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Can I claim GST/HST Input Tax Credits (ITCs) on Uber, taxi, or limousine fares? | The Canada Revenue Agency describes in detail here what information businesses must generally include on their invoices so that GST/HST registrants can claim Input Tax Credits (ITCs) for the expenses. Quote: Sales invoices for GST/HST registrants You have to give customers who are GST/HST registrants specific information on the invoices, receipts, contracts, or other business papers that you use when you provide taxable goods and services. This information lets them support their claims for input tax credits (ITCs) or rebates for the GST/HST you charged. [...] The page quoted continues with a table describing what, specifically, needs to be on a sales invoice based on the total amount of the invoice; the requirements differ for: total sale under $30, total sale between $30 to $149.99, and total sale $150 or more. For the total sale under $30 category, the only things a sales invoice must contain to support an ITC claim are (1) the provider's business name, (2) the invoice date, and (3) the total amount paid/payable. i.e. When the total sale is under $30, there is no requirement for any GST/HST amount to be indicated separately, nor for a business number to be present on the invoice. Hence, IMHO (and I am neither an accountant nor a lawyer), if your Uber rides are for $30 or less, then you shouldn't expect a GST/HST number anyway, and a simple invoice as described should be enough for you to claim your ITCs. Whether or not the provider is registered in fact for GST/HST is beside the point. For amounts over $30, you need a bit more. While the page above specifies that the provider's business number should be included beginning with the next level of total sales, there are exceptions to those rules described at another page mentioned, Exceptions to invoice requirements, that specifically apply to the taxi/limousine case. Quote: Exceptions to invoice requirements GST/HST registrants are required to keep the necessary documentation to support their claim for ITCs and rebates. In certain circumstances the documentation requirements have been reduced. [...] For taxi or limousine fares your books and records must show: So at a minimum, for fare in excess of $30 total, you should ask the driver to note either (a) the amount of GST/HST charged, or (b) a statement that the fare includes GST/HST. The driver's business number need not be specified. Consequently, if your receipt for a ride in excess of $30 does not contain any such additional information with respect to GST/HST, then I would expect the receipt does not satisfy the CRA's requirements for supporting your ITC claim. i.e. Keep your individual rides under $30 each, or else get a better receipt from the driver when it is above that amount. p.s. It should go without saying, but your rides, of course, must be considered reasonable business expenses in order to qualify for GST/HST ITCs for your business. Receipts for rides of a personal nature are not eligible, so be sure to maintain proper records as to the business purpose and destination for each ride receipt so claimed. |
Claiming income/deductions on an illegal apartment | The IRS demands and expects to be paid tax on all taxable activity, including illegal activity. If they expect drug dealers, hit men, and smugglers to pay tax, they expect you to pay tax on your basement apartment. The flip side of this is that the IRS keeps reported tax activities confidential. They only share what is required (for example, your taxable income with your state). You can read the details in their disclosure laws. Deductions will work just as they would if your apartment was perfectly legal. In the eyes of the IRS, whether your income is legal or not is none of their business. They care only about whether it is being taxed appropriately. They will not share any information with your zoning authority without a court order. |
If I put a large down payment (over 50%) towards a car loan, can I reduce my interest rate and is it smart to even put that much down? | As others have already pointed out, the bank isn't getting your money upfront - the cash goes to the dealer and the bank will be financing you a much smaller amount. They really don't have any incentive to give you a better interest rate, but it never hurts to ask. The more important (and unasked) question is should you do this? Keeping in mind that a loan with good credit could be in the 1.8% range. Average long-term returns in the market are over 3x that, so by paying upfront you're trading the opportunity for 6%+ returns for the ability to save -2% fees. |
First Job, should I save or invest? | Since you seem to be interested in investing in individual stocks, this answer will address that. As for the general question of investing, the answer that @johnfx gave is just about as good as it gets. Investing in individual stocks is extremely risky and takes a LOT of work to do right. On top of the fairly obvious need to research a stock before you buy, there is the matter of keeping up with the stocks to know when you need to sell as well as myriad other facets of investing. Paid professionals spend all day, every day, doing this and they have a hard time beating an index fund. Unless you take the time to educate yourself and are willing to continually put in a good bit of effort, I would advise you to stay away from individual stocks and rely on mutual funds. |
What are some sources of information on dividend schedules and amounts? | Yahoo Finance is definitely a good one, and its ultimately the source of the data that a lot of other places use (like the iOS Stocks app), because of their famous API. Another good dividend website is Dividata.com. It's a fairly simple website, free to use, which provides tons of dividend-specific info, including the highest-yield stocks, the upcoming ex-div dates, and the highest-rated stocks based on their 3-metric rating system. It's a great place to find new stocks to investigate, although you obviously don't want to stop there. It also shows dividend payment histories and "years paying," so you can quickly get an idea of which stocks are long-established and which may just be flashes in the pan. For example: Lastly, I've got a couple of iOS apps that really help me with dividend investing: Compounder is a single-stock compound interest calculator, which automatically looks up a stock's info and calculates a simulated return for a given number of years, and Dividender allows you to input your entire portfolio and then calculates its growth over time as a whole. The former is great for researching potential stocks, running scenarios, and deciding how much to invest, while the latter is great for tracking your portfolio and making plans regarding your investments overall. |
Where to start with personal finance? | This Stack Exchange site is a nice place to find answers and ask questions. Good start! Moving away from the recursive answer... Simply distilling personal finance down to "I have money, I'll need money in the future, what do I do", an easily digestible book with how-to, multi-step guidelines is "I Will Teach You To Be Rich". The author talks about setting up the accounts you should have, making sure all your bills are paid automatically, saving on the big things and tips to increase your take home pay. That link goes to a compilation page on the blog with many of the most fundamental articles. However, "The World’s Easiest Guide To Understanding Retirement Accounts" is a particularly key article. While all the information is on the free blog, the book is well organized and concise. The Simple Dollar is a nice blog with frugal living tips, lifestyle assessments, financial thoughts and reader questions. The author also reviews about a book a week. Investing - hoping to get better returns than savings can provide while minimizing risk. This thread is an excellent list of books to learn about investing. I highly recommend "The Bogleheads' Guide to Investing" and "The Only Investment Guide You'll Ever Need". The world of investment vehicles is huge but it doesn't have to be complicated once you ignore all the fads and risky stuff. Index mutual funds are the place to start (and maybe end). Asset allocation and diversification are themes to guide you. The books on that list will teach you. |
How to rescue my money from negative interest? | How about placing the money in a safety deposit box at the same bank? This will probably work out cheaper than the loss due to negative rates. Although, I'm quite sure the banks won't like this idea. |
How to help a financially self destructive person? | I'm afraid your best recourse may be legal. I don't know that internet is a necessity, but the court would frown upon anyone paying $4K for rent but not being able to afford to heat the water or turn the lights on. $48K a year net should be enough for her to at least keep the kids with these things. I don't know that you can educate her. Her issue is very deep-seated and far beyond a good financial planning type session. |
As a Sole Proprietor, will “employer” Solo 401k contributions count towards gross income? | This seems to depend on what kind of corporation you have set up. If you're set up as a sole proprietor, then the Solo 401k contributions, whether employee or employer, will be deducted from your gross income. Thus they don't reduce it. If you're set up as an S-Corp, then the employer contributions, similar to large employer contributions, will be deducted from wages, and won't show up in Box 1 on your W-2, so they would reduce your gross income. (Note, employee contributions also would go away from Box 1, but would still be in Box 3 and 5 for FICA/payroll tax purposes). This is nicely discussed in detail here. The IRS page that discusses this in more (harder to understand) detail is here. Separately, I think a discussion of "Gross Income" is merited, as it has a special definition for sole proprietorships. The IRS defines it in publication 501 as: Gross income. Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. For a list of community property states, see Community property states under Married Filing Separately, later. Self-employed persons. If you are self-employed in a business that provides services (where products are not a factor), your gross income from that business is the gross receipts. If you are self-employed in a business involving manufacturing, merchandising, or mining, your gross income from that business is the total sales minus the cost of goods sold. In either case, you must add any income from investments and from incidental or outside operations or sources. So I think that regardless of 401(k) contributions, your gross income is your gross receipts (if you're a contractor, it's probably the total listed on your 1099(s)). |
What is the correct answer for percent change when the start amount is zero dollars $0? | In computing, you'd generally return naa%, for 'not a number'. Could you not put '-%' to show there is no value at this point? Surely the people seeing this aren't idiots and understand the charge on 0 is 0? |
