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How can I improve my credit score if I am not paying bills or rent? | Any kind of credit contract such as a mobile phone contract (could be SIM only or with a handset) would also help increase your number of accounts and demonstrate a track record of responsible management and repayments. If you have a Pay As You Go phone at present consider a SIM only contract with the same network, and if your parents currently pay for your phone consider if it would be worth switching it into your own name. Also make sure that you are registered on the Electoral Role at your permanent address and have at least a minimum payment direct debit set up on your credit card (even though you state you intend to repay in full) to make sure you don't forget a payment as this will disproportionately affect your score when combined with young age and few other accounts. Lastly ensure that you have a decent amount of "head room" on your rolling credit accounts like credit cards and aren't using more than 80% of the credit available to you through your monthly spending, if necessary by asking for an increased limit from your company (and then not using it). |
Theoretically, if I bought more than 50% of a company's stocks, will I own the company? | You'll own whatever fraction you bought. To own the company (as in, boolean - yes or no) you need to buy 100% of the outstanding stock. RE controlling the company, in general the answer is yes - although the mechanism for this might not be so straight forward (ie. you may have to appoint board members and may only be able to do so at pre-set intervals) and there may be conditions in the company charter designed to stop this happening. Depending on your jurisdiction certain ownership percentages can also trigger the need to do certain things so you may not be able to just buy 50% - in Australia when you reach 20% ownership you have to launch a formal takeover bid. |
Should I pay off my car loan within the year? | Something I'd like to plant firmly into your mind - If you're able to save up enough money to buy the things you want outright, credit will be of little use to you. Many people find once they've accumulated very good credit scores by use of good financial habits, that they rarely end up using credit, and get little out of having a 'great' credit score compared to an 'average' credit score. Of course, a lot of that would depend on your financial situation, but it's something to keep in mind. As stated by others, and documented widely online, you don't need to make payments on a loan or carry a card balance to build your credit history. Check your credit on a popular site, such as Credit Karma (No affiliation). There, you'll see a detailed breakdown of the different areas of your credit profile that matter; things like: The best thing I could recommend is get a credit line or credit card, and use it responsibly. Carrying a balance will waste money on interest, much like the car payment. Just having it and not over-using it (Or not using it at all) will 'build' your credit history. Of course, some institutions may close your account after X number of years of inactivity. With this in mind, I'd say it's safe to pay off the car loan. Read your agreement and make sure there aren't early termination / early payment fees for this. Edit: There have been notes in the comments section's of question/answer's here about concerns with getting apartment. My two cents here: Most apartments I've seen check your credit for negative marks. Having no credit history, and thus never missing a payment or having a judgement made against you, will likely be enough to get you into most normal-quality apartments, assuming the rest of your application / profile is in order, like: - Good references, if asked for them - At least 2.5x rent payment in gross income etc, things like that. If they really think you're a risk, they may ask for a larger deposit (Though I'm sure in some areas there may be restrictions on whether they can do this, or how much they can do it) and still let you rent there. |
Is it acceptable to receive payment from U.S. in Indian saving bank account via PayPal? | It is fine to receive payments into Indian Savings Bank account. There are no restriction on deposits. There are only restrictions on number of withdrawls in a quarter. A Current[a.k.a Checking] account makes it easier to manage. You haven't asked about tax, but I you may already know you would need to pay taxes irrespective of whether you got the money in Savings or Current account. Edit: Any individual can open a Current Account on individual's name. There is no restriction. There are multiple aspects to determine whether the activity you are doing is a service as defined by the Service Tax Rules. Please consult a CA to guide you. For less than 5K INR he would not only advice you but also do everything required to file taxes. |
If a stock doesn't pay dividends, then why is the stock worth anything? | There are two main ways you can make money through shares: through dividends and through capital gains. If the company is performing well and increasing profits year after year, its Net Worth will increase, and if the company continues to beat expectations, then over the long term the share price will follow and increase as well. On the other hand, if the company performs poorly, has a lot of debt and is losing money, it may well stop paying dividends. There will be more demand for stocks that perform well than those that perform badly, thus driving the share price of these stocks up even if they don't pay out dividends. There are many market participants that will use different information to make their decisions to buy or sell a particular stock. Some will be long term buy and hold, others will be day traders, and there is everything in between. Some will use fundamentals to make their decisions, others will use charts and technicals, some will use a combination, and others will use completely different information and methods. These different market participants will create demand at various times, thus driving the share price of good companies up over time. The annual returns from dividends are often between 1% and 6%, and, in some cases, up to 10%. However, annual returns from capital gains can be 20%, 50%, 100% or more. That is the main reason why people still buy stocks that pay no dividends. It is my reason for buying them too. |
My investment account is increasingly and significantly underperforming vs. the S&P 500. What should I do? | Fire your fund manager. There are several passive funds that seek to duplicate the S&P 500 Index returns. They have lower management fees, which will make returns lower than S&P, and they have less risk by following a broadly diversified strategy (versus midcap growing stocks). There's also ETFs, but evidence is growing that they're not as safe as hoped. But here's the deal: the S&P has been on a tear lately. It could be overvalued and what looks like a good investment could start falling again. A possible alternative would be one of the Lifetime funds that seek to perform portfolio adjustment with a retirement decade target; they're fairly new which mostly means nobody knows how they screw you over yet. In theory, this decade structure means the brokerage can execute trading cash for stocks, stocks for bonds, and bonds for cash in house. |
Why is OkPay not allowed in the United States? | Here's the real reason OKPay (actually the banks they interface with) won't accept US Citizens. The Foreign Account Tax Compliance Act Congress passed the Foreign Account Tax Compliance Act (FATCA) in 2010 without much fanfare. One reason the act was so quiet was its four-year long ramp up; FATCA did not really take effect until 2014. Never before had a single national government attempted, and so far succeeded in, forcing compliance standards on banks across the world. FATCA requires any non-U.S. bank to report accounts held by American citizens worth over $50,000 or else be subject to 30% withholding penalties and possible exclusion from U.S. markets. By mid-2015, more than 100,000 foreign entities had agreed to share financial information with the IRS. Even Russia and China agreed to FATCA. The only major global economy to fight the Feds is Canada; however it was private citizens, not the Canadian government, who filed suit to block FATCA under the International Governmental Agreement clause making it illegal to turn over private bank account information. Read more: The Tax Implications of Opening a Foreign Bank Account | Investopedia http://www.investopedia.com/articles/personal-finance/102915/tax-implications-opening-foreign-bank-account.asp#ixzz4TzEck9Yo Follow us: Investopedia on Facebook |
Are bond ETF capital gains taxed similar to stock or stock funds if held for more than 1 year? | Yes, that's correct. |
What is the best way to stay risk neutral when buying a house with a mortgage? | It is pretty simple to avoid risk in home ownership: Do those things and your risk of home ownership is about nil. |
Over how much time should I dollar-cost-average my bonus from cash into mutual funds? | I'm staring at this chart and asking myself, How long a period is enough to have an average I'd be happy with regardless of the direction the market goes? 3 years? 4 years? Clearly, a lump sum investment risks a 2000 buy at 1500. Not good. Honestly, I love the question, and find it interesting, but there's likely no exact answer, just some back and forth analysis. You're investing about $40K/yr anyway. I'd suggest a 4 year timeframe is a good time to invest the new money as well. Other folk want to offer opinions? Edit - with the OP's additional info, he expects these bonuses to continue, my updated advice is to DCA quarterly if going into assets with a transaction fee or monthly if into a no-fee fund, over just a one year period. |
Making higher payments on primary residence mortgage or rental? | I'll assume you live in the US for the start of my answer - Do you maximize your retirement savings at work, at least getting your employer's match in full, if they do this. Do you have any other debt that's at a higher rate? Is your emergency account funded to your satisfaction? If you lost your job and tenant on the same day, how long before you were in trouble? The "pay early" question seems to hit an emotional nerve with most people. While I start with the above and then segue to "would you be happy with a long term 5% return?" there's one major point not to miss - money paid to either mortgage isn't liquid. The idea of owing out no money at all is great, but paying anything less than "paid in full" leaves you still owing that monthly payment. You can send $400K against your $500K mortgage, and still owe $3K per month until paid. And if you lose your job, you may not so easily refinance the remaining $100K to a lower payment so easily. If your goal is to continue with real estate, you don't prepay, you save cash for the next deal. Don't know if that was your intent at some point. Disclosure - my situation - Maxing out retirement accounts was my priority, then saving for college. Over the years, I had multiple refinances, each of which was a no-cost deal. The first refi saved with a lower rate. The second, was in early 2000s when back interest was so low I took a chunk of cash, paid principal down and went to a 20yr from the original 30. The kid starts college, and we target retirement in 6 years. I am paying the mortgage (now 2 years into a 10yr) to be done the month before the kid flies out. If I were younger, I'd be at the start of a new 30 yr at the recent 4.5% bottom. I think that a cost of near 3% after tax, and inflation soon to near/exceed 3% makes borrowing free, and I can invest conservatively in stocks that will have a dividend yield above this. Jane and I discussed the plan, and agree to retire mortgage free. |
Estimated Taxes after surge in income | Well a definitive answer would require a lot of information. Instead of posting that kind of info online, you should take a look at the instructions for Form 2210 and in particular "Schedule AI -- Annualized Income Installment Method," which corrects the penalty for highly variable income. Using this form you will likely be able to avoid the penalty, but it is hard to know for sure. |
In what cases can a business refuse to take cash? | You have to take legal tender to settle a debt. If your business model doesn't involve the customer incurring a debt that is then settled, you don't have to take cash. For example, in a restaurant where you pay after eating, you can insist on paying cash, because you're settling a debt. But in McDonald's they can refuse your cash at the counter, because you've not received your food yet and so no debt has been incurred. |
What happens if stock purchased on margin plummets below what I have in the brokerage? | Different brokerages have different house rules for margin requirements and margin calls. You will likely get a margin call giving you a small amount of time to deposit the required funds to bring your account balance up to the required margin requirements. In reality, a stock that falls from $50 to $4 in a short period will probably become unmarginable. In short, yes, you will owe the broker for the loss. |
Online stock screener to find stocks that are negatively correlated to another stock/index? | SeekingAlpha has a section dedicated to Short ETFs as well as others. In there you will find SH, and SDS. Both of which are inverse to the S&P 500. Edit: I linked to charts that compare SH and SDS to SPY. |
RSU taxation: when am I taxed, and how much? | Restricted Stock Units are different from stock options because instead of buying them at a particular strike price, you receive the actual shares of stock. They are taxed as ordinary income at the time that the restriction is lifted (you don't have to sell them to be taxed). Usually, you can choose to have a percentage of the stock withheld to cover tax withholding or pay for the withholding out of pocket (so you can retain all of your shares). |
