Question
stringlengths 14
166
| Answer
stringlengths 3
17k
|
|---|---|
What are my investment options in Australia?
|
If you want higher returns you may have to take on more risk. From lowest returns (and usually lower risk) to higher returns (and usually higher risk), Bank savings accounts, term deposits, on-line savings accounts, offset accounts (if you have a mortgage), fixed interest eg. Bonds, property and stock markets. If you want potentially higher returns then you can go for derivatives like options or CFDs, FX or Futures. These usually have higher risks again but as with any investments some risks can be partly managed. Also, CMC Markets charges $11 commission up to $10,000 trade. This is actually quite a low fee - based on your $7,000, $22 for in and out of a position would be less than 0.32% (of course you might want to buy into more than one company - so your brokerage would be slightly higher). Still this is way lower than full service brokerage which could be $100 or more in and then again out again. What ever you decide to do, get yourself educated first.
|
Is it ever a good idea to close credit cards?
|
Assuming that a person has good financial discipline and is generally responsible with spending, I think that having a few hundred or thousand dollars extra of available credit is usually worth more to that person for the choice/flexibility it provides in unforeseen circumstance, versus the relatively minor hit that could be taken to their credit score.
|
What are the benefits of opening an IRA in an unstable/uncertain economy?
|
Yes, it's possible to withdraw money without penalty but you have to do it in a special way. For example you have to withdraw the same amount every year until you retire: Tapping Your IRA Penalty-Free as for unstable economy - you can trade many instruments in your IRA. you can do bonds, mutual funds, stocks, ETFs or just keep it in cash. Some do well in bad economy.
|
Why don't banks print their own paper money / bank notes?
|
Actually, banks do issue their own money, it's just not embodied as a piece of paper, it's called checkbook money and in the US, it's backed by 3$ per every 100$ promised, that's the magic of "fractional reserve banking."
|
Should I fund a move by borrowing or selling other property assets?
|
It is a lot easier to make money when you are not in debt. If you can sell the apartment, get rid of your existing mortgage and buy the new house outright, that is probably the best course of action.
|
Are you preparing for a possible dollar (USD) collapse? (How?)
|
Buying gold, silver, palladium, copper and platinum. The first two I am thinking about new currencies. The last three for the perpetual need for the metals in industry. I also have invested in Numismatic coins. They are small portable and easy to hide around the house. I only collect silver coins, so even if the world really blows up and numismatics goes out the window, I can depend on them forming a barter system through the content value of the silver. The problem with collectable items is that they are easy to see. For example, a nice painting just shouts out "steal me!". I don't buy large gold coins. As long as the coin is below 1/4 Oz gold I collect it. If the dollar does finaly collapse, to be honest it will be so bad that I think weapons will be order of the day. Do I think it will collapse...nah never.
|
Using pivot points to trade in the short term
|
Pivots Points are significant levels technical analysts can use to determine directional movement, support and resistance. Pivot Points use the prior period's high, low and close to formulate future support and resistance. In this regard, Pivot Points are predictive or leading indicators. There are at least five different versions of Pivot Points. I will focus on Standard Pivot Points here as they are the simplest. If you are looking to trade off daily charts you would work out your Pivot Points from the prior month's data. For example, Pivot Points for first trading day of February would be based on the high, low and close for January. They remain the same for the entire month of February. New Pivot Points would then be calculated on the first trading day of March using the high, low and close for February. To work out the Standard Pivot Points you use the High, Low and Close from the previous period (i.e. for daily charts it would be from the previous month) in the following formulas: You will now have 5 horizontal lines: P, R1, R2, S1 and S2 which will set the general tone for price action over the next month. A move above the Pivot Point P suggests strength with a target to the first resistance R1. A break above first resistance shows even more strength with a target to the second resistance level R2. The converse is true on the downside. A move below the Pivot Point P suggests weakness with a target to the first support level S1. A break below the first support level shows even more weakness with a target to the second support level S2. The second resistance and support levels (R2 & S2) can also be used to identify potentially overbought and oversold situations. A move above the second resistance level R2 would show strength, but it would also indicate an overbought situation that could give way to a pullback. Similarly, a move below the second support level S2 would show weakness, but would also suggest a short-term oversold condition that could give way to a bounce. This could be used together with a momentum indicator such as RSI or Stochastic to confirm overbought or oversold conditions. Pivot Points offer a methodology to determine price direction and then set support and resistance levels, however, it is important to confirm Pivot Point signals with other technical analysis indicators, such as candle stick reversal patterns, stochastic and general Support and Resistance Levels in the price action. These pivot points can be handy but I actually haven’t used them for trade setups and entries myself. I prefer to use candle sticks together with stochastic to determine potential turning points and then take out trades based on these. You can then use the Pivot Points Resistance and Support levels to help you estimate profit targets or areas to start becoming cautious and start tightening your stops. Say, for example, you have gone long from a signal you got a few days ago, you are now in profit and the price is now approaching R2 whilst the Stochastic is approaching overbought, you might want to start tightening your stop loss as you might expect some weakness in the price in the near future. If prices continue up you keep increasing your profits, if prices do reverse then you keep the majority of your existing profits. This would become part of your trade management. If you are after finding potential market turning points and take out trades based on these, then I would suggest using candlestick charting reversal patterns for your trade setups. The patterns I like to use most in my trading can be described as either the Hammer or One White Soldier for Bullish reversals and Shooting Star or One Black Crow for Bearish reversals. Below are diagrams of where to place your entries and exits on both Bullish and Bearish reversal patterns. Bullish Reversal Pattern So after some period of weakness in the price you would look for a bullish day where the price closes above the previous day’s high, you place your buy order here just before market close and place your initial stop just below the low of the day. You would apply this either for an uptrending stock where the price has retracted from or near the trendline or Moving Average, or a ranging stock where price is bouncing off the support line. The trade is reinforced if the Stochastic is in or near the oversold and crossing back upwards, volume on the up day is higher than volume on the down days, and the market as a whole is moving up as well. The benefit with this entry is that you are in early so you capture any bullish move up at the open of the next day, such as gaps. The drawbacks are that you need to be in front of your screen before market close to get your price close to the market close and you may get whipsawed if prices reverse at the open of the next day, thus being stopped out with a small loss. As the price moves up you would move your stop loss to just below the low of each day. Alternative Bullish Reversal Entry An alternative, entry would be to wait for after market close and then start your analysis (easier to do after market close than whilst the market is open and less emotions involved). Place a stop buy order to buy at the open of next trading day just above the high of the bullish green candle. Your stop is placed exactly the same, just below the low of the green bullish candle. The benefits of this alternative entry include you avoid the trade if the price reverses at the open of next day, thus avoiding a potential small loss (in other words you wait for further confirmation on the next trading day), and you avoid trading during market open hours where your emotions can get the better of you. I prefer to do my trading after market close so prefer this alternative. The drawback with this alternative is that you may miss out on bullish news prior to and at the next open, so miss out on some potential profits if prices do gap up at the open. This may also increase your loss on the trade if the prices gaps up then reverses and hits your stop on the same day. However, if you choose this method, then you will just need to incorporate this into your trading plan as potential slippage. Bearish Reversal Pattern So after some short period of strength in the price you would look for a bearish day where the price closes below the previous day’s low, you place your sell short order here just before market close and place your initial stop just above the high of the day. You would apply this either for an downtrending stock where the price has retracted from or near the trendline or Moving Average, or a ranging stock where price is bouncing off the resistance line. The trade is reinforced if the Stochastic is in or near the overbought and crossing back downwards, volume on the up day is higher than volume on the up days, and the market as a whole is moving down as well. The benefit with this entry is that you are in early so you capture any bearish move down at the open of the next day, such as gaps. The drawbacks are that you need to be in front of your screen before market close to get your price close to the market close and you may get whipsawed if prices reverse at the open of the next day, thus being stopped out with a small loss. As the price moves down you would move your stop loss to just above the high of each day. Alternative Bearish Reversal Entry An alternative, entry would be to wait for after market close and then start your analysis (easier to do after market close than whilst the market is open and less emotions involved). Place a stop sell short order to sell at the open of next trading day just below the low of the bearish red candle. Your stop is placed exactly the same, just above the high of the red bearish candle. The benefits of this alternative entry include you avoid the trade if the price reverses at the open of next day, thus avoiding a potential small loss (in other words you wait for further confirmation on the next trading day), and you avoid trading during market open hours where your emotions can get the better of you. I prefer to do my trading after market close so prefer this alternative. The drawback with this alternative is that you may miss out on bearish news prior to and at the next open, so miss out on some potential profits if prices do gap down at the open. This may also increase your loss on the trade if the prices gaps down then reverses and hits your stop on the same day. However, if you choose this method, then you will just need to incorporate this into your trading plan as potential slippage. You could also trade other candle stick patterns is similar ways. And with the long entries you can also use them to get into the market with longer term trend following strategies, you would usually just use a larger stop for longer term trading. To determine the size of your order you would use the price difference between your entry and your stop. You should not be risking more than 1% of your trading capital on any one trade. So if your trading capital is $20,000 your risk per trade should be $200. If you were looking to place your buy at 5.00 and had your initial stop at $4.60, you would divide $200 by $0.40 to get 500 stocks to buy. Using this form of money management you keep your losses down to a maximum of $200 (some trades may be a bit higher due to some slippage which you should allow for in your trading plan), which becomes your R-multiple. Your aim is to have your average win at 3R or higher (3 x your average loss), which will give you a positive expectancy even with a win ratio under 50%. Once you have written down your trading rules you can search stock charts for potential setups. When you find one you can backtest the chart for similar setup over the past few years. For each setup in the past jot down the prices you would have entered at, where you would have set your stop, work out your R, and go day by day, moving your stop as you go, and see where you would have been stopped out. Work out your profit or loss in terms of R for each setup and then add them up. If you get a positive R multiple, then this may be a good stock to trade on this setup. If you get a negative R multiple, then maybe give this stock a miss and look for the next setup. You can setup watch-lists of stocks that perform well for both long setups and short setups, and then trade these stocks when you get a new signal. It can take some time starting off, but once you have got your watch-lists for a particular setup, you just need to keep monitoring those stocks. You can create other watch-lists for other type of setups you have backtested as well.
|
Where does the money go when I buy stocks?
|
When you buy a share of stock, you are almost always buying from someone who previously purchased that share and now wants to sell it. The money -- minus broker's fee -- goes to that other investor, which may be a person, a company (rarely the company that issued the stock, but that will occasionally be the case), an investment fund, the "market maker" for that stock (websearch for definition of that term), or anyone else. They owned a small percentage of the company; you bought it from them and gave them the money for it, just as you would buy anything else. You don't know or care who you bought from; they don't know or care who they sold to; the market just found a buyer and seller who could agree on the price. There are a very few exceptions to that. The company may repurchase some of its own shares and/or sell them again, depending on its own financial needs and obligations. For example, my own employer has to purchase its own shares periodically so it has enough on hand to sell to employees at a slight discount through the Employee Stock Ownership Program. But you generally don't know that's who you're selling to; it happens like any other transaction. And during the Initial Public Offering, if you're lucky/privileged enough to get in on the first wave of purchases, you're buying from the investment bank that's managing this process ... though that's an almost vanishingly rare case for "retail" investors like us; we're more likely to get the shares after someone has already pushed the price up a bit. But really, when you buy a share the money goes to whoever you bought it from, and that's all you can know or need to know.
