if you're sure you wouldn't want to leave early.
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Advice on low-risk long-term strategy for extra cash?
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I can think of three things you might do: Talk to a fee-only adviser. As the comments suggest, this would only be one or two sessions to lay out what all you have, establish what you want it to do, and write a plan that you are comfortable carrying out yourself. What do your 401k and Roth IRA look like? If you mean for this money to be long-term, then your retirement portfolio might be a good place to start. I don't currently own them, but one of my personally hobby horses is I-Series Savings Bonds, commonly called I Bonds. Even in the current low interest rate environment, they are a good deal relative to everything else out there. I summarized this more fully in my answer to another question. You can invest up to $10,000 per SSN per year, and the interest rate is the sum of a fixed rate plus a floating rate based on CPI. Currently the fixed rate is 0%, but the floating rate is better than what you can get from most other cash-like instruments.
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60% Downpayment on house?
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If you decide you need the extra money, you can always go refinance and get more cash out. At the end of the day, though, if you pay off your house sooner you can invest more of your income sooner; that's just a matter of discipline.
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Why are bank transactions not instant?
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If you want your bank to pay $1 to a beneficiary Bob, then the service (no matter how implemented) needs to result in Bob's bank saying to Bob "Hey, I owe you $1". The usual way how this is done consists of two parts - your bank needs to somehow tell Bob's bank "hey guys, do us a favor and please give Bob $1 with a message from the sender", and your bank needs to convince the other bank that they'll pay for (cover) that. This is the main source for the delays in international payments - there are thousands of banks, and most of possible pairs have no legal contact between themselves whatsoever, no bilateral agreements, no trust and no reasonable enforcement mechanism for small claims. If I'm Bob's bank, then a random bank from anywhere from Switzerland to Nigeria can send me an instruction "give Bob $1, we'll make it up for you", the SWIFT network is a common way of doing this. However, most likely I'm going to give Bob the money only after I receive the funds somehow, which means that they have given the money to some institution I work with. For payments within a single country, it often is a centralized exchange or a central bank, and the payment speed is then determined by the details of that particular single payment network - e.g. UK Faster Payments or the various systems used in USA. For international payments, it may require a chain of multiple intermediaries (correspondent banks) - for example, a payment of $1mm from Kazakhstan to China will likely involve the Kazakhstan bank asking their main correspondent in USA (some major bank such as Chase JPMorgan) to give the money to the relevant chinese bank's correspondent in USA (say, Citi) to then give the money to that chinese bank to then give the money to the actual recipient. Each of those steps can happen because those entities have bilateral agreements, trust and accounts with each other; and each of those steps generally takes time and verification. If you want all payments to happen instantly, then you need all institutions to join a single binding payment system. It's not as easy as it sounds, as it is a nightmare of jurisdiction - for example, if you'd want me (as Bob's bank) to credit Bob instantly, then the system needs to provide solid guarantees that I would get paid even if (a) the payer institution changes its mind, made a mistake or intentional fraud; (b) the payer institution goes insolvent; (c) the system provider gets insolvent. Providing such guarantees is expensive, they need to be backed by multi-billion capital, and they're unrealistic to enforce across jurisdictions (e.g. would an Iranian bank get recourse if some funds got blocked because of USA sanctions). The biggest such project as far as I know is SEPA, across most of Europe. Visa and MasterCard networks perform the same function - a merchant gets paid by the CC network even if the payer can't pay his CC bill or the paying bank goes insolvent.
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Would I qualify for a USDA loan?
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You probably won't get a mortgage. UDSA has a 41% ratio of monthly debt to monthly income limit, and a score of 660 or better. A 250,000 mortgage at current rates for 30 year mortgage is about $1560/mo. (included in this figure is the 1% mortgage insurance premium, the .4% annual fee, the current rate for a 660 credit rating, the 2% points fee added at the front of the mortgage, typical closing cost added to transaction, and the .5% fee for over-mortgage insurance for the first 3 years since your mortgage will be higher than the value of the house due to these additional fees) Credit card payments = $120 ($60 times 2) Car payments = $542 ($271 for your car, $271 for the car you will be getting) Student loan = $50/month Child Support = $500/month Total = $2772/month Your income per month is 82000/12 = $6833/month $2772/$6833 = 40.6%... This is awfully close to the limit, so they likely would also look at your ability to save. Not seeing savings in the above example, I assume it is low. USDA site One mortgage help site breaks down some of the requirements into layman's language. Not knowing your exact location (county/state) and how many children you have, it is hard to be sure whether you make too much to qualify. This link shows the income limits by number of people in the house and the county/state. There are few places in which you could be living that would qualify you to any of their programs unless you have a several children. As others have posted, I suggest you get your debt down.
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What exactly can a financial advisor do for me, and is it worth the money?
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Technically, anyone who advises how you should spend or proportion your money is a financial adviser. A person that does it for money is a Financial Advisor (difference in spelling). Financial Advisors are people that basically build, manage, or advise on your portfolio. They have a little more institutional knowledge on how/where to invest, given your goals, since they do it on a daily basis. They may know a little more than you since, they deal with many different assets: stocks, ETFs, mutual funds, bonds, insurances (home/health/life), REITs, options, futures, LEAPS, etc. There is risk in everything you do, which is why what they propose is generally according to the risk-level you want to assume. Since you're younger, your risk level could be a little higher, as you approach retirement, your risk level will be lower. Risk level should be associated with how likely you're able to reacquire your assets if you lose it all as well as, your likelihood to enjoy the fruits from your investments. Financial Advisors are great, however, be careful about them. Some are payed on commissions, which are given money for investing in packages that they support. Basically, they could get paid $$ for putting you in a losing situation. Also be careful because some announce that they are fee-based - these advisers often receive fees as well as commissions. Basically, associate the term "commission" with "conflict-of-interest", so you want a fee-only Advisor, which isn't persuaded to steer you wrong. Another thing worth noting is that some trading companies (like e*trade) has financial services that may be free, depending how much money you have with them. Generally, $50K is on the lower end to get a Financial Advisors. There has been corruption in the past, where Financial Advisors are only given a limited number of accounts to manage, that means they took the lower-valued ones and basically ran them into the ground, so they could get newer ones from the lot that were hopefully worth more - the larger their portfolio, the more $$ they could make (higher fees or more commissions) and subjectively less work (less accounts to have to deal with), that's subjective, since the spread of the wealth was accross many markets.
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Can my employer limit my maximum 401k contribution amount (below the IRS limit)?
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Congratulations on your raise! Is my employer allowed to impose their own limit on my contributions that's different from the IRS limit? No. Is it something they can limit at will, or are they required to allow me to contribute up to the IRS limit? The employer cannot limit you, you can contribute up to the IRS limit. Your mistake is in thinking that the IRS limit is 17K for everyone. That is not so. You're affected by the HCE rules (Highly Compensated Employees). These rules define certain employees as HCE (if their salary is significantly higher than that of the rest of the employees), and limit the ability of the HCE's to deposit money into 401k, based on the deposits made by the rest of the employees. Basically it means that while the overall maximum is indeed 17K, your personal (and other HCE's in your company) is lowered down because those who are not HCE's in the company don't deposit to 401k enough. You can read more details and technical explanation about the HCE rules in this article and in this blog post.
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Do high interest rates lead to higher bond yields or lower?
