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Freelancing and getting taxes taken out up front instead of end of year? | It seems that you think you are freelancing, and they think you are an employee. What's bad for you, the tax office will also think you are an employee if they withhold tax for you. Alternatively, they think you are stupid, and they keep the money, but are actually not paying it to the tax office at all, in which case you will have a bad surprise when you do your tax returns. First, I'd ask them for proof that they are indeed paying these taxes into some account related to you. I'd then ask a tax adviser for some serious advice. If they are acting out of incompetence and not out of malice, then you should be mostly fine, but your work there will count as employment. Heaven knows why they treat you as an employee. Check your contract with them; whether it is between you and them or your company and them. It maybe that they never hired a contractor and believe that they have to pay employment tax. They don't. If your company sends them a bill, then they need to pay that bill, 100% of it, and that's it. Taxes are fully your business and your responsibility. As "quid" said, if they say they are withholding tax, then at the very least there must be a paystub that proves they have actually been paying these taxes. If they withhold taxes, and there is no paystub, then this looks like a criminal attempt to cheat you. If they have actually paid taxes properly into your account, then they are merely creating a mess that can hopefully be fixed. But it is probably complicated enough that you need a tax advisor, even if you had none before, since instead of paying to your company, they paid some money to the company, and some to you personally. |
What is a Student Loan and does it allow you to cover a wide range of expenses relating to school? | Is a student loan a type of loan or just a generic name used to refer to a loan for someone who is going back to school? A student loan from the federal government is a specific type of loan used for education purposes (i.e. attending college). They have guidelines associated with them that are very flexible as compared to a student loan from a private bank. If a student loan is a different type of loan, does it only cover the costs of going to the school? Every student at a university has a "budget" or the "cost of attendance". That includes direct and indirect costs. Direct costs are ones billed directly to you (i.e. tuition, room and board - should you choose to live on campus, and associated fees). Indirect costs are such things like books, travel expenses (if you live out of state), and personal things. Direct costs are controlled by the school. Indirect costs are estimated. The school will usually conduct market research to determine the costs for indirect items. Some students go above that, and some go below. For example, transportation is an indirect cost. A school could set that at $500. There are students who will be above that, and some below that. If you choose not to live on campus, then rent and food will become an indirect cost. Student loans can cover up to 100% of your budget (direct and indirect added together). If your total budget is $60,000 (tuition, room and board, transportation, books, supplies, etc.) Then you are able to borrow up to that amount ($60,000). However, because your budget is both direct and indirect costs, you will only be billed for your direct costs (tuition, etc.). So if your direct costs equal $50,000 and your student loan was certified for $60,000, then you will get that $10,000 back in the form of a refund from the school. That does not mean you don't have to pay it back - you still do. But that money is meant for indirect costs (i.e. books, rent - if you're not staying on campus, etc.). If your school is on semesters vs quarters, then that amount is divided between the terms. Summer term is not factored in, that's another process. Also with student loans, there are origination costs - the money associated with processing a loan. A good rule of thumb is to never borrow more than you need. Source: I used to work in financial aid at my college. |
Is there any drawback in putting all my 401K into a money market fund? | What you're describing is called timing the market. That is, if you correctly predict when the market will drop, you can sell before the drop, wait for the drop, then buy after the drop has occurred. Sell high, buy low. The fundamental problem with that, though, is: What ends up happening, on average, is you end up slightly behind. There's quite a lot of literature on this; see Betterment's explanation for example. Forbes (click through ad first) also has a detailed piece on the matter. Now, we're not really talking HFT issues here; and there are some structural things that some argue you can take advantage of (restrictions on some organizational investors, for example, similar to a blackjack dealer who has to hit on 16). However, everyone else knows about these too - so it's hard to gain much of an edge. Plenty of people say they can time the market right, and even yourself perhaps you timed a particular drop accurately. This tends to lead to false confidence though; how many drops that you timed badly do you remember? Ultimately, most investors end up slightly down when they attempt to time the market, because of the transaction costs (if you guess two drops, one 'right' and one 'wrong', and they have exactly opposite gains/losses before commissions, you will lose a bit on each due to commission), and because of the overall upward trend in the market (ie, if you picked at random one month a year to be out of the market, you'd lose around 10% annualized gains from doing that; same applies here). All of that aside, there is one major caveat: risk tolerance. If you are highly risk tolerant, say a 30 year old investing your 401(k), then you should stay in no matter what. If you're not - say you're 58 and retiring in a few years - then knowledge that there's a higher risk time period coming up might suggest moving to a less risky portfolio, even at the known cost of some gains. |
What forms of payment am I compelled to accept? | When you're selling something through a provider, like Craig's List or newspapers, the only thing that may limit your choices is the provider. They may refuse your post if it's against their rules or the law. But luckily they usually don't limit or enforce certain payment choices. These private business providers have the right to do so if they want. You don't need to be their customer. They may state their terms for using the service and even refuse service (before any payment is made). The fun part is that you may do so as well. Just remember to state your terms in your post so the prospective buyers are aware of them. I've found it best to put payment and delivery terms in separate lines so that they are easily noticeable, for example: Nice victorian handbasket with gold embroidery, only used once. Signed by the original author. Comes with a certificate of authenticity. No delivery, only cash payments. |
What assets would be valuable in a post-apocalyptic scenario? | Gold and silver are for after the crisis, not during. Gold and silver are far more likely to be able to be exchanged for things you need, since they are rare, easily divided, etc. Getting land away from where the crap is happening is also good, but it's more than that. Say you have land somewhere. How will the locals view you if you move there to hunker down only when things go bad? They won't really trust you, and you'll inherit a new set of problems. Building relationships in an off-the-beaten-path area requires a time investment. Investing in lifestyle in general is good. Lifestyle isn't just toys, but it's privacy, peace of mind, relationships with people with whom you can barter skills, as well as the skills you might think you'd need to do more than just get by in whatever scenario you envision. For the immediate crisis, you'd better have the things you'll need for a few months. Stores probably won't be supplied on any regular basis, and the shelves will be bare. Trying to use gold or silver during the crisis just makes you a target for theft. With regard to food, it's best to get acclimated to a diet of what you'd have on hand. If you get freeze-dried food, eat it now, so that it's not a shock to your system when you have to eat it. (Can you tell I've been thinking about this? :) ) |
What would a stock be worth if dividends did not exist? [duplicate] | This is how capital shares in split capital investment trusts work they never get any dividend they just get the capital when the company is wound up |
Assessed value of my house | You said the tax assessor gave you an appraised value, but I think you mean assessed value. This article YOUR HOME; Market vs. Appraisal: What's the Real Value? explains the differences pretty well. |
Is there a benefit, long term, to life insurance for a youngish, debt, and dependent free person? | For most situations the "no need" answers are 100% correct. The corner case to think about depends on your health and your family history. Not to be morose, but if folks in your family who died young from heart issues, clusters of cancer or other terminal illnesses, you may want to consider getting medically qualified for a modest amount of insurance when you are young. Then, when you have children, you usually have the option of incrementally upgrading your coverage over time. |
Effective returns on investment in housing vs other financial instruments | The assumption that house value appreciates 5% per year is unrealistic. Over the very long term, real house prices has stayed approximately constant. A house that is 10 years old today is 11 years old a year after, so this phenomenon of real house prices staying constant applies only to the market as a whole and not to an individual house, unless the individual house is maintained well. One house is an extremely poorly diversified investment. What if the house you buy turns out to have a mold problem? You can lose your investment almost overnight. In contrast to this, it is extremely unlikely that the same could happen on a well-diversified stock portfolio (although it can happen on an individual stock). Thus, if non-leveraged stock portfolio has a nominal return of 8% over the long term, I would demand higher return, say 10%, from a non-leveraged investment to an individual house because of the greater risks. If you have the ability to diversify your real estate investments, a portfolio of diversified real estate investments is safer than a diversified stock portfolio, so I would demand a nominal return of 6% over the long term from such a diversified portfolio. To decide if it's better to buy a house or to live in rental property, you need to gather all of the costs of both options (including the opportunity cost of the capital which you could otherwise invest elsewhere). The real return of buying a house instead of renting it comes from the fact that you do not need to pay rent, not from the fact that house prices tend to appreciate (which they won't do more than inflation over a very long term). For my case, I live in Finland in a special case of near-rental property where you pay 15% of the building cost when moving in (and get the 15% payment back when moving out) and then pay a monthly rent that is lower than the market rent. The property is subsidized by government-provided loans. I have calculated that for my case, living in this property makes more sense than purchasing a market-priced house, but your situation may be different. |
What is an “Options Account”? | Options are a derivative product, and in this case, derive their value from an underlying security, a traded stock. An option gives you the right, but not the obligation, to buy a stock at a given price (the strike price) by a given time (the expiration date.) What I just described is a call option. The opposite instrument is a put, giving you the right, but not the obligation, to sell the stock at a given price. Volumes have been written on the subject, but I'd suggest that for a custodial Roth, I'd not activate the ability to trade options. How to get started with options investing? offers a nice introduction to trading options. In my response, I offer an example of a trade that's actually less risky due to the option component. |
Why is OkPay not allowed in the United States? | If you read the link that MD-Tech provided, it actually indicates that the foreign companies (mostly banks) are choosing not to work with the United States in their latest answer, so it looks like it's not OkPay, but the financial companies that they use. On further research, the reason that this is banned is to prevent capital flight in the future. OkPay offers may ways to transfer funds in and out, such as traditional credit cards, like VISA and MasterCard, and other non-traditional ways, such as crypto-coins. Here is another example of how the US government is limiting what US consumers can do with their money. Apparently while no one was looking in 2010, they were able to pass some new restrictions. |
