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Does financing a portfolio on margin affect the variance of a portfolio?
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Yes, more leverage increases the variance of your individual portfolio (variance of your personal net worth). The simple way to think about it is that if you only own only 50% of your risky assets, then you can own twice as many risky assets. That means they will move around twice as much (in absolute terms). Expected returns and risk (if risk is variance) both go up. If you lend rather than borrow, then you might have only half your net worth in risky assets, and then your expected returns and variation in returns will go down. Note, the practice of using leverage differs from portfolio theory in a couple important ways.
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Calculating Pre-Money Valuation for Startup
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When the VC is asking what your Pre-Money Valuation is, he's asking what percentage of shares his $200,000 will buy. If you say your company is worth $800K, then after he puts the money in, it will be worth $1M, and he will own 20% of all shares – you'll still own the remainder. So when the VC is asking for a valuation, what he really wants to know is how much of your company he's going to own after he funds you. Determining your pre-money valuation, then, is a question of negotiation: how much money will you need, how likely are you to require more money later (and thus dilute the VC's shares, or give up more of your own shares), how likely is your business to survive, and how much money will it make if it does survive? It isn't about the actual value of your business right now, as much as it is "how much work has gone into this, and how successful can it be?" The value is going to be a bit higher than you expect, because the work is already done and you can get to market faster than someone else who hasn't started yet. VCs are often looking for long shots – they'll invest in 10 companies, and expect 7 to fail, 2 to be barely-profitable, and the last one to make hilarious amounts of money. A VC doesn't necessarily want 51% of your company (you'll probably lose motivation if you're not in charge), but they'll want as much as they can get otherwise.
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Principal 401(k) managed fund fees, wow. What can I do?
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When you look at managed funds the expense ratios are always high. They have the expense of analyzing the market, deciding where to invest, and then tracking the new investments. The lowest expenses are with the passive investments. What you have noticed is exactly what you expect. Now if you want to invest in active funds that throw off dividends and capital gains, the 401K is the perfect place to do it, because that income will not be immediately taxable. If the money is in a Roth 401K it is even better because that income will never be taxed.
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Are capitalization rate and net profit margin the same thing?
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Capitalization rate and "Net Profit margin" are two different things. In Capitalization rate note that we are taking the "total value" in the denominator and in Net profit margin we are taking "Revenue/Sales". Capitalization Rate: Capitalization Rate = Yearly Income/Total Value For example (from Investopedia: ) if Stephane buys a property that will generate $125,000 per year and he pays $900,000 for it, the cap rate is: 125,000/900,000 = 13.89%. Net Profit margin: Net Profit margin = Net Profit/Revenue For example (from finance formulas): A company's income statement shows a net income of $1 million and operating revenues of $25 million. By applying the formula, $1 million divided by $25 million would result in a net profit margin of 4%. Although the formula is simplistic, applying the concept is important in that 4% of sales will result in after tax profit.
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Should a high-school student invest their (relative meager) savings?
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Is investing a good idea with a low amount of money? Yes. I'll take the angle that you CAN invest in penny stocks. There's nothing wrong with that. The (oversimplified) suggestion I would make is to answer the question about your risk aversion. This is the four quadrant (e.g., http://njaes.rutgers.edu:8080/money/riskquiz/) you are introduced to when you first sit down to open your brokerage (stocks) or employer retirement account (401K). Along with a release of liability in the language of "past performance is not an indicator..." (which you will not truly understand until you experience a market crash). The reason I say this is because if you are 100% risk averse, then it is clear which vehicles you want to have in your tool belt; t-bills, CDs, money market, and plain vanilla savings. Absolutely nothing wrong with this. Don't let anyone make you feel otherwise with remarks like "your money is not working for you sitting there". It's extremely important to be absolutely honest with yourself in doing this assessment, too. For example, I thought I was a risk taker except when the market tumbled, I reacted exactly how a knee-jerk investor would. Also, I feel it's not easy to know just how honest you are with yourself as we are humans, and not impartial machines. So the recommendation I would give is to make a strong correlation to casino gambling. In other words, conventional advice is to only take "play money" to the casino. This because you assume you WILL lose it. Then you can enjoy yourself at the casino knowing this is capital that you are okay throwing in the trash. I would strongly caution you to only ever invest capital in the stock market that you characterize as play money. I'm convinced financial advisors, fund managers, friends will disagree. Still, I feel this is the only way you will be completely okay when the market fluctuates -- you won't lose sleep. IF you choose this approach, then you can start investing any time. That five drachma you were going to throw away on lottery tickets? transfer it into your Roth IRA. That twenty yen that you were going to ante in your weekly poker night? transfer it into your index fund. You already got past the investors remorse of (losing) that money. IF you truly accept that amount as play money, then you CAN put it into penny stocks. I'll get lots of criticism here. However, I maintain that once you are truly okay with throwing that cash away (like you would drop it into a slot machine), then it's the same whether you lose it one way or in another investment vehicle.
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Do other countries have the equivalent of Australia's Negative Gearing?
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I would say similar rules apply in the US. If you have a net loss from rental property, you certainly can claim that loss against your personal income. There are various rules around this though that make it a bit less clear cut. If you are a "real estate professional", which basicly means you spend at least 750 hours per year working on your rental properties (or related activities), then all losses are deductible against any other ordinary income you have. If you aren't a "real estate professional", then your rental income is considered a "passive activity" and losses you can count against regular income are limited to $25,000 per year (with a carry-forward provision) and begin to phase out entirely if your income is between $100,000 and $150,000. So, the law here is structured to allow most small-time investors to take rental real estate losses against their ordinary income, but the income phase-out provision is designed to prevent the wealthy from using rental property losses to avoid taxation.
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Tenant wants to pay rent with EFT
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I am able to set this up for my tenants by providing them with a form to fill out so that they provide their name and bank account information, and then I gave that to my bank and they establish a recurring ACH transfer. This way the tenant never gets my bank information. One note about this, I had a tenant break her lease and move out. She notified me a couple of days before the first of the month, and by the time she had moved a few days later the rent had been automatically paid. She called her bank and asked them to reverse the most recent transaction so she could have that month's rent refunded, and much to my surprise, they did. So the financial transfer is not necessarily one-way. This is in the US.
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What resources can I use to try and find out the name of the manager for a given fund?
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Yahoo Finance: http://finance.yahoo.com/q/pr?s=VFINX+Profile Under "Management Information"
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Trouble sticking to a budget when using credit cards for day to day transactions?
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Do yourself a favor: calculate the price of airfare, calculate how many points it takes to get a good flight, and calculate how many points you get per dollar spent. What you will find is that it is a ripoff. Leave the card at home and unlink it from your online purchasing accounts. You're welcome. If you really want to earn rewards, just put your necessary bills on that card. Over time it will accumulate, but do the math first so you can weigh the consequences.
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Idea for getting rich using computers to track stocks
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I (and probably most considering trading) had a similar thought as you. I thought if I just skimmed the peaks and sold before the troughs, perhaps aided by computer, I'd be able to make a 2% here, 2% there, and that would add up quickly to a nice amount of money. It almost did seem "foolproof". Then I realized that sometimes a stock just slides...down...and there is no peak higher than what I bought it for. "That's OK," I'd think, "I'm sure it will recover and surpass the price I bought it for...so now I play the waiting game." But then it continues sliding, and my $10k is now worth $7k. Do I sell? Did I build a stop loss point into my computer program? If so, what is the right place to put that stop? What if there is a freak dip down and it triggers the stop loss but THEN my stock recovers? I just lost $14,000 like this last week--luckily, only virtually! The point is, your idea only has half a chance to work when there is a mildly volatile stock that stays around some stable baseline, and even then it is not easy. And then you factor in fees as others mentioned... People do make money doing this (day traders), and some claim you can use technical analysis to time orders well, so if you want to try that, read about technical analysis on this site or elsewhere.
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Why doesn't change in accounts receivable on balance sheet match cash flow statement?
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It is difficult to reconcile historical balance sheets with historical cash flow statements because there are adjustments that are not always clearly disclosed. Practitioners consider activity on historical cash flow statements but generally don't invest time reconciling historical accounts, instead focusing on balancing projected balance sheets / cash flow statements. If you had non-public internal books, you could reconcile the figures (presuming they are accurate). In regards to Mike Haskel's comment, there's also a section pertaining to operating capital, not just effects on net income.
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Am I still building a credit score if I use my credit card like a debit card?
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AIUI credit cards report three main things. The potential problem with your strategy is that by pre loading you never actually get a bill and so your provider may not report your payments. Better to wait until the bill comes and then pay it in full. That ensures that your use of the card is properly reported.
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Scam or Real: A woman from Facebook apparently needs my bank account to send money
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The answers here are all correct. This is 100% scam, beyond any reasonable doubt. Don't fall for it. However, I felt it valuable to explain what would happen were you to fall for this. It's not all that hard to understand, but it involves understanding some of the time delays that exist in modern banking today. The most important thing to understand is that depositing a check does not actually put dollars in your account, even though it appears to. A check is not legal tender for debts public and private. It's a piece of paper known as a "bill of exchange." It's an authorization for a payee (you), to request that their bank pay you the amount on the check. A transaction made with a check does not actually draw to a close until your bank and their bank communicate and cause the actual transfer of funds to take place. This process is called "clearing" the check. Despite living in the modern times, this process is slow. It can take 7-10 days to clear a check (especially if it is an international bank). This is not good for the banking business. You can imagine how difficult it would be to tell a poor client, who is living paycheck to paycheck, that he can't have his pay until the check clears a week later. Banks have an interest in hiding this annoying feature of the modern banking system, so they do. When you deposit a check, the bank will typically advance you the money (an interest free loan, in effect) while the check "floats" (i.e. until it clears). This creates the illusion that the money is actually in your account for most intents and purposes. (presumably a bank would distinguish between the floating check and a cleared check if you tried to close out your account, but otherwise it looks and feels like the money is in your hands). Of course, if the check is dishonored (because the payer had insufficient funds, or the account simply did not exist), your bank will not get the money. At this moment, they will cancel any advances you received and notify you that the check bounced. Again, this happens 7-10 days later. The general pattern of this scam is that they will pay you by a method which clears slowly, like a check. They will then ask you to withdraw the money using a faster clearing method (like a wire transfer or withdrawing the cash). Typically they will be encouraging you to move quickly (they are on a timetable... when their check bounces, the game is up!) At this time, it will appear as though the account has a positive balance, but in fact it has a negative balance plus an advance on the check. This looks great until 7-10 days later, when the check bounces. At that time, the bank will cancel the advance, and reality will set in. You will now have an open bank account, legally opened by you in your own name, which is deeply in debt. Meanwhile, the scammer walks away with all the money that you sent them (which cleared quickly). There are many variants which can hide the details. Some can play games with check kiting to try to make your first check clear (then try to rope you in for a more painful hit). Some will change the instruments they use (checks are the easy ones, so they're simply most common). Don't try to think "maybe this one is legit." These scammers literally make a living off of making shady transactions look legit. Things I would recommend looking out for:
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Possible to use balance transfers to avoid interest with major credit cards?
