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Is it okay to be married, 30 years old and have no retirement?
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First, I would recommend getting rid of this ridiculous debt, or remember this day and this answer, "you will be living this way for many years to come and maybe worse, no/not enough retirement". Hold off on any retirement savings right now so that the money can be used to crush this debt. Without knowing all of your specifics (health insurance deductions, etc.) and without any retirement contribution, given $190,000 you should probably be taking home around $12,000 per month total. Assuming a $2,000 mortgage payment (30 year term), that is $10,000 left per month. If you were serious about paying this off, you could easily live off of $3,000 per month (probably less) and have $7,000 left to throw at the student loan debt. This assumes that you haven't financed automobiles, especially expensive ones or have other significant debt payments. That's around 3 years until the entire $300,000 is paid! I have personally used and endorse the snowball method (pay off smallest to largest regardless of interest rate), though I did adjust it slightly to pay off some debts first that had a very high monthly payment so that I would then have this large payment to throw at the next debt. After the debt is gone, you now have the extra $7,000 per month (probably more if you get raises, bonuses etc.) to enjoy and start saving for retirement and kid's college. You may have 20-25 years to save for retirement; at $4,000 per month that's $1 million in just savings, not including the growth (with moderate growth this could easily double or more). You'll also have about 14 years to save for college for this one kid; at $1,500 per month that's $250,000 (not including investment growth). This is probably overkill for one kid, so adjust accordingly. Then there's at least $1,500 per month left to pay off the mortgage in less than half the time of the original term! So in this scenario, conservatively you might have: Obviously I don't know your financials or circumstances, so build a good budget and play with the numbers. If you sacrifice for a short time you'll be way better off, trust me from experience. As a side note: Assuming the loan debt is 50/50 you and your husband, you made a good investment and he made a poor one. Unless he is a public defender or charity attorney, why is he making $60,000 when you are both attorneys and both have huge student loan debt? If it were me, I would consider a job change. At least until the debt was cleaned up. If he can make $100,000 to $130,000 or more, then your debt may be gone in under 2 years! Then he can go back to the charity gig.
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Selling stocks - capital gains
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In the US you specify explicitly what stocks you're selling. Brokers now are required to keep track of cost basis and report it to the IRS on the 1099-B, so you have to tell the broker which position it is that you're closing. Usually, the default is FIFO (i.e.: when you sell, you're assumed to be closing the oldest position), but you can change it if you want. In the US you cannot average costs basis of stocks (you can for mutual funds), so you either do FIFO, LIFO (last position closed first), or specify the specific positions when you submit the sale order.
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15 year mortgage vs 30 year paid off in 15
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Actually the extra payment comes off the back end of the mortgage. So technically the mortgage is ony reduced one month. However, banks always recalculate the amortization table when the last payment is paid or a payoff amount is requested. There is a difference between the two situations but that is a minor amount. The 30 year note offers flexibility that the 15 does not. Pick one, save money-15 year, get flexibility-30 year.
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How to maximize small business 401k contribution?
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My understanding is that to make the $18,000 elective deferral in this case, you need to pay yourself at least $18,000. There will be some tax on that for social security and Medicare, so you'll actually need to pay yourself a bit more to cover that too. The employer contribution is limited to 25% of your total compensation. The $18,000 above counts, but if you want to max out on the employer side, you'll need to pay yourself $140,000 salary since 25% of $140,000 is the $35,000 that you want to put into the 401k from the employer side. There are some examples from the IRS here that may help: https://www.irs.gov/retirement-plans/one-participant-401-k-plans I know that you're not a one-participant plan, but some of the examples may help anyway since they are not all specific to one-participant plans.
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How to reconcile final payment on installment sale for IRS form 6252?
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Reading IRS Regulations section 15a.453-1(c) more closely, I see that this was a contingent payment sale with a stated maximum selling price. Therefore, at the time of filing prior years, there was no way of knowing the final contingent payment would not be reached and thus the prior years were filed correctly and should not be amended. Those regulations go on to give an example of a sale with a stated maximum selling price where the maximum was not reached due to contingency and states that in such cases: When the maximum [payment] amount is subsequently reduced, the gross profit ratio will be recomputed with respect to payments received in or after the taxable year in which an event requiring reduction occurs. However, in this case, that would result in a negative gross profit ratio on line 19 of form 6252 which Turbo Tax reports should be a non-negative number. Looking further in the regulations, I found an example which relates to bankruptcy and a resulting loss in a subsequent year: For 1992 A will report a loss of $5 million attributable to the sale, taken at the time determined to be appropriate under the rules generally applicable to worthless debts. Therefore, I used a gross profit ratio of zero on line 19 and entered a separate stock sale not reported on a 1099-B as a worthless stock on Form 8949 as a capital loss based upon the remaining basis in the stock sold in an installment sale. I also included an explanatory statement with my return to the IRS stating: In 2008, I entered into an installment sale of stock. The sale was a contingent payment sale with a stated maximum selling price. The sales price did not reach the agreed upon maximum sales price due to some contingencies not being met. According to the IRS Regulations section 15a.453-1(c) my basis in the stock remains at $500 in 2012 after the final payment. Rather than using a negative gross profit ratio on line 19 of form 6252, I'm using a zero ratio and treating the remaining basis as a schedule-D loss similar to worthless stock since the sale is now complete and my remaining basis is no longer recoverable.
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Can anybody explain the terms “levered beta riders”, “equity long-short” and “the quant process driven discipline” for me, please?
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Translation : Funds managers that use traditionnal methods to select stocks will have less success than those who use artificial intelligence and computer programs to select stocks. Meaning : The use of computer programs and artificial intelligence is THE way to go for hedge fund managers in the future because they give better results. "No man is better than a machine, but no machine is better than a man with a machine." Alternative article : Hedge-fund firms, Wall Street Journal. A little humour : "Whatever is well conceived is clearly said, And the words to say it flow with ease." wrote Nicolas Boileau in 1674.
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If the housing market is recovering, why would a REIT index ETF (e.g. VNQ) not be performing well?
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VNQ only holds ~16% residential REITs. The rest are industrial, office, retail (e.g. shopping malls), specialized (hotels perhaps?) etc. Thus, VNQ isn't as correlated towards housing as you might have assumed just based on it being about "real estate." Second of all, if by "housing" you mean that actual houses have gone up appreciably, then you ought to realize that residential REITs seldom hold actual houses. The residential units held tend primarily to be rental apartments. There is a relationship in prices, but not direct.
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Investing in income stocks for dividends - worth it?
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After looking at your profile, I see your age...28. Still a baby. At your age, and given your profession, there really is no need to build investment income. You are still working and should be working for many years. If I was you, I'd be looking to do a few different things: Eliminating debt reduces risk, and also reduces the need for future income. Saving for, and purchasing a home essentially freezes rent increases. If home prices double in your area, in theory, so should rent prices. If you own a home you might see some increases in taxes and insurance rates, but they are minor in comparison. This also reduces the need for future income. Owning real estate is a great way to build residual income, however, there is a lot of risk and even if you employ a management company there is a lot more hands on work and risk. Easier then that you can build an after tax investment portfolio. You can start off with mutual funds for diversification purposes and only after you have built a sizable portfolio should (if ever) make the transition to individual stocks. Some people might suggest DRIPs, but given the rate at which you are investing I would suggest the pain of such accounts is more hassle then it is worth.
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Is UK house price spiral connected to debt based monetary system?
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There are a few factors at work here, supply and demand being the main one. The Office for National Statistics has some good information: http://visual.ons.gov.uk/uk-perspectives-housing-and-home-ownership-in-the-uk/ Supply has historically struggled to compete with demand in the UK and this situation has been exacerpated since the 1980s when Margaret Thatcher was Prime Minister. She set up a variety of schemes to encourage people to own their own home, such as tax relief (MIRAS) and since then home ownership in the UK has increased dramatically. The then conservative government also set up the "right to buy" scheme (in 1980) that allowed council tenants to purchase their council houses at a discounted rate. The effect of this was to increase the number of home owners whilst reducing the amount of housing available for councils to rent to new tenants. Anecdotal evidence (I can't find a documented source to back this up) suggests that councils did not build sufficient new homes to replace those purchased by their ex-tenants. The population of the UK has also increased, by around 10 million since 1980 (around 20%) and this has pushed up demand for housing. House building in the UK has not kept pace with these factors that has led to a shortage of supply that has pushed up prices. http://www.ons.gov.uk/ons/rel/pop-estimate/population-estimates-for-uk--england-and-wales--scotland-and-northern-ireland/2013/sty-population-changes.html There's another factor at play here as well. If you go back to the 1970s around 53% of women would go out to work but in 2013 this figure increased to 67% as it became more common for households to have double incomes. This extra supply of cash also pushed up house prices. http://www.ons.gov.uk/ons/dcp171776_328352.pdf Your question regards a debt based monetary system is not entirely clear, but there are limitations put onto how much money people can borrow that are potentially limiting how much house prices can rise by. Today most lenders are more conservative in how much they will lend but this wasn't the case in the mid 2000s when house prices rose very quickly. Lenders are more cautious today after the crash of the late 2000s, but things are begining to relax again and they are starting to lend more which could in turn lead to further house price rises in line with what was seen in the 2000s. Recessions have coincided with house prices falling back or at least being stable. In the 1980s house prices trebled from 1980 to 1988 but then fell back a little as the recession hit, before starting to rise again in 1997. This rise was sustained until 2008 during which time prices trebled again. Based on this you could assume prices will treble again as we come out of the recession, as long as this is sustained for 8 years or so. However, as the potential for more households to become double income is reduced (high female employment already) and wages are unlikely to raise that quickly, this may not be realistic, unless the mortgage lenders become extremely lax, to the point of reckless! To answer your other question, about the affordability of housing, this will be based on the level of wages in the UK and how strict or lax the lenders are, also taking into effect the availability of housing for purchase. If wages rise, house prices will rise, if lenders are willing to lend more money, house prices will rise and if demand continues to outrstip supply, prices will rise. None of the major UK political parties are likely to solve the problems of population growth and not enough houses being built so it is likely prices will rise but you could argue that they are not far off a peak based on current wages and lenders attitudes. If the UK economy continues to recover from the recession, it is possible they will fuel another housing boom by lending ever increasing salary multiples as happened in the 2000s, unless there is government intervention, ie regulation of the lenders.
