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Need exit strategy for aging mother who owns aging rental properties, please | I debated whether to put this in an answer or a comment, because I'm not sure that this can be answered usefully without a lot more information, which actually would then probably make it a candidate for closing as "too localized". At the very least we would need to know where (which jurisdiction) she is located in. So, speaking in a generic way, the options available as I see them are: Contact the mortgage companies and explain she can't continue to make payments. They will likely foreclose on the properties and if she still ends up owing money after that (if you are in the US this also depends on whether you are in a "non-recourse" state) then she could be declared bankrupt. This is rather the "nuclear option" and definitely not something to be undertaken lightly, but would at least wipe the slate clean and give her some degree of certainty about her situation. Look very carefully at the portfolio of properties and get some proper valuations done on them (depending on where she is located this may be free). Also do a careful analysis of the property sales and rental markets, to see whether property prices / rental rates are going up or down. Then decide on an individual basis whether each property is better kept or sold. You may be able to get discounts on fees if you sell multiple properties in one transaction. This option would require some cold hard analysis and decision making without letting yourselves get emotionally invested in the situation (difficult, I know). Depending on how long she has had the properties for and how she came to own them, it MIGHT be an option to pursue action against whoever advised her to acquire them. Clearly a large portfolio of decaying rental properties is not a suitable investment for a relatively elderly lady and if she only came by them relatively recently, on advice from an investment consultant or similar, you might have some redress there. Another option: could she live in one of the properties herself to reduce costs? If she owns her own home as well then she could sell that, live in the one of the rentals and use the money saved to finance the sale of the other rentals. Aside from these thoughts, one final piece of advice: don't get your own finances tangled up in hers (so don't take out a mortgage against your own property, for example). Obviously if you have the leeway to help her out of your budget then that is great, but I would restrict that to doing things like paying for grocery shopping or whatever. If she is heading for bankruptcy or other financial difficulties, it won't help if you are entangled too. |
Advice on strategy for when to sell | I bought 1000 shares of a $10 stock. When it doubled, I sold half, no need to be greedy. I watched the shares split 2 for one, and sold as it doubled and doubled again. In the end, I had $50,000 in cash pulled out and still had 100 shares. The shares are now worth $84K since they split 7 for one and trade near $120. Had I just kept the shares till now, no sales, I'd have 14,000 shares of Apple worth $1.68M dollars. $130K for an initial $10,000 investment is nothing to complain about, but yes, taking a profit can be the wrong thing. 25%? Was that all the potential the company had? There's one question to ask, not where is the price today compared to last year or two years ago, but what are the company's prospects. Is the reason I bought them still valid? Look at your investment each quarter as if you were making the decision that day. I agree, diversification is important, so the choice is only hold or sell, not to buy more of a good company, because there are others out there, and the one sane thing Cramer says that everyone should adhere to is to not put your eggs in one basket. |
A debt collector will not allow me to pay a debt, what steps should I take? | This is somewhat unbelievable. I mean if you had a business of collecting debts, wouldn't you want to collect said debts? Rather than attempting to browbeat people with these delinquent debts into paying, you have someone volunteering to pay. Would you want to service that client? This would not happen in just about any other industry, but such is the lunacy of debt collecting. The big question is why do you need this cleared off your credit? If it is just for a credit score, it probably is not as important as your more recent entries. I would just wait it out, until 7 years has passed, and you can then write the reporting agencies to remove it from your credit. If you are attempting to buy a home or similarly large purpose and the mortgage company is insisting that you deal with this, then I would do the following: Write the company to address the issue. This has to be certified/return receipt requested. If they respond, pay it and insist that it be marked as paid in full on your credit. I would do this with a money order or cashiers check. Done. Dispute the charge with the credit reporting agencies, providing the documentation of no response. This should remove the item from your credit. Provide this documentation to the mortgage broker. This should remove any hangup they might have. Optional: Sue the company in small claims court. This will take a bit of time and money, but it should yield a profit. There was a post on here a few days ago about how to do this. Make part of any settlement to have your name cleared of the debt. It is counterproductive to fall into the trap of the pursuit of a perfect credit score. A person with a 750 often receives the same rate options as a person with 850. Also your relationship with a particular lender could trump your credit score. Currently I am "enjoying" the highest credit score of my life, over 820. Do you know how I did it? I got out of debt (including paying off the mortgage) and I have no intentions of ever going into debt for anything. So why does it matter? It is a bit ridiculous. |
Is it worth it to re-finance my car loan? | If you're a bit into the loan, then they're probably hoping that you'll take longer to pay off the loan. Is there a fee for refinancing the loan? If so, be sure to take that into account. A smart way to approach it (assuming that the fees are low or zero) would be to continue making the same payment you had been before the refinance. Then you'll end your loan ahead of schedule. (This assumes that there's no prepayment penalty.) |
Why can't a US state default, but a EU state can? | But do you know about a US state risking to go default now or in the past? Ultimately, a US state could go into default. However, I doubt that such a scenario would be allowed to transpire. This seems to happen to California with some regularity. That is, risking default. What would happen is not quite well known: "There is no provision for a state to go bankrupt," Kyser said. "I don't think anyone really knows what will happen or even if the state will go into receivership if it does default. I can tell you this, officials are looking at all the (current) laws." (source) I believe that the answer to your question is that it could happen, but likely would not be allowed to occur. The nature of the EU and US are quite different. The individual states forming the US are not separate nations. For better or for worse, the US is a stronger federation than the EU. (Something that is lamented at times when the Feds mess with the purview of the locals.) |
What to do with an expensive, upside-down car loan? | If you can't sell it, refinance the bugger. Even if you can knock the interest rate down to 8% and take out a 3-year loan, you'll save about $100 per month. Or really kill the payment (but pay more interest) by taking out another 6-year. A 6-year at 9% on $12k is only $215/month. My credit union routinely advertises specials on car loans. It shouldn't be difficult to get out of the usurious loan you have now. As for others' advice about getting another job, having been a PhD student I hesiate to suggest that you get another one, because your job is probably your life right now. But can your wife (or even you) start a blog on a subject that interests you? A few posts a week add up over time, and pretty soon you have a real asset that can be another basket to put your eggs in. |
How can foreign investor (residing outside US) invest in US company stocks? | Instead of SSN, foreign person should get a ITIN from the IRS. Instead of W9 a foreigner should fill W8-BEN. Foreigner might also be required to file 1040NR/NR-EZ tax report, and depending on tax treaties also be liable for US taxes. |
Do Americans really use checks that often? | A very interesting topic, as I am moving to the US in a month. I realise this thread is old but its been helpful to me. My observations from my home country "Before we judge anyone who doesn't use direct deposit or who prefers to be paid in cold hard cash, consider that direct deposit is a luxury of stability. Steady job, home, etc. Direct deposit doesn't make sense for a contractor or day labourer who expect to work for a different person each day or week" --- well here a contractor would still be paid by a direct deposit, even if he was working for many different people. On the invoice the contractor provides Bank account details, and customer logs onto their internet banking and pays electronically. It is a a very simple process and is the preferred method of payment by most businesses even small contractors. Many accounting software programs are linked to bank accounts and can quickly reconcile accounts for small business. Many businesses will not accept a cheque in Australia anymore as they are considered to be a higher risk. I started work in 1994 and have never received any payment except via direct deposit. |
Should I cancel an existing credit card so I can open another that has rewards? | Cancelled cards don't fall off the system for a long time, up to ten years. Card terms change, with notice of course, but it can happen at any time. I had a card with a crazy perk, 5% back in Apple Gift cards. This was pre-iPod days, but it was great to get a new computer every two years for free. But it was short lived. Three years into it, the cards were changed, a no-perk card from the bank. That is now my oldest account, and it goes unused. Instead of holding cards like this, I wish I had flipped it to a different card years ago. Ideally, your mix of cards should provide value to you, and if they all do, then when one perk goes away, it's time to refresh that card. This is a snapshot from my report at CreditKarma. (Disclosure, I like these guys, I've met their PR folk. I have no business relationship with them) Elsewhere on the page it's noted that average card age is a 'medium impact' item. I am 50, but I use the strategy above to keep the cards working for me. My current score is 784, so this B on the report isn't hurting too much. The tens of thousands I've saved in mortgage interest by being a serial refinancer was worth the hit on account age, as was the credit card with a 10% rebate for 90 days, the 'newest account' you see in the snapshot. In the end, the score manipulation is a bit of a game. And some of it is counter-intuitive. Your score can take a minor hit for actions that would seem responsible, but your goal should be to have the right mix of cards, and the lowest interest (long term) loans. |
Getting Cash from Credit Card without Fees | You said: Use a credit card (to get my 3% Cash back) to withdraw cash ... Then you said: Is there any way to do this without paying a cash advance fee (or any fees in general)? Right there you have stated the inconsistency. Withdrawing cash using a credit card is a cash advance. You may or may not be charged a fee for doing the cash advance, but no credit card will offer you cash back on a cash advance, so you can't earn your 3% by using cash advances. As others have mentioned, you can sometimes get close by using the card to purchase things that are almost like cash, such as gift cards. But you have to make a purchase. |
What is a rule of thumb for accruing debt on a rental property? | To start, I hope you are aware that the properties' basis gets stepped up to market value on inheritance. The new basis is the start for the depreciation that must be applied each year after being placed in service as rental units. This is not optional. Upon selling the units, depreciation is recaptured whether it's taken each year or not. There is no rule of thumb for such matters. Some owners would simply collect the rent, keep a reserve for expenses or empty units, and pocket the difference. Others would refinance to take cash out and leverage to buy more property. The banker is not your friend, by the way. He is a salesman looking to get his cut. The market has had a good recent run, doubling from its lows. Right now, I'm not rushing to prepay my 3.5% mortgage sooner than it's due, nor am I looking to pull out $500K to throw into the market. Your proposal may very well work if the market sees a return higher than the mortgage rate. On the flip side I'm compelled to ask - if the market drops 40% right after you buy in, will you lose sleep? And a fellow poster (@littleadv) is whispering to me - ask a pro if the tax on a rental mortgage is still deductible when used for other purposes, e.g. a stock purchase unrelated to the properties. Last, there are those who suggest that if you want to keep investing in real estate, leverage is fine as long as the numbers work. From the scenario you described, you plan to leverage into an already pretty high (in terms of PE10) and simply magnifying your risk. |
In a competitive market, why is movie theater popcorn expensive? | To add to Jason's answer; a further mechanism is that of monopoly rents which you mention in your question. Movie theatres are often in shopping complexes (which themselves may offer a particular cinema exclusivity), or physically remote from each other, making price comparison more difficult. Different companies may not offer the same movies (similar to the way phone companies offer difficult-to-compare contract pricing). Once you've paid for your movie ticket, if you're suddenly thirsty or peckish, the theatre is the only place selling snacks. Many theatres (including film theatres) discourage (or refuse) patrons from consuming products purchased elsewhere on site. A sense of "capture" is reinforced with ticket collection at the entrance or some form of barrier (inside vs outside the cordon). A theatre can thus capture their patrons and then leverage that access in order to discriminate amongst the higher-paying consumers mentioned by Jason. |