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IMO, it's a good deal. Pre-paying 3% interest is better than accruing it at 1-2% per month. The other nice thing about it is that all of your payments hit the principal.
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Where to invest proceeds from home sale to be used to buy new house within five years?
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For a two year time frame, a good insured savings account or a low-cost short-term government bond fund is most likely the way I would go. Depending on the specific amount, it may also be reasonable to look into directly buying government bonds. The reason for this is simply that in such a short time period, the stock market can be extremely volatile. Imagine if you had gone all in with the money on the stock market in, say, 2007, intending to withdraw the money after two years. Take a broad stock market index of your choice and see how much you'd have got back, and consider if you'd have felt comfortable sticking to your plan for the duration. Since you would likely be focused more on preservation of capital than returns during such a relatively short period, the risk of the stock market making a major (or even relatively minor) downturn in the interim would (should) be a bigger consideration than the possibility of a higher return. The "return of capital, not return on capital" rule. If the stock market falls by 10%, it must go up by 11% to break even. If it falls by 25%, it must go up by 33% to break even. If you are looking at a slightly longer time period, such as the example five years, then you might want to add some stocks to the mix for the possibility of a higher return. Still, however, since you have a specific goal in mind that is still reasonably close in time, I would likely keep a large fraction of the money in interest-bearing holdings (bank account, bonds, bond funds) rather than in the stock market. A good compromise may be medium-to-high-yield corporate bonds. It shouldn't be too difficult to find such bond funds that can return a few percentage points above risk-free interest, if you can live with the price volatility. Over time and as you get closer to actually needing the money, shift the holdings to lower-risk holdings to secure the capital amount. Yes, short-term government bonds tend to have dismal returns, particularly currently. (It's pretty much either that, or the country is just about bankrupt already, which means that the risk of default is quite high which is reflected in the interest premiums demanded by investors.) But the risk in most countries' short-term government bonds is also very much limited. And generally, when you are looking at using the money for a specific purpose within a defined (and relatively short) time frame, you want to reduce risk, even if that comes with the price tag of a slightly lower return. And, as always, never put all your eggs in one basket. A combination of government bonds from various countries may be appropriate, just as you should diversify between different stocks in a well-balanced portfolio. Make sure to check the limits on how much money is insured in a single account, for a single individual, in a single institution and for a household - you don't want to chase high interest bank accounts only to be burned by something like that if the institution goes bankrupt. Generally, the sooner you expect to need the money, the less risk you should take, even if that means a lower return on capital. And the risk progression (ignoring currency effects, which affects all of these equally) is roughly short-term government bonds, long-term government bonds or regular corporate bonds, high-yield corporate bonds, stock market large cap, stock market mid and low cap. Yes, there are exceptions, but that's a resonable rule of thumb.
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How feasible would it be to retire just maxing out a Roth IRA?
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I wouldn't settle for 10%, and I certainly wouldn't settle for a Roth. I'd recommend not retiring. I'd recommend building up a side business in your "free" time while you're working that's closer to your calling that you can "retire into." Don't be complacent.
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How do I cash in physical stock certificates? (GM 1989)
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which means the current total is $548,100. Is that correct? Yep Unfortunately the "current" GM stock is different than the GM stock of 1989. GM went bankrupt in 2011. It's original stock changed to Motors Liquidation Company (MTLQQ) and is essentially worthless today. There was no conversion from the old stock to the new stock. What do I do with these certificates? Can I bring them to my bank, or do I need to open an account with a stock company like Fidelity? See here for some instructions on cashing them in (or at least registering them electronically). I've never dealt with physical stocks, but I presume that a broker is going to charge you something for registering them vs. direct registration, though I have no idea how much that would be. I read somewhere that I only have to pay taxes when I cash out these stocks. But are these rules any different because I inherited the stocks? You will pay capital gains tax on the increase in value from the time your father died to the time you sell the shares. If that time is more than one year (and the stock has gone up in value) you will pay a 15% tax on the total increase. If you have held them less than one year, they will be short-term capital gains which will count as regular income, and you will pay whatever your marginal tax rate is. If you sell the stock at a loss, then you'll be able to deduct some or all of that loss from your income, and may be able to carry forward losses for a few years as well. I did not catch that the stock you mention was GM stock. GM went bankrupt in 2011, so it's likely that the stock you own is worthless. I have edited the first answer appropriately but left the other two since they apply more generally. In your case the best you get is a tax deduction for the loss in value from the date your father died.
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What does APR mean I'm paying?
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Banks have to disclose up front the Annual Percentage Rate or interest rate that will be charged if you have an outstanding balance on a credit card. However, the APR of 19.9% is not charged all at once. For example if you had a $100 dollar balance on your credit card you would not be charged 19.9% interest or 19.90 making your new balance 119.90. Instead you would be charged the periodic rate which is one month's interest. You can easily calculate the period rate by dividing the APR by 12. So, 19.9% equals 1.65833% per month. This means if you had a $100 balance you would be charged 1.65833% interest or 1.66 making your new balance 101.66. Ask the bank or look on the website for a document called "Cardholders Agreement". If you can't find a link ask them for a copy so you can read all the fine print ahead of time.
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What options do I have at 26 years old, with 1.2 million USD?
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You should invest your money. To figure out what rate of return you need, use this equation: (How Much Money You Want Per Year) / (Total Amount of Cash You Have) = (Annualized Interest Rate) If we plug in the amount of annualized interest you can expect to safely get while not managing your money personally, 2% by my estimate, we get X / 1.2m = 0.02%; X=24K/year A measly $24,000 / year. Many people say that you can get 10, 12, even 30% return on your investment. I won't speculate on if this is true, but I will guarantee that you cannot get those returns simply by handing your money over to a money manager. So your options are, 1) Earn a guaranteed $24,000 and earn the rest you need to live by working 2) Learn to invest your money (and then do so intelligently) and earn enough to live off the interest To learn how to invest your money, read Beating the Street, by Peter Lynch. https://www.amazon.ca/Beating-Street-Peter-Lynch/dp/0671891634 Good luck!
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How high should I set my KickStarter funding goal in order to have $35,000 left over?
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I think you might be missing something important here. If you are running a business, then any expenses that your business incurs are deductible. Yes, Kickstarter would report the full amount. The IRS requires them to report everything that you raised. However, the Kickstarter and Amazon fees would be a business expense. Your cost on the backer rewards are deductible business expenses as well. Legal fees, accounting fees: deductible. Money that you spend on equipment may not be deductible all in one year; you may have to depreciate it over multiple years. This is where the accountant that you are paying accounting fees to will come in handy. People who do an iOS app Kickstarter campaign for $5000 might have a few things going on that you don't:
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I'm only spending roughly half of what I earn; should I spend more?
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Aside from what everyone else has said about your money (saving, investing, etc.), I'd like to comment on what else you could spend it on: Spend it all on small/stupid things that, while stupid, would make me happier. For example take taxis more often, eat often in nice restaurants, buy designer clothes, etc. I'll be young only one time. You could also put the money towards something more... productive? Like a home project. Convert a room in your living space into an office or a theater-like room. Install hardwood floors yourself. Renovate a bathroom. Plant a garden of things you would enjoy eating later. Something that you would enjoy having or doing and can look back at and be proud of putting your money towards something that you accomplished.
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Buy home and leverage roommates, or split rent?
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I've done this, both as one of the renters and (in a different house) as the landlord. I had roommates I had not lived with before though. It's definitely doable, but can get awkward. Some advice in no particular order Make sure you can afford the house on your own. This avoids the awkward situation of making you financially dependent on your friends. Also, it shouldn't be a problem for a 110k house on a 70k salary. Set the rent below market rates. The arrangement should be financially beneficial to everyone, not just yourself. Expect your roommates to leave eventually. These days people will go where job opportunities take them.
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Why should a company go public?
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Most businesses want to grow, and there are a variety of ways to raise the money needed to hire new employees and otherwise invest in the business to increase the rate of that growth. You as a stock holder should hope that management is choosing the least expensive option for growth. Some of the options are debt, selling equity to venture capitalists, or selling equity on the open market (going public). If they choose debt, they pay interest on that debt. If they choose to sell equity to venture capitalists, then your shares get diluted, but hopefully the growth makes up for some of that dilution. If they choose to go public, dilution is still a concern, but the terms are usually a little more favorable for the company selling because the market is so liquid. In the US, current regulations for publicly traded companies cost somewhere in the neighborhood of $1M/year, so that's the rule of thumb for considering whether going public makes sense when calculating the cost of fundraising, but as mentioned, regulations make it less advantageous for executives who choose to sell their shares after the company goes public. (They can't sell when good spot prices appear.) Going public is often considered the next step for a company that has grown past the initial venture funding phase, but if cash-flow is good, plenty of companies decide to just reinvest profits and skip the equity markets altogether.
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I received $1000 and was asked to send it back. How was this scam meant to work?
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This is almost certainly a scam or a mistake. This is not good, spendable money: it is not yours to keep. Very simple to handle. Tell the bank, in writing that you were not expecting to receive this money and are a bit surprised to receive it. Preferably in a way that creates a paper trail. And then stop talking. Why? Because you honestly don't know. This puts you at arm's length to the money: disavowing it, but not refusing it. Wildest dreams: nobody wants it back ever. As for the person bugging you for the cash, tell them nothing except work with their own bank. Then ignore them completely. He probably hacked someone else, diverted their money into your account, and he's conning you into transferring it to a third location: him. Leaving you holding the bag when the reversals hit months later. He doesnt want you reversing; that would return the money to the rightful owner! He works this scam on dozens of people, and he wins if some cooperate. Now here's the hard part. Wait. This is not drama or gossip, you do not need to keep people updated. You are not a bank fraud officer who deals with the latest scams everyday, you don't know what the heck you are doing in this area of practice. (In fact, playing amateur sleuth will make you suspicious). There is nothing for you to do. That urge to "do something" is how scammers work on you. And these things take time. Not everyone banks in real time on smartphone apps. Of course scammers target those who'd be slow to notice; this game is all about velocity. Eventually (months), one of two things is likely to happen. The transfer is found to be fraudulent and the bank reverses it, and they slap you with penalties and/or the cops come knockin'. You refer them to the letter you sent, explaining your surprise at receiving it. That letter is your "get out of jail free" card. The other person works with their bank and claws back the money. One day it just disappears. (not that this is your problem, but they'd file a dispute with their bank, their bank talks to your bank, your bank finds your letter, oh, ok.) If a year goes by and neither of these things happens, you're probably in the clear. Don't get greedy and try to manipulate circumstances so you are more likely to keep the money. Scammers prey on this too. I think the above is your best shot.
