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Making $100,000 USD per month, no idea what to do with it
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If you already have 500k in a Schwab brokerage account, go see your Schwab financial consultant. They will assign you one, no charge, and in my experience they're sharp people. Sure, you can get a second opinion (or even report back here, maybe in chat?), but they will get you started in the right direction. I'd expect them to recommend a lot of index funds, just a bit of bonds or blended funds, all weighted heavily toward equities. If you're young and expect the income stream to continue, you can be fairly aggressive. Ask about the fees the entire way and you'll be fine.
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Explanations on credit cards in Canada
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If so, it seems to me that this system is rather error prone. By that I mean I could easily forget to make a wire some day and be charged interests while I actually have more than enough money on the check account to pay the debt. I have my back account (i.e. chequing account) and VISA account at/from the same bank (which, in my case, is the Royal Bank of Canada). I asked my bank to set up an automatic transfer, so that they automatically pay off my whole VISA balance every month, on time, by taking the money from my bank account. In that way I am never late paying the VISA so I never pay interest charges. IOW I use the VISA like a debit card; the difference is that it's accepted at some places where a debit card isn't (e.g. online, and for car rentals), and that the money is deducted from my bank account at the end of the month instead of immediately.
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Vanguard Mutual Funds — Diversification vs Share Class
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In general, I'd try to keep things as simple as possible. If your plan is to have a three-fund portfolio (like Total Market, Total International, and Bond), and keep those three funds in general, then having it separated now and adding them all as you invest more is fine. (And upgrade to Admiral Shares once you hit the threshold for it.) Likewise, just putting it all into Total Market as suggested in another answer, or into something like a Target Retirement fund, is just fine too for that amount. While I'm all in favor of as low expense ratios as possible, and it's the kind of question I might have worried about myself not that long ago, look at the actual dollar amount here. You're comparing 0.04% to 0.14% on $10,000. That 0.1% difference is $10 per year. Any amount of market fluctuation, or buying on an "up" day or selling on a "down" day, is going to pretty much dwarf that amount. By the time that difference in expense ratios actually amounts to something that's worth worrying about, you should have enough to get Admiral Shares in all or at least most of your funds. In the long run, the amount you manage to invest and your asset allocation is worth much much more than a 0.1% expense ratio difference. (Now, if you're going to talk about some crazy investment with a 2% expense ratio or something, that's another story, but it's hard to go wrong at Vanguard in that respect.)
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I have a 2008 HHR under finance it needs a new engine
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I'm leaning more towards trading it in can anyone give me some pointers on how to get the best deal? Information is key to getting the best deal possible. That is why I would strongly suggest getting a second opinion on the repairs. A misfire could be caused by many things. From cheap (bad spark plugs or cables) to mid-range cost (timing is off) to expensive (not getting proper compression in the cylinders due to mechanical issues that could require an engine rebuild). Also, car diagnostics is not an exact science, so it is definitely worth checking with another mechanic. You trust the first place you took it too, which is great. You taking it to another place does not represent a lack of trust, it represents knowing that humans are fallible and car repair diagnostics are not perfect either. Once you have quotes from 2 or 3 places for the repair work, you are in a much better position to negotiate. The next step is to see how much it will cost to replace the thing. Get actual quotes for trade-in from dealers, and you must disclose the engine troubles to them when getting this quote. $8,000 minus this amount is how much you are under water. Add that to the price of the car you would like to purchase to know how much of a loan you will have to take out (minus any downpayment). The next thing to consider is how you manage your risk from there. Your new car will be under-water too. Can you even get a loan? Will you need additional collateral or gap insurance to get the loan? What happens if you get in an accident the next day and total this car? Once you have all of this information, you are ready to really start thinking about the decision to be made. Things to consider: How reliable has the HHR been up to now? You don't want to put $3,500 into it now only to have to spend a few grand more in a month to replace the transmission. It is hard for us to know this as we don't know how long you have had it, what troubles you have had in the past, how well you have taken care of it (regular oil changes and maintenance). Keshlam is right about asking mechanics to check for other problems and scheduled maintenance that has not been done (e.g., timing belts replaced). Once you have made your decision, remember that everything is negotiable if you are wiling to walk away. If you decide to keep the car, try to get a better deal on the repairs by checking out other repair shops. If you decide to buy another car and get rid of this one, both the sale price of the new car and the trade-in price of the HHR are negotiable. Shop around and put in the work to buy something that will last a at a good price.
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Is it OK to use a credit card on zero-interest to pay some other credit cards with higher-interest?
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good vs "bad" debt in the context of that post. At least in the UK this can be a good tactic to reduce the cost of credit card debt. Some things to consider
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What's a good way to find someone locally to help me with my investments?
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I strongly suggest personal referral. Ask all of your friends/family/neighbors/co-workers/dog-sitter what they think of their brokers until you find someone who loves his broker. As for transferring assets, I've found it to be quite easy. It's in the new broker's best interest to get those assets, so he should be more than willing to help.
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Do Fundamentals Matter Anymore in Stock Markets?
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It sounds to me like you may not be defining fundamental investing very well, which is why it may seem like it doesn't matter. Fundamental investing means valuing a stock based on your estimate of its future profitability (and thus cash flows and dividends). One way to do this is to look at the multiples you have described. But multiples are inherently backward-looking so for firms with good growth prospects, they can be very poor estimates of future profitability. When you see a firm with ratios way out of whack with other firms, you can conclude that the market thinks that firm has a lot of future growth possibilities. That's all. It could be that the market is overestimating that growth, but you would need more information in order to conclude that. We call Warren Buffet a fundamental investor because he tends to think the market has made a mistake and overvalued many firms with crazy ratios. That may be in many cases, but it doesn't necessarily mean those investors are not using fundamental analysis to come up with their valuations. Fundamental investing is still very much relevant and is probably the primary determinant of stock prices. It's just that fundamental investing encompasses estimating things like future growth and innovation, which is a lot more than just looking at the ratios you have described.
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Theoretically, if I bought more than 50% of a company's stocks, will I own the company?
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I believe Tom Au answered your key question. Let me just add in response to, "What if someone was just simply rich to buy > 50%, but does not know how to handle the company?" This happens all the time. Bob Senior is a brilliant business man, he starts a company, it is wildly successful, then he dies and Bob Junior inherits the company. (If it's a privately owned company he may inherit it directly; if it's a corporation he inherits a controlling interest in the stock.) Bob Junior knows nothing about how to run a business. And so he mismanages the company, runs it into the ground, and eventually it goes bankrupt. Stock holders lose their investment, employees lose their jobs, and in general everyone is very unhappy. I suppose it also happens that someone gets rich doing thing A and then decides that he's going to buy a business that does thing B. He has no idea how to run a business doing thing B and he destroys the company. I can't think of any specific examples of this off the top of my head, but I've heard of it happening with people who make a ton of money as actors or professional athletes and then decide to start a business.
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What will happen to my shares if company delisted
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If they own enough shares to vote to sell, you will be paid the offer price quoted to you. At that point if you do not wish to sell your only recourse will be to file a lawsuit. This is a common tactic for significant shareholders who have a minority stake and cannot block the sale because they have insufficient voting rights. What usually happens then is that they either settle the lawsuit out of court by paying a little more to the holdouts or the lawsuit is thrown out and they take the original offer from the buyer. Rarely does a lawsuit from a buyout go to trial.
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Return on asset (ROA) value for a stock is reported differently on Yahoo Finance and MarketWatch
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Why there is this huge difference? I am not able to reconcile Yahoo's answer of 5.75%, even using their definition for ROA of: Return on Assets Formula: Earnings from Continuing Operations / Average Total Equity This ratio shows percentage of Returns to Total Assets of the company. This is a useful measure in analyzing how well a company uses its assets to produce earnings. I suspect the "Average Total Equity" in their formula is a typo, but using either measure I cannot come up with 5.75% for any 12-month period. I can, however, match MarketWatch's answer by looking at the 2016 fiscal year totals and using a "traditional" formula of Net Income / Average Total Assets: I'm NOT saying that MatketWatch is right and Yahoo is wrong - MW is using fiscal year totals while Yahoo is using trailing 12-month numbers, and Yahoo uses "Earnings from Continuing Operations", but even using that number (which Yahoo calculates) I am not able to reconcile the 5.75% they give.
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Ways to save for child's college education where one need not commit to set contributions? [duplicate]
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529 is good. Though, I would avoid other kinds of investments in kids names and or setting up accounts that are too complex or difficult to use as college costs will come in may aspects starting application fees and travel expenses when looking for college as well as housing and allowance spending.
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Why would a company care about the price of its own shares in the stock market?
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The main reason is that a public company is owned by its share holders, and share holders would care about the price of the stock they are owning, therefore the company would also care, because if the price go down too much, share holders become angry and may vote to oust the company's management.
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Is there a free, online stock screener for UK stocks?
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AdvFN has one--click the Charts & Research pulldown and choose UK Screener. Free but requires login.
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How long should I keep an uncleared transaction in my checkbook?
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Typically I'll carry the charge for quite awhile, up to a year. If it hasn't cleared by then, I contact the institution that should have received the money to see what they want to do about it. If they tell me not to worry about it, then I change the payee to be "Overdraft Protection", and consider it as having been spent. That way I build up (slowly) a cushion in my checking account.
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Buying a foreclosed property
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That may depend largely in which country you are in, the legislation in that country and the state of the economy and property market (more specifically) at the time of the foreclosure. In Australia, where we do not have non-recourse loans (except in SMSFs) the banks are obliged to recoup as much as possible for the mortgagee, however they would not hold on to the property indefinitely, as that could cause other problems and they have to return the mortgagee portion of the funds back to them (if there is any funds left after the bank takes their portion). In 2008, when the property market here was weak we had bought some foreclosure houses and were able to get them 20% to 25% below what they were selling at the year before. If there was a forclosure in today's strong market in Australia (and especially in Sydney), I dought you would get much of a discount at all. So it may largly depend on the demand and supply at the time of the forclosure.