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How much time should be spent on Penny Stocks Trading a day?
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How long is a piece of string? This will depend on many variables. How many trades will you make in a day? What income would you be expecting to make? What expectancy do you need to achieve? Which markets you will choose to trade? Your first step should be to develop a Trading Plan, then develop your trading rules and your risk management. Then you should back test your strategy and then use a virtual account to practice losing on. Because one thing you will get is many losses. You have to learn to take a loss when the market moves against you. And you need to let your profits run and keep your losses small. A good book to start with is Trade Your Way to Financial Freedom by Van Tharp. It will teach you about Expectancy, Money Management, Risk Management and the Phycology of Trading. Two thing I can recommend are: 1) to look into position and trend trading and other types of short term trading instead of day trading. You would usually place your trades after market close together with your stops and avoid being in front of the screen all day trying to chase the market. You need to take your emotion out of your trading if you want to succeed; 2) don't trade penny stocks, trade commodities, FX or standard stocks, but keep away from penny stocks. Just because you can buy them for a penny does not mean they are cheap.
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Should I keep most of my banking, credit, and investment accounts at the same bank?
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http://www.fdic.gov/deposit/deposits/index.html FDIC currently insures up to $250,000. (I would have put that as a comment to Jeffery but it says it was locked.) You don't want to put all your eggs in one basket. If you shop around, and keep shopping all the time you can keep your accounts in a single place so long as that single place provides the best deal. Don't have any loyalty to your banking institutions because they don't have any loyalty to you. Also, having lots of accounts means you are familiar with lots of institutions, so you are likely better at shopping around. Things I consider. For fewer institutions: For more institutions:
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How can I find if I can buy shares of a specific company?
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Hmm... Well there are several ways to do that: Go to any bank (or at the very least major ones). They can assist you with buying and/or selling stocks/shares of any company on the financial market. They keep your shares safe at the bank and take care of them. The downside is that they will calculate fees for every single thing they do with your money or shares or whatever. Go to any Financial broker/trader that deals with the stock market. Open an account and tell them to buy shares from company "X" and keep them. Meaning they won't trade with them if this is what you want. Do the same as point 2, but on your own. Find a suitable broker with decent transaction fees, open an account, find the company's stock code and purchase the stocks via the platform the broker uses.
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Assessing risk, and Identifying scams in Alternative Investments
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10 to 20% return on investment annually. "When I hear that an investment has a 10%+ return on it I avoid it because...". In my opinion, and based on my experience, 10% annually is not an exageration. I start to ask questions only if one talks about return of 30% annually or more. These kind of returns are possible, but very rare. What sort of things do we need to look out for with alternative investment? First the quality of the website and the documentation provided. Then the resume of the founders. Who are those guys? I check their LinkedIn profile. If they have none, I am out. A LinkedIn profile is a minimum if you manage an investment company. I also look for diversification and this is the case with Yieldstreet. How do we assess the risks associated with alternative investments? I would never put more than 10% of my capital in any investment, alternative ones included. I also try to find financial information on the promoter itself. In Yieldstreet case check the legal advisor. I remember an international fraud case I analyse. The promoter I investigated had seven small trust involved: in British Virgin Islands, in Panama, in Holland, in Portugal, in the United States and Canada plus a banking account in Switzerland and the biggest shareholding company in the Isle of Man. No need to talk about what happened after. The investors were all non residents in the juridictions involved and no legal recourse were possible. They lost everything. These promoters regularly change juridictions to avoid detection. As far as Yieldstreet is concerned, what I read and checked seems interesting. Thanks for your question. I will check it out myself more. I am also a very cautious investor. To evaluate alternative investments is difficult , but no need to be afraid or to avoid them. We are accredited investors after all.
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Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan?
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If you take a loan, you make a contract with your lender, let's call them "bank" (even if it might not be a real bank). This loan contract contains an agreed-upon way of paying back the loan. Both sides agreed upon these conditions. Any change of it (like paying back early) needs the consent of both sides. So, in general, no, you cannot just pay back everything earlier unless the other side accepts this change of the contract. Consider it from the bank's point of view: They want to earn money by getting the interest you have to pay when you pay back everything nice and slowly. It is their business. They plan on these expected revenues etc. So if, for whatever reason, you have to pay back the whole remaining loan at once, you create a revenue loss for the bank and are liable for this financial damage. In German the term for this is "Vorfälligkeitsentschädigung" which translates to "prepayment penalty" or "acceleration fee". You just have to pay it, so in the end you come out like if you were paying back the loan in the agreed-upon fashion. However, many loan contracts contain the option to pay back early at specific points in time in specific amounts and under specific conditions.
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Why do stores and manufacturers use mail in rebates? A scam, or is there a way to use them effectively?
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It's an effective way to achieve market segmentation without having to ask your customers how rich they are, and you get the benefit of finding out additional information like their address, email etc. The principle is similar to coupons on cereal boxes, anybody can get the rebate/discount if they go to the effort, but people who are cash rich/time poor are less likely to do so than those that really need the money. Joel Spolsky wrote about this and various other pricing mechanisms a while back, I like to reference the article every few weeks. It's well worth a read. Now, if you're retired and living off of social security, $7 an hour sounds pretty good, so you do it, but if you're a stock analyst at Merrill Lynch getting paid $12,000,000 a year to say nice things about piece-of-junk Internet companies, working for $7 an hour is a joke, and you're not going to clip coupons. Heck, in one hour you could issue "buy" recommendations on ten piece-of-junk Internet companies! So coupons are a way for consumer products companies to charge two different prices and effectively segment their market into two. Mail-in rebates are pretty much the same as coupons, with some other twists like the fact that they reveal your address, so you can be direct marketed to in the future.
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ETF holding shares in itself
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Lindsell Train Investment Trust could be different than the "Lindsell Train Limited", the company that runs the fund and thus you are mixing apples and oranges here since the bank isn't a listed stock.
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What to bear in mind when considering a rental home as an investment?
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Here would be the big two you don't mention: Time - How much of your own time are you prepared to commit to this? Are you going to find tenants, handle calls if something breaks down, and other possible miscellaneous issues that may arise with the property? Are you prepared to spend money on possible renovations and other maintenance on the property that may occur from time to time? Financial costs - You don't mention anything about insurance or taxes, as in property taxes since most municipalities need funds that would come from the owner of the home, that would be a couple of other costs to note in having real estate holdings as if something big happens are you expecting a government bailout automatically? If you chose to use a property management company for dealing with most issues then be aware of how much cash flow could be impacted here. Are you prepared to have an account to properly do the books for your company that will hold the property or would you be doing this as an individual without any corporate structure? Do you have lease agreements printed up or would you need someone to provide these for you?
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What forms (S-1, 8-K, etc) and keywords in news headlines signify dilution?
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Possibles: stock offering, secondary placement, increase authorized number of shares, shelf registration.
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What are “preferred” stocks? How are they different from normal (common) stocks?
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I seem not to be able to comment on the first answer due to reputation, so I'll aim to enhanced the first answer which is generally good but with these caveats: 1) Dividends are not "guaranteed" to preferred shareholders. Rather, preferred shareholders are normally in line ahead (i.e. in preference to or "preferred") of common shareholders in terms of dividend payment. This is an extremely important distinction, because unlike investments that we generally consider "guaranteed" such as CDs (known as GICs in Canada), a company's board can suspend the dividend at anytime for long periods of time without significant repercussions -- whereas a missed payment to a bank or secured bondholder can often push a company into bankruptcy very quickly. 2) Due to point 1), it is extremely important to know the "convenants" or rules sorrounding both the preferred shares you are buying and the other more senior creditors of that issuing company (i.e. taxes (almost always come first), banks loans, leases, bonds etc.). It is also important to know if a particular preferred share has "cumulative" dividends. You generally only want to buy preferred's that have "cumulative" dividends, since that means that anytime the company misses a payment, they must pay those dividends first before any other dividends at the same or lower priority in the future. 3) Unlike a common stock, your upside on a preferred stock is relatively fixed: you get a fixed share of the company's profit and that's it, whereas a common shareholder gets everything that's left over after interest and preferred dividends are paid. So if the company does really well you will theoretically do much better with common stock over time. For the above reasons, it is generally advisable to think of preferred shares as being more similar to really risky bonds in the same company, rather than similar to common stock. Of course, if you are an advanced investor there are a lot more variables in play such as tax considerations and whether the preferred have special options attached to them such conversion into common shares.
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How to share income after marriage and kids?
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The bottom line is choosing the right partner. If your partner works as hard as you do, than everything should be split, irregardless of who makes more. Unfortunately, my bf, now by separated husband, borrowed money from me before we were married. I saw a lack of work ethic in him from the beginning, loved him anyway and married him but decided to keep my money separate as a result. This was a beginning with lack of trust and knowing I would be the higher earner, harder worker, and better provider. Down the road he won a lawsuit and got about $700k. I saw about $25k of this money to pay bills created with the intention of him paying them off when he got the money, and because he pilfered it away, we lost our house and it ended in my leaving.... I'm still doing ok because I work hard for what I have. He is struggling. We were never on the same page, never discussed finances because of his lack of work ethic and my mistrust of how he would decide how the money would be used. Sadly, who you decide to be your partner is the most important decision here...It should be based on mutual respect, both working hard to achieve a common goal, and communicating the budget every year, perhaps even each month.... I'm the terrible example.
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Why would anyone want to pay off their debts in a way other than “highest interest” first?
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I wouldn't advocate it, but one reason to pay a lower interest rate is if you have $990 on a $1000 limit credit card with 6% interest and $5000 on a $15k limit card at 10% interest. Having $500 to pay in a month and putting it on the lower interest would free up a greater percentage of credit on that card and could potentially help your credit rating I believe. I think having $1000 on 10 different credit cards w/ $15k limit reflects better than $10k on one $15k card, regardless of interest rates. Personally I think that's dumb b/c having the extra credit available is an opportunity to get into trouble a lot easier.
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Can a US bank prevent you from making early payments to the principal on a home mortgage?
