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What could happen to Detroit Municipal bonds because of Detroit's filing for bankruptcy? | What could happen to bonds such as these because of Detroit filing for bankruptcy? Depending on how the courts process Detroit's situation, there could be that some bonds become worthless since they are so low and the city can't pay anything on those low priority debts. Others may get pennies on the dollar. There could also be the case that some bailout comes along that makes the bonds good though I'd say that is a long shot at this point. Are these bonds done for, or will bondholders receive interest payments and eventual payment? I wouldn't suspect that they are done for in the sense of being completely worthless though at the same time, I'd be very careful about buying any of them given that they are likely to be changed a great deal. Could these bonds tend to rise over time after the bankruptcy? Yes, it is possible. If there was some kind of federal or state bailout that is done, the bonds could rise. However, that is one heck of an "if" as you'd need to have someone come to guarantee the bonds in a sense. What similar situations from the past might support this idea? Not that many as this is the biggest municipal bankruptcy ever, but here are a few links that may be useful as a starting point, though keep in mind Detroit's scale is part of the story as it is such a big amount being defaulted: |
What is the true value, i.e. advantages or benefits, of building up equity in your home? | The equity you have is an asset. Locked away until you sell, and sometimes pledged as a loan if you wish. The idea that it's dead money is nonsense, it's a pretty illiquid asset that has the potential for growth (at the rate of inflation or slightly higher, long term) and provides you an annual dividend in the form of free rent. In this country, most people who own homes have a disproportionate amount of their wealth in their house. This is more a testament to the poor saving rate than anything else. For me, a high equity position means that I can sell my home and buy a lesser sized house for cash. I am older and my own goal (with the mrs) is to have the house paid and college for the kid fully funded before we think of retiring. For others, it's cash they can use to rent after they retire. I hope that helped, there's nothing magic about this, just a lot of opinions. |
Finding stocks following performance of certain investor, like BRK.B for Warren Buffet | Since the vast majority of fund managers/big investors run private entities, it's not possible to track their performance. It's possible to look at what they are holding (that's never real-time information) and emulate their performance. |
What are Vanguard's Admiral Shares? | Vanguard's Admiral shares are like regular ("investor") shares in their funds, only they charge lower expense ratios. They have higher investment minimums, though. (For instance, the Vanguard Total Stock Market Index Fund has a minimum of $3,000 and an expense ratio of .18% for the Investor Shares class, but a minimum of $10,000 and an expense ratio of .07% for Admiral Shares). If you've bought a bunch of investor shares and now meet the (recently-reduced) minimum for Admiral shares, or if you have some and buy some more investor shares in the future and meet the minimums, you will qualify for a free, no-tax-impact conversion to the Admiral Shares and save yourself some money. For more information, see the Vanguard article on their recent changes to Admiral Shares minimums. Vanguard also offers institutional-class shares with even lower expense ratios than that (with a minimum of $5 million, .06% expense ratios on the same fund). A lot of the costs of operating a fund are per-individual, so they don't need to charge you extra fees for putting in more money after a certain point. They'd rather be competitive and offer it at cost. Vanguard's funds typically have very low expense ratios to begin with. (The investor shares I've been using as an example are advertised as "84% lower than the average expense ratio of funds with similar holdings".) In fact, Vanguard's whole reason for existing is the premise (stated in founder John C Bogle's undergraduate thesis at Princeton) that individuals can generally get better returns by investing in a cheap fund that tracks an index than by investing in mutual funds that try to pick stocks and beat the index and charge you a steep markup. The average real return of the stock market is supposedly something like 4%; even a small-looking percentage like 1% can eat a big portion of that. Over the course of 40 years waiting for retirement, saving 1% on expenses could leave you with something like 50% more money when you've retired. If you are interested in the lower expense ratios of the Admiral share classes but cannot meet the minimums, note that funds which are available as ETFs can be traded from Vanguard brokerage accounts commission-free and typically charge the same expense ratios as the Admiral shares without any minimums (but you need to trade them as individual shares, and this is less convenient than moving them around in specific dollar amounts). |
What one bit of financial advice do you wish you could've given yourself five years ago? | Compound interest. Next time you buy a 100$ toy realize that if you save it - in x years that 100$ you saved and invested could potentially be more than 100$ where as most likely whatever you're buying will be worth much less. |
High-risk investing is better for the young? Why? | Would my high-risk investment choices, aside from the main question, have any bearing on the road I want to go down and test (managing mutual/hedge funds)? Absolutely! First of all, understand that hedge fund managers are managing other people's money. Those people desire a certain risk profile and expected return, so your hedge fund will need to meet those expectations. Plus, hedge fund managers don't typically get fixed fees alone - they also get a percentage of any gains the fund makes; so managers have a vested interest in making sure that hedge funds perform well. |
File bankruptcy, consolidate, or other options? | If your parents' business isn't viable (regardless of what combination of the economy or their management of it caused it not to be viable) it would seem that you'd be throwing good money after bad to save it. If the whole thing gets paid off, then they get rid of the debt, but the economy will still be in the tank and they'll be going in the hole again. If they think they're five years away from retirement, then they're kidding themselves. They won't be able to retire. They should get bankruptcy advice and should start looking for other sources of income. Maybe sell their house and get something smaller. Have their expenses match their income. Sorry if this sounds harsh but it will be difficult for them to recover from this mess if they're in their late fifties. |
Tracking the Madrid Interbank Offered Rate (MIBOR) and the Euro Interbank Offered Rate (EURIBOR) | For Euribor Nothing seems to exist for MIBOR, except maybe the Spanish stock exchange. |
Can I force him to pay? | Its best to seek a lawyer, but it is unlikely you can force him to pay. You probably know couples, that are in some part of the divorce process, that have trouble obtaining court ordered payments. In your case you have less of a legal standing (exception: if you have children together). As far as the house goes, the two of you entered into some sort of business arrangement and it will be difficult to "force" him to pay. One thing that works for you is that he has excellent credit. If he is interested in keeping a high credit rating he will ensure that no payments are late on the home. Your question suggests that the two of you are not getting along very well right now, and that needs to stop. The best financial decision you can make right now is to get along with him. It seems that the two of you have not officially broken up. If you do decide to depart ways, do so as amicably as possible. You will have to work to get the home in your name only, and him off the deed. This benefits both of you as you will have sole control of the house and this ill advised business decision can end. He will have the home off his credit and will not be responsible if you miss a payment and can also buy a home or whatever of his own. Good luck and do your best to work this out. Seeking peace will cost you a lot less money in the long run. Fighting in court cost a lot of money. Giving in to semi-reasonable demands are far cheaper then fighting. Here is an example. Lets say he normally contributes $500 to the mortgage, and he decides to move out. I would ask him to contribute $200 until you can get his name off the loan, say 6 months at the most. After that you will put the house up for sale if you cannot obtain a mortgage in your own name and will split any profits. |
Why should we expect stocks to go up in the long term? | The total value of the stock market more or less tracks the total value of the companies listed in the stock market, which is more or less the total value of the US economy (since very few industries are nationalized or dominated by privately held companies). The US economy has consistently grown over time, thanks to the wonders of industrialization, the discovery of new markets, new natural resources, etc. Thus, the stock market has continued to grow as well. Will it forever? No. The United States will not exist for ever. But there's no obvious reason it won't continue to grow, at least for a while, though of course if I could accurately predict that I would be far richer than I am. Why do other countries not have the same result? China is its own ball of wax since it's a sort-of-market-sort-of-command economy. Japan has major issues economically right now and doesn't really have the natural or people resources; it also had a huge market bubble a while back that it's never recovered from. And many European countries are doing fine. German's DAX30 index was at around 2500 in 2004 and is now at nearly 13000. That's pretty fast growth. If you go back further (there was a crash ending in around 2004), you can see around the fall of the Berlin wall it was still around 2000; even going that far back, that's about an 8% annual bump. The FTSE was also around 2000 back then, around 8000 now, which is around 5% annual growth. Many of these indexes were more seriously hurt than the US markets in the two major crashes of this millenium; while the US markets fell a lot in 2008, they didn't fall nearly as much as many smaller markets in 2002, so had less to recover from. Both DAX and FTSE suffered similar falls in 2002 to 2008, and so even though during good periods they've grown quite quickly, they haven't overall done as well as they could have given the crashes. |
Shorting stocks: Indicators that a stock will drop? | First utilize a security screener to identify the security profiles you are looking to identify for identifying your target securities for shorting. Most online brokers have stock screeners that you can utilize. At this point you may want to look at your target list of securities to find out those that are eligible for shorting. The SHO thresold list is also a good place to look for securities that are hard to borrow to eliminate potential target securities. http://regsho.finra.org/regsho-Index.html Also your broker can let you know the stocks that are available for borrowing. You can then take your target securities and then you can look at the corporate filings on the SEC's Edgar site to look for the key words you are looking for. I would suggest that you utilize XBRL so you can electronically run your key word searched in an automated manner. I would further suggest that you can run the key word XBRL daily for issuer filings of your target list of securities. Additional word searches you may want to consider are those that could indicate a dilution of the companies stock such as the issuance of convertible debt. Also the below link detailing real short interest may be helpful. Clearing firms are required to report short interest every two weeks. http://www.nasdaq.com/quotes/short-interest.aspx |
What tax advantage should I keep an eye for if I am going to relocate? | Look for states that have no income tax. A lot of these states supplement their revenue with higher property taxes, but if you rent and do not own property in the state, then you will have no state tax liability. Similarly, many states treat capital gains no differently than income tax, so if you make your earnings due to a large nest egg, then way you will still incur no tax liability on the state level Look for "unincorporated" areas, as these are administrative divisions of states that do not have a municipal government, and as such do not collect local taxes. Look for economic development perks of the new jurisdiction. Many states have some kind of formal tax credit for people that start business or buy in certain areas, but MONEY TALKS and you can make an individual arrangement with any agency, municipality etc. If the secretary at city hall doesn't know about a prepackaged formal arrangement that is offered to citizens, then ask for the "expedited development package" which generally has a "processing fee" involved. This is something you make up ie. "What is the processing fee for the expedited development package, quote on quote" States like Maryland and Nevada have formalized this process, but you are generally paying off the Secretary of State for favorable treatment. You'll always be paying off someone. |
