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Should we invest some of our savings to protect against inflation?
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Okay. Savings-in-a-nutshell. So, take at least year's worth of rent - $30k or so, maybe more for additional expenses. That's your core emergency fund for when you lose your job or total a few cars or something. Keep it in a good savings account, maybe a CD ladder - but the point is it's liquid, and you can get it when you need it in case of emergency. Replenish it immediately after using it. You may lose a little cash to inflation, but you need liquidity to protect you from risk. It is worth it. The rest is long-term savings, probably for retirement, or possibly for a down payment on a home. A blended set of stocks and bonds is appropriate, with stocks storing most of it. If saving for retirement, you may want to put the stocks in a tax-deferred account (if only for the reduced paperwork! egads, stocks generate so much!). Having some money (especially bonds) in something like a Roth IRA or a non-tax-advantaged account is also useful as a backup emergency fund, because you can withdraw it without penalties. Take the money out of stocks gradually when you are approaching the time when you use the money. If it's closer than five years, don't use stocks; your money should be mostly-bonds when you're about to use it. (And not 30-year bonds or anything like that either. Those are sensitive to interest rates in the short term. You should have bonds that mature approximately the same time you're going to use them. Keep an eye on that if you're using bond funds, which continually roll over.) That's basically how any savings goal should work. Retirement is a little special because it's sort of like 20 years' worth of savings goals (so you don't want all your savings in bonds at the beginning), and because you can get fancy tax-deferred accounts, but otherwise it's about the same thing. College savings? Likewise. There are tools available to help you with this. An asset allocation calculator can be found from a variety of sources, including most investment firms. You can use a target-date fund for something this if you'd like automation. There are also a couple things like, say, "Vanguard LifeStrategy funds" (from Vanguard) which target other savings goals. You may be able to understand the way these sorts of instruments function more easily than you could other investments. You could do a decent job for yourself by just opening up an account at Vanguard, using their online tool, and pouring your money into the stuff they recommend.
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Brokerage account for charity
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If the charity accepts stock, you can avoid the tax on the long term cap gain when you donate it. e.g. I donate $10,000 in value of Apple. I write off $10,000 on my taxes, and benefit with a $2500 refund. If I sold it, I'd have nearly a $1500 tax bill (bought long enough ago, the basis is sub $100). Any trading along the way, and it's on you. Gains long or short are taxed on you. It's only the final donation that matters here. Edit - to address Anthony's comment on other answer - I sell my Apple, with a near $10,000 gain (it's really just $9900) and I am taxed $1500. Now I have $8500 cash I donate and get $2125 back in a tax refund. By donating the stock I am ahead nearly $375, and the charity, $1500.
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What things are important to consider when investing in one's company stock?
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I would pass on their deal if they will only match if you invest in their stock. Think about when/if the company falls on bad times. What happens to the stock of a company when bad times come? The board of directors will reduce or eliminate the dividend payout. Current and potential investors will take notice. Current owners of the stock will sell. Potential investors will avoid buying. The price of the stock with go down. And, quite likely, the company will lay off workers. If/when that happens you would find yourself without a job and holding (almost) worthless stock as your savings. That would be quite a bad situation to be in.
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What options do I have at 26 years old, with 1.2 million USD?
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The amount of money you have should be enough for you to live a safe but somewhat restricted life if you never worked again - but it could set you up for just about any sort of financial goal (short of island buying) if you do just about any amount of work. The basic math for some financial rules of thumb to keep in mind: If your money is invested in very low-risk ways, such as a money market fund, you might earn, say, 3% in interest every year. That's $36k. But, if you withdraw that $36k every year, then every year you have the same principal amount invested. And a dollar tomorrow can't buy as much as a dollar today, because of inflation. If we assume for simplicity that inflation is 1% every year, then you need to contribute an additional $12k to your principal balance every year, just so that it has the same buying power next year. This leaves you with a net $24k of interest income that you can freely spend every year, for the rest of your life, without ever touching your principal balance. If your money is invested more broadly, including equity investments [stocks], you might earn, say, 7% every year. Some years you might lose money on your investments, and would need to draw down your principal balance to pay your bills. Some years you might do quite well - but would need to remain conservative and not withdraw your 'excess' earnings every year, because you will need that 'excess' to make up for the bad years. This would leave you with about $74k of income every year before inflation, and about $62k after inflation. But, you would be taking on more risk by doing this. If you work enough to pay your daily bills, and leave your investments alone to earn 7% on average annually, then in just 10 years your money would have doubled to ~ $2.4 Million dollars. This assumes that you never save another penny, and spend everything you make. It's a level of financial security that means you could retire at a drop of the hat. And if don't start working for 20 years [which you might need to do if you spend in excess of your means and your money dries up], then the same will not be true - starting work at 45 with no savings would put you at a much greater disadvantage for financial security. Every year that you work enough to pay your bills before 'retirement' could increase your nest egg by 7% [though again, there is risk here], but only if you do it now, while you have a nest egg to invest. Now in terms of what you should do with that money, you need to ask yourself: what are your financial goals? You should think about this long and hard (and renew that discussion with yourself periodically, as your goals will change over time). You say university isn't an option - but what other ways might you want to 'invest in yourself'? Would you want to go on 'sabbatical'-type learning trips? Take a trade or learn a skill? Start a business? Do you want to live in the same place for 30 years [and thus maybe you should lock-down your housing costs by buying a house] or do you want to travel around the world, never staying in the same place twice [in which case you will need to figure out how to live cheaply and flexibly, without signing unnecessary leases]. If you want to live in the middle of nowhere eating ramen noodles and watching tv, you could do that without lifting a finger ever again. But every other financial goal you might have should be factored into your budget and work plan. And because you do have such a large degree of financial security, you have a lot of options that could be very appealing - every low paying but desirable/hard-to-get job is open to you. You can pursue your interests, even if they barely pay minimum wage, and doing so may help you ease into your new life easier than simply retiring at such a young age [when most of your peers will be heavy into their careers]. So, that is my strongest piece of advice - work now, while you're young and have motivation, so that you can dial back later. This will be much easier than the other way around. As for where you should invest your money in, look on this site for investing questions, and ultimately with that amount of money - I suggest you hire a paid advisor, who works based on an hourly consultation fee, rather than a % management fee. They can give you much more directed advice than the internet (though you should learn it yourself as well, because that will give you the best piece of mind that you aren't being taken advantage of).
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How to calculate S corporation distribution from past K-1s?
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Disclaimer: I'm not a tax professional, or an expert on S-Corps. However, I do have my own S-Corp, and my decision process for taking a distribution has nothing (directly) to do with K-1 past or present, or profit and loss. If I have "extra" cash in my S-Corp, I take a distribution. Assuming I do my taxes correctly, the money will be taxed whether I take a distribution or leave it in the business. So it really comes down to how much cash the business requires to continue operating and meeting its expenses.
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Which is the better strategy for buying stocks monthly?
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To optimize your return on investment, you need to buy low and sell high. If you knew that one stock had hit rock bottom, and the others had not, buying the low stock would be the best. However, unless you can predict the future, you don't know if any individual stock has hit the bottom, or if it will continue to drop. If you decide to spend the same amount of money each month on stock purchases, then when the price is low, you will automatically buy more shares, and when the price is high, you will buy fewer shares. This strategy is sometimes called dollar cost averaging. It eliminates the need to predict the future to optimize your buying. All that having been said, I agree with @Powers that at the investment amount that you are talking about and the per transaction fee you listed, a monthly investment in several stocks will cause you to lose quite a bit to transaction fees. It sounds like you need a different strategy.