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Some lenders want to discourage the borrower from making these additional payments because they want to sell this as a service. They might set this up for you, or they have a contract with a 3rd party to set it up. These services generally charge you to initiate the process, and may have a recurring fee. They take 1/2 a payment every 2 weeks. Then forward the money on the first of the month to the lender. Once a year they will send in the 13th monthly payment. This gives them control of up to a months payment per account. There is no law that says they have to accept early payments. So check the documents to make sure it is allowed for that mortgage. Then send in a test payment directing that the excess funds go to pay down principal. Verify online that the extra funds were credited correctly. Even it works once the borrower will have to keep checking to make sure it is handled correctly each month.
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How does a bank make money on an interest free secured loan?
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Other answers didn't seem to cover it, but most "0%" bank loans (often offered to credit card holders in the form of balance transfer checks), aside from less-obvious fees like already-mentioned late fees, also charge an actual loan fee, typically 2-3% (or a minimum floor amount) - that was the deal with every single transfer 0% offer I ever saw from a bank. So, effectively, even if you pay off the loan perfectly, on time, and within 0% period, you STILL got a 3% loan and not 0% (assuming 0% period lasts 12 months which is often the case).
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How come I can't sell short certain stocks? My broker says “no shares are available”
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In finance, short selling (also known as shorting or going short) is the practice of selling assets, usually securities, that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to the lender. Remember your broker has to borrow it from somewhere, other clients or if they hold those specific stocks themselves. So if it isn't possible for them to lend you those stocks, they wouldn't. High P/E stocks would find more sellers than buyers, and if the broker has to deliver them, it would be a nightmare for him to deliver all those stocks, which he had lent you(others) back to whom he had borrowed from, as well as to people who had gone long(buy) when you went short(sell). And if every body is selling there is going to be a dearth of stocks to be borrowed from as everybody around is selling instead of buying.
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Trying to understand Return on Capital (Joel Greenblatt's Magic Formula version)
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I've spent enough time researching this question where I feel comfortable enough providing an answer. I'll start with the high level fundamentals and work my way down to the specific question that I had. So point #5 is really the starting point for my answer. We want to find companies that are investing their money. A good company should be reinvesting most of its excess assets so that it can make more money off of them. If a company has too much working capital, then it is not being efficiently reinvested. That explains why excess working capital can have a negative impact on Return on Capital. But what about the fact that current liabilities in excess of current assets has a positive impact on the Return on Capital calculation? That is a problem, period. If current liabilities exceed current assets then the company may have a hard time meeting their short term financial obligations. This could mean borrowing more money, or it could mean something worse - like bankruptcy. If the company borrows money, then it will have to repay it in the future at higher costs. This approach could be fine if the company can invest money at a rate of return exceeding the cost of their debt, but to favor debt in the Return on Capital calculation is wrong. That scenario would skew the metric. The company has to overcome this debt. Anyways, this is my understanding, as the amateur investor. My credibility is not even comparable to Greenblatt's credibility, so I have no business calling any part of his calculation wrong. But, in defense of my explanation, Greenblatt doesn't get into these gritty details so I don't know that he allowed current liabilities in excess of current assets to have a positive impact on his Return on Capital calculation.
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Is it really possible to get rich in only a few years by investing?
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10 year US Treasury bonds are currently yielding 3.46%. If you're offered an investment that looks better than that, you should ask yourself why big investors are putting their money in US Treasuries instead of what you've been offered. And obviously at 3.46% per year, you're not going to get rich quick -- it will take you over twenty years to double your money, and that's without allowing for inflation.
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Buying a home with down payment from family as a “loan”
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Keep in mind that lenders will consider the terms of any loans you have when determining your ability to pay back the mortgage. They'll want to see paperwork, or if you claim it is a gift they will require a letter to that effect from your relative. Obviously, this could effect your ability to qualify for a loan.
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How can I find/compare custodians for my HSA in the United States?
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The account I have found that works best as a HSA is Alliant Credit Union. They have fee-free HSA (no fees for almost all types of transactions or monthly fees) and a fairly decent online banking website. I've been with them for about 5 years now without trouble. FYI - They are a credit union not a bank so you do have to make a small $10 donation to one of their charities to become "eligible" for opening the account.
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International (ex-US) ETFs with low exposure to financial sector?
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If you are looking for a European financials ETF to short, you could take a look at the iShares EURO STOXX Banks, which is traded on a a few German stock exchanges (Frankfurt etc.): iShares Euro Stoxx Banks Website You find its current holdings here: holdings.
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I have an extra 1000€ per month, what should I do with it?
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What about getting the saving account - "Bausparen" (~100EUR/month) which you can later use for credit to get better mortgage deal and to buy a flat for renting to others (Anlegerwohnung)?
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What are the pitfalls of loaning money to friends or family? Is there a right way to do it?
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I recently lent some money to my sister. While I generally agree with Phillip that lending to family and friends should be avoided, I felt I needed to make an exception. She really needed the cash, and my husband and I agreed that we would be ok without it. Here are some guidelines I used that may be helpful to others: In the end, I think lending to family and friends should be avoided, and certainly should not be done lightly, but by communicating clearly and directly, and keeping careful records, I think you can help someone out and still avoid the lingering awkwardness at future Thanksgivings when one person is convinced that the other owes one more payment, and the other swears it was paid in full.
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How is it possible that a stock has a P/E of 0.01?
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See Berkshire Hathaway Inc. (BRK-A) (The Class A shares) and it will all be clear to you. IMHO, the quote for the B shares is mistaken, it used earning of A shares, but price of B. strange. Excellent question, welcome to SE. Berkshire Hathaway is a stock that currently trades for nearly US$140,000. This makes it difficult for individual investors to buy or sell these shares. The CEO Warren Buffet chose to reinvest any profits which means no dividends, and never to split the shares, which meant no little liquidity. There was great pressure on him to find a way to make investing in Berkshire Hathaway more accessible. In June '96, the B shares were issued which represented 1/30 of a share of the Class A stock. As even these "Baby Berks" rose in price to pass US$4500 per share, the stock split 50 to 1, and now trade in the US$90's. So, the current ratio is 1500 to 1. The class B shares have 1/10,000 the voting rights of the A. An A share may be swapped for 1500 B shares on request, but not vice-versa.
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Shares; are they really only for the rich/investors?
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I think small sums invested regularly over long-term can do good for you, things to consider: I would go with an index fund and contribute there there regularly.
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Account that is debited and account that is credited
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I'm not sure if this is your point of confusion, but when an account is said to be debited (or credited), the words "debited" or "credited" are not referring to a type of account (such as "checking"). They are referring to an operation that is performed on an account. The same account can be credited at one time and debited at another time.
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How can someone with a new job but no credit history get a loan to settle another debt?
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The more I think about this the more I think you are actually better off letting it go to collections. At least then you would be able to agree an affordable repayment schedule based on your real budget, and having a big dent in your credit score because it's gone to collections doesn't actually put you in any worse position (in terms of acquiring credit in the future) than you are now. Whoever is the creditor on your original loan is (IMO) quite unreasonable demanding a payment in full on a given date, especially given that you say you've only been made aware of this debt recently. The courts are usually much more reasonable about this sort of thing and recognise that a payment plan over several years with an affordable monthly payment is MUCH more likely to actually get the creditor their money back than any other strategy. They will also recognise and appreciate that you have made significant efforts to obtain the money. I'm also worried about your statement about how panicked and "ready to give up" you are. Is there someone you can talk to? Around here (UK) we have debt counselling bureaus - they can't help with money for the actual debt itself, but they can help you with strategies for dealing with debt and will explain all parts of the process to you, what your rights and responsibilities are if it does go to court, etc. If you have something similar I suggest you contact them, even just to speak to someone and find out that this isn't the end of the world. It's a sucky situation but in a few years you'll be able to look back and at least laugh wryly at it.
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Should the poor consider investing as a means to becoming rich?
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Given that a poor person probably has much less to invest, how can odds be in their favor? To add to Lan's great answer, if one is "poor" because they don't have enough income to build wealth (invest), then there are only two ways to change the situation - earn more or spend less. Neither are easy but both are usually possible. One can take on side jobs, look for a better-paying career, etc. Cutting spending can also be hard but is generally easier than adding income. In general, wealth building is more about what you do with your income than about how much you make. Obviously the more you make, the easier it is, but just about anyone can build wealth if they spend less than they make. Once your NET income is high enough that you have investible income, THEN you can start building wealth. Unfortunately many people have piles of debts to clean up before they are able to get to that point. What could a small guy with $100 do to make himself not poor anymore, right? Just having $100 is not going to make you "rich". There is a practical limit to how much return you can make short of high-risk activities like gambling, lottery tickets, etc. (I have actually seen this as a justification for playing the lottery, which I disagree with but is an interesting point). If you just invest $100 at 25% per year (for illustration - traditional investments typically only make 10-12% on average), in 10 years you'll have about $931. If instead you invest $100 per month at 12% annualized, in 10 years you'll have over $23,000. Not that $23,000 makes you rich - the point is that regularly saving money is much more powerful than having money to start with.
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If a stock doesn't pay dividends, then why is the stock worth anything?
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Stock has value to the buyer even if it does not currently pay dividends, since it is part ownership of the company (and the company's assets). The owners (of which you are now a part) hire managers to make a "dividend policy decision." If the company can reinvest the profits into a project that would earn more than the "minimum acceptable rate of return," then they should do so. If the company has no internal investment opportunities at or above this desired rate, then the company has an obligation to declare a dividend. Paying out a dividend returns this portion of profit to the owners, who can then invest their money elsewhere and earn more. For example: The stock market currently has, say, a 5% rate of return. Company A has a $1M profit and can invest it in a project with an expected 10% rate of return, so they should do so. Company B has a $1M profit, but their best internal project only has an expected 2% rate of return. It is in the owners' best interest to receive their portion of their company's profit as a dividend and re-invest it in other stocks. (Others have pointed out the tax deferrment portion of dividend policy, so I skipped that)
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Are investor's preference for dividends justified?
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Stocks aren't just paper -- they're ownership of a company. Getting cash from a stock that doesn't pay dividends basically means reducing your stake in the company. If the stock pays dividends, on the other hand, you still have the same shares, but now you have cash too. You can choose to buy more of the company...or, more importantly, to use it elsewhere if that's what you want to do.
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Why do US retirement funds typically have way more US assets than international assets?
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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.