can the government or debt collectors garnish money from any bank account to which the debtor has access? | There is a difference between an owner and a signer. An owner is the legal owner of the funds. A signer has access to withdraw the funds. In most cases, when a new personal account is opened the name is added as an owner&signer. However, that is not always the case. A person could be an owner, but not a signer, in a custodial arrangement. For example, a minor child may be an owner only on their account with a custodial parent listed as a signer. The minor could not withdraw from the account. A person could be a signer, but not an owner, in a business or estate/trust account. The business or estate would be the owner with individuals listed as signers only. The business employees do not own the funds, they are only allowed to withdraw and disburse the funds on behalf of the company. The creditor can only garnish/withhold funds that are owned by the indebted. If the second person on the account is only a signer, those funds cannot be withheld as part of a judgment against the second person (they don't own those funds). However, simply titling the second person as a signer only is not sufficient. If you share access with the second person and allow them to spend the money for their own benefit, they are no longer just a signer. They have become an owner because you are sharing your funds with them. Think of the business relationship as an example. The employee is a signer so they can withdraw funds and pay business expenses, like the electric bill. If the employee withdrew funds and bought herself a new dress, she is stealing because she does not own those funds. If the second person on the account buys things for themselves, or transfers some of the money into their own account, they are demonstrating that more than a signer-only relationship exists. A true signer-only relationship is where the individual can only withdraw funds on the owner's behalf. For example, the owner is out of town and needs a bill paid, the signer can write a check and pay the bill for the owner. A limited power of attorney may be worth looking into. With a limited POA, the owner can define the scope and expiration of the power of attorney. With this arrangement, the second person becomes an executor of the owner under certain circumstances. For example, you could write a power of attorney that states something like: John Smith is hereby granted the limited power to withdraw funds from account 1234, on deposit at Anytown Bank, for the purpose of paying debts and obligations and otherwise maintain my estate in the event of my incapacitation or inability to attend to my own affairs. This Power of Attorney shall expire on it's fifth anniversary unless renewed. If the person you have granted the power of attorney abuses their access, you could sue them and you would only have to demonstrate that they overstepped the scope of their power. |
When should I start saving/investing for my retirement? | Start as early as possible and you will want to kiss your younger self when you get to retirement age. I know you (and everyone else at that age) thinks that they don't make enough to start saving and leans towards waiting until you get established in your career and start making better money. Don't put it off. Save some money out of each paycheck even if it is only $50. Trust me, as little as you make now, you probably have more disposable income than you will when you make twice as much. Your lifestyle always seems to keep up with your income and you will likely ALWAYS feel like you don't have money left over to save. The longer you wait, the more you are going to have to stuff away to make up for that lost time you could have been compounding your returns as shown in this table (assuming 9.4 percent average gain annually, which has been the average return on the stock market from 1926-2010). I also suggest reading this article when explains it in more detail: Who Wants to be a millionaire? |
What's the difference between TaxAct and TurboTax? | I prefer TaxAct. I find it simpler to use and more helpful in helping answer the questionnaire. I have a fairly complex tax return and it handles it just fine. |
Is housing provided by a university as employer reported on 1040? | To answer your question directly, this is a taxable benefit that they are providing for you in lieu of higher wages. It is taxable to the employee as income and through payroll taxes. It is taxable to the employer for their half of the payroll taxes. |
super confused about bid and ask size. help | In the stock market many participants enter orders that are not necessarily set at the current market price of the stock (i.e. they are not market orders, they are limit orders). They can be lower than the market price (if they want to buy) or they can be higher than the market price (if they want to sell). The set of orders at each point of time for a security is called the order book. The lowest selling price of the order book is the offer or ask, the higher buying price is the bid. The more liquid is a security, the more orders will be in the order book, and the narrower will be the bid-ask spread. The depth of the order book is the number of units that the order book can absorb in any direction (buy or sell). As an example: imagine I want to buy 100 units at the lowest offer, but the size of the lowest offer is only 50 units, and there is not any further order, that means the stock has little depth. |
implementation of risk managed momentum strategy | The paragraph before on page 115 states: Scaling corresponds to having a weight in the long and short legs that is different from one and varies over time, but the strategy is still self-financing. Meaning that the long and short positions are no longer equal due to weighting one side more highly than the other. The weighting of one side (either long or short) is the number between 0.2 and 2 that you mention. |
What are the downsides that prevent more people from working in high-income countries, and then retiring in low-income (and cost of living) ones? | There are two parts to the hack you describe. One is moving to a high-cost, high-pay country to work, and the other is moving to a low-cost, low-pay country to retire. As Dilip mentioned in a comment, the first part is not so easy in many cases. You can't just take a plane to the USA and start making big bucks immediately. In the first place, it's illegal to work without special visa permissions. Even if you manage to secure that permission (or take the risk of trying to work illegally), there's no guarantee you'll get a job, let alone a high-paying one. The same is true in most other high-paying countries. As for the second part, that takes considerable willpower as well. After spending X years getting used to a country, investing time and money, you must then have the resolve to uproot your life a second time and move to another country. For the most part, countries are expensive for a reason. Even if you in principle reject the cost-benefit tradeoffs of a particular country, it can be difficult to give up some of those benefits when the time comes (e.g., trains running on time, reliable electricity, donut shops, or whatever). You might "get soft" or become co-opted by the rich-country rat race and find it difficult to extricate yourself. All of these problems are compounded if, as in many cases, you happened to start a family while in the expensive country. At the least, moving would require uprooting not just you but your family. Also, quality of education is often one of the main reasons people immigrate permanently to expensive countries. Even a person who personally would prefer to retire to a cheaper country may be unwilling to transplant their children into that country's education system. (Of course, they could wait until the children are self-supporting, but that makes the wait longer, and may result in them living far away from their children, which they may not want.) As JoeTaxpayer notes, the same reasons may work on smaller levels, even within a country. In theory it's perfectly possible to power through a brief, lucrative career in Silicon Valley and then retire to Idaho, but it doesn't seem to happen as often as the plain numbers might suggest. A simple way to put it might be that the kind of person who would be happy living in a cheap environment often cannot or will not endure a lengthy "tour of duty" in an expensive environment. Either you like the expensive environment and stay, or you leave, not as a planned lifehack, but because you realize you don't like it. |
I cosigned for a friend who is not paying the payment | Another option, not yet discussed here, is to allow the loan to go into default and let the loaning agency repossess the property the loan was used for, after which they sell it and that sale should discharge some significant portion of the loan. Knowing where the friend and property is, you may be able to help them carry out the repossession by providing them information. Meanwhile, your credit will take a significant hit, but unless your name is on the deed/title of the property then you have little claim that the property is yours just because you're paying the loan. The contract you signed for the loan is not going to be easily bypassed with a lawsuit of any sort, so unless you can produce another contract between you and your friend it's unlikely that you can even sue them. In short, you have no claim to the property, but the loaning agency does - perhaps that's the only way to avoid paying most of the debt, but you do trade some of your credit for it. Hopefully you understand that what you loaned wasn't money, but your credit score and earning potential, and that you will be more careful who you choose to lend this to in the future. |
Is it bad etiquette to use a credit or debit card to pay for single figure amounts at the POS | Personally, I think it's a bad practice, because ultimately using cards for such minuscule transactions raises costs for everyone, especially at merchants whose average transaction is small. How does carrying cash improve your personal security? If someone is going to mug you, they do not know in advance whether you have money or not. |
Loan holder wants a check from the insurance company that I already cashed and used to repair my car | What would happen if you was to cash a check, didn’t realize it was to you and your finance company, take it to a local business that has a money center, they cash the check without even having you sign let alone having the finance companies endorsement on it . The money cleared my account like a couple months ago and it was just brought up now .. ? The reason why the check was made out the owner and the lender is to make sure the repairs were done on the car. The lender wants to make sure that their investment is protected. For example: you get a six year loan on a new car. In the second year you get hit by another driver. The damage estimate is $1,000, and you decide it doesn't look that bad, so you decide to skip the repair and spend the money on paying off debts. What you don't know is that if they had done the repair they would have found hidden damage and the repair would have cost $3,000 and would have been covered by the other persons insurance. Jump ahead 2 years, the rust from the skipped repair causes other issues. Now it will cost $5,000 to fix. The insurance won't cover it, and now a car with an outstanding loan balance of $4,000 and a value of $10,000 if the damage didn't exist needs $5,000 to fix. The lender wants the repairs done. They would have not signed the check before seeing the proof the repairs were done to their satisfaction. But because the check was cashed without their involvement they will be looking for a detailed receipt showing that all the work was done. They may require that the repair be done at a certified repair shop with manufacturer parts. If you don't have a detailed bill ask the repair shop for a copy of the original one. |
Value investing | As an aside, why does it seem to be difficult to get a conclusive answer to this question? I'm going to start by trying to answer this question and I think the answer here will help answer the other questions. Here is a incomplete list of the challenges involved: So my question is, is there any evidence that value investing actually beats the market? Yes there is a lot of evidence that it works and there is a lot of evidence that it does not. timday's has a great link on this. Some rules/methods work over some periods some work during others. The most famous evidence for value investing probably comes from Fama and French who were very careful and clever in solving many of the above problems and had a large persistent data set, but their idea is very different from Damodaran's, for instance, and hard to implement though getting easier. Is the whole field a waste of time? Because of the above problems this is a hard question. Some people like Warren Buffet have clearly made a lot of money doing this. Though it is worth remembering a good amount of the money these famous investors make is off of fees for investing other peoples' money. If you understand fundamental analysis well you can get a job making a lot of money doing it for a company investing other peoples' money. The markets are very random that it is very hard for people to tell if you are good at it and since markets generally go up it is easy to claim you are making money for people, but clearly banks and hedge funds see significant value in good analysts so it is likely not entirely random. Especially if you are a good writer you can make a more money here than most other jobs. Is it worth it for the average investor saving for retirement? Very, very hard to say. Your time might be better spent on your day job if you have one. Remember because of the fees and added risk involved over say index investing more "Trading is Hazardous to Your Wealth." |
