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As an investing novice, what to do with my money? | I'd keep the risk inside the well-funded retirement accounts. Outside those accounts, I'd save to have a proper emergency fund, not based on today's expenses, but on expenses post house. The rest, I'd save toward the downpayment. 20% down, with a reserve for the spending that comes with a home purchase. It's my opinion that 3-5 years isn't enough to put this money at risk. |
Is it bad etiquette to use a credit or debit card to pay for single figure amounts at the POS | Etiquette doesn't really come into the picture here. The business offers a service and I choose to accept it. Personally, I use my debit card as much as possible. For every transaction, I record it in my checkbook. Then, when I do reconciling, I know exactly how much I paid for various categories of stuff. Good for budgeting. Most often my purchases are over $10 but when they aren't, I have no qualms about using the card. |
Why GOOG is “After Hours” while FB is “Pre-market”? | Pre-Market trading activity is shown on the site from 4:15 - 9:30 AM (actual trading starts at 4:00 AM EST) The NASDAQ Stock Market Trading Sessions (Eastern Time) Pre-Market Trading Hours from 4:00 a.m. to 9:30 a.m. Market Hours from 9:30 a.m. to 4:00 p.m. After-Market Hours from 4:00 p.m. to 8:00 p.m. Read more: http://www.nasdaq.com/about/trading-schedule.aspx#ixzz38OtcISrq In this case GOOG did not trade in the Pre-market until that time and FB was. |
How do you invest in real estate without using money? | There is (almost) always money involved somewhere, but it doesn't have to come from you. It can be investors, credit cards, or even seller-financing (I've done all 3). Examples: If you can find partners with the money to make the deals happen, then your job is to put the deal together. Find the properties, negotiate the price, even get the property under contract (all without any obligation or cost on your part... yes it absolutely can be done). Then your partners will fund the deal if it's good enough and their terms are met, etc. In some areas you can put a property on a credit card. If you find a house say for $25,000 that will rent for $300/month, and you can put it on a credit card (especially at zero percent for a year or something similar), then you can generate cashflow as a landlord without putting up any cash of your own on the purchase. Of course there are many risks associated with landlording and i could tell you horror stories... but we're not addressing that here. You can negotiate a sale with an owner who agrees to finance the entire purchase for you. I once purchased 3 properties at once this way from a seller who financed the entire sale, all closing costs, everything, this way. Of course they needed a lot of repair and such so I had to fund that another way, but at least the purchase itself cost me no money out of pocket. So these infomercials/courses are not inherently scams in the sense that what they are teaching is (usually... I'm sure there are exceptions) true. However they generally give you enough information to get into trouble, and not out. But that's what true learning is... it's getting into trouble and finding a way out that doesn't kill you. =) That's called experience, and you can't buy that for any price. |
Any reason to be cautious of giving personal info to corporate fraud departments? | I can't address the psychology of trust involved in your question, but here are some common sense guidelines for dealing with your issue. Make sure you know who you are talking to. Call the company you need to speak to via a publicly available phone number. An email or something you got in a letter might be from a different source. If you use a website, you should be sure you are on the correct website. Keep careful records. Make good notes of each phone call and keep all emails and letters forever. Note the time, name and/or ID of the person you spoke to and numbers called in addition to keeping notes on what actions should be done. Keep your faxing transmission receipts and shipping tracking numbers too. If you are nervous, ask them why they want the info. The fraud department should be able to explain it to you. For example, they probably want your social because that is how your credit report is identified. If they are going to fix a credit report, they will need a social. It is doubtful they would have a good explanation why they need your mother's maiden name. Ask for secure transmission, or confirm they have it. Postal mail isn't so secure, but I'll go out on a limb and say most fax machines today are not really fax machines, but software that deals in PDFs. At some point you will have to realize you will have to transmit something. No method is perfect, but you can limit your exposure. Help them do their jobs. If you are (understandably) nervous, consider their motivations: corporate profit. BUT that could very well mean not running afoul of the law and (with any luck) treating customers the best way they know to earn business. If you stymy the fraud department, how can they help you? If the ID theft was serious enough, document your issue for future law enforcement so you getting pulled over for speeding doesn't result in you going to jail for whatever crime the other person did. Perhaps the fraud department you are dealing with can assist there. Finally, while you work with fraud departments to clear up your name and account, work on the other end to limit future damage. Freeze your credit. See if you bank or credit card have monitoring. Use CreditKarma.com or a similar if you cannot find a free service. (Please don't ever pay for credit monitoring.) |
Do I make money in the stock market from other people losing money? | Do I make money in the stock market from other people losing money? Sometimes. If the market goes down, and someone sells -- on a panic, perhaps, or nervousness -- at a loss, if you have extra cash then you can buy that stock on the hope/expectation that its value will rise. |
Do I have to explain the source of *all* income on my taxes? | Do I have to explain the source of all income on my taxes? "Yes, you do", say the ghosts of Ermenegildo and Mary Cesarini. https://turbotax.intuit.com/tax-tips/general/what-to-know-about-taxes-on-found-property/L9BfdKz7N The Cesarinis argued to the IRS that the money wasn’t income, and so it should not be taxed as such. The IRS wasn’t swayed by the couple’s argument. The case went to federal court, and the IRS won. “Found” property and money has been considered taxable income ever since. The IRS plainly states that taxpayers must report “all income from any source," even income earned in another country, unless it is explicitly exempt under the U.S. Tax Code. This covers a wide range of miscellaneous income, including gambling winnings. According to the Cesarini decision, money you find isn’t explicitly exempt. The tax impact won’t be significant if you find an item of property with a fair market value of only $500 and are in the 25% tax bracket. You’ll owe the IRS $125 ($500 x .25 = $125). However, if you are a finder and keeper of $10,000, your tax burden will be $2,500 ($10,000 x .25 = $2,500). |
Investing small amounts at regular intervals while minimizing fees? | I am not sure whether this hold in all countries, but at least in the Netherlands my bank allows for investment in funds without charging transaction costs. The downside is that these funds charge an annual fee of about 1%, but for the amounts you are talking about this definitely sounds more attractive than the alternative. As an alternative, you could ofcourse just take care of the transaction costs. That way your child can see their funds develop as you put it into different stocks without being distracted by the details. Of course you feel the 'pain' but I believe the main lesson stands out most this way. |
What can I replace Microsoft Money with, now that MS has abandoned it? | I've been budgeting with MS Money since 2004 and was pretty disappointed to hear it's being discontinued. Budgeting is actually a stress-relieving hobby for me, and I can be a bit of a control-freak when it comes to finances, so I decided to start early looking for a replacement rather than waiting until MS Money can no longer download transactions. Here are the pros and cons of the ones I've tried (updated 10/2010): You Need A Budget Pro (YNAB) - Based on the old envelopes system, YNAB has you allot money from each paycheck to a specific budget category (envelope). It encourages you to live on last money's income, and if you have trouble with overspending, that can be a great plan. Personally, I'm a big believer in the envelope concept, so that's the biggest pro I found. Also, it's a downloaded software, so once I've bought it (for about $50) it's mine, without forced upgrades as far as I've seen. The big con for me was that it does not automatically download transactions. I would have to sign on to each institution's website and manually download to the program. Also, coming from Money, I'm used to having features that YNAB doesn't offer, like the ability to store information about my accounts. Overall, it's forward-thinking and a good budgeting system, but will take some extra time to download transactions and isn't really a comprehensive management tool for all my financial needs. You can try it out with their free trial. Mint - This is a free online program. The free part was a major pro. It also looks pretty, if that's important to you. Updating is automatic, once you've got it all set up, so that's a pro. Mint's budgeting tools are so-so. Basically, you choose a category and tell it your limit. It yells at you (by text or email) when you cross the line, but doesn't seem to offer any other incentive to stay on budget. When I first looked at Mint, it did not connect with my credit union, but it currently connects to all my banks and all but one of my student loan institutions. Another recent improvement is that Mint now allows you to manually add transactions, including pending checks and cash transactions. The cons for me are that it does not give me a good end-of-the-month report, doesn't allow me to enter details of my paychecks, and doesn't give me any cash-flow forecasting. Overall, Mint is a good casual, retrospective, free online tool, but doesn't allow for much planning ahead. Mvelopes - Here's another online option, but this one is subscription-based. Again, we find the old envelopes system, which I think is smart, so that's a pro for me. It's online, so it downloads transactions automatically, but also allows you to manually add transactions, so another pro. The big con on this one is the cost. Depending on how you far ahead you choose to pay (quarterly, yearly or biannually), you're paying $7.60 to $12 per month. They do offer a free trial for 14 days (plus another 14 days offered when you try to cancel). Another con is that they don't provide meaningful reports. Overall, a good concept, but not worth the cost for me. Quicken - I hadn't tried Quicken earlier because they don't offer a free trial, but after the last few fell short, I landed with Quicken 2009. Pro for Quicken, as an MS Money user is that it is remarkably similar in format and options. The registers and reports are nearly identical. One frustration I'd had with Money was that it was ridiculously slow at start-up, and after a year or so of entering data, Quicken is dragging. Con for Quicken, again as an MS Money user, is that it's budgeting is not as detailed as I would like. Also, it does not download transactions smoothly now that my banks all ask security questions as part of sign-in. I have to sign in to my bank's website and manually download. Quicken 2011 is out now, but I haven't tried it yet. Hopefully they've solved the problem of security questions. Quicken 2011 promises an improved cash-flow forecast, which sounds promising, and was a feature of MS Money that I have very much missed. Haven't decided yet if it's worth the $50 to upgrade to 2011. |
What options do I have at 26 years old, with 1.2 million USD? | Firstly, sorry about the accident. I am afraid you will need to do your own legwork, because you cannot trust other people with your money. It's a good thing you do not need to rush. Take your time to learn things. One thing is certain, you cannot let your money sit in a bank - inflation will digest them. You need to learn about investing yourself, or you run a risk of someone taking advantage of you. And there are people who specialise in exploiting people who have money and no idea what to do with them. There is no other way, if you have money, you need to know how to deal with it, or you are likely to lose it all. Since you need to have monthly income and also income that makes more money to make further investments, you need to look at two most common investments that are safe enough and also give good returns on investment: Property and index funds. You might also have a look at National bonds as this is considered safest investment possible (country has to go bust for you to lose money), but you are too young for that. Young = you can take more risk so Property and shares (indexes). You want to have your property investments in a country that is stable and has a good ROI (like Netherlands or Lithuania). Listen to some audio lectures: https://www.audible.co.uk/pd/Health-Personal-Development/Investing-in-Real-Estate-6th-Edition-Audiobook/B008SEH1R0 https://www.audible.co.uk/pd/Business/The-Secrets-of-Buy-to-Let-Success-Audiobook/B00UVVM222 https://www.audible.co.uk/pd/Non-fiction/Economics-3rd-Edition-Audiobook/B00D8J7VUC https://www.audible.co.uk/pd/Advanced-Investments-Part-1-Audiobook/B00HU81B80 After you sorted your investment strategy, you might want to move to a country that is Expat friendly and has lower living costs than US and you should be able to live like a king... best of luck. |