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When should I start an LLC for my side work?
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The major reason to start an LLC for side work is if you want the additional personal liability protection afforded by one. If you're operating as a sole proprietor, you may be exposing yourself to liability: debts and judgments against your business can put your personal assets at risk! So, if you're intending to continue and grow your side work in the future, you ought to consider the LLC sooner than later. It's also an important legal decision and you should consider seeking a professional opinion. The Wall Street Journal has a brief guide titled How to Form an LLC. Here are some notable excerpts: A limited liability company, or LLC, is similar to a partnership but has the legal protections of personal assets that a corporation offers without the burdensome formalities, paperwork and fees. [...] Some states charge annual fees and taxes that can diminish the economic advantage of choosing to become an LLC. Among LLC advantages: pass-through taxation – meaning the profits and losses “pass through” the business to the individuals owning the business who report this information on their own personal tax returns. The result can be paying less in taxes, since profits are not taxed at both the business level and the personal level. Another plus: Owners aren’t usually responsible for the company’s debts and liabilities. [...] Also check out onstartups.com's Startup 101: Should You Form An Inc. or An LLC? Here are some additional articles that discuss the advantages / disadvantages of forming an LLC:
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May 6, 2010 stock market decline/plunge: Why did it drop 9% in a few minutes?
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I hate attributing an event like this to a single cause. That implies that the market is an orderly system where everything operates smoothly. I prefer to see it as much chaotic. When I see a drop like that happen, I'd say that there were a lot of sellers of stocks and all the buyers were bidding less and less for those few minutes. Perhaps the catalyst for that was a typo or a strange order. But in the end all the participants in the market responded by bidding down stocks, not just one person. It takes sides to complete a trade. I know my model is a bit simplistic... I'd be happy if someone corrected me :-)
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What's the least risky investment for people in Europe?
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Putting the money in a bank savings account is a reasonably safe investment. Anything other than that will come with additional risk of various kinds. (That's right; not even a bank account is completely free of risk. Neither is withdrawing cash and storing it somewhere yourself.) And I don't know which country you are from, but you will certainly have access to your country's government bonds and the likes. You may also have access to mutual funds which invest in other countries' government bonds (bond or money-market funds). The question you need to ask yourself really is twofold. One, for how long do you intend to keep the money invested? (Shorter term investing should involve lower risk.) Two, what amount of risk (specifically, price volatility) are you willing to accept? The answers to those questions will determine which asset class(es) are appropriate in your particular case. Beyond that, you need to make a personal call: which asset class(es) do you believe are likely to do better or less bad than others? Low risk usually comes at the price of a lower return. Higher return usually involves taking more risk (specifically price volatility in the investment vehicle) but more risk does not necessarily guarantee a higher return - you may also lose a large fraction of or even the entire capital amount. In extreme cases (leveraged investments) you might even lose more than the capital amount. Gold may be a component of a well-diversified portfolio but I certainly would not recommend putting all of one's money in it. (The same goes for any asset class; a portfolio composed exclusively of stocks is no more well-diversified than a portfolio composed exclusively of precious metals, or government bonds.) For some specifics about investing in precious metals, you may want to see Pros & cons of investing in gold vs. platinum?.
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How do I explain why debt on debt is bad to my brother?
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How about doing some calculations and show him how much he is paying for things he is buying on credit.Mix in some big and small purchases to show how silly it is on both. Some examples: What really made the debt issue hit home for me (no pun intended) was when I bought my first house and read the truth in lending disclosure statements to find that a $70K house (those were the days) was going to cost me over $200K by the time I had paid off a 30 year note.
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Are stories of turning a few thousands into millions by trading stocks real?
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you'll need 25k to start or 2k in multiple accounts, that way you have access to margin, and don't have to worry about Pattern day trading limits. Be right more than you are wrong. Go up look for 3x potential up vs down risk. Compound daily. you can't double a penny every day every day for a month it becomes to difficult. but you can do 1%/day or maybe better. 2k compounded 1% every day becomes 75k at the end of a year (but you'll likely have to take weekends off, or look for other markets)
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Can housing prices rise faster than incomes in the long run?
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When over the long term housing costs in a area rise faster than wages rise, the demographic of who lives in the area changes. The size and income parameters change. A region that was full of young singles is now populated with couples with adult children, that means that the businesses and amenities have to change. At a national level it isn't sustainable unless other items change. The portion of monthly income that can be safely allocated to housing would have to change. One adjustment could be the the lengthening of home loan periods, thus dropping the monthly payment. This has been seen with car loans, over the last few decades the length of loans has increased. In interesting related event could be the change in deduction of mortgage interest and property tax. If this was to change abruptly, there could be an abrupt change the estimated value of housing, because the calculus of affordability would change.
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Money market account for emergency savings
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So long as you have complete, virtually instant access to funds through checks, debit card, or ATM transaction, then yes it would be a better option than a "vanilla" savings account. If it's in a brokerage account that you would need to process a transfer and potentially wait a few days for everything to settle, then I would just keep it in savings. The amount earned in interest isn't worth the extra hassle. A compromise might be to keep a few thousand in a savings account and the rest in a money market. That way you earn some interest and still have instant access to enough funds to cover most emergencies.
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As an investor what are side effects of Quantitative Easing in US and in EU?
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Quantitative Easing Explained: http://www.npr.org/blogs/money/2010/10/07/130408926/quantitative-easing-explained The short of it is that you're right; the Fed (or another country's Central Bank) is basically creating a large amount of new money, which it then injects into the economy by buying government and institutional debt. This is, in fact, one of the main jobs of the central bank for a currency; to manage the money supply, which in most fiat systems involves slowly increasing the amount of money to keep the economy growing (if there isn't enough money moving around in the economy it's reflected in a slowdown in GDP growth), while controlling inflation (the devaluation of a unit of currency with respect to most or all things that unit will buy including other currencies). Inflation's primary cause is defined quite simply as "too many dollars chasing too few goods". When demand is low for cash (because you have a lot of it) while demand for goods is high, the suppliers of those goods will increase their price for the goods (because people are willing to pay that higher price) and will also produce more. With quantitative easing, the central bank is increasing the money supply by several percentage points of GDP, much higher than is normally needed. This normally would cause the two things you mentioned: Inflation - inflation's primary cause is "too many dollars chasing too few goods"; when money is easy to get and various types of goods and services are not, people "bid up" the price on these things to get them (this usually happens when sellers see high demand for a product and increase the price to take advantage and to prevent a shortage). This often happens across the board in a situation like this, but there are certain key drivers that can cause other prices to increase (things like the price of oil, which affects transportation costs and thus the price to have anything shipped anywhere, whether it be the raw materials you need or the finished product you're selling). With the injection of so much money into the economy, rampant inflation would normally be the result. However, there are other variables at play in this particular situation. Chief among them is that no matter how much cash is in the economy, most of it is being sat on, in the form of cash or other "safe havens" like durable commodities (gold) and T-debt. So, most of the money the Fed is injecting into the economy is not chasing goods; it's repaying debt, replenishing savings and generally being hoarded by consumers and institutions as a hedge against the poor economy. In addition, despite how many dollars are in the economy right now, those dollars are in high demand all around the world to buy Treasury debt (one of the biggest safe havens in the global market right now, so much so that buying T-debt is considered "saving"). This is why the yields on Treasury bonds and notes are at historic lows; it's bad everywhere, and U.S. Government debt is one of the surest things in the world market, especially now that Euro-bonds have become suspect. Currency Devaluation - This is basically specialized inflation; when there are more dollars in the market than people want to have in order to use to buy our goods and services, demand for our currency (the medium of trade for our goods and services) drops, and it takes fewer Euros, Yen or Yuan to buy a dollar. This can happen even if demand for our dollars inside our own borders is high, and is generally a function of our trade situation; if we're buying more from other countries than they are from us, then our dollars are flooding the currency exchange markets and thus become cheaper because they're easy to get. Again, there are other variables at play here that keep our currency strong. First off, again, it's bad everywhere; nobody's buying anything from anyone (relatively speaking) and so the relative trade deficits aren't moving much. In addition, devaluation without inflation is self-stablizing; if currency devalues but inflation is low, the cheaper currency makes the things that currency can buy cheaper, which encourages people to buy them. At the same time, the more expensive foreign currency increases the cost in dollars of foreign-made goods. All of this can be beneficial from a money policy standpoint; devaluation makes American goods cheaper to Americans and to foreign consumers alike than foreign goods, and so a policy that puts downward pressure on the dollar but doesn't make inflation a risk can help American manufacturing and other producer businesses. China knows this just as well as we do, and for decades has been artificially fixing the exchange rate of the Renmin B (Yuan) lower than its true value against the dollar, meaning that no matter how cheap American goods get on the world market, Chinese goods are still cheaper, because by definition the Yuan has greater purchasing power for the same cost in dollars. In addition, dollars aren't only used to buy American-made goods and services. The U.S. has positioned its currency over the years to be an international medium of trade for several key commodities (like oil), and the primary currency for global lenders like the IMF and the World Bank. That means that dollars become necessary to buy these things, and are received from and must be repaid to these institutions, and thus the dollar has a built-in demand pretty much regardless of our trade deficits. On top of all that, a lot of countries base their own currencies on our dollar, by basically buying dollars (using other valuable media like gold or oil) and then holding that cash in their own central banks as the store of value backing their own paper money. This is called a "dollar board". Their money becomes worth a particular fraction of a dollar by definition, and that relationship is very precisely controllable; with 10 billion dollars in the vault, and 20 billion Kabukis issued from Kabukistan's central bank, a Kabuki is worth $.50. Print an additional 20 billion Kabuki and the value of one Kabuki decreases to $.25; buy an additional 10 billion dollars and the Kabuki's value increases again to $.50. Quite a few countries do this, mostly in South America, again creating a built-in demand for U.S. dollars and also tying the U.S. dollar to the value of the exports of that country. If Kabukistan's goods become highly demanded by Europe, and its currency increases relative to the dollar, then the U.S. dollar gets a boost because by definition it is worth an exact, fixed number of Kabukis (and also because a country with a dollar board typically has no problem accepting dollars as payment and then printing Kabukis to maintain the exchange rate)
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Can this year's free extension-to-pay be filed electronically? IRS Form 1127
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Form 1127 (updated link) should be filed in paper (with the supporting documents) to the IRS office that has jurisdiction in the area where you live. From the instructions (see the link above): File Form 1127 with the Internal Revenue Service (Attn: Advisory Group Manager), for the area where you maintain your legal residence or principal place of business. See Pub. 4235, Collection Advisory Group Addresses, to find the address for your local advisory group. However, if the tax due is a gift tax reportable on Form 709, send Form 1127 to: Department of the Treasury Internal Revenue Service Center Cincinnati, OH 45999
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Is dividend included in EPS
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EPS is often earnings/diluted shares. That is counting shares as if all convertible securities (employee stock options for example) were converted. Looking at page 3 of Q4 2015 Reissued Earnings Press Release we find both basic ($1.13) and diluted EPS ($1.11). Dividends are not paid on diluted shares, but only actual shares. If we pull put this chart @ Yahoo finance, and hovering our mouse over the blue diamond with a "D", we find that Pfizer paid dividends of $0.28, $0.28, $0.28, $0.30 in 2015. Or $1.14 per share. Very close to the $1.13, non-diluted EPS. A wrinkle is that one can think of the dividend payment as being from last quarter, so the first one in 2015 is from 2014. Leaving us with $0.28, $0.28, $0.30, and unknown. Returning to page three of Q4 2015 Reissued Earnings Press Release, Pfizer last $0.03 per share. So they paid more in dividends that quarter than they made. And from the other view, the $0.30 cents they paid came from the prior quarter, then if they pay Q1 2016 from Q4 2015, then they are paying more in that view also.