Do I have to pay the internet installation charges for my home's company internet? | It appears so. I suppose you could try saying that you don't want to pay for it and won't have Internet installed, but that could be detrimental to your career. There is no law that says your company has to pay for your Internet unless you have some kind of contract with them that says you will. If anything, your best option might be to try to claim it is a business expense and deduct it on your taxes. |
As an investing novice, what to do with my money? | I'm normally not a fan of partitioning investment money into buckets but your case may be the clearest case for it I've seen in awhile. Your income and saving is good and you have two clearly defined goals of retirement saving and saving for a house each with very different time frames ~30 years and 3-5 years respectively. For medium term money, like saving for a house, just building up cash is not actually a bad idea. This minimizes the chance that a market crash will happen at the same time you need to withdraw the money. However, given you have the means to take more risk a generally smarter scheme would be to invest much of the money in a broad liquid bond funds with a somewhat lower percentage in stocks and then reduce the amount of stock each year as you get closer even moving some into cash. This gives reasonable positive expected return while lowering the risk of having to sell during a crisis as the time to purchase gets shorter and shorter. The retirement money should be invested for the long term as usual. A majority in low-fee index stock funds/etfs is the standard advice for good reason. |
Is there a register that shows the companies with notifiable interest in a stock? | There are multiple places where you can see this. Company house website On any financial news website, if you have access e.g. TESCO on FT On any 3rd party website which supply information on companies e.g. TESCO on Companycheck An observation though, FT lists down more shareholders for me than Companycheck as I pay for FT. |
When a stock price rises, does the company get more money? | Seems like no one in this thread has heard of "treasury stocks", which indeed allow a company to own and sell its own stock. Think about it. When there is a stock buy-back funded by excess profits, where does that stock go? |
Why is being “upside down” on a mortgage so bad? | Being underwater a little is not all that scary, but those who talk of being underwater are typically underwater by quite a lot. The amount of money they owe is large compared to their yearly income. Consider a metaphor. I put you in a hole. Its only 1 foot deep. You're not too concerned. If you want to leave, you can step out of it. Now we look at a deeper hole, 3 feet. Now you're still not too concerned. You can't just walk out, but if you need to get out you can wiggle your way up. 6 feet. Now you start getting nervous. Climbing out is getting trickier and trickier. You may not be able to move in response to a changing enviornment around you, because you're stuck in a hole. Now make the hole 10 feet. Now you can't reach the edges. Now you're in trouble. You have lost all mobility. You can't get out under your own power. Now if something bad happens (such as losing your job or a sudden health issue), you can't move around to solve the problem. This is the issue that arise from underwater mortgages. Say you lose your job because the job market in your area dried up (think Detroit in the big auto manufacturer crash). You need to move. You are legally endebted to a lender for your existing underwater house by more than you can sell it for. You need to pay for the privilege to sell it. You still owe payments on it, so if you just buy a new house (or rent) in the new state, you're paying for twice as much property. You can't just shuffle the underwaterness from your old house to your new house because the new lender has no interest in giving a loan for more than the value of the new home. The only options you have to play with is renting the old house, which many underwater families did, or bankrupcy. If the area you were in is depressed, you may not be able to rent the house for enough to cover your mortgage. This is the fear of being underwater. You have a piece of paper which claims some lender can take money from you that you may or may not have, and that the US government will allow them to take your assets, if need be, to settle the score. If you're underwater by a few thousand, it's typically not a big deal. If you're underwater by 80 or 90 thousand dollars, which some people were, that's a lot of money to be endebted for without the assets to recover them. If you subscribe to the realtor story that the market will recover, all you have to do is scrape by, holding on, until the market rises again. However, those who are underwater recognize that the reason much of this occurred is that we entered a bubble because realtors kept saying the market could only go up. Fool me once.... |
What is the opposite of a hedge? | The opposite of a hedge is leverage (aka gearing). A hedge is where you spend money to reduce your exposure. Leverage is where you spend money to increase your exposure. Spread bets are a form of leverage - that's what makes them such an effective way to lose all your money, quickly. |
Can I write off time spent learning my trade - Two-Man S-Corp | I'm not sure what you mean by "writing off your time," but to answer your questions: Remember that, essentially, you are a salaried employee of a corporation. So if you are spending time at your job, even if you are not billing anything to a client, you are earning your salary. If there are costs involved with these activities (maybe class fees, a book purchase, or travel expenses), the corporation should be paying the costs as business expenses. However, the logistics of this, whether the corporation writes a business check to the vendor directly, or you put the expenses on a personal credit card and are reimbursed with an expense check from the corporation, don't matter. Your accountant can show you the right way to do this. |
Why don't banks give access to all your transaction activity? | To add technical detail to other answers, your (and some commenters') estimates of storing that data is woefully (many orders of magnitude) off. Let's take your 10MB of transaction data per user. You're only estimating text records like in Quicken. Now add on the volume of storing everye check's image. That's 100K (if not 500Kb depending on resolution of the scan) per check. If you have 100 checks per year (not unrealistic, if you pay all utility/morgage bills by check, as well as purchases), you now have 10Mb/year to 50MB/year. Now you're asking for 10 years of this, so you have 100-500MB per customer. NOT 10MB-70MB as you initially assumed. Let's take a mid-range figure, 300 MB. You were estimating using consumer grate cheap-o storage (which Facebook can afford for their data, as they don't store transaction data). Now let's up that to enterprise server hard drives. Your storage costs just rose 2x-5x. Now, typically you'd have RAID. So 2x more. Most large financial institutions have multiple data centers. You typically store all data's copies in those data centers for DR purposes. Your multiplier added another 2x-4x Most production data servers have multiple copies (Write DB server + one or more read-only copies). Multiply by 2x-4x With some rare exceptions, most banks don't just have one central database server. Each major app / business line would have its own DB, so you multiply that by 2x-20x depending on the bank, especially if it's arrived at its size by merging with other banks and has dozens of inherited legacy systems. multiple backups. Regulatory backup requirements means you don't just back up your data once a year. You do it daily, till the data is purged from DB. Meaning, you don't store ONE copy of your transaction in backup. You stored, say, 10*365 copies, assuming 10 year retention) So, at the low end, your cost estimates are 30*2*2*2*2*2 = 900 times off (3 orders of magnitude) just for live database storage, and 3500 times off for backup costs. At the high end, they could be 50*5*2*4*4*20=16,000 times off (4-5 orders of magnitude) At this range, no, it isn't worth it for the bank to keep your transactions available in DB and online any longer than bare-bones absolutely critically necessary. |
dividend cover ratio for stocks | Sources such as Value Line, or S&P stock reports will show you dividend payout ratios (the American usage. These are the inverse of dividend cover ratios, with dividends being in the numerator, and earnings in the denominator. For instance, if the dividend cover ratio is 2, the dividend payout ratio is 1/2= 50%. |
How are mortgage payments decided? [duplicate] | It has nothing to do with forcing people to pay off their debt; in that case it would make better sense to have people pay off debt rather than interest. It is because you want to have your actual payment stay the same each month, which is easier for the vast majority of people to comprehend and put into their budget. It is called an annuity in Finance terms. In theory you could use another method - eg. pay of the same amount of debt each month - then your interest payments will decrease over time. But in that case your monthly payment (debt + interest) will not be stable - It will start of high and decrease a little bit each month. With an annuity you have a constant cashflow. In Finance you generally operate with three methods of debt repayment: Annuity: Fixed cashflow. High interest payment in the beginning with small debt payments - later it will be reversed. Serial loan: Fixed debt payments. Debt payments are equally spread out accross the period - interst is paid on the remaining debt. Cash flow will decrease over time, because interest payments become smaller for each period. Standing loan: You only pay interest on the loan, no debt payments during the period. All debt is payed back in the end of the loan. In Europe it is common practise to combine a 30 year annuity with a 10 year standing loan, so that you only pay interest on the loan for the first 10 years, thereafter you start paying back the debt and interest, the fixed amount each month (the annuity). This is especially common for first-time buyers, since they usually have smaller salaries early in life than later and therefore need the additional free cash in the beginning of their adult life. |
Ways to establish credit history for international student | There's an excellent new service called SelfScore that offers US credit cards to international students. They work with students without a credit history and even without an SSN by using other qualifying factors such as major, financial resources in their home country, and employability upon graduation. Worth clarifying: it's neither a secured credit card nor a prepaid card. It's a proper US credit card with no annual fees and a relatively low APR designed to help students build US credit. The spending limit is relatively small but that probably doesn't matter for just building a credit history. |
Fair Value of a monthly payment given two Bank Payment structures | There is one basic principle to apply here: to compare money paid at different times, all the amounts must be compounded or discounted to the same point in time. In this case, the moment of the initial $225,000 loan is convenient. At that moment, you get $225,000 You then make 30 payments on the 40% mortgage. The amount of these payments has to be calculated; they're paying off a $90,000 mortgage with 30 monthly payments at a monthly rate of 0.5% Finally, you make 30 payments of an amount X, starting one month after the 40% mortgage ends. So far we've just listed the amount and time of all the payments back and forth. A time-line type diagram is a huge help here. Finally, use compound interest and annuity formulas to bring all the payments to the starting point, using an interest rate of 1% a month! Equate money in with money out and solve for X |
What should I do with my money? | If you are in an economy which has a decent liquid debt market (corporate bonds, etc.), then you may look into investing in AA or AA+ rated bonds. They can provide higher returns than bank deposits and are virtually risk-free. (Though in severe economic downturns, you can see defaults in even very high-rated bonds, leading to partial or complete loss of value however, this is statistically quite rare). You can make this investment through a debt mutual fund but please make sure that you read through the offer document carefully to understand the investment style of the mutual fund and their expense ratio (which directly affect your returns). In any case, it is always recommended to reach out to an investment adviser who is good with local tax laws to minimize taxes and maximize returns. |