Is there a financial benefit for buyers from using community currencies? | Short answer: NO, there is no financial benefits for you to expect in a local currency even if some might give tiny discounts on local sales. Local currencies are attractive for small business or communities, they are perfectly legal and starting to be popular in a lot of places. Local currencies encourage individuals and businesses to exchange goods and services locally. Using them is like investing in your community. It could give you the feeling of doing something good for your community. Check this article for a discussion on the subject. They should not be considered investments. Local currencies do not offer the same financial security and some could be like monopoly money, but that would be another subject or question to debate. So, to summarize: no money to be made for your personal use, but some real social and financial benefits for your community. Would'nt that be a kind of personal benefit for you ? |
Is my stock gone forever from a reverse split / bought by another company? | You can't own fractional shares. If the Reverse Split resulted in you having less a full share (for example, if you had 500 shares, and they did a 1000:1 reverse split), your fractional share was cashed in (sold). That could be that 'money market' activity shown on the next day? It is your responsibility to be prepared for a reverse split, by either selling at your desired price, or buying more shares, so you end with an integer number of shares after the reverse split. |
Pay off entire mortgage or put into investments | I like this option, rather than exposing all 600k to market risk, I'd think of paying off the mortgage as a way to diversify my portfolio. Expose 400k to market risk, and get a guaranteed 3.75% return on that 200k (in essence). Then you can invest the money you were putting towards your mortgage each month. The potential disadvantage, is that the extra 200k investment could earn significantly more than 3.75%, and you'd lose out on some money. Historically, the market beats 3.75%, and you'd come out ahead investing everything. There's no guarantee. You also don't have to keep your money invested, you can change your position down the road and pay off the house. I feel best about a paid off house, but I know that my sense of security carries opportunity cost. Up to you to decide how much risk you're willing to accept. Also, if you don't have an emergency fund, I'd set up that first and then go from there with investing/paying off house. |
How do public-company buyouts work? | As a TL;DR version of JAGAnalyst's excellent answer: the buying company doesn't need every last share; all they need is to get 51% of the voting bloc to agree to the merger, and to vote that way at a shareholder meeting. Or, if they can get a supermajority (90% in the US), they don't even need a vote. Usually, a buying company's first option is a "friendly merger"; they approach the board of directors (or the direct owners of a private company) and make a "tender offer" to buy the company by purchasing their controlling interest. The board, if they find the offer attractive enough, will agree, and usually their support (or the outright sale of shares) will get the company the 51% they need. Failing the first option, the buying company's next strategy is to make the same tender offer on the open market. This must be a public declaration and there must be time for the market to absorb the news before the company can begin purchasing shares on the open market. The goal is to acquire 51% of the total shares in existence. Not 51% of market cap; that's the number (or value) of shares offered for public trading. You could buy 100% of Facebook's market cap and not be anywhere close to a majority holding (Zuckerberg himself owns 51% of the company, and other VCs still have closely-held shares not available for public trading). That means that a company that doesn't have 51% of its shares on the open market is pretty much un-buyable without getting at least some of those private shareholders to cash out. But, that's actually pretty rare; some of your larger multinationals may have as little as 10% of their equity in the hands of the upper management who would be trying to resist such a takeover. At this point, the company being bought is probably treating this as a "hostile takeover". They have options, such as: However, for companies that are at risk of a takeover, unless management still controls enough of the company that an overruling public stockholder decision would have to be unanimous, the shareholder voting body will often reject efforts to activate these measures, because the takeover is often viewed as a good thing for them; if the company's vulnerable, that's usually because it has under-performing profits (or losses), which depresses its stock prices, and the buying company will typically make a tender offer well above the current stock value. Should the buying company succeed in approving the merger, any "holdouts" who did not want the merger to occur and did not sell their stock are "squeezed out"; their shares are forcibly purchased at the tender price, or exchanged for equivalent stock in the buying company (nobody deals in paper certificates anymore, and as of the dissolution of the purchased company's AOI such certs would be worthless), and they either move forward as shareholders in the new company or take their cash and go home. |
What is the difference between “good debt” vs. “bad debt”? | The word "good" was used in contrast to "bad" but these words are misused here. There are three kinds of debt: Debt for spending. Never go into debt to buy consumables, go out for a good time, for vacations, or other purchases with no lasting financial value. Debt for depreciating assets, such as cars and sometimes things like furniture. There are those who put this in the same category as the first, but I know many people who can budget a car payment and pay it off during the life of the car. In a sense, they are renting their car and paying interest while doing so. Debt for appreciating, money-making assets. Mortgage and student loans are both often put into the good category. The house is the one purchase that, in theory, provides an immediate return. You know what it saves you on the rent. You know what it costs you, after tax. If someone pays 20% of their income toward their fixed rate mortgage, and they'd otherwise be paying 25% to rent, and long term the house will keep up with inflation, it's not bad in the sense that they need to aggressively get rid of it. Student loans are riskier in that the return is not at all guaranteed. I think that one has to be careful not to graduate with such a loan burden that they start their life under a black cloud. Paying 10% of your income for 10 years is pretty crazy, but some are in that position. Finally, some people consider all debt as bad debt, live beneath their means to be debt free as soon as they can, and avoid borrowing money. |
Can a Covered Call be called away before the expiration date? | They can sell a lower price call if they expect the stock to plummet in the near term but they are bullish on the longer term. What they are looking to do is collect the call premium and hope it expires worthless. And then again 'hope' that the stock will ultimately turn around. So yes, a lot of hoping. But can you explain what you mean by 'my brokerage gives premiums for prices lower than the current price'? Do you mean you pay less in commissions for ITM calls? |
Buying insurance (extended warranty or guarantee) on everyday goods / appliances? | IMO it's usually not worth it and here's why. There's a statistical distribution of how likely a unit may fail depending on its age. Probability is high for a short period after the unit comes into use because there are parts that were not thoroughly tested and manufacturing defects. Then all those defective parts fail and get replaces and the unit likely functions without faults for years. Then it reaches it lifetime end and again probability becomes much higher - parts wear out and start failing one by one. Every unit comes with a manufacturer warranty of one to two years already and that warranty will likely cover any defect causes by materials and manufacturing defects - the period when fault probability is initially high. "Extended warranty" only covers the unit for two-to-five years and most units have lifetime of about ten years. This means that the "extended warranty" is in effect when it is least useful. |
Unusual real estate market with seemingly huge rental returns | The way to resolve your dilemma is to consult the price-to-rent ratio of the property. According to smartasset.com: The price-to-rent ratio is a measure of the relative affordability of renting and buying in a given housing market. It is calculated as the ratio of home prices to annual rental rates. So, for example, in a real estate market where, on average, a home worth $200,000 could rent for $1000 a month, the price-rent ratio is 16.67. That’s determined using the formula: $200,000 ÷ (12 x $1,000). Smartasset.com also goes on to give a table comparing different cities' price-to-rent ratio and then claim that the average price-to-rent ratio is currently 19.21. If your price-to-rent ratio is lower than 19.21, then, yes, your rents are more expensive than the average house. Smartasset.com claims that a high price-to-rent ratio is an argument in favor of tenants "renting" properties while a low price-to-rent ratio favors people "buying" (either to live in the property or to just rent it out to other people). So let's apply the price-to-rent ratio formula towards the properties you just quoted. There's a specific house I could buy for 190 (perhaps even less) that rents for exactly 2000 / month. 190K/(2000 * 12) = 7.92 There's a house for sale asking 400 (been on the market 2 yrs! could probably get for 350) which rents for 2800 /month. (400K)/(2800*12) = 11.90 (350K)/(2800*12) = 10.42 One can quite easily today buy a house for 180k-270k that would rent out for 1700-2100 / month. Lower Bound: (180K)/(1700*12) = 8.82 Upper Bound: (270K)/(2100*12) = 10.71 Even so, the rental returns here seem "ridiculously high" to me based on other markets I've noticed. Considering how the average price-to-rent ratio is 19.21, and your price-to-rent ratio ranges from 7.92 to 11.90, you are indeed correct. They are indeed "ridiculously high". Qualification: I was involved in real estate, and used the price-to-rent ratio to determine how long it would take to "recover" a person's investment in the property. Keep in mind that it's not the only thing I care about, and obviously the price-to-rent ratio tends to downplay expenses involved in actually owning properties and trying to deal with periods of vacancy. There's also the problem of taking into account demand as well. According to smartasset.com, Detroit, MI has the lowest price-to-rent ratio (with 6.27), which should suggest that people should buy properties immediately in this city. But that's probably more of a sign of people not wanting to move to Detroit and bid up the prices of properties. EDIT: I should also say that just because the properties are "ridiculously expensive" right now doesn't mean you should expect your rents to decrease. Rather, if rents keep staying at their current level, I'd predict that the property values will slowly increase in the future, thereby raising the price-to-rent ratio to 'non-ridiculous' mode. |
ISA trading account options for US citizens living in the UK | NL7 is most likely right. With the rise of regulatory burden some financial institutions are refusing to do business for which they are at risk of not being compliant (because of complexity) or where being compliant is to onerous. Would suggest you have a look at Good luck |
I got my bank account closed abruptly how do I get money out? | First, if your account has been closed you should not be able to use your debit card in any format. As you mentioned that you are able to use that so your back account is active. So this indicates it is a scam In case account is closed, bank confirms your address and will send you a cheque for the amount in your account. Don't worry. You money will never be lost |
How can I improve my credit score if I am not paying bills or rent? | US based so I don't know how closely this translates to the UK, but generally speaking there are three things that contribute to a strong credit score. Length/volume of credit history. This is a combination of how many accounts appear in your history along with how long they have been open. Having a series of accounts that were maintained in good standing looks better than only having one. Maintaining an account in good standing for a prolonged period (3+ years) is better than a bunch of short term items. "Ideally" your credit history should contain a mix of term loans that were paid per contract and a few (1?) revolving account that shows ongoing use. The goal is to show that you can handle ongoing obligations responsibly, and manage multiple things at the same time. Utilization. Or how much you currently owe vs how much people have agreed to lend you. Being close to your limits raises questions about whether or not you can really handle the additional debt. Having large availability raises questions about whether you would be able to handle it if you suddenly maxed things out. Finding the correct middle point can be challenging, the numbers I have seen thrown around most by the "experts" is 20-30% utilization. Recent Activity. Or how much new debt have you taken on? If someone is opening lots of new accounts it raises red flags. Shopping around for a deal on a auto loan or mortgage before settling on one is fine. Opening 5 new credit lines in the past 6 months, probably going to knock you down a bit. One of the concerns here is have you had the accounts long enough to demonstrate that you will be able to handle them in the long term. One route that was suggested to me in my early years was to go take out a 6mo loan from a bank, and just place the money in a CD while I made the payments. Then repeat with a longer term. Worst case, you can cash out the CD to pay off the loan in an emergency, but otherwise it helps show the type of history they are looking for. All that said, I have to agree with Pete B's answer. Don't play the credit game if you don't really need to. Or play it just enough to stay in the game and plan your finances to avoid relying on it. (Advice I wish I had taken long ago.) |
