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Question about being a resident | One thing to consider besides what rules Oregon has, is what rules your old state have. Of course the lack of income tax in Nevada means that most people are trying to convince their new state they are still a resident of Nevada. You are a full-year Oregon resident if you live in Oregon all year. You are also a full-year Oregon resident, even if you live outside Oregon, if all of the following are true: Part-year resident: You are a part-year resident if you moved into or out of Oregon during the tax year. The requirement for financial life means that you should: change all your Nevada banks to Oregon banks; Change all your mail to Oregon; Sell any property or end any leases you have in Nevada. Or course you need to research the rules for in state college tuition, death with dignity if any apply to you. In border areas you must be careful to establish residency for children to attend public schools. Some families try to cheat to get their children into a better school. |
What does investment bank risk during IPO? | There are two kinds of engagements in an IPO. The traditional kind where the Banks assume the risks of unsold shares. Money coming out of their pockets to hold shares no one wants. That is the main risk. No one buying the stock that the bank is holding. Secondly, there is a "best efforts" engagement. This means that bank will put forth its best effort to sell the shares, but will not be on the hook if any don't sell. This is used for small cap / risky companies. Source: Author/investment banker |
Is it bad etiquette to use a credit or debit card to pay for single figure amounts at the POS | Until the CARD act, credit card rules required that merchants had no minimum purchase requirement to use a card. New rules permit a minimum but it must be clearly posted. Update - Stores can now refuse small credit card charges is an excellent article which clarifies the rules. It appears that these rules apply to credit, not debit cards. So to be clear - the minimum do not apply to the OP as he referenced using a debit card. "Superiority"? Hm. I'd be a bit embarrassed to charge such small amounts. Although when cash in my wallet is very low, I may have little choice. Note, and disclaimer, I am 48, 30 years ago when I started using cards, there were no POS machines. Credit card transactions had a big device that got a card imprint and the merchant looked up to see if your card was stolen in a big book they got weekly/monthly. Times have changed, and debit cards may be faster, especially if with cash you give the cashier $5.37 for a $2.37 transaction, but the guy entered $5 already. This often takes a manager to clear up. |
What are “preferred” stocks? How are they different from normal (common) stocks? | I know this has already been answered and I know its frowned upon to dump a link, however, when it comes to investments it's best to get data from an 'official' source to avoid misinterpretations and personal opinions. The attached pdf is from the S&P and provides detailed, but not overwhelming, information regarding the types of preferreds, the risks & common terminology: http://us.spindices.com/documents/education/practice-essentials-us-preferreds.pdf Page 1: PREFERRED SECURITIES DEFINED Borrowing from two worlds, a preferred security has both equity and fixed income characteristics. As such, the preferred structure offers a flexible approach to structuring a preferred offering for an issuer. Companies have many reasons to issue preferred securities. Financial institutions, for example, need to raise capital. Many times they will use the preferred market because of any required regulatory requirements, in addition to cost considerations. Banks and financial institutions are required to maintain a certain level of Tier 1 capital—which includes common equity and perpetual non-cumulative preferreds—as protection against the bank’s liabilities. Issuing more common equity comes at a cost, including the dilution of existing shares, which a company may not want to bear. Preferred securities are a cheaper alternative approach to raising the capital. Companies often use preferred stock for strategic reasons. Some of these uses include: |
Why does a stock's price fluctuate so often, even when fresh news isn't available? | Investors are "forever" comparing the prices of stocks to other stocks. As others have pointed out, this is done faster and more frequently nowadays with high-speed computer programs. There may be no "fresh" news on stock A, but if there is fresh news on stock B (as there usually is), the news on B affects the COMPARISON with stock A. That could be what causes trading in stock A that has "no news." |
Am I understanding buying options on stock correctly | Here is a quick and dirty explanation of options. In a nutshell, you pay a certain amount to buy a contract that gives you the right, but not the obligation, to buy or sell a stock at a predetermined price at some date in the future. They come in a few flavors: I'll give you $100 if you let me buy 10,000 shares of XYZ for $10 more per share than it is trading at today any time before August 10th. I'll give you $100 if you promise to buy 10,000 shares of XYZ from me for $10 less per share than it is trading at today if I ask before August 10th. There are also two main types based on the expiration behavior: There are lots of strategies that employ options, too many to go into. Two key uses are.. Leverage: Buying Call options can give you a much higher return on your investment than just investing in the actual stock. However, with much higher risk of losing all of your investment instead of just some of it when the stock drops. Hedging: If you already own the underlying stock, put options can be used to buy down risk of serious drops in a holding. |
How can the ROE on a stock be more than 100%? | A company's Return on Equity (ROE) is its net income divided by its shareholder's equity. The shareholder's equity is the difference between total assets and total liabilities, and is not dependent on the stock price. What it takes to have a ROE over 100% is to have the income be greater than the equity. This might happen for a variety of reasons, but one way a high ROE happens is if the shareholder's equity (the divisor) is small, which can occur if past losses have eroded the company's capital (the original invested cash and retained earnings). If the equity has become a small value, the income for some period might exceed it, and so the ROE would be over 100%. Operating margin is not closely related to ROE. Although operating income is related to net income, to calculate the margin you divide by sales, which is completely unrelated to shareholder's equity. So there is no relationship with ROE to be expected. Operating margin is primarily dependent on market conditions, and can be substantially different in different industries. |
How to find SEC filings that are important to stock market | 10-Q is the quarterly report, and accordingly is filed quarterly. Similarly, 10-K is the annual report. 8-K is a general form for notification of material events. It is filed every time a material event is required to be reported to the shareholders. It may accompany the periodical reports, but doesn't have to. It can be filed on its own. If you're only interested in the financial statements, then you should be looking for the 10K/10Q forms. SEC will tell you when the forms were filed (dates), but it won't tell you what's more material and what's less. So you can plot a stock price graph on these dates, and see what was deemed more material by the investors based on the price fluctuations, but be prepared to find fluctuations that have no correlation to filings - because the market as a whole can drag the stock up or down. Also, some events may not be required to be reported to SEC, but may be deemed material by the investors. For example, a Cupertino town hall meeting discussing the zoning for the new AAPL HQ building may be deemed material by the investors, based on the sentiments, even if no decision was made to be reported to SEC. |
Stocks given by company vest if I quit? | You were probably not given stock, but stock options. Those options have a strike price and you can do some more research on them if needed. Lets assume that you were given 5K shares at a strike of 20, and they vest 20% per year. Assume the same thing in your second year and you are going to leave in year three. You would have 2K shares from your year 1 grant, and 1K shares from your year 2 grant, so 2K total. If you leave no more shares would be vested. If you leave you have one of two options: To complicate matters subsequent grants may have different strike prices, so perhaps year two grant is at $22 per share. However, in pre-public companies that is not likely the case. For a bit of history, I worked at a pre-ipo company and we were all going to get rich. I was given generous grants, but decided to leave. I really wanted to buy my options but simply didn't have the money. Shortly after I left the company folded, so the money would have been thrown away anyway. When a company is private the motivate their employees with tales of riches, but they are not required to disclose financial data. This company did a very good job of convincing employees that all was fine, when it wasn't. Also I received options in a publicly traded company. Myself and other employees received options that were "underwater" or worth far less than the strike price. You could let them expire so one did not owe money, but they were worthless. Hopefully that answers your question. |
P/E multiples for privately held companies? | You're indeed right, this cannot be answered affirmatively. I will try, without going too deep in details, to brush a shallow portrait In its simplest form, a going concern company could be valued by the present value of a growing perpetuity (Cash Flow/(Required return - growth)), assuming compounding perpetual growth. That's a massive assumption for a yet to turn a dime company. That's why comparable transactions are usually used as benchmark. In this case, your PE can be thought as the inverse of a growing perpetuity, and it's size will be determined by the difference between return and growth. So when you're pre-revenue, you're basically trying to value a moonshot with everything to prove, no matter how genius the idea. Considering the high levels of financial risks due to failure, VCs will require biblical levels of returns (50% to 90% is not unheard of). Hence why they usually leave with a good chunk of the company in seed rounds. When you've had a few sales, you got to know your customer and you've tested the markets, your direction gets clearer and your prospects improve. Risks moves down a notch and the next round of financing will be at much lower rates. Your growth rate, still high but nowhere as crazy as before, can be estimated with relatively more precision. Companies turning a recurrent level of profits are the easiest to value (all else being equal). The financial mathematics are more appropriate now, and their value will be derived by current market conditions as well as comparable transactions. With unlimited resources and perfect markets, the value of the company will be the same wether the founder is at the helm or the VCs are in the place. But considering many founders need the VCs' resources to extract the value of their company and markets are imperfect, the value of the company can change significantly depending on the decisions. Hope that helps! |
Who gets the dividend when a stock is bought/sold around the ex-dividend date? [duplicate] | Your understanding is incorrect. The date of record is when you have to own the stock by. The ex-dividend date is calculated so that transaction before that date settles in time to get you listed as owner by the date of record. If you buy the stock before the ex-dividend date, you get the dividend. If you buy it on or after the ex-dividend date, the seller gets the dividend. |
Does reading financial statements (quarterly or annual reports) really help investing? | Financial statements provide a large amount of specialized, complex, information about the company. If you know how to process the statements, and can place the info they provide in context with other significant information you have about the market, then you will likely be able to make better decisions about the company. If you don't know how to process them, you're much more likely to obtain incomplete or misleading information, and end up making worse decisions than you would have before you started reading. You might, for example, figure out that the company is gaining significant debt, but might be missing significant information about new regulations which caused a one time larger than normal tax payment for all companies in the industry you're investing in, matching the debt increase. Or you might see a large litigation related spending, without knowing that it's lower than usual for the industry. It's a chicken-and-egg problem - if you know how to process them, and how to use the information, then you already have the answer to your question. I'd say, the more important question to ask is: "Do I have the time and resources necessary to learn enough about how businesses run, and about the market I'm investing in, so that financial statements become useful to me?" If you do have the time, and resources, do it, it's worth the trouble. I'd advise in starting at the industry/business end of things, though, and only switching to obtaining information from the financial statements once you already have a good idea what you'll be using it for. |
Is there a free, online stock screener for UK stocks? | I'm actually building a UK stock screener right now. It's more of an exercise in finding out how to work out technical things like MACD and EMA calculations, but if those are the things you're interested in, it's at http://www.pifflevalve.co.uk/screen-builder/ As I say, it's more of a personal project than anything commercial, but it's fun to play with. |
What did John Templeton mean when he said that the four most dangerous words in investing are: ‘this time it’s different'? | A brief review of the financial collapses in the last 30 years will show that the following events take place in a fairly typical cycle: Overuse of that innovation (resulting in inadequate supply to meet demand, in most cases) Inadequate capacity in regulatory oversight for the new volume of demand, resulting in significant unregulated activity, and non-observance of regulations to a greater extent than normal Confusion regarding shifting standards and regulations, leading to inadequate regulatory reviews and/or lenient sanctions for infractions, in turn resulting in a more aggressive industry "Gaming" of investment vehicles, markets and/or buyers to generate additional demand once the market is saturated "Chickens coming home to roost" - A breakdown in financial stability, operational accuracy, or legality of the actions of one or more significant players in the market, leading to one or more investigations A reduction in demand due to the tarnished reputation of the instrument and/or market players, leading to an anticipation of a glut of excess product in the market "Cold feet" - Existing customers seeking to dump assets, and refusing to buy additional product in the pipeline, resulting in a glut of excess product "Wasteland" - Illiquid markets of product at collapsed prices, cratering of associated portfolio values, retirees living below subsistence incomes Such investment bubbles are not limited to the last 30 years, of course; there was a bubble in silver prices (a 700% increase through one year, 1979) when the Hunt brothers attempted to corner the market, followed by a collapse on Silver Thursday in 1980. The "poster child" of investment bubbles is the Tulip Mania that gripped the Netherlands in the early 1600's, in which a single tulip bulb was reported to command a price 16 times the annual salary of a skilled worker. The same cycle of events took place in each of these bubbles as well. Templeton's caution is intended to alert new (especially younger) players in the market that these patterns are doomed to repeat, and that market cycles cannot be prevented or eradicated; they are an intrinsic effect of the cycles of supply and demand that are not in synch, and in which one or both are being influenced by intermediaries. Such influences have beneficial effects on short-term profits for the players, but adverse effects on the long-term viability of the market's profitability for investors who are ill-equipped to shed the investments before the trouble starts. |