Who buys variable annuities? | I wrote a detailed answer about variable annuities on another question, but I want to include one specific situation where a variable annuity may be the right course of action. (For the sake of simplicity, I'm quoting directly from that answer): Three-quarters of US states protect variable annuity assets from creditors. Regular IRA's don't benefit from protection under the Employee Retirement Income Security Act (ERISA) and may therefore be more vulnerable to creditors. If you're a potential target for lawsuits, e.g. a doctor worried about medical malpractice suits, variable annuities may be an option for you. As always, you should consult a legal/tax professional to see if this might be a good option for you to consider. The SEC also has a fantastic publication on variable annuities that provides a great deal of information. It's not directly related to this question because it doesn't necessarily focus on the circumstances in which they might be a good fit for you, but it's educational nevertheless and should give you more than enough information to properly evaluate any policy you're looking to buy. |
A guy scammed me, but he gave me a bank account number & routing number. Can I use that to take out what he owes me? | A routing number and account number are on the bottom of every check. If anybody who ever handled your checks or even saw your checks could just withdraw as much money as they wanted, the whole banking system would need to be reworked. In short, just having that info is not enough. Not legally. |
Why are typical 401(k) plan fund choices so awful? | I would point this out to the committee or other entity in charge of handling this at work. They do have a fiduciary responsibility for the participant's money and should take anything reasonable seriously. The flip side to this is 95% of participants -- especially participants under 35 or so -- really pay next to no attention to this stuff. We consider it a victory to get people to pony up the matching contributions. Active participation in investment would blow our minds. |
Are spot market ,regular market and ready market same in stock trading if not then what is the difference? | So, the term "ready market" simply means that a market exists in which there are legitimate buy/sell offers, meaning there are investors willing to own or trade in the security. A "spot market" means that the security/commodity is being delivered immediately, rather at some predetermined date in the future (hence the term "futures market"). So if you buy oil on the spot market, you'd better be prepared to take immediate delivery, where as when you buy a futures contract, the transaction doesn't happen until some later date. The advantage for futures contract sellers is the ability to lock in the price of what they're selling as a hedge against the possibility of a price drop between now and when they can/will deliver the commodity. In other words, a farmer can pre-sell his grain at a set price for some future delivery date so he can know what he's going to get regardless of the price of grain at the time he delivers it. The downside to the farmer is that if grain prices rise higher than what he sold them for as futures contracts then he loses that additional money. That's the advantage to the buyer, who expects the price to rise so he can resell what he bought from the farmer at a profit. When you trade on margin, you're basically borrowing the money to make a trade, whether you're trading long (buying) or short (selling) on a security. It isn't uncommon for traders to pledge securities they already own as collateral for a margin account, and if they are unable to cover a margin call then those securities can be liquidated or confiscated to satisfy the debt. There still may even be a balance due after such a liquidation if the pledged securities don't cover the margin call. Most of the time you pay a fee (or interest rate) on whatever you borrow on margin, just like taking out a bank loan, so if you're going to trade on margin, you have to include those costs in your calculations as to what you need to earn from your investment to make a profit. When I short trade, I'm selling something I don't own in the expectation I can buy it back later at a lower price and keep the difference. For instance, if I think Apple shares are going to take a steep drop at some point soon, I can short them. So imagine I short-sell 1000 shares of AAPL at the current price of $112. That means my brokerage account is credited with the proceeds of the sale ($112,000), and I now owe my broker 1000 shares of AAPL stock. If the stock drops to $100 and I "cover my short" (buy the shares back to repay the 1000 I borrowed) then I pay $100,000 for them and give them to my broker. I keep the difference ($12,000) between what I sold them for and what I paid to buy them back, minus any brokerage fees and fees the broker may charge me for short-selling. In conclusion, a margin trade is using someone else's money to make a trade, whether it's to buy more or to sell short. A short trade is selling shares I don't even own because I think I can make money in the process. I hope this helps. |
What is my next step with investing, given a signing bonus of restricted stock units? | Coincidentally just read a nice post on this topic: http://thefinancebuff.com/no-tax-advantage-in-rsu.html In short, sell the stock as soon as it vests and treat it as a cash bonus. Assuming you're in the US and the stock is possible to sell (public company, no trading window restrictions, you have no material nonpublic information, etc.) What do you do with a cash bonus? If you have no savings, an emergency fund would be good, then start on retirement savings perhaps... it sounds a bit like you could use some broad general financial planning info, my favorite book for that is: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/B0013L2ED6 One exception to selling immediately could be if the company stock is hugely undervalued, but it probably isn't, and it's probably too hard to determine. |
Learning stock trading financing etc for someone from mathematical background [duplicate] | Security Analysis(very difficult for beginners )& Intelligent Investor by Benjamin Graham. All about(book series by McGraw) on Stocks,Derivatives,Options,Futures,Market Timings. Reminiscence of a Stock Operator (Life of jesse Livermore). Memoirs , Popular Delusions and Madness of the Crowds by Charles Mackay. Basics of Technical analysis includig Trading Strategies via Youtube videos & Google. Also opt for Seeking alpha free version to learn about portfolio allocation under current scenario there will be few articles as it will ask for premium version if you love it then opt for it. But still these books will do. |
I've got $100K to invest over the next 2 to 7 years. What are some good options? | Well, a proper answer needs a few more details: 1) What's your marginal tax bracket? (A CD is just plain silly for someone in a high tax bracket and in a high tax state) 2) What's your state of residence? 3) Do you have a 401k to draw on for a house loan in case of badly timed volatility? 4) What does will the rest of our investment portfolio look like in case of a sudden rise in interest rates? Depending on the answers to those questions, the mix of investments could be anywhere from: Tell me more about bracket/state/other investment mix and I can suggest something. |
Should I use regular or adjusted close for backtesting? | A one year period of study - Stock A trades at $100, and doesn't increase in value, but has $10 in dividends over the period. Stock B starts at $100, no dividend, and ends at $105. However you account for this, it would be incorrect to ignore stock A's 10% return over the period. To flip to a real example, MoneyChimp shows the S&P return from Jan 1980 to Dec 2012 as +3264% yet, the index only rose from 107.94 to 1426.19 or +1221%. The error expands with greater time and larger dividends involved, a good analysis won't ignore any dividends or splits. |
When investing, is the risk/reward tradeoff linear? | The relationship is not linear, and depends on a lot of factors. The term you're looking for is efficient frontier, the optimal rate of return for a given level of risk. The goal is to be on the efficient frontier, meaning that for the given level of risk, you're receiving the greatest possible rate of return (reward). http://www.investopedia.com/terms/e/efficientfrontier.asp |
Do companies that get taken-over have to honour the old gift card/certificate? | I know this is old, but Joe Taxpayer is wrong. When you dissolve a corporation in selling it, all liabilities go with the old owners and the new owners, smartly starting with a new corporation and taxpayer ID, start with a clean slate. The only way this is not true is if the new owners did not change a thing legally and kept everything the same, other than there names, which would be entirely insane if you asked any lawyer in the country. Gift cards are a touchy situation, if not negotiated in the deal, by law the new owners DO NOT have to take them. Yes, it's good PR, but when there's a considerable amount of money out there it could bury the new owners by giving away free stuff. |
I'm in the U.S. What are vehicles to invest in international stocks? | Interactive Brokers offers many foreign markets (19 countries) for US based investors. You can trade all these local markets within one universal account which is very convenient in my view. IB offering |
The board of directors in companies | Boards of Directors are required for corporations by nearly all jurisdictions. Some jurisdictions have almost self-defeating requirements however, such as in tax havens. Boards of Directors are compensated by the company for which they sit. Historically, they have set their own compensation almost always with tight qualitative legal bounds, but in the US, that has now changed, so investors now set Director compensation. Directors are typically not given wages or salary for work but compensation for expenses. For larger companies, this is semantics since compensation averages around one quarter of a million of USD. Regulations almost always proscribe agencies such as other corporations from sitting on boards and individuals convicted of serious crimes as well. Some jurisdictions will even restrict directories to other qualities such as solvency. While directors are elected by shareholders, their obligations are normally to the company, and each jurisdiction has its own set of rules for this. Almost always, directors are forbidden from selling access to their votes. Directors are almost always elected by holders of voting stock after a well-publicized announcement and extended time period. Investors are almost never restricted from sitting on a board so long as they meet the requirements described above. |
What risks are there acting as a broker between PayPal and electronic bank transfers? | The sting here is definitely in the tail, the PS that says We are starting to call you from the same day when we get your details. The initial email doesn't ask for details, it asks for commitment. Once committed, you will be more relaxed about providing details. This makes me think that this is more serious than a simple financial scam. This is an effort to steal your identity, and that could be much more serious than the one-off loss of a few thousand dollars. Here's why: 1. The scammer could get numerous credit cards and store cards in your name, run up thousands or even hundreds of thousands of dollars in charges, and leave you stuck with explaining what happened. I know someone who went from being a multi-millionaire to a pauper in a few months when his identity was stolen - and he is no fool. 2. It will take you years to clear your name. Meanwhile, your credit is shot, and you might have trouble getting a job, renting an apartment, or simply getting a cellphone contract. 3. Once you've repaired your credit, the scammer can just go through his old files and do it all over again. 4. Cloaked in your identity, and therefore being seen as you, the scammer can pull any number of scams, for which you will eventually be blamed. Then as well as dealing with credit bureaus, you will be dealing with another, more serious bureau: the FBI. |
How can I find out who the major short sellers are in a stock? | There is no way to know anything about who has shorted stuff or how concentrated the positions are in a few investors. Short positions are not even reported in 13(F) institutional filings. I'll take the bonus points, though, and point you to the US Equity Short Interest data source at quandl. |