|
How much money should I put on a house?
|
Before doing anything else: you want a lawyer involved right from the beginning, to make sure that something reasonable happens with the house if one of you dies or leaves. Seriously, you'll both be safer and happier if it's all explicit. How much you should put on the house is not the right question. Houses don't sell instantly, and while you can access some of their stored value by borrowing against them that too can take some time to arrange. You need to have enough operating capital for normal finances, plus an emergency reserve to cover unexpectedly being out of work or sudden medical expenses. There are suggestions for how much that should be in answers to other questions. After that, the question is whether you should really be buying a house at all. It isn't always a better option than renting and (again as discussed in answers to other questions) there are ongoing costs in time and upkeep and taxes and insurance. If you're just thinking about the financials, it may be better to continue to rent and to invest the savings in the market. The time to buy a house is when you have the money and a reliable income, plan not to move for at least five years, really want the advantages of more elbow room and the freedom to alter the place to suit your needs (which will absorb more money)... As far as how much to put down vs. finance: you really want a down payment of at least 20%. Anything less than that, and the bank will insist you pay for mortgage insurance, which is a significant expense. Whether you want to pay more than that out of your savings depends on how low an interest rate you can get (this is a good time in that regard) versus how much return you are getting on your investments, combined with how long you want the mortgage to run and how large a mortgage payment you're comfortable committing to. If you've got a good investment plan in progress and can get a mortgage which charges a lower interest rate than your investments can reasonably be expected to pay you, putting less down and taking a larger mortgage is one of the safer forms of leveraged investing... IF you're comfortable with that. If the larger mortgage hanging over you is going to make you uncomfortable, this might not be a good answer for you. It's a judgement call. I waited until i'd been in out of school about 25 years before I was ready to buy a house. Since i'd been careful with my money over that time, I had enough in investments that I could have bought the house for cash. Or I could have gone the other way and financed 80% of it for maximum leverage. I decided that what I was comfortable with was financing 50%. You'll have to work thru the numbers and decide what you are comfortable with. But I say again, if buying shared property you need a lawyer involved. It may be absolutely the right thing to do ... but you want to make sure everything is fully spelled out... and you'll also want appropriate terms written into your wills. (Being married would carry some automatic assumptions about joint ownership and survivor rights... but even then it's safer to make it all explicit.) Edit: Yes, making a larger down payment may let you negotiate a lower interest rate on the loan. You'll have to find out what each bank is willing to offer you, or work with a mortgage broker who can explore those options for you.
|
How to incentivize a real-estate broker to find me a cheap house
|
Shop lots of houses. Find at least three you want and start by offering a low price and working your way up. Your risk is that houses you would have liked get bought by someone else while you are negotiating, that is how you discover how much you actually have to pay to get a house. Brokers only get paid if a deal closes. That is their incentive to get you a better price. If they know you will buy a different house unless the one they are selling gets your business, then they will work to make that happen.
|
How do I find a legitimate, premium credit repair service?
|
If the bad credit items are accurate, disputing the accuracy of the items seems at best, unethical. If the bad credit items are inaccurate, the resolution process provided by each of the 3 credit bureaus, while time consuming, seems the way to go.
|
When will the U.K. convert to the Euro as an official currency?
|
When economies are strong, it is particularly alluring to have a single currency as it makes trade and tourism simpler and helps reduce costs. The problem comes when individual member economies get into trouble. Because the Eurozone is a loose grouping of nations, there is no direct equivalent of the US Federal government to coordinate a response, there is instead an odd mixture of National and Central government that makes it harder to get a unified approach to the economy (OK, it's maybe not so different to the US in reality). This lack of flexibility means that some of the key levers of international finance are compromised, for example a weak economy can't float its currency to improve exports. Similarly individual country's interest rates can't be adjusted to balance spending. I suspect the main reason though is political and based on concepts of sovereignty and national pride. The UK does the majority of its trade with the Eurozone, so the pros would possibly outweigh the cons, but the UK as a whole (and some of our papers in particular) have always regarded Europe with suspicion. Most Brits only speak English and find France and Germany a strange and obtuse place. The (almost) common language makes it easier to relate to the US and Canada than our near neighbours. It seems the perception amongst the political establishment is that any attempt to join the Euro is political suicide, while that is the case it is unlikely to happen. Purely from a personal perspective, I'd welcome the Euro except it means a lot of the products I routinely buy would become a lot more expensive if price is 'harmonised'. For an example compare the price of the iPod Touch in the UK (£209.99) to France(€299). The French pay £262 at the current exchange rate, which is close to 25% more. Ouch. See also my question about Canada adopting the US Dollar
|
When's the best time to sell the stock of a company that is being acquired/sold?
|
I'm not sure what you expect in terms of answers, but it depends on personal factors. It pretty well has to depend on personal factors, since otherwise everyone would want to do the same thing (either everyone thinks the current price is one to sell at, or everyone thinks it's one to buy at), and there would be no trades. You wouldn't be able to do what you want, except on the liquidity provided by market makers. Once that's hit, the price is shifting quickly, so your calculation will change quickly too. Purely in terms of maximising expected value taking into account the time value of money, it's all about the same. The market "should" already know everything you know, which means that one time to sell is as good as any other. The current price is generally below the expected acquisition price because there's a chance the deal will fall through and the stock price will plummet. That's not to say there aren't clever "sure-fire" trading strategies around acquisitions, but they're certain to be based on more than just timing when to sell an existing holding of stock. If you have information that the market doesn't (and assuming it is legal to do so) then you trade based on that information. If you know something the market doesn't that's going to be good for price, hold. If you know something that will reduce the price, sell now. And "know" can be used in a loose sense, if you have a strong opinion against the market then you might like to invest based on that. Nothing beats being paid for being right. Finally, bear in mind that expected return is not the same as utility. You have your own investment goals and your own view of risk. If you're more risk-averse than the market then you might prefer to sell now rather than wait for the acquisition. If you're more risk-prone than the market then you might prefer a 90% chance of $1 to 90c. That's fine, hold the stock. The extreme case of this is that you might have a fixed sum at which you will definitely sell up, put everything into the most secure investments you can find, and retire to the Caribbean. If that's the case then you become totally risk-averse the instant your holding crosses that line. Sell and order cocktails.
|
Why is there so much variability on interest rate accounts
|
In answering your question as it's written: I don't think you're really "missing" something. Different banks offer different rates. Online banks, or eBanking solutions, such as CapitalOne, Ally, Barclays, etc., typically offer higher interest rates on basic savings accounts. There are differences between Money Market accounts and Standard Savings accounts, but primarily it comes down to how you can access your cash. This may vary based on bank, but Ally has a decent blurb about it: Regular savings accounts are easy to open and, when you choose an online bank like Ally Bank, you tend to get interest rates that are more competitive than brick-and-mortar counterparts, according to Bankrate.com. Additionally, as a member of the FDIC, Ally Bank gives you peace of mind knowing that the money in your Ally Bank Online Savings Account is insured to the maximum allowed by the law. Money market accounts are easy to open, too. And again, online banks may offer better rates than traditional banks. Generally, you have a bit more flexibility of access with a money market account than you do with a savings account. You can access funds in your Ally Bank Money Market Account through electronic fund transfers, checks, debit cards and ATM withdrawals. With savings accounts, your access is limited to electronic funds transfers or telephone withdrawals (and in-person withdrawals at traditional banks). Both types of accounts are subject to federal transaction limits. Here's a bit more information about a Money Market Account and why the rate might be a little bit higher (from thesimpledollar.com): A money market deposit account is a bit different. The restrictions on what a bank can do with that money are somewhat looser – they can often invest that money in things such as treasury notes, certificates of deposit, municipal bonds, and so on in addition to the tight restrictions of a normal savings accounts. In other words, the bank can take your money and invest it in other investments that are very safe. Now outside of your question, if you have $100K that you want to earn interest on, I'd suggest looking at options with higher rates of return rather than a basic savings account which will top out around 1% or so. What you do with that money is dependent on how quickly you need access to it, and there are a lot of Q&A's on this site that cover suggestions.
|
What do brokers do with bad stock?
|
You have to consider a case where you just cannot sell it. Think of it as a bad piece of real estate in Detroit. If there are absolutely no buyers, you cannot sell it (until a buyer shows up)
|
Can you explain “time value of money” and “compound interest” and provide examples of each?
|
Here are some really excellent video tutorials on these topics: Introduction to Compound Interest Introduction to Present Value
|
Is gold subject to inflation? [duplicate]
|
Gold is a risky and volatile investment. If you want an investment that's inflation-proof, you should buy index-linked government bonds in the currency that you plan to be spending the money in, assuming that government controls its own currency and has a good credit rating.
|
Why does Yahoo miss some mutual fund dividends/capital gains?
|
This looks more like an aggregation problem. The Dividends and Capital Gains are on quite a few occassions not on same day and hence the way Yahoo is aggregating could be an issue. There is a seperate page with Dividends and capital gains are shown seperately, however as these funds have not given payouts every year, it seems there is some bug in aggregating this info at yahoo's end. For FBMPX http://uk.finance.yahoo.com/q/hp?s=FBMPX&b=2&a=00&c=1987&e=17&d=01&f=2014&g=v https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/316390681 http://uk.finance.yahoo.com/q/pr?s=FBMPX
|
Should I get a auto loan to diversify my credit lines if I have the cash to pay upfront
|
There is no need to get an auto loan just to try and affect your credit score. It is possible to have a score over 800 without any sort of auto loan. If you can afford to pay for the vehicle up front that is the better option. Even with special financing incentives it is better to pay up front if you can. Yes it is possible to use the funds to make more if you finance with a silly low interest rate, however it's also possible to lose a job or have some other financial disaster happen and need that money for something else making it more difficult to make the payment. It may be just me but I find the peace of mind not having the payment to be worth a lot.
|
Definition of “secular” in the context of markets?
|
Secular means a long term. A secular basis is something done on a long term basis while a secular trend is a long term trend. http://financial-dictionary.thefreedictionary.com/Secular
|
What kind of life insurance is cheaper? I'm not sure about term vs. whole vs. universal, etc
|
Wow, very amused by some of the answers. I will comment on those later. To directly answer your question, here is a link to a brochure that explains the three basic typs and is written in straightforward language. link text That is step one. Step 2 is a question, cheapest when, initially or for long term? Without a doubt term initially is the cheapest. However every 10 years or 20 years it increases in price. As the name term implies it is temporary. Coverage will end at some point, 75, or 80 depending upon plan design chosen. It is possible that if you choose Term you can outlive your coverage and all you have are a bunch of cancelled cheques. Young people with a mortgage, children and other debts should buy a lot of term as the mortgage will be paid off, the kids will no longer be dependent. These needs are temporary. However some needs are permanent. What about leaving a Legacy at Death to a Charity? Insurance is a good solution and can provide a tax deduction too. Term isn't a good fit. Or a business owner wishing to transfer his/her business at death to their children. Taxes will be due and permanent insurance such as Whole Life and Universal Life can be arranged to provide cash to pay tax whenever this happens. Let me ask you who received 10% in the last ten years on their equity portfolio. Almost zero people did. However a Whole Plan would have generated a guaranteed return of 3.0% plus a non-guaranteed return via dividends that the combined internal rate of return on a combined basis would be about 5.6% AFTER TAXES. Life a bond portfolio yield. (Internal rate of return is dependent on age at buying, years of investing. All insurance comany software can show you the internal rate of return.) IRR is essesntially: what is the return after tax that you must get to equal the equity or death benefit from a permanent insurance plan. Someone mentioned by Term and Invest the difference. That is what universal life is, Term and Invest the difference except the difference is growing tax sheltered.Outside investments with comparable risk are taxable! There is no easy answer for what type is right, often a combination is. The key question you should ask is How Much Is Enough? Then consider types based upon your needs and budget. Here is a link where you can calculate how much you need. I hope this helps a bit.