Is it possible that for shares to be reinvested in a stock you already sold? | I believe this depends on the broker's policies. For example, here is Vanguard's policy (from https://personal.vanguard.com/us/whatweoffer/stocksbondscds/brokeragedividendprogram): Does selling shares affect a distribution? If you sell the entire position two days or more before the dividend-payable date, your distribution will be paid in cash. If, however, you sell an entire position within the two day time frame of the security's payable date, the dividend will be reinvested, resulting in additional shares. Selling these subsequent shares will require another sell order, which will incur additional commission charges. Dividends which would have been reinvested into less than one whole share will be automatically liquidated into cash. If you want to guarantee you receive no fractional shares, I'd call your broker and ask whether selling stock ABC on a particular date will result in the dividend being paid in shares. |
Corporate Finance | If it's raising $25 million with a debt to equity ratio of 50% then it's raising $8.33 million of debt and $16.67 million of equity. You've priced it as if it were raising $25 million of debt and $25 million of equity, which would be raising $50 million with a debt to equity ratio of 100%. |
Money Structuring | See "Structuring transactions to evade reporting requirement prohibited." You absolutely run the risk of the accusation of structuring. One can move money via check, direct transfer, etc, all day long, from account to account, and not have a reporting issue. But, cash deposits have a reporting requirement (by the bank) if $10K or over. Very simple, you deposit $5000 today, and $5000 tomorrow. That's structuring, and illegal. Let me offer a pre-emptive "I don't know what frequency of $10000/X deposits triggers this rule. But, like the Supreme Court's, "We have trouble defining porn, but we know it when we see it. And we're happy to have these cases brought to us," structuring is similarly not 100% definable, else one would shift a bit right." You did not ask, but your friend runs the risk of gift tax issues, as he's not filing the forms to acknowledge once he's over $14,000. |
Debit card funds on preauthorization hold to paypal: can it be used for another transaction? | You said the hold would last a week. That's your answer. No you can't spend it again until the hold clears. |
Will I have to pay taxes for Australia if I have an Australian bank account? | If you are a resident of New Zealand for tax purposes, you will be taxed in New Zealand on all of your "worldwide income". This is income derived from New Zealand as well as income derived from all other countries Source: http://www.ird.govt.nz/international/nzwithos/income/overseas-income-index.html Another link that will be of use is this: https://www.ato.gov.au/individuals/international-tax-for-individuals/work-out-your-tax-residency/ This is Australia's rules on if you qualify as a resident for tax purposes. I am not an accountant or a lawyer but my reading of this is you actually have to reside in Australia to be considered a resident - whether or not you have a bank account there doesn't appear to play into it. Additionally, Australia and NZ have a "double taxation agreement", explained here: http://www.ird.govt.nz/yoursituation-nonres/double-tax/ So this should prevent you from being taxed in both places. |
Who gets the periodic payments when an equity is sold on an repurchase agreement? | Repurchase agreements are a way of financing a security position. You have a collateralized loan where you give your security in exchange for cash. Let's say you have a 10 year Treasury note paying 3.5% while the 1-week repurchase rate is 0.5%. You loan the security to someone with a promise to repurchase it from them some time in the future. You collect the 3.5% coupon and you pay the 0.5% interest. Clearly it makes no sense for someone to collect interest on money and also collect coupon payments. And for the counter-party it makes no sense to be not getting coupon payments and also to be paying interest. This how one website explains the process: During the transaction, any coupon payments that come due belong to the legal owner, the "borrower." However, when this happens, a cash amount equal to the coupon is paid to the original owner, this is called "manufactured payment." In order to avoid the tax payment on the coupon, some institutions will repo the security to a tax exempt entity and receive the manufactured payment and avoid the tax ("coupon washing") I find this unequivocal description to be the clearest During the life of the transaction the market risk and the credit risk of the collateral remain with the seller. (Because he has agreed to repurchase the asset for an agreed sum of money at maturity). Provided the trade is correctly documented if the collateral has a coupon payment during the life of the repo the buyer is obliged to pay this to the seller. |
Placing limit order and stop loss on same stock at same time | if it opens below my limit order What exactly are you trying to achieve here? If your limit order is for 100 and the stock opens "below" your limit order, say 99, then it is obviously going to buy it automatically. also place a stop loss on the same order Most brokers allow limit + stop loss order at the same time on same order. What I conclude from your question is that you're with a broker that is using obscure technology. Get a better broker or maybe, retry phrasing your question correctly. |
Does a US LLC owned by a non-resident alien have to pay US taxes if it operates exclusively online? | Since as you say, an LLC is a pass-through entity, you will be making income in the U.S. when you sell to U.S. customers. And so you will need to file the appropriate personal tax forms in the US. As well as potentially in one or more States. The US government does not register LLCs. The various States do. So you'll be dealing with Oregon, Wisconsin, Wyoming, one of those for the LLC registration. You will also need to have a registered agent in the State. That is a big deal since the entire point of forming an LLC is to add a liability shield. You would lose the liability shield by not maintaining the business formalities. Generally nations aim to tax income made in their nation, and many decline to tax income that you've already paid taxes on in another nation. A key exception: If money is taxed by the U.S. it may also be taxed by one of the States. Two States won't tax the same dollar. Registering an LLC in one State does not mean you'll pay state taxes there. Generally States tax income made in their State. It's common to have a Wyoming LLC that never pays a penny of tax in Wyoming. Officially, an LLC doing business in a State it did not form in, must register in that State as a "foreign LLC" even though it's still in the USA. The fee is usually the same as for a domestic LLC. "Doing business" means something more than incidental sales, it means having a presence specifically in the State somehow. It gets complicated quick. If you are thinking of working in someone's app ecosystem like the Apple Store, Google Play, Steam etc. Obviously they want their developers coding, not wrestling with legalities, so some of them make a priority out of clearing and simplifying legal nuisances for you. Find out what they do for you. |
Legitimate unclaimed property that doesn't appear in any state directory? | You can't blame companies like 'Legal Claimant Services' for making a profit by providing this service. That is capitalism and it is the way of the world. It is just like any other business you can do yourself - from making dinner to cutting your own grass. If you choose to do it yourself, you save money but you also do the work. When I got my letter telling me about a claim, I automatically went online to do some research. That's how I found this site and information that led me to validate the claim. I then chose to follow a few simple instructions and keep all of the claim instead of giving away 30%. |
I might use a credit card convenience check. What should I consider? | Read the terms carefully. With promotional offers, if you do anything "bad", the promotion is terminated and you immediately revert to either your normal rate or a penalty rate. "Bad" includes things like: making a late payment, going over your limit, paying less than the minimum payment, etc. I wouldn't sweat the potential credit score impacts. These promotions are pretty much the best deals that you can get for an unsecured loan. |
Events that cause major movement in forex? | Trading Speeches can be difficult, 1 comment can be bullish then next phrase bearish. However language algorithms can process the tone of the entire message before you can read the first word or have even finished downloading the text of the statement. The biggest news is the 1st Friday of the month, the non-farm payrolls out of the USA. You used to be able to get the news before the price moved, but high-frequency algos changed all that, essentially the exchanges get quote stuffed, so good luck unless you are using a bucketshop. Better to wait for a pull back from the initial reaction if the numbers are good, otherwise you will get a fill at the peak. If the numbers are a big deviation from expectations then you can just jump in. Back in 2006 the Bank of England raised interest rates when it wasn't expected and the GBPUSD flew 500 pips. This Forex calendar has charts of every news release, so you can see what to expected based on what has happened in the past with a certain bit of economic news. http://www.fasteconomicnews.com/fx_calendar.aspx |
Does a disciplined stock investor stick with their original sell strategy, or stay in and make more? | One of things I've learned about trading on the stock market is not to let your emotions get to you. Greed and fear are among them. You may be overthinking. Why not keep it simple, if you think it can go up to $300 a share, put in a stop loss at $X amount where you would secure your invested money along with some gains. If it goes up, let it go up, if it doesn't well you got an exit. Then if it goes up change your stop loss amount higher if you are feeling more optimistic about the stock. And by the way, a disciplined investor would stick to their strategy but also have the smarts to rethink it on the fly such as in a situation like you are in. Just in my opinion anyway, but congrats on the gain! Some gains are better than none. |
If the U.S. defaults on its debt, what will happen to my bank money? | I have been through default in Ukraine august 1998. That was a real nightmare. The financial system stopped working properly for 1 month, about 30% of businesses went bankrupt because of chain effect, significant inflation and devaluation of currency. So, it is better to be prepared, because this type of processes result in unpredictable situation. |
Why invest in IRA while a low-cost index fund is much simpler? | The advantage of an IRA (or 401k) is you get taxed effectively one time on your income, whereas you get taxed effectively multiple times on some of the money in a taxable account. You have to consider it from the perspective of time value of money -- the concept that an amount of money now is the same value as a greater amount of money in the future. And in fact, if you put your money in an investment, the principal at the start can be considered the same value as the principal + earnings at the end. In both Traditional and Roth IRA, you pay taxes on the entire value of money once (remember that the principal when depositing is the same value as the principal + earnings when withdrawing). The only difference is when (year deposited or year withdrawn), so the main difference between the two is the tax rate when depositing vs. tax rate when withdrawing. I'll give you an example to demonstrate. We will assume you invest $1000 of pre-tax wages, it grows at 5% per year, there's a 25% flat tax now and in the future, you withdraw it after 20 years, and withdrawals are not subject to any penalty. |