What are my chances at getting a mortgage with Terrible credit but High income | First step, pull a copy of your credit report, and score. You should monitor that score and do what you can to bring it up. Your chances are far better if (a) you first save a sizable downpayment, and (b) go with a local bank that doesn't just write the mortgage and sell it. Better still, go to that local bank and inquire about REO (real estate owned by the bank) property. These are properties they foreclosed on and depending how they are carrying them, you might find decent opportunities. As a matter of logic, a local bank that owns these specific properties (as compared to debt pools where big banks have piles of paper owned fractionally) are more willing to get a new owner in and paying a new loan. Congrats on the new, higher, income. I'd suggest you first build the emergency fund before the downpayment fund. Let us know how it goes. |
Borrowed shares how are they tracked? | Brokerage firms are required to report the number of shares being shorted. This information is reported to the exchange (NYSE of NASDAQ) and is made public. Most financial sites indicate the number of shares being shorted for a particular stock. The image below from Yahoo finance shows 3.29 million shares of CMG were being shorted at the close of 9-28-2012. This is over 12% of the total outstanding shares of CMG. For naked short selling additional information is tracked. If the brokerage is unable to borrow shares to deliver before the settlement date of a short sale then the transaction is recorded as fails-to-deliver. No money or shares are exchanged since the brokerage is unable to deliver the shares that were agreed upon. A large amount of fails-to-deliver transactions for a stock usually indicates an excessive amount of naked shorting. When investors and brokerage firms start to aggressively short a stock they will do so without having borrowed the shares to sell. This will result in a large amount of naked short selling. When there are a large number of naked short sellers not all the sellers will be able to borrow the necessary shares before the settlement date and many fails-to-deliver transactions will be recorded. The SEC records the number of fails-to-deliver transactions. The table below summarizes the fails-to-deliver transactions from 1-1-2012 through 9-14-2012 (data obtained from here). The “Ext Amount” column shows the total dollar value of the transactions that failed ( i.e. Fail Qty * Share price ). The “Volume” column is the total number of shares traded in the same time period. The “% Volume” shows the percentage of shares that failed to deliver as a percentage of the total market volume. The table orders the data in descending order by the quantity of shares that were not delivered. Most of the companies at the top of the list no longer exist. For many of these companies, the quantity of shares that failed to deliver where many multiples of the number of shares traded during the same time period. This indicates massive naked short selling as many brokerages where unable to find shares to borrow before the settlement date. More information here. |
What purchases, not counting real estate, will help me increase my cash flow? | Mutual funds can be relatively low risk and a good starting point. Really it depends on you. What are your goals? This is a pretty open ended question. These can all be low risk and provide some return. Note "Less Knowledge" is never a good qualifier for an investment. Your money is your business and you are entitled to know what your business is up to. |
Why is auto insurance ridiculously overpriced for those who drive few miles? | One reason is because car insurance is mandated. Mandated insurance means the government is forcing people to purchase it, which also means that everyone must have the opportunity to purchase it at a reasonable cost, even if the insurer would normally not choose to insure them. In mandated industries, risk pools are formed which means that as a whole, lower risk members partially subsidize higher risk members. In mandated industries that have a large risk variance, the insurance system would break down if everyone was charged their "fair share" because high risk members would be unable to afford a policy. (This is even more prominent with health insurance than car insurance because the difference in risk is vastly greater.) On a positive note, perhaps you may get a warm and fuzzy feeling knowing that you are helping out others "in need". |
Cash flow implications of converting primary mortgaged residence to rental | You have some of the math right, but are missing a few things. Here's what I can offer - if I leave anything out, someone please expand or clarify. Rental income can be reduced by mortgage interest and maintenance costs (as you mentioned), but also by property tax payments, association fees, insurance costs, landlord expenses, and depreciation. Note that if you don't live in the property for 3 years, you'll have to pay capital gains tax if/when you sell the house. You can live in it again for 2 of the last 5 years to avoid this. Many people recommend only assuming you will get 10 months of rental income a year, to account for transitions between tenants, difficult in finding new tenants, and the occasional deadbeat tenant. This also adds a buffer for unexpected problems you need to fix in the house. If you can't at least break even on 10 months of income a year, consider the risk. I think there are also some cases where you need to repay depreciation amounts that you have deducted, but I don't know the details. Renting out a house can be fun and profitable, but it's very far from a sure thing. I'd always recommend preparation and caution, and of course talking to professionals about the finances, accounting, and lease-writing. Good luck! |
JCI headache part 2: How to calculate cost basis / tax consequences of JCI -> ADNT spinoff? | Your 1099-B report for ADNT on the fractional shares of cash should answer this question for you. The one I am looking at shows ADNT .8 shares were sold for $36.16 which would equal a sale price of $45.20 per share, and a cost basis of $37.27 for the .8 shares or $46.59 per share. |
What are the advantages/disadvantages of a self-directed IRA? | This type of account will sell you just enough rope to hang yourself. Gold is at $1400 or so. Were you around when it first hit $800 in '79/'80? I was. No one was saying "sell" only forecasts of $2000. If you bought and held, you've still not broken even to inflation let alone simple market returns. |
Any specific examples of company valuations according to Value Investing philosophy? | I highly recommend http://pages.stern.nyu.edu/~adamodar/ Professor Damodaran. He's written some of the best valuation books in existence (my favorite, simply "Investment Valuation"). On his website you'll find a big pile of spreadsheets, that are models for working the various approaches to valuing a company. Also, he teaches an MBA-level valuation course at Stern School of Business in NYC. And he videotapes it and you can watch it for free. Very smart, kind, generous man. |
Can I trade more than 4 stocks per week equally split between two brokers without “pattern day trading” problems? | No, if your brokers find out about this, even though it is unlikely, you will be identified as a pattern day trader. The regulations do not specify a per broker limit. Also, it's like a credit history. Brokers are loosely obligated to inform other brokers that a client is a pattern day trader when transferring accounts. |
Do real nappies (reusable / cloth diapers) really save money? | I only used disposable diapers for my baby's first month. However, I now use half disposable diapers (for part-time daycare) and half cloth. My son is now 1 year and during a normal weekday, I go through 4 disposable diapers and 3-4 cloth diapers (this count includes a double thick cloth diaper for night). On the weekend, I use about 7-8 cloth diapers a day. For disposable, I buy Costco's Kirkland brand diapers which gives me about 200 diapers for $50. I tend to go through one pack every other month. For cloth, I bought FuzziBunz One-Size Diapers. These are pretty expensive diapers (about $19/each) but I wanted ones that would last over multiple children (I chose these over the BumGenius because I thought snaps would last longer than velcro). I bought 24 new cloth diapers which means I wash diapers every 2-3 days. A couple of weeks ago I totaled up my receipts for cloth and disposable diapers and determined that I will recoup my diaper costs at around 16 months of part-time use. Notes: |
How do I receive payment from the USA to my current account in India | There is nothing called best; Depending on the amounts there are several options and each will cost some money. If your business is still small customers are individuals try PayPal it will be easy for everyone. The other options are accepting Credit Card, you would need to set-up card gateway on your website etc Simple wire transfer, it will cost more both for your customers and to you. |
How does a small worker co-op track/manage stocks/shares | What I know about small companies and companies who are not listed on the stock markets is this: If a small company has shares issued to different people either within an organization or outside the value of the shares is generally decided by the individual who wants to sell the share and the buyer who wants to buy it. Suppose my company issued 10 shares to you for your help in the organization. Now you need money and you want to sell it. You can offer it at any price you want to to the buyer. If the buyer accepts your offer thats the price you get. So the price of the share is determined by the price a buyer is willing to buy it at from you. Remember the Face value of the shares remains the same no matter what price you sell it for. Now annual profit distribution is again something called dividends. Suppose my company has 100 shares in total out of which I have given you 10. This means you are a 10% owner of the company and you will be entitled to 10% of the net profit the company makes. Now at the end of the year suppose my company makes a 12,000 USD net profit. Now a panel called board of directors which is appointed by share holders will decide on how much profit to keep within the company for future business and how much to distribute about share holders. Suppose they decide to keep 2000 and distribute 10,000 out of total profit. Since you own 10% shares of the company you get 1000. The softwares you are talking are accounting softwares. You can do everything with those softwares. After-all a company is only about profit and loss statements. |
Formula for estimating amount needed to become full-time stock market investor | You can't get there from here. This isn't the right data. Consider the following five-year history: 2%, 16%, 32%, 14%, 1%. That would give a 13% average annual return. Now compare to -37%, 26%, 15%, 2%, 16%. That would give a 4% average annual return. Notice anything about those numbers? Two of them are in both series. This isn't an accident. The first set of five numbers are actual stock market returns from the last five years while the latter five start three years earlier. The critical thing is that five years of returns aren't enough. You'd need to know not just how you can handle a bull market but how you do in a bear market as well. Because there will be bear markets. Also consider whether average annual returns are what you want. Consider what actually happens in the second set of numbers: But if you had had a steady 4% return, you would have had a total return of 21%, not the 8% that would have really happened. The point being that calculating from averages gives misleading results. This gets even worse if you remove money from your principal for living expenses every year. The usual way to compensate for that is to do a 70% stock/30% bond mix (or 75%/25%) with five years of expenses in cash-equivalent savings. With cash-equivalents, you won't even keep up with inflation. The stock/bond mix might give you a 7% return after inflation. So the five years of expenses are more and more problematic as your nest egg shrinks. It's better to live off the interest if you can. You don't know how long you'll live or how the market will do. From there, it's just about how much risk you want to take. A current nest egg of twenty times expenses might be enough, but thirty times would be better. Since the 1970s, the stock market hasn't had a long bad patch relative to inflation. Maybe you could squeak through with ten. But if the 2020s are like the 1970s, you'd be in trouble. |