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Finance algebra
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With the following variables the periodic (annual) repayment is given by The recurrence equation for the balance b at the end of month x is derived from b[x + 1] = b[x] (1 + r) - d where b[0] = s giving The interest portion of the final payment is b[n - 1] r and the total principal repaid at the end of period n - 1 is s - b[n - 1] Solving simultaneously n = 8.9998 and s = 7240 The principal repaid at the end of the first period is s - b[1] or d - r s = 479.74
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What are good games to play to teach young children about saving money?
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I found this great resource at MarketWatch.com - a listing on online games that help parents teach kids about saving and finance, set up by age group. Here's an example of some of the content: For children six to nine: www.fleetkids.com, sponsored by the Fleet Bank, has great games -- like "Buy lo, Sell hi" and "Chunka Change" -- that teach kids about spending and saving. Kids can compete for prizes such as computers and backpacks for their schools.
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How much time would I have to spend trading to turn a profit?
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Making a profit in trading is not a function of time, it's a function of information, speed, and consistency. Regardless of how much time you spend learning about trading, there is no guarantee that you will ever become profitable because you will always be competing against a counter-party who is either better- or more poorly-informed than you are. Since trading is a zero-sum game, someone is always a winner and someone else is always a loser. So you need to be either better informed than your counter-party, or you need to be as well informed as them but beat them to the punch. You also need to be able to be consistent, or else eventually you will get wiped out when the unexpected happens or you make a mistake. This is why resources such as full-time professional analysts, high-speed trading terminals/platforms, and sophisticated algorithms can provide significant advantages. Personally, I think that people with talent and those kinds of resources would take all my lunch money, so I don't trade and stick to passive investing. One funny story, I once knew a trader who was in the money on a particular trade and went out to have a drink to celebrate. The next day, she remembered that she had forgotten to exercise the options. Luckily, they had expired while in the money, and by rule had been exercised automatically as a result.
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Do high interest rates lead to higher bond yields or lower?
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Imagine that the existing interest rate is 5%. So on a bond with face value of 100, you would be getting a $5 coupon implying a 5% yield. Now, if let's say the interest rates go up to 10%, then a new bond issued with a face value of 100 will give you a coupon of $10 implying a 10% yield. If someone in the bond market buys your bond after interest price adjustment, in order to make the 10% yield (which means that an investor typically targets at least the risk-free rate on his investments) he needs to buy your bond at $50 so that a $5 coupon can give a 10% yield. The reverse happens when interest rates go down. I hope this somewhat clears the picture. Yield = Coupon/Investment Amount Update: Since the interest rate of the bond does not change after its issuance, the arbitrage in the interest rate is reflected in the market price of the bond. This helps in bringing back the yields of old bonds in-line with the freshly issued bonds.
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how can a US citizen buy foreign stocks?
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For question #1, at least some US-based online brokers do permit direct purchases of stocks on foreign exchanges. Depending on your circumstances, this might be more cost effective than purchasing US-listed ADRs. One such broker is Interactive Brokers, which allows US citizens to directly purchase shares on many different foreign exchanges using their online platform (including in France). For France, I believe their costs are currently 0.1% of the total trade value with a 4€ minimum. I should warn you that the IB platform is not particularly user-friendly, since they market themselves to traders and the learning curve is steep (although accounts are available to individual investors). IB also won't automatically convert currencies for you, so you also need to use their foreign exchange trading interface to acquire the foreign currency used to purchase a foreign stock, which has plusses and minuses. On the plus side, their F/X spread is very competitive, but the interface is, shall we say, not very intuitive. I can't answer question #2 with specific regards to US/France. At least in the case of IB, though, I believe any dividends from a EUR-denominated stock would continue to accumulate in your account in Euros until you decide to convert them to dollars (or you could reinvest in EUR if you so choose).
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If stock price drops by the amount of dividend paid, what is the use of a dividend
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The stock will slowly gain that $1 during the year. Suppose we have the highly theoretical situation that a company's stock is worth exactly $10 right after it paid its dividend, its dividend is always $1 per stock, and the company and everything else is so stable that its value never changes. Then the stock value right before the next dividend is paid will be close to $11 -- after all, it's worth a certain $1 dividend the next day, plus the $10 stock. And in between, half a year after the dividend was paid, it will be in between, say $10.50, or actually slightly less than that (because people like to buy in late so they can make money some other way with the money first). But the point holds -- the price decrease on the day that dividend is paid had been building up the whole period before that decrease. So stock dividends do make you money.
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Should I use a credit repair agency?
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I think you already have a lot of good ideas here. I also don't agree with going with a company to "repair" your credit. They don't have any secret method on how to do so anyway, it takes time and hard work. Cut out things that you are more luxury items. Cable for me is a must (Haha) but I can go without having HBO, showtime, etc. Make a list of the things you currently pay for and you will be able to see exactly what you can't "live without" and what you can live without. The good thing nowadays there's so many side gig options available! Check out this article here: https://www.learnvest.com/2017/06/this-is-how-much-you-could-make-through-airbnb-uber-and-7-other-popular-side-gigs. This goes into detail on how much you can make on these sites on a monthly average. Since you're in IT, you can use fiverr! I've used fiverr a lot of projects, you create your own deadlines, work schedule, you accept the jobs you want, similar to your UBer and Lyft but Fiverr has a lot of contractors with a variety of skills specifically in IT, lots of demand for web developers not sure what IT field you're in. Hope this helps! Good luck!
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How does a change in market cap affect a company's operational decisions?
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In practical terms, it shouldn't. Market cap changes every day (assuming public trading, of course) or even second-by-second, and focusing on investor sentiment toward your company's stock is not the wisest way to make strategic decisions. That being said, company execs do need to be mindful of unusual swings in their company's share prices because it can sometimes be an indicator of news/information of which they're unaware. At the same time, you can't just disregard your shareholders, especially the big institutional players who may have large voting blocks with which to replace you if they feel you're not responsive to events. They are the ones who make strategic decisions based on your company's share price, right? (grin) The issue around swings in market cap is more about public perception than reality, so it is important for companies to have a good public relations strategy ready to go that can address questions/concerns in case of some market event. After all, consumers who hear that a company's share price has suddenly fallen by, say, 30% might be more hesitant to do business with that company because there's a (perhaps irrational) fear the company's not doing well and may not be around much longer. Investors are, by their very nature, emotional rather than rational. Any kind of news can cause a stampede toward or away from a stock for no reason that an investment professional could ever explain. That's why it's impossible to spend any real time focusing on market cap (leave that to your P.R. department to worry about). IF, as a company executive, you focus on doing the right things to make your company successful then any questions/concerns about market cap will resolve themselves. Good luck!
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Would open source credit score formulas be feasible?
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The major bureaus use the Fair Isaac scoring model, for the most part. Here's an excerpt from a web site (Versions of the FICO scoring model) to explain: One of the first things a newcomer to this board learns is the difference between FICO and FAKO scores. FAKO refers to the non-FICO scores offered by various companies. FAKO scores have little value since few of them are used by lenders and they do not match closely to FICO scores. But even when you stick with FICO scores, confusion can ensue because FICO scores have many different editions, versions, and variations. On a single day, a consumer could theoretically have dozens of different FICO scores, depending on which version and credit agency is used to produce the score. This post provides a summary of the various FICO versions. Please offer any corrections or updates, and they will be edited in. The FICO scoring model with its familiar range of 300 to 850 was first introduced in 1989. Since then, FICO has released five major revisions: 1995, 1998, 2004, 2008, and 2014. Each "edition" uses a different formula and produces a different score. When a new FICO edition is released, many lenders continue using an older version for years before "upgrading." The 1995 revision is no longer in common use, but later editions are still used by lenders. Most FICO editions are commonly known by the year of introduction: FICO 98, FICO 04, and FICO 08 (although FICO now calls it FICO Score 8, without the zero). The most recent edition is FICO Score 9 introduced in 2014. As of 2014, FICO Score 8 is the most commonly used. However, most mortgage lenders use FICO 04 for Equifax and Transunion, and FICO 98 for Experian. In addition to the "classic" version, FICO offers "Industry Option" versions customized for auto loans, credit cards, installment loans, personal finance loans, and insurance. These have a score range of 250 to 900, so the scores are not fully comparable with "classic" versions. As of 2015, Auto and Bankcard scores are available from myFICO as described here. Citibank provides the Equifax FICO 8 Bankcard score free each month to credit cards holders. Each credit agency (Transunion, Equifax, and Experian) uses a customized version of each FICO edition. As a result, a consumer's FICO scores from each agency may differ even when all credit information is identical among the agencies. Because there are many FICO versions, when a score is received, it's helpful to know which version it is. If a lender provides a credit score, ask for details such as which credit agency was used, which FICO edition was used, and whether the score is an Industry Option version. The lender may not always be willing or able to provide the answers, but it doesn't hurt to ask. Transunion Official name: FICO Risk Score Classic 98 Common name: TU-98 Available directly to consumers: No Real-world score range: 336 to 843 (as shown on page 16 of this Transunion document) Equifax Official name: Equifax FICO Score 4 (also known as Equifax Beacon 96) Common name: EQ-98 This version appears to be seldom used, but a poster reported it used on a mortgage application in 2014. Available directly to consumers: No Experian Official name: Experian FICO Score 2 (also known as Experian FICO Risk Model v2) Common name: EX-98 Available directly to consumers: from myFICO when buying a product that includes all 19 available scores (as described here). Some credit unions such as PSECU provide it free each month to members. Real-world score range: 320 to 844 (as shown on this Experian document) Most mortgage lenders use FICO 04 for Equifax and Transunion, and FICO 98 for Experian. All three scores will normally be pulled and the middle score (not the average) will be used by the lender. Transunion Official name: Transunion FICO Score 4 (also known as Transunion FICO Risk Score Classic 04) Common name: TU-04 Available directly to consumers: from myFICO as described here. Real-world score range: 309 to 839 (as shown on page 16 of this Transunion document) Equifax Official name: Equifax FICO Score 5 (also known as Equifax Beacon 5.0) Common name: EQ-04 Available directly to consumers: from myFICO as described here. Also available from Equifax when buying FICO score (as a one-time purchase with the "Score Power" product available here, or as part of credit monitoring available here). Some credit unions such as DCU provide it free each month to members. Real-world score range: 334 to 818 Experian Official name: Experian FICO Score 3 (also known as Experian FICO Risk Model v3) Common name: EX-04 Available directly to consumers: from myFICO when buying a product that includes all 19 available scores (as described here). Real-world score range: 325 to 850 (as shown on this Experian document) Transunion Official name: Transunion FICO Score 8 (also known as Transunion FICO 8 Risk Score or FICO Risk Score Classic 08) Common name: TU-08 Available directly to consumers: from myFICO as described here. Some credit card issuers such as Discover, Barclays, and Walmart provides it free each month. Real-world score range: 341 to 850 (as shown on page 15 of this Transunion document) Equifax Official name: Equifax FICO Score 8 (also known as Equifax Beacon 09) Common name: EQ-08 Available directly to consumers: from myFICO as described here. Real-world score range: 300 to 850 Experian Official name: Experian FICO Score 8 (also known as Experian FICO Risk Model v8) Common name: EX-08 Available directly to consumers: from myFICO as described here. Real-world score range: 316 to 850 (as shown on this Experian document) How FICO Score 8 differs from previous versions is explained here. In May 2014, a poster named android01 received 850 scores from all three credit agencies, as described in this post. In June 2014, a poster named fused received 850 scores from all three credit agencies, as described in this post. This 2011 press release describes a study of FICO Score 8 scores. From a sample of 250,000 credit reports, it found 0.02% had a score of 850, or about 1 out of every 5000 persons. In 2014, FICO announced a new version called FICO Score 9. More info here. As of February 2016, the score is now available directly to consumers, as described here. This New York Times article says FICO 9 includes two important changes: unpaid debts that result in collection actions will no longer have a negative effect on a score if the debt has been paid. unpaid medical debts will have less negative effect on scores. In 2001, FICO released a new scoring model called NextGen. It is claimed to be an improvement over "classic" FICO models because it tracks more factors. But it has failed to catch on with lenders because its score range of 150 to 950 is incompatible with the familiar 300 to 850 range, requiring lenders to recalculate cutoff scores and revise many rules and policies. Only a small percentage of lenders reportedly use NextGen. Transunion Official name: Precision Available directly to consumers: No Equifax Official name: Pinnacle Available directly to consumers: In 2014, Pentagon Federal Credit Union (PenFed) began to provide this score free to its credit card holders, as discussed in this post. Experian Official name: FICO Advanced Risk Score Available directly to consumers: No I included all of this to make the point that there are many variations of the scoring models, and all of them are customized to one degree or another by each of the major bureaus as a means of giving their models more credibility, as far as they're concerned. To your question about coming up with a "fair" scoring model, can you propose what makes current scoring models unfair? I think it's a safe assumption to make that the financial community has already had a substantial amount of input into how the current scoring models work. To think otherwise implies that the credit bureaus are just kinda "winging it" with whatever they think is best. Their models are designed to give their client creditors the best scoring model possible based on what those creditors have stated is important to them. There isn't a unified single scoring model out there, and the bureaus definitely won't share the details of their modifications. You can always come up with your own custom model, but how it compares to what's widely used, that's anyone's guess. I hope this helps. Good luck!