|
Germany: Employee and Entrepreneur at same time (for getting AppStore payments)
|
In Germany you can register a Einzelunternehmen and receive payments into your personal bank account with a German bank. Apple will certainly be able to transfer to accounts in Germany as payments go via the European SEPA standard. Tax wise if you are living in Germany you will need to pay tax in Germany, so this is really the easiest way of doing it.
|
Hypothetical: can taxes ever cause a net loss on otherwise-profitable stocks?
|
You have a sequence of questions here, so a sequence of answers: If you stopped at the point where you had multiple wins with a net profit of $72, then you would pay regular income tax on that $72. It's a short term capital gain, which does not get special tax treatment, and the fact that you made it on multiple transactions does not matter. When you enter your next transaction that takes the hypothetical loss the question gets more complicated. In either case, you are paying a percentage on net gains. If you took a two year view in the second case and you don't have anything to offset your loss in the second year, then I guess you could say that you paid more tax than you won in the total sequence of trades over the two years. Although you picked a sequence of trades where it does not appear to play, if you're going to pursue this type of strategy then you are likely at some point to run into a case where the "wash sale" rules apply, so you should be aware of that. You can find information on this elsewhere on this site and also, for example, here: http://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02 Basically these rules require you to defer recording a loss under some circumstances where you have rapid wins and losses on "substantially identical" securities. EDIT A slight correction, you can take part of your losses in the second year even if you have no off-setting gain. From the IRS: If your capital losses exceed your capital gains, the amount of the excess loss that you can claim on line 13 of Form 1040 to lower your income is the lesser of $3,000, ($1,500 if you are married filing separately)
|
Tenant wants to pay rent with EFT
|
Similar to @SoulsOpenSource's answer, I would suggest Venmo, which works like PayPal but is free for debit-card-to-debit-card transactions. More information here.
|
Rate of change of beta
|
This is (almost) a question in financial engineering. First I will note that a discussion of "the greeks" is well presented at https://en.wikipedia.org/wiki/Greeks_(finance) These measures are first, second and higher order derivatives (or rate of change comparisons) for information that is generally instantaneous. (Bear with me.) For example the most popular, Delta, compares prices of an option or other derived asset to the underlying asset price. The reason we are able to do all this cool analysis is because the the value of the underlying and derived assets have a direct, instantaneous relationship on each other. Because beta is calculated over a large period of time, and because each time slice covered contributes equally to the aggregate, then the "difference in Beta" would really just be showing two pieces of information: Summarizing those two pieces of information into "delta beta" would not be useful to me. For further discussion, please see http://www.gummy-stuff.org/beta.htm specifically look at the huge difference in calculation of GE's beta using end-of-month returns versus calculation using day-before-end-of-month returns.
|
Definition of day trading
|
The American "Security Exchange Commission" has imposed a rule upon all stock trading accounts. This rule is "Regulation-T". This rule specifies that stock trading accounts must be permitted three days after the termination of a trade to settle the account. This is just fancy lingo to justify the guarantee that the funds are either transferred out of your account to another persons (the person that made money), or the money flows into your account. A "Day Trader's" account avoids the hassle because you're borrowing money from your broker to trade with and circumvent Reg-T. It's technically not how long you hold the trade that determines if you're a day trader, or not. It's your accounts liquidity and your credit worthiness.
|
What are the differences in taxes rules for specialty ETFs such as GLD (Gold ETF) and general ETFs?
|
Gold ETFs are treated different than stock ETFs, as a collectable. This makes long-term investing in gold ETFs (for one year or longer) subject to a relatively large capital gains tax (maximum rate of 28%, rather than the 15% rate that is applicable to most other long-term capital gains). Read The Gold Showdown: ETFs Vs. Futures for more details.
|
why is buying trading-stock from cash not regarded as an expense?
|
Because the stock still has the same value as the money paid for it - you are just exchanging one asset for another (of course the stock value starts to change immediately, but for the accounting the fictional value is the buying price). For the accounting, it is similar to changing a 100$ bill in five 20$ bills - same value, still assets.
|
Do you know of any online monetary systems?
|
You say you want a more "stable" system. Recall from your introductory economics courses that money has three roles: a medium of exchange (here is $, give me goods), a unit of account (you owe me $; the business made $ last year), and a store of value (I have saved $ for the future!). I assume that you are mostly concerned with the store-of-value role being eroded due to inflation. But first consider that most people still want regular currency, so as a medium of exchange or accounting unit anything would face an uphill battle. If you discard that role for your currency, and only want to store value with it, you could just buy equities and commodities and baskets of currencies and debt in a brokerage account (possibly using mutual funds) to store your value. Trillions of dollars' worth of business takes place this way every year already. Virtual currency was a bit of a dot-com bubble thing. The systems which didn't go completely bust and are still around have been beset by money-laundering, and otherwise remain largely an ignored niche. An online fiat currency has the same basic problem that another currency has. You need to trust the central bank not to create more money and cause inflation (or even just abscond with the funds... or go bankrupt / get sued). Perhaps the Federal Reserve may be jerking us around on that front right now.... they're still a lot more believable than a small private institution. Some banks might possibly be trustworthy enough to launch a currency, but it's hard to see why they'd bother (it can't be a big profit center, because people aren't willing to pay too much to just use money.) And an online currency that's backed by commodities (e.g. gold) is going to be subject to potentially violent swings in the prices of commodities. Imagine getting a loan out for your house, denominated in terms of e-gold, and then the price of gold triples. Ouch?
|
Accepting high volatility for high long-term returns
|
Modern portfolio theory has a strong theoretical background and its conclusions on the risk/return trade-off have a lot of good supporting evidence. However, the conclusions it draws need to be used very carefully when thinking about retirement investing. If you were really just trying to just pick the one investment that you would guess would make you the most money in the future then yes, given no other information, the riskiest asset would be the best one. However, for most people the goal retirement investing is to be as sure as possible to retire comfortably. If you were to just invest in a single, very risky asset you may have the highest expected return, but the risk involved would mean there might be a good chance you money may not be there when you need it. Instead, a broad diversified basket of riskier and safer assets leaning more toward the riskier investments when younger and the safer assets when you get closer to retirement tends to be a better fit with most people's retirement goals. This tends to give (on average) more return when you are young and can better deal with the risk, but dials back the risk later in life when your investment portfolio is a majority of your wealth and you can least afford any major swings. This combines the lessons of MPT (diversity, risk/return trade-off) in a clearer way with common goals of retirement. Caveat: Your retirement goals and risk-tolerance may be very different from other peoples'. It is often good to talk to (fee-only) financial planner.
|
CFD market makers: How is the price coupled to the underlying security?
|
CFD providers typically offer CFDs to investors using either the direct market access (DMA) model or the market maker (MM) model. Direct Market Access The DMA model gives you access to trade the Underlying instrument on the relevant Exchange from which the CFD is then derived. All CFD Transactions under the DMA model have corresponding trades in the Underlying instrument. Under the DMA model, providers typically charge their clients Commission based on the notional contract value of the CFD. Market Maker The MM model uses the price of the Underlying instrument to derive the price of the CFD that is offered. Trading under the MM model does not necessarily mean that your CFD will be reflected by a corresponding trade in the Underlying instrument. Under the MM model each CFD Transaction creates a direct financial exposure for the provider, which may or may not be hedged in the Underlying instrument. Where the financial exposure is not hedged, the market risk may increase for the market maker. The MM model enables the provider to offer CFDs against synthetic assets, even if there is little Liquidity in the Underlying instrument, which can result in a wider range of products on offer than with the DMA model. Volatility and Illiquidity in the Underlying instrument can affect the pricing of MM CFDs. The MM model can charge its clients Commission based on the notional contract value or it can incorporate costs and fees in the dealing Spread, which represents the difference in price at which the issuer is prepared to Buy and Sell the CFD. What Do I use and why? I have traded with both DMA and MM models and prefer the MM. The big advantage with MM is that they will provide a market even when the underlying is very illiquid and only might have a few trades each day. Regarding the spread of the MM to the spread of the underlying, I have found the MM to be practically in line with the underlying spread about 95% of the time. The other 5% it may have been slightly wider than the spread of the underlying by usually 1c or 2c. Most MMs aim to give you the best spread they can because they want to keep your business. If they gave too wide a spread (compared to the underlying) it wouldn't be long before they had no customers.
|
In the stock market, why is the “open” price value never the same as previous day's “close”?
|
It's done by Opening Auction (http://www.advfn.com/Help/the-opening-auction-68.html): The Opening Auction Between 07.50 and a random time between 08.00 and 08.00.30, there will be called an auction period during which time, limit and market orders are entered and deleted on the order book. No order execution takes place during this period so it is possible that the order book will become crossed. This means that some buy and sell orders may be at the same price and some buy orders may be at higher prices than some sell orders. At the end of the random start period, the order book is frozen temporarily and an order matching algorithm is run. This calculates the price at which the maximum volume of shares in each security can be traded. All orders that can be executed at this price will be filled automatically, subject to price and priorities. No additional orders can be added or deleted until the auction matching process has been completed. The opening price for each stock will be either a 'UT' price or, in the event that there are no transactions resulting form the auction, then the first 'AT' trade will be used.
|
Taxes and withholding on unpaid salary
|
As others have said, make sure you can and do file your taxes on a cash basis (not accrual). It sounds like it's very unlikely the company is going to issue you a 1099 for invoices they never paid you. So you just file last year's taxes based on your income, which is the money you actually received. If they do pay you later, in the new year, you'll include that income on next year's tax return, and you would expect a 1099 at that time. Side note: not getting paid is unfortunately common for consultants and contractors. Take the first unpaid invoice and sue them in small claims court. After you win (and collect!), tell them you'll sue them for each unpaid invoice in turn until they pay you in full. (You might need to break up the lawsuits like that to remain under the small claims limit.)
|
Best way to start investing, for a young person just starting their career?
|
I would personally suggest owning Mutual Funds or ETF's in a tax sheltered account, such as a 401k or an IRA, especially Roth options if available. This lets you participate in the stock market while ensuring that you have diversified portfolio, and the money is managed by an expert. The tax sheltered accounts (or tax free in the case of Roth accounts) increase your savings, and simplify your life as you don't need to worry about taxes on earnings within those accounts, as long as you leave the money in. For a great beginner's guide see Clark's Investment Guide (Easy).
|
How to calculate how much house I can afford?