What are the advantages of doing accounting on your personal finances? | Everyone should keep track of what they spend. When you see how much you are spending on each category of expense, you can make good decisions about how much your life is improved by something vs. how much you spend on that thing. Everyone makes better decisions when they are informed by accurate information about those decisions. There's no reason why personal finances are different from any other decision you make in life. This remains true whether you make very little or very much. Some people define rich as being able to live on less money than you earn. |
Does an individual share of a stock have some kind of unique identifier? | I agree with the answer by @Michael that this number doesn't exist. It's hard to see what use it would have and it would be difficult to track. I'm writing a separate answer because I also disagree with the premise of your question: Individual shares of stock have never to my knowledge had such a number. Your comment about numbers on stock certificates identifies the certificate document, which will generally represent multiple shares of stock. That number no more identifies a single share of stock than the serial number on a $10 bill identifies any one of the ten dollars it represents. Even at the "collective" unit of $10, when the bill is eventually replaced with a new one, the new bill has a new number. No continuity. |
Pros / cons of being more involved with IRA investments [duplicate] | diversifying; but isn't that what mutual funds already do? They diversify and reduce stock-specific risk by moving from individual stocks to many stocks, but you can diversify even further by selecting different fund types (e.g. large-cal, small-cap, fixed- income (bond) funds, international, etc.). Your target-date fund probably includes a few different types already, and will automatically reallocate to less risky investments as you get close to the target date. I would look at the fees of different types of funds, and compare them to the historical returns of those funds. You can also use things like morningstar and other ratings as guides, but they are generally very large buckets and may not be much help distinguishing between individual funds. So to answer the question, yes you can diversify further - and probably get better returns (and lower fees) that a target-date fund. The question is - is it worth your time and effort to do so? You're obviously comfortable investing for the long-term, so you might get some benefit by spending a little time looking for different funds to increase your diversification. Note that ETFs don't really diversify any differently than mutual funds, they are just a different mechanism to invest in funds, and allow different trading strategies (trading during the day, derivatives, selling short, etc.). |
How can rebuilding a city/large area be considered an economic boost? | You are not wrong. This is called the "Broken Window" fallacy in economics. Imagine if 20% of a population was employed to go around breaking windows. This would stimulate the economy as many people would have to be employed to make new windows, repair the broken windows, etc.. The problem is that everyone would have been better off if they didn't have to spend their valuable resources on repairing a perfectly functioning window. Although many people will be employed to rebuild Japan, this doesn't improve the standard of living for the folks in Japan. |
What publicly available software do professional stock traders use for stock analysis? | If you are looking to analyze stocks and don't need the other features provided by Bloomberg and Reuters (e.g. derivatives and FX), you could also look at WorldCap, which is a mobile solution to analyze global stocks, at FactSet and S&P CapitalIQ. Please note that I am affiliated with WorldCap. |
Difference between Edward Jones or Betterment | Instead of saying which one is better, which is too subjective, I think it is more important to understand what these institutions are. They are kind of different animals. Edward Jones pretty much a full service wealth manager. They meet with you in person, advise you on what retirement and savings accounts to get, they talk to you to evaluate your risk preferences. They will talk to you about planning for your kids' college and about your insurance situation. They will probably attend your kids' bar mitzvahs and stuff too. Of course, this isn't free. With Edward Jones you will pay a fixed percentage of your managed wealth to them every year. And they will likely put your money in expensive mutual funds. And those mutual funds will charge a special 12b-1 fee, which is a kickback to the wealth manager. Plan on giving 2% or so of your total wealth to the manager per year, plus whatever the mutual funds charge. I don't have experience with Betterment, but they appear to be a robo advisor. Robo advisors attempt to do the same kinds of things as wealth managers, but rely on computer algorithms and web pages to give you advice whenever possible. This makes some sense because most people aren't actually that special in terms of their financial situation. I don't know their cost structure, but presumably it will be significantly cheaper than Edward Jones. They will almost certainly put you in cheaper funds (index funds and ETF's). Think of it as a cost-conscious alternative to Edward Jones. Vanguard is a discount broker and a mutual fund family. Their funds are among the biggest and cheapest in the world. Fees on many of these funds will be a fraction of the equivalent funds Edward Jones will put you in. They will charge you nothing at all to manage your money. They will give you some assistance and advice if you call them but don't expect any house calls. They aren't particularly in the business of giving advice. If you know what you want to invest in, this is the cheapest way to do it by far. Basically you won't have to pay anything at all except the actual cost of the assets you are investing in. Which is the best? Depends on your own preferences and ability. If you do not want to learn about personal finance and don't particularly care about whether you are getting the best return--if you don't mind paying for a personal touch--Edward Jones might be a good choice. For most people who are comfortable asking this type of question online and interested in learning about finance even a little bit, I'd expect that Betterment or Vanguard will be a better choice. For people who are willing to learn a bit of finance and manage their own affairs, using Vanguard (or a close competitor, like Fidelity) will ultimately result in the most wealth generated (the least given away to the financial industry). |
Why do people build a stock portfolio if one could get a higher return from bank interest than dividend per annum? | Large companies whose shares I was looking at had dividends of the order of ~1-2%, such as 0.65%, or 1.2% or some such. My savings account provides me with an annual return of 4% as interest. Firstly inflation, interest increases the numeric value of your bank balance but inflation reduces what that means in real terms. From a quick google it looks like inflation in india is currently arround 6% so your savings account is losing 2% in real terms. On the other hand you would expect a stable company to maintain a similar value in real terms. So the dividend can be seen as real terms income. Secondly investors generally hope that their companies will not merely be stable but grow in value over time. Whether that hope is rational is another question. Why not just invest in options instead for higher potential profits? It's possible to make a lot of money this way. It's also possible to lose a lot of money this way. If your knowlage of money is so poor you don't even understand why people buy stocks there is no way you should be going near the more complicated financial products. |
How can I check my credit score? | Different states have different laws, check your local laws concerning credit. Some states even guarantee you to get one free credit report per year. If you recently apply for an apartment, a mortgage or denied a credit card or loan, you can usually get a free copy from whomever you authorized to pull your credit report. Sign up credit monitoring service, there are quite a few of these. Most credit card companies offer such service, Amex, Chase, Citibank, etc. It' costs around $10-$20 per month. If you sign up a service and pull your own credit report, it's considered a "soft" pull which won't affect your score negatively. |
What are the alternatives to compound interest for a Muslim? | There are many Shariah compliant investments, so that could direct your resulting searches. Shariah compliance is a very strict interpretation of Islam and for investing offers strict guidelines in what to invest in and excludes investments in companies that engage in certain businesses such as gambling, tobacco, pork and trading of gold and silver on a deferred basis (and more). Many multinational financial service companies such as the Standard & Poors (S&P) offer Shariah Compliant funds and indices, as such, it makes it easier to invest in a variety of different assets through them. You can also look at their fund's constituents and invest in those assets directly. Secondly, going back to your original question about a compound interest equivalent, you can look at the products offered by Shariah Compliant banks. Now, if it is really important for you to adhere to the strictest interpretations of your faith, you should know that most Islamic Banks have interest bearing assets within them and that they disguise that fact. The global financial system is based on interest bearing instruments such as bonds, and Islamic banks are large holders and issuers of those instruments, and all of their consumer products are also based on the interest rates of them. Even convoluted alternatives such as Islamic mortgages, where they are advertised as non-interest bearing equivalents, many times are also the interest bearing version. Unfortunately, these lies are enough for the banks to continue to get business from their target audiences, but outside of Islam this is a very standard and stable business practice. The point is that you should look very carefully at the alternatives you find. |
Facebook buying WhatsApp for 19 Billion. How are existing shareholders affected? | It's a dilution of the ownership; the public used to own x% of Facebook and now they own less than x% of the bigger Facebook that incorporates Whatsapp (assuming that Whatsapp was completely private before). Logically, the $15 billion is allocated proportionately between the existing stockholders (x% of it for the general public, y% for Mark Zuckerberg, etc). However it doesn't really make sense to think of it that way unless Whatsapp is actually worthless. What's important are the proportions. Suppose that the newly issued shares correspond to 25% of the previous share capital. Then previously the general public owned x% out of 100%, and now they own x% out of 125%, i.e. (0.8x)% of the new share capital. Whether the actual value of those stocks has changed depends entirely on the actual value that Whatsapp adds to the old Facebook. As Dheer says, only time will tell on that one. Apart from the financial consequences, dilution is sometimes considered important because it can mean a change in influence: a significant shareholder would often be able to encourage the company to act in a certain way. With a lower percentage ownership, that influence is diminished. |