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It is important to distinguish between cause and effect as well as the supply (saving) versus demand (borrowing) side of money to understand the relationship between interest rates, bond yields, and inflation. What is mean by "interest rates" is usually based on the officially published rates determined by the central bank and is referenced to the overnight lending rate for meeting reserve requirements. In practice, what the means is, (for example) in the United States the Federal Reserve will have periodic meetings to determine whether to leave this rate alone or to raise or lower the rate. The new rate is generally determined by their assessment of current and forecast national and global economic conditions and factors in the votes of the various Regional Federal Reserve Presidents. If the Fed anticipates economic weakness they will tend to lower and keep rates lower, while when the economy seems to be overheated the tendency will be to raise rates. Bond yields are also based on the expectation of future economic conditions, but as determined by market participants. At times the market will actually "lead" the Fed in bidding bond prices up or down, while at other times it will react after the Fed does. However, ignoring the varying time lag the two generally will track each other because they are really the same thing. The only difference is the participants which are collectively determining what the rates/yields are. The inverse relationship between interest rates and inflation is the main reason for fluctuating rates in the first place. The Fed will tend to raise rates to try to slow inflation, and lower rates when it feels inflation is too low and economic growth should be stimulated. Likewise, when the economy is doing poorly there is both little inflationary pressure (driving interest rates down both in terms of what savers can accept to keep ahead of inflation and at) and depressed levels of borrowing (reduced demand for money, driving down rates to try to balance supply and demand), and the opposite is true when the economy is booming. Bond yields are thus positively correlated to inflation because during periods of high inflation savers won't want to invest in bonds that don't provide them with an acceptable inflation adjusted yield. But high interest rates tend to have the effect or reining in inflation because it gets more costly for borrowers and thus puts a damper on new economic activity. So to summarize,
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How can one get their FICO/credit scores for free? (really free)
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I visited annualcreditreport.com to get my annual credit report. It is only the report, not the score or FICO score. This is the only outlet I know of that allows you to get your report for free, without a bunch of strings attached or crap to sign up for and cancel later. It was very easy. I was wary of putting in my private information, but how else can they possibly pull you up? Read the instructions carefully. You go to each bureau to fetch your report, and they dutifully give you a free report, but they push hard to try and sell you a score or a report service. It is easy to avoid these if you read carefully. Once you get a report, you have print it out or you can't see it again for another year. Each bureau has a different site, with different rules, and different identity checks to get in. Again, read the instructions and it isn't hard. Instead of printing, I just saved the page as HTML. You get one html file and a folder with all the images and other stuff. This suits me but you might like to print. After you get each report, you have to click a link to back to the annualcreditreport.com site. From there you go to the next bureau. Regarding a score. Everybody does it differently. Free Issac does FICO, but anybody who pulls your credit can generate a score however they like, so getting a score isn't anywhere near as important as making sure your report is accurate. You can use credit.com to simulate a score from one of the bureaus (I can't easily see which one at the moment). It is as easy as annualcreditreport.com and I have no issue getting a simulated score and report card.
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Tax liability for stocks vested for a H1B visa holder
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You're asking whether the shares you sold while being a US tax resident are taxable in the US. The answer is yes, they are. How you acquired them or what were the circumstances of the sale is irrelevant. When you acquired them is relevant to the determination of the tax treatment - short or long term capital gains. You report this transaction on your Schedule D, follow the instructions. Make sure you can substantiate the cost basis properly based on how much you paid for the shares you sold (the taxable income recognized to you at vest).
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Are stock prices likely drop off a little bit on a given friday afternoon?
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It is called the Monday Effect or the Weekend Effect. There are a number of similar theories including the October Effect and January Effect. It's all pretty much bunk. If there were any truth to traders would be all over it and the resulting market forces would wipe it out. Personally, I think all technical analysis has very little value other than to fuel conversations at dinner parties about investments. You might also consider reading about Market efficiency to see further discussion about why technical approaches like this might, but probably don't work.
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Is Bitcoin a commodity or a currency [duplicate]
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I would classify Bitcoin as a hybrid. Currency : It is accepted by e-businesses as a form of payment Commodity : Chart illustrating the volatility and speculative nature of Bitcoin
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Frustrated Landlord
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If you're losing money or breaking even, you own a bad investment. The problem you have is that you are emotionally invested in your tenant. That isn't a bad thing in general but it's costing you money and, unless interest rates fall enough to justify a refi or property taxes go down in your area, that's kind of unlikely to change. Option #1 - Tell your wife that you are willing to accept a loss up to a certain level because of your long term relationship with your tenant. In a perfect world, the two of you would then discuss what the "magic number" would be where you got out and come to a compromise. For example, if you are comfortable losing up to $3,000 per year and she is unhappy with any loss, you may agree on selling the house when your losses climb to $1,500. In a less perfect world, it would cause an argument as she has already told you what she wants you to do. Option #2 - Raise the rent to the break even point. From what you've said, this will likely result in the loss of your tenant but you could then rent to someone else for significantly more. Option #3 - Sell the house. It's an investment property which means it's supposed to make money for you. It can do that very quickly by way of a sale and then it's no longer your problem. Option #4 - Sell the house to your tenant. You bought it for $50,000 and it's currently worth $150,000 (roughly). The problem you face is that property taxes have gone up and caused your mortgage to increase past your tenants ability to pay. My guess is, after 15 years, your payoff is somewhere in the high $20's to mid 30's assuming you got a 30 year loan and haven't refinanced. If you sell to her for say $75,000 (or even up to $90,000) you will still make a profit (wife is happy), she will get a mortgage she can afford and be able to stay in the house (you and the tenant are happy). Added bonus is that her property taxes would be lower (assuming a different rate for investment property in your area). I would discuss this at length with your wife as well before making such an offer. Option #5 - Get a property management company. As mentioned above, they will keep a percentage but will remove your emotions from the equation altogether and turn the situation into a winner. I don't know if your wife is right in saying you don't have the stomach for this, but I do think your heart is getting in the way in this particular situation. I get the feeling that if your tenant was 25 years old and had only been renting from you since last October, you would have no problem raising the rent to market levels at every renewal.
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What are “headwinds” and “tailwinds” in financial investments?
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Headwinds in an economic situation represent events or conditions e.g. a credit crisis, rising costs, natural disasters, etc, that slow down the growth of an economy. So headwinds are negative. Tailwinds are the opposite and help to increase growth of an economy.
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Is gold really an investment or just a hedge against inflation?
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From Wikipedia: Investment has different meanings in finance and economics. In Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time. In contrast putting money into something with an expectation of gain without thorough analysis, without security of principal, and without security of return is speculation or gambling. The second part of the question can be addressed by analyzing the change in gold price vs inflation year by year over the long term. As Chuck mentioned, there are periods in which it didn't exceed inflation. More important, over any sufficiently long length of time the US stock market will outperform. Those who bought at the '87 peak aren't doing too bad, yet those who bought in the last gold bubble haven't kept up with inflation. $850 put into gold at the '80 top would inflate today to $2220 per the inflation calculator. You can find with a bit of charting some periods where gold outpaced inflation, and some where it missed. Back to the definition of investment. I think gold fits speculation far better than it does investment. I've heard the word used in ways I'd disagree with, spend what you will on the shoes, but no, they aren't an investment, I tell my wife. The treadmill purchase may improve my health, and people may use the word colloquially, but it's not an investment.
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Any Ubiquitous Finance App That is on Mac, iOS and Windows?