When does it make sense for the money paid for equity to go to the corporation? | If the check is written as a check to BigCo, it is less clear how Jack can compensate himself for the equity sale. It is as if the equity was owned by the corporation, not by Jack. This is correct. If the check is written to BigCo, then it is BigCo issuing new shares. Jack doesn't compensate himself for the equity sale, as he didn't sell anything. The company traded shares for money which it uses for expansion. In the long term, the capital gain from expansion may exceed the value of a $200,000 no-interest loan to the company. If the value of the company before investing $250,000 is $1 million, then the value after investing is $1.25 million. So $250,000 is 20% of the value of the company. BigCo should not give the buyer 25% of BigCo but only 20% in that example. If it does give 25%, the buyer is getting a $312,500 stake for only $250,000. With the other example, Jack sells 25% of the company for $250,000 from his personal shares. This doesn't change the assessed value of the company, just Jack's stake. Jack then loans the company $200,000. This also doesn't change the assessed value of the company (at least in theory). It gains $200,000 but has an offsetting debt of $200,000. In net, that's no change. Assets and liabilities balance the same. So if you know that the assessed value of the company is $1 million and that the buyer is paying $250,000 for a 25% stake at that same valuation, then you know that the check is being written to Jack. If the check is written to BigCo, then one or more of those numbers is incorrect. The buyer could be getting a 20% stake. The new value of the company after the investment is $1.25 million. Or paying $333,333.33. The new value of the company after the investment is $1,333,333.33. Or BigCo could only be worth $750,000 before the investment. The new value of the company after the investment is $1 million. Or Jack is getting screwed, selling $312,500 in stock (25%) for only $250,000. Jack's shares drop from being worth $1 million to only $937,500. The value of the company is $1.25 million. Or some combination of smaller changes that balances. |
Is selling put options an advisable strategy for a retiree to generate stable income? | I am close to retirement and sell cash secured puts and covered calls on a regular basis. I make 15 % plus per year from the puts. Less risky than buying stocks, which I also do. Riskier than bonds, but several times the income. Example: I owned 4,000 shares of XYZ, which I bought last year at 6.50 and was at 7.70 two months ago. I sold 3,000 shares, sold 10 Dec puts @ 7.50 (1,000 shares) for $.90 per share and sold 10 Dec calls at 10.00 for $.20. Now I had cash from the sale of 3,000 shares ($23,100) plus $900 cash from the sale of the puts, plus $200 cash from the sale of the calls. Price is now at 6.25. Had I held the 4,000 shares, I would be down $5,800 from when it was 7.70. Instead, I am down $1,450 from the held 1,000 shares, down $550 on the put and up $200 on the calls. So down $1,800 instead of down $5,800. I began buying XYZ back at 6.25 today. |
Did the New York Stock Exchange ever close on a weekday so they could file paperwork? | Yes, from June 1968 until December 1968, they closed the NYSE every Wednesday so they could catch up on paperwork representing billions of dollars in unprocessed transactions. Even after the NYSE re-opened on Wednesdays in January 1969, they still had to close it early at 2pm for seven more months. Forbes has a description of this: Not to be forgotten, though, is the Paperwork Crunch. In a day of email and the Cloud and trading completed in microseconds, the idea that Wall Street needed Wednesdays off in the late 1960′s to catch up on back-office tasks seems especially quaint. Yet, in 1968, the NYSE found itself sitting on more than $4 billion in unprocessed transactions. Trading had risen to 21 million shares daily; by contrast, even in the heavy volume days in 1929, trading never went above 16 million shares. Papers stacked on desks. A (now old) joke formed: If a fan blew the wrong way in a Wall Street office, visitors below could expect a ticker-tape parade. “Everybody agreed that the securities-processing system had virtually broken down, and the only major point of dispute was who was more responsible for the mess: the back offices of the brokerage firms of the stock-transfer agents,” Securities and Exchange Commission Commissioner Ray Garrett, Jr. said in 1974. Some 100 broker-dealers failed, crumbling under the pressure of fulfilling those back-orders. The fix: an organization akin to the FDIC, the Securities Investor Protection Corporation. Wall Street would stick to the shortened weeks from June to December; in January, Wednesday trading resumed, though it ended early at 2 for another seven months. |
what would you do with $100K saving? | I would buy an ETF (or maybe a couple) in stable, blue chip companies with a decent yield (~3%) and then I'd play a conservative covered call strategy on the stock selling a new position about once a month. That's just me. |
Executor of will | The creditors will not be able to go after his father's estate (assuming the father had nothing to do with the business), but at some point, the estate will be divided up. At that point, any money or assets that your husband inherits will be fair game, as they are now your husband's money or assets. I want to be clear; it's nothing to do with your husband being executor (or co-executor) of the estate. This does not contradict zeta-band's earlier answer; Zeta-band is talking about the estate before it is divided up, I'm just pointing out that there may be issues after it is divided up. |
Does the premium of an option of a certain strike price increase at a slower rate from OTM to ITM as gamma affects delta? | If we assume constant volatility, gamma increases as the stock gets closer to the strike price. Thus, delta is increasing at a faster rate as the stock reaches closer to ITM because gamma is the derivative of delta. As the stock gets deeper ITM, the gamma will slow down as delta reaches 1 or -1 (depends if a call or a put). Thus, the value of the option will change depending upon the level of the delta. I am ignoring volatility and time for this description. See this diagram from Investopedia: Gamma |
Will an ETF increase in price if an underlying stock increases in price | Since the market is in general rather efficient, the price of the ETF will most of the time reflects the prices of the underlying securities. However, there are times when ETF price deviates from its fundamental value. This is called trading at a premium/discount. This creates arbitrage opportunity, which is actually being studied in finance literature. |
Are traders 100% responsible for a stock's price changes? | Yes, the value of a stock is completely, 100% determined by what people are willing to pay for it in conjunction with what people who have it are willing to sell it for. If something really bad happened to a company, like their only factory burned to the ground, and the traders didn't care, then I guess, in that scenario, the value of the stock would not change. But you can spin all sorts of hypotheticals of that sort. If dogs could talk, would German Shepherds speak German? Etc. Any answer is pretty meaningless because the premise is wildly unlikely. As CQM notes, "traders" in this context means everyone who buys or sells stock. If you buy stock, that includes you. They're not some mystical cabal somewhere. If you see a stock listed at, whatever, $50, and you are not willing to pay more than $40 for it, then you refuse to buy, and so you tend to force the price down. If you're not a billionaire, then your impact on the market is tiny, but the market is made up of millions of people each with tiny influence. Note that all this is true not just of the stock market, but of every product on the market. A product is worth whatever the owner is willing to sell it for and people are willing to pay. This is what determines the price of everything from houses to toasters. It's a little theory I've invented that I like to call, "the law of supply and demand". :-) |
Is buying a lottery ticket considered an investment? | This question feels like an EL&U question to me, and so I will treat it as one. Investment, noun form of to invest, originally from the Latin investire, meaning to clothe, means: [T]o commit (money) in order to earn a financial return Merriam-Webster Online Dictionary, Invest, vb. tr., definition 1 As such, when a person commits money with the purpose of earning a financial return, they are investing. Playing the lottery, when done so for the purpose of financial return, would fall under this definition - even if it's a poor choice. Gambling, verb tense of to gamble, likely originally from the word gamen, meaning to play, means: a : to play a game for money or property b : to bet on an uncertain outcome Merriam-Webster Online Dictionary, Gamble, vb. itr., definition 1 Playing the lottery is clearly gambling (as a lottery is a game, by definition). The second definition could well include investing in the stock market, particularly certain kinds of investments (derivatives, currency speculation, for example). Aside from the definitions, however, normal usage clearly favors investment to be something with an expectation of positive return, while gambling is taking a risk without that expectation (rather with the hope of positive return). Legally, as well, playing the lottery is not something that is considered investment (so it is taxed differently). However, the question was "Can", and by definition, clearly it can be (assuming you are not asking legally). |
How to Store Funds Generated through FX Trading | Earned income is what your software is doing, so it is taxable. So you can't really make it tax exempt. You can form a business and claim the revenues from that business as income and deduct expenses it costs you to earn that revenue. If you buy a server to run your software, then that is an acceptable expense to deduct from your revenues. Others can be more questionable and the best thing to do is to consult a CPA. If you are still in the testing stage and the revenues will be small then it should not matter. Worry about the important things, not if you paid the IRS a few hundred to much. Are you in a state/country that allows online gambling? In most states here in the US you are operating on shaky legal ground. Before "Black Friday" I used to earn a nice part-time income playing online poker. |
How to model fees from trades on online platforms? | where A1 is the number of trades. you may have to change the number 100 to 99 depending on how the 100th trade is charged. The idea is to use the if statement to determine the price of the trades. Once you are over the threshold the price is 14*number over threshold. |
Stock market vs. baseball card trading analogy | Actually, this is a pretty good analogy to certain types of stocks, specifically tech and other "fad" stocks. Around the turn of the century, there were a lot of "Bobs" buying tech stocks (like they would baseball cards), for tech stocks' sakes. That's what drove the internet and tech stock bubbles of high valuations. At other times, the tech stocks are bought and sold mainly by "Steve's" for business reasons such as likely (not merely possible) future appreciation, and command a much lower valuation. |
Is this investment opportunity problematic? | it seems you have 3 concerns: |
Payroll taxes on exercised stock options | The trickiest thing is the federal tax. It's typical to withhold 25% federal on this type of event. If your federal marginal rate was already towards the top of that bracket, you'll owe the missing 3% as you enter the 28% bracket. Nothing awful, just be aware. |
What percent of my salary should I save? | A single percentage figure makes little sense here as you are asking for a bunch of different things: |
How to select a bank based on availability in two areas? | Asking a bank for which ATM/branch network it belongs to and where those networks are would be your best bet. |
Online tutorials for calculating DCF (Discounted Cash Flow)? | what do you mean exactly? Do you have a future target price and projected future dividend payments and you want the present value (time discounted price) of those? Edit: The DCF formula is difficult to use for stocks because the future price is unknown. It is more applicable to fixed-income instruments like coupon bonds. You could use it but you need to predict / speculate a future price for the stock. You are better off using the standard stock analysis stuff: Learn Stock Basics - How To Read A Stock Table/Quote The P/E ratio and the Dividend yield are the two most important. The good P/E ratio for a mature company would be around 20. For smaller and growing companies, a higher P/E ratio is acceptable. The dividend yield is important because it tells you how much your shares grow even if the stock price stays unchanged for the year. HTH |