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Borrowing 100k and paying it to someone then declaring bankruptcy
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This is fraud and could lead to jail time. The vast majority of people cannot obtain such loans without collateral and one would have to have a healthy income and good credit to obtain that kind of loan to purchase something secured by a valuable asset, such as a home. Has this been done before? Yes, despite it being the US, you may find this article interesting. Hopefully, you see how the intent of this hypothetical situation is stealing.
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How long should I keep my tax documents, and why?
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Unfortunately, my taxes tend to be complicated This. In and of itself, is a greater reason to keep the documents. The other answer offered a good summary, but keep in mind, if the IRS decides you fraudulently withheld claiming income, they can go back 7 years. I bought a rental property in 1987, and sold it in 2016. In that case, keeping the returns seemed the right thing to do to have the paper trail for basis, else I could claim anything, and hope for the best. I have all my tax returns since my first tax return, 1980. It's one drawer of a file cabinet. Not too great a burden.
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Buying a foreclosed property
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Usually... I think that's overstating the case. You CAN get a bargain (especially if the place is in not-so-great condition), but not every foreclosure will be a good deal even if it is priced well below its most recently appraised value. As the buyer it's your responsibility to determine whether it's priced well or not, and to decide whether you're willing and able to repair its deficiencies after you buy it. The same's true when purchasing any house; foreclosures just make it more likely that there are problems and (hopefully) wind up being priced to allow for them. I don't know of a single website which lists all foreclosures. Some of the home listing websites do have a "show me foreclosure listings" filter, and I'm sure that the better tools available to real estate agents can select these. But if that's the direction you're interested in going, you should be looking at distressed properties generally, NOT just foreclosures; you may get a better deal, in the long run, by going for the one that has been mechanically maintained but is just plain ugly rather than the one with a pretty skin whose heating system hasn't been serviced for the last decade. Do your homework, shop around, don't fall in love with any one house... all the same rules apply at this end of the spectrum just as strongly as they do in the mid or upper ranges. Perhaps more so. Happy hunting!
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Will a credit card issuer cancel an account if it never incurs interest?
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I've got a card that I've had for about 25 years now. The only time they charged me interest I showed it was their goof (the automatic payment failed because of their mistake) and they haven't cancelled it. No annual fee, a bit of cash back. The only cards I've ever had an issuer close are ones I didn't use.
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Trading : how to deal with crashes (small or big)
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You can buy out of the money put options that could minimize your losses (or even make you money) in the event of a huge crash. Put options are good in that you dont have to worry about not getting filled, or not knowing what price you might get filled with a stop-loss order, however, put options cost money and their value decays over time. It's just like buying insurance, you always have to pay up for it.
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How to calculate car insurance quote
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On top of the given answers, the type of referral will also factor in. When you're up for renewal and go to a comparison site (in the UK: CompareTheMarket, MoneySupermarket, Confused, GoCompare, ... ) and struggle accurately through all their lists of questions, you see that some of the data differs (e.g., not all the same jobs can be entered; if you have had an accident, not all ask whose fault it was and/or don't leave the option "not yet resolved" --possibly forcing you to guess which way it will be adjudicated,-- and/or what the total repair cost was). So as these referrers feed slightly different data to roughly the same set of insurance providers, you will get slightly different quotes on the same providers. And expect your own provider to offer a slightly better quote than you'll get in reality for renewing: The referrer's (one-time) cut has to be still taken off, but they count it as a new client so somebody gets a bonus for that --- you they disregard as a captive client and give what boils down to a loyalty penalty. [Case in point: I had an unresolved car accident, resolved months later in my favour. With all honest data including unresolved claim and its cost and putting my 'accident-free years' factor at 0 instead of 7, my old provider quoted about 8% more than the previous year on comparison sites; but my renewal papers quoted me 290% more, upon telephone enquiry the promised to refund the difference if court found in my favour though they refused to give this in writing. So: No thanks!] Then the other set of referrals they get is from you directly going to their website asking for a quote. They know what type of link you've followed (banner, or google result, etc), they may know some info from your browser's cookies (time spent where) or other tracking service, and from your data they may guess how tech-savvy and shop-wise you are, and scale your offer accordingly. [Comparison-site shoppers are lumped together at a relatively high savvy-level, of course!]. Companies breaking down your data and their own in a particular way can find advantages and hence offer you better terms, as said in the main answer (this is like Arbitration in stock exchanges, ensuring a certain amount of sanity: if there's something to exploit, somebody will, and everybody will follow). It may be that they find a certain group of people maybe more accident-prone but cheaper to deal with (more flexible in repair-times, or easy to bully in accepting shared-fault when they weren't at fault), or they want a certain client (for women, for civil servants, for sporty drivers, for homeowners --- often for cross-selling other insurance services). Or they claim to want pensioners because the company can offer them 'a familiar voice' (same account manager always contacting them) while they're easier to bamboozle and less likely to shop around when offered a rubbish deal. Also, 100% straight comparison of competing offers isn't possible as the fine details of the T&Cs (terms & conditions) would differ, as well as various little pinpricks in the claims handling process. And depreciation of a car, and various ways of dealing with it: You insure it for the buying prices, but two years later it's worth about 40% less on paper --- so in case of total loss, replacing like-for-like will cost you still at least 80% of the value for which you've been insuring it while they'll probably offer you the 100-40= 60%. Mostly because instead of your trusted car you have something unknown that may have hidden defects, or been mistreated and about to die. [Case in point: My 3-y-old dealer-bought car's gearbox died just outside the 6month warranty period, notwithstanding its "150-item inspection you can rely on". In the end the national brand agreed to refund the parts (15% of what I paid for the car) but not the labour (a few hours).] And any car model's value differs (in descending order) from its "forecourt price", "private selling price", "part exchange price", and "auction price". Depending on your ompanies may happily insure you for forecourt price (=what you paid to dealer) but then point out that the value of that car is the theoretical P/X value, i.e., the car without anybody's profit, far less than you've been paying for. [Conversely, if you crash it after insuring below market value, they can pay you your stupidly low figure.]
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How to know which companies enter the stock market?
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Market Watch has an IPO calender with details of upcoming IPOs that should provide most of the information you need.
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The difference between Islamic Banks and Western Banks
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One of the principles of Sharia Banking is (Wikipedia): Shariah prohibits what is called "Maysir" and "Gharar". Maysir is involved in contracts where the ownership of a good depends on the occurrence of a predetermined, uncertain event in the future whereas Gharar describes speculative transactions. Both concepts involve excessive risk and are supposed to foster uncertainty and fraudlent behaviour. In other words risky investments are prohibited in Sharia Banking.
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BoA Closed my Accounts and Froze my Funds. How can I get money back besides cashier's check?
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I'd suggest you contact the Office of the Controller of Currency, who regulates BOA and file a complaint. This whole deal seems shady. According to the OCC FAQ, the fact that they closed the account is in their prerogative. However, I would think they are obligated to quickly return your funds, but can't find anything specific to that. The banks are very sensitive to having complaints filed against them, so if nothing else this may encourage them to be more helpful, even if your complaint isn't actionable. OCC Complaint Process. This topic on how long a bank can hold a large deposit before making funds available may also be helpful.
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Are there any dangers in publicly sharing my personal finance data?
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I think it's advisable to exercise a fair amount of caution when posting information about yourself online. With the advances in data aggregation efforts, information that would have been considered sufficiently anonymized in years past might no longer be sufficient to protect you from bad actors online. For example, depending on which state, and even which county you live in, the county recorder's office may allow anyone with Internet access to freely search property records by your name. If they know approximately where you live (geolocation from the IP address that you use to post to a blog--which could be divulged if criminals compromised the blogging site) and your surname, they might be able to find your exact address if you own your home. If you have considerable wealth it could open you to targeted ransom attacks from organized criminals.
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How do I calculate ownership percentage for shared home ownership?
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You and your husband are fronting all the money upfront. I'm guessing this will cost you around 67,000 once closing costs and fees are included. So obviously you would be hundred percent owners at the beginning. You'll then pay 31% of the mortgage and have your sister pay the remaining 69%. This puts your total investment at the end at 67k + 74.4k + 31% of interest accrued, and your sisters total investment at 165.6k+69% of interest accrued. If you hold the full length of the mortgage, your sister will have invested much more than you( assuming 30 year fixed rate, and 3.75%, she'd pay 116.6k in interest as opposed to your 49.6k) She will have spent 282.2k and y'all will have spent 191k. However if you sell early, your percentage could be much higher. These calculations don't take into account the opportunity cost of fronting all the cash. It could be earning you more in the stock market or in a different investment property. Liability also could be an issue in the case of her not being able to pay. The bank can still come after you for the whole amount. Lastly and most importantly, this also doesn't include the fact that she will be living there and y'all will not. What kind of rent would she be paying to live in a similar home? If it is more than 1400, you will basically be subsidizing her living, as well as tying up funds, and increasing your risk exposure. If it is more than 1400, she shouldn't be any percent owner.
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Long term bond index prices before 2000?
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The Barclay's 20+ Year Treasury Bond inception date was July 21, 2002. You aren't going to find treasury bond information going back to 1900 because Treasury Bills have only been issued since 1929. The U.S. Department of the Treasury will give you data back to 1990. There's a good article in the Globe and Mail which covers why you may want to buy bonds as part of your portfolio. The key is diversification. Historically, stocks have done better than bonds long-term, but when stocks fall, bonds tend to (though do not always) go up. If you are investing for 30 years, the risk of putting money into bonds is that you will not make as much money as if you had put the money into stocks. Historically (in the US or Canada), you'd have seen positive returns, just not as high as investing in the stock market. There are many investment strategies. I live in Canada and personally favour the one described in the Canadian Couch Potato, a passive index investment strategy where I invest my money in Canadian, U.S. and International equity (stock market mutual funds) and also in a Canadian bond fund. There are, of course, plenty of people who will tell you to take a radically different strategy with your investments.