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As I have said before on this site, I personally use Moneydance. They have Mac, Linux and Windows support, and recently added an iOS mobile version that syncs with the desktop. I have only used the Mac "desktop" version, and it seems to function well, but have not tried the other platforms, nor the iOS version. I have no company affiliation, but am a (mostly) happy user. :-)
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Why do car rental companies prefer/require credit over debit cards?
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People with credit cards tend to have better credit than those who only have debit cards. People with better credit tend to not abuse such things as car rentals. It costs money for any company to run your credit. It doesn't cost a rental company any outflow of money to reject debit cards. So the possession of a credit card becomes a stand-in for running your credit before you rent a car.
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Are solar cell panels and wind mills worth the money?
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To answer the investment aspect takes a bit of math. First, solar insolation numbers: This represents the average sun-hours per day for a given area. You can see the range from 4 to 6, or 1460 hrs to about 2190 hrs of sun per year depending on location. I believe electricity also has a range of cost, but 15 cents per KWH is a good average. So, a 1KW panel will produce as much as $328 per year of electricity in a high sun-hrs area, but only $219 in a lower sun-hrs area. If we agree to ignore the government subsidies and look for the stable price unaffected by outside influence, an installed price of even $2500 would produce a return of 13% and a reasonable full payback over an 8 year period. I call this installed price a tipping point, the price where this purchase provides a decent return. Some would accept a lower return, and therefore a higher price. As duff points out, this should be treated as the post rebate/tax credit price. Those help to push the price below this point. At the price point where the energy cost per panel is below, the government intervention may be unnecessary. The power companies may find consumer owned panels are the cheapest way to clip the peak consumption which tends to be the most expensive power demand.) One can take the insolation numbers and cost of local power to produce a grid showing the return for a 1KW panel in $$/year. (At this point the cost of money kick in. The present value of $100/yr is far higher today than if short term rates were say, 8%) Once panels drop to where they are compelling for the higher return areas, I'd expect volume to drive continued improvements in cost and better economies of scale. Initially, the need for storage isn't there, as the infrastructure is in place to drive your meter backwards if you produce more than you use. The peek sun coincides with peek demand and the electric companies are happy to have your demand go negative during those times. Update - the conversation with Duff led me to research 'demand charge' a bit more. You see, the utility company has to have equipment to generate the peak demand, usually occurring in the early afternoon, say 12N-2PM as the sun is brightest and AC use in particular, highest. I found that Austin energy has a PDF describing the fee for this. Simply put, the last kW of demand will cost you $14.03 in summer months and $12.65 in winter. This adds to $160/yr that a 1kW panel might save the owner. Even if one does capture the full power at peak every month, $100 is still non-trivial. This factor alone justifies $1000 worth of panel cost, and as Duff points out, the government may find it cheaper to use this method to clip peak demand than by funding bigger power generators. To summarize, the question isn't so much "are they worth it" as "what is a xKW panel worth?" (A function of annual savings and time value of money.) The ever decreasing installed cost for a given system makes solar an inevitable part of the future power technology. I am not a green tree hugging guy, but I do like to breathe fresh air as much as anyone. I'm happy with whatever role solar plays in cutting down pollution.
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How to plan in a budget for those less frequent but mid-range expensive buys?
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We have what we call "unallocated savings" that go into a fund for this purpose. We'll also take advantage of "6 months no interest" or similar financing promotions, and direct this savings towards the payments.
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Why are interest rates on saving accounts so low in USA and Europe?
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There is really much simpler explanation for the interest rate differences in different countries. It is the interest rate arbitrage. It is a very well explored economic concept, so you can look it up on the Internet, in case you want to know more. 1) Interest rates for the same currency in different countries Basically, as one smart person here pointed out, there is only one price of money in free market economy. It happens, because investors can move their money unrestrictedly anywhere in the World to capitalize on the local interest rates advantage. For instance, if I can take a loan in the USA at 3-4% annual interest and receive 5-6% annual income on my dollar deposit in Russia, I would take a loan in the US and open a deposit in Russia to enjoy a risk free interest rate differential income of 2% (5-6% - 3-4% ~ 2%). So, would any reasonable person. However, in real World very few banks in Russia or anywhere would pay you an an interest rate higher than it can borrow money at. It'd probably lose money if it'd do so. Anyways, the difference between the risk free rate and interest rate on the dollar deposit can be attributed to the risk premium of this particular bank. The higher expected return, the greater risk premium. If there is a positive difference in the interest rates on the dollar deposits in different countries, it will almost entirely accounted for the risk premium. It is generally much riskier to keep money in, say Russian bank, than American. That's why investors want greater return on their dollar deposits in Russian banks than in American. Of course, if you'd want to park your USD in Russian bank you'd also have to consider transaction costs. So, as you may have already guessed, there is no free lunch. 2) Interest rates in different currencies for different countries If we are talking about the interest rates in different sovereign currencies, it is a somewhat similar concept, only there is more risk if you keep money in local currency (risk premium is much higher). Probably, the biggest component of this risk is inflation (that is only attributed to the prices in local currency). For that reason, current interest rates on deposits in Russian Rubles are at 10-12%, but only 1-3% in the US Dollars. An economic concept that discusses this phenomenon in great detail is Interest Rate Parity. Hope this was helpful. P.S. It doesn't look quite realistic that you can get an 8% annual income for USD deposit in Russia with the interest rates in the U.S. being at 1-2%. At present moment, a 30-year mortgage annual interest rate in the US is at ~2-3% and an annual interest rates for dollar deposits in Sberbank (one of the safest Russian banks = very little risk premium) is at 1-3%. So, arbitrage is impossible.
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Is the stock market a zero-sum game?
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No, the stock market and investing in general is not a zero sum game. Some types of trades are zero sum because of the nature of the trade. But someone isn't necessarily losing when you gain in the sale of a stock or other security. I'm not going to type out a technical thesis for your question. But the main failure of the idea that investing is zero sum is the fact the a company does not participate in the transacting of its stock in the secondary market nor does it set the price. This is materially different from the trading of options contracts. Options contracts are the trading of risk, one side of the contract wins and one side of the contract loses. If you want to run down the economic theory that if Jenny bought her shares from Bob someone else is missing out on Jenny's money you're free to do that. But that would mean that literally every transaction in the entire economy is part of a zero sum game (and really misses the definition of zero sum game). Poker is a zero sum game. All players bet in to the game in equal amounts, one player takes all the money. And hell, I've played poker and lost but still sometimes feel that received value in the form of entertainment.
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Is it legal if I'm managing my family's entire wealth?
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There are two issues. The first is that you can manage all of your family's money. The second issue arises if you now "own" all of your family's money. As far as entities go, it is best to keep money or assets in as many different hands as possible. Right now, if someone sued you and won, they could take away not only your money, but your parents' and brother's money, under your name. Also, there are gift, estate and inheritance tax consequences to your parents and brother handing all their money to you. You should have three or four separate "piles" of money, one for yourself, one for your brother and one for each of your parents, or at least both of them as a couple. If someone sued one parent, the other parent, your brother and you are protected. You can have all these piles of money under your management. That is, your parents and brother should each maintain separate brokerage accounts from yours, and then give you the authorization to trade (but not withdraw from) their accounts. This could all be at the same brokerage house, to make the reporting and other logistics relatively easy.