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Is there a good rule of thumb for how much I should have set aside as emergency cash?
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The bare minimum should be 6-months of expenses. Ideally, it should be at least 1 year. My personal preference is 2+ years, but one thing at a time. Figure out your necessary expenses: food, shelter, transportation and necessary extras. An example of a necessity, beyond the basics, for me is a decent internet connection. Telephone costs is another good example. (Meanwhile, electricity and such bills should be included in the figure for shelter.) You may want to include some allowance for clothing as well; especially for the 2+ year plan.
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Who can truly afford luxury cars?
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In addition to those who are wealthy (not the same as high income), there are also a certain number of people whose professional livelihood is enhanced by projecting wealth/income they may or may not have. For example, some consultants, lawyers, financial advisors or other salespeople. The same is true of luxury homes for industries where entertaining clients and associates is expected. These people are essentially making an educated bet that the additional sales they expect to make will outweigh the additional expense of the luxury items, similar to purchasing advertising. But in many cases, people are either living beyond their current income, or living beyond their long-term income by failing to save for when they are too old/sick to work. Additionally, many car brands that we traditionally associate with luxury have created mid-priced lines in the $30-40K range recently, so it is possible that some of the cars you are seeing are not as expensive as you might expect.
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Is there a legal deadline for when your bank/brokerage has to send your tax forms to you?
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I got notice from Charles Schwab that the forms weren't being mailed out until the middle of February because, for some reason, the forms were likely to change and rather than mail them out twice, they mailed them out once. Perhaps some state tax laws took effect (such as two Oregon bills regarding tax rates for higher incomes) and they waited on that. While I haven't gotten my forms mailed to me yet, I did go online and get the electronic copies that allowed me to finish my taxes already.
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Historical stock prices: Where to find free / low cost data for offline analysis?
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I also searched for some time before discovering Market Archive, which AFAIK is the most affordable option that basically gives you a massive multi-GB dump of data. I needed sufficient data to build a model and didn't want to work through an API or have to hand-pick the securities to train from. After trying to do this on my own by scraping Yahoo and using the various known tools, I decided my time was better spent not dealing with rate-limiting issues and parsing quirks and whatnot, so I just subscribed to Market Archive (they update the data daily).
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How to deal with the credit card debt from family member that has passed away?
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Sorry for your loss. Like others have said Debts cannot be inherited period (in the US). However, assets sometimes can be made to stand for debts. In most cases, credit card debt has no collateral and thus the credit card companies will often either sell the debt to a debt collector or collections agency, sue you for it, or write it off. Collecting often takes a lot of time and money, thus usually the credit card companies just sell the debt, to a debt collector who tries to get you to pay up before the statute of limitations runs out. That said, some credit card companies will sue the debtor to obtain a judgement, but many don't. In your case, I wouldn't tell them of your loss, let em do their homework, and waste time. Don't give them any info,and consult with a lawyer regarding your father's estate and whether his credit card will even matter. Often, unscrupulous debt collectors will say illegal things (per the FDCPA) to pressure anyone related to the debtor to pay. Don't cave in. Make sure you know your rights, and record all interactions/calls you have with them. You can sue them back for any FDCPA infractions, some attorneys might even take up such a case on contingency, i.e they get a portion of the FDCPA damages you collect. Don't pay even a penny. This often will extend or reset the statute of limitations time for the debt to be collectable. i.e Ex: If in your state, the statute of limitations for credit card debt is 3 years, and you pay them $0.01 on year 2, you just bought them 3 more years to be able to collect. TL;DR: IANAL, most credit card debt has no collateral so don't pay or give any info to the debt collectors. Anytime you pay it extends the statute of limitations. Consult an attorney for the estate matters, and if the debt collectors get too aggressive, and record their calls, and sue them back!
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How do you save money on clothes and shoes for your family?
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I'm all for thrift stores and yard sales. When they're littler they're more into comfort, perhaps insisting on certain colors, but somewhere around 13 they start to become more fashion conscious. If you want name brand clothes for kids, hit yard sales or consignment stores in better neighborhoods. Other places are Ross's or Marshall's. Both carry name brands. It's just you never know what they'll have. Another stategy is to buy fewer clothes. If you do laundry twice a week, you just don't need as much. Aim for mix and match. Also have play clothes for rough and tumble wear and "good" clothes for school and church. All these help keep costs down. My sister and I maintained an informal exchange between the cousins. This helped a good deal. A church in our neighborhood has a yearly clothing giveaway. That kind of thing may be an option for you as well. Or you could request needed items on Yahoo's freecycle. I see alot of clothes being given or requested on that site. I had one son who ripped out knees. Double kneed pants were a great investment. It looked like a rather large patch of fusible interfacing attached to the inside knee area. So it might work if you tried that on exisitng pants. Hope these help.
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Investment strategy for a 20 year old with about 30k in bank account
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You don't state a long term goal for your finances in your message, but I'm going to assume you want to retire early, and retire well. :-) any other ideas I'm missing out on? A fairly common way to reach financial independence is to build one or more passive income streams. The money returned by stock investing (capital gains and dividends) is just one such type of stream. Some others include owning rental properties, being a passive owner of a business, and producing goods that earn long-term royalties instead of just an immediate exchange of time & effort for cash. Of these, rental property is probably one of the most well-known and easiest to learn about, so I'd suggest you start with that as a second type of investment if you feel you need to diversify from stock ownership. Especially given your association with the military, it is likely there is a nearby supply of private housing that isn't too expensive (so easier to get started with) and has a high rental demand (so less risk in many ways.) Also, with our continued current low rate environment, now is the time to lock-in long term mortgage rates. Doing so will reap huge benefits as rates and rents will presumably rise from here (though that isn't guaranteed.) Regarding the idea of being a passive business owner, keep in mind that this doesn't necessarily mean starting a business yourself. Instead, you might look to become a partner by investing money with an existing or startup business, or even buying an existing business or franchise. Sometimes, perfectly good business can be transferred for surprisingly little down with the right deal structure. If you're creative in any way, producing goods to earn long-term royalties might be a useful path to go down. Writing books, articles, etc. is just one example of this. There are other opportunities depending on your interests and skill, but remember, the focus ought to be on passive royalties rather than trading time and effort for immediate money. You only have so many hours in a year. Would you rather spend 100 hours to earn $100 every year for 20 years, or have to spend 100 hours per year for 20 years to earn that same $100 every year? .... All that being said, while you're way ahead of the game for the average person of your age ($30k cash, $20k stocks, unknown TSP balance, low expenses,) I'm not sure I'd recommend trying to diversify quite yet. For one thing, I think you need to keep some amount of your $30k as cash to cover emergency situations. Typically people would say 6 months living expenses for covering employment gaps, but as you are in the military I don't think it's as likely you'll lose your job! So instead, I'd approach it as "How much of this cash do I need over the next 5 years?" That is, sum up $X for the car, $Y for fun & travel, $Z for emergencies, etc. Keep that amount as cash for now. Beyond that, I'd put the balance in your brokerage and get it working hard for you now. (I don't think an average of a 3% div yield is too hard to achieve even when picking a safe, conservative portfolio. Though you do run the risk of capital losses if invested.) Once your total portfolio (TSP + brokerage) is $100k* or more, then consider pulling the trigger on a second passive income stream by splitting off some of your brokerage balance. Until then, keep learning what you can about stock investing and also start the learning process on additional streams. Always keep an eye out for any opportunistic ways to kick additional streams off early if you can find a low cost entry. (*) The $100k number is admittedly a rough guess pulled from the air. I just think splitting your efforts and money prior to this will limit your opportunities to get a good start on any additional streams. Yes, you could do it earlier, but probably only with increased risk (lower capital means less opportunities to pick from, lower knowledge levels -- both stock investing and property rental) also increase risk of making bad choices.
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How to realize capital gains before going from non-resident alien to resident alien in USA
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This will work as intended, but there's another point to consider. In the US, the tax rate on proceeds from stock sales is higher for short term holdings, which are defined as held for less than one year. Both rates vary based on your income. Bracket numbers are for fiscal year 2014, filing as single. The difference between short and long term capital gains tax in the US is a minimum of ten percentage points, and works out to 15 percentage points on average. This is substantial. If you won't be reporting much income the year you move to the US (say because you only worked for a portion of the year) it is decidedly to your advantage to wait and sell the stocks in the US, to get that sweet 0% rate. At a minimum, you should hold the position for a year if you sell and rebuy, from a tax optimization perspective. Two caveats:
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Why deep in the money options have very low liquidity
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One reason might be the 100% margin requirement on long options. Suppose I want to go long AAPL. I could get a deep ITM call or buy shares. $12,700 for 100 shares, with it's 25% margin requirement is like around $3200 locked up cash. Combine with a deep OTM Jan 2017 $70 strike put for $188, would give a $3400 margin requirement to enter the trade. or I could be in the JAN 2017 $70 strike for nearer $5800, but with a 100% margin requirement due to being a long call. So (3400/5800) = 59% increase in margin requirement for Deep ITM calls. Plus long term the shares will pay dividends, while a LEAP CALL does not.
