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What to do with $50,000? | Considered a down payment on a house? Some illiquid assets? Otherwise you are doing 'responsible' get rich slow (read: get rich old) type things. And this question only invites opinion based answer. You tried futures and don't want to take that kind of risk again with your $50,000, so thats that |
Like a Roth IRA for intellectual property, offshore assignment? | One can have a self-directed IRA. This is not like a Schwab, eTrade, etc IRA. It has a special type of custodian that knows how to manage it. I became aware of such an account as a way to purchase a rental property. There were two issues. The type of property I looked at wasn't anything a bank was willing to finance. And the rules regarding self dealing added a potential layer of expense as I technically could not perform the simplest of things for the property. For you, the obstacle looks like self-dealing. Any IRA can only be funded with cash or transfer/conversion from another IRA/401(k). I don't know how you would get the intelligent property into the IRA in the first place. Once you own a patent, or anything else, you can't sell it into the IRA. It's at times like this that member littleadv would suggest this is the time to talk to a pro before you do anything hazardous to your wealth. |
Do banks give us interest even for the money that we only had briefly in our account? | The other answers demonstrate that you'll receive a paltry amount of money in two days, by comparing to things like wages, the cost of electricity, etc. But the real point is you're incurring risk by paying late, in particular, the realistic risk of the post office messing up. That's not worth it, and it's this kind of overhead that people usually mess up when trying to optimize their finances. (More commonly, it's "I can save 5 cents by doing this, but there's about a 400% chance I'm going to mess everything else up since I don't have infinite mental bandwidth). You asked a good and important question, but for your actual situation I must emphasize it's terrible personal finance to risk dropping your books for a superficial optimization. |
Stock valuation - Volkswagen | (I live in the UK and along with my wife we both drive Volkswagen cars.) A few factors: VW is widely acknowledged as having some of the best diesel car engines. -Now lot of people are questioning if diesel car will be outlawed. VM management has just said they don’t know what their workers are doing! The USA has made it clear they will create pollution law in a way that benefit their own car makers. (E.g. they don’t care about CO2.) If not diesel cars, then it needs hybrid or electric cars to get good MPG – VM is not seen as a leader in these. Hybrid cars tend to be gas as diesel engines cost too much. VW is no longer looking like a nice safe investment! I think VW will recover, but it may get worse for them before it gets better - trying to call the bottom of a stock is high risk. |
Am I considered in debt if I pay a mortgage? | The statistic you cited comes from the Federal Reserve Board's Survey of Consumer Finances, a survey that they do every three years, most recently in 2013. This was reported in the September 2014 issue of the Federal Reserve Bulletin. They list the percentage of Americans with any type of debt as 74.5 in 2013, down slightly from 74.9 in 2010. The Bulletin also has a table with a breakdown of the types of debt that people have, and primary residence mortgages are at the top of the list. So the answer is yes, the 75% statistic includes Americans with home mortgages.* The bigger question is, are you really "in debt" if you have a home mortgage? The answer to that is also yes. When you take out a mortgage, you really do own the house. You decide who lives there, you decide what changes you are going to make to it, and you are responsible for the upkeep. But the mortgage debt you have is secured by the house. This means that if you refuse to pay, the bank is allowed to take possession of the house. They don't even get the "whole" house, though; they will sell it to recoup their losses, and give you back whatever equity you had in the house after the loan is satisfied. Is it good debt? Many people think that if you are borrowing money to purchase an appreciating asset, the debt is acceptable. With this definition, a car loan is bad, credit card debt is very bad, and a home mortgage might be okay. Even Dave Ramsey, radio host and champion of the debt-free lifestyle, is not opposed to home mortgages. Home mortgages allow people to purchase a home that they would otherwise be unable to afford. * Interestingly, according to the bulletin appendix, credit card balances were only included as debt for the survey purposes if there was a balance after the most recent bill was paid, not including purchases made after the bill. So people that do not carry a balance on their credit card were not considered "in debt" in this statistic. |
I am a contractor with revenue below UK's VAT threshold. Should I register for VAT? | The most important thing to remember is that being VAT registered, you must add VAT to every bill, so every bill will be 20% higher. If the bill payer is a company, they don't care because they deduct the 20% VAT from their own VAT bill. If the bill payer is a private person, their cost of your services has just gone up by 20% and it is going to hurt your business. So the question is, what kind of customers do you have? But if your customers are companies, then the flat rate scheme mentioned above is very little work and puts a nice little amount of extra cash in your pocket (suitable if your bills are mostly for your work and not for parts that you buy for the customer and bill them for). |
Is there a good strategy to invest when two stock companies either merge or acquisition? | There is a strategy called merger-arbitrage where you buy the stock of the acquired company when it sells for less than the final acquisition price. Usually the price will rise to about the acquisition price fairly rapidly after the merge is announced, so you have to move fast. The danger is that the merger gets called off (regulatory reasons, the acquired company board votes no) and you get left holding shares bought at a price higher than the price after the merger collapses. This is kind of an advanced strategy and a tough one to back test since each M&A deal is unique. |
how much of foreign exchange (forex/fx) “deep liquidity” is really just unbacked leverage and what is the effect? | In essence the problem that the OP identified is not that the FX market itself has poor liquidity but that retail FX brokerage sometimes have poor counterparty risk management. The problem is the actual business model that many FX brokerages have. Most FX brokerages are themselves customers of much larger money center banks that are very well capitalized and provide ample liquidity. By liquidity I mean the ability to put on a position of relatively decent size (long EURUSD say) at any particular time with a small price impact relative to where it is trading. For spot FX, intraday bid/ask spreads are extremely small, on the order of fractions of pips for majors (EUR/USD/GBP/JPY/CHF). Even in extremely volatile situations it rarely becomes much larger than a few pips for positions of 1 to 10 Million USD equivalent notional value in the institutional market. Given that retail traders rarely trade that large a position, the FX spot market is essentially very liquid in that respect. The problem is that there are retail brokerages whose business model is to encourage excessive trading in the hopes of capturing that spread, but not guaranteeing that it has enough capital to always meet all client obligations. What does get retail traders in trouble is that most are unaware that they are not actually trading on an exchange like with stocks. Every bid and ask they see on the screen the moment they execute a trade is done against that FX brokerage, and not some other trader in a transparent central limit order book. This has some deep implications. One is the nifty attribute that you rarely pay "commission" to do FX trades unlike in stock trading. Why? Because they build that cost into the quotes they give you. In sleepy markets, buyers and sellers cancel out, they just "capture" that spread which is the desired outcome when that business model functions well. There are two situations where the brokerage's might lose money and capital becomes very important. In extremely volatile markets, every one of their clients may want to sell for some reason, this forces the FX brokers to accumulate a large position in the opposite side that they have to offload. They will trade in the institutional market with other brokerages to net out their positions so that they are as close to flat as possible. In the process, since bid/ask spreads in the institutional market is tighter than within their own brokerage by design, they should still make money while not taking much risk. However, if they are not fast enough, or if they do not have enough capital, the brokerage's position might move against them too quickly which may cause them lose all their capital and go belly up. The brokerage is net flat, but there are huge offsetting positions amongst its clients. In the example of the Swiss Franc revaluation in early 2015, a sudden pop of 10-20% would have effectively meant that money in client accounts that were on the wrong side of the trade could not cover those on the other side. When this happens, it is theoretically the brokerage's job to close out these positions before it wipes out the value of the client accounts, however it would have been impossible to do so since there were no prices in between the instantaneous pop in which the brokerage could have terminated their client's losing positions, and offload the risk in the institutional market. Since it's extremely hard to ask for more money than exist in the client accounts, those with strong capital positions simply ate the loss (such as Oanda), those that fared worse went belly up. The irony here is that the more leverage the brokerage gave to their clients, the less money would have been available to cover losses in such an event. Using an example to illustrate: say client A is long 1 contract at $100 and client B is short 1 contract at $100. The brokerage is thus net flat. If the brokerage had given 10:1 leverage, then there would be $10 in each client's account. Now instantaneously market moves down $10. Client A loses $10 and client B is up $10. Brokerage simply closes client A's position, gives $10 to client B. The brokerage is still long against client B however, so now it has to go into the institutional market to be short 1 contract at $90. The brokerage again is net flat, and no money actually goes in or out of the firm. Had the brokerage given 50:1 leverage however, client A only has $2 in the account. This would cause the brokerage close client A's position. The brokerage is still long against client B, but has only $2 and would have to "eat the loss" for $8 to honor client B's position, and if it could not do that, then it technically became insolvent since it owes more money to its clients than it has in assets. This is exactly the reason there have been regulations in the US to limit the amount of leverage FX brokerages are allowed to offer to clients, to assure the brokerage has enough capital to pay what is owed to clients. |
Does home equity grow with the investment put into the house? | If I have a house that its market value went from $100k to $140k can I get HELOC $40K? Maybe - the amount that you can borrow depends on the market value of the house, so if you already have $100k borrowed against it, it will be tough to borrow another $40k without paying a higher interest rate, since there is a real risk that the value will decrease and you will be underwater. Can I again ask for HELOC after I finish the renovation in order to do more renovation and maybe try to end up renovating the house so its value raises up to $500k? I doubt you can just "renovate" a house and increase its market value from $140k to $500K. Much of a house's value is determined by its location, and you can quickly outgrow a neighborhood. If you put $360k in improvements in a neighborhood where other homes are selling for $140k you will not realize nearly that amount in actual market value. People that buy $500k houses generally want to be in an area where other homes are worth around the same amount. If you want to to a major renovation (such as an addition) I would instead shop around for a Home Improvement Loan. The main difference is that you can use the expected value of the house after improvements to determine the loan balance, instead of using the current value. Once the renovations are complete, you roll it and the existing mortgage into a new mortgage, which will likely be cheaper than a mortgage + HELOC. The problem is that the cost of the improvements is generally more than the increase in market value. It also helps you make a wise decision, versus taking out a $40k HELOC and spending it all on renovations, only to find out that the increase in market value is only $10k and you're now underwater. So in your case, talk to a contractor to plan out what you want to do, which will tell you how much it will cost. Then talk to a realtor to determine what the market value with those improvements will be, which will tell you how much you can borrow. It's highly likely that you will need to pay some out-of-pocket to make up the difference, but it depends on what the improvements are and what comparable homes sell for. |
How bad is it to have a lot of credit available but not used? | Ironically, the worst financial advice I read comes from "bankers." The top dozen members here can be trusted to give better advice than the average banker. Your score is not improved by maintaining a balance, only by using the card(s) regularly. No need to carry charges month to month and pay interest, rather, have the bill reflect a 1-9% utilization. I'd recommend Credit Karma to see how the factors affect your score. FICO scoring prefers to see a large number of accounts, low utilization, high average account age, low number of inquiries, no late payments. CK will let you see a simulated score and how it changes based on these variables. |