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Advantage of Financial Times vs. free news sources for improving own knowledge of finance?
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If you are interested in a career in algorithmic trading, I strongly encourage you to formally study math and computer science. Algorithmic trading firms have no need for employees with financial knowledge; if they did, they'd just be called "trading" firms. Rather, they need experts in machine learning, statistical modeling, and computer science in general. Of course there are other avenues of employment at an algorithmic trading firm, such as accounting, clearing, exchange relations, etc. If that's the sort of thing you're interested in, again you'll probably want a formal education in those areas as opposed to just reading about finance in the news. If you edit your question or add a comment below with information about your particular background, I could perhaps advise you in a bit more detail. ::edit:: Given your comment, I would say you have a fine academic background for the industry. When hiring mathematicians, firms care most about the ease with which you can explore and extract features from massive datasets (especially time series) regardless of what the dataset might represent. An intelligent firm will not care whether you arrive at their doorstep with zero finance knowledge; they will want to teach you everything from scratch anyway. Nonetheless, some domain knowledge could be helpful, but you're not going to get "more" of it from reading any mass market news source, whether you have to pay for it or not. That's because Some non-mass-market news sources in the industry are These are subscription-only and actually discuss real information that real professional investors care about. They are loaded with industry jargon, they're extremely opinionated, and (in my opinion) they're useless. I can't imagine trying to learn about the industry from them, but if you want to spend money for news in order to be exposed to the innards of the industry, then either of these is far better than the Financial Times. Despite requiring a subscription, the Financial Times still does not cover the technical details of professional trading. Instead of trying to learn from news, then, I would suggest some old favorites: and, above all else, Read everything in the navigation box on the right side under Financial Markets and Financial Instruments.
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How to rescue my money from negative interest?
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First off, the answer to your question is something EVERYONE would like to know. There are fund managers at Fidelity who will a pay $100 million fee to someone who can tell them a "safe" way to earn interest. The first thing to decide, is do you want to save money, or invest money. If you just want to save your money, you can keep it in cash, certificates of deposit or gold. Each has its advantages and disadvantages. For example, gold tends to hold its value over time and will always have value. Even if Russia invades Switzerland and the Swiss Franc becomes worthless, your gold will still be useful and spendable. As Alan Greenspan famously wrote long ago, "Gold is always accepted." If you want to invest money and make it grow, yet still have the money "fluent" which I assume means liquid, your main option is a major equity, since those can be readily bought and sold. I know in your question you are reluctant to put your money at the "mercy" of one stock, but the criteria you have listed match up with an equity investment, so if you want to meet your goals, you are going to have to come to terms with your fears and buy a stock. Find a good blue chip stock that is in an industry with positive prospects. Stay away from stuff that is sexy or hyped. Focus on just one stock--that way you can research it to death. The better you understand what you are buying, the greater the chance of success. Zurich Financial Services is a very solid company right now in a nice, boring, highly profitable business. Might fit your needs perfectly. They were founded in 1872, one of the safest equities you will find. Nestle is another option. Roche is another. If you want something a little more risky consider Georg Fischer. Anyway, what I can tell you, is that your goals match up with a blue chip equity as the logical type of investment. Note on Diversification Many financial advisors will advise you to "diversify", for example, by investing in many stocks instead of just one, or even by buying funds that are invested in hundreds of stocks, or indexes that are invested in the whole market. I disagree with this philosophy. Would you go into a casino and divide your money, putting a small portion on each game? No, it is a bad idea because most of the games have poor returns. Yet, that is exactly what you do when you diversify. It is a false sense of safety. The proper thing to do is exactly what you would do if forced to bet in casino: find the game with the best return, get as good as you can at that game, and play just that one game. That is the proper and smart thing to do.
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Must ETF companies match an investor's amount invested in an ETF?
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The point here is actually about banks, or is in reference to banks. They expect you know how a savings account at a bank works, but not mutual funds, and so are trying to dispel an erroneous notion that you might have -- that the CBIC will insure your investment in the fund. Banks work by taking in deposits and lending that money out via mortgages. The mortgages can last up to 30 years, but the deposits are "on demand". Which means you can pull your money out at any time. See the problem? They're maintaining a fiction that that money is there, safe and sound in the bank vault, ready to be returned whenever you want it, when in fact it's been loaned out. And can't be called back quickly, either. They know only a little bit of that money will be "demanded" by depositors at any given time, so they keep a percentage called a "reserve" to satisfy that, er, demand. The rest, again, is loaned out. Gone. And usually that works out just fine. Except sometimes it doesn't, when people get scared they might not get their money back, and they all go to the bank at the same time to demand their on-demand deposits back. This is called a "run on the bank", and when that happens, the bank "fails". 'Cause it ain't got the money. What's failing, in fact, is the fiction that your money is there whenever you want it. And that's really bad, because when that happens to you at your bank, your friends the customers of other banks start worrying about their money, and run on their banks, which fail, which cause more people to worry and try to get their cash out, lather, rinse repeat, until the whole economy crashes. See -- The Great Depression. So, various governments introduced "Deposit Insurance", where the government will step in with the cash, so when you panic and pull all your money out of the bank, you can go home happy, cash in hand, and don't freak all your friends out. Therefore, the fear that your money might not really be there is assuaged, and it doesn't spread like a mental contagion. Everyone can comfortably go back to believing the fiction, and the economy goes back to merrily chugging along. Meanwhile, with mutual funds & ETFs, everyone understands the money you put in them is invested and not sitting in a gigantic vault, and so there's no need for government insurance to maintain the fiction. And that's the point they're trying to make. Poorly, I might add, where their wording is concerned.
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Paying off mortgage or invest in annuity
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There is no formula to answer the question. You have to balance return on investment with risk. There's also the question of whether you have any children or other heirs that you would like to leave money to. The mortgage is presumably a guaranteed thing: you know exactly how much the payments will be for the rest of the loan. I think most annuities have a fixed rate of return, but they terminate when you both die. There are annuities with a variable return, but usually with a guaranteed minimum. So if you got an annuity with a fixed 3.85% return, and you lived exactly 18 more years, then (ignoring tax implications), there'd be no practical difference between the two choices. If you lived longer than 18 years, the annuity would be better. If less, paying off the mortgage would be better. Another option to consider is doing neither, but keeping the money in the 401k or some other investment. This will usually give better than 3.85% return, and the principal will be available to leave to your heirs. The big drawback to this is risk: investments in the stock market and the like usually do better than 3 or 4%, but not always, and sometimes they lose money. Earlier I said "ignoring tax implications". Of course that can be a significant factor. Mortgages get special tax treatment, so the effective interest rate on a mortgage is less than the nominal rate. 401ks also get special tax treatment. So this complicates up calculations trying to compare. I can't give definitive numbers without knowing the returns you might get on an annuity and your tax situation.
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Questioning my Realtor
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My realtor told me that even though they're only asking for 1/2 the money and have excellent credit that the mortgage company may not lend it to them if I'm over priced. Is this true? I've never heard of it before. It is a chance, but it is a red herring to the discussion. Having excellent credit has nothing to do with being eligible for a debt object of a specific size. Just because you have excellent credit, would you get approved for a property of $10,000,000 if you only made $35,000 a year (and had no other net worth)? But regarding your potential buyers, a chance vs a good chance is different. Your realtor just told you some basic always true lending fact that has nothing to do with your situation.
