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Digital envelope system: a modern take | I definitely get where you're coming from. The envelope system sounds good, but doesn't appeal to most people under 50 for many of these reasons (physical cash in my hand is just a hassle - it has no appeal or reduced spending affect on me). There are various options for prepaid debit cards such as https://www.netspend.com/ or you could use gift cards for things like gas and groceries (though that likely won't get you duplicate cards or automatic payments). As far as automatic payments, just set that up through your bank. So it's still not a perfect solution. I wish there was a better, more straightforward way, but this is the best as far as I know. Update: Ramsey solutions has since launched EveryDollar. This is Dave's preferred solution for an online "digital envelope system". |
Beginner dividend investor - first steps | How do I start? (What broker do I use?) We don't make specific recommendations because in a few years that might not be the best recommendation any more. You are willing to do your own research, so here are some things to look for when choosing a broker: What criticism do you have for my plan? Seeking dividend paying stock is a sensible way to generate income, but share prices can still be very volatile for a conservative investor. A good strategy might be to invest in several broad market index and bond funds in a specific allocation (for example you might choose 50% stocks and 50% bonds). Then as the market moves, your stocks might increase by 15% one year while bonds stay relatively flat, so at the beginning of the next year you can sell some of your stocks and buy bonds so that you are back to a 50-50 allocation. The next year there might be a stock market correction, so you sell some of your bonds and buy stock until you are back to a 50-50 allocation. This is called rebalancing, and it doesn't require you to look at the market daily, just on a regular interval (every 3 months, 6 months, or 1 year, whatever interval you are comfortable with). Rebalancing will give you greater gains than a static portfolio, and it can insulate you from losses when the stock market panics occasionally if you choose a conservative allocation. |
Is there software to buy and sell stocks in real time on very small moves in price? | I'm answering in a perspective of an End-User within the United Kingdom. Most stockbrokers won't provide Real-time information without 'Level 2' access, however this comes free for most who trade over a certain threshold. If you're like me, who trade within their ISA Holding each year, you need to look elsewhere. I personally use IG.com. They've recently began a stockbroking service, whereas this comes with realtime information etc with a paid account without any 'threshold'. Additionally, you may want to look into CFDs/Spreadbets as these, won't include the heavy 'fees' and tax liabilities that trading with stocks may bring. |
Are cashiers required to check a credit card for a signature in the U.S.? | It depends on the business. Some ask for ID and check against the signature (rare); some ask for ID but barely glance at it; some check just that it's signed (also rare); some ask for me to input my ZIP code on the card reader (KMart); and some don't do anything (most common). What they do doesn't seem connected to whether I put the card in the reader myself, or hand it to the cashier for them to scan. It does seem silly to check IDs, etc., as there are places such as gas stations where I never even see an employee, and can spend just as much there as at WalMart, KMart, or the grocery store, all places that tend to do more checking. |
For the first time in my life, I'm going to be making real money…what should I do with it? | Fund your retirement accounts first. Even as an intern, it is still worthwhile to open a Roth IRA and start contributing to it. See my answer to a similar question: Best way to start investing, for a young person just starting their career? |
What benefits do “title search companies” have over physically visiting a land records offices? | Basically what @littleadv said, but let me amplify what I think is the most important point. As he/she says, one thing you're paying them for is their expertise. If the title on record at the county office had a legal flaw in it, would you recognize it? In a way your question is like asking, Why should I go to a doctor when I could just make my own medicine out of herbs I grow in my garden and treat myself? Maybe you could. But the doctor and the pharmacist have years of training on how to do this right. You probably don't. Is it possible for you to learn everything you need to do it right? Sure. But do you want to spend the time to study all that for something that you will do -- buy a house -- maybe once every ten years? Will you remember it all next time or have to learn it all over? But really most important is, title companies offer insurance in case the title turns out to be flawed. That, to me, is the big reason why I would use a title company even if I was paying cash and there was no bank involved to insist on it. If there's some legal flaw in the title and it turns out that someone else has a claim to my house, and I lose in court, I would be out about $100,000. Your house might be costing you much more. That's a huge risk to take. Paying the couple of hundred dollars for insurance against that risk seems well worth it to me. And by the way, I don't think the "due diligence" is easy. It's NOT just a matter of making sure a title is really on file at the court house and has the proper stamp on it. It's all about, Does someone else have a legal claim to this property? Like, maybe three owners ago someone forged a signature on a deed, so the sale is fraudulent, and now the person who was defrauded or his heirs discover the issue and claim the property. Or maybe the previous owner failed to pay a contractor who did repairs on the house, and now he goes to court and gets a lien on the property. It's unlikely that you have the expertise to recognize a forged document. You almost surely have no way to recognize a forged signature of someone you never met on an otherwise valid-looking document. And you'd have to do a lot of research to find every contractor who ever worked on the house and insure none of them have a claim. Etc. |
Do I repay Social Security Disability Insurance (SSDI) if I suddenly have income and assets | There are two types of insurance, which causes some confusion. Social Security Disability Insurance (which you indicate you have) is insurance you can receive benefit from if you earn enough "work credits" (payroll taxes) prior to your disability onset. It is not a needs-based program. Supplemental Security Income is a need-based program which does not consider your work history. To qualify for this, your total assets need to be lower than some threshold and your family income also below some threshold. If you inherit a home, or money, I doubt this would jeopardize your SSDI qualification, since your qualification was based on a disabling condition and work history. If you inherit an income property, which you manage (i.e. you become a landlord), this may jeopardize your claim that you are unable to work. Even if you are not making an "income" as the landlord, but the work your are performing is deemed to have some "value" this too could jeopardize your claim. All of this can be very complicated, and there are some excellent references on the web including SSA website, and some other related websites. Finally, if you become able to work while on SSDI, your benefit may/will end depending on the level of work you are able to perform. But just because you are able to work again does not mean you need to repay past benefits received (assuming your condition has not been falsified). Your local social security office, or the social security main office both offer telephone support and can also answer questions regarding your concern. Here are a couple relevant links: |
What are the risks of Dividend-yielding stocks? | Dividend Stocks like any stock carry risk and go both up and down. It is important to choose a stock based on the company's potential and performance. And, if they pay a dividend it does help. -RobF |
Buy the open and set a 1% limit sell order | Nothing is wrong and it should be profitable - but it sounds too good to be true. The devil is in the details and you have not described how you found those stocks. For example, you may have scanned the 500 stocks in the S&P 500, and you may have found a few that exhibit that pattern over a given time window. But it doesn't mean that they will continue to do so. In other words they may just be random outliers. This is generically called overfitting. A more robust test would be to use a period, say 2000-2005 to find those stocks and check over a future period, say 2006-2014 if the strategy you describe is profitable. My guess is that it won't. |
Please explain: What exactly is a CDS or “Credit Default Swap”? | A Credit Default Swap is a derivative, a financial contract with a value dependent upon another asset. A CDS, in essence, is exactly what it sounds like a swap upon default. The typical arrangement is that a holder of non-risk free credit enters into an arrangement with a counterparty to pay the counterparty a portion of the income received from the non-risk free credit in exchange for being able to force the counterparty to deliver risk free credit if the non-risk free credit defaults. Banks use this mechanism to reduce the risk of the loans they produce while packaging them to be resold to investors. Banks will typically buy CDSes on mortgages and corporate bonds, paying part of the income from interest payments received, to have the right to force counterparties, typically hedge funds and insurance companies, to swap national Treasuries upon the event that the mortgages or corporates default. The banks receive less income yet are able to take on more inventory to sell to investors so that more loans can be made to borrowers, households and corporations. Hedge funds typically take on more complex arrangements while insurance companies sell CDSes because they are usually overflowing with risk-free assets yet are starved for income. |
In India, what is the difference between Dividend and Growth mutual fund types? | After searching a bit and talking to some investment advisors in India I got below information. So thought of posting it so that others can get benefited. This is specific to indian mutual funds, not sure whether this is same for other markets. Even currency used for examples is also indian rupee. A mutual fund generally offers two schemes: dividend and growth. The dividend option does not re-invest the profits made by the fund though its investments. Instead, it is given to the investor from time to time. In the growth scheme, all profits made by the fund are ploughed back into the scheme. This causes the NAV to rise over time. The impact on the NAV The NAV of the growth option will always be higher than that of the dividend option because money is going back into the scheme and not given to investors. How does this impact us? We don't gain or lose per se by selecting any one scheme. Either we make the choice to get the money regularly (dividend) or at one go (growth). If we choose the growth option, we can make money by selling the units at a high NAV at a later date. If we choose the dividend option, we will get the money time and again as well as avail of a higher NAV (though the NAV here is not as high as that of a growth option). Say there is a fund with an NAV of Rs 18. It declares a dividend of 20%. This means it will pay 20% of the face value. The face value of a mutual fund unit is 10 (its NAV in this case is 18). So it will give us Rs 2 per unit. If we own 1,000 units of the fund, we will get Rs 2,000. Since it has paid Rs 2 per unit, the NAV will fall from Rs 18 to Rs 16. If we invest in the growth option, we can sell the units for Rs 18. If we invest in the dividend option, we can sell the units for Rs 16, since we already made a profit of Rs 2 per unit earlier. What we must know about dividends The dividend is not guaranteed. If a fund declared dividends twice last year, it does not mean it will do so again this year. We could get a dividend just once or we might not even get it this year. Remember, though, declaring a dividend is solely at the fund's discretion; the periodicity is not certain nor is the amount fixed. |
If I were to get audited, what would I need? | While IANAL (tax or otherwise), I have always found that keeping original receipts is the only way to go. While anything can, at some level, be forged or faked, a photo is one more step removed from the original. A mere listing on a web site isn't much proof of anything. Keep your originals for a suggested seven years; while the IRS is trying to audit much faster than that, and any inkling of fraud can be investigated at any time, you should be well and clear with originals kept that long. |