Buying a multi-family home to rent part and live in the rest | Others have already made good points, so I'll just add a few more: You say that if you bought it, your mortgage, insurance, and taxes minus the rental income from the bottom floor would leave you with costs of 1/4 of your current rent. That means you're getting a fantastic deal on the purchase price. I suspect you may be underestimating some of those costs. So, get exact figures on the mortgage, insurance and taxes and do the math. If it is that good, go for it, just make sure to get that home inspection (in case there's major problems and they're trying to get out while the gettin's good) Also, some advice: Be prepared to cover that entire monthly cost for a few months. Units can stand empty for a while. Also, you may want to rent out slowly - a good tenent found after a couple months is much better than a bad tenent found quickly. Also, have some money set aside for maintenence. As a renter, you've never really had to think about that before, but as a homeowner you do. As a landlord, it's even more important - you can not fix something in your own home for a while if you needed to wait, but in a tenent unit, you have to fix it immediately. Finally, taxes: You do get to deduct interest, and so on, but it'll work a little differently than you think. You'll have to split it in half (if the units are the same size) and deduct half the interest as a normal homeowner deduction, the other half as a business expense. Same for PMI, insurance, and property taxes. If you do maintenance that effects both units, like fixing the roof, half will be deductible, the other half not. However, maintenance that only affects the tenant unit is fully deductible. You can claim depreciation, but only for half. So, your starting amount you can depreciate would be (purchase price - land value)/2. Same thing here - half is your home, the other half is a business. Note that some things you'd think of as maintenance costs actually can't be deducted, only depreciated over time. Take that leaky roof, for example. If you replaced it instead of repairing it, you could not deduct your replacement costs. It counts as an improvement, and gets added to your cost-basis, where you depreciate it along with (half!) the house. If your tenant's refrigerator went out, and you replaced it, you couldn't deduct that either. However you can depreciate all of it on another schedule (seperate from home depreciation). If you repaired it instead, you can deduct all of it immediately. Taxes suck. |
How to file tax for the sale of stocks from form 1099B? | You can group your like-kind (same symbol, ST/LT) stock positions, just be sure that your totals match the total dollar amounts on the 1099. An inconsistency will possibly result in a letter from IRS to clarify. So, if you sold the 100 shares, and they came from 7 different buys, list it once. The sell price and date is known, and for the buy price, add all the buys and put "Various" for the date. If you have both long term and short term groups as part of those 7 buys, split them into two groups and list them separately. |
Is investing into real estate a good move for a risk-averse person at the moment | If you live and work in the euro-zone, then even after a "crash" all of your income and most of your expenses will still be in euros. The only portion of your worth you need to worry about protecting is the portion you intend to spend on goods from outside the euro-zone (i.e. imports). In that case, you may want to consider parking some of your money in short-term government bonds issued by other countries, such as the UK, Switzerland, and USA (or wherever else your favorite goods tend to come from). If the euro actually "massively devalues" (an extremely unlikely scenario), then you can expect foreign goods to cost a lot more than they do now. Inflation might also pick up, so you might also want to purchase some OATis. |
is the bankruptcy of exchange markets possible? | @MichaelBorgwardt gave an excellent answer. Let me add a little analogy here that might help. Suppose you bought a car from Joe's Auto Sales. You pay your money, do all the paperwork, and drive your car home. The next day Joe's goes bankrupt. What affect does that have on your ownership rights to your car? The answer is, Absolutely none. Same thing with stocks and a stock exchange. A stock exchange is basically just a store where you can buy stock. Once you buy it, it's yours. That said, there could potentially be a problem with record keeping. If you bought a car from Joe's Auto Sales, and Joe went out of business before sending the registration paperwork to the state, you might find that the state has no record that you legally own the car and you could have difficulty proving it. Likewise if a stock exchange went out of business without getting all their records properly updated, their might be an issue. Actually I think the bigger concern here for most folks would be their broker and not the stock exchange, as your broker is the one who keeps the records of what stocks you own long term. In practice, though, most companies are responsible enough to clean up their paperwork properly when they go out of business, and if they don't, a successor company or government regulators or someone will try to clean it all up. |
which types of investments should be choosen for 401k at early 20's? | I can't find a decent duplicate, so here are some general guidelines: First of all by "stocks" the answers generally mean "equities" which could be either single stocks or mutual funds that consist of stocks. Unless you have lots of experience that can help you discern good stocks from bad, investing in mutual funds reduces the risk considerably. If you want to fine-tune the plan, you can weigh certain categories higher to change your risk/return profile (e.g. equity funds will have higher returns and risk than fixed income (bond) funds, so if you want to take a little more risk you can put more in equity funds and less in fixed income funds). Lastly, don't stress too much over the individual investments. The most important thing is that you get as much company match as you can. You cannot beat the 100% return that comes from a company match. The allocation is mostly insignificant compared to that. Plus you can probably change your allocation later easily and cheaply if you don't like it. Disclaimer: these are _general_ guidelines for 401(k) investing in general and not personal advice. |
Why aren't bond mutual funds seeing huge selloffs now? | The Fed sets the overnight borrowing costs by setting its overnight target rate. The markets determine the rates at which the treasury can borrow through the issuance of bonds. The Fed's actions will certainly influence the price of very short term bonds, but the Fed's influence on anything other than very short term bonds in the current environment is very muted. Currently, the most influential factor keeping bond prices high and yields low is the high demand for US treasuries coming from overseas governments and institutions. This is being caused by two factors : sluggish growth in overseas economies and the ongoing strength of the US dollar. With many European government bonds offering negative redemption yields, income investors see US yields as relatively attractive. Those non-US economies which do not have negative bond yields either have near zero yields or large currency risks or both. Political issues such as the survival of the Euro also weigh heavily on market perceptions of the current attractiveness of the US dollar. Italian banks may be about to deliver a shock to the Eurozone, and the Spanish and French banks may not be far behind. Another factor is the continued threat of deflation. Growth is slowing around the world which negatively effects demand. Commodity prices remain depressed. Low growth and recession outside of the US translate into a prolonged period of near zero interest rates elsewhere together with renewed QE programmes in Europe, Japan, and possibly elsewhere. This makes the US look relatively attractive and so there is huge demand for US dollars and bonds. Any significant move in US interest rates risks driving to dollar ever higher which would be very negative for the future earning of US companies which rely on exports and foreign income. All of this makes the market believe that the Fed's hands are tied and low bond yields are here for the foreseeable future. Of course, even in the US growth is relatively slow and vulnerable to a loss of steam following a move in interest rates. |
How can I find out what factors are making a stock's price rise? | When you look at the charts in Google Finance, they put the news on the right hand side. The time stamp for each news item is indicated with a letter in the chart. This often shows what news the market is reacting to. In your example: Clicking on the letter F leads to this Reuters story: http://www.reuters.com/article/2011/02/04/usa-housing-s-idUSWAT01486120110204 |
Clarifications On PFIC Rules | Answers: 1: No, Sections 1291-1298 of the IRC were passed in the Reagan adminstration. 2: Not only can a foreign company like a chocolate company fall afoul of the definition of PFIC because of the "asset test", which you cite, but it can also be called a PFIC because of the "income test". For example, I have shares in a development-stage Canadian biotech which is considered a PFIC because it has no income at all, except for a minor amount of bank interest on its working capital. This company is by no means "passive" (it has run 31 clinical trials in over 1100 human research subjects, burning $250M of investor's money in the process) nor is it an "investment company", but the stupid IRS considers it to be a "passive foreign investment company"! The IRS looks at it and sees only the bank account, and assumes it is a foreign shell corporation set up to shield the bank interest from them. 3: Yes, a foreign mutual fund is EXACTLY what congress intended to be a PFIC when passed IRC 1291-1298. (Biotechs, candy factories, ect got nailed as innocent bystanders.) Note that if you hold a US mutual fund then every year you'll get a form 1099 in the mail. The 1099 will report your share of the mutual fund's own income and capital gains, which you must report on your taxes. (You can also have capital gains from selling your shares of the mutual fund, but that's a different thing.) Now suppose that there was no PFIC law. Then the US investors in the mutual fund would do better if the mutual fund were in a foreign country, for two reasons: a) The fund would no longer distribute 1099's. That means the shareholders wouldn't have to pay tax every year on their proportions of the fund's own income/gains. The money that would have sooner gone to the IRS can sit around for years earning interest. b) The fund could return profits to shareholders exclusively through capital gains rather than dividends, thus ensuring that all of the investors' income on the fund would be taxed at <15%-20% rather than up to 39%. The fund could do this by returning cash to shareholders exclusively through buybacks. However, the US mutual fund industry doesn't want to move the industry to Canada, and it only takes a few newspaper articles about a foreign loophole to make congress spring to action. 4) It depends. If you have a PEDIGREED QEF election in place (as I do for my biotech shares) then form 8621 takes a few minutes by hand. However, this requires both the company and the investor to fully cooperate with congress's vision for PFICs. The company cooperates by providing a so-called "PFIC annual information sheet", which replaces the 1099 form for a US mutual fund. The investor cooperates by having a "QEF election" in place for EACH AND EVERY TAX YEAR in which he held the stock and by reporting the numbers from the PFIC annual information sheet on his return. (Note that the QEF election persists once made, until revoked. There are subtleties here that I am glossing over, since "deemed sale" elections and other means may be used to modify a share's holding period to come into compliance.) Note that there is software coming out to handle PFICs, and that the software makers will already run their software to make your form 8621 for $75 or so. I should also warn you that the blogs of tax accountants and tax lawyers all contradict each other on the basic issue of whether you can take capital losses on PFICs for which you have no form 8621 elections. (See section 2.3 of my notes http://tinyurl.com/mh9vlnr for commentary on this mess.) I do not know if the software people will tell you which elections are best made on form 8621, though, or advise you if it's time to simply dump your investment. The professional software is at 8621.com, and the individual 8621 preparation is at http://expattaxtools.com/?page_id=242. BTW, in case you're interested, I wrote up a very careful analysis of how to deal with the PFIC situation for the small biotech I invested in in certain cases. It is posted http://tinyurl.com/mh9vlnr. (For tax reasons it was quite fortunate that the share price dipped to near an all-time low on Jan 1, 2015, making the (next) 2015 tax year ripe for a so-called "deemed sale" election. This was only possible because the company provides the necessary "PFIC annual information statements", which your chocolate factory may or may not do.) |
Why is property investment good if properties de-valuate over time? | As some others have pointed out, it's key to remember the difference in market value and accounting value. To simplify things, book value is the only item that specifically depreciates... it happens in the world of accounting to try to time "when did I use a long term asset?" with "when did I obtain value from that asset?" For a house, governments usually allow owners to claim depreciation of the building over a set period of time. This does not affect your resale value of the house. Similarly, for a commercial property, governments set laws for how an individual or a company can time the "use" of that asset vs. their accounting. Some companies can have totally depreciated ("zero cost") assets that are still very productive. Market Property values are derived from 3 specific sources: Value in Trade is an estimate of the value that others would be willing to pay for a similar asset. That's why you can buy a house today, and in a "normal" market, the same house should be worth a similar amount of money in the future. Value in Use can be more interesting... this is where a farmer can extract $100,000 in value per year from 10 acres of land. But as a region develops, a manufacturing company can generate $300,000 per year from the same 10 acres of land. The company can buy out the farmer at a 'fair' price (>$100,000 per year) and still net positive from the investment. Income Approach tends to be focused on properties that have a cash flow, but can be adapted to other property estimates. It evaluates the current "business case" for any property with the cost of money down, the overall investment price, and the expected value from any returns. Remember, the market value is very simply, the price you could obtain if you sold the asset at a given time. It is rarely considered in terms of "how much will this go down?". Book value is an accounting exercise and declines by a set amount every year, because it means you can estimate the "cost" of owning an asset vs the value it generates in a particular time period. |