How to invest 100k | The best way to invest in college for your kid is to buy an investment property and rent it out. You might think I am really crazy to ask you to you to buy a real estate property when everyone is running from real estate. Go where others are running away from it. Look where others are not looking. Find out the need for a decent rental property in your city or county and start following the real estate market to understand the real activities including the rental market. I would say follow it for 6 months before jumping in with any investment. And manage your property with good tenants until your kid is ready to go to college. By the time your kid is ready for college, the property would have been paid off by the rents and you can sell the property to send your kid to college. |
GnuCash, how do I book loan from credit card, being paid back with salary? [duplicate] | When you pay the flight, hotel, conference attendance fees of $100: When you repay the credit card debt of $100: When you receive the gross salary of $5000: Your final balance sheet will show: Your final income statement will show: Under this method, your "Salary" account will show the salary net of business expense. The drawback is that the $4900 does not agree with your official documentation. For tax reporting purposes, you report $5000 to the tax agency, and if possible, report the $100 as Unreimbursed Employee Expenses (you weren't officially reimbursed). For more details see IRS Publication 529. |
How do I enter Canadian tax info from US form 1042-S and record captial gains from cashing in stock options? | Depending on what software you use. It has to be reported as a foreign income and you can claim foreign tax paid as a foreign tax credit. |
How do you measure the value of gold? | We measure the value of gold by comparing it to other things. Sorry, but there is no better answer than that. There is no gold standard (pun intended) by which objects can be measured in value because "value" is a subjective term. It would be comparable to asking how funny is an object. Different objects are funny to different people. Even if we gathered all the really "funny" object together, there is no guaranty those objects would be funny next year - unless we all agreed they were as part of a social contract. Which is basically what we do with currency. While gold does not need a social contract in order for it to retain its value, this is only because it is has been (1) very useful and (2) rare. If either of these two factors change, the value of gold will change - which it has on several occasions. WARRING: Rant about "Intrinsic Value" of gold below. Gold has no "intrinsic" value. None whatsoever. "Intrinsic value" makes just as much sense as a "cat dog" animal. "Dog" and "cat" are referring to two mutually exclusive animals, therefore a "cat dog" is a nonsensical term. Intrinsic Value: "The actual value of a company or an asset based on an underlying perception of its true value ..." Intrinsic value is perceived, which means it is worth whatever you, or a group of people, think it is. Intrinsic value has nothing, I repeat, absolutely nothing, to do with reality. The most obvious example of this is the purchase of a copy-right. You are assigning an intrinsic value to a copy-right by purchasing it. However, when you purchase a copy-right you are not buying ink on a page, you are purchasing an idea. Someone's imaginings that, for all intensive purposes, doesn't even exist in reality! By definition, things that do not exist do not have "intrinsic" properties - because things that don't exist, don't have any natural properties at all. "Intrinsic" according to Websters Dictionary: "Belonging to the essential nature or constitution of a thing ... (the intrinsic brightness of a star)." An intrinsic property of an object is something we know that exists because it is a natural property of that object. Suns emit light, we know this because we can measure the light coming from it. It is not subjective. "Intrinsic Value" by definition is the OPPOSITE of "Intrinsic" |
What things should I consider when getting a joint-mortgage? | this seems like a bad idea. Example: You want to sell. He doesn't. But he doesn't have enough money to buy you out. What will you do? You might want to sell because you need money, you have to move, you want to get married, you want to start a new business, etc. You two are not equals (you need a place to live), so this is unlikely to work. |
How can I invest in US Stocks from outside the US with a credit card instead of a bank account? | You'll have to take cash from your Credit Card account and use that to trade. I doubt any brokerage house will take credit cards as it's trading without any collateral (since credit cards are an unsecured credit) |
Convention for adding ishares (ETFs) into personal accounts | ETF is essentially a stock, from accounting perspective. Treat it as just another stock in the portfolio. |
Insider Trading? | Nope, its not legal. Easy to explain: If you know something that isn't public known ("inside") it's called insider trading. Hard to prove (impossible), but still illegal. To clarify: If the CEO says it AND its known in public its not illegal. In any case the CEO could face consequences (at least from his company). |
In a competitive market, why is movie theater popcorn expensive? | Movie theater popcorn concessions are not really a competitive market. |
How can a 529 plan help me save for my child's college education? | You get to put money away with special tax incentives (ie - no or less taxes to pay) They are state sponsored and therefore pretty reliable, but some states are better than others. Like with many of these tax incentive type accounts (FSA, Dependent Care Spending Accounts) they are use it or lose it. (In a 529, use it or transfer it). So the money put away is a sunk cost towards education and cannot be repurposed for something else should your kid not want to attend school. http://money.howstuffworks.com/personal-finance/financial-planning/529.htm |
Buying shares- Stocks & Shares ISA, or Fund & Share account? | The main difference is that the ISA account like a Cash ISA shelters you from TAX - you don't have to worry about Capital Gains TAX. The other account is normal taxable account. With only £500 to invest you will be paying a high % in charges so... To start out I would look at some of the Investment Trust savings schemes where you can save a small amount monthly very cost-effectively - save £50 a month for a year to see how you get on. Some Trusts to look at include Wittan, City Of London and Lowland |
What's the point of a benchmark? | Yes an index is by definition any arbitrary selection. In general, to measure performance there are 2 ways: By absolute return - meaning you want a positive return at all times ie. 10% is good. -1% is bad. By relative return - this means beating the benchmark. For example, if the benchmark returns -20% and your portfolio returns -10%, then it has delivered +10% relative returns as compared to the benchmark. |
What's so hard about a mutual fund manager pricing their mutual fund? | Given that a mutual fund manager knows, at the end of the day, precisely how many shares/units/whatever of each investment (stock, equity, etc.) they own, plus their bank balance, It is calculating this given. There are multiple orders that a fund manager requests for execution, some get settled [i.e. get converted into trade], the shares itself don't get into account immediately, but next day or 2 days later depending on the exchange. Similarly he would have sold quite a few shares and that would still show shares in his account. The bank balance itself will not show the funds to pay as the fund manager has purchased something ... or the funds received as the fund manager has sold something. So in general they roughly know the value ... but they don't exactly know the value and would have to factor the above variables. That's not a simple task when you are talking about multiple trades across multiple shares. |
How can I find out what percentage the publicly traded shares (float) are of the total company? | I think you're looking for the public float: Public float or the unqualified term may also refer to the number of outstanding shares in the hands of public investors as opposed to company officers, directors, or controlling-interest investors. Assuming the insider held shares are not traded, these shares are the publicly traded ones. The float is calculated by subtracting restricted shares from outstanding shares. As mentioned, Treasury stock is probably the most narrow definition of restricted stock (not publicly traded), but shares held by corporate officers or majority investors are often included in the definition as well. In any case, the balance sheet is indeed a good place to start. |
Should I invest in a Health Insurance +1 policy from my Employer? | If I read your figures correctly, then the cost difference is negligible. ($1.84 difference) The main determining factor, I'd think, would be the coverage. Do you get more, or less, coverage now than you would if you went together on the same plan? You'd both be covered, but what is the cap? Plans, and employer contributions, change all the time. How is business in both of your companies? Are you likely to get cut? Are you able to get back into a plan at each of your employers if you quit the plan for a while? These rules may be unpleasant surprises if, say, your wife cancels her plan, goes on yours, and you lose your job. She may not be able to get back into her insurance immediately, or possibly not at all. A spouse losing a job isn't a "qualifying life event" the way marriage, birth of a child, divorce, etc., is. |
How do you quantify investment risk? | For a retail investor who isn't a Physics or Math major, the "Beta" of the stock is probably the best way to quantify risk. Examples: A Beta of 1 means that a stock moves in line with the market. Over 1 means that you would expect the stock to move up or down faster than the market as a whole. Under 1 means that you would expect the stock to move slower than the market as a whole. |
What Happens to Bank Stocks If Country Defaults | The prices seem very low even considering the risk? The prices are low because of the risk. Nothing happens to the banks if the sovereign defaults. However, the sovereign debt holders - lose some or all the money they lent to that sovereign. Incidentally, many banks invest in the treasury bonds of various countries, especially those they're located in. They also invest in other companies that rely on the government, or the currency. If that dependency is too high - the bank may fail. If the dependency is not high, or non-existent - the bank will survive. If the bank fails - yes, your shares will be wiped out, that's what happens with bankrupt companies. If you considering investing in banks in a country that you think may default - research them and see how much investments they have that will be affected by that default. |
Any Ubiquitous Finance App That is on Mac, iOS and Windows? | You can try SplashMoney. It works on many platforms, including iPhone, iPod and Mac, but also Palm OS, Android, Blackberry and windows. I've been using it —since more than two years now— with my old Palm OS PDA and it works great. As I work mainly with Linux, I've tested very few times its synchronization with its desktop companion running on windows. |
Car finance (loan) insurance requirements (store car) | Okay, definitive answer for this particular company (Toyota Finance) is (somewhat surprisingly, and glad I asked) it must be fully insured at all times, including liability, even if being stored. I asked at a dealership and they answered "just fire and theft (of course)" but I ended up calling their finance department and the answer was the opposite. So there you go. Thanks for the answers (and for trying to talk me out of wasting money). |
What is a good 5-year plan for a college student with $15k in the bank? | I disagree with the IRA suggestion. Why IRA? You're a student, so probably won't get much tax benefits, so why locking the money for 40 years? You can do the same investments through any broker account as in IRA, but be able to cash out in need. 5 years is long enough term to put in a mutual fund or ETF and expect reasonable (>1.25%) gains. You can use the online "analyst" tools that brokers like ETrade or Sharebuilder provide to decide on how to spread your portfolio, 15K is enough for diversifying over several areas. If you want to keep it as cash - check the on-line savings accounts (like Capitol One, for example, or Ally, ING Direct that will merge with Capitol One and others) for better rates, brick and mortar banks can not possible compete with what you can get online. |
How does remittance work? How does it differ from direct money transfer? | If you are a citizen of India and working in Germany, then you are most likely an NRI (NonResident Indian). If so, you are not entitled to hold an ordinary Indian bank account, and all such existing accounts must be converted to NRO (NonResident Ordinary) accounts. If your Indian bank knows about NRO accounts, then it will be eager to assist you in the process of converting your existing accounts to NRO accounts most likely it also offers a money remittance scheme (names like Remit2India or Money2India) which will take Euros from your EU bank account and deposit INR into your NRO account. Or, you can create an NRE (NonResident External) account to receive remittances from outside India. The difference is that interest earned in an NRO account is taxable income to you in India (and subject to TDS, tax deduction at source) while interest earned in an NRE account is not taxable in India. The remittance process takes a while to set up, but once in place, most remittances take 5 to 6 business days to complete. |