Non-owner car insurance and registration | this is a bit unusual, but not unheard of. i have known more than one car whose owner was not its driver. besides the obvious risk that the legal owner of the car will repossess it, this seems fairly safe. your insurance should cover any financial liability that you incur during an accident. even if the car is repossessed by the owner, you are only out the registration fees. i would suggest you avoid looking this gift horse in the grill. her father on the other hand might be in for some drama and financial mess if he has a falling-out with his "friend". this arrangement reminds me of divorces where one spouse owns the car, but the other drives it and pays the loan. usually, when the relationship goes south, one spouse is forced to sell the car at a loss. |
Implications of a Canadian company IPO having a dual TSX/NYSE stock listing? | Investors who are themselves Canadian and already hold Canadian dollars (CAD) would be more likely to purchase the TSX-listed shares that are quoted in CAD, thus avoiding the currency exchange fees that would be required to buy USD-quoted shares listed on the NYSE. Assuming Shopify is only offering a single class of shares to the public in the IPO (and Shopify's form F-1 only mentions Class A subordinate voting shares as being offered) then the shares that will trade on the TSX and NYSE will be the same class, i.e. identical. Consequently, the primary difference will be the currency in which they are quoted and trade. This adds another dimension to possible arbitrage, where not only the bare price could deviate between exchanges, but also due to currency fluctuation. An additional implication for a company to maintain such a dual listing is that they'll need to adhere to the requirements of both the TSX and NYSE. While this may have a hard cost in terms of additional filing requirements etc., in theory they will benefit from the additional liquidity provided by having the multiple listings. Canadians, in particular, are more likely to invest in a Canadian company when it has a TSX listing quoted in CAD. Also, for a company listed on both the TSX and NYSE, I would expect the TSX listing would be more likely to yield inclusion in a significant market index—say, one based on market capitalization, and thus benefit the company by having its shares purchased by index ETFs and index mutual funds that track the index. I'll also remark that this dual U.S./Canadian exchange listing is not uncommon when it comes to Canadian companies that have significant business outside of Canada. |
Who can truly afford luxury cars? | Approximately 25% of all cars sold last year were leased, which is the highest on record. When you are leasing you don't own the car, instead you are basically renting it for a fixed term, and turning it back to the dealership. It is very cost effective, because the manufacturers have a keen interest in making lots of cars. They are often subsidizing the lease by giving incentives to the dealer. They are gambling on the future value of their cars. They can lose on that gamble. The car business has turned into a financial nightmare for the car companies; they have huge development costs as the cars become more like mobile computing platforms loaded with sensors, and software that is constantly changing. They can't hold a model for 20 years like Mercedes was able to do in the past. Now they have to constantly update their products. The only way to survive as a car maker is to pump out volume, and the leasing programs, which are quietly being underwritten by the manufacturers help them increase the production quantities, which helps lower the fixed development costs. If only the defense contractors could do this! they are stuck spending billions to build 20 planes, and so each one has a staggering price tag. In the future, the car companies that will survive are those that have terrific credit, and low borrowing costs. That means Japanese and Germans will own the car business entirely in the end, and countries with higher borrowing costs (like America and Brasil) will not be competitive. Luckily Ford is so frugal, due to the lingering spirit of its founder, that they can hold out. One thing strongly in favor of leasing is that you have zero maintenance costs typically. The repair risk is significant in luxury cars. When you buy a 10 year old BMW, and when the tranny goes, it costs a fortune. Having a superb car for 30 months for a few hundred bucks a month is something a lot of people enjoy doing. Who can blame them? you spend an hour or 2 a day in your car, and why not live in a nice place? |
devastated with our retirement money that we have left | It sounds like the kinds of planners you're talking to might be a poor fit, because they are essentially salespersons selling investments for a commission. Some thoughts on finding a financial planner The good kind of financial planner is going to be able to do a comprehensive plan - look at your whole life, goals, and non-investment issues such as insurance. You should expect to get a document with a Monte Carlo simulation showing your odds of success if you stick to the plan; for investments, you should expect to see a recommended asset allocation and an emphasis on low-cost no-commission (commission is "load") funds. See some of the other questions from past posts, for example What exactly can a financial advisor do for me, and is it worth the money? A good place to start for a planner might be http://napfa.org ; there's also a franchise of planners providing hourly advice called the Garrett Planning Network, I helped my mom hire someone from them and she was very happy, though I do think your results would depend mostly on the individual rather than the franchise. Anyway see http://www.garrettplanningnetwork.com/map.html , they do require planners to be fee-only and working on their CFP credential. You should really look for the Certified Financial Planner (CFP) credential. There are a lot of credentials out there, but many of them mean very little, and others might be hard to get but not mean the right thing. Some other meaningful ones include Chartered Financial Analyst (CFA) which would be a solid investment expert, though not necessarily someone knowledgeable in financial planning generally; and IRS Enrolled Agent, which means someone who knows a lot about taxes. A CPA (accountant) would also be pretty meaningful. A law degree (and estate law know-how) is very relevant to many planning situations, too. Some not-very-meaningful certifications include Certified Mutual Fund Specialist (which isn't bogus, but it's much easier to get than CFP or CFA); Registered Investment Adviser (RIA) which mostly means the person is supposed to understand securities fraud laws, but doesn't mean they know a lot about financial planning. There are some pretty bogus certifications out there, many have "retirement" or "senior" in the name. A good question for any planner is "Are you a fiduciary?" which means are they legally required to act in your interests and not their own. Most sales-oriented advisors are not fiduciaries; they wouldn't charge you a big sales commission if they were, and they are not "on your side" legally speaking. It's a good idea to check with your state regulators or the SEC to confirm that your advisor is registered and ask if they have had any complaints. (Small advisors usually register with the state and larger ones with the federal SEC). If they are registered, they may still be a salesperson who isn't acting in your interests, but at least they are following the law. You can also see if they've been in trouble in the past. When looking for a planner, one firm I found had a professional looking web site and didn't seem sketchy at all, but the state said they were not properly registered and not in compliance. Other ideas A good book is: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 it's very approachable and you'd feel more confident talking to someone maybe with more background information. For companies to work with, stick to the ones that are very consumer-friendly and sell no-load funds. Vanguard is probably the one you'll hear about most. But T. Rowe Price, Fidelity, USAA are some other good names. Fidelity is a bit of a mixture, with some cheap consumer-friendly investments and other products that are less so. Avoid companies that are all about charging commission: pretty much anyone selling an annuity is probably bad news. Annuities have some valid uses but mostly they are a bad deal. Not knowing your specific situation in any detail, it's very likely that 60k is not nearly enough, and that making the right investment choices will make only a small difference. You could invest poorly and maybe end up with 50K when you retire, or invest well and maybe end up with 80-90k. But your goal is probably more like a million dollars, or more, and most of that will come from future savings. This is what a planner can help you figure out in detail. It's virtually certain that any planner who is for real, and not a ripoff salesperson, will talk a lot about how much you need to save and so forth, not just about choosing investments. Don't be afraid to pay for a planner. It's well worth it to pay someone a thousand dollars for a really thorough, fiduciary plan with your interests foremost. The "free" planners who get a commission are going to get a whole lot more than a thousand dollars out of you, even though you won't write a check directly. Be sure to convert those mutual fund expense ratios and sales commissions into actual dollar amounts! To summarize: find someone you're paying, not someone getting a commission; look for that CFP credential showing they passed a demanding exam; maybe read a quick and easy book like the one I mentioned just so you know what the advisor is talking about; and don't rush into anything! And btw, I think you ought to be fine with a solid plan. You and your husband have time remaining to work with. Good luck. |
Sell or keep rental Property? | How is the current mortgage payment broken out? I have a mortgage on a rental property with a payment of $775, but $600 is principal. If I were at breakeven on a sale or a bit underwater, I'd be better off just holding still, the tenant paying the loan down over $7000/year. You question is a good one, but a good answer would require more details. A bank may not agree to a short sale on an investment property, especially since there's a second property to go after. I'm not making a judgement, just saying, it's not a slam-dunk to just short sell it. |
Question about MBS and how it pays | A Mortgage Backed Security or MBS is the security. It's not an entity, it's essentially a contract. As an investment they function more or less the same way a bond does. There is nothing wrong with the concept behind a Mortgage Backed Security. Functionally securities like these allows banks and other institutions to lend to high-risk borrowers. You package small slices of a wide range of risk from a large number of mortgages and the investor sill receive something similar to the average of the rates being charged. Essentially from a big pool of mortgages of varying risk you will create a different big pool of bonds that can be sold to investors based on some sort of expected return. For a frame of reference on a much smaller scale look at peer to peer lending sites like LendingClub and Prosper. The idea is lots of people of varying risk profiles make requests for loans of varying amounts. You bring your $2,500 and invest $25 in to 100 different loans. This way even if a few default you will still eek out a profit. It also allows you to include riskier borrowers without materially impacting your expected return. |
How to shop for mortgage rates ? | I asked my realtor, but she recommends to go with just one banker (her friend), and not to do any rate shopping. You need a new realtor. Anyone who would offer such advice is explicitly stating they are not advocating on your behalf. I'd do the rate shopping first. When you make an offer, once it's accepted, time becomes critical. The seller expects you to go to closing in so many days after signing the P&S. The realtor is specifically prohibited from pushing a particular lender on you. She should know better. In response to comment - Rate Shopping can be as simple as making a phone call, and having a detailed conversation. Jasper's list can be conveyed verbally. Prequalification is the next step, where a bank actually writes a letter indicating they have a high confidence you will qualify for the loan. |
Why don't share prices of a company rise every other Friday when the company buys shares for its own employees? | Many companies actually just issue new shares for employee compensation instead of buying back existing ones. So actually, the share price should go down because the same value is now diluted over more shares. In addition, this would not necessarily affect companies with many employees than those with fewer employees because companies with more employees tend to be bigger and thus have more shares (among which the change in demand would be distributed). Also, I think many companies do not issue shares to employees every pay day, but just e.g. once every quarter. |
Why do people use mortgages, when they could just pay for the house in full? | Besides all of the other answers, I will point out that many people simply don't have enough cash sitting around to buy a home outright. It would take many years (or even decades) for the average family to accumulate the necessary cash. Also, while you are pinching your pennies for years in an attempt to save up for your dream house, remember that inflation is steadily driving up the cost of goods and services. A house that costs $200K today could cost $230K in 5 years due to inflation. |
