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Are stock prices likely drop off a little bit on a given friday afternoon? | There are classes of 'traders' who close their positions out every evening, not just on fridays. But their are other types of businesses who trade shortly before or nearly right at market close with both buys and sells There are lots of theories as to how the market behaves at various times of day, days of the week, months of the year. There are some few patterns that can emerge but in general they don't provide a lot of 'lift' above pure random chance, enough so that if you 'bet' on one of these your chances of being wrong are only very slightly different from being right, enough so that it's not really fair to call any of them a 'sure thing'. And since these events are often fairly widely spaced, it's difficult to play them often enough to get the 'law of large numbers' on your side (as opposed to say card-counting at a blackjack table) which basically makes betting on them not much different from gambling |
Borrowed shares how are they tracked? | Brokerage firms are required to report the number of shares being shorted. This information is reported to the exchange (NYSE of NASDAQ) and is made public. Most financial sites indicate the number of shares being shorted for a particular stock. The image below from Yahoo finance shows 3.29 million shares of CMG were being shorted at the close of 9-28-2012. This is over 12% of the total outstanding shares of CMG. For naked short selling additional information is tracked. If the brokerage is unable to borrow shares to deliver before the settlement date of a short sale then the transaction is recorded as fails-to-deliver. No money or shares are exchanged since the brokerage is unable to deliver the shares that were agreed upon. A large amount of fails-to-deliver transactions for a stock usually indicates an excessive amount of naked shorting. When investors and brokerage firms start to aggressively short a stock they will do so without having borrowed the shares to sell. This will result in a large amount of naked short selling. When there are a large number of naked short sellers not all the sellers will be able to borrow the necessary shares before the settlement date and many fails-to-deliver transactions will be recorded. The SEC records the number of fails-to-deliver transactions. The table below summarizes the fails-to-deliver transactions from 1-1-2012 through 9-14-2012 (data obtained from here). The “Ext Amount” column shows the total dollar value of the transactions that failed ( i.e. Fail Qty * Share price ). The “Volume” column is the total number of shares traded in the same time period. The “% Volume” shows the percentage of shares that failed to deliver as a percentage of the total market volume. The table orders the data in descending order by the quantity of shares that were not delivered. Most of the companies at the top of the list no longer exist. For many of these companies, the quantity of shares that failed to deliver where many multiples of the number of shares traded during the same time period. This indicates massive naked short selling as many brokerages where unable to find shares to borrow before the settlement date. More information here. |
What options do I have at 26 years old, with 1.2 million USD? | Since the question asked for options, rather than advice, I’ll offer a few. And you can ignore the gratuitous advice that may sneak in. There are countries that will happily give you citizenship for a fee. And others where an investment of far less than your million will get you well on your way. Having citizenship and a passport from another country can be handy if your current one is or becomes unpopular or unstable. From data at numbeo.com, I estimate that my lifestyle would cost me $3300 (US) in Geneva, Switzerland, and that everywhere else on the planet would be less. I haven’t been to Geneva, but I have spent only $2500 (average) per month in eleven countries over three years, and could have been comfortable on far less. $2500/month will go through 1.2 million in only forty years, but if you use it to generate income, and are less wasteful than me, ... With the first few dollars you get, you might take steps to hedge the possibility of not actually getting it all. Appeals can take a long time, and if the defendant runs out of money or figures out how to hide, the size of the judgment is irrelevant. Believe strongly enough in something to donate money for/to it? I’ll leave the investment options to others. |
Should I invest my money in an ISA or Government bonds? (Or any other suggestion) | There are a number of UK banks that offer what passes for reasonable interest on an amount of cash held in their current accounts. I would suggest that you look into these. In the UK the first £1000 of bank or building society interest is paid tax-free for basic rate taxpayers (£500 for higher rate tax-payers) so if your interest income is below these levels then there is no point in investing in a cash ISA as the interest rate is often lower. At the moment Santander-123 bank account pays 1.5% on up to £20000 and Nationwide do 5% on up to £2500. A good source if information on the latest deals is Martin Lewis' Moneysaving Expert Website |
Should I prioritize retirement savings inside of my HSA? | You would want to prioritize Roth and retirement over HSA. As the HSA is only for health and dental expenses, which you will always have, overfunding it will put you in a bit of a pickle for all of the life involved. For example, even if you or a loved one develop a strange & expensive ailment, the HSA will only cover the medical costs, but not any travel to specialists, hotel stays, home alterations, special vehicles, or lifestyle alterations (food, clothing). However, you will eventually stop working even if you are healthy throughout your life. I would suggest that you treat the HSA as a part of your overall emergency fund, giving it a cap the same as you would normal non-retirement savings. Since you stated you have three young children, small and large medical expenses (such as braces, trips to the emergency room) are something that are almost guaranteed, thus having fairly large amount in the HSA would be very beneficial throughout their time with you. Once the children have left however, if you still have an overwhelming balance in your HSA, you may not want to add anymore to the HSA. Setting a cap for the HSA based off a certain number of years of deductible payments for medication would be a good place to start. Roth accounts, whether it be within your company's 401k plan or the IRAs for yourself and your spouse, are single-handedly the best location for your money for long-term savings. Roth money grows tax-free, is immune to Required Minimum Distribution provisions, and will avoid estate escrow when going to one's beneficiaries. Even if you tap into the funds prior to age 59 1/2, you would only pay taxes on any investment growth, in addition to the 10% early withdrawal penalty. If you have established Roth IRA accounts and have an AGI that disallows you to further contribute to them, there is still a provision to get Roth funds contributed via conversion through what is commonly called a "back door" Roth. |
Can I borrow against my IRA to pay off debt or pay for a car? | No. Borrowing is not allowed, but if you take a withdrawal, you have 60 days to deposit into another IRA account. This effectively creates a 60 day loan. Not what you're really looking for. If you take this withdrawal and re-deposit to new account within 60 days, no problem. If not, you owe tax on the untaxed amount as well as a 10% penalty. This comes from IRS' Publication 590, I have the document memorized by substance, not page number. |
What does it mean “sell on ask” , “sell on bid” in stocks? | It's good to ask this question, because this is one of the fundamental dichotomies in market microstructure. At any time T for each product on a (typical) exchange there are two well-defined prices: At time T there is literally no person in the market who wants to sell below the ask, so all the people who are waiting to buy at the bid (or below) could very well be waiting there forever. There's simply no guarantee that any seller will ever want to part with their product for a lesser price than they think it's worth. So if you want to buy the product at time T you have a tough choice to make: you get in line at the bid price, where there's no guarantee that your request will ever be filled, and you might never get your hands on the product you decide that owning the product right now is more valuable to you than (ask - bid) * quantity, so you tell the exchange that you're willing to buy at the ask price, and the exchange matches you with whichever seller is first in line Now, if you're in the market for the long term, the above choice is completely immaterial to you. Who cares if you pay $10.00 * 1000 shares or $10.01 * 1000 shares when you plan to sell 30 years from now at $200 (or $200.01)? But if you're a day trader or anyone else with a very short time horizon, then this choice is extremely important: if the price is about to go up several cents and you got in line at the bid (and never got filled) then you missed out on some profit if you "cross the spread" to buy at the ask and then the price doesn't go up (or worse, goes down), you're screwed. In order to get out of the position you'll have to cross the spread again and sell at at most the bid, meaning you've now paid the spread twice (plus transaction fees and regulatory fees) for nothing. (All of the above also applies in reverse for selling at the ask versus selling at the bid, but most people like to learn in terms of buying rather than selling.) |
Can my accounting for Tax Basis differ from my broker's | No. If you didn't specify LIFO on account or sell by specifying the shares you wish sold, then the brokers method applies. From Publication 551 Identifying stock or bonds sold. If you can adequately identify the shares of stock or the bonds you sold, their basis is the cost or other basis of the particular shares of stock or bonds. If you buy and sell securities at various times in varying quantities and you cannot adequately identify the shares you sell, the basis of the securities you sell is the basis of the securities you acquired first. For more information about identifying securities you sell, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Pub. 550. The trick is to identify the stock lot prior to sale. |
Can a US bank prevent you from making early payments to the principal on a home mortgage? | Are there any known laws explicitly allowing or preventing this behavior? It's not the laws, it's what's in the note - the mortgage contract. I read my mortgage contracts very carefully to ensure that there's no prepayment penalty and that extra funds are applied to the principal. However, it doesn't have to be like that, and in older mortgages - many times it's not like that. Banks don't have to allow things that are not explicitly agreed upon in the contract. To the best of my knowledge there's no law requiring banks to allow what your friend wants. |
Best way to invest money as a 22 year old? | The classic answer is simple. Aim to build up a a financial cushion that is the equivalent of 3 times your monthly salary. This should be readily accessible and in cash, to cover any unforeseen expenses that you may incur (car needs repairing, washing machine breaks down etc). Once you have this in place its then time to think about longer term investments. Monthly 'drip feeding' into a mutual stock based investment fund is a good place to start. Pick a simple Index based or fund with a global investment bias and put in a set amount that you can regularly commit to each month. You can get way more complicated but for sheer simplicity and longer term returns, this is a simple way to build up some financial security and longer term investments. |