What if 40% of the remaining 60% Loan To Value (ratio) is not paid, or the borrower wants to take only 60% of the loan? | The loan-to-value ratio (LTV Ratio) is a lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. It sounds like your lender has a 60% requirement. Remember the home is the collateral for the loan. If you stop making payments, they can take the house back from you. That number is less than 100% to accommodate changing market prices, the cost of foreclosure, repairing and reselling the home. They may be a safety factor built in depending on the home's location. If you want to buy a $1.8 million dollar home you will have to come up with 40% down payment. That down payment is what reduces the risk for the lender. So no, there is no way to cheat that. Think about the transaction from the view of the lender. Note: in some areas, you can still get a loan if you don't have the required down payment. You just have to pay a monthly mortgage insurance. It's expensive but that works for many home buyers. A separate insurance company offers a policy that helps protect the lender when there isn't enough deposit paid. Update: Er, no. Keep it simple. The bank will only loan you money if it has collateral for the loan. They've built in a hefty safety margin to protect them in case you quit paying them your monthly payments. If you want to spend the money on something else, that would work as long as you provide collateral to protect the lender. You mention borrowing money for some other purpose then buying a home. That would be fine, but you will have to come up with some collateral that protect the lender. If you wanted to buy a new business, the bank would first ask for an appraisal of the value of the assets of the business. That could be applied to the collateral safety net for the lender. If you wanted to buy a business that had little appraisal value, then the bank would require more collateral from you in other forms. Say you wanted to borrow the money for an expensive operation or cosmetic surgery. In that case there is no collateral value in the operation. You can't sell anything from the surgery to anybody to recover costs. The money is spent and gone. Before the bank would loan you any money for such a surgery, they would require you to provide upfront collateral. (in this case if you were to borrow $60,000 for surgery, the bank would require $100,000 worth of collateral to protect their interest in the loan.) You borrow money, then you pay it back at a regular interval at an agreed upon rate and schedule. Same thing for borrowing money for the stock market or a winning horse at the horse race. A lender will require a hard asset as collateral before making you a loan... Yes I know you have a good tip on a winning horse,and you are bound to double your money, but that's not the way it works from a lender's point of view. It sounds like you are trying to game the system by playing on words. I will say quit using the "40% to 60%" phrase. That is just confusing. The bank's loan to value is reported as a single number (in this case 60%) For every $6000 you want to borrow, you have to provide an asset worth $10,000 as a safety guarantee for the loan. If you want to borrow money for the purchase of a home, you will need to meet that 60% safety requirement. If you want to borrow $1,000,000 cash for something besides a home, then you will have to provide something with a retail value of $1,666,667 as equity. I think the best way for you to answer your own question is for you to pretend to be the banker, then examine the proposal from the banker's viewpoint. Will the banker alway have enough collateral for whatever it is you are asking to borrow? If you don't yet have that equity, and you need a loan for something besides a home, you can always save your money until you do have enough equity. Comment One. I thought that most lenders had a 75% or 80% loan to value ratio. The 60% number seems pretty low. That could indicate you may be a high risk borrower, or possibly that lender is not the best for you. Have you tried other lenders? It's definitely worth shopping around for different lenders. Comment Two. I will say, it almost sounds like you aren't being entirely honest with us here. No way someone with a monthly income who can afford a $1.8 Million home would be asking questions like this. I get that English probably isn't your first language, but still. The other thing is: If you are truly buying a $1.8 Million dollar home your real estate agent would be helping you find a lender that will work with you. They would be HIGHLY motivated to see this sale happen. All of your questions could be answered in ten minutes with a visit to your local bank (or any bank for that matter.) When you add up the costs and taxes and insurance on a 30 fixed loan, you'd have a monthly mortgage payment of nearly $10,500 a month or more. Can you really afford that on your monthly income? |
Taxes: Sold House this Year, Buying Next Year | When you sell your primary residence, you are required to capitalize any loss or gain at that point; you do not carry over your loss or gain (as you might in an investment property). As such, the timing of the purchase of the next house is not relevant in this discussion: you gained however much you gained already. This changed from the other (rollover) method in 1997 (see this bankrate article for more details.) However, as discussed in IRS Tax Topic 701, you can exclude up to $250,000 (single or filing separately) or $500,000 (married filing jointly) of gain if it is your primary residence and meets a few requirements (mostly, that you owned it for at least 2 years in the past 5 years, and similarly used it as your main home for at least 2 years of the past 5 years). So given you reported 25% gain, as long as your house is under a million dollars or so, you're fine (and if it's over a million dollars, you probably should be paying a CPA for this stuff). For California state tax, it looks like it is the same (see this Turbotax forum answer for a good explanation and links to this California Franchise Tax Board guide which confirms it: For sale or exchanges after May 6, 1997, federal law allows an exclusion of gain on the sale of a personal residence in the amount of $250,000 ($500,000 if married filing jointly). The taxpayer must have owned and occupied the residence as a principal residence for at least 2 of the 5 years before the sale. California conforms to this provision. However, California taxpayers who served in the Peace Corps during the 5 year period ending on the date of the sale may reduce the 2 year period by the period of service, not to exceed 18 months. |
Learn investing as a programmer | My master's thesis was on using genetic algorithms and candle stick method. If you are familiar, the AI was used to answer questions like "what is a long day", which is not formally defined in most candle stick texts. So in theory unlimited potential for learning including teaching machines to learn. Wall street pays pretty well for such developers, and if you are young and single man Manhattan is pretty sweet place to be. In practicality your formula for building wealth is the same as everyone else's: get out of debt, build an emergency fund, and invest. Initially invest in growth stock mutual funds through a 401K (assuming US). |
Can I prove having savings without giving out the account number? | If you're worried about the account number just take a statement and black out the account number with a Sharpie or the like. That is if the account number even appears on it, these days it often doesn't. |
Why is RSU tax basis based on remaining shares after shares are witheld? | You only got 75 shares, so your basis is the fair market value of the stock as of the grant date times the number of shares you got: $20*75. Functionally, it's the same thing as if your employer did this: As such, the basis in that stock is $1,500 ($20*75). The other 25 shares aren't yours and weren't ever yours, so they aren't part of your basis (for net issuance; if they were sell to cover, then the end result would be pretty similar, but there'd be another transaction involved, but we won't go there). To put it another way, suppose your employer paid you a $2000 bonus, leaving you with a $1500 check after tax withholding. Being a prudent person and not wishing to blow your bonus on luxury goods, you invest that $1500 in a well-researched investment. You wouldn't doubt that your cost basis in that investment at $1500. |
Different ways of looking at P/E Ratio vs EPS | Check your math... "two stocks, both with a P/E of 2 trading at $40 per share lets say, and one has an EPS of 5 whereas the other has an EPS of 10 is the latter a better purchase?" If a stock has P/E of 2 and price of $40 it has an EPS of $20. Not $10. Not $5. |
Should I put more money down on one property and pay it off sooner or hold on to the cash? | I would go with the 2nd option (put down as little as possible) with a small caveat: avoid the mortgage insurance if you can and put down 20%. Holding your rental property(ies)'s mortgage has some benefits: You can write off the mortgage interest. In Canada you cannot write off the mortgage interest from your primary residence. You can write off stuff renovations and new appliances. You can use this to your advantage if you have both a primary residence and a rental property. Get my drift? P.S. I do not think it's a good time right now to buy a property and rent it out simply because the housing prices are over-priced. The rate of return of your investment is too low. P.S.2. I get the feeling from your question that you would like to purchase several properties in the long-term future. I would like to say that the key to good and low risk investing is diversification. Don't put all of your money into one basket. This includes real estate. Like any other investment, real estate goes down too. In the last 50 or so years real estate has only apprepriated around 2.5% per year. While, real estate is a good long term investment, don't make it 80% of your investment portfolio. |
How does an enlarged share base affect share price? | Most of the time when a stock splits to create more shares, it is done to bring the price per share down to a level that makes potential investors more comfortable. There are psychological reasons why some companies keep the price in the $30 to $60 range. Others like to have the price keep rising into the hundreds or thousands a share. The split doesn't help current investors, with the possible exception that the news spurs interest in the stock which leads to a short term rise in prices; but it also doesn't hurt current investors. When a reverse stock split is done, the purpose is for one of several reasons: |
Switch from DINK to SIWK: How do people afford kids? | If commuting is a big budget item, then can you: A side job is one way to make extra money, but I'd suggest a home business. If your wife substitute teaches, I bet she writes fairly well, and in any case you can. Write a personal finance blog or just a site with articles. Focus on surviving and thriving with child(ren) in a one-income Christian household in the suburbs of Philadelphia. Or if you have a hobby that stokes your furnace, write about that. Heck, do both. The content just stays there and gets traffic day after day that you can monetize. My main suggestion would be to start this now because it's not overnight money. But in the long run it can turn into a nice, fairly passive income. The big advantage of this is that mommy gets to stay home with the kids and build up a decent business. The cost is $10/year for the domain (per domain) and maybe $10/month for hosting. Or, if some other legitimate work-at-home business presents itself, go with that. I suggest blogging because it's what I know, but everyone's an expert in something unique. |
Where can I get interesting resources on Commodities? | Here are some pretty big name news agencies which have a section dedicated to commodities: CNN Bloomberg Reuters |
How does investment into a private company work? | However what actually appears to happen is that the 100k is invested into the company to fund some growth plan. So is it actually the case that E's company is worth 400k only AFTER the transaction? Is the 100k added to the balance sheet as cash and would the other 300k be listed as an IP asset? The investor gets 25% of the shares of the company and pays $100k for them, so Owner's Equity increases by $100k, and the company gets $100k more in cash. The $400k number is an implicit calculation: if 25% of the company is worth $100k, 100% of the company is worth $400k. It's not on the books: the investor is just commenting that they feel that they are being over-charged. |