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LLC Partnership Earned Income vs. Partnership Share
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Why would you file four K-1s for each partner? You file one K-1 per partner, on which you report the total of income attributed to that partner. It shouldn't and cannot "vary". There's no variables here, the income you report is the income already earned and attributed to that partner. What's there to vary? How you decide the attribution of income is governed by your operating agreement, the IRS only needs the bottom line.
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If I want to take cash from Portugal to the USA, should I exchange my money before leaving or after arriving?
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in my experience no-cash transactions are the best deal. Take your Portuguese credit card, get some cash ($60) for emergencies. Only pay with your credit card. It's much cheaper because it's all virtual. The best would be to set up an American bank account and transfer the money there. You can also get Paypal account, they offer credit cards too. The virtual banks, credit unions are the best option because they don't charge you for transactions. They don't have expenses with keeping actual money. Find some credit Union that accepts foreigners and take it from there. You can exchange your money on the airport because it's in tax free zone. I recommend the country of the currency since they sell you their 'valuts' and you are buying dollars. Not selling Euros... Make sure to find out what is the best deal.
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How can rebuilding a city/large area be considered an economic boost?
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You're entirely correct. It's one of those "broken window" fallacies. Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son happened to break a square of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation - "It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?" Frederic Bastiat's 1850 essay, "That which is seen and that which is not seen" is still the best and most beautifully-written of such explanations. As you point out, a gain for the construction companies is more than offset by the loss of life and financial expenditure of the insurance companies. Plus, it is never possible to quantify the entirety of the loss in terms of opportunities foregone ("that which is not seen"). People who were about to do incredible things but now gone. Property, of any nature, no longer of use to build on or perform service. Any replacement comes at the expense of other opportunities.
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A guy scammed me, but he gave me a bank account number & routing number. Can I use that to take out what he owes me?
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A routing number and account number are on the bottom of every check. If anybody who ever handled your checks or even saw your checks could just withdraw as much money as they wanted, the whole banking system would need to be reworked. In short, just having that info is not enough. Not legally.
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How much lump sum investment in stocks would be needed to yield a target stable monthly income?
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I will add another point to ChrisinEdmonton's answer... I recognize that this is perhaps appropriate as a comment--or maybe 1/2 of an answer, but the comment formatting is inadequate for what I want to say. The magic formula that you need to understand is this: (Capital Invested) * (Rate of Return) = (Income per Period) When ChrisinEdmonton says that you need $300,000, he is doing some basic algebra... (Capital Required) = (Income per Period) / (Rate of Return) So if you're looking at $12,000 per year in passive income as a goal, and you can find a "safe" 4% yield, then what ChrisinEdmonton did is: $12,000 / 0.04 = $300,000 You can use this to play around with different rates of return and see what investment options you can find to purchase. Investment categories like REITs will risk your principal a little more, but have some of the highest dividend yields of around 8%--12%. You would need $100,000--$150,000 at those yields. Some of the safest approaches would be bonds or industrial stocks that pay dividends. Bonds exist around 3%--4%, and industrial dividend stocks (think GE or UTX or Coca Cola) tend to pay more like 2%-3%. The key point I'm trying to make is that if you're looking for this type of passive income, I recommend that you don't plan on the income coming from gains to the investment... This was something that ChrisinEdmonton wasn't entirely clear about. It can be complicated and expensive to whittle away at a portfolio and spend it along the way.
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Will the stock market continue to grow forever?
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The stock market may not grow "forever". There will be growth in the stock market, though. The stock market is a positive-sum game, since it is driven in large part by the profits earned by the companies. This doesn't mean that any individual stock will go up forever, it doesn't mean that any given index will go up forever, and it doesn't mean there won't be periods when the market as a whole drops. But it is reasonable to expect that long-term investing in the market as a whole will continue to return profits that reflect the success of companies invested in. Historically, that return has averaged about 8%; future results may be different and exact results will depend on exactly when and how you invest. Re "what about Japan, which has been flat over 30 years": Market being flat doesn't mean individual companies may not be growing strongly. Picking stocks may become more important, and we might need to relearn to focus on dividends rather than being so monomaniacal about growth (dividends are not reflected in the indices, please note), but there will be money to be made. How much, and how much effort is required to get it, and whether the market offers the best available bets, deponent sayeth not. Past results are no guarantee of future returns, and your results may be better or worse than average. You should be diversified into bonds and such anyway, rather than only in the stock market.
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Are marijuana based investments promising, or just another scam?
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Is there any truth to this, or is this another niche scam that's been brewing the last few years? While it may not be an outright scam, such schemes do tend to be on borderline of scams. Technically most of what is being said claimed can be true, however in reality such windfall gains never happen to the investors. Whatever gains are there will be cornered by the growers, trades, other entities in supply chain leaving very little to the investors. It is best to stay away from such investments.
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Why is the breakdown of a loan repayment into principal and interest of any importance?
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The reason it's broken out is very specific: this is showing you how much interest accrued during the month. It is the only place that's shown, typically. Each month's (minimum) payment is the sum of [the interest accrued during that month] and [some principal], say M=I+P, and B is your total loan balance. That I is fixed at the amount of interest that accrued that month - you always must pay off the accrued interest. It changes each month as some of the principal is reduced; if you have a 3% daily interest rate, you owe (0.03*B*31) approximately (plus a bit as the interest on the interest accrues) each month (or *30 or *28). Since B is going down constantly as principal is paid off, I is also going down. The P is most commonly calculated based on an amortization table, such that you have a fixed payment amount each month and pay the loan off after a certain period of time. That's why P changes each month - because it's easier for people to have a constant monthly payment M, than to have a fixed P and variable I for a variable M. As such, it's important to show you the I amount, both so you can verify that the loan is being correctly charged/paid, and for your tax purposes.
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Evidence for timing market in the short run?
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This is the S&P a bit over 20 years. If you've discovered a way to sell at 1400 in 2000, buy at 800 or so in 2003, sell again, well, you get the idea. There's strong evidence the typical investor hears the S&P is making new highs and rushes in. It's this influx that may send stocks higher from here, until the smart money senses 'overbought' and bails. I am not the smart money, but my ability to ignore emotion, and use asset allocation naturally had me selling a bit into each run up, and of course buying during downturns. Not all or none, and not with any perfect timing, just at year end when I'm rebalancing. I am not a fan of short term timing, although I do respect Victor's observations and excellent example of when it's been shown to work.
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Corporate Finance
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If it's raising $25 million with a debt to equity ratio of 50% then it's raising $8.33 million of debt and $16.67 million of equity. You've priced it as if it were raising $25 million of debt and $25 million of equity, which would be raising $50 million with a debt to equity ratio of 100%.
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When should I walk away from my mortgage?
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The value of debt is that it allows you to profit from the return of equity beyond the amount of actual net equity you own. Of course, this only works if the cost of borrowing is less than your return on equity. Market timing matters a great deal but isn't accounted for in this view. For my answer I would like to hand-wave away market timing considerations. One plausible justification is that you could default on your current home and then immediately go buy one of equal value. If you buy a new home of a lesser value (due to lack of funds) and then prices appreciate, then you missed some opportunity cost but probably not $100k worth of it. Moving on, here are some helpful assumptions I'll make. I'll ignore performance of your portfolio after retirement and only seek to optimize F, which will be your net worth upon retirement. In either case, your current net worth is earning the R2 rate. We can convert this for both your current net worth and future savings using conversion formulas. Present to future value F = P (1+R2)^x Annual to future value F = S ( (1+R2)^x - 1 ) / R2 Adding these together is sufficient to obtain F in the case that you have no borrowing power. The case where you do not default and maintain your credit score is different due to an initial $100k penalty and the amortized value of borrowing power. In a completely theoretical sense, you get an effective (R2-R1) yield on all borrowed money. The future value will be the following: F = A1 (1+R2-R1)^x One step is missing, however, which is to convert this value (the value of having a good credit score) into present value to compare to value of your defaulting. P of borrowing power = F / (1+R2)^x = A1 { (1+R2-R1)/(1+R2) }^x Now, let's put some specific values in. Say that you can borrow $300k with your good credit history and this applies for the next 25 years, after which you retire. The borrowing rate is 7% and the time-value of money to you is 10%. I would then calculate: P of borrowing power = $58 k < $100 k This indicates that it would be more economical to default. Of course, some people might point out that it will be removed from your record after 7 years. If you plug 7 years instead of 25 years into the equation, almost no assumptions about rates will lead to the option of keeping your house being preferable. So in a nutshell, the value of your credit is probably less than $100k in a purely mathematical sense. But there are other factors too. If you don't have that borrowing ability maybe you wouldn't be able to borrow money to start the business of your dreams. If you are a rock star entrepreneur, then time-value of money to you could be 1,000% yield, sure, then maybe you could make the above numbers work (to favor keeping the house). I've also neglected ethics. As other people point out, it would be like stealing from the bank.