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Investment / Savings advice in uncertain economy
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An alternative to a savings account is a money market account. Not a bank "Money Market" account which pays effectively the same silly rate as a savings account, but an actual Money Market investment account. You can even write checks against some Money Market investment accounts. I have several accounts worth about 13,000 each. Originally, my "emergency fund" was in a CD ladder. I started experimenting with two different Money market investment accounts recently. Here's my latest results: August returns on various accounts worth about $13k: - Discover Bank CD: $13.22 - Discover Bank CD: $13.27 - Discover Bank CD: $13.20 - Discover Savings: $13.18 - Credit Union "Money Market" Savings account: $1.80 - Fidelity Money Market Account (SPAXX): $7.35 - Vanguard Money market Account (VMFXX): $10.86 The actual account values are approximate. The Fidelity Money Market Account holds the least value, and the Credit Union account by far the most. The result of the experiment is that as the CDs mature, I'll be moving out of Discover Bank into the Vanguard Money Market account. You can put your money into more traditional equities mutual fund. The danger with them is the stock market may drop big the day before you want to make your withdrawl... and then you don't have the down payment for your house anymore. But a well chosen mutual fund will yield better. There are 3 ways a mutual fund increase in value: Here's how three of my mutual funds did in the past month... adjusted as if the accounts had started off to be worth about $13,000: Those must vary wildly month-to-month. By the way, if you look up the ticker symbols, VASGX is a Vanguard "Fund of Funds" -- it invests not 100% in the stock market, but 80% in the stock market and 20% in bonds. VSMGX is a 60/40 split. Interesting that VASGX grew less than VSMGX...but that assumes my spreadsheet is correct. Most of my mutual funds pay dividends and capital gains once or twice a year. I don't think any pay in August.
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Should I pay off a 0% car loan?
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I struggle with 0% interest things in my personal life. A responsible me that thinks logically says continue to pay it on time and take advantage of the benefit of the interest free loan you got. It will keep your funds liquid in the case of an emergency, build your credit and teach you self control. Paying it off now has little to no benefit. It does however tie up $3,000 worth of capital you could be using for building interest or leveraging against other purchases.
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If I pay someone else's property taxes, can I use it as a deduction on my income tax return?
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To make matters worse, if you pay the property tax your mother in law can't take the deduction either. You may be better off paying rent and having her handle the property correctly, as a rental.
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Economics Books
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I followed Economics by Michael Parkin for my college level course. It does not involve very complicated mathematics (beyond simple arithmetic and interpreting plots/charts). I found it very enjoyable. Stocks, bonds, and other money market instruments are not covered under this subject usually. They are covered under finance. I normally recommend Hull to people but because you are not interested in mathematics I would recommend Stuart R Veale.
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What are the options for a 19-year-old college student who only has about $1000?
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$1000 is not that much, and I think the best you can do with them is keeping them in a high-yield savings account (look at the online savings accounts that give 1% and more, not the regular bank savings accounts which are worthless). If you need money all of a sudden (for a school book, or rent, or bills, or some other emergency expense), you don't want to deal with selling stocks or funds (which may be at loss) or breaking into your CD's. It is usually considered a good practice to keep cash that would keep you afloat for 5-6 months in savings or some cash equivalent, as an emergency fund.
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Can my brother fix his credit?
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In a nutshell, not really. That's the risk you take when you co-sign for someone. The lender only made the loan because of the strength of your brother's credit, not your mother's, so his reputation (in the form of his credit rating) is going to take the hit because of his mother's behaviors. The one thing he can do is this: The credit bureaus allow you to add a comment or explanation to your credit file which may be helpful, provided potential creditors read it, which is never a guarantee. It's worth trying though, so suggest to him to look into it. Here's a link for him/you/anyone to look at that can help explain how this works and what effects it can have: Adding a comment to your credit file for negative items I hope this helps. Good luck!
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Why ever use a market order?
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I think it all boils down to which is your priority. So it all depends. People that want the stock sooOoooo badly will definitely go for the market order.
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Investing small amounts at regular intervals while minimizing fees?
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I think your best bet would be commission-free ETFs, which have no minimum and many have a share price under $100. Most online brokerages have these now, e.g. Vanguard, Fidelity, etc. Just have to watch out for any non-trading fees brokerages may charge with a low balance.
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How can I escalate a credit dispute when the bureau “confirms” the item?
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I was I a similar position as you, and sometimes credit bureaus might be difficult to deal with, especially when high amounts of money are involved. To make the long story short, someone opened a store credit card under my name and made a charge of around 3k. After reporting this to the bureaus, they did not want to remove the account from my credit report citing that the claim was "frivolous". After filing a police report, the police officer gave me the phone number for the fraud department of this store credit card, and after they investigated, they removed the account from my credit. I would suggest to do the following: Communicating with Creditors and Debt Collectors You have the right to: Stop creditors and debt collectors from reporting fraudulent accounts. After you give them a copy of a valid identity theft report, they may not report fraudulent accounts to the credit reporting companies. Get copies of documents related to the theft of your identity, like transaction records or applications for new accounts. Write to the company that has the documents, and include a copy of your identity theft report. You also can tell the company to give the documents to a specific law enforcement agency. Stop a debt collector from contacting you. In most cases, debt collectors must stop contacting you after you send them a letter telling them to stop. Get written information from a debt collector about a debt, including the name of the creditor and the amount you supposedly owe. If a debt collector contacts you about a debt, request this information in writing. I know that you said that the main problem was that your credit account was combined with another. But there might be a chance that identity theft was involved. If this is the case, and you can prove it, then you might have access to more tools to help you. For example, you can file a report with the FTC, and along with a police report, this can be a powerful tool in stopping these charges. Feel free to go to the identitytheft.gov website for more information.
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Why would my job recruiter want me to form an LLC?
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LLC is, as far as I know, just a US thing, so I'm assuming that you are in the USA. Update for clarification: other countries do have similar concepts, but I'm not aware of any country that uses the term LLC, nor any other country that uses the single-member LLC that is disregarded for income tax purposes that I'm referring to here (and that I assume the recruiter also was talking about). Further, LLCs vary by state. I only have experience with California, so some things may not apply the same way elsewhere. Also, if you are located in one state but the client is elsewhere, things can get more complex. First, let's get one thing out of the way: do you want to be a contractor, or an employee? Both have advantage, and especially in the higher-income areas, contractor can be more beneficial for you. Make sure that if you are a contractor, your rate must be considerably higher than as employee, to make up for the benefits you give up, as well as the FICA taxes and your expense of maintaining an LLC (in California, it costs at least $800/year, plus legal advice, accounting, and various other fees etc.). On the other hand, oftentimes, the benefits as an employee aren't actually worth all that much when you are in high income brackets. Do pay attention to health insurance - that may be a valuable benefit, or it may have such high deductibles that you would be better off getting your own or paying the penalty for going uninsured. Instead of a 401(k), you can set up an IRA (update or various other options), and you can also replace all the other benefits. If you decide that being an employee is the way to go, stop here. If you decide that being a contractor is a better deal for you, then it is indeed a good idea to set up an LLC. You actually have three fundamental options: work as an individual (the legal term is "sole proprietorship"), form a single-member LLC disregarded for income tax purposes, or various other forms of incorporation. Of these, I would argue that the single-member LLC combines the best of both worlds: taxation is almost the same as for sole proprietorship, the paperwork is minimal (a lot less than any other form of incorporation), but it provides many of the main benefits of incorporating. There are several advantages. First, as others have already pointed out, the IRS and Department of Labor scrutinize contractor relationships carefully, because of companies that abused this status on a massive scale (Uber and now-defunct Homejoy, for instance, but also FedEx and other old-economy companies). One of the 20 criteria they use is whether you are incorporated or not. Basically, it adds to your legal credibility as a contractor. Another benefit is legal protection. If your client (or somebody else) sues "you", they can usually only sue the legal entity they are doing business with. Which is the LLC. Your personal assets are safe from judgments. That's why Donald Trump is still a billionaire despite his famous four bankruptcies (which I believe were corporate, not personal, bankrupcies). Update for clarification Some people argue that you are still liable for your personal actions. You should consult with a lawyer about the details, but most business liabilities don't arise from such acts. Another commenter suggested an E&O policy - a very good idea, but not a substitute for an LLC. An LLC does require some minimal paperwork - you need to set up a separate bank account, and you will need a professional accounting system (not an Excel spreadsheet). But if you are a single member LLC, the paperwork is really not a huge deal - you don't need to file a separate federal tax return. Your income will be treated as if it was personal income (the technical term is that the LLC is disregarded for IRS tax purposes). California still does require a separate tax return, but that's only two pages or so, and unless you make a large amount, the tax is always $800. That small amount of paperwork is probably why your recruiter recommended the LLC, rather than other forms of incorporation. So if you want to be a contractor, then it sounds like your recruiter gave you good advice. If you want to be an employee, don't do it. A couple more points, not directly related to the question, but hopefully generally helpful: If you are a contractor (whether as sole proprietor or through an LLC), in most cities you need a business license. Not only that, but you may even need a separate business license in every city you do business (for instance, in the city where your client is located, even if you don't live there). Business licenses can range from "not needed" to a few dollars to a few hundred dollars. In some cities, the business license fee may also depend on your income. And finally, one interesting drawback of a disregarded LLC vs. sole proprietorship as a contractor has to do with the W-9 form and your Social Security Number. Generally, when you work for somebody and receive more than $600/year, they need to ask you for your Social Security Number, using form W-9. That is always a bit of a concern because of identity theft. The IRS also recognizes a second number, the EIN (Employer Identification Number). This is basically like an SSN for corporations. You can also apply for one if you are a sole proprietor. This is a HUGE benefit because you can use the EIN in place of your SSN on the W-9. Instant identity theft protection. HOWEVER, if you have a disregarded LLC, the IRS says that you MUST use your SSN; you cannot use your EIN! Update: The source for that information is the W-9 instructions; it specifically only excludes LLCs.
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What will my taxes be as self employed?
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Whether you're self-employed or not, knowing exactly how much tax you will pay is not always an easy task. Various actions you can take (e.g., charitable donations, IRA contributions, selling stocks) may increase or reduce your tax liability. One tool I've found useful for estimating federal taxes is the Excel 1040 spreadsheet. This is a spreadsheet version of the income tax return form. It is not official and is not created by the IRS, but is maintained as a labor of love by a private individual. In practice, however, it is pretty much an accurate implementation of the tax calculation algorithms encoded in the tax forms and instructions. The nice thing about it is that it's a spreadsheet. You can plug numbers into various slots in the spreadsheet and see how they affect your federal tax liability. (You may also owe state taxes depending on what state you live in.) Of course, the estimates you get by doing this are only (at most) as accurate as your estimates of the various numbers you plug in. Still, I think it's a free and useful way to get a ballpark estimate of your tax liability based on numbers that you can more easily estimate (e.g., how much money you expect to earn).