What are some good ways to control costs for groceries? | You may use an app called Flipp (or one that serves your area) to check fliers while in the store. If your preferred store has a price match policy, this can save you a few bucks every trip. Just look up at the app what you are buying and price match it over the cashier. It may or may not work on your store, always ask first. Try to learn some of the products you always buy regular prices. That way you can tell a real special from a fake one, like I write here about the 2/$5 specials. Buy generic brands for things you don't care that much, like bleach and other cleaning products that does not have a real quality difference from the branded ones. Try different cheaper brands until you find one that is ok for you. There are lots of ways to save money on groceries, you just need the will to do so ;) Good luck! |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | Other people have already demonstrated the effect of compound interest to the question. I'd like to add a totally different perspective. Note that the article says if you can follow this simple recipe throughout your working career, you will almost certainly beat out most professional investors [...] you'll likely accumulate enough savings to retire comfortably. (the latter point may be the more practical mark than the somewhat arbitrary million (rupees? dollars?) My point here is that the group of people who do put away a substantial fraction of their (lower) early wages and keep them invested for decades show (at least) two traits that will make a very substantial difference to the average (western) person. They may be correlated, though: people who are not tempted or able to resist the temptation to spend (almost) their whole income may be more likely to not touch their savings or investments. (In my country, people like to see themselves as "world champions in savings", but if you talk to people you find that many people talk about saving for the next holidays [as opposed to saving for retirement].) Also, if you get going this way long before you are able to retire you reach a relative level of independence that can give you a much better position in wage negotiations as you do not need to take the first badly paid job that comes along in order to survive but can afford to wait and look and negotiate for a better job. Psychologically, it also seems to be easier to consistently keep the increase in your spending below the increase of your income than to reduce spending once you overspent. There are studies around that find homeowners on average substantially more wealthy than people who keep living in rental appartments (I'm mostly talking Germany, were renting is normal and does not imply poverty - but similar findings have also been described for the US) even though someone who'd take the additional money the homeowner put into their home over the rent and invested in other ways would have yielded more value than the home. The difference is largely attributed to the fact that buying and downpaying a home enforces low spending and saving, and it is found that after some decades of downpayment homeowners often go on to spend less than their socio-economic peers who rent. The group that is described in this question is one that does not even need the mental help of enforcing the savings. In addition, if this is not about the fixed million but about reaching a level of wealth that allows you to retire: people who have practised moderate spending habits as adults for decades are typically also much better able to get along with less in retirement than others who did went with a high consumption lifestyle instead (e.g. the homeowners again). My estimate is that these effects compound in a way that is much more important than the "usual" compounding effect of interest - and even more if you look at interest vs. inflation, i.e. the buying power of your investment for everyday life. Note that they also cause the group in question to be more resilient in case of a market crash than the average person with about no savings (note that market crashes lead to increased risk of job loss). Slightly off topic: I do not know enough how difficult saving 50 USD out of 50 USD in Pakistan is - and thus cannot comment whether the savings effort called for in the paper is equivalent/higher/lower than what you achieve. I find that trying to keep to student life (i.e. spending that is within the means of a student) for the first professional years can help kick-starting a nest egg (European experience - again, not sure whether applicable in Pakistan). |
If you want to trade an equity that reflects changes in VIX, what is a good proxy for it? | VXX VZX XVIZ and there are plenty others correlated to market volatility if you want the wildest hedge, use VXX, it is also the most liquid |
What is the true value, i.e. advantages or benefits, of building up equity in your home? | Taking out your equity when refinancing means that you take out a new loan for the full value of your house (perhaps less 20% as a down payment on the new mortgage, otherwise you'll be paying insurance), pay off your old lender, and keep the rest for yourself. The result is much the same as using as a HELOC or home equity loan (or a second mortgage), except it's all rolled into a single new mortgage. The advantage is that the interest rate on a first mortgage is going to be lower than on HELOC or equivalent, and the equity requirements may be lower (e.g. a HELOC may only let you borrow against the amount of equity that exceeds 25% or 30%, while a new mortgage will require you only to have 20% equity). This is especially attractive to those whose homes have appreciated significantly since they bought them, especially if they have a lot of high-interest debt (e.g. credit cards) they want to pay off. Of course, rolling credit card debt into a 30-year mortgage isn't actually paying it off, but the monthly payments will be a lot lower, and if you're lucky and your home appreciates further, you can pay it off fully when you sell the property and still have paid a lot less interest. The downside is that you have turned unsecured debt into secured debt, which puts your home at risk if you find yourself unable to pay. In your case, you don't yet have even 20% equity in your home, so I wouldn't recommend this. :-) Equity is simply the difference between the amount you still owe on your home and the amount you'd get if you were to sell it. Until you do sell it, this amount is tentative, based on the original purchase price and, perhaps, an intervening appraisal that shows that the property has appreciated. That is really all that it is and there's nothing magic about it, except that since you own your home, you have equity in it, while as a renter, you would not. It used to be (decades ago, when you needed 20% down to get a mortgage) that selling was the only time you'd be able to do anything with the equity in your home. Now you can "take it out" as described above (or borrow against it) thanks to various financial products. It is sometimes tempting to consider equity roughly equivalent to "profit." But some of it is your own money, contributed through the down payment, your monthly principal payment, and improvements you have made -- so "cashing out" isn't all profit, it's partly just you getting your own money back. And there are many additional expenses involved in owning a home, such as interest, property taxes, maintenance, utilities, and various fees, not to mention the commissions when you buy or sell, which the equity calculation doesn't consider. Increasing equity reflects that you own a desirable property in a desirable location, that you have maintained and maybe even improved it, that you are financially responsible (i.e., paying your mortgage, taxes, etc.), and that your financial interests are aligned with your neighbors. All those things feel pretty good, and they should. Otherwise, it is just a number that the banks will sometimes let you borrow against. :-) |
Is short selling a good hedging strategy during overzealous market conditions? | Right, wrong or indifferent I see account gains of nearly 50% so far this year; now being January 23, 2016. That is mostly staying on the short side. I am not adverse to long positions at all; only hop to the other side when the tide turns. I will probably end up castrating myself on the fence at some point. |
How can I get a wholesaler ID number? | Small businesses are often governed by local regulations and state law. In a low liability small quantity arena, you should be able to get away with a DBA (doing business as) arrangement, such as DBA "Jay's Gem's". A small business license may come with a state Tax ID and satisfy your supplier, but a Federal EIN can be obtained from the IRS, and may be necessary to apply for the business license. It wouldn't hurt to talk to the local chamber of commerce or state small business agencies if you have questions about local requirements. |
Are Certificates of Deposit worth it compared to investing in the stock market? | A CD is guaranteed to pay its return on maturation. So if you need a certain amount of money at a specific time in the future, the CD is a more reliable way of getting it. The stock market might give you more money or less. More is obviously OK. Less is not if you're planning to pay basic expenses with it, e.g. food, rent, etc. Most retirement portfolios will have a mix of investments. Some securities (stocks and bonds), some guaranteed returns (CDs, treasuries), and some cash equivalents (money market, savings, and checking accounts). Cash equivalents are good for short term expenses and an emergency fund. Guaranteed returns are good for medium term expenses. Securities are good for the long term. Once retired, the general system is to maintain enough cash equivalents for the next few months of expenses and emergencies. Then schedule CDs for the next few years so that you have a predictable amount. Finally, keep the bulk of your wealth in securities. As you get older, your potential emergencies increase and your need for savings decreases, so the mix shifts more and more to the cash equivalents and guaranteed returns and away from securities. CDs have limited use prior to retirement (and the couple years right before retirement), mainly saving up for a large purchase like a house, car, or major appliance. Even there if you have the option of delaying the purchase, that might allow you to use securities instead. Perhaps some of your emergency fund in a short term CD that you keep rolling over. Note that the problem isn't so much that securities will fall. It's that they'll fall right when you need the money. So rather than sell 1% of your securities to meet your needs, you have to sell 2%. That's a dead weight loss of 1% that you have to deduct from your returns. That roughly matches the drop from the height of 2007 to the trough of 2009 of the S&P 500. And it was 2012 before it recovered. If in 2007, you had put the 1% of your portfolio in a two-year CD, you'd be ahead even at zero interest in 2009. |
UK: Personal finance book for a twenty-something | Try this as a starter - my eBook served up as a blog (http://www.sspf.co.uk/blog/001/). Then read as much as possible about investing. Once you have money set aside for emergencies, then make some steps towards investing. I'd guide you towards low-fee 'tracker-style' funds to provide a bedrock to long-term investing. Your post suggests it will be investing over the long-term (ie. 5-10 years or more), perhaps even to middle-age/retirement? Read as much as you can about the types of investments: unit trusts, investment trusts, ETFs; fixed-interest (bonds/corporate bonds), equities (IPOs/shares/dividends), property (mortgages, buy-to-let, off-plan). Be conservative and start with simple products. If you don't understand enough to describe it to me in a lift in 60 seconds, stay away from it and learn more about it. Many of the items you think are good long-term investments will be available within any pension plans you encounter, so the learning has a double benefit. Work a plan. Learn all the time. Keep your day-to-day life quite conservative and be more risky in your long-term investing. And ask for advice on things here, from friends who aren't skint and professionals for specific tasks (IFAs, financial planners, personal finance coaches, accountants, mortgage brokers). The fact you're being proactive tells me you've the tools to do well. Best wishes to you. |
What are the risks & rewards of being a self-employed independent contractor / consultant vs. being a permanent employee? | When I worked for myself it was bad because But Ultimately I gave up my business and went to work for a school teaching, and through a series of other jobs ended up in a very stable reliable trustworthy job. When I was younger the variable paycheck didn't outweigh the freedom. Now that I am a dad I only think about having insurance and a secure job. The other option to consider is having a regular job, and then doing a little side work for yourself. You get all the benefits of both (and all the detractions) |
If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes? | You are not required to file a tax return in Canada if you have no taxable income. If you do not file a return you may be requested to by Canada Revenue Agency, and then you'll need to file one. There are hundreds of thousands of Canadian residents who do not file tax returns. The Minister who overlooks the CRA may assess any amount of taxes on any resident whether they file a return or not. There are penalties for failing to file a return or filing late. The penalties are based on a percentage of the taxes owed. If you owe no taxes, then the penalties are meaningless. |
Why should a company go public? | The reason to go public is to get money. Not to be snarky, but your question is like asking, "Why should a company try to sell its products, when if they just piled them up in a warehouse they wouldn't have to worry about shipping and customer complaints and collecting sales tax?" The answer, of course, is because they want the money. Sure, there are disadvantages to going public, like more regulation, required financial disclosures, and having to answer to stockholders. That's the price you pay for accepting money from people. They're not going to give you money for nothing. |
Can I use a different HSA than PayFlex that came with aetna? | There are some cases I'm aware of where a large employer will offer alternative HSA vendors, but this is not the norm as far as I'm aware, and would only be an option if your employer has already negotiated for this with your insurer. It's likely that this specific vendor is built in for the particular HSA product your employer has elected from Aetna. If this really ticks you off on principle, you can check if they offer a stable value fund. If so, you can essentially treat this money as part of your emergency fund, and somewhat reduce your own emergency fund and invest that money however you see fit. |
Where can I find company filing information in Singapore? | If you are refering to company's financial reports and offerings, the required source for companies to disclose the information is the SGX website (www.sgx.com) under the Company Disclosure tab. This includes annual statements for the last 5 years, prospectus for any shares/debentures/buy back/etc which is being offered, IPO offers and shareholders meetings. You may also find it useful to check the Research section of the SGX website where some of the public listed companies have voluntarily allowed independent research firms to monitor their company for a couple of years and produce a research report. If you are referring to filings under the Companies Act, these can be found at the Accounting and Regulatory Authority (ACRA) website (www.acra.gov.sg) and you can also purchase extracts of specific filings under the ACRA iShop. To understand the Singapore public listing system and the steps to public listing, you may find it useful to purchase one of the resource documents available for Singapore law, finance, tax and corporate secretaryship which are sold by CCH (www.cch.com.sg). Specifically for public listing the Singapore Annotated Listing Manual may help. It is common practice for companies here to employ law firms and research firms to do the majority of this research instead of doing it themselves which I one of the reasons this information is online but perhaps not so visible. I hope I have understood your question correctly! |