When is Cash Value Life Insurance a good or bad idea? | Buy term and invest the rest is something you will hear all the time, but actually cash value life insurance is a very misunderstood, useful financial product. Cash value life insurance makes sense if: If you you aren't maxing out your retirement accounts, just stick with term insurance, and save as much as you can for retirement. Otherwise, if you have at least 5 or 10k extra after you've funded retirement (for at least 7 years), one financial strategy is to buy a whole life policy from one of the big three mutual insurance firms. You buy a low face value policy, for example, say 50k face value; the goal is to build cash value in the policy. Overload the policy by buying additional paid up insurance in the first 7 years of the policy, using a paid-up addition rider of the policy. This policy will then grow its cash value at around 2% to 4% over the life of the policy....similar perhaps to the part of your portfolio that would would be in muni bonds; basically you are beating inflation by a small margin. Further, as you dump money into the policy, the death benefit grows. After 7 or 8 years, the cash value of the policy should equal the money you've put into it, and your death benefit will have grown substantially maybe somewhere around $250k in this example. You can access the cash value by taking a policy loan; you should only do this when it makes sense financially or in an emergency; but the important thing to realize is that your cash is there, if you need it. So now you have insurance, you have your cash reserves. Why should you do this? You save up your cash and have access to it, and you get the insurance for "free" while still getting a small return on your investment. You are diversifying your financial portfolio, pushing some of your money into conservative investments. |
In US, is it a good idea to hire a tax consultant for doing taxes? | I've been highly compensated for a while now, and I have never used a tax professional. My past complications include the year that my company was bought by a VC firm and my stock options and stock held were bought out to the tune of 5x my salary. And now I have two kids in college, with scholarships, and paying the remainder out of 529 accounts. Usually, I don't even use tax software. My typical method is to use the online software -- like turbotax online -- and let it figure out where I am. Then I use the "Free File Fillable forms" online to actually complete the process. Search for "Free File Fillable Forms" -- it's not the same as using turbotax or TaxAct for free. My suggestion to you: download the PDF form of 1040EZ and 1040A from the IRS. Print the EZ, and fill it out. This will give you a better feel for what exactly is going on. With your income, I don't think you can file the EZ, but it's a good way to get your feet wet. The way income taxes work here in the US: According to the IRS, the Personal Exemption this year is worth $4,050, and the Standard Deduction $6,300, assuming you're single. Lets assume that your salary will be in fact 75,000, and you don't pay for any benefits, but you do make a 401k contribution of 15% of your salary. Then your W-2 at the end of the year should tell you to put 63,750 in a particular box on your 1040 form. (63,750 is 85% of 75,000). Lets then assume 63,750 is your AGI after other additions and subtractions. 63,750 - 4,050 - 6,300 == 53,400. The federal Tax system is graduated, meaning there are different ranges (brackets) with different percentages. The term tax people use for taxable income of 53,400 is "marginal tax rate"...so the last dollar they tax at 25%. Other dollars less. According to the IRS, if you're single, then on 53,400, you pay "$6,897.50 plus 25% of the amount over $50,400" Or 6897.50 + 750, or 7647.50. Note this is only Federal Income Tax. You will also be paying Social Security and Medicare payroll Tax. And I'm guessing you'll also be paying colorado state income tax. Each state has its own forms and methods for figuring out the taxes and stuff. By the way, when you start, you'll fill out a "W-4" form to "help" you figure out how much to withhold from every paycheck. (I find the W-4 is not helpful at all). Your company will withhold from your paycheck some mysterious amount, and the process of filling out your 1040A or 1040EZ or whatever will be, likely, to get the over-withheld amount back. |
Advantages/Disadvantages to refinancing online? | If you've been in your house for a few years (and have built some equity up) and the market is active in your area, online is probably fine. The local banks will be better if it's not obvious to someone in Bangor, ME that your neighborhood in San Diego is worth substantially more than the crappy area 2 miles away. I've had 3 mortgages, one from a regional bank, one from a broker-sourced national mortgage company and another from a local bank. The bigger banks had better statements and were easier to do stuff with online. The smaller bank has been a better overall value, because the closing costs were low and they waived some customary fees. In my case, the national mortgage company had a better APR, but my time horizon for staying in the house made the smaller bank (which had a competitive APR, about a half point higher than the lowest advertised) a better value due to much lower up-front costs. |
Can I buy only 4 shares of a company? | Simple answer: Yes A better question to ask might be "Should I invest all my savings to buy 4 shares of a single stock." My answer to that would be "probably not". If this is your first venture into the world of owning publicly traded companies, then you're better off starting with some sort of mutual fund or ETF. This will start your portfolio with some amount of diversification so you don't have all your eggs in one basket. If you really want to get into the world of picking individual stocks, a good rule of thumb to follow is to invest $1 in some sort of indexed fund for every $1 you invest in an individual stock. This gives you some diversification while still enabling you to scratch that itch of owning a part of Apple or whatever other company you think is going in the right direction. |
Determining the minimum dividend that should be paid from my S corporation | There are no dividends from S-Corp. There are distributions. Big difference. S-Corps fill form 1120S and schedule K-1 per shareholder. In the schedule all the income of your S-Corp will be assigned to various categories that you will later copy to your personal tax return as your personal income. It is not dividend income. The reason people prefer to take distributions from their S-Corps instead of salary is because you don't pay SE taxes on the distributions. That is also the reason why the IRS forces you to pay yourself a reasonable salary. But the tax rate on the income, all of it, is your regular income tax rate, unless the S-Corp income is categorized in a preferred category. The fact that its an S-Corp income doesn't, by itself, allow any preferential treatment. If you're learning the stuff as you go - you should probably get in touch with a tax professional to advise you. All the S-Corp income must be distributed. Its not a matter of "avoiding paying the tax", its the matter of "you must do it". Not a choice. My answer was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer (circ 230 disclaimer). |
Advice for college student: Should I hire a financial adviser or just invest in index funds? | Two things to consider: When it comes to advice, don't be "Penny wise and Pound foolish". It is an ongoing debate whether active management vs passive indexes are a better choice, and I am sure others can give good arguments for both sides. I look at it as you are paying for advice. If your adviser will teach you about investing and serve your interests, having his advise will probably prevent you from making some dumb mistakes. A few mistakes (such as jumping in/out of markets based on fear/speculation) can eliminate any savings in fees. However, if you feel confident that you have the resources and can make good decisions, why pay for advise you don't need? EDIT In this case, my opinion is that you don't need a complex plan at this time. The money you would spend on financial advise would not be the best use of the funds. That said, to your main question, I would delay making any long-term decisions with these funds until you know you are done with your education and on an established career path. This period of your life can be very volatile, and you may find yourself halfway through college and wanting to change majors or start a different path. Give yourself the option to do that by deferring long-term investment decisions until you have more stability. For that reason, I would avoid focusing on retirement savings. As others point out, you are limited in how much you can contribute per year. If you want to start, ROTH is your best bet, but if you put it in don't pull it out. That is a bad habit to get into. Personal finance is as much about developing habits as it is doing math... A low-turnover index fund may be appropriate, but you don't want to end up where you want to buy a house or start a business and your investment has just lost 10%... I would keep at least half in a liquid, safe account until after graduation. Any debt you incur because you tied up this money will eliminate any investment gains (if any). Good Luck! EDITED to clarify retirement savings |
What does “profits to the shareholders jumped to 15 cents a share” mean? | It means that the company earned 15 cents per share in the most recently reported quarter. Share price may or not be affected, depending on how buyers and sellers value the company. Just because profits "jumped," does not mean the shares will follow suit. An increase in profits may have already been priced into the stock, or the market expected the increase in profit to be even higher. As the shareholder, you don't actually get any of these profits into your hands, unless the company pays out a portion of these profits as a dividend. |
income tax for purchased/sold short term & long term shares | As mentioned by Dilip, you need to provide more details. In general for transacting on stocks; Long Term: If you hold the stock for more than one year then its long term and not taxable. There is a STT [Securities Transaction Tax] that is already deducted/paid during buying and selling of a stock. Short Term: If you hold the stock for less than one year, it's short term gain. This can be adjusted against the short term loss for the financial year. The tax rate is 10%. Day Trading: Is same as short term from tax point of view. Unless you are doing it as a full time business. If you have purchased multiple quantities of same stock in different quantities and time, then when you selling you have to arrive at profit or loss on FIFO basis, ie First in First Out |
Why companies appear in several stock exchanges? | If I buy the one from NSY, is it the "real" Sinopec? No - you are buying an American Depository Receipt. Essentially some American bank or other entity holds a bunch of Sinopec stock and issues certificates to the American exchange that American investors can trade. This insulates the American investors from the cost of international transactions. The price of these ADRs should mimic the price of the underlying stock (including changes the currency exchange rate) otherwise an arbitrage opportunity would exist. Other than that, the main difference between holding the ADR and the actual stock is that ADRs do not have voting rights. So if that is not important to you then for all intents and purposes trading the ADR would be the same as trading the underlying stock. |
Why index funds have different prices? | Funds which track the same index may have different nominal prices. From an investors point of view, this is not important. What is important is that when the underlying index moves by a given percentage, the price of the tracking funds also move by an equal percentage. In other words, if the S&P500 rises by 5%, then the price of those funds tracking the S&P500 will also rise by 5%. Therefore, investing a given amount in any of the tracking funds will produce the same profit or loss, regardless of the nominal prices at which the individual funds are trading. To see this, use the "compare" function available on the popular online charting services. For example, in Google finance call up a chart of the S&P500 index, then use the compare textbox to enter the codes for the various ETFs tracking the S&P500. You will see that they all track the S&P500 equally so that your relative returns will be equal from each of the tracking funds. Any small difference in total returns will be attributable to management fees and expenses, which is why low fees are so important in passive investing. |