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Paying Tax on Stocks Trading
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The answer to your question doesn't depend on who you trade with but what country you live in. If you live outside of the US, you will have to pay tax on dividends... sometimes. This depends on the tax treaty that your country has with the US. Canada, Australia, UK and a few other countries have favorable tax treaties with the US that allow you to not be double taxed. You must look into the tax treaty that your home country has with the US to answer the question. Each country is different.
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When do companies typically announce stock splits?
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In 2005, Apple announced a split on Feb 11... CUPERTINO, California — February 11, 2005 — Apple® announced today that its Board of Directors has approved a two-for-one split of the Company’s common stock and a proportional increase in the number of Apple common shares authorized from 900 million to 1.8 billion. Each shareholder of record at the close of business on February 18, 2005 will receive one additional share for every outstanding share held on the record date, and trading will begin on a split-adjusted basis on February 28, 2005. ...one month after announcing earnings. CUPERTINO, California—January 12, 2005—Apple® today announced financial results for its fiscal 2005 first quarter ended December 25, 2004. For the quarter, the Company posted a net profit of $295 million, or $.70 per diluted share. These results compare to a net profit of $63 million, or $.17 per diluted share, in the year-ago quarter. Revenue for the quarter was $3.49 billion, up 74 percent from the year-ago quarter. Gross margin was 28.5 percent, up from 26.7 percent in the year-ago quarter. International sales accounted for 41 percent of the quarter’s revenue. I wouldn't expect Apple to offer another split, as it's become somewhat fashionable among tech companies to have high stock prices (see GOOG or NFLX or even BRK-A/BRK-B). Additionally, as a split does nothing to the underlying value of the company, it shouldn't affect your decision to purchase AAPL. (That said, it may change the perception of a stock as "cheap" or "expensive" per human psychology). So, to answer your question: companies will usually announce a stock split after releasing their financial results for the preceding fiscal year. Regardless of results, though, splits happen when the board decides it is advantageous to the company to split its stocks.
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How credible is Stansberry's video “End of America”?
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Predictions, especially doomsday predictions, can go wrong quickly. I would be careful of anyone calling an "end" to a country like the U.S., especially, if they have something to gain and a history of being wrong. On the other hand, someone warning of something with a past of financial credibility can be quite useful. For instance, compare Frank Stansberry to Jesse Colombo (@TheBubbleBubble on Twitter). Jesse was one of the few who predicted the financial crisis in 2004 and is currently warning of new bubbles (ie: the higher education bubble) - even admitting to profiting off of some of them and encouraging others to do the same. However, his assertions can be investigated to verify accuracy, but they are hardly the end of the end (in fact, Jesse likes to boast that he's an optimist and thinks eventually we'll usher in a Golden Age). Frank Stansberry, on the other hand, doesn't seem to carry the credibility; a brief internet search generated some issues he's had with the SEC about misleading investors. (Completely forgot to add, Mike Shedlock - Mish - also has made some predictions that have come true and clashed with some other financial advisers over inflation vs. deflation. While people were screaming "HYPER-INFLATION" back in 2008-2009, Mish constantly attacked them for being wrong, and has continued to be right. Some of his political views, of course, aren't popular, but some of his financial predictions have been stellar.) Anyone who warns of anything should always be checked out for both what they've said, what they are currently saying, and what their agenda is. As one of my mentors warned me, everyone has an agenda and that's not always bad - their agenda may align with yours, just make sure it does. [On a humorous side note, my father has predicted the end of the world every six months since 1994.]
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If I put a large down payment (over 50%) towards a car loan, can I reduce my interest rate and is it smart to even put that much down?
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With that credit rating you should have no trouble getting a rate in that range. I have a similar credit score and my credit union gave me a car loan at 1.59%. No haggling required. In regards to your question, I think you have it backwards. They are more likely to give you a good rate on a high balance than a low one. Think about it from the bank's perspective... "If I give you a small sale, will you give me a discount?" This is the question you are asking. Their profit is a factor of how much you borrow and the interest rate. Low rate=less profit, low financing amount = less profit. The deal you proposed is a lose-lose for them.
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How much power does a CEO have over a public company?
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If Steve Jobs [Tim Cook] were to decide to try to kill Apple, does he have the power to do so? Yes. But he would be held accountable. In addition to the other answers, the CEO is a fiduciary of the corporation. That means his/her actions must be in good faith and look out for the well-being of the company. Otherwise, he could be sued and held liable for civil damages and even criminally prosecuted for malfeasance.
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Can I depreciate a car given to me?
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That seems to indicate that you can in fact depreciate a vehicle given to you? Section 1015 discusses the calculation of basis for gifted property, it says nothing about depreciation. Personal property cannot be depreciated for tax purposes unless it is used for business purposes. So unless you drive your car as part of your sole-proprietor business, you cannot depreciate it, be it a gift or a car you purchased yourself. If you can depreciate the car, then sec. 1015 is used to calculate the basis for the depreciation.
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To whom should I report fraud on both of my credit cards?
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You need to run a virus scan on your computers to make sure you do not have a key-logger program running on either. I would also think about designating one old computer to only access your bank accounts and not do anything but that. If your computer is infected then every time you login your credit cards can be compromised.
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Why do banks insist on allowing transactions without sufficient funds?
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The reason they want the transaction to go through is because they make money that way. Remember the overdraft protection might incur a fee. If it does their experience may show them that the fee is a greater source of profit when balanced against the losses incurred because of insufficient funds. Even free overdraft transactions are limited. If they didn't want to make money they would have a way to make sure that multiple overdrafts in a short time window wouldn't require multiple protection events. Remember each time they transfer funds they only bring you to zero. As it is now the coffee you buy after putting money on your subway fare card might also trigger an overdraft transfer.
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Co- Signed car loan and need to have the other signer relinquish claim to ownership
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Your arrangements with the bank are irrelevant. Whoever is named on the title of the vehicle owns it. If she is the "primary", then I assume her name is on the title, therefore she owns the car. If you drive off with the car and it is titled in her name, she can report it stolen and have you arrested for grand theft auto unless you have a dated and signed permission in writing from her to use the car. Point #2: If a car loan was involved, then you didn't "purchase" the car, the bank did. If you want to gain ownership of the car, then you need to have her name removed from the title and have yours put in its place. Since the bank has possession of the title, this will require the cooperation of both your girlfriend and the bank.
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I have $12k in a Chase checking account, but want to start earning interest/saving/investing/etc to make more money. What should I do?
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Alright so you have $12,000 and you want to know what to do with it. The main thing here is, you're new to investments. I suggest you don't do anything quick and start learning about the different kinds of investment options that can be available to you with returns you might appreciate. The most important questions to ask yourself is what are your life goals? What kind of financial freedom do you want, and how important is this $12,000 dollars to you in achieving your life goals. My best advice to you and to anyone else who is looking for a place to put their money in big or small amounts when they have earned this money not from an investment but hard work is to find a talented and professional financial advisor. You need to be educated on the options you have, and keep them in lines of what risks you are willing to take and how important that principal investment is to you. Investing your money is not easy at all, and novices tend to lose their money a lot. The same way you would ask a lawyer for law advice, its best to consult a financial planner for advice, or so they can invest that money for you.
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Is foreign stock considered more risky than local stock and why?
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One risk not mentioned is that foreign stock might be thinly traded on your local stock market, so you will find it harder to buy and sell, and you will be late to the game if there is some sudden change in the share price in the original country.