Is it sensible to redirect retirement contributions from 401(k) towards becoming a landlord? | As a general rule, diversification means carrying sufficient amounts in cash equivalents, stocks, bonds, and real estate. An emergency fund should have six months income (conservative) or expenses (less conservative) in some kind of cash equivalent (like a savings account). As you approach retirement, that number should increase. At retirement, it should be something like five years of expenses. At that time, it is no longer an emergency fund, it's your everyday expenses. You can use a pension or social security to offset your effective monthly expenses for the purpose of that fund. You should five years net expenses after income in cash equivalents after retirement. The normal diversification ratio for stocks, bonds, and real estate is something like 60% stocks, 20% bonds, and 20% real estate. You can count the equity in your house as part of the real estate share. For most people, the house will be sufficient diversification into real estate. That said, you should not buy a second home as an investment. Buy the second home if you can afford it and if it makes you happy. Then consider if you want to keep your first home as an investment or just sell it now. Look at your overall ownership to determine if you are overweighted into real estate. Your primary house is not an investment, but it is an ownership. If 90% of your net worth is real estate, then you are probably underinvested in securities like stocks and bonds. 50% should probably be an upper bound, and 20% real estate would be more diversified. If your 401k has an employer match, you should almost certainly put enough in it to get the full match. I prefer a ratio of 70-75% stocks to 25-30% bonds at all ages. This matches the overall market diversification. Rebalance to stay in that range regularly, possibly by investing in the underweight security. Adding real estate to that, my preference would be for real estate to be roughly a quarter of the value of securities. So around 60% stocks, 20% bonds, and 20% real estate. A 50% share for real estate is more aggressive but can work. Along with a house or rental properties, another option for increasing the real estate share is a Real Estate Investment Trust (REIT). These are essentially a mutual fund for real estate. This takes you out of the business of actively managing properties. If you really want to manage rentals, make sure that you list all the expenses. These include: Also be careful that you are able to handle it if things change. Perhaps today there is a tremendous shortage of rental properties and the vacancy rate is close to zero. What happens in a few years when new construction provides more slack? Some kinds of maintenance can't be done with tenants. Also, some kinds of maintenance will scare away new tenants. So just as you are paying out a large amount of money, you also aren't getting rent. You need to be able to handle the loss of income and the large expense at the same time. Don't forget the sales value of your current house. Perhaps you bought when houses were cheaper. Maybe you'd be better off taking the current equity that you have in that house and putting it into your new house's mortgage. Yes, the old mortgage payment may be lower than the rent you could get, but the rent over the next thirty years might be less than what you could get for the house if you sold it. Are you better off with minimal equity in two houses or good equity with one house? I would feel better about this purchase if you were saying that you were doing this in addition to your 401k. Doing this instead of your 401k seems sketchy to me. What will you do if there is another housing crash? With a little bad luck, you could end up underwater on two mortgages and unable to make payments. Or perhaps not underwater on the current house, but not getting much back on a sale either. All that said, maybe it's a good deal. You have more information about it than we do. Just...be careful. |
Ordering from Canada, charged in CAD or USD? | Typically, businesses always charge their 'home' currency, so if the shop is in Canada, you will pay Canadian Dollars. Normally you don't have any choices either. Your credit card company will convert it to your currency, using the current international currency exchange rate (pretty good), plus a potential fee between 0 and 5% - depending on your credit card (not so good). If it is a significant amount, or you plan to do that more than once, and if you have multiple credit cards, check first to see which one has the lowest international fee; 0% is not uncommon, but neither is 3 or 4%. If it's a 10$ thingy, it's probably not worth the time; but 4% of 1000 is already 40$... As of right now, the currency exchange rate is 1.33, so you would pay ~75 USD; plus the potential fee, 0$ - 4$. Understand that this exchange rate is floating continuously; it probably won't change much, but it will change. |
Does the expense ratio of a fund-of-funds include the expense ratios of its holdings? | From The Prospectus for VTIVX; as compared to the Total Stock Market Fund; You can see how the Target date fund is a 'pass through' type of expense. It's not an adder. That's how I read this. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | Question: Does a billion dollars make you 1,000 times more happy than a million dollars? Answer: It doesn't. What counts is not the amount of money, but the subjective improvement that it makes to your life. And that improvement isn't linear, which is way the expected value of the inrease in your happiness / welfare / wellbeing is negative. The picture changes if you consider that by buying a ticket you can tell yourself for one week "next week I might be a billionaire". What you actually pay for is not the expected value of the win, but one week of hope of becoming rich. |
What happened to buyers of ABT right before the split? | The trades after that date were Ex-DIV, meaning after 5 pm Dec 12, new trades did not include the shares that were to be spun out. The process is very orderly, no one pays $60 without getting the spinoff, and no one pays $30 but still gets it. The real question is why there's that long delay nearly three weeks to make the spinoff shares available. I don't know. By the way, the stock options are adjusted as well. Someone owning a $50 put isn't suddenly in the money on 12/13. Edit - (I am not a hoarder. I started a fire last night and realized I had a few Barron's in the paper pile) This is how the ABT quote appeared in the 12/24 issue of Barron's. Both the original quote, and the WI (when issued) for the stock less the spin off company. |
How to determine contractor hourly rate and employee salary equivalents? | Take $100,000 base salary, x 1.5 = $150,000 contractor salary, divide by 1,872 hours = $80/hr |
Do I have to pay a capital gains tax if I rebuy different stocks? | Yes. As long as the stock is in a taxable account (i.e. not a tax deferred retirement account) you'll pay gain on the profit regardless of subsequent purchases. If the sale is a loss, however, you'll risk delaying the claim for the loss if you repurchase identical shares within 30 days of that sale. This is called a wash sale. |
How to calculate the rate of return on selling a stock? | If annualized rate of return is what you are looking for, using a tool would make it a lot easier. In the post I've also explained how to use the spreadsheet. Hope this helps. |
How to sell a worthless option | Sounds like an illiquid option, if there are actually some bidders, market makers, then sell the option at market price (market sell order). If there are not market makers then place a really low limit sell order so that you can sit at the ask in the order book. A lot of time there is off-book liquidity, so there may be a party looking for buy liquidity. You can also exercise the option to book the loss (immediately selling the shares when they get delivered to you), if this is an American style option. But if the option is worthless then it is probably significantly underwater, and you'd end up losing a lot more as you'd buy the stock at the strike price but only be able to sell at its current market value. The loss could also be increased further if there are even MORE liquidity issues in the stock. |
How much is university projected to cost in Canada in 18 years? | For a Canadian university education, an October 2009 article at Canada.com says: [...] The study estimates the total price tag of an undergraduate degree at a whopping $137,013 for students living away from home and $101,426 for those staying at home. [...] |
What is the cheapest way to move money from the United States to Canada? [duplicate] | No fees: Write a check. Deposit it into the other bank. |
Why do 10 year-old luxury cars lose so much value? | The answer is very simple. Part of the luxury is having the cutting edge technology with the very latest features. The price premium is not just from increased build quality; it's simply a perception. Additionally, 10 years takes its toll on a car. The smooth suspension gets rougher over time, and all the little features start to break down. Part of the price of that car factors in the expense of expected repairs. That's true of every car, but the repairs are more expensive when there are lots of gadgets to break down, especially on imports. |
Unmarried couple buying home, what are the options in our case? | You've laid out several workable options. You might try going to mortgage broker and looking at what offers you get each way. I can say that it sounds like your partner will have a difficult time qualifying for a mortgage. That puts you on the first and third options. Forget about "building equity." You cannot rely on the house you're living in to provide a return on investment. Housing is an expense, even if you own it outright. Keep that in mind when you consider taking from the stream of money contributing to your retirement. This link is to a blog which really clarifies the "rent vs. own, which is better?" question. The answer is, it depends on the individual and the location, and the blogger in the link explains how to answer that question for your situation. One of the key advantages of ownership is that it gives you freedom to modify the interior, exterior, and grounds (limited by local building codes of course.) |
My investment account is increasingly and significantly underperforming vs. the S&P 500. What should I do? | The majority (about 80%) of mutual funds are underperforming their underlying indexes. This is why ETFs have seen massive capital inflows compared to equity funds, which have seen significant withdrawals in the last years. I would definitively recommend going with an ETF. In addition to pure index based ETFs that (almost) track broad market indexes like the S&P 500 there are quite a few more "quant" oriented ETFs that even outperformed the S&P. I am long the S&P trough iShares ETFs and have dividend paying ETFs and some quant ETFS on top (Invesco Powershares) in my portfolio. |
What are the common income tax deductions used by “rich” salaried households? | From Rich Dad, Poor Dad. 3 Major Things: With rental real estate, in addition to mortgage interest, you also deduct property taxes, and must claim depreciation (cost of house / 27.5 years) Business Expenses. For example, buy a yacht and put it in a charter fleet. Deduct interest on the loan, depreciation of the asset, property taxes, upkeep of the boat. Your "business" earns profit from chartering the boat, which if I recall correctly is taxed at a lower rate. You get to go sailing for free. Then there was the concept of subdividing the businesses. If you own a restaurant, create another business to own the property, and the equipment used in the company. Then lease the equipment and rent the land to the restaurant. Now admittedly I thought this was like the Daylight Savings plan of tax avoidance, I mean now aren't you essentially having two companies paying half the taxes. I am sure there are well paid CPAs that make the math happen, perhaps using insurance plans.. Perhaps each business funds a "whole life" insurance account, and contributes vast amounts into that. Then you take a loan from your insurance account. Loans of course are not income, so not taxed. The third way is to create your own bank. Banks are required to have reserves of 9%. Meaning if I have $100 dollars, the FDIA allows me to loan $1,111. I then charge you 20% interest, or $222/yr. Now how much can I loan? ...well you can see how profitable that is. Sure you pay taxes, but when you print your own money who cares? Most of this is just gleamed from books, and government publications, but that was my general understanding of it. Feel free to correct the finer points. |
Do people tend to spend less when using cash than credit cards? | Unless a study accounts for whether the users are following a budget or not, it is irrelevant to those who are trying to take their personal finances seriously. I can certainly believe that those who have no budget will spend more on a credit card than they will on a debit card or with cash. Under the right circumstances spending with cards can actually be a tool to track and reduce spending. If you can see on a monthly and yearly basis where all of your money was spent, you have the information to make decisions about the small expenses that add up as well as the obvious large expenses. Debit cards and credit cards offer the same advantage of giving you an electronic record of all of your transactions, but debit cards do not come with the same fraud protection that credit cards have, so I (and many people like me) prefer to use credit cards for security reasons alone. Cash back and other rewards points bolster the case for credit cards over debit cards. It is very possible to track all of your spending with cash, but it is also more work. The frustration of accounting for bad transcriptions and rechecking every transaction multiple times is worth discussing too (as a reason that people get discouraged and give up on budgeting). My point is simply that credit cards and the electronic records that they generate can greatly simplify the process of tracking your spending. I doubt any study out there accounts for the people who are specifically using those benefits and what effect it has on their spending. |