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How are they earning money in the movie “Trading Places”?
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Sell 200 at 142. What does that mean? I haven't seen the movie, so I won't try to put anything in story context. "Sell 200 at 142" means to sell 200 units (usually shares, but in this case it would likely be gallons or barrels of orange juice or pounds or tons of frozen juice). In general, this could mean that you have 200 units and want to sell what you have. Or you could borrow 200 units from someone and sell those--this is called a naked short. In this case, it seems that what they are selling is a futures contract. With a futures contract, you are promising to obtain orange juice by some future date and sell it for the agreed price. You could own an orange grove and plan to turn your oranges into juice. Or you could buy a futures contract of oranges to turn into juice. Or you could arbitrage two futures contracts such that one supplies the other, what they're doing here. In general people make profits by buying low and selling high. In this case they did so in reverse order. They took the risk of selling before they had a supply. Then they covered their position by purchasing the supply. They profited because the price at which they bought was lower than the price at which they sold. The reason why this is necessary is that before buying the oranges, the orange juice makers need to know that they can make a profit. So they sell orange juice on the futures market. Then they know how much they can afford to pay for oranges on a different market. And the growers know how much they can get for oranges, so they can pay people to water and pick them. Without the futures markets, growers and orange juice makers would have to take all the risk themselves. This way, they can share risks with each other and financiers. Combined with insurance, this allows for predictable finances. Without it, growers would have to be wealthy to afford the variation in crop yields and prices.
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Huge return on investment, I feel like im doing the math wrong
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And now it is at about $3. Many times "skeletons" are bought and inflated for various reasons. Some are legitimate (for example a private business merging into a defunct but public corporation to avoid wasting resources on going public), some are not (mainly pump-and-dump scams that are using "skeletons"). I don't know what was the case here (probably speculation based on the new marijuana laws in the US), but clearly the inflated price was completely unjustified since it went crashing down.
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Buying a mortgaged house
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Just as a renter doesn't care what the landlord's mortgage is, the buyer of a house shouldn't care what the seller paid, what the current mortgage is, or any other details of the seller's finances. Two identical houses may be worth $400K. One still has a $450K loan, the other is mortgage free. You would qualify for the same value mortgage on both houses. All you and your bank should care about is that the present mortgage is paid or forgiven by the current mortgage holder so your bank can have first lien, and you get a clean title. To answer the question clearly, yes, it's common for a house with a mortgage to be sold, mortgage paid off, and new mortgage put in place. The profit or loss of the homeowner is not your concern.
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Does this plan make any sense for early 20s investments?
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I would wait, and invest that money in a Roth IRA. Because taxes are paid on the contributions to a Roth IRA, you can withdraw the contributions at any time, tax and penalty-free. In addition, you can withdraw contributions and earning to purchase your first home.
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Source(s) for hourly euro/usd exchange rate historic data?
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See the FX section of the quantitative finance SE data wiki.
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Optimal pricing of close to zero marginal cost content
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With near zero marginal cost, and infinite supply, your prices are going to be decided by entry cost, competition, and what the market will bear. Generally speaking, though, there are no accurate models for getting these kinds of optimal prices in advance - your best bet is to test, experiment, and then build a business and market specific model based on what you observe. Look at the Steam network, as an example. They are in the business of selling 0 marginal cost software (games), in a market with a significant but quickly decreasing entry cost, and with solid competition. Despite being around for years in a mature market, they're still discovering unexpected optimal price points when testing how their customers behave.
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When a stock price goes down, does the money just disappears into thin air?
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In short, thanks to the answers and comments posted so far. No actual money is magically disappeared when the stock price goes down but the value is lost. The value changes of a stock is similar to the value changes of a house. The following is the long answer I came up with based on the previous answers and comments alone with my own understandings. Any experts who find any of the following is 200% out of place and wrong, feel free to edit it or make comments. Everything below only applies if the following are true: The stock price is only decreasing since the IPO because the company has been spending the money but not making profits after the IPO. The devaluation of the stock is not the result of any bad news related to the company but a direct translation of the money the company has lost by spending on whatever the company is doing. The actual money don’t just disappear into the thin air when the stock price goes down. All the money involved in trading this stock has already distributed to the sellers of this stock before the price went down. There is no actual money that is literally disappeared, it was shifted from one hand to another, but again this already happened before the price went down. For example, I bought some stocks for $100, then the price went down to $80. The $100 has already shifted from my hand to the seller before the price went down. I got the stock with less value, but the actual money $100 did not just go down to $80, it’s in the hand of the seller who sold the stock to me. Now if I sell the stock to the same seller who sold the stock to me, then I lost $20, where did the $20 go? it went to the seller who sold the stock to me and then bought it back at a lower price. The seller ended up with the same amount of the stocks and the $20 from me. Did the seller made $20? Yes, but did the seller’s total assets increased? No, it’s still $100, $80 from the stocks, and $20 in cash. Did anyone made an extra $20? No. Although I did lost $20, but the total cash involved is still there, I have the $80 , the seller who sold the stock to me and then bought it back has the $20. The total cash value is still $100. Directly, I did lost $20 to the guy who sold me the stock when the stock has higher value and then bought it back at a lower price. But that guy did not increased his total assets by $20. The value of the stock is decreased, the total money $100 did not disappear, it ended up from one person holding it to 2 people holding it. I lost $20 and nobody gained $20, how is that possible? Assume the company of the stock never made any profit since it’s IPO, the company just keeps spending the money, to really track down where the $20 I lost is going, it is the company has indirectly spent that money. So who got that $20 I lost? It could be the company spent $20 for a birthday cake, the $20 went to the cake maker. The company never did anything to make that $20 back, so that $20 is lost. Again, assume the stock price only goes down after its IPO, then buying this stock is similar to the buying a sport car example from JoeTaxpayer (in one of the answers), and buying an apple example from BrenBarn(in one of the comments from JoeTaxpayer’s answer). Go back to the question, does the money disappears into the thin air when the value of the stock goes down? No, the money did not disappear, it switched hands. It went from the buyer of the stock to the company, and the company has spent that money. Then what happens when the stock price goes down because bad news about the company? I believe the actual money still did not just disappear. If the bad news turn out to be true that the company had indeed lost this much money, the money did not disappear, it’s been spent/lost by the company. If the bad news turn out to be false, the stock price will eventually go up again, the money is still in the hand of the company. As a summary, the money itself did not disappear no matter what happens, it just went from one wallet to another wallet in many different ways through the things people created that has a value.
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Making $100,000 USD per month, no idea what to do with it
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In my opinion, I would: If the income is from this year, you can tax shelter $59,000 plus somewhere between $50,000 and $300,000 depending on age, in a 401(k) and defined benefit plan. This will take care of the current tax burden. Afterwards, set aside your remaining tax liability in cash. The after-tax money should be split into cash and the rest into assets. The split depends on your level of risk tolerance. Build a core portfolio using highly liquid and non-correlated ETFs (think SPY, TLT, QQQ, ect.). Once these core positions are locked in. Start lowering your basis by systematically selling a 1 standard deviation call in the ETF per 100 units of underlying. This will reduce your upside, extend your breakeven, and often yield steady income. Similarly, you can sell 1 standard deviation iron condors should the VIX be high enough. Point is, you have the money to deploy a professional-type, systematic strategy that is non-correlated, and income generating.
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Should I participate in a 401k if there is no company match?
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I believe @Dilip addressed your question alread, I am going to focus on your second question: What are the criteria one should use for estimating the worth of the situation? The criteria are: I hope this helps.
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Starting with Stocks or Forex?
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I took a course in forex trading for 3 months. I also studied financial markets in the Uni. I have been saving in order to start investing but I face the same question. I have gathered some advantages and disadventages that I would like to know your opinion. Forex market is more liquid, its more easy to identify what makes the currency change and to "predict" it. For small investors its an intraday trading. The risk is huge but the return can be also huge. Stocks are for long term investements. Its difficult to have a bigger return unless you know something that others dont. Its more difficult to predict price change since its easier to anyone influence it. The risk is less.
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Where can I find the dividend history for a stock?
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I second @DumbCoder, every company seems to have its own way of displaying the next dividend date and the actual dividend. I keep track of this information and try my best to make it available for free through my little iphone web app here http://divies.nazabe.com
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What is a Discount Called in the Context of a Negative Interest Rate?
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Negative Yields on Bonds is opposite of Getting profit on your investment. This is some kind of new practice from world wide financial institute. the interest rate is -0.05% for ten years. So a $100,000 bond under those terms would be "discounted" to $100,501, give or take. No, actually what you are going to get out from this investment is after 10 years when this investment is mature for liquidation, you will get return not even your principle $100,000 , but ( (Principle $100,000) minus (Negative Yields @ -0.05) Times ( 10 Years ) ) assume the rates are on simple annual rate. Now anyone may wander why should someone going to buy this kind of investment where I am actually giving away not only possible profit also losing some of principle amount! This might looks real odd, but there is other valid reason for issuing / investing on such kind of bond. From investor prospective: Every asset has its own 'expense' for keeping ownership of it. This is also true for money/currency depending on its size. And other investment possibility and risk factor. The same way people maintain checking account with virtually no visible income vs. Savings account where bank issue some positive rate of interest with various time factor like annually/half-yearly/monthly. People with lower level of income but steady on flow choose savings where business personals go for checking one. Think of Millions of Ideal money with no secure investment opportunity have to option in real. Option one to keeping this large amount of money in hand, arranging all kind of security which involve extra expense, risk and headache where Option two is invest on bond issued by Government of country. Owner of that amount will go for second one even with negative yields on bonds where he is paying in return of security and risk free grantee of getting it back on time. On Issuing Government prospective: Here government actually want people not to keep money idle investing bonds, but find any possible sector to invest which might profitable for both Investor + Grater Community ultimately country. This is a basic understanding on issue/buy/selling of Negative interest bearing bond on market. Hope I could explain it here. Not to mention, English is not my 1st language at all. So ignore my typo, grammatical error and welcome to fix it. Cheers!
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How do I determine how much rent I could charge for a property or location?