The Benefits/Disadvantages of using a credit card | In the UK, using a credit card adds a layer of protection for consumers. If something goes wrong or you bought something that was actually a scam, if you inform the credit card company with the necessary documents they will typically clear the balance for that purchase (essentially the burden of 'debt' is passed to them and they themselves will have to chase up the necessary people). Section 75 of the Consumer Credit Act I personally use my credit card when buying anything one would consider as "consumer spending" (tvs, furniture ect). I then pay off the credit card immediately. This gives me the normal benefits of the credit card (if you get cashback or points) PLUS the additional consumer credit protection on all my purchases. This, in my opinion is the most effective way of using your credit card. |
Vanguard Target Retirement Fund vs. Similar ETF Distribution (w/ REIT) | Your approach sounds solid to me. Alternatively, if (as appears to be the case) then you might want to consider devoting your tax-advantaged accounts to tax-inefficient investments, such as REITs and high-yield bond funds. That way your investments that generate non-capital-gain (i.e. tax-expensive) income are safe from the IRS until retirement (or forever). And your investments that generate only capital gains income are safe until you sell them (and then they're tax-cheap anyway). Of course, since there aren't really that many tax-expensive investment vehicles (especially not for a young person), you may still have room in your retirement accounts after allocating all the money you feel comfortable putting into REITs and junk bonds. In that case, the article I linked above ranks investment types by tax-efficiency so you can figure out the next best thing to put into your IRA, then the next, etc. |
Is it true that 90% of investors lose their money? | The article "Best Stock Fund of the Decade: CGM Focus" from the Wall Street Journal in 2009 describe the highest performing mutual fund in the USA between 2000 and 2009. The investor return in the fund (what the shareholders actually earned) was abysmal. Why? Because the fund was so volatile that investors panicked and bailed out, locking in losses instead of waiting them out. The reality is that almost any strategy will lead to success in investing, so long as it is actually followed. A strategy keeps you from making emotional or knee-jerk decisions. (BTW, beware of anyone selling you a strategy by telling you that everyone in the world is a failure except for the few special people who have the privilege of knowing their "secrets.") (Link removed, as it's gone dead) |
What tax year does my income get assigned to if my client sends the payment in December but I receive it in January? | Confused? see your CPA |
Why did I lose 2 cents more than the difference in the stock prices on my Robinhood trade? | There is a misunderstanding somewhere that your question didn't illuminate. You should have lost $0.04 as you say. Assuming the prices are correct the missing $0.02 aren't covered by a reasonable interpretations of the Robinhood fees schedule. For US-listed stocks: $0 plus SEC fees: 0.00221% of principal ($22.10 per $1,000,000 of principal) plus Trading Activity Fee: $0.000119/share rounded to nearest penny plus short/long term capital gains taxes The total fee rate is 0.002329% or 0.00002329*the price of the trade. With you trades totaling around $11, the fee would be ~0.000256 or ~1/40 of a penny. The answer is probably that they charge $0.01 for any fraction of a penny. It's difficult to explain as anything other than avarice, so I won't try. |
Dividend yeild per unit | $36 dividend/900 DJIA = 4% 5.5% bond yield = ($36 dividend/660 DJIA) Graham wrote this at a very different time in financial markets- interest rates were much higher, and the DJIA much lower. In addition, bonds were yielding more than stocks, unlike today when the DJIA % the 10yr Treasury yield 2.63% and 2.13% respectively. In addition, his "weigher of the odds" suggests waiting to invest until equity prices are lower (usually dividends aren't reduced), and therefore the DJIA dividend yield would rise relative to bond yields. |
Personal finance in EFU and NAFA | I want to know why my investment is having loss in 4 to 5 months. As the funds invest in stock markets, the Pakistan stock market is going down in last 4-5 months from all time high. Should I liquidate my investment or wait in hope that it will grow again? This is opinion based and one cannot predict what will happen in future. The funds may grow or may loose value. If I loose all my investment value, is it insured. OR do I loose everything? The growth fund I understand is not guaranteeing any returns. in theory you can loose all the money, however practically there will be some value. If you need guaranteed returns maybe EFU Guaranteed Growth fund will be better choice. |
One of my stocks dropped 40% in 2 days, how should I mentally approach this? | Did you read Soichiro Honda's biography? He is the founder of Honda Motor. His plant was destroyed by an earthquake, and then he proceeded to build another factory which, as World War II broke out, was lost again with his money, and many of his friends', but he started again. |
Can I deduct equipment expenses for a job I began overseas? | A computer is a special case because the IRS thinks that you might be using it for personal applications. You may need to keep a log, or be able to state that you also have another computer for non-business use. That said, if your schedule C shows a small profit then you don't need to itemize expenses, just state the total. |
Should we prepay our private student loans, given our particular profile? | Don't frett to much about your retirement savings just put something towards it each year. You could be dead in ten years. You should always try to clear out debt when you can. But don't wipe yourself out! Expedite the repayment process. |
What are the financial advantages of living in Switzerland? | Some of the advantages of Switzerland: Not everything is about money. |
What explains the enormous increase in gold price in the early 21st century? | Since 2007 the world has seen a period of striking economic and financial volatility featuring the deepest recession since the 1930s despite this gold has performed strongly with its price roughly doubling since the global financial crisis began in mid-2007. 1. Gold and real interest rates: One of the factor that influences gold prices is real interest rate which is to some extent related to inflation. Since gold lacks a yield of its own, the opportunity cost of holding gold increases with a real interest rate increase and decreases with a fall in real interest rates. 2. Gold and the US dollar: The external value of the US dollar has been a significant influence on short-term gold price movements. The IMF estimated6 in 2008 that 40-50% of the moves in the gold price since 2002 were dollar-related, with a 1% change in the effective external value of the dollar leading to a more than 1% change in the gold price (Source). 3. Gold and financial stress: It is a significant and commonly observed influence on the short-term price of gold. In periods of financial stress gold demand may rise for a number of reasons: 4. Gold and political instability: It is another factor that can boost gold prices. Investor concerns about wars, civil conflicts and international tensions can boost demand for gold for similar reasons to those noted above for periods of financial stress. Gold‟s potential function as a „currency of last resort‟ in case of serious system collapse provides a particular incentive to hold it in case the political situation is especially severe. (Source) 5. Gold and official sector activity: The behaviour of central banks and other parts of the official sector can have an important impact on gold prices. One reason for this is that central banks are big holders of gold, possessing some 30,500 metric tons in 2010, which is approximately 15% of all above-ground gold stocks. As a result, central bank policies on gold sales and purchases can have significant effects, and these policies have been subject to considerable shifts over the decades. (Source) (Source of above graphs) |
CFD market makers: How is the price coupled to the underlying security? | CFD providers typically offer CFDs to investors using either the direct market access (DMA) model or the market maker (MM) model. Direct Market Access The DMA model gives you access to trade the Underlying instrument on the relevant Exchange from which the CFD is then derived. All CFD Transactions under the DMA model have corresponding trades in the Underlying instrument. Under the DMA model, providers typically charge their clients Commission based on the notional contract value of the CFD. Market Maker The MM model uses the price of the Underlying instrument to derive the price of the CFD that is offered. Trading under the MM model does not necessarily mean that your CFD will be reflected by a corresponding trade in the Underlying instrument. Under the MM model each CFD Transaction creates a direct financial exposure for the provider, which may or may not be hedged in the Underlying instrument. Where the financial exposure is not hedged, the market risk may increase for the market maker. The MM model enables the provider to offer CFDs against synthetic assets, even if there is little Liquidity in the Underlying instrument, which can result in a wider range of products on offer than with the DMA model. Volatility and Illiquidity in the Underlying instrument can affect the pricing of MM CFDs. The MM model can charge its clients Commission based on the notional contract value or it can incorporate costs and fees in the dealing Spread, which represents the difference in price at which the issuer is prepared to Buy and Sell the CFD. What Do I use and why? I have traded with both DMA and MM models and prefer the MM. The big advantage with MM is that they will provide a market even when the underlying is very illiquid and only might have a few trades each day. Regarding the spread of the MM to the spread of the underlying, I have found the MM to be practically in line with the underlying spread about 95% of the time. The other 5% it may have been slightly wider than the spread of the underlying by usually 1c or 2c. Most MMs aim to give you the best spread they can because they want to keep your business. If they gave too wide a spread (compared to the underlying) it wouldn't be long before they had no customers. |
renter's insurance for causing property damage | Renters' Insurance should also have some level of liability coverage. I.e.: if you caused a flooding because you went on and broke the pipe, or a fire because you smoked in the bed - there should be some level of coverage for that. However, most of the damage the tenant can do is probably not accidental. If you broke the pipe - you probably did something wrong. If you caused fire by smoking in bed - you obviously did something wrong. While seemingly accidental, you're deeply at fault. Insurance companies are not in business for rewarding risky behavior. Accidents where the tenant has nothing to do with what happened (earthquakes, fires because of, say, wiring, flooding because it rained too much, or bird flying into a window and shattering it) - are covered by the homeowner's insurance. In any case, talk to your insurance agent about your specific policy and concerns. |