How do I know when I am financially stable/ready to move out on my own? | I'll just say this. You are in much better shape financially than I was when I moved out on my own and started supporting myself, and I did fine. The 6 month emergency fund is nice, but I'd gamble that most people that have been out on their own for a long time can't match that. The main thing is just to keep a budget that is commensurate with your income and adjust it if you see that emergency fund start to dwindle. Look at it this way, assuming you are wrong and you completely weren't ready for independent living, you could always go back. Nothing ventured nothing gained. |
How do I report this cash bonus/tip on income tax return? | How do I report this on our income tax return? You should include it on Line 7 of your Form 1040. Additionally, you should report the extra payment to your employer if it was greater that $20. You can use From 4070 to do this if your employer does not provide you with a form. And finally, you are right, you should Form 4137 to report any tips that you include on your Form 1040 in order to pay the required social security and medicare taxes. Credit is due to glibdud and Nathan L for constructive feedback! Thanks! |
Currently sole owner of a property. My girlfriend is looking to move in with me and is offering to pay 'rent'. Am I at risk here? | Edit #2 My whole answer was based on my misunderstanding that you were renting out a totally separate property to your girl friend. I finally understand now that you're renting out a room in YOUR apartment flat to your gf. So, based on my new understanding, I don't think it's necessarily a bad idea. The answer below is my answer to a different question ;) Original Answer My answer has nothing to do with business, but is totally relationship based. If you care about her in a "we might be together a long time" way, then I wouldn't do this. I don't care what arrangements you setup before hand, at some point, you're bound to feel like she owes you something at some point. Let alone the easiest of situations to imagine (she's late on the rent, she loses her job and can't pay, etc) you'll be forced to make decisions about how much your desire to love and care for her outweighs your need to pay your mortgage. You can argue how magnanimous your are all day long, but is this something you want to bring into your relationship? Now, if you don't really care to stay with her that long and you could do life with or without her, then go for it. I think the big question is, is your relationship worth £200? Edit In the interest of supporting my opinion, here are a few articles I found on the subject: Unfortunately, the way renting to friends or family often works out is far from what would be expected between people who care about one another. For the most part, friends and family members will actually make bad renters, because they’ll expect more from you than a tenant who doesn’t know you. You may get a lot of requests for maintenance and repairs, even for minor things, and you may also find that family members and friends think they should be entitled to perks because of your personal relationship with them. When they don’t get special treatment, they can get angry with you, and that hurts both your professional relationship and your personal relationship. American Apartment Owners Association "In my experience, landlords renting to relatives doesn't work out perfectly," said Ceyhun Doker, a REALTOR® associate at Keller Williams Realty in Burlingame, CA. "When you don't know each other, there are fewer problems." realator.com |
Is my mortgage more likely to be sold if I pre-pay principal? | It's not unusual/undesirable. If everyone prepaid their mortgage, banks would not like this, but we're in no danger of that :). Also, the amount you are pre-paying is not so significant as to make them pay special attention. In many cases when a borrower pre-pays, they will not continue to do so over the life of the loan since it's so easy to stop at any time, and the extra payments are voluntary. Depending on who originated the mortgate, it might be sold even more often than in your case. It's no longer commonplace for a bank to hold a mortgage to maturity, now that banks and other institutions have separated the origination of the loan from its servicing. It's likely that your mortgage was bundled with others through a process called securitization, and will be bought/sold based on the bank's need for liquitity or to balance out the maturity of its assets and liabilities (whether they need more cash now versus later), or based on the types of ways your bank has decided that it wants to make money versus farming out other types of business to others. What would substantially change the value of your mortgage to a bank is if it were performing (ie you are paying on time) but then became non-performing (ie you fall behind in your payments). It's also possible that if you have a very small mortgage or principal balance, that there is very little risk to the bank, and little difference between the present and future values of your loan, but banks don't typically make these types of transactions based on the characteristics of an individual loan. |
Physical Checks - Mailing | You can try writing on the back of the check, in the signature area, "For deposit only to account xxxxxxxxx", leaving room for the signature. This may or may not be legally binding, but it states your intnt and is in a form the bank will recognize. |
How much more than my mortgage should I charge for rent? | While JoeTaxpayer gave a very insightful answer, and clearly the best answer, let me break it down really simple for you. Talk with a good to great property management company. Given that you will be out of state, you will need one anyway. A good one is worth their cost, a great one even better. They will tell you what the "market will bear" on renting your place and the expected costs. From there you can make an intelligent decision. Have you had any experience in running rental properties? I am going to assume not, and as such you should have professionals as part of your team. More than likely you will have to put money in to sustain this property as a rental. It is just how the numbers tend to work out. |
Can I invest in the USA or EU from an Asian 3rd-world country, over the Internet? | Absolutely. It does highly depend on your country, as US brokerages are stricter with or even closed to residents of countries that produce drugs, launder money, finance terror, have traditional difficulty with the US, etc. It also depends on your country's laws. Some countries have currency controls, restrictions on buying foreign/US securities, etc. That said, some brokerages have offices world-wide, so there might be one near you. If your legal situation as described above is fortunate, some brokers will simply allow you to setup online using a procedure not too different from US residents: provide identification, sign tons of documents. You'll have to have a method to deliver your documentation in the ways you'd expect: mail, fax, email. E*Trade is the best starter broker, right now, imo. Just see how far you can go in the sign-up process. |
How can people have such high credit card debts? | I would say you are typical. The way people are able to build their available credit, then subsequently build their average balances is buy building their credit score. According to FICO your credit score is made up as follows: Given that you had no history, and only new credit you are pretty much lacking in all areas. What the typical person does, is get a card, pay on it for 6 months and assuming good history will either get an automatic bump; or, they can request a credit limit increase. Credit score has nothing to do with wealth or income. So even if you had 100K in the bank you would likely still be facing the same issue. The bank that holds the money might make an exception. It is very easy to see how a college student can build to 2000 or more. They start out with a $200 balance to a department store and in about 6 months they get a real CC with a 500 balance and one to a second department store. Given at least a decent payment history, that limit could easily increase above 2500 and there could be more then one card open. Along the lines of what littleadv says, the companies even welcome some late payments. The fees are more lucrative and they can bump the interest rate. All is good as long as the payments are made. Getting students and children involved with credit cards is a goal of the industry. They can obtain an emotional attachment that goes beyond good business reasoning. |
What is a good way to keep track of your credit card transactions, to reduce likelihood of fraud? | Read your bill, question things that don't look familiar. People who steal credit card numbers don't bother to conceal themselves well. So if you live in Florida, and all of the sudden charges appear in Idaho, you should investigate. Keeping charge slips seems counter-productive to me. I already know that I bought gasoline from the station down the street, a slip of paper whose date may or may not align with the credit card bill is not very useful. The half-life for a stolen card is hours. So you tend to see a bunch of charges appearing quickly. If someone is stealing $20 a week from you over an extended period of time, the theif is probably someone you live or work with, and paper slips won't help you there either. |
To rebalance or not to rebalance | Yes E[x] is expected value of x. E[x|y] = expected value of x, given y. c, k are some constants Let E[s_{n+1}|s_n=c] = c, but if E[s_{n+1}|s_n,s_{n-1},...,s_{n-m}] ->some constant k as m->\infty (call this equation 1) then rebalancing makes sense. Notes: |
What are my chances at getting a mortgage with Terrible credit but High income | The bottom line, is that you are doing the right thing now: correcting your past indiscretions. Get those collections taken care of, then start saving for a down payment. Of course, during this time, you should pay your bills early or on time. During that time your credit will improve dramatically. I bet that this will not be an issue once you have your down payment saved, so the point is moot. However, with outstanding collections it is very unlikely you will get a loan. In my own case, I had to pay a collection, that I did not owe, in order to obtain a mortgage. It was for a small amount and the loan officer told me that "it is the cost of doing business". Ship $150 and my loan when through free and clear. |
How does Yahoo finance adjust stock data for splits and dividends? | For stock splits, let's say stock XYZ closed at 100 on February 5. Then on February 6, it undergoes a 2-for-1 split and closes the day at 51. In Yahoo's historical prices for XYZ, you will see that it closed at 51 on Feb 6, but all of the closing prices for the previous days will be divided by 2. So for Feb 5, it will say the closing price was 50 instead of 100. For dividends, let's say stock ABC closed at 200 on December 18. Then on December 19, the stock increases in price by $2 but it pays out a $1 dividend. In Yahoo's historical prices for XYZ, you will see that it closed at 200 on Dec 18 and 201 on Dec 19. Yahoo adjusts the closing price for Dec 19 to factor in the dividend. |
what is a mortgage gift exchange? | The issue is that the lender used two peoples income, debts, and credit history to loan both of you money to purchase a house. The only way to get a person off the loan, is to get a new loan via refinancing. The new loan will then be based on the income, debt, and credit history of one person. There is no paperwork you can sign, or the ex-spouse can sign, that will force the original lender to remove somebody from the loan. There is one way that a exchange of money between the two of you could work: The ex-spouse will have to sign paperwork to prove that it is not a loan that you will have to payback. I picked the number 20K for a reason. If the amount of the payment is above 14K they will have to document for the IRS that this is a gift, and the amount above 14K will be counted as part of their estate when they die. If the amount of the payment is less than 14K they don't even have to tell the IRS. If the ex-souse has remarried or you have remarried the multiple payments can be constructed to exceed the 14K limit. |
Estimated Tax on Unplanned Capital Gains | I'm assuming your talking USA. There are two ways to look. If you know you should pay on the cap gains, the best way to handle that separately from your salary is to file a quarterly tax payment. That, I understand, is what the self-employed have to do. I'm in the situation where at some point, probably this year, the company that employs me will be bought out, and I will owe capital gains taxes on my shares gobbled up in the buy-out. It's a cash-for-stock transaction. So, in my case, I've just adjusted my W-4 to take advantage of the safe-harbor provision related to taxes I payed in 2016 and my salary. The details vary depending on your situation, but in my case, I've calculated what it will take in W-4 allowances to make sure I pay 110% of my 2016 tax payment (after refund). I'm not worrying about what the actual taxes on those shares of company stock will be, because I've met the rules for safe-harbor. Safe harbor just means that they can't penalize you for under-withholding or underpayment. It doesn't mean I won't have to write a check on april 15. |