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Does a bond etf drop by the amount of the dividend just like an equity etf
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It may be true for a bond fund. But it is not true for bond etf. Bond etf will drop by the same amount when it distribute dividend on ex-dividend date.
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Exercising an option without paying for the underlying
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It would be nice if the broker could be instructed to clear out the position for you, but in my experience the broker will simply give you the shares that you can't afford, then freeze your account because you are over your margin limit, and issue a margin call. This happened to me recently because of a dumb mistake: options I paid $200 for and expected to expire worthless, ended up slightly ITM, so they were auto-exercised on Friday for about $20k, and my account was frozen (only able to close positions). By the next Monday, market news had shifted the stock against me and I had to sell it at a loss of $1200 to meet the margin call. This kind of thing is what gives option trading a reputation for danger: A supposedly max-$200-risk turned into a 6x greater loss. I see no reason to ever exercise, I always try to close my positions, but these things can happen.
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Does dollar cost averaging really work?
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If you define dollar cost cost averaging as investing a specific dollar amount over a certain fixed time frame then it does not work statistically better than any other strategy for getting that money in the market. (IE Aunt Ruth wants to invest $60,000 in the stock market and does it $5000 a month for a year.) It will work better on some markets and worse on others, but on average it won't be any better. Dollar cost averaging of this form is effectively a bet that gains will occur at the end of the time period rather than the beginning, sometimes this bet will pay off, other times it won't. A regular investment contribution of what you can afford over an indefinite time period (IE 401k contribution) is NOT Dollar Cost Averaging but it is an effective investment strategy.
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How to invest in gold at market value, i.e. without paying a markup?
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if you bought gold in late '79, it would have taken 30 years to break even. Of all this time it was two brief periods the returns were great, but long term, not so much. Look at the ETF GLD if you wish to buy gold, and avoid most of the buy/sell spread issues. Edit - I suggest looking at Compound Annual Growth Rate and decide whether long term gold actually makes sense for you as an investor. It's sold with the same enthusiasm as snake oil was in the 1800's, and the suggestion that it's a storehouse of value seems nonsensical to me.
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Sell or keep rental Property?
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How is the current mortgage payment broken out? I have a mortgage on a rental property with a payment of $775, but $600 is principal. If I were at breakeven on a sale or a bit underwater, I'd be better off just holding still, the tenant paying the loan down over $7000/year. You question is a good one, but a good answer would require more details. A bank may not agree to a short sale on an investment property, especially since there's a second property to go after. I'm not making a judgement, just saying, it's not a slam-dunk to just short sell it.
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Intrinsic value of non-voting shares which don't pay dividends
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Some companies offer discounts for shareholders. I believe Disney used to do so, for example; if your family was doing the Disneyland-every-year routine that could be a significant benefit.
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Other than being able to borrow to invest, how is a margin trading account different from a cash account?
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In summary: In long form: Spreads and shorts are not allowed in cash accounts, except for covered options. Brokers will allow clients to roll option positions in a single transaction, which look like spreads, but these are not actually "sell to open" transactions. "Sell to open" is forbidden in cash accounts. Short positions from closing the long half of a covered trade are verboten. Day-trading is allowed in both margin and cash accounts. However, "pattern day-trading" only applies to margin accounts, and requires a minimum account balance of $25,000. Cash accounts are free to buy and sell the same security on the same day over and over, provided that there is sufficient buying power to pay for opening a new position. Since proceeds are held for both stock and option sales in a cash account, that means buying power available at the start of the day will drop with each purchase and not rise again until settlement. Unsettled funds are available immediately within margin accounts, without restriction. In cash accounts, using unsettled funds to purchase securities will require you to hold the new position until funds settle -- otherwise your account will be blocked for "free-riding". Legally, you can buy securities in a cash account without available cash on deposit with the broker, but most brokers don't allow this, and some will aggressively liquidate any position that you are somehow able to enter for which you didn't have available cash already on deposit. In a margin account, margin can help gloss over the few days between purchase and deposit, allowing you to be somewhat more aggressive in investing funds. A margin account will allow you to make an investment if you feel the opportunity is right before requiring you to deposit the funds. See a great opportunity? With sufficient margin, you can open the trade immediately and then run to the bank to deposit funds, rather than being stuck waiting for funds to be credited to your account. Margin accounts might show up on your credit report. The possibility of losing more than you invested, having positions liquidated when you least expect it, your broker doing possibly stupid things in order to close out an over-margined account, and other consequences are all very serious risks of margin accounts. Although you mentioned awareness of this issue, any answer is not complete with mentioning those risks.
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Stock grant, taxes, and the IRS
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If you have a one-time event, you are allowed to make a single estimated payment for that quarter on Form 1040-ES. People seem to fear that if they make one such payment they will need to do it forevermore, and that is not true. The IRS instructions do kind of read that way, but that's because most people who make estimated payment do so because of some repeating circumstance like being self-employed. In addition, you may qualify for one or more waivers on a potential underpayment penalty when you file your Form 1040 even if you don't make an estimated payment, and you may reduce or eliminate any penalty by annualizing your income - which is to say breaking it down by quarter rather than the full year. Check on the instructions for Form 2210 for more detail, including Schedule AI for annualizing income. This is some work, but it might be worthwhile depending on your situation. https://www.irs.gov/instructions/i2210/ch02.html
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How to buy stock on the Toronto Stock Exchange?
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While most all Canadian brokers allow us access to all the US stocks, the reverse is not true. But some US brokers DO allow trading on foreign exchanges. (e.g. Interactive Brokers at which I have an account). You have to look and be prepared to switch brokers. Americans cannot use Canadian brokers (and vice versa). Trading of shares happens where-ever two people get together - hence the pink sheets. These work well for Americans who want to buy-sell foreign stocks using USD without the hassle of FX conversions. You get the same economic exposure as if the actual stock were bought. But the exchanges are barely policed, and liquidity can dry up, and FX moves are not necessarily arbitraged away by 'the market'. You don't have the same safety as ADRs because there is no bank holding any stash of 'actual' stocks to backstop those traded on the pink sheets.
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Why invest for the long-term rather than buy and sell for quick, big gains?
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As an easy way to answer... look at an index, let's say the S&P 500. Look at the price this last October, and predict where it will move in November... easy right? It already happened, and you have the benefit of hindsight. The move looks like such a consistent, obvious continuation of the previous up and down pattern. It looks predictable, like you could have guessed that. Now, look at today's price, and predict where it will go next month. Not so easy now? The problem is, every point you're at, all the time, looks like a possible inflection point or turning point. If you're following an uptrend, you may think it'll continue, but you may also think that it zigged so far up already, that now it's ready for a zag down where you'll buy. So you wait... and it keeps rising, and you kick yourself for missing out. Next time, you see another uptrend and resolve to buy it regardless, thinking now it'll keep going, but it turns down the second you buy it, and keeps dropping. You kick yourself again. The market is amazing at doing this to you every time. In real time, every wiggle in the price looks simultaneously like a trend that could continue, and like a trend that has moved far enough and is ready to reverse. And more likely you'll guess the wrong one. The ONLY way with some little hope of succeeding is to study study study, and find and learn trading rules with just over 50/50 chances (like buying when a moving average is touched within an uptrend as an example, and setting a stop loss at -1%, and a sell limit at +2% or something), and then never ever deviate from that strategy, because your only hope is in the consistency of statistics and odds over time. You'll get many -1% losses, and hopefully enough 2% gains to compensate the losses, plus some profit. OR, to make it easier, just buy in on a dip, and hold and hold and collect dividends, and be content to match the market without effort.