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How to trade “exotic” currencies?
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Use a currency ETF. there are many. Specific to your question there is WisdomTree Dreyfus Brazilian Real Fund (BZF) I don't happen to find a currency ETF for Thailand, so the closest you could come to a Thai currency fund would be something that's an Index fund ETF that is based on an index in the Thai Market such as: MSCI Thailand Investable Market Index Fund Because that fund is investing in an index of stocks that trade on the Thai market, you are in effect investing in something denominated in Baht. This is spelled out in the prospectus where it discusses 'currency risk'. The problem is that you are however not investing in just the currency, but rather a broad index of stocks denominated in that currency. Still to the extent the market holds fairly steady, you get much the same effect of investing in just the currency. to the extent the market is moving, you get the net effect of what the thai market does, plus how the bhat trades relative to the dollar.
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How to minimise the risk of a reduction in purchase power in case of Brexit for money held in a bank account?
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GBP has already lost part of his value just because of the fear of Brexit. An actual Brexit may not change GBP as much as expected, but a no-Brexit could rise GBP really a lot.
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Different ways of looking at P/E Ratio vs EPS
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all other things being equal if you have two stocks, both with a P/E of 2, and one has an EPS of 5 whereas the other has an EPS of 10 is the latter a better purchase? What this really boils down to is the number of shares a company has outstanding. Given the same earnings & P/E, a company with fewer shares will have a higher EPS than a company with more shares. Knowing that, I don't think the number of shares has much if anything to do with the quality of a company. It's similar to the arguments I hear often from people new to investing where they think that a company with a share price of $100/share must be better than a company with a share price of $30/share simply because the share price is higher.
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How can I know the minimum due credit card payment and date for an ANZ Visa card?
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You are in luck, I have an ANZ credit card as well. I have just checked my paper statement with online, and was able to find a matching online statement in less than a minute. You simply click on your credit card account from the list of accounts. Under Date Range it will have the Current incomplete statement period. You simply click on the down arrow and select the last complete date range ending sometime in late April (depending on your credit card cycle). You then press on View next to the drop down box. This should provide you with a list of purchases and payment/credits for that period, followed by a line with your Credit Limit, Available Funds and Closing Balance. The line below that then shows your Due Date, and Overdue/Overlimit, the Minimum Payment and Amount Due Now If you are after paying only the minimum amount then you pay this amount by the due date (you will be charged interest if you only pay this amount). If, on the otherhand, you wish to avoid paying any interest then you need to pay the full Closing Balance before the due date. You should also be able to get electronic statements sent to your email address.
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How do I bring money overseas?
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This page from TripAdvisor may be of interest. Look at what fees are charged on your ATM cards and credit cards, and consider overpaying your credit card so you have a credit balance that you can draw on for cash "advances" from ATMs that will dispense in local currency. Depending on what fees your bank charges, you may get a better rate than the forex cash traders at the airport. Edit: Cards may not always have the best rate. I recently heard from a traveler who was able to use a locally but not globally dominant currency to buy cash of a major currency at a shopping mall (with competitive forex traders) at rates even better than the mid-market rates posted at xe.com and similar places; I don't think you'll have that experience going from Australia to Malaysia (but another traveler reading this might have a different pair). In my experience the card rates are slightly worse than those and the airport forex traders significantly worse.
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What's the difference between Term and Whole Life insurance?
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Just to add to @duffbeer703 comment, additionally, the cash value is NOT part of the death benefit. The policy is intended to grow the cash value to the point where it matches the death benefit and then it 'matures' and you get the cash. My point being, is that since they don't give you both, you are really transferring the reponsiblity from them to you over time, your savings (that you lose) becomes part of the death benefit and they supliment it with less and less over the years so that it would equal the death benefit. @duffbeer703 nailed it right on the head, buy term and invest the difference and once you've got your savings built, really the need for insurance isn't there any longer (if you've got 1/2 million saved, do you really need insurance?)
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declaring payments to a credit card for a shared expense
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If this is a business expense - then this is what is called reimbursement. Reimbursement is usually not considered as income since it is money paid back to you for an expense you covered for your employer with your after-tax money. However, for reimbursement to be considered properly executed, from income tax stand point, there are some requirements. I'm not familiar with the UK income tax law specifics, but I reason the requirements would not differ much from places I'm familiar with: before an expense is reimbursed to you, you should usually do this: Show that the expense is a valid business expense for the employer benefit and by the employer's request. Submit the receipt for reimbursement and follow the employer's procedure on its approval. When income tax agent looks at your data, he actually will ask about the £1500 tab. You and you'll employer will have to do some explaining about the business activity that caused it. If the revenue agent is not satisfied, the £750 that is paid to you will be declared as your income. If the required procedures for proper reimbursement were not followed - the £750 may be declared as your income regardless of the business need. Have your employer verify it with his tax accountant.
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gift is taxable but is “loan” or “debt” taxable?
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If you are looking to transfer money to another person in the US, you can do do with no tax consequence. The current annual gift limit is $14k per year per person, so for example, my wife and I can gift $56k to another couple with no tax and no forms. For larger amounts, there is a lifetime exclusion that taps into your $5M+ estate tax. It requires submitting a form 709, but just paperwork, no tax would be due. This is the simplest way to gift a large sum and not have any convoluted tracking or structured loan with annual forgiveness. One form and done. (If the sum is well over $5M you should consider a professional to guide you, not a Q&A board)
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Is the Net Profit the 'final word' on a company's health?
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To answer your question briefly: net income is affected by many things inside and outside of management control, and must be supplemented by other elements to gain a clear picture of a company's health. To answer your question in-depth, we must look at the history of financial reporting: Initially, accounting was primarily cash-based. That is, a business records a sale when a customer pays them cash, and records expenses when cash goes out the door. This was not a perfectly accurate system, as cashflow might be quite erratic even if sales are stable (collection times may differ, etc.). To combat problems with cash-based accounting, financial reporting moved to an accrual-based system. An accrual is the recording of an item before it has fully completed in a cash transaction. For example, when you ship goods to a customer and they owe you money, you record the revenue - then you record the future collection of cash as a balance sheet item, rather than an income statement item. Another example: if your landlord charges you rent on December 31st for the past year, then in each month leading up to December, you accrue the expense on the income statement, even though you haven't paid the landlord yet. Accrual-based accounting leaves room for accounting manipulation. Enron is a prime example; among other things, they were accruing revenue for sales that had not occurred. This 'accelerated' their income, by having it recorded years before cash was ever collectible. There are specific guidelines that restrict doing things like this, but management will still attempt to accelerate net income as much as possible under accounting guidelines. Public companies have their financial statements audited by unrelated accounting firms - theoretically, they exist to catch material misstatements in the financial statements. Finally, some items impacting profit do not show up in net income - they show up in "Other Comprehensive Income" (OCI). OCI is meant to show items that occurred in the year, but were outside of management control. For example, changes in the value of foreign subsidiaries, due to fluctuations in currency exchange rates. Or changes in the value of company pension plan, which are impacted by the stock market. However, while OCI is meant to pick up all non-management-caused items, it is a grey area and may not be 100% representative of this idea. So in theory, net income is meant to represent items within management control. However, given the grey area in accounting interpretation, net income may be 'accelerated', and it also may include some items that occurred by some 'random business fluke' outside of company control. Finally, consider that financial statements are prepared months after the last year-end. So a company may show great profit for 2015 when statements come out in March, but perhaps Jan-March results are terrible. In conclusion, net income is an attempt at giving what you want: an accurate representation of the health of a company in terms of what is under management control. However it may be inaccurate due to various factors, from malfeasance to incompetence. That's why other financial measures exist - as another way to answer the same question about a company's health, to see if those answers agree. ex: Say net income is $10M this year, but was only $6M last year - great, it went up by $4M! But now assume that Accounts Receivable shows $7M owed to the company at Dec 31, when last year there was only $1M owed to the company. That might imply that there are problems collecting on that additional revenue (perhaps revenue was recorded prematurely, or perhaps they sold to customers who went bankrupt). Unfortunately there is no single number that you can use to see the whole company - different metrics must be used in conjunction to get a clear picture.
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Why are U.S. Treasury interest rates are so low vs. other nearly risk-free rates?
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As I'm sure you are reading in Hull's classic, the basic valuation of bonds depends on the chance of entity defaulting on those bonds. Let's start with just looking at the US. The United States has a big advantage over corporations in issuing debt as it also prints the same currency that the debt is denominated in. This makes it much easier not to default on your debt as you can always print more money to pay it. Printing too much currency would cause inflation lowering the value of debt, but this would also lower the value of US corporate debt as well. So you can think of even the highest rated corporate bonds as having the same rate as government debt plus a little extra due to the additional default risk of the corporation. The situation with other AA rated governments is more complicated. Most of those governments have debt denominated in their local currency as well so it may seem like they should all have similar rates. However, some governments have higher and some actually have lower rates than the United States. Now, as above, some of the difference is due to the possible need of printing too much currency to cover the debt in crisis and now that we have more than one country to invest in the extra risk of international money flowing out of the country's bonds. However, the bigger difference between AA governments rates depends more on money flow, central banks and regulation. Bonds are still mostly freely traded instruments that respond to supply and demand, but this supply and demand is heavily influenced by governments. Central banks buy up large portions of the debt raising demand and lowering rates. Regulators force banks to hold a certain amount of treasuries perhaps inflating demand. Finally, to answer your question the United States has some interesting advantages partially just due to its long history of stability, controlled inflation and large economy making treasuries valuable as one of the lowest risk investments. So its rates are generally on the low end, but government manipulation can still mean that it is not necessarily the lowest.
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Which is the better strategy for buying stocks monthly?
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It would seem that you are in a position where you are able to save money and you hope to have your money work for you. From your statement above, it is implied that you are a professional with a steady income not related to the finance field. With that said, it is better to diversify your portfolio and have your money work for you through passive investments rather than an active one, where you actively search for companies that are below market price. That research takes time and much more experience in order to properly execute. Now, if your overall goal is to trade actively, then maybe researching individual companies might be the best way to get your feet wet. But, if your goal is to create a diversified portfolio and make your money work for you, then passive is the way to go. Two passive financial Vehicles: Mutual funds and ETFs. Depending on what you are hoping to accomplish in the future, an ETF or a mutual fund will likely suite your situation. I would encourage you to do your due diligence and find out the weakness and strength of each. From there you are able to make an informed decision.