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Buying a home with down payment from family as a “loan”
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I would recommend against loans from family members. But if you decide to go down that path take care of the basics: This is a business decision so treat it like one. I would add that the situation you describe sounds extremely generous to your family member. I'd look at standard loan agreements (ie. in the marketplace) and model your situation more on them - if you do this, even with you paying a premium, you'd never come up with something as generous as what you have described.
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Non Resident Alien(Working full time on F1-OPT) new car sales tax deduction
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No, if you are a nonresident alien, you cannot deduct sales tax. You can only deduct state income tax. 1040NR Schedule A (which is page 3 of 1040NR) does not contain an option for sales tax, like 1040 Schedule A does. If you are a resident alien, then you can deduct sales tax.
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Why do some companies offer 401k retirement plans?
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One important thing that hasn't been mentioned here is that the vast majority of companies have eventually eliminated their Company provided Pension Plans and replaced it with a 401K with some degree of matching. There is a cost advantage to doing this as companies no longer have to maintain or work to maintain a 100% vested pension plan. This takes a great burden off them. They also don't have to manage the pension/annuity that the retirement benefit entails.
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Is it normal for brokers to ask whether I am a beginner?
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Brokers need to assess your level of competency to ensure that they don't allow you to "bite off more than you can chew" and find yourself in a bad situation. Some brokers ask you to rate your skills, others ask you how long you've been trading, it always varies based on broker. I use IB and they gave me a questionairre about a wide range of instruments, my skill level, time spent trading, trades per year, etc. Many brokers will use your self-reported experience to choose what types of instruments you can trade. Some will only allow you to start with stocks and restrict access to forex, options, futures, etc. until you ask for readiness and, for some brokers, even pass a test of knowledge. Options are very commonly restricted so that you can only go long on an option when you own the underlying stock when you are a "newbie" and scale out from there. Many brokers adopt a four-tiered approach for options where only the most skilled traders can write naked options, as seen here. It's important to note that all of this information is self-reported and you are not legally bound to answer honestly in any way. If, for example, you are well aware of the risks of writing naked options and want to try it despite never trading one before, there is nothing stopping you from saying you've traded options for 10 years and be given the privilege by your broker. Of course, they're just looking out for your best interest, but you are by no means forced into the scheme if you do not wish to be.
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The Benefits/Disadvantages of using a credit card
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In the UK, using a credit card adds a layer of protection for consumers. If something goes wrong or you bought something that was actually a scam, if you inform the credit card company with the necessary documents they will typically clear the balance for that purchase (essentially the burden of 'debt' is passed to them and they themselves will have to chase up the necessary people). Section 75 of the Consumer Credit Act I personally use my credit card when buying anything one would consider as "consumer spending" (tvs, furniture ect). I then pay off the credit card immediately. This gives me the normal benefits of the credit card (if you get cashback or points) PLUS the additional consumer credit protection on all my purchases. This, in my opinion is the most effective way of using your credit card.
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Is it unreasonable to double your investment year over year?
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I know it may not last longer but i was able to 2.5x my wealth over last 2 years.(2016, 2017 cont) I was successfully able to convert 70k into 452k in 21months. Now at this amount, I am really worried and want to take all the profit. I agree that I have been lucky with these returns but it was not all outright luck. Now my plan is to take 100k of it and try high risk investments while investing 350k in index funds.
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Does it make sense to buy a house in my situation?
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Short answer: NO. Do NOT buy a house. Houses are a "luxury" good (see Why is a house not an investment?). Although the experience of the early 2000s seemed to convince most people otherwise, houses are not an investment. Historically, it has usually been cheaper to rent, because owning a house has non-pecuniary benefits such as the ability to change things around to exactly the way you like them. Consult a rent vs. buy calculator for your area to see if your area is exceptional. I also would not rely on the mortgage interest deduction for the long term, as it seems increasingly likely the Federal government will do away with it at some point. The first thing you must do is eliminate your credit card and other debts. Try to delay paying your lawyers and anyone else who is not charging you interest (or threatening to harm you in other ways) as long as possible. Save enough money to maintain your current standard of living for 6 months should you lose your job, then put the rest in your 401(k). Another word of advice: learn to live with less. Your kids do not need separate bedrooms. Hopefully one day the time will come when you can afford a larger house, but it should not be your highest priority. You and your kids will all be worse off in the end should you have unexpected financial difficulties and you have overextended yourself to buy a house. Now that your credit score is up, see if you can renegotiate your credit card loans or negotiate a new loan with lower interest.
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Invest all at once after maxing out Roth IRA - or each time I contribute?
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This depends on the terms and conditions of your IRA account, and those of the investments you have chosen. In general, you are better off investing as quickly as is feasible given those terms. Money in your cash account doesn't earn much of a return, so the quicker you get money into something earning a return, the better. However, pay attention to the fees and costs associated with investing. If there is a per-transaction fee, you may want to consolidate, as it may be more efficient to do so - after all, if you contribute $500 at a shot, and it costs you $5 to make a trade, you're paying 1% off the top to make that trade if you make 11 of them, versus 0.1% to make 1, so the question is do you earn that 1% back over the course of the six months? That will depend on what you are investing in. More than likely you're going to earn more than 1% over the course of the six months, so it's probably worth investing it in pieces still in that situation, but if the transaction cost is higher, or the time differential lower, you may have a less clear-cut answer. I invest at Vanguard in their funds and have no transaction fees, so I have a more obvious answer (invest as soon as possible). You also need to consider whether you have minimums to pay attention to - maybe your investment is something you can only buy whole shares of, for example, or you might have a much higher fee if you make small transactions. In that case, you should wait until you have the minimum to make that transaction if the fee is more than the return you'll get. So the answer is - make the transactions as early as you can, subject to considering the fees you will pay for making them.
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Which account type to use for claimable expense I pay upfront for my employer?
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I used Quicken, so this may or may not be helpful. I have a Cash account that I call "Temporary Assets and Liabilities" where I track money that I am owed (or that I owe in some cases). So if I pay for something that is really not my expense, it is transferred to this account ("transferred" in Quicken terms). The payment is then not treated as an expense and the reimbursement is not treated as income--the two transactions just balance out.
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Why do people always talk about stocks that pay high dividends?
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Technically, the difference between dividends and growth ought to be that dividends can be reinvested in stocks other than the one that paid them, which is a definite advantage if you actually have a strategy. Dividend -paying stocks used to be preferred for exactly that reason, back in the days when fewer people were directly playing in the market and more knew what they were doing. Unfortunately, getting a periodic dividend from a stock whose price is relatively steady isn't as exciting a game as watching your stock's value bounce around and (hopefully) creep upward on a second-by-second basis. Those who are thinking in gambling terms rather than investment terms -- or who think they can beat the pros at high frequency trading, comment withheld -- want the latter, and have been putting a lot of pressure on companies to operate in the latter mode. That doesn't make it better -- certainly not for the longer-term investors -- just more fashionable. And fashion often means getting stuck with something impractical because everyone else is doing it. On this, I second Scrooge: Humbug!
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Austrailian tax resident earning salary in the UK - how much tax do I pay on foreign income?
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This page and this page on the ATO website provide some information on tax rates. They're rather lengthy and there's a few exceptions, but essentially, your entire foreign income, even if held overseas, is taxable. Australians are taxed worldwide.
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Should I use regular or adjusted close for backtesting?
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If you want to monitor how well you did in choosing your investments you will want to use stock prices that account for the dividends and splits and other changes (not just the closing price). The adjusted close will include these changes where the straight close will not include them. Using the adjusted close you will get your true percentage change. For example I have a stock called PETS that paid an $0.18 dividend in July 2015. The adjusted closes before that day in July are all $0.18 lower per share. Say the closing price had been unchanged at $20.00. The close prices would say I made no profit, but the adjusted closing price would say I made $0.18 per share on this investment because the adjusted close would read $19.82 in June 2015 but would read $20.00 in August 2015 (just like the closing price). The adjusted close allows me to know my true profit per share.
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Is 401k as good as it sounds given the way it is taxed?