I received $1000 and was asked to send it back. How was this scam meant to work? | There are three possibilities. This is a scam, as others have pointed out, it works by you sending money, then them stopping the original transfer, meaning you sent them your money and not theirs. They make money cause a stop payment only costs $50 (or around there) but you sent $1,000. So they profit $950. You lose $1,000 and maybe some processing fees. This is money hiding, or money laundering. They send you $1,000 in drug money, you send them $1,000 in "clean" money. You don't lose any money. But they gain a clear paper trail. With large sums of money (in the U.S. anything over $5k) you have to prove a paper trail. They just did. You gifted it to them. On your end, it looks like you just profited from illegal activity, which in the worst case ends in confiscation of ALL your assets and jail time. It might not come to that, but it could. This was an honest mistake, by an idiot. It is possible to wire a complete stranger money. If you make a mistake on the wire transfer forms, and the account number exists, it will go through. Now what makes the sender an idiot is not the mistake. We all do that. It's the fact that banks have a built in system for handling these mistakes. Simply put, you can make a stop payment. It's around $50 (varies by bank and sometimes amount transferred), it's easy to do, and almost automatic. If you tell a bank rep that you made a mistake they will likely have you fill out a paper, and in many cases will "just take care of it". If "the idiot" didn't want to tell the bank of the mistake, or didn't ask for help, or didn't want to pay the fee. Then maybe they would contact the receiving party. But that's pretty dumb. Resolution The resolution in all cases is the same. Visit your local branch, or send in writing, an explanation: "I found $1,000 in my bank account that I didn't put there, and got this email (see attached print out). Please advise." They will "freeze" the $1,000 (or maybe the account but I have never seen that) while they investigate. You won't be able to spend it, they might even remove it pending the investigation. They will contact the bank that issued the transfer and attempt to sort things out. You shouldn't be charged anything. You also won't get to keep the money. Eventually the bank will send you a letter stating what happened with the investigation. And the money will vanish from your account. Specific questions I wanted to state the information above even though it doesn't address your concerns directly because it is important. To address your specific questions: Question 1) Surely bank account numbers have a checksum, which make it relatively difficult for a typo to result in a payment going to the wrong person? Nope, that's up to each bank. Usually the account numbers are not sequential, but there is no "checksum" either. Just like credit cards, there are rules, but once you know those rules you can generate fake ones all day long. In some cases, account numbers 5487-8954-7854 and 5487-8945-7854 are both valid. It happens. Question 2) What are likely sources of them being able to find my phone number to call me? Phone numbers are not private. Not even close. Phone books, Google, Websites, etc etc. if you think your phone number is in any way a secret then your totally misinformed. Account numbers are not a secret either. Especially bank account numbers. You could totally just call a bank, and say "What is the name on account 12345?" and they would tell you. Checks have your name and account number on them, as do MANY documents from a bank. So anything from asking the bank, to finding a copy of a check or document in the trash are valid ways to make the link. Question 3) How were they expecting to benefit? See options 1 and 2 above. If is is really option 3, then your bank should have directed the money back. But if the person was so messed up as you say, the account may have been closed and "written off". When that happens a lot of weird stuff can happen. Essentially the bank is "taking a loss" of money and doesn't want the money back even if the account was closed with a negative balance. Usually though contract with debt collectors, they may have already been "paid" for that debt, and are not allowed to take the money back. These things happen, but it seems like a pretty odd set of things that need to line up for #3 to be valid. About your Length of time Usually these things resolve in less then 90 days. Usually far less. At the 90 day mark, it gets really hard to reverse a transaction. It's possible that it was a scam and so many people fell for it that the scammers just let you keep the money instead of "highlighting" their scam. The fact that your using a "net bank" means that your can't go in person, but you should get details in writing. State the transaction number (it should be in your account records) and ask them for a "letter of resolution" or some form of official document stating the outcome of their investigation. I suspect that no one every really investigated the issue and the rep you spoke to never did anything then ask you to ask them to fill out a stop payment. You need a record of trying to sort this out. You don't want to up for some legal battle 10 years from now because someone found out that the money was part of a pool that was used to fund some terrorist group or some such. So get a paper trail, then go with what the bank says. |
How to calculate money needed for bills, by day | Trying to figure out how much money you have available each day sounds like you're making this more complicated than it needs to be. Unless you're extremely tight and you're trying to squeeze by day by day, asking "do I have enough cash to buy food for today?" and so on, you're doing too much work. Here's what I do. I make a list of all my bills. Some are a fixed amount every month, like the mortgage and insurance premiums. Others are variable, like electric and heating bills, but still pretty predictable. Most bills are monthly, but I have a few that come less frequently, like water bills in my area come every 3 months and I have to pay property taxes twice a year. For these you have to calculate how much they cost each month. Like for the water bill, it's once every 3 months so I divide a typical bill by 3. Always round up or estimate a little high to be safe. Groceries are a little tricky because I don't buy groceries on any regular schedule, and sometimes I buy a whole bunch at once and other times just a few things. When groceries were a bigger share of my income, I kept track of what I spent for a couple of months to figure out an average per month. (Today I'm a little richer and I just think of groceries as coming from my spending money.) I allocate a percentage of my income for contributions to church and charities and count this just like bills. It's a good idea to put aside something for savings and/or paying down any outstanding loans every month. Then I add these up to say okay, here's how much I need each month to pay the bills. Subtract that from my monthly income and that's what I have for spending money. I get paid twice a month so I generally pay bills when I get paid. For most bills the due date is far enough ahead that I can wait the maximum half a month to pay it. (Worst case the bill comes the day after I pay the bills from this paycheck.) Then I keep enough money in my checking account to, (a) Cover any bills until the next paycheck and allow for the particularly large bills; and (b) provide some cushion in case I make a mistake -- forget to record a check or make an arithmetic error or whatever; and (c) provide some cushion for short-term unexpected expenses. To be safe, (a) should be the total of your bills for a month, or as close to that as you can manage. (b) should be a couple of hundred dollars if you can manage it, more if you make a lot of mistakes. If you've calculated your expenses properly and only spend the difference, keeping enough money in the bank should fall out naturally. I think it's a lot easier to try to manage your money on a monthly basis than on a daily basis. Most of us don't spend money every day, and we spend wildly different amounts from day to day. Most days I probably spend zero, but then one day I'll buy a new TV or computer and spend hundreds. Update in response to question What I do in real life is this: To calculate my available cash to spend, I simply take the balance in my checking account -- assuming that all checks and electronic payments have cleared. My mortgage is deducted from my checking every month so I post that to my checking a month in advance. I pay a lot of things with automatic charges to a credit card these days, so my credit card bills are large and can't be ignored. So subtract my credit card balances. Subtract my reserve amount. What's left is how much I can afford to spend. So for example: Say I look at the balance in my checkbook today and it's, say, $3000. That's the balance after any checks and other transactions have cleared, and after subtracting my next mortgage payment. Then I subtract what I owe on credit cards. Let's say that was $1,200. So that leaves $1,800. I try to keep a reserve of $1,500. That's plenty to pay my routine monthly bills and leave a healthy reserve. So subtract another $1,500 leaves $300. That's how much I can spend. I could keep track of this with a spreadsheet or a database but what would that gain? The amount in my checking account is actual money. Any spreadsheet could accumulate errors and get farther and farther from accurate values. I use a spreadsheet to figure out how much spending money I should have each month, but that's just to use as a guideline. If it came to, say, $100, I wouldn't make grandiose plans about buying a new Mercedes. If it came to $5,000 a month than buying a fancy new car might be realistic. It also tells me how much I can spend without having to carefully check balances and add it up. These days I have a fair amount of spending money so when, for example, I recently decided I wanted to buy some software that cost $100 I just bought it with barely a second thought. When my spending money was more like $100 a month, lunch at a fast food place was a big event that I planned weeks in advance. (Obviously, I hope, don't get stupid about "small amounts". If you can easily afford $100 for an impulse purchase, that doesn't mean that you can afford $100 five times a day every day.) Two caveats: 1. It helps to have a limited number of credit cards so you can keep the balances under control. I have two credit cards I use for almost everything, so I only have two balances to keep track of. I used to have more and it got confusing, it was easy to lose track of how much I really owed, which is a set up for getting in trouble. |
If gold's price implodes then what goes up? | Nothing necessarily has to "benefit." Right now, what primarily drives demand for gold is its perceived use as a hedge against the inflation of fiat currency. I.e. when inflation strikes, the price of gold goes up rapidly. Thus, for a given currency, gold decreasing in price is almost always a signal that the currency is increasing in value. However, it may be that at some point in time people everywhere just decide that gold is no longer worth using as an inflation hedge, and thus the price collapses simply because demand collapsed. No corresponding "benefit". |
How does the importance of a cash emergency fund change when you live in a country with nationalized healthcare? | Unanticipated unemployment is usually the triggering factor for drawing on an emergency fund. Ask yourself: what happens if I lose my job tomorrow? Or my spouse becomes unemployed? What happens if I become disabled and can't work for x amount of time? Sure, you can discount your chances of needing such a fund if you have free health care. But having health insurance doesn't change the fact that an emergency fund is a good idea. There are many ways to go broke! |
What does the average log-return value of a stock mean? | Log-returns are very commonly used in financial maths, especially quantitative finance. The important property is that they're symmetrical around 0 with respect to addition. This property makes it possible to talk about an average return. For instance, if a stock goes down 20% over a period of time, it has to gain 25% to be back where you started. For the log-return on the other hand the numbers are 0.223 down over a period of time, and 0.223 up to get you back to square 1. In this sense, you can simply take an arithmetic average and it makes sense. You can freely add up or subtract values on the log-return scale, like log-interest rates or log-inflation rates. Whereas the arithmetic mean of (non-log) returns is simply meaningless: A stock with returns -3% and +3% would have 0% on average, when in fact the stock has declined in price? The correct approach on direct price-returns would be to take a different mean (e.g. geometric) to get a decent average. And yet it will be hard to incorporate other information, like subtracting the risk-free rate or the inflation rate to get rate-adjusted average returns. In short: Log-returns are easier to handle computationally, esp. in bulk, but non-log-returns are easier to comprehend/imagine as a number of their own. |
Should I pay more into company pension, or is there a better way to save? | Re: Specifically, am I right in that everything I put on these is deducted from tax, or are there other rules? and Am I correctly understanding this as "anything above £3,600 per year will not be deducted from your tax"? Neither interpretation seems quite right… Unless what you mean is this: The contributions (to a pension, or to the share-save scheme) are deducted from your pay before it is taxed. That's how it works for employer-run pension schemes. In other words, you are paying the gross amount you earn into the pension, not the amount after tax. It's a tax-efficient way to save, because: compared to other forms of saving: (The bit about the £3,600: you can ignore this assuming you're earning more than £3,600 a year.) What happens to the pension if you decide to move back to France or another country? In some cases you can transfer tax free. Worst case, you'd pay some tax on the transfer but not more than 25%. [See here for the current rules: https://www.gov.uk/transferring-your-pension/transferring-to-an-overseas-pension-scheme. Re: the share scheme, if by 'salary exchange' you mean salary sacrifice (where your gross pay is officially reduced by that amount e.g. £150 a month), that's even more tax-efficient, because it saves you paying the National Insurance contribution too (approx 9% of the pay packet). Conclusion: Saving into pension and company share save schemes is supremely tax-efficient and, provided you're OK with your money being locked away until you're 57 (pension) or tied up in company shares, it's understandably many people's priority to make use of these schemes before considering other forms of saving where you pay into them from your salary after tax. Now, about this: I am trying to understand how much I should put into it Should I put money into these, or should look for another way to save (how will this work out if I go back to France or another country)? Nobody here can advise you what to do since individuals' goals and circumstances are different and we don't know enough of the picture. That said: FWIW, I'll tell you what I might do based solely on what you've told us in the question… First, I'd definitely contribute 6% to the company pension. This gets you the full employer match. That's free money (plus, remember the tax relief = more free money). If you're 27, a total of 12% salary into a pension a year is a decent rate to start saving for retirement. Actually, 14% would be generally advisable, and maybe more still – it's generally a case of 'the more the better' especially while young, as you have time for growth and you don't know what later priorities might change / financial needs might arise. Nevertheless, you said you might move overseas. So in your position I would then: |