How do I get rid of worthless penny stocks if there is no volume (so market/limit orders don't work) and my broker won't buy them from me? | Your broker should be able to answer this. Many brokers will buy it from you for the cost of a commission, if there's no legit buyer. |
Is it possible to improve stock purchase with limit orders accounting for volatility? | The simplest solution to fire-and-forget is to pick something like a Target Date mutual fund made up of low-overhead index funds (within your 401k or a Roth IRA, perhaps) and set up automatic purchase to that. If you're talking about limit orders and so on, that ain't simple. |
Assessing risk, and Identifying scams in Alternative Investments | I have personally invested $5,000 in a YieldStreet offering (a loan being used by a company looking to expand a ridesharing fleet), and would certainly recommend taking a closer look if they fit your investment goals and risk profile. (Here's a more detailed review I wrote on my website.) YieldStreet is among a growing crop of companies launched as a result of legislative and regulatory changes that began with the JOBS Act in 2012 (that's a summary from my website that I wrote after my own efforts to parse the new rules) but didn't fully go into effect until last year. Most of them are in Real Estate or Angel/Venture, so YieldStreet is clearly looking to carve out a niche by assembling a rather diverse collection of offerings (including Real Estate, but also other many other categories). Unlike angel/venture platforms (and more like the Real Estate platforms), YieldStreet only offers secured (asset-backed) investments, so in theory there's less risk of loss of principal (though in practice, these platforms haven't been through a serious stress test). So far I've stuck with relatively short-term investments on the debt crowdfunding platforms (including YieldStreet), and at least for the one I chose, it includes monthly payments of both principal and interest, so you're "taking money off the table" right away (though presumably then are faced with how to redeploy, which is another matter altogether!) My advice is to start small while you acclimate to the various platforms and investment options. I know I was overwhelmed when I first decided to try one out, and the way I got over that was to decide on the maximum I was willing to lose entirely, and then focus on finding the first opportunity that looked reasonable and would maximize what I could learn (in my case it was a $1,000 in a fix-and-flip loan deal via PeerStreet). |
Forex vs day trading for beginner investor | This image is an advertisement from this week's Barron's. The broker would want to put himself in the best light, correct? This shows you that of their current accounts, 53.5% are not profitable. And these guys have the best track record of the list. Also keep in mind that their client base isn't random. The winners tend to stay, so even if it were 50/50, the 50% of losers might represent many times that number of people who came to the table, lost their money and left. |
How to find a reputable company to help sell a timeshare? | The one thing I would like to add to Ben's answer is that you will be lucky to get out of this with no proceeds. So that 30-40K paid for the timeshare maybe a total loss. If this purchase was financed with the timeshare used as collateral you may need to pay it off prior to being released. One tactic I heard used is to offer the sales team, that sold you the timeshare, a bonus for selling yours instead of one out of inventory. Assuming their commission is typically 25% of the sales price, you might consider offering them 40% or some higher figure. Doing it this way, you will have all the slick marketing on your side probably generating the highest amount of revenue possible. Timeshares are really bad deals. If you know this you can score some cheap vacations by attending their seminars and continuing to say no. The wife and I recently got back from a nice trip to Aruba mostly paid for with airline points, and a 2 hour timeshare tour. |
Prices go up and salary doesn't: where goes delta? | Salaries normally shouldn't fluctuate with inflation and deflation... Inflation prevents consumers from spending (prices get too high), ultimately taking money out of circulation. This causes the market to go in to deflation (or at least deflate back to normal). That's when people begin to spend again, and start the cycle all over again. Now... Imagine if salaries increased with inflation... Inflation would never end. Everyone could keep affording the high prices. A Starbucks coffee would eventually cost $150, but the "middle-class" would all be millionaires. Your "small-change" would consist of a wad of useless bills, and the government would have to continually print out more money just to keep up. NOTE: This is not a direct answer to "where goes delta?", but would more be directed to the part "Prices go up and salary doesn't". |
Net income correlation with Stock Price | Ideally, stock price reflects the value of the company, the dividends it is expected to pay, and what people expect the future value of the company to be. Only one of those (maybe one and a half) is related to current sales, and not always directly. Short-term motion of a stock is even less directly linked, since it also reflects previous expectations. A company can announce disappointing sales and see its stock go up, if the previous price was based on expecting worse news. |
How an ETF pays dividend to shareholders if a holding company issues dividend | Join me for a look at the Quote for SPY. A yield of 1.82%. So over a year's time, your $100K investment will give you $1820 in dividends. The Top 10 holdings show that Apple is now 3% of the S&P. With a current dividend of 2.3%. Every stock in the S&P has its own different dividend. (Although the zeros are all the same. Not every stock has a dividend.) The aggregate gets you to the 1.82% current dividend. Dividends are accumulated and paid out quarterly, regardless of which months the individual stocks pay. |
Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan? | You are expecting, that if you pay off a 30 mortgage after 16 years, you should be charged the same amount of interest as someone who had a 16 year mortgage for the same amount and with the same interest rate. This isn't correct, and here's why: the person with the 16 year mortgage paid it off faster than you. They paid more each month and the size of their loan shrunk faster than yours. After 15 years they had paid off a LOT more than you. You paid a lump sum after 16 years, but at this point, the extra money which they had paid had been in the banks hands for a long time. You caught up with them then, but you had been behind them for all of the previous years. On the other hand, you owed the same amount in each of those years as the person who took out a 30 year mortgage and didn't prepay. Therefore you paid the same amount of interest as this person, not the first person. If you could arrange in advance a loan where you made the same payment as you did for 16 years, then paid the balance in a lump sum, then you would have paid exactly what you did. |
Where can I find a company's earnings history for free? | Regulators? SEC, in the US. Its public records for public companies. |
Why are credit cards preferred in the US? | The real reason credit cards are so popular in the US is that Americans are lazy and broke, and the credit card companies know how to market to that. Have you ever heard of the $30k millionaires? These were individuals that purchased as if they were some of the wealthy elite, but had no real money to back it up. American society has pushed the idea of "living on credit" for quite some time now. An idea that is even furthered by watching the US government operate solely on credit. (Raise the debt ceiling much?) Live in America for more than six months and you will be bombarded with "Pre-Approved Deals" with low introductory rates that are designed to sucker the average consumer into opening multiple accounts that they don't need. Then, they try and get you to carry a balance by allowing low minimum payments that could take in the neighborhood of 20 years to pay off, depending on carried balance. This in turn pads the credit companies' pockets with all of the interest you now pay on the account. The few truly wealthy Americans do not purchase on credit. |
What are some good books for learning stocks, bonds, derivatives e.t.c for beginner with a math background? | Start with Options, Futures and Other Derivatives by John Hull. |
Can I pay taxes using bill pay from my on-line checking account? | I can't speak for the US, but I've completed direct tax payments via my online bank account (for business and personal) in two countries (South Africa and the UK). I find it easier and with a better record that the transaction took place than any of the other methods available (including going directly into a tax office to pay by cheque). Mail can go missing. Queueing in their offices takes hours and the result can still be misfiled (by them). Ditto allowing them to do a pay run on your account - they can make a mistake and you'll have difficulty proving it. A payment via my bank account gives me an electronic record and I can ensure all the details are correct myself. In addition, in the UK, paying online gives you a good few months extra grace to pay. Even in South Africa, online payments are given a few weeks grace over physical payments. Their recognising that you paying electronically saves them processing time. |
Financial implications of purchasing a first home? | Congrats! Make sure you nail down NOW what happens to the house should you eventually separate. I know lots of unmarried couples who have stayed together for decades and look likely to do so for life; I've also seen some marriages break up that I wouldn't have expected to. Better to have this discussion NOW. Beyond that: Main immediate implications are that you have new costs (taxes, utilities, maintenance) and new tax issues (mortgage interest and property tax deductability) and you're going to have to figure out how to allocate those between you (if there is a between; not sure whether unmarried couples can file jointly these days). |
Is it possible for credit card companies to check credit score in India? | Is it possible for the card issuing banks to check my score without my permission? As far as I understand these things, that is exactly the whole purpose of these sorts of credit-rating institutions. The banks and other financial businesses are their customers. They exist to serve those customers. Their relationship, if any, with a consumer is probably secondary to that. When you apply for credit, you give that business any permission needed. |
For net worth, should I value physical property at my cost to replace it, or the amount I could get for selling it? | Valuation by definition is what an item is worth, not what you paid for it. Net worth should be market value for fixed assets or "capital" goods. I would consider this cars, real property, furniture, jewelry, appliances, tools, etc. Everything else can be valued by liquidation value. You can use valuation guides for tax deductions as a way to guide your valuation. Insurance companies usually just pick a percentage of your home's value as a guesstimate for content value. I could see doing this as a way to guide purchase decisions for appliances, cars or the like. But if you are trying to figure out the market value of your socks and underwear, I would argue that you're doing something that's a little silly. |