Do credit ratings (by Moody's, S&P, and Fitch) have any relevance? | I like Muro questions! No, I don't think they do. Because for me, as a personal finance investor type just trying to save for retirement, they mean nothing. If I cannot tell what the basic business model of a company is, and how that business model is profitable and makes money, then that is a "no buy" for me. If I do understand it, they I can do some more looking into the stock and company and see if I want to purchase. I buy index funds that are indexes of industries and companies I can understand. I let a fund manager worry about the details, but I get myself in the right ballpark and I use a simple logic test to get there, not the word of a rating agency. If belong in the system as a whole, I could not really say. I could not possibly do the level of accounting research and other investigation that rating agencies do, so even if the business model is sound I might lose an investment because the company is not an ethical one. Again, that is the job of my fund manager to determine. Furthermore and I mitigate that risk by buying indexes instead of individual stock. |
What is a good 5-year plan for a college student with $15k in the bank? | You can put them in a 5 years CD and getting a maximum of %2.5 APY if you're lucky. If you put 15k now, in 5 years you'll have $1.971. If it sounds good then take a look at the current inflation rate (i'm in usa)... If you want to think about retirement then you should open a Roth IRA. But you won't be able to touch the money without penalties (10% of earnings) before you get 59 1/2 years old. Another option would be to open a regular investment account with an online discounted broker. Which one? Well, this should be a totally separate question... If you decide to invest (Roth IRA or regular account) and you're young and inexperienced then go for a balanced mutual fund. Still do a lot of research to determine your portfolio allocation or which fund is best suited for you. Betterment (i never used it) is a no brainer investment broker. Please don't leave them in a generic checking or low interest savings account because you'll save nothing (see inflation again)... |
Where can I find closed dates for the New York Stock Exchange for the coming year? | The NYSE holidays are listed online here: https://www.nyse.com/markets/hours-calendars |
How does Robinhood stock broker make money? | Robinhood seems interesting. Some say it's a gimmicky site with a nice UI not an investing or trading platform. From investopedia: 1. For now, the app stays afloat for mainly two reasons. First, the business itself is extremely lean: no physical locations, a small staff, no massive public relations campaigns and only one operating system platform to maintain. Robinhood also generates interest off of unused cash deposits from user accounts according to the Federal Funds rate. 2. Second, venture capitalists such as Index Ventures, Ribbit Capital, Google Ventures, Andreessen Horowitz, Social Leverage,and “many others” have invested more than $16 million in the app. 3. According to Barron’s, Robinhood plans to implement margin trading in 2015, eventually charging 3.5% interest for the service. E*Trade charges 8.44% for accounts under $25,000. Phone assisted trading will also be available at $10 per trade in the future. 4. Originally, Robinhood planned to make money off of order flows – a common tactic used by discount brokerages in the 1990s to generate revenue. According to the company's FAQ, Robinhood backpedaled on the idea because it executes orders through a clearing partner and, as a result, receives little to no payment for order flow. The company is willing to return to its original plan in the future if it receives order flows directly or begins to generate a lot of revenue from them. |
Withdraw funds with penalty or bear high management fees for 10 years? | To me, it depends. How much are their total assets? Having 10% of your money in something like that isn't crazy. having it all in? That IS crazy. Can they reduce their exposure to this account without paying a penalty (say pull out 10%?) The Manager should be taking direction from them. If they aren't able to get the manager to re-allocate to something more suitable, under your friends direction, they should then pursue whether or not the manager is operating lawfully. |
Can a CEO short his own company? | That would be the ultimate in insider trading. They made a stock transaction knowing in advance what was going to happen to the share price. They could easily expect to face jail time, plus the CEO would still face lawsuits from the board of directors, the stockholders and the employees. |
How does one determine the width of a candlestick bar? | You could theoretically use any time period unit, but 1 minute and 30 minute seem to be the most common and useful. Especially for active traders. This also has the added advantage of giving you useful insight into the trade volumes throughout the day; assuming that is also included on the chart. I think most include that as a bar chart across the bottom. Here is a great example for crude oil on dailyfx: https://www.dailyfx.com/crude-oil Notice that the chart has time options at the top left which include 1 minute, 30 minutes, 1 hour, and 1 day. |
How does the importance of a cash emergency fund change when you live in a country with nationalized healthcare? | There are, of course, many possible financial emergencies. They range from large medical expenses to losing your job to being sued to major home or car repairs to who-knows-what. I suppose some people are in a position where the chances that they will face any sort of financial emergency are remote. If you live in a country with national health insurance and there is near-zero chance that you will have any need to go outside this system, you are living with your parents and they are equipped to handle any home repairs, you ride the bus or subway and don't own a car so that's not an issue, etc etc, maybe there just isn't any likely scenario where you'd suddenly need cash. I can think of all sorts of scenarios that might affect me. I'm trying to put my kids through college, so if I lost my job, even if unemployment benefits were adequate to live on, they wouldn't pay for college. I have terrible health insurance so big medical bills could cost me a lot. I have an old car so it could break down any time and need expensive repairs, or even have to be replaced. I might suddenly be charged with a crime that I didn't commit and need a lawyer to defend me. Etc. So in a very real sense, everyone's situation is different. On the other hand, no matter how carefully you think it out, it's always possible that you will get bitten by something that you didn't think of. By definition, you can't make a list of unforeseen problems that might affect you! So no matter how safe you think you are, it's always good to have some emergency fund, just in case. How much is very hard to say. |
How to motivate young people to save money | Although my kid just turned 5, he's learning the value of money now, which should help him in the future. First thing, teach him that you exchange money for goods and services. Let him see the bills, and explain what they're for (i.e. "I pay ISP Co to give us Internet; that lets us watch Youtube and Netflix, as well as play games with Grandma on your GameStation"). After a little while, they will see where it goes, and why. Then you have your automatic bills, such as mortgage payments. I make a habit of taking out the cash after I get paid, and my son comes with me to the bank where I deposit it again (I get paid monthly, so it's only one extra withdraw). He can physically see the money, and understand that if the stack is gone, it's gone. Now that he is understanding things cost money, he wants to make money himself. He volunteers to help clean up the kitchen and vacuum rooms in the house, usually without being asked. I give him a dollar or two for the simple chores like that. Things like cleaning his room or his own mess, he does not get paid for. He puts all his money into his piggy bank, and he has some goals in mind: a big fire truck, a police helicopter, a pool, a monster truck, a boat. Remember he's only 5. He has his goals, and we have the money he's been saving up. We calculate how many times he needs to vacuum the living room, or clean up dishes, to get there, and he realizes it takes a long time. He looks for other ways to make money around the house, and we come up with solutions together. I am hoping in a year or two that I can show him my investments and get him to understand why they make or lose money. I want to get him in to the habit of investing a little bit every few months, then every month, to help his income grow, even if he can't touch the money quite yet. |
Is there a mathematical formula to determine a stock's price at a given time? | The fallacy in your question is in this statement: "The formulas must exist, because prices can be followed real time." What you see are snapshots of the current status of the stock, what was the last price a stock was traded at, what is the volume, is the price going up or down. People who buy and hold their stock look at the status every few days or even every few months. Day traders look at the status every second of the trading day. The math/formula comes in when people try to predict where the stock is going based on the squiggles in the line. These squiggles move based on how other people react to the squiggles. The big movements occur when big pieces of news make large movements in the price. Company X announces the release of the key product will be delayed by a year; the founder is stepping down; the government just doubled the order for a new weapon system; the insiders are selling all the shares they can. There are no formulas to determine the correct price, only formulas that try to predict where the price may go. |
Legal Financing | Find a lawyer or law firm who wants to represent you and talk to them. |
Where should a young student put their money? | It really is dependent upon your goals. What are your short term needs? Do you need a car/clothing/high cost apartment/equipment when you start your career? For those kinds of things, a savings account might be best as you will need to have quick access to cash. Many have said that people need two careers, the one they work in and being an investor. You can start on that second career now. Open up some small accounts to get the feel for investing. This can be index funds, or something more specialized. I would put money earmarked for a home purchase in funds with a lower beta (fluctuation) and some in index funds. You probably would want to get a feel for what and where you will actually be doing in your career prior to making a leap into a home purchase. So figure you have about 5 years. That gives you time to ride out the waves in the market. BTW, good job on your financial situation. You are set up to succeed. |
What to do with an expensive, upside-down car loan? | If you can't sell it, refinance the bugger. Even if you can knock the interest rate down to 8% and take out a 3-year loan, you'll save about $100 per month. Or really kill the payment (but pay more interest) by taking out another 6-year. A 6-year at 9% on $12k is only $215/month. My credit union routinely advertises specials on car loans. It shouldn't be difficult to get out of the usurious loan you have now. As for others' advice about getting another job, having been a PhD student I hesiate to suggest that you get another one, because your job is probably your life right now. But can your wife (or even you) start a blog on a subject that interests you? A few posts a week add up over time, and pretty soon you have a real asset that can be another basket to put your eggs in. |
Retired, want to buy a mobile home; how to finance? | Do you think your 403b will earn more than the mortgage interest rate? If so, then mortgage seems the way to go. Conservative investment strategies might not earn much more than a 3-4% mortgage, and if you're paying 5-6% it's more likely you'll be earning less than the mortgage. From another point of view, though, I would probably take a loan anyway just from a security standpoint - you have more risk if you put a third of your retirement savings into one purchase directly, whereas if you do a 10-15 year loan, you'll have more of a cushion. Also, if you don't outlive the mortgage, you'll have had use of more of your retirement income than otherwise - though I do wonder if it puts you at some risk if you have significant medical bills (which might require you to liquidate your 403b but wouldn't require you to sell your house, so paying it off has some upside). Also, as @chili555 notes in comments, you should consider the taxation of your 403(b) income. If you pull it out in one lump sum, some of it may be taxed at a higher rate than if you pulled it out more slowly over time, which will easily overwhelm any interest rate differences. This assumes it's not a Roth 403(b) account; if it is Roth then it doesn't matter. |
Why is it important to research a stock before buying it? | The following is only an overview and does not contain all of the in-depth reasons why you should look more deeply. When you look at a stock's financials in depth you are looking for warning signs. These may warn of many things but one important thing to look for is ratio and growth rate manipulation. Using several different accounting methods it is possible to make a final report reflect a PE ratio (or any other ratio) that is inconsistent with the realities of the company's position. Earnings manipulation (in the way that Enron in particular manipulated them) is more widespread than you might think as "earnings smoothing" is a common way of keeping earnings in line (or smooth) in a recession or a boom. The reason that PE ratio looks so good could well be because professional investors have avoided the stock as there appear to be "interesting" (but legal) accounting decisions that are of concern. Another issue that you don't consider is growth. earnings may look good in the current reporting period but may have been stagnant or falling when considered over multiple periods. The low price may indicate falling revenues, earnings and market share that you would not be aware of when taking only your criteria into account. Understanding a firm will also give you an insight into how future news might affect the company. If the company has a lot of debt and market interest rates rise or fall how will that effect their debt, if another company brings out a competing product next week how will it effect the company? How will it effect their bottom line? How much do they rely on a single product line? How likely is it that their flagship product will become obsolete? How would that effect the company? Looking deeply into a company's financial statements will allow you to see any issues in their accounting practices and give you a feel for how they are preforming over time, it will also let you look into their cost of capital and investment decisions. Looking deeply into their products, company structure and how news will effect them will give you an understanding of potential issues that could threaten your investment before they occur. When looking for value you shouldn't just look at part of the value of the company; you wouldn't just look at sales of a single T-shirt range at Wallmart when deciding whether to invest in them. It is exactly the same argument for why you should look at the whole of the company's state when choosing to invest rather than a few small metrics. |