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I'm 20 and starting to build up for my mortgage downpayment, where should I put my money for optimal growth?
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The big question is whether you will be flexible about when you'll get that house. The overall best investment (in terms of yielding a good risk/return ratio and requiring little effort) is a broad index fund (mutual or ETF), especially if you're contributing continuously and thereby take advantage of cost averaging. But the downside is that you have some volatility: during an economic downturn, your investment may be worth only half of what it's worth when the economy is booming. And of course it's very bad to have that happening just when you want to get your house. Then again, chances are that house prices will also go down in such times. If you want to avoid ever having to see the value of your investment go down, then you're pretty much stuck with things like your high-interest savings account (which sounds like a very good fit for your requirements.
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Pros & cons in Hungary of investing retirement savings exclusively in silver? What better alternatives, given my concerns?
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To be honest, I think a lot of people on this site are doing you a disservice by taking your idea as seriously as they are. Not only is this a horrible idea, but I think you have some alarming misunderstandings about what it means to save for retirement. First off, precious metals are not an "investment"; they are store of value. The old saying that a gold coin would buy a suit 300 years ago and will still buy a suit today is pretty accurate. Buying precious metals and expecting them to "appreciate" in the future because they are "undervalued" is just flat-out speculation and really doesn't belong in a well-planned retirement account, unless it's a very small part for the purposes of diversification. So the upshot to all of this is the most likely outcome is you get zero return after inflation (maybe you'll get lucky or maybe you'll be very unlucky). Next you would say that sure, you're giving up some expected return for a reduction in risk. But, you've done away with diversification which is the most effective way to minimize risk... And I'm not sure what scenario you're imagining that the stock market or any other reasonable investment doesn't make any returns. If you invest in a market wide index fund, then the expected return is going to be roughly in proportion with productivity gains. To say that there will be no appreciation of the stock market over the next 40 years is to say that technological progress will stop and/or we will have large-scale economic disruptions that will wipe out 40 years of progress. If that happens, I would say it's highly questionable whether silver will actually be worth anything at all. I'd rather have food, property, and firearms. So, to answer your question, practically any other retirement savings plan would be better than the one that you currently outlined, but the best plan is just to put your money in a very low-cost index fund at Vanguard and let it sit until you retire. The expense ratios are so stupidly small, that it's not going to meaningfully affect your return.
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I want to invest in Gold. Where do I go and buy it?
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Without getting into whether you should invest in Gold or Not ... 1.Where do I go and make this purchase. I would like to get the best possible price. If you are talking about Physical Gold then Banks, Leading Jewelry store in your city. Other options are buying Gold Mutual Fund or ETF from leading fund houses. 2.How do I assure myself of quality. Is there some certificate of quality/purity? This is mostly on trust. Generally Banks and leading Jewelry stores will not sell of inferior purity. There are certain branded stores that give you certificate of authenticity 3.When I do choose to sell this commodity, when and where will I get the best cost? If you are talking about selling physical gold, Jewelry store is the only place. Banks do not buy back the gold they sold you. Jewelry stores will buy back any gold, however note there is a buy price and sell price. So if you buy 10 g and sell it back immediately you will not get the same price. If you have purchased Mutual Funds / ETF you can sell in the market.
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Why not just invest in the market?
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Most of it is probably due to ignorance and disbelief. A few years ago, I started doing week-long trades with my IRA. For a while I would make money each time, and over the first year I had about a 20% rate of return. If you asked me if I thought I was smarter than other people in the market, I would've told you no - I just spent more time, and most people accepted a small financial penalty for not having to spend the time directly managing their portfolio. Then I made a few poor choices, and all my previous earnings disappeared quickly. In the short term, yeah, things were great, but that didn't extrapolate out. So now that I'm a few years into investing, I'm almost entirely in index funds.
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Foreign Earned Income Exclusion - Service vs. Product?
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Fear tactics posted above, likely by IRS agents. Yes, you qualify based on the residence test. You perform your work outside the US. You gather business data in a foreign country. The income is excluded.
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Can stock brokerage firms fail?
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Yes, any company can go under. SIPC offers a level of protection. They don't guarantee against stocks dropping, but will replace stocks that you owned, but the broker stole from you. (overgeneralization). There's a $500K limit, with $250K max in cash.
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What does it mean to a life insurance policy holder to convert from a stock to mutual insurance company?
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A stock insurance company is structured like a “normal” company. It has shareholders (that are the company's investors), who elect a board of directors, who select the senior executive(s), who manage the people who run the actual company. The directors (and thus the executives and employees) have a legal responsibility to manage the company in a way which is beneficial for the shareholders, since the shareholders are the ultimate owner of the company. A mutual insurance company is similar, except that the people holding policies are also the shareholders. That is, the policyholders are the ultimate owners of the company, and there generally aren't separate shareholders who are just “investing” in the company. These policyholder-shareholders elect the board of directors, who select the senior executive(s), who manage the people who run the actual company. In practice, it probably doesn't really make a whole lot of difference, since even if you're just a "customer" and not an "owner" of the company, the company is still going to want to attract customers and act in a reasonable way toward them. Also, insurance companies are generally pretty heavily regulated in terms of what they can do, because governments really like them to remain solvent. It may be comforting to know that in a mutual insurance company the higher-ups are explicitly supposed to be working in your best interest, though, rather than in the interest of some random investors. Some might object that being a shareholder may not give you a whole lot more rights than you had before. See, for example, this article from the Boston Globe, “At mutual insurance firms, big money for insiders but no say for ‘owners’ — policyholders”: It has grown into something else entirely: an opaque, poorly understood, and often immensely profitable world in which some executives and insiders operate with minimal scrutiny and, no coincidence, often reap maximum personal rewards. Policyholders, despite their status as owners, have no meaningful oversight of how mutual companies spend their money — whether to lower rates, pay dividends, or fund executive salaries and perks — and few avenues to challenge such decisions. Another reason that one might not like the conversion is the specific details of how the current investor-shareholders are being paid back for their investment in the process of the conversion to mutual ownership, and what that might do to the funds on hand that are supposed to be there to keep the firm solvent for the policyholders. From another Boston Globe article on the conversion of SBLI to a mutual company, “Insurer SBLI wants to get banks out of its business,” professor Robert Wright is cautiously optimistic but wants to ensure the prior shareholders aren't overpaid: Robert Wright, a professor in South Dakota who has studied insurance companies and owns an SBLI policy, said he would prefer the insurer to be a mutual company that doesn’t have to worry about the short-term needs of shareholders. But he wants to ensure that SBLI doesn’t overpay the banks for their shares. “It’s fine, as long as it’s a fair price,” he said. That article also gives SBLI's president's statement as to why they think it's a good thing for policyholders: If the banks remained shareholders, they would be likely to demand a greater share of the profits and eat into the dividends the insurance company currently pays to the 536,000 policyholders, about half of whom live in Massachusetts, said Jim Morgan, president of Woburn-based SBLI. “We’re trying to protect the policyholders from having the dividends diluted,” Morgan said. I'm not sure there's an obvious pros/cons list for either way, but I'd think that I'd prefer the mutual approach, just on the principle that the policyholders “ought” to be the owners, because the directors (and thus the executives and employees) are then legally required to manage the company in the best interest of the policyholders. I did cast a Yes vote in my proxy on whether SBLI ought to become a mutual company (I'm a SBLI term-life policyholder.) But policy terms aren't changing, and it'd be hard to tell for sure how it'd impact any dividends (I assume the whole-life policies must be the ones to pay dividends) or company solvency either way, since it's not like we'll get to run a scientific experiment trying it out both ways. I doubt you'd have a lot of regrets either way, whether it becomes a mutual company and you wish it hadn't or it doesn't become one and you wish it had.