What would I miss out on by self insuring my car? | As others have pointed out, it's all about a fixed, small cost versus the potential of a large cost. If you have insurance, you know you will pay a fixed amount per month. There is a 100% probability that you will have to pay this premium. If you don't have insurance, there is a large chance that you will have no cost in any given month, and a small chance that you will have a large cost. Like my home-owners insurance costs me about $50 per month. If I didn't have insurance and my house burned down, I would be out something like $100,000. What's the chance that my house will burn down this month? Very small. But I'd rather pay $50 and not have to worry about it. On the other hand, I just bought a filing cabinet for $160 and the store offered me an "extended warranty" for something like $20 a year. What's the probability that some accident will happen that damages my filing cabinet? Pretty small. Even if it did, I think I could handle shelling out $160. I can imagine my stomach in knots and lying awake at nights worrying about the possibility of losing $100,000 or finding myself homeless. I can't imagine lying awake at nights worrying about losing $160 or being force to stuff my files under the bed. I'll take my chances. When I was young and had even less money than I have now, I bought cars that cost me a thousand dollars or. Even poor as I was, I knew that if the car was totaled I could dig up the cash to buy another. It wasn't worth paying the insurance premium. These days I'm driving a car that cost me $6,000. I have collision and comprehensive insurance, but I think it's debatable. I bought the car with cash to begin with, and if I had to I could scrape up the cash to replace it. Especially considering that my last payment for my daughter's college tuition is due next month and then that expense is gone. :-) |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | Here's a few. Is this what you're looking for? Also this should probably be a community wiki. |
Do people tend to spend less when using cash than credit cards? | I'd like to know if there is any reliable research on the subject. Intuitively, this must be true, no? Is it? First, is it even possible to discover the correlation, if one exists? Dave Ramsey is a proponent of "Proven study that shows you will spend 10% more on a credit card than with cash." Of course, he suggests that the study came from an otherwise reliable source, Dun & Bradstreet. A fellow blogger at Get Rich Slowly researched and found - Nobody I know has been able to track down this mythical Dun and Bradstreet study. Even Dun and Bradstreet themselves have been unable to locate it. GRS reader Nicole (with the assistance of her trusty librarian Wendi) contacted the company and received this response: “After doing some research with D&B, it turns out that someone made up the statement, and also made up the part where D&B actually said that.” In other words, the most cited study is a Myth. In fact, there are studies which do conclude that card users spend more. I think that any study (on anything, not just this topic. Cigarette companies buy studies to show they don't cause cancer, Big Oil pays to disprove global warming, etc.) needs to be viewed with a critical eye. The studies I've seen nearly all contain one of 2 major flaws - My own observation - when I reviewed our budget over the course of a year, some of the largest charges include - I list the above, as these are items whose cost is pretty well fixed. We are not in the habit of "going for a drive," gas is bought when we need it. All other items I consider fixed, in that the real choice is to pay with the card or check, unlike the items some claim can be inflated. These add to about 80% of the annual card use. I don't see it possible for card use to impact these items, and therefore the "10% more" warning is overreaching. To conclude, I'll concede that even the pay-in-full group might not adhere to the food budget, and grab the $5 brownie near the checkout, or over tip on a restaurant meal. But those situations are not sufficient to assume that a responsible card user comes out behind over the year for having done so. A selection of the Studies I am referencing - |
Should I pay more than 20% down on a home? | First of all, realize that buying a home isn't really an investment. It is cheaper to rent. In recent years, people were able to sell their houses for astronomical profits, but that won't be happening much in the future. Additionally, there are many hidden costs of owning a home. Regarding the mortgage interest tax deduction, don't buy a house just to get this. It is like spending $1 to get back some amount of money less than $1. So just keep that in mind. Are you debt free? If not, pay off your other debts before buying a home. I follow the advice of Dave Ramsey, so I'll echo it here. Make sure you have an emergency fund and no debt. At this point I think you are ready to buy a house. When you do, put down as much as you can; above 20% if possible. Then get a 15 year fixed rate mortgage. At this point, start saving for your kid's college (if you believe in that) and paying down your home. Having no mortgage is a dream many people never have. I cannot wait until I have no mortgage. Don't get suckered into getting a high priced loan. Pay down as much of the price of the house as possible up front. This gives you flexibility too. What if you need to sell quickly? Well, you will have equity from the get-go, so this will be much easier. Good luck with your purchase! |
Who are the real big share holders of $AMDA? | There are not necessarily large shareholders, maybe every other Joe Schmoe owns 3 or 5 shares; and many shares might be inside investment funds. If you are looking for voting rights, typically, the banks/investment companies that host the accounts of the individual shareholders/fund owners have the collective voting rights, so the Fidelity's and Vanguard's of the world will be the main and deciding voters. That is very common. |
why do I need an emergency fund if I already have investments? | It all depends on the liquidity of your investments some examples: You can mitigate only the risk that you can control. It is always good to have: |
Income At the Sell or Reception? | It looks like fair-market value when you receive your virtual currency is counted as income. And you're also subject to self-employment tax on that income. Here's an FAQ from the IRS: Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.Q-9: Is an individual who “mines” virtual currency as a trade or business subject to self-employment tax on the income derived from those activities? A-9: If a taxpayer’s “mining” of virtual currency constitutes a trade or business, and the “mining” activity is not undertaken by the taxpayer as an employee, the net earnings from self-employment (generally, gross income derived from carrying on a trade or business less allowable deductions) resulting from those activities constitute selfemployment income and are subject to the self-employment tax. See Chapter 10 of Publication 334, Tax Guide for Small Business, for more information on selfemployment tax and Publication 535, Business Expenses, for more information on determining whether expenses are from a business activity carried on to make a profit. You'd of course be able to offset that income with the expense of mining the virtual currency, depreciation of dedicated mining equipment, electricity, not sure what else. Edit: Here's a good resource on filing taxes with Bitcoin: Filling in the 1040 Income from Bitcoins and all crypto-currencies is declared as either capital gains income or ordinary income, for example from mining. Income Ordinary income will be declared on either your 1040 (line 21 - Other Income) for an individual, or within your Schedule C, if you are self-employed or have sole-proprietor business. Capital Gains Capital gains income, or losses, are declared on Schedule D. Since there are no reported 1099 forms from Bitcoin exchanges, you will need to include your totals with Box C checked for short-term gains, and with Box F checked for long-term gains. Interesting notes from that article, your first example could actually be trickier than expected if you started mining before there was a Monero to USD exchange. Also, there can also be capital gains implications from using your virtual currency to buy goods, which sounds like a pain to keep track of. |
I'm currently unemployed and have been offered a contract position. Do I need to incorporate myself? How do I do it? | Do you need to incorporate? This depends on whether the company prefers you to be incorporated. If you are going through a recruiting company, some of them are willing to deal with non-incorporated people (Sole Proprietor) and withhold taxes from your cheques for you. If you do want to incorporate, you can do it yourself, go through a paralegal, or you can even do it online. I did mine in Ontario for about $300 (no name search - i just have a numbered corporation like 123456 Ontario Inc.) through www.oncorp.com - there are other sites that do it as well. Things to consider - if you're contracting through a corporation you most likely need to: Talk to an accountant about these for clarification - most of them will give you an initial consultation for free. Generally speaking, accountant fees for corporate filing taxes averages about $1000-2000 a year. |
Should I pay off my 401k loan or reinvest the funds elsewhere? | This summer I used a loan from my 401(k) to help pay for the down payment of a new house. We planned on selling a Condo a few months later, so we only needed the loan for a short period but wanted to keep monthly payments low since we would be paying two mortgages for a few months. I also felt like the market might take a dip in the future, so I liked the idea of trying to cash out high and buy back low (spoiler alert: this didn't happen). So in July 2017 I withdrew $17,000 from my account (Technically $16,850.00 principal and $150 processing fee) at an effective 4.19% APR (4% rate and then the fee), with 240 scheduled payments of $86.00 (2 per month for 10 years). Over the lifetime of the loan the total finance charge was $3,790, but that money would be paid back into my account. I was happy with the terms, and it helped tide things over until the condo was sold a few months later. But then I decided to change jobs, and ended up having to pay back the loan ~20 weeks after it was issued (using the proceeds from the sale of the condo). During this time the market had done well, so when I paid back the funds the net difference in shares that I now owned (including shares purchased with the interest payments) was $538.25 less than today's value of the original count of shares that were sold to fund the loan. Combined with the $150 fee, the overall "cost" of the 20 week loan was about 4.05%. That isn't the interest rate (interest was paid back to my account balance), but the value lost due to the principal having been withdrawn. On paper, my account would be worth that much more if I hadn't withdrawn the money. Now if you extrapolate the current market return into 52 weeks, you can think of that loan having an APR "cost" of around 10.5% (Probably not valid for a multi year calculation, but seems accurate for a 12 month projection). Again, that is not interest paid back to the account, but instead the value lost due to the money not being in the account. Sure, the market could take a dip and I may be able to buy the shares back at a reduced cost, but that would require keeping sizable liquid assets around and trying to time the market. It also is not something you can really schedule very well, as the loan took 6 days to fund (not including another week of clarifying questions back/forth before that) and 10 day to repay (from the time I initiated the paperwork to when the check was cashed and shares repurchased). So in my experience, the true cost of the loan greatly depends on how the market does, and if you have the ability to pay back the loan it probably is worth doing so. Especially since you may be forced to do so at any time if you change jobs or your employment is terminated. |
How does investing in commodities/futures vary from stocks? | As Dilip has pointed out in the comment, investing in commodities is to either delivery or Buy. Lets say you entered into buying "X" quantities of Soybeans in November, contract is entered into May. In November, if the price is higher than what you purchased for, you can easily sell this, and make money. If in November, the price is lower than your contract price, you have an option to sell it at loss. If you don't want to sell it at loss, you are supposed to take the physical shipment [arrange for your own transport] and store it in warehouse. Although there are companies that will allow you to lease their warehouse, it very soon becomes more loss making proposition. By doing this you can HOLD onto as long as you want [or as long as the good survive and don't rot] It makes sense for a large wholesaler to enter into Buy contracts as he would be like to get known prices for at least half the stock he needs. Similarly large farmers / co-operative societies need to enter into Sell contracts so that they are safeguarded against price fluctuations. |
Is an interest-only mortgage a bad idea? | Normally interest only mortgages are taken incase one planning to sell off the property after a few years and purchase of the property is for investment. In such a case instead of burdening oneself with a huge EMI, one opts for an interest only mortgage, and towards the end of the term, sell off the house at profit and repay back the entire principal. I am not to sure if interest only mortgages are encouraged for properties you plan to live in. Although I do not know about the ING scheme, normally there is no prepayment option on interest only mortgages, its Bank way of earning a fixed income for the contracted period and thats the reason why the interest rates are lower than a regular mortgage. If you do the math, you may be paying more in total interest than on a regular mortgage. |
Is it possible to lower the price of a stock while buying? | The strategy could conceivably work if you had sufficient quantity of shares to fill all of the outstanding buy orders and fill your lower buy orders. But in this case you are forcing the market down by selling and reinforcing the notion that there is a sell off by filling ever lower buy orders. There is the potential to trigger some stop loss orders if you can pressure it low enough. There is a lot of risk here that someone sees what you are doing and decides to jump in and buy forcing the price back up. Could this work sure. But it is very risky and if you fail to create the panic selling then you risk losing big. I also suspect that this would violate SEC Rules and several laws. And if the price drops too far then trading on the stock would be halted and is likely to return at the appropriate price. Bottom line I can not see a scenario where you do not trigger the stop, net a profit and end up with as many or more stock that you had in the first place. |