Understanding the symbols next to the Ticker | I don't understand what the D, to the right of APPLE INC, means. This means the graph below is for the "D". There is selection at top and you can change this to Minutes [5,20,60,etc], Day, Week [W], Month [M] I'm not understanding how it can say BATS when in actuality AAPL is listed on the NASDAQ. Do all exchanges have info on every stock even from other exchanges and just give them to end-users at a delayed rate? BATS is an exchange. A stock can be listed on multiple exchange. I am not sure if AAPL is also listed on BATS. However looks like BATS has agreement with major stock exchanges to trade their data and supplies this to trading.com |
Fundamentals of creating a diversified portfolio based on numbers? | Your question is a complex one because knowledge of the investor's beliefs about the market is required. For almost any quantitative portfolio, one must have a good estimate of the expected return vector and covariance matrix of the assets in question. The expected return vector, in particular, is far from estimable. No one agrees on it and there is no way to know who is right and who is wrong. In a world satisfying the conditions of the CAPM, you can bypass this problem because the main implication of the CAPM is that the market weights are optimal. In that case the answer to your question is that you should determine the market weights of the various assets and use those along with saving in a risk-free account or borrowing, depending on your risk tolerance. This portfolio has the added benefit that you don't need to rebalance much...the weights in your portfolio adjust at the same rate as the market weights. Any portfolio that has something besides this also includes some notion of expected return aside from CAPM fair pricing. The question for you, then, is whether you have such a notion. If you do, you can mix your information with the market weights to come up with a portfolio. This is what the Black-Litterman method does, for example: get the expected return vector implied by market weights and the covariance matrix, mix with your expected return vector, then use mean-variance optimization to come up with your final weights. |
What does it mean when Share price and volume sales aren't negatively correlated? | When stocks have a change in price it is because of a TRADE. To have a trade you have to have both a buyer and a seller. When the price of a security is going up there are an equal amount of shares being sold as being bought. When the price of a security is going down there are an equal amount of shares being bought as being sold. There almost always is an unequal amount of shares waiting to be sold compared to the amount waiting to be bought. But waiting shares do not move the price, only when the purchase price and the sale price agree, and a trade occurs, does the price move. So the price does not go down because more shares are being sold. Neither does the price go up because more shares are being bought. |
Early Exercise and 83(b) Election | I assume I can/will need to file an 83(b) election, in order to avoid tax repercussions? What exactly will this save me from? 83(b) election is for restricted stock grants, not for stock purchases. For restricted stocks, you generally pay income tax when they vest. For startups the price difference between the time of the grant and the time of the vesting can be astronomical and by choosing 83(b) you effectively pay income tax on the value of the grant instead of the value of the vest. Then, you only pay capital gains tax on the difference between the sale price and the grant value when you sell. In your case you're exercising an option, i.e.: you're buying a stock, so 83(b) is irrelevant. What you will pay though is the tax on the difference between the strike price and the stock FMV (unless the stocks you end up buying are restricted - which would have been the case if you exercised your options early, but I don't think is going to be the case now). What steps should I take to (in the eyes of the law) guarantee that the board has received my execution notice? The secretary of the board is a notorious procrastinator and can be very unorganized. You should read what the grant contract/company policy says on that. Ask the HR/manager. Usually, a certified letter with return receipt should be enough, but you should verify the format, the address, and the timeframe. |
Paid off oldest CC keep it open or close it? | Close the account. The age doesn't outweigh the fact that you have to pay for the card. It would be one thing if the credit line was a couple thousand but showing the credit bureaus that you are staying away from the $425.00 doesn't really make them think you are any more trustworthy with your available credit. Utilization matters when you are staying away from much larger chunks of your available credit (across all cards). |
Is engaging in stocks without researching unwise? | If you don't want to do the deep research on each individual company, you might want to look at index funds and similar "whole market" investments. |
What are the pros and cons of buying an item on installments with zero percent interest? | If (and only if) there is a zero interest installment plan available, technically the only uncontrollable risk is that there will likely be a hard inquiry on your credit report which may or may not also have a corresponding debt obligation attached to it. (Personally, I recently signed up for one such plan with Google and I had a hard inquiry but no debt added to my report). The other risks are that 1) your monthly payment goes up, so if you are living on a tight budget the added payment might make it harder to meet your next bill, and 2) you could miss a payment which generally triggers interest to accrue retroactively at a high rate, and in some cases could be grounds for immediate repayment. The pro / reward of these plans is that you have to spend less of your capital upfront, which you may be able to use for other purposes (presumably with a higher net present value than purchasing the item you're considering outright). A larger example would be purchasing a new car. You want to buy a $50k car and you have the cash on hand to pay in full, but you are being offered 0% interest for 36 months. You may be more inclined to take a loan at 0% with 0 down payment and invest your money in another vehicle (no pun intended) that offers you a decent rate of return and you will come out ahead in the end. Of course, this example works in a perfect world where you can get such an offer, there are no extra fees available, you aren't worrying about your debt-to-income ratio in preparation for a big purchase like a house, there isn't a higher insurance premium to consider, etc. In short, 0% financing, be it for a phone or a car, can be a nice perk for the informed consumer who is not using the financing as a way to purchase outside their financial means, but it is offered by companies as a way to make people buy things they normally would not and, hopefully, capitalize on people missing payments in order to reap the sweet 20%+ interest rates generally seen with these offers. In your specific situation with the phone, you should consider if you get a discount on your monthly plan for purchasing outright, or if you can get the phone subsidized if you sign a contract (and you know you like your provider enough to stay for its duration). If the monthly plan rate stays the same and you're looking at either $500 now or $500 over 24 months and you don't mind a hard inquiry, there's not much of compelling reason to pass on the financing and hold on to your $500. |
Recommendation on Options Back Testing tool please | Based on my experience with OpenQuant, which is a development platform for automated trading strategies (and therefore can be easily be used for backtesting your personal strategy), I can give a little insight into what you might look for in such a platform. OpenQuant is a coding environment, which reads data feeds from a variety of sources (more on that in the second point), and runs the code for your strategy on that data and gives you the results. The data could be imported from a live data feed or from historical data, either through numerous API's, CSV/Excel, etc. You can write your own strategies using the custom C# libraries included with the software, which spares you from implementing your own code for technical indicators, basic statistical functions, etc. Getting the data is another issue. You could use joe's strategy and calculate option prices yourself, although you need to exercise caution when doing this to test a strategy. However, there is no substitute for backtesting a strategy on real data. Markets change over time, and depending on how far back you're interested in testing your strategy, you may run into problems. The reason there is no substitute for using real data is that attempting to replicate the data may fail in some circumstances, and you need a method of verifying that the data you're generating is correct and realistic. Calculating a few values, comparing them to the real values, and calibrating accordingly is a good idea, but you have to decide for yourself how many checks you want to do. More is better, but it may not be enough to realistically test your strategy. Disclaimer: Lest you interpret my post as a shameless plug for the OpenQuant platform, I'll state that I found the interface awful (it looked vaguely like Office 2000 but ten years too late) and the documentation woefully incomplete. I last used the software in 2010, so it may have improved in the intervening years, but your mileage may vary. I only use it as an example to give some insight into what you might look for in a backtesting platform. When you actually begin trading, a different platform is likely in order. That being said, it responded fairly quickly and the learning curve wasn't too steep. The platform wasn't too expensive at the time (about $700 for a license with no data feeds, I think) but I was happy that the cost wasn't coming out of my pocket. It's only gotten more expensive and I'm not sure it's worth it. |
Is U.S estate tax applicable to joint brokerage account of non-US citizens if one party dies? | If the brokerage account holds US assets, such as the stock of US companies, then it may be taxable under some conditions. The rules are complex and depend on the nationality of the individuals, because the results may be affected by tax treaties between the United States and whatever country the person is from. |
Why do people always talk about stocks that pay high dividends? | Technically, the difference between dividends and growth ought to be that dividends can be reinvested in stocks other than the one that paid them, which is a definite advantage if you actually have a strategy. Dividend -paying stocks used to be preferred for exactly that reason, back in the days when fewer people were directly playing in the market and more knew what they were doing. Unfortunately, getting a periodic dividend from a stock whose price is relatively steady isn't as exciting a game as watching your stock's value bounce around and (hopefully) creep upward on a second-by-second basis. Those who are thinking in gambling terms rather than investment terms -- or who think they can beat the pros at high frequency trading, comment withheld -- want the latter, and have been putting a lot of pressure on companies to operate in the latter mode. That doesn't make it better -- certainly not for the longer-term investors -- just more fashionable. And fashion often means getting stuck with something impractical because everyone else is doing it. On this, I second Scrooge: Humbug! |