In a competitive market, why is movie theater popcorn expensive? | John R. Lott, Jr. and Russell D. Roberts argue that popcorn in movie theaters has a price commensurate with its much higher cost. See also Lott's criticism of the Gil and Hartmann paper. |
Are Credit Cards a service to banks? | Credit cards are a golden goose for banks, as they get to issue high-interest loans and simultaneously generate alot of fee income. Debit cards aren't quite as good, but they still generate substantial fee income -- ~2% of every credit/non-PIN debit transaction goes to the bank and credit card network. Credit histories exist because they are the most effective tool available to predict whether you will pay back your loans or not. You don't need a credit history to buy most things, you need a credit history to get a large loan. Think of it from perspective of a lender: Credit scoring is the bank's way screening out people who are expensive to do business with. It's objective, doesn't discriminate on the basis of race, sex or other factors, and you have recourse if the rating agencies have incorrect information. |
Why do people always talk about stocks that pay high dividends? | Someone who buys a stock is fundamentally buying a share of all future dividends, plus the future liquidation value of the company in the event that it is liquidated. While some investors may buy stocks in the hope that they will be able to find other people willing to pay more for the stock than they did, that's a zero sum game. The only way investors can make money in the aggregate is if either stocks pay dividends or if the money paid for company assets at liquidation exceeds total net price for which the company sold shares. One advantage of dividends from a market-rationality perspective is that dividend payments are easy to evaluate than company value. Ideally, the share price of a company should match the present per-share cash value of all future dividends and liquidation, but it's generally impossible to know in advance what that value will be. Stock prices may sometimes rise because of factors which increase the expected per-share cash value of future dividends and liquidations. In a sane market, rising prices on an item will reduce people's eagerness to buy and increase people's eagerness to sell. Unfortunately, in a marketplace where steady price appreciation is expected the feedback mechanisms responsible for stability get reversed. Rapidly rising prices act as a red flag to buyers--unfortunately, bulls don't see red flags as signal to stop, but rather as a signal to charge ahead. For a variety of reasons including the disparate treatment of dividends and capital gains, it's often not practical for a company to try to stabilize stock prices through dividends and stock sales. Nonetheless, dividends are in a sense far more "real" than stock price appreciation, since paying dividends generally requires that companies actually have sources of revenues and profits. By contrast, it's possible for stock prices to go through the roof for companies which have relatively few assets of value and no real expectation of becoming profitable businesses, simply because investors see rising stock prices as a "buy" signal independent of any real worth. |
Is investing in an ETF generally your best option after establishing a Roth IRA? | When investing small amounts, you should consider the substantial toll that commissions will take on your investment. In your case, $800 placed in just one ETF will incur commissions of about $8 each way, or a total of 2% of your investment. I suggest you wait until you have at least $5000 to invest in stocks or ETFs. Since this is in a IRA, your options are limited, but perhaps you may qualify for a Vanguard mutual fund, which will not charge commissions and will have annual expenses only a trivial amount higher than the corresponding ETF. it should probably go in a mixed allocation fund, and since you are young, it should be a relatively aggressive one. Mutual funds will also allow you to contribute small amounts over time without incurring any extra fees. |
Valuation Spreadsheet | In general spreadsheets can do all of what you ask. Have a try of some online training like these to get started. |
Best way to start investing, for a young person just starting their career? | Adding to the very good advises above - Concentrate on costs related to investment activity. Note all expenses and costs that you pay. Keep it low. |
How do I calculate what percentage of my portfolio is large-, mid- or small- cap? | The portfolio manager at Value Research Online does this very nicely. It tracks the underlying holdings of each fund, yielding correct calculations for funds that invest across the board. Take a look at the screenshot from my account: If you have direct equity holdings (e.g., not through a mutual fund), that too gets integrated. Per stock details are also visible. |
Approximation of equity value for company in default | Generally "default" means that the company cannot pay off their debts, and since debt holders get paid before equity holders, their equity would be effectively worthless. That said, companies can emerge from Chapter 11 bankruptcy (reorganization) and retain equity value, but it is rare. Most times, stocks are de-listed or frozen on stock exchanges, and company's reorganization plan will cancel all existing equity shares, instead focusing all of their attention on paying back as much debt as possible. If the company issues new equity after reorganizing, it might provide a way for holders of the original equity to exchange their shares for the new equity, but it is rare, and the value is usually significantly less that the value of the original equity. |
Why is the dominant investing advice for individuals to use mutual funds, exchanged traded funds (ETFs), etc | Cost. If an investor wanted to diversify his portfolio by investing in the companies that make up the S&P 500, the per-share and commission costs to individually place trades for each and every one of those companies would be prohibitive. I can buy one share of an exchange-traded fund that tracks the S&P 500 for less than the purchase price of a single share in some of the companies that make up the index. |
How U.S. Depreciation works Explain in brief? | If a business tool has a limited lifespan, it's value decreases (depreciates) from year to year. The business can capture that loss of value on some things that it couldn't otherwise write off as expenses. A few tools can be either expenses or depreciated, but only one of those can be chosen for that particular object. This is generally not relevant for individual taxpayers, unless you can show that the item is being used for income-producing purposes. |
What kinds of information do financial workers typically check on a daily basis? | I think it depends where you live in the world, but I guess the most common would be: Major Equity Indices I would say major currency exchange rate: And have a look at the Libors for USD and EUR. I guess the intent of the question is more to see how implicated you are in the daily market analysis, not really to see if you managed to learn everything by heart in the morning. |
How to resolve imbalances and orphan transactions in Gnucash? | I have been following some of these threads. Some of them are really old. I have read used recording to equity accounts to resolve the imbalance USD issue. The thing I noticed is that all my imbalances occur when paying bills. I took all the bills and set them up as vendor accounts, entered the bills in the new bills, and used the process payment when paying bills. The imbalance issue stopped. It makes sense. The system is a double entry. That's it will credit and debit. Assets accounts are increased with a debit and decreased with a credit. Equity accounts are increased with a credit and decreased with a debit. ie; Say you have an monthly insurance bill for $100. You enter it into the new vendor bill. This credits Accounts Payable. When paying the bill it credits checking, debits account payable, credits vendor account, debits the expense insurance. In short for each credit there has to be a debit for the books to balance. When there is no account for it to record to it will record in Imbalance USD to balance the books. |
Unemployment Insurance Through Options | This is a snapshot of the Jan '17 puts for XBI, the biotech index. The current price is $65.73. You can see that even the puts far out of the money are costly. The $40 put, if you get a fill at $3, means a 10X return if the index drops to $10. A 70X return for a mild, cyclic, drop isn't likely to happen. Sharing youtube links is an awful way to ask a question. The first was far too long to waste my time. The second was a reasonable 5 minutes, but with no example, only vague references to using puts to protect you in bad years. Proper asset allocation is more appropriate for the typical investor than any intricate option-based hedging strategy. I've successfully used option strategies on the up side, multiplying the returns on rising stocks, but have never been comfortable creating a series of puts to hit the jackpot in an awful year. |
Is there an online cost-basis calculator that automatically accounts for dividend re-investments and splits? | Reinvestment creates a nightmare when it comes time to do taxes, sadly. Tons of annoying little transactions that happened automatically... Here's one article trying to answer your question: http://www.smartmoney.com/personal-finance/taxes/figuring-out-your-cost-basis-when-youve-lost-the-statements-9529/ You could also try this thing: http://www.gainskeeper.com/us/BasisProIndividual.aspx But I couldn't tell you if it would help. If it makes you feel better, brokerages are now required by the IRS to track your basis for you, so for new transactions and assets you shouldn't end up in this situation. Doesn't help with the old stuff ;-) |
How does a brokerage firm work? | The brokerage executes the transactions you tell them to make on your behalf. Other than acting as your agent for those, and maintaining your account, and charging a fee for the service, they have no involvement -- they do not attempt to predict optimal anything, or hold any assets themselves. |
Why does it matter if a Central Bank has a negative rather than 0% interest rate? | That is kind of the point, one of the hopes is that it incentivizes banks to stop storing money and start injecting it into the economy themselves. Compared to the European Central Bank investing directly into the economy the way the US central bank has been doing. (The Federal Reserve buying mortgage backed securities) On a country level, individual European countries have tried this before in recent times with no noticeable effect. |
How can I pay for school to finish my degree when I can't get a student loan and have bad credit? | Here's what you can do: roll up your sleeves and get to work. Work 2 or 3 jobs while you take 12 credit hours. Live in the cheapest available housing (that is reasonably safe). Have no social life. Wake up, work, class, eat, work, study, sleep. Every day. Don't eat at restaurants. Eat only simple meals at home. Every meal. Have a car payment? Get rid of your car and use public transit or get the cheapest running car possible. One year of nothing but focused effort on paying for and finishing school. If you can't earn enough to cover 14K on top of your basic living expenses, then you aren't working hard enough, or you have extenuating circumstances that make finishing your degree at this time infeasible. |