Dispute credit card transaction with merchant or credit card company? | As a rule of thumb, go in the order of proximity to the transaction. This would typically mean: Side note: I own a website that provides an online service that accepts PayPal and credit cards (via PayPal), and I personally have experience with all 3 of the above options. I can tell you from the merchant's point of view that I would also prefer the same order. I've had people contact my customer service department asking for a refund and we always immediately comply. Some people never contact us and just file a dispute directly with PayPal, and although refunding through the PayPal dispute is just as easy as refunding directly, it always makes me ask, "Why didn't they just contact us first?" One time we had a customer skip us and PayPal, and filed a dispute directly with their Credit Card. The CC company contacted PayPal and PayPal contacted us. The process was the same from my point of view, I just clicked a button saying issue refund. But my $5 refund cost me an additional $20 due to the CC dispute. Now that I know this I will never approve a CC dispute again. Anytime one happens I would just issue a refund directly, and then notify the dispute that their CC has already been refunded, which should end the dispute. |
What variety of hedges are there against index funds of U.S. based stocks? | The only way to hedge a position is to take on a countervailing position with a higher multiplier as any counter position such as a 1:1 inverse ETF will merely cancel out the ETF it is meant to hedge yielding a negative return roughly in the amount of fees & slippage. For true risk-aversion, continually selling the shortest term available covered calls is the only free lunch. A suboptimal version, the CBOE BuyWrite Index, has outperformed its underlying with lower volatility. The second best way is to continually hedge positions with long puts, but this can become very tax-complicated since the hedged positions need to be rebalanced continually and expensive depending on option liquidity. The ideal, assuming no taxes and infinite liquidity, is to sell covered calls when implied volatility is high and buy puts when implied volatility is low. |
What's the benefit of opening a Certificate of Deposit (CD) Account? | If you've already got emergency savings sufficient for your needs, I agree that you'd be better served by sending that $500 to your student loan(s). I, personally, house the bulk of my emergency savings in CDs because I'm not planning to touch it and it yields a little better than a vanilla savings account. To address the comment about liquidity. In addition to my emergency savings I keep plain vanilla savings accounts for miscellaenous sudden expenses. To me "emergency" means lost job, not new water pump for my car; I have other budgeted savings for that but would spend it on a credit card and reimburse myself anyway so liquidity there isn't even that important. The 18 month CDs I use are barely less liquid than vanilla savings and the penalty is just a couple months of the accrued interest. When you compare a possible early distribution penalty against the years of increased yield you're likely to come out ahead after years of never touching your emergency savings, unless you're budgeted such that a car insurance deductible is an emergency expense. Emergency funds should be guaranteed and non-volatile. If I lose my job, 90 days of accrued interest isn't a hindrance to breaking open some of my CDs, and the process isn't so daunting that I'd meaningfully harm my finances. Liquidity in 2017 and liquidity in whatever year a text book was initially written are two totally different animals. My "very illiquid" brokerage account funds are only one transaction and 3 settlement days less liquid than my "very liquid" savings account. There's no call the bank, sell the security, wait for it to clear, my brokerage cuts a check, mail the check, cash the check, etc. I can go from Apple stock on Monday to cash in my hand on like Thursday. On the web portal for the bank that holds my CDs I can instantly transfer the funds from a CD to my checking account there net of a negligible penalty for early distribution. To call CDs illiquid in 2017 is silly. |
Why is economic growth so important? | There is an economic principle called "non-satiation," which translated into plain English means "people always want more." (This was best illustrated in the movie, Oliver Twist, "Please sir, can I have MORE?") Over time, most people won't be satisfied with "things as they are." Which is why growth is so important. Many behavioral economists would argue that it is not the LEVEL of utility, but rather the utility CHANGES (in calculus, "deltas" or "derivatives") that make people happy. Or not. |
How to calculate my estimated taxes. 1099 MISC + Self Employment | There is a shortcut you can use when calculating federal estimated taxes. Some states may allow the same type of estimation, but I know at least one (my own--Illinois) that does not. The shortcut: you can completely base your estimated taxes for this year on last year's tax return and avoid any underpayment penalty. A quick summary can be found here (emphasis mine): If your prior year Adjusted Gross Income was $150,000 or less, then you can avoid a penalty if you pay either 90 percent of this year's income tax liability or 100 percent of your income tax liability from last year (dividing what you paid last year into four quarterly payments). This rule helps if you have a big spike in income one year, say, because you sell an investment for a huge gain or win the lottery. If wage withholding for the year equals the amount of tax you owed in the previous year, then you wouldn't need to pay estimated taxes, no matter how much extra tax you owe on your windfall. Note that this does not mean you will not owe money when you file your return next April; this shortcut ensures that you pay at least the minimum allowed to avoid penalty. You can see this for yourself by filling out the worksheet on form 1040ES. Line 14a is what your expected tax this year will be, based on your estimated income. Line 14b is your total tax from last year, possibly with some other modifications. Line 14c then asks you to take the lesser of the two numbers. So even if your expected tax this year is one million dollars, you can still base your estimated payments on last year's tax. |
How to Calculate Profit and Loss for trading position? | Month to date For the month to date (MTD), the price on Feb 28th is $4.58 and the price on March 16th is $4.61 so the return is which can be written more simply as The position is 1000 shares valued at $4580 on Feb 28th, so the profit on the month to date is Calendar year to date For the calendar year to date (YTD), the price on Dec 31st is $4.60 and the price on Feb 28th is $4.58 so the return to Feb 28th is The return from Feb 28th to March 16th is 0.655022 % so the year to date return is or more directly So the 2011 YTD profit on 1000 shares valued at $4600 on Dec 31st is Year to date starting Dec 10th For the year to date starting Dec 10th, the starting value is and the value on Dec 31st is 1000 * $4.60 = $4600 so the return is $4600 / $4510 - 1 = 0.0199557 = 1.99557 % The year to date profit is therefore Note - YTD is often understood to mean calendar year to date. To cover all the bases state both, ie "calendar YTD (2011)" and "YTD starting Dec 10th 2010". Edit further to comment For the calendar year to date, with 200 shares sold on Jan 10th with the share price at $4.58, the return from Dec 31st to Jan 10th is The return from Jan 10th to Feb 28th is The return from Feb 28th to March 16th is The profit on 1000 shares from Dec 31st to Jan 10th is $4600 * -0.00434783 = -$20 The profit on 800 shares from Jan 10th to Feb 28th is zero. The profit on 800 shares from Feb 28th to March 16th is So the year to date profit is $4. |
Should I continue to invest in an S&P 500 index fund? | Cycle analysis indicates that the current bear market, which began in May/June, should last until late 2016 / early 2017. So if you want to trade the short side, then it's a great time to be short for the next 15-18 months. |
How much do brokerages pay exchanges per trade? | There is no one answer to this question, but there are some generalities. Most exchanges make a distinction between the passive and the aggressive sides of a trade. The passive participant is the order that was resting on the market at the time of the trade. It is an order that based on its price was not executable at the time, and therefore goes into the order book. For example, I'm willing to sell 100 shares of a stock at $9.98 but nobody wants to buy that right now, so it remains as an open order on the exchange. Then somebody comes along and is willing to meet my price (I am glossing over lots of details here). So they aggressively take out my order by either posting a market-buy, or specifically that they want to buy 100 shares at either $9.98, or at some higher price. Most exchanges will actually give me, as the passive (i.e. liquidity making) investor a small rebate, while the other person is charged a few fractions of a cent. Google found NYSEArca details, and most other exchanges make their fees public as well. As of this writing the generic price charged/credited: But they provide volume discounts, and many of the larger deals do fall into another tier of volume, which provides a different price structure. |
What does Dividend 165% mean in stock market? | Do not confuse the DIV (%) value and the dividend yield. As you can see from this page, the DIV (%) is, as you say, 165%. However, the dividend yield is 3.73% at the time of writing. As the Investopedia page referenced above says: The payout ratio is calculated as follows: Annual Dividends per Share / Earnings per Share. which means that the dividends being paid out are more than the earnings of the company: In extreme cases, dividend payout ratios exceed 100%, meaning more dividends were paid out than there were profits that year. Significantly high ratios are unsustainable. |
Got a “personal” bonus from my boss. Do I have to pay taxes and if so, how do I go about that? | I actually think your boss is creating a problem for you. Of course it's taxable. The things IRS will look at (and they very well might, as it does stand out) what kind of payment is that. Why did it not go through payroll? The company may be at risk here for avoiding FICA/FUTA/workers' compensation insurance/State payroll taxes. Some are mandatory, and cannot be left to the employee to pay. On your side it raises your taxable income without the appropriate withholding, you may end up paying underpayment penalties for that (that is why you've been suggested to keep proofs of when you were paid). Also, it's employment income. If it is not wages - you're liable for self-employment taxes (basically the portion of FICA that the employer didn't pay, and your own FICA withholding). When you deposit the check is of no matter to the IRS, its when you got it that determines when you should declare the income. You don't have a choice there. I suggest asking the company payroll why it didn't go through them, as it may be a problem for you later on. |
Reinvesting earnings increases the book value of equity? | The book value is Total Assets minus Total Liabilities and so if you increase the Total Assets without changing the Total Liabilities the difference gets bigger and thus higher. Consider if a company had total assets of $4 and total liabilities of $3 so the book value is $1. Now, if the company adds $2 to the assets, then the difference would be 4+2-3=6-3=3 and last time I checked 3 is greater than 1. On definitions, here are a couple of links to clarify that side of things. From Investopedia: Equity = Assets - Liabilities From Ready Ratios: Shareholders Equity = Total Assets – Total Liabilities OR Shareholders Equity = Share Capital + Retained Earnings – Treasury Shares Depending on what the reinvestment bought, there could be several possible outcomes. If the company bought assets that appreciated in value then that would increase the equity. If the company used that money to increase sales by expanding the marketing department then the future calculations could be a bit trickier and depend on what assumptions one wants to make really. If you need an example of the latter, imagine playing a game where I get to make up the rules and change them at will. Do you think you'd win at some point? It would depend on how I want the game to go and thus isn't something that you could definitively say one way or the other. |
Why is being “upside down” on a mortgage so bad? | The problem comes when the borrower cannot afford his home. If a borrower buys more home than they can afford, as long as he can sell the house for more than he owes, he's not in a disastrous situation. He can sell the house, pay off the mortgage, and choose more affordable housing instead. If he is upside-down on his home, he doesn't have that option. He's stuck in his home. If he sells it, he will have to come up with extra money to pay off the mortgage (which he doesn't have, because he is in a home he can't afford). It used to be commonplace for banks to issue mortgages for 100% of the value of the home. As long as the home keeps appreciating, everybody is happy. But if the house drops in value and the homeowner finds himself unable to make house payments, both the homeowner and the bank are at risk. Recent regulations in the U.S. have made no-down-payment mortgages less common. |