What is the meaning of public stock price data from before the official first day of trading? [duplicate] | For the case of spinoffs it reflects the market as activities as the specific steps that have to be followed take place. For example the spinoff of Leidos from SAIC in 2013. (I picked this one becasue I knew some of the details) On September 9, 2013, the Board of Directors of SAIC, Inc.(Ticker Symbol (NYSE):SAI) approved the following: The separation of its technical, engineering and enterprise information technology services business through the distribution of shares of SAIC Gemini, Inc. to stockholders. Each stockholder of record of SAIC, Inc. as of September 19, 2013 (Record Date) will receive one (1) share of SAIC Gemini, Inc. common stock for every seven (7) shares of SAIC, Inc. common stock held by such stockholder as of the Record Date. This distribution will be effective after market close on September 27, 2013 (Distribution Date). After the Distribution Date, SAIC Gemini, Inc. will be renamed Science Applications International Corporation (New SAIC). A one (1) for four (4) reverse stock split of the SAIC, Inc. common stock effective as of Distribution Date. After the Distribution Date, SAIC, Inc. will be renamed Leidos Holdings, Inc. (Leidos). Q 11: What are the different trading markets that may occur between Record Date and Distribution Date? A: Beginning two days prior to the Record Date of September 19, 2013 through the Distribution Date on September 27, 2013, there may be three different trading markets available with respect to SAIC, Inc. and the separation. Stock Ticker – SAI (Regular Way Trading with Due Bills): Shares of SAI common stock that trade on the regular-way market will trade with an entitlement to shares of the New SAIC common stock distributed on the Distribution Date. Purchasers in this market are purchasing both the shares of Leidos and New SAIC common stock. Form of Stock Ticker –SAIC (When Issued Trading): Shares of New SAIC common stock may be traded on a “when-issued” basis. These transactions are made conditionally because the security has been authorized, but not yet issued. Purchasers in this market are only purchasing the shares of New SAIC common stock distributed on the Distribution Date. Form of Stock Ticker – LDOS (Ex-Distribution Trading): Shares that trade on the ex-distribution market will trade without an entitlement to shares of New SAIC common stock distributed on the Distribution Date. Purchasers in this market are only purchasing the shares of Leidos common stock. So the stock price for New SAIC starts a few days before the record date of 19 September 2013, while LDOS (new name for the old SAIC) goes back much earlier. But the company didn't split until after the close of business on 27 September 2013. http://investors.saic.com/sites/saic.investorhq.businesswire.com/files/doc_library/file/GeneralStockholder-QuestionsandAnswers.pdf |
What is the best use of “spare” money? | There's a hellova lot to be said for investing in real estate (simple residential real estate), even though it's grandma's advice. The two critical elements are 1) it's the only realistic way for a civilian to get leverage. this is why it almost always blows away "tinkering in the stock markets" in the 10-year frame. 2) but perhaps more importantly - it's a really "enforced" saving plan. you just have to pay it off every month. There are other huge advantages like, it's the best possible equity for a civilian, so you can get loans in the future to start your dotcom, etc. Try to buy yourself a very modest little flat (perhaps to rent out?) or even something like a garage or storeroom. Real estate can crash, but it's very unlikely; it only happens in end of the world situations where it won't matter anyway. When real estate drops say 30% everyone yells about that being a "crash" - I've never, ever owned a stock that hasn't had 30% down times. Food for thought! |
Why should we expect stocks to go up in the long term? | Companies are expected to make a profit, otherwise there is no point to their existence and no motivation for investment. That profit comes back to shareholders as growth and/or dividend. If a company is doing well and has a healthy profit to turn back into investment to facilitate increased future earnings, it increases shareholder equity and share price. If a company is doing well and has a healthy profit to pay out in dividend, it makes the shares more attractive to investors which pushes the price up. Either way, shares go up. Share prices drop when companies lose money, or there are market disturbances affecting all companies (recessions), or when individual companies fail. Averaged over all companies over the long term (decades), stocks can be reasonably expected to go up. |
How does Big Money work? (i.e. stocks, Enron, net worth) | 1) You ignore dividends. You can hold your 10 million shares and never sell them and still get cash to live on if the security pays dividends. McDonalds stock pays 3% in dividends (a year). If you owned 10 million shares of McDonalds you would get 75,000 every three months. I am sure you could live on 25,000 a month. 2) Enron was an energy company. They sold energy and made a profit (or rather were supposed to). Enron didn't make their money by selling stock. McDonalds makes their money by selling hamburgers (and other food). The income of a company comes from their customers, not from selling stock. 3) IF you sold all of your 10 million shares within a short time frame it, likely, would drive the price of the stock down. But you do not need a billion dollars to live on. If you sold 1000 shares each month you would have plenty for buying cars and pizza. Selling 1000 shares may drive the price of the stock down for a minute or two. But the rest of the transactions, for that security made the same day, would quickly obscure the effect you had on the stock. 4) When you buy stock your money does not (usualy) go to the company. If I were to buy 100 shares of McDonalds, McDonalds would not get $11670.That money is (usually) paid to a 'Market Maker' who, in turn, will use the cash to buy MCD from other individual shareholders (presumably for less than 116.70 a share). |
Understanding how this interpretation of kelly criterion helps the trader | The goal of the kelly criterion strategy is to find a balance between preservation of starting capital and returns. One of extreme you could bet the entirety of your account on one trade, which would maximize your returns if you win, but leave you unable to further invest if you lose. On the other extreme, you could bet the smallest amount of capital possible over the course of several trades to increase the probability that you'll even out to 70% accuracy over time. But this method would be extremely slow. So for your case, investing 40% each time is one way to find an optimal balance between these two extremes. Use this as a rule of thumb though, because your own situation and investing goals may differ from the goal of optimal growth. |
Mortgage or not? | Short answer: No. Longer answer: The only reason to move would be to get out of the condo and into a SFR of equal cost because condos can be quite difficult to sell and you don't really want that potential burden later on. Moving is expensive though and you can't afford to spend more when you are already living on the financial edge. Speaking of living on the edge, that's a recipe for disaster. I make, ratio-wise, a similar sort of income. Even accounting for the generous college tuition, you should be able to save at least $20K per year...at a bare minimum. And if you were careful, I figure you should be able to save $40K/year. You need to figure out where you are dumping all of your money and cut WAY back on spending and focus entirely on saving money. 1) Stop eating out. Make your own meals. I average about $2 per meal per person - no junk food. Eating out is 6 to 30 times as expensive as making meals at home. Do the math: $10 * 2 people * number of times you eat out per week * 52 ($1,040 per year for each time/week!) vs $2 * 2 people * 21 (3 meals per day) * 52 ($4,368 per year for both of you...maximum). Now I know some meals are more expensive to prepare, but the math is not unrealistic - I spend about $140 per month on groceries and make the bulk of my own food. Eating out is sticker shock for me. The food I prepare is nutritionally balanced and complete. Now I'm not a complete health-nut. I love the occasional deep-fried treat or hamburger, but those are "once every couple of months" sort of things, which makes them special. 2) Stop going to Starbucks or wherever you habitually go. It takes fuel to get there. It's also expensive when you get there. Bring your own drink if you are hanging out with friends. 3) Drop golf. Or whatever expensive sport you are sinking money into. Invest in some cheap running clothes and focus on cardio-based workouts. Heart health is more important than anything else. If you can't live without your sport, then find an alternate sport that is "equal"-ish in challenge but a ton cheaper to play. For example, if you like playing golf, play discgolf instead (most cities have courses) - there's no cost beyond a couple of discs and the challenge is still there. 4) Drop entertainment. Movies at the theater are expensive. Drop your cable subscription (you are getting financially raped for $1,500/year). Get a Netflix subscription and find shows via free online streaming services. Buy some dominoes, card games, and a couple of classic board games. Keep entertainment simple and cheap. 5) Drop your cell phone's data plan. Republic Wireless is the only decent cellular provider and even their $12/month plan is living a luxury lifestyle. If you spend more than $10/month/person for phone service, you are spending too much. 6) Stop driving everywhere. Gas is expensive. Cars are expensive. If you have more than two cars, sell the extras. If your car is worth more than $20,000, sell it and get something cheaper. 7) Stop drinking alcohol. Alcohol impairs mental functions, is addictive, smells terrible, and is ridiculously expensive. There's no actual need to consume it either. By the way, don't go and make major financial changes without the wife's sign-off. Finances are the #1 reason for divorce. So get her "OK" on this stuff. Hopefully you already knew that. The above are just some common financial pitfalls where people sink thousands and thousand of dollars and gain nothing. You can still have a full and complete life with just a minimum of the above. There is no excuse for living on the edge financially. Your story is one I'm going to share with those who give me the same excuse because they are "poor". You are "I want to punch you in the face" wealthy and you spend every last penny because you think that's how money works. You are wrong. One final piece of advice: Find a financial adviser. It is clear to me that you've been managing money wrong your whole life. A financial adviser will look at your situation and help you far more than someone on the Internet ever can. If you attend a church, many churches have the excellent Crown Financial Ministries program available which teaches sound financial management principles. The education system doesn't show people how to manage money, but that's not an excuse either. Once you dig yourself out of the financial hole you've dug for yourself, you can pass the knowledge on how to correctly manage money onto other people. |
Why does the calculation for IRR use revenue, not profit? | The short answer is that you would want to use the net inflow or net outflow, aka profit or loss. In my experience, you've got a couple different uses for IRR and that may be driving the confusion. Pretty much the same formula, but just coming at it from different angles. Thinking about a stock or mutual fund investment, you could project a scenario with an up-front investment (net outflow) in the first period and then positive returns (dividends, then final sale proceeds, each a net inflow) in subsequent periods. This is a model that more closely follows some of the logic you laid out. Thinking about a business project or investment, you tend to see more complicated and less smooth cashflows. For example, you may have a large up-front capital expenditure in the first period, then have net profit (revenue less ongoing maintenance expense), then another large capital outlay, and so on. In both cases you would want to base your analysis on the net inflow or net outflow in each period. It just depends on the complexity of the cashflows trend as to whether you see a straightforward example (initial payment, then ongoing net inflows), or a less straightforward example with both inflows and outflows. One other thing to note - you would only want to include those costs that are applicable to the project. So you would not want to include the cost of overhead that would exist even if you did not undertake the project. |