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Generally Accepted Accounting Principles question
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You recognize expense when you sell the hot dog. When you pay for the buns you have inventory, which is an asset. When you sell the hot dog - you have cost of goods sold, which is the expense. Expense principle says that you recognize expense when you use the product. You use the buns when you actually sell the hot dog, not before. The matching principle is also honored because you recognize expense of the buns at the time of recognizing revenue of the hot dog.
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Can you explain “time value of money” and “compound interest” and provide examples of each?
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The fundamental concept of the time value of money is that money now is worth more than the same amount of money later, because of what you can do with money between now and later. If I gave you a choice between $1000 right now and $1000 in six months, if you had any sense whatsoever you would ask for the money now. That's because, in the six months, you could use the thousand dollars in ways that would improve your net worth between now and six months from now; paying down debt, making investments in your home or business, saving for retirement by investing in interest-bearing instruments like stocks, bonds, mutual funds, etc. There's absolutely no advantage and every disadvantage to waiting 6 months to receive the same amount of money that you could get now. However, if I gave you a choice between $1000 now and $1100 in six months, that might be a harder question; you will get more money later, so the question becomes, how much can you improve your net worth in six months given $1000 now? If it's more than $100, you still want the money now, but if nothing you can do will make more than $100, or if there is a high element of risk to what you can do that will make $100 that might in fact cause you to lose money, then you might take the increased, guaranteed money later. There are two fundamental formulas used to calculate the time value of money; the "future value" and the "present value" formulas. They're basically the same formula, rearranged to solve for different values. The future value formula answers the question, "how much money will I have if I invest a certain amount now, at a given rate of return, for a specified time"?. The formula is FV = PV * (1+R)N, where FV is the future value (how much you'll have later), PV is the present value (how much you'll have now), R is the periodic rate of return (the percentage that your money will grow in each unit period of time, say a month or a year), and N is the number of unit periods of time in the overall time span. Now, you asked what "compounding" is. The theory is very simple; if you put an amount of money (the "principal") into an investment that pays you a rate of return (interest), and don't touch the account (in effect reinvesting the interest you earn in the account back into the same account), then after the first period during which interest is calculated and paid, you'll earn interest on not just the original principal, but the amount of interest already earned. This allows your future value to grow faster than if you were paid "simple interest", where interest is only ever paid on the principal (for instance, if you withdrew the amount of interest you earned each time it was paid). That's accounted for in the future value formula using the exponent term; if you're earning 8% a year on your investment, then after 1 year you'll have 108% of your original investment, then after two years you'll have 1.082 = 116.64% (instead of just 116% which you'd get with simple interest). That .64% advantage to compounding doesn't sound like much of an advantage, but stay tuned; after ten years you'll have 215.89% (instead of 180%) of your original investment, after 20 you'll have 466.10% (instead of 260%) and after 30 your money will have grown by over 1000% as opposed to a measly 340% you'd get with simple interest. The present value formula is based on the same fundamental formula, but it's "solved" for the PV term and assumes you'll know the FV amount. The present value formula answers questions like "how much money would I have to invest now in order to have X dollars at a specific future time?". That formula is PV = FV / (1+R)N where all the terms mean the same thing, except that R in this form is typically called the "discount rate", because its purpose here is to lower (discount) a future amount of money to show what it's worth to you now. Now, the discount rate (or yield rate) used in these calculations isn't always the actual yield rate that the investment promises or has been shown to have over time. Investors will calculate the discount rate for a stock or other investment based on the risks they see in the company's financial numbers or in the market as a whole. The models used by professional investors to quantify risk are rather complex (the people who come up with them for the big investment banks are called "quants", and the typical quant graduates with an advanced math degree and is hired out of college with a six-figure salary), but it's typically enough for the average investor to understand that there is an inherent risk in any investment, and the longer the time period, the higher the chance that something bad will happen that reduces the return on your investment. This is why the 30-year Treasury note carries a higher interest rate than the 10-year T-note, which carries higher interest than the 6-month, 1-year and 5-year T-bills. In most cases, you as an individual investor (or even an institutional investor like a hedge fund manager for an investment bank) cannot control the rate of return on an investment. The actual yield is determined by the market as a whole, in the form of people buying and selling the investments at a price that, coupled with the investment's payouts, determines the yield. The risk/return numbers are instead used to make a "buy/don't buy" decision on a particular investment. If the amount of risk you foresee in an investment would require you to be earning 10% to justify it, but in fact the investment only pays 6%, then don't buy it. If however, you'd be willing to accept 4% on the same investment given your perceived level of risk, then you should buy.
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ACH processing time of day
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Each bank is different, so your question needs to be more specific. For instance, I believe Paypal and Chase settles at 7pm EST on business days. Bank of America at 5PM.
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Should I give to charity by check or credit card?
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As someone that has run a nonprofit, my 2 cents: First: thank you for giving and for being conscientious about wanting to make things as easy as possible. The best method is the one you'll actually do. If there is a chance that you will end up not donating by check because you don't have a stamp, you forget, etc. go ahead and do it online. A donation with a fee is better than an intention without one. We had one case where a potential donor decided to give, but was so worried about the processing fee that they wanted to write a check. We followed up 3 times on the pledge, spent time following up with the pledge's connection that wanted to see if it came through, and in the end they never sent the check. Their pledge wound up costing us staff time and money as we tried to make their giving easy. If you are as likely to give, size matters. My rule of thumb is that if you are giving $1 up to about a hundred dollars, the fee (which most nonprofits can get to about 3% or 3.5%) is about the same as the added staff time opening the check, adding an extra to the deposit slip, etc. But as soon as you are giving a couple hundred dollars and especially if you are giving in the thousands, it is definitely better to do it by check. Most banks don't charge an extra deposit fee at the scale of most nonprofits, and we probably have some run to the bank happening in the next day or two. Really your thank you note should be the same whether online or by check (even though you'll get the auto-thank you online), so that time difference shouldn't really play into it. The donation will be appreciated either way. While I cringe a bit if I see a $1,500 donation come through online knowing that the check would be cheaper, that is far outweighed by the thankfulness that someone thought of us and made it happen.
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How come we can find stocks with a Price-to-Book ratio less than 1?
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Book value = sell all assets and liquidate company . Then it's the value of company on book. Price = the value at which it's share gets bought or sold between investors. If price to book value is less than one, it shows that an 100$ book value company is being traded at 99$ or below. At cheaper than actually theoretical price. Now say a company has a production plant . Situated at the most costliest real estate . Yet the company's valuation is based upon what it produces, how much orders it has etc while real estate value upon which plant is built stays in book while real investors don't take that into account (to an extend). A construction company might own a huge real estate inventory. However it might not be having enough cash flow to sustain monthly expense. In this scenario , for survival,i the company might have to sell its real estate at discount. And market investors are fox who could smell trouble and bring price way below the book value Hope it helps
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When is the right time to buy a new/emerging technology?