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Don't forget inflation. With a Roth 401k (or IRA), you don't pay any taxes on inflationary or real gains. You pay taxes at the beginning and then no more taxes (unless you invest money after you distributed from it). With a regular, taxable investment account (not a 401k or IRA), you pay taxes on the initial amount. And then you pay taxes on the gains, both inflationary and real. So you effectively pay taxes on the inflated principal twice. Once at initial earning and once when it shows up as inflationary gains. I'll give an example later. With a traditional 401k (or IRA), you pay no taxes on the initial amount. You pay taxes on the distributed amount. That includes taxes on gains, but it only taxes them once, not twice. All the taxes are paid at distribution time. Here's a semirealistic example. This is not a real example with real numbers, but the numbers shouldn't be ridiculously off. They could happen. I'm going to ignore variation and pretend that all the numbers will be the same each year so as to simplify the math. So you pay a 25% marginal tax rate and want to invest $12,000 plus any tax savings. Roth: $12,000 principal Traditional IRA (Trad): $16,000 principal with $4000 in tax savings Taxable Investment Account (TIA): $12,000 principal Let's assume that you make an 8% rate of return and inflation is 3%. Both numbers are possible, although higher and lower numbers have occurred in the past. That gives you returns of $960 for the Roth and TIA cases and a return of $1280 for the Trad case. Pay no annual taxes on the Roth or Trad cases. Pay 25% marginal tax on the TIA case, that's $240. Balances after one year: Roth: $12,960 Trad: $17,280 TIA: $12,720 Inflation decreases the value of the Roth and TIA cases by $360 in the Roth and TIA cases. And by $480 in the Trad case. Ten years of inflationary gains (cumulative): Roth: $5354 Trad: $7138 TIA: $4872 Net buildup (including inflationary gains): Roth: $25,907 Trad: $34,543 TIA: $23,168 Real value (minus inflation to maintain spending power): Roth: $20,554 Trad: $27,405 TIA: $18,109 Now take out $3000 per year, after taxes. That's $3000 in the the Roth and TIA cases, as you already paid the taxes. In the Trad case, that's $4000 because you have to pay 25% tax which will cost $1000. Do that for five years and the new balances are Roth: $9931 Trad: $13,241 TIA: $5973 The TIA will run out in the 8th year. The Roth and Trad will both run out in the 9th year. So to summarize. The Traditional IRA initially grows the most. The TIA grows the least. The TIA is tax-advantaged over the Traditional IRA at that point, but it still runs out first. The Roth IRA grows about the same as the Traditional after taxes are included. Note that I left out the matching contribution from a 401k. That would help both those options. I assumed that the marginal tax rate would be 25% on the Traditional IRA distributions. It might be only 15%, which would increase the advantage of the Traditional IRA. I assumed that the 15% rate on capital returns would still be true for the entire period. If that is increased, the TIA option gets a lot worse. Inflation could be higher or lower. As stated earlier, the TIA account is hit the worst by inflation.
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Is there software to buy and sell stocks in real time on very small moves in price?
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I'm answering in a perspective of an End-User within the United Kingdom. Most stockbrokers won't provide Real-time information without 'Level 2' access, however this comes free for most who trade over a certain threshold. If you're like me, who trade within their ISA Holding each year, you need to look elsewhere. I personally use IG.com. They've recently began a stockbroking service, whereas this comes with realtime information etc with a paid account without any 'threshold'. Additionally, you may want to look into CFDs/Spreadbets as these, won't include the heavy 'fees' and tax liabilities that trading with stocks may bring.
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Risks associated with investing in dividend paying stocks for short term income. Alternatives?
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Your back of the envelope calculation shows an income of about 5.5% per year, which is much better than a bank. The risk of course is that in a few years when you want to sell the stock, the price may not be at the level you want. The question is what are you giving up with this plan. You have 80K in cash, will cutting it to 30K in cash make it harder for your business to survive? If your income from the business starts slowly, having that 50K in cash may be better. Selling the stock when the business is desperate for money may lock in losses.
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How to trade “exotic” currencies?
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There are firms that let you do this. I believe that Saxo Bank is one such firm (note that I'm not endorsing the company at all, and have no experience with it) Keep in mind that the reason that these currencies are "exotic" is because the markets for trading are small. Small markets are generally really bad for retail/non-professional investors. (Also note: I'm not trying to insult Brazil or Thailand, which are major economies. In this context, I'm specifically concerned with currency trading volume.)
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Buy home and leverage roommates, or split rent?
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It's doable, but there's a fair amount of risk involved. The biggest issue is that your roommates could move out. It's possible that they could have a falling out, get a job in a different city, or just move on. How difficult would it be to find another roommate? How many roommates can you lose and still afford to pay the mortgage, insurance, taxes, and all the rest of your living expenses? Even if you you retain all of your roommates until the mortgage is paid off, there's still some risk involved. If you were to lose your job, could you continue to make mortgage payments? Worst case scenario is that you could become unemployed for a time while home values in your State/City/neighborhood are crashing. Last, the position on landlord has the potential to be lucrative, but also comes with a fair amount of responsibility. It will be a drain on your time to maintain the house and to make sure you always have tenants. I know you said that your roommates are good about paying on time, but are you willing to evict a friend because they won't/can't pay rent? It's easier to ask the landlord for an extension on rent when you're friends. All that being said, I think that this idea is worth considering. My recommendation is that you consider every aspect of it, and proceed cautiously if you choose to do so.
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How much of a down payment for a car should I save before purchasing it?
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Do you need the car, or is this an optional purchase for you? Do you currently have a car that is in good working order? If you can continue to save for the car instead of buying now, you'll be getting interest on what you've saved -- and that's a lot better than 0% financing.
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How can a credit card company make any money off me? I have a no-fee card and pay my balance on time
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They don't make any money off of you personally. They make money off of the merchants per transaction when you use the card. You trigger this fee to the credit card issuer, but it doesn't come out of your pocket. (Or it shouldn't; merchants aren't allowed to pass this fee on to you.) They keep you around because you may at some point become less responsible than you already are, and it would be quite costly to get you back (a couple hundred dollars is the cost of acquiring a new credit card customer). People who are less responsible than you subsidize your free float and your rewards (if any) but the new CARD act makes it more difficult for people to use their cards irresponsibly, so these perks that you enjoy will get less perky with time.
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What purchases, not counting real estate, will help me increase my cash flow?
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You can increase your monthly cash flow in two ways: It's really that simple. I'd even argue that to a certain extent, decreasing expenses can be more cash-positive than increasing income by the same amount if you're spending post-tax money because increasing income generally increases your taxes. So if you have a chunk of cash and you want to increase your cash flow, you could decrease debt (like Chris suggested) and it would have the same effect on your monthly cash flow. Or you could invest in something that pays a dividend or pays interest. There are many options other than real estate, including dividend-paying stocks or funds, CDs, bonds, etc. To get started you could open an account with any of the major brokerage firms and get suggestions from their financial professionals, usually for free. They'll help you look at the risk/reward aspects of various investments.
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Should I re-allocate my portfolio now or let it balance out over time?
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This depends completely on your investing goals. Typically when saving for retirement younger investors aim for a more volatile and aggressive portfolio but diversify their portfolio with more cautious stocks/bonds as they near retirement. In other words, the volatility that owning a single stock brings may be in line with your goals if you can shoulder the risk.
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Why is it rational to pay out a dividend?
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Firstly, investors love dividend paying company as dividends are proof of making profit (sometimes dividend can be paid out of past profits too) Secondly, investor cash in hand is better than potential earnings by the company by way of interest. Investor feels good to redeploy received cash (dividend) on their own Thirdly, in some countries dividend are tax free income as tax on dividends has already been paid. As average tax on dividend is lower than maximum marginal tax; for some investor it generates extra post tax income Fourthly, dividend pay out ratio of most companies don't exceed 30% of available fund for paying (surplus cash) so it is seen as best of both the world Lastly, I trust by instinct a regular dividend paying company more than not paying one in same sector of industry
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Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”?
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I primarily intend to add on to WBT's answer, which is good. It has been shown that "momentum" is a very real, tangible factor in stock returns. Stocks that have done well tend to keep doing well; stocks that are doing poorly tend to keep doing poorly. For a long-term value investor, of course fundamental valuation should be your first thing to look at - but as long as you're comfortable with the company's price as compared to its value, you should absolutely hang onto it if it's been going up. The old saying on Wall Street is "Cut your losses, and let your winners ride." As WBT said, there may be some tangible emotional benefit to marking your win while you're ahead and not risking that it tanks, but I'd say the odds are in your favor. If an undervalued company starts rising in stock price, maybe that means the market is starting to recognize it for the deal it is. Hang onto it and enjoy the fruits of your research.
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Deducting Hobby Expenses on my Federal Income Taxes?
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I suggest to start charging slightly more than needed to cover expenses. All you need is to show profit. It doesn't have to be significant - a couple of hundred of dollars of consistent yearly profit should suffice to show a profitable business. Then you can deduct on Schedule C all the related expenses. The caveat is that the profit (after the deduction of the expenses will be a bit smaller) will be subject to not only income tax but also the self-employment tax. But at least you'll pay tax on profit that is not entirely phantom. I remember suggesting you getting a professional consultation on this matter a while ago. You should really do that - talk to a EA/CPA licensed in your state, it may be well worth the $100-200 fee they'll charge for the consultation (if at all...).
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Does working in finance firms improve a person's finance knowledge?
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It depends what you mean by financial knowledge. Often you will work in a group focused on some aspect of the company's business. As an example, I work for a company and my group works on econometric models. Although I have a degree in finance, I don't encounter or talk about corporate or personal finance. I do talk about investing with a friend, but in general, our group is focused on one aspect of finance and economics for the company. From another direction, often financial companies will offer financial literacy training through HR and benefits programs where you can improve your knowledge of finance outside of your groups focus. In the end, you will learn the most by persuing new knowledge through reading on current financial literature. I hope this helps. Edit: If you add some specifics to what you would like to learn about I may be able to point you in the right direction.
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Why should I trust investment banks' ratings?
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In theory, GS has a Chinese Wall between the department which issued the advice and any departments which may profit from such advice. This would take away some of your distrust, except for the fact that GS did violate these rules in the past (see the answer from user10665). You're wondering about the timing, prior to the release of figures by Tesla itself. This is quite normal. Predicting the past is not that useful ;) The price range indeed is wide, but that too is a meaningful opinion. It says that GS thinks Tesla's share price strongly depends on factors which are hard to predict. In comparison, Coca Cola's targets will be in a much smaller range because its costs and sales are very stable.
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Does doing your “research”/“homework” on stocks make any sense?