Fundamentals of creating a diversified portfolio based on numbers? | Most of the “recommendations” are just total market allocations. Within domestic stocks, the performance rotates. Sometimes large cap outperform, sometimes small cap outperform. You can see the chart here (examine year by year): https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1428692400000&chddm=99646&chls=IntervalBasedLine&cmpto=NYSEARCA:VO;NYSEARCA:VB&cmptdms=0;0&q=NYSEARCA:VV&ntsp=0&ei=_sIqVbHYB4HDrgGA-oGoDA Conventional wisdom is to buy the entire market. If large cap currently make up 80% of the market, you would allocate 80% of domestic stocks to large cap. Same case with International Stocks (Developed). If Japan and UK make up the largest market internationally, then so be it. Similar case with domestic bonds, it is usually total bond market allocation in the beginning. Then there is the question of when you want to withdraw the money. If you are withdrawing in a couple years, you do not want to expose too much to currency risks, thus you would allocate less to international markets. If you are investing for retirement, you will get the total world market. Then there is the question of risk tolerance. Bonds are somewhat negatively correlated with Stocks. When stock dips by 5% in a month, bonds might go up by 2%. Under normal circumstances they both go upward. Bond/Stock allocation ratio is by age I’m sure you knew that already. Then there is the case of Modern portfolio theory. There will be slight adjustments to the ETF weights if it is found that adjusting them would give a smaller portfolio variance, while sacrificing small gains. You can try it yourself using Excel solver. There is a strategy called Sector Rotation. Google it and you will find examples of overweighting the winners periodically. It is difficult to time the rotation, but Healthcare has somehow consistently outperformed. Nonetheless, those “recommendations” you mentioned are likely to be market allocations again. The “Robo-advisors” list out every asset allocation in detail to make you feel overwhelmed and resort to using their service. In extreme cases, they can even break down the holdings to 2/3/4 digit Standard Industrial Classification codes, or break down the bond duration etc. Some “Robo-advisors” would suggest you as many ETF as possible to increase trade commissions (if it isn’t commission free). For example, suggesting you to buy VB, VO, VV instead a VTI. |
What are some valuable sources for investment experience, when there is very little to no money to start with? | Fake stock market trading may teach you about trading, which isn't necessarily the same thing as investing. I think you need to understand how things work and how to read financial news and statistics before you start trading. Otherwise, you're just going to get frustrated when you mysteriously win and lose funny money. I'd suggest a few things: Also, don't get into individual stocks until you have at least $5k to invest -- focus on saving and use ETFs or mutual funds. You should always invest in around a half dozen diversified stocks at a time, and doing that with less than $1,000 a stock will make it impossible to trade and make money -- If a $100 stock position goes up 20%, you haven't cleared enough to pay your brokerage fees. |
What are the advantages of paying off a mortgage quickly? | The financial reasons, beyond simply owning your home outright, are: You're no longer paying interest. Yes, the interest is tax-deductible in the U.S. (though not in Canada), but the tax savings is a percentage of a percentage; if you paid, say, $8000 in interest last year, at the 25% marginal rate you effectively save $2000 off your taxes. But, if you paid off your home and had that $8000 in your pocket, you'd pay the $2000 in taxes but you'd have $6000 left over. Which is the better deal? In Canada, the decision gets even easier; you pay taxes on the interest money either way, so you're either spending the $8000 in interest, lost forever as cost of capital, or on other things. Whatever you're earning is going into your own pocket, not the bank's. Similar to the interest, but also including principal, a home you own outright is a mortgage payment you don't have to make. You can now use that money, principal and interest, for other things. Whether these advantages outweigh those of anything else you could do with a few hundred grand depends primarily on the rate of return. If you got in at the bottom of the mortgage crisis (which is pretty much right now) and got a rate in the 3-4% range, with no MIP or other payment on top, then almost anything you can do with the amount you'd need to pay off a mortgage principal would get you a better rate of return. However, you'll need some market savvy to avoid risks. In most cases when someone has pretty much any debt and a big wad of cash they're considering how to spend, I usually recommend paying off the debt, because that is, in effect, a risk-free way to increase the net rate of return on your total wealth and income. Balancing debt with investments always carries with it the risk that the investment will fail, leaving you stuck with the debt. Paying the debt on the other hand will guarantee that you don't have to pay interest on that outstanding amount anymore, so it's no longer offsetting whatever gains you are making in the market on your savings or future investments. |
What are some time tested passive income streams? | Last year was a great opportunity for dividend stocks and MLPs. I have a few which are earning 6-9% of my investment basis cost. Municipal bonds are a good value now. If you have the connections, passive investments in convenience franchises or other commercial property are a good income stream. A Dunkin Donuts used to be an amazing money printing machine. |
An online casino owes me money and wants to pay with a wire transfer. Is this safe? | Someone online asking for your bank account info never has your best interests at heart. They can send you a check and while it may take a while to really clear, they can't use it to suck money out of your account. Be very cautious. |
I spend too much money. How can I get on the path to a frugal lifestyle? | I agree with the first poster- the first step is to measure your spending and put it down into raw numbers. Once you have the raw numbers, you will feel a natural inclination to improve on those numbers. Set yourself a daily target for cash / incidental expenses. It doesnt have to be a crazy target - just something you can achieve easily. Mark a 'tick' mark next to every day on the calendar that you meet that target (or spend less than the target). Gradually the momentum from the past few 'ticks' will automatically compel you to want to tick off the next day. At the end of each week, lower the target a little. You'll find that when you start measuring your expenditure, you become more aware of how you might be wasting money. All too often we just go out and buy stuff we don't need without really thinking about it. |
Do rental car agencies sell their cars at a time when it is risky for the purchaser? | My mother worked for one of the major American car rental companies. She talked about this topic with me and my answer will summarize the talk. Does the fact that they sell the car mean during this time suggest that they know the car's cost of further maintenance or other costs will be higher? Or is there another reason they sell at this time which, has a calculated advantage to them, but which is less than idea statistically for me, the purchaser? There is much more to the price equation. A premium rental car company (one that only rents fairly new, nice cars) has a certain image to maintain to protect their perceived value. A new-ist car also, besides the point of the image of the general company, commands a better rental price. Many Web sites and articles warn against buying former rental cars, because people renting these cars often mistreat them. This is a bad argument you've read. If former rental cars are in bad shape, the price will reflect that. If they are priced the same for the same miles ridden, they have equivalent wear and tear. In other words, the relative price of the car determines whether rental cars are more heavily worn not random people's opinions on the internet. People on the internet are mostly wrong. Irony intended. From the single company I have as reference, I also don't see that as relevant. There are company and governmental regulations to keep maintenance up. I clean my car once a year. Change the oil twice. Replace my wipers every eighteen months. And so forth. The maintenance cycles required for rental cars may (and this is just speculation) negate the gradual extra degradation that drivers may have on rental cars. |
Is it worth incorporating, when working in Canada as a contractor for an employer in the US? | Interesting as I am in the exact same situations as yourself. I, in fact, just incorporated. You will be able "save" more in taxes in the end. The reason I put "save" in quotes, is that you don't necessarily save on taxes, but you can defer taxes. The driving factor behind this is that you specify your own fiscal calendar/year. Incorporating allows you to defer income for up to 6 months. Meaning that if you make your fiscal year starting in August or September, for example, you can claim that income on the following year (August + 6 months = February). It allows you to keep the current year taxes down. Also, any income left over at year end, is taxed at 15% (the Corporation rate) rather than the 30-40% personal rate you get with a sole-proprietorship. In a nutshell, with sole-proprietorship, all income is taxable (after write-offs)... in a corporation, you can take some of that income and keep it in the corporation (gives your company a "value"), and is only taxed at 15% - big saving there. I primarily work with US businesses. I am, however, a dual-citizen, US and Canadian, which allowed me as a sole-proprietor, to easily work with US companies. However, as a sole-proprietor or a Corporation, you simply need to get an EIN from the IRS and any US company will report earnings to that number, with no deductions. At year end, it is your responsibility to file the necessary tax forms and pay the necessary taxes to both countries. Therefore you can solicit new US business if you choose, but this is not restricted to corporations. The real benefit in incorporating is what I mentioned above. My suggestion to you is to speak with you CA, who can outline all benefits. Revenue Canada's website had some good information on this topic as well. Please let me know if you need anything else explained. |
Super-generic mutual fund type | If you are looking for an index index fund, I know vanguard offers their Star fund which invests in 11 other funds of theirs and is diversified across stocks, bonds, and short term investments. |
60% Downpayment on house? | I put about that down on my place. I could have purchased it for cash, but since my investments were returning more interest than the loan was costing me (much easier to achieve now!), this was one of the safest possible ways of making "leverage" work for me. I could have put less down and increased the leverage, but tjis was what I felt most comfortable with. Definitely make enough of a down payment to avoid mortgage insurance. You may want to make enough of a down payment that the bank trusts you to handle your property insurance and taxes yourself rather than insisting on an escrow account and building that into the loan payments; I trust myself to mail the checks on time much more than I trust the bank. Beyond that it's very much a matter of personal preference and what else you might do with the money. |
Is short selling a good hedging strategy during overzealous market conditions? | Short selling can be a good strategy to hedge, but you have almost unlimited downside. If a stock price skyrockets, you may be forced to cover your short by the brokerage before you want to or put up more capital. A smarter strategy to hedge, that limits your potential downside is to buy puts if you think the market is going down. Your downside is limited to the total amount that you purchased the put for and no more. Another way to hedge is to SELL calls that are covered because you own the shares the calls refer to. You might do this if you thought your stock was going to go down but you didn't want to sell your shares right now. That way the only downside if the price goes up is you give up your shares at a predetermined price and you miss out on the upside, but your downside is now diminished by the premium you were paid for the option. (You'd still lose money if the shares went down since you still own them, but you got paid the option premium so that helps offset that). |
Paying off mortgage or invest in annuity | I am in the process of writing an article about how to maximize one's Social Security benefits, or at least, how to start the analysis. This chart, from my friends at the Social Security office shows the advantage of waiting to take your benefit. In your case, you are getting $1525 at age 62. Now, if you wait 4 years, the benefit jumps to $2033 or $508/mo more. You would get no benefit for 4 years and draw down savings by $73,200, but would get $6,096/yr more from 64 on. Put it off until 70, and you'd have $2684/mo. At some point, your husband should apply for a spousal benefit (age 66 for him is what I suggest) and collect that for 4 years before moving to his own benefit if it's higher than that. Keep in mind, your generous pensions are likely to push you into having your social security benefit taxed, and my plan, above will give you time to draw down the 401(k) to help avoid or at least reduce this. |