What are the costs to establish an LLC and to maintain it? | The cost will be around $300-$500 if you do it correctly it in Florida and can be over a $1,000 if you do it in New York (New York is more expensive due to a publication requirement that New York has for LLC’s). The price ranges I’ve given include filing, state fees, getting a tax ID number (EIN), operating agreement, membership certificates, registered agent fees and publication fees if done in New York. Each state also have licensing boards and city fees that are applicable, so you would want to also make sure that you are keeping compliant there. Yearly paperwork to keep the LLC running won’t be so expensive, expect the state to charge a yearly fee and require some basic information to be submitted. I had a quick look at Florida, and with someone filing it for you, expect around $200 to $250 a year, plus registered agent fees. If you are late in Florida the penalty is $400 so you definitely would want a service that provides compliance calendar notifications to make sure you are on time with fees. In regards to bookkeeping and taxes, yearly tax filing will start at $250 to $500 for an LLC and move up from there depending on the services being offered and the amount of time of work. I recently referred someone to an accountant that will charge $250 to file an almost zero tax return on an LLC. I think $40 an hour is a little low for a bookkeeper but it all depends on where you are. I know in some major cities bookkeepers expect $75 an hour or higher. So the expectation in Miami and Manhattan will probably be more expensive than Jacksonville and Albany. If you doing a little business don’t expect the cost to be too much on the bookkeeping. So, breakdown: $300-$500 (FL) - $1,000 (NY) Registration of LLC + any business license, city or other registrations $250 Yearly Fee + Yearly Registered Agent + any business licenses, city or other fee $500 Tax Return + Bookkeeping Fee Banks will charge more than a personal account so expect $120 a year plus. In regards to service I would look at companies that specialize in foreigners setting up businesses in the US, because they will have services designed to help you more than services that primarily specialize with US clients. You are going to have some different needs, based on not having a Social Security Number or establishing from overseas. |
Explanations on credit cards in Canada | A credit card is a way to borrow money. That's all. Sometimes the loans are very small - $5 - and sometimes they are larger. You can have a credit card with a company (bank or whatever) that you have no other relationship with. They're not a property of a bank account, they are their own thing. The card you describe sounds exactly like a debit card here, and you can treat your Canadian debit card like your French credit card - you pay for things directly from your bank account, assuming the money is in there. In Canada, many small stores take debit but not credit, so do be sure to get a debit card and not only a credit card. Now as to your specific concerns. You aren't going to "forget to make a wire." You're going to get a bill - perhaps a paper one, perhaps an email - and it will say "here is everything you charged on your credit card this month" along with a date, which will be perhaps 21 days from the statement date, not the date you used the card. Pay the entire balance (not just the minimum payment) by that date and you'll pay no interest. The bill date will be a specific date each month (eg the 23rd) so you can set yourself a reminder to check and pay your bill once a month. Building a credit history has value if you want to borrow a larger amount of money to buy a car or a house, or to start a business. Unlike the US, it doesn't really have an impact on things like getting a job. If you use your card for groceries, you use it enough, no worries. In 5 years it is nice to look back and see "never paid late; mostly paid the entire amount each month; never went over limit; never went into collections" and so on. In my experience you can tell they like you because they keep raising your limit without you asking them to. If you want to buy a $2500 item and your credit limit is $1500 you could prepay $1000 onto the credit card and then use it. Or you could tell the vendor you'd rather use your debit card. Or you could pay $1500 on the credit card and then rest with your debit card. Lots of options. In my experience once you get up to that kind of money they'd rather not use a credit card because of the merchant fees they pay. |
Can I transfer my investment property into a SMSF? | Regarding transferring a residential investment property into your SMSF, no you cannot do it. You cannot transfer residential property into your SMSF from a related party. You can only transfer Business Real Property (that is commercial or industrial property) into a SMSF from a related party. You can buy new residential property inside your SMSF, and you can also borrow within the fund (using a non-recourse loan) to help you buy it, or you could buy it as tenants-in-common with your SMSF (that is you own say 50% in your own name and 50% under the SMSF). Regarding self-managing the investment properties held in your SMSF, yes you can, but you should make sure all your paperwork is in order (all your t's crossed and your i's dotted). You can even charge your SMSF for managing the properties, but this should be at market rates (not more). |
How is gold shared in worldwide economies? | Money is no longer backed by gold. It's backed by the faith and credit of the issuing government. A new country,say, will first trade goods for dollars or other currency, so its ownership of gold is irrelevant. Its currency will trade at a value based on supply/demand for that currency. If it's an unstable currency, inflating too quickly, the exchange rate will reflect that as well. More than that your question kind of mixes a number of issues, loosely related. First is the gold question, second, the question of currency exchange rates and they are derived, with an example of a new country. Both interesting, but distinct processes. |
Will my wife's business losses offset my income on a joint tax return? | First, filing status. If you and your wife are legally married, you should be filing your tax returns as married, either jointly or separately. In the US, "head of household" has a specific meaning and is for unmarried people who are supporting one or more relatives, per the IRS. If you are working full-time and your wife is not, then likely you will file a joint return, including all your income and all the expenses for your wife's business. So yes, the losses in her business will offset your income. Depending on how complex things are, you may want to hire a professional to help with your taxes. The rules for what can and cannot be deducted as a business expense can be opaque. |
How can I diversify $7k across ETFs and stocks? | nan |
What standards should I expect of my CPA when an error was made? | What is the right way to handle this? Did you check the forms? Did the form state $0 tax due on the FTB LLC/Corp form (I'm guessing you operate as LLC/Corp, since you're dealing with the Franchise Tax)? The responsibility is ultimately yours. You should cross check all the numbers and verify that they're correct. That said, if the CPA filled the forms incorrectly based on your correct data - then she made a mistake and can be held liable. CPA filing forms from a jurisdiction on the other end of the country without proper research and knowledge may be held negligent if she made a grave mistake. You can file a law suit against the CPA (which will probably trigger her E&O insurance carrier who'll try to settle if there's a good chance for your lawsuit to not be thrown away outright), or complain to the State regulatory agency overseeing CPAs in the State of her license. Or both. Am I wrong for expecting the CPA should have properly filled out and filed my taxes? No, but it doesn't shift the responsibility from you. How can I find out if the CPA has missed anything else? Same as with doctors and lawyers - get a second opinion. Preferably from a CPA licensed in California. You and only you are responsible for your taxes. You may try to pin the penalties and interest on the CPA if she really made a mistake. California is notorious for very high LLC/Corp franchise tax (cost of registering to do business in the State). It's $800 a year. You should have read the forms and the instructions carefully, it is very prominent. It is also very well discussed all over the Internet, any search engine would pop it up for you with a simple "California Franchise Tax for LLC/Corp" search. CA FTB is also very aggressive in assessing and collecting the fee, and the rules of establishing nexus in CA are very broad. From your description it sounds like you were liable for the Franchise tax in CA, since you had a storage facility in CA. You may also be liable for sales taxes for that period. |
How to pay bills for one month while waiting for new job? | The first thing I would try is to take out a loan from a local credit union. If you don't know of any that you're eligible for, start looking at the National Credit Union Administration's Credit Union Locator. You should be able to get a good rate since your credit is so good. If for whatever reason you can't get the credit union loan, I would open another credit card. Try hard to get the loan though, because using a credit card will most likely be significantly more expensive. If you can't cover your cash-only expenses with cash you already have, make sure that you can get cash from the card. For example, one of my cards regularly sends me checks that I could write to myself to get cash, but be careful with this strategy. Usually the interest is much higher than normal purchases. Either way, until you've paid off this emergency debt and built up an emergency fund of 3-6 months of expenses, cut your expenses as much as possible. This Experian article has some good tips: |
What are the benefits of opening an IRA in an unstable/uncertain economy? | You bring up a valid concern. IRAs are good retirement instruments as long as the rules don't change. History has shown that governments can change the rules regarding retirement accounts. As long as you have some of your retirement assets outside of an IRA I think IRAs are good ways to save for retirement. It's not possible to withdraw the money before retirement without penalty. Also, you will be penalized if you do not withdraw enough when you do retire. |
Am I required to have a lawyer create / oversee creation of my will? | This is not intended as legal advice, and only covers general knowledge I have on the subject of wills as a result of handling my own finances. Each state of the USA has its own laws on wills and trusts. You can find these online. For example, in Kentucky I found state laws here: http://www.lrc.ky.gov/krs/titles.htm and Title XXXIV is about wills and trusts. I would recommend reading this, and then talking to a lawyer if it is not crystal clear. Generally, if a lawyer does not draft your will, then either (1) you have no will, or (2) you use a form or computer program to make a will, that must then be properly witnessed before it is valid. If you don't have it witnessed properly, then you have no will. In some states you can have a holographic will, which means a will in your own handwriting. That's when you have that 3am heart attack, and you get out a pad of paper and write "I rescind all former wills hereby bequeathing everything to my mistress Samantha, and as to the rest of you go rot in hell. " One issue with these is that they have to get to court somehow, and someone has to verify the handwriting, and there are often state laws about excluding a current spouse, so you can guess for yourself whether that one might disappear in the fireplace when another family member finds it next to the body or if a court would give it validity. And there can be logic or grammar problems with do it yourself wills, made in your own handwriting, without experience or good references on how to write things out. Lawyers who have done a bunch of these know what is clear and makes sense. (1) In Tennessee, where I live, an intestate's property, someone who died with no will, is divided according to the law. The law looks to find a spouse or relatives to divide the property, before considering giving it to the state. That might be fine for some people. It happened once in my family, and was resolved in court with minimal red tape. But it really depends on the person. Someone in the middle of an unfinalized divorce, for instance, probably needs a will help to sort out who gets what. (2) A form will is valid in Tennessee if it is witnessed properly. That means two witnesses, who sign in yours' and each others' presence. In theory they can be called to testify that the signature is valid. In practice, I don't know if this happens as I am not a lawyer. I have found it difficult to find witnesses who will sign a form will, and it is disconcerting to have to ask friends or coworkers for this sort of favor as most people learn never to sign anything without reading it. But a lawyer often has secretaries that do it... There is a procedure and a treaty for international wills, which I know about from living overseas. To streamline things, you can get the witnesses to each sign an affidavit after they signed the will. The affidavit is sworn written testimony of what happened, that they saw the person sign their will and sign in each others' presence, when, where, no duress, etc. If done correctly, this can be sufficient to prove the will without calling on witnesses. There is another option (3) you arrange your affairs so that most of your funds are disbursed by banks or brokers holding your accounts. Option (3) is really cheap, most stock brokers and banks will create a Transfer-On-Death notice on your account for free. The problem with this is that you also need to write out a letter that explains to your heirs how to get this money, and you need to make sure that they will get the letter if you are dead. Also, you can't deal with physical goods or appoint a guardian for children this way. The advantage of a lawyer is that you know the document is correct and according to local law and custom, and also the lawyer might provide additional services like storing the will in his safe. You can get personalized help that you can not get with a form or computer program. |
How do you translate a per year salary into a part-time per hour job? | There is no fixed formulae, its more of how much you can negotiate Vs how many others are willing to work at a lower cost. Typically in software industry the rates for part time work would be roughly in the range of 1.5 to 2 times that of the full time work for the same job. With the above premise roughly the company would be willing to pay $100,000 for 2000 hrs of Part time work(1), translating into around $50 per hour. How much you actually get would depend on if there is someone else who can work for less say at $30 at hour. (1) The company does not have 2000 hrs of work and hence its engaging part time worker instead of full time at lesser cost. |