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TL;DR: Sure, "do your own homework" is sometimes a cop out. But that doesn't mean we shouldn't do our homework. I agree that in many cases this is a cop-out by commentators. However, even if you believe in perfect market efficiency, there is benefit in "doing your homework" for many reasons. One of which you already mention in the question: different stocks all with the same "value" might have widely ranging risk. Another factor that might vary between stocks is their tax consequences. High dividend stocks might be a better fit for some buyers than others. One stock might be priced at $40 because there is a small chance they might get regulatory approval for a new product. This might make this stock very risky with a 20% of being $150 in 12 months, and a 80% chance of being $20. Another stock might be priced at $40 because the company is a cash cow, declining in revenues but producing a large dividend of $0.40 per quarter. Low risk, but also with some potential tax disadvantages. Another stock might be priced at $40 because it's a high growth stock. This would be less risky than the first example, but more risky than the second example. And the risk would be more generalized, i.e. there wouldn't be one day or one event that would be make or break the stock. In short, even if we assume that the market is pricing everything perfectly, not all stocks are equal and not all stocks are equally appropriate to everyone. Sometimes when we hear an analyst say "they should have done their homework" they are really saying "This was a high risk/high reward stock. They should have known that this had a potential downside." And that all assumes that we believe in 100% pure market efficiency. Which many disagree with, at least to some extent. For example, if we instead subscribe to Peter Lynch's theories about "local knowledge", we might believe that everyone has some personal fields of expertise where they know more than the experts. A professional stock analyst is going to follow many stocks and many not have technical experience in the field of the company. (This is especially true of small and mid cap stocks.) If you happen to be an expert in LED lighting, it is entirely feasible (at least to me) that you could be able to do a better job of "doing homework" on CREE than the analysts. Or if you use a specialized piece of software from a small vendor at work, and you know that the latest version stinks, then you will likely know more than the analyst does. I think it is somewhat akin to going to a doctor. We could say to ourselves "the doctor is more knowledgeable about me than medicine, I'm just going to do what they tell me to do." And 99% of the time, that is the right thing to do. But if we do our "homework" anyway, and research the symptoms, diagnoses, and drugs ourselves as well, we can do get benefits. Sometimes we just can express our preferences amongst equal solutions. Sometimes we can ask smarter questions. And sometimes we have some piece of knowledge that the doctor doesn't have and can actually make an important discovery they didn't know. (And, just like investing, sometimes we can also have just enough knowledge to be dangerous and do ourselves harm if we go against the advice of the professionals.)
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Investing/business with other people's money: How does it work?
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You can either borrow money... credit card, line of credit, re-finance your home, home equity line of credit, loan, mortgage, etc. Or you have other invest in your company as equity. They will contribute $X to get Y% of your company and get Z% of the profits. Note amount of profits does not necessarily have to equate to percentage owned. This makes sense if they are a passive investor, where they just come up with the money and you do all the work. Also voting rights in a company does not have to equate to percentage owned either. You can also have a combination of equity and debt. If you have investors, you would need to figure out whether the investor will personally guarantee the debt of your company - recourse vs non-recourse. If they have more risk, they will want more of a return. One last way to do it is crowdfunding, similar to what people do on Kickstarter. Supporters/customers come up with the money, then you deliver the product. Consulting practices do something similar with the concept of retainers. Best of luck.
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What is the purpose of the wash sale rule?
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'Note that "to keep an investor from lowering their tax bill" is not an explanation'. Well, yes it is. In fact it is the only explanation. The rule plainly exists to prevent someone from realizing a loss when their economic situation remains unchanged before/after a sale. Now, you might say 'but I have suffered a loss, even if it is unrealized!' But, would you want to pay tax on unrealized gains? The tax system still caters to reducing the tax impact of investments, particularly capital investments. Part and parcel with the system of taxing gains only when realized, is that you can recognize losses only when realized. Are there other ways to 'artificially' reduce taxable income? Yes. But the goal of a good tax system should be to reduce those opportunities. Whether you agree that it is fair for the government to prevent this tax-saving opportunity, when others exist, is another question. But that is why the rule exists.
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Where is “Cash Credit from Unsettled Activity” coming from?
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The Cash Credit from Unsettled Activity occurs because AGG issued a dividend in the past week. Since you purchased the ETF long enough before the record date (June 5, 2013) for that trade to settle, you qualified for a dividend. The dividend distribution was $0.195217/share for each of your six shares, for a total credit of $1.17 = 6 * 0.195217. For any ETF, the company's website should tell you when dividends are issued, usually under a section titled "Distributions" or something similar. If you look in your Fidelity account's History page, it should show an entry of "Dividend Received", which confirms that the cash credit is coming from a dividend distribution. You could look up your holdings and see which one(s) recently issued a dividend; in this case, it was AGG.
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About to start being an Independent Contractor - Any advice on estimating taxes?
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One possibility that I use: I set up an LLC and get paid through that entity. Then I set up a payroll service through Bank of America and set up direct deposit so that it is free. I pay myself at 70% of my hourly rate based on the number of hours I work, and the payroll service does all the calculations for me and sets up the payments to the IRS. Typically money is left over in my business account. When tax time rolls around, I have a W2 from my LLC and a 1099 from the company I work for. I put the W2 into my personal income, and for the business I enter the revenue on the 1099 and the payroll expenses from paying myself; the left over in the business account is taxed as ordinary income. Maybe it's overkill, but setting up the LLC makes it possible to (a) set up a solo 401(k) and put up to $51k away tax-free, and (b) I can write off business expenses more easily.
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How can I find if I can buy shares of a specific company?
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A company whose stock is available for sale to the public is called a publicly-held or publicly-traded company. A public company's stock is sold on a stock exchange, and anyone with money can buy shares through a stock broker. This contrasts with a privately-held company, in which the shares are not traded on a stock exchange. In order to invest in a private company, you would need to talk directly to the current owners of the company. Finding out if a company is public or private is fairly easy. One way to check this is to look at the Wikipedia page for the company. For example, if you take a look at the Apple page, on the right sidebar you'll see "Type: Public", followed by the stock exchange ticker symbol "AAPL". Compare this to the page for Mars, Inc.; on that page, you'll see "Type: Private", and no stock ticker symbol listed. Another way to tell: If you can find a quote for a share price on a financial site (such as Google Finance or Yahoo Finance), you can buy the stock. You won't find a stock price for Mars, Inc. anywhere, because the stock is not publicly traded.
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What sort of tax treatment does a charitable micro-lending loan incur?
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When lending through Kiva you are not making a "charitable contribution" it's a loan so you cannot deduct the amount you loaned out. If you do lose money from your loan you can write off your entire loss same as you would with any other investment. However you should be careful because in the event of a tax audit you need to have the proper documentation in order to prove that loss (I don't know what Kiva provides). So to answer your question, no you would not be liable for any taxes from a Kiva loan.
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How to invest in stocks without using an intermediary like a broker? Can shares be bought direct?
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Am I wrong? Yes. The exchanges are most definitely not "good ole boys clubs". They provide a service (a huge, liquid and very fast market), and they want to be paid for it. Additionally, since direct participants in their system can cause serious and expensive disruptions, they allow only organizations that know what they're doing and can pay for any damages the cause. Is there a way to invest without an intermediary? Certainly, but if you have to ask this question, it's the last thing you should do. Typically such offers are only superior to people who have large investments sums and know what they're doing - as an inexperienced investor, chances are that you'll end up losing everything to some fraudster. Honestly, large exchanges have become so cheap (e.g. XETRA costs 2.52 EUR + 0.0504% per trade) that if you're actually investing, then exchange fees are completely irrelevant. The only exception may be if you want to use a dollar-cost averaging strategy and don't have a lot of cash every month - fixed fees can be significant then. Many banks offer investments plans that cover this case.
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Will I be liable for taxes if I work for my co. in India for 3 months while I am with my husband in UK
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Generally all the countries have similar arrangement regarding Income Tax, if you live in the UK for more than you stay in India for a given year then the Indian authorities won't be able to tax you but you might come under the UK Tax Law.
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Cash out 401k for house downpayment
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Absolutely never.Even in a hot market, it's like picking up dimes in front of a bulldozer. It's just plain stupid. If you can't afford a 20% down payment and a 15 year mortgage, just rent.
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What is the proper way to report additional income for taxes (specifically, Android development)?
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If this is truly hobby income (you do not intend to operate as a business and don't have a profit motive) then report the income on Line 21 ("other income") of form 1040. If this is a business, then the income and expenses belong on a Schedule C to form 1040. The distinction is in the treatment of profits and losses - your net profits on a business are subject to self-employment tax, while hobby income is not. Net losses on a business are deductible against other income; net losses on a hobby are miscellaneous itemized deductions in the "2%" box on Schedule A. From a tax point of view, selling apps and accepting donations are different. Arguably, donations are gifts; gifts are not taxable income. The hobby/business and income/gift distinctions are tricky. If the dollar amounts are small, nobody (including the IRS) really cares. If you start making or losing a lot of money, you'll want to get a good tax person lined up who can help you decide how to characterize these items of income and expens, how to put them on your return, and how to defend the return on audit if necessary.
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How can I legally and efficiently help my girlfriend build equity by helping with a mortgage?
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There is no simple, legally reasonable, way for her to build equity by helping out with your mortgage, without her having a claim to your mortgage. The only 'equitable' thing she can do is rent from you. If you want her to be building equity, have her start and fund a brokerage account for herself. If you have an affinity for real estate, have her buy REITs in said investment account.
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Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely?
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I'm going to be buying a house / car / home theater system in the next few months, and this loan would show up on my credit report and negatively impact my score, making me unable to get the financing that I'll need.
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What one bit of financial advice do you wish you could've given yourself five years ago?
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I wish I would have known macro-economics taught by the Austrian School types at The Mises Institute. Their teachings would have compelled me to do the following:
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Good way to record currency conversion transactions in personal accounting software?