Wash sales + restricted stock in USA: grant date or vesting date? | For restricted stock, I think the vesting date meets the requirements of the second wash sale trigger from IRS Pub 550: Wash Sales: Acquire substantially identical stock or securities in a fully taxable trade I base this on these two quotes from IRS Pub 525: Restricted Property: any income from the property, or the right to use the property, is included in your income as additional compensation in the year you receive the income or have the right to use the property. - Until the property becomes substantially vested, it is owned by the person who makes the transfer to you, usually your employer. So on the vest date: The transfer is taxable Ownership is transferred to you That seems close enough to "a fully taxable trade" for me. Maybe this changes if you pay the tax on the stock on the grant date. See Pub 525: Restricted Property: Choosing to include in income for year of transfer. Obviously, if this is important you should consult your tax advisor. Technicalities aside, I don't think it passes the sniff test. You're getting salable shares when the restricted stock vests. If you're selling other shares at a loss within 30 days of the vesting date, that smells like a wash sale to me. |
Is there any reason to buy shares before/after a split? | Assuming you plan to buy a whole number of shares and have a maximum dollar value you intend to invest, it may be better to wait for the split if the figures don't quite work out nicely. For example, if you are going to invest $1,000 and the stock pre-split is $400 and the split is 2 for 1, then you'd buy 2 shares before the split unless you have an extra $200 to add. Meanwhile, after the split you could buy 5 shares at $200 so that you invest all that you intend. Aside from that case, it doesn't really make a difference since the split is similar to getting 2 nickels for a dime which in each case is still a total value of 10 cents. |
How does investing in commodities/futures vary from stocks? | As Dilip has pointed out in the comment, investing in commodities is to either delivery or Buy. Lets say you entered into buying "X" quantities of Soybeans in November, contract is entered into May. In November, if the price is higher than what you purchased for, you can easily sell this, and make money. If in November, the price is lower than your contract price, you have an option to sell it at loss. If you don't want to sell it at loss, you are supposed to take the physical shipment [arrange for your own transport] and store it in warehouse. Although there are companies that will allow you to lease their warehouse, it very soon becomes more loss making proposition. By doing this you can HOLD onto as long as you want [or as long as the good survive and don't rot] It makes sense for a large wholesaler to enter into Buy contracts as he would be like to get known prices for at least half the stock he needs. Similarly large farmers / co-operative societies need to enter into Sell contracts so that they are safeguarded against price fluctuations. |
Is it better to buy US stocks on US stock exchanges as a European? | Liquidity on dual listed equities is rarely the same on both exchanges. More liquidity means you would typically get a better price assuming you execute the trades using the same order types. It's recommended to trade where the liquidity is greater unless your trading method benefits somehow from it being lower. It's important to remember that some ADRs (some European companies listed in US) have ADR fees which vary. USD/EUR transaction fees are low when using a decent broker but you're obviously participating in the currency risk. |
Interest on security deposits paid to landlords, in Michigan? | No. The full text of the Landlord-Tenant Act (specifically, section 554.614 of Act 348 of the year 1972) makes no mention of this. Searching the law for "interest" doesn't yield anything of interest (pardon the pun). Specifically, section 554.604 of the same law states that: (1) The security deposit shall be deposited in a regulated financial institution. A landlord may use the moneys so deposited for any purposes he desires if he deposits with the secretary of state a cash bond or surety bond written by a surety company licensed to do business in this state and acceptable to the attorney general to secure the entire deposits up to $50,000.00 and 25% of any amount exceeding $50,000.00. The attorney general may find a bond unacceptable based only upon reasonable criteria relating to the sufficiency of the bond, and shall notify the landlord in writing of his reasons for the unacceptability of the bond. (2) The bond shall be for the benefit of persons making security deposits with the landlord. A person for whose benefit the bond is written or his legal representative may bring an action in the district, common pleas or municipal court where the landlord resides or does business for collection on the bond. While it does sound like the landlord is required to deposit the money in a bank or other secured form, e.g. the Secretary of State, he/she isn't required to place it in an account that will earn interest. |
Investing/business with other people's money: How does it work? | You can either borrow money... credit card, line of credit, re-finance your home, home equity line of credit, loan, mortgage, etc. Or you have other invest in your company as equity. They will contribute $X to get Y% of your company and get Z% of the profits. Note amount of profits does not necessarily have to equate to percentage owned. This makes sense if they are a passive investor, where they just come up with the money and you do all the work. Also voting rights in a company does not have to equate to percentage owned either. You can also have a combination of equity and debt. If you have investors, you would need to figure out whether the investor will personally guarantee the debt of your company - recourse vs non-recourse. If they have more risk, they will want more of a return. One last way to do it is crowdfunding, similar to what people do on Kickstarter. Supporters/customers come up with the money, then you deliver the product. Consulting practices do something similar with the concept of retainers. Best of luck. |
Put idle savings to use while keeping them liquid | I'm new to this, but how about putting a big part of your money into an MMA? I don't know about your country, but in Germany, some online banks easily offer as much as 2.1% pa, and you can access the money daily. If you want decent profit without risk this is a great deal, much better than most saving accounts. |
What are my tax-advantaged investment options at a university job? | Yes. Two years after your first contribution to the SIMPLE IRA, you can roll it to a traditional IRA. You can still contribute "pre-tax", but the mechanism will be slightly different, since with an employer plan the contribution was automatically deducted from your paycheck. With an individual plan, you make the contributions yourself and then get a tax deduction when you file. Since contributions to traditional and Roth IRAs combined are capped at $5,500 if you're under 50, some sort of employer-sponsored plan might be better from a contribution standpoint. If your institution offers some sort of plan other than a 401(k), you might still want to roll to a traditional IRA, since you will have much more flexibility in the investments you choose. On the flip side, if that thought is overwhelming, having a smaller set of options might be better for your peace of mind. |
Gigantic point amount on rewards card - what are potential consequences? | I can't give you proper legal advice, but if I called their customer service and used half an hour of my time to wait and explain the situation in detail, and their official response was "just use the points," I would do just that. Of course you would have stronger legal standing if you had recorded their answer, or had it in writing from them. But I don't think spending these points will come crashing down on you. And morally I see absolutely no problem with spending these points; it is not as if you are stealing from someone else. These points can usually be given away in any kind of crazy manner. Sometimes there are lotteries or events where they give away 100,000 points for new customers who open up an account on a specific weekend. Sometimes they give points to customers who want to terminate their contracts as an attempt to coax them into staying. They have given you a lot of points and don't really care. As a result you are probably staying their customer forever – and will most likely tell this story to many friends. This is free advertising for them. Heck, maybe they would even make a news story out of this some day, it could be good publicity. Everyone is essentially getting these points "for free" but in fact the company has a business case by improving their image and customer retention with these points. So you can spend these points with a sound mind morally. Legally you would have to contact a lawyer, but I think chances for legal repercussions are small if you have done your duty, informed them and their customer service basically said it's ok. |
Is expense to freelancers tax deductible? | Yes, but make sure you issue a 1099 to these freelancers by 1/31/2016 or you may forfeit your ability to claim the expenses. You will probably need to collect a W-9 from each freelancer but also check with oDesk as they may have the necessary paperwork already in place for this exact reason. Most importantly, consult with a trusted CPA to ensure you are completing all necessary forms correctly and following current IRS rules and regulations. PS - I do this myself for my own business and it's quite simple and straight forward. |
Wash sale rule + Mutual Funds/ETFs? | I think the IRS doc you want is http://www.irs.gov/publications/p550/ch04.html#en_US_2010_publink100010601 I believe the answers are: |
How to reduce mortgage rate with low income but high assets | In your shoes, I would pay off the mortgage with the after tax investments and be done. You have different goals than I do in that you want to keep the debt. So, I would start calling mortgage brokers and asking for someone who does "manual underwriting". Manual underwriting essentially means they use common sense and look at your situation for what it is instead of saying "income=10K means disapprove mortgage". It may be that your situation is different enough from mortgage guidelines that you can't now get a conforming mortgage (i.e. one that is readily re-sellable to another mortgage holder). If that is the case, you can look for a small bank or credit union that would be interested in adding your loan to their portfolio and not reselling it. |
I'm getting gouged on prices for medical services when using my HSA plan. How to be billed fairly? | I had an HSA for two or three years. I found very routinely that my insurance company had negotiated rates with in-network providers. So as I never hit the deductible, I always had to pay 100% of the negotiated rate, but it was still much less than the providers general rate. Sometimes dramatically so. Like I had some blood and urine tests done and the general rate was $450 but the negotiated rate was only $40. I had laser eye surgery and the general rate was something like $1500 but the negotiated rate was more like $500. Et cetera. Other times it was the same or trivially different, like routine office visits it made no difference. I found that I could call the insurance company and ask for the negotiated rate and they would tell me. When I asked the doctor or the hospital, they either couldn't tell me or they wouldn't. It's possible that the doctor's office doesn't really know what rates they've agreed to, they might have just signed some contract with the insurance company that says, yes, we'll accept whatever you give us. But either way, I had to go to the insurance company to find out. You'd think they'd just publish the list on a web site or something. After all, it's to the insurance company's advantage if you go to the cheapest provider. With a "regular" non-HSA plan, they're share of the total is less. Even with an HSA plan if you go to a cheaper provider you are less likely to hit the deductible. Yes, medical care in the U.S. is rather bizarre in that providers routinely expect you to commit to paying for their services before they will tell you the price. Can you imagine any other industry working this way? Can you imagine buying a car and the dealer saying, "I have no idea what this car costs. If you like it, great, take it and drive it home, and in a few weeks we'll send you a bill. And of course whatever amount we put on that bill you are legally obligated to pay, but we refuse to tell you what that amount will be." The American Medical Association used to have a policy that they considered it "unethical" for doctors to tell patients the price of treatment in advance. I don't know if they still do. |