Withdraw funds with penalty or bear high management fees for 10 years? | I think the main question is whether the 1.5% quarterly fee is so bad that it warrants losing $60,000 immediately. Suppose they pull it out now, so they have 220000 - 60000 = $160,000. They then invest this in a low-cost index fund, earning say 6% per year on average over 10 years. The result: Alternatively, they leave the $220,000 in but tell the manager to invest it in the same index fund now. They earn nothing because the manager's rapacious fees eat up all the gains (4*1.5% = 6%, not perfectly accurate due to compounding but close enough since 6% is only an estimate anyway). The result: the same $220,000 they started with. This back-of-the-envelope calculation suggests they will actually come out ahead by biting the bullet and taking the money out. However, I would definitely not advise them to take this major step just based on this simple calculation. Many other factors are relevant (e.g., taxes when selling the existing investment to buy the index fund, how much of their savings was this $300,000). Also, I don't know anything about how investment works in Hong Kong, so there could be some wrinkles that modify or invalidate this simple calculation. But it is a starting point. Based on what you say here, I'd say they should take the earliest opportunity to tell everyone they know never to work with this investment manager. I would go so far as to say they should look at his credentials (e.g., see what kind of financial advisor certification he has, if any), look up the ethical standards of their issuers, and consider filing a complaint. This is not because of the performance of the investments -- losing 25% of your money due to market swings is a risk you have to accept -- but because of the exorbitant fees. Unless Hong Kong has got some crazy kind of investment management market, charging 1.5% quarterly is highway robbery; charging a 25%+ for withdrawal is pillage. Personally, I would seriously consider withdrawing the money even if the manager's investments had outperformed the market. |
Money market account for emergency savings | Depends on how urgent your need for the emergency savings might be. If the money market account allows you to get your money in the same amount of time as the savings account then there is no real downside, but if the account takes a few days for you to access and you need your money sooner then you probably shouldn't. Also money market accounts DO give more interest than most savings accounts, but the interest rates are generally still pretty low, so it might be an improvement, but probably not a huge one |
What does “interest rates”, without any further context, generically refer to? | When "people say", each person is referring to whatever he/she is looking at. Interest rates tend to move roughly the same, but often there is a bias regarding long vs. short term. In the US right now, short term interest rates are very low but there is a lot of chatter saying they will rise in the future. The differential between long term rates and short term rates is high compared to historical norms, suggesting that the market believes this chatter. You can also look at the differences in rates between different quality levels. If the economy is improving, the difference in rate for lower rated debt vs. higher rated debt decreases as people think the chance of businesses failing is decreasing. Right now, any interest rate you look at is well below long term historical averages, so asserting that interest rates are low is quite safe. |
Is a fixed-price natural gas or electricity contract likely to save money? | In my area, the fixed prices are based on an average. My gas company will look at my previous months (six months if I remember correctly) payments and give me an average based on that amount. Then I am contracted for a year based on that average. If I lower my costs, I'm under contract and will not see the savings but if I go over for some reason, I will save money there. It really depends on how your utility companies work so I would check with them, look at your previous billing cycles and determine if the plan will possibly save you money. Of course some things can't be planned for such as the economic downturn like someone else mentioned. |
Why does a company's stock price affect its ability to raise debt? | As JB hints, it is likely due to superior or improving, fundamentals. If the fundamentals of a company improve then its ability to repay loans improves. If its ability to repay improves then more sources of cash become willing to lend to the company. Also if fundamentals are improving then more sources are willing to buy and/or hold the stock. |
How to protect myself against unauthorized recurring CC charges? | There is no way to stop any merchant from setting a recurring charge flag on a purchase. According to the following article, Mastercard and Visa encourages merchants to use this feature and even give them a better rate. I have found it impossible to stop these unauthorized transactions. The article sites that the merchant is allowed to march the charges across expired cards to find a good card that you might have as well as the article states they can cross banks to find you if you have the same type of card. Virtual account numbers will not protect you. Sorry but the only solution I have found is to close the account with the bank and move to a different type of card, mastercard to visa, or vice versa. This will only protect you for one move ,because if you have to do this again. Merchants that you thought were forgotten even years later will find you and post a charge legally. Virtual numbers from Mastercard or Visa won't stop them. I believe this is the number one reason for credit card fraud for consumers. There is no reason for a merchant to let anyone off the hook when the credit card company will side with them. The article below does state that Mastercard does have a "stop recurring payment" flag. Apparently no CSR tht I have talked to knows about it when I have asked to get a problem fixed. I have found that the only way to stop these charges from happening is to close all my visa and mastercard credit cards, pay with a check that you write and mail or a PayPal one time payment that is sent to pay for an invoice. Recurring Credit-Card Charges May Irk Consumers |
What's the appeal of dividends in investing? [duplicate] | A dividend is one method of returning value to shareholders, some companies pay richer dividends than others; some companies don't typically pay a dividend. Understand that shareholders are owners of a company. When you buy a stock you now own a portion (albeit an extremely small portion) of that company. It is up to you to determine whether holding stock in a company is worth the risk inherent to equity investing over simply holding treasury notes or some other comparable no risk investment like bank savings or CDs. Investing isn't really intended to change your current life. A common phrase is "investing in tomorrow." It's about holding on to money so you'll have it for tomorrow. It's about putting your money to work for you today, so you'll have it tomorrow. It's all about the future, not your current life. |
Will a credit card company close my account if I stop using it? | The answer is maybe. I had a Chase card without a purchase in over 4 years get canceled out of the blue, without so much as a notification telling me it was at risk for cancelation. They told me they typically close accounts after 24 months of inactivity (not including card fees) but let mine go for longer because I have several other credit cards, savings and checking accounts with them. I would recommend spending at least once per year on the card. |
Is there any benefit to investing in an index fund? | Why not figure out the % composition of the index and invest in the participating securities directly? This isn't really practical. Two indices I use follow the Russell 2000 and the S&P 500 Those two indices represent 2500 stocks. A $4 brokerage commission per trade would mean that it would cost me $10,000 in transaction fees to buy a position in 2500 stocks. Not to mention, I don't want to track 2500 investments. Index funds provide inexpensive diversity. |
Why diversify stocks/investments? | Basically, diversifying narrows the spread of possible results, raising the center of the returns bell-curve by reducing the likelihood of extreme results at either the high or low end. It's largely a matter of basic statistics. Bet double-or-nothing on a single coin flip, and those are the only possible results, and your odds of a disaster (losing most or all of the money) are 50%. Bet half of it on each of two coin flips, and your odds of losing are reduced to 25% at the cost of reducing your odds of winning to 25%, with 50% odds that you retain your money and can try the game again. Three coins divides the space further; the extremes are reduced to 12.5% each, with the middle being most likely. If that was all there was, this would be a zero-sum game and pure gambling. But the stock market is actually positive-sum, since companies are delivering part of their profits to their stockholder owners. This moves the center of the bell curve up a bit from break-even, historically to about +8%. This is why index funds produce a profit with very little active decision; they treat the variation as mostly random (which seems to work statistically) and just try to capture average results of a (hopefully) slightly above-average bucket of stocks and/or bonds. This approach is boring. It will never double your money overnight. On the other hand, it will never wipe you out overnight. If you have patience and are willing to let compound interest work for you, and trust that most market swings regress to the mean in the long run, it quietly builds your savings while not driving you crazy worrying about it. If all you are looking for is better return than the banks, and you have a reasonable amount of time before you need to pull the funds out, it's one of the more reliably predictable risk/reward trade-off points. You may want to refine this by biasing the mix of what you're holding. The simplest adjustment is how much you keep in each of several major investment categories. Large cap stocks, small cap stocks, bonds, and real estate (in the form of REITs) each have different baseline risk/return curves, and move in different ways in response to news, so maintaining a selected ratio between these buckets and adding the resulting curves together is one simple way to make fairly predictable adjustments to the width (and centerline) of the total bell curve. If you think you can do better than this, go for it. But index funds have been outperforming professionally managed funds (after the management fees are accounted for), and unless you are interested in spending a lot of time researching and playing with your money the odds of your doing much better aren't great unless you're willing to risk doing much worse. For me, boring is good. I want my savings to work for me rather than the other way around, and I don't consider the market at all interesting as a game. Others will feel differently. |
Should I sell a 2nd home, or rent it out? | If you can generate a higher ROI by renting than by cashing out and investing, then you should rent it out. Please consider your risk tolerance as well. It's always a personal decision whether to assume higher risk for a higher return. |
One of my stocks dropped 40% in 2 days, how should I mentally approach this? | You shouldn't be picking stocks in the first place. From New York Magazine, tweeted by Ezra Klein: New evidence for that reality comes from Goldman Sachs, via Bloomberg News. The investment bank analyzed the holdings of 854 funds with $2.1 trillion in equity positions. It found, first of all, that all those “sophisticated investors” would have been better off stashing their money in basic, hands-off index funds or mutual funds last year — both of them had higher average returns than hedge funds did. The average hedge fund returned 3 percent last year, versus 14 percent for the Standard & Poor’s 500. Mutual funds do worse than index funds. Tangentially-related to the question of whether Wall Street types deserve their compensation packages is the yearly phenomenon in which actively managed mutual funds underperform the market. Between 2004 and 2008, 66.21% of domestic funds did worse than the S&P Composite 1500. In 2008, 64.23% underperformed. In other words, if you had a fund manager and his employees bringing their skill and knowledge to bear on your portfolio, you probably lost money as compared to the market as a whole. That's not to say you lost money in all cases. Just in most. The math is really simple on this one. Stock picking is fun, but undiversified and brings you competing with Wall Streeters with math Ph.Ds. and twenty-thousand-dollars-a-year Bloomberg terminals. What do you know about Apple's new iPhone that they don't? You should compare your emotional reaction to losing 40% in two days to your reaction to gaining 40% in two days... then compare both of those to losing 6% and gaining 6%, respectively. Picking stocks is not financially wise. Period. |
Is selling only shares you bought with margin on a margin/unsettled cash purchase free ride? | I'm not 100% sure, but I don't think it would be considered a free ride. The idea of a free ride is that you are engaging in a transaction when you do not actually have the money available to cover it, since the broker is technically giving you a 3 day loan whenever you purchase your stock (3 day rule to settle.) However, if you are using a margin account, and you have enough credit available, then you are not actually using unsettled assets, but rather an additional line of credit which was granted to you. You would just need to make sure that your total transactions are less than your purchasing power. That's my take on it anyway. I hope that helps, and hopefully someone can confirm or reject what I have said. |