Should you always max out contributions to your 401k? | Definitely not. You are too young. Let me explain: Your money will be locked up for at least 40 years, and you will have to navigate some really quirky and trap-laden rules in order to get money for simple things. Let's say you want to buy a house. You won't be able to leverage the 401K for that. College Tuition? Limits. Your money is locked in and you may get some match, but that assumes your smartest decision at your age is to save money for retirement. At your age, you should be investing in your career, and that requires cash at hand. If you want to withdraw early you pay more of a penalty than just the tax rate. Put differently: investing in your human capital, at a young age, can yield stronger results than just squirreling money. I'd say don't worry until you are 30. BTW: I'm 24 now. I used to save money in a 401K for a few months, before I understood the rules. Since then, I decided against 401K and just saved the money in a bank. After a few years, I had enough to start my business :) the 401K couldn't give me that opportunity. Further Explanation: I am in the NYC area. Many of my friends and I had to decide between living in manhattan or choosing to live in the outer boroughs or NJ. One thing I noticed was that, while the people in manhattan were burning much more money (to the tune of 1500 per month), they were actually much more productive and were promoted more often. Having lived in brooklyn and in manhattan, even though it is less expensive, you actually lose at least an hour a day thanks to the commute (and have to deal with crap like the 6 train). Personally, after moving in, I invested the extra time in myself (i.e. sleeping more, working longer hours, side projects). Now, when all is said and done, the people who decided to invest in themselves in the short term are financially more secure (both job-wise and economically, thanks to a few bonus cycles) than those who decided to save on rent and put it in a 401K. As far as the traps are concerned, my dad tried to take out a student loan and was denied thanks to a Vanguard quirk which didnt allow more than 50K to be borrowed (even though the account had over 500K to begin with). |
Buy home and leverage roommates, or split rent? | It's doable, but there's a fair amount of risk involved. The biggest issue is that your roommates could move out. It's possible that they could have a falling out, get a job in a different city, or just move on. How difficult would it be to find another roommate? How many roommates can you lose and still afford to pay the mortgage, insurance, taxes, and all the rest of your living expenses? Even if you you retain all of your roommates until the mortgage is paid off, there's still some risk involved. If you were to lose your job, could you continue to make mortgage payments? Worst case scenario is that you could become unemployed for a time while home values in your State/City/neighborhood are crashing. Last, the position on landlord has the potential to be lucrative, but also comes with a fair amount of responsibility. It will be a drain on your time to maintain the house and to make sure you always have tenants. I know you said that your roommates are good about paying on time, but are you willing to evict a friend because they won't/can't pay rent? It's easier to ask the landlord for an extension on rent when you're friends. All that being said, I think that this idea is worth considering. My recommendation is that you consider every aspect of it, and proceed cautiously if you choose to do so. |
Looking into investment bonds for the first time- what do I need to be aware of? | First off, I do not recommend buying individual bonds yourself. Instead buy a bond fund (ETF or mutual fund). That way you get some diversification. The risk-reward ratio will be evident in what you find to invest in. Junk bond funds pay the highest rates. Treasury bond funds pay the lowest. So you have to ask yourself how comfortable are you with risk? Buy the funds that pay the highest rate but still let you sleep at night. |
Good book-keeping software? | I like Quicken for personal use, and they have a small business edition if you don't want to move into QuickBooks. |
Is there any emprical research done on 'adding to a loser' | This is basically martingale, which there is a lot of research on. Basically in bets that have positive expected value such as inflation hedged assets this works better over the long term, than bets that have negative expected value such as table games at casinos. But remember, whatever your analysis is: The market can stay irrational longer than you can stay solvent. Things that can disrupt your solvency are things such as options expiration, limitations of a company's ability to stay afloat, limitations in a company's ability to stay listed on an exchange, limitations on your borrowings and interest payments, a finite amount of capital you can ever acquire (which means there is a limited amount of times you can double down). Best to get out of the losers and free up capital for the winners. If your "trade" turned into an "investment", ditch it. Don't get married to positions. |
What's the difference between TaxAct and TurboTax? | I prefer TaxAct. I find it simpler to use and more helpful in helping answer the questionnaire. I have a fairly complex tax return and it handles it just fine. |
What's the best gold investment strategy for a Singapore resident? | With gold at US$1300 or so, a gram is about $40. For your purposes, you have the choice between the GLD ETF, which represents a bit less than 1/10oz gold equivalent per share, or the physical metal itself. Either choice has a cost: the commission on the buy plus, eventually, the sale of the gold. There may be ongoing fees as well (fund fees, storage, etc.) GLD trades like a stock and you can enter limit orders or any other type of order the broker accepts. |
If there's no volume discount, does buying in bulk still make sense? | Instead of buying in bulk, I invest the money in equity mutual funds, for an expected return of 12%, which is more than inflation. So, I make more returns. But at the cost of a slight risk, which I'm comfortable with. |
Should I sell my stocks to put a down payment on a house before it becomes a long term investment? | In the United States Short-term capital gains are taxed at rates similar to regular income which is 25% if you make less than $91,000 and 28% if you make more than that but less than $190,000. If you make more than $190,000 then the rate is 33%. If you hold the stock for a year or more than the tax rate is 15%, unless your income is less than $33,000 in which case there is no tax on long-term gains. As a general rule, the way to make money is to stay out of debt, so I cannot advise you to assume a mortgage. Financially you are better off investing your money. Much like you I bought a house with a mortgage using about $30,000 in a down payment about 20 years ago and I paid it off a few years ago. If I had to do it over again, I would have bought a shack (a steel building) for $30,000 and lived in that and invested my income. If I had done that, I would be about $500,000 richer today than I am now. |
My account's been labeled as “day trader” and I got a big margin call. What should I do? What trades can I place in the blocked period? | I assume that whatever you're holding has lost a considerable amount of its value then? What sort of instrument are we talking about? If the margin call is 14k on something you borrowed against the 6900 you're a bit more leveraged than "just" another 100%. The trading company you're using should be able to tell you exactly what happens if you can't cover the margin call, but my hunch is that selling and taking the cash out ceased to be an option roughly at the time they issued the margin call. Being labelled as a day trader or not most likely did not have anything to do with that margin call - they're normally issued when one or more of your leveraged trades tank and you don't have enough money in the account to cover the shortfall. Not trying to sound patronising but the fact that you needed to ask this question suggests to me that you shouldn't have traded with borrowed money in the first place. |
What is the best credit card for someone with no credit history | Consider getting yourself a gas card. Use it for a year. Make your payments on time. Then reapply for a credit card. |
Clear example of credit card balance 55 days interest-free “trick”? | Well, I answered a very similar question "Credit card payment date" where I showed that for a normal cycle, the average charge isn't due for 40 days. The range is 35-55, so if you want to feel good about the float just charge everything the day after the cycle closes, and nothing else the rest of the month. Why is this so interesting? It's no trick, and no secret. By the way, this isn't likely to be of any use when you're buying gas, groceries, or normal purchases. But, I suppose if you have a large purchase, say a big TV, $3000, this will buy you extra time to pay. It would be remiss of me to not clearly state that anyone who needs to take advantage of this "trick" is the same person who probably shouldn't use credit cards at all. Those who use cards are best served by charging what they can afford to pay at that moment and not base today's charges on what paychecks will come in by the due date of the credit card bill. |
Why do card processing companies discourage “cash advance” activities | This is most likely protecting Square's relationship with Visa/Mastercard/AMEX/etc. Credit card companies typically charge their customers a much higher interest rate with no grace period on cash advances (withdrawals made from an ATM using a credit card). If you use Square to generate something that looks like a "merchandise transaction" but instead just hand over a wad of banknotes, you're forcing the credit card company to apply their cheaper "purchases" interest rate on the transaction, plus award any applicable cashback offers†, etc. Square would absolutely profit off of this, but since it would result in less revenue for the partner credit card companies, that would quickly sour the relationship and could even result in them terminating their agreements with Square altogether. † This is the kind of activity they are trying to prevent: 1. Bill yourself $5,000 for "merchandise", but instead give yourself cash. 2. Earn 1.5% cashback ($75). 3. Use $4,925 of the cash and a $75 statement credit to pay your credit card statement. 4. Pocket the difference. 5. Repeat. Note, the fees involved probably negate any potential gain shown in this example, but I'm sure with enough creative thinking someone would figure out a way to game the system if it wasn't expressly forbidden in the terms of service |
Isn't the subtraction of deprecation and amortization redundant in the calculation of Owner's Earnings? | This formula is not calculating "Earnings". Instead, it is calculating "Free Cash Flow from Operations". As the original poster notes, the "Earnings" calculation subtracted out depreciation and amortization. The "Free Cash Flow from Operations" adds these values back, but for two different reasons: |
83(b) and long term capital gain | You should apply for 83(b) within 30 days. 10 months is too late, sorry. |
Can I pay taxes using bill pay from my on-line checking account? | I wouldn't do this. There is a chance that your check could get lost/misdirected/misapplied, etc. Then you would need to deal with the huge bureaucracy to try to get it fixed while interest and penalties pile up. What you can do is have the IRS withdraw the money themselves by providing the rounting number and account number of your bank. This should work whether is it a traditional brick and mortar bank or an online bank. |
What is the effect of a high dollar on the Canadian economy, investors, and consumers? | It depends primarily on how the Canadian economy is designed i.e export oriented or import oriented. If you look at this, it shows more or less equal amount of exports and imports. For the specific case of Canada, the exports would become costlier, because of a costlier dollar, but at the same time imports would become cheaper. This is only a generalization, not specific goodswise, which would require a more detailed ananlysis. But investors have a different dilemma. Canadian investors would find it cheaper to invest abroad so may channel their investments abroad because they may find it costlier to invest in Canada. While foreign investors would find it costlier to invest in Canada and may wait for later or invest somehwre else. Then government may try to boost up investment and start lowering the interest rates, if it sees the rising dollar as detrimental for the Canadian economy and investments flowing abroad instead of Canada. But what would be the final outcome of the whole rigmarole is little difficult to predict, because something is arriving and something is departing and above all goverment is doing something or is going to do. But the basic gist is Canadian exporters will be sad and Canadian importers will be happy, but vice versa for foreign investors intending to invest in Canada. |