Where I can find S&P 500 stock data history? | I assume you're after a price time series and not a list of S&P 500 constituents? Yahoo Finance is always a reasonable starting point. Code you're after is ^GSPC: https://finance.yahoo.com/quote/%5EGSPC/history?p=^GSPC There's a download data button on the right side. |
Where can publicly traded profits go but to shareholders via dividends? | Apart from investing in their own infrastructure, profits can be spent purchasing other companies, (Mergers and Acquisitions) investing in other securities, and frankly whatever they please. The idea here is that publicly traded companies have a fiduciary duty to their shareholders to make as much money as they can with the resources (including cash, but including so much more than that) available to the company. It happens that the majority of huge companies eventually stopped growing and figured out that they weren't good at making money outside their core discipline and started giving the money back through dividends, but that norm has been eroded by tech companies that have figured out how to keep growing and driving up share prices even after they become giants. Shareholders will pressure management to issue dividends if share prices don't keep going up, but until the growth slows down, most investors hang on and don't rock the boat. |
Why do financial institutions charge so much to convert currency? | Echoing that bank fees are mostly "because they can", although partly this is because simply holding onto the money doesn't really pay enough for the physical infrastructure of branches, ATMs and staff. So like a budget airline they make it up on additional fees. But that document doesn't actually say they charge 3% for currency conversion! It's "0.20% of transaction amount" for currency conversion, which is not bad (although watch out for the "spread" between buying and selling rates). I see "International POS/ATM Transaction Fee 3% of transaction amount", which is very different. That's a card fee. The big issue with these is fraud - your card number suddenly being used in a different country will nearly always trigger extra fraud checks. It also involves a much more complicated settlement process. I'm more unimpressed with the monthly service charges and the huge $85 fee for international wire transfers. |
When after a companys IPO date can I purchase shares? | You can purchase stock immediately in the open market on the day of the IPO when market opens. Below link gives you more information. http://finance.zacks.com/buy-ipo-stock-3903.html |
Yahoo Finance shows incorrect data | Yes, I see the same problem. Google's version seems to be correct, however. |
The Intelligent Investor: Northern Pacific Railway example | The company was paying "only" $1 a share in dividends, compared to $10 a share in earnings. That is a so-called payout ratio of 10%, which is low. A more normal payout ratio would be 40%, something like $4 a share. If a $13 stock had a $4 dividend, the dividend yield would be about 30%, which would be "too high," meaning that the price would go up to drive down the resulting yield. Even $1 a share on a $13 stock is a high dividend of about 7%, allowing for appreciation to say, the $20-$25 range. Graham was a great believer in the theory that management should pay out "most" of its earnings in dividends. He believed that by holding dividends so far below earnings, the company was either being "stingy," or signalling that the $10 a share of earnings was unsustainable. Either of these would be bad for the stock. For instance, if $1 a share in dividends actually represented a 40% payout ratio, it would signal management's belief that they could normally earn only $2.50 a year instead of $10. |
Should I change 401k investment options to prepare for rising interest rates? | I see that you're invested in a couple bond funds. You do not want to be invested in bonds when the Fed raises rates. When rates climb, the value of bond investments decline, and vice-versa. So that means you should sell bonds before a rate hike, and buy them before a rate drop. |
Using multiple bank accounts | I live near historic Concord, Massachusetts, and frequently drive past Walden Pond. I'm reminded of Henry David Thoreau's words, "Simplify, simplify, simplify." In my opinion, fewer is better. 2 checkbooks? I don't see how that makes budgeting any easier. The normal set of expenses are easily kept as one bucket, one account. The savings 2&3 accounts can also be combined and tracked if you really want to think of them as separate accounts. Now, when you talk about 'Retirement' that can be in tax-wise retirement accounts, e.g. 401(k), IRA, etc. or post tax regular brokerage accounts. In our situation, the Schwab non-retirement account was able to handle emergency (as money market funds) along with vacation/rainy day, etc, in CDs of different maturities. As an old person, I remember CDs at 10% or higher, so leaving money in lower interest accounts wasn't good. Cash would go to CDs at 1-5 year maturities to maximize interest, but keep money maturing every 6-9 months. Even with the goal of simplifying, my wife and I each have a 401(k), an IRA, and a Roth IRA, I also have an inherited Roth, and I manage my teen's Roth and brokerage accounts. That's 9 accounts right there. No way to reduce it. To wrap it up, I'd go back to the first 4 you listed, and use the #4 checking attached to the broker account to be the emergency fund. Now you're at 3. Any higher granularity can be done with a spreadsheet. Think of it this way - the day you see the house you love, will you not be so willing to give up that year's vacation? |
How to avoid getting back into debt? | The essential (and obvious) thing to avoid getting back into debt (or to reduce debt if you have it) is to make your total income exceed your total expenses. That means either increasing your income or reducing your total expenses. Either take effort. Basically, you need a plan. If your plan is to increase income, work out how. If the plan is to increase hours in your current, you need to allow for your needs (sleep, rest, etc) and also convince your employer they will benefit by paying you to work more hours. If your intent is to increase your hourly rate, you need to convince a current or prospective employer that you have the capacity, skills, etc to deliver more on the job, so you are worth paying more. If your intent is to get qualifications so you can get a better paying job, work out how much effort (studying, etc) you will apply, over how long, what expenses you will carry (fees, textbooks, etc), and how long you will carry them for (will you accept working some years in a higher paying job, to clear the debt?). Most of those options involve a lot of work, take time, and often mean carrying debt until you are in a position to pay it off. There is nothing wrong with getting a job while studying, but you have to be realistic about the demands. There is nothing sacrosanct about studying that means you shouldn't have a job. However, you need to be clear how many hours you can work in a job before your studies will suffer unnecessarily, and possibly accept the need to study part time so you can work (which means the study will take longer, but you won't struggle as much financially). If your plan is to reduce expenses, you need a budget. Itemize all of your spend. Don't hide anything from that list, no matter how small. Work out which of the things you need (paying off debt is one), which you can get rid of, which you need to reduce - and by how much. Be brutal with reducing or eliminating the non-essentials no matter how much you would prefer otherwise. Keep going until you have a budget in which your expenses are less than your income. Then stick to it - there is no other answer. Revisit your budget regularly, so you can handle things you haven't previously planned for (say, rent increase, increase fees for something you need, etc). If your income increases (or you have a windfall), don't simply drop the budget - the best way to get in trouble is to neglect the budget, and get into a pattern of spending more than you have. Instead, incorporate the changes into your budget - and plan how you will use the extra income. There is nothing wrong with increasing your spend on non-essentials, but the purpose of the budget is to keep control of how you do that, by keeping track of what you can afford. |
Is there any way to pay online in a country with no international banking system | If the vendor accepts cryptocurrencies, this may be your only option. It's not clear if exporting cryptocurrency violates Ethiopian law, but at least cryptocurrencies have not yet been banned. If you can find someone who can trade you cryptocurrency, you can send it anywhere. Because cryptocurrencies are still extremely price volatile, I recommend you use Ripple, the fastest I can find. It can 100% confirm transactions on average within 10 seconds. This will keep your exposure to price volatility at a minimum if you send the cryptocurrency as soon as you buy it. If you choose this route, please take precausions. Your government may retroactively ban it and pursue you. Considering the Ethiopian government's history, this is not unlikely, and banning cryptocurrencies outright is. |
devastated with our retirement money that we have left | I'll be blunt. |
60% Downpayment on house? | I put about that down on my place. I could have purchased it for cash, but since my investments were returning more interest than the loan was costing me (much easier to achieve now!), this was one of the safest possible ways of making "leverage" work for me. I could have put less down and increased the leverage, but tjis was what I felt most comfortable with. Definitely make enough of a down payment to avoid mortgage insurance. You may want to make enough of a down payment that the bank trusts you to handle your property insurance and taxes yourself rather than insisting on an escrow account and building that into the loan payments; I trust myself to mail the checks on time much more than I trust the bank. Beyond that it's very much a matter of personal preference and what else you might do with the money. |
Is the Yale/Swenson Asset Allocation Too Conservative for a 20 Something? | You can look the Vanguard funds up on their website and view a risk factor provided by Vanguard on a scale of 1 to 5. Short term bond funds tend to get their lowest risk factor, long term bond funds and blended investments go up to about 3, some stock mutual funds are 4 and some are 5. Note that in 2008 Swenson himself had slightly different target percentages out here that break out the international stocks into emerging versus developed markets. So the average risk of this portfolio is 3.65 out of 5. My guess would be that a typical twenty-something who expects to retire no earlier than 60 could take more risk, but I don't know your personal goals or circumstances. If you are looking to maximize return for a level of risk, look into Modern Portfolio Theory and the work of economist Harry Markowitz, who did extensive work on the topic of maximizing the return given a set risk tolerance. More info on my question here. This question provides some great book resources for learning as well. You can also check out a great comparison and contrast of different portfolio allocations here. |
Ethics and investment | Domini offers such a fund. It might suit you, or it might include things you wish to avoid. I'm not judging your goals, but would suggest that it might be tough to find a fund that has the same values as you. If you choose individual stocks, you might have to do a lot of reading, and decide if it's all or none, i.e. if a company seems to do well, but somehow has an tiny portion in a sector you don't like, do you dismiss them? In the US, Costco, for example, is a warehouse club, and treats employees well. A fair wage, benefits, etc. But they have a liquor store at many locations. Absent the alcohol, would you research every one of their suppliers? |
Cheapest way to wire or withdraw money from US account while living in Europe | Atm machine and my Credit Union account. Low fees (often zero, if the machine is on any of the same networks) and decent exchange rate, and no need to carry cash or traveler's checks to be exchanged. Alternatively, pay by credit card, though there is a foreign transaction fee on that. |
Is it inadvisable to leave a Roth IRA to charity upon death? | I think what those articles are saying is: "If you want to leave some money to charity and some to relatives, don't bequeath a Roth to charity while bequeathing taxable accounts to relatives." In other words, it's not "bad" to leave a Roth IRA to charity, it's just not as good as giving it to humans, if there are humans you want to give money to. In your situation, the total amount you want to leave to relatives is less than the value of your Roth. So it sounds like the advice as it applies to you is: "Don't leave your relatives $30K from your taxable funds while leaving the whole Roth to charity. Instead, leave $30K of your Roth to your relatives, while leaving all the taxable funds to charity (along with the leftover $20K of the Roth)." In other words, the Roth is a "last resort" for charitable giving --- only give away Roth money to charity if you already gave humans all the money you want to give them. (I'm unsure of the details of how you would actually designate portions of the Roth for different beneficiaries, but some googling suggests it is possible.) |