Multiple mortgage pre-approvals and effects on credit score | The problem is not the credit score; it is the "competing" inquiries. Multiple inquiries will be considered as one if done withing a short time period (2 month, IIRC) and for the same kind of credit, because people do shop for rates, you're not the first one to do that. So don't worry about that. What you should be worrying about is banks asking questions about these inquiries, which is an annoying (at least for me) technicality. You'll have to explain to each of the banks that you want a pre-approval from that you're going to take the mortgage from them, and not from anyone else. In writing, with your signature notarized. Which is OK because it's done (the signature and notarizing) at closing, but you'll have to "convince" them that they're the chosen ones to get approved. Other than that it's pretty simple. I've done that (including the declaration that I'm not going to take any loans based on the other "competing" inquiries), and it worked fine when I took the original mortgage, and when I refinanced it later in a similar "shopping" fashion. Do it closer to the actual bidding, because closing does take at least 3-4 weeks, and the rate lock is usually for 30-60 days, so not much time to shop if you take that road. |
Buying shares in a company after you quit | US law dictates that you cannot buy / sell shares in a company you work for except during open trading windows. I understand lockout periods when you're in a company but what about after you quit? There's no such law. Trading lockouts are imposed by companies themselves to avoid the complexities of identifying "insiders". For large companies it sometimes is easier/cheaper to assume everyone is insider instead of imposing internal data flow controls and limitations. For such companies, their internal policies would also manage how the employees who are leaving should be treated. |
What is the relationship between the earnings of a company and its stock price? | You would think that share prices is just a reflection of how well the company is doing but that is not always the case. Sometimes it reflects the investor confidence in the company more than the mere performance. So for instance if some oil company causes some natural disaster by letting one of there oil tankers crash into a coral reef then investor confidence my take a big hit and share prices my fall even if the bottom line of the company was not all that effected. |
How do I use investments to lower my taxes [US]? | Not exactly. There are a few ways to manage your taxes with investments. 1) For most investments you get taxed on any gain in value in the investment or dividends paid by that investment. Most investments (with some exceptions for mutual funds) you don't take the tax hit until you sell the investment and realize the gain. For bonds, cds, and other cash type investments you have to pay taxes in the year they pay out the interest or dividend. 2) You can put money (up to a certain limit) in a traditional IRA and can subtract that amount from your income for tax calculation for the year you invest it. However, you are going to pay taxes on it when you take the money out at retirement. It really just delays the taxes. 3) If you put the money in a Roth IRA, you don't get a tax break now, but you don't have to pay any taxes on the money or the gains when you take it out at retirement. 4) The gains from some mutual funds can be tax exempt, but that just saves you from paying tax on the increase in value. 5) Don't fall for scams that try to use insurance policies as investments to avoid taxes. The fees are ginormous, which usually makes them a ripoff. |
Are mutual funds a good choice for a medium to low risk investment with a two year horizon? | I assume you mean Stock Mutual funds. 2008 wasn't that long ago. Down 37%. 07/08 combined were down 34%, or 07/09 down 20%. The point of the long term is that over time, a decade will almost ensure a positive return. 2 years is too short, in my opinion. |
How to pay with cash when car shopping? | Ask the dealer to drive to the bank with you, if they really want cash. |
What's the purpose of having separate checking and savings accounts? | Additionally, it used to be the case that savings accounts would have a noticeably higher interest than checking accounts (if the checking account paid any at all). So you would attempt to maximize your cash working for you by putting as much as you could into the savings account and then only transferring out what you needed to cover bills, etc into the checking account. |
Car expense deductions with multiple work locations | Suppose that I work from home, but do not qualify for a business use of home deduction. As I understand it, this means I cannot deduct trips from home to another work location (e.g., going to a client's home or office to do work there). I do not think this is true. You cannot deduct trips to your main business location, i.e.: you cannot deduct trips to your office or client's location if this is your main client and you routinely work on-site. However, if you only visit your clients on occasion for specific events while doing your routine work at home - you can definitely deduct those trips. The deduction of the home usage itself has nothing to do with it. However, there's a different reason they refer to pub 587. Your home must qualify as principal place of business (even if it doesn't qualify for deduction). The qualifications of "principal place of business" are described in pub 587. "if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second." What is not clear to me is what exactly is deductible if there are significant time gaps (within a single day) between trips to different clients. You got it right. What this quote means is that if you have client A and client B, and you drive from A to B - you can only deduct the travel between A and B, nothing else. I.e.: if you have 2 hours to kill and you take a trip to the mall - you cannot deduct the mileage attributable to that trip. You only deduct the actual distance between A and B as it would be had you driven from A to B directly. The example you cite re first client being considered as the place of business is for the case where your home doesn't qualify as principal place of business. In this case you start counting miles from your first client, and only for direct trips from client to client. If you only have 1 client in that day, tough luck, nothing to deduct. Also, it's not clear whether stopoffs between clients would really be "personal reasons", since the appointment times are often set by the client, so it's not as if the delay between A and B was just because I felt like it; there was never the option of going directly from A to B. That's what is called "facts and circumstances". You can argue that you had enough time between meetings to go back to your home office to continue working. The IRS agent auditing you (and you're likely to get audited) will consider that. Maybe will accept it. Maybe not. If I had a gap like that described above, I could save on my taxes by going to the park or a hamburger stand instead of going home between A and B But then you wouldn't be at home, so why would it be "principal place of business" if you're not there? Boom, lost deduction for the trip to the first client. I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State). You're dealing with deductions that are considered "red flags" for the IRS. I.e.: many people believe that these deductions (business use of your home/car) trigger audits. To substantiate business use of your car you need to keep very good track of your travels (literally travel log, they sell them at Staples), and make sure to distinguish between personal travel and business travel, keep proofs that the meetings took place (although keeping a log is a requirement, it can be backdated/faked, so if audited - the IRS will want to see more than your own documentation). A good tax adviser will educate you on all these rules, and also clarify the complexities you were asking about here. I'm not a tax adviser, so don't rely on this answer when you're preparing your tax return or responding to the IRS audit. In your edit you ask this: Specifically, what I'm wondering is whether it is possible for a home to qualify as a "principal place of business" for purposes of deducting car expenses but not for the home office deduction. The answer is yes. Deductibility is determined by exclusivity of use, among other things. But the fact that you manage your business from your kitchen doesn't make your kitchen any less of a principal place of business. It is non-deductible because you also cook your dinners there, but it is still, nonetheless, your principal place of business. The Pub 587 which I linked to has these qualifications: Your home office will qualify as your principal place of business if you meet the following requirements. You use it exclusively and regularly for administrative or management activities of your trade or business. You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. As you see, exclusivity of the usage of your home area is not a requirement here. The "exclusively and regularly" in the quote refers to your business not using any other location, and managing it from home regularly. I.e.: if you manage your business a day in a year - that's not enough for it to be considered principal. If you manage your business from your office and your home - you cannot consider home as principal. |
What are the easier to qualify home loans in Canada? | Your credit score is really bad, and it's highly unlikely anyone will be willing to give you a mortgage, especially if you still have bad debt showing up on your credit report. What would help? Well, clearing off any bad debt would be a good place to start. Ideally, you want to get your credit rating up above 680, though that may be optimistic here. Note, though, that bad debt falls off your credit report after a while. Exactly how long depends on your province. Note that making partial payment, or even just acknowledging the debt, will reset the 'timer', however. I mention this, though, because you mention some of your debt is from 5 or 6 years ago. It may be just about to fall off. It would also help if you can show that your credit is so bad because of mistakes from a number of years ago, but you've been making payments and staying on top of all debts for the past few years, if that's the case. Also, it would help if you had a reasonable downpayment. 20% minimum, but you'll be a lower credit risk if you are able to put down 50 - 75%. You could also consider having someone with good credit co-sign the mortgage. Note that most people will not be willing to do this, as they take on substantial financial risk. All that said, there are some institutions which specialise in dealing with no credit or bad credit customers. You pay more fees and will pay a vastly higher interest rate, but this may be a good option for you. Check out mortgage brokers specialising in high-risk clients. You can also consider a rent-to-own, but almost all the advice I've ever seen say to avoid these if you can. One late payment and you may lose all the equity you think you've been building up. Note that things may be different if you are moving from the U.S. to Canada, and have no credit history in Canada. In that case, you may have no credit rather than bad credit. Most banks still won't offer you a mortgage in this case, but some lenders do target recent immigrants. Don't rule out renting. For many people, regardless of their credit rating, renting is a better option. The monthly payments may be lower, you don't need a downpayment, you don't have to pay realtor and legal fees (and pay again if you need to move). A couple of sites provide more information on how your credit rating affects your possibility of getting a mortgage, and how to get mortgages with bad credit: http://mortgages.ca/credit-score-needed-mortgage-canada/ and http://mortgages.ca/mortgage-solutions/new-to-canada-financing/, along with http://www.ratehub.ca/mortgage-blog/2013/11/how-to-get-a-mortgage-with-bad-credit/ |
Using cash back rewards from business credit card | A C-Corp is not a pass-through entity, any applicable taxes would be paid by the Corporation, which is a separate legal entity from yourself. If you use the points to purchase something for yourself, that would constitute "income" to you, and would be taxable on your personal income tax. |
Are those “auto-pilot” programs a scam or waste of time? | Genuine (nearly) passive income can be had from some kinds of investing. Index funds are an example of a mostly self-managing investment. Of course investment involves some risk (the income is essentially paying you for taking that risk) and returns are reasonable but proportional to the risk -- IE, not spectacular unless the risk is high. If someone is claiming they can get you better than market rate of return, look carefully at what they are getting out of it and what the risks are. Fees subtract directly from your gains, and if they claim there is no additional risk, they need to prove that. You are giving someone your money. Be very sure you are going to get it back. If it isn't self-evident where the income comes from, it's probably a scam. If someone is using the term "auto-pilot", it is almost certainly a scam. If they are talking about website advertising and the like, it is far from autopilot if you want to make any noticable amount of money (though you may make money for them). |