Does a growing economy mean the economy is becoming less efficient? | A growing economy should become more efficient because of increased opportunity for division of labor: specialization. External regulation or monetary policy external to the free market can cause parts of the economy to grow in response to said regulations. This creates inefficiencies that are wrung out of the economy after the policies reverse. A couple of examples: Tinkering with the economy causes the inefficiencies. |
Pay online: credit card or debit card? | Nowadays, some banks in some countries offer things like temporary virtual cards for online payments. They are issued either free of charge or at a negligible charge, immediately, via bank's web interface (access to which might either be free or not, this varies). You get a separate account for the newly-issued "card" (the "card" being just a set of numbers), you transfer some money there (same web-interface), you use it to make payment(s), you leave $0 on that "card" and within a day or a month, it expires. Somewhat convenient and your possible loss is limited tightly. Check if your local banks offer this kind of service. |
Should I finance a new home theater at 0% even though I have the cash for it? | Be very careful with this. When we tried this with furniture, they charged an "administrative" fee to setup the account. I believe it was about $75. So if you defer interest for one year on a $1000 purchase and pay a $75 administrative fee, it's 7.5% interest. Also, they don't always send you a bill when it's due, they just let you go over the date when you could have paid it without paying interest, and then you owe interest from the date of purchase. These plans are slimy. Be careful. |
Why is the breakdown of a loan repayment into principal and interest of any importance? | Yes, the distinction between how your funds are applied to principal vs interest is very important. The interest amount charged each period (probably monthly) is not just one fixed sum calculated at the origination, but rather is a dynamically calculated amount that changes each period relative to how much principal is remaining (amount you owe). The picture you posted showing principal and interest assumes the payer always paid their minimum payment and never made any extra payments of principal. Take a look at the following graph and play around with the extra payment fields. You will see some pretty drastic differences in the Total Interest Paid (green lines) when extra payments are made. http://mortgagevista.com/#m=2&a=240000&b=4.5&c=30y&e=200&f=1/2020&g=10000&h=1/2025&G&H&J&M&N&P&n&o&p&q&x |
Fund or ETF that simulates the investment goals of an options “straddle” strategy? | Why bother with the ETF? Just trade the options -- at least you have the ability to know what you actually are doing. The "exotic" ETFs the let you "double long" or short indexes aren't options contracts -- they are just collections of unregulated swaps with no transparency. Most of the short/double long ETFs also only attempt to track the security over the course of one day -- you are supposed to trade them daily. Also, you have no guarantee that the ETFs will perform as desired -- even during the course of a single day. IMO, the simplicity of the ETF approach is deceiving. |
How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap! | Shop around for Gym January is a great time to look because that's when most people join and the gyms are competing for your business. Also, look beyond the monthly dues. Many gyms will give free personal training sessions when you sign up - a necessity if you are serious about getting in shape! My gym offered a one time fee for 3 years. It cost around $600 which comes out to under $17 a month. Not bad for a new modern state of the art gym. |
Why can it be a bad idea to buy stocks after hours? | During market hours, there are a lot of dealers offering to buy and sell all exchange traded stocks. Dealers don't actually care about the company's fundamentals and they set their prices purely based on order flow. If more people start to buy than sell, the dealer notices his inventory going down and starts upping the price (both his bid and ask). There are also traders who may not be "dealers", but are willing to sell if the price goes high enough or buy if the price goes low enough. This keeps the prices humming along smoothly. During normal trading hours, if you buy something and turn around and sell it two minutes later, you'll probably be losing a couple cents per share. Outside normal market hours, the dealers who continue to have a bid and ask listed know that they don't have access to good price information -- there isn't a liquid market of continuous buying and selling for the dealer to set prices he considers safe. So what does he do? He widens the spread. He doesn't know what the market will open tomorrow at and doesn't know if he'll be able to react quickly to news. So instead of bidding $34.48 and offering at $34.52, he'll move that out to $33 and $36. The dealer still makes money sometimes off this because maybe some trader realized that he has options expiring tomorrow, or a short position that he's going to get a margin call on, or some kind of event that pretty much forces him to trade. Or maybe he's just panicking and overreacting to some news. So why not trade after hours? Because there's no liquidity, and trading when there's no liquidity costs you a lot. |
What's the most correct way to calculate market cap for multi-class companies? | Some companies issue multiple classes of shares. Each share may have different ratios applied to ownership rights and voting rights. Some shares classes are not traded on any exchange at all. Some share classes have limited or no voting rights. Voting rights ratios are not used when calculating market cap but the market typically puts a premium on shares with voting rights. Total market cap must include ALL classes of shares, listed or not, weighted according to thee ratios involved in the company's ownership structure. Some are 1:1, but in the case of Berkshire Hathaway, Class B shares are set at an ownership level of 1/1500 of the Class A shares. In terms of Alphabet Inc, the following classes of shares exist as at 4 Dec 2015: When determining market cap, you should also be mindful of other classes of securities issued by the company, such as convertible debt instruments and stock options. This is usually referred to as "Fully Diluted" assuming all such instruments are converted. |
Why don't banks allow more control over credit/debit card charges? | Credit cards and debit cards make up the bulk of the transactions in the US. Visa and Mastercard take a percentage of each credit card transaction. For the most part, this fee it built into the price of what you buy. That is, you don't generally pay extra at the grocery store if you use a credit card (gasoline purchases are a notable exception here.) If you were getting something like 2% of a third of all the retail transactions in the US, you'd probably not want to rock the boat too much either. Since there is little fraud relative to the amount of money they are taking in, and it can often be detected using statistical analysis, they don't really stand to gain that much by reducing it through these methods. Sure they can reduce the losses on the insurance they provide to the credit card consumer but they risk slowing down the money machine. These companies want avoid doing something like reducing fraud by 0.5% revenues but causing purchases with the cards drop by 1%. More security will be implemented as we can see with the (slow) introduction of chip cards in the US but only at a pace that will prevent disruption of the money machine. EMV will likely cause a large drop in CC fraud at brick-and-mortar stores but won't stop it online. You will likely see some sort of system like you describe rolled out for that eventually. |
Questioning my Realtor | My realtor told me that even though they're only asking for 1/2 the money and have excellent credit that the mortgage company may not lend it to them if I'm over priced. Is this true? I've never heard of it before. It is a chance, but it is a red herring to the discussion. Having excellent credit has nothing to do with being eligible for a debt object of a specific size. Just because you have excellent credit, would you get approved for a property of $10,000,000 if you only made $35,000 a year (and had no other net worth)? But regarding your potential buyers, a chance vs a good chance is different. Your realtor just told you some basic always true lending fact that has nothing to do with your situation. |
What is the standard deviation and mean return of oil? | Your question is a moving target. And my answer will be subject to revision. I disagree with the votes to close, as you are asking (imho) what role commodities and specifically oil, play in one's asset allocation. Right? How much may be opinion, but there's a place to ask if. I'm looking at this chart, and thinking, long term, the real return is zero. The discussion regarding gold has been pretty exhausted. For oil, it's not tough to make the case that it will fluctuate, but long term, there's no compelling reason to believe its price will rise any faster than inflation over the really long term. |
Why would I choose a 40-Year depreciation instead of the standard 27.5-Year? | There are specific cases where you are required to use ADS: Required use of ADS. You must use ADS for the following property. Listed property used 50% or less in a qualified business use. See chapter 5 for information on listed property. Any tangible property used predominantly outside the United States during the year. Any tax-exempt use property. Any tax-exempt bond-financed property. All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. See publication 946. If none of those apply to your property - you may elect ADS. Why would you elect ADS when you're not required to use it? If you can't think of a reason, then don't elect it. For most people the shorter the depreciation period - the more they can deduct (or accumulate in passive losses) each year, and that is usually the desirable case. If you plan on selling in 10 years, keep in mind the depreciation recapture and consider whether the passive losses (offsetting regular income) are worth the extra tax in this case. |
Accepted indicators for stock market valuation | There are several camps for stock valuation, and much of it boils down to your investment style. A growth investor will not consider something with a 50x P/E ratio to be overvalued, but a value investor certainly would. I would recommend looking up the Fama-French n-factor model (it was 3-factor, I believe they have released newer papers which introduce other factors), and reading The Intelligent Investor by Benjamin Graham. Graham's methodology is practically canon for many investors, and the methodology focuses on value, while outlining quantitative factors for determining if a stock is under or over valued. |
Does home equity grow with the investment put into the house? | The bank I work with would be more inclined to expand an existing HELOC rather than write a new one. I think that would be your best bet if you decide to continue borrowing against your home. Consider that your own income would have to support the repayment of these larger homes. If it is, why didn't you buy a larger home to begin with? As far as increasing the appraisal, you don't usually get one dollar of increased appraisal for each dollar you spend on improvements unless you have a rundown house in a nice neighborhood; part of the appraisal comes from a comparison with the appraisals of the other homes nearby. Eventually you get close enough to par with the other houses that anyone looking for something more expensive will often choose a different neighborhood entirely. Update: To your edit that mentions the original lender will cap the amount you can borrow, you can take additional secondary mortgages/HELOCs, but the interest rate is usually higher because it is not the first mortgage. I don't generally recommend it, but the option is there. |
How to treat miles driven to the mechanic, gas station, etc when calculating business use of car? | Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose. Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3. And of course never throw anything away until you're room temperature. |