Why are big companies like Apple or Google not included in the Dow Jones Industrial Average (DJIA) index? | The Dow Jones Industrial Average (DJIA) is a Price-weighted index. That means that the index is calculated by adding up the prices of the constituent stocks and dividing by a constant, the "Dow divisor". (The value of the Dow divisor is adjusted from time to time to maintain continuity when there are splits or changes in the roster.) This has the curious effect of giving a member of the index influence proportional to its share price. That is, if a stock costing $100 per share goes up by 1%, that will change the index by 10 times as much as if a stock costing $10 per share goes up by the same 1%. Now look at the price of Google. It's currently trading at just a whisker under $700 per share. Most of the other stocks in the index trade somewhere between $30 and $150, so if Google were included in the index it would contribute between 5 and 20 times the weight of any other stock in the index. That means that relatively small blips in Google's price would completely dominate the index on any given day. Until June of 2014, Apple was in the same boat, with its stock trading at about $700 per share. At that time, Apple split its stock 7:1, and after that its stock price was a little under $100 per share. So, post-split Apple might be a candidate to be included in the Dow the next time they change up the components of the index. Since the Dow is fixed at 30 stocks, and since they try to keep a balance between different sectors, this probably wouldn't happen until they drop another technology company from the lineup for some reason. (Correction: Apple is in the DJIA and has been for a little over a year now. Mea culpa.) The Dow's price-weighting is unusual as stock indices go. Most indices are weighted by market capitalization. That means the influence of a single company is proportional to its total value. This causes large companies like Apple to have a lot of influence on those indices, but since market capitalization isn't as arbitrary as stock price, most people see that as ok. Also, notice that I said "company" and not "stock". When a company has multiple classes of share (as Google does), market-cap-weighted indices include all of the share classes, while the Dow has no provision for such situations, which is another, albeit less important, reason why Google isn't in the Dow. (Keep this in mind the next time someone offers you a bar bet on how many stocks are in the S&P 500. The answer is (currently) 505!) Finally, you might be wondering why the Dow uses such an odd weighting in its calculations. The answer is that the Dow averages go back to 1896, when Charles Dow used to calculate the averages by hand. If your only tools are a pencil and paper, then a price-weighted index with only 30 stocks in it is a lot easier to calculate than a market-cap-weighted index with hundreds of constituents. About the Dow Jones Averages. Dow constituents and prices Apple's stock price chart. The split in 2014 is marked. (Note that prices before the split are retroactively adjusted to show a continuous curve.) |
Owing state tax Interest and a result of living in Maryland and working in Virginia | Ultimately, you are the one that is responsible for your tax filings and your payments (It's all linked to your SSN, after all). If this fee/interest is the result of a filing error, and you went through a preparing company which assumes liability for their own errors, then you should speak to them. They will likely correct this and pay the fees. On the other hand, if this is the result of not making quarterly payments, then you are responsible for it. (Source: Comptroller of Maryland Site) If you [...] do not have Maryland income taxes withheld by an employer, you can make quarterly estimated tax payments as part of a pay-as-you-go plan. If your employer does withhold Maryland taxes from your pay, you may still be required to make quarterly estimated income tax payments if you develop a tax liability that exceeds the amount withheld by your employer by more than $500. From this watered-down public-facing resource, it seems like you'll get hit with fees for not making quarterly payments if your tax liability exceeds $500 beyond what is withheld (currently: $0). |
Tax planning for Indian TDS on international payments | Tax Deducted at source is applicable to Employee / Employer [contract employee] relations ... it was also made applicable for cases where an Indian company pays for software products [like MS Word etc] as the product is not sold, but is licensed and is treated as Royalty [unlike sale of a consumer product, that you have, say car] ... Hence it depends on how your contract is worded with your India clients, best is have it as a service agreement. Although services are also taxed, however your contract should clearly specify that any tax in India would be borne by your Indian Client ... Cross Country taxation is an advanced area, you will not find good advice free :) |
Tax consequences when foreign currency changes in value | If you buy foreign currency as an investment, then the gains are ordinary income. The gains are realized when you close the position, and whether you buy something else go back to the original form of investment is of no consequence. In case #1 you have $125 income. In case #2 you have $125 income. In case #3 you have $166 loss. You report all these items on your Schedule D. Make sure to calculate the tax correctly, since the tax is not capital gains tax but rather ordinary income at marginal rates. Changes in foreign exchange between a transaction and the conversion of the proceeds to USD are generally not considered as income (i.e.: You sold a property in Mexico, but since the money took a couple of days to clear, the exchange rate changed and you got $2K more/less than you would based on the exchange rate on the day of the transaction - this is not a taxable income/loss). This is covered by the IRC Sec. 988. There are additional rules for contracts on foreign currency, TTM rules, etc. Better talk to a licensed tax adviser (EA/CPA licensed in your State) for anything other than trivial. |
Is it a good idea to get an unsecured loan to pay off a credit card that won't lower a high rate? | nan |
Some U.S. Tax Questions (CPA Concerns) | He has included this on Schedule D line 1a, but I don't see any details on the actual transaction. It is reported on form 8949. However, if it is fully reported in 1099-B (with cost basis), then you don't have to actually detail every position. Turbotax asked me to fill in individual stock sales with proceeds and cost basis information. ... Again, it seems to be documented on Schedule D in boxes 1a and 8a. See above. I received a 1099-Q for a 529 distribution for a family member. It was used for qualified expenses, so should not be taxable. Then there's nothing to report. I believe I paid the correct amounts based on my (possibly flawed) understanding of estimated taxes. His initial draft had me paying a penalty. I explained my situation for the year, and his next draft had the penalties removed, with no documentation or explanation. IRS assesses the penalty. If you volunteer to pay the penalty, you can calculate it yourself and pay with the taxes due. Otherwise - leave it to the IRS to calculate and assess the penalty they deem right and send you a bill. You can then argue with the IRS about that assessment. Many times they don't even bother, if the amounts are small, so I'd suggest going with what the CPA did. |
When is the right time to buy a new/emerging technology? | As you said, the next generation will be cheaper and more efficient. Same for the generation after that. From a financial standpoint, there isn't a steadfast theory that supports when to buy the technology. It comes down to primarily personal issues. As far as I know, Musk's claims about the cost were relating to a traditional slate roof, not a traditional asphalt shingle roof. I can't recall if he explicitly said one way or the other, but I have yet to see any math that supports a comparison to asphalt shingles. If you look at all of the demos and marketing material, it's comparisons to various styles of tile roofing, which is already more expensive than asphalt shingles. Do you feel it's worth it to invest now, or do you think it would be more worth it to invest later when the costs are lower? A new roof will last 10-20 years (if not longer...I'm not a roof expert). Do you need a new roof yet? Are your electricity bills high enough that the cost of going solar will offset it enough? Can you sell unused power back to your power company? I could go on, but I think you get the point. It's entirely a personal decision, and not one that will have a definitive answer. If you keep waiting to make a purchase because you're worried that the next generation will be cheaper and more efficient, then you're never going to make the purchase. |
In a competitive market, why is movie theater popcorn expensive? | In the theater, it's a person who can afford to buy expensive pop corn, cause he can buy the expensive movie ticket too... Also sitting at one place will make him feel hungry and buy something to eat... So maximum chances are that in the theater, that guy is your potential customer... Otherwise if the popcorn seller is somewhere outside the theater, they may charge you less. That's because of a different target audience... They would be targeting anyone who comes near the theater, who would not be willing to pay for expensive snacks or movie tickets... So very few customers around will be actually potential customers... To maximize their profits, they will keep the prices low and supply as much as they can... I know this is going against the normal Price Elasticity of Demand and Supply graph, but if the prices are low there will be high demand, so if the PED is more than 1, the supplier should supply as much as they can, to maximize profits... Its all based on the target audience... That's what I think should be the case of expensive popcorn in movie theaters... |
Better rate for investment between CD or savings | Excel has two functions you can use: Your question has the CD with a APR and the savings account that mentions both APR and APY. So convert them both to APY to compare them. The savings account (2.27 APY) will return more money based on the numbers in your question (2.27% vs 1.56%) The previous part was the math part of the answer. The following takes into other considerations. For this case the Savings account will return a larger amount of money if the conditions don't change. The CD rate is guaranteed, but the savings account could change every business day. The savings rate could go up, or down. If you expect the savings account rate to rain higher than the CD you might not want to lock into the CD. If you expect the savings rate will drop then get the CD. Of course there are penalties if you cash in the CD early. |
What is the next step to collect money after a judgment has been ignored? | On the off chance that your indebted person is unwilling to pay and you know they have the methods, it's a great opportunity to utilize your neighborhood sheriff. You have three alternatives to gather: a bank exact, wage garnishment, or a land lien. It sounds like you'll have to contact your nearby police/sheriff's specialty and they can additionally enable you to out and get you your cash. |
23 and on my own, what should I be doing? | You are doing Great! But you might want to read a couple of books and do some studying on budgeting and personal finance - education yourself now and you will avoid pain in the future. I learned a lot from reading Dave Ramsey's Total Money Makeover, and I have found some great advice from the simple budgeting guidelines on LearnVest. Budget in these three categories with these percentages, You may find that your "essentials" lower than 50%, because you are sharing room and utilities. You want to put as much into "financial" as you can for the first 1-2 years, to reduce (or eliminate) your student loan debt. Many folks will recommend you save six months (salary/expenses) for emergencies and unexpected situations. But understand that you are in debt now, and you have a unique opportunity to pay off your debt before your living expenses creep up (as they so often do). Since you are a contractor, put aside 2 months expenses (twice what I would normally advise), and then attack paying off your debts with passion. Since you have a mix of student loans, focus on paying them off by picking one at a time, paying the minimum against the others while you pay off the one you picked, then proceed to the next. Dave Ramsey advises a Debt Snowball, paying the smallest one first (psychological advantage, early wins), while others advise paying the highest interest off first. Since you have over $2400/month available to pay down debt, you could plan on reducing your student loan debt substantially in a year. But avoid accumulating other debt along the way. Save for larger purchases. Your bedroom purchase may have been premature, but you needed some basics. But check your contract. Since many 0% furniture loan deals retroactively charge interest if you don't pay them off in full - you might want to make regular payments, and pay the debt off a month early (avoid any 'gotcha's). You might want to open a retirement account - many folks recommend a Roth account for folks your age - it is after tax, but you don't pay tax when you withdraw money. Roth is better when you have lots of deductions (think mortgage, kids). But some retirement account would be great to get started. Open a credit union account (if you can), that will make getting a credit card or personal loan (installment) easier. You want to build a credit file, but you don't want credit card debt (seems contradictory), so opening 2 credit cards over the next year will help your credit. You want a good credit mix (student loans, revolving, installment, and mortgage - wait on that one). |
Wells Fargo Brokerage has no shares of stock to short | This is the bird's eye view of how shorting works: When you place an order to sell a stock short, your broker attempts to grab the desired number of shares from any accounts of its other customers and makes them available for you to sell. If no other customers own shares of this stock, then generally you are out of luck (It is more complicated like that in practice, but this is just an overview). Your odds are better if the particular stock has a large float (i.e. a large number of shares that are actually available for trading) and its short ratio is low (which means relatively few shares are currently being sold short). Also, a large brokerage may be more likely to have access to the shares than a small niche-market broker. The example you've given, Angie's List (ANGI) is a $600M small-cap with a comparatively low float, and though I haven't been able to glean the short ratio, it appears that a lot of investors are bearish on this stock and probably already had the same idea to short it. There is really no way to find out if a specific broker has shares in inventory available for shorting, short of (forgive the pun) checking directly with the broker. |