Do you know of any online monetary systems? | Congratulations! You see the problem. You can't get away from unstable currencies. The other problem is that the US will shut down anything that appears to be providing a replacement for the US Dollar. Once a token or medallion or gift certificate or whatever starts being used outside the confines of one business or one network of businesses, it will be shut down, quickly. It happened with Las Vegas gambling tokens. Another more recent attempt was with the Liberty Dollar, gold and silver coins and certificates that not only had precious metal backing, but whose proponents encouraged taking them to retailers and paying with them as if they were US Dollars. There were other problems with this idea, but it was the competitive stature of the Liberty dollar that got the headquarters raided and the main site shut down. Basically, all signs point toward dealing with currencies and their state of being systematically eroded over time. If you do find one that appears to exist, be wary, because the rules can change at any time, and the "money" will be nowhere near as liquid as a proper currency. |
Will a credit card company close my account if I stop using it? | The workaround solution is to simply avoid having an exactly zero balance on your account. Thus for inactive credit cards that I want to keep around for emergency use, I always leave a small positive balance on the card. The credit card company reserves the right to cancel my card at any time, but a positive balance would force them to send me a check for the privilege of doing so. A positive balance avoids making the account appear inactive and makes it cheaper for them to simply leave the account open. |
Are the AARP benefits and discounts worth the yearly membership cost? | Note: this answer was provided when the question was only about Life Insurance, therefore it does not address any other "benefits" Term Life Insurance is very easy to evaluate, once you have determined how much you need and for how long. For significant amounts of coverage they may require a physical to be performed. The price quotes will be for two levels of health, so you can compare costs from many companies quite easily. You have several sources in no particular order: employer, independent company, 3rd party like AARP, AAA, or via you bank or credit union. Note that the 3rd party will be getting a cut of the premium. Also some choices offered from the employer or 3rd party may be limited in size or duration. The independent companies will be able to have terms that extend for 10 years or more. So view the insurance offered by AARP as just another option that has to be compared to all your other options. |
What to do with a distribution as a young person? | I highly recommend passive investing through something like betterment (www.betterment.com) or vanguard's ETFs. FutureAdvisor.com can provide some good advice as to what funds to invest in. I'd recommend using that money to max out your Roth IRAs each year, too. |
Question about being a resident | One thing to consider besides what rules Oregon has, is what rules your old state have. Of course the lack of income tax in Nevada means that most people are trying to convince their new state they are still a resident of Nevada. You are a full-year Oregon resident if you live in Oregon all year. You are also a full-year Oregon resident, even if you live outside Oregon, if all of the following are true: Part-year resident: You are a part-year resident if you moved into or out of Oregon during the tax year. The requirement for financial life means that you should: change all your Nevada banks to Oregon banks; Change all your mail to Oregon; Sell any property or end any leases you have in Nevada. Or course you need to research the rules for in state college tuition, death with dignity if any apply to you. In border areas you must be careful to establish residency for children to attend public schools. Some families try to cheat to get their children into a better school. |
Why does the Fed use PCE over CPI? | The reason is in your own question. The answer is simple. They use that code to tax the product otherwise it would just be out of pocket expenses. |
Why invest for the long-term rather than buy and sell for quick, big gains? | There are people (well, companies) who make money doing roughly what you describe, but not exactly. They're called "market makers". Their value for X% is somewhere on the scale of 1% (that is to say: a scale at which almost everything is "volatile"), but they use leverage, shorting and hedging to complicate things to the point where it's nothing like a simple as making a 1% profit every time they trade. Their actions tend to reduce volatility and increase liquidity. The reason you can't do this is that you don't have enough capital to do what market makers do, and you don't receive any advantages that the exchange might offer to official market makers in return for them contracting to always make both buy bids and sell offers (at different prices, hence the "bid-offer spread"). They have to be able to cover large short-term losses on individual stocks, but when the stock doesn't move too much they do make profits from the spread. The reason you can't just buy a lot of volatile stocks "assuming I don't make too many poor choices", is that the reason the stocks are volatile is that nobody knows which ones are the good choices and which ones are the poor choices. So if you buy volatile stocks then you will buy a bunch of losers, so what's your strategy for ensuring there aren't "too many"? Supposing that you're going to hold 10 stocks, with 10% of your money in each, what do you do the first time all 10 of them fall the day after you bought them? Or maybe not all 10, but suppose 75% of your holdings give no impression that they're going to hit your target any time soon. Do you just sit tight and stop trading until one of them hits your X% target (in which case you start to look a little bit more like a long-term investor after all), or are you tempted to change your strategy as the months and years roll by? If you will eventually sell things at a loss to make cash available for new trades, then you cannot assess your strategy "as if" you always make an X% gain, since that isn't true. If you don't ever sell at a loss, then you'll inevitably sometimes have no cash to trade with through picking losers. The big practical question then is when that state of affairs persists, for how long, and whether it's in force when you want to spend the money on something other than investing. So sure, if you used a short-term time machine to know in advance which volatile stocks are the good ones today, then it would be more profitable to day-trade those than it would be to invest for the long term. Investing on the assumption that you'll only pick short-term winners is basically the same as assuming you have that time machine ;-) There are various strategies for analysing the market and trying to find ways to more modestly do what market makers do, which is to take profit from the inherent volatility of the market. The simple strategy you describe isn't complete and cannot be assessed since you don't say how to decide what to buy, but the selling strategy "sell as soon as I've made X% but not otherwise" can certainly be improved. If you're keen you can test a give strategy for yourself using historical share price data (or current share price data: run an imaginary account and see how you're doing in 12 months). When using historical data you have to be realistic about how you'd choose what stocks to buy each day, or else you're just cheating at solitaire. When using current data you have to beware that there might not be a major market slump in the next 12 months, in which case you won't know how your strategy performs under conditions that it inevitably will meet eventually if you run it for real. You also have to be sure in either case to factor in the transaction costs you'd be paying, and the fact that you're buying at the offer price and selling at the bid price, you can't trade at the headline mid-market price. Finally, you have to consider that to do pure technical analysis as an individual, you are in effect competing against a bank that's camped on top of the exchange to get fastest possible access to trade, it has a supercomputer and a team of whizz-kids, and it's trying to find and extract the same opportunities you are. This is not to say the plucky underdog can't do well, but there are systematic reasons not to just assume you will. So folks investing for their retirement generally prefer a low-risk strategy that plays the averages and settles for taking long-term trends. |
Why do banks insist on allowing transactions without sufficient funds? | The reason they want the transaction to go through is because they make money that way. Remember the overdraft protection might incur a fee. If it does their experience may show them that the fee is a greater source of profit when balanced against the losses incurred because of insufficient funds. Even free overdraft transactions are limited. If they didn't want to make money they would have a way to make sure that multiple overdrafts in a short time window wouldn't require multiple protection events. Remember each time they transfer funds they only bring you to zero. As it is now the coffee you buy after putting money on your subway fare card might also trigger an overdraft transfer. |
Do investors go long option contracts when they cannot cover the exercise of the options? | I think it depends on your broker. Some brokers will not try to auto exercise in the money options. Others will try to do the exercise it if you have available funds. Your best bet, if find yourself in that situation, is to sell the option on the open market the day of or slightly before expiration. Put it on your calendar and don't forget, you could loose your profits. @#2 Its in the best interest of your broker to exercise because they get a commission. I think they are used to this situation where there is a lack of funds. Its not like bouncing a check. You will need to check with your broker on this. @#3 I think many or most options traders never intend on buying the underling stock. Therefore no, they do not always make sure there is enough funds to buy. |
What determines a tax resident in Florida | I think the 60 days/year come from the IRS tax residency determination, which isn't a Florida law but applies to all the states. Have a look at the "substantial presence" paragraph to see where the 60 days are coming from. |
US Bank placing a hold on funds from my paycheck deposit: Why does that make sense? | It is possible that they only do the hold on the first deposit from a given source. It is probably worth asking if they intend to do the hold on every paycheck or just the first one. |
Why can't online transactions be completed outside of business hours? | Generally, unless you're doing a wire transfer, bank transactions are processed in batches overnight. So the credit card company won't be able to confirm your transfer until the next business day (it may take even longer for them to actually receive the money). |
For what dates are the NYSE and U.S. stock exchanges typically closed? | All public US equity exchanges are closed on the 9 US trading holidays (see below) and open on all other days. Exchanges also close early (13:00 ET) on the Friday after Thanksgiving and on the day before Independence Day if Independence Day is being observed on a Tuesday, Wednesday, Thursday, or Friday. (Some venues have extended trading hours as a matter of course; for them an "early close" might be later than 13:00 ET.) To answer the second question, yes, if you know NASDAQ's or AMEX's holiday schedule, then you know NYSE's (modulo the timing of their early close). I'm not sure about the options exchanges; they're not regulated the same way and are a good example of exchanges with extended trading hours in the first place. The US trading holidays are as follows. Note that trading holidays are not the same as federal or bank holidays, which include Columbus Day and Veterans Day but do not include Good Friday. |
Best Time to buy a stock in a day | The best time to buy a stock is the time of day when the stock price is lowest! Obviously you learned nothing from that sentence, but unfortunately you won't get a much better answer than that. Here's a question that is very similar to yours: "Is it better to have a picnic for lunch or for dinner to minimize the chance of getting rained out?" Every day is different... |
Why do governments borrow money instead of printing it? | The government could actually do either one to expand the money supply as necessary to keep up with rising productivity / an increased labor supply. The question is merely political. In the case of the US, printing money involves convincing politicians to spend it. While we currently run a deficit, there is a large lobby within the US who are incredibly anti-deficit, and are fighting against this for no good reason. If the money supply were left in their hands, we would end up with a shrinking money supply and rapid deflation. On the other hand, the Fed can simply bypass the politicians, and control the money supply directly by issuing bonds. It's easier for them, they don't have to explain it to voters (only to economists), and it gives them more direct control without any messy political considerations like which programs to expand or cut. |