|
Fundamentals: Then remember that you want to put 20% or more down in cash, to avoid PMI, and recalculate with thatmajor chunk taken out of your savings. Many banks offer calculators on their websites that can help you run these numbers and figure out how much house a given mortgage can pay for. Remember that the old advice that you should buy the largest house you can afford, or the newer advice about "starter homes", are both questionable in the current market. =========================== Added: If you're willing to settle for a rule-of-thumb first-approximation ballpark estimate: Maximum mortgage payment: Rule of 28. Your monthly mortgage payment should not exceed 28 percent of your gross monthly income (your income before taxes are taken out). Maximum housing cost: Rule of 32. Your total housing payments (including the mortgage, homeowner’s insurance, and private mortgage insurance [PMI], association fees, and property taxes) should not exceed 32 percent of your gross monthly income. Maximum Total Debt Service: Rule of 40. Your total debt payments, including your housing payment, your auto loan or student loan payments, and minimum credit card payments should not exceed 40 percent of your gross monthly income. As I said, many banks offer web-based tools that will run these numbers for you. These are rules that the lending industy uses for a quick initial screen of an application. They do not guarantee that you in particular can afford that large a loan, just that it isn't so bad that they won't even look at it. Note that this is all in terms of mortgage paymennts, which means it's also affected by what interest rate you can get, how long a mortgage you're willing to take, and how much you can afford to pull out of your savings. Also, as noted, if you can't put 20% down from savings the bank will hit you for PMI. Standard reminder: Unless you explect to live in the same place for five years or more, buying a house is questionable financially. There is nothing wrong with renting; depending on local housing stock it may be cheaper. Houses come with ongoung costs and hassles rental -- even renting a house -- doesn't. Buy a house only when it makes sense both financially and in terms of what you actually need to make your life pleasant. Do not buy a house only because you think it's an investment; real estate can be a profitable business, but thinking of a house as simultaneously both your home and an investment is a good way to get yourself into trouble.
|
Owning REIT vs owning real estate - which has a better hypothetical ROI?
|
You've already hit on the big difference. If you buy a property, you've made a big commitment, for better or worse. If you bought wisely, you'll be very happy. If not, you could go bankrupt. An REIT spreads out the risk, but the reward isn't as great. There's less barrier to entry in buying shares of an REIT than there is in buying an investment property: money, time, maintenance. The answer for you depends on what level of effort you want to put into your investment. If you are all ready to pick up an investment property, make the down payment, get appraisal and inspection, clean up the house, and fill it with tenants, then go for it. Otherwise, research some REITs and buy some shares. (Disclaimer: I have a rental property that's doing pretty well now.)
|
Buying my first car out of college
|
I support the strategy to buy a less expensive car at the outset and then save for that more expensive car. You mentioned that you would be able to save $9000 by the time you had to start making payments. That sounds like a great budget for car shopping. For $9k you can get a dependable used car. If you find the right high-yield savings account you can get around 2% on your $500/month direct deposit. That's a difference of about 5% when you add in the 2.9% interest that you would have been paying on the loan. (You can't find such a low risk investment that would yield 5% these days.) Also, at that rate (2%) you would have $27k saved up in less than 52 months, or over $31k in 60 months. Then you could buy a BMW with cash! And I'm sure they would give you a cash discount. Alternatively you could be just finishing paying off the loan and might already be looking at the next car you'll take a loan out for. The point is not that you have to completely deprive yourself for the rest of your life. But by not taking out a loan you were certainly come out ahead in 5-10 years time. Also, one common mistake that new grads make is thinking that they are rich right out of college. Yes, you definitely have a nice salary and "could afford it" by most people's standards. I have a coworker that graduated and started work a year ago. He first bought a brand new Subaru. Why Subaru I do not know, but that is what he thought he wanted. After driving the car for a few months he decided for a few reasons that it was not what he wanted. So he sold the car (for a loss) and bought a slightly used Nissan Z. He has since decided that he needs a more practical car for day to day driving to minimize the abuse that his Z takes. So he has bought another car. This time a low budget Honda. Had he started with a low budget car he could be driving the same car to work right now, but have a good chunk of savings for a new car instead of a loan and a car that he drives only occasionally.
|
Why do investors buy stock that had appreciated?
|
From an amateur: Prices aren't entirely rational - they float, and the day to day prices of stock are an excellent example of this. So how would you assign an appropriate value to it? There is a logical minimum, the scrap value of the assets and the cash on hand. However, that doesn't take into account the expectations for growth people have for that company. If everyone thought a $100 mil company was going to be worth $200 mil by the end of next year, they'd still be willing to pay at a $150 mil price point now. That said, the market is big enough that it's easy enough to find someone who has those growth expectations. They still expect it to be worth more in the future, and they'll buy it now. And if no one buys at that price point, that's when prices start to fall.
|
How to model fees from trades on online platforms?
|
where A1 is the number of trades. you may have to change the number 100 to 99 depending on how the 100th trade is charged. The idea is to use the if statement to determine the price of the trades. Once you are over the threshold the price is 14*number over threshold.
|
What risks are there acting as a broker between PayPal and electronic bank transfers?
|
This is definitely a scam. I had a friend sign up for a very similar offer and what they did was send a fake check and then asked to transfer the same amount to them. So now you just send them a couple grand and you're holding a fake check.
|
Advice on what to do with my equity?
|
How will 45K-60K "end up in your pocket"? Are you selling your home? Where are you going to live? You talk about moving to Arizona, what is so magical about that place? Congratulations on making a wise purchase. Some people with new found money use it to correct past mistakes. However, if they do not change their behavior they end up in the same situation just less them money they once had. While 50K income is respectable at your age, it is below the national average for households. One factor in having a college education is those with them tend to experience shorter and fewer periods of unemployment especially for males. Nothing will ever replace hustle, however. I'd ask you to have a plan to raise your income. Can you double it in 5 years? You need to get rid of the revolving debt. Do that out of current income. No need to touch the house proceeds for something so small. Shoot for 9 months. Then you need to get rid of the speeding fines and the vehicle loan. That is a lot of vehicle for your income. Again, I would do that out of current income or by selling the vehicle and moving to something more inline with your income. As far as to moving or flipping foreclosures that is more of a question that has to do with your hopes and dreams. Do you want to move your children every 3 years? What if you move to Arizona and it turns out to be quite horrible? You and your wife need to sit down and discuss what is best for your family.
|
Why do moving average acts as support and resistance?
|
A moving average will act as support or resistance to a stock only when the stock is trending. The way it acts as support for instance is similar to a trend-line. Take the daily chart of CBA over the last 6 months: The first chart shows CBA with an uptrend support line. The second chart shows CBA during the same period with 50 day EMA as a support. Both can be used as support for the uptrend. Generally you can used these types of support (or resistance in a downtrend) to determine when to buy a stock and when to sell a stock. If I was looking to buy CBA whilst it was uptrending, one strategy I could use was to wait until it hit or got very close to the support trend-line and then buy as it re-bounces back up. If I already held the stock I could use a break down below the uptrend support line as a stop to exit out of the stock.
|
Saving for a non-necessity
|
Your question is rather direct, but I think there is some underlying issues that are worth addressing. One How to save and purchase ~$500 worth items This one is the easy one, since we confront it often enough. Never, ever, ever buy anything on credit. The only exception might be your first house, but that's it. Simply redirect the money you would spend in non necessities ('Pleasure and entertainment') to your big purchase fund (the PS4, in this case). When you get the target amount, simply purchase it. When you get your salary use it to pay for the monthly actual necessities (rent, groceries, etc) and go through the list. The money flow should be like this: Two How to evaluate if a purchase is appropriate It seems that you may be reluctant to spend a rather chunky amount of money on a single item. Let me try to assuage you. 'Expensive' is not defined by price alone, but by utility. To compare the price of items you should take into account their utility. Let's compare your prized PS4 to a soda can. Is a soda can expensive? It quenches your thirst and fills you with sugar. Tap water will take your thirst away, without damaging your health, and for a fraction of the price. So, yes, soda is ridiculously expensive, whenever water is available. Is a game console expensive? Sure. But it all boils down to how much do you end up using it. If you are sure you will end up playing for years to come, then it's probably good value for your money. An example of wrongly spent money on entertainment: My friends and I went to the cinema to see a movie without checking the reviews beforehand. It was so awful that it hurt, even with the discount price we got. Ultimately, we all ended up remembering that time and laughing about how wrong it went. So it was somehow, well spent, since I got a nice memory from that evening. A purchase is appropriate if you get your money's worth of utility/pleasure. Three Console and computer gaming, and commendation of the latter There are few arguments for buying a console instead of upgrading your current computer (if needed) except for playing console exclusives. It seems unlikely that a handful of exclusive games can justify purchasing a non upgradeable platform unless you can actually get many hours from said games. Previous arguments to prefer consoles instead of computers are that they work out of the box, capability to easily connect to the tv, controller support... have been superseded by now. Besides, pc games can usually be acquired for a lower price through frequent sales. More about personal finance and investment
|
Why is the bid-ask spread considered a cost?
|
Your assets are marked to market. If you buy at X, and the market is bidding at 99.9% * X then you've already lost 0.1%. This is a market value oriented way of looking at costs. You could always value your assets with mark to model, and maybe you do, but no one else will. Just because you think the stock is worth 2*X doesn't mean the rest of the world agrees, evidenced by the bid. You surely won't get any margin loans based upon mark to model. Your bankers won't be convinced of the valuation of your assets based upon mark to model. By strictly a market value oriented way of valuing assets, there is a bid/ask cost. more clarification Relative to littleadv, this is actually a good exposition between the differences between cash and accrual accounting. littleadv is focusing completely on the cash cost of the asset at the time of transaction and saying that there is no bid/ask cost. Through the lens of cash accounting, that is 100% correct. However, if one uses accrual accounting marking assets to market (as we all do with marketable assets like stocks, bonds, options, etc), there may be a bid/ask cost. At the time of transaction, the bids used to trade (one's own) are exhausted. According to exchange rules that are now practically uniform: the highest bid is given priority, and if two bids are bidding the exact same highest price then the oldest bid is given priority; therefore the oldest highest bid has been exhausted and removed at trade. At the time of transaction, the value of the asset cannot be one's own bid but the highest oldest bid leftover. If that highest oldest bid is lower than the price paid (even with liquid stocks this is usually the case) then one has accrued a bid/ask cost.
|
Why buying an inverse ETF does not give same results as shorting the ETF
|
Suppose that the ETF is currently at a price of $100. Suppose that the next day it moves up 10% (to a price of $110) and the following day it moves down 5% (to a price of $104.5). Over these two days the ETF has had a net gain of 4.5% from its original price. The inverse ETF reverses the daily gains/losses of the base ETF. Suppose for simplicity that the inverse ETF also starts out at a price of $100. So on the first day it goes down 10% (to $90) and on the second day it goes up 5% (to $94.5). Thus over the two days the inverse ETF has had a net loss of 5.5%. The specific dollar amounts do not matter here. The result is that the ETF winds up at 110%*95% = 104.5% of its original price and the inverse ETF is at 90%*105% = 94.5% of its original price. A similar example is given here. As suggested by your quote, this is due to compounding. A gain of X% followed by a loss of Y% (compounded on the gain) is not in general the same as a loss of X% followed by a gain of Y% (compounded on the loss). Or, more simply put, if something loses 10% of its value and then gains 10% of its new value, it will not return to its original value, because the 10% it gained was 10% of its decreased value, so it's not enough to bring it all the way back up. Likewise if it gains 10% and then loses 10%, it will go slightly below its original value (since it lost 10% of its newly increased value).