High credit utilization, some high interest - but credit score not overly bad. How to attack debt in this situation? | While paying off your debt quickly is obviously desirable it is simply not going to be possible. Even with tight budgeting I think you will struggle to put more than £500 or so per month towards your debt. I would keep trying to move the highest interest debt onto something cheaper, be it a loan, a balance transfer credit card ( http://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards#nofees ) etc. It is also worth looking at your current credit cards more carefully. Sometimes you may be able to get a balance transfer deal on an existing card by talking to the card issuer, then shuffle your debt around to take advantage of it ( http://www.moneysavingexpert.com/credit-cards/cut-credit-card-interest ) Some think it's taboo but in your position I would also be seriously considering if you have any friends and family who can lend you money at a less crippling interest rate. |
Sale of jointly owned stock | It depends on when she became the shareholder of record. When your wife received the stock, was ownership clearly transferred to her? If it was, then she should have the right to sell it if she wants. The gross amount of the sale will be reported to the IRS, and then it will be up to you (and/or your tax advisers) to determine its tax basis so that you pay tax only on the appropriate gain. If she hasn't become the shareholder of record yet, then it can be a bit of a mess. Your wife's father saying "Merry Christmas; I'm giving you 500 shares of AAPL" doesn't transfer ownership to you. Him calling up the brokerage and transferring them into an account with her name (or her name and his name) does. Is your wife's father's estate settled yet? If not, then sorting all of this out is part of the fun. If it is, and this asset was left dangling out there, then that's beyond anything I know about. |
How to share income after marriage and kids? | Some basic thoughts, mostly on fairness. I guess the answer doesn't really fit this site, it's more about ethics, but this fits the question which isn't really just about money either. So when both work the same amount, it seems appropriate that both get the same mount of money, doesn't it? That is, the scheme of (as already contained in your question and in some other answers) is fair by this logic. Pay attention to hidden money: for example the one who works more for money might automatically get a pension funded this way. This is hidden money which already goes to only one partner, so when dividing equally, you'll need to take that into account (or just include "equal pensions for both" in the family's needs directly). |
Why would a person not want to purchase a Personal Liability (Umbrella) insurance policy? | This article has a section titled "Do you need an umbrella policy to cover your personal liability risks?" that says: If you have young children, for example, you might need a policy because they have lots of friends. These little tikes might get into some mischief and hurt themselves at your home. If so, you’re at risk of being sued. Do you have people over often? Do you drive like a maniac or a Parisian? Do you have firearms on your premises? Do you have gardeners and housekeepers on the grounds? All these are reasons why you might want to own an umbrella policy. Although many people in the US are homeowners, parents, drivers, etc., not everyone falls into these categories. For some people, as low as the premiums for such a policy might be, the expected cost outweighs the expected benefit. The cost of a lawsuit may be extremely high, but someone may feel that the chance of a lawsuit being filed against them is low enough to be safely ignored and not worth insuring against. I'm probably not a great example, but I'll use my own situation anyway. Even though a liability policy probably wouldn't cost me too much, I'm almost certain that I wouldn't derive any benefit from it. I live alone without children (or firearms, pet tigers, gardeners, etc.) in a 520 sq. ft. apartment, so the probability that something bad would happen to someone on the small bit of property that I rent and that they would file a sizable lawsuit against me is small enough that I choose to ignore it. |
The board of directors in companies | Boards of Directors are required for corporations by nearly all jurisdictions. Some jurisdictions have almost self-defeating requirements however, such as in tax havens. Boards of Directors are compensated by the company for which they sit. Historically, they have set their own compensation almost always with tight qualitative legal bounds, but in the US, that has now changed, so investors now set Director compensation. Directors are typically not given wages or salary for work but compensation for expenses. For larger companies, this is semantics since compensation averages around one quarter of a million of USD. Regulations almost always proscribe agencies such as other corporations from sitting on boards and individuals convicted of serious crimes as well. Some jurisdictions will even restrict directories to other qualities such as solvency. While directors are elected by shareholders, their obligations are normally to the company, and each jurisdiction has its own set of rules for this. Almost always, directors are forbidden from selling access to their votes. Directors are almost always elected by holders of voting stock after a well-publicized announcement and extended time period. Investors are almost never restricted from sitting on a board so long as they meet the requirements described above. |
Dry cleaners lost $160 pants, what should I do? | Read the claim ticket or receipt for when you made the initial drop-off. Every dry cleaning business that I've used in the USA has had a warning about damages or in case of loss. They always agree to reimburse up to a certain amount, usually $50 or $100 per item. This is standard in California, Arizona, New York and Florida, as best I can recall. You won't get the full amount, and you may or may not get the maximum, but the dry cleaner should give you some kind of cash recompense as a result of losing your clothing while they had it in their possession. |
How does the person lending shares to the short selller protect themselves if the short sellers are correct? | Lending of shares happens in the background. Those who have lent them out are not aware that they have been lent out, nor when they are returned. The borrowers have to pay any dividends to the lenders and in the end the borrowers get their stock back. If you read the fine print on the account agreement for a margin account, you will see that you have given the brokerage the permission to silently loan your stocks out. Since the lending has no financial impact on your portfolio, there's no particular reason to know and no particular protection required. Actually, brokers typically don't bother going through the work of finding an actual stock to borrow. As long as lots of their customers have stocks to lend and not that many people have sold short, they just assume there is no problem and keep track of how many are long and short without designating which stocks are borrowed from whom. When a stock becomes hard to borrow because of liquidity issues or because many people are shorting it, the brokerage will actually start locating individual shares to borrow, which is a more time-consuming and costly procedure. Usually this involves the short seller actually talking to the broker on the phone rather than just clicking "sell." |
Do I pay a zero % loan before another to clear both loans faster? | Aside from the calculations of "how much you save through reducing interest", you have two different types of loan here. The house that is mortgaged is not a wasting asset. You can reasonably expect that in 2045 it will have retained its worth measured in "houses", against the other houses in the same neighbourhood. In money terms, it is likely to be worth more than its current value, if only because of inflation. To judge the real cost or benefit of the mortgage, you need to consider those factors. You didn't say whether the 3.625% is a fixed or variable rate, but you also need to consider how the rate might compare with inflation in the long term. If you have a fixed rate mortgage and inflation rises above 3.625% in future, you are making money from the loan in the long term, not losing what you pay in interest. On the other hand, your car is a wasting asset, and your car loans are just a way of "paying by installments" over the life of the car. If there are no penalties for early repayment, the obvious choice there is to pay off the highest interest rates first. You might also want to consider what happens if you need to "get the $11,000 back" to use for some other (unplanned, or emergency) purpose. If you pay it into your mortgage now, there is no easy way to get it back before 2045. On the other hand, if you pay down your car loans, most likely you now have a car that is worth more than the loans on it. In an emergency, you could sell the car and recover at least some of the $11,000. Of course you should keep enough cash available to cover "normal emergencies" without having to take this sort of action, but "abnormal emergencies" do sometimes happen! |
How to transform dividends into capital gains? | Some investment trusts have "zero dividend preference shares" which deliver all their gains as capital gains rather than income, even if the trust was investing in income yielding stocks. They've rather gone out of fashion after a scandal some years ago (~2000). Good 2014 article on them here includes the quote "Because profits from zero dividend preference shares are taxed as capital gains, they can be used tax efficiently if you are smart about how you use your annual capital gains tax allowance." |
Is gold really an investment or just a hedge against inflation? | Another answer to this question occurred to me as I started learning more about historical uses for gold etc. Perhaps it's a crackpot idea, but I'm going to float it anyway to see what you folks think. Investing in Gold is an indirect investment in the Economy and GDP of the nation of India. To that extent is it only a hedge against inflation, so long as the indian economy grows at a more rapid rate than your local inflation rate. Fact, India currently consumes more than 1/3 of gold production, predominantly in the form of Jewelry. And their demand has been growing rapidly, up 69% just between 2009 and 2010 alone. I can't find too many historial consumption numbers for India, but when you look at past articles on this subject, you see phrases like 'one forth' and '20%' being used only a few years go to describe India's consumption levels. Fact, India has virtually no domestic sources of gold. India’s handful of gold mines produce about 2.5 tonnes of the metal each year, a fraction of the country’s annual consumption of about 800 tonnes. Fact. Indian Culture places high value on gold as a visible demonstration of wealth. Particularly in situations such In Indian weddings where the bride brings in gold to show her family's status and wealth and it forms part of the dowry given to bride. It is believed that a bride wearing 24k gold on their wedding to bring luck and happiness throughout the married life. Fact, the recent trends in outsourcing, Indian citizens working abroad sending money home, etc have all lead to a influx of foreign cash to the Indian economy and explosive GDP growth. See the following chart and compare the period of 2000-current with a chart showing the price of gold in other answer here. Notice how the curves parallel each other to a large degree Potentially unfounded conclusion drawn from above numbers. The rapid growth of the Indian economy, coupled with a rich cultural tradition that values gold as a symbol of wealth, along with a sudden rise in 'wealthy' people due to the economy and influx of foreign cash, has resulted in skyrocketing demand for gold from India, and this large 'consumption' demand is the most likely explanation for the sudden rise in the price of gold over the last several years. Investors then jump on the 'rising price bandwagon' as especially does anyone that can make a profit from selling gold to those seeking to get on said bandwagon. As such, as long as indian cultural tradition remains unchanged, and their economy remains strong, the resulting increasing demand for gold will sustain current and perhaps increased prices. Should there be any sudden collapse in the Indian GDP, gold will likely tumble in parallel. disclaimer: not an expert, just observations based off the data I've seen, there may be other parts to the picture of 'gold demand' that I've not considered. |
Why don't more people run up their credit cards and skip the country? | It's harder than you think. Once card companies start seeing your debt to credit line ratios climb, they will slash your credit lines quickly. Also, cash credit lines are always much smaller, so in reality, such a scheme would require you to buy goods that can be converted to cash, which dilutes your gains and makes it more likely that you're going to get detected and busted. Think of the other problems. Where do you store your ill-gotten gains? How do you get the money out of the country? How will your actions affect your family and friends? Also, most people are basically good people -- the prospect of defrauding $100k, leaving family and friends behind and living some anonymous life in a third world country isn't an appealing one. If you are criminally inclined, building up a great credit history is not very practical -- most criminals are by nature reactive and want quick results. |
How can I find out what factors are making a stock's price rise? | A few days ago they launched Fannie Mae Guaranteed Multifamily Structures (link) but who knows? It's a penny stock now. Google Finance is pretty good at marking news right on the chart for a particular stock. That's how I tracked that piece of news down. Can't say that it precipitated a lot of people buying the stock, but Google Finance isn't a bad place to start looking. |
Found an old un-cashed paycheck. How long is it good for? What to do if it's expired? | The typical rule in the US is 180 days, but some banks do it differently. However, even if the check is dead, you should be able to call the payroll department for your old job. They can stop payment on the old check and issue you another one. |