Purpose of having good credit when you are well-off? | I have never had a credit card and have been able to function perfectly well without one for 30 years. I borrowed money twice, once for a school loan that was countersigned, and once for my mortgage. In both cases my application was accepted. You only need to have "good credit" if you want to borrow money. Credit scores are usually only relevant for people with irregular income or a past history of delinquency. Assuming the debtor has no history of delinquency, the only thing the bank really cares about is the income level of the applicant. In the old days it could be difficult to rent a car without a credit car and this was the only major problem for me before about 2010. Usually I would have to make a cash deposit of $400 or something like that before a rental agency would rent me a car. This is no longer a problem and I never get asked for a deposit anymore to rent cars. Other than car rentals, I never had a problem not having a credit card. |
Does an index have a currency? | More importantly, index funds are denominated in specific currencies. You can't buy or sell an index, so it can be dimensionless. Anything you actually do to track the index involves real amounts of real money. |
What does the average log-return value of a stock mean? | Log-returns are very commonly used in financial maths, especially quantitative finance. The important property is that they're symmetrical around 0 with respect to addition. This property makes it possible to talk about an average return. For instance, if a stock goes down 20% over a period of time, it has to gain 25% to be back where you started. For the log-return on the other hand the numbers are 0.223 down over a period of time, and 0.223 up to get you back to square 1. In this sense, you can simply take an arithmetic average and it makes sense. You can freely add up or subtract values on the log-return scale, like log-interest rates or log-inflation rates. Whereas the arithmetic mean of (non-log) returns is simply meaningless: A stock with returns -3% and +3% would have 0% on average, when in fact the stock has declined in price? The correct approach on direct price-returns would be to take a different mean (e.g. geometric) to get a decent average. And yet it will be hard to incorporate other information, like subtracting the risk-free rate or the inflation rate to get rate-adjusted average returns. In short: Log-returns are easier to handle computationally, esp. in bulk, but non-log-returns are easier to comprehend/imagine as a number of their own. |
Calculate investment's interest rate to break-even insurance cost [duplicate] | I believe the following formula provides a reasonable approximation. You need to fill in the following variables: The average annual return you need on investing the 15% = (((MP5 - MP20) * 12) + (.0326 * .95 * PP / Y)) / (PP *.15) Example assuming an interest rate of 4% on a 100K home: If you invest the $15K you'll break even if you make a 9.86% return per year on average. Here's the breakdown per year using these example numbers: Note this does not consider taxes. |
Making $100,000 USD per month, no idea what to do with it | What I would do, in this order: Get your taxes in order. Don't worry about fancy tricks to screw the tax man over; you've already admitted that you're literally making more money than you know what to do with, and a lot of that is supported, one way or another, by infrastructure that's supported by tax money. Besides, your first priority is to establish basic security for yourself and your family. Making sure you won't be subjected to stressful audits is an important part of that! Pay off any and all outstanding debts you may have. This establishes a certain baseline standard of living for you: no matter what unexpected tragedies may come up, at least you won't have to deal with them while also keeping the wolves at bay at the same time! Max out a checking account. I believe the FDIC maximum insured value is $250,000. Fill 'er up, get a debit card, and just sit on it. This is a rainy day fund, highly liquid and immediately usable in case you lose your income. Put at least half of it into an IRA or other safe investments. Bonds and reliable dividend-paying stocks are strongly preferred: having money is good but having income is much better, especially in retirement! Quality of life. Splurge a little. (Emphasis on a little!) Look around your life. There are a few things that it would be nice if you just had, but you've never gotten around to getting. Pick up a few of them, but don't go overboard. Spending too much too quickly is a good way to end up with no money and no idea what happened to it. Also, note that this isn't just for you; family members deserve some love too! Charitable giving. If you have more money than you know what to do with, there are plenty of people out there who know exactly what to do--try to go on living and build a basic life for themselves--but have no money with which to do so. Do your research. Scam charities abound, as do more-or-less legitimate ones who actually do help those in need, but also end up sucking up a surprisingly high percentage of donations for "administrative costs". Try and avoid these and send your money where it will actually do some good in the world. Reinvest in yourself. You're running a business. Make sure you have the best tools and training you can afford, now that you can afford more! |
Are variable rate loans ever a good idea? | It all has to do with risk and reward. The risk is that interest rates will rise. To entice you to go with the variable, they make it so it is cheaper if interest rates never rise. Your job is to guess whether interest rates are likely to go up or not. In a first approximation, you should go fixed. The bank employs very smart people whose entire job is to know whether interest rates will go up or not. Those people chose the price difference between the two, and it's sure to favour the bank. That is, the risk of extra payments you'll make on the variable is probably more than the enticement. But, some people can't sleep at night if their payments (or more realistically, the interest part of their payments) might double. If that's you, go fixed. If that's not you, understand that the enticement actually has to be turned up a bit, to get more people to go variable, because of the sleeping-at-night feature. Think long and hard about your budget and what would happen if your payment jumped. If you could handle it, variable might be the better choice. Personally, I have been taking "variable" on my mortgage for decades (and now I don't have one) and never once regretted it. I also counselled my oldest child to take variable on her mortgage. Over this century so far, if rates ticked up, they didn't tick up to the level the fixed was offered at. Mostly they have sat flat. But if ever there was a world in which "past performance does not predict future results" it would be interest rate trends. Do your own research. |
Intrinsic value of non-voting shares which don't pay dividends | Even with non-voting shares, you own a portion of the company including all of its assets and its future profits. If the company is sold, goes out of business and liquidates, etc., those with non-voting shares still stand collect their share of the funds generated. There's also the possibility, as one of the comments notes, that a company will pay dividends in the future and distribute its assets to shareholders that way. The example of Google (also mentioned in the comments) is interesting because when they went to voting and non-voting stock, there was some theoretical debate about whether the two types of shares (GOOG and GOOGL) would track each other in value. It turned out that they did not - People did put a premium on voting, so that is worth something. Even without the voting rights, however, Google has massive assets and each share (GOOG and GOOGL) represented ownership of a fraction of those assets and that kept them highly correlated in value. (Google had to pay restitution to some shareholders of the non-voting stock as a result of the deviation in value. I won't get into the details here since it's a bit of tangent, but you could easily find details on the web.) |
What tax law loophole is Buffet referring to? | A Section 1256 contract is any: Non-equity options include debt options, commodity futures options, currency options, and broad-based stock index options. A broad-based stock index is based upon the value of a group of diversified stocks or securities (such as the Standard and Poor's 500 index). 60% of the capital gain or loss from Section 1256 Contracts is deemed to be long-term capital gain or loss and 40% is deemed to be short-term capital gain or loss. What this means is a more favorable tax treatment of 60% of your gains. http://www.tradelogsoftware.com/tax-topics/futures/ It's a really wierd rule (arbitraty 60% designation, so broad, etc), but section 1256 contracts get preferential tax treatment and that's what Buffett's talking about. |
How do I refinance a car loan into someone else's name so it can be their car? | Your first step is to talk to the current lender and ask about refinancing in the other person's name. The lender is free to say no, and if they think the other person is unlikely to pay it back, they won't refinance. If you're in this situation because the other person didn't qualify for a loan in the first place, the lender probably won't change their mind, but it's still worth asking. From the lender's point of view, you'll be selling the other person the car. If they qualify for a loan, it's as simple as getting the loan from a bank, then doing whatever is required by your state to sell a car between either private parties or between relatives (depending on who the other person is). The bank might help you with this, or your state's DMV website. Here are a few options that don't involve changing who is on the loan: Taking out a loan for another person is always a big risk. Banks have entire departments devoted to determining who is a good credit risk, and who isn't, so if a person can't get a loan from a bank, it's usually for a good reason. One good thing about your situation: you actually bought the car, and are the listed owner. Had you co-signed on a loan in the other person's name, you'd owe the money, but wouldn't even have the car's value to fall back on when they stopped paying. |
Is it legal to charge interest on interest? | Yes it most cases it is legal. Plus depending on how you look at it, the last payment of 1000 can be principal paid and interest was paid in initial installments. |
What are the risks of Dividend-yielding stocks? | The risk in a divident paying stock can come from 2 sources. The business of the company, or the valuation of the stock at the time you buy. The business of the company relates to how they are running things, the risks they are taking with the company, innovations in their pipeline, and their competitive landscape. You can find all sorts of examples of companies that paid nice dividends but didn't end so well... Eastman Kodak, Enron, Lehman brothers, all used to pay very nice dividends at some point... On the other hand you have the valuation. The company is running great, but the market has unrealistic expectations about it. Think Amazon and Yahoo back in 2001... the price was way too high for the company's worth. As the price of a stock goes up, the return that you get from its future cash flows (dividends) goes down (and viceversa). If you want to go deep into the subject, check out this course from Chicago U they spend a lot of time talking about dividends, future returns from stocks and the risk rewards of finding stocks by methods such as these. |
List of Investments from safest to riskiest? | I think your premise is slightly flawed. Every investment can add or reduce risk, depending on how it's used. If your ordering above is intended to represent the probability you will lose your principal, then it's roughly right, with caveats. If you buy a long-term government bond and interest rates increase while you're holding it, its value will decrease on the secondary markets. If you need/want to sell it before maturity, you may not recover your principal, and if you hold it, you will probably be subject to erosion of value due to inflation (inflation and interest rates are correlated). Over the short-term, the stock market can be very volatile, and you can suffer large paper losses. But over the long-term (decades), the stock market has beaten inflation. But this is true in aggregate, so, if you want to decrease equity risk, you need to invest in a very diversified portfolio (index mutual funds) and hold the portfolio for a long time. With a strategy like this, the stock market is not that risky over time. Derivatives, if used for their original purpose, can actually reduce volatility (and therefore risk) by reducing both the upside and downside of your other investments. For example, if you sell covered calls on your equity investments, you get an income stream as long as the underlying equities have a value that stays below the strike price. The cost to you is that you are forced to sell the equity at the strike price if its value increases above that. The person on the other side of that transaction loses the price of the call if the equity price doesn't go up, but gets a benefit if it does. In the commodity markets, Southwest Airlines used derivatives (options to buy at a fixed price in the future) on fuel to hedge against increases in fuel prices for years. This way, they added predictability to their cost structure and were able to beat the competition when fuel prices rose. Even had fuel prices dropped to zero, their exposure was limited to the pre-negotiated price of the fuel, which they'd already planned for. On the other hand, if you start doing things like selling uncovered calls, you expose yourself to potentially infinite losses, since there are no caps on how high the price of a stock can go. So it's not possible to say that derivatives as a class of investment are risky per se, because they can be used to reduce risk. I would take hedge funds, as a class, out of your list. You can't generally invest in those unless you have quite a lot of money, and they use strategies that vary widely, many of which are quite risky. |