How good is Wall Street Survivor for learning about investing? | While I've never used Wall Street Survivor, I took a look over the marketing materials and I've seen multiple similar contests run among investment interns also just out of college. I see some good here and some bad. First off, I love interactive web-based tutorials. I've used one to learn the syntax of a new programming language and I find the instant feedback and the ability to work at your own pace very useful. The reviews seem to say that Wall Street Survivor is a good way to learn the basics of how trading stocks works and the lingo. Also, it seems pretty fun which I've found helps a lot. Wall Street Survivor will hopefully teach you that there are many real stock markets and that they may have somewhat different prices and they likely take the real and timely data from a single market. Wall Street Survivor also frightens me. The big problem that I see with interns running similar contests is that the market is extremely random over short to medium periods of time. An intern can make an awful portfolio or even pick stocks at random and still win the contest. These interns know a lot about the randomness in markets already so they don't believe they are trading geniuses because they won a contest, I'm not sure there is much to temper this view on this web-site. Also, while Wall Street Survivor teaches you about trading it doesn't appear to teach you about investing. The website appears to encourage short term views and changing positions a lot and doesn't seem to simulate the full trading costs (including fees) that would eat away at the gains of a individual investor that trades that much. It gives some help with longer term thinking like diversification, but also seems to encourage trading that makes Wall Street Survivor more money, but are likely detrimental to the user. I would say have fun with Wall Street Survivor. Let it teach you some things about trading, but don't give the site much if any money. At the same time, pick up a copy of short book called "A Random Walk Down Wall Street" and start learning about investing at the same time. Feel free to come back to Stack Exchange with questions along the way. |
How to rebalance a portfolio without moving money into losing investments | If you are making regular periodic investments (e.g. each pay period into a 401(k) plan) or via automatic investment scheme in a non-tax-deferred portfolio (e.g. every month, $200 goes automatically from your checking account to your broker or mutual fund house), then one way of rebalancing (over a period of time) is to direct your investment differently into the various accounts you have, with more going into the pile that needs bringing up, and less into the pile that is too high. That way, you can avoid capital gains or losses etc in doing the selling-off of assets. You do, of course, take longer to achieve the balance that you seek, but you do get some of the benefits of dollar-cost averaging. |
Investment Options for 14-year old? | As you are 14, you cannot legally buy premium bonds yourself. Your parents could buy them and hold them for you, mind you. That said, I'm not a fan of premium bonds. They are a rather weird combination of a savings account and a lottery. Most likely, you'll receive far less than the standard interest rate you'd get from a savings account. Sure, they may pay off, but they probably won't. What I would suggest, given that you expect to need the money in five years, is simply place it in a savings account. Shop around for the best interest rate you can find. This article lists interest rates, though you'll want to confirm that it is up to date. There are other investment options. You could invest in a mutual fund which tracks the stock market or the bond market, for example. On average, that'll give you a higher rate of return. But there's more risk, and as you want the money in five years, I'd be uncomfortable recommending that at this time. If you were looking at investing for 25 years, that'd be a no-brainer. But it's a bit risky for 5 years. Your investment may go down, and that's not something I'd have been happy with when I was 14. There may be some other options specific to the UK which I don't know about. If so, hopefully someone else will chime in. |
Renting or Buying an House | When you sell a house around between 7-10% of the sales price will go to various fees. Mostly to the agents, but also to county fees, city fees, deed tax, and possibly covering closing costs for the buyers. So if you sell a $400k house for the same price you buy, just in fees, you're out $40k. Mortgages are structured so that the frontend is very interest heavy, while at the end you're mostly paying towards principal. So for the first two years you will pay down very little of the principal. Figure around $2500 for the mortgage, and without running the numbers I bet you would pay an average for the first two years of around $1800/month in interest. $43,200. Mortgage interest is tax deductible, so you'll get some of that back. That's also $16,800 in equity you'll have on the house, so you'll get that back out when you sell. Rough numbers, I would be you lose around $50k buying the house and selling for the same price two years later. That doesn't take into account having to do any maintenance. And it assumes you can sell quickly when you want to. Renting is not throwing away money. You don't lose any money. You get a place to live in exchange. You don't build equity, sure, but you don't need to worry about maintenance and other related issues. When you're looking to be somewhere short term renting is generally the best idea. |
Is there a general guideline for what percentage of a portfolio should be in gold? | My personal gold/metals target is 5.0% of my retirement portfolio. Right now I'm underweight because of the run up in gold/metals prices. (I haven't been selling, but as I add to retirement accounts, I haven't been buying gold so it is going below the 5% mark.) I arrived at this number after reading a lot of different sample portfolio allocations, and some books. Some people recommend what I consider crazy allocations: 25-50% in gold. From what I could figure out in terms of modern portfolio theory, holding some metal reduces your overall risk because it generally has a low correlation to equity markets. The problem with gold is that it is a lousy investment. It doesn't produce any income, and only has costs (storage, insurance, commissions to buy/sell, management of ETF if that's what you're using, etc). The only thing going for it is that it can be a hedge during tough times. In this case, when you rebalance, your gold will be high, you'll sell it, and buy the stocks that are down. (In theory -- assuming you stick to disciplined rebalancing.) So for me, 5% seemed to be enough to shave off a little overall risk without wasting too much expense on a hedge. (I don't go over this, and like I said, now I'm underweighted.) |
In the USA, does the income tax rate on my wages increase with the amount of money in my bank account? | I know that if you make more, you pay more, but do those who have more, not make more, pay higher income tax? In general, no. In most locales, income tax is based on income, not on wealth. I am retired. I have little income but a fair amount of wealth. I play very little income tax. (But I do pay other kinds of taxes.) Here's a scenario. 2 people of average wealth with similar situations have the same job with equal pay. After 5 years, their situations haven't changed and they still earn equal pay, but now one has $40,000 in their account and the other $9,000. Does one now pay higher income tax because he has more in his account or does he pay the same because he makes the same? In most locales, you pay income tax on everything that is counted as income. Your salary is income. In some cases, earned interest is income. But aside from the earned interest from your bank accounts, neither the $40,000 nor the $9,000 is income. Your huge mansion isn't income. Your expensive car isn't income. The huge amount of land you own isn't income. The pricey artwork on your walls isn't income. You don't pay income tax on any of these, but your local may impose other taxes on these (such as property tax, etc.) [Note: consult the tax laws of your specific locale if you want to know details.] |
Can a CEO short his own company? | Yes. It's called executive hedging, and it's a lot more common than most people know. As long as it's properly disclosed and the decision is based on publicly available information, there's technically nothing wrong with it. Krispy Kreme, Enron, MCI, and ImClone are the most notable companies that had executives do it on a large scale, but almost every company has or had executives execute a complex form of hedging known as a prepaid variable forward (PVF). In a PVF, the executive gives his shares to an investment bank in exchange for a percentage of cash up front. The bank then uses the executive shares to hedge in both directions for them. This provides a proxy that technically isn't the executive that needs to disclose. There's talk about it needing to be more public at the SEC right now. http://www.sec.gov/news/statement/020915-ps-claa.html |
What are good games to play to teach young children about saving money? | I also saw a lot of reference to Mutual Mania Board Game, which is geared towards kids 11yrs+ and helps them learn about spending, saving, profit and loss. |
I can make a budget, but how can I get myself to consistently follow my budget? | Do a monthly budget, unique to each month, before the month begins, spend all of your money on paper. Use envelopes to help you keep track of how much you have left for things you buy throughout the month. Have separate envelopes for things like groceries, restaurants, clothing, entertainment. Put the amount of money for each category in cash in the envelope. Only spend the money out of the correct envelope and don't mix and mingle between envelopes. Pay in cash, with real money. Don't use credit or debit cards, it's proven you spend more when you are not paying with cash. |
(How) can I print my own checks on my printer on regular paper? | There are certain standards that modern checks need to meet. These aren't required by law, but banks today generally insist on them. If you are able to meet these standards and print your own checks at home, you are allowed to do so. One way this is commonly done is with purchased check blanks and check printing software. Office supply stores sell check blanks that fit into standard computer printers. This check paper includes the necessary security features of checks, and using the check printing software, you can print your personal information, including your name & address, your bank's name and address, and your account numbers. The account numbers on the bottom of the checks are called the MICR code, which stands for Magnetic Ink Character Recognition. Normally, these numbers were printed with special magnetic ink, which was used in automated check reading machines. Checks that you purchase from your bank still use magnetic ink; however, modern check readers are optical, and don't require magnetic ink. So you should be able to print checks with your printer using standard ink/toner, and not have a problem. Without purpose-specific check printing software, you could still buy blank check paper from the store, and with a little trial-and-error you could print using Excel. The biggest challenge with doing this would be printing the MICR code: you would probably need to install an MICR font on your computer and play around with the size and location until you get it where you want it. Doing a little Googling, I see that there are some check printing Excel templates out there, but I haven't tried any of these, and it is unclear to me whether they actually print the MICR, or whether they assume that you have blank checks with the MICR account number and check numbers already printed. Without purchasing blank check paper, you won't have any of the security features, such as microprinting, watermarks, erasure protection, anti-photocopying background, etc. As you mentioned, if you are depositing checks via mobile phone app, as some banks now allow, none of these security features are doing any good. The problem, however, is that you are not writing checks for yourself; you are writing checks to other people, and you have no way of knowing whether or not their banks are going to give them trouble with your checks. There is enough check fraud out there that lots of bank tellers are very cautious. I recommend sticking with check paper that has the security features because, if nothing else, it will make your check look more like a real check. |