Is Peter Lynch talking about the Dividend Adjusted PEG Ratio in this quote? | Essentially, yes, Peter Lynch is talking about the PEG Ratio. The Price/Earnings to Growth (PEG) Ratio is where you take the p/e ratio and then divide that by the growth rate (which should include any dividends). A lower number indicates that the stock is undervalued, and could be a good buy. Lynch's metric is the inverse of that: Growth rate divided by the p/e ratio. It is the same idea, but in this case, a higher number indicates a good value for buying. In either case, the idea behind this ratio is that a fairly priced stock will have the p/e ratio equal the growth rate. When your growth rate is larger than your p/e ratio, you are theoretically looking at an undervalued stock. |
Whole life insurance - capped earnings | I need to see the policy you are referring to give a more accurate answer. However what could be happening, it’s again the way these instruments are structured; For example if the insurance premium is say 11,000 of which 1000 is toward expenses and Term insurance amount. The Balance 10,000 is invested in growth. The promise is that this will grow max of 9.5% and never below zero. IE say if we are talking only about a year, you can get anything between 10,000 to 10,950. The S & P long-term average return is in the range of 12 -15% [i don't remember correctly] So the company by capping it at 9.5% is on average basis making a profit of 2.5% to 5.5%. IE in a good year say the S & P return is around 18%, the company has pocketed close to 9% more money; On a bad year say the Index gave a -ve return of say 5% ... The Insurance company would take this loss out of the good years. If say when your policy at the S & P for that year has given poor returns, you would automatically get less returns. Typically one enters into Life Insurance on a long term horizon and hence the long term averages should be used as a better reference, and going by that, one would make more money just by investing this in an Index directly. As you whether you want to invest in such a scheme, should be your judgment, in my opinion I prefer to stay away from things that are not transparent. |
What are some good ways to control costs for groceries? | Also make a menu and make a shopping list from that. It will help you control how much you buy, and help to enforce only buying what you need. You don't need to limit your menu, but buying what you need in appropriate quantities will help. Don't forget to add snacking and desserts to your menu. |
What is the rationale behind brokerages establishing tiers/levels for options trading? | Option tiers are broker specific, according mostly to their business model and presumably within the bounds of FINRA Rule 2111 (Suitability). The tier system can be as complex as E*Trade or as simple as none with Interactive Brokers. The suitability is determined presumably by compliance presumably by the legal history of the rule. The exact reasoning is political, effected by the relevant party composition of the legislature and executive. The full legal history will have the judiciary's interpretations of legislation and policy. Cash and margin rules are dictated primarily by the Federal Reserve and more precisely by FINRA and the SEC. This is the only distinction made by IB. |
Is it possible to transfer stock I already own into my Roth IRA without having to sell the stock? | No. A deposit to an IRA must be in cash. A conversion from traditional IRA to Roth can be "in kind" i.e. As a stock transfer. Last, any withdrawals can also be in stock or funds. IRS Publication 590, so important, it's now in 2 sections Part A and Part B, addresses IRA issues such as this as well as most others. By the way - now on page 7 - "Contributions, except for rollover contributions, must be in cash." |
5/1 ARM: Lifetime cap, First Adjustment Cap, Margin, and Annual Cap? | You quote a rate (2.75%) and then quote a margin (1.75%). The margin is usually an addition to some base rate. How is the margin expressed in the figures you have? Is it included in the rate, or in addition to it? As for the other stuff, it looks like the rate can go up at most 1% per year, up to a maximum of 5% increase. The first adjustment cap is also 1%. That just says that your first rate increase is capped the same as subsequent increases. If the margin is already included, and the increases are based on your initial rate, then this puts you at a maximum of 7.75%. You must verify this. I don't have your loan documents. And again, why would you want to risk an increase at all? You have a decent fixed-rate mortgage already. That still doesn't make sense to me. Going from 2.75% to 7.75% as above can increase your monthly payment by over 40%. |
Best way for for soon to turn 18 to learn about money? | Do you have a smart phone? Check out the Clark Howard Podcast. I listen every day. Of course you can listen from your computer but its far easier to consume from a pod catcher |
Why would you ever turn down a raise in salary? | In the UK, the government has recently announced that Child Benefit will no longer be paid to those who earn over £44k. This means that if you currently earn £43,999, and your employer offers you a raise of £10 per annum to £44,009, then you could be over £1k worse off as a result. |
What home improvements are tax deductible? | As noted above but with sources An improvement materially adds to the value of your home, considerably prolongs its useful life, or adapts it to new uses. You must add the cost of any improvements to the basis of your home. You cannot deduct these costs. Source Page 11, Adjusted Basis, Improvements Second, A repair keeps your home in an ordinary, efficient operating condition. It does not add to the value of your home or prolong its life. Repairs include repainting your home inside or outside, fixing your gutters or floors, fixing leaks or plastering, and replacing broken window panes. You cannot deduct repair costs and generally cannot add them to the basis of your home. Source Page 12, Adjusted Basis, Repairs versus improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you are not required to capitalize the expense. You must capitalize any expense you pay to improve your rental property. An expense is for an improvement if it results in a betterment to your property, restores your property, or adapts your property to a new or different use. Source Page 5, Repairs and Improvements Good Luck, |
What is the benefit of investing in retirement plan versus investing directly in stocks yourself? | In the US, the key to understanding the benefits of retirement accounts is to understand capital gains taxes and how they work. Retirement accounts are designed for making investments throughout your career, then after several decades of contributions, withdrawing that money to pay for your needs when your full-time employment has concluded. Normally when you invest money in a brokerage account, if the value of your investment increases, and you sell in less than a year, those investments are considered short-term gains and taxed as ordinary income. If you hold that same investment for over a year, the same investment is taxed at a lower capital gains rate (depending on which tax bracket you are in during that year, the amount due could be up to 20%, but much lower than your regular income tax rate). When you place your money in a retirement account, you are choosing to either pay the tax due on the income when you put it in the account, or put the money in tax free and pay the tax when you withdraw (these are called tax-deferred accounts). When you have money invested several decades, the raw dollar amount increases greatly, but inflation is also reducing the value of those dollars. Imagine you bought some bonds that payed 4% over 40 years, but inflation was 2% during those same years. When you sell those bonds 40 years later, you will owe capital gains on the entire gain even though half of the gain came from inflation. Retirement accounts allow you to buy and sell according to your investment needs and goals without any consideration about whether the gains are short-term or long-term, and they also allow you to pay taxes just once, either when you put it in, or when you take it out, with no worries about whether you're paying taxes on inflated gains. |
What are the usual terms of a “rent with an option to buy” situation? | While the other people have tried to answer your question as thoroughly as possible, I fear they are entirely incorrect in answering your question itself as it stands. The answer is that there are no usual terms. There are a handful of different options coming out now for this exact scheme. Examples include the UK Governments "Help To Buy" scheme. Accomodation is offered at a normal rate, and a small portion of the rent is set aside each month. At the end of a fixed period, that money becomes a deposit which the letter hands over to a mortgage provider who accepts it as a deposit. This might well be a terminology thing, since the other scenario which people described falls into the same name you've used. That scenario is where the investor who owns the property is considering sale of the property, and is happy to negotiate a price up front for the next year. Usually the rent and price is higher than the market rate because if the market goes well over the next year they could end up out of pocket. Putting that into perspective, over that year they are gaining their $1,000 a month or so, but having $100,000 invested means a return of 12%. If the property value is over $250,000 which I believe to be more likely, they are achieving a return of (I think) 4.8%. That's not a bad rate, by any means, but realistically they are losing a bit more for maintenance, and they could be making more from their money. If the market were to go up in that time by more than 4.8% (my house, for instance, increased in value by over 15% in the last 12 months), they are making a substantial loss since you are getting a house at 15% below the market rate. The total works out to a 10.2% loss for them. Note that I don't know the US housing market at all, I'm speaking mostly from my experience of the market here in the UK. This is what I hear, what I see, and what I've played. To summarise a bit: Make sure you check your terms before signing anything. |
How can you correlate a company stock's performance with overall market performance? | Generally, if you are trend trading, and if the market as a hole is going up strongly and an individual stock is falling sharply on the same day, I would tend to stay away from buying that stock at the moment. The market is showing strength whilst at the same time the stock is showing weakness. The general rule of thumb for trend trading is to buy rising stocks in a rising market. Or you could look to short sell falling stocks in a falling market. |
Should I put more money down on one property and pay it off sooner or hold on to the cash? | I'd suggest taking all the money you have saved up and putting in a mutual fund and hold off on buying a rental property until you can buy it outright. I know it seems like this will take forever, but it has a HUGE advantage: I know it seems like it will take forever to save up the money to buy a property for cash, but in the long run, its the best option by far. |
What's a good free checking account? | Online banks are the future. As long as you don't need a clerk to talk to (and why would you need?) there's nothing you can't do with an online bank that you can with a brick and mortar robbers. I use E*Trade trading account as a checking account (it allows writing paper checks, debit card transactions, ACH in/out, free ATM, etc). If you don't need paper checks that often you can use ING or something similar. You can always go to a local credit union, but those will wave the fee in exchange for direct deposit or high balance, and that you can also get from the large banks as well, so no much difference there. Oh where where did Washington Mutual go.... |
Should I buy a house or am I making silly assumptions that I can afford it? | The (interest bearing) mortgage of £300,000 would be SIX times your salary. That's a ratio that was found in Japan, and (I believe) was a main reason for their depressed economy of the past two decades. Even with an interest free loan of nearly £150,000, it would be a huge gamble for someone of your income. Essentially, you are gambling that 1) your income will "grow" into your mortgage, (and that's counting income from renting part of the property) or 2) the house will rise in value, thereby bailing you out. That was a gamble that many Americans took, and lost, in the past ten years. If you do this, you may be one of the "lucky" ones, you may not, but you are really taking your future in your hands. The American rule of thumb is that your mortgage should be no more than 2.5-3 times income, that is maybe up to £150,000. Perhaps £200,000 if £50,000 or so of that is interest free. But not to the numbers you're talking about. |
What argument(s) support the claim that long-term housing prices trend upward? | The Shiller data is inflation adjusted. In effect, a flat line means that long term, housing rises with inflation, no more no less. There's no argument, just the underlying data to support his charts. This, among them. As much as I respect Nobel Prize winning Robert Shiller, his approach and analysis of the boom ignored interest rates. Say we look at a $50K earning couple. This is just below median income. At 9%, they qualify to borrow $145K. As rates fell to 4%, they qualify for $244K. Same fixed 30 term. Ignoring all other factors, the swing in rates will generate an oscillation around the long term trend. And my own data crunching suggests the equilibrium median home price will tend toward the price supported by the median income. A similar, but not identical question - Why can't house prices be out of tune with salaries? In response to Chan-Ho's comment - I'd imagine Shiller understood the interest impact. To clarify, the chart, as presented, ignores it. |