Why do some companies offer 401k retirement plans? | The company itself doesn't benefit. In most cases, it's an expense as the match that many offer is going to cost the company some percent of salary. As Mike said, it's part of the benefit package. Vacation, medical, dental, cafeteria plans (i.e. both flexible spending and dependent care accounts, not food), stock options, employee stock purchase plans, defined contribution or defined benefit pension, and the 401(k) or 403(b) for teachers. Each and all of these are what one should look at when looking at "total compensation". You allude to the lack of choices in the 401(k) compared to other accounts. Noted. And that lack of choice should be part of your decision process as to how you choose to invest for retirement. If the fess/selection is bad enough, you need to be vocal about it and request a change. Bad choices + no match, and maybe the account should be avoided, else just deposit to the match. Note - Keith thanks for catching and fixing one typo, I just caught another. |
Can the Philadelphia Center City District Tax be deducted on my Schedule-A? | My basic rule of thumb is that if the the bill come from a government office of taxation, and that if you fail to pay the amount they can put a tax lien on the property it is a tax. for you the complication is in Pub530: Assessments for local benefits. You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Local benefits include the construction of streets, sidewalks, or water and sewer systems. You must add these amounts to the basis of your property. You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. An example is a charge to repair an existing sidewalk and any interest included in that charge. If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. An assessment for a local benefit may be listed as an item in your real estate tax bill. If so, use the rules in this section to find how much of it, if any, you can deduct. I have never seen a tax bill that said this amount is for new streets, and the rest i for things the IRS says you can deduct. The issue is that if the Center City tax bill is a separate line or a separate bill then does it count. I would go back to the first line of the quote from Pub 530: You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Then I would look at the quote from the CCD web site: The Center City District (CCD) is a business improvement district. Our mission is to keep Philadelphia's downtown, called Center City, clean, safe, beautiful and fun. We provide security, cleaning and promotional services that supplement, but do not replace, basic services provided by the City of Philadelphia and the fundamental responsibilities of property owners. CCD also makes physical improvements to the downtown, installing and maintaining lighting, > signs, banners, trees and landscape elements. and later on the same page: CCD directly bills and collects mandatory payments from properties in the district. CCD also receives voluntary contributions from the owners of tax-exempt properties that benefit from our services. The issues is that it is a business improvement district (BID), and you aren't a business: I did find this document from the city of Philadelphia explain how to establish a BID: If the nature of the BID is such that organizers wish to include residential properties within the district and make these properties subject to the assessment, it may make sense to assess these properties at a lower level than a commercial property, both because BID services and benefits are business-focused, and because owner-occupants often cannot treat NID assessments as tax-deductible business expenses, like commercial owners do. Care must be taken to ensure that the difference in commercial and residential assessment rates is equitable, and complies with the requirements of the CEIA. from the same document: Funds for BID programs and services are generated from a special assessment paid by the benefited property owners directly to the organization that manages the BID’s activities. (Note: many leases have a clause that allows property owners to pass the BID assessment on to their tenants.) Because they are authorized by the City of Philadelphia, the assessment levied by the BID becomes a legal obligation of the property owner and failure to pay can result in the filing of a lien. I have seen discussion that some BIDS can accept tax deductible donations. This means if a person itemizes they can deduct the donation. I would then feel comfortable deducting the tax because: If you can't deduct it that would mean the only people who can't deduct it are home owners. So deduct it. (keep in mind I am not a tax professional) |
Where should I invest my savings? | Since you mention the religion restriction, you should probably look into the stock market or funds investing in it. Owning stock basically means you own a part of a company and benefit from any increase in value the company may have (and 'loose' on decreases, provided you sell your stock) and you also earn dividends over the company's profit. If you do your research properly and buy into stable companies you shouldn't need to bother about temporary market movements or crashes (do pay attention to deterioration on the businesses you own though). When buying stocks you should be aiming for the very long run. As mentioned by Victor, do your research, I recommend you start it by looking into 'value stocks' should you choose that path. |
Are wash sale rules different for stocks and ETFs / Mutual Funds? | No, there's nothing special in mutual funds or ETFs. Wash sale rules apply to any asset. |
Qualified Stock Options purtchased through my Roth IRA | No, you cannot. ISO are given to you in your capacity as an employee (that's why it is "qualified"), while your IRA is not an employee. You cannot transfer property to the IRA, so you cannot transfer them to the IRA once you paid for them as well. This is different from non-qualified stock options (discussed in this question), which I believe technically can be granted to IRA. But as Joe suggests in his answer there - there may be self-dealing issues and you better talk to a licensed tax adviser (EA/CPA licensed in your State) if this is something you're considering to do. |
I'm an American in my mid 20's. Is there something I should be doing to secure myself financially? | I may be walking on thin ice but that's never stopped me from answering before. ;) I have a PhD in physics. I knew that I wasn't a die-hard publisher so I didn't pursue academia. A postdoc will likely pay about what a person with a BS in math could make in industry, but you're now a few years past that age. You'll be playing catch-up. The magic of compounding was working on a small amount of money while you were studying, if it was anything like my experience. When I think "postdoc" I think "you're looking for tenure track" so if that's incorrect forgive me. Competition will be fierce for those positions, meaning you'll be looking at not one but several postdoc positions, all at low salaries. Postdocs are a way of absorbing the glut of PhDs. Tenure track is a long road, and by the time you get there -- if you get there -- who knows if there will be such a thing as tenure? Long way of putting this: I'd take a good, hard, careful look outside of academia for your employment if you're concerned about your financial outlook. |
Is business the only way to become a millionaire? | Not at all. The Millionaire Next Door offers a book full of anecdotes on couples that earned money and saved their way to being millionaires. I believe about 1/3 or so had businesses, but the rest were employed and simply saved wisely. $3860/yr saved for 40 years at 8% will return $1M. Adjust the numbers to hit a million sooner or reach a higher goal. The Author might be accused of survey bias. This is the phenomenon of studying the final results without looking at the pool of people years prior. Little Adv' is correct that while 1/3 of millionaires may have gotten that way by starting a business, that says nothing about how many businesses need to start to find the one millionaire that resulted. I view the book more as a lesson of "spend beneath your means" and focus on his anecdotes of the dual income couples who saved their way to this status. If you are in no rush, get this book from your library and spend the few hours to read it. In response to my Friend Dilip's comment, MoneyChimp offers a good look at compound growth (for the S&P) over time. The 40 years ending 2012, which obviously include the 'lost decade,' returned a CAGR of 9.78%. Not to be confused with the average 11.43%. When I pull the numbers for each year's return and apply an annual $3860 deposit, the 40 years ends with $2.2M. A 1% fee, or 1% lower return resulted in $1.6M. If 8% isn't conservative, of course you can run the numbers you wish. The 40 years contained both a lost decade and two great ones. Will the 3 decades post-lost average to get the Quad-Decade period to 8%+? I don't know. |
US Banks offering Security Tokens in 2012 | Charles Schwab and HSBC offer security tokens. |
Capital Gains in an S Corp | A nondividend distribution is typically a return of capital; in other words, you're getting money back that you've contributed previously (and thus would have been taxed upon in previous years when those funds were first remunerated to you). Nondividend distributions are nontaxable, so they do not represent income from capital gains, but do effect your cost basis when determining the capital gain/loss once that capital gain/loss is realized. As an example, publicly-traded real estate investment trusts (REITs) generally distribute a return of capital back to shareholders throughout the year as a nondividend distribution. This is a return of a portion of the shareholder's original capital investment, not a share of the REITs profits, so it is simply getting a portion of your original investment back, and thus, is not income being received (I like to refer to it as "new income" to differentiate). However, the return of capital does change the cost basis of the original investment, so if one were to then sell the shares of the REIT (in this example), the basis of the original investment has to be adjusted by the nondividend distributions received over the course of ownership (in other words, the cost basis will be reduced when the shares are sold). I'm wondering if the OP could give us some additional information about his/her S-Corp. What type of business is it? In the course of its business and trade activity, does it buy and sell securities (stocks, etc.)? Does it sell assets or business property? Does it own interests in other corporations or partnerships (sales of those interests are one form of capital gain). Long-term capital gains are taxed at rates lower than ordinary income, but the IRS has very specific rules as to what constitutes a capital gain (loss). I hate to answer a question with a question, but we need a little more information before we can weigh-in on whether you have actual capital gains or losses in the course of your S-Corporation trade. |
How do I protect myself from a scam if I want to help a relative? | Let's summarize your relative's problem: How is this possible? If both of those statements are true, then he should be able to explain exactly why those statements are true, and then you can explain it to us, and then we can all nod our heads and admit, "Wow, that makes sense. Proceed if you want to." But until that happens I suggest you take the advice I offered in the first paragraph of this answer. |
What is an “International Equity”? | International means from all over the world. In the U.S. A Foreign Equity fund would be non-US stocks. There's an odd third choice I'm aware of, a fund of US companies that derive their sales from overseas, primarily. |