Does this sound like a great idea regarding being a landlord and starting a real estate empire? | A lot of people do this. For example, in my area nice townhouses go for about $400K, so if you have $80,000 you can buy one and rent it. Here are the typical numbers: So you would make $350 per month or $4,200 per year on $80,000 in capital or about 5% profit. What can go wrong: (1) The property does not rent and sits vacant. You must come up with $2100 in mortgage payments, taxes, and insurance every month without fail or default. (2) Unexpected expenses. A new furnaces costs over $5,000. A new roof costs $7,000. A new appliance costs $600 to $2000 depending on how upscale your property is. I just had a toilet fixed for a leaky plunger. It cost me $200. As you can see maintenance expenses can quickly get a lot higher than the $50 shown above... and not only that, if you fix things as cheaply as possible (as most landlords do), not only does that decrease the rentability of the property, but it causes stuff to break sooner. (3) Deadbeats. Some people will rent your property and then not pay you. Now you have a property with no income, you are spending $2100 per month to pay for it, AND you are facing steep attorney fees to get the deadbeats evicted. They can fight you in court for months. (4) Damage, wear and tear. Whenever a tenant turns over there is always a lot of broken or worn stuff that has to be fixed. Holes in the wall need to be patched. Busted locks, broken windows, non-working toilets, stains on the carpet, stuck doors, ripped screens, leaky showers, broken tiles, painting exterior trim, painting walls, painting fences, etc. You can spend thousands every time a tenant changes. Other caveats: Banks are much more strict about loaning to non home owners. You usually have to have reserve income. So, if you have little or no income, or you are stretched already, it will be difficult to get commercial loans. For example, lets say your take-home pay is $7,000 and you have no mortgage at all (you rent), then it is fine, the bank will loan you the money. But lets say you only have $5,000 in take home pay and you have an $1,800 mortgage on your own home. In that case it is very unlikely a bank will allow you to assume a 2nd mortgage on a rental property. The more you try to borrow, the more reserve income the bank will require. This tends to set a limit on how much you can leverage. |
How should one structure a portfolio given the possibility that a Total Stock Market Index might decline and not recover for a long time? | John Bogle never said only buy the S&P 500 or any single index Q:Do you think the average person could safely invest for retirement and other goals without expert advice -- just by indexing? A: Yes, there is a rule of thumb I add to that. You should start out heavily invested in equities. Hold some bond index funds as well as stock index funds. By the time you get closer to retirement or into your retirement, you should have a significant position in bond index funds as well as stock index funds. As we get older, we have less time to recoup. We have more money to protect and our nervousness increases with age. We get a little bit worried about that nest egg when it's large and we have little time to recoup it, so we pay too much attention to the fluctuations in the market, which in the long run mean nothing. How much to pay Q: What's the highest expense ratio that one should pay for a domestic equity fund? A: I'd say three-quarters of 1 percent maybe. Q: For an international fund? A: I'd say three-quarters of 1 percent. Q: For a bond fund? A: One-half of 1 percent. But I'd shave that a little bit. For example, if you can buy a no-load bond fund or a no-load stock fund, you can afford a little more expense ratio, because you're not paying any commission. You've eliminated cost No. 2.... |
Does home equity grow with the investment put into the house? | In short, your scenario could work in theory, but is not realistic... Generally speaking, you can borrow up to some percentage of the value of the property, usually 80-90% though it can vary based on many factors. So if your property currently has a value of $100k, you could theoretically borrow a total of $80-90k against it. So how much you can get at any given time depends on the current value as compared to how much you owe. A simple way to ballpark it would be to use this formula: (CurrentValue * PercentageAllowed) - CurrentMortgageBalance = EquityAvailable. If your available equity allowed you to borrow what you wanted, and you then applied it to additions/renovations, your base property value would (hopefully) increase. However as other people mentioned, you very rarely get a value increase that is near what you put into the improvements, and it is not uncommon for improvements to have no significant impact on the overall value. Just because you like something about your improvements doesn't mean the market will agree. Just for the sake of argument though, lets say you find the magic combination of improvements that increases the property value in line with their cost. If such a feat were accomplished, your $40k improvement on a $100k property would mean it is now worth $140k. Let us further stipulate that your $40k loan to fund the improvements put you at a 90% loan to value ratio. So prior to starting the improvements you owed $90k on a $100k property. After completing the work you would owe $90k on what is now a $140k property, putting you at a loan to value ratio of ~64%. Meaning you theoretically have 26% equity available to borrow against to get back to the 90% level, or roughly $36k. Note that this is 10% less than the increase in the property value. Meaning that you are in the realm of diminishing returns and each iteration through this process would net you less working capital. The real picture is actually a fair amount worse than outlined in the above ideal scenario as we have yet to account for any of the costs involved in obtaining the financing or the decreases in your credit score which would likely accompany such a pattern. Each time you go back to the bank asking for more money, they are going to charge you for new appraisals and all of the other fees that come out at closing. Also each time you ask them for more money they are going to rerun your credit, and see the additional inquires and associated debt stacking up, which in turn drops your score, which prompts the banks to offer higher interest rates and/or charge higher fees... Also, when a bank loans against a property that is already securing another debt, they are generally putting themselves at the back of the line in terms of their claim on the property in case of default. In my experience it is very rare to find a lender that is willing to put themselves third in line, much less any farther back. Generally if you were to ask for such a loan, the bank would insist that the prior commitments be paid off before they would lend to you. Meaning the bank that you ask for the $36k noted above would likely respond by saying they will loan you $70k provided that $40k of it goes directly to paying off the previous equity line. |
File bankruptcy, consolidate, or other options? | If your parents can afford to shell out $1,250 a month for 5 years, they would pretty much have the debt paid off, provided the credit card companies don't start playing games with rates. If that payment is too high, maybe you could kick in $5k every few months to knock the principal down. If they think the business can keep puttering along without losing more money, that may be the way to go. Five years is long enough that the business or property may have recovered some value. Another option, depending on the value of the home, could be a reverse mortgage. I don't know how the economy has affected those programs, but that might be a good option to get the debt cleared away. My grandfather was in a similar position back in the 70's. He owned taverns in NYC that catered to an industrial clientele... the place was booming in the 60s and my grandfather and his brother owned 4 locations at one point. But the death of his brother, post-Vietnam malaise, suburban exodus and shutting of industry really hurt the business, and he ended up selling out his last tavern in 1979 -- which was a dark hour in NYC history and real estate values. A few years later, that building sold for a tremendous amount of money... I believe 10x more. I don't know whether there was a way for his business to survive for another 5-7 years, as I was too young to remember. But I do remember my grandfather (and my father to this day) being melancholy about the whole affair. It's hard to have to work part-time in your 60's and be constantly reminded that your family business -- and to some degree a part of your life -- ended in failure. The stress of keeping things afloat when you're broke is tough. But there's also a mental reward from getting through a tough situation on your own. Good luck! |
How do I interpret this analysis from Second Opinion? | No, you shouldn't buy it. The advice here is to keep any existing holdings but not make new purchases of the stock. |
Are stories of turning a few thousands into millions by trading stocks real? | The short answer is yes, it is possible to do what these classes claim, however, it is highly unlikely. For every person they can show you that got rich using whatever so called method they are teaching, there are hundreds of people that didn't that they aren't telling you about. What I would recommend is invest in a well diversified portfolio. If you have a higher tolerance for risk then you can make some of that portfolio out of higher risk/reward investments. Maybe you pick the next Apple or Google or Netflix or whatever but that portion of your portfolio should be money that you can afford to lose in case you pick duds. |
Making $100,000 USD per month, no idea what to do with it | You want CFP or CFA who is also a fiduciary, meaning that by law they have to put your interests ahead of their own. Financial planners who are not fiduciaries can, and often do, recommend investment vehicles that earn them the most commission with little regard of your financial goals. If you already have $500,000 to invest and racking up $100,000 a month you probably qualify for most institutions private client programs. That means that the firm/advisor will look at your financial situation and come up with a custom-tailored investment plan for you which should also include tax planning. I would start with whatever financial institutions you already work with - Schwab, your bank etc. Set up a meeting and see what they have to offer. Make sure you interrogate them about their fees, their licenses/certifications and above all if they are a fiduciary. |
What is a good way to keep track of your credit card transactions, to reduce likelihood of fraud? | Read your bill, question things that don't look familiar. People who steal credit card numbers don't bother to conceal themselves well. So if you live in Florida, and all of the sudden charges appear in Idaho, you should investigate. Keeping charge slips seems counter-productive to me. I already know that I bought gasoline from the station down the street, a slip of paper whose date may or may not align with the credit card bill is not very useful. The half-life for a stolen card is hours. So you tend to see a bunch of charges appearing quickly. If someone is stealing $20 a week from you over an extended period of time, the theif is probably someone you live or work with, and paper slips won't help you there either. |
Why are big companies like Apple or Google not included in the Dow Jones Industrial Average (DJIA) index? | That is a pretty exclusive club and for the most part they are not interested in highly volatile companies like Apple and Google. Sure, IBM is part of the DJIA, but that is about as stalwart as you can get these days. The typical profile for a DJIA stock would be one that pays fairly predictable dividends, has been around since money was invented, and are not going anywhere unless the apocalypse really happens this year. In summary, DJIA is the boring reliable company index. |
How could I find someone to find a room for me to live in? (For a fee, of course.) | Many colleges have offices that can help students find off campus housing. They will have information about rooms being let by families, and about houses being shared by groups of students. The biggest issue is that many of the best places were filled months ago. With only a month to go before classes start time is tight. You can also look for electronic listings organized through a campus newspaper. The advantage of going through university resources is that they will have more information regarding the types of students they are looking for. A house full of undergrads is different than a family house that rents only to young professors. |
What does it mean for a normal citizen like me when my country's dollar value goes down? | There are several possible effects: There isn't much you could do about it. If you had enough money to try to hedge by buying foreign securities, in theory you could be happy no matter what your dollar did: if it goes up, you have pain or gain from local effects (depending on whether imports or exports have a bigger effect on your life) and that is offset by your investment having gain or pain. Ditto if it goes down. In reality the amount you might have to invest to get to this point is probably not a realistic amount for an ordinary person to invest outside their country. I own a Canadian company that bills a number of US clients and I buy very little from the US (I'm big on local food, for example, and very frugal on the consumer-goods front.) When the Canadian dollar falls, I effectively get a raise, so I'm happy while all around me are wringing their hands. |
Do I still need to pay capital gains taxes when I profit from a stock in a foreign currency? | Yes, you still need to pay income tax on your capital gain regardless of whether you converted your USD proceeds back into CAD. When you calculate your gains for tax purposes, you'll need to convert all of your gains to Canadian dollars. Generally speaking, CRA will expect you to use a historical USD to CAD exchange rate published by the Bank of Canada. At that page, notice the remark at right: Are the Exchange Rates Shown Here Accepted by Canada Revenue Agency? Yes. The Agency accepts Bank of Canada exchange rates as the basis for calculations involving income and expenses that are denominated in foreign currencies. |
Pros & cons in Hungary of investing retirement savings exclusively in silver? What better alternatives, given my concerns? | I think precious metals as an investment might set one up for disappointment. Why does it seem to continually decline despite the variance? As many have noted, there isn't much productive use for precious metals, and no major wars are taking place, so they aren't being used as currency substitutes, not to mention that more is being pulled out of the ground every day. The real reason why this graph shows silver to decline in real value over time is because its using a suboptimal price index. An optimal one would most likely show a stable price over the long run. Silver is a great speculation if one can determine with high confidence the direction. |
How do i get into investing stocks [duplicate] | 50 (dollars, Euros?) is a very small amount to invest. The first time I ever bought stock I picked a winner. It went up by about 40% in the first few months. I sold it and lost money. How? I only bought 10 shares at $7.50 each. The profit was less than the two commissions for buying and selling (about $17 a piece). If you are thinking of buying individual stocks, You simply need to save up more money before it will be practical. If you are not trying to beat the market, which is probably not something an amateur like you or I should attempt, then you should consider low cost index funds. I have money in mutual funds, some of which, have as low as a $100 minimum investment. I have moved entirely away from picking stocks. It was a good experience and I could afford to lose the money, but as a long term strategy, it just was not working for me. Note: This is coming from an American. If this somehow does not apply in Europe... |
Why would people sell a stock below the current price? | People in this case, are large institutional investors. The "bid ask" spread is for "small traders" like yourself. It is put out by the so-called specialists (or "market makers") and is typically good for hundreds or thousands of shares at a time. Normally, 2 points on a 50 stock is a wide spread, and the market maker will make quite a bit of money on it trading with people like yourself. It's different if a large institution, say Fidelity, wants to sell, say 1 million shares of the stock. Depending on market conditions, it may have trouble finding buyers willing to buy in those amounts anywhere near 50. To "move" such a large block of stock, they may have to put the equivalent of K-Mart's old "Blue Light Special" on, several points below. |