Taxes due for hobbyist Group Buy | From the poster's description of this activity, it doesn't look like he is engaged in a business, so Schedule C would not be appropriate. The first paragraph of the IRS Instructions for Schedule C is as follows: Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the instructions for Form 1040, line 21, or Form 1040NR, line 21. What the poster is doing is acting as a nominee or agent for his members. For instance, if I give you $3.00 and ask you to go into Starbucks and buy me a pumpkin-spice latte, you do not have income or receipts of $3.00, and you are not engaged in a business. The amounts that the poster's members are forwarding him are like this. Money that the poster receives for his trouble should be reported as nonbusiness income on Line 21 of Form 1040, in accordance with the instructions quoted above and the instructions for Form 1040. Finally, it should be noted that the poster cannot take deductions or losses relating to this activity. So he can't deduct any expenses of organizing the group buy on his tax return. Of course, this would not be the case if the group buy really is the poster's business and not just a "hobby." Of course, it goes without saying that the poster should document all of this activity with receipts, contemporaneous emails (and if available, contracts) - as well as anything else that could possibly be relevant to proving the nature of this activity in the event of an audit. |
Using stock markets in Europe, how can I buy commodities / resources, to diversify my portfolio? | I recommend avoiding trading directly in commodities futures and options. If you're not prepared to learn a lot about how futures markets and trading works, it will be an experience fraught with pitfalls and lost money – and I am speaking from experience. Looking at stock-exchange listed products is a reasonable approach for an individual investor desiring added diversification for their portfolio. Still, exercise caution and know what you're buying. It's easy to access many commodity-based exchange-traded funds (ETFs) on North American stock exchanges. If you already have low-cost access to U.S. markets, consider this option – but be mindful of currency conversion costs, etc. Yet, there is also a European-based company, ETF Securities, headquartered in Jersey, Channel Islands, which offers many exchange-traded funds on European exchanges such as London and Frankfurt. ETF Securities started in 2003 by first offering a gold commodity exchange-traded fund. I also found the following: London Stock Exchange: Frequently Asked Questions about ETCs. The LSE ETC FAQ specifically mentions "ETF Securities" by name, and addresses questions such as how/where they are regulated, what happens to investments if "ETF Securities" were to go bankrupt, etc. I hope this helps, but please, do your own due diligence. |
How to find if a public company has taken out a loan? | Somewhat. The balance sheet will include liabilities which as Michael Kjörling points out would tell you the totals for the debt which would often be loans or bonds depending on one's preferred terminology. However, if the company's loan was shorter than the length of the quarter, then it may not necessarily be reported is something to point out as the data is accurate for a specific point in time only. My suggestion is that if you have a particular company that you want to review that you take a look at the SEC filing in full which would have a better breakdown of everything in terms of assets, liabilities, etc. than the a summary page. http://investor.apple.com/ would be where you could find a link to the 10-Q that has a better breakdown though it does appear that Apple doesn't have any bonds outstanding. There are some companies that may have little debt due to being so profitable in their areas of business. |
If I want a Credit Card offered through a different Credit Union should I slowly transition my banking to that CU? | No. There's no inherent reason to link the place that you bank with any other financial service. There may occasionally be benefits; for instance you can sometime get lower rates on mortgages or loans by having a a checking account with an institution. Or perhaps it'll be easier for you to make a same-day payment on a credit account. There could be some negatives as well. If you fall behind on a loan account, the bank may take money from your savings/checking account to satisfy your debt. Choose a bank or CU that's convenient to you. Choose a credit card from whatever bank or CU provides you with the best benefits. If that credit card is coming from a CU that requires a savings account for membership, open a minimum balance savings account and apply for the product you're interested in. If your credit is as good as you claim, they'll be happy to offer you the credit card regardless of whether you do your day-to-day banking with them. |
Why are american call options more valuable than european options ONLY if the underlying asset pays cash flows? | Really all you need to know is that American style can be exercised at any point, European options cannot be exercised early. Read on if you want more detail. The American style Call is worth more because it can be exercised at any point. And when the company pays a dividend, and your option is in the money, if the extrinsic value is worth less than the dividend you can be exercised early. This is not the case for a European call. You cannot be exercised until expiration. I trade a lot of options, you wont be exercised early unless the dividend scenario I mentioned happens. Or unless the extrinsic value is nothing, but even then, unless the investor really wants that position, he is more likely to just sell the call for an equivalent gain on 100 shares of stock. |
How do I find quality Wind power / renewable energy mutual funds? | Usually it makes sense to invest in individual companies when you're investing in a "hot" sector. Secular funds have their own risks that can be difficult to measure. First Solar is one of the premier PV players. The fund gives you a false sense of diversification. If you bought a mutual fund in 2000 in the computer space, you'd have pieces of HP, Dell, Apple, IBM, EMC, Cisco, Intel etc. Did the sector perform the same as the companies in it? Nooo. As for renewable energy, IMO that ship has sailed for the "pure play" renewable stocks. I'd look at undervalued companies with exposure to renewables that haven't been hyped up. (or included in a sector mutual fund) Examples for this area? The problem with this sector is that the industry is dependent on government subsidies, and the state of government budgets make that a risky play. Proceed with caution! |
Is 6% too high to trade stocks on margin? | That seems a little high in my experience. I've used a home equity line of credit instead, as the rates are much lower (~3.5%). |
What could be the cause of a extreme high/low price in after hours market? | Often these types of trades fall into two different categories. An error by broker or exchange. Exchange clearing out part of their books incorrectly is an example. Most exchanges make firms reopen their positions for after market hours. There may have been an issue doing so or exchange could incorrectly cancel positions. I was in the direct feed industry for years and this was a big issue. At the same time the broker can issue a no limit buy on accident (or has software that is prospecting and said software has a bug or written poorly). unscrupulous parties looking to feign an upswing or downswing in market. Let's say you hold 500k shares in a stock that sells for $11. You could possibly buy 100 shares for $13. Trust me you will find a seller. Then you are hoping that people see that trade as a "norm" and trade from there, allowing you to rake in $1M for spending an extra $200 - NOTE this is not normal and an extreme example. This was so common in the early days of NASDAQ after hours that they discontinued using the after hours trades as part of historical information that they keep like daily/yearly high or closing price. The liquidity allows for manipulation. It isn't seen as much now since this has been done a million times but it does still happen. |
Why do US retirement funds typically have way more US assets than international assets? | To expand a bit on @MSalters's answer ... When I read your question title I assumed that by "retirement funds" you meant target-date funds that are close to their target dates (say, the 2015 target fund). When I saw that you were referring to all target-date funds, it occurred to me that examining how such funds modify their portfolios over time would actually help answer your question. If you look at a near-term target fund you can see that a smaller percent is invested internationally, the same way a smaller percent is invested in stocks. It's because of risk. Since it's more likely that you will need some of the money soon, and since you'll be cashing out said money in US Dollars, it's risky to have too much invested in foreign currencies. If you need money that's currently invested in a foreign currency and that currency happens to be doing poorly against USD at the moment, then you'll lose money simply because you need it now. This is the same rationale that goes into target-date funds' moving from stocks to bonds over time. Since the value of a stock portfolio has a lot more natural volatility than the value of a bond portfolio, if you're heavily invested in stocks when you need to withdraw money, there's a higher probability that you'll need to cash out just when stocks happen to be doing relatively poorly. Being invested more in bonds around when you'll need your money is less risky. Similarly, being more invested in US dollars than in foreign currencies around when you'll need your money is also less risky. |
Cost Basis in Retirement Accounts Irrelevant? | One thing to keep in mind is that with Roth accounts, there are different withdrawal considerations based on your contributions. For example, you can withdraw Roth IRA contributions whenever you want in the future. However this really has nothing to do with your cost basis and purely to do with the contribution amount vs balance. |
Using a self-directed IRA to buy vacation condo, rent it out to an LLC for $1 | Self directed IRAs have rules to prevent self-dealing of this sort called "prohibited transactions". You can't buy or sell or lease assets or obtain services from anyone closely linked to you or any beneficiaries of the IRA. You can't loan yourself money from the IRA, and you can't deliberately take the proceeds that should be going to your self directed IRA and give them to another account that you own. |
Basic mutual fund investment questions | In summary, you are correct that the goal of investing is to maximize returns, while paying low management fees. Index investing has become very popular because of the low fees. There are many actively traded mutual funds out there with very high management fees of 2.5% and up that do not beat the market. This begs the question of why you are paying high management fees and not just investing in index funds. Consider maxing out your tax sheltered accounts (401(k) and ROTH IRA) to avoid even more fees on your returns. Also consider having a growth component of your portfolio which is generally filled with equity, along with a secure component for assets such as bonds. Bonds may not have the exciting returns of equity, but they help to smooth out the volatility of your portfolio, which may help to keep peace of mind when the market dips. |
Shares; are they really only for the rich/investors? | Small purchases will have a disproportionate expense for commissions. Even a $5 trade fee is 5% on a $100 purchase. So on one hand, it's common to advise individuals just starting out to use mutual funds, specifically index funds with low fees. On the flip side, holding stocks has no annual fee, and if you are buying for the long term, you may still be better off with an eye toward cost, and learn over time. In theory, an individual stands a better chance to beat the experts for a number of reasons, no shareholders to answer to, and the ability to purchase without any disclosure, among them. In reality, most investor lag the average by such a wide margin, they'd be best off indexing and staying in for the long term. |
Is it possible to trade US stock from Europe ? | Yes, it's possible and even common but it depends on your bank or broker. One of the main differences is that you might assume FX risk if your account is in EUR and you trade stock denominated in USD. You might also encounter lower liquidity or price differences if you don't trade on the primary exchange where stocks are listed, i.e. NYSE, Nasdaq... |