What is the smartest thing to do in case of a stock market crash | If the market has not crashed but you know it will, sell short or buy puts. If the market has crashed, buy equities while they are cheap. If you don't know if or when it will crash hold a diversified portfolio including stocks, bonds, real estate, and alternatives (gold, etc). |
22-year-old inherited 30k from 529 payout - what is the best way to invest? | First, I applaud you for caring. Most people don't! In fact, I was in that category. You bring up several issues and I'll try to address them separately. (1) Getting a financial planner to talk with you. I had the same experience! My belief is that they don't want to admit that they don't know how things work. I even asked if I could pay them an hourly fee to ask questions and review stocks with them. Most declined. You'll find that very few people actually take the time to get trained to evaluate stocks and the stock market as a whole. (See later Investools.com). After looking, however, I did find people who would spend an hour or two with me when we met once a quarter to review my "portfolio"/investments. I later found training that companies offered. I would attend any free training I could get because they actually wanted to spend time and talk and teach investors. Bottom line is: Talking to their clients is the job of a financial planner. If he (or she) is not willing to take this time, it is in your best interest to find someone who will spend that time. (2) Learning about investing! I'm not affiliated with anyone. I'm a software developer and I do my own trading/investments. The opinions I share are my own. When I was 20 years away from retirement, I started learning about the stock market so that I would know how it worked before I retired so that (a) I could influence a change if one was needed, and (b) so I wouldn't have to blindly accept the advice of the "experts" even when the stock market is crashing. I have used Investools.com, and TDAmeritrade's Think-or-Swim platform. I've learned a tremendous amount from the Investools training. I recommend them. But don't expect to learn how to get rich from them or any training you take. The TDA Think-or-swim platform I highly recommend BECAUSE it has a feature called "Paper Money". It lets you trade using the real market but with play money. I highly recommend ANY platform that you can use to trade IN PAPER money! The think-or-swim platform would allow you to invest $30,000 in paper money (you can have as much as you want) into any stock. This would let you see if you can make more money than your current investment advisor. You could invest $10K in one SPY, $10K in DIA and $10K in IWM (these are symbols for the S&P 500, Dow 30, and Small Cap stocks). This is just an example, I'm not suggesting any investment advise! It's important that you actually do this not just write down on a piece of paper or Excel spreadsheet what you were going to do because it's common to "cheat" and change the dates to meet your needs. I have found it incredibly helpful to understand how the market works by trying to do my own paper and now real money investing. I was and you will be surprised to find that many trades lose money during the initial start part of the trade because it's very difficult to buy at the exact right time. An important part of managing your own investments is learning to trade with rules and not get "emotionally involved" in your trades. (3) Return on investment. You were not happy with $12 return. Low returns are a byproduct of the way most investment firms (financial planners) take (diversification). They diversify to take a "hands off" approach toward investment because that approach has been the only approach that they have found that works relatively well in all market conditions. It's not (necessarily) a bad approach. It avoids large losses in down markets (most riskier approaches lose more than the market). The downside is it also avoids the high returns. If the market goes up 15% the investment might only go up 5%. 30K is enough to give to multiple investment firms a try. I gave two different firms $25K each to see how they would invest. The direction was to accept LOTS of risk (with the potential for large losses or large gains). In a year that the market did very well, one lost money, and one made a small gain. It was a learning experience. I, now, have taken the money back and invest it myself. NOTE: I would be happy with a guy who made me 10-15% year over year (in good times and bad) and didn't talk with me, but I haven't found someone who can do that. :-) NOTE 2: Don't believe what you hear from the news about the stock market being up 5% year to date. Do your own analysis. NOTE 3: Investing in "the market" (S&P 500 for example) is a great way to go if you're just starting. Few investment firms can beat "the market" although many try to do so. I too have found it's easier to do that than other approaches I've learned. So, it might be a good long term approach as well. Best wishes to you in your learning about the market and desires to make money with your money. That is what is all about. |
Why would this FHA refinance cause my mortgage insurance payment to increase so much? | The PMI premium you pay is dependent on a very large number of variables in the finance market. Mortgage insurance, at the higher inter-bank levels, is handled with credit default swaps (the ones you've been hearing about on the news for the past 4 years), where the lender bundles a block of mortgages, takes them to a guarantor like AIG or Freddie Mac, and says "We bet you that these mortgages will default this month, because the homeowners have little or no equity to deter them; if we win, you agree to swap these debts for their current face value". The lender examines the mortgages, calculates the odds of a default severe enough that the bank would come to collect, using complex environmental heuristics, multiplies by the value of the potential payout, adds a little for their trouble, and says "well, we'll take that bet if you pay us $X". The bank takes the deal, then divvies up that cost among the mortgages and bills the homeowner for their share. The amount you pay for PMI can therefore depend on pretty much anything in this entire process; the exact outstanding amount and equity status of your loan, the similar status of other mortgages your loan will be bundled with for assessment, who the guarantor is, what exact heuristic they use to come up with an amount, the weighting the bank uses to divvy it up, and how much they actually pass on to you. Most of these same variables are at play when you shop for actual insurance for your car or home, which is why your premiums will go up or down with the same insurer and why someone else always seems to have a better deal (pretty much every insurer can say that "drivers who switched saved an average of $X"; of course they did, otherwise they wouldn't have switched). Thinking of it in those terms, it's easy to see how this number can vary widely based on numbers you can't see. You're free to say no, and it will cost you nothing right up until you sign something that says you agree to be penalized for saying no. While the overall amount of the payments does decrease, the PMI has gone up, and that's money you'll never see again just like interest (except you can deduct interest; not PMI). I would do the tax math; find out how much you could deduct over the next year in interest on your current loan, then on their proposed terms, and what the resulting tax bills will be from both. You may save monthly only to pay more than you saved to Uncle Sam at the end of the year. You're also free to negotiate. The worst they can do is stay firm on their offer, but they may take a second look and say "you're right, that PMI is rather high, we'll try again and see if we can do better". They can either negotiate with their insurer, or they can eat some of the PMI cost that they're currently passing on to you. |
Iraqi Dinars. Bad Investment, or Worst Investment? | Currency, like gold and other commodities, isn't really much of an investment at all. It doesn't actually generate any return. Its value might fluctuate at a different rate than that of the US dollar or Euro, but that's about it. It might have a place as a very small slice of a basket of global currencies, but most US / European households don't actually need that sort of basket; it's really more of a risk-management strategy than an investment strategy and it doesn't really reflect the risks faced by an ordinary family in the US (or Europe or similar). Investments shouldn't generally be particularly "exciting". Generally, "exciting" opportunities mean that you're speculating on the market, not really investing in it. If you have a few thousand dollars you don't need and don't mind losing, you can make some good money speculating some of the time, but you can also just lose it all too. (Maybe there's a little room for excitement if you find amazing deals on ordinary investments at the very bottom of a stock market crash when decent, solid companies are on sale much cheaper than they ordinarily are.) |
Is foreign stock considered more risky than local stock and why? | In addition to @MD-tech's answer: I'd distinguish between stock of a foreign company traded in local currency at a local exchange from the same stock traded in the foreign currency at a foreign exchange (and maybe with a foreign bank holding your accounts). The latter option will typically have higher variation because of exchange rate, and (usually) higher risks associated with possibility of recovery, (double) taxation and the possible legal difficulties @MD-tech mentions. Trading the foreign stock at a local exchange may mean that the transaction volume is far lower than at their "home" exchange. Holding stock of companies working in foreign markets OTOH can be seen as diversification and may lower your risk. If you only invest in the local market, your investments may be subject to the same economic fluctuations that your wage/employment/pension situation is subject to - it may be good to try de-correlating this a bit. Of course, depending on political circumstances in your home country, foreign investments may be less risky (though I'd suspect these home countries also come with a high risk of seizing foreign investments...) |
Is giving my girlfriend money for her mortgage closing costs and down payment considered fraud? | It's a gift if there are no strings attached. If you are rationalizing it to try to make it a gift for tax or any other purpose when there really is a connection between the transactions, or when you expect any kind of value or benefit in return for it, then it's not a gift... don't make it one and don't call it one. That would indeed likely be fraud. Play be the rules and sleep easy, is how I like to live. |
What's the catch with biweekly mortgage payments? | Making extra principal payments will reduce the term of your loan. I wouldn't sign up for a biweekly schedule, just do it yourself so you have more flexibility. A simple spreadsheet will allow you to play "What if?" and make it clear that extra principal payments are most effective early in the term of the loan. My wife and I paid off our home in less than 10 years with this approach. Some will say that the opportunity costs of not using that money for something else outweighs the gains. I would say that not having a mortgage has a positive impact on your cash flow and your assets (you own the home), which combine to create more opportunity, not less. That being said, It should be obvious that paying off higher interest debt first is the priority, (Paying off a zero percent interest car loan early is just foolish) |