Entering the stock market in a poor economy | Wow I love some of these answers. Remember why you are investing in the first place. For me I like Dividend stocks and Dividend Capturing. Here is why. With over 3500 dividend stock companies paying out dividends this year, that means I can get a dividend check almost every day. What about if the stock goes down you ask? Well out of these 3500 companies there is a small group of these stocks that have consistently increased their dividend payout to their investors for over 25 years and a smaller group that have been increasing every year their pay outs for over 50 years. Yes Kennedy was in office back then and to this day they consistently pay higher and higher dividend payments to their investors, every year... for 50 years. As for the Dividend Capturing strategy, that allows me to collect up 10-20 checks per month with that little effort. As for the stock going down... Here is a little tidbit that most buyers overlook. Stock price is more or less the public's perception of the value of a certain company. Earnings, balance sheet, cash flow, market cap and a few other things in the quarterly report will give you a better answer to the value of a company. If stock price goes down while earning and market go keep going up... what does that tell you? |
Might I need a credit score to rent, or for any other non-borrowing finances? | Credit scores are not such a big deal in Canada as they are in the US and even some European countries. One reason for this: the Social Insurance Number (SIN number) isn't used for so many purposes like the Social Security Number (SSN) in the US. The SIN number isn't even required to get credit (but with some exceptions it is needed to open an interest-bearing savings account, so that the interest income can be reported). You can refuse to provide the SIN number to most private companies. Canada also has one of the highest per-capita immigration rates of any large country, so new arrivals are expected, and services are geared up for them. Most of the banks offer special deals for "New Canadians". You should get a credit card (even if just a secured credit card) through them with one of these offers to start a credit file anyway, but there's no need to actually use it much. Auto-paying a utility bill through the card, and paying it off in full each month, is one way to keep it active. No need to ever pay any interest. Most major apartment rental firms will expect a good proportion of their renters to be new to Canada, so should have procedures in place to deal with it (such as a higher deposit). You should not give them your SIN for a credit check, even when you're more established. Same for utilities, they can just charge a higher deposit if they can't credit check you. For private landlords, everything is negotiable (but see the laws link at the end of this answer). You will later need a credit rating for a mortgage on a house (if not paying cash), so it's worth getting that one token credit card. Useful for car rental also. Here's a fairly complete summary of the laws on renting in Canada, which includes the maximum deposits that can be asked for, and notice periods. |
How to calculate new price for bond if yield increases | I am currently trying out some variations (moving terms around ...) of the formula for the present value of money The relationship between yield and price is much simpler than that. If you pay £1015 for a bond and its current yield is 4.69%, that means you will receive in income each year: 4.69% * £1015 = £47.60 The income from the bond is defined by its coupon rate and its face value, not the market value. So that bond will continue to pay £47.60 each year, regardless of the market price. The market price will go up or down according to the market as a whole, and the credit rating of the issuer. If the issuer is likely to default, the market price goes down and the yield goes up. If similar companies start offering bonds with higher yields, the market price goes down to make the bond competitive in the market, again raising yield. So if the yield goes up to 4.87%, what is the price such that 4.87% of that price is £47.60? £47.60 / 4.87% = £977.48 Another way to think of it: if the yield goes up from 4.69% to 4.87%, then yield has increased by a factor of: 4.87% / 4.69% = 1.0384 Consequently, market price must decrease by the same factor: £1015 / 1.0384 = £977.48 |
Can my employer limit my maximum 401k contribution amount (below the IRS limit)? | One description of what happened is at 401(k) Plan Fix-It Guide. The issue is the plan was "Top Heavy," i.e. those making a high income were making disproportionately larger deposits than the lower paid employees. As the IRS article suggests, a nice matching deposit from the employer can eliminate the lower limit caused by the top heavy-ness. Searching on [top heavy 401(k)] will yield more details if you wish to research more. |
Planning to invest in stock, age 16 | First of all, since you're 16 - you will not invest in anything. You cannot, you're a minor. You cannot enter contracts, and as such - you cannot transact in property. Your bank accounts are all UGMA accounts. I.e.: your guardian (or someone else who's the trustee on the account) will be the one transacting, not you. You can ask them to do trades, but they don't have to. They must make decisions in your best interest, which trades may not necessarily be. If however they decide to make trades, or earn interest, or make any other decision that results in gains - these are your gains, and you will be taxed on them. The way taxes work is that you're taxed on income. You're free to do with it whatever you want, but you're taxed on it. So if you realized gains by selling stocks, and reinvested them - you had income (the gains) which you did with whatever you felt like (reinvested). The taxman doesn't care what you did with the gains, the taxman cares that you had them. For losses it is a bit more complicated, and while you can deduct losses - there are limitations on how much you can deduct, and some losses cannot be deducted at all when realized (like wash sale losses or passive activity losses). When you have stock transactions, you will probably need to file a tax return reporting the transactions and your gains/losses on them. You may end up not paying any tax at all, but since the broker is reporting the transactions - you should too, if only to avoid IRS asking why you didn't. This, again, should be done by your guardian, since you personally cannot legally sign documents. You asked if your gains can affect your parents' taxes. Not exactly - your parents' taxes can affect you. This is called "Kiddie Tax" (unofficially of course). You may want read about it and take it into account when discussing your investments with your guardian/parents. If kiddie tax provisions apply to you - your parents should probably discuss it with their tax adviser. |
Should I avoid credit card use to improve our debt-to-income ratio? | For scoring purposes, having a DTI between 1-19% is ideal. From Credit Karma: That being said, depending on the loan type you looking at receiving (FHA, VA, Conventional, etc), there are certain max DTIs that you want to stay away from. As a rule, for VA, you want to try to stay away from 41% DTI. Exceptions are made for people with sufficient funds in the bank (3-9 months) to go to higher DTIs. If you keep a 19% utilization overall, that will get you a higher score but it will also show that you have a monthly payment on a particular revolving credit account. While the difference between 729 and 745 seems like a lot of points, there are rules as to how the interest rates are determined. So you will find that many banks have the same or similar rates due to recent legislation in Dodd-Frank. In the days of subprime mortgages, this was not the case. Adjustable rate mortgages did not necessarily go away, the servicer just has to make sure that the buyer can weather the full amount once it reaches maturity, not the lower amount. That is what got a lot of people in trouble. From "how interest rates are set": Before quoting you an interest rate, the loan officer will add on how much he and his branch want to earn. The branch or company sets a policy on how little that can be (the minimum amount the loan officer adds on to his cost) but does not want to overcharge borrowers either (so they set a maximum the loan officer can charge) Between that minimum and maximum, the loan officer has a great deal of flexibility. For example, say the loan officer decides he and his branch are going to earn one point. When you call and ask for a rate quote, he will add one point to the cost of the loan and quote you that rate. According to the rate sheet above, seven percent will cost you zero points. Six and three-quarters percent will cost you one point. In our example, at 7.125% the loan officer and branch would earn one point and have some money left over. This could be used to pay some of the fees (processing, documents, etc), which is how you get a "no fees -no points" mortgage. You just pay a higher interest rate. Where this scoring helps you is in credit card interest rates and auto loan and personal loan rates, which have different rate structures. My personal opinion is to avoid the use of the credit cards. Playing games to try to maximize your score in this situation won't help you when you are talking about 20 points potentially. If you were at the bottom level and were trying to meet a minimum score to qualify, then I would recommend you try to game this scoring system. Take the extra money you would put on a credit card and save it for housing expenses. Taking the Dave Ramsey approach, you should have at least $1000 in emergency funds as most problems you encounter will be less than $1000. That advice rings true. |
Mutual Funds Definition and Role | I think you are asking about actively managed funds vs. indexes and possibly also vs. diversified funds like target date funds. This is also related to the question of mutual fund vs. ETF. First, a fund can be either actively managed or it can attempt to track an index. An actively managed fund has a fund manager who tries to find the best stocks to invest in within some constraints, like "this fund invests in large cap US companies". An index fund tries to match as closely as possible the performance of an index like the S&P 500. A fund may also try to offer a portfolio that is suitable for someone to put their entire account into. For example, a target date fund is a fund that may invest in a mix of stocks, bonds and foreign stock in a proportion that would be appropriate to someone expecting to retire in a certain year. These are not what people tend to think of as the canonical examples of mutual funds, even though they share the same legal structure and investment mechanisms. Secondly, a fund can either be a traditional mutual fund or it can be an exchange traded fund (ETF). To invest in a traditional mutual fund, you send money to the fund, and they give you a number of shares equal to what that money would have bought of the net asset value (NAV) of the fund at the end of trading on the day they receive your deposit, possibly minus a sales charge. To invest in an ETF, you buy shares of the ETF on the stock market like any other stock. Under the covers, an ETF does have something similar to the mechanism of depositing money to get shares, but only big traders can use that, and it's not used for investing, but only for people who are making a market in the stock (if lots of people are buying VTI, Big Dealer Co will get 100,000 shares from Vanguard so that they can sell them on the market the next day). Historically and traditionally, ETFs are associated with an indexing strategy, while if not specifically mentioned, people assume that traditional mutual funds are actively managed. Many ETFs, notably all the Vanguard ETFs, are actually just a different way to hold the same underlying fund. The best way to understand this is to read the prospectus for a mutual fund and an ETF. It's all there in reasonably plain English. |
Is this Employee Stock Purchase Plan worth it when adding my student loan into the equation? | It's 5% free money, if you believe the company's stock is fairly valued and likely to grow and/or return reasonable dividends until you're ready to sell it. There's usually a minimum holding period of a few months to a year before these discounted shares can be sold; take that into account |
Good habits pertaining to personal finance for someone just getting started? | If you are not working, I believe you would be getting some money from your family to meet your expenses. In such a case, I would start with maintaining a Cash A/c which would list your monthly expenses and the money you received, which is what I used to do at your age. You can maintain it in a notebook with pen/pencil or using online tools such as Google Sheets. Enter each expense entries each day as debits and entries towards any money you receive as credits. At the end of the month, tally them and see how much you have left. Also, this gives you a clear picture of where your expenses are what is that you can avoid. On longer term, this can help you form an annual budget for your personal finances. |
Is buying or selling goods for gold or silver considered taxable? | What you are doing is barter trade. Most countries [if not all] would tax this on assumed fair value. There are instances where countries may relax this norm in border areas for a small amount. Barter is not just for gold – one can virtually do this for any goods, i.e. sell garments in exchange for oil, sell electronic chips in exchange for consumer goods, etc. Quite a few business would flourish doing this and not exchange currency at all, hence the need for government to tax on the [assumed / calculated / arrived/ derived] fair value. A word of caution: at times this may not be fair at all and may actually cost more than had one done a transaction using currency. |
Can a car company refuse to give me a copy of my contract or balance details? | No, they cannot refuse to provide you with the current balance or a balance history. The other answers point you to resources that are available to help you put pressure on the dealership. The bottom line is that you now know that you have the right to the details and to audit their recording of the transactions. You should now use that information and demand a better response in writing. If they have to give you a response in writing, they can't deny the answer they gave in a court of law later on. They understand this, and they will take you more seriously if you send a letter. Make sure to keep copies of the letter and send it with certified delivery. |