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When are stop market/limit orders visible on the open market?
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From the non-authoritative Investopedia page: A stop-limit order will be executed at a specified price, or better, after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy or sell at the limit price or better. So once the stop price has been breached, your limit order is placed and will be on the order books as a $9 ask. For a vanilla stop order, a market order will be placed and will be filled using the highest active bid(s).
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Transferring money between two banks
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Why? Because they can get away with it, of course. In short - why not? You may want to read the answers to this similar question (my answer is the one accepted by the OP). Who has the money? The banks, who else. I have found that some banks are capable of sending/receiving ACH transfers faster than others. I have accounts in two banks, lets call them A and B. If I send money (push) from A to B, it may take several days. But if I decide to pull the money from A to B by originating the transaction through my account at B - the money arrives the next day! So the actual transfer only takes a night, one business day. Its just the direction that matters - if the bank has to give the money out, it will do all it can (including taking 2-3 days for "processing") to keep the money as long as possible. But when another bank charges them - they have no choice but to pay. By the way, bank B behaves better - when I send the money from my account at B, it arrives to A the next day as well. Try a similar experiment. Instead of originating the transaction at the sender bank - try to originate it at the receiver bank, see how long it takes then for the money to appear on your account after it disappeared from the other one.
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What is the best way to get a “rough” home appraisal prior to starting the refinance process?
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I see your remarks regarding Zillow, but would add a question. Why not look only for recent sales? If you find homes similar to yours with recent sales, that's similar to how the appraisers do it. I've refinanced many times and each time, I looked at sales within three miles of my house. I hit the appraised price very close in my estimate, high or low compared to Zillow, but used transaction data from there.just my thought. I chose a random neighborhood, and this was the first house I clicked. The main view shows last sale date, so I'd obviously suggest the OP look for more recent ones. If turnover is that low in his neighborhood, I understand, but the comment that transactions aren't listed is factually incorrect. I'd like my 2pts back. :)
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Capital gains on no-dividend stocks - a theoretical question
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Stock prices are set by the market - supply and demand. See Apple for example, which is exactly the company you described: tons of earnings, zero dividends. The stock price goes up and down depending on what happens with the company and how investors feel about it, and it can happen that the total value of the outstanding stock shares will be less than the value of the underlying assets of the company (including the cash resulted from the retained earnings). It can happen, also, that if the investors feel that the stock is not going to appreciate significantly, they will vote to distribute dividends. Its not the company's decision, its the board's. The board is appointed by the shareholders, which is exactly why the voting rights are important.
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What do “cake and underwear” stocks refer to?
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There are some euphemisms that are better known than others. A category of stocks that's suitable for "widows and orphans" would be stocks that are low beta, and perhaps high dividend. Safe (being relative) enough to put a window's money into. The term "cake and underwear" appears to me to be a Buffetism. And I'd interpret it to mean,"not tech, not stocks that are either high growth or cyclic, but stocks that make things that have steady demand and that most consumers use." Google the phrase, only Buffet comes up.
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What's the best online tool that can track my entire portfolio including gains/losses?
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You can use a tool like WikiInvest the advantage being it can pull data from most brokerages and you don't have to enter them manually. I do not know how well it handles dividends though.
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Any reason to keep IRAs separate?
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Can't see why would you need to track the sources of the original funds. Can't think of a reason not to consolidate, if at all it will only make the management of your IRA more convenient, and may be even cheaper (if the fees depend on the account value...).
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Why are wire transfers and other financial services in Canada so much more expensive than in Europe?
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I don't believe there is any particular structural or financial reason that outgoing wire transfers cost so much in Canada, their costs are no higher than other countries (and lower than many). Wires seem to be an area where the Canadian banks have decided people don't comparison shop, so it's not a competitive advantage to offer a better price. The rates you quoted are on the low side: $80 for a largish international wire is not unusual, and HSBC charges up to $150! There are several alternative ways to transfer money domestically in Canada. If the recipient banks at the same bank, it's possible to go into a branch and transfer money directly from your own account to their account (I've never been charged for this). The transfer is immediate. But it couldn't be done online, last time I checked. For transfers where you don't know the recipients bank account, you can pay online with Interac E-Transfers, offered by most Canadian banks. It's basically e-mailing money. It usually costs $1 to $1.50 per transfer, and has limits on how much you can send per day/week. Each of the banks also have a bill-pay service, but unlike similar services in the US (where they mail a paper check if the recipient isn't on their system), each Canadian bank has a limited number of possible payees (mostly utilities, governments, major stores).
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What does a contract's worth mean?
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It means $400m expected revenue, likely spread out over multiple years as it gets implemented, and not entirely guaranteed to happen as they still need to fulfill the contract. The impact on the stock price is complex - it should be positive, but nowhere close to a $400m increase in market cap. If the company is expected to routinely win such contracts, it may have no significant effect on the stock price, as it's already priced in - say, if analysts expect the company to win 1.2b contracts in this fiscal year, and now they've done 1/3 of that, as expected.
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Can stockholders choose NOT to elect a board of directors?
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Under Sarbanes–Oxley, no. There are specific responsibilities vested in the board members. Without a CEO and a CFO, the quarterly financial reports cannot be signed off. Many countries have similar responsibilities for board members, and by the same reasoning therefore a need for board members.
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How do I screen for stocks that are near to their 52 weeks low
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Although is not online, I use a standalone version from http://jstock.sourceforge.net It got drag-n-drop boxes, to let me design my own indicators. However, it only contain technical analysis information, not fundamental analysis information. It does come with tutorial http://jstock.sourceforge.net/help_stock_indicator_editor.html#indicator-example, on how to to build an indicator, to screen "Stock which Its Price Hits Their 14 Days Maximum"
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Why do investors buy stock that had appreciated?
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From an amateur: Prices aren't entirely rational - they float, and the day to day prices of stock are an excellent example of this. So how would you assign an appropriate value to it? There is a logical minimum, the scrap value of the assets and the cash on hand. However, that doesn't take into account the expectations for growth people have for that company. If everyone thought a $100 mil company was going to be worth $200 mil by the end of next year, they'd still be willing to pay at a $150 mil price point now. That said, the market is big enough that it's easy enough to find someone who has those growth expectations. They still expect it to be worth more in the future, and they'll buy it now. And if no one buys at that price point, that's when prices start to fall.
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What evidence exists for claiming that you cannot beat the market?
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Will the investor beat the benchmark for a given period will follow a Bernoulli distribution -- each period is a coin toss, and heads mean the investor beat the market for that period. I can't prove the negative that there is no investor ever whose probability function p = 1, but you can statistically expect a number of individual investors with p ~ 0.5 to have a sequence of many heads in a row, as a function of the total population. By example, my father explained investment scams and hot-hand theory to me this way when I was younger: Imagine an investor newsletter which mails out to a mailing list of 1024 prospects (or alternately, a field of 1024 amateur investor bloggers in a challenge). Half the letters or bloggers state AAPL will go up this week, half that AAPL will go down this week. In the newsletter case, next week ignore the people we got wrong. In the blogger case, they're losers, so we don't pay attention to them. Next week, similar split: half newsletters or bloggers claim GOOG go up, half GOOG go down. This continues for a 10 week cycle. Now, in week 10: the newsletter has a prospect they have hit correct 10x in a row: how much will he pay for a subscription? Or, one amateur investor blogger has been on a 10 week winning streak and wins the challenge, so of course let's give her a CNBC show after Jim Cramer. No matter what, next week, this newsletter or investor is shooting 50-50. How do you know this person is not the statistically expected instance backed up by a pyramid of 1023 Bernoulli distribution losers? Alternately, if you think you're going to be the winner, you've got a 1/1024 shot.
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If I want a Credit Card offered through a different Credit Union should I slowly transition my banking to that CU?
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As has been stated, you don't need to actively bank with a credit union to apply for one of their credit cards. That said, one benefit to having account activity, and significant capital with a CU, is to increase the likelihood of having a larger credit line granted to you, when you do apply. If you are going to use the card sparingly however, then this is a non issue. That said, if you really want to maximize card benefits, then you want to look for cards with large sign up bonuses (e.g. Chase Sapphire, or Ink Bold if you have a business) and sign up exclusively for those bonuses. These cards offer rewards in excessive value of $1000 in travel services (hotels/plane tickets), or $500 cash back if you prefer straight cash back redemptions. If you prefer to keep it really simple, you can sign up for a cash back card, like the Amex Fidelity, which offers 2% cash back everywhere, with no annual fee (albeit the cash back is through their investment account, which you don't actually have to 'invest' with). Personally, I have the Penfed card, and use it exclusively for gas (5% cash back). I also have a Charles Schwab bank account, which I keep funded exclusively for ATM withdrawals (free ATM usage, worldwide, 100% fee reimbursement). I use the accounts exclusively for the benefit they provide me, and no more and have never had an issue. I also have 3 dozen other credit cards which I signed up for exclusively for the sign up bonus, but that's outside the scope of this question. I only mention it because you seem to believe it is difficult to get approved for a new credit line. If your credit is good however, you won't have a problem. For a small idea, of how to maximize credit card bonus categories, I would advise you read this. As mentioned in the article, its possible to get rewards almost everywhere you shop. In short, anytime you use cash, you are missing out on a multitude of benefits a credit card offers you (e.g. see the benefits of a visa signature card) in addition to points/cash back.
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Why is the fractional-reserve banking not a Ponzi scheme?
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Your question contains two different concepts: fractional reserve banking and debt-based money. When thinking of these two things I think it is important to analyze these items separately before trying to understand how the whole system works. Fractional Reserve Banking As others have pointed out fractional reserve banking is not a ponzi scheme. It can be fraudulent, however. If a bank tells all its depositors that they can withdrawal their money at any time (i.e. on demand) and the bank then proceeds to loan out some portion of the depositors' money then the bank has committed fraud since there is no way they could honor the depositors' requests for their money if many of them came for their money at one time. This is true regardless of what type of money is deposited - dollars, gold, etc.. This is how most modern banks operate. Debt-based money Historically, the Fed would introduce new money by buying US Treasuries. This means Federal Reserve Notes (FRN) are backed by US Treasuries. I agree that this seems strange. Does this mean if I take my FRNs to the Fed I could redeem them for US Treasuries? But US Treasuries are promises to pay FRNs in the future. This makes my head hurt. Reminds me of the definition for recursion: see recursion. Here is an experiment. What if we wanted to recreate FRNs today and none existed? The US government would offer a note to pay 100 FRNs in one year and pay 5% interest on the note. The Fed would print up its first 100 FRNs to buy the note from the US government. The US government would spend the FRNs. The first 100 FRNs have now entered into circulation. At the end of the note's term the Fed should have 105 FRNs since the government agreed to pay 5% interest on the note. But how is the US government going to pay the interest and principal on the note when only 100 FRNs exist? I think this is the central point to your question. I can come up with only two answers: 1) the Fed must purchase some assets that are not debt based 2) the US government must continue to issue debt that is purchased by newly printed FRNs in order to pay back older debt and interest. This is a ponzi scheme. The record debt levels seem to indicate the ponzi scheme option was chosen.