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A calculator that takes into account portfolio rebalancing?
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R has really good package that lets you calculate the return of rebalanced portfolios. The package is called: PerformanceAnalytics (see: http://www.inside-r.org/packages/cran/PerformanceAnalytics/docs/Return.portfolio). I quickly wrote a small script for you that lets you do exactly what you want. Code: By default the portfolio is rebalanced to an equally weighted portfolio. It is also possible to rebalance your portfolio using custom weights. See the documentation on how to do this. In order for this code to work you need to have your data already in return terms. You can do this easily in Excel. Make sure your data in excel looks like this: Than export your data to a CSV file. Note: before you run the code make sure you have installed the package PerformanceAnalytics. You can do this as follows: Let me know if you have any questions regarding the above.
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Can the beta of a stock be used as a lagging indicator for the stock w.r.t the market
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The beta of a stock can be interpreted as the average relative movement of a stock with respect to the movement of a market index. In your case, the stock will move on average by 0.8. Thus over a longer time horizon, not on a daily, weekly basis.
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Why do P/E ratios for a particular industry tend to cluster around particular values?
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This falls under value investing, and value investing has only recently picked up study by academia, say, at the turn of the millennium; therefore, there isn't much rigorous on value investing in academia, but it has started. However, we can describe valuations: In short, valuations are randomly distributed in a log-Variance Gamma fashion with some reason & nonsense mixed in. You can check for yourself on finviz. You can basically download the entire US market and then some, with many financial and technical characteristics all in one spreadsheet. Re Fisher: He was tied for the best monetary economist of the 20th century and created the best price index, but as for stocks, he said this famous quote 12 days before the 1929 crash: "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months." - Irving Fisher, Ph.D. in economics, Oct. 17, 1929 EDIT Value investing has almost always been ignored by academia. Irving Fisher and other proponents of it before it was codified by Graham in the mid 20th century certainly didn't help with comments like the above. It was almost always believed that it was a sucker's game, "the bigger sucker" game to be more precise because value investors get destroyed during recession/collapses. So even though a recessionless economy would allow value investors and everyone never to suffer spontaneous collapses, value investors are looked down upon by academia because of the inevitable yet nearly always transitory collapse. This expresses that sentiment perfectly. It didn't help that Benjamin Graham didn't care about money so never reached the heights of Buffett who frequently alternates with Bill Gates as the richest person on the planet. Buffett has given much credibility, and academia finally caught on around in 2000 or so after he was proven right about a pending tech collapse that nearly no one believed would happen; at least, that's where I begin seeing papers being published delving into value concepts. If one looks harder, academia's even taken the torch and discovered some very useful tools. Yes, investment firms and fellow value investors kept up the information publishing, but they are not academics. The days of professors throwing darts at the stock listings and beating active managers despite most active managers losing to the market anyways really held back this side of academia until Buffett entered the fray and embarrassed them all with his club's performance, culminating in the Superinvestors article which is still relatively ignored. Before that, it was the obsession with beta, the ratio of a security's variance to its covariance to the market, a now abandoned theory because it has been utterly discredited; the popularizers of beta have humorously embraced the P/B, not giving the satisfaction to Buffet by spurning the P/E. Tiny technology firms receive ridiculous valuations because a long-surviving tiny tech firm usually doesn't stay small for long thus will grow at huge rates. This is why any solvent and many insolvent tech firms receive large valuations: risk-adjusted, they should pay out huge on average. Still, most fall by the wayside dead, and those 100 P/S valuations quickly crumble. Valuations are influenced by growth. One can see this expressed more easily with a growing perpetuity: Where P is price, i is income, r is the rate of return, and g is the growth rate of i. Rearranging, r looks like: Here, one can see that a higher P relative to i will dull the expected rate of return while a higher g will boost it. It's fun for us value investor/traders to say that the market is totally inefficient. That's a stretch. It's not perfectly inefficient, but it's efficient. Valuations are clustered very tightly around the median, but there are mistakes that even us little guys can exploit and teach the smart money a lesson or two. If one were to look at a distribution of rs, one'd see that they're even more tightly packed. So while it looks like P/Es are all over the place industry to industry, rs are much more well clustered. Tech, finance, and discretionaries frequently have higher growth rates so higher P/Es yet average rs. Utilities and non-discretionaries have lower growth rates so lower P/Es yet average rs.
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Who puts out buy/sell orders during earnings reports or other scheduled relevant information?
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The early bird catches the worm. The first person who makes use of the information gains! That is why hedge funds pay billions of dollars to place their routers right at the center of wall street. Moreover, the information is not always correct. The article you are reading may be a rumor spread by someone on wall street.Then there is speculation and that is factored into the price. For example:- In spite of all the bad news from Greece, the market still continued to rise. This was because, everyone had an idea about what was going to happen and the price was factored in way before Greece actually defaulted. The game is way more complicated than it seems. If everyone sat down and read reports, opportunities to make millions of dollars would have been lost in those few seconds. (Please note:- I do not mean reading reports is bad)
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Deducting last years (undocumented) side business loss
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You should speak to a good tax adviser. The less documentation you have the more problems IRS are going to cause you. Generally you can deduct business losses (in the year they occurred, which is 2011), but you have to show that that was a valid business, not just a way to reduce your tax bill with personal expenses. Thus lack of documentation reduces your ability to prove that you're entitled to the deduction. The burden of proof is generally on you. You can not deduct it from 2012 taxes, but you can still amend 2011. Keep in mind though that amended returns have higher chance of audit, and a significant business loss on a business that only existed that year is a major red flag which will raise the probability of an audit to very high percentage. Theoretically, if the business was real and just failed - you can definitely deduct this. But practically, lack of documentation may cause too big a problem, and a tax adviser might suggest you giving it up if he doesn't think you have a real chance to convince the IRS. Definitely don't do that without a professional advice. It is worth fighting for, its quite a loss, but don't do it on your own as you will definitely lose.
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Does buying and selling a stock OR holding onto it make a company look better?
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I have watched the ticker when I have made a transaction. About ¼ of the time my buy (or sell) actually moves the going price. But that price movement is wiped out by other transactions within two (or so) munites. Is your uncle correct? Yes. Will anyone notice? No.
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No trading data other than close for a stock on a given date
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The last column in the source data is volume (the number of stocks that was exchanged during the day), and it also has a value of zero for that day, meaning that nobody bought or sold the stocks on that day. And since the prices are prices of transactions (the first and the last one on a particular day, and the ones with the highest/lowest price), the prices cannot be established, and are irrelevant as there was not a single transaction on that day. Only the close price is assumed equal to its previous day counterpart because this is the most important value serving as a basis to determine the daily price change (and we assume no change in this case). Continuous-line charts also use this single value. Bar and candle charts usually display a blank space for a day where no trade occurred.
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How do rich people guarantee the safety of their money, when savings exceed the FDIC limit?
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Even assuming hypothetically that you are able to split money in different bank accounts to get full coverage and all your accounts are in top ranking financial institutions in USA, you can not rely on FDIC if all or most of those banks go broke. Because FDIC just has a meagre 25 billion dollars to cover all bank accounts in the USA. And you know the amount of bank deposits in USA run in at least a trillion of dollars. US Deposits & FDIC Insurance figures
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I am not VAT registered. Do I need to buy from my supplier with excl VAT prices or incl VAT?