Should I continue to invest in an S&P 500 index fund? | Your 5-8 year time frame is interesting because it is actually a two windows. When people are savings for retirement, they tell us how many years or decades they have until they reach retirement age. But they also imply that they are planning on spending decades withdrawing the money. But you wanting the money for a house in 5-8 years are needing the money more like somebody who is saving college money for a teenager. In fact your plan is similar in time frame as a 13 year old has for their college fund; start in 5 years but only have a 4 year spending window. Take the California 529 program: Beneficiary Age 13-14: Beneficiary Age 18+: The funding agreement provides a minimum guaranteed rate of return on the >amounts allocated to it by the Investment Portfolio. The minimum effective >annual interest rate will be neither less than 1% nor greater than 3% at >any time. So you plan of investing 100% in the S&P with your window is way too risky. You should only invest a portion of your down payment in equities, and be prepared to only be in that mode for a few years. Any drop in the market now hurts you, but one just before you need the funds would be devastating. |
How to invest with a low net worth | You might want to consider 'investing' a portion of that money into educating yourself. The payoff might not be as immediately obvious or gratifying but with appropriate determination, in the long term it will generate you a much greater return. If you would like to learn about investing, a great starting point would be to buy and read the book 'The Intelligent Investor' by Benjamin Graham. This will be a great barometer for how ready you are to invest in the stock market. If you are able to understand the concepts discussed and comprehend why they are important, you will have gone far in ensuring that you will make adequate returns over your lifetime and will - more importantly - increase the odds of safeguarding your capital. |
How can one get their FICO/credit scores for free? (really free) | Credit Sesame monitors your credit score for free. My understanding is that they make their money off of credit card referrals. |
I received $1000 and was asked to send it back. How was this scam meant to work? | This is a very trivial scam. Flow is like this: Send money to Mr. X (you, in this case). Call Mr. X and ask for the money back, because mistake. Usually they ask for a wire transfer/cash/gift cards/prepaid cards or something else irreversible/untraceable. Mr. X initiates transfer back to Scammer. Accept the transfer from Mr. X Dispute the original transfer or otherwise cancel it through the netbank Mr. X cannot dispute his transfer to the Scammer, since it was genuinely and intentionally initiated by Mr. X. End up with twice the money, at the expense of Mr. X In other countries this is usually done with forged checks, but transfers can work just as well. As long as the transfer can be retroactively canceled or reversed - the scam works. You mentioned money laundering - this is definitely a possibility as well. They transfer dirty money to you from unidentified sources, and you send a "gift" to them with a clear paper trail. When the audit comes - the only proof is that you actually sent them the gift, and no-one will believe your story. You'll have to explain why the Mr. Z who's now in jail sent you a $1K of his drug money. However, in this case I think it is more likely a scam, and the scammer didn't really know what he was doing... |
I cosigned for a friend who is not paying the payment | Without all the details it's hard to tell what options you may have, but none of them are good. When you cosign you are saying that, you believe the primary signer will make good on the loan, but that if he doesn't you will. You are 100% responsible for this debt. As such, there are some actions you can take. First, really try to stress to your friend, that they need to get you outta this loan. Urge them to re-finance with out you if they can. Next look for "better" ways of defaulting on the loan and take them. Depending on what the loan is for you could deed-in-lue or short sale. You may just have to admit default. If you work with the bank, and try not to drag out the process, you will likely end up in a better place down the line. Also of importance is ownership. If you pay the loan, do you get ownership of the thing the loan was secured against? Usually not, but working with an attorney and the bank, maybe. For example, if it's a car, can the "friend" sign over the car to you, then you sell it, and reduce your debt. Basically as a cosigner, you have some rights, but you have all the responsibilities. You need to talk to an attorney and possibly the bank, and see what your options are. At this point, if you think the friend is not that much of a friend anymore, it's time to make sure that any conversation you have with them is recorded in email, or on paper. |
Is there any instrument with real-estate-like returns? | nan |
If I pay taxes on my earnings, would someone also pay taxes on the same earnings if I subcontract them and pay a share? | If you want to subcontract some of your excess work to somebody else, you better be in business! While some kinds of employees (e.g. commissioned salespeople) are permitted to deduct some expenses on their income tax, generally only a real business can deduct wages for additional employees, or the cost of services provided by subcontractors. Do you invoice your clients and charge HST (GST)? Or do you tell your clients each pay period how many hours you worked and they compensate you through their payroll system like everybody else that walks through the door? If you're not invoicing and charging HST (GST) (assuming you exceed the threshold, and if you have too much work, you probably do!), then perhaps your clients are treating you as an employee – by default – and withholding taxes, CPP, and EI so they don't get in trouble? After all, Canada Revenue Agency is likely to consider any person providing a service to a company to be an employee unless there is sufficient evidence to the contrary, and when there isn't enough evidence, it's the company paying for the services that would be on the hook for unpaid taxes, CPP, and EI. Carefully consider what form of business you are operating, or were intending to operate. It's essential for your business to be structured appropriately if you want to hire or subcontract. You ought to be either self-employed as a sole proprietor, or perhaps incorporated if it makes more sense to your situation. Next, act accordingly. For instance, it's likely that your business should be taking care of the source deductions, CPP, and EI. In fact, self-employed individuals shouldn't even be paying into EI – an independent contractor wouldn't qualify to make an EI claim if they lost a contract. As an independent, one doesn't have a job, one has a business, and EI doesn't cover the business itself, only the employees that the business deals with at arm's length. As a business owner, you would be considered non-arms-length, and exempt from EI. Growing your business in the way that you are suggesting is an important enough a step that you should seek professional advice in advance. Find a good accountant that deals with self-employed individuals & small businesses and run all this by him. He should be able to guide you accordingly. Find a lawyer, too. A lawyer can guide you on how to properly subcontract others while protecting you and your business. Finally, be mindful of what it is you agreed to in your contract with your client: Do they expect all services to be performed by you, personally? Even if it wasn't written down who exactly would be performing the services, there may be an assumption it's you. Some negotiation may be in order if you want to use subcontractors. |
Combined annual contribution limits for individuals [duplicate] | Your contribution limit to a 401(k) is $18,000. Your employer is allowed to contribute to your 401(k), usually a "matching contribution". That matching contribution comes from your employer, so is not subject to your personal contribution limit. A contribution to a regular 401(k) is typically made with pre-tax money (i.e. you don't pay payroll taxes on the money you contribute) so you pay less taxes for the current tax year. However when you retire and you take money out, you pay taxes on the money you take out. On one hand, your tax rate may be lower when you have retired, but on the other hand, if your investments have appreciated over time, the total amount of tax you pay would be higher. If your company offers a Roth 401(k) plan, you can contribute $18,000 of after tax money. This way you pay the tax on the $18,000 today, as you would if you did not put the money in the 401(k), but when you take the money out at retirement, you would not have to pay tax. In my opinion, that serves as a way to pay effectively more money into your 401(k). Some firms put vesting provisions on the amount that they match in your 401(k), e.g. 4 years at 25% per year. So you have to work 1 full year to be entitled to 25% of their matching contribution, 2 years for 50%, and 4 years to receive all of it. Check your company's Summary Plan Description of the 401(k) to be sure. You are not allowed to invest pre-tax money into a Traditional IRA if you are already contributing to a 401(k) plan and have reached the income limits ($62,000 AGI for single head of household). You are allowed to contribute post-tax money to a Traditional IRA plan if you have already contributed to a 401(k), which you can then Roll-over into a Roth IRA (look up 'backdoor IRA'). The IRA contribution limit applies to all IRA accounts over that calendar year. You could put some money in a traditional IRA, a Roth IRA, another traditional IRA, etc. so long as the total amount is not more than the contribution limit. This gives you an upper limit of 5.5k + 18k = 23.5 investments in retirement accounts. Note however, once you reach age 50, these limits increase to 6.5k (IRA) + 24k (401(k)). They also are adjusted periodically with the rate of inflation. The following approach may be more efficient for building wealth: This ordering is the subject of debate and people have different opinions. There is a separate discussion of these priorities here: Best way to start investing, for a young person just starting their career? Note however, a 401(k) loan becomes payable if you leave your company, and if not repaid, is an unauthorised distribution from your 401k (and therefore subject to an additional 10% tax penalty). You should also be careful putting money into an IRA, as you will be subject to an additional 10% tax penalty if you take out the money (distribution) before retirement, unless one of the exceptions defined by the IRA applies (e.g. $10,000 for first time home purchase), which could wipe out more than any gains you made by putting it in there in the first place. Your specific circumstances may vary, so this approach may not be best for you. A registered financial advisor may be able to help - ensure they are legitimate: https://adviserinfo.sec.gov |
What is a stock warrant? How do warrants work? | In Australia there are 2 type of warrants (I don't know if it is the same in the US, UK and other countries), the first are trading warrants and the second are instalment warrants. The trading warrants are exactly what it says, they are used for trading. They are similar to option and have calls and puts. As Cameron says, they differ from exchange traded options in that they are issued by the financial companies whereas options are generally written by other investors. Instalment warrants on the other hand are usually bought and sold by investors with a longer term view. There are no calls and puts and you can just go long with them. They are also issued by financial companies, and how they work is best explained through an example: if I was to buy a stock directly say I would be paying $50 per share, however an instalment warrant in the underlying stock may be offered for $27 per warrant. I could buy the warrant directly from the company when it is issued or on the secondary market just like shares. I would pay the $27 per warrant upfront, and then in 2 years time when the warrant expires I have the choice to purchase the underlying stock for the strike price of say $28, roll over to a new issue of warrants, sell it back on the secondary market, or let it expire, in which case I would receive any intrinsic value left in the warrant. You would have noticed that the warrant purchase price plus the strike price adds up to more than the share price ($55 compared to $50). This is the interest component inherent in the warrant which covers the borrowing costs until expiry, when you pay the second portion (the strike price) and receive the underlying shares. Another difference between Instalment warrants and trading warrants (and options) is that with instalment warrants you still get the full dividends just like the shares, but at a higher yield than the shares. |
What does market cap (or market capitalization) mean? | Market cap is the current value of a company's equity and is defined as the current share price multiplied by the number of shares. Please check also "enterprise value" for another definition of a company`s total value (enterprise value = market cap adjusted for net nebt). Regarding the second part of your question: Issuing new shares usually does not affect market cap in a significant way because the newly issued shares often result in lower share prices and dilution of the existing share holders shares. |
What is a good way to keep track of your credit card transactions, to reduce likelihood of fraud? | The best way is to retain the charge slips. After you are done for the month you can discard them. Alternatively if you are using any of the personal finance tool or a simple XLS to track exepnses, it would be easy to figure out what you actually spent and what was not yours. |
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