Is 401k as good as it sounds given the way it is taxed? | Be sure to consider the difference between Roth 401K and standard 401K. The Roth 401K is taxed as income then put into your account. So the money you put into the Roth 401K is taxed as income for the current year, however, any interest you accumulate over the years is not taxed when you withdraw the money. So to break it down: You may also want to look into Self Directed 401K, which can be either standard or Roth. Check if your employer supports this type of account. But if you're self employed or 1099 it may be a good option. |
Costs around a modern crowd-sourced hedge fund | Your inference in #1 is incorrect. The million dollars he has contributed is going to be part of the assets of the fund. This is common practice and is a way for the founder to express confidence that the fund will make money. He wants you to come up with a model that he can then use to trade those assets. Presumably he will give you some money if he uses your model and it works. Regarding #2, there are lots of ways of getting data. Sometimes you can buy it directly from the exchange. You can also buy from vendors like tickdata.com. There are lots of such vendors. Since he makes a big deal about saying it's expensive, I'm assuming he is talking about data at relatively high frequency (not daily, which would be cheap). Stock data is still not bad. Complete US data would be a few thousand dollars (maybe 20K at the most). For someone sitting at home with no capital, that's a lot of money, but for a hedge fund it's nothing. As an institutional investor, your broker will give you a data feed that will provide all prices in real time (but not historically). If he's been in operation a while, he could have just saved the prices as they came out of the pipe. I don't think that's the case here, though, based on how young he is and how little money is involved. In short, he paid for some data and has "encrypted" it in such a way that he can legally share it for free. Supposedly his method preserves the structure so that you could write a trading model based on the encrypted data and it would work on real data. Once you have a good trading model, you sell it to him and he will use it to trade his million dollars and whatever other money he is able to gather. |
Borrowing share with a covered call for short? | No, if your stock is called away, the stock is sold at the agreed upon price. You cannot get it back at your original price. If you don't want your stock to be called, make sure you have the short call position closed by expiration if it is ITM. Also you could be at risk for early assignment if the option has little to no extrinsic value, although probably not. But when dividends are coming, make sure you close your short ITM options. If the dividend is worth more than the extrinsic value, you are pretty much guaranteed to be assigned. Been assigned that way too many times. Especially in ETFs where the dividends aren't dates are not always easy to find. It happens typically during triple witching. If you are assigned on your short option, you will be short stock and you will have to pay the dividend to the shareholder of your short stock. So if you have a covered call on, and you are assigned, your stock will be called away, and you will have to pay the dividend. |
Is there a generally accepted term for fractions of Currency Units? | The Coinage Act of 1792 of the Continental Congress established that the lowest money of account for the United States is one-thousandth (1/1000) of a dollar. This sub-unit is the mille (also written mil, mill). Other sub-units given by the act are the disme for one-tenth (1/10) of a dollar (for which, etymologically, is the origin of the word dime), and the cent for one-hundredth (1/100) of a dollar. The ten-thousandth of the dollar value is taken on account by a few financial organizations, but has no official given term. For the monetary value of USD 27.4955, it may be quoted as twenty-seven dollars, forty-nine cents, and five-and-a-half milles. |
In what state should I register my web-based LLC? | I would prefer to see you register in your home state, and then focus on making money, rather than spending time looking to game the system to save a few bucks. People worry way too much about these trivial fees when they should be focused on making their business successful. Get registered, get insurance, and then pour it on and start making money. Make $650 your target for a week's income - you can do it! Next year's goal should be spending $50 a month on a payroll service because you're SO BUSY you can't take the extra time to pay your own social security taxes. |
Account that is debited and account that is credited | The terms debit and credit come from double-entry book-keeping. In this system, every transaction is applied against two accounts: it debits one and credits the other by equal amounts. (Or more technically, it affects two or more accounts, and the total of the credits equals the total of the debits.) Whether a debit or a credit adds or subtracts from the balance depends on the type of account. The types of accounts were defined so that it is always possible to have these matching debits and credits. Assets, like cash or property that you own, are "debit accounts", that is, a debit is an increase in the balance of the account. Liabilities, like money you owe, are "credit accounts", that is, a credit is an increase. To get into all the details would require giving a tutorial on double-entry book-keeping, which I think is beyond the scope of a forum post. By a quick Bing search I find this one: http://simplestudies.com/double-entry-accounting-system.html. I haven't gone through it so I can't say if it's a particularly good tutorial. There are plenty of others on the Web and in bookstores. Note that the terminology can be backwards when someone you're doing business with is describing the account, because their viewpoint may be the opposite of yours. For example, to me, my credit card is a liability: I owe the bank money. So when I post a charge, that's a credit, and when I pay it off, that's a debit. But to the bank, my account is an asset: the customer (me) owes them money. So to the bank, a charge is a debit and a payment is a credit. |
How to calculate ownership for property with a partner | To add to ChrisInEdmonton's answer: Your conveyancing solicitor should be able to advise on the details, but a typical arrangement involves: As an alternative to the numbers in Chris' answer, it could be argued that you should first be reimbursed for the fees you paid (accounting for inflation), but that any remaining profits from the property itself should be divided in proportion to your individual investments (so 51.6% to you, and 48.4% to your partner, assuming you contribute to the loans equally). |
I have an extra 1000€ per month, what should I do with it? | First check: Do you have all the insurances you need? The two insurances everyone should have are: Another insurance you might want to get is a contents insurance ("Hausratsversicherung"). But if you don't own any super-expensive furniture or artworks, you might also opt to self-insure and cover it with: Priority 2: Emergency fund. Due to the excellent healthcare and welfare system in Germany, this is not as important as in many other countries. But knowing that you have a few thousand € laying around in liquid assets in case something expensive breaks down can really help you sleep at night. If you decide not to pay for contents insurance, calculate what it would cost you if there is a fire in your apartment and you would have to replace everything. That's how large your emergency fund needs to be. You also need a larger emergency fund if you are a homeowner, because as a homeowner there might always be an emergency repair you have to pay for. Priority 3: Retirement. Unless there will be some serious retirement reforms in the next 40 years (and I would not bet on that!), the government-provided pension will not be enough to cover your lifestyle cost. If you don't want to suffer from poverty as a senior citizen you will have to build up a retirement plan now. Check which options your company provides ("Betriebliche Altersvorsorge") and what retirement options you have which give you free money from the government ("Riester-Rente"). Getting professional advise to compare all the options with each other can be really beneficial. Priority 4: Save for a home. In the long-run, owning a home is much cheaper than renting one. Paying of a mortgage is just like paying rent - but with the difference that the money you pay every month isn't spent. Most of it (minus interest and building maintenance costs) stays your capital! At one point you will have paid it off and then you never have to pay rent in your life. It even secures the financial future of your children and grandchildren, who will inherit your home. But few banks will give you a good interest rate if you have no own capital at all. So you should start saving money now. Invest a few hundred € every month in a long-term portfolio. You might also get some additional free money for this purpose from your employer ("Vermögenswirksame Leistungen"). |
Collecting Dividends while insulating volatility through options? | The strategy is right. As pointed out by you, will the " volatility cause the premium on the price of the options to be too high to make this worthwhile" ... this is subjective and depends on how the markets feels about the volatility and the trend ... ie if the market believes that the stock will go up, the option at 45 would cost quite a bit less. However if the market believes the stock would go down, the option at 45 would be quite high [and may not even be available]. There is no generic right or wrong, the strategy is right [with out without putting dividend into equation] it depends what options are available at what prices. |
Putting the gordon equation into practice | The Gordon equation does not use inflation-adjusted numbers. It uses nominal returns/dividends and growth rates. It really says nothing anyone would not already know. Everyone knows that your total return equals the sum of the income return plus capital gains. Gordon simply assumes (perfectly validly) that capital gains will be driven by the growth of earnings, and that the dividends paid will likewise increase at the same rate. So he used the 'dividend growth rate' as a proxy for the 'earnings growth rate' or 'capital gains rate'. You cannot use inflation-removed estimates of equity rates of return because those returns do not change with inflation. If anything they move in opposite directions. Eg in the 1970's inflation the high market rates caused people to discount equity values at larger rates --- driving their values down -- creating losses. |
$200k in an IRA, unallocated. What's the safest investment? | Note that long term you need to plan for possible inflation, so "a little bit of return" generally wants to be at least high enough to offset that plus "a little bit". Which is why just shoving it in a bank, while extremely safe, isn't usually the best choice. You need to make some decisions about how you trade off risk versus return, whether you will comfortable riding out a downturn while waiting for recovery, and so on. My standard advice, as someone else who knows how little he knows: It's worth spending a few hundred of those dollars to talk to a real financial planner. (NOT someone who has any interest in selling you particular products, like a broker or agent!) They can help you ask yourself the right questions about comfort and goals and timeframe to pick a strategy which suits your needs. It won't be "exciting", but it sounds luke you agree with me that this shouldn't be exciting and "market rate of return" (about 8% annually, long term) is generally good enough, with more conservative positions as you approach the point of needing that money. |
What is insider trading exactly? | Insider trading is any trading done on material non-public information relating to an instrument. If my sister, who works for a drugs testing company, tells me that stage 3 trials of a drug look like they will fail and I trade on that information (probably by shorting a company's stock) that is insider trading. If an employee of that firm trades on that same stock knowing that the trials are likely to fail that is too. If an employee of that company trades on the stock without knowing that information that is NOT insider trading. If I know from an insider I met at the pub that a large orange producer has seen a fall in production due to a blight and I trade on oranges futures, even though I am not directly trading in the stock it is still insider trading. I mentioned that the information must be material, that means that it must have the potential to move the market; if I know that a firm is going to increase profits by 10% this year it is not material if analyst expectations are for a similar rise. You are right that small scale insider trading, such as by employees and their families, is relatively unregulated and unchecked but directors and C-level employees of a firm are required to publish all and any dealings that they have in the stock and several have been caught and penalized for insider trading. edit: http://www.sec.gov/spotlight/insidertrading/cases.shtml details some cases, many involving director and C-level employees, that the SEC has prosecuted recently. Incidentally I work in financial fraud monitoring and we use an analytic based on previous days' trades and today's news (i.e. when the information becomes public) to identify traders who might either be indulging in or receiving orders to trade on insider information. Essentially this works by looking for large changes in position against an instrument that later has material information releases relevant to it. One final thing to think about: given that being caught will generally cause perpetrators to go to prison and be banned from director level jobs and/or trading for life as well as a large, life-changing fine and a massive loss of reputation not many people with insider information want to risk trading on it, myself included. |