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It looks like there's some confusion about the purchase price and reclaiming VAT. You should pay your supplier the total amount (£10 + VAT in this scenario, so £12) - look for this figure on the invoice or receipt. The supplier doesn't normally expect you to work this out for yourself, so I'd be a little surprised if it's not on there? As Dumbcoder's said, you'd then be able to claim the VAT back from HMRC if you were VAT registered. But seeing as you're not, then you don't need to worry about claiming it. And as for selling the product without VAT, you can (and probably should) increase the unit price to cover the extra cost, otherwise you'll be operating at a loss. Hope this helps!
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how do I calculate rate of return on call options that are spread
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You don't necessarily have to use a LEAP to do a spread. Since you are doing a covered call, I'm assuming that you would be comfortable with having that call exercised and you are bullish on the stock. So doing a spread trade with the short call option would essentially be capping your maximum profit without risking the obligation to sell the stock below market value. An example for the payoff from a bull call spread: long lower strike call, short higher (covered) strike call can be found here
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What is the purpose of endorsing a check?
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The best reason for endorsing a check is in case it is lost. If the back is blank, a crooked finder could simply write "pay to the order of " on it and deposit it in his own account. You do not need a signature for the endorsement. The safest way to endorse a check is to write "FOR DEPOSIT ONLY" followed by an account number, in which case the signature is not needed. most businesses make up rubber stamps with this and stamp it the minute they receive a check. That way it has no value to anyone else. Depositing checks is increasingly going the way of the dodo. Many businesses today use check truncation - the business scans the check in, sends the digital image to the bank, and stores the check. I was surprised that Chase already has an applet for iPhones that you can use to deposit a check by taking a picture of it!
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Are stock purchases on NASDAQ trackable to personal information?
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The broker will probably submit records to the IRS, so there isn't anonymity at that level...
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Why is economic growth so important?
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Wealth is not distributed equally in any economy. And, even if it were, differentiation between people would lead to different interests being expressed in different ways. As people either attempt to earn more (to improve their situation) or different people express those interests in different ways (saving money to go on a skiing holiday, or to put a downpayment on a house) people invite new products and services to be created to satisfy those demands. In addition, there is the problem of uncertainty. People save money today to cope with uncertainty tomorrow (healthcare, pensions, education, etc.). Those savings don't remain idle, but are lent to others who believe that they can make a return through investing in new businesses or ideas. The point being that any dynamic economy will experience change in the amount of goods available to the people within that economy. From an economic perspective "growth" is just another permutation. From a political perspective, "growth" implies that people are getting wealthier. If that growth is asymmetrically distributed (e.g. the poor don't experience it and the middle classes don't feel they get enough of it) then that is a problem for politicians. The emerging markets of the world are trying to raise millions of people out of poverty. Growth is a way of measuring how quickly they are achieving that end. Growth, in and of itself, is meaningless. There are some people who believe that "we" (as some proxy of society) have enough stuff and growth is unnecessary but that implies that everyone is satisfied. For as long as some people wish to have more wealth/stuff, and have the means to achieve this, there will be growth. And for as long as there is uncertainty growth will vary.
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Is it OK to use a credit card on zero-interest to pay some other credit cards with higher-interest?
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The short answer is no, it's probably not ok. The longer answer is, it might be, if you are very disciplined. You need to make sure that you have enough money to pay off the card after a year, and that you pay the card on time, every month, without exception. There may also be balance transfer or other fees that only make it worth while if the interest rate or balance on the other loan is high. The problem is most of these offers will raise your rates to very high levels (think 20% or more) if you are even one day late with one payment. Some of them also will back charge you interest starting from day one, although I have only seen this on store credit "one year, same as cash" type offers. In the end you need to balance the possible payoff against how much it will cost you if you do it wrong. Remember, the banks are not in the business of lending out free money. They wouldn't do this unless enough people didn't pay it back in one year for them to make a profit.
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Why does ExxonMobil's balance sheet show more liabilities than assets?
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You are reading the balance sheet wrong. Everything Joe says is completely correct, but more fundamentally you have missed out on a huge pile of assets. "Current assets" is only short term assets. You have omitted more than $300B in long-term assets, primarily plant and equipment. The balance sheet explicitly says: Net tangible Assets (i.e. surplus of assets over liabilities) $174B
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Tax Write-offs and knowing how much I need to spend before the end of the year
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(I'm assuming USA tax code as this is untagged) As the comments above suggest there is no "right" answer or easy formula. The main issue is that you likely got into business to make money and if you make money consistently you will pay taxes. Reinvesting generally should be a business decision where the main concern is revenue growth and taxes are an important but secondary concern. Taxes can be complicated, but for a small LLC shouldn't be that bad. I highly recommend that you take some time closely analyze your business and personal taxes for the previous year. Once you understand the problem better, you can optimize around it. If it is a big concern, some companies buy software so they can estimate their taxes periodically through the year and make better decisions.
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Why would anyone want to pay off their debts in a way other than “highest interest” first?
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Very good Ben, in a more simplistic form: If debt was about math only, we would not have payday lenders, 21% + credit cards, or sub-prime car loans. Yet these things are prevalent. Debt reduction is often about behavior modification. As such small wins are necessary to keep going much like a 12 step program; or, gamification as Ben pointed out. The funny thing is that if a person becomes and stays intense on a debt reduction program, interest rate "inefficiency" is dwarfed by extra income or increased austerity.
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Filing personal with 1099s versus business s-corp?
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Depends whom the 1099 was issued to. If it was issued to your corporation - then its your corporation's income, not yours. Why would it go to your tax return? Your corporation and you are two separate legal entities. You will have to file the 1120S, whether you have corporate income or not, it has to be filed each year. So why make a mess of your reporting and not just report the corporation income on its return and your personal income on your own return? If you no longer use the corporation and all the 1099's are issued to you personally, then just dissolve it so that you won't have to file an empty 1120S every year and pay additional fees for maintaining it.
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What does “interest rates”, without any further context, generically refer to?
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It refers to the risk free rate of a particular country. Because all other rates are usually pegged to the risk free rate. In US,it is the 30 day treasury rate. In England, it is the LIBOR In Canada, it is the overnight rate at which banks lend money to each other. All of these come under the category of risk free rate.
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Why would a company care about the price of its own shares in the stock market?
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Fiduciary They are obligated by the rules of the exchanges they are listed with. Furthermore, there is a strong chance that people running the company also have stock, so it personally benefits them to create higher prices. Finally, maybe they don't care about the prices directly, but by being a good company with a good product or service, they are desirable and that is expressed as a higher stock price. Not every action is because it will raise the stock price, but because it is good for business which happens to make the stock more valuable.
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How to acquire skills required for long-term investing?
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I would say that the three most important skills are: Note that some costs are hidden. So, for example, a mutual fund investing in other countries than where you live in may mean the investment target country charges a certain percentage of dividends going to the mutual fund. The mutual fund company doesn't usually want to tell you this. There may be clever financial instruments (derivatives) that can be used to avoid this, but they are not without their problems. If you diversify into equities at low cost, you will have a very wealthy future. I would recommend you to compare two options: ...and pick from these options the cheaper one. If your time has a high value, and you wish to take this value into account, I would say it is almost always far better option to choose an index fund. Whatever you do, don't pay for active management! It is a mathematical truth that before costs, actively managed investments will yield the same return than indexed investments. However, the costs are higher in active management, so you will have less total return. Don't believe that good historical return would imply good future return. However, if for some reason you see an index fund that continuously loses to the index more than by the amount of stated costs, beware!