What are the differences between an investment mortgage and a personal mortgage? | If you are going to live in the house for awhile, you can probably use a regular mortgage. Shop around and look for a mortgage program that works. Look at local banks/credit unions, particularly those with community development programs. Usually an investment mortgage is higher rate, higher payment and has higher underwriting standards. |
Could someone explain this scenario about Google's involvement in the wireless spectrum auction? | If history is any guide, Page’s idealistic impulses could result in a vaster, more sprawling company. The following is an example of one of Page’s idealistic impulses (wanting people to share spectrum) which could result in a vaster, more sprawling company (if they hadn't been outbid, Google would have expanded by buying a business asset i.e. spectrum which they didn't need). I've no experience with bidding. I don't understand what's happening at all An 'auction' is a way to sell something. Instead of offering it for sale at a fixed price, you offer it 'to the highest bidder'. Someone (e.g. Google) says, "I'll offer you [some amount: e.g. a million dollars] for it." If no-one else exceeds that bid, then you say 'sold' and Google has bought it. Alternatively someone else comes along with a higher bid, "I'll offer you two million dollars for it," in which case they're the new high bidder, and you'll sell it to them unless the process repeats itself with anyone counter-offering an even higher bid. See also http://en.wikipedia.org/wiki/Auction and http://en.wikipedia.org/wiki/Spectrum_auction The "Disadvantages" section of this article alleges (currently without a citation) that: Despite the apparent success of spectrum auctions, an important disadvantage limiting both efficiency and revenues is demand reduction and collusive bidding. The information and flexibility in the process of auction can be used to reduce auction prices by tacit collusion. When bidder competition is weak and one bidder holds an apparent advantage to win the auction for specific licenses, other bidders will often choose not to the bid for higher prices, hence reducing the final revenue generated by the auction.[citation needed] In this case, the auction is best thought of as a negotiation among the bidders, who agree on who should win the auction for each discrete bit of spectrum. Google's bid made that impossible (or, at least, ensured that the winning bid would be at least as high as the minimum which was set by Google's bid). |
Does a stock really dip in price on the ex-dividend date? And why would it do this? | This effect has much empirical evidence as googling "dividend price effect evidence" will show. As the financial economic schools of thought run the gamut so do the theories. One school goes as far to call it a market inefficiency since the earning power thus the value of an equity that's affected is no different or at least not riskier by the percentage of market capitalization paid. Most papers offer that by the efficient market hypothesis and arbitrage theory, the value of an equity is known by the market at any point in time given by its price, so if an equity pays a dividend, the adjusted price would be efficient since the holder receives no excess of the price instantly before payment as after including the dividend since that dividend information was already discounted so would otherwise produce an arbitrage. |
Does a company's stock price give any indication to or affect their revenue? | If the company reported a loss at the previous quarter when the stock what at say $20/share, and now just before the company's next quarterly report, the stock trades around $10/share. There is a misunderstanding here, the company doesn't sell stock, they sell products (or services). Stock/share traded at equity market. Here is the illustration/chronology to give you better insight: Now addressing the question What if the stock's price change? Let say, Its drop from $10 to $1 Is it affect XYZ revenue ? No why? because XYZ selling ads not their stocks the formula for revenue revenue = products (in this case: ads) * quantity the equation doesn't involve capital (stock's purchasing) |
What is the rough estimate of salary value for a taxpayer to pay AMT? | Alternative Minimum Tax is based not just on your income, but moreso on the deductions you use. In short, if you have above the minimum AMT threshold of income (54k per your link), and pay a tiny amount of tax, you will pay AMT. AMT is used as an overall protection for the government to say "okay, you can use these deductions from your taxable income, but if you're making a lot of money, you should pay something, no matter what your deductions are". This extra AMT can be used to reduce your tax payment in a future year, if you pay regular tax again. For example - if you have 60k in income, but have 60k in specific deductions from your income, you will pay zero regular tax [because your taxable income will be zero]. AMT would require you to pay some tax on your income above the minimum 54k threshold, which might work out to a few thousand bucks. Next year, if you have 60k in income, but only 15k in deductions, then you would pay some regular tax, and would be able to offset that regular tax by claiming a credit from your AMT already paid. AMT is really a pre-payment of tax paid in years when you have a lot of deductions. Unless you have a lot of deductions every single year, in which case you might not be able to get all of your AMT refunded in the end. Wikipedia has a pretty good summary of AMT in the US, here: https://en.wikipedia.org/wiki/Alternative_minimum_tax. If you think AMT is unfair (and maybe in some cases you might pay it when you think it's "unfair"), look at the root causes of paying AMT listed in that Wikipedia article: I am not trying to convince you that AMT is fair, just that it applies only when someone already has a very low tax rate due to deductions. If you have straight salary income, it would only apply in rare scenarios. |
Can I just file a 1040-ES? | Yes, you can send in a 2012 1040-ES form with a check to cover your tax liability. However, you will likely have to pay penalties for not paying tax in timely fashion as well as interest on the late payment. You can have the IRS figure the penalty and bill you for it, or you can complete Form 2210 (on which these matters are figured out) yourself and file it with your Form 1040. The long version of Form 2210 often results in the smallest extra amount due but is considerably more time-consuming to complete correctly. Alternatively, if you or your wife have one or more paychecks coming before the end of 2012, it might be possible to file a new W-4 form with the HR Department with a request to withhold additional amounts as Federal income tax. I say might because if the last paycheck of the year will be issued in just a few days' time, it might already have been sent for processing, and HR might tell you it is too late. But, depending on the take-home pay, it might be possible to have the entire $2000 withheld as additional income tax instead of sending in a 1040-ES. The advantage of doing it through withholding is that you are allowed to treat the entire withholding for 2012 as satisfying the timely filing requirements. So, no penalty for late payment even though you had a much bigger chunk withheld in December, and no interest due either. If you do use this approach, remember that Form W-4 applies until it is replaced with another, and so HR will continue to withhold the extra amount on your January paychecks as well. So, file a new W-4 in January to get back to normal withholding. (Fix the extra exemption too so the problem does not recur in 2013). |
Can I buy a new house before selling my current house? | If you can qualify for two mortgages, this is certainly possible. For this you can talk to a banker. However, most people do not qualify for two mortgages so they go a different route. They make offers on a new home with a contingency to sell the existing home. A good Realtor will walk you through this and any possible side effects. Keep in mind that the more contingencies in an offer the less attractive that offer is to sellers. This is how cash buyers can get a better deal (no contingencies and a very fast close). Given the hotness of your market a seller might reject your offer as opposed to first time home buyer that does not need to sell an old home. On the other hand, they may see your contingency as low risk as the market is so hot. This is why you probably need a really good agent. They can frame the contingency in a very positive light. |
Make your money work for you | Thats a very open question, Depends on the risk you are willing to take with the money, or the length of time you are willing sit on it, or if you have a specific goal like buying a house. Some banks offer high(ish) rate savings accounts http://www.bankaccountsavings.co.uk/calculator with a switching bonus that could be a good start. (combining the nationwide flexdirect and regular saver) if you want something more long term - safe option is bonds, medium risk option is Index funds (kind of covers all 3 risks really), risky option is Stocks & shares. For these probably a S&S ISA for a tax efficient option. Also LISA or HtB ISA are worth considering if you want to buy a house in the future. |
Google Finance: Input Parameters For Simple Moving Averages | I looked at this a little more closely but the answer Victor provided is essentially correct. The key to look at in the google finance graph is the red labled SMA(###d) would indicate the period units are d=days. If you change the time axis of the graph it will shift to SMA(###m) for period in minutes or SMA(###w) for period in weeks. Hope this clears things up! |
Why should we expect stocks to go up in the long term? | I have read in many personal finance books that stocks are a great investment for the long term, because on average they go up 5-7% every year. This has been true for the last 100 years for the S&P500 index, but is there reason to believe this trend will continue indefinitely into the future? It has also been wrong for 20+ year time periods during those last 100 years. It's an average, and you can live your whole career at a loss. There are many things to support the retention of the average, over the next 100 years. I think the quip is out of scope of your actual investment philosophy. But basically there are many ways to lower your cost basis, by reinvesting dividends, selling options, or contributing to your position at any price from a portion of your income, and by inflation, and by the growth of the world economy. With a low enough cost basis then a smaller percentage gain in the index gives you a magnified profit. |
Wash sale rule impact on different scenarios between different types of accounts | The wash sale rule only applies when the sale in question is at a loss. So the rule does not apply at all to your cases 3, 4, 7, 8, 11, 12, 15, and 16, which all start with a gain. You get a capital gain at the first sale and then a separately computed gain / loss at the second sale, depending on the case, BUT any gain or loss in the IRA is not a taxable event due to the usual tax-advantaged rules for the IRA. The wash sale does not apply to "first" sales in your IRA because there is no taxable gain or loss in that case. That means that you wouldn't be seeking a deduction anyway, and there is nothing to get rolled into the repurchase. This means that the rule does not apply to 1-8. For 5-8, where the second sale is in your brokerage account, you have a "usual" capital gain / loss as if the sale in the IRA didn't happen. (For 1-4, again, the second sale is in the IRA, so that sale is not taxable.) What's left are 9-10 (Brokerage -> IRA) and 13-14 (Brokerage -> Brokerage). The easier two are 13-14. In this case, you cannot take a capital loss deduction for the first sale at a loss. The loss gets added to the basis of the repurchase instead. When you ultimately close the position with the second sale, then you compute your gain or loss based on the modified basis. Note that this means you need to be careful about what you mean by "gain" or "loss" at the second sale, because you need to be careful about when you account for the basis adjustment due to the wash sale. Example 1: All buys and sells are in your brokerage account. You buy initially at $10 and sell at $8, creating a $2 loss. But you buy again within the wash sale window at $9 and sell that at $12. You get no deduction after the first sale because it's wash. You have a $1 capital gain at the second sale because your basis is $11 = $9 + $2 due to the $2 basis adjustment from wash sale. Example 2: Same as Example 1, except that final sale is at $8 instead of at $12. In this case you appear to have taken a $2 