Stock market order execution | When you are placing an order with an online broker you should already know what exchange or exchanges that stock trades on. For example if you look up under Yahoo Finance: Notice how News Corp is traded both on the ASX and the Nasdaq. The difference is the shares traded on the ASX have the extension .AX, that is how you know the difference between them. When you are putting orders in with your online broker you will need to select the exchange you wish your order to go to (if your broker allows trading on multiple exchanges). So you should always know which exchange your order goes to. |
What exactly is a “bad,” “standard,” or “good” annual raise? If I am told a hard percentage and don't get it, should I look elsewhere? | There are many variables to this answer. One is, how close are you to the average salary range in the industry you are working in. If you are making more than average it would make sense that you are not getting a big raise from the employer's perspective. You have to be a top performer if you are looking for the top salary range. Big raises come from promotions or new jobs, generally speaking. The short and personal answer is, I worked at a big company (bank) and now know that companies do not give large raises to people as a rule. Honestly the only way to make good $ is to leave, all employers have all kinds of excuses as to why they are not giving you significant raises. Large raises and bonuses are reserved for "management". The bigger the company, the less likely it is that they will give you raises just because, esp. above 3-5%. At the same time, the market sets the rate, and if you are not getting passively recruited, it may mean that you need to work on getting a broader skill set if you are looking to make more $ somewhere else. The bottom line is, you have to think of yourself as a free agent at all times. You also need to make yourself more attractive as a potential hire elsewhere. |
Does the bid price of a stock change depending on which brokerage I am using? | They could have different quotes as there are more than a few pieces here. Are you talking a Real Time Level II quote or just a delayed quote? Delayed quotes could vary as different companies would be using different time points in their data. You aren't specifying exactly what kind of quote from which system are you using here. The key to this question is how much of a pinpoint answer do you want and how prepared are you to pay for that kind of access to the automated trades happening? Remember that there could well be more than a few trades happening each millisecond and thus latency is something to be very careful here, regardless of the exchange as long as we are talking about first-world stock exchanges where there are various automated systems being used for trading. Different market makers is just a possible piece of the equation here. One could have the same market maker but if the timings are different,e.g. if one quote is at 2:30:30 and the other is at 2:30:29 there could be a difference given all the trades processed within that second, thus the question is how well can you get that split second total view of bids and asks for a stock. You want to get all the outstanding orders which could be a non-trivial task. |
Why can Robin Hood offer trading without commissions? | They make money off you by increasing the spread you buy and sell your stocks through them. So for example, if the normal spread for a stock was $10.00 for a buy and $10.02 for a sell, they might have a spread of $9.98 for the buy and $10.02 for the sell. So for an order of 1000 shares (approx. $10000) they would make $0.02 per share which would equal $20.00. |
Facebook buying WhatsApp for 19 Billion. How are existing shareholders affected? | Of course it is a dilution of existing shareholders. When you buy milk in the supermarket - don't you feel your wallet diluted a little? You give some $$$ you get milk in return. You give some shares, you get Watsapp in return. That's why such purchases must go through certain process of approval - board of directors (shareholders' representatives) must approve it, and in some cases (don't know if in this particular) - the whole body of the shareholders vote on the deal. |
Smart to buy a house in college? | If you don't plan to stay in it, it is never good money to try to buy a house in a bad neighborhood. The question you want to be asking is probably "Is it smart to buy this piece of real estate," not "is it smart to buy a house in college." In this case, it's probably not smart because you won't actually have revenue from the property (you'll break even compared to renting), you may face some expensive repairs (water heater or other appliances going out, etc.), and you may find that your startup costs in things like lawn mowers, etc. is not worth the hassle (or cost of lawn service if you have someone else do it.) On top of that, can you get a loan with your proven income and assets? Don't forget to factor the cost of selling the house again into it -- and how long can you leave it on the market after you move out if it doesn't sell without going bankrupt yourself? In my opinion, it'd be a giant albatross around your neck. |
Does financing a portfolio on margin affect the variance of a portfolio? | Financing a portfolio with debt (on margin) leads to higher variance. That's the WHOLE POINT. Let's say it's 50-50. On the downside, with 100% equity, you can never lose more than your whole equity. But if you have assets of 100, of which 50% is equity and 50% is debt, your losses can be greater than 50%, which is to say more than the value of your equity. The reverse is true. You can make money at TWICE the rate if the market goes up. But "you pay your money and you take your chances" (Punch, 1846). |
Shifting income to 401k | Assumptions made for this answer, they may not be true for anybody: For the numbers part we will assume you are single and make 96,000 per year. Unknowns: how long you have to wait post accumulation to convince the bank you really do make $96,000 per year. |
How do third-party banks issue car loans? | I have gotten a letter of credit from my credit union stating the maximum amount I can finance. Of course I don't show the dealer the letter until after we have finalized the deal. I Then return in 3 business days with a cashiers check for the purchase price. In one case since the letter was for an amount greater then the purchase price I was able drive the car off the lot without having to make a deposit. In another case they insisted on a $100 deposit before I drove the car off the lot. I have also had them insist on me applying for their in-house loan, which was cancelled when I returned with the cashiers check. The procedure was similar regardless If I was getting a loan from the credit union, or paying for the car without the use of a loan. The letter didn't say how much was loan, and how much was my money. Unless you know the exact amount, including all taxes and fees,in advance you can't get a check in advance. If you are using a loan the bank/credit Union will want the car title in their name. |
Is refinancing my auto loan just to avoid dealing with the lender that issued it a crazy idea? | What are the fees associated with changing the new loan? Are those fees worth the peace of mind? If so, than it is not "crazy". The decision really boils down to that: is it worth the money that you will spend refinancing the loan to not have to deal with the original bank that financed your loan, assuming that you find an institution that will be more amenable to your financial expectations. |
Are market orders safe? | A market sell order will be filled at the highest current "bid" price. For a reasonably liquid stock, there will be several buy orders in line, and the highest bid must be filled first, so there should a very short time between when you place the order and when it is filled. What could happen is what's called front running. That's when the broker places their own order in front of yours to fulfill the current bid, selling their own stock at the slightly higher price, causing your sale to be filled at a lower price. This is not only unethical but illegal as well. It is not something you should be concerned about with a large broker. You should only place a market order when you don't care about minute differences between the current ask and your execution price, but want to guarantee order execution. If you absolutely have to sell at a minimum price, then a limit order is more appropriate, but you run the risk that your limit will not be reached and your order will not be filled. So the risk is a tradeoff between a guaranteed price and a guaranteed execution. |
Is selling put options an advisable strategy for a retiree to generate stable income? | This is a really bad idea. You are asking to be forced to pay for something at a time when you most likely NOT want to buy it. Why? There is no stability (much less any degree of predictability) to give up the right to control when and for how much you would be willing to own the S&P500. Just don't do it....."generate stable income" and "selling puts" is an oxymoron. ===retired investment advisor |
Is there a resource for knowing when Annual and Quarterly Reports are coming out? | https://www.google.com/search?q=quarterly+and+annual+financial+report+calendar&oq=quarterly+and+annual+financial+report+calendar&aqs=chrome..69i57.9351j0j7&sourceid=chrome&ie=UTF-8 The third result on Google is: https://www.bloomberg.com/markets/earnings-calendar/us The fourth result on Google is: https://finance.yahoo.com/calendar/earnings |
Sell Stock using Limit | if I put a limit sell at $22.00 now, will it not sell until it's at $22.00 and I will continue to keep the stock? Basically yes. But note that brokers generally don't allow such limit orders to persist indefinitely. The default may even be that they're only valid until the end of the day, and usually the maximum validity is 30 or 60 days. |
What's the difference between a high yield dividend stock vs a growth stock? | There can be the question of what objective do you have for buying the stock. If you want an income stream, then high yield stocks may be a way to get dividends without having additional transactions to sell shares while others may want capital appreciation and are willing to go without dividends to get this. You do realize that both Pfizer and GlaxoSmithKline are companies that the total stock value is over $100 billion yes? Thus, neither is what I'd see as a growth stock as these are giant companies that would require rather large sales to drive earnings growth though it may be interesting to see what kind of growth is expected for these companies. In looking at current dividends, one is paying 3% and the other 5% so I'm not sure either would be what I'd see as high yield. REITs would be more likely to have high dividends given their structure if you want something to research a bit more. |
Should I “hedge” my IRA portfolio with a life cycle / target date mutual fund? | I like that you are hedging ONLY the Roth IRA - more than likely you will not touch that until retirement. Looking at fees, I noticed Vanguard Target retirement funds are .17% - 0.19% expense ratios, versus 0.04 - 0.14% for their Small/Mid/Large cap stocks. |
What's the catch with biweekly mortgage payments? | Interest is a fee that you pay in order to use someone else's money. Once you've made the deal, pretty much anything you do that reduces the total interest that you pay does so by reducing the time for which you get to use their money. As an extreme example, consider a thirty-year interest-only loan, with a balloon payment at the end. If you pay it off after fifteen years you pay half as much interest because you had the use of the money for half as long. The same thing happens when you make biweekly payments: you reduce the total interest that you pay by giving up the use of some of the borrowed money sooner. That's not necessarily bad, but it's also not automatically good. |
What does “Net Depreciation in Fair Value” mean on a financial report? | First, the annual report is just that, a snapshot that shows value at the beginning and end of the period. Beginning = Aug 08 = $105B End = Aug 09 = $89B Newsletter date May 10 = $96B Odd they chose end of August as it's not even a calendar quarter end. The $16B was market loss during that period. Nearly half of that seemed to be recovered by the time this newsletter came out. The balance sheet also has to show deposits and payments made to existing retirees. I haven't looked at the S&P numbers for those dates, but my gut says this is right. The market tanked and the plan was down, but not too bad. Protect? The PBGC guarantees pensions up to a certain limit. I believe that in general, teachers are below the limit and are not at risk of a reduced benefit. You do need to check that your plan is covered. If not, I believe the state would take over directly. I hope this helps. |
Why do employers require you to spread your 401(k) contributions throughout the year to get the maximum match? | There's no such requirement in general. If your particular employer requires that - you should address the question to the HR/payroll department. From my experience, matches are generally not conditioned on when you contribute, only how much. |
Reducing taxable income in US in December | My first question to you is if you itemize? If not the charitable contributions will not do any good. Along these lines, donating unused items to Goodwill or similar can help boost your charitable giving. The bottom line is that the 401K is one of the few real deductions high earners have. If you anticipate earning similarly next year, you could both contribute the max. You still have some time before the end of the year, can you get more in your wife's account? Does your state have income tax? You might be able to deduct sales tax for larger purchases if you made any. However, I would not justify a large purchase just to write off the sales tax. Conventional wisdom will tell you that you should have a large mortgage in order to deduct the interests. However, it does not make sense to pay the bank 10K so you can get 3K back from the government. That seems pretty dumb. If you did not do additional withholding, you probably will have to pay a significant amount plus penalty if you owe more than $1000. You still have time to make one more quarterly payment, so you may want to do so by January 15th. For next year I would recommend the following: The funny thing about giving is that it rarely helps the recipient, it does so much more for the giver. It helps you build wealth. For myself I like to give to charities that have a bent to helping people out of poverty or homelessness. We have two excellent ones here in Orlando, FL: Orlando Rescue Mission and Christian Help. Both have significant job training and budgeting programs. |