Why would I buy a bond with a negative yield? | The question in my view is going into Opinion and economics. Why would I buy a bond with a negative yield? I guess you have answered yourself; Although the second point is more relevant for high net worth individual or large financial institutions / Governments where preserving cash is an important consideration. Currently quite a few Govt Bonds are in negative as most Govt want to encourage spending in an effort to revive economy. |
Formula that predicts whether one is better off investing or paying down debt | Although I don't think you need to factor in risk tolerance to get the probabilities, I agree with JoeTaxpayer that you will need to factor in risk tolerance in order to make a practical decision about what to do. In fact, I think that to make a practical decision you will need more than the specific probability you ask for you in the question; rather, you would like to see the complete probability distribution of possible outcomes. In other words, it's not enough to know that there is a 51% chance that investing will outperform paying down debt. You actually need to know much it outperforms when it does outperform, and how much it underperforms when it underperforms. As JoeTaxpayer's comment suggests, you might not choose to make an investment that had a 99% chance of outperforming debt payment by 1%, and a 1% chance of underperforming by 99%. I think it possible to address these questions by doing simulations. This can be done even with a spreadsheet, but more flexibly with simple programming. Essentially you can create some kind of probabilistic model of the various factors (e.g., chance that your investment will go up or down) and see what actually happens: how often you lose a lot of money, lose a little money, gain a little money, or gain a lot of money. Then based on that you can consult your inner spirit animal to decide whether the probability distribution of possible gains outweighs that of possible losses. |
What is the maximum I can have stored in a traditional 401(k) and a Roth 401(k)? | I've never seen anything in any IRS publication that placed limits on the balance of a 401K, only on what you can contribute (and defer from taxes) each year. The way the IRS 'gets theirs' as it were is on the taxes you have to pay (for a traditional IRA anyway) which would not be insubstantial when you start to figure out the required minimum distribution if the balance was 14Mill.. You're required to take out enough to in theory run the thing out of money by your life expectancy.. The IRS has tables for this stuff to give you the exact numbers, but for the sake of a simple example, their number for someone age 70 (single or with a spouse who is not more than 10 years younger) is 27.4.. If we round that to 28 to make the math nice, then you would be forced to withdraw and pay taxes on around $500,000 per year. (So there would be a hefty amount of taxes to be paid out for sure). So a lot of that $500K a year going to pay taxes on your distributions, but then, considering you only contributed 660,000 pre-tax dollars in the first place, what a wonderful problem to have to deal with. Oh don't throw me in THAT briar patch mr fox! |
Why are there many small banks and more banks in the U.S.? | I can't find a citation, but from memory (EDIT: and reading the newspapers at the time it happened): up until around 1980, banks couldn't cross state borders. In my state, at least, they were also very local, only staying within one county. This was to enforce "localness", the thought being that local bankers would know local people and the local situation better than far away people who only see numbers and paperwork. |
What's a good way to find someone locally to help me with my investments? | I would start by talking to a Fee-Only Financial Planner to make sure the portfolio fits with your goals. You can find a list here: http://www.napfa.org/ |
Do I even need credit cards? | Eventually you are going to need some sort of real credit history. It is possible that you will be able to evade this if you never buy a house, or if you pay cash for any house/condo/car/boat/etc that you buy. Even employers check credit history these days. I wouldn't be surprised if some medical professionals such as surgeons check it also. Obviously if you have a mortgage and car loan this doesn't apply, but I'd be curious how you acquired those unless you have substantial income and/or assets. Combine this with the fact that certain things like renting a car essentially require a credit card (because they need to put a hold on more money than they are actually going to take out of your card, so they can take that money if you don't bring the car back), and I think you should have a credit card unless you and your wife are individuals with zero impulse control, which sounds highly improbable. If your concern is the financial liability of the credit line, just keep the credit line low. |
Mortgage or not? | Buy a rental property instead. You get tax benefits as well as passive income. And it pays for itself |
Should I sell when my stocks are growing? | You should constantly look at your investment portfolio and sell based on future outlook. Don't get emotional. Selling a portfolio of stocks at once without a real reason is foolish. If you have a stock that's up, and circumstances make you think it's going to go up further, hold it. If prospects are not so good, sell it. Also, you don't have to buy or sell everything at once. If you've made money on a stock and want to realize those gains, sell blocks as it goes up. Stay diversified, monitor your portfolio every week and keep a reserve of cash to use when opportunity strikes. If you have more stocks or funds than you can keep current on every week, you should consolidate your positions over time. |
How does owning a home and paying on a mortgage fit into family savings and investment? | Have you ever tried adding up all your mortgage payments over the years? That sum, plus all the money that you put as a down payment (including various fees paid at closing) plus all the repair and maintenance work etc) is the amount that you have "invested" in your house. (Yes, you can account for mortgage interest deductions if you like to lower the total a bit). Do you still feel that you made a good "investment"? |
What should I do with $4,000 cash and High Interest Debt? | When paying off multiple debts there is a protocol that many support. Payoff your debts according to the snowball method. The snowball method proposes that you make minimum payments on all debts except the smallest one. Payoff the smallest debt as quickly as possible. As smaller debts are paid off, that makes one less minimum payment you need to make, leaving you with more money to put against the next smallest debt. So in your case, pay off the smaller debt completely, then follow up on the larger one by making regular payments at least equal to the sum of your two current minimum payments. You'll see immediate progress in tackling your debt and have one less minimum to worry about, which can serve as a little safety of it's own if you have a bad month. As to saving the thousand dollars, that is pragmatic and prudent. It's not financially useful (you won't make any money in a savings account), but having cash on hand for emergencies and various other reasons is an important security for modern living. As suggested in another answer, you can forgo saving this thousand and put it against debt now, because you will have a freed up credit card. Credit can certainly give you that same security. This is an alternative option, but not all emergencies will take a credit card. You typically can't make rent with your credit card, for example. Good luck paying your debts and I hope you can soon enjoy the freedom of a debt free life. |
How to calculate ownership for property with a partner | I can't quite follow your question, so I'm proceeding under the following assumptions: - You paid £31,000 - Your partner paid £4,242 - You have at least one mortgage, which you both pay equally. If the relationship terminates, sell the property. You are reimbursed £31,000 and your partner is reimbursed £4,242. Any remaining proceeds from the sale are split 50-50. If the result is a net loss (i.e. you are underwater on your mortgage), you split the debt 50-50. If you are not both paying the same toward the mortgage, I'd split the profit or loss according to how much you each pay toward the mortgage. Of course, this is not the only possible way you can split things up. You can use pretty much any way you both think is fair. For example, maybe you should get more benefits from a profit because you contributed more up-front. The key thing, though, is that you must both agree in writing, in advance. This is reasonable; this is what I did, for example. Note that if the relationship ends, one or the other of you may wish to keep the property. I'd suggest including a clause in your written agreement simply disallowing this; specify criteria to force a sale. But I know lots of people are happy to allow this. They treat that situation as a forced sale from both people to one person. For example, if your partner chooses to stay in the house, he or she must buy the property from you at prevailing market rates. |
Is there any US bank that does not charge for incoming wire transfers? | Yes, a business account at Chase bank offers free incoming wire transfer fees when you keep a minimum balance of over 100k. It's the only one I have found. |
In double entry book-keeping, how should I record writing of a check? | I have no idea what the traditional accounting way of dealing with this might be; but does your accounts package has the concept of subaccounts within a bank account? If so, to me it would make sense that when a cheque is written, you move money in the accounts package from the bank account to a subaccount named 'Cheques Written'; then when it is cashed, move money from that subaccount to the supplier. Then from a reporting perspective, when you want a report that will correspond to your actual bank statement, run a report that includes the subacconut; when you want a report that tells you how much you have available to spend, rune a report that excludes the subaccount. |
Are there any statistics that support the need for Title Insurance? | The point of title insurance is that when you buy a house, it is possible that you may eventually find out that the seller didn't actually own the property - either because they were trying to deceive you, or some transfer of ownership in the past wasn't carried out properly. If that happens you can find yourself with no house, and still owing the mortgager the purchase price. Hardly anybody can afford to take that kind of hit, which is why you need some form of protection against it. The traditional way of doing this was to get a lawyer to do a title search, in which they check that everything in order. However this costs tens of dollars at least to do the work for every sale, and hardly ever finds anything. Title Insurance is a company volunteering to take the hit for you if there turns out to be a problem, in return for a payment of less than the title search would cost. In essence they are saying that it's cheaper to take the risk than do the work. What are the statistics? This report seems to indicate that payout is around 5% of premium, but title insurance is a one-off premium and the payout can theoretically happen many years down the line. However it is almost certain that the insurance companies have done the math and believe that selling this insurance will be profitable for them, so they believe that payouts are going to be substantially less than 100%. Is title insurance worth it for you? If the payout is 5% of premiums, the in a purely statistical sense it is not worth it. You would on average gain more by not taking it. However that is true of almost all insurance. The policy is there to protect you in the unlikely but not impossible event where you would otherwise lose a huge amount of money. Unless you can afford to lose the value of your house, you need some form of protection. We've already seen that the only other form of protection is a title search, and they cost more. The other issue is that if you are taking a mortgage, your mortgager will absolutely insist that you have either a title search or title insurance. There is no other way - and title insurance is the cheaper of the two. In this case it is best to look on the title insurance as simply a cost of doing business. It's irrelevant whether it's worth it or not - you can't do the transaction without it. |
Can PayPal transfer money automatically from my bank account if I link it in PayPal? | See this help article from Paypal about payment methods for purchases. When you don’t have a PayPal balance or don’t have enough in your PayPal balance, we’ll use your bank account as the default payment method unless you select a different way to pay. So yes, Paypal will automatically deduct from your bank account when you make a purchase, unless you link another payment method and make that your default. |
Double-entry accounting: how to keep track of mortgage installments as expenses? | If your mortgage is an interest only one then the full amount of the payment you make should be to an expense account perhaps called mortgage interest. If the mortgage is a repayment mortgage you need to split the amount of the payment between such an expense account called mortgage interest and between a liability account which is the amount of the loan. In practice I have not found it very easy to do all this as the actual amounts vary depending on number of days in the month and then there are occasional charges etc made by the mortgage company so some approximations seem to be needed unless one is to spend hours trying to get it exactly correct...... Steve |
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