How can small children contribute to the “family economy”? | Similar to the lawn care you mentioned: if you have space, you could have the kids create a mini-farmstand. They could grow flowers for cutting, some vegetables, etc. It would be a different twist on the classic lemonade stand. If the kids are into animals and space and zoning allows, you could keep chickens and add eggs to your mini-farmstand. Upfront costs for the garden would be small enough that they can learn about how investing in a business works at a very small scale. Along with learning about money, they also learn responsibility because it requires commitment and daily attention. It's also seasonal in a way that meshes well with school (though having animals is a constant year-round responsibility). |
Why are Rausch Coleman houses so cheap? Is it because they don't have gas? | In northwest Arkansas, most of the houses this company offers do cost about 90 - 110 dollars per square foot. The exceptions use the Whitney plan, which has the following design features (and/or problems) which happen to save the builder a lot of money: One very nice feature is the U-shaped stairway in the center of the house. It is easy to find, and has an angled landing. It might be a bit narrow, though. Does the builder bother to put rebar in the brickwork? Arkansas is in earthquake country. What are the floors like? Is the first floor a slab concrete floor with vinyl flooring (and/or carpet on thin pad) immediately above the concrete? Is the second floor bouncy, due to using long-span joists of code-minimum size? Does the builder bother to make the rear windows look as nice as the front windows? As mentioned earlier, the builder only bothers to have one side window. Where to learn more: Fernando Pagés Ruiz is a Nebraska homebuilder who wrote a book on Building the Affordable House: Trade Secrets for High-Value, Low-Cost Construction (The Taunton Press, 2005). He has also written many articles in Fine Homebuilding, including "Building Affordable Houses". True North Consulting specializes in helping builders eliminate waste and "value-engineer" their designs. True North often works with Tim Garrison, the self-proclaimed "builder's engineer". |
How much does it cost to build a subdivision of houses on a large plot of land? | You can hire a builder to build for you on a lot that you would be happy to live on with utilities already connected. Subdividing a large piece of land gets a little more complicated. What easements exist, and what new easements would need to be created when connecting utilities? Would all of the lots already have street access, or do you need to dedicate some of the land to building a new road in the subdivision? Also, I edited your post because 83,000sqft is 1.9 acres. Building homes on .19 acre parcels (assuming no need for a road to take another 15% of the lot) reduces the value of the homes that you are building. You should run the numbers with 6 houses and see how attractive the math looks. Also, you should look for updated numbers on cost to build. Custom homes are likely closer to $275-$350 (where an architect is involved with drawing the plans). |
How can I decide whether do a masters even if I have go into debt after doing it? | Strictly from an ROI perspective, this is likely very dependent on your field. Some masters degrees (quant finance, business, engineering) will be well worth the debt, since a degree from the right university will yield a respectable ROI, whereas other degrees/fields (philosophy, fine arts, etc) will be basically a waste of money. Regardless of the field you can input your information into an ROI calculator and see what you get. I typically err on the side of using the lowest average reported salary for the degree programs you're considering (self reported salary data is notoriously inflated). |
Tax: 1099 paper form | You can print them on any IRS-approved paper, you don't have to use pre-printed forms. The IRS publishes specifications for paper that is approved for use for these kinds of forms (109*, W*, etc). Here's the reason why it is important: Even the slightest deviation can result in incorrect scanning, and may affect money amounts reported for employees. Note that some portions of these forms are in different color (1099-MISC copy A). This is important, and using incorrect color will affect the IRS OCR mechanisms. Forms for individuals are less complicated with regards to technical specifications, because individuals must file them, and as such any complication will unnecessarily burden the citizenry. All the 109*, W* etc forms are not legally required to be filed by all citizens. You're only required to file them if you chose to do business, or chose to employ others. As such, using professional software and special forms is a cost of doing your business, and not a tax as it would be had it been mandatory to everyone. Mistakes in individual forms due to OCR failure or something else will be noticed by the taxpayers (less/more refund, etc) or through the internal matching and cross-check. However, forms 109* and W* feed that matching and cross-check system and are considered source of truth by it, and as such their processing must be much more reliable and precise. |
Buy home and leverage roommates, or split rent? | I've done this, both as one of the renters and (in a different house) as the landlord. I had roommates I had not lived with before though. It's definitely doable, but can get awkward. Some advice in no particular order Make sure you can afford the house on your own. This avoids the awkward situation of making you financially dependent on your friends. Also, it shouldn't be a problem for a 110k house on a 70k salary. Set the rent below market rates. The arrangement should be financially beneficial to everyone, not just yourself. Expect your roommates to leave eventually. These days people will go where job opportunities take them. |
Option Theta: What conditions are needed for Theta > P/N, where P = option price, and N = days to expiration? | So, if an out-of-the-money option (all time value) has a price P (say $3.00), and there are N days... The extrinsic value isn't solely determined by time value as your quote suggests. It's also based on volatility and demand. Here is a quote from http://www.tradingmarkets.com/options/trading-lessons/the-mystery-of-option-extrinsic-value-767484.html distinguishing between extrinsic time value and extrinsic non-time value: The time value of an option is entirely predictable. Time value premium declines at an accelerating rate, with most time decay occurring in the last one to two months before expiration. This occurs on a predictable curve. Intrinsic value is also predictable and easily followed. It is worth one point for every point the option is in the money. For example, a call with a strike of 30 has three points of intrinsic value when the current value of the underlying stock is $33 per share; and a 40 put has two points of intrinsic value when the underlying stock is worth $38. The third type of premium, extrinsic value, increases or decreases when the underlying stock changes and when the distance between current value of stock and strike of the option get closer together. As a symptom of volatility, extrinsic value may be greater for highly volatile underlying stock, and lower for less volatile stocks. Extrinsic value is the only classification of option premium that is unpredictable. The SPYs you point out probably had a volatility component affecting value. This portion is a factor of expectations or uncertainty. So an event expected to conclude prior to expiration, but of unknown outcome can cause theta to be higher than p/n. For example, a drug company is being sued and the outcome of a trial will determine whether that company pays out millions or not. The extrinsic will be higher than p/n prior to the outcome of the trial then drops after. Of course, the most common situation where this happens is earnings. After the announcement, it's not unusual to see a dramatic drop in the extrinsic portion of options. This is why sometimes a new option trader gets angry when buying calls prior to earnings. When 'surprise' good earnings are announced as hoped, the rise is stock price is largely offset by a fall in extrinsic value giving call holders little or no gain! As for the reverse situation where theta is lower than p/n would expect? Well you can actually have negative theta meaning the extrinsic portion rises over time. (this statement is a little confusing because theta is usually described as negative, but since you describe it as a positive number, negative here means the opposite of what you'd expect). This is a quote from "Option Volatility & Pricing". Keep in mind that they use 'positive' theta to mean the time value increases up over time: Is it ever possible for an option to have a positive theta such that if nothing changes the option will be worth more tomorrow than it is today? When futures options are subject to stock-type settlement, as they currently are in the United States, the carrying cost on a deeply in-the-money option, either a call or a put, can, under some circumstances, be greater than the volatility component. If this happens, and the option is European (no early exercise permitted), it will have a theoretical value less than parity (less than intrinsic value). As expiration approaches, the value of the option will slowly rise to parity. Hence, the option will have a positive theta. Sheldon Natenberg. Option Volatility & Pricing: Advanced Trading Strategies and Techniques (Kindle Locations 1521-1525). Kindle Edition. |
Is the contribution towards Employment Insurance (EI) wasted if I never get fired, or are my premiums refunded? | It is not wasted: it bought you peace of mind. Perhaps you would have had peace of mind without it, because of the particular industry you are in. But people from any industry can get sick or give birth, and not all industries are as evergreen as people think. A number of my onetime programmer colleagues now drive a truck or run a farm because new programming jobs weren't as easy to get as they once were. Like any insurance, it can't be affordable if it is bought only by those who think they will need it. The premiums you pay, in addition to giving you peace of mind, lower the premiums your neighbours pay. That contributes to social harmony. When your neighbours collect EI while looking for another job, they aren't tempted to turn to crime or legal-but-not-savoury ways to earn money. You probably like that, too. The fact they didn't get to choose whether or not to contribute means that they will be covered even if they aren't prudent and forward-looking people, which again is a benefit for you. And BTW, employers pay $1.40 in premiums for every dollar you pay. And we never collect. It's not for us. But we pay it. |
Didn't apply for credit card but got an application denied letter? | This question has the [united kingdom] tag, so the information about USA or other law and procedures is probably only of tangential use. Except for understanding that no, this is not something to ignore. It may well indicate someone trying to use your id fraudulently, or some other sort of data-processing foul-up that may adversely impact your credit rating. The first thing I would do is phone the credit card company that sent the letter to inform them that I did not make his application, and ask firmly but politely to speak to their fraud team. I would hope that they would be helpful. It's in their interests as well as yours. (Added later) By the way, do not trust anything written on the letter. It may be a fake letter trying to lure or panic you into some other sort of scam, such as closing your "compromised" bank account and transferring the money in it to the "fraud team" for "safety". (Yes, it sounds stupid, but con-men are experts at what they do, and even finance industry professionals have fallen victim to such scams) So find a telephone number for that credit card company independently, for example Google, and then call that number. If it's the wrong department they'll be able to transfer you internally. If the card company is unhelpful, you have certain legal rights that do not cost much if anything. This credit company is obliged to tell you as an absolute minimum, which credit reference agencies they used when deciding to decline "your" application. Yes, you did not make it, but it was in your name and affected your credit rating. There are three main credit rating agencies, and whether or not the bank used them, I would spend the statutory £2 fee (if necessary) with each of them to obtain your statutory credit report, which basically is all data that they hold about you. They are obliged to correct anything which is inaccurate, and you have an absolute right to attach a note to your file explaining, for example, that you allege entries x,y, and z were fraudulently caused by an unknown third party trying to steal your ID. (They may be factually correct, e.g. "Credit search on ", so it's possible that you cannot have them removed, and it may not be in your interests to have them removed, but you certainly want them flagged as unauthorized). If you think the fraudster may be known to you, you can also use the Data Protection Act on the company which write to you, requiring them to send you a copy of all data allegedly concerning yourself which it holds. AFAIR this costs £10. In particular you will require sight of the application and signature, if it was made on paper, and the IP address details, if it was made electronically, as well as all the data content and subsequent communications. You may recognise the handwriting, but even if not, you then have documentary evidence that it is not yours. As for the IP address, you can deduce the internet service provider and then use the Data Protection act on them. They may decline to give any details if the fraudster used his own credentials, in which case again you have documentary evidence that it was not you ... and something to give the police and bank fraud investigators if they get interested. I suspect they won't be very interested, if all you uncover is fraudulent applications that were declined. However, you may uncover a successful fraud, i.e. a live card in your name being used by a criminal, or a store or phone credit agreement. In which case obviously get in touch with that company a.s.a.p. to get it shut down and to get the authorities involved in dealing with the crime. In general, write down everything you are told, including phone contact names, and keep it. Confirm anything that you have agreed in writing, and keep copies of the letters you write and of course, the replies you receive. You shouldn't need any lawyer. The UK credit law puts the onus very much on the credit card company to prove that you owe it money, and if a random stranger has stolen your id, it won't be able to do that. In fact, it's most unlikely that it will even try, unless you have a criminal record or a record of financial delinquency. But it may be an awful lot of aggravation for years to come, if somebody has successfully stolen your ID. So even if the first lot of credit reference agency print-outs look "clean", check again in about six weeks time and yet again in maybe 3 months. Finally there is a scheme that you can join if you have been a victim of ID theft. I've forgotten its name but you will probably be told about it. Baically, your credit reference files will be tagged at your request with a requirement for extra precautions to be taken. This should not affect your credit rating but might make obtaining credit more hassle (for example, requests for additional ID before your account is opened after the approval process). Oh, and post a letter to yourself pdq. It's not unknown for fraudsters to persuade the Post Office to redirect all your mail to their address! |