Looking for advice on rental property | You say that one property is 65% of the value of the two properties and the other is 35%. But how much of that do the two of you actually own? If you have co-signed mortgages on both properties, then your equity is going to be lower. If you sold both properties, then your take away would be just half of that equity. And while the 35% property may be less valuable, if you bought it first, it may actually have more equity. It's the equity that matters here, not the value of the property. With a mortgage, the bank is more of an owner than you are until you've paid down most of the loan. You may find that the bank won't agree to a single-owner refinance. A co-signed mortgage is a lot easier for them to collect, as they can hold either of you responsible for the entire loan. If you sell the 65% property, then you can pay off any mortgage on that property and use the equity payout from that to buy out your relative on the 35% property. If you currently have no mortgage, you'd even have cash back. This is your fewest strings option. Let's say that you have no mortgage now. So this mortgage would be the only mortgage on the property. It's not so much, as 15:65 is 3:13 or 18.75% of the value of the property. That's more of a home equity loan than a mortgage. You should be able to get a good rate. It might reduce your short term profit, but it should be survivable if you have other income. If you don't have other income, then seriously consider selling the 65% property and diversifying the payout into something else. E.g. stocks and bonds. Perhaps your relative would be willing to float you the loan. That would save you bank fees and closing costs. Write up a contract and agree to take assignment of the title at payoff. You'll need to pay a lawyer to write up the contract (paying a modest amount now to cover the various future possibilities), but that should still be cheaper. There's a certain amount of trust required on both sides, but this gives you some separation. And of course it takes your relative out of the day-to-day management entirely. Perhaps the steady flow of cash would provide what they need. If your relative is willing to remain that involved, that can work. Note that they may not want to do this, so don't get too attached to the idea. Be prepared for a no. This would be a great option for you, as you pretty much get everything you have now. They get back the time meeting with you to make decisions, but they also give up control over those decisions. Some people would not like that tradeoff. The one time I was involved with a professional managing a property for me, the fee was around 7% of the rent. If that fits your area, you might reasonably charge 5%. That gives a discount for family and not being a professional. There's a relatively easy way to find out what fits your area. Look around and see what companies offer multiple listings. Call until you find a couple that will do management for you. Get quotes for managing your properties. Now you'll know the amounts. The big failing though is that this may not describe the issue that your relative has. If the real problem is that the two of you have different approaches to property management, then making you the only decision maker may be the wrong direction. This is certainly financially feasible, but it still may not be the right solution for your relationship. If you get a no on this, I'd recommend moving on to other solutions immediately. This may simply be too favorable to you. |
Pros/cons of borrowing money using a mortgage loan and investing it in a low-fee index fund? | Essentially, what you're describing is a leveraged investment. As others noted, the question is how confident you can be that (a) the returns on the investment will exceed what you're paying in interest, and (b) that if you lose the bet you'll still be able to pay off the loan without severely injuring yourself. I did essentially this when I bought my house, taking out a larger loan than necessary and leaving more money in my investments, which had been returning more than the mortgage's interest rate. I then got indecently lucky during the recession and was able to refinance down to under 4%, which I am very certain my investment will beat. I actually considered lengthening the term of the loan for that reason, or borrowing a bit more, but decided not to double down on the bet; that was my own risk-comfort threshold. Know exactly what your risks are, including secondary effects of these risks. Run the numbers to see what the likely return is. Decide whether you like the odds enough to go for it. |
How does the process of “assignment” work for in-the-money Options? | I often sell covered calls, and if they are in the money, let the stock go. I am charged the same fee as if I sold online ($9, I use Schwab) which is better than buying back the option if I'm ok to sell the stock. In my case, If the option is slightly in the money, and I see the options are priced well, i.e. I'd do another covered call anyway, I sometimes buy the option and sell the one a year out. I prefer to do this in my IRA account as the trading creates no tax issue. |
Has anyone compared an in-person Tax Advisor to software like Turbo Tax? | I have fairly simple tax returns and my experience was that TurboTax software produced roughly the same result as human accountant and costs much less. The accountant was never able to find any deductions that the program couldn't find. Of course, if you have business, etc. you probably need an accountant to help you navigate all the rules, requirements, etc. But for simple enough cases I found that the additional pay is not justified. |
Tax Form 1099 and hourly worker do i file a W-2 if my employer filed the 1099 for me? | Forms 1099 and W2 are mutually exclusive. Employers file both, not the employees. 1099 is filed for contractors, W2 is filed for employees. These terms are defined in the tax code, and you may very well be employee, even though your employer pays you as a contractor and issues 1099. You may complain to the IRS if this is the case, and have them explain the difference to the employer (at the employer's expense, through fines and penalties). Employers usually do this to avoid providing benefits (and by the way also avoid paying payroll taxes). If you're working as a contractor, lets check your follow-up questions: where do i pay my taxes on my hourly that means does the IRS have a payment center for the tax i pay. If you're an independent contractor (1099), you're supposed to pay your own taxes on a quarterly basis using the form 1040-ES. Check this page for more information on your quarterly payments and follow the links. If you're a salaried employee elsewhere (i.e.: receive W2, from a different employer), then instead of doing the quarterly estimates you can adjust your salary withholding at that other place of work to cover for your additional income. To do that you submit an updated form W4 there, check with the payroll department on details. Is this a hobby tax No such thing, hobby income is taxed as ordinary income. The difference is that hobby cannot be at loss, while regular business activity can. If you're a contractor, it is likely that you're not working at loss, so it is irrelevant. what tax do i pay the city? does this require a sole proprietor license? This really depends on your local laws and the type of work you're doing and where you're doing it. Most likely, if you're working from your employer's office, you don't need any business license from the city (unless you have to be licensed to do the job). If you're working from home, you might need a license, check with the local government. These are very general answers to very general questions. You should seek a proper advice from a licensed tax adviser (EA/CPA licensed in your state) for your specific case. |
Is Peter Lynch talking about the Dividend Adjusted PEG Ratio in this quote? | Essentially, yes, Peter Lynch is talking about the PEG Ratio. The Price/Earnings to Growth (PEG) Ratio is where you take the p/e ratio and then divide that by the growth rate (which should include any dividends). A lower number indicates that the stock is undervalued, and could be a good buy. Lynch's metric is the inverse of that: Growth rate divided by the p/e ratio. It is the same idea, but in this case, a higher number indicates a good value for buying. In either case, the idea behind this ratio is that a fairly priced stock will have the p/e ratio equal the growth rate. When your growth rate is larger than your p/e ratio, you are theoretically looking at an undervalued stock. |
How much more than my mortgage should I charge for rent? | so if we rent it out we don't want to just charge what we're paying on our mortgage - we'd definitely be losing money if we did that. I think you're overlooking one thing: your profit/loss is not monthly. Your profit is the property that's left after the mortgage ends. Even if you have to add extra $100 every month because you rent lower than the mortgage + maintenance + taxes, after 30 years you're left with property worth ie.$200k while you've paid for it ie. 30 years * 12 months * $100 = $36k. You can rent it lower than your costs and still make a profit in the long run. |
Basic questions about investing in stocks | What is a stock? A share of stock represents ownership of a portion of a corporation. In olden times, you would get a physical stock certificate (looking something like this) with your name and the number of shares on it. That certificate was the document demonstrating your ownership. Today, physical stock certificates are quite uncommon (to the point that a number of companies don't issue them anymore). While a one-share certificate can be a neat memento, certificates are a pain for investors, as they have to be stored safely and you'd have to go through a whole annoying process to redeem them when you wanted to sell your investment. Now, you'll usually hold stock through a brokerage account, and your holdings will just be records in a database somewhere. You'll pick a broker (more on that in the next question), instruct them to buy something, and they'll keep track of it in your account. Where do I get a stock? You'll generally choose a broker and open an account. You can read reviews to compare different brokerages in your country, as they'll have different fees and pricing. You can also make sure the brokerage firm you choose is in good standing with the financial regulators in your country, though one from a major national bank won't be unsafe. You will be required to provide personal information, as you are opening a financial account. The information should be similar to that required to open a bank account. You'll also need to get your money in and out of the account, so you'll likely set up a bank transfer. It may be possible to request a paper stock certificate, but don't be surprised if you're told this is unavailable. If you do get a paper certificate, you'll have to deal with considerably more hassle and delay if you want to sell later. Brokers charge a commission, which is a fee per trade. Let's say the commission is $10/trade. If you buy 5 shares of Google at $739/share, you'd pay $739 * 5 + $10 = $3705 and wind up with $3695 worth of stock in your account. You'd pay the same commission when you sell the stock. Can anyone buy/own/use a stock? Pretty much. A brokerage is going to require that you be a legal adult to maintain an account with them. There are generally ways in which a parent can open an account on behalf of an underage child though. There can be different types of restrictions when it comes to investing in companies that are not publicly held, but that's not something you need to worry about. Stocks available on the public stock market are available to, well, the public. How are stocks taxed? Taxes differ from country to country, but as a general rule, you do have to provide the tax authorities with sufficient information to determine what you owe. This means figuring out how much you purchased the stock for and comparing that with how much you sold it for to determine your gain or loss. In the US (and I suspect in many other countries), your brokerage will produce an annual report with at least some of this information and send it to the tax authorities and you. You or someone you hire to do your taxes will use that report to compute the amount of tax owed. Your brokerage will generally keep track of your "cost basis" (how much you bought it for) for you, though it's a good idea to keep records. If you refuse to tell the government your cost basis, they can always assume it's $0, and then you'll pay more tax than you owe. Finding the cost basis for old investments can be difficult many years later if the records are lost. If you can determine when the stock was purchased, even approximately, it's possible to look back at historical price data to determine the cost. If your stock pays a dividend (a certain amount of money per-share that a company may pay out of its profits to its investors), you'll generally need to pay tax on that income. In the US, the tax rate on dividends may be the same or less than the tax rate on normal wage income depending on how long you've held the investment and other rules. |
Sell Stock using Limit | if I put a limit sell at $22.00 now, will it not sell until it's at $22.00 and I will continue to keep the stock? Basically yes. But note that brokers generally don't allow such limit orders to persist indefinitely. The default may even be that they're only valid until the end of the day, and usually the maximum validity is 30 or 60 days. |
How can I spend less? | Try the Envelope Budgeting System. It is a pretty good system for managing your discretionary outflows. Also, be sure to pay yourself first. That means treat savings like an expense (mortgage, utilities, etc.) not an account you put money in when you have some left over. The problem is you NEVER seem to have anything leftover because most people's lifestyle adjusts to fit their income. The best way to do this is have the money automatically drafted each month without any action required on your part. An employer sponsored 401K is a great way to do this. |
Do I pay taxes on a gift of mutual funds? | I gift my daughter stock worth $1000. No tax issue. She sells it for $2000, and has a taxable gain of $1000 that shows up on her return. Yes, you need to find out the date of the gift, as that is the date you value the fund for cost basis. The $3500 isn't a concern, as the gift seems to have been given well before that. It's a long term capital gain when you sell it. And, in a delightfully annoying aspect of our code, the dividends get added to basis each year, as you were paying tax on the dividend whether or not you actually received it. Depending on the level of dividends, your basis may very well be as high as the $6500 current value. (pls ask if anything here needs clarification) |
What's “wrong” with taking money from your own business? | If you are the only owner: then morally there is nothing wrong with this, as long as you make sure that everything is tracked so that you pay the proper taxes from the correct entity. The danger for you and your business is if the transfers aren't planned. Because you may not be re-investing enough of the profits back into the company. That means that the equipment may be aging but you aren't replacing it, it can also mean that you aren't spending enough on business development. If you pay yourself so much that you bankrupt the company that isn't good. If you live the good life but starve the employees and they realize it, or if you starve the business and the employees realize it; then you might have a problem motivating and retaining employees. |