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Should I sell and rebuy stocks before the end of the year to trigger a gain and offset capital losses?
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You have multiple issues buried within this question. First, we don't know your tax bracket. For my answer, I'll assume 25%. This simply means that in 2016, you'll have a taxable $37,650 or higher. The interesting thing is that losses and gains are treated differently. A 25%er's long term gain is taxed at 15%, yet losses, up to $3000, can offset ordinary income. This sets the stage for strategic tax loss harvesting. In the linked article, I offered a look at how the strategy would have resulted in the awful 2000-2009 decade producing a slight gain (1%, not great, of course) vs the near 10% loss the S&P suffered over that time. This was by taking losses in down years, and capturing long term gains when positive (and not using a carried loss). Back to you - a 15%er's long term gain tax is zero. So using a gain to offset a loss makes little sense. Just as creating a loss to offset the gain. The bottom line? Enjoy the loss, up to $3000 against your income, and only take gains when there's no loss. This advice is all superseded by my rule "Don't let the tax tail wag the investing dog." For individual stocks, I would never suggest a transaction for tax purposes. You keep good stocks, you sell bad ones. Sell a stock to take a short term loss only to have it recover in the 30 day waiting period just once, and you'll learn that lesson. Learn it here for free, don't make that mistake at your own expense.
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Inverse Relationship between Volatility and Beta
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For any isolated equity market, its beta will less resemble the betas of all other interconnected equity markets. For interconnected markets, beta is not well-dispersed, especially during a world expansion because richer nations have more wealth thus a dominant influence over smaller nations' equity markets causing a convergence. If the world is in recession, or a country is in recession, all betas or the recessing country's beta will start to diverge, respectively. If the world's economies diverge, their equity markets' betas will too. If a country is having financial difficulty, its beta too will diverge. Beta is correlation against a ratio of variance, so variance or "volatiliy" is only half of that equation. Correlation or "direction" is the other half. The ratio of variance will give the magnitude of beta, and correlation will give the sign or "direction". Therefore, interconnected emerging equity markets should have higher beta magnitudes because they are more variant but should generally over time have signs that more closely resemble the rest. A disconnected emerging equity market will improbably have average betas both by magnitude and direction.
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What effect does a company's earnings have on the price of its stock?
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No, the stock market is not there for speculation on corporate memorabilia. At its base, it is there for investing in a business, the point of the investment being, of course, to make money. A (successful) business earns money, and that makes it valuable to its owners since that money can be distributed to them. Shares of stock are pieces of business ownership, and so are valuable. If you knew that the business would have profit of $10,000,000 every year, and would distribute that to the owners of each of its 10,000,000 shares each year, you would know to that each share would receive $1 each year. How much would such a share be worth to you? If you could instead put money in a bank and get 5% a year back, to get $1 a year back you would have to put $20 into the bank. So maybe that share of stock is worth about $20 to you. If somebody offers to sell you such a share for $18, you might buy it; for $23, maybe you pass up the offer. But business is uncertain, and how much profit the business will make is uncertain and will vary through time. So how much is a share of a real business worth? This is a much harder call, and people use many different ways to come up with how much they should pay for a share. Some people probably just think something like "Apple is a good company making money, I'll buy a share at whatever price it is being offered at right now." Others look at every number available, build models of the company and the economy and the risks, all to estimate what a share might be worth, more or less. There is no indisputable value for a share of a successful business. So, what effect does a company's earnings have on the price of its stock? You can only say that for some of the people who might buy or sell shares, higher earnings will, all other thing being equal, have them be willing to spend more to buy it or demand more when selling it. But how much more is not quantifiable but depends on each person's approach to the problem. Higher earnings would tend to raise the price of the stock. Yet there are other factors, such as people who had expected even higher earnings, whose actions would tend to lower the price, and people who are OK with the earnings now, but suspect trouble for the business is appearing on the horizon, whose actions would also tend to lower the price. This is why people say that a stock's price is determined by supply and demand.
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Is Cost of Living overstated?
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I'm not convinced that cost of living is related to ensuring greater appreciation of assets over time, especially over a 30 year window. The importance of regional differences in cost of living to anyone's decision-making should be weighted by the percentage of their income spent on indexed items. That is, for people who spend 35%, or even 50% of their salary on indexed items, regional variances in cost of living are far more important than for people who spend 10% of their salaries on these items. Essentially, as income goes up, the significance of cost of living goes down. See http://macromon.wordpress.com/2011/02/02/how-u-s-income-groups-get-squeezed-by-food-prices/ for a pretty picture of the relevance of cost of living across income groups (for food & gas, which are often not included in indexes due to volatility). So, if you are wondering whether cost of living is overstated, perhaps it's because you are in an income group that doesn't need to worry about it as much. Whether it's overstated or not will depend on how much one makes and spends.
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What is the lifespan of a series of currency?
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In general, currency has no expiration date. Specifically, in Canada, the Bank of Canada has been issuing banknotes since 1935, and these are still considered legal tender, even though they don't look much like the modern banknotes. Before that, Canadian chartered banks issued currency, and these also still have value. However, there are a few things to note. First of all, with currency of that age, it often has more value as a collector's item than the face value. So spending it at a store would be foolish. Second, store clerks are not experts in old currency, and will not accept a bill that they do not recognize. If you want the face value of your old currency, you may need to exchange it for modern currency at a bank. Having said all that, there are certainly cases where currency does expire. Generally this happens when a country changes currency. For example, when the Euro was introduced, the old currencies were discontinued. After a window of exchange, the old currency in many cases lost its value. So if you have some old French Franc notes, for example, they can no longer be exchanged for Euros. These types of events cannot be predicted in the future, of course, so it is impossible to say when, if ever, the Canadian currency you have today will lose its spending value in Canada.
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Is person-person lending/borrowing protected by law?