Can my own corporation deduct my expenses even if I am a full time employee? | No, your business cannot deduct your non-business expenses. You can only deduct from your business income those reasonable expenses you paid in order to earn income for the business. Moreover, for there to be a tax benefit, your business generally has to have income (but I expect there are exceptions; HST input tax credits come to mind.) The employment income from your full-time job wouldn't count as business income for your corporation. The corporation has nothing to do with that income – it's earned personally, by you. With respect to restaurant bills: These fall under a category known as "meals & entertainment". Even if the expense can be considered reasonable and business-related (e.g. meeting customers or vendors) the Canada Revenue Agency decided that a business can only deduct half of those kinds of expenses for tax purposes. With respect to gasoline bills: You would need to keep a mileage and expense log. Only the portion of your automobile expenses that relate to the business can be deducted. Driving to and from your full-time job doesn't count. Of course, I'm not a tax professional. If you're going to have a corporation or side-business, you ought to consult with a tax professional. (A point on terminology: A business doesn't write off eligible business expenses — it deducts them from business income. Write off is an accounting term meaning to reduce the value of an asset to zero. e.g. If you damaged your car beyond repair, one could say "the car is a write-off.") |
What's the difference between Market Cap and NAV? | I think the key concept here is future value. The NAV is essentially a book-keeping exercise- you add up all the assets and remove all the liabilities. For a public company this is spelled out in the balance sheet, and is generally listed at the bottom. I pulled a recent one from Cisco Systems (because I used to work there and know the numbers ;-) and you can see it here: roughly $56 billion... https://finance.yahoo.com/q/bs?s=CSCO+Balance+Sheet&annual Another way to think about it: In theory (and we know about this, right?) the NAV is what you would get if you liquidated the company instantaneously. A definition I like to use for market cap is "the current assets, plus the perceived present value of all future earnings for the company"... so let's dissect that a little. The term "present value" is really important, because a million dollars today is worth more than a million dollars next year. A company expected to make a lot of money soon will be worth more (i.e. a higher market cap) than a company expected to make the same amount of money, but later. The "all future earnings" part is exactly what it sounds like. So again, following our cisco example, the current market cap is ~142 billion, which means that "the market" thinks they will earn about $85 billion over the life of the company (in present day dollars). |
Is CFD a viable option for long-term trading? | CFDs should not be used as a buy and hold strategy (which is risky enough doing with shares directly). However, with proper money and risk management and the proper use of stop losses, a medium term strategy is very plausible. I was using CFDs in the past over a short time period of usually between a couple of days to a couple is weeks, trying to catch small swings with very tight stops. I kept getting wipsawed due to my stops being too tight so had too many small loses for my few bigger wins. And yes I lost some money, almost $5k in one year. I have recently started a more medium term strategy with wider stops trying to catch trending stocks. I have only recently started this strategy and so far have 2 loses and 3 wins. Just remember that you do get charged a financing fee for holding long position overnight, buy for short position you actually get paid the funding fee for overnight positions. My broker charges the official interest rate + 2.5% for long positions and pays the official rate - 2.5% for short positions. So yes CFDs can be used for the longer term as long as you are implementing proper money and risk management and use stop losses. Just be aware of the implications of using margin and all the costs involved. |
Joining a company being acquired | Is there anything I need to ask or consider during my negotiation process based on the fact that they probably will soon be own by another company? Very tricky situation. You are being hired by one company, and one hiring manager. But you already know that there are big changes ahead. What you don't know is how all those changes will actually play out. You will at least end up working for a different company. I've worked for several companies in the past that were acquired, and some that acquired other companies. After each acquisition, the nature of the company changed significantly. Some teams were let go completely (often "overhead" departments like accounting, marketing, etc, that were handled at the corporate level), some teams were moved to a different location, others stayed the same. Sometimes management changed. In one case I was working for a new boss who worked out of the home office in another state. The time frame for these changes ranged from immediately, to several years after the acquisition. For me at least, some of the things that made the job appealing earlier typically were gone. Try as best you can to ask questions about the acquisition, and about the nature of the acquiring company. If they are allowed to tell you the name of the company that is acquiring them, do some searching. See if you can find out how the company typically deals with acquisitions - do they immediately let almost everyone go (keeping only the "essential" few), or do they run new acquisitions as separate divisions and leave them alone for at least a while? Try to find out from your hiring manager what their expectations are for your specific team post-acquisition. Try to find out if anything within your offer is subject to change, post-acquisition. Are you being hired under the old, pre-acquisition rules? Or under the new, post-acquisition rules? The fact that you even know the company is being acquired is good. Often, companies cannot even divulge that fact until very near the end. On the other hand your use of the phrase "probably will soon", makes me wonder how much is definite here. Here's something you might wish to read: https://workplace.stackexchange.com/questions/20357/a-coworker-beat-me-to-resignation-how-can-i-resign-in-a-professional-manner |
How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap! | I came across an article posted at Squawkfox last week. It's particularly relevant to answering this question. See 10 Ways to Cut Your Fitness Membership Costs. Here's an excerpt: [...] If you’re in the market for a shiny new gym membership, it may be wise to read the fine print and know your rights before agreeing to a fitness club contract. No one wants to be stuck paying for a membership they can no longer use, for whatever reason. But if you’re revved and ready to burn a few calories, here are ten ways to get fitter while saving some cash on a fitness club or gym membership. Yay, fitness tips! [...] Check it out! |
Insurance, healthcare provider, apparent abuse, lack of transparency | I wouldn't classify your treatment as abuse. Medical billing has become more complex not less complex. You need to learn to ask even more questions regarding expenses, you probably need to see these price quotes in writing. You did several things correctly. Staying in-network generally is best because many plans have two deductible limits: In-network, and out-of-network. You need to make sure that the insurance company does credit you with having paid the new patient fee. That will qualify as an expense toward the deductible and your maximum out of pocket for the year. Some doctors offices don't send to insurance companies items that they know will not be covered, not remembering that these costs are critical under the High deductible plans with a health savings account. Doctors offices have problems determining how much the cost to you will be. It depends not just on the insurance company but also which type of plan you have, which sub-plan you have, and are you covered by more than one plan. Not to mention individual deductibles, family deductibles, and annual out-of-pocket amount. All this is wanted prior to the doctor seeing the patient. Most doctors offices will work with you, they know that each insurance plan treats each medical billing code differently, sometimes they make a mistake. Talk to them. |
Do the activities of my LLC need to be limited to a particular field? | No. When you file your Articles of Organization, simply state that your business will operate under the law. You don't need to give any further specification. |
Bollinger Bands and TRENDING market | If upper and bollinger bands either converge (both bands are getting more and more close together) or diverge (both bands are getting more and more away from each other), does that mean the market is TRENDING? The answer is no. The divergence or convergence of BB-upper & lower band does not indicate if the market is trending or not. It only indicated if volatility is increasing or decreasing. Or is market trending only in case if both bands, upper and lower, are parallel and at the same time NOT horizontal? The answer is yes. To understand the reason consider that BB is constructed from a central Moving Average along with standard deviation. Upper Band=MA+2*SD, Lower Band=MA-2*SD. A moving average is a trend following indicator and volatility has nothing to do with trend (as SD only measures the price movement around the mean). Which essentially means BB has trend following qualities. The upper and lower bands remain more or less parallel in between band contraction and expansion. Refer below: You shall see distinctly phases when BB bands are not parallel and are parallel and not horizontal. As mentioned above, when BB bands are expanding or contracting they do not give indication of the trend direction. When they are parallel, close or apart and not horizontal, they provide a good directional bias through the general slope. Though a more effective method to determine trend and its direction is the central MA of BB. Again, refer below: Here you can see that some portion of the bands are parallel and more or less horizontal. The price action would tell you that the stock is now range-bound as opposed to trending. The primary use of the BB bands are to gauge volatility as @misantroop stated. The primary trend direction is usually derived from the central MA. |
A University student wondering if investing in stocks is a good idea? | For most people, investing in the stock market directly is one of the last things to do. That's not to say you shouldn't, but rather that there are other things to consider as well. Start with automatic monthly deposits to a liquid account such as savings or money market. The morale boost you get from seeing the balance grow is nearly impossible to beat. Following that, paying down any debts such as student loans or credit cards. Once you've done that, then you should look at company sponsored 401k plans or IRAs. Sharebuilder offers IRAs holding whichever stock or fund you pick. Again, automatic monthly deposits are the way to go here. Good luck, and happy investing :) |
Why can't house prices be out of tune with salaries | Indefinitely is easy to answer. Assume that the average house currently costs four times the average salary, and that house prices rise 1% faster than salaries indefinitely. Then in only 1,000 years' time, the average house will cost around 84,000 times the average salary. In 10,000 years, it will be 6.5*10E43 times the average salary. That doesn't seem plausible to me. If you want arguments about "for the foreseeable future", instead of "indefinitely", then that's harder. |
Who owned my shares before me? | Not sure about US. In India all Demat shares have a unique identity. Incase of splits or merging of shares, new ID's are created maintaining the linking of older ID's. The Demat holding entity would have all the history of a particular stock. It is mandatory to disclose the name of the person / entity who has purchased the shares. Of Course if shares are purchased by Fund houses or other aggregators then its the aggregators name that would be available. All this data is confidential and not meant for common consumption. |
What to do with south african currency free fall | Transfer your savings to a dollar-based CD. Or even better, buy some gold on them. |
How long does a bank's “Know Your Customer” (KYC) process typically take? | The idea is to positively identify you with properly issued government ID. If you show up with your passport, visa, and another form of government-issued identification which the banker can recognize and use (for example - international driver's license, a US-State driver's license, EU internal ID, etc) - it will be quick and painless. Usually, at least two distinct forms of identification are required from foreigners: passport and something else, and not the visa stamped in a passport, that just shoes to show your status upon your W9/W8 requirements may be based. You'll probably be asked for a TIN before any payments are made to you by the bank. If you don't have anything credible to show as your identification it will be equally quick and painless, except that you'd be leaving without a bank account. If your identity cannot be established properly there and then - they will not serve you. |
Asset allocation when retirement is already secure | You will hear a lot about diversifying your portfolio, which typically means having a good mix of investment types, areas of investments, etc. I'd like to suggest that you should also diversify your sources. Sad to say but the defined benefit pension is not a rock solid, sure fire source of security in your retirement planning. Companies go bankrupt, government agencies are reorganized, and those hitherto-untouchable assets are destroyed overnight. So, treat your new investment strategy as if you were starting over, and invest accordingly, for example, aggressively for a few years, then progressively safer as you get older. There are other strategies too, depending on factors like your taste for risk: you might prefer to be conservative until you reach some safety threshold to reach "certain safety" and then start making riskier investments. You may also consider different investment vehicles and techniques such as index funds, dollar cost averaging, and so on. |