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Most effective Fundamental Analysis indicators for market entry
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I think by definition there aren't, generally speaking, any indicators (as in chart indicators, I assume you mean) for fundamental analysis. Off the top of my head I can't think of one chart indicator that I wouldn't call 'technical', even though a couple could possibly go either way and I'm sure someone will help prove me wrong. But the point I want to make is that to do fundamental analysis, it is most certainly more time consuming. Depending on what instrument you're investing in, you need to have a micro perspective (company specific details) and a macro perspective (about the industry it's in). If you're investing in sector ETFs or the like, you'd be more reliant on the macro analysis. If you're investing in commodities, you'll need to consider macro analysis in multiple countries who are big producers/consumers of the item. There's no cut and dried way to do it, however I personally opt for a macro analysis of sector ETFs and then use technical analysis to determine my entry and/or exit.
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If a country can just print money, is global debt between countries real?
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I think the important fact here is that all of our currencies are Fiat Currencies. So currency technically means nothing, because (as you mentioned) the country could print more any time it wants. Now what makes it useful is the combination of two big things: So I would say, we know they owe us 100 "dollars", and the dollar is just a word we use to represent value. It is not technically worth anything, beyond the fact that the government controls the amount of that currency in circulation and you trust that people still want more of that currency.
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What is the preferred way to set up personal finances?
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There's a lot of personal preference and personal circumstance that goes into these decisions. I think that for a person starting out, what's below is a good system. People with greater needs probably aren't reading this question looking for an answer. How many bank accounts should I have and what kinds, and how much (percentage-wise) of my income should I put into each one? You should probably have one checking account and one savings / money market account. If you're total savings are too low to avoid fees on two accounts, then just the checking account at the beginning. Keep the checking account balance high enough to cover your actual debits plus a little buffer. Put the rest in savings. Multiple bank accounts beyond the basics or using multiple banks can be appropriate for some people in some circumstances. Those people, for the most part, will have a specific reason for needing them and maybe enough experience at that point to know how many and where to get them. (Else they ask specific questions in the context of their situation.) I did see a comment about partners - If you're married / in long-term relationship, you might replicate the above for each side of the marriage / partnership. That's a personal decision between you and your partner that's more about your philosophy in the relationship then about finance specifically. Then from there, how do I portion them out into budgets and savings? I personally don't believe that there is any generic answer for this question. Others may post answers with their own rules of thumb. You need to budget based on a realistic assessment of your own income and necessary costs. Then if you have money some savings. Include a minimal level of entertainment in "necessary costs" because most people cannot work constantly. Beyond that minimal level, additional entertainment comes after necessary costs and basic savings. Savings should be tied to your long term goals in addition to you current constraints. Should I use credit cards for spending to reap benefits? No. Use credit cards for the convenience of them, if you want, but pay the full balance each month and don't overdo it. If you lack discipline on your spending, then you might consider avoiding credit cards completely.
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Buy tires and keep car for 12-36 months, or replace car now?
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There are a few factors I like to consider when I'm reasoning financially over my households cars. How many KMs will the car travel each year because I like to factor in how often tires will need to be changed, how much tires for my models cost as well as how gas efficient they are. Knowing how much the car is driven and in what environmental/road conditions is also important factors to know because that will help guestimate possible repairs cost. Also possible taxes should be taken in to consideration. For example a few years ago I had a diesel Citroen C5 that had yearly taxes of roughly 500$. The replacement costs only 150$ a year in taxes. So switching cars 3 years early would have saved me 1050$ in taxes. So some information on possible taxes, how far you drive each year, what environmental conditions, type of driving (daily long rides or just short etc..) as well as the fuel efficiency of both cars would help to better calculate your costs for say three scenarios. Car change in 12, 24 and 32 months respectively.
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What's the fuss about Credit Score / History?
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Since we seem to be discussing credit score and credit history interchangeably, if I can add credit report as the third part of the puzzle, I have another point. Your credit score and credit report can be effective tools to notice identity theft or fraud in your name. Keeping track of your report will allow you to not only protect your good name (which is apparently in dispute here) but also those businesses who ultimately end up paying for the stolen goods or services.
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Why not just invest in the market?
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Perhaps someone has an investment objective different than following the market. If one is investing in stocks with an intent on getting dividend income then there may be other options that make more sense than owning the whole market. Secondly, there is Slice and Dice where one may try to find a more optimal investment idea by using a combination of indices and so one may choose to invest 25% into each of large-cap value, large-cap growth, small-cap value and small-cap growth with an intent to pick up benefits that have been seen since 1927 looking at Fama and French's work.
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Why index funds have different prices?
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To add on to the other answers, in asking why funds have different price points one might be asking why stocks aren't normalized so a unit price of $196 in one stock can be directly compared to the same price in another stock. While this might not make sense with AAPL vs. GOOG (it would be like comparing apples to oranges, pun intended, not to mention how would two different companies ever come to such an agreement) it does seem like it would make more sense when tracking an index. And in fact less agreement between different funds would be required as some "natural" price points exist such as dividing by 100 (like some S&P funds do). However, there are a couple of reasons why two different funds might price their shares of the same underlying index differently. Demand - If there are a lot of people wanting the issue, more shares might be issued at a lower price. Or, there might be a lot of demand centered on a certain price range. Pricing - shares that are priced higher will find fewer buyers, because it makes it harder to buy round lots (100 shares at $100/share is $10,000 while at $10/share it's only $1000). While not everyone buys stock in lots, it's important if you do anything with (standardized) options on the stock because they are always acting on lots. In addition, even if you don't buy round lots a higher price makes it harder to buy in for a specific amount because each unit share has a greater chance to be further away from your target amount. Conversely, shares that are priced too low will also find fewer buyers, because some holders have minimum price requirements due to low price (e.g. penny) stocks tending to be more speculative and volatile. So, different funds tracking the same index might pick different price points to satisfy demand that is not being filled by other funds selling at a different price point.
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Should I collect receipts after paying with a card?
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In this answer, I won't elaborate on the possibilities of fraud (or pure human error), because something can always go wrong. I will, however, explain why I think you should always keep receipts. When the (monthly or so) time comes to pay your credit card bill, your credit card company sends you a list of transactions. That list has two primary purposes, both of which I would consider equally important: While for the former item, a receipt is not necessary (though it certainly does not hurt showing the receipt along with the bill to provide further proof that the payment was indeed connected to that bill), the latter point does require you to store the receipts so you can check, item-by-item, whether each of the sums is correct (and matched with a receipt at all). So, unless you can actually memorize all the credit card transactions you did throughout the past one or two months, the receipts are the most convenient way of keeping that information until the bill arrives. Yes, your credit card company probably has some safeguards in place to reveal fraud, which might kick in in time (the criteria are mostly heuristical, it seems, with credit cards or legitimate transactions here getting blocked every now and then simply because some travelling of the actual owner was misinterpreted as theft). However, it is your money, it is your responsibility to discover any issues with the bill, just as you would check the monthly transaction list from your bank account line by line. Ultimately, that is why you sign the vendor copy of the receipt when buying something offline; if you discover an issue in your list of transactions, you have to notify your credit card company that you dispute one of the charges, and then the charging vendor has to show that they have your signature for the respective transaction. So, to summarize: Do keep your receipts, use them to check the list of transactions before paying your credit card bill. EDIT: The receipt often cannot be replaced with the bill from the vendor. The bill is useful for seeing how the sum charged by the respective vendor was created, but in turn, such bills often do not contain any payment information, or (when payment was concluded before the bill was printed, as sometimes happens in pre-paid scenarios such as hotel booking) nondescript remarks such as "- PAYMENT RECEIVED -", without any further indication of which one of your credit cards, debit cards, bank accounts, stored value cards, or cash was used.
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Why should a company go public?
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You go public to raise money, to invest in the business and/or pay off the existing shareholders. It's really as simple as that. The advantage of being public is that your shares can easily be bought and sold, and so you can issue and sell new ones and your existing shareholders can sell out if they want to. The disadvantage is that you are much more tightly regulated, with more disclosure requirements, and also that you are exposed to much more pressure from your shareholders to maintain and increase your share price.
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Why don't SPY, SPX, and the e-mini s&p 500 track perfectly with each other?
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As a futures trader, I can tell you that the highs and lows for the ES futures diverge simply because they trade around the clock, from 6PM ET to 5PM ET the next day. The SPX is only open during market hours, as is the SPY, but the SPY also trades in the extended hours sessions for about 3.5 hours before and after the regular hours of 930 AM ET to 4PM ET ET. So bottom line, while they pretty much track each other, the difference in their trading hours results in the highs and lows being different.
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Saving $1,000+ per month…what should I do with it?
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I like the other answers. But, here's one thing that concerns me that hasn't specifically been addressed yet: You mentioned your student loans are at low rates of interest. Are those rates fixed or variable? If those interest rates are variable, I would not count on rates remaining low indefinitely. If you could imagine those rates going up by say 2% or 4% or more over time, would such rates make you change your mind about the debt and the pace at which you're paying it off? I would suggest that as the economy recovers over the next couple of years, the spectre of inflation will force the Fed to raise interest rates. You don't want to be holding variable-rate debt when rates are rising. For that reason, if your loan rate is variable, I would increase your payment amount so you can eliminate your debt sooner than later. Also – You mention in one of your comments that buying a home is 4+ years away. That's not a long time, so I wouldn't commit the bulk of your savings to investing in the stock market, which can be temperamental over short periods of time. You don't want to be in a large loss position just when it's time to buy your first home. However, it may be worth having some of your skin in the game, so to speak. Personally, I would take a balanced approach: 1/3 debt repayment, 1/3 high interest cash savings, and 1/3 in some broad diversified index funds – and not all in the U.S. Although, I also like the idea of getting some travel in while young, so perhaps 1/4 allocations to the money stuff, and 1/4 towards travel? :-) Good luck.
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I got my bank account closed abruptly how do I get money out?
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If you can get to a physical branch, get a cashier's check (or call them and have them send you one by mail). When they draft the cashier's check they remove the money from your account immediately and the check is drawn against the bank itself. You could hold onto that check for a little while even after your account closes and you make other arrangements for banking. If you cannot get a cashier's check, then you should try to expeditiously open a new account and do an ACH from old to new. This might take more days to set up than you have left though.
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Why having large capital is advantageous to trading
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You wouldn't want to trade with too small amount of capital - it becomes harder and more expensive to diversify with a small account. Also, the bigger the account the more discounts and special may be offered by your broker (especially if you are a frequent trader). You are also able to trade more often, and have a buffer against a few losses in a row not wiping out your entire account.
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What's the best way to make money from a market correction?