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When is the right time to buy a new/emerging technology? When it's trading at a discount that allows you to make your money back and then some. The way you presented it, it is of course impossible to say. You have to look at exactly how much cheaper and efficient it will be, and how long that will take. Time too has a cost, and being invested has opportunity cost, so the returns must not only arrive in expected quantity but also arrive on time. Since you tagged this investing, you should look at the financial forecasts of the business, likely future price trajectories, growth opportunity and so on, and buy if you expect a return commensurate with the risk, and if the risk is tolerable to you. If you are new to investment, I would say avoid Musk, there's too much hype and speculation and their valuations are off the charts. You can't make any sensible analysis with so much emotion running wild. Find a more obscure, boring company that has a sound business plan and a good product you think is worth a try. If you read about it on mainstream news every day you can be sure it's sucker bait. Also, my impression that these panels are actually really expensive and have a snowball's chance in Arizona (heh) in a free market. Recently the market has been manipulated through green energy subsidies of a government with a strong environmentalist voter base. This has recently changed, in case you haven't heard. So the future of solar panels is looking a bit uncertain. I am thinking about buying solar panels for my roof. That's not an investment question, it's a shopping question. Do you actually need a new roof? If no, I'd say don't bother. Last I checked the payoff is very small and it takes over a decade to break even, unless you live in a desert next to the Mexican border. Many places never break even. Electricity is cheap in the United States. If you need a new roof anyway, I suppose look at the difference. If it's about the same you might as well, although it's guaranteed to be more hassle for you with the panels. Waiting makes no sense if you need a new roof, because who knows how long that will take and you need a roof now. If a solar roof appeals to you and you would enjoy having one for the price available, go ahead and get one. Don't do it for the money because there's just too much uncertainty there, and it doesn't scale at all. If you do end up making money, good for you, but that's just a small, unexpected bonus on top of the utility of the product itself.
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Can the Delta be used to calculate the option premium given a certain target?
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One thing I would like to clear up here is that Black Scholes is just a model that makes some assumptions about the dynamics of the underlying + a few other things and with some rather complicated math, out pops the Black Scholes formula. Black Scholes gives you the "real" price under the assumptions of the model. Your definition of what a "real" price entails will depend on what assumptions you make. With that being said, Black Scholes is popular for pricing European options because of the simplicity and speed of using an analytic formula as opposed to having a more complex model that can only be evaluated using a numerical method, as DumbCoder mentioned (should note that, for many other types of derivative contracts, e.g. American or Bermudan style exercise, the Black Scholes analytic formula is not appropriate). The other important thing to note here is that the market does not necessarily need to agree with the assumptions made in the Black Scholes model (and they most certainly do not) to use it. If you look at implied vols for a set of options which have the same expiration but differing strike prices, you may find that the implied vols for each contract differ and this information is telling you to what degree the traders in the market for those contracts disagree with the lognormal distribution assumption made by Black Scholes. Implied vol is generally the thing to look at when determining cheapness/expensiveness of an option contract. With all that being said, what I'm assuming you are interested in is either called a "delta-gamma approximation" or more generally "Greek/sensitivities based profit and loss attribution" (in case you wanted to Google some more about it). Here is an example that is relevant to your question. Let's say we had the following European call contract: Popping this in to BS formula gives you a premium of $4.01, delta of 0.3891 and gamma of 0.0217. Let's say you bought it, and the price of the stock immediately moves to 55 and nothing else changes, re-evaluating with the BS formula gives ~6.23. Whereas using a delta-gamma approximation gives: The actual math doesn't work out exactly and that is due to the fact that there are higher order Greeks than gamma but as you can see here clearly they do not have much of an impact considering a 10% move in the underlying is almost entirely explained by delta and gamma.
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Does getting a 1099 from another state count as working in another state if I was physically in my home state?
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This depends on the state law. In case of the State of New York - these are the criteria for sourcing the NY income: As a sole proprietor or partnership, your New York source income includes: Business activities As a nonresident sole proprietor or partnership, you carry on a business, trade, profession, or occupation within New York State if you (or your business): As you can see, the qualification depends on the way you do business, and the amount of business transactions you have in New York. If it is not clear to you - talk to a CPA/EA licensed to practice in the State of New York to give you an advice.
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More money towards down payment versus long-term investments
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There are two components to any non-trivial financial decision: Assuming that all things remain equal, borrowing money at a low rate while investing for a higher return is a no-brainer. The problem is, all things do not remain equal. For example: I think that you need to assess your position and preferences. I'd err on the side of being in less debt.
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Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely?
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I have been in this situation and I essentially went for the truthful answer. I first explained that co-signing for a loan wasn't just vouching for the person, which I certainly would do, but it was putting my name on the loan and making me the person they loan company would go after if a payment was ever missed. Then I explained that even within married couples, money can be a major source of strife and fights, it would be even worse for someone not quite as close like a family member or friend. Essentially I wouldn't want to risk my relationship with a good friend or family member over some financial matter.
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Owning REIT vs owning real estate - which has a better hypothetical ROI?
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Your question may have another clue. You are bullish regarding the real estate market. Is that for your city, your state, your nation or for the whole world? Unless you can identify particular properties or neighborhoods that are expected to be better than the average return for your expected bull market in real estate, you will be taking a huge risk. It would be the same as believing that stocks are about to enter a bull market, but then wanting to put 50% of your wealth on one stock. The YTD for the DOW is ~+7%, yet 13 of the 30 have not reached the average increase including 4 that are down more than 7%. Being bullish about the real estate segment still gives you plenty of opportunities to invest. You can invest directly in the REIT or you can invest in the companies that will grow because of the bullish conditions. If your opinion changes in a few years it is hard to short a single property.
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I cosigned for a friend who is not paying the payment
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I came across such a situation and I am still facing it. My friend borrowed my credit card for his expenses as he had misplaced his debit card and for the time being had asked for my credit card to handle the expenses he does. He paid for initial 2 months and then was not able to make payments, mainly due to not being able to arrange money or if it was a contri party, he would collect cash from friends but again spend the same. Months passes by... the bill had come upto 65k and calls from bank and other respective organizations Finally my dad came into picture and slowly the issue is resolving he has paid 50K remaining is still pending. So basically, the reason I shared this part of story was he is my Best friend and in order to not spoil our friendship I did not want to take any such step which would later on affect our friendship. This completely depends on the individuals how they react to the situation. Keeping Ego, superiority, favour sort of feelings and words apart things can be resolved between friends. You do not know what is the situation on the other side. Probably you can connect with him ask him to explain you why is not able to pay the debts and take action accordingly. If he is not able to provide a proper reason then you may take some actions like mentioned in initial answers, run after the assets he own or anything else.Stay Calm and patient. Do not take any such step which you would regret later on...!
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Is leveraging notoriety to raise stock prices illegal in the US?
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pump and dump is a common Illegal practice of boiler room operations. It refers to the talking a stock up, both through word of mouth as well as selling shares to unwitting buyers. I fail to see much difference between that practice and this.
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Are these really bond yields?
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Yes those are really yields. A large portion of the world has negative yielding bonds in fact. This process has been in motion for the past 10 years for very specific reasons. So congratulations on discovering the bond market.
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How can I determine if my rate of return is “good” for the market I am in?