How do margins on tracker mortgages (variable rate mortages) vary over time? | how do these margins vary over time Depends on a lot of factors. The bank's financial health, bank's ongoing business activities, profits generated from it's other businesses. If it is new to mortgages, it mightn't take a bigger margin to grow its business. If it is in the business for long, it might not be ready to tweak it down. If the housing market is down, they might lower their margin's to make lending attractive. If their competitors are lowering their margins, the bank in question might also. Do they rise when the base rate rises, or fall, or are they uncorrelated? When rates rise(money is being sucked out to curb spending), large amount of spending decreases. So you can imagine margins will need to decrease to keep the mortgage lending at previous levels. Would economic growth drive them up or down? Economic growth might make them go up. Like in case 1, base rates are low -> people are spending(chances are inflation will be high) -> margins will be higher(but real value of money will be dependent on inflation) Is there any kind of empirical or theoretical basis to guess at their movement? Get a basic text book on macroeconomics, the rates and inflation portion will be there. How the rates influence the money supply and all. It will much more sense. But the answer will encompass a mixture of all conditions and not a single one in isolation. So there isn't a definitive answer. This might give you an idea of how it works. It is for variable mortgage but should be more or less near to what you desire. |
Loan math problem | Lachlan has $600 cash and a car worth $500. That's $1,100. The new car is priced at $21,800. Lachlan needs a loan for $20,700. However, the finance company insists that the buyer must pay a 10% deposit, which is $2,180. Lachlan only has $1,100, so no loan. The car dealer wants to make a sale, so suggests some tricks. The car dealer could buy Lachlan's old banger for $1,500 instead of $500, and sell the new car for $22,800 instead of $21,800. Doesn't make a difference to the dealer, he gets the same amount of cash. Now Lachlan has $600 cash and $1,500 for his car or $2,100 in total. He needs 10% of $22,800 as deposit which is $2,280. That's not quite there but you see how the principle works. Lachlan is about $200 short. So the dealer adds $1,200 to both car prices. Lachlan has $600 cash and a car "worth" $1,700, total $2,300. The new car is sold for $23,000 requiring a $2,300 deposit which works out exactly. How could we have found the right amount without guessing? Lachlan had $1,100. The new car costs $21,800. The dealer increases both prices by x dollars. Lachlan has now $1,100 + x deposit. The car now costs $21,800 + x. The deposit should be 10%, so $1,100 + x = 10% of ($21,800 + x) = $2,180 + 0.1 x. $1,100 + x = $2,180 + 0.1 x : Subtract $1,100 x = $1,080 + 0.1 x : Subtract 0.1 x 0.9 x = $1,080 : Divide by 0.9 x = $1,080 / 0.9 = $1,200 The dealer inflates the cost of the new car and the value of the old car by $1,200. Now that's the theory. In practice I don't know how the finance company feels about this, and if they would be happy if they found out. |
Are forward curves useful tools for trading decisions and which informations can be gathered from them? | As far as trading is concerned, these forward curves are the price at which you can speculate on the future value of the commodity. Basically, if you want to speculate on gold, you can either buy the physical and store it somewhere (which may have significant costs) or you can buy futures (ETFs typically hold futures or hold physical and store it for you). If you buy futures, you will have to roll your position every month, meaning you sell the current month's futures and buy the next month's. However, these may not be trading at the same price, so each time you roll your position, you face a risk. If you know you want to hold gold for exactly 1 year, then you can buy a 1-year future, which in this case according to your graph will cost you about $10 more than buying the front month. The forward curve (or sometimes called the futures term structure) represents the prices at which gold can be bought or sold at various points in the future. |
Paying Off Principal of Home vs. Investing In Mutual Fund | I'm probably going to get a bunch of downvotes for this, but here's my not-very-popular point of view: I think many times we tend to shoot ourselves in the foot by trying to get too clever with our money. In all our cleverness, we forget a few basic rules about how money works: It's better to have 0 debt and a small amount of savings than lots of debt and lots of savings. Debt will bite you. Many times even the "good" mortgage debt will bite you. I have several friends who have gotten mortgages only to find out they had to move long before they were able to pay it off. And they weren't able to sell their homes or they sold at a loss. When you have debt, you are restricted. Someone else is always holding something over your head. You're bound to it. Pay it off ASAP (within reason) while putting a decent amount into a high-yield savings account. Only after the debt is gone, go and be clever with your money. |
Latest China devaluation (24/08/2015) and the affect on house prices in UK | No. There is no indication that the recent decline will have an impact on the house market in the UK. The reason(s) for the downward move these last few weeks are mainly due to: The last two points caused the Chinese government to decide to devaluate the Yuan. This in turn triggered an unforeseen panic attack among investors and speculators around the globe starting with the Chinese that are trading on borrowed money (not only on margin but also by using loans). The UK house prices are not influenced by the above factors, not even indirectly. The most important factors for house prices are in general: If you keep the above points in mind you should be able to decide whether now is the right time to buy a house in your area. Given that a lot of central banks (incl. BoE) are maintaining a low interest rate policy (except fed soon), now is a good time to take a mortgage. Sources used: I know interest rates are determined by the BoE which looks at the global picture to determine these rates but the main directive of a central bank is to maintain an inflation close to but not exactly 2 % as to spur on economic growth. As such, the value of a company as valuated on the stock market is not or barely taken into account. The negligible impact is the reason why I stated that the crash in the summer of 2015 doesn't even have an indirect impact. Also such a crash is very short lived. It's more the underlying reason for the fears that could cause issues if they drag on. |
If I make over 120k a year, what are my options for retirement plans? | There are three common options for you: |
Are there any Social Responsibility Index funds or ETFs? | At the other end of the spectrum is the VICEX fund. it invests in industries such as tobacco, gaming, defense/weapons, liquor and other companies whose products or services are widely considered not to be socially responsible |
How to record “short premium” in double-entry accounting? | Thanks for your reply. I’m not familiar with the term “Held-For-Trading Security”. My securities are generally held as collateral against my shorts. To clarify, I am just trying to track the “money in” and “money out” entries in my account for the shorts I write. The transaction is relatively straight forward, except there is a ton of information attached! In simple terms, for the ticker CSR and short contract CSRUQ8, the relevant entries look something like this: There are no entries for expiries. I need to ensure that funds are available for future margin calls and assignments. The sale side using covered calls is as involved. |
Why do only motor insurers employ “No Claims Discounts”? | Discounting premiums based on some past history is not unique to auto policies. Other insurers will discount premiums based on past claims history they just don't shout about it as a marketing means to attract customers. Life insurance is underwritten based on your health history; if you want to consider your "preferred" underwriting status based on your clear health history a "discount based on your healthy habits" you're free to do so. All sorts of lines of insurance use all sorts of things to determine an underwriting classes. The fact that auto insurers trumpet specific discounts does not mean the same net effect is not available on other lines of coverage. Most states require auto rates and discounts to be filed and approved with some state regulator, some regulatory bodies even require that certain discounts exist. You could likely negotiate with your business insurance underwriters about a better rate and if the underwriters saw fit they could give you a discount. Auto insurers can offer discounts but are generally beholden to whatever rate sheet is on file with the applicable regulatory body. For the person who downvoted, here's a link to a spreadsheet outlining one of the CA department of insurance allowable rating factor sheets related to auto insurance. |
Company asking for card details to refund over email | A bona-fide company never needs your credit card details, certainly not your 3-digit-on-back-of-card #, to issue a refund. On an older charge, they might have to work with their merchant provider. But they should be able to do it within the credit card handling system, and in fact are required to. Asking for details via email doesn't pass the "sniff test" either. To get a credit card merchant account, a company needs to go through a security assessment process called PCI-DSS. Security gets drummed into you pretty good. Of course they could be using one of the dumbed-down services like Square, but those services make refunds ridiculously easy. How did you come to be corresponding on this email address? Did they initially contact you? Did you find it on a third party website? Some of those are fraudulent and many others, like Yelp, it's very easy to insert false contact information for a business. Consumer forums, even moreso. You might take another swing at finding a proper contact for the company. Stop asking for a cheque. That also circumvents the credit card system. And obviously a scammer won't send a check... at least not one you'd want! If all else fails: call your bank and tell them you want to do a chargeback on that transaction. This is where the bank intervenes to reverse the charge. It's rather straightforward (especially if the merchant has agreed in principle to a refund) but requires some paperwork or e-paperwork. Don't chargeback lightly. Don't use it casually or out of laziness or unwillingness to speak with the merchant, e.g. to cancel an order. The bank charges the merchant a $20 or larger investigation fee, separate from the refund. Each chargeback is also a "strike"; too many "strikes" and the merchant is barred from taking credit cards. It's serious business. As a merchant, I would never send a cheque to an angry customer. Because if I did, they'd cash the cheque and still do a chargeback, so then I'd be out the money twice, plus the investigation fee to boot. |
Pros & cons in Hungary of investing retirement savings exclusively in silver? What better alternatives, given my concerns? | Like Jeremy T said above, silver is a value store and is to be used as a hedge against sovereign currency revaluations. Since every single currency in the world right now is a free-floating fiat currency, you need silver (or some other firm, easily store-able, protect-able, transportable asset class; e.g. gold, platinum, ... whatever...) in order to protect yourself against government currency devaluations, since the metal will hold its value regardless of the valuation of the currency which you are denominating it in (Euro, in your case). Since the ECB has been hesitant to "print" large amounts of currency (which causes other problems unrelated to precious metals), the necessity of hedging against a plummeting currency exchange rate is less important and should accordingly take a lower percentage in your diversification strategy. However, if you were in.. say... Argentina, for example, you would want to have a much larger percentage of your assets in precious metals. The EU has a lot of issues, and depreciation of hard assets courtesy of a lack of fluid currency/capital (and overspending on a lot of EU governments' parts in the past), in my opinion, lessens the preservative value of holding precious metals. You want to diversify more heavily into precious metals just prior to government sovereign currency devaluations, whether by "printing" (by the ECB in your case) or by hot capital flows into/out of your country. Since Eurozone is not an emerging market, and the current trend seems to be capital flowing back into the developed economies, I think that diversifying away from silver (at least in overall % of your portfolio) is the order of the day. That said, do I have silver/gold in my retirement portfolio? Absolutely. Is it a huge percentage of my portfolio? Not right now. However, if the U.S. government fails to resolve the next budget crisis and forces the Federal Reserve to "print" money to creatively fund their expenses, then I will be trading out of soft assets classes and into precious metals in order to preserve the "real value" of my portfolio in the face of a depreciating USD. As for what to diversify into? Like the folks above say: ETFs(NOT precious metal ETFs and read all of the fine print, since a number of ETFs cheat), Indexes, Dividend-paying stocks (a favorite of mine, assuming they maintain the dividend), or bonds (after they raise the interest rates). Once you have your diversification percentages decided, then you just adjust that based on macro-economic trends, in order to avoid pitfalls. If you want to know more, look through: http://www.mauldineconomics.com/ < Austrian-type economist/investor http://pragcap.com/ < Neo-Keynsian economist/investor with huge focus on fiat currency effects |