When should I start an LLC for my side work? | The major reason to start an LLC for side work is if you want the additional personal liability protection afforded by one. If you're operating as a sole proprietor, you may be exposing yourself to liability: debts and judgments against your business can put your personal assets at risk! So, if you're intending to continue and grow your side work in the future, you ought to consider the LLC sooner than later. It's also an important legal decision and you should consider seeking a professional opinion. The Wall Street Journal has a brief guide titled How to Form an LLC. Here are some notable excerpts: A limited liability company, or LLC, is similar to a partnership but has the legal protections of personal assets that a corporation offers without the burdensome formalities, paperwork and fees. [...] Some states charge annual fees and taxes that can diminish the economic advantage of choosing to become an LLC. Among LLC advantages: pass-through taxation – meaning the profits and losses “pass through” the business to the individuals owning the business who report this information on their own personal tax returns. The result can be paying less in taxes, since profits are not taxed at both the business level and the personal level. Another plus: Owners aren’t usually responsible for the company’s debts and liabilities. [...] Also check out onstartups.com's Startup 101: Should You Form An Inc. or An LLC? Here are some additional articles that discuss the advantages / disadvantages of forming an LLC: |
When filing a US 1065 as a General Partnership, do we combine our expenditures for a home office? | Your home doesn't belong to the partnership, it belongs to you. So you can (if qualified) deduct home office usage as a business expense on your individual tax return. Same goes to your partner. Similarly any other unreimbursed expense. |
My Brokerage statement shows “Adjusted due to previous wash sale disallowed loss” what does this mean? | Summary of accepted answer: Your "loss" will not count as a loss (to the IRS). Which means no tax deduction for a "short-term capital loss" (on that sale). Instead, the IRS simply pretends like you had paid less for the stock to begin with. |
How is my employer affected if I have expensive claims on my group health insurance? | Many big companies self insure. They pay the insurance company to manage the claims, and to have access to their network of doctors, hospitals, specialists, and pharmacies; but cover the costs on a shared basis with the employees. Medium sized companies use one of the standard group policies. Small companies either have expensive policies because they are a small group, or they have to join with other small companies through an association to create a larger group. The bigger the group the less impact each individual person has on the group cost. The insurance companies reprice their policies each year based on the expected demographics of the groups, the negotiated rates with the network of providers, the required level of coverage, and the actual usage of the group from the previo year.. If the insurance company does a poor job of estimating the performance of the group, it hits their profits; which will cause them to raise their rates the next year which can impact the number of companies that use them. Some provisions of the new health care laws in the US govern portability of insurance regarding preexisting conditions, minimum coverage levels, and the elimination of many lifetime cap. Prior to these changes the switching of employers while very sick could have a devastating impact on the finances of the family. The lifetime cap could make it hard to cover the person if they had very expensive illnesses. If the illness doesn't impact your ability to work, there is no need to discuss it during the interview process. It won't need to be discussed except while coordinating care during the transition. There is one big issue though. If the old company uses Aetna, and the new company doesn't then you might have to switch doctors, or hospitals; or go out-of-network at a potentially even bigger cost to you. |
How can I verify that a broker I found online is legitimate? | (I answered a similar question before.) Essentially, you shouldn't trust a site you find on the Internet merely because it looks professional and real. Before signing up with any new service provider you found online, you should verify the authenticity of both the organization itself and their web site address. Even if the name displayed by a web site represents a legitimate brokerage firm, any site you happen to come across on the Internet could be an elaborate spoof of a real company, intended to capture your personal details (or worse). First, to check if a brokerage firm is in fact registered to trade securities – in the United States – you can consult FINRA's BrokerCheck online service. This might be the first of many checks you should undertake ... after you convince yourself that FINRA is legitimate. A meta-problem ;-) Then, if you want to know if the web site address is authentic, one way is to contact that broker offline using the contact information found from a trusted source, such as the FINRA BrokerCheck details. Unfortunately, those details do not currently appear to contain the broker's web site URL. (Else, that could be useful.) Another thing to look at is the site's login or sign-up page, for a valid SSL certificate that is both issued to the correct legal name of the brokerage firm as well as has been signed by a well-known certificate authority (e.g. VeriSign). For a financial services firm of any kind, you should look for and expect to see an Extended Validation Certificate. Any other kind of certificate might only assert that the certificate was issued to the domain-name owner, and not necessarily to an organization with the registered legal name. (Yes, anybody can register a domain with a similar name and then acquire a basic SSL certificate for that domain.) FWIW, Scottrade and ShareBuilder are both legitimate brokers (I was aware already of each, but I also just checked in the FINRA tool), and the URLs currently linked to by the question are legitimate web site addresses for each. Also, you can see their EV certificates in action on secured pages here and here. As to whether your investments with those brokers would be "safe" in the event of the broker failing (e.g. goes bankrupt), you'll want to know that they are members of the Securities Investor Protection Corporation (Wikipedia). (Of course, this kind of protection doesn't protect you if your investments simply go down in value.) But do your own due diligence – always. |
Why have candlestick charts overlaps? | Remember that prices refer to discrete events in the market - trades - it is easily possible that the highest price for a trade in the next period is lower than the highest price in the current one as someone in the current period may be willing to pay more in this period than anyone in the next. The ending price of a period is also determined this way; it is the last price that someone was willing to pay in this period not the first price that someone will pay in the next period. Why? because the last price in this period is not in the next period by definition! edit: added something on illiquid stocks Illiquid stocks may have intraday gaps in the sequence of candlesticks where no trading occurred. Below is one such chart for 1pm plc.(OPM.L) a UK based leasing company (thanks to Yahoo finance for this): |
What is title insurance, and should I get title insurance for my home? | Here is a pretty exhaustive article on that question. Long story short, it is an insurance policy against the possibility that the person selling the property to you doesn't legally own it. If there was some mistake or fraud along the way the proper owner could theoretically repossess the property without you getting your money back. If you are financing the property, it is almost a certainty that the lender will require you to buy it whether you want it or not. |
Bid-Ask at market open, which comes first? [duplicate] | The options market requires much more attention to avoid the situation you're describing. An overnight $10 ask will remain on the books most likely as Good-Til-Canceled. The first to bid the low order gets it. If traders are paying attention, which they probably are then they will bid at $10. If not, they will bid immediately at $20. If they crossed the order, it would be filled at their higher than $10 bid. This is all governed by the exchange where the ask is posted, and most implement price-time priority. |
1000 pound to invest | Depending what your timeframe preferences are, here are a couple of options: Stock indexes: as per Fool's investing guide, historically this had the highest return / risk ratio. On a 5-year horizont, with no extra work, this seems the best option. Premium bonds, similar to most cash ISAs currently available, have a rather rubbish ROI ATM (~3-5% AER at max) Invest it into yourself, in the form of personal development, classes & courses, or starting a business. Disadvantage: this also will carry an opportunity cost in the form of your time. On a longer timeline, however, if this improves your market value only by 1%, that pays extreme dividends over the rest of your carrier. With a single grand at hand, I'd definitely recommend going for option 3 -considering yourself as an investing vehicle, and ask yourself: how can you best improve stakeholder value? You'd be surprised at the kind of results a single grand can make. |
What is the valuation of a company based on? | The textbook answer would be "assets-liabilities+present discounted value of all future profit". A&L is usually simple (if a company has an extra $1m in cash, it's worth $1m more; if it has an extra $1m in debt, it's worth $1m less). If a company with ~0 assets and $50k in profit has a $1m valuation, then that implies that whoever makes that valuation (wants to buy at that price) really believes one of two things - either the future profit will be significantly larger than $50k (say, it's rapidly growing); or the true worth of assets is much more - say, there's some IP/code/patents/people that have low book value but some other company would pay $1m just to get that. The point is that valuation is subjective since the key numbers in the calculations are not perfectly known by anyone who doesn't have a time machine, you can make estimates but the knowledge to make the estimates varies (some buyers/sellers have extra information), and they can be influenced by those buyers/sellers; e.g. for strategic acquisitions the value of company is significantly changed simply because someone claims they want to acquire it. And, $1m valuation for a company with $500m in profits isn't appropriate - it's appropriate only if the profits are expected to drop to zero within a couple years; a stagnant but stable company with $500m profits would be worth at least $5m and potentially much more. |
What are some good, easy to use personal finance software? [UK] | My Finances is a personal finance app for iPhone and iPad. The app uses iCloud to sync the data between your devices if you want to. Otherwise the data is only local and won't be synced to any server. Spoiler: I'm the developer and my opinion may be biased. |
Is it a good idea to get an unsecured loan to pay off a credit card that won't lower a high rate? | Why not just get another credit card and transfer the balance? Many of them will give you special perks like x months of no interest for doing so. Also, once you call to actually cancel the card you will see for sure whether they really have any power to negotiate rates. From their perspective 15% APR is more than 0%APR which is what they'd get if they lose your business. |
Are Forex traders forced to use leverage? | While it's not true that you have to use leverage to participate in Forex, the alternative makes it impractical for most people to be able to do so. You need to be able to put a lot of money into it in order to not trade on leverage. The fact is, most accounts for "normal" people require leverage because the size of the typical contract is more than the average person can afford to risk (or usually more than the average person has). Leverage, however, in the Forex market is not like Leverage in the stock or commodities market (well, they're the same thing in theory, but they are executed differently). In Forex, the broker is the one lending you the money in nearly all cases, and they will cash out your position when your account balance is exhausted. Thus, there is no risk for them (barring fraud or other illegal issues). Technically, I don't believe they guarantee that you will not accrue a debt, but I've never heard of anyone having their position cashed out and then owed more money. They've very good about making sure you can only spend money you've deposited. To put this another way, if you have $1,000 in your account and you are leveraged to 100,000. Once your trade drops to $1000 in losses your position is automatically cashed out. There is no risk to the broker, and no risk to you (other than your $1000)... So trading without leverage has little value, while traiding with leverage has lots of potential gain and no downsides (other than a faster rate of loss, but if you're worried about that, just trade smaller lots.) |