Started new job. Rollover previous employer 401k to new 401k, IRA or Roth IRA? | Rolling a 401(k) to an IRA should be your default best option. Rolling a 401(k) to another 401(k) is rarely the best option, but that does happen. I've done it once when I started a job at a company that had a great 401(k) with a good selection of low-cost mutual funds. I rolled the 401(k) from one previous job in to this 401(k) to take advantage of it. In all other cases, I rolled 401(k)s from previous jobs to my Rollover IRA, which gave me the most freedom of investment options. Finally, with 401(k)-to-Roth IRA rollovers, it's important to decouple two concepts so you can analyze it as a sum of two transactions: |
If gold's price implodes then what goes up? | It's not clear that anything needs to go up if gold goes down. In a bubble, asset prices can just collapse, without some other asset increasing to compensate. Economies are not a zero-sum game. On the other hand, gold may fall when people decide they don't need to hoard some store of value that, to their minds, never changes. It could very well indicate that there is more confidence in the broader economy. I am not a gold bug, so I don't much see the point in "investing" in something that is non-productive and also inedible, but to each his own. |
For what dates are the NYSE and U.S. stock exchanges typically closed? | The NYSE publishes a list of holidays at its website. New link: https://www.nyse.com/markets/hours-calendars Old link in the original answer that doesn't work now: http://www.nyse.com/about/newsevents/1176373643795.html Hope that helps! |
Best way to start investing, for a young person just starting their career? | When you start to buy stock, don't buy too little of it! Stocks come at a cost (you pay a commission), and you need to maintain a deposit, you have to take these costs into account when buying to calculate your break even point for selling. Don't buy stock for less than 1.500€ Also, diversify. Buy stock from different sectors and from different geographies. Spread your risks. Start buying 'defensive' stocks (food, pharma, energy), then move to more dynamic sectors (telecom, informatics), lastly buy stock from risky sectors that are not mature markets (Internet businesses). Lastly, look for high dividend. That's always nice at the end of the year. |
How to convince someone they're too risk averse or conservative with investments? | Let the man be. If you've tried again and again to convince him, and haven't, maybe he doesn't want to be convinced. It's his money, and he has every right to manage it as he sees fit. You can advise him, but its his call whether he accepts your advice or not, and for what reasons. And suppose you push and push and it gets through? Now either he has more money than he would otherwise, and he's happy he has such a smart friend. Or he loses 30% of his money, and you're trying to tell him that he's going to earn it back in due time, but you can't, because he's not talking to you. Ever. What do you think is the mean benefit to your friendship? |
Is there a difference between buying few shares of an expensive stock vs many shares of an inexpensive one? | Before the prevalence of electronic trading, trading stocks was very costly, dropping from ~15c in the late 1970s to less than a nickel per share today. Exchange fees for liquidity takers are ~0.3c per share, currently. When orders were negotiated exclusively by humans, stocks used to be quoted in fractions rather than decimal, such as $50 1/2 instead of something more precise like $50.02. That necessary ease of negotiation for humans to rapidly trade extended to trade size as well. Traders preferred to handle orders in "round lots", 100 shares, for ease of calculation of the total cost of the trade, so 100 shares at $50 1/2 would have a total cost of $5,050. The time for a human to calculate an "odd lot" of 72 shares at $50.02 would take much longer so would cost more per share, and these costs were passed on to the client. These issues have been negated by electronic trading and simply no longer exist except for obsolete brokerages. There are cost advantages for extremely large trades, well above 100 shares per trade. Brokerage fees today run the gamut: they can be as insignificant as what Interactive Brokers charges to as high as a full service broker that could charge hundreds of USD for a few thousand USD trade. With full service brokerages, the charges are frequently mystifying and quoted at the time a trade is requested. With discount brokerages, there is usually a fee per trade and a fee per share or contract. Interactive Brokers will charge a fee per share or option only and will even refund parts of the liquidity rebates exchanges provide, as close as possible to having a seat on an exchange. Even if a trader does not meet Interactive Brokers' minimum trading requirement, the monthly fee is so low that it is possible that a buy and hold investor could benefit from the de minimis trade fees. It should be noted that liquidity providing hidden orders are typically not rebated but are at least discounted. The core costs of all trades are the exchange fees which are per share or contract. Over the long run, costs charged by brokers will be in excess of charges by exchanges, and Interactive Brokers' fee schedule shows that it can be reduced to a simple markup over exchange fees. Exchanges sometimes have a fee schedule with lower charges for larger trades, but these are out of reach of the average individual. |
Taxation of shares | If you sell your shares for more than their value at the time you received them (i.e. you make a profit) then you will be liable for capital gains tax - but only if the profit exceeds your annual allowance (£11,100, in tax year 2015-16). This is unrelated to how you came by the shares in the first place. (Note that there are certain exemptions to this, which includes some employer share schemes.) |
Does it make sense to buy a house in my situation? | My opinion is to hold off. I don't see housing market rising anytime soon, possibly even going lower, so you don't have to worry about getting in before it rises. Pay off the credit card debt, maybe even earlier if possible, then that flexibility will be there, the divorce proceedings may have an end in sight, and therefore you'll know more about any outcomes from that. The economy is still shaky, the flexibility of renting may come in real handy. |
Why is the dominant investing advice for individuals to use mutual funds, exchanged traded funds (ETFs), etc | Funds - especially index funds - are a safe way for beginning investors to get a diversified investment across a lot of the stock market. They are not the perfect investment, but they are better than the majority of mutual funds, and you do not spend a lot of money in fees. Compared to the alternative - buying individual stocks based on what a friend tells you or buying a "hot" mutual fund - it's a great choice for a lot of people. If you are willing to do some study, you can do better - quite a bit better - with common stocks. As an individual investor, you have some structural advantages; you can take significant (to you) positions in small-cap companies, while this is not practical for large institutional investors or mutual fund managers. However, you can also lose a lot of money quickly in individual stocks. It pays to go slow and to your homework, however, and make sure that you are investing, not speculating. I like fool.com as a good place to start, and subscribe to a couple of their newsletters. I will note that investing is not for the faint of heart; to do well, you may need to do the opposite of what everybody else is doing; buying when the market is down and selling when the market is high. A few people mentioned the efficient market hypothesis. There is ample evidence that the market is not efficient; the existence of the .com and mortgage bubbles makes it pretty obvious that the market is often not rationally valued, and a couple of hedge funds profited in the billions from this. |
How to pay with cash when car shopping? | I usually get a cashiers check to cover about 90% - 95% of the expected amount (whatever I think is just below my wet-dream-price), and bring the rest in cash. That doesn't require so much cash to be carried. Alternatively you can write a personal check for the exact reminder, or go to the bank for the reminder after the deal is made - with the majority already paid in a cashiers check nobody would disagree. |
why would someone buy or sell just a few shares in stocks | I buy or sell a few shares whenever I have a small amount of money to transfer into out of my mutual funds. Since I'm not paying transaction fees, there is no reason not to, when that is what makes sense. If you are paying a fee for each transaction, of course it makes sense to try to wait until you have a larger amount to move so the overhead per share is lower. |
Do dividend quotes for U.S. stocks include witheld taxes? | No. As a rule, the dividends you see in the distribution table are what you'll receive before paying any taxes. Tax rates differ between qualified and unqualified/ordinary dividends, so the distribution can't include taxes because tax rates may differ between investors. In my case I hold it in an Israeli account but the tax treaty between our countries still specifies 25% withheld tax This is another example of why tax rates differ between investors. If I hold SPY too, my tax rate will be very different because I don't hold it in an account like yours, so the listed dividend couldn't include taxes. |
What will be the long term impact of the newly defined minimum exchange rate target from francs to euro? | The total size of the eurozone economy is $13 trillion, whereas Switzerland'd GDP is about $0.5 trillion, so the eurozone is about 26 times larger. As such, I would not expect this move to have a large effect on the eurozone economy. On the margins, this may decrease somewhat eurozone exports to Switzerland and increase imports from Switzerland, so this would be a slight negative for eurozone growth. Switzerland accounts for 5.2% of the EU's imports, and these imports will now be slightly cheaper, which puts some deflationary pressure on the EU, particularly in the Swiss-specialized industries of chemicals, medicinal products, machinery, instruments and time pieces. But overall, 5.2% is a rather small proportion. Bottom line, most common eurozone countries' people should probably not fret too much about this announcement. What it means for Switzerland and Swiss citizens, however, is a totally different (and much more interesting) question. |
Different ways of looking at P/E Ratio vs EPS | 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. |
What are some good books for learning stocks, bonds, derivatives e.t.c for beginner with a math background? | My personal favorites are Options, Futures, and Other Derivatives by John C Hull Thinking Fast and Slow - Daniel Kahneman Expected Returns - Antti Ilmanen [check out the video : How to Think About Expected Returns] It is a 600 page book … A summary of it: Without a rational expectation of expected returns, investing can lead to severe disappointment and disillusionment. Making a good model to forecast expected returns is so difficult. Near-term expectation is almost impossible. The key is very very much about focusing on the long-term, and on getting returns that are feasible, not outlandish. There are three pillars that are central: Practically, the work of an investment manager today involves finding many different sources of returns, and diversifying effectively between them, and finally being humble about what returns we can expect today. |
How does the price of oil influence the value of currency? | From an investor's standpoint, if the value of crude oil increases, economies that are oil dependent become more favourable (oil companies will be more profitable). Therefore, investors will find that country's currency more attractive in the foreign exchange market. |
Why do gas stations charge different amounts in the same local area? | There are many factors. Most gas stations price their gas based on what it will cost them to replace it. So when their supplier raises the price that it charges the station the station typically raises its prices proportionality. The suppliers tend to have their own rates. The business needs to make a profit so the business sets the price where it feels it will make the most money. Some stations buy bargain gas. Many people say they find this gas to be just fine. Personally some stations gas seems to make my cars run much worse. I can say that my mileage can vary by as much as 4 miles to the gallon based on where I get my gas. So I pay more to go to those stations that consistently have provided me good gasoline. However higher prices do not necessarily mean better gas. We have a BP just down the street that seems to have bad gas while one about a half a mile away that I prefer because I have never had a bad tank of gas. Both are priced about the same. Also some localities have special tax zones. These are local taxes levied based on the location. We have 4 different zones here in Peoria IL (150k pop). That does not take into account the smaller cities around us. |