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This may not be entirely scientific, but as a landlord my usual approach is just to do a search for rental properties on Craigslist for comparable homes in the neighborhood. There are all kinds of formulas professional property managers use, but in the end these listings are the ones you are going to be competing with for tenants. Also, it isn't super accurate, but online services like Zillow.com can give you some numbers for rental houses that include those that aren't currently advertising.
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Does buying and selling a stock OR holding onto it make a company look better?
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I have watched the ticker when I have made a transaction. About ¼ of the time my buy (or sell) actually moves the going price. But that price movement is wiped out by other transactions within two (or so) munites. Is your uncle correct? Yes. Will anyone notice? No.
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Why invest for the long-term rather than buy and sell for quick, big gains?
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The price of a shares reflects the expected future returns of that company. If it does not someone will notice and buy until it does. Look at this chart http://www.finanzen.net/chart/Arcandor (click on max), that's a former DAX company, so one of the largest german companys. Now it's bankrupt. Why do you think you are the only one who is going to notice? There are millions of people and even more computers, some a going to be smarter than you. Of course that does not happen to everyone but who knows. Is Volkswagen going to survive the current crisis? Probably. Is it coming back to former glory in the next half year? Who knows? Here comes the obvious solution: Don't buy single stocks, spread it out over many companies, some will shine, some will plument and you get the average. Oh that's an index, how convinent. Now if there were a way to save on all these transaction costs you're incurring...
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Where can I invest for the Short Term and protect against Inflation?
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Your goals are mutually exclusive. You cannot both earn a return that will outpace inflation while simultaneously having zero-risk of losing money, at least not in the 2011 market. In 2008, a 5+% CD would have been a good choice. Here's a potential compromise... sacrifice some immediate liquidity for more earnings. Say you had $10,000 saved: In this scheme, you've diversified a little bit, have access to 50% of your money immediately (either through online transfer or bringing your bonds to a teller), have an implicit US government guarantee for 50% of your money and low risk for the rest, and get inflation protection for 75% of your money.
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Which graduate student loans are preferable?
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All new loans must be originated from the direct loan program. In most cases, the Stafford loan is better, as the rate is lower (6.8% vs. 7.9% for the PLUS loan). There aren't many viable alternatives for most people. Private student loans exist, but carry significantly higher rates and worse payment terms. The exceptions are programs that exist for professions like medicine and dentistry. Credit cards usually carry higher rates and limited credit lines, but you have the option of negotiating the balance down or declaring bankruptcy to discharge the debt if you are unable to repay.
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401(k) Investment stategies
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You could end up with nothing, yes. I imagine those that worked at Enron years ago if their 401(k) was all in company stock would have ended up with nothing to give an example here. However, more likely is for you to end up with less than you thought as you see other choices as being better that with the benefit of hindsight you wish you had made different choices. The strategies will vary as some people will want something similar to a "set it and forget it" kind of investment and there may be fund choices where a fund has a targeted retirement date some years out into the future. These can be useful for people that don't want to do a lot of research and spend time deciding amongst various choices. Other people may prefer something a bit more active. In this case, you have to determine how much work do you want to do, do you want to review fund reviews on places like Morningstar, and do periodic reviews of your investments, etc. What works best for you is for you to resolve for yourself. As for risks, here are a few possible categories: Time - How many hours a week do you want to spend on this? How much time learning this do you want to do in the beginning? While this does apply to everyone, you have to figure out for yourself how much of a cost do you want to take here. Volatility - Some investments may fluctuate in value and this can cause issues for some people as it may change more than they would like. For example, if you invest rather aggressively, there may be times where you could have a -50% return in a year and that isn't really acceptable to some people. Inflation - Similarly to those investments that vary wildly there is also the risk that with time, prices generally rise and thus there is something to be said for the purchasing power of your investment. If you want to consider this in more detail consider what $1,000,000 would have bought 30 years ago compared to now. Currency risk - Some investments may be in other currencies and thus there is a risk of how different denominations may impact a return. Fees - How much do your fund's charge in the form of annual expense ratio? Are you aware of the charges being taken to manage your money here?
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what is the timezone that yahoo uses for stock information
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Using your example link, I found the corresponding chart for a stock that trades on London Stock Exchange: https://ca.finance.yahoo.com/echarts?s=RIO.L#symbol=RIO.L;range=1d As you can see there, the chart runs from ~8:00am to ~4:30pm, and as I write this post it is only 2:14pm Eastern Time. So clearly this foreign chart is using a foreign time zone. And as you can see from this Wikipedia page, those hours are exactly the London Stock Exchange's hours. Additionally, the closing price listed above the graph has a timestamp of "11:35AM EST", meaning that the rightmost timestamp in the graph (~4:30pm) is equal to 11:35AM EST. 16:30 - 11:30 = 5 hours = difference between London and New York at this time of year. So those are two data points showing that Yahoo uses the exchange's native time zone when displaying these charts.
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Transfer of stock of non-public company after vesting
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If the company is non-public, your hands are tied. Most startups have a Stock Option Plan with specific rules on the shares. In almost all cases, they have a Transferability clause preventing transfers of options and shares unless approved by the company (who would almost always say no). Additionally, they usually have a Right of First Refusal (ROFR), which states that if shares are going to be transferred, the company gets the chance to buy it first. In your case, the company may argue your friend would sell you the shares for free and the company would exercise their ROFR and buy back the shares for free. There is not much you can do in this case. You may be able to write up a contract between your friend and you, but it would be costly and possibly not worth the effort. You may be better off asking for a lump sum or some other sort of compensation. Additionally, your friend might want to be careful with this idea. You could potentially gain access to sensitive company tools/documents which could get them in a lot of trouble.
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What is the p/e ratio?
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PE ratio is the current share price divided by the prior 4 quarters earnings per share. Any stock quote site will report it. You can also compute it yourself. All you need is an income statement and a current stock quote.
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Can a shareholder be liable in case of bankruptcy of one of the companies he invested in?
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In an open corporation scenario a stock holder may well be found liable. It's a very narrow and uncommon bunch of scenarios but it's well worth sharing. See the paragraph on open corporations in the following document: http://nationalparalegal.edu/public_documents/courseware_asp_files/businessLaw/RightsOfShareholders/LiabilityOfShareholders.asp
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Prices go up and salary doesn't: where goes delta?
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One of the byproducts of free trade is that there is now a global labor market. So companies routinely review their operations and think strategically about where the company is going. Standard options are: Because the disincentives that once existed in the past are gone (the need for humans to do work, tariffs, regulation, poor infrastructure in the developing world), the available supply of labor is greater and demand lower -- thus wages are falling in real terms. Think in the simplest terms in an office environment. In 1980 to make photocopies, you needed a Xerox machine that required a technician on site every couple of weeks to make adjustments, change toner, etc. There was probably a local rep you called to schedule break/fix serivce. Now technology has replaced that copy machine with a cheap multi-function device that requires no maintenance and any technical support is delivered by a person sitting in a Indian call center. So to answer your question, the incremental money from rising prices goes to a number a places. Alot of it goes to oil producers and other commodity producers. Much of it consists of indirect costs that fulfill other mandated services -- when you buy something, buried in that cost are things like health insurance, prescription drugs and school taxes.
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Form 1040 - where to place my stipend?
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If you're correct that it's not taxable because it's non-taxable reimbursement (which is supported by your W-2), then it should not go on your 1040 at all. If it is taxable, then it really should have appeared on your W-2 and would probably end up on Line 7 of your Form 1040.
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How to know which companies enter the stock market?
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Thanks to the other answers, I now know what to google for. Frankfurt Stock Exchange: http://en.boerse-frankfurt.de/equities/newissues London Stock Exchange: http://www.londonstockexchange.com/statistics/new-issues-further-issues/new-issues-further-issues.htm
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Sales Tax: Rounded Then Totaled or Totaled Then Rounded?
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Tax is often calculated per item. Especially in the days of the internet, some items are taxable and some aren't, depending on the item and your nexus. I would recommend calculating and storing tax with each item, to account for these subtle differences. EDIT: Not sure why this was downvoted, if you don't believe me, you can always check with Amazon: http://www.amazon.com/gp/help/customer/display.html/ref=hp_468512_calculated?nodeId=468512#calculated I think they know what they're talking about. FINAL UPDATE: Now, if someone goes to your site, and buys something from your business (in California) and the shipping address for the product is Nevada, then taxes do not have to be collected. If they have a billing address in California, and a shipping address in Nevada, and the goods are shipping to Nevada, you do not have to declare tax. If you have a mixture of tangible (computer, mouse, keyboard) and intangible assets (warranty) in a cart, and the shipping address is in California, you charge tax on the tangible assets, but NOT on the intangible assets. Yes, you can charge tax on the whole order. Yes for most businesses that's "Good enough", but I'm not trying to provide the "good enough" solution, I'm simply telling you how very large businesses run and operate. As I've mentioned, I've done several tax integrations using software called Sabrix (Google if you've not heard of it), and have done those integrations for companies like the BBC and Corbis (owned and operated by Bill Gates). Take it or leave it, but the correct way to charge taxes, especially given the complex tax laws of the US and internationally, is to charge per item. If you just need the "good enough" approach, feel free to calculate it by total. Some additional reading: http://en.wikipedia.org/wiki/Taxation_of_Digital_Goods Another possible federal limitation on Internet taxation is the United States Supreme Court case, Quill Corp. v. North Dakota, 504 U.S. 298 (1992),[6] which held that under the dormant commerce clause, goods purchased through mail order cannot be subject to a state’s sales tax unless the vendor has a substantial nexus with the state levying the tax. In 1997, the federal government decided to limit taxation of Internet activity for a period of time. The Internet Tax Freedom Act (ITFA) prohibits taxes on Internet access, which is defined as a service that allows users access to content, information, email or other services offered over the Internet and may include access to proprietary content, information, and other services as part of a package offered to customers. The Act has exceptions for taxes levied before the statute was written and for sales taxes on online purchases of physical goods.
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How to negotiate when you have something to give back?