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I found an answer by Peter Selinger, in two articles, Tutorial on multiple currency accounting (June 2005, Jan 2011) and the accompanying Multiple currency accounting in GnuCash (June 2005, Feb 2007). Selinger embraces the currency neutrality I'm after. His method uses "[a]n account that is denominated as a difference of multiple currencies... known as a currency trading account." Currency trading accounts show the gain or loss based on exchange rates at any moment. Apparently GnuCash 2.3.9 added support for multi-currency accounting. I haven't tried this myself. This feature is not enabled by default, and must be turned on explicity. To do so, check "Use Trading Accounts" under File -> Properties -> Accounts. This must be done on a per-file basis. Thanks to Mike Alexander, who implemented this feature in 2007, and worked for over 3 years to convince the GnuCash developers to include it. Older versions of GnuCash, such as 1.8.11, apparently had a feature called "Currency Trading Accounts", but they behaved differently than Selinger's method.
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Does it make sense to buy a house in my situation?
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I wouldn't buy a house at this time. Your credit card debt is the most expensive thing you have. Which is to say that you want to get rid of it as soon as possible. The lawyer isn't cheap, and your personal situation is not fully resolved. Congratulations on paying off the IRS, and getting up the 401k to 17.5k. Take care of the two things in paragraph 1, first,and then think about buying a house. You're doing too much good work to have it possibly be derailed by home payments.
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Would it ever be a bad idea to convert a traditional IRA to a Roth IRA with the following assumptions?
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Taking all your assumptions: With Roth, you take $6112 from work, (let's call you tax rate 10%) pay $612 in taxes, and contribute $5500 (the max if you are younger than 50). This $5500 will grow to $21,283 in 20 years at 7% annual growth ($5500*(1.07^20)), and you will pay no additional taxes on it. With the traditional IRA, you take $6112 from work, pay $612 in taxes, and contribute $5500. You will receive a tax deduction at tax time of $612 for the contribution. This money will also grow to $21,283. This will be taxed at your ordinary income rate (which we're calling 10%), costing you $2123 at the time of withdrawal. You will have $19,155 left over. EDIT: If you invest your tax savings from every contribution to the Traditional IRA, then the numbers wash out. Perhaps a pivotal question is whether you believe you will have greater taxable earnings from your investments in retirement than you have in taxable earnings today -- affecting the rate at which you are taxed.
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When I ask a broker to buy stock, what does the broker do?
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My answer isn't a full one, but that's because I think the answer depends on, at minimum, the country your broker is in, the type of order you place (limit, market, algo, etc.,) and the size of your order. For example, I can tell from watching live rates on regular lot limit orders I place with my UK-based broker that they hold limit orders internally until they see a crossing rate on the exchange my requested stock is trading on, then they submit a limit order to that exchange. I only get filled from that one exchange and this happens noticeably after I see my limit price print, and my fills are always better than my limit price. Whereas with my US-based broker, I can see my regular lotsize limit order in the order book (depth of book data) prior to any fills. I will routinely be notified of a fill before I see the limit price print. And my fills come from any number of US exchanges (NYSE, ARCA, BATS, etc.) even for the same stock. I should point out that the "NBBO" rule in the US, under SEC regulation NMS, probably causes more complications in handling of market and limit orders than you're likely to find in most countries.
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I co-signed a car but i am listed as the primary account holder for the loan
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The buyer can get another cosigner or you can sell the car to pay off the loan. These are your only options if financing cannot be obtained independently.
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How do used vehicle exchange programs at car dealerships work?
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You are correct to be wary. Car dealerships make money selling cars, and use many tactics and advertisements to entice you to come into their showroom. "We are in desperate need of [insert your make, model, year and color]! We have several people who want that exact car you have! Come in and sell it to us and buy a new car at a great price! We'll give you so much money on your trade in!" In reality, they play a shell game and have you focus on your monthly payment. By extending the loan to 4 or 5 years (or longer), they can make your monthly payment lower, sure, but the total amount paid is much higher. You're right: it's not in your best interest. Buy a car and drive it into the ground. Being free of car payments is a luxury!
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Does it make sense to take out student loans to start an IRA?
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Depending on the student loan, this may be improper usage of the funds. I know the federal loans I received years ago were to be used for education related expenses only. I would imagine most, if not all, student loans would have the same restrictions. Bonus Answer: You must have earned income to contribute to an IRA (e.g. money received from working (see IRS Publication 590 for details)). So, if your earmarked money is coming from savings only, then you would not be eligible to contribute. As far as whether you can designate student loans for the educational expenses and then used earned income for an IRA I would imagine that is fine. However, I have not found any documentation to support my assumption.
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How should I handle taxes for Minecraft server donations?
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First to clear a few things up. It is definitely not a gift. The people are sending you money only because you are providing them with a service. And for tax purposes, it is not a "Donation". It has nothing to do with the fact that you are soliciting the donation, as charitable organizations solicit donations all the time. For tax purposes, it is not a "Donation" because you do not have 501(c)(3) non profit status. It is income. The question is then, is it "Business" income, or "Hobby" related income? Firstly, you haven't mentioned, but it's important to consider, how much money are you receiving from this monthly, or how much money do you expect to receive from this annually? If it's a minimal amount, say $50 a month or less, then you probably just want to treat it as a hobby. Mostly because with this level of income, it's not likely to be profitable. In that case, report the income and pay the tax. The tax you will owe will be minimal and will probably be less than the costs involved with setting up and running it as a business anyway. As a Hobby, you won't be able to deduct your expenses (server costs, etc...) unless you itemize your taxes on Schedule A. On the other hand if your income from this will be significantly more than $600/yr, now or in the near future, then you should consider running it as a business. Get it clear in your mind that it's a business, and that you intend it to be profitable. Perhaps it won't be profitable now, or even for a while. What's important at this point is that you intend it to be profitable. The IRS will consider, if it looks like a business, and it acts like a business, then it's probably a business... so make it so. Come up with a name for your business. Register the business with your state and/or county as necessary in your location. Get a bank account for your business. Get a separate Business PayPal account. Keep personal and business expenses (and income) separate. As a business, when you file your taxes, you will be able to file a Schedule C form even if you do not itemize your taxes on Schedule A. On Schedule C, you list and total your (business) income, and your (business) expenses, then you subtract the expenses from the income to calculate your profit (or loss). If your business income is more than your business expenses, you pay tax on the difference (the profit). If your business expenses are more than your business income, then you have a business loss. You would not have to pay any income tax on the business income, and you may be able to be carry the loss over to the next and following years. You may want to have a service do your taxes for you, but at this level, it is certainly something you could do yourself with some minimal consultations with an accountant.
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How does a small worker co-op track/manage stocks/shares
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What I know about small companies and companies who are not listed on the stock markets is this: If a small company has shares issued to different people either within an organization or outside the value of the shares is generally decided by the individual who wants to sell the share and the buyer who wants to buy it. Suppose my company issued 10 shares to you for your help in the organization. Now you need money and you want to sell it. You can offer it at any price you want to to the buyer. If the buyer accepts your offer thats the price you get. So the price of the share is determined by the price a buyer is willing to buy it at from you. Remember the Face value of the shares remains the same no matter what price you sell it for. Now annual profit distribution is again something called dividends. Suppose my company has 100 shares in total out of which I have given you 10. This means you are a 10% owner of the company and you will be entitled to 10% of the net profit the company makes. Now at the end of the year suppose my company makes a 12,000 USD net profit. Now a panel called board of directors which is appointed by share holders will decide on how much profit to keep within the company for future business and how much to distribute about share holders. Suppose they decide to keep 2000 and distribute 10,000 out of total profit. Since you own 10% shares of the company you get 1000. The softwares you are talking are accounting softwares. You can do everything with those softwares. After-all a company is only about profit and loss statements.
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Can I sell a stock immediately?
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In order to see whether you can buy or sell some given quantity of a stock at the current bid price, you need a counterparty (a buyer) who is willing to buy the number of stocks you are wishing to offload. To see whether such a counterparty exists, you can look at the stock's order book, or level two feed. The order book shows all the people who have placed buy or sell orders, the price they are willing to pay, and the quantity they demand at that price. Here is the order book from earlier this morning for the British pharmaceutical company, GlaxoSmithKline PLC. Let's start by looking at the left-hand blue part of the book, beneath the yellow strip. This is called the Buy side. The book is sorted with the highest price at the top, because this is the best price that a seller can presently obtain. If several buyers bid at the same price, then the oldest entry on the book takes precedence. You can see we have five buyers each willing to pay 1543.0 p (that's 1543 British pence, or £15.43) per share. Therefore the current bid price for this instrument is 1543.0. The first buyer wants 175 shares, the next, 300, and so on. The total volume that is demanded at 1543.0p is 2435 shares. This information is summarized on the yellow strip: 5 buyers, total volume of 2435, at 1543.0. These are all buyers who want to buy right now and the exchange will make the trade happen immediately if you put in a sell order for 1543.0 p or less. If you want to sell 2435 shares or fewer, you are good to go. The important thing to note is that once you sell these bidders a total of 2435 shares, then their orders are fulfilled and they will be removed from the order book. At this point, the next bidder is promoted up the book; but his price is 1542.5, 0.5 p lower than before. Absent any further changes to the order book, the bid price will decrease to 1542.5 p. This makes sense because you are selling a lot of shares so you'd expect the market price to be depressed. This information will be disseminated to the level one feed and the level one graph of the stock price will be updated. Thus if you have more than 2435 shares to sell, you cannot expect to execute your order at the bid price in one go. Of course, the more shares you are trying to get rid of, the further down the buy side you will have to go. In reality for a highly liquid stock as this, the order book receives many amendments per second and it is unlikely that your trade would make much difference. On the right hand side of the display you can see the recent trades: these are the times the trades were done (or notified to the exchange), the price of the trade, the volume and the trade type (AT means automatic trade). GlaxoSmithKline is a highly liquid stock with many willing buyers and sellers. But some stocks are less liquid. In order to enable traders to find a counterparty at short notice, exchanges often require less liquid stocks to have market makers. A market maker places buy and sell orders simultaneously, with a spread between the two prices so that they can profit from each transaction. For instance Diurnal Group PLC has had no trades today and no quotes. It has a more complicated order book, enabling both ordinary buyers and sellers to list if they wish, but market makers are separated out at the top. Here you can see that three market makers are providing liquidity on this stock, Peel Hunt (PEEL), Numis (NUMS) and Winterflood (WINS). They have a very unpalatable spread of over 5% between their bid and offer prices. Further in each case the sum total that they are willing to trade is 3000 shares. If you have more than three thousand Dirunal Group shares to sell, you would have to wait for the market makers to come back with a new quote after you'd sold the first 3000.