What is a normal amount of money to spend per week on food/entertainment/clothing? | Zero? Ten grand? Somewhere in the middle? It depends. Your stated salary, in U.S. dollars, would be high five-figures (~$88k). You certainly should not be starving, but with decent contributions toward savings and retirement, money can indeed be tight month-to-month at that salary level, especially since even in Cardiff you're probably paying more per square foot for your home than in most U.S. markets (EDIT: actually, 3-bedroom apartments in Cardiff, according to Numbeo, range from £750-850, which is US$1200-$1300, and for that many bedrooms you'd be hard-pressed to find that kind of deal in a good infield neighborhood of the DFW Metro, and good luck getting anywhere close to downtown New York, LA, Miami, Chicago etc for that price. What job do you do, and how are you expected to dress for it? Depending on where you shop and what you buy, a quality dress shirt and dress slacks will cost between US$50-$75 each (assuming real costs are similar for the same brands between US and UK, that's £30-£50 per shirt and pair of pants for quality brands). I maintain about a weeks' wardrobe at this level of dress (my job allows me to wear much cheaper polos and khakis most days and I have about 2 weeks' wardrobe of those) and I typically have to replace due to wear or staining, on average, 2 of these outfits a year (I'm hard on clothes and my waistline is expanding). Adding in 3 "business casual" outfits each year, plus casual outfits, shoes, socks, unmentionables and miscellany, call it maybe $600(£400)/year in wardrobe. That doesn't generally get metered out as a monthly allowance (the monthly amount would barely buy a single dress shirt or pair of slacks), but if you're socking away a savings account and buying new clothes to replace old as you can afford them it's a good average. I generally splurge in months when the utilities companies give me a break and when I get "extra" paychecks (26/year means two months have 3 checks, effectively giving me a "free" check that neither pays the mortgage nor the other major bills). Now, that's just to maintain my own wardrobe at a level of dress that won't get me fired. My wife currently stays home, but when she worked she outspent me, and her work clothes were basic black. To outright replace all the clothes I wear regularly with brand-new stuff off the rack would easily cost a grand, and that's for the average U.S. software dev who doesn't go out and meet other business types on a daily basis. If I needed to show up for work in a suit and tie daily, I'd need a two-week rotation of them, plus dress shirts, and even at the low end of about $350 (£225) per suit, $400 (£275) with dress shirt and tie, for something you won't be embarrassed to wear, we're talking $4000 (£2600) to replace and $800 (£520) per year to update 2 a year, not counting what I wear underneath or on the weekends. And if I wore suits I'd probably have to update the styles more often than that, so just go ahead and double it and I turn over my wardrobe once every 5 years. None of this includes laundering costs, which increase sharply when you're taking suits to the cleaners weekly versus just throwing a bunch of cotton-poly in the washing machine. What hobbies or other entertainment interests do you and your wife have? A movie ticket in the U.S. varies between $7-$15 depending on the size of the screen and 2D vs 3D screenings. My wife and I currently average less than one theater visit a month, but if you took in a flick each weekend with your wife, with a decent $50 dinner out, that's between $260-$420 (£165-270) monthly in entertainment expenses. Not counting babysitting for the little one (the going rate in the US is between $10 and $20 an hour for at-home child-sitting depending on who you hire and for how long, how often). Worst-case, without babysitting that's less than 5% of your gross income, but possibly more than 10% of your take-home depending on UK effective income tax rates (your marginal rate is 40% according to the HMRC, unless you find a way to deduct about £30k of your income). That's just the traditional American date night, which is just one possible interest. Playing organized sports is more or less expensive depending on the sport. Soccer (sorry, football) just needs a well-kept field, two goals and and a ball. Golf, while not really needing much more when you say it that way, can cost thousands of dollars or pounds a month to play with the best equipment at the best courses. Hockey requires head-to-toe padding/armor, skates, sticks, and ice time. American football typically isn't an amateur sport for adults and has virtually no audience in Europe, but in the right places in the U.S., beginning in just a couple years you'd be kitting your son out head-to-toe not dissimilar to hockey (minus sticks) and at a similar cost, and would keep that up at least halfway through high school. I've played them all at varying amateur levels, and with the possible exception of soccer they all get expensive when you really get interested in them. How much do you eat, and of what?. My family of three's monthly grocery budget is about $300-$400 (£190-£260) depending on what we buy and how we buy it. Americans have big refrigerators (often more than one; there's three in my house of varying sizes), we buy in bulk as needed every week to two weeks, we refrigerate or freeze a lot of what we buy, and we eat and drink a lot of high-fructose corn-syrup-based crap that's excise-taxed into non-existence in most other countries. I don't have real-world experience living and grocery-shopping in Europe, but I do know that most shopping is done more often, in smaller quantities, and for more real food. You might expect to spend £325 ($500) or more monthly, in fits and starts every few days, but as I said you'd probably know better than me what you're buying and what it's costing. To educate myself, I went to mysupermarket.co.uk, which has what I assume are typical UK food prices (mostly from Tesco), and it's a real eye-opener. In the U.S., alcohol is much more expensive for equal volume than almost any other drink except designer coffee and energy drinks, and we refrigerate the heck out of everything anyway, so a low-budget food approach in the U.S. generally means nixing beer and wine in favor of milk, fruit juices, sodas and Kool-Aid (or just plain ol' tap water). A quick search on MySupermarkets shows that wine prices average a little cheaper, accounting for the exchange rate, as in the States (that varies widely even in the U.S., as local and state taxes for beer, wine and spirits all differ). Beer is similarly slightly cheaper across the board, especially for brands local to the British Isles (and even the Coors Lite crap we're apparently shipping over to you is more expensive here than there), but in contrast, milk by the gallon (4L) seems to be virtually unheard of in the UK, and your half-gallon/2-liter jugs are just a few pence cheaper than our going rate for a gallon (unless you buy "organic" in the US, which carries about a 100% markup). Juices are also about double the price depending on what you're buying (a quart of "Innocent" OJ, roughly equivalent in presentation to the U.S. brand "Simply Orange", is £3 while Simply Orange is about the same price in USD for 2 quarts), and U.S.-brand "fizzy drinks" are similarly at a premium (£1.98 - over $3 - for a 2-liter bottle of Coca-Cola). With the general preference for room-temperature alcohol in Europe giving a big advantage to the longer unrefrigerated shelf lives of beer and wine, I'm going to guess you guys drink more alcohol and water with dinner than Americans. Beef is cheaper in the U.S., depending on where you are and what you're buying; prices for store-brand ground beef (you guys call it "minced") of the grade we'd use for hamburgers and sauces is about £6 per kilo in the UK, which works out to about $4.20/lb, when we're paying closer to $3/lb in most cities. I actually can't remember the last time I bought fresh chicken on the bone, but the average price I'm seeing in the UK is £10/kg ($7/lb) which sounds pretty steep. Anyway, it sounds like shopping for American tastes in the UK would cost, on average, between 25-30% more than here in the US, so applying that to my own family's food budget, you could easily justify spending £335 a month on food. |
What should my finances look like at 18? | If you're making big money at 18, you should be saving every penny you can in tax-advantaged retirement accounts. (If your employer offers it, see if you can do a Roth 401(k), as odds are good you'll be in a higher tax bracket at retirement than you are now and you will benefit from the Roth structure. Otherwise, use a regular 401(k). IRAs are also an option, but you can put more money into a 401(k) than you can into an IRA.) If you do this for a decade or two while you're young, you'll be very well set on the road to retirement. Moreover, since you think "I've got the money, why not?" this will actually keep the money from you so you can do a better job of avoiding that question. Your next concern will be post-tax money. You're going to be splitting this between three basic sorts of places: just plain spending it, saving/investing it in bank accounts and stock markets, or purchasing some other form of capital which will save you money or provide you with some useful capability that's worth money (e.g. owning a condo/house will help you save on rent - and you don't have to pay income taxes on that savings!) 18 is generally a little young to be setting down and buying a house, though, so you should probably look at saving money for a while instead. Open an account at Vanguard or a similar institution and buy some simple index funds. (The index funds have lower turnover, which is probably better for your unsheltered accounts, and you don't need to spend a bunch of money on mutual fund expense ratios, or spend a lot of time making a second career out of stock-picking). If you save a lot of your money for retirement now, you won't have to save as much later, and will have more income to spend on a house, so it'll all work out. Whatever you do, you shouldn't blow a bunch of money on a really fancy new car. You might consider a pretty-nice slightly-used car, but the first year of car ownership is distressingly close to just throwing your money away, and fancy cars only make it that much worse. You should also try to have some fun and interesting experiences while you're still young. It's okay to spend some money on them. Don't waste money flying first-class or spend tooo much money dining out, but fun/interesting/different experiences will serve you well throughout your life. (By contrast, routine luxury may not be worth it.) |
How to find out the amount of preferred stock of Coca Cola Company? | From The Coca-Cola Company website, section for Investors: Stock History, Issues Year 1919 Original issue -- 600,000 shares 100,000 preferred, par $100 each 500,000 common, without nominal or par value 1926 Eliminated 100,000 preferred in November. This means there were preferred shares issued in 1919. However, all preferred shares were "eliminated" (not sure what that means) as of 1926. There has been no subsequent reissuance of preferred shares of Coca-Cola since then. I think the company is still authorized to issue them, should they choose to do so in the future. |
As a total beginner, how do I begin to understand finance & stocks? | How I understand it is: supply/demand affect price of stock negatively/positively, respectively. Correct. Volume is the amount of buying/selling activity in these stocks (more volume = more fluctuation, right?). Sort of. Higher volume means higher liquidity. That is, a stock that is traded more is easier to trade. It doesn't necessarily mean more fluctuation and in the real world, it often means that these are well-understood stocks with a high amount of analyst coverage. This tends towards these stocks not being as volatile as smaller stocks with less liquidity. Company revenue (and profit) will help an investor predict company growth. That is one factor in a stock price. There are certain stocks that you would buy without them making a profit because their future revenue looks potentially explosive. However, these stocks are very risky and are bubble-prone. If you're starting out in the share market, it's generally a good idea to invest in index funds (I am not a broker, my advice should not be taken as financial advice). These funds aggregate risk by holding a lot of different companies. Also, statistics have shown that over time, buying and holding index funds long term tends to dramatically outperform other investment strategies, particularly for people with low amounts of capital. |
When (if) I should consider cashing in (selling) shares to realize capital gains? | How about this rule? Sell 10% of your shares every time they double in price. (of course, only buy stocks that repeatedly double in price) |
How to know if I can have NOL (U.S. tax)? | Individuals most definitely can have NOL. This is covered in the IRS publication 536. What is the difference between NOL and capital loss? NOL is Net Operating Loss. I.e.: a situation where your (allowable) expenses and deductions exceed your gross income. Basically it means that you have negative income for that year, for tax purposes. Capital loss occurs when the total amount of your capital gains reported on Schedule D is negative. What are their relations then? Not all expenses and deductions that you usually put on your tax return are allowed for NOL calculation. For example, capital loss is not allowed. I.e.: if you earned $2000 and you lost in stocks $3000 - you do not get a $1K NOL. Capital losses are excluded from NOL calculation and in this scenario you still have non-negative income for NOL purposes even though it is offset in full by capital loss deduction and your "taxable income" line is negative. The $1K that was not allowed - gets carried forward to the next year using the Capital Loss Carryover Worksheet in the instructions to Schedule D. You calculate your NOL using form 1045 schedule A. You can use the form 1045 to apply the NOL to prior 2 years, or you can elect to apply it only to future years (up to 20 years). In what cases, capital loss can be NOL? Never. |
Legal requirements to sell design content, artwork and also freelance in India? | There is no requirement to open a company. You can work as freelancer. You need to report income and file returns. If your income is more than exempt limit, pay taxes. Apply for a PAN number if you don't have one yet. |
What determines a tax resident in Florida | I think the 60 days/year come from the IRS tax residency determination, which isn't a Florida law but applies to all the states. Have a look at the "substantial presence" paragraph to see where the 60 days are coming from. |
Is it ever a good idea to close credit cards? | It is an issue of both utilization and average age of accounts. If your cards with $0 balances on them are: A) newer cards than the ones you are carrying balances on and you don't want them B) much lower limit cards than the ones you are carrying balances on then you can raise your score by closing them, as the utilization change won't be a large factor and you can raise the average age of your open accounts. |
S&P is consistently beating inflation? | TL;DR: Because stocks represent added value from corporate profits, and not the price the goods themselves are sold at. This is actually a very complicated subject. But here's the simplest answer I can come up with. Stocks are a commodity, just like milk, eggs, and bread. The government only tracks certain commodities (consumables) as part of the Consumer Price Index (CPI). These are generally commodities that the typical person will consume on a daily or weekly basis, or need to survive (food, rent, etc.). These are present values. Stock prices, on the other hand, represent an educated guess (or bet) on a company's future performance. If Apple has historically performed well, and analysts expect it to continue to perform, then investors will pay more for a stock that they feel will continue pay good dividends in the future. Compound this with the fact that there is usually limited a supply of stock for a particular company (unless they issue more stock). If we go back to Apple as an example, they can raise their price they charge on an iPhone from $400 to $450 over the course of say a couple years. Some of this may be due to higher wage costs, but efficiencies in the marketplace actually tend to drive down costs to produce goods, so they will probably actually turn a higher profit by raising their price, even if they have to pay higher wages (or possibly even if they don't raise their price!). This, in economics, is termed value added. Finally, @Hart is absolutely correct in his comment about the stocks in the S&P 500 not being static. Additionally, the S&P 500 is a hand picked set of "winners", if you will. These are not run-of-the-mill penny stocks for companies that will be out of business in a week. These are companies that Standard & Poor's Financial Services LLC thinks will perform well. |