Digital envelope system: a modern take | If psychologically there is no difference to you between cash and debit (you should test this over a couple of months on yourself and spouse to make sure), then I suggest two debit cards (one for you and spouse) on your main or separate checking account. If you use Mint you can set budgets for each category (envelope) and when a purchase is made Mint will automatically categorize that transaction and deduct that amount from the correct budget. For example: If you have a "Fast Food" budget set at $100 per month and you use the debit at McDonalds, Mint should automatically categorize it as "Fast Food" and deduct the amount from the "Fast Food" budget that you set. If it can't determine a category or gets it wrong, you can just select the proper category. Mint has an iPhone (also Android and Windows phone) app that I find very easy to use. Many people state that they don't have this psychologically difference between spending cash and debit/credit, but I would say that most actually do, especially with small purchases. It doesn't have anything to do with intellect or knowing that you are actually spending money. It has more to do with tangibility, and the physical act of handing over cash. You may not add that soda and candy bar to your purchase if you have visible cash in your wallet that will disappear more quickly. I lived in Germany for 2 years before debit cards were around or common. I'm a sharp guy and even though I knew that I paid $100 for the 152 DM, it still kind of felt like spending Monopoly money, especially considering that in the US we are used to coins normally being 25 cents or less and in Germany coins are up to 10 DM (almost $10) and are used more frequently than paper. |
The best credit card for people who pay their balance off every month | The answer today is the Fidelity Rewards Amex. This card pays the highest cash back (2%) on ALL purchases. The answer gets more complicated if you like miles, or you want to use one card for groceries and gas and another for restaurants, etc. But the Fidelity Amex gives you 2% on everything you purchase, automatically deposited into your Fidelity account as cash (no coupons to rip off, or checks to deposit). |
What happens to my position if I hold some stocks of a company that gets acquired? | The stockholders of company A vote to approve or disapprove the buy out. That is the only control you have on the price: Vote to approve or disapprove. If the deal is approved then you get the money, or stock in B, or both, in accordance with the terms of the deal. It will arrive into your account automatically. |
At what age should I start or stop saving money? | Are you working? Does your employer offer a 401(k) and if so, is there any match? Saving should be taught to kids at the same time they are old enough to get an allowance. There are many numbers tossed around, but 10% is a start for any new saver. If a college graduate can start by saving even 15%, better still. If you find that the 10% is too much, just start with what you can spare, and work to build that up over time, perhaps by splitting any future raises, half going toward savings, half to spending. Good luck. Edit - my 12 yr old made good money this summer baby sitting. I'm opening a Roth IRA for her. A 10 yr head start on her retirement savings. Edit (Jan-2013) - she's 14 now, 3 deposits to the Roth total $6000, and she's planning to up the number this year. Her goal is to have $50K saved in her Roth by the time she graduates college. Edit, by request (July-2017) 18, and off to college next month. Just under $24K, all invested in an S&P low cost index. We are planning to continue deposits of $4-$5K/yr, so the $50K is still a good goal. |
Why are capital gains taxed at a lower rate than normal income? | There are many reasons, which other answers have already discussed. I want to emphasize and elaborate on just one of the reasons, which is that it avoids double taxation, especially on corporate earnings. Generally, for corporations, its earnings are already taxed at around 40% (for the US - including State income taxes). When dividends are distributed out, it is taxed again at the individual level. The effect is the same when equity is sold and the distribution is captured as a capital gain. (I believe this is why the dividend and capital gain rates are the same in the US.) For a simplistic example, say there is a C Corporation with a single owner. The company earns $1,000,000 before income taxes. It pays 400,000 in taxes, and has retained earnings of $600,000. To get the money out, the owner can either distribute a dividend to herself, or sell her stake to another person. Either choice leads to $600,000 getting taxed at another 20%~30% or so at the individual level (depending on the State). If we calculate the effective rate, it is above 50%! Many people invest in stock, including mutual funds, and the dividends and capital gains are taxed at lower rates. Individual tax returns that contain no wage income often have very low average tax rates for this reason. However, the investments themselves are continuously paying out their own taxes, or accruing taxes in the form of future tax liability. |
Should I worry too much about saving my 20% down before buying my first house? | The only problem that I see is that by not giving the 20% right away, you might need to pay PMI for a few months. In addition, in the case of conventional loans, I heard that banks will not remove the PMI after reaching 80% LTV without doing an appraisal. In order to be removed automatically, you need to reach 78% LTV. Finally, I think you can get a better interest by giving 20% down, and you can get a conventional loan instead of a FHA loan, which offers the option to avoid the PMI altogether (on FHA, you have two PMIs: one upfront and one monthly, and the monthly one is for the life of the loan if you give less than 10%). |
Is there any kind of unsecured stock loan? | buy an option, they cost less and let you buy shares in the future at the price you see now. only if you plan to buy more than 100 shares of the stock at that future date though. better learn how to use options strategically first, which I won't go into. but this is indeed their purpose. |
Is it worth it to buy TurboTax Premier over Deluxe if I sold investments in a taxable account? | I have found that using the online version can help determine the correct product. Try Deluxe online, you can upload the data from last year. When you get to the key forms see what happens if you don't switch. Then switch to Premiere. Compare the results. |
How is it possible that a preauth sticks to a credit card for 30 days, even though the goods have already been delivered? | The answer to your question is very simple: The preauth and the shipment of the goods have no connection within the credit card system. It is possible to process a payment that does not cancel a preauthorization. This is needed for the case where you place two orders and the one you placed second ships first. A preauth can remain active for some time unless it is captured or cancelled. So in your case a preauth was placed and remained active. That you were shipped and billed for some goods had no effect on the preauth because one side or the other failed to attach them. |
Is there a government-mandated resource that lists the shareholders of a public company? | No, there is no such list, as the other answers mention it is practically impossible to compile one. However you can see the institutional investors of a public company. MSN Money has this information available in a fair amount of details. For example see the Institutional Investors of GOOG |
Do mutual fund companies deliberately “censor” their portfolios/funds? | If I invest in individual stocks I will, from time to time, sell stocks that aren't performing well. If the value of my portfolio has gone up by 10%, then the value of my portfolio has gone up by 10%, regardless of whether selling those stocks is labeled as "delete[ing] failures". Same thing for mutual funds: selling underperforming stocks is perfectly ordinary, and calling it "delete[ing] failures" in order to imply some sort of dishonesty is simply dishonest. |
Why is the number of issued shares less than the number of outstanding shares | I have been asking myself a similar question about the financial statements of Weyerhaeuser. In response to Dheer's comment, whilst treasury shares are treated as a negative, it is issued shares less treasury shares (the negative) which gives the outstanding shares. So the original query remains unanswered. I've searched several sources and all state that outstanding shares will never be greater than issued shares. I've realized that the shares referred to are those authorized followed by those issued and outstanding (current year and prior year respectively) i.e. the shares that are both issued and outstanding as they must be issued in order to be outstanding This is supported in the example of Weyerhaeuser as there was a large increase in shares during Q1 2016 as a result of their merger with Plum Creek. Shares issued and outstanding are 510 million and 759 million respectively. |
How should I report my RSUs in my tax return | Your employer should send you a statement with this information. If they didn't, you should still be able to find it through E*Trade. Navigate to: Trading & Portfolios>Portfolios. Select the stock plan account. Under "Restricted Stock", you should see a list of your grants. If you click on the grant in question, you should see a breakdown of how many shares were vested and released by date. It will also tell you the cost basis per share and the amount of taxes withheld. You calculate your cost basis by multiplying the number of released shares by the cost basis per share. You can ignore the ordinary income tax and taxes withheld since they will already have been included on your W2 earnings and withholdings. Really all you need to do is report the capital gain or loss from the cost basis (which if you sold right away will be rather small). |
60% Downpayment on house? | If you decide you need the extra money, you can always go refinance and get more cash out. At the end of the day, though, if you pay off your house sooner you can invest more of your income sooner; that's just a matter of discipline. |
Personal credit card for business expenses | Early on, one might not be able to get credit for their business. For convenience, and the card perks, it makes sense to use the personal card. But for sake of a clean paper trail, I'd choose 1 card and use it exclusively, 100% for the business. Not one card here, one card there. |
Should withheld income tax be included as income? | This very topic was the subject of a question on workplace SE https://workplace.stackexchange.com/questions/8996/what-can-relocation-assistance-entail TL/DR; From tax publication 521 - Moving expenses table regarding how to report IF your Form W-2 shows... your entire reimbursement reported as wages in box 1 AND you have... moving expenses THEN... file Form 3903 showing all allowable expenses,* but do not show any reimbursements. There are tax implications Covered in tax publication 521 - Moving expenses and Employers tax guide to Fringe Benefits related to moving expenses. From the Employers View: Moving Expense Reimbursements This exclusion applies to any amount you directly or indirectly give to an employee, (including services furnished in kind) as payment for, or reimbursement of, moving expenses. You must make the reimbursement under rules similar to those described in chapter 11 of Publication 535 for reimbursement of expenses for travel, meals, and entertainment under accountable plans. The exclusion applies only to reimbursement of moving expenses that the employee could deduct if he or she had paid or incurred them without reimbursement. However, it does not apply if the employee actually deducted the expenses in a previous year. Deductible moving expenses. Deductible moving expenses include only the reasonable expenses of: Moving household goods and personal effects from the former home to the new home, and Traveling (including lodging) from the former home to the new home. Deductible moving expenses do not include any expenses for meals and must meet both the distance test and the time test. The distance test is met if the new job location is at least 50 miles farther from the employee's old home than the old job location was. The time test is met if the employee works at least 39 weeks during the first 12 months after arriving in the general area of the new job location. For more information on deductible moving expenses, see Publication 521, Moving Expenses. Employee. For this exclusion, treat the following individuals as employees. A current employee. A leased employee who has provided services to you on a substantially full-time basis for at least a year if the services are performed under your primary direction or control. Exception for S corporation shareholders. Do not treat a 2% shareholder of an S corporation as an employee of the corporation for this purpose. A 2% shareholder is someone who directly or indirectly owns (at any time during the year) more than 2% of the corporation's stock or stock with more than 2% of the voting power. Treat a 2% shareholder as you would a partner in a partnership for fringe benefit purposes, but do not treat the benefit as a reduction in distributions to the 2% shareholder. Exclusion from wages. Generally, you can exclude qualifying moving expense reimbursement you provide to an employee from the employee's wages. If you paid the reimbursement directly to the employee, report the amount in box 12 of Form W-2 with the code “P.” Do not report payments to a third party for the employee's moving expenses or the value of moving services you provided in kind. From the employees view: The not be included as income the expenses must be from an accountable plan: Accountable Plans To be an accountable plan, your employer's reimbursement arrangement must require you to meet all three of the following rules. Your expenses must have a business connection – that is, you must have paid or incurred deductible expenses while performing services as an employee of your employer. Two examples of this are the reasonable expenses of moving your possessions from your former home to your new home, and traveling from your former home to your new home. You must adequately account to your employer for these expenses within a reasonable period of time. You must return any excess reimbursement or allowance within a reasonable period of time. Also what is interesting is the table regarding how to report IF your Form W-2 shows... your entire reimbursement reported as wages in box 1 AND you have... moving expenses THEN... file Form 3903 showing all allowable expenses,* but do not show any reimbursements. |