loss on the first buy-sell and another $1 loss on the second buy-sell. For taxes however, you cannot claim the loss at the first sale due to the wash. At the second sale, your basis is still $11 (as in Example 1), so your overall capital loss is the $3 dollars that you might expect, computed as the $8 final sale price minus the $11 (wash-adjusted) basis. Now for 9-10 (Brokerage->IRA), things are a little more complicated. In the IRA, you don't worry about the basis of individual stocks that you hold because of the way that tax advantages of those accounts work. You do need to worry about the basis of the IRA account as a whole, however, in some cases. The most common case would be if you have non-deductable contributions to your traditional IRA. When you eventually withdraw, you don't pay tax on any distributions that are attributable to those nondeductible contributions (because you already paid tax on that part). There are other cases where basis of your account matters, but that's a whole question in itself - It's enough for now to understand 1. Basis in your IRA as a whole is a well-defined concept with tax implications, and 2. Basis in individual holdings within your account don't matter. So with the brokerage-IRA wash sale, there are two questions: 1. Can you take the capital loss on the brokerage side? 2. If no because of the wash sale, does this increase the basis of your IRA account (as a whole)? The answer to both is "no," although the reason is not obvious. The IRS actually put out a Special Bulletin to answer the question specifically because it was unclear in the law. Bottom line for 9-10 is that you apparently are losing your tax deduction completely in that case. In addition, if you were counting on an increase in the basis of your IRA to avoid early distribution penalties, you don't get that either, which will result in yet more tax if you actually take the early distribution. In addition to the Special Bulletin noted above, Publication 550, which talks about wash sale rules for individuals, may also help some. |
Should Emergency Funds be Used for Infrequent, but Likely, Expenses? | This is probably a very opinion-based Q&A. But anyway: My solution to such questions is to have multiple layers of emergency funds. I have one amount in a bank account that I do not like to tap, but can (and do) when I need money. This is most close to your infrequent but not completely surprising moments of cash need. I have a second layer in the form of stocks. As I understand that selling stocks should not be done when you need money, but when the stock price is good, this provides a fairly high barrier to selling it on a whim. Before I do so, especially if the stock price isn't at a local max, it would have to be an emergency. My third layer is even more fixed investment which I can't access with online brokerage. The physical aspect makes sure that it has to be a real, serious emergency before I turn that into cash. If you have such a layered approach, the question is not black and white anymore, and easier to answer. |
is the bankruptcy of exchange markets possible? | It might be easiest to think of stock exchanges like brokers. If you buy a home, and your broker goes bankrupt, you still own your home, but you could not sell it without the aid of another broker. Same with stocks, you own the stocks you buy, but you would be unable to either purchase new stocks or sell your stock holdings without an exchange. |
Tenant wants to pay rent with EFT | What you've described is the norm in Australia, where it's rare for anyone under sixty to use cheques. Assuming they're transferring the funds using internet banking, I would have the following suggestions: You make it clear that the the funds must reach your account by the due date for rent. It is their (the tenant's) responsibility to allow for the normal transfer delay from their account to yours. This will save unpleasant arguments later if the rent is late. If you're not comfortable with your tenant knowing your banking details, set up another account specifically for receiving rental income payments and paying your costs associated with the property. This may have the added benefit of simplifying things at tax time. Another alternative, which I think others have mentioned, is to use an escrow service like PayPal, but be aware that these kinds of services will usually charge a small percentage when you withdraw your funds. |
Explain: “3% annual cost of renting is less than the 9% annual cost of owning” | The 3% and 9% figures are based on the cost of borrowing money and all the other ownership costs associated with real estate. From the same article: http://patrick.net/housing/crash1.html Because it's usually still much cheaper to rent than to own the same size and quality house, in the same school district. In rich neighborhoods, annual rents are typically only 3% of purchase price while mortgage rates are 4% with fees, so it costs more to borrow the money as it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 8% of purchase price, which is more than twice the cost of renting and wipes out any income tax benefit. Imagine you are renting a house. If the cost of your annual rent is lower than X then renting is obviously the best idea from a monetary calculation. If rent is greater than Y being a landlord makes more sense. In the middle it is debatable, and the non-monetary reasons need to be considered. |
Some stock's prices don't fluctuate widely - Is it an advantages? | I don't think you are reading the stock chart right. ORCL has a beta of 1.12 which means it has more volatility than the market as a whole. See image below for a fairly wild stock chart for a year. I would not truly consider ESPP participation investing, unless you intend to buy and hold the stock. If you intend to sell the stock soon after you are able, it is more speculation. ESPP's are okay based upon the terms. If the stock was a constant price, and you could sell right away, then an ESPP plan would be easy money. Often, employees are often given a 15% discount to purchase the stock. If you can sell it before any price drop, then you are guaranteed to make 15% on the money invested minus any commissions. Some employers make ESPP participants hold the stock for a year. This makes such a plan less of a value. The reasons are the stock can drop in price during that time, you could need the money, or (in the best case) your money is tied up longer making the ROI less. The reasons people invest in stock are varied and is far to much to discuss in a single post. Some of your colleagues are using the ESPP solely to earn the discount in their money. |
Is it advisable to go for an auto loan if I can make the full payment for a new car? | Full payment is always better than auto-loan if you are prudent with finances. I.E if you take a loan, you are factoring the EMI hence your savings will remain as is. However if you manage well, you can buy the car with cash and at the same time put aside the notional EMI as savings and investments. The other factor to consider is what return your cash is giving. If this more than auto-loan interest rate post taxes, you should opt for loan. For example if auto-loan is 10% and you are getting a return of 15% after taxes on investment then loan is better. Company Car lease depends on terms. More often you get break on taxes on the EMI component. But you have to buy at the end of lease period and re-register the car in your name, so there is additional cost. Some companies give lease at very favourable rates. Plus if you leave the job lease has to be broken and it becomes more expensive. |
Does financing a portfolio on margin affect the variance of a portfolio? | Financing a portfolio with debt (on margin) leads to higher variance. That's the WHOLE POINT. Let's say it's 50-50. On the downside, with 100% equity, you can never lose more than your whole equity. But if you have assets of 100, of which 50% is equity and 50% is debt, your losses can be greater than 50%, which is to say more than the value of your equity. The reverse is true. You can make money at TWICE the rate if the market goes up. But "you pay your money and you take your chances" (Punch, 1846). |
Does a stock's price represent current liquidation of all shares? | What if everyone decided to sell all the shares at a given moment, let's say when the stock is trading at $40? It would fall to the lowest bid price, which could be $0.01 if someone had that bid in place. Here is an example which I happened to find online: Notice there are orders to buy at half the market price and lower... probably all the way down to pennies. If there were enough selling activity to fill all of those bids you see, then the market price would be the lowest bid on the screen. Alternatively, the bid orders could be pulled (cancelled), which would also let the price free-fall to the lowest bid even if there were few actual sellers. Bid-stuffing is what HFT (high frequency trading) algorithms sometimes do, which some say caused the Flash Crash of May 2010. The computers "stuff" bids into the order book, making it look like there is demand in order to trigger a market reaction, then they pull the bids to make the market fall. This sort of thing happens all the time and Nanex documents it http://www.nanex.net/FlashCrash/OngoingResearch.html Quote stuffing defined: http://www.investopedia.com/terms/q/quote-stuffing.asp I remember the day of the Flash Crash very well. I found this video on youtube of CNBC at that time. Watch from the 5:00 min mark on the video as Jim Crammer talks about PG easily not being worth the price of the market at that time. He said "Who cares?", "Its not a real price", "$49.25 bid for 50,000 shares if I were at my hedge fund." http://www.youtube.com/watch?v=86g4_w4j3jU You can value a stock how you want, but its only actually worth what someone will give you for it. More examples: Anadarko Petroleum, which as we noted in today's EOD post, lost $45 billion in market cap in 45 milliseconds (a collapse rate of $1 billion per millisecond), flash crashing from $90 all the way to an (allegedly illegal) stub quote of $0.01. http://www.zerohedge.com/news/2013-05-17/how-last-second-flash-crash-pushed-sp-500-1667-1666 How 10,000 Contracts Crashed The Market: A Visual Deconstruction Of Last Night's E-Mini Flash Crash http://www.zerohedge.com/news/2012-12-21/how-10000-contracts-crashed-market-visual-deconstruction-last-nights-e-mini-flash-cr Symantec Flash-Crash Destroys Over $1.5 Billion In Less Than A Second http://www.zerohedge.com/news/2013-04-30/symantec-flash-crash-destroys-over-15-billion-less-second This sort of thing happens so often, I don't pay much attention anymore. |
Can one be non-resident alien in the US without being a resident anywhere else? | You may be considered a resident for tax purposes. To meet the substantial presence test, you must have been physically present in the United States on at least: 31 days during the current year, and 183 days during the 3 year period that includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count: All of the days you were present in the current year, and One-third of the days you were present in the first year before the current year, and One-sixth of the days you were present in the second year before the current year. If you are exempt, I'd check that ending your residence in Germany doesn't violate terms of the visa, in which case you'd lose your exempt status. If you are certain that you can maintain your exempt status, then the income would definitively not be taxed by the US as it is not effectively connected income: You are considered to be engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant on an "F," "J," "M," or "Q" visa. The taxable part of any U.S. source scholarship or fellowship grant received by a nonimmigrant in "F," "J," "M," or "Q" status is treated as effectively connected with a trade or business in the United States. and your scholarship is sourced from outside the US: Generally, the source of scholarships, fellowship grants, grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. I would look into this from a German perspective. If they have a rule similiar to the US for scholarships, then you will still be counted as a resident there. |
Explanations on credit cards in Canada | If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt. I have my back account (i.e. chequing account) and VISA account at/from the same bank (which, in my case, is the Royal Bank of Canada). I asked my bank to set up an automatic transfer, so that they automatically pay off my whole VISA balance every month, on time, by taking the money from my bank account. In that way I am never late paying the VISA so I never pay interest charges. IOW I use the VISA like a debit card; the difference is that it's accepted at some places where a debit card isn't (e.g. online, and for car rentals), and that the money is deducted from my bank account at the end of the month instead of immediately. |