The doctor didn't charge the health insurance in time, am I liable? | I work for a health billing company. It is completely the provider's responsibility to bill your health insurance in a timely manner if they have your health insurance information on file (it sounds like they did). If you can gather a copy of your EOB (Explanation of Benefits) from your health insurance, it will likely say something to the extent of: "claim was submitted after the timely filing limit, therefore no payment was made. The patient is not liable for the remaining balance." Don't let the hospital/physician bully you into paying for something they should have submitted to the insurance in the first place. |
Is trading stocks easier than trading commodities? | I would not argue if its more difficult, its different, and it much depends what kind of stocks you refer to, i take large caps as example. The players are different. Companies and even govts may hedge in the commodities (futures) market while in big caps this and other entities mainly invest. (Of course there’s HFT in large caps too). Futures often come with way higher leverage, lower spread and less commissions than stocks attracting retail and institutional speculators/HFT. Another big difference is that commodity prices react to all kind of news events (Stocks do too, but not that much and frequent), this kind of reactions big caps only do on earnings or on news directly affecting the company. Commodities are much more volatile on geo economic / political news events. This combined with higher leverage & HFT produces astounding moves. To sum it up, the players are different and act different than in large stocks, liquidity may be another thing. |
Why is auto insurance ridiculously overpriced for those who drive few miles? | Other people lie to the companies about how many miles they drive, so they can't take the mileage figures literally. You aren't specifying whether you want liability only, or more-comprehensive insurance. Stuff happens when you aren't driving. Cars get stolen. Other drivers hit parked cars and leave. Trees fall on parked cars. Move to Virginia where insurance is not required. Just pay $500 a year for not having insurance, and be careful. |
Online brokers with a minimum stock purchase lower than $500 | With InteractiveBrokers there is no minimum trade amount, they also offer Australian Equities. |
When is the right time to buy a new/emerging technology? | As you said, the next generation will be cheaper and more efficient. Same for the generation after that. From a financial standpoint, there isn't a steadfast theory that supports when to buy the technology. It comes down to primarily personal issues. As far as I know, Musk's claims about the cost were relating to a traditional slate roof, not a traditional asphalt shingle roof. I can't recall if he explicitly said one way or the other, but I have yet to see any math that supports a comparison to asphalt shingles. If you look at all of the demos and marketing material, it's comparisons to various styles of tile roofing, which is already more expensive than asphalt shingles. Do you feel it's worth it to invest now, or do you think it would be more worth it to invest later when the costs are lower? A new roof will last 10-20 years (if not longer...I'm not a roof expert). Do you need a new roof yet? Are your electricity bills high enough that the cost of going solar will offset it enough? Can you sell unused power back to your power company? I could go on, but I think you get the point. It's entirely a personal decision, and not one that will have a definitive answer. If you keep waiting to make a purchase because you're worried that the next generation will be cheaper and more efficient, then you're never going to make the purchase. |
Working Capital Definition | As you say, if you delay paying your bills, your liabilities will increase. Like say your bills total $10,000 per month. If you normally pay after 30 days, then your short-term liabilities will be $10,000. If you stretch that out to pay after 60 days, then you will be carrying two months worth of bills as a short-term liability, or $20,000. Your liabilities go up. Assume you keep the same amount of cash on hand after you stretch out your payments like this as you did before. Now your liabilities are higher but your assets are the same, so your working capital goes down. For example, suppose you kept $25,000 in the bank before this change and you still keep $30,000 after. Then before your working capital was $25,000 minus $10,000, or $15,000. After it is $25,000 minus $20,000, or only $5,000. So how does this relate to cash flow? While presumably if the company has $10,000 per month in bills, and their bank balance remains at $25,000 month after month, then they must have $10,000 per month in income that's going to pay those bills, or the bank balance would be going down. So now if they DON'T pay that $10,000 in bills this month, but the bank account doesn't go up by $10,000, then they must have spent the $10,000 on something else. That is, they have converted that money from an on-going balance into cash flow. Note that this is a one-time trick. If you stretch out your payment time from 30 days to 60 days, then you are now carrying 2 months worth of bills on your books instead of 1. So the first month that you do this -- if you did it all at once for all your bills -- you would just not pay any bills that month. But then you would have to resume paying the bills the next month. It's not like you're adding $10,000 to your cash flow every month. You're adding $10,000 to your cash flow the month that you make the change. Then you return to equilibrium. To increase your cash flow every month this way, you would have to continually increase the time it takes you to pay your bills: 30 days this month, 45 days the next, 60 the next, then 75, 90, etc. Pretty soon your bills are 20 years past due and no one wants to do business with you any more. Normally people see an action like this as an emergency measure to get over a short-term cash crunch. Adopting it as a long-term policy seems very short-sighted to me, creating a long-term relationship problem with your suppliers in exchange for a one-shot gain. But then, I'm not a big corporate finance officer. |
At what interest rate should debt be used as a tool? | It's tough to borrow fixed and invest risk free. That said, there are still some interesting investment opportunities. A 4% loan will cost you 3% or less after tax, and the DVY (Dow high yielders) is at 3.36% but at a 15% favored rate, you net 2.76% if my math is right. So for .5%, you get the fruits of the potential rise in dividends as well as any cap gains. Is this failsafe? No. But I believe that long term, say 10 years or more, the risk is minimal. |
Is it possible to trade US stock from Europe ? | Yes, it's possible and even common but it depends on your bank or broker. One of the main differences is that you might assume FX risk if your account is in EUR and you trade stock denominated in USD. You might also encounter lower liquidity or price differences if you don't trade on the primary exchange where stocks are listed, i.e. NYSE, Nasdaq... |
Is keeping track of your money and having a budget the same thing? | A budget is a predetermined plan for spending allocated funds to a fixed set of categories according to a schedule. If by, "Keeping track of your money" you mean you are only recording your spending to see on what it is being spent and when, then the answer is no. A budget has constraints on three things: Schedule: The mortgage has to be paid at the 1st of the month with a 2 day grace period. Amount: The mortgage payment is 1500.00 Category: The mortgage. Tracking your money would be as follows: 10/5/2016: $25 for a video game. 10/5/2016: $129.99 for two automobile tires. 10/6/2016: $35.25 for luncheon. I didn't like him! Why did I blow this money? 10/7/2016: nothing spent...yoohoo! 10/8/2016: Payday, heck yeah! I'm financially solvent YET AGAIN! How do I do it?! See the difference? |
I'm upside down on my car loan and need a different car, what can I do? | I am new to the site and hope I can help! We just purchased a used car a few weeks ago and used dealer's finance again so that's not the issue here. I want to focus on what you can do to resolve your issue and not focus on the mistakes that were made. 1 - DO NOT PURCHASE A NEW CAR! Toyota Camrys are great cars that will last forever. I live in Rochester, NY and all you need is snow tires for the winter as ChrisInEdmonton suggested. This will make a world of difference. Also, when you get a car wash get an under-spray treatment for salt and rust (warm climate cars don't usually come with this treatment). 2 - Focus on paying this loan off. Pay extra to the monthly note, put any bonuses you get to the note. Take lunches to work to save money so you can pay extra. I'm not sure if you put any money down but your monthly note should be around $300? I would try putting $400+ down each month until it is paid off. Anything you can do. But, do not buy a new car until this one is fully paid off! Let me know if this helps! Thanks! |
Why doesn't Japan just divide the Yen by 100? | Think about moving the decimal point in a bunch of accounting software and price stickers. Think about getting confused, "is that price in old yen or new yen?" - not just immediately, but every time you hear a historical price figure. Think of the inconveniences. How many billions of yen would that cost the Japanese economy? It could be a lot. How many billions of yen would the Japanese economy save by enacting such a conversion? Because I doubt it's anywhere that much. |
Trouble sticking to a budget when using credit cards for day to day transactions? | If you keep going over budget with your credit card, then stop using the credit card. If you plan to pay off the card every month, then your balance should always be under whatever your budget is. For example, if you budget to spend $500, then even though your card has a limit of $5,000 you will never carry a balance of over $500. Most banks have an option to email and / or text message you when you pass a certain balance threshold; in this instance, you would set two notices, one when your balance exceeds $400 (warning you that you're close & need to start paying closer attention), and one when you exceed $500. Additionally, maybe you aren't ready to pay for everything with your credit card. I prefer to use mine just for groceries, and then pay it off at the end of the month. Whatever rewards you get for putting all of your purchases on the card are more than paid for when you cross your budget limit, costing you more in interest and fees. Perhaps starting with just one type of purchase (groceries or gas are good choices, as most consumers are fairly consistent in their purchases of both) would allow you to ease into using the card until you get used to managing your budget with it. Personal finances are all about behavior, not knowledge. Don't worry too much about slipping up right now and making a mistake; just keep practicing good behavior with your credit card, and soon managing your budget with it will be as natural for you as when you only used cash. |
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