|
How do I know if a dividend stock is “safe” and not a “dividend yield trap”?
|
Let me provide a general answer, that might be helpful to others, without addressing those specific stocks. Dividends are simply corporate payouts made to the shareholders of the company. A company often decides to pay dividends because they have excess cash on hand and choose to return it to shareholders by quarterly payouts instead of stock buy backs or using the money to invest in new projects. I'm not exactly sure what you mean by "dividend yield traps." If a company has declared an dividend for the upcoming quarter they will almost always pay. There are exceptions, like what happened with BP, but these exceptions are rare. Just because a company promises to pay a dividend in the approaching quarter does not mean that it will continue to pay a dividend in the future. If the company continues to pay a dividend in the future, it may be at a (significantly) different amount. Some companies are structured where nearly all of there corporate profits flow through to shareholders via dividends. These companies may have "unusually" high dividends, but this is simply a result of the corporate structure. Let me provide a quick example: Certain ETFs that track bonds pay a dividend as a way to pass through interest payments from the underlying bonds back to the shareholder of the ETF. There is no company that will continue to pay their dividend at the present rate with 100% certainty. Even large companies like General Electric slashed its dividend during the most recent financial crisis. So, to evaluate whether a company will keep paying a dividend you should look at the following: Update: In regards to one the first stock you mentioned, this sentence from the companies of Yahoo! finance explains the "unusually" dividend: The company has elected to be treated as a REIT for federal income tax purposes and would not be subject to income tax, if it distributes at least 90% of its REIT taxable income to its share holders.
|
What happens to my savings if my country defaults or restructures its debt?
|
I am going to add in an opinion here from the Wall Street Journal that I read this morning in What's at Stake in the Greek Vote, in light of current events and elections in Greece. The article claims that if the election results make it sound like a break from the Euro is imminent then ... we will see a full-fledged bank run. Greek banks would collapse ... The market exchange-rate would likely be two or three drachmas to the euro, which would double or triple the Greek price of imported goods within a few days. Prices of assets, including real-estate assets, would crumble. Those who moved their deposits abroad would be able to buy these assets cheaply, leading to a significant, regressive redistribution of Greek wealth. In short, you'd lose two-thirds of your savings unless you were storing them somewhere safe from the conversion. The article also predicts difficulty importing goods (other nations will demand to be paid in euro, not drachma) leading to disruption of trade and various supply shortages. I will note that the predictions here seem to be in opposition to some other advice here which suggests that real estate will be an effective hedge.
|
Complete Opposite Calculations and Opinions - Using Loan to Invest - Paying Monthly Installments with Monthly Income
|
The advice you were given in the other question was don't do it. The math is not the issue. The interest structure is not the issue. But there is a significant chance that you could lose money on the deal. If you invested your money in a NASDAQ heavy position in January 2000, you are still waiting to break even in November of 2013; Invest in almost anything in August 2001 and you will be down for a long time. Invest just before the housing collapse in 2007 and only now returning back to where you were. If you take money on a monthly basis and invest it you will be better off. If want to get the loan; then set up a stream of money into a bank account to make sure that when payments are due you have the cash to do so. When the two years are up you will have cash to repay the loan, and no need to sell the investments. Also if you are a bad judge of investments you won't have a problem repaying the loan. Using a loan to purchase stock reduces your gains and increases your losses. Use the power of Dollar cost averaging by making periodic purchases.
|
Student loan payments and opportunity costs
|
I'll use similar logic to Dave Ramsey to answer this question because this is a popular question when we're talking about paying off any debt early. Also, consider this tweet and what it means for student loans - to you, they're debt, to the government, they're assets. If you had no debt at all and enough financial assets to cover the cost, would you borrow money at [interest rate] to obtain a degree? Put it in the housing way, if you paid off your home, would you pull out an equity loan/line for a purchase when you have enough money in savings? I can't answer the question for you or anyone else, as you can probably find many people who will see benefits to either. I can tell you two observations I've made about this question (it comes a lot with housing) over time. First, it tends to come up a lot when stocks are in a bubble to the point where people begin to consider borrowing from 0% interest rate credit cards to buy stocks (or float bills for a while). How quickly people forget what it feels (and looks like) when you see your financial assets drop 50-60%! It's not Wall Street that's greedy, it's most average investors. Second, people asking this question generally overlook the behavior behind the action; as Carnegie said, "Concentration is the key to wealth" and concentrating your financial energy on something, instead of throwing it all over the place, can simplify your life. This is one reason why lottery winners don't keep their winnings: their financial behavior was rotten before winning, and simply getting a lot of money seldom changes behavior. Even if you get paid a lot or little, that's irrelevant to success because success requires behavior and when you master the behavior everything else (like money, happiness, peace of mind, etc) follows.
|
Why would anyone buy a government bond?
|
There are a few other factors possible here: Taxes - Something you don't mention is what are the tax rates on each of those choices. If the 4% gain is taxed at 33% while the 3% government bond is taxed at 0% then it may well make more sense to have the government bond that makes more money after taxes. Potential changes in rates - Could that 4% rate change at any time? Yield curves are an idea here to consider where at times they can become inverted where short-term bonds yield more than long-term bonds due to expectations about rates. Some banks may advertise a special rate for a limited time to try to get more deposits and then change the rate later. Beware the fine print. Could the bond have some kind of extra feature on it? For example, in the US there are bonds known as TIPS that while the interest rate may be low, there is a principal adjustment that comes as part of the inflation adjustment that is part how the security is structured.
|
Do US mutual funds and ETFs pay taxes on dividends?
|
Mutual funds don't pay taxes themselves, they distribute any dividends or capital gains to the shareholders. Thus, if you hold a mutual fund in a tax-advantaged account like a 401k or IRA then the distribution isn't a taxable event while in a regular taxable account you would have to pay taxes on the distributions. From Forbes: There can be foreign companies on US stock exchanges that would still work the same way. Unilever for example is an Anglo-Dutch multinational listed on the NYSE as "UN."
|
Why can't house prices be out of tune with salaries
|
The big problem with your argument is the 10% per year figure, because in the long term (especially if adjusted for inflation) the prices have not been going up nearly that fast. Here is a site with some nice graphs for prices over the last 40 years, and it's pretty clear to see that pretty much just what you were talking about happened, prices outpaced the ability of people to pay, which progressively locked out more and more first time buyers, and eventually that breaks the cycle, pops the bubble, and the prices adjust. There is always of course the choice to NOT buy a house, and just rent, or if you had the feeling that you are near the top of a bubble, SELL and go back to renting. It's interesting to note that in general, rental rates did not increase at nearly the same pace as the prices in the recent bubble. (which of course made it harder for anyone who bought 'investment' properties in the recent 8 years or so to cover their payments via rental revenue.)
|
When will the 2017 US Federal Tax forms be released?
|
It's not quite as bad as the comments indicate. Form 1040ES has been available since January (and IME has been similarly for all past years). It mostly uses the prior year (currently 2016) as the basis, but it does have the updated (2017) figures for items that are automatically adjusted for inflation: bracket points (and thus filing threshhold), standard deductions, Social Security cap, and maybe another one or two I missed. The forms making up the actual return cannot be prepared very far in advance because, as commented, Congress frequently makes changes to tax law well after the year begins, and in some cases right up to Dec. 31. The IRS must start preparing forms and pubs -- and equally important, setting the specifications for software providers like Intuit (TurboTax) and H&RBlock -- several months ahead in order to not seriously delay filing season, and with it refunds, which nearly everyone in the country considers (at least publicly) to be worse than World War Three and the destruction of the Earth by rogue asteroids. I have 1040 series from the last 4 years still on my computer, and the download dates mostly range from late September to mid January. Although one outlier shows the range of possibility: 2013 form 1040 and Schedule A were tweaked in April 2014 because Congress passed a law allowing charitable contributions for Typhoon Haiyan to be deducted in the prior year. Substantive, but relatively minor, changes happen every year, including many that keep recurring like the special (pre-AGI) teacher supplies deduction ("will they or won't they?"), section 179 expensing (changes slightly almost every year), and formerly the IRA-direct-to-charity option (finally made permanent last year). As commented, the current Congress and President were elected on a platform with tax reform as an important element, and they are talking even more intensely than before about doing it, although whether they will actually do anything this year is still uncertain. However, if major reform is done it will almost certainly apply to future years only, and likely only start after a lag of some months to a year. They know it causes chaos for businesses and households alike to upend without advance warning the assumptions built in to current budgets and plans -- and IME as a political matter something that is enacted now and effective fairly soon but not now is just as good (but I think that part is offtopic).
|
Price of a call option
|
When I log in to Schwab to look at these options it tells me there's only Adjusted Options available on these terms: Adjusted Options: Multiplier: 100; Deliverable: 15 PTIE; Cash: ---- It does confirm your July Call quote price of $0.05 because the contract, though priced for 100 shares, will only deliver 15 shares. Separately, looking at the company website for news there was a 7 for 1 Reverse Split announced on May 8, which is the culprit for this option adjustment and the seemingly nonsensical call price.
|
Why would you ever turn down a raise in salary?
|
The only valid reason from a financial point of view is if the raise is a promotion or comes with conditions that are unacceptable to you. You may not want added supervisory responsibilties, for example. You need to use discretion when refusing advancement though, at places where I have worked, declining a raise or promotion is seen as a career killer for some circumstances.
|
Full-time work + running small side business: Best business structure for taxes?
|
I have a very similar situation doing side IT projects. I set up an LLC for the business, created a separate bank account, and track things separately. I then pay myself from the LLC bank account based on my hours for the consulting job. (I keep a percentage in the LLC account to pay for expenses.) I used to do my taxes myself, but when I created this arrangement, I started having an accountant do them. An LLC will not affect your tax status, but it will protect you from liability and make things more accountable come tax time.
|
Received an unexpected cashiers check for over $2K from another state - is this some scam?
|
This is so very much a scam. The accepted answer already tells you the basics of it. In addition to the cheque being fake, there is also the possibility that the cheque is a legitimate cheque but has been stolen (or swindled off) from somebody else. In that case, the delay with which the cashing of the cheque will blow up can be considerably longer than the accepted answer states since it depends on the other victim noticing and reporting the fraudulent transfer. The end result is the same: you are not going to be allowed to keep the money. Report this to both your sister's bank as well as her local police. Nothing good can come off this.
|
Carry-forward of individual losses, with late-filed past taxes [US]
|
Is Jim right to be worries? Yes, since the statute of limitations for refunds for 2012 is close and he might lose any tax refunds he might be entitled to for that year. Also, the pattern itself may raise some flags of suspicion and trigger audits, both because of such a variance in income and because of the medical expenses (which are generally considered a red flag). So he might get audited. However, if all the income and expenses are properly documented, audit itself should not be a problem.
|
How does a company select a particular price for its shares?