Is there a bank account that allows ACH deposits but not ACH withdrawals? | Nowadays, all checks you write will not be send to your bank anymore, but instead the bank where they get deposited does an ACH from your bank. That implies that not allowing this to happen, your bank would not be able to honor any checks you wrote (without enforcing paper check delivery in the mail, but the Check21 bill does not allow such enforcing anymore). Basically, your bank would not be able to do business with anyone. The obvious conclusion is that no such bank exists. |
Tracking the Madrid Interbank Offered Rate (MIBOR) and the Euro Interbank Offered Rate (EURIBOR) | You can find both here: http://www.bde.es/tipos/tipose.htm |
What determines price fluctuation of groceries | Yes and no. First off, commodity prices reflect the cost of a good about 3 steps back in the retail supply chain; the agreed-upon price for the raw foodstuff between farmers/ranchers and manufacturers. Your grocer may carry bags of whole grain wheat, but that's certainly not all he carries that contains it. Same for corn, rice and other staple grains, as well as for fruits and vegetables, herbs (yes, you can buy basil by the ton on the CME), meats, various sugars, etc. So, a long-term sustained change in prices of a commodity foodstuff will eventually affect the real cost to you to buy things they're made from. However, in the short term, the retail supply chain will generally act as a buffer between these prices and the ones you see on the store shelf. Consumers don't like price increases, especially of necessities like food. When food costs go up, consumers can and will very quickly change their spending habits, buying cheaper options to get their needed calories. That makes manufacturers nervous; consumers not buying their product is a worse scenario than consumers buying their product at a reduced gain or even at a loss. So, manufacturers, and suppliers and retailers, will all absorb as much as they can of the cost of a commodities increase before beginning to pass it on to consumers. On the flip side, while consumers like price drops, they don't notice them as much as price increases. So, the supply chain will also absorb a fall in commodity prices by resisting price reductions in the consumer goods, as long as they can get away with it (which is usually longer than the price reduction actually lasts). The net effect is that processed food prices typically follow the gentle upward climb of long-term inflation, and only rarely do you see drastic price increases or decreases. Where this model breaks down a little bit is in highly perishable foodstuffs, especially seasonal or "wild-managed" foods; fruits and vegetables, seafood, etc. The limited time in which the stuff can be sold makes the process of getting a fish out of the ocean and a fruit off the tree and into your grocery store much more market-driven; the producers, suppliers and grocers are all in constant contact over what's available and how much they can get for what price. The prices therefore are typically a lower markup (unlike highly processed grain-based foods, there's not much added value to be marked up between the apple farmer picking the fruit and the grocer putting it on display), but also much more volatile; if there's a bumper crop of fruit, the farmer has to unload it all or it goes to waste, while similarly if an early freeze decimated the apple crop, the suppliers can't just get some of last year's bumper crop out of storage; they fight with everyone else for what little made it to market. Farmers will sometimes intentionally let excess crop spoil in order to maintain a minimum price for what they sell (the rest can at least be composted and used for fertilizer, saving them some money on maintenance), but there's no silver bullet for a shortage. This is why a lot of these foods, especially seafood, are considered luxury items; they're not stable enough for everyone to get as much as they want whenever they want, unlike staple grains. |
Offsetting capital losses against gains for stocks | The loss for B can be used to write off the gain for A. You will fill out a schedule 3 with cost base and proceeds of disposition. This will give you a $0 capital gain for the year and an amount of $5 (50% of the $10 loss) you can carry forward to offset future capital gains. You can also file a T1-a and carry the losses back up to 3 years if you're so inclined. It can't be used to offset other income (unless you die). Your C and D trades can't be on income account except for very unusual circumstances. It's not generally acceptable to the CRA for you to use 2 separate accounting methods. There are some intricacies but you should probably just use capital gains. There is one caveat that if you do short sales of Canadian listed securities, they will be on income account unless you fill out form T-123 and elect to have them all treated as capital gains. I just remembered one wrinkle in carrying forward capital losses. They don't reduce your capital gains anymore, but they reduce your taxable income. This means your net income won't be reduced and any benefits that are calculated from that (line 236), will not get an increase. |
How to choose a good 401(k) investment option? | The vanguard funds are all low fee your employer has done a good job selecting their provider for 401(k). I would do a roth if you can afford it as taxes are at a historical low. Just pick the year you want to get your money if you will need your money in 2040 pick Vanguard Target Retirement 2040 Fund. Its that simple. This is not a "thing" ( low-risk, and a decent return ). Risk and reward are correlated. Get the vanguard and every year it rebalances so that you take less risk every year. Lastly listen to the Clark Howard podcast if you are having trouble making decisions or contact their 45 hour a week free advice email/phone help. |
Why is day trading considered riskier than long-term trading? | Well, let me take your question for baremetal, and aknowledge you did not asked about the difference between daytrading and investing which is obviously leverage. I would not consider daytrading more risky as long as you keep leverageout of the equation. Daytrading can be turbolent and confusing, where things unfold in a very short amount of time, (let trade nfp payroll or some breaking event, yay), eventually the risk is more overseeable in long term trading, as soon as you put leverage into the equation things look vary different, indeed. |
Where can I find information on corporate bonds (especially those rated as “junk”) ? | Bond information is much tougher to get. Try to find access to a Bloomberg terminal. Maybe you have a broker that can do the research for you, maybe your local university has one in their business school, maybe you know someone that works for a bank/financial institution or some other type of news outlet. Part of the reason for the difference in ease of access to information is that bond markets are dominated by institutional investors. A $100 million bond issues might be 90% owned by 10-20 investors (banks, insurance co's, mutual funds, etc.) that will hold the bonds to maturity and the bonds might trade a few times a month/year. On the other hand a similar equity offering may have several hundred or thousand owners with daily trading, especially if it's included in an active stock index. That being said, you can get some information on Fidelity's website if you have an account, but I think their junk data is limited. Good luck with the hunt. |
How much life insurance do I need? | If I remember the information in "The Wealthy Barber" correctly, he said: And as someone once said to me, "make sure you're worth more alive than dead!" :-) |
How can I withdraw money from my LLC? | Generally, unless you explicitly elect otherwise, LLCs are transparent when it comes to taxes. So the money in the LLC is your money for tax purposes, there's no need to pay yourself a salary. In fact, the concept of salary for LLC members doesn't exist at all. It is either distributions or guaranteed payments (and even that is mostly relevant to multi-member LLCs). The only concern is the separation of personal and LLC finances - avoiding commingling. Mixing your personal and business expenses by using the same accounts/cards for both business and personal spending may cause troubles when it comes to the liability protection in case of a lawsuit. I'd suggest discussing this with a FL-licensed attorney. Bottom line - technically the withdrawal is just writing yourself a check from the business account or moving money between your personal and business accounts. If you're a sole member - you need not more than that. Make sure the operating agreement explicitly empowers you to do that, of course. There are no tax consequences, but as I mentioned - there may be legal consequences. |
Why are Rausch Coleman houses so cheap? Is it because they don't have gas? | The reason Rausch Coleman homes are generally cheaper, is because they are a high volume dealer. Their communities usually have 5 to 7 floor plan options only. They get exceptional deals on their materials because of the volume of material bought. They have it down to a science when it comes to the numbers. As far as the quality of their homes, I cant answer that. I have never been in one or known of anyone that has bought one. |
Should I re-allocate my portfolio now or let it balance out over time? | Personally I'm not a huge fan of rebalancing within an asset class. I would vote for leaving the HD shares alone and buying other assets until you get to the portfolio you want. Frequent buying and selling incurs costs and possible tax consequences that can really hurt your returns. |
250k USD in savings. What's next? | A good answer to the question really depends on where you want to live, ultimately. Where you want to live pretty much dictates your investment priorities. If you want to invest in "terrain" so you can build a house next to all the "cool," people in Guayaquil that should be your first priority. Your new wife may have an opinion on that matter, you should consult her. In real life, most people are less concerned about their absolute level of wealth than with "keeping up" with their friends, or other reference group. If you don't buy the "terrain," the danger is that in five years, it may go up three, four, five times and be out of your reach, even if your other investments do well on the absolute standard. While it's fairly easy to invest the equivalent of $250K in Ecuadorian land, it's hard to invest that much in Ecuadorian stocks. If you want to buy stocks with that kind of money, it will be U.S., European, or maybe other Latin American, e.g., Brazilian stocks. That kind of asset allocation would tell me that you are thinking of leaving your country at some point. If you're "undecided," a sensible allocation might be 50-50. But in any event, first decide how you want to live your life, then adopt the investment strategy that best supports that life. |