Is it ever logical to not deposit to a matched 401(k) account? | The original question was aimed at early payment on a student loan at 6%. Let's look at some numbers. Note, the actual numbers were much lower, I've increased the debt to a level that's more typical, as well as more likely to keep the borrower worried, and "up at night." On a $50K loan, we see 2 potential payoffs. A 6 year accelerated payoff which requires $273.54 extra per month, and the original payoff, with a payment of $555.10. Next, I show the 6 year balance on the original loan terms, $23,636.44 which we would need to exceed in the 401(k) to consider we made the right choice. The last section reflects the 401(k) balance with different rates of return. I purposely offer a wide range of returns. Even if we had another 'lost decade' averaging -1%/yr, the 401(k) balance is more than 50% higher than the current loan debt. At a more reasonable 6% average, it's double. (Note: The $273.54 deposit should really be adjusted, adding 33% if one is in the 25% bracket, or 17.6% if 15% bracket. That opens the can of worms at withdrawal. But let me add, I coerced my sister to deposit to the match, while married and a 25%er. Divorced, and disabled, her withdrawals are penalty free, and $10K is tax free due to STD deduction and exemption.) Note: The chart and text above have been edited at the request of a member comment. What about an 18% credit card? Glad you asked - The same $50K debt. It's tough to imagine a worse situation. You budgeted and can afford $901, because that's the number for a 10 year payoff. Your spouse says she can grab a extra shift and add $239/mo to the plan, because that' the number to get to a 6 year payoff. The balance after 6 years if we stick to the 10 year plan? $30,669.82. The 401(k) balances at varying rates of return again appear above. A bit less dramatic, as that 18% is tough, but even at a negative return the 401(k) is still ahead. You are welcome to run the numbers, adjust deposits for your tax rate and same for withdrawals. You'll see -1% is still about break-even. To be fair, there are a number of variables, debt owed, original time for loan to be paid, rate of loan, rate of return assumed on the 401(k), amount of potential extra payment, and the 2 tax rates, going in, coming out. Combine a horrific loan rate (the 18%) with a longer payback (15+ years) and you can contrive a scenario where, in fact, even the matched funds have trouble keeping up. I'm not judging, but I believe it's fair to say that if one can't find a budget that allows them to pay their 18% debt over a 10 year period, they need more help that we can offer here. I'm only offering the math that shows the power of the matched deposit. From a comment below, the one warning I'd offer is regarding vesting. The matched funds may not be yours immediately. Companies are allowed to have a vesting schedule which means your right to this money may be tiered, at say, 20%/year from year 2-6, for example. It's a good idea to check how your plan handles this. On further reflection, the comments of David Wallace need to be understood. At zero return, the matched money will lag the 18% payment after 4 years. The reason my chart doesn't reflect that is the match from the deposits younger than 4 years is still making up for that potential loss. I'd maintain my advice, to grab the match regardless, as there are other factors involved, the more likely return of ~8%, the tax differential should one lose their job, and the hope that one would get their act together and pay the debt off faster. |
Is a fixed-price natural gas or electricity contract likely to save money? | The answer to this question will vary considerably by state and how utilities are regulated in your area. In New York, ESCOs (Energy Supply Companies) are almost always a ripoff for consumers versus the old-style regulated utility (in NY the utility supply markups are tightly regulated, but ESCOs are less regulated). You also need to really understand the marketplace rules for "locking in" a price. If you can lock in the July price for natural gas for a year, that rocks. There are other factors as well. But even then its a real bet, since weather and supply factors can have a dramatic effect on gas prices in the winter. IMO, the best bet is to run with the market rates and bank the efficiency improvements that you build into your home over time. Some utilities offer "budget plans" that smooth out your payments without interest -- I'd recommend that route if predictable bills are your goal. |
Pay online: credit card or debit card? | I use another solution: debit card with an account kept empty most of the time and another account in the same bank without any card. I keep the money on the second card-less account, and when I want to buy something, I instantly transfer the appropriate amount to the account with the card and pay. That way money is on the account tied to a debit card only for a minute before payment, and normally it is empty - so even if someone would try to fraudulently use my card number - I don't care - the transaction will be rejected. I think its the perfect solution - no fraud possible, and I don't have to worry about possibly having to bother calling my bank and requesting a chargeback, which is stressful and a waste of time and harmful to peace of mind (what if they refuse the chargeback)? I prefer to spend a minute before each transaction to transfer the money between the two accounts, and that time is not a waste, because I use it to reconsider the purchase - which prevents impulse-buying. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | The time to have looked into this is before you bought the condo, not now. You are presumably an adult. Your parents have apparently made it possible for you to have a roof of your own over your head for what is probably below rental rates (but I don't know your area, so can't say). From their point of view, they may have been doing you a favor, while giving themselves an investment opportunity. What would they be doing with that money otherwise, and at a higher or lower rate of return, and with greater or lesser risk? Where and how would you be living otherwise? More Importantly, if you can't talk to them about this you have bigger problems than money. |
Is the “Bank on Yourself” a legitimate investment strategy, or a scam? | Oddly enough, I started to research the "Bank on Yourself" strategy today as well (even before I'd ran across this question!). I'd heard an ad on the radio for it the other day, and it caught my attention because they claimed that the strategy isn't prone to market fluctuations like the stock market. It seemed in their radio ad that their target market was people who had lost serious money in their 401k's. So I set about doing some research of my own. It seems to me that the website bankonyourself.com gives a very superficial overview of the strategy without truly ever getting to the meat of it. I begin having a few misgivings at the point that I realized I'd read through a decent chunk of their website and yet I still didn't have a clear idea of the mechanism behind it all. I become leery any time I have to commit myself to something before I can be given a full understanding of how it works. It's shady and reeks of someone trying to back you into a corner so they can bludgeon you with their sales pitch until you cry "Mercy!" and agree to their terms just to stop the pain (which I suspect is what happens when they send an agent out to talk to you). There were other red flags that stood out to me, but I don't feel like getting into them. Anyway, through the use of google I was able to find a thread on another forum that was a veritable wealth of knowledge with regard to the mechanism of "Bank on Yourself" how it works. Here is the link: Bank on Yourself/Infinite Banking... There are quite a few users in the thread who have excellent insights into how all of it works. After reading through a large portion of the thread, I came away realizing that this strategy isn't for me. However, it does appear to be a potential choice for certain people depending upon their situation. |
Impact of RMD on credit worthiness | I feel like this has nothing to do with income, and as such RMDs will not really help or harm you. After a person passes, credit card companies are unlikely to collect any outstanding balance. Debts cannot be inherited, however, assets can be made to stand for debts. Many assets pass to heirs without the probate process and in some cases all of them pass this way. This leaves creditors with nothing and having to write off the balance. Even if assets do pass through probate heirs may dispute the creditors. In that case credit card balances may not be high enough justify hiring a lawyer to fight for payment; or, if they do the judge may be unsympathetic and offer nothing or pennies on the dollar. The bottom line is that they probably see you, or your demographic, as a poor credit risk and reduced their exposure by lowering your limit. While that is not what they told you, they probably have to carefully structure what they say to avoid any discrimination claims. |
Is dividend taxation priced in derivatives? | While derivative pricing models are better modeling reality as academia invests more into the subject, none sufficiently do. If, for example, one assumes that stock returns are lognormal for the purposes of pricing options like Black Scholes does, the only true dependent variable becomes log-standard deviation otherwise known as "volatility", producing the infamous "volatility smile" which disappears in the cases of models with more factors accounting for other mathematical moments such as mean, skew, and kurtosis, etc. Still, these more advanced models are flawed, and suffer the same extreme time mispricing as Black Scholes. In other words, one can model anything however one wants, but the worse the model, the stranger the results since volatility for a given expiration should be constant across all strikes and is with better models. In the case of pricing dividends, these can be adjusted for the many complexities of taxation, but the model becomes ever more complex and extremely computationally expensive for each eventuality. Furthermore, with more complexity in any model, the likelihood of discovering a closed form in the short run is less. For equities in a low interest rate, not high dividend yield, not low volatility, low dividend tax environment, the standard swap pricing models will not provide results much different from one where a single low tax rate on dividends is assumed. If one is pricing a swap on equity outside of the bounds above, the dividend tax rate could have more of an effect, but for computational efficiency, applying a single assumed dividend tax rate would be optimal with D*(1-x), instead of D in a formula, where D is the dividend paid and x is the tax rate. In short, a closed form model is only as good as its assumptions, so if anomalies appear between the actual prices of swaps in the market and a swap model then that model is less correct than the one with smaller anomalies of the same type. In other words, if pricing equity swaps without a dividend tax rate factored more closely matches the actual prices than pricing with dividend taxes factored then it could be assumed that pricing without a dividend tax factored is superior. This all depends upon the data, and there doesn't seem to be much in academia to assist with a conclusion. If equity swaps do truly provide a tax advantage and both parties to a swap transaction are aware of this fact then it seems unlikely swap sellers wouldn't demand some of the tax advantage back in the form of a higher price. A model is no defense since volatility curves persist despite what Black Scholes says they should be. |
Freehold and Leasehold for Pub/Bar? | Freehold is simple - it's when you own the building and the land it's on. There's no rent to pay (but you will still have to pay taxes!). Leasehold is when the property is leased - rented out for a fixed period that could be anything from 6 months to 199 years. There will be a rent to pay. The person who owns the property is still the freeholder. There may be some confusion caused by what is being sold. You can buy out a lease from the current leaseholder. It's also possible to buy the freehold of a property that is currently leased to someone else. It is also possible to have a freehold building on leasehold land. |
How do I know if refinance is beneficial enough to me? | When evaluating a refinance, you need to figure out the payback time. Refinancing costs money in closing costs. The payback time is the time it takes to recover the closing costs with the amount of money you are saving in interest. For example, if the closing costs are $2,000, your payback time is 2 years if it takes 2 years to save that amount in interest with the new interest rate vs. the old one. To estimate this, look at the difference in interest rate between your mortgage and the new one, and your mortgage balance. For example, let's say that you have $100,000 left on your mortgage, and the new rate is 1% lower than your current rate. In one year, you will save roughly $1,000 in interest. If your closing costs are $2,000, then your payback time is somewhere around 2 years. If you plan on staying in this house longer than the payback time, then it is beneficial to refinance. There are mortgage refinance calculators online that will calculate payback time more precisely. One thing to watch out for: when you refinance, if you expand the term of your mortgage, you might end up paying more interest over the long term, even though your rate is less and your monthly payment is less. For example, let's say you currently have 8 years left on a 15-year mortgage. If you refinance to a new 15-year mortgage, your monthly payment will go down, but if you only pay the new minimum payment for the next 15 years, you could end up paying more in interest than if you had just continued with your old mortgage for the next 8 years. To avoid this, refinance to a new mortgage with a term close to what you have left on your current mortgage. If you can't do that, continue paying whatever your current monthly payment is after you refinance, and you'll pay your new mortgage early and save on interest. |
Does a stay at home mom need term life insurance? | Absolutely! Just because a spouse doesn't have a taxable income, doesn't mean they aren't providing real, tangible benefit to the family economy with an important job. As tragic as it is to consider losing your spouse, are you truly in a position to replace everything they do you for you? Knowing what they do for you and appreciating the effort your spouse gives is important, but don't sell short the dollar amount of what they provide. Your life insurance policy should be to keep you whole. Without your spouse, you will need childcare. You might need domestic services to the home. What about a nanny or similar service? Would $50K cover that until your child is an adult? There are a number of added expenses in the short and long term that would occur if a spouse died. How much for a funeral? Obviously you know the amount and term depends on the age of your kid. But I think you should really try to account for the number of daily hours you spouse puts in, and try to attach a cost to those hours. Then buy insurance for them just as you would for a wage earning. For example, buy a policy that is 10x the annual cost for services it would take to compensate for your spouse. Your tolerance for risk and cost can adjust it up and down from there. |
Saving up for an expensive car | Any way you look at it, this is a terrible idea. Cars lose value. They are a disposable item that gets used up. The more expensive the car, the more value they lose. If you spend $100,000 on a new car, in four years it will be worth less than $50,000.* That is a lot of money to lose in four years. In addition to the loss of value, you will need to buy insurance, which, for a $100,000 car, is incredible. If your heart is set on this kind of car, you should definitely save up the cash and wait to buy the car. Do not get a loan. Here is why: Your plan has you saving $1,300 a month ($16,000 a year) for 6.5 years before you will be able to buy this car. That is a lot of money for a long range goal. If you faithfully save this money that long, and at the end of the 6.5 years you still want this car, it is your money to spend as you want. You will have had a long time to reconsider your course of action, but you will have sacrificed for a long time, and you will have the money to lose. However, you may find out a year into this process that you are spending too much money saving for this car, and reconsider. If, instead, you take out a loan for this car, then by the time you decide the car was too much of a stretch financially, it will be too late. You will be upside down on the loan, and it will cost you thousands to sell the car. So go ahead and start saving. If you haven't given up before you reach your goal, you may find that in 6.5 years when it is time to write that check, you will look back at the sacrifices you have made and decide that you don't want to simply blow that money on a car. Consider a different goal. If you invest this $1300 a month and achieve 8% growth, you will be a millionaire in 23 years. * You don't need to take my word for it. Look at the car you are interested in, go to kbb.com, select the 2012 version of the car, and look up the private sale value. You'll most likely see a price that is about half of what a new one costs. |