Is there a way to create a limit order with both an upper and lower limit | In a way yes but I doubt you'd want that. A "Stop-Limit" order has both stop and limit components to it but I doubt this gives you what you want. In your example, if the stock falls to $1/share then the limit order of $3/share would be triggered but this isn't quite what I'd think you'd want to see. I'd suggest considering having 2 orders: A stop order to limit losses and a limit order to sell that are separate rather than fusing them together that likely isn't going to work. |
Didn't apply for credit card but got an application denied letter? | It's marketing or SCAM tentative. Please check with extreme attention before clicking any link present in the communication. |
What is quotational loss in stock market? | Been a long while since I've read it but if I remember correctly with quotational loss Graham refers to an unjustified decline in stock price because of Mr. Market's fear and loathing where the business prospects of the company are actually still sound. This is opposed to "actual" loss of capital which he would consider to be a company going bankrupt or just more generally turning out to have way worse business prospects than expected with the justified decline in stock price that entails. |
What debts are both partners liable for in a 'community property' state? | No two states have the same exact laws regarding community property. I would recommend asking a competent financial advisor in your area, as they would be more familiar with the local statutes. |
Why would you ever turn down a raise in salary? | I don't know of a situation where rejecting a raise would make sense. Often, one can be in a phaseout of some benefit, so that even though you're in a certain tax bracket, the impact of the next $100 is greater than the bracket rate alone. Taxation of social security benefits is one such anomaly. It can be high, but never over 100%. Update - The Affordable Care Act contains such an anomaly - go to the Kaiser Foundation site, and see the benefit a family of three might receive. A credit for up to $4631 toward their health care insurance cost. But, increase the income to above $78120 Modified Adjusted Gross Income (MAGI) and the benefit drops to zero. The fact that the next dollar of income will cost you $4631 in the lost credit is an example of a step-function in the tax code. I'd still not turn down the raise, but I'd ask that it be deposited to my 401(k). And when reconciling my taxes each April, I'd use an IRA in case I still went over a bit. Consider, it's April, and your MAGI is $80,120. Even if you don't have to cash to deposit to the IRA, you borrow it, from a 24% credit card if need be. Because the $2000 IRA will trigger not just $300 less Federal tax, but a $4631 health care credit. Note - the above example will apply to a limited, specific group who are funding their own health care expense and paying above a certain percent of income. It's not a criticism of ACA, just a mathematical observation appropriate to this question. For those in this situation, a close look at their projected MAGI is in order. Another example - the deduction for college tuition and fees. This is another "step function." Go a dollar over the threshold, $130K joint, and the deduction drops from $4000 to $2000. You can claim that a $2000 deduction is a difference of 'only' $500 in tax due, but the result is a quick spike in the marginal rate. For those right at this number, it would be worth it to increase their 401(k) deduction to get back under this limit. |
Empirical performance data of ETFs and Mutual Funds tracking identical Indexes? | Why don't you look at the actual funds and etfs in question rather than seeking a general conclusion about all pairs of funds and etfs? For example, Vanguard's total stock market index fund (VTSAX) and ETF (VTI). Comparing the two on yahoo finance I find no difference over the last 5 years visually. For a different pair of funds you may find something very slightly different. In many cases the index fund and ETF will not have the same benchmark and fees so comparisons get a little more cloudy. I recall a while ago there was an article that was pointing out that at the time emerging market ETF's had higher fees than corresponding index funds. For this reason I think you should examine your question on a case-by-case basis. Index fund and ETF returns are all publicly available so you don't have to guess. |
Conservative ways to save for retirement? | Dividend reinvestment plans are a great option for some of your savings. By making small, regular investments, combined with reinvested dividends, you can accumulate a significant nest egg. Pick a medium to large cap company that looks to be around for the foreseeable future, such as JNJ, 3M, GE, or even Exxon. These companies typically raise their dividends every year or so, and this can be a significant portion of your long term gains. Plus, these programs are usually offered with miniscule fees. Also, have a go at the interest rate formulas contained in your favorite spreadsheet application. Calculate the FutureValue of a series of payments at various interest rates, to see what you can expect. While you cannot depend on earning a specific rate with a stock investment, a basic familiarity with the formula can help you determine a rate of return you should aim for. |
Can I open a Solo 401(k) if I am an independent contractor but also work part-time as an employee? | I'm in a similar situation as I have a consulting business in addition to my regular IT job. I called the company who has my IRA to ask about setting up the Individual 401k and also mentioned that I contribute to my employer's 401k plan. The rep was glad I brought this up because he said the IRS has a limit on how much you can contribute to BOTH plans. For me it would be $24K max (myAge >= 50; If you are younger than 50, then the limit might be lower). He said the IRS penalties can be steep if you exceed the limit. I don't know if this is an issue for you, but it's something you need to consider. Be sure to ask your brokerage firm before you start the process. |
Best way to day trade with under $25,000 | One way a lot of people bypass the pattern trading equity requirement is to open multiple brokerage accounts. You have $10k, put $5k in one and $5k in another. Although I don't recommend it! |
Is it better to pay an insurance deductible, or get an upgrade? | I think you have a few choices that cannot be described by math alone: Repair current phone: 149 Replace current phone with new model from carrier: 100 + cost of new phone Replace current phone with new model on payment plan from carrier: 100 + cost of new phone + finance charge (could be zero or cleverly hidden). You can also replace the current phone with either a used or new bought from a separate party. Quite recently I was selling some gently used IPhones 4S for around $140. So really you have to determine what is most important to you guys. Is it important to have the newest model phone with laying out the least amount of cash now? Then by all means go with the payment plan with your current carrier. Is it most important to be financially efficient, while having a good working phone? Then pay the deductible; or buy something gently used. In my opinion, having a phone payment is a losing game, akin to buying a new car every three years or so. You are buying something on time that quickly depreciates and hiding the true cost of the item in "painless" monthly payments. |
Why invest in IRA while a low-cost index fund is much simpler? | Lots of good answers. I'll try and improve by being more brief. For each option you will pay different taxes: Index Fund: Traditional IRA Roth IRA You can see that the Roth IRA is obviously better than investing in a taxable account. It may not be as obvious that the traditional IRA is better as well. The reason is that in the traditional account you can earn returns on the money that otherwise would have gone to the government today. The government taxes that money at the end, but they don't take all of it. In fact, for a given investment amount X and returns R, the decision of Roth vs Traditional depends only on your tax rate now vs at retirement because X(1-tax)(1+R_1)(1+R_2)...(1+R_n) = X(1+R_1)(1+R_2)...(1+R_n)(1-tax) The left hand side is what you will have at retirement if you do a Roth and the right hand side is what you will have at retirement if you do traditional. Only the tax rate differences between now and retirment matter here. An index fund investment is like the left hand side but has some additional tax terms on your capital gains. It's clearly worse than either. |
Is it worth it to reconcile my checking/savings accounts every month? | Banks make mistakes. Reconciling your account with your bank statement is the way to catch the errors. |
Organizing Expenses/Income/Personal Finance Documents (Paperless Office) | I'm trying to organize my financial papers as well. I have a Fujitsu ScanSnap and it's tearing through my papers like a hot knife through butter (i.e. awesome). Here's how I'm addressing organizing the paper. I'm organizing mine a little bit organically. Here are the main parts: So anyway, all that to say that it's not necessary to organize the files to the hilt. If you want to, that's fine too, but it's a tradeoff: up-front organization for possibly some time savings later. The search function available is decreasing the advantage of organizing your files carefully. If throwing all of your files in a digital pile makes your skin crawl, then I won't force you otherwise, but I'm not worried about it for the time being. What you're doing with the other tracking sounds fine to me. Others may have different insights there. |
Why might a brokerage firm stop offering a particular ETF commission free? | Forbes has an article investigating this. Here are the key parts: On line at the bottom of the list of funds there is an entire screen of grey-faded micro print which includes this telling disclosure: TD Ameritrade receives remuneration from certain ETFs (exchange-traded funds) that participate in the commission-free ETF program for shareholder, administrative and/or other services. In other words, TD Ameritrade is now enforcing a pay-to-play for their so-called commission-free exchange-traded funds. They are willing to forego their $6.95 trading commission in favor of remuneration directly from the ETF vendors. Because Vanguard refuses to pay such money to custodians, they are no longer being allowed to play. and Joseph Giannone, a TD Ameritrade spokesman, was quoted as saying, "With any business decision, client needs are paramount, but the underlying economics of programs can’t be ignored. ... In line with industry practices, certain providers pay servicing, administrative or other fees. Vanguard elected not to be a part of the new program." So basically it sounds like Vanguard, and presumably iShares as well, were unwilling to pay TD Ameritrade to continue offering their ETFs commission-free. |
Invest all at once after maxing out Roth IRA - or each time I contribute? | This depends on the terms and conditions of your IRA account, and those of the investments you have chosen. In general, you are better off investing as quickly as is feasible given those terms. Money in your cash account doesn't earn much of a return, so the quicker you get money into something earning a return, the better. However, pay attention to the fees and costs associated with investing. If there is a per-transaction fee, you may want to consolidate, as it may be more efficient to do so - after all, if you contribute $500 at a shot, and it costs you $5 to make a trade, you're paying 1% off the top to make that trade if you make 11 of them, versus 0.1% to make 1, so the question is do you earn that 1% back over the course of the six months? That will depend on what you are investing in. More than likely you're going to earn more than 1% over the course of the six months, so it's probably worth investing it in pieces still in that situation, but if the transaction cost is higher, or the time differential lower, you may have a less clear-cut answer. I invest at Vanguard in their funds and have no transaction fees, so I have a more obvious answer (invest as soon as possible). You also need to consider whether you have minimums to pay attention to - maybe your investment is something you can only buy whole shares of, for example, or you might have a much higher fee if you make small transactions. In that case, you should wait until you have the minimum to make that transaction if the fee is more than the return you'll get. So the answer is - make the transactions as early as you can, subject to considering the fees you will pay for making them. |
Why doesn't change in accounts receivable on balance sheet match cash flow statement? | Increase in A/R in balance sheet includes the A/R of acquired businesses. Change in A/R in cash flow statement might say "excluding effects of business acquisitions". |
Should I pay off my car loan within the year? | Pay it off....I've only ever paid interest on mortgages to buy the houses I've lived in (I paid both mortgages of years ahead of schedule) & as a result my credit rating's way above average, I use credit cards for everything, pay 'em off in full every month unless I'm paid not to (currently have around 8,000 sitting interest free while the cash earns 6% elsewhere). Life's sweet if you understand the system. Hell if you don't. Keep saving... |
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