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Do you recall where you read that 25% is considered very good? I graduated college in 1984 so that's when my own 'investing life' really began. Of the 29 years, 9 of them showed 25% to be not quite so good. 2013 32.42, 2009 27.11, 2003 28.72, 1998 28.73, 1997 33.67, 1995 38.02, 1991 30.95, 1989 32.00, 1985 32.24. Of course this is only in hindsight, and the returns I list are for the S&P index. Even with these great 9 years, the CAGR (compound annual growth) of the S&P from 1985 till the end of 2013 was 11.32% Most managed funds (i.e. mutual funds) do not match the S&P over time. Much has been written on how an individual investor's best approach is to simply find the lowest cost index and use a mix with bonds (government) to match their risk tolerance. "my long term return is about S&P less .05%" sounds like I'm announcing that I'm doing worse than average. Yes, and proud of it. Most investors (85-95% depending on survey) lag by far more than this, many percent in fact)
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where to get stock price forecast
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First, stock prices forecasts are usually pretty subjective so in the following resources you will find differing opinions. The important thing is to read both positive and negative views and do some of your additional research and form your own opinion. To answer your question, some analysts don't provide price targets, some just say "Buy", "Sell", "Hold", and others actually give you a price target. Yahoo provides a good resource for collecting reports and giving you a price target. http://screener.finance.yahoo.com/reports.html
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How's the graph of after/pre markets be drawn?
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the data source is the same as the live market trading. pre and after market trading are active markets and there are actual buyers and sellers getting their orders matched.
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Does it make sense to buy an index ETF (e.g. S&P 500) when the index is at an all-time high?
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In other words, to a first-order approximation, the S&P 500 is always at an all-time high. I'm going to run with this observation a bit. The crash of '87 was remarkable. It was a drop of 1/3 in a short time, yet, when one looked at the year, the Dow was up nearly 5% with dividends included. A one-year Rip Van Winkler would have woken up thinking it an unremarkable year. I actually recall a conversation I had on Aug 25th 1987. I was discussing the market with a colleague over lunch, and while I didn't call the top that day, I remarked that it didn't matter much, that 5-10 years later just staying in the market would have been the right thing. Compare this 87-95 chart to the longer term chart derobert shows. In his chart, this is all but a blip. In my chart you can see it took about 3-1/2 years to be in the black, as the market then shot up from there. A dollar cost averager would not have bought at that short term high, well not more than a tiny bit. The best I can do to conclude is to say I'd never just buy in all at once. You buy in over time, X% of your income each month, and if you have a chunk to invest, smooth it out over a few years.
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What does an x% inflation rate actually mean?
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Let's say there's a product worth $10 in July and the inflation rate in August is 10%. Will it then cost $11 in August? Yes. That's basically what inflation means. However. The "monthly" inflation numbers you typically see are generally a year over year inflation rate on that month. Meaning August 2017 inflation is 10% that means inflation was 10% since last July 2016, not since July 2017. At the micro consumer level, inflation is very very very vague. Some sectors of the economy will inflate faster than the general inflation rate, others will be slower or even deflate. Sometimes a price increase comes with a value increase so it's not really inflation. And lastly, month over month inflation isn't something you will feel. Inflation is measured on the whole economy, but actual prices move in steps. A pear today might cost $1, and a pear in five years might cost $1.10. That's 10% over 5 years or about 2% per year but the actual price change might have been as abrupt as yesterday a pear was $1 and now it's $1.10. All of the prices of pears over all of the country won't be the same. Inflation is a measure of everything in the economy roughly blended together to come up with a general value for the loss in purchasing power of a currency and is applicable over long periods. A USD inflation rate of 3% does not mean the pear you spent $1 on today will necessarily cost $1.03 next year.
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On what time scales are stock support and resistance levels meaningful?
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Support and resistance only works as a self-fulfilling prophecy. If everyone trading that stock agrees there's a resistance at so-and-so level, and it is on such-and-such scale, then they will trade accordingly and there will really be a support or resistance. So while you can identify them at any time scale (although as a rule the time scale on which you observed them should be similar to the time scale on which you intend to use them), it's no matter unless that's what all the other traders are thinking as well. Especially if there are multiple possible S/P levels for different time scales, there will be no consensus, and the whole system will break down as one cohort ruins the other group's S/P by not playing along and vice versa. But often fundamentals are expected to dominate in the long run, so if you are thinking of trades longer than a year, support and resistance will likely become meaningless regardless. It's not like that many people can hold the same idea for that long anyhow.
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Where to park money low-risk on interactivebrokers account?
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The standard low-risk/gain very-short-term parking spot these days tends to be a money market account. However, you have only mentioned stock. For good balance, your portfolio should consider the bond market too. Consider adding a bond index fund to diversify the basic mix, taking up much of that 40%. This will also help stabilize your risk since bonds tend to move opposite stocks (prperhaps just because everyone else is also using them as the main alternative, though there are theoretical arguments why this should be so.) Eventually you may want to add a small amount of REIT fund to be mix, but that's back on the higher risk side. (By the way: Trying to guess when the next correction will occur is usually not a winning strategy; guesses tend to go wrong as often as they go right, even for pros. Rather than attempting to "time the market", pick a strategic mix of investments and rebalance periodically to maintain those ratios. There has been debate here about "dollar-cost averaging" -- see other answers -- but that idea may argue for investing and rebalancing in more small chunks rather than a few large ones. I generally actively rebalance once a year or so, and between those times let maintainng the balance suggest which fund(s) new money should go into -- minimal effort and it has worked quite well enough.,)
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Making your first million… is easy! (??)
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I think there's a measure of confirmation bias here. If you talk to somebody that started a successful business and got a million out of it, he'd say "it's easy, just do this and that, like I did". If you consider this as isolated incident, you would ignore thousands of others that did exactly the same and still struggle to break even, or are earning much less, or just went broke and moved on long time ago. You will almost never hear about these as books titled "How I tried to start a business and failed" sell much worse than success stories. So I do not think there's a guaranteed easy way - otherwise we'd have much more millionaires than we do now :) However, it does not mean any of those ways is not worth trying - whatever failure rate there is, it's less than 100% failure rate of not trying anything. You have to choose what fits your abilities and personality best - frugality, risk, inventiveness? Then hope you get as lucky as those "it's easy" people are, I guess.
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High-risk investing is better for the young? Why?
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I'm going to diverge from most of the opinions expressed here. It is common for financial advisors to assume that your portfolio should become less risky as you get older. Explanations for this involve hand-waving and saying that you can afford to lose money when young because you have time to make up for it later. However, the idea that portfolios should become less risky as you get older is not well-grounded in finance theory. According to finance theory, regardless of your age and wealth, returns are desirable and risk is undesirable. Your risk aversion is the only factor that should decide how much risk you put in your portfolio. Do people become more risk averse as they get older? Sometimes. Not always. In fact, there are theoretical reasons why people might want more aggressive portfolios as they age. For example: As people become wealthier they generally become less risk averse. Young people are not normally very wealthy. When you are young, most of your wealth is tied up in the value of your human capital. This wealth shifts into your portfolio as you age. Depending on your field, human capital can be extremely risky--much riskier than the market. Therefore to maintain anything like a constant risk profile over your life, you may want very safe investments when young. You mention being a hedge fund manager. If we enter a recession, your human capital will take a huge hit because you will have a hard time raising money or getting/keeping a job. No one will value your skills and your future career prospects will fall. You will not want the double whammy of large losses in your portfolio. Hedge fund managers are clear examples of people who will want a very safe personal portfolio during their early working years and may be willing to invest very aggressively in their later working and early retirement years. In short, the received wisdom that portfolios should start out risky and get safer as we age is not always, and perhaps not even usually, true. A better guide to how much risk you should have in your portfolio is how you respond to questions that directly measure your risk aversion. This questions ask things like how much you would pay to avoid the possibility of a 20% loss in your portfolio with a certain probability.