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For person A to be protected (meaning able to recover some or all of the money should the other party try to welsh on the deal), the two of them must have entered into a valid, binding contract where both parties acknowledge and agree to the debt and the terms. Such a contract is subject to the Statute of Frauds, a collection of laws governing contracts which is mostly borrowed from English common law. The basics are that in all cases, a "contract" is only formed when both parties agree, technically when one party accepts an offer made by the other party. Both the offer and acceptance must be made sincerely. For a contract, once entered, to be enforceable, proof of the contract's existence and terms must itself exist. Certain types of transactions (real estate, large amounts of money) require contracts to be in written form, and witnessed by a trusted third party (in most cases this party is required to be a notary public). And contracts must have a certain amount of quid-pro-quo; contracts that provide a unilateral benefit can be thrown out on a case-by-case basis. A contract that simply states that Person B owes Person A money, without stating what benefit Person A had provided Person B in return for the money (in this case A gives B the money to begin with), is unenforceable. The benefits must of course be legal on both sides; a contract to deliver 5 tons of cocaine will not be upheld by any court in any free country, and neither will any contract attempting to enforce hush money, kickbacks, bribery etc (though some toe the line; one could argue that a signing bonus is tantamount to bribery). In some cases even seemingly benign clauses, like "escape clauses" allowing one party a "free out", can make the contract unenforceable as they could be abused to the severe detriment of one party. There are also jurisdiction-specific rules, such as limits on "finance charges" for debts not owed to a "bank" (a bar, for instance, cannot charge 10% on an outstanding tab in the United States). This is HUGE for your example, because if Person A had specified an interest rate in excess of the allowed rate for non-bank lenders, not only will the contract get thrown out even though Person B agreed to the terms, but Person A could find themselves on the hook for punitive damages payable to Person B, FAR in excess of the contracted amount. Given that the agreement meets all tests of validity for a contract, if either party fails to perform in accordance with the contract, causing a loss or "tort" for the other party, the injured party can sue. Generally the two options are "strict performance" (the injuring party is ordered by the court to comply exactly with the terms of the contract), or payment of net actual damages and dissolution of the contract. In your example, if Person A had lent Person B money, strict performance would mean payment of the debt in the installments agreed, at the rate agreed; actual damages would be payment of the outstanding balance plus current interest charges (without any further penalty). Notice that it's "net" damages; if Person A was to issue the loan in installments, and missed one, causing Person B to suffer damages from the loss of expected cash flow directly resulting in their failure to pay according to the terms, then Person B's proven damages are subtracted from A's; very often, the plaintiff in a suit to recover money can end up owing the defendant for a prior failure to perform. There are further laws governing bankruptcy; basically, if the other person cannot satisfy the contract and cannot pay damages, they will pay what they can, and the contract is terminated with prejudice ("no blood from a turnip").
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Do stock prices really go down by the amount of the dividend?
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Ex-Dividend Price Behavior of Common Stocks would be a study from the Federal Reserve Bank of Minneapolis and University of Minnesota if you want a source for some data. Abstract This study examines common stock prices around ex-dividend dates. Such price data usually contain a mixture of observations - some with and some without arbitrageurs and/or dividend capturers active. Our theory predicts such mixing will result in a nonlinear relation between percentage price drop and dividend yield - not the commonly assumed linear relation. This prediction and another important prediction of theory are supported empirically. In a variety of tests, marginal price drop is not significantly different from the dividend amount. Thus, over the last several decades, one-for-one marginal price drop have been an excellent (average) rule of thumb.
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How to pay bills for one month while waiting for new job?
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A traditional bank is not likely to give you a loan if you have no source of income. Credit card application forms also ask for your current income level and may reject you based on not having a job. You might want to make a list of income and expenses and look closely at which expenses can be reduced or eliminated. Use 6 months of your actual bills to calculate this list. Also make a list of your assets and liabilities. A sheet that lists income/expenses and assets/liabilities is called a Financial Statement. This is the most basic tool you'll need to get your expenses under control. There are many other options for raising capital to pay for your monthly expenses: Sell off your possessions that you no longer need or can't afford Ask for short term loan help from family and friends Advertise for short term loan help on websites such as Kijiji Start a part-time business doing something that you like and people need. Tutoring, dog-walking, photography, you make the list and pick from it. Look into unemployment insurance. Apply as soon as you are out of work. The folks at the unemployment office are willing to answer all your questions and help you get what you need. Dip into your retirement fund. To reduce your expenses, here are a few things you may not have considered: If you own your home, make an appointment with your bank to discuss renegotiation of your mortgage payments. The bank will be more interested in helping you before you start missing payments than after. Depending on how much equity you have in your home, you may be able to significantly reduce payments by extending the life of the mortgage. Your banker will be impressed if you can bring them a balance sheet that shows your assets, liabilities, income and expenses. As above, for car payments as well. Call your phone, cable, credit card, and internet service providers and tell them you want to cancel your service. This will immediately connect you to Customer Retention. Let them know that you are having a hard time paying your bill and will either have to negotiate a lower payment or cancel the service. This tactic can significantly reduce your payments. When you have your new job, there are some things you can do to make sure this doesn't happen again: Set aside 10% of your income in a savings account. Have it automatically deducted from your income at source if you can. 75% of Americans are 4 weeks away from bankruptcy. You can avoid this by forcing yourself to save enough to manage your household finances for 3 - 6 months, a year is better. If you own your own home, take out a line of credit against it based on the available equity. Your bank can help you with that. It won't cost you anything as long as you don't use it. This is emergency money; do not use it for vacations or car repairs. There will always be little emergencies in life, this line of credit is not for that. Pay off your credit cards and loans, most expensive rate first. Use 10% of your income to do this. When the first one is paid off, use the 10% plus the interest you are now saving to pay off the next most expensive card/loan. Create a budget you can stick to. You can find a great budget calculator here: http://www.gailvazoxlade.com/resources/interactive_budget_worksheet.html Note I have no affiliation with the above-mentioned site, and have a great respect for this woman's ability to teach people about how to handle money.
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Does it make sense to buy a house in my situation?
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My opinion is to hold off. I don't see housing market rising anytime soon, possibly even going lower, so you don't have to worry about getting in before it rises. Pay off the credit card debt, maybe even earlier if possible, then that flexibility will be there, the divorce proceedings may have an end in sight, and therefore you'll know more about any outcomes from that. The economy is still shaky, the flexibility of renting may come in real handy.
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Which Benjamin Graham book should I read first: Security Analysis or Intelligent Investor?
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Read the Security Analysis. I believe if you read it completely, you will have a real good chance of succeeding at making good money. If you find the book hard to read just go through it and underline under the text as you read it.
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What does quantitative easing 2 mean for my bank account?
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IMO, QE2 will likely have no perceptible impact in the near term. Keeping all of your savings in a bank guarantees that you will lose money to inflation & taxes. I'd suggest consulting a financial advisor -- preferably someone who understands issues facing someone with assets in the US and Canada. In terms of what portion of your savings should be in USD vs. CAD, that's going to depend on your situation. I'd probably want more assets in the place that I'm living in for the next several years.
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Should you keep your stocks if you are too late to sell?
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You should distinguish between the price and the value of a company: "Price is what you pay, value is what you get". Price is the share price you pay for one share of the company. Value is what a company is worth (based on fundamental analysis, one of the principles of value investing). I would recommend selling the stock only if the company's value has deteriorated due to fundamental changes (e.g. better products from competitors, declining market) and its value is lower than the current share price.
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What are dividends, when are they paid, and how do they affect my position?
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Dividends can also be automatically reinvested in your stock holding through a DRIP plan (see the wikipedia link for further details, wiki_DRIP). Rather than receiving the dividend money, you "buy" additional stock shares your with dividend money. The value in the DRIP strategy is twofold. 1) your number of shares increases without paying transaction fees, 2) you increase the value of your holding by increasing number of shares. In the end, the RIO can be quite substantial due to the law of compounding interest (though here in the form of dividends). Talk with your broker (brokerage service provider) to enroll your dividend receiving stocks in a DRIP.
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Can my brother fix his credit?
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In a nutshell, not really. That's the risk you take when you co-sign for someone. The lender only made the loan because of the strength of your brother's credit, not your mother's, so his reputation (in the form of his credit rating) is going to take the hit because of his mother's behaviors. The one thing he can do is this: The credit bureaus allow you to add a comment or explanation to your credit file which may be helpful, provided potential creditors read it, which is never a guarantee. It's worth trying though, so suggest to him to look into it. Here's a link for him/you/anyone to look at that can help explain how this works and what effects it can have: Adding a comment to your credit file for negative items I hope this helps. Good luck!
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