Are wash sale rules different for stocks and ETFs / Mutual Funds? | What JoeTaxpayer means is that you can sell one ETF and buy another that will perform substantially the same during the 30 day wash sale period without being considered substantially the same from a wash sale perspective more easily than you could with an individual stock. For example, you could sell an S&P 500 index ETF and then temporarily buy a DJIA index ETF. As these track different indexes, they are not considered to be substantially the same for wash sale purposes, but for a short term investing period, their performance should still be substantially the same. |
Is this follow-up after a car crash a potential scam? | You have to realize that you're trying to have your cake and eat it too. You want to do things "unofficially" by not reporting the accident (to insurance companies and/or police), but you want to do it "officially" in that you want to have legal recourse if they try to hit you up for more money. The only way to have it both ways is to trust the other person. From a financial perspective, ultimately you need to decide if the monetary cost of your raised insurance premiums, etc., outweighs the cost of whatever money the other party in the accident will try to squeeze out of you (factoring in the likelihood that they will do so). You also would need to factor in the likelihood that, rather than trying to scam you, they'll pursue legal action against you. In short, from a purely monetary perspective, if the legitimate cost of repairs is $700 and the cost to you of doing it by the book via insurance is $2000, you should be willing to be scammed for up to $1300, because you'll still come out ahead. Of course, there are psychological considerations, like whether someone unscrupulous enough to scam you will stop at $1300. But those numbers are the baseline for whatever outcome calculations you want to do. On the more qualitative side of things, it is possible they're trying to scam you, but also possible they're just trying to hustle you into doing everything quickly without thinking about it. They may not be trying to gouge you monetarily, they just want to pressure you so they get their money. I agree with other answerers here that the ideal way would be for them to send you an actual bill after repairs are complete. However, you could ask them to send you a written copy of the repair shop estimate, along with a written letter in which they state that they will consider payment of that amount to resolve the issue and won't pursue you further. The legal strength of that is dubious, but at least you have some documentation that you didn't just try to stiff them. If they won't give you some form of written documentation, I would read that as a red flag, bite the bullet, and contact your insurance company. |
What gives non-dividend stocks value to purchasers? [duplicate] | Instead of giving part of their profits back as dividends, management puts it back into the company so the company can grow and produce higher profits. When these companies do well, there is high demand for them as in the long term higher profits equates to a higher share price. So if a company invests in itself to grow its profits higher and higher, one of the main reasons investors will buy the shares, is in the expectation of future capital gains. In fact just because a company pays a dividend, would you still buy it if the share price kept decreasing year after year? Lets put it this way: Company A makes record profits year after year, continually keeps beating market expectations, its share price keeps going up, but it pays no dividend instead reinvests its profits to continually grow the business. Company B pays a dividend instead of reinvesting to grow the business, it has been surprising the market on the downside for a few years now, it has had some profit warnings lately and its share price has consistently been dropping for over a year. Which company would you be interested in buying out of the two? I know I would be interested in buying Company A, and I would definitely stay away from Company B. Company A may or may not pay dividends in the future, but if Company B continues on this path it will soon run out of money to pay dividends. Most market gains are made through capital gains rather than dividends, and most people invest in the hope the shares they buy go up in price over time. Dividends can be one attractant to investors but they are not the only one. |
What does it mean to long convexity of options? | Convexity refers to vega. Gamma refers to delta. Negative carry refers to time decay. |
What are these fees attached to mutual fund FSEMX? | Annual-report expense ratios reflect the actual fees charged during a particular fiscal year. Prospectus Expense Ratio (net) shows expenses the fund company anticipates will actually be borne by the fund's shareholders in the upcoming fiscal year less any expense waivers, offsets or reimbursements. Prospectus Gross Expense Ratio is the percentage of fund assets used to pay for operating expenses and management fees, including 12b-1 fees, administrative fees, and all other asset-based costs incurred by the fund, except brokerage costs. Fund expenses are reflected in the fund's NAV. Sales charges are not included in the expense ratio. All of these ratios are gathered from a fund's prospectus. |
Should I buy a home or rent in my situation? | My experience with owning a home is that its like putting down roots and can be like an anchor holding you to an area. Before considering whether you can financially own a home consider some of the other implications. Once you own it you are stuck for awhile and cannot quickly move away like you can with renting. So if a better job opportunity comes up or your employer moves you to another office across town that doubles your commute time, you'll be regretting the home purchase as it will be a barrier to moving to a more convenient location. I, along with my fiancée and two children, are being forced to move out of my parents home ASAP. Do not rush buying a home. Take your time and find what you want. I made the mistake once of buying a home thinking I could take on some DIY remodeling to correct some features I wasn't fond of. Life intervenes and finding extra time for DIY house updates doesn't come easy, especially with children. Speaking of children, consider the school district when buying a home too. Often times homes in good school districts cost more. If you don't consider the school district now, then you may be faced with a difficult decision when the kids start school. IF you are confident you won't want to move anytime soon and can find a house you like and want to jump into home ownership there are some programs that can help first time buyers, but they can require some effort on your part. FHA has a first time buyer program with a 3.5% down payment. You will need to search for a lender that offers FHA loans and work with them. FHA covers this program by charging mortgage insurance every month that's part of your house payment. Fannie Mae has the HomeReady program where first time home buyers can purchase a foreclosed home from their inventory for as little as 3% down and possibly get up to 3% from the seller to apply toward closing costs. Private mortgage insurance (PMI) is required with this program too. Their inventory of homes can be found on the https://www.homepath.com/ website. There is also NACA, which requires attending workshops and creating a detailed plan to prove you're ready for homeownership. This might be a good option if they have workshops in your area and you want to talk with someone in person. https://www.naca.com/about/ |
Does reading financial statements (quarterly or annual reports) really help investing? | Wow, I cannot believe this is a question. Of course reading the 10Ks and 10Qs from the SEC are incredibly beneficial. Especially if you are a follower of the investing gurus such as Warren Buffett, Peter Lynch, Shelby Davis. Personally I only read the 10K's I copy the pertinent numbers over to my spreadsheets so I can compare multiple companies that I am invested in. I'm sure there are easier ways to obtain the data. I'm a particular user of the discounted free cash flow methodology and buying/selling in thirds. I feel like management that says what they are going to do and does it (over a period of years) is something that cannot be underestimated in investing. yes, there are slipups, but those tend to be well documented in the 10Qs. I totally disagree in the efficient market stuff. I tend to love using methodologies like Hewitt Heisermans " It's Earnings that Count" you cannot do his power-staircase without digging into the 10Qs. by using his methodology I have several 5 baggers over the last 5 years and I'm confident that I'll have more. I think it is an interesting factoid as well that the books most recommended for investing in stocks on Amazon all advocate reading and getting information from 10Ks. The other book to read is Peter Lynch's one-up-wall-street. The fact is money manager's hands are tied when it comes to investing, especially in small companies and learning over the last 6 years how to invest on my own has given me that much more of my investing money back rather than paying it to some money manager doing more trades than they should to get commision fees. |
Why I can't view my debit card pre-authorized amounts? | The hard hold is the bank holding your money for no reason but to make money of your. Like the hotel took deposit for my over night and they released the time checked out in there system but it never showed on my account . I had to call the bank why the numbers are not adding up to my current balance. It's illegal practice by banks to hold your money until your realize you didn't spent that much and that musing amount is not even showing on your account. When it happen they will release after 30 days or you can call the bank right away soon as you done your business so you can use the money right away not the bank |
I'm 23 and was given $50k. What should I do? | nan |
How does spot-futures arbitrage work in the gold market? | As proposed: Buy 100 oz of gold at $1240 spot = -$124,000 Sell 1 Aug 2014 Future for $1256 = $125,600 Profit $1,600 Alternative Risk-Free Investment: 1 year CD @ 1% would earn $1240 on $124,000 investment. Rate from ads on www.bankrate.com "Real" Profit All you are really being paid for this trade is the difference between the profit $1,600 and the opportunity for $1240 in risk free earnings. That's only $360 or around 0.3%/year. Pitfalls of trying to do this: Many retail futures brokers are set up for speculative traders and do not want to deal with customers selling contracts against delivery, or buying for delivery. If you are a trader you have to keep margin money on deposit. This can be a T-note at some brokerages, but currently T-notes pay almost 0%. If the price of gold rises and you are short a future in gold, then you need to deposit more margin money. If gold went back up to $1500/oz, that could be $24,400. If you need to borrow this money, the interest will eat into a very slim profit margin over the risk free rate. Since you can't deliver, the trades have to be reversed. Although futures trades have cheap commissions ~$5/trade, the bid/ask spread, even at 1 grid, is not so minimal. Also there is often noisy jitter in the price. The spot market in physical gold may have a higher bid/ask spread. You might be able to eliminate some of these issues by trading as a hedger or for delivery. Good luck finding a broker to let you do this... but the issue here for gold is that you'd need to trade in depository receipts for gold that is acceptable for delivery, instead of trading physical gold. To deliver physical gold it would likely have to be tested and certified, which costs money. By the time you've researched this, you'll either discover some more costs associated with it or could have spent your time making more money elsewhere. |
How do banks lose money on foreclosures? | The "just accounting" is how money market works these days. Lets look at this simplified example: The bank creates an asset - loan in the amount of X, secured by a house worth 1.25*X (assuming 20% downpayment). The bank also creates a liability in the amount of X to its depositors, because the money lent was the money first deposited into the bank by someone else (or borrowed by the bank from the Federal Reserve(*), which is, again, a liability). That liability is not secured. Now the person defaults on the loan in the amount of X, but at that time the prices dropped, and the house is now worth 0.8*X. The bank forecloses, sells the house, recovers 80% of the loan, and removes the asset of the loan, creating an asset of cash in the value of 0.8*X. But the liability in the amount of X didn't go anywhere. Bank still has to repay the X amount of money back to its depositors/Feds. The difference? 20% of X in our scenario - that's the bank's loss. (*) Federal Reserve is the US equivalent of a central bank. |
How risky are penny stocks? | Penny stocks are only appealing to two types of investors: Most of the beginners who invest in penny stocks only do so because they don't have a lot of money to invest in the marketplace while starting out, or they would otherwise like to avoid investing their savings into penny stocks. * If you are a beginning investor - do NOT invest in Penny Stocks * |