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Totally new to finance, economy, where should I start?
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A couple of good books I enjoyed and found very understandable (regarding the stock market): As for investment information you can get lost for days in Investopedia. Start in the stock section and click around. The tutorials here (free) give a good introduction to different financial topics. Regarding theoretical knowledge: start with what you know well, like your career or your other interests. You'll get a running start that way. Beyond that, it depends on what area of finance you want to start with. If it's your personal finances, I and a lot of other bloggers write about it all the time. Any of the bloggers on my blogroll (see my profile for the link) will give you a good perspective. If you want to go head first into planning your financial life, take a look at Brett Wilder's The Quiet Millionaire. It's very involved and thorough. And, of course, ask questions here.
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Why might it be a bad idea to invest 100% of your 401(k) into a stock index fund?
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I've read a nice rule of thumb somewhere that you should consider: You should invest (100-YOURAGE)% of your money in stock The rest should be something less volatile and more liquid, so you have some money when the stock market goes down and you need some money nevertheless. So you would start with buying about 75% stock and balance your stock percentage over time by buing more secure assets to keep the stock percentage at the desired level. At some time you might need to sell stock to rebalance and invest in more secure assets.
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When is Cash Value Life Insurance a good or bad idea?
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The standard answer I have heard is that if you were to purchase term life insurance and invest the difference between the cost of the policies, your investments would grow larger than the cash value of the insurance. Also when you take cash out of CVLI the insurance value drops by a like amount. So you can't have your cake and leave it to your heirs too. Either you get the cash value OR they get the insurance value. Hopefully, there could be some of both. Although I believe the philosophy of that answer I have two issues with it. First, you must be dedicated enough to invest the difference every month. I can imagine that might be tough to do consistently and if you take breaks from the investing will you still accumulate more than you would have with the insurance? Second, for the past couple of years all of my investments in mutual funds have lost value. My life insurance has continued to grow cash value over the same time period. Hmm, maybe there isn't a one size fits all solution. If you need a large amount of insurance, term life will certainly be more affordable. However, considering this as an investment I would not expect that to be a deciding factor. Good luck with your decision. It is great that at such a young age you are concerned about investments.
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Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan?
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Loans do not carry an "interest balance". You can not pay off "all the interest". The only way to reduce the interest to zero is to pay off the loan. Otherwise, the interest due each month is some percentage of the outstanding principal. Think of it from the bank's perspective: they've invested some amount of money in you, and they expect a return on that investment in the form of interest. If you somehow paid in 16 years all the interest the bank expected to receive in 30 years, you've been scammed.
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Being a 1099 for a company I part-own?
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The contract he wants me to sign states I'll receive my monthly stipend (if that is the right word) as a 1099 contractor. The right word is guaranteed payment, which is what "salary" is called when a partner is working for a partnership she's a partner in. Which is exactly the case in your situation. 1099 is not the right form to report this, the partnership (LLC in your case) should be using the Schedule K-1 for that. I suggest you talk to a lawyer and a tax adviser (EA/CPA) who are licensed in your State, before you sign anything.
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Does Edmunds get a kick-back from the use of Edmunds Price Promise?
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Yes, Edmunds gets money from the dealerships in this program. According to this USA Today article from 2013, dealers pay Edmunds a monthly fee to participate in the program. This contrasts with TrueCar.com, a similar service, where dealers pay a fee for each sale. And yes, it is certainly possible to negotiate a lower price than the Edmunds Price Promise quote, if you enjoy haggling. The purpose of the program is not to get you the best price, just the easiest buying experience. From the USA Today article: Edmunds.com's price promise business model is designed to take the uncertainty out of pricing, speed up the buying process and also comes with the expectation that the customer will be given top-notch customer service. Dealers who have participated find that they are able to sell their cars for $300 to $500 more than consumers who go through the more traditional price quote request process. Customers, [Edmunds.com president and chief operating officer Seth] Berkowitz said, are willing to pay a little more than the best possible deal if they can save time, get great customer service and know they are getting a fair price.
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If I have a lot of debt and the housing market is rising, should I rent and slowly pay off my debt or buy and roll the debt into a mortgage?
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What you propose is to convert unsecured debt into secured debt. Conversion of unsecured debt into secured debt is not generally a good idea (several reasons). The debt you currently owe does not have assets securing the debt, so the creditor knows they are exposed to risk, and may be more willing to negotiate or relax terms on the debt, should you encounter problems. When you provide an asset to secure debt, you lose freedom to sell that asset. When you incur debt their is usually a spending problem that needs to be corrected, which is typically not fixed when a refinance solution is used. You do not mention interest rate, which would be one benefit to conversion of unsecured to secured debt, so you probably are not gaining adequate benefit from the conversion strategy. This strategy is often contemplated using 'cash-out' refinancing to borrow against a home you already own, and the (claimed) benefit is often to lower the interest rate on the debt. Your scenario is more complicated in that you have not purchased the home (yet). Though it may be a good idea to purchase a home, that choice depends on a different set of considerations (children, job stability, rental vs. buy costs, lifestyle, expected appreciation, etc) from how to best handle a large debt (income vs. expenses, how to increase income or reduce expenses, lifestyle, priorities, etc). Another consideration is that you already have a problem with the large debt owed to one (set of) creditor(s), and you have a plan which would shift the risk/exposure to another (set of) creditor(s) who may have been less complicit in accruing the original debt. Was the debt incurred jointly during the marriage, and something you accepted responsibility to repay? You mention that you make great income, and you specify one expense (rent), but you neither provided the amount of income, total of all your expenses, nor your free cash flow amount, nor any indication of percentages spent on rent, essential expenses, lifestyle, nor amount available to retire debt. Since you did not provide specifics, we can take a look at three scenarios, scenario #1, $4000/month income scenario #1, $6000/month income scenario #1, $8000/month income Depending upon your income and choices, you might have < $500/month to pay towards debt, or as much as $3000/month to pay towards debt, and depending upon interest rate (which OP did not provide), this debt could take < 2 years to pay or > 5 years to pay. Have you accepted the responsibility for the debt? It will be a tough task to repay the debt. And you will learn that debt comes with a cost as you repay it. One problem people often encounter when they refinance debt is they have not changed the habits which produced the debt. So they often continue their spending habits and incur new unsecured debt, landing them back in the same problem position, but with the increased secured debt combined with additional new unsecured debt. Challenge yourself to repay a specific portion of the debt in a specific time, and consider ways to reduce your expenses (and/or increase your income) to provide more money to repay the debt quicker. As you also did not disclose your assets, it is hard to know whether you could repay a portion of the debt from assets you already own. It makes sense to sell assets that have a low (or zero) return to repay debt that has a high interest rate. Perhaps you have substantial assets that you are reluctant to sell, but that you could sell to repay a large part of the debt?
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Any tips for asset allocation across multiple retirement accounts?
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I have a similar plan and a similar number of accounts. I think seeking a target asset allocation mix across all investment accounts is an excellent idea. I use excel to track where I am and then use it to adjust to get closer (but not exactly) to my target percentages. Until you have some larger balances, it may be prudent to use less categories or realize that you can't come exactly to your percentages, but can get close. I also simplify by primarily investing in various index funds. That means that in my portfolio, each category has 1 or 2 funds, not 10 or 20.
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How does giving to charity work?
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For many people, giving to charity will have minimal effect on their taxes. Non-profits love to attract donations by saying the money is tax deductible, but