|
First, keep in mind that there are generally 2 ways to buy a corporation's shares: You can buy a share directly from the corporation. This does not happen often; it usually happens at the Initial Public Offering [the first time the company becomes "public" where anyone with access to the stock exchange can become a part-owner], plus maybe a few more times during the corporations existence. In this case, the corporation is offering new ownership in exchange for a price set the corporation (or a broker hired by the corporation). The price used for a public offering is the highest amount that the company believes it can get - this is a very complicated field, and involves many different methods of evaluating what the company should be worth. If the company sets the price too low, then they have missed out on possible value which would be earned by the previous, private shareholders (they would have gotten the same share % of a corporation which would now have more cash to spend, because of increased money paid by new shareholders). If the company sets the price too high, then the share subscription might only be partially filled, so there might not be enough cash to do what the company wanted. You can buy a share from another shareholder. This is more common - when you see the company's share price on the stock exchange, it is this type of transaction - buying out other current shareholders. The price here is simply set based on what current owners are willing to sell at. The "Bid Price" listed by an exchange is the current highest bid that a purchaser is offering for a single share. The "Ask Price" is the current lowest offer that a seller is offering to sell a single share they currently own. When the bid price = the ask price, a share transaction happens, and the most recent stock price changes.
|
What's a good free checking account?
|
Capital One 360. No minimums balance, no fees. Everything's online. Make deposits using an app or an image of the check. ATMs are free almost everywhere.
|
How does an enlarged share base affect share price?
|
Most of the time when a stock splits to create more shares, it is done to bring the price per share down to a level that makes potential investors more comfortable. There are psychological reasons why some companies keep the price in the $30 to $60 range. Others like to have the price keep rising into the hundreds or thousands a share. The split doesn't help current investors, with the possible exception that the news spurs interest in the stock which leads to a short term rise in prices; but it also doesn't hurt current investors. When a reverse stock split is done, the purpose is for one of several reasons:
|
Previous owner of my home wants to buy it back but the property's value is less than my loan… what to do?
|
A short-sale seems like an extreme and unethical course to take. You should read your mortgage documents or work with your attorney to read the mortgage and determine whether it is an "assumable" mortgage. If so, you might be able to get the former owner to take over the mortgage.
|
Does an index have a currency?
|
More importantly, index funds are denominated in specific currencies. You can't buy or sell an index, so it can be dimensionless. Anything you actually do to track the index involves real amounts of real money.
|
Is 401k as good as it sounds given the way it is taxed?
|
If you pay 20% tax now and none later or if you pay no tax now and 20% later, it doesn't make a difference. Mathematically, it's the same. You have to guess about which tax rate (now vs later) will be higher for you in order for you to make the best choice. Predicting tax rates 40 years in advance is hard. Everybody pretends like they can do this accurately. I would suggest going half and half. If you have 20k and put half in pre-tax (10k in) and half in post-tax (only 8k in) you end up with 18k total in which is right in the middle of where you would be if you went with the whole 20k in either extreme. It would also leave you owing 2k in tax rather than the possible 4k in tax if you had gone with all pre-tax. When you split down the middle, you are guaranteed to have 50% in the "right" side, the side with the best outcome. Being guaranteed to be 50% on the right side is pretty good compared to maybe being 100% on the wrong side.
|
Wash Sales and Day Trading
|
Great question! It can be a confusing for sure -- but here's a great example I've adapted to your scenario: As a Day Trader, you buy 100 shares of LMNO at $100, then after a large drop the same day, you sell all 10 shares at $90 for a loss of $1,000. Later in the afternoon, you bought another 100 shares at $92 and resold them an hour later at $97 (a $500 profit), closing out your position for the day. The second trade had a profit of $500, so you had a net loss of $500 (the $1,000 loss plus the $500 profit). Here’s how this works out tax-wise: The IRS first disallows the $1,000 loss and lets you show only a profit of $500 for the first trade (since it was a wash). But it lets you add the $1,000 loss to the basis of your replacement shares. So instead of spending $9,200 (100 shares times $92), for tax purposes, you spent $10,200 ($9,200 plus $1,000), which means that the second trade is what caused you to lose the $500 that you added back (100 x $97 = $9,700 minus the 100 x $102 = $10,200, netting $500 loss). On a net basis, you get to record your loss, it just gets recorded on the second trade. The basis addition lets you work off your wash-sale losses eventually, and in your case, on Day 3 you would recognize a $500 final net loss for tax purposes since you EXITED your position. Caveat: UNLESS you re-enter LMNO within 30 days later (at which point it would be another wash and the basis would shift again). Source: http://www.dummies.com/personal-finance/investing/day-trading/understand-the-irs-wash-sale-rule-when-day-trading/
|
401K - shift from agressive investment to Money Market
|
I can understand your fears, and there is nothing wrong with taking action to protect yourself from them. How much income do you need in retirement? For arguments sake, lets say you need to pull 36K per year from your 401K or 3K per month. Lets also assume that you current contribute (with any match) 1,000 per month. Please adjust to your actual numbers accordingly. One option would be to pull out 48K right now and put it in a money market. With your contributions, I would then put half into the money market and half into more aggressive investments. In 10 years, you would have about 110K in your money market account. You could live off of that for three years. If the market does crash, this should give you plenty of time to recover. Taking this option opens you to another risk, which is being beat up by inflation or lack of growth on a nice pile of cash. My time frame is not that different then yours (I am about 12 years away), but am still all in stocks. Having 48K and more with not opportunity for growth frightens me more than any temporary stock market crash. Having said that I think it would be a horrible mistake to get completely out of stocks. Many of those destroyed in 2008 also missed 2012 through 2014 which were awesome years. So do some. Set aside a year or three of income in something nice and safe. Maybe one year of income in money market, one in bonds and preferred stocks, and one in blue chips.
|
What is S/P in “Tax Deduction S/P”?
|
From reading the manual, SP means summary punching. Summary punching is the automatic preparation of one total card to replace a group of detail cards.
|
Why don't banks give access to all your transaction activity?
|
Many good points have been brought up, and I'll just link to them here, for ease. Source: I work at a credit/debit card transaction processing company on the Database and Processing Software teams. See mhoran_psprep's answer. See Chris' answer. Believe it or not, banks don't expose their primary (or secondary) database to end users. They don't expose their fastest / most robust database to end users. By only storing x days of data in that customer-facing database and limiting the range of any one query, any query run against it is much less likely to cause system-wide slowness. They most definitely have database archives which are kept offline, and most definitely have an employee-facing database which allows employees to query larger ranges of data. What would a bank have to gain by allowing you to query a full year of transactions?
|
What is a formula for calculating equity accumulated while repaying car loan?
|
Here is a simple way to analyze the situation. Go to your bank or credit union website and use their loan calculator with their current real interest rates and down payment requirements. Enter the rate, and number of years. Enter different values for the loan amount to get the monthly payment to the level you want ($400). Today for my credit union, the max loan would be about $9,500. Keep in mind there may be taxes, registration fees, and down payment on top of this. Jump ahead two years. The loan is paid off, the car is owned free and clear. You will be able to sell it and get some money in your pocket. If you go for a longer term loan to keep the payments under your goal the issue is that in two years you might be upside down on the loan. The car may be worth less than the remaining balance on the loan. Your equity would be negative.
|
How to safely earn interest on business profits (UK)
|
I found some UK personal accounts offer up to 3% interest (no names here, but it is well known bank with red logo). You can take out directors loan from your company, put the cash into that personal account and earn interest. Just don't forget to return this loan before end of financial year, so this interest does not become your dividends.
|
What are some time tested passive income streams?
|
Last year was a great opportunity for dividend stocks and MLPs. I have a few which are earning 6-9% of my investment basis cost. Municipal bonds are a good value now. If you have the connections, passive investments in convenience franchises or other commercial property are a good income stream. A Dunkin Donuts used to be an amazing money printing machine.
|
Tax brackets in the US
|
Yes, your tax bracket is 25%. However, that doesn't mean that your take home pay will be 75% of your salary. There is much more that goes into figuring out what your take home pay will be. First, you have payroll taxes. This is often listed on your pay stub as "FICA." The Social Security portion of this tax is 6.2% on the first $118,500 of your pay and the Medicare portion is another 1.45% on the first $200,000. (Your employer also has to pay additional tax that does not appear on your stub.) So 7.65% of your salary gets removed off the top. In addition to the federal income taxes that get withheld, you may also have state income taxes that get withheld. The amount varies with each state. Also, the 25% tax bracket does not mean that your tax is 25% of your entire salary. You step through the tax brackets as your income goes up. So part of your salary is taxed at 10%, part at 15%, and the remainder is at 25%. The amount of federal income tax that is withheld from your paycheck is really a rough estimate of how much tax you actually owe. There are lots of things that can reduce your tax liability (personal exemptions, deductions, credits) or increase your tax (investment income, penalties). When you do your tax return, you calculate the actual tax that you owe, and you either get a refund if too much was taken out of your check, or you need to send more money in if too little was taken out.
|
I'm only spending roughly half of what I earn; should I spend more?
|
I use to think there was something wrong with me because I always hated spending money. This hatred of spending resulted in me always saving quite a bit of my income. Since I don't enjoy spending it, why am I making and saving it (besides for an emergency fund)? I've come to the realization that I enjoy my free time more than I enjoy making lots of money. So I go to work for something to do - and pay the bills - but I am no longer trying to advance my career, or be the best at my profession, or climb some corporate ladder, or be some superstar. In fact, I'm considering a career change where I would make half of what I'm making now. What's my point? If having a lot of savings depresses you and you don't enjoy spending it then consider reducing your income.
|
How do credit card payments work? What ensures the retailer charges the right amount?
|
Your credit card limit is nothing more than a simple number. When you purchase something, the merchant receives a number (i.e. the amount of the transaction) from your card company (e.g. Visa) in their bank account, and that number is subtracted from your limit (added to your balance). The amount is recorded, and isn't changed, so that's how they get the "exact" amount you paid. Transferring a number is easier than the retailer having to wait for cash to get from you to your card company to them. Moving numbers around is the basis of the modern financial system. And yes, it is always a risk to let someone else have your credit card number. An untrustworthy company/person may use it to charge you without your permission, or if they have your full details they could use it as if they were you. With a reputable retailer like Amazon, the main risk is data theft: If a security hole is found in Amazon's system, someone could steal your credit card info and misuse it.
|
Search index futures in Yahoo Finance or Google Finance
|
Options - yes we can :) Options tickers on Yahoo! Finance will be displayed as per new options symbology announced by OCC. The basic parts of new option symbol are: Root symbol + Expiration Year(yy)+ Expiration Month(mm)+ Expiration Day(dd) + Call/Put Indicator (C or P) + Strike price Ex.: AAPL January 19 2013, Put 615 would be AAPL130119P00615000 http://finance.yahoo.com/q?s=AAPL130119P00615000&ql=1 Futures - yes as well (: Ex.: 6A.M12.E would be 6AM12.CME using Yahoo Finance symbology. (simple as that, try it out) Get your major futures symbols from here: http://quotes.ino.com/exchanges/exchange.html?e=CME
|
Should I buy a home or rent in my situation?