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The best way to make money during a market correction is to be a financial services company handling transactions for people who think they can beat the market, and charging a percentage commission on each transaction, while keeping your own money somewhere nice and safe, stable and low-fee.
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Should I pay more than 20% down on a home?
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First of all, realize that buying a home isn't really an investment. It is cheaper to rent. In recent years, people were able to sell their houses for astronomical profits, but that won't be happening much in the future. Additionally, there are many hidden costs of owning a home. Regarding the mortgage interest tax deduction, don't buy a house just to get this. It is like spending $1 to get back some amount of money less than $1. So just keep that in mind. Are you debt free? If not, pay off your other debts before buying a home. I follow the advice of Dave Ramsey, so I'll echo it here. Make sure you have an emergency fund and no debt. At this point I think you are ready to buy a house. When you do, put down as much as you can; above 20% if possible. Then get a 15 year fixed rate mortgage. At this point, start saving for your kid's college (if you believe in that) and paying down your home. Having no mortgage is a dream many people never have. I cannot wait until I have no mortgage. Don't get suckered into getting a high priced loan. Pay down as much of the price of the house as possible up front. This gives you flexibility too. What if you need to sell quickly? Well, you will have equity from the get-go, so this will be much easier. Good luck with your purchase!
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HELOC vs. Parental Student Loans vs. Second Mortgage?
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I'd like to propose a 4th option: Let your kid(s) take out their own student loans, and then you can make payments directly to help them pay them down. Some advantages to this method: Note the many similarities to the HELOC, which would probably be my second choice.
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Is the MBA an overrated degree/qualification?
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The quality of the MBA is really what decides if it's worth it. You have to make sure the school where you are going to is highly regarded or even prestigious. There is a big difference between what you find prestigious and others find prestigious. The student believing it is an awesome school is not enough, the companies and recruiters must believe it too. Make sure you do your homework on the ranking of the MBA program. Additionally, your undergraduate plays a role how well your MBA is perceived. A decent undergraduate degree complemented with an MBA from a highly ranked school will put you in a trajectory for a high salary and a management position.
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Buying my first car out of college
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I agree with the consensus as far as getting a cheaper car, paying with cash, getting a more fuel efficient car, etc. But I'd like to point out, you should make sure you really need a car at all. I ride a bike to work! If I need a car, I can use Zipcar or City Car Share or borrow a friend's car, rent a car, take the train, ride a bus, walk. But mostly, ride my bike. Burn fat not gasoline! ;)
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Working on a tax free island to make money?
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If you're an American, and willing to give up citizenship, good luck to you. Otherwise, Uncle Sam still wants his due -- Americans are responsible for paying taxes on income earned anywhere on earth, regardless of their residence.
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Is there a general guideline for what percentage of a portfolio should be in gold?
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By mentioning GLD, I presume therefore you are referring to the SPRD Gold Exchange Traded Fund that is intended to mirror the price of gold without you having to personally hold bullion, or even gold certificates. While how much is a distinctly personal choice, there are seemingly (at least) three camps of people in the investment world. First would be traditional bond/fixed income and equity people. Gold would play no direct role in their portfolio, other than perhaps holding gold company shares in some other vehicle, but they would not hold much gold directly. Secondly, at the mid-range would be someone like yourself, that believes that is in and of itself a worthy investment and makes it a non-trivial, but not-overriding part of their portfolio. Your 5-10% range seems to fit in well here. Lastly, and to my taste, over-the-top, are the gold-gold-gold investors, that seem to believe it is the panacea for all market woes. I always suspect that investment gurus that are pushing this, however, have large positions that they are trying to run up so they can unload. Given all this, I am not aware of any general rule about gold, but anything less than 10% would seem like at least a not over-concentration in the one area. Once any one holding gets much beyond that, you should really examine why you believe that it should represent such a large part of your holdings. Good Luck
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Why do volatility stocks/ETFs (TVIX, VXX, UVXY) trend down in the long-term?
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There is more than a single reason why TVIX loses value over time. Futures curve. VIX is always expected to trend up when under 20(although this could change in the future). This means 1 month away futures contracts are bought at a premium closer to 20. If the .VIX stayed flat at 15, by the end of the month, that contract is only worth about 15. meaning you lost 25%. This affects all VIX ETFs and makes inverse VIX ETFs attractive to hold(if you don't mind your account blowing up periodically). Leverage decay. if VIX goes down 25% two consecutive days, your x2 ETF(TVIX, UVXY) goes down 75%. Even if it doubled back to yesterday's value next day, you'd still be 25% down. ETF funding costs. The fund managers take some money from the pot every day.
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Is it worth it to reconcile my checking/savings accounts every month?
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Account statements and the account information provided by your personal finance software should be coming from the same source, namely your bank's internal accounting records. So in theory one is just as good as the other. That being said, an account statement is a snapshot of your account on the date the statement was created, while synchronizations with your personal finance application is dynamically generated upon request (usually once a day or upon login). So what are the implications of this? Your account statement will not show transactions that may have taken place during that period but weren't posted until after the period ended (common with credit card transactions and checks). Instead they'd appear on the next statement. Because electronic account synchronizations are more frequent and not limited to a specific time period those transactions will show up shortly after they are posted. So it is far easier to keep track of your accounts electronically. Every personal finance software I've ever used supports manual entries so what I like to do is on a daily basis I manually enter any transaction which wasn't posted automatically. This usually only takes a few minutes each evening. Then when the transaction eventually shows up it's usually reconciled with my manually entered one automatically. Aside from finding (infrequent) bank errors this has the benefit of keeping me aware of how much I'm spending and how much I have left. I've also caught a number of cashier errors this way (noticing I was double-charged for an item while entering the receipt total) and its the best defense against fraud and identity theft I can think of. If you're looking at your accounts on a daily basis you're far more likely to notice an unusual transaction than any monitoring service.
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Repaying Debt and Saving - Difficult Situation
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Just a thought, but have you considered approaching your sister about assuming the student loans or repaying your mother (even if it is a small amount/month) for financing her college education? If she is in her last year of college, in theory she should be earning at least some income within the next 2 years. Also, it doesn't seem like a lot to ask considering the sacrifices (both financial and otherwise) that a single mom probably made over the years. I'm sure your mom would be hesitant to ask as it seems like she prioritizes her children above herself by your description of the situation, but I bet if you could talk the sister into the mom would grudgingly accept it if she really is in such a tight financial situation.
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Why might it be advisable to keep student debt vs. paying it off quickly?
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Like all other loan-vs-savings questions, it depends on the terms of the loan. If you have a choice, the usual answer is to pay off the loan with the worst terms (which usually means the highest interest rate) first, and only start with savings when you've paid off all the high-interest loans entirely. If your student loan is on US terms, then pay it off as soon as you can, unless you have commercial debt (credit-card or unsecured personal loan), which you should pay off first, or unless you have or are realistically likely to get eligibility for a forgiveness program. But it does depends on the terms of the debt, which in turn depend on the country you studied in; on UK terms it's a very bad idea to pay off a student loan any faster than you have to. Interest is restricted to the rate of inflation, so good investments probably beat the interest rate of the student loan; the required repayments vary with your income, so savings are more useful than debt repayment if you encounter income difficulties (e.g unemployment) in the future, and finally the debt is automatically forgiven after 30 years, so you may never have to pay it all back anyway - so why pay it off voluntarily if it would get forgiven eventually anyway?
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Does the Black-Scholes Model apply to American Style options?
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as no advantage from exerting American call option early,we can use Black schole formula to evaluate the option.However, American put option is more likely to be exercised early which mean Black schole does not apply for this style of option
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Why do credit cards have minimum limits?
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It discourages people from obtaining a high-limit card simply to show off, because the bank's forcing them to use it or lose it.
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Official Bank Check
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The legal department at the Bank left me a message telling me that the bank check was paid & the recipient got the funds. Call up the bank and find out who the recipient was. Generally it can only be cashed by the person whose name is on it - the original business partner to whom it was intended. It is unlikely to be cashed by the attorney, unless he misrepresented the facts to the bank and got the funds. My question is how could he have cashed it without the original bank check? The other possibility is your mom lost this check, went to the bank and requested them to cancel this and reissue a fresh banker's check and give it to the business partner - in which case the check you had was worthless. You would need to work with the bank and ask them for details. However without the details of the original bank check that you found, it would be difficult for the bank to help you.
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How can I cash out a check internationally?
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I know someone around there, who might be able to collect it for me.Would I still be able to cash it out in the other country? Or can he/she cash it out for me? Unlikely. Unless they deposit it into a US bank account in your name. You can cash US checks in almost any decent bank anywhere in the world, but it may cost you some and will probably take 2-3 weeks. Since the amount is won in the US, how would I pay the taxes? , since its earned over there. You would file a tax return with the IRS and send them a payment. You can buy drafts in US dollars almost anywhere in the world.
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How to convince someone they're too risk averse or conservative with investments?
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Introduce him to the concept of Inflation Risk, and demonstrate that being too conservative with your investments might be a very risky strategy as well.
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how do capital gains work if you don't know the original purchase price?
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There are two scenarios to determine the relevant date, and then a couple of options to determine the relevant price. If the stocks were purchased in your name from the start - then the relevant date is the date of the purchase. If the stocks were willed to you (i.e.: you inherited them), then the relevant date is the date at which the person who willed them to you had died. You can check with the company if they have records of the original purchase. If it was in "street name" - they may not have such records, and then you need to figure out what broker it was to hold them. Once you figured out the relevant date, contact the company's "investor relationships" contact and ask them for the adjusted stock price on that date (adjusted for splits/mergers/acquisitions/whatever). That would be the cost basis per share you would be using. Alternatively you can research historical prices on your favorite financial information site (Google/Yahoo/Bloomberg or the stock exchange where the company is listed). If you cannot figure the cost basis, or it costs too much - you can just write cost basis as $0, and claim the whole proceeds as gains. You'll pay capital gains tax on the whole amount, but that may end up being cheaper than conducting the investigation to reveal the actual numbers.
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What can I replace Microsoft Money with, now that MS has abandoned it?
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Uh, Quicken is virtually identical to MS Money. If you liked money and don't want to change, use that.
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Why is it possible to just take out a ton of credit cards, max them out and default in 7 years?
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The U.S. bankruptcy laws no longer make it simple to discharge credit card debt, so you can't simply run up a massive tab on credit cards and then just walk away from them anymore. That used to be the case, but that particular loophole no longer exists the way it once did. Further, you could face fraud charges if it can be proven you acted deliberately with the intent to commit fraud. Finally, you won't be able to rack up a ton of new cards as quickly as you might think, so your ability to amass enough to make your plan worth the risk is not as great as you seem to believe. As a closing note, don't do it. All you do is make it more expensive for the rest of us to carry credit cards. After all, the banks aren't going to eat the losses. They'll just pass them along in the form of higher fees and rates to the rest of us.
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