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Interest charges on balance transfer when purchases are involved
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The 'common sense' in it is that they want the maximum money from you while still suggesting to a quick read that you get away free. Their target is not to make you happy, but to make money of you.
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Mortgage company withholding insurance proceeds
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Fire insurance, as you have discovered, is a complete ripoff. Most people pay fire insurance all their lives with no benefit whatsoever, and those such as yourself who are lucky enough to get a payout find that it is completely insufficient to replace their loss. I once computed the actual beneficial net present financial value of my fire insurance policy and it came out to $40 per month. The cost was $800 per month. That is typical. Homeowners pay $500 to $800 per year for something that is worth $30 to $50 per year. Ironically banks would actually make more money from mortgages if they did not require mortgagees to buy insurance, but nevertheless they insist on it. It is not about logic, but about fear and irrationality. When I paid off my mortgage and gained ownership of my home the first thing I did was cancel my fire insurance. I now invest the money I would have wasted on insurance, making money instead of losing it. Being compelled to throw money down the toilet on fire insurance is one of the hidden costs of a homeowners mortgage in the United States. In your situation, the main option is to borrow the money to rebuild the house using the land as collateral, if the land is valuable enough. Of course, you still owe the money for your original mortgage on your now (non-existent) home. So, to get a home, you will have to have the income to service two mortgages. A loan officer at a reputable bank can tell you whether you have the income necessary to support two mortgages. If you were maxed out on your original mortgage, then you may not have enough income and you are screwed. In that case you will have to go back to renting and gradually paying off your old mortgage. (If it were me, I would sue the insurance company pro se as a way to get the necessary money to rebuild the home, because insurance companies roll over like a $20 hooker when they get sued. Juries hate insurance companies. But I am unusual in that I love courtrooms and suing people. Most people are terrified of courtrooms though, so it may not be an option for you.)
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Can saving/investing 15% of your income starting age 25, likely make you a millionaire?
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I see a lot of answers calculcating with incomes that are much higher than yours, here is something for your situation: If you would keep your current income for the rest of your life, here is approximately how things would turn out after 40 years: All interest is calculated relative to the amount in your portfolio. Therefore, lets start with 1 dollar for 40 years: With your current income, 15% would be 82.5 dollar. At 12% this would over 40 years get you almost 1 million dollar. I would call a required return of more than 12% not 'likely'. The good news, is that your income will likely increase, and especially if this happens fast things will start to look up. The bad news is, that your current salary is quite low. So, it basically means that you need to make some big jumps in the next few years in order to make this scenario likely. If you can quickly move your salary towards ranges that are more common in the US, then 15% of your income can build up to a million before you retire. However, if you just follow gradual growth, you would need to get quite lucky to reach a million. Note that even if reaching a million appears unlikely, it is probably still a good idea to save!
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Snowball debt or pay off a large amount?
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My advice: IMO, all things being somewhat equal, you should always try to retire debts as quickly as possible in most cases, so start with the small cases. The method of calculating credit card interest is written on the statement. Usually it is "average daily balance method". Don't sweat the details. Just pay the things off.
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What does it mean for a company to have its market cap larger than the market size?
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First read mhoran's answer, Then this - If the company sold nothing but refrigerators, and had 40% market share, that's $4M/yr in sales. If they have a 30% profit margin, $1.2M in profit each year. A P/E of 10 would give a stock value totaling $12M, more than the market size. The numbers are related, of course, but one isn't the maximum of the other.
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Making money through CFD
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A CFD is like a bet. Bookies don't own horses or racetracks but you still pay them and they pay you if the horses win. If you buy a CFD the money goes to the firm you bought it from and if the stock price changes in your favour, they will pay you. However, if it goes against you they may ask you for more money than you originally invested to cover your losses. Constacts for difference are derivatives, i.e. you gain on the change in the price or delta of something rather than on its absolute value. Someone bets one way and is matched with someone (or perhaps more than one) betting the other way. Both parties are bound by the contract to pay or be payed on the outcome. One will win and the other will necessarily lose. It's similar in concept to a spread bet, although spread bets often have a fixed timescale whereas CFDs do not and CFDs generally operate via the payment of a commission rather than via charges included in the spread. There's more information on both CFDs and spread betting here If somone has a lot of CFDs that might affect the stock price if it's known about as others may buy/sell real stock to either make the CFD pay or may it not pay depending on whether they think they can make money on it. Otherwise CFDs don't have much of an effect on stock prices.
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How do index funds actually work?
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Now company A has been doing ok for couple of weeks, but then due to some factors in that company its stock has been tanking heavily and doesn't appear to have a chance to recover. In this kind of scenario, what does happen? In this scenario, if that company is included in the index being tracked, you will continue holding until such time that the index is no longer including that company. Index funds are passively managed because they simply hold the securities contained in the index and seek to keep the allocations of the fund in line with the proportions of the index being tracked. In an actively managed fund the fund manager would try to hedge losses and make stock/security picks. If the manager thought a particular company had bad news coming maybe they would offload some or all the position. In an index fund, the fund follows the index on good days and bad and the managers job is to match the asset allocations of the index, not to pick stocks.
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Should I pay off a 0% car loan?
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Mostly to play devil's advocate, I will recommend something different than everybody else. If you can pay off the entire $3,000 balance and are torn between saving that money somewhere that will earn a return and paying it off now to be debt-free, why not a little of both? What if you pay half now and then save the other half and make a big payment at the end. Essentially that becomes two $1,500 payments: one now, one right before the 0% due date. To me, the half up-front significantly reduces the risk, but leaves some cash available to grow.
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Is it legal if I'm managing my family's entire wealth?
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I am not going to discuss legality, because with family members you are able to give a lot of guidance and assistance without running into legal issues. The biggest problem is that when they transfer the funds to you and you invest the money, all the tax rates and tax limits are determined by your situation; plus you have more investments than you should have so you hit those limits and brackets quicker. For example: In the United states a person can put $5,500 or $6,500 into a IRA or Roth IRA each year. If you combine the funds for three with your funds then you are giving up three quarters of the amount that you can invest in that type of account. The decision regarding Roth or not depends on age and income level. But now their decision is related to what is best based on your situation. The ability to even deduct IRA deposits would be based on your situation. Of course for taxable accounts the tax rate is determined by your income, not theirs. If they want you to have the ability to make investment decisions for them, then power of attorney is the way to go. The money is deposited in their name, and all the rules and tax rates are determined by their situation. You make sure they have all the information they need to login and review the accounts, but you make the all the moves within and between accounts.
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Can you explain “time value of money” and “compound interest” and provide examples of each?
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Compound interest means that the interest in each time period is calculated taking into account previously earned interest and not only the initial sum. Thus, if you had $1000 and invested it so that you'd earn 5% each year, than if you would withdraw the earnings each year you in 30 years you would earn 0.05*30*1000 = $1500, so summarily you'd have $2500, or 150% profit. However, if you left all the money to earn interest - including the interest money - then at the end of 30 years you'd have $4321 - or 330% profit. This is why compound interest is so important - the interest on the earned interest makes money grow significantly faster. On the other hand, the same happens if you owe money - the interest on the money owed is added to the initial sum and so the whole sum owed grows quicker. Compound interest is also important when calculating interest by time periods. For example, if you are told the loan accumulates 1% interest monthly, you may think it's 12% yearly. However, it is not so, since monthly interest is compounded - i.e., in February the addition not only February's 1% but also 1% on 1% from January, etc. - the real interest is 12.68% yearly. Thus, it is always useful to know how interest is compounded - both for loans and investments - daily, monthly, yearly, etc.
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Where to find out conversion ratio between General Motors bonds and new GM stock?
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Depending on the specific bond, here is the official info. http://www.wilmingtontrust.com/gmbondholders/index.html Bottom line, it won't be determined for a while yet, as the filing with the Bankruptcy Court still has lots of blanks.
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Should I change 401k investment options to prepare for rising interest rates?
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The bond funds should tell you their duration. My 401(k) has similar choices, and right now, I'm at the short maturity, i.e. under 1 year. The current return is awful, but better than the drop the longer term funds will experience as rates come back up. Not quite mathematically correct, but close enough, "duration" gives you the time-weighted average maturity in a way that tells you how the value responds to a rate change. If a fund has a 10 year duration, a .1% rate rise will cause the fund value to drop 1.0%.
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Highest market cap for a company from historical data
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Adjustments can be for splits as well as for dividends. From Investopedia.com: Historical prices stored on some public websites, such as Yahoo! Finance, also adjust the past prices of the stock downward by the dividend amount. Thus, that could also be a possible factor in looking at the old prices.
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What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund?
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Some things are nearly universal, and have been mentioned already. My "favorite" forseeable expenses in this category are: However, I also advocate saving for expenses that are specific to you. Look back on your expenses for the last 12 months, minimum (18 or 24 may be better). Ask yourself these questions: I ask about large expenditures because you may make enough that you can "eat" these lapses in budgeting, as I did for many years. It is not an emergency now, but it turned into an emergency down the road as my spending went out of control. Look at all expenditures over a certain level, say $100 or $200. Some personal examples of expenses that aren't quite so universal, but turned into small emergencies: This last one was rather unexpected. It is the reason why I ask the question "why didn't I budget for it?" These fees and dues are for my professional-level certifications. In my industry, they are "always" paid for by the company. A year ago, they weren't paid by my former employer because they planned to lay me off. This year, they weren't paid by my present employer because I am technically a temporary worker (4 years is temporary?). So, from now on, I plan to save for this expense. If my employer pays my dues, then I stop saving for the expense, but keep the money I've saved.
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