Do my 401k/Roth accounts benefit from compounding? | You buy a share of something for $100. It goes up by 10% over a year, and you now have $110 in value. It goes up by 10% next year and you now have $121. That original $10 increase was compounded even though you're not earning interest because the gains are measured as a percentage. If, instead, you'd only invested the second year you'd have less value. Assuming the markets average a positive gain (above inflation) you see greater gains the earlier you're invested. |
Why would a company care about the price of its own shares in the stock market? | The most significant reason is that if the board of directors of a company neglects the stock value, the stockholders will vote them out of their jobs. |
Why is company provided health insurance tax free, but individual health insurance is not? | Basically a company who provides health insurance for their employees provides it as part of the employee's salary package. This is an expense by the company in its pursuit of making income. In general, tax deductions are available on any expense incurred in deriving income (the exception is when social policy allows deductions for other types of expenses). If you pay for your own health insurance individually, then this expense is not an expense for you to derive your income, and as such is not tax deductible. |
Long term saving: Shares, Savings Account or Fund | Congratulations on a solid start. Here are my thoughts, based on your situation: Asset Classes I would recommend against a long-term savings account as an investment vehicle. While very safe, the yields will almost always be well below inflation. Since you have a long time horizon (most likely at least 30 years to retirement), you have enough time to take on more risk, as long as it's not more than you can live with. If you are looking for safer alternatives to stocks for part of your investments, you can also consider investment-grade bonds/bond funds, or even a stable value fund. Later, when you are much closer to retirement, you may also want to consider an annuity. Depending on the interest rate on your loan, you may also be able to get a better return from paying down your loan than from putting more in a savings account. I would recommend that you only keep in a savings account what you expect to need in the next few years (cushion for regular expenses, emergency fund, etc.). On Stocks Stocks are riskier but have the best chance to outperform versus inflation over the long term. I tend to favor funds over individual stocks, mostly for a few practical reasons. First, one of the goals of investing is to diversify your risk, which produces a more efficient risk/reward ratio than a group of stocks that are highly correlated. Diversification is easier to achieve via an index fund, but it is possible for a well-educated investor to stay diversified via individual stocks. Also, since most investors don't actually want to take physical possession of their shares, funds will manage the shares for you, as well as offering additional services, such as the automatic reinvestments of dividends and tax management. Asset Allocation It's very important that you are comfortable with the amount of risk you take on. Investment salespeople will prefer to sell you stocks, as they make more commission on stocks than bonds or other investments, but unless you're able to stay in the market for the long term, it's unlikely you'll be able to get the market return over the long term. Make sure to take one or more risk tolerance assessments to understand how often you're willing to accept significant losses, as well as what the optimal asset allocation is for you given the level of risk you can live with. Generally speaking, for someone with a long investment horizon and a medium risk tolerance, even the most conservative allocations will have at least 60% in stocks (total of US and international) with the rest in bonds/other, and up to 80% or even 100% for a more aggressive investor. Owning more bonds will result in a lower expected return, but will also dramatically reduce your portfolio's risk and volatility. Pension With so many companies deciding that they don't feel like keeping the promises they made to yesterday's workers or simply can't afford to, the pension is nice but like Social Security, I wouldn't bank on all of this money being there for you in the future. This is where a fee-only financial planner can really be helpful - they can run a bunch of scenarios in planning software that will show you different retirement scenarios based on a variety of assumptions (ie what if you only get 60% of the promised pension, etc). This is probably not as much of an issue if you are an equity partner, or if the company fully funds the pension in a segregated account, or if the pension is defined-contribution, but most corporate pensions are just a general promise to pay you later in the future with no real money actually set aside for that purpose, so I'd discount this in my planning somewhat. Fund/Stock Selection Generally speaking, most investment literature agrees that you're most likely to get the best risk-adjusted returns over the long term by owning the entire market rather than betting on individual winners and losers, since no one can predict the future (including professional money managers). As such, I'd recommend owning a low-cost index fund over holding specific sectors or specific companies only. Remember that even if one sector is more profitable than another, the stock prices already tend to reflect this. Concentration in IT Consultancy I am concerned that one third of your investable assets are currently in one company (the IT consultancy). It's very possible that you are right that it will continue to do well, that is not my concern. My concern is the risk you're carrying that things will not go well. Again, you are taking on risks not just over the next few years, but over the next 30 or so years until you retire, and even if it seems unlikely that this company will experience a downturn in the next few years, it's very possible that could change over a longer period of time. Please just be aware that there is a risk. One way to mitigate that risk would be to work with an advisor or a fund to structure and investment plan where you invest in a variety of sector funds, except for technology. That way, your overall portfolio, including the single company, will be closer to the market as a whole rather than over-weighted in IT/Tech. However, if this IT Consultancy happens to be the company that you work for, I would strongly recommend divesting yourself of those shares as soon as reasonably possible. In my opinion, the risk of having your salary, pension, and much of your investments tied up in the fortunes of one company would simply be a much larger risk than I'd be comfortable with. Last, make sure to keep learning so that you are making decisions that you're comfortable with. With the amount of savings you have, most investment firms will consider you a "high net worth" client, so make sure you are making decisions that are in your best financial interests, not theirs. Again, this is where a fee-only financial advisor may be helpful (you can find a local advisor at napfa.org). Best of luck with your decisions! |
Where can you find historical PEs of US indices? | Internet sites Books Academic |
On what dates do the U.S. and Canada release their respective federal budgets? | Canada does not have a set date on which a (Federal) budget plan is unveiled. In 2011 it was June 6th. In 2012 it was March 29th and in 2013 it was 21st March. |
How does one interpret financial data for stocks listed on multiple exchanges? | First and foremost you need to be aware of what you are comparing. In this case, HSBC as traded on the NYSE exchange is not common shares, but an ADR (American Depository Receipt) with a 5:1 ratio from the actual shares. So for most intents and purposes owning one ADR is like owning five common shares. But for special events like dividends, there may be other considerations, such as the depository bank (the institution that created the ADR) may take a percentage. Further, given that some people, accounts or institutions may be required to invest in a given country or not, there may be some permanent price dislocation between the shares and the ADR, which can further lead to discrepancies which are then highlighted by the seeming difference in dividends. |
What are the reasons to get more than one credit card? | nan |
How do I evaluate risk exposure to my U.K. bank in light of the possible collapse of the Euro or Eurozone economies? | You could evaluate the risk exposure of your UK bank reading this post and this other old one. They basically say that UK bank exposure to Greece is less than 6 billions pounds (BOE data), so there is no reason to be worried now. The main issue of this crisis is not the Greek exit from the Euro on its own (it seems to be considered almost a fact by CITI, and by MS at 35% probability, Profumo ex CEO of UNICREDIT, says the possibility are more than 50%) – the main issue is that other countries like Italy and Spain might follow the same fate. If they do, the exposure of many foreign banks (including the UK ones) to their debts is not negligible (191,80 billions pounds for UK banks) moreover other EU banks (even the German ones) exposed to Italy and to Spain will suffer too, and this suffering will be translated into more suffering for UK banks exposed also to Germany and to France. That's why you read Euro doom articles like this one from Paul Krugman (who won a Nobel Memorial Prize in Economics.) |
Sales Tax: Rounded Then Totaled or Totaled Then Rounded? | Taxes should not be calculated at the item level. Taxes should be aggregated by tax group at the summary level. The right way everywhere is LINE ITEMS SUMMARY PS:If you'd charge at the item level, it would be too easy to circumvent the law by splitting your items or services into 900 items at $0.01 (Which once rounded would mean no tax). This could happen in the banking or plastic pellets industry. |
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? | Although the market discussion by other answers is correct, the tax structure of many developed nations (I am familiar with Canada in particular) offers a preferred tax rate for dividend income compared to taxable gains. Consequently, if your portfolio is large enough to make transaction fees a very small percentage rate, this is a viable investment strategy. However, as the preferred tax rate for dividends typically will catch up to that for capital gains at some cut-off point, there is a natural limit on how much income can be favourably obtained in this way. If you believe your portfolio might be large enough to benefit from this investment strategy, talk to a qualified investment advisor, broker, or tax consultant for the specifics for your tax jurisdiction. |
Getting Cash from Credit Card without Fees | While I think this is generally inadvisable, there are sites and communities dedicated to "points churning" credit card reward programs. In general, no there is no easy way to get cash from a credit card, and receive the spending rewards, and not pay fees well in excess of your rewards value. However, there are people who figure out ways to do this kind of thing. Like buying prepaid Visa cards $500 at a time from drug stores on a 5% bonus rewards month. Or buying rolls of $1 coins from the US treasury with free shipping. The issue is the source of the fees. When you spend money on your card the merchant pays a fee. When you get cash from an ATM not only is there no merchant remitting a fee there is an ATM operator and a network both charging fees. |