Can institutional, quant, or other professional traders “prey on” (make money from) retail investors? | The primary advantage of HFTs is their speed to act upon opportunities that exist for only fractions of a second. The reason why they are able to do this is because they invest heavily in hardware, custom software, and custom algorithms. Most of the fleeting advantage, as they all manage to top each other's hardware seemingly every other day, is from the hardware investment. To see the extremes that HFTs will go to invest in hardware, one might view this. It is highly likely that the trader with the market making algorithm could have been ignorant of the "hide not slide" order and missed out on many more opportunities while still being successful. Haim Bodek, who is very much against this order type, was not so lucky. If it was truly an investment bank then it was unlikely that they were actually front running, which is very illegal and easily possible with much more low tech means, since companies like Citadel handle most orders now, and they have not been successful in investment banking. The reality of HFT is slowly coming to light, that while HFT can provide extremely consistent returns with enormous sharpe ratios, the capital investment is equally enormous, and the amount of capital that can be employed is also as enormously limited. After all, the richest people on the planet are not HFT owners. Also, when it comes to time periods longer than 500ms, their results become very human. |
Old Cancelled Cards | FICO 08, a newer fico formula that many lenders are simultaneously switching to now, ignores artificially lengthened credit history/score by piggybacking. So don't feel left out in that regard. Average age of accounts is affected when closed accounts fall off your credit report, which can take 7 years, not just by closing them. But I'm not familiar with the latest "weightings" of these things, so its tough to say how significant it will be when that happens. There are also newer FICO formulas, that may become relevant 7 years from now, so it is definitely something to be conscious of but they aren't immediately consequential, since you can do other things to improve your credit worthiness in the near term. |
At what point do index funds become unreliable? | private investors that don't have the time or expertise for active investment. This may be known as every private investor. An index fund ensures average returns. The bulk of active trading is done by private institutions with bucketloads of experts studying the markets and AI scraping every bit of data it can get (from the news, stock market, the weather reports, etc...). Because of that, to get above average returns an average percent of the time, singular private investors have to drastically beat the average large team of individuals/software. Now that index ETF are becoming so fashionable, could there be a tipping point at which the market signals that active investors send become so diluted that this "index ETF parasitism" collapses? How would this look like and would it affect only those who invest in index ETF or would it affect the stock market more generally? To make this question perhaps more on-topic: Is the fact (or presumption) that index ETF rely indirectly on active investment decisions by other market participants, as explained above, a known source of concern for personal investment? This is a well-covered topic. Some people think this will be an issue. Others point out that it is a hard issue to bootstrap. I gravitate to this view. A small active market can support a large number of passive investors. If the number of active investors ever got too low, the gains & likelihood of gains that could be made from being an active investor would rise and generate more active investors. Private investing makes sense in a few cases. One example is ethics. Some people may not want to be invested, even indirectly, in certain companies. |
Can someone explain a stock's “bid” vs. “ask” price relative to “current” price? | The current stock price you're referring to is actually the price of the last trade. It is a historical price – but during market hours, that's usually mere seconds ago for very liquid stocks. Whereas, the bid and ask are the best potential prices that buyers and sellers are willing to transact at: the bid for the buying side, and the ask for the selling side. But, think of the bid and ask prices you see as "tip of the iceberg" prices. That is: The "Bid: 13.20 x200" is an indication that there are potential buyers bidding $13.20 for up to 200 shares. Their bids are the highest currently bid; and there are others in line behind with lower bid prices. So the "bid" you're seeing is actually the best bid price at that moment. If you entered a "market" order to sell more than 200 shares, part of your order would likely be filled at a lower price. The "Ask: 13.27 x1,000" is an indication that there are potential sellers asking $13.27 for up to 1000 shares. Their ask prices are the lowest currently asked; and there are others in line behind with higher ask prices. So the "ask" you're seeing is the best asking price at that moment. If you entered a "market" order to buy more than 1000 shares, part of your order would likely be filled at a higher price. A transaction takes place when either a potential buyer is willing to pay the asking price, or a potential seller is willing to accept the bid price, or else they meet in the middle if both buyers and sellers change their orders. Note: There are primarily two kinds of stock exchanges. The one I just described is a typical order-driven matched bargain market, and perhaps the kind you're referring to. The other kind is a quote-driven over-the-counter market where there is a market-maker, as JohnFx already mentioned. In those cases, the spread between the bid & ask goes to the market maker as compensation for making a market in a stock. For a liquid stock that is easy for the market maker to turn around and buy/sell to somebody else, the spread is small (narrow). For illiquid stocks that are harder to deal in, the spread is larger (wide) to compensate the market-maker having to potentially carry the stock in inventory for some period of time, during which there's a risk to him if it moves in the wrong direction. Finally ... if you wanted to buy 1000 shares, you could enter a market order, in which case as described above you'll pay $13.27. If you wanted to buy your shares at no more than $13.22 instead, i.e. the so-called "current" price, then you would enter a limit order for 1000 shares at $13.22. And more to the point, your order would become the new highest-bid price (until somebody else accepts your bid for their shares.) Of course, there's no guarantee that with a limit order that you will get filled; your order could expire at the end of the day if nobody accepts your bid. |
How do I add my income to my personal finance balance? | Congratulations on keeping better track of your finances! Typically there will be a class of accounts labelled "Income", under which you will have a separate account for each type of income (stock dividends, paychecks, home appreciation, etc). In that case, showing your income would be a transfer from the Paycheck account to your Checking account. Note that, as there are no offsetting transactions, this means your income account will steadily accrue a balance over time - just ignore this number, it's only the sum of all your paychecks. There are methods of dealing with that number (and making the income account have a zero balance), but you don't need to worry about it at this stage. Just learning to properly track expenses is the major accomplishment. |
What makes a Company's Stock prices go up or down? | Here are some significant factors affect the company stock price performance: Usually, profitability is known to the public through the financial statements; it won't be 100% accurate and people would also trade the stock with the price not matching to the true value of the firm. Still there are dozens of other various reasons exist. People are just not behaving as rational as what the textbook describes when they are trading and investing. |
Digital envelope system: a modern take | The whole point of the "envelope system" as I understand it is that it makes it easy to see that you are staying within your budget: If the envelope still has cash in it, then you still have money to spend on that budget category. If you did this with a bunch of debit cards, you would have to have a way to quickly and easily see the balance on that card for it to work. There is no physical envelope to look in. If your bank lets you check your balance with a cell-phone app I guess that would work. But at that point, why do you need separate debit cards? Just create a spreadsheet and update the numbers as you spend. The balance the bank shows is always going to be a little bit behind, because it takes time for transactions to make it through the system. I've seen on my credit cards that sometimes transactions show up the same day, but other times they can take several days or even a week or more. So keeping a spreadsheet would be more accurate, or at least, more timely. But all that said, I can check my bank balance and my credit card balances on web sites. I've never had a desire to check from a cell phone but at least some banks have such apps -- my daughter tells me she regularly checks her credit card balance from her cell phone. So I don't see why you couldn't do it with off-the-shelf technology. Side not, not really related to your question: I don't really see the point of the envelope system. Personally, I keep my checkbook electronically, using a little accounting app that I wrote myself so it's customized to my needs. I enter fixed bills, like insurance premiums and the mortgage payment, about a month in advance, so I can see that that money is already spoken for and just when it is going out. Besides that, what's the advantage of saying that you allot, say, $50 per month for clothes and $100 for gas for the car and $60 for snacks, and if you use up all your gas money this month than you can't drive anywhere even though you have money left in the clothes and snack envelopes? I mean, it makes good sense to say, "The mortgage payment is due next week so I can't spend that money on entertainment, I have to keep it to pay the mortgage." But I don't see the point in saying, "I can't buy new shoes because the shoe envelope is empty. I've accumulated $5000 in the shampoo account since I went bald and don't use shampoo any more, but that money is off limits for shoes because it's allocated to shampoo." |
Where can I find a company's earnings history for free? | I was going to comment above, but I must have 50 reputation to comment. This is a question that vexes me, and I've given it some thought in the past. Morningstar is a good choice for simple, well-organized financial histories. It has more info available for free than some may realize. Enter the ticker symbol, and then click either the Financials or the Key Ratios tab, and you will get 5-10 years of some key financial stats. (A premium subscription is $185 per year, which is not too outrageous.) The American Association of Individual Investors (AAII) provides some good histories, and a screener, for a $29 annual fee. Zacks allows you to chart a metric like EPS going back a long ways, and so you can then click the chart in order to get the specific number. That is certainly easier than sorting through financial reports from the SEC. (A message just popped up to say that I'm not allowed to provide more than 2 links, so my contribution to this topic will end here. You can do a search to find the Zacks website. I love StackExchange and usually consult it for coding advice. It just happens to be an odd coincidence that this is my first answer. I might even have added that aside in a comment, but again, I can't comment as of yet.) It's problem, however, that the universe of free financial information is a graveyard of good resources that no longer exist. It seems that eventually everyone who provides this information wants to cash in on it. littleadv, above, says that someone should be paid to organize all this information. However, think that some basic financial information, organized like normal data (and, hey, this is not rocket science, but Excel 101) should be readily available for free. Maybe this is a project that needs to happen. With a mission statement of not selling people out later on. The closest thing out there may be Quandl (can't link; do a search), which provides a lot of charts for free, and provides a beautiful and flexible API. But its core US fundamental data, provided by Sharadar, costs $150 per quarter. So, not even a basic EPS chart is available there for free. With all of the power that corporations have over our society, I think they could be tabulating this information for us, rather than providing it to us in a data-dumb format that is the equivalent of printing a SQL database as a PDF! A company that is worth hundreds of billions on the stock market, and it can't be bothered to provide us with a basic Excel chart that summarizes its own historical earnings? Or, with all that the government does to try to help us understand all of these investments, they cannot simply tabulate some basic financial information for us? This stuff matters a great deal to our lives, and I think that much of it could and should be available, for free, to all of us, rather than mainly to financial professionals and those creating glossy annual reports. So, I disagree that yet another entity needs to be making money off providing the BASIC transparency about something as simple as historical earnings. Thank you for indulging that tangent. I know that SE prides itself on focused answers. A wonderful resource that I greatly appreciate. |
What is the different between 2 :1 split and 1:1 split | I'm guessing you're conflating bonus share issuance with stock split. That seems very common to me, from a quick search; there's even some issues of terminology between the US and Europe, I think - it seems some Europeans may use Bonus Shares to mean Stock Split, as opposed to the more common meaning in the US of Stock Dividend. Sometimes a bonus share issuance is (incorrectly) called a stock split, like in this public announcement from STADA in 2004. It is a 1:1 bonus share issuance (meaning they issue one bonus share to everyone who has one share now), but it is in essence the same thing as a stock split (a 2:1 stock split, namely). They combined the 1:1 from bonus share with the wording 'split', causing the confusion. Bonus share issuance, also known as a stock dividend, is covered well in this question/answer on this site, or from a search online. It has no obvious effect initially - both involve doubling shares out there and halving the price - but it has a substantially different treatment in terms of accounting, both to the company and to your tax accountant. |
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