How to find an optimum linear combination of various investments? | You're talking about modern portfolio theory. The wiki article goes into the math. Here's the gist: Modern portfolio theory (MPT) is a theory of finance that attempts to maximize portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, by carefully choosing the proportions of various assets. At the most basic level, you either a) pick a level of risk (standard deviation of your whole portfolio) that you're ok with and find the maximum return you can achieve while not exceeding your risk level, or b) pick a level of expected return that you want and minimize risk (again, the standard deviation of your portfolio). You don't maximize both moments at once. The techniques behind actually solving them in all but the most trivial cases (portfolios of two or three assets are trivial cases) are basically quadratic programming because to be realistic, you might have a portfolio that a) doesn't allow short sales for all instruments, and/or b) has some securities that can't be held in fractional amounts (like ETF's or bonds). Then there isn't a closed form solution and you need computational techniques like mixed integer quadratic programming Plenty of firms and people use these techniques, even in their most basic form. Also your terms are a bit strange: It has correlation table p11, p12, ... pij, pnn for i and j running from 1 to n This is usually called the covariance matrix. I want to maximize 2 variables. Namely the expected return and the additive inverse of the standard deviation of the mixed investments. Like I said above you don't maximize two moments (return and inverse of risk). I realize that you're trying to minimize risk by maximizing "negative risk" so to speak but since risk and return are inherently a tradeoff you can't achieve the best of both worlds. Maybe I should point out that although the above sounds nice, and, theoretically, it's sound, as one of the comments points out, it's harder to apply in practice. For example it's easy to calculate a covariance matrix between the returns of two or more assets, but in the simplest case of modern portfolio theory, the assumption is that those covariances don't change over your time horizon. Also coming up with a realistic measure of your level of risk can be tricky. For example you may be ok with a standard deviation of 20% in the positive direction but only be ok with a standard deviation of 5% in the negative direction. Basically in your head, the distribution of returns you want probably has negative skewness: because on the whole you want more positive returns than negative returns. Like I said this can get complicated because then you start minimizing other forms of risk like value at risk, for example, and then modern portfolio theory doesn't necessarily give you closed form solutions anymore. Any actively managed fund that applies this in practice (since obviously a completely passive fund will just replicate the index and not try to minimize risk or anything like that) will probably be using something like the above, or at least something that's more complicated than the basic undergrad portfolio optimization that I talked about above. We'll quickly get beyond what I know at this rate, so maybe I should stop there. |
Why should one only contribute up to the employer's match in a 401(k)? | In addition to George Marian's excellent advice, I'll add that if you're hitting the limits on IRA contributions, then you'd go back to your 401(k). So, put enough into your 401(k) to get the match, then max out IRA contributions to give you access to more and better investment options, then go back to your 401(k) until you top that out as well, assuming you have that much available to invest for retirement. |
Why government bonds fluctuate so much, even though interest rates don't change that often? | Long term gov't bonds fluctuate in price with a seemingly small interest rate fluctuation because many years of cash inflows are discounted at low rates. This phenomenon is dulled in a high interest rate environment. For example, just the principal repayment is worth ~1/3, P * 1/(1+4%)^30, what it will be in 30 years at 4% while an overnight loan paying an unrealistic 4% is worth essentially the same as the principal, P * 1/(1+4%)^(1/365). This is more profound in low interest rate economies because, taking the countries undergoing the present misfortune, one can see that their overnight interest rates are double US long term rates while their long term rates are nearly 10x as large as US long term rates. If there were much supply at the longer maturities which have been restrained by interest rates only manageable by the highly skilled or highly risky, a 4% increase on a 30% bond is only about a 20% decline in bond price while a 4% increase on a 4% bond is a 50% decrease. The easiest long term bond to manipulate quantitatively is the perpetuity where p is the price of the bond, i is the interest payment per some arbitrary period usually 1 year, and r is the interest rate paid per some arbitrary period usually 1 year. Since they are expressly linked, a price can be implied for a given interest rate and vice versa if the interest payment is known or assumed. At a 4% interest rate, the price is At 4.04%, the price is , a 1% increase in interest rates and a 0.8% decrease in price . Longer term bonds such as a 30 year or 20 year bond will not see as extreme price movements. The constant maturity 30 year treasury has fluctuated between 5% and 2.5% to ~3.75% now from before the Great Recession til now, so prices will have more or less doubled and then reduced because bond prices are inversely proportional to interest rates as generally shown above. At shorter maturities, this phenomenon is negligible because future cash inflows are being discounted by such a low amount. The one month bill rarely moves in price beyond the bid/ask spread during expansion but can be expected to collapse before a recession and rebound during. |
Stocks: do Good Till Cancelled orders get executed during after hours? | You'd have to check the rules for your broker to make sure that the term is being used in its usual sense, but the typical answer to your question is "no." A GTC will execute during market hours. You would need to explicitly specify extended hours if you want to execute outside of market hours (which your broker may or may not support). |
Is it better to pay an insurance deductible, or get an upgrade? | I think you have a few choices that cannot be described by math alone: Repair current phone: 149 Replace current phone with new model from carrier: 100 + cost of new phone Replace current phone with new model on payment plan from carrier: 100 + cost of new phone + finance charge (could be zero or cleverly hidden). You can also replace the current phone with either a used or new bought from a separate party. Quite recently I was selling some gently used IPhones 4S for around $140. So really you have to determine what is most important to you guys. Is it important to have the newest model phone with laying out the least amount of cash now? Then by all means go with the payment plan with your current carrier. Is it most important to be financially efficient, while having a good working phone? Then pay the deductible; or buy something gently used. In my opinion, having a phone payment is a losing game, akin to buying a new car every three years or so. You are buying something on time that quickly depreciates and hiding the true cost of the item in "painless" monthly payments. |
What is a stock split (reverse split)? | It was actually a reverse split meaning that every 10 shares you had became 1 share and the price should be 10x higher. - Citigroup in reverse split The chart just accounts for the split. The big dip is Googles way of showing from what price it split from. If you remember before the split the stock was trading around $4-$5 after the reverse split the stock became 10x higher. Just to clear it up a 1:2(1 for 2) split would mean you get 1 share for every 2 shares you have. This is known as a reverse split. A 2:1(2 for 1) split means you get 2 shares for every 1 share you have. The first number represents the amount of shares you will receive and the second number represents how many shares you will be giving up. |
Is there a country that uses the term “dollar” for currency without also using “cents” as fractional monetary units? | Going through the list of economies that currently use the dollar, all of them list cents as a fractional unit. In Hong Kong and Taiwan, the 1/100 fractional unit is still called a cent, but it's no longer in circulation in coin form and only finds use in financial markets or electronic payments. In countries like Malaysia, the word "sen" is used as the translation of the word "cent", even though the word for the actual currency, "ringgit", isn't a translation of the word "dollar". A similar situation occurs in Panama. The local currency is called the balboa, and it's priced on par (1:1) with the US dollar. US banknotes are also accepted as legal tender, and Panamanians sometimes use the terms balboa/dollar interchangeably. The 1/100 subdivision of the balboa is the centésimo, which is merely a translation of cent. Like Malaysia, the fractional unit is called "cent" (or a translation) but the main unit isn't merely a translation of the word "dollar." On a historical note, the Spanish Dollar was subdivided into 8 reales in order to match the German thaler (the word that forms the basis for the English word "dollar"). |
US tax for a resident NRI | If you are tax-resident in the US, then you must report income from sources within and without the United States. Your foreign income generally must be reported to the IRS. You will generally be eligible for a credit for foreign income taxes paid, via Form 1116. The question of the stock transfer is more complicated, but revolves around the beneficial owner. If the stocks are yours but held by your brother, it is possible that you are the beneficial owner and you will have to report any income. There is no tax for bringing the money into the US. As a US tax resident, you are already subject to income tax on the gain from the sale in India. However, if the investment is held by a separate entity in India, which is not a US domestic entity or tax resident, then there is a separate analysis. Paying a dividend to you of the sale proceeds (or part of the proceeds) would be taxable. Your sale of the entity containing the investments would be taxable. There are look-through provisions if the entity is insufficiently foreign (de facto US, such as a Subpart-F CFC). There are ways to structure that transaction that are not taxable, such as making it a bona fide loan (which is enforceable and you must pay back on reasonable terms). But if you are holding property directly, not through a foreign separate entity, then the sale triggers US tax; the transfer into the US is not meaningful for your taxes, except for reporting foreign accounts. Please review Publication 519 for general information on taxation of resident aliens. |
Will a stop order get triggered if the floor is hit and trading is halted? | quantycuenta is right, if a halt is in place, then no trading will occur, simple as that. But in the practice of risk management it is a little different. Want to remind you that you are assuming that trading is halted immediately upon the drop in price. That doesn't always happen, so if there is any time between the actual price drop and halt of trading, then it is possible that your order will be filled, depending on how liquid your security is. Also not every security has circuit breakers in place and the exact requirements to trigger a breaker is not public information. In some cases, trades are ordered to be rolled back (reversed) by the exchange but this is usually reserved for institutional traders who make some sort of mistake. This article below mentions day traders who bought at or near the bottom of the May 6, 2010 flash crash. This was before circuit breakers but I think it's a good story for someone looking to understand the finer workings of the electronic market. http://www.marketwatch.com/story/book-takes-a-look-inside-professional-day-traders-1339513989350 |
Why is the stock market price for a share always higher than the earnings per share? | When you buy a stock, you're really paying for a STREAM of earnings, from now till whenever. The job of an investor is to figure out how large that stream will be in the future. But if the stock price were the same as "earnings" (for one year), it would mean that you would get all future earnings for "free." That's not likely to happen unless 1) the company is in liquidation," meaning "no future" and 2) it earned ALL of the money it ever earned in the past year, meaning "no past." If there are likely to be any earnings in the future, you will have to pay for those future earnings, over and above what was earned in the most recent year. |
Online tutorials for calculating DCF (Discounted Cash Flow)? | what do you mean exactly? Do you have a future target price and projected future dividend payments and you want the present value (time discounted price) of those? Edit: The DCF formula is difficult to use for stocks because the future price is unknown. It is more applicable to fixed-income instruments like coupon bonds. You could use it but you need to predict / speculate a future price for the stock. You are better off using the standard stock analysis stuff: Learn Stock Basics - How To Read A Stock Table/Quote The P/E ratio and the Dividend yield are the two most important. The good P/E ratio for a mature company would be around 20. For smaller and growing companies, a higher P/E ratio is acceptable. The dividend yield is important because it tells you how much your shares grow even if the stock price stays unchanged for the year. HTH |
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