|
My experience with owning a home is that its like putting down roots and can be like an anchor holding you to an area. Before considering whether you can financially own a home consider some of the other implications. Once you own it you are stuck for awhile and cannot quickly move away like you can with renting. So if a better job opportunity comes up or your employer moves you to another office across town that doubles your commute time, you'll be regretting the home purchase as it will be a barrier to moving to a more convenient location. I, along with my fiancée and two children, are being forced to move out of my parents home ASAP. Do not rush buying a home. Take your time and find what you want. I made the mistake once of buying a home thinking I could take on some DIY remodeling to correct some features I wasn't fond of. Life intervenes and finding extra time for DIY house updates doesn't come easy, especially with children. Speaking of children, consider the school district when buying a home too. Often times homes in good school districts cost more. If you don't consider the school district now, then you may be faced with a difficult decision when the kids start school. IF you are confident you won't want to move anytime soon and can find a house you like and want to jump into home ownership there are some programs that can help first time buyers, but they can require some effort on your part. FHA has a first time buyer program with a 3.5% down payment. You will need to search for a lender that offers FHA loans and work with them. FHA covers this program by charging mortgage insurance every month that's part of your house payment. Fannie Mae has the HomeReady program where first time home buyers can purchase a foreclosed home from their inventory for as little as 3% down and possibly get up to 3% from the seller to apply toward closing costs. Private mortgage insurance (PMI) is required with this program too. Their inventory of homes can be found on the https://www.homepath.com/ website. There is also NACA, which requires attending workshops and creating a detailed plan to prove you're ready for homeownership. This might be a good option if they have workshops in your area and you want to talk with someone in person. https://www.naca.com/about/
|
Can I move my 401k to another country without paying tax penalty?
|
Transfers can be made from U.S. pension plans to Canadian RRSPs, if the following conditions are met: Way more details here: http://www.howlandtax.com/answers/05Sept21.htm And googling 'transfer 401k to rrsp' yields much fruit.
|
Why do stores and manufacturers use mail in rebates? A scam, or is there a way to use them effectively?
|
It's an effective way to achieve market segmentation without having to ask your customers how rich they are, and you get the benefit of finding out additional information like their address, email etc. The principle is similar to coupons on cereal boxes, anybody can get the rebate/discount if they go to the effort, but people who are cash rich/time poor are less likely to do so than those that really need the money. Joel Spolsky wrote about this and various other pricing mechanisms a while back, I like to reference the article every few weeks. It's well worth a read. Now, if you're retired and living off of social security, $7 an hour sounds pretty good, so you do it, but if you're a stock analyst at Merrill Lynch getting paid $12,000,000 a year to say nice things about piece-of-junk Internet companies, working for $7 an hour is a joke, and you're not going to clip coupons. Heck, in one hour you could issue "buy" recommendations on ten piece-of-junk Internet companies! So coupons are a way for consumer products companies to charge two different prices and effectively segment their market into two. Mail-in rebates are pretty much the same as coupons, with some other twists like the fact that they reveal your address, so you can be direct marketed to in the future.
|
Borrow money to invest in a business venture with equity?
|
It's clearly a risk, but is it any different than investing in your own business? Yes, it is different. If you own a business, you determine the path of the business. You determine how much risk the business takes. You can put in extra effort to try to make the business work. You can choose to liquidate to preserve your capital. If you invest without ownership, perhaps the founder retains a 50% plus one share stake, then whomever controls the business controls all those things. So you have all the risks of owning the business (in terms of things going wrong) without the control to make things go right. This makes investing in someone else's business inherently riskier. Another problem that can occur is that you could find out that the business is fraudulent. Or the business can become fraudulent. Neither of those are risks if you are the business owner. You won't defraud yourself. Angel investing, that is to say investing in someone else's startup, is inherently risky. This is why it is difficult to find investors, even though some startups go on to become fabulously wealthy (Google, YouTube, Facebook, Twitter, etc.). Most startups fail. They offer the possibility of great returns because it's really hard to determine which ones will fail and which will succeed. Otherwise the business would just take out the same loan that Jane's getting, and leave Jane out of it.
|
Any reason to keep around my account with my old, 'big' bank?
|
I'd add that bigger banks tend to have experience doing more complicated things. As an example, my local credit union (~12 offices), simply didn't have the software to wire money to a Canadian bank, as where Chase did. The Canadian routing number wasn't in the format of a US institution, and their software user interface just didn't allow for that number to be entered. Also, most smaller banks don't have international toll free (in-country) numbers for foreign access. Smaller banks also tend to have less sophisticated business banking tools and experience. If you take a Treasury bond approval to a small bank, they'll generally look at you like you have three heads. So the international side of things is definitely in the favor of big banks; they have a lot more money to dump on services.
|
How do you get out of a Mutual Fund in your 401(k)?
|
Most 401k plans (maybe even all 401k plans as a matter of law) allow the option of moving the money in your 401k account from one mutual fund to another (within the group of funds that are in the plan). So, you can exit from one fund and put all your 401k money (not just the new contributions) into another fund in the group if you like. Whether you can find a fund within that group that invests only in the companies that you approve of is another matter. As mhoran_psprep's answer points out, changing investments inside a 401k (ditto IRAs, 403b and 457 plans) is without tax consequence which is not the case when you sell one mutual fund and buy another in a non-retirement account.
|
Magazine subscription leads to unauthorized recurring payment
|
You have a subscription that costs $25 They have the capabilities to get that $25 from the card on file if you had stopped paying for it, you re-upping the cost of the subscription was more of a courtesy. They would have considered pulling the $25 themselves or it may have gone to collections (or they could courteously ask if you wanted to resubscribe, what a concept) The credit card processing agreements (with the credit card companies) and the FTC would handle such business practices, but "illegal" wouldn't be the word I would use. The FTC or Congress may have mandated that an easy "opt-out" number be associated with that kind of business practice, and left it at that.
|
Why is the fractional-reserve banking not a Ponzi scheme?
|
They're not at all the same. A Ponzi scheme is a fraudulent investment method that pays off early investors with deposits from later ones. Fractional reserve banking is the practice of keeping only a fraction of a bank's demand deposits on reserve, while lending out the rest. The reserve requirement is how central banks limit the amount of money that can float around in commercial banks. In the latter case, there is no "later investor" somewhere down near the bottom of a money food chain. Every dollar, regardless of whether it was created fresh from one of the federal reserve banks or created via several chained loans, is worth the same. If the dollars depreciate for whatever reason, they do so for everyone. Now, if you want a good example of a Ponzi scheme that is actually legal, look at Social Security. Edit: A "debt-based society" is separate from fractional-reserve banking. If the Fed creates $1,000,000, the total amount of money that can float around is still capped based on whatever the reserve requirement is. (For a 10% reserve requirement, it's something like $10,000,000.) We have unsustainable debt increases because of lack of self-control on the part of our leaders. The fractional-reserve process helps it along, but it's not the culprit. It's an enabler.
|
What happened when the dot com bubble burst?
|
Well basically a lot of dot-com companies that had no real plans for having actual profit's, self-destructed. I had worked for a company called VarsityOnline.com which was depending on endless money from investor's, and had never really made any kind of profit, for which it had ample opportunity. People lost sight of reality, that just because it wasn't a real brick and mortar store, that common sense, good service and good products didn't matter. We were so clueless back then.
|
Advice for opening an IRA as a newbie
|
If you want to 'offset' current (2016) income, only deductible contribution to a traditional IRA does that. You can make nondeductible contributions to a trad IRA, and there are cases where that makes sense for the future and cases where it doesn't, but it doesn't give you a deduction now. Similarly a Roth IRA has possible advantages and disadvantages, but it does not have a deduction now. Currently he maximum is $5500 per person ($6500 if over age 50, but you aren't) which with two accounts (barely) covers your $10k. To be eligible to make this deductible traditional contribution, you must have earned income (employment or self-employment, but NOT the distribution from another IRA) at least the amount you want to contribute NOT have combined income (specifically MAGI, Modified Adjusted Gross Income) exceeding the phaseout limit (starts at $96,000 for married-joint) IF you were covered during the year (either you or your spouse) by an employer retirement plan (look at box 13 on your W-2's). With whom. Pretty much any bank, brokerage, or mutual fund family can handle IRAs. (To be technical, the bank's holding company will have an investment arm -- to you it will usually look like one operation with one name and logo, one office, one customer service department, one website etc, but the investment part must be legally separate from the insured banking part so you may notice a different name on your legal and tax forms.) If you are satisified with the custodian of the inherited IRA you already have, you might just stay with them -- they may not need as much paperwork, you don't need to meet and get comfortable with new people, you don't need to learn a new website. But if they sold you an annuity at your age -- as opposed to you inheriting an already annuitized IRA -- I'd want a lot of details before trusting they are acting in your best interests; most annuities sold to IRA holders are poor deals. In what. Since you want only moderate risk at least to start, and also since you are starting with a relatively small amount where minimum investments, expenses and fees can make more of an impact on your results, I would go with one or a few broad (= lower risk) index (= lower cost) fund(s). Every major fund familly also offers at least a few 'balanced' funds which give you a mixture of stocks and bonds, and sometimes some 'alternatives', in one fund. Remember this is not committing you forever; any reasonable custodian will allow you to move or spread to more-adventurous (but not wild and crazy) investments, which may be better for you in future years when you have some more money in the account and some more time to ponder your goals and options and comfort level.
|
If a stock has only buyers and no sellers how does its price go up?
|
Depending on what currency the price is quoted in and is originally sold, currency fluctuation can also carry over onto the price in your currency. An example for that would be bitcoin prices which sometimes show heavy ups and downs in one currency, but seem totally stable in another and can be tracked back to changed exchange rates between currencies. Also like others have said, prices on stocks are not actually fixed. You can offer to buy or sell at any price. Only if 2 people want to buy or sell for the same price there will actually be a transaction.
|
15 year mortgage vs 30 year paid off in 15
|
Yes. It does cost the same to pay off a "15 year in 15" year versus a "30 year in 15 year" mortgage. After all, the 30 year amortization period is only used by the lender to calculate the monthly payment he'll expect, while, unbeknownst to him, you are using a 15 year amortization and the same rate to calculate the payments you'll really make. One factor: Can you make extra payments at the level you want, without incurring penalties from the lender? Most mortgages have prepayment limits. After all. he's seeing his nice steady 30 years of cash flow suddenly shortened. He has to go out and find someone else to lend the unexpected payments to... EDIT: Closed mortgages, with pre-payment charges are the norm here in Canada; open mortgages predominate in the US http://www.cmhc-schl.gc.ca/en/corp/nero/jufa/jufa_018.cfm
|
What to do with a 50K inheritance [duplicate]
|
My grandma left a 50K inheritance You don't make clear where in the inheritance process you are. I actually know of one case where the executor (a family member, not a professional) distributed the inheritance before paying the estate taxes. Long story short, the heirs had to pay back part of the inheritance. So the first thing that I would do is verify that the estate is closed and all the taxes paid. If the executor is a professional, just call and ask. If a family member, you may want to approach it more obliquely. Or not. The important thing is not to start spending that money until you're sure that you have it. One good thing is that my husband is in grad school and will be done in 2019 and will then make about 75K/yr with his degree profession. Be a bit careful about relying on this. Outside the student loans, you should build other expenses around the assumption that he won't find a job immediately after grad school. For example, we could be in a recession in 2019. We'll be about due by then. Paying off the $5k "other debt" is probably a no brainer. Chances are that you're paying double-digit interest. Just kill it. Unless the car loan is zero-interest, you probably want to get rid of that loan too. I would tend to agree that the car seems expensive for your income, but I'm not sure that the amount that you could recover by selling it justifies the loss of value. Hopefully it's in good shape and will last for years without significant maintenance. Consider putting $2k (your monthly income) in your checking account. Instead of paying for things paycheck-to-paycheck, this should allow you to buy things on schedule, without having to wait for the money to appear in your account. Put the remainder into an emergency account. Set aside $12k (50% of your annual income/expenses) for real emergencies like a medical emergency or job loss. The other $16k you can use the same way you use the $5k other debt borrowing now, for small emergencies. E.g. a car repair. Make a budget and stick to it. The elimination of the car loan should free up enough monthly income to support a reasonable budget. If it seems like it isn't, then you are spending too much money for your income. Don't forget to explicitly budget for entertainment and vacations. It's easy to overspend there. If you don't make a budget, you'll just find yourself back to your paycheck-to-paycheck existence. That sounds like it is frustrating for you. Budget so that you know how much money you really need to live.