How can I find a checking account that allows for automated transfers of dynamic amounts? | Almost any financial institution has the technical ability to do this (simply called sweeps, auto sweeps, or deposit sweeps); the issue you face is finding an institution that is willing to do it for you. I think you will have the most luck at your primary financial institution where you currently keep the majority of your banking relationship. You will have better luck at small-town banks and credit unions. The mega banks will likely not waver from their established policies. Deposit sweeps are common for business accounts. They are usually tied to a savings account, which is usually held within the same institution, however this is not a requirement. The sweep can send money to any US bank if you can provide the routing number and account number. The sweep will establish a peg balance, or floor balance, on the checking account. At the end of the day, any amount above the peg is swept into the savings account automatically. I doubt you will find what you’re asking for within an online banking system. You will likely have to go into a branch and speak with a personal banker. Explain to them you want to establish a sweep on your checking account and want to send the funds to another financial institution. You will have better luck asking for a peg of $100, or some other small amount. They may not take your request seriously if you want to completely empty the checking account to zero. |
Professional tax for employees - startup in India | The tax is depended upon state where you are registered and the salary paid. More here If you employ contract you need not pay tax. |
Are there any dangers in publicly sharing my personal finance data? | Status alone shouldn't be a problem. A fellow blogger publishes a blogger list at Rock Star Finance where he lists nearly 1000 personal finance bloggers web sites. You can see that many of them publicly offer their numbers. What you need to consider is whether you are anonymous, or if friends and family will know it's you. "Hey Tev, you have no debt and already saved XXX francs? Can you lend me ZZ francs to buy....?" That is the greater risk. The potential larger risk for the higher worth people is that of targeted theft. (Interesting you couldn't find this via search, the PF blogging community is large, mature, and continuing to grow.) |
Can I move my 401k to another country without paying tax penalty? | hello – I am a natural born US citizen; I have worked 35+ years in the United States; I have a 401(k), IRA, Social Security benefits. I have researched the ex-patriot possibilities for several years. I've consulted both accountants and tax attorneys. The long answer is: hire tax consultants/attorneys to try to shelter what assets you can. 401(k), IRA, and Social Security benefits are all taxable worldwide to US citizens. unless you become the citizen of your new country of residence, these taxes are unavoidable. since all of the above assets are considered "pretax" to the US government, they are all taxable on distribution whether slowly or in lump sum. the short answer is: "Hotel California"… "Relax, said the watchman – we are programmed to receive. You can check out any time, but you can never leave…" |
what is the timezone that yahoo uses for stock information | Using your example link, I found the corresponding chart for a stock that trades on London Stock Exchange: https://ca.finance.yahoo.com/echarts?s=RIO.L#symbol=RIO.L;range=1d As you can see there, the chart runs from ~8:00am to ~4:30pm, and as I write this post it is only 2:14pm Eastern Time. So clearly this foreign chart is using a foreign time zone. And as you can see from this Wikipedia page, those hours are exactly the London Stock Exchange's hours. Additionally, the closing price listed above the graph has a timestamp of "11:35AM EST", meaning that the rightmost timestamp in the graph (~4:30pm) is equal to 11:35AM EST. 16:30 - 11:30 = 5 hours = difference between London and New York at this time of year. So those are two data points showing that Yahoo uses the exchange's native time zone when displaying these charts. |
What types of ETFs are taxed differently by the IRS? | Very interesting question. While searching i also found that some precious metal ETFs (including IAU) gains are taxed at 28% because IRS considers it "collectible", rather than the usual long term 15% for stocks and stock holding ETFs. As for capital gain tax you have to pay now my guess it's because of the following statement in the IAU prospectus (page 34): When the trust sells gold, for example to pay expenses, a Shareholder will recognize gain or loss .... |
Corporate Finance | If it's raising $25 million with a debt to equity ratio of 50% then it's raising $8.33 million of debt and $16.67 million of equity. You've priced it as if it were raising $25 million of debt and $25 million of equity, which would be raising $50 million with a debt to equity ratio of 100%. |
Was this a good deal on a mortgage? | The key question is whether this number includes taxes and insurance. When you get a mortgage in the U.S., the bank wants to be sure that you are paying your property taxes and that you have homeowners insurance. The mortgage is guaranteed by a lien on the house -- if you don't pay, the bank can take your house -- and the bank doesn't want to find out that your house burned down and you didn't bother to get insurance so now they have nothing. So for most mortgages, the bank collects money from the borrower for the taxes and insurance, and then they pay these things. This can also be convenient for the borrower as you are then paying a fixed amount every month rather than being hit with sizeable tax and insurance bills two or three times a year. So to run the numbers: As others point out, mortgage rates in the US today are running 3% to 4%. I just found something that said the average rate today is 3.6%. At that rate, your actual mortgage payment should be about $1,364. Say $1,400 as we're taking approximate numbers. So if the $2,000 per month does NOT include taxes and insurance, it's a bad deal. If it does, then not so bad. You don't say where you live. But in my home town, property taxes on a $300,000 house would be about $4,500 per year. Insurance is probably another $1000 a year. And if you have to get PMI, add another 1/2% to 3/4%, or $1500 to $2250 per year. Add those up and divide by 12 and you get about $600. Note my numbers here are all highly approximate, will vary widely depending on where the house is, so this is just a general ballpark. $1400 + $600 = $2000, just what you were quoted. So if the number is PITI -- principle, interest, taxes, and insurance -- it's about what I'd expect. |
Calculate investment's interest rate to break-even insurance cost [duplicate] | You are comparing a risk-free cost with a risky return. If you can tolerate that level of risk (the ups and downs of the investment) for the chance that you'll come out ahead in the long-run, then sure, you could do that. So the parameters to your equation would be: If you assume that the risky returns are normally distributed, then you can use normal probability tables to determine what risk level you can tolerate. To put some real numbers to it, take the average S&P 500 return of 10% and standard deviation of 18%. Using standard normal functions, we can calculate the probability that you earn more than various interest rates: so even with a low 3% interest rate, there's roughly a 1 in 3 chance that you'll actually be worse off (the gains on your investments will be less than the interest you pay). In any case there's a 3 in 10 chance that your investments will lose money. |
Loan holder wants a check from the insurance company that I already cashed and used to repair my car | What would happen if you was to cash a check, didn’t realize it was to you and your finance company, take it to a local business that has a money center, they cash the check without even having you sign let alone having the finance companies endorsement on it . The money cleared my account like a couple months ago and it was just brought up now .. ? The reason why the check was made out the owner and the lender is to make sure the repairs were done on the car. The lender wants to make sure that their investment is protected. For example: you get a six year loan on a new car. In the second year you get hit by another driver. The damage estimate is $1,000, and you decide it doesn't look that bad, so you decide to skip the repair and spend the money on paying off debts. What you don't know is that if they had done the repair they would have found hidden damage and the repair would have cost $3,000 and would have been covered by the other persons insurance. Jump ahead 2 years, the rust from the skipped repair causes other issues. Now it will cost $5,000 to fix. The insurance won't cover it, and now a car with an outstanding loan balance of $4,000 and a value of $10,000 if the damage didn't exist needs $5,000 to fix. The lender wants the repairs done. They would have not signed the check before seeing the proof the repairs were done to their satisfaction. But because the check was cashed without their involvement they will be looking for a detailed receipt showing that all the work was done. They may require that the repair be done at a certified repair shop with manufacturer parts. If you don't have a detailed bill ask the repair shop for a copy of the original one. |
How does an index rearrange its major holdings | S & P Index Announcements would have notes on when there are changes to the index. For example in the S & P Small-cap 600 there is a change that takes affect on Feb. 19, 2013. As for how index funds handle changes to the fund, this depends a bit on the nature of the fund as open-end mutual funds would be different than exchange-traded funds. The open-end fund would have to sell and purchase to keep tracking the index which can be interesting to see how well this is handled to keep the transaction costs down while the ETFs will just unload the shares in the redemption units of the stock leaving the index while taking in new shares with creation units of the newly added stock to the index. |
Should I overpay to end a fixed-rate mortgage early? [duplicate] | I would strongly encourage you to either find specifically where in your written contract the handling of early/over payments are defined and post it for us to help you, or that you go and visit a licensed real estate attorney. Even at a ridiculously high price of 850 pounds per hour for a top UK law firm (and I suspect you can find a competent lawyer for 10-20% of that amount), it would cost you less than a year of prepayment penalty to get professional advice on what to do with your mortgage. A certified public accountant (CPA) might be able to advise you, as well, if that's any easier for you to find. I have the sneaking suspicion that the company representatives are not being entirely forthcoming with you, thus the need for outside advice. Generally speaking, loans are given an interest rate per period (such as yearly APR), and you pay a percentage (the interest) of the total amount of money you owe (the principle). So if you owe 100,000 at 5% APR, you accrue 5,000 in interest that year. If you pay only the interest each year, you'll pay 50,000 in interest over 10 years - but if you pay everything off in year 8, at a minimum you'd have paid 10,000 less in interest (assuming no prepayment penalties, which you have some of those). So paying off early does not change your APR or your principle amount paid, but it should drastically reduce the interest you pay. Amortization schedules don't change that - they just keep the payments even over the scheduled full life of the loan. Even with prepayment penalties, these are customarily billed at less than 6 months of interest (at the rate you would have payed if you kept the loan), so if you are supposedly on the hook for more than that again I highly suspect something fishy is going on - in which case you'd probably want legal representation to help you put a stop to it. In short, something is definitely and most certainly wrong if paying off a loan years in advance - even after taking into account pre-payment penalties - costs you the same or more than paying the loan off over the full term, on schedule. This is highly abnormal, and frankly even in the US I'd consider it scandalous if it were the case. So please, do look deeper into this - something isn't right! |
Form 1042-S for foreign resident and owner of trade account | As you have indicated, the 1042-S reflects no income or withholding. As such, you are not required to file a US tax return unless you have other income from the US. Gains on stocks are not reported until realized upon sale. FYI, your activity does not fit the requirements of being engaged in a trade or business activity. While the definition is documented in several places of the Code, I have attached Publication 519 which most accurately represents the application to your situation as you have described it. https://www.irs.gov/publications/p519/ch04.html#en_US_2016_publink1000222308 |
What is down -34% in stock terms? | The sentence is mathematically wrong and verbally unclear. Mathematically, you calculate the downwards percentage by So, it should be Verbally, the reporter should have written "The stock is down by 25%", not "down by -25%". |
How can cold-callers know about my general financial status | Just a note about cold callers: I own a phone which I use solely for software development purposes. It has a SIM card that I bought for £0.99 on eBay (needed to activate the phone). Nobody knows that there is any relationship between me and that phone or it's phone number. I have never paid any phone charges, and I cannot make phone calls with that phone. As I said, it is just used for software development purposes. I get phone calls from cold callers on that phone. Not only do they not know anything about my financial situation, they know nothing and cannot know anything about who I am. They tell me that I was recently involved in an accident and I am likely to get compensation. Yet they don't know my name, my address, anything. Lucky enough, my real business mobile phone is so far not on their radar. It is most likely that they know absolutely nothing about you, but have a lot of practice in being convincing if they get you to talk to them. |
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