Selecting between investment vehicles for income | You have a comparatively small sum to invest, and since you're presumably expecting to go to college.university soon, where you may well need the money, you also have a short timescale for your investment. I don't think anything stock-related would be good for you -- you need a longer timescale for stock market investments, at least five years and preferably ten or more. I don't know the details of Australian savings, but I'd suggest just finding a bank that is giving a good interest rate for a one-year fixed-term savings account. |
What's a good free checking account? | The best bank with least amount of gotchas is Alliant Credit Union. I did a lot of research and finally decided on this bank. I did a comparative study between ING, Ally and Alliant and found Alliant to be superior than the the other two. More about my study: http://www.moneycone.com/a-bank-thats-better-than-ally-and-ingdirect/ If you do find a better bank than this, please update this post, I'd definitely like to know! Disclaimer: I have no relationship with either of the three banks. |
Are non-residents or foreigners permitted to buy or own shares of UK companies? | It's easy to own many of the larger UK stocks. Companies like British Petroleum, Glaxo, and Royal Dutch Shell, list what they call ADRs (American Depositary Receipts) on the U.S. stock exchanges. That is, they will deposit local shares with Bank of NY Mellon, JP Morgan Chase, or Citicorp (the three banks that do this type of business), and the banks will turn around and issue ADRs equivalent to the number of shares on deposit. This is not true with "small cap" companies. In those cases, a broker like Schwab may occasionally help you, usually not. But you might have difficulty trading U.S. small cap companies as well. |
Does keeping 'long-term' safety net in bonds make sense? | The answer to your question depends very much on your definition of "long-term". Because let's make something clear: an investment horizon of three to six months is not long term. And you need to consider the length of time from when an "emergency" develops until you will need to tap into the money. Emergencies almost by definition are unplanned. When talking about investment risk, the real word that should be used is volatility. Stocks aren't inherently riskier than bonds issued by the same company. They are likely to be a more volatile instrument, however. This means that while stocks can easily gain 15-20 percent or more in a year if you are lucky (as a holder), they can also easily lose just as much (which is good if you are looking to buy, unless the loss is precipitated by significantly weaker fundamentals such as earning lookout). Most of the time stocks rebound and regain lost valuation, but this can take some time. If you have to sell during that period, then you lose money. The purpose of an emergency fund is generally to be liquid, easily accessible without penalties, stable in value, and provide a cushion against potentially large, unplanned expenses. If you live on your own, have good insurance, rent your home, don't have any major household (or other) items that might break and require immediate replacement or repair, then just looking at your emergency fund in terms of months of normal outlay makes sense. If you own your home, have dependents, lack insurance and have major possessions which you need, then you need to factor those risks into deciding how large an emergency fund you might need, and perhaps consider not just normal outlays but also some exceptional situations. What if the refrigerator and water heater breaks down at the same time that something breaks a few windows, for example? What if you also need to make an emergency trip near the same time because a relative becomes seriously ill? Notice that the purpose of the emergency fund is specifically not to generate significant interest or dividend income. Since it needs to be stable in value (not depreciate) and liquid, an emergency fund will tend towards lower-risk and thus lower-yield investments, the extreme being cash or the for many more practical option of a savings account. Account forms geared toward retirement savings tend to not be particularly liquid. Sure, you can usually swap out one investment vehicle for another, but you can't easily withdraw your money without significant penalties if at all. Bonds are generally more stable in value than stocks, which is a good thing for a longer-term portion of an emergency fund. Just make sure that you are able to withdraw the money with short notice without significant penalties, and pick bonds issued by stable companies (or a fund of investment-grade bonds). However, in the present investment climate, this means that you are looking at returns not significantly better than those of a high-yield savings account while taking on a certain amount of additional risk. Bonds today can easily have a place if you have to pick some form of investment vehicle, but if you have the option of keeping the cash in a high-yield savings account, that might actually be a better option. Any stock market investments should be seen as investments rather than a safety net. Hopefully they will grow over time, but it is perfectly possible that they will lose value. If what triggers your financial emergency is anything more than local, it is certainly possible to have that same trigger cause a decline in the stock market. Money that you need for regular expenses, even unplanned ones, should not be in investments. Thus, you first decide how large an emergency fund you need based on your particular situation. Then, you build up that amount of money in a savings vehicle rather than an investment vehicle. Once you have the emergency fund in savings, then by all means continue to put the same amount of money into investments instead. Just make sure to, if you tap into the emergency fund, replenish it as quickly as possible. |
Why are credit cards preferred in the US? | Personally, I use my credit cards for everything because I get reward points (or, cash back, depending on the card), and I build credit history. I've had credit cards since I was 18 (now 22), and my credit score is in the higher end 700s which I'm told is pretty good for my age. Additionally, since I put my rent and large purchases on my credit card, I have a lot of reward points. I use these to buy things I wouldn't normally buy to try them out and see if they bring any value into my life. If not, I didn't really lose anything, but I have found value in some of those things. I realize most of this is gamification and consumerism at play, but getting that extra little thing once in a while for "free" which is pretty nice. |
Quantiative Easing fuels stock markets, but why? | There's a premium or discount for various stocks subject to influence by the alternatives available to investors, meaning investments are susceptible to the principle of supply and demand. This is easily seen when industries or business models get hot, and everybody wants a tech company, a social media company, or a solar company in his portfolio. You'll see bubbles like the dotcom bubble, the RE bubble, etc., as people start to think that the industry and not its performance are all that matters. The stock price of a desired industry or company is inflated beyond what might otherwise be expected, to accommodate the premium that the investment can demand. So if bonds become uniformly less attractive in terms of returns, and certain institutional investors are largely obliged to continue purchasing them anyway, then flexible investors will need to look elsewhere. As more people want to buy stocks, the price rises. Supply and demand is sometimes so elementary it feels nearly counter-intuitive, but it applies here as elsewhere. |
Best way to pay off debt? | The key phrase in your post is that the options are "in a good position now". They may be worthless in three months or a year. If I was you I would cash in the options and pay off the debt. Cash in enough to also cover taxes. You may want to cash them all in. |
Calculate how much interest I will pay given a creditcard balance and a monthly payment? | At the end of each period, add the interest, in this case an easy 1%, and then subtract the payment. With less than 4 months to payoff, the interest here is about $21. Instead of trying to find credit card calculators, just use the more common mortgage calculator. The math is the same until the final month, when the credit card may handle accrued interest slightly differently. Edit - A finance calculator indicates 3.407 payments, or total payment of $1022.12, $22.12 is interest. (from my initial guess of $21 above) |
How can this be enough to fund a scholarship in perpetuity? | The Trinity study looked at 'safe' withdrawal rates from retirement portfolios. They found it was safe to withdraw 4% of a portfolio consisting of stocks and bonds. I cannot immediately find exactly what specific investment allocations they used, but note that they found a portfolio consisting largely of stocks would allow for the withdrawal of 3% - 4% and still keep up with inflation. In this case, if you are able to fund $30,000, the study claims it would be safe to withdraw $900 - $1200 a year (that is, pay out as scholarships) while allowing the scholarship to grow sufficiently to cover inflation, and that this should work in perpetuity. My guess is that they invest such scholarship funds in a fairly aggressive portfolio. Most likely, they choose something along these lines: 70 - 80% stocks and 20 - 30% bonds. This is probably more risky than you'd want to take, but should give higher returns than a more conservative portfolio of perhaps 50 - 60% stocks, 40 - 50% bonds, over the long term. Just a regular, interest-bearing savings account isn't going to be enough. They almost never even keep up with inflation. Yes, if the stock market or the bond market takes a hit, the investment will suffer. But over the long term, it should more than recover the lost capital. Such scholarships care far more about the very long term and can weather a few years of bad returns. This is roughly similar to retirement planning. If you expect to be retired for, say, 10 years, you won't worry too much about pulling out your retirement funds. But it's quite possible to retire early (say, at 40) and plan for an infinite retirement. You just need a lot more money to do so. $3 million, invested appropriately, should allow you to pull out approximately $90,000 a year (adjusted upward for inflation) forever. I leave the specifics of how to come up with $3 million as an exercise for the reader. :) As an aside, there's a Memorial and Traffic Safety Fund which (kindly and gently) solicited a $10,000 donation after my wife was killed in a motor vehicle accident. That would have provided annual donations in her name, in perpetuity. This shows you don't need $30,000 to set up a scholarship or a fund. I chose to go another way, but it was an option I seriously considered. Edit: The Trinity study actually only looked at a 30 year withdrawal period. So long as the investment wasn't exhausted within 30 years, it was considered a success. The Trinity study has also been criticised when it comes to retirement. Nevertheless, there's some withdrawal rate at which point your investment is expected to last forever. It just may be slightly smaller than 3-4% per year. |
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