|
Why would a passive investor buy anything other than the market portfolio + risk free assets?
|
Investing is always a matter of balancing risk vs reward, with the two being fairly strongly linked. Risk-free assets generally keep up with inflation, if that; these days advice is that even in retirement you're going to want something with better eturns for at least part of your portfolio. A "whole market" strategy is a reasonable idea, but not well defined. You need to decide wheher/how to weight stocks vs bonds, for example, and short/long term. And you may want international or REIT in the mix; again the question is how much. Again, the tradeoff is trying to decide how much volatility and risk you are comfortable with and picking a mix which comes in somewhere around that point -- and noting which assets tend to move out of synch with each other (stock/bond is the classic example) to help tune that. The recommendation for higher risk/return when you have a longer horizon before you need the money comes from being able to tolerate more volatility early on when you have less at risk and more time to let the market recover. That lets you take a more aggressive position and, on average, ger higher returns. Over time, you generally want to dial that back (in the direction of lower-risk if not risk free) so a late blip doesn't cause you to lose too much of what you've already gained... but see above re "risk free". That's the theoretical answer. The practical answer is that running various strategies against both historical data and statistical simulations of what the market might do in the future suggests some specific distributions among the categories I've mentioned do seem to work better than others. (The mix I use -- which is basically a whole-market with weighting factors for the categories mentioned above -- was the result of starting with a general mix appropriate to my risk tolerance based on historical data, then checking it by running about 100 monte-carlo simulations of the market for the next 50 years.)
|
How will going from 75% Credit Utilization to 0% Credit Utilization affect my credit score?
|
I wrote an article about FICO scoring which shows that 30% of your score is based on utilization or amount owed. I can't say exactly how much your score will rise, or how long it will take, but your score will improve dramatically from what you propose. This chart is from Credit Karma, and it shows how zero utilization is actually bad when it comes to your score. I wrote an article on my blog titled Too Little Debt in which I discuss further. Under 20% is ideal, just not zero.
|
Can I place a stock limit order to buy above the current price? Can I place a stock limit order to sell below the current price?
|
I have done this, and the reason is to make sure that I don't run out of money in my account to place the order if there is an unexpected upswing in price. Suppose I have $1000 in my account and I want to buy 10 shares of ABCD that are currently at $99. If the price doesn't change, then I am all set, but if the price goes up to $101 then I don't have sufficient funds to make the purchase. By placing a limit order at $100 I can ensure that I have enough money to place the order. In general, it is a rather unlikely scenario that it could happen, but placing the limit order is easy to do and it gives me peace of mind. I don't know what you mean about bypassing the queue.
|
How to reconcile a credit card that has an ongoing billing dispute?
|
What I would prefer is top open a new category charges under dispute and park the amount there. It can be made as an account as well in place of a income or expenses category. This way your account will reconcile and also you will be able to track the disputes.
|
Why do 10 year-old luxury cars lose so much value?
|
I believe one of the main reasons cars -- luxury or otherwise -- depreciate so quickly is that many auto accidents can cause serious engine/frame damage but are easily cosmetically repaired. If you smash up the car but get the body fixed, and you don't go through insurance, it will be indistinguishable from the same car that hasn't been in a crash.
|
How smart is it to really be 100% debt free?
|
Around 3 months back, I paid back my last loan from my father which he gave for the car. Now I am totally debt free from 2 months. I have paid back following loans, 1. Education loan. 2. Car loan. I don't have my own property yet. I have a 3 months emergency fund saved which helps me overcome if there is a sudden expense. Overall, its a great idea to be debt free. I used to get extreme thoughts while I had a loan. I paid back and now I am doing good.
|
(Legitimate & respectable) strategies to generate “passive income” on the Internet?
|
One idea that I read among some of the many, many personal finance blogs out there is to create a niche website with good content and generate some ad revenue. The example the author gave was a website he'd made with some lessons to learn basic Spanish. Something as specific as that has a reasonable chance of becoming popular even if you never post new content (since you were looking for passive). The ad income won't be great, but it's likely to stay > 0 for a significant while.
|
401(k) not fully vested at time of acquisition
|
Unfortunately, the money that is not vested is not yours. It belongs to your employer. They have promised to give it to you after you have been with the company for a certain length of time, but if you aren't still with the company after that time, no matter what the reason, the money never becomes yours. Sorry to hear about this. It would have been nice if your company had waived the vesting requirement like this guy's employer did, but I don't think they are required to do so, unfortunately. If it's a lot of money, you could ask an attorney, but as @JoeTaxpayer said, AT&T and IBM probably know what they are doing.
|
What is the process through which a cash stock transaction clears?
|
This is the sad state of US stock markets and Regulation T. Yes, while options have cleared & settled for t+1 (trade +1 day) for years and now actually clear "instantly" on some exchanges, stocks still clear & settle in t+3. There really is no excuse for it. If you are in a margin account, regulations permit the trading of unsettled funds without affecting margin requirements, so your funds in effect are available immediately after trading but aren't considered margin loans. Some strict brokers will even restrict the amount of uncleared margin funds you can trade with (Scottrade used to be hyper safe and was the only online discount broker that did this years ago); others will allow you to withdraw a large percentage of your funds immediately (I think E*Trade lets you withdraw up to 90% of unsettled funds immediately). If you are in a cash account, you are authorized to buy with unsettled funds, but you can't sell purchases made on unsettled funds until such funds clear, or you'll be barred for 90 days from trading as your letter threatened; besides, most brokers don't allow this. You certainly aren't allowed to withdraw unsettled funds (by your broker) in such an account as it would technically constitute a loan for which you aren't even liable since you've agreed to no loan contract, a margin agreement. I can't be sure if that actually violates Reg T, but when I am, I'll edit. While it is true that all marketable options are cleared through one central entity, the Options Clearing Corporation, with stocks, clearing & settling still occurs between brokers, netting their transactions between each other electronically. All financial products could clear & settle immediately imo, and I'd rather not start a firestorm by giving my opinion why not. Don't even get me started on the bond market... As to the actual process, it's called "clearing & settling". The general process (which can generally be applied to all financial instruments from cash deposits to derivatives trading) is: The reason why all of the old financial companies were grouped on Wall St. is because they'd have runners physically carting all of the certificates from building to building. Then, they discovered netting so slowed down the process to balance the accounts and only cart the net amounts of certificates they owed each other. This is how we get the term "bankers hours" where financial firms would close to the public early to account for the days trading. While this is all really done instantly behind your back at your broker, they've conveniently kept the short hours.
|
If gold's price implodes then what goes up?
|
Ok, I think what you're really asking is "how can I benefit from a collapse in the price of gold?" :-) And that's easy. (The hard part's making that kind of call with money on the line...) The ETF GLD is entirely physical gold sitting in a bank vault. In New York, I believe. You could simply sell it short. Alternatively, you could buy a put option on it. Even more risky, you could sell a (naked) call option on it. i.e. you receive the option premium up front, and if it expires worthless you keep the money. Of course, if gold goes up, you're on the hook. (Don't do this.) (the "Don't do this" was added by Chris W. Rea. I agree that selling naked options is best avoided, but I'm not going to tell you what to do. What I should have done was make clear that your potential losses are unlimited when selling naked calls. For example, if you sold a single GLD naked call, and gold went to shoot to $1,000,000/oz, you'd be on the hook for around $10,000,000. An unrealistic example, perhaps, but one that's worth pondering to grasp the risk you'd be exposing yourself to with selling naked calls. -- Patches) Alternative ETFs that work the same, holding physical gold, are IAU and SGOL. With those the gold is stored in London and Switzerland, respectively, if I remember right. Gold peaked around $1900 and is now back down to the $1500s. So, is the run over, and it's all downhill from here? Or is it a simple retracement, gathering strength to push past $2000? I have no idea. And I make no recommendations.
|
What am I actually buying when trading in CFDs
|
The economic effect of a CFD from your point of view is very close to the effect of owning the stock. If the stock goes up, you make money. If it goes down you lose money. If it pays a dividend, you get that dividend. You'll typically pay commission for buying and selling the CFDs in a similar way to the commission on stock purchases, though one of the advertised advantages of CFDs is that the commission will be lower. They also often have tax advantages, for example in the UK you don't have to pay stamp duty on CFDs. In theory you are exposed to credit risk on the CFD issuer, which you aren't with the real stocks: if the issuer goes bankrupt, you may lose any money you have invested regardless of how well the stock has performed. It's certainly similar to a bet, but not much more so than investing directly in the stock. In practice the issuer of the CFDs is likely to hedge its own exposure by actually buying the underlying stocks directly, but they can aggregate across lots of contracts and they would tolerate some unhedged exposure to the stock, so they can cut down on the transaction fees. You also won't get the same voting rights as the underlying stock would grant you.
|
Clothing Store Credit Card Account closed but not deleted
|
They close accounts to render them inoperative. They never delete accounts because they want to retain the data to inform any future decision to give you credit. Also, 99% of the time, if a customer demands their account be deleted, it's because of adverse credit marks and the angry customer wants this accurate information to stop burning their credit report. The answer in this case absolutely must be "heck, no!" That pretty much precludes any valid reason to delete an account. As such, their business systems are not built in a way to make account deletion really possible. Even if you got a job with the company's data-processing department and had direct query/write accesses to the databases, you would find it technically inachievable to surgically remove the specific data (without risking serious damage to the entire DB). And it would still be in transaction logs, so not gone forever. Another reason to keep your account alive is to give you online access to statements. After all, the IRS can audit you 5 years after the fact, so it's real nice to be able to go back that far. Most places the statue of limitations is 6-7 years, so again, defending yourself in a lawsuit, here's raw data from an independent third party that you couldn't have faked. Strictly from a customer service POV, that means you can self-serve on requests like that, instead of having to involve expensive staff time. I totally get the annoyance of having yet another login/password you don't want to have flapping out there in the breeze potentially exposed to a cracker... but given that the account is closed, it's probably not going to cause you much trouble. If anything, change the password to one outside your normal choices, perhaps even one you don't know (retain). As long as you retain the email you have tied to the account, you can always reset the password on the off chance you ever need to get back in. Speaking of that, don't rely on your ISP's (me@rr.net or me@att.net or me@xfinity.com), get a Gmail account. I have a dedicated gmail account just for stuff like that.
|
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.