How do dividend reinvestment purchases work? | The Brokerage firm will purchase shares for the dividend paid in a omnibus account for the security of the issuer and then they will distribute fractional shares among all their clients that chose Div Reinvest. They will only have to buy 1 extra share to account for the fractional portion of what they allocate. The structure of the market does not permit trading of fractional shares. There is generally not any impact to the market place for Div Reinvest with the exception of certain securities that pay large dividends that are not liquid. sometimes this occurs in preferred securities where a large amount of Div reinvestment could create a large market order that has market impact. Most brokers place market orders for the opening on the day following the payment of the dividend. When you sell the fractional portion same process as full shares are sold into the market and the fractional if traded between you and the brokers omnibus account. if it creates a full share for the broker (omnibus has .6 shares and you sell him .5 they would likely flip that out to the street with the full share portion of your order. This would not have impact to outstanding shares and all cost are operational and with the broker handling the Div reinvestment service. |
Clarify on some Stocks Terminology | Yep, you have it pretty much right. The volume is the number of shares traded that day. The ticker is giving you the number of shares bought at that price in a given transaction, the arrow meaning whether the stock is up or down on the day at that price. Institutional can also refer to pensions, mutuals funds, corporates; generally any shareholder that isn't an individual person. |
Do you avoid tax when taking a home equity loan? | Why would someone invest in other instruments (e.g. stocks) to pay for childrens' college education when the capital gains on those are taxed, unlike a home equity loan? Many tax advantageous vehicles exist for the purpose of saving for college education such as 529 plans, Roth IRAs, Series EE and I bonds. Tax and penalty free distributions from a portfolio of stocks is possible if the distributions are for qualified education expenses and the account is in the form of a Roth IRA. A house is collateral for a home equity line of credit. A combination of unfortunate events could cause someone to default on the loan and loose their residence. Also, the tax advantages of 529 plans, and Roth IRAs are not applicable to purchase a motor boat. With respect, some people like to leave the home equity loan untapped for other uses. More Details: 529 plans are not taxed by on the Federal level when the withdraws are used for college. In many states, contributions to state sponsored 529 plans are deductible on the state level. These are not self directed so you can't trade stocks/bonds in a 529 plan, however, certain plans allow you to lock in the rate you pay for credit at today's prices. If you want a self directed (ability to trade stocks/bonds) vehicle with tax free disbursements for qualified education, consider a Roth IRA. There are yearly contribution limits, and penalty if the proceeds are not used for qualified educational expenses. Also I believe interest revenue from Series EE and I bonds is tax free if the bond is used for education. There are special conditions and situations to 529 plans, Roth IRAs, Series EE and I bonds, the purpose of this answer was to expand upon the tax advantageous vehicles for higher education. |
Who can truly afford luxury cars? | There's an aspect to this question that I really love. In general, it's a question about consumer behavior that can be expanded to inquire about the purchasing profile of any luxury good. Who buys $500 pocketbooks, $1000 wristwatches, etc? I can offer one observation regarding the car. Two close neighbors, both couples drive cars valued well above what my wife and I drive. Both families moved, and shared with us that they failed to save for their kid's college tuition. My response was to feel that this was a choice they made. As I commented to my daughter, "We can afford anything, we just can't afford everything." Our budget started with saving both for retirement and college. Very little eating out, and modest vacations, cars, and clothing. This story is getting more common for us as our peers have high school age children. As others have mentioned, the millionaire next door does not drive a Ferrari or wear a Rolex. To some extent, if you were able to peek at the budgets of these car buyers, you'll find what members here would consider at best, an interesting set of priorities. |
How should I handle student loans when leaving University and trying to buy a house? | Concise answers to your questions: Depends on the loan and the bank; when you "accelerate" repayment of a loan by applying a pre-payment balance to the principal, your monthly payment may be reduced. However, standard practice for most loan types is that the repayment schedule will be accelerated; you'll pay no less each month, but you'll pay it off sooner. I can neither confirm nor deny that an internship counts as job experience in the field for the purpose of mortgage lending. It sounds logical, especially if it were a paid internship (in which case you'd just call it a "job"), but I can't be sure as I don't know of anyone who got a mortgage without accruing the necessary job experience post-graduation. A loan officer will be happy to talk to you and answer specific questions, but if you go in today, with no credit history (the student loan probably hasn't even entered repayment) and a lot of unknowns (an offer can be rescinded, for instance), you are virtually certain to be denied a mortgage. The bank is going to want evidence that you will make good on the debt you have over time. One $10,000 payment on the loan, though significant, is just one payment as far as your credit history (and credit score) is concerned. Now, a few more reality checks: $70k/yr is not what you'll be bringing home. As a single person without dependents, you'll be taxed at the highest possible withholdings rate. Your effective tax rate on $70k, depending on the state in which you live, can be as high as 30% (including all payroll/SS taxes, for a 1099 earner and/or an employee in a state with an income tax), so you're actually only bringing home 42k/yr, or about $1,600/paycheck if you're paid biweekly. To that, add a decent chunk for your group healthcare plan (which, as of 2014, you will be required to buy, or else pay another $2500 - effectively another 3% of gross earnings - in taxes). And even now with your first job, you should be at least trying to save up a decent chunk o' change in a 401k or IRA as a retirement nest egg. That student loan, beginning about 6 months after you leave school, will cost you about $555/mo in monthly payments for the next 10 years (if it's all Stafford loans with a 50/50 split between sub/unsub; that could be as much as $600/mo for all-unsub Stafford, or $700 or more for private loans). If you were going to pay all that back in two years, you're looking at paying a ballpark of $2500/mo leaving just $700 to pay all your bills and expenses each month. With a 3-year payoff plan, you're turning around one of your two paychecks every month to the student loan servicer, which for a bachelor is doable but still rather tight. Your mortgage payment isn't the only payment you will make on your house. If you get an FHA loan with 3.5% down, the lender will demand PMI. The city/county will likely levy a property tax on the assessed value of land and building. The lender may require that you purchase home insurance with minimum acceptable coverage limits and deductibles. All of these will be paid into escrow accounts, managed by your lending bank, from a single check you send them monthly. I pay all of these, in a state (Texas) that gets its primary income from sales and property tax instead of income, and my monthly payment isn't quite double the simple P&I. Once you have the house, you'll want to fill the house. Nice bed: probably $1500 between mattress and frame for a nice big queen you can stretch out on (and have lady friends over). Nice couch: $1000. TV: call it $500. That's probably the bare minimum you'll want to buy to replace what you lived through college with (you'll have somewhere to eat and sleep other than the floor of your new home), and we're already talking almost a month's salary, or payments of up to 10% of your monthly take-home pay over a year on a couple of store credit cards. Plates, cookware, etc just keeps bumping this up. Yes, they're (theoretically) all one-time costs, but they're things you need, and things you may not have if you've been living in dorms and eating in dining halls all through college. The house you buy now is likely to be a "starter", maybe 3bed/2bath and 1600 sqft at the upper end (they sell em as small as 2bd/1bt 1100sqft). It will support a spouse and 2 kids, but by that point you'll be bursting at the seams. What happens if your future spouse had the same idea of buying a house early while rates were low? The cost of buying a house may be as little as 3.5% down and a few hundred more in advance escrow and a couple other fees the seller can't pay for you. The cost of selling the same house is likely to include all the costs you made the seller pay when you bought it, because you'll be selling to someone in the same position you're in now. I didn't know it at the time I bought my house, but I paid about $5,000 to get into it (3.5% down and 6 months' escrow up front), while the sellers paid over $10,000 to get out (the owner got married to another homeowner, and they ended up selling both houses to move out of town; I don't even know what kind of bath they took on the house we weren't involved with). I graduated in 2005. I didn't buy my first house until I was married and pretty much well-settled, in 2011 (and yes, we were looking because mortgage rates were at rock bottom). We really lucked out in terms of a home that, if we want to or have to, we can live in for the rest of our lives (only 1700sqft, but it's officially a 4/2 with a spare room, and a downstairs master suite and nursery/office, so when we're old and decrepit we can pretty much live downstairs). I would seriously recommend that you do the same, even if by doing so you miss out on the absolute best interest rates. Last example: let's say, hypothetically, that you bite at current interest rates, and lock in a rate just above prime at 4%, 3.5% down, seller pays closing, but then in two years you get married, change jobs and have to move. Let's further suppose an alternate reality in which, after two years of living in an apartment, all the same life changes happen and you are now shopping for your first house having been pre-approved at 5%. That one percentage point savings by buying now, on a house in the $200k range, is worth about $120/mo or about $1440/yr off of your P&I payment ($921.42 on a $200,000 home with a 30-year term). Not chump change (over 30 years if you had been that lucky, it's $43000), but it's less than 5% of your take-home pay (month-to-month or annually). However, when you move in two years, the buyer's probably going to want the same deal you got - seller pays closing - because that's the market level you bought in to (low-priced starters for first-time homebuyers). That's a 3% commission for both agents, 1% origination, 0.5%-1% guarantor, and various fixed fees (title etc). Assuming the value of the house hasn't changed, let's call total selling costs 8% of the house value of $200k (which is probably low); that's $16,000 in seller's costs. Again, assuming home value didn't change and that you got an FHA loan requiring only 3.5% down, your down payment ($7k) plus principal paid (about another $7k; 6936.27 to be exact) only covers $14k of those costs. You're now in the hole $2,000, and you still have to come up with your next home's down payment. With all other things being equal, in order to get back to where you were in net worth terms before you bought the house (meaning $7,000 cash in the bank after selling it), you would need to stay in the house for 4 and a half years to accumulate the $16,000 in equity through principal payments. That leaves you with your original $7,000 down payment returned to you in cash, and you're even in accounting terms (which means in finance terms you're behind; that $7,000 invested at 3% historical average rate of inflation would have earned you about $800 in those four years, meaning you need to stick around about 5.5 years before you "break even" in TVM terms). For this reason, I would say that you should be very cautious when buying your first home; it may very well be the last one you'll ever buy. Whether that's because you made good choices or bad is up to you. |
Is a currency “hedged” ETF actually a more speculative instrument than an unhedged version? | Currency hedge means that you are somewhat protected from movements in currency as your investment is in gold not currency. So this then becomes less speculative and concentrates more on your intended investment. EDIT The purpose of the GBSE ETF is aimed for investors living in Europe wanting to invest in USD Gold and not be effected by movements in the EUR/USD. The GBSE ETF aims to hedge against the effects of the currency movements in the EUR/USD and more closely track the USD Gold price. The 3 charts below demonstrate this over the past 5 years. So as is demonstrated the performance of the GBSE ETF closely matches the performance of the USD Gold price rather than the EUR Gold price, meaning someone in Europe can invest in the fund and get the appropriate similar performance as investing directly into the USD Gold without being affected by currency exchange when changing back to EUR. This is by no way speculative as the OP suggests but is in fact serving the purpose as per the ETF details. |
UK: Personal finance book for a twenty-something | Public sector and private industry retirement plans, taxation and estate planning would be the most substantial differences between the two countries. The concepts for accumulating wealth are the same, and if you are doing anything particularly lucrative with an above average amount of risk, the aforementioned differences are not very relevant, for a twenty something. |
Does investing more money into stocks increase chances of profit? | Have a read of this PF&M article, which @Blackjack has an excellent answer that speaks around risk. Answers which suggest that the return is proportional to the amount invested is a very simplistic argument. It is far more complex than that. I would content that your initial question Does investing more money into stocks increase chances of profit? is not the best question. The answer is it depends upon your investment methodology. The following will increase your chance of overall profit in the stock market |
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