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I don't think that there is a generic answer that will apply to this question across all goods. The answer depends on how the related businesses work, how much insight you have into the true value of the goods, and probably other things. Your car example is a good one that shows multiple options - There are dealers who will buy as a single transaction, sell as a single transaction, or do a simultaneous sell with trade-in. I had a hot tub once, on the other hand, where I could find people who would do a trade-in, but there was no dealer who would just buy my used tub. There's not much parallel between the car and the tub because the options available are very different. To the extent that there is a generic answer, I generally agree with the point in @keshlam's answer about trying to avoid entrapment, but I take a slightly different view. If you want to get your best deal, you need to have an idea going into the process of what you want in net and keep focused on meeting your goal. If for some reason, it's convenient for the dealer to "move money around" between the new car and the trade-in, I'm ok with that as long as I'm getting what I want out of the deal. If possible, I prefer to deal with both transactions at once because it's simpler. At the same time, I'm willing to remove the trade-in from the deal if I'm not getting what I want. (Threatening to do so can also give you some information about where the dealer really puts the value between the new car and trade-in since, if you threaten to pull the trade-in, the price on the car will probably change in response.)
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Will paying off my car early hinder my ability to build credit?
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Don't fuss about your credit score when you're paying 9%. Get rid of the loan as fast as you can. Period.
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What are the disadvantages to borrowing money for energy conservation measures / solar panels?
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If you sell the property before the ten years are up, the panels might have declined in value more than the amount you owe declined. In the original post's situation, this is a negligible risk. Suppose (for the sake of argument) that each year's panels are 10% better than the previous year's panels. Even if the panels lasted forever, and even if the price you could sell the power for stayed the same, then the value of your panels should decline 9% per year. If the panels are financed at a 4.5% APR for 10 years, your principal should decline by 8.1% in the first year. A second risk is that the solar panels might be ugly, or might go out of fashion. When selling a home, "curb appeal" matters. If potential buyers do not like how your home looks with the solar panels, you might not be able to get as much money for the house if you have to sell it. A third risk is that the loan might harm your credit rating, or otherwise restrict your ability to borrow. Even though this deal does not impinge on your disposable income, a bank might think that it raises your debt-service-to-income (DTI) ratio. This could theoretically prevent you from refinancing your home, or raise the interest rates on potential loans you might want to take out. A fourth risk is that the installation process might damage your home in a way that causes expensive damage. Water leakage and electrical fires can potentially destroy homes. You need to have the solar system competently installed. A fifth risk is that the solar power system might make it harder to maintain or replace your roof. Will your roof need to be replaced during the life of the solar power system? If so, consider options that do not force you to throw away the solar power system prematurely.
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Getting live data from Yahoo! Finance for the National Stock Exchange of India (NSE)?
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I wouldn't think so. If you read the list of features listed on the page you referred to, notice: Track Stocks It looks like it is restricted to the major U.S. stock markets. No mention of India's NSE.
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Restricting a check from being deposited via cell phone
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No, most check deposits are processed that way. Banks transmit the pictures of the checks between themselves, and allow business customers to deposit scans for quite some time now. I see no reason for you to be concerned of a check being in a dusty drawer, it's been deposited, cannot be deposited again. If you're concerned of forgery - well, nothing new there.
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Why would a car company lend me money at a very low interest rate?
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This is "incentive financing". Simply put, the car company isn't in the business of making money by buying government bonds. They're in the business of making money by selling cars. If you are "qualified" from a credit standpoint, and want to buy a $20k car on any given Sunday, you'll typically be offered a loan of between 6% and 9%. Let's say this loan is for three years and you can offer $4000 down payment and/or trade. The required monthly payment on the remaining $16k at the high end of 9% is $508.80, which over 3 years means you'll pay $2,316.64 in interest. Now, that may sound like a good chunk of change, and for the ordinary individual, it is, possibly enough that you decide not to buy today. Now, let's say, all other things being equal, that the company is offering 0.9% incentive financing. Same price, same down payment, same loan term. Your payments over 3 years decrease to $450.64, and over the same loan term you would only pay $222.97 in interest. You save over $2,093.67 in interest over three years, which for you is again a decent chunk of change. Theoretically, the car company's losing that same $2,093.67 in interest by offering this deal, and depending on how it's getting the money it lends you (most financial companies are middlemen, getting money from bond-buying investors who expect a rate of return), that could be a real loss and not just opportunity cost. But, that incentive got you to walk in their door, and not their competitor's. It helped convince you to buy the $20,000 car. The gross margin on that car (price minus direct costs) is typically 20% for the dealer, plus another 20% for the manufacturer, so by giving up the $2,000 on the financing side, the dealer and manufacturer just earned themselves 4 times that much. On top of that, by buying that car, you're committing to buy the parts for the car, a side business with even higher margins, of which the car company gets a pretty big chunk. You may even be required to use dealer service while the car's under warranty in order to keep the warranty valid, another cha-ching. When you get right down to it, the loss from the incentive financing is drowned in the gross profits they make from selling the car to you. Now, in reality, it's a fine balance. The percentages I mentioned are gross margins (EBITDASG&A - Earnings Before Interest, Taxes, Depreciation, Amortization, Sales, General and Administrative costs; basically, just revenue minus direct cost of goods sold). Add in all these side costs and you get a net margin of only about 3.5% of revenue, so your $20k car purchase may only make the car company's stakeholders $700 on the sale, plus slightly higher net margins on parts and service over the life of the car. Because incentive financing is typically only offered through the company's own financing subsidiary, the loss isn't in the form of a cost paid, but simply a revenue not realized, but it can still move a car company from net positive to net negative earnings if the program is too successful. This is why not everyone does it, and not all at the same time; if you're selling enough cars without it, why give away money? Typically, these incentives are offered for two reasons; to clear out old cars or excess inventory, or to maintain ground against a competitor's stronger sales numbers. Keeping cars on a lot ready to sell is expensive, and so is not having your brand driving around on the street turning heads and imprinting their name on the minds of potential customers.
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If a stock is selling for less than book value, is the company headed for bankruptcy?
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An answer can be found in my book, "A Modern Approach to Graham and Dodd Investing," p. 89 http://www.amazon.com/Modern-Approach-Graham-Investing-Finance/dp/0471584150/ref=sr_1_1?s=books&ie=UTF8&qid=1321628992&sr=1-1 "If a company has no sustained cash flow over time, it has no value...If a company has positive cash flow but economic earnings are zero or less, it has a value less than book value and is a wasting asset. There is enough cash to pay interim dividends, bu the net present value of the dividend stream is less than book value." A company with a stock trading below book value is believed to be "impaired," perhaps because assets are overstated. Depending on the situation, it may or may not be a bankruptcy candidate.
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Should a retail trader bother about reading SEC filings
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I use 10-K and 10-Qs to understand to read the disclosed risk factors related to a business. Sometimes they are very comical. But when you see that risk factor materializing you can understand how it will effect the company. For example, one microlending company's risk factor stated that if Elizabeth Warren becomes head of the Consumer Financial Protection Bureau we will have a hard time... so we are expanding in Mexico and taking our politically unfavorable lending practices there. I like seeing how many authorized shares there are or if there are plans to issue more. An example was where I heard from former employees of a company how gullible the other employees at that company were and how they all thought they were going to get rich or were being told so by upper management. Poor/Quirky/Questionable/Misleading management is one of my favorite things to look for in a company so I started digging into their SEC filings and saw that they were going to do a reverse split which would make the share prices trade higher (while experiencing no change in market cap), but then digging further I saw that they were only changing the already issued shares, but keeping the authorized shares at the much larger amount of shares, and that they planned to do financing by issuing more of the authorized shares. I exclaimed that this would mean the share prices would drop by 90%-99% after the reverse split and you mean to tell me that nobody realizes this (employees or the broad market). I was almost tempted to stand outside their office and ask employees if I could borrow their shares to short, because there wasn't enough liquidity on the stock market! This was almost the perfect short but it wasn't liquid or have any options so not perfect after all. It traded from $20 after the reverse split to $1.27 I like understanding how much debt a company is in and the structure of that debt, like if a loan shark has large payments coming up soon. This is generally what I use those particular forms for. But they contain a lot of information A lot of companies are able to act they way they do because people do not read.
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Previous owner of my home wants to buy it back but the property's value is less than my loan… what to do?
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How about doing a Lease Option with a very long term and a very early "option" for the guy buying. Essentially he will be making your mortgage payments for the next couple few years. Much less paperwork for the both of you that way. See a lawyer for the paperwork, from my limited experience with a real estate lawyer is a standard document and shouldn't cost that much.
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Confirming that stocks are listed under my name
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Street name is not what you think it is in the question. The broker is the owner in street name. There is no external secondary owner information. I don't know if there is available independent verification, but if the broker is in the US and they go out of business suddenly, you can make a claim to the SIPC.
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Forex independent investments
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Unless you are buying a significant value of your goods in USD then the relative strength of USD versus your local currency will have little to no effect on what the value of your investments is worth to you. In fact only (de|in)flation will effect your purchasing power. If your investments are in your local currency and your future expenses (usage of the returns on the investments) will be in your local currency FX has no effect. To answer your question, however, since all investments involve flows of money there can be no investment (other than perhaps gold which is really a form of currency) that isn't bound to at least one currency. In general investments are expected to be valued against the investor's home currency (I tend to call it "fund currency" as I work with hedge funds) as the return on the investment will be paid out in the fund currency and returns will be compared on the same basis. If investments are to be made internationally then it is necessary to reduce, or "hedge" the exchange rate risk. This is normally done using FX swaps or futures that allow an exchange rate in the future to be locked in today. Far from being unbound from FX moves these derivatives are closely bound to any moves but crucially are bound in the opposite direction to the hoped for FX move. an example of this would be if I'm investing 100GBP (my local currency) in a US company XYZ corp which I expect to do well. Suppose I get 200USD for my 100GBP and so buy 1 * 200USD shares in XYZ. No matter what happens to XYZ stock any move in GBP/USD will affect my P&L so I buy a future that allows me to exchange 200USD for 100GBP in 6 month's time. If GBP rises I can sell the future and make money on both the higher exchange rate and the increase in XYZ corp. If GBP falls I can keep the future until maturity and exchange the 200USD from XYZ corp for 100GBP so I only take the foreign exchange hit on any profits. If I expect my profits to be 10USD I can even buy futures such that I can lock in the exchange rate for 110USD in 6 months so that I will lose even less of my profit from the exchange rate move.
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How much of each stock do index funds hold?
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Yes, it depends on the fund it's trying to mirror. The ETF for the S&P that's best known (in my opinion) is SPY and you see the breakdown of its holdings. Clearly, it's not an equal weighted index.
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