Why is it not a requirement for companies to pay dividends? | This answer will expand a bit on the theory. :) A company, as an entity, represents a pile of value. Some of that is business value (the revenue stream from their products) and some of that is assets (real estate, manufacturing equipment, a patent portfolio, etc). One of those assets is cash. If you own a share in the company, you own a share of all those assets, including the cash. In a theoretical sense, it doesn't really matter whether the company holds the cash instead of you. If the company adds an extra $1 billion to its assets, then people who buy and sell the company will think "hey, there's an extra $1 billion of cash in that company; I should be willing to pay $1 billion / shares outstanding more per share to own it than I would otherwise." Granted, you may ultimately want to turn your ownership into cash, but you can do that by selling your shares to someone else. From a practical standpoint, though, the company doesn't benefit from holding that cash for a long time. Cash doesn't do much except sit in bank accounts and earn pathetically small amounts of interest, and if you wanted pathetic amounts of interests from your cash you wouldn't be owning shares in a company, you'd have it in a bank account yourself. Really, the company should do something with their cash. Usually that means investing it in their own business, to grow and expand that business, or to enhance profitability. Sometimes they may also purchase other companies, if they think they can turn a profit from the purchase. Sometimes there aren't a lot of good options for what to do with that money. In that case, the company should say, "I can't effectively use this money in a way which will grow my business. You should go and invest it yourself, in whatever sort of business you think makes sense." That's when they pay a dividend. You'll see that a lot of the really big global companies are the ones paying dividends - places like Coca-Cola or Exxon-Mobil or what-have-you. They just can't put all their cash to good use, even after their growth plans. Many people who get dividends will invest them in the stock market again - possibly purchasing shares of the same company from someone else, or possibly purchasing shares of another company. It doesn't usually make a lot of sense for the company to invest in the stock market themselves, though. Investment expertise isn't really something most companies are known for, and because a company has multiple owners they may have differing investment needs and risk tolerance. For instance, if I had a bunch of money from the stock market I'd put it in some sort of growth stock because I'm twenty-something with a lot of savings and years to go before retirement. If I were close to retirement, though, I would want it in a more stable stock, or even in bonds. If I were retired I might even spend it directly. So the company should let all its owners choose, unless they have a good business reason not to. Sometimes companies will do share buy-backs instead of dividends, which pays money to people selling the company stock. The remaining owners benefit by reducing the number of shares outstanding, so they own more of what's left. They should only do this if they think the stock is at a fair price, or below a fair price, for the company: otherwise the remaining owners are essentially giving away cash. (This actually happens distressingly often.) On the other hand, if the company's stock is depressed but it subsequently does better than the rest of the market, then it is a very good investment. The one nice thing about share buy-backs in general is that they don't have any immediate tax implications for the company's owners: they simply own a stock which is now more valuable, and can sell it (and pay taxes on that sale) whenever they choose. |
How can one identify institutional accumulation of a particular stock using price and volume data? | A couple ways, but its not a guarantee. You have to have special charts. Instead of each tick being 1 min, 5 min, or whatever, it is a set number of trades. Say 2000. Since retail investors only buy and sell in small amounts, there will be small volume per tick. An institutional investor, however, would have a much much higher trade lot size, even if using an algo. Thus, large volume spikes in such a chart would signal institutional activity over retail. Similarly, daily charts showing average trade size can help you pick out when institutional activity is highest, as they have much larger trade sizes. You could also learn how the algos work and look for evidence one is being used. ie every time price hits VWAP a large sell order goes through would indicate an institutional investor is selling, especially if it happens multiple times in a row. |
Can my employer limit my maximum 401k contribution amount (below the IRS limit)? | YMMV, but I don't accept non-answers like that from HR. Sometimes you need to escalate. Usually when I get this sort of thing, I go to my boss and he asks them the question in writing and they give him a better answer. (HR in most companies seem to be far more willing to give information to managers than employees.) Once we both had to go to our VP to get HR to properly listen to and answer the question. Policies like this which may have negative consequences (your manager could lose a good employee over this depending on how to close to retirement you are and how much you need to continue making that larger contribution) that are challenged by senior managment have a better chance of being resolved than when non-managment employees bring up the issue. Of course I havea boss I know will stand up for me and that could make a difference in how you appraoch the problem. |
Trading on forex news, Interactive Brokers / IDEALPRO, and slippage | Slippage is tied to volatility, so when volatility increases the spread will also increase. There is no perfect formula to figure out slippage but from observations, it might make sense to look at the bar size in relation to previous bars to determine slippage (assuming fixed periods). This is because when there is a sudden spike in price, it's usually due to stop order triggering or a news event and those will increase the volatility dramatically in seconds. |
what would you do with $100K saving? | I would buy an ETF (or maybe a couple) in stable, blue chip companies with a decent yield (~3%) and then I'd play a conservative covered call strategy on the stock selling a new position about once a month. That's just me. |
Can paying down a mortgage be considered an “investment”? | If by "investment" you mean something that pays you money that you can spend, then no. But if you view "investment" as something that improves your balance sheet / net worth by reducing debt and reducing how much money you're throwing away in interest each month, then the answer is definitely yes, paying down debt is a good investment to improve your overall financial condition. However, your home mortgage might not be the first place to start looking for pay-downs to save money. Credit cards typically have much higher interest rates than mortgages, so you would save more money by working on eliminating your credit card debt first. I believe Suze Orman said something like: If you found an investment that paid you 25% interest, would you take it? Of course you would! Paying down high interest debt reduces the amount of interest you have to pay next month. Your same amount of income will be able to go farther, do more because you'll be paying less in interest. Pay off your credit card debt first (and keep it off), then pay down your mortgage. A few hundred dollars in extra principal paid in the first few years of a 30 year mortgage can remove years of interest payments from the mortgage term. Whether you plan to keep your home for decades or you plan to move in 10 years, having less debt puts you in a stronger financial position. |
Best personal finance software for Mac for German resident | I haven't used it in years, but look at GnuCash. From the site, one bullet point under Feature Highlights: |
Idea for getting rich using computers to track stocks | The main reason I'm aware of that very few individuals do this sort of trading is that you're not taking into account the transaction costs, which can and will be considerable for a small-time investor. Say your transaction costs you $12, that means in order to come out ahead you'll have to have a fairly large position in a given instrument to make that fee back and some money. Most smaller investors wouldn't really want to tie up 5-6 figures for a day on the chance that you'll get $100 back. The economics change for investment firms, especially market makers that get special low fees for being a market maker (ie, offering liquidity by quoting all the time). |
Does an owner of a bond etf get an income even if he sells before the day of distribution? | There are two 'dates' relevant to your question: Ex-Dividend and Record. To find out these dates for a specific security visit Dividend.Com. You have to purchase the security prior to the Ex-Dividend date, hold it at least until the Record Date. After the Record Date you can sell the security and still receive the dividend for that quarter. ---- edit - - - - I was wrong. If you sell the security after the Ex-div date but before the date of record you still get the dividend. http://www.investopedia.com/articles/02/110802.asp |
Growth rate plus dividend yieid total? | Avoiding the complexities of tax [dividends likely taxed the year they are received, barring special tax accounts which many countries implement in for example, locked-in retirement type accounts; share growth is likely only taxed when sold / on death / on expatriation / similar], and assuming you reinvest the dividends every year in new shares, then yes, total growth in your account is the same whether that growth is comprised of entirely dividends, entirely share increase, or a mixture of both. It is those caveats (tax + reinvestment) which could change things. |
What to do with a 50K inheritance [duplicate] | My grandma left a 50K inheritance You don't make clear where in the inheritance process you are. I actually know of one case where the executor (a family member, not a professional) distributed the inheritance before paying the estate taxes. Long story short, the heirs had to pay back part of the inheritance. So the first thing that I would do is verify that the estate is closed and all the taxes paid. If the executor is a professional, just call and ask. If a family member, you may want to approach it more obliquely. Or not. The important thing is not to start spending that money until you're sure that you have it. One good thing is that my husband is in grad school and will be done in 2019 and will then make about 75K/yr with his degree profession. Be a bit careful about relying on this. Outside the student loans, you should build other expenses around the assumption that he won't find a job immediately after grad school. For example, we could be in a recession in 2019. We'll be about due by then. Paying off the $5k "other debt" is probably a no brainer. Chances are that you're paying double-digit interest. Just kill it. Unless the car loan is zero-interest, you probably want to get rid of that loan too. I would tend to agree that the car seems expensive for your income, but I'm not sure that the amount that you could recover by selling it justifies the loss of value. Hopefully it's in good shape and will last for years without significant maintenance. Consider putting $2k (your monthly income) in your checking account. Instead of paying for things paycheck-to-paycheck, this should allow you to buy things on schedule, without having to wait for the money to appear in your account. Put the remainder into an emergency account. Set aside $12k (50% of your annual income/expenses) for real emergencies like a medical emergency or job loss. The other $16k you can use the same way you use the $5k other debt borrowing now, for small emergencies. E.g. a car repair. Make a budget and stick to it. The elimination of the car loan should free up enough monthly income to support a reasonable budget. If it seems like it isn't, then you are spending too much money for your income. Don't forget to explicitly budget for entertainment and vacations. It's easy to overspend there. If you don't make a budget, you'll just find yourself back to your paycheck-to-paycheck existence. That sounds like it is frustrating for you. Budget so that you know how much money you really need to live. |
Meaning of capital market | Just to clarify, In wikipedia when it says It is defined as a market in which money is provided for periods longer than a year They are referring to the company which is asking for money. So for example the stock market provides money to the issuing company of an IPO, indefinitely. Meaning the company that just went public is provided with money for a period longer than a year. The definition in Investopedia basically says the same thing Wikipedia does it is just phrased slightly different and leaves out the "for periods longer than a year". For example Wikipedia uses the term "business enterprises" and "governments" while Investopedia uses the term private sector and public sector, in this context "business enterprise" is "private sector" and "governments" is "public sector" So in the sense of the length debt is issued yes, money market would be the opposite of a capital market but both markets still offer a place for governments and companies to raise money and both are classified as financial markets. |
Possible to use balance transfers to avoid interest with major credit cards? | I have done this for years and have been quite successful at it. Two reason I even need to do this - desire to pay for engagement ring and pay for 150 person wedding without using my nest-egg/savings. You need to keep a document that details when the free APRs run out, and you need to setup automatic payments of the minimum balance from your checking account so you ensure you do not miss a payment. You need to understand when you are going to need to make big purchases of homes/apartments/cars so that you can ensure you aren't doing this right before your credit score is being checked (Need to leave 12 months without opening new accounts before doing this). I have been able to finance about $60,000 worth of unsecured debt paying between 3-5% interest per year. We have an unsecured credit line with Citibank that charges 14% and is capped at $10,000, and Discover Personal Loans charge around 14% as well (in pre-paid interest!). I would say, all things considering, that this is a great deal if you don't have a secured line of credit with a low interest rate. It is something, however, that if you aren't diligent can get away from you. From my experience I would rather pay a small amount of interest while allowing my savings and retirement to grow interest (hopefully greater than 3-5%) than pay the huge expense and start from zero. But if you miss a single payment on a 0 APR balance transfer they charge you all back interest concessions plus charge you a penalty rate. Like many of the other posts, you need discipline to make this work. |
Which USA Brokerage Firms can I transfer my India stocks to? | You might what to check out Interactive Brokers. If your India stock is NSE listed they might be able to do it since they support trading on that exchange. I would talk to a customer service rep there first. https://www.interactivebrokers.com/en/index.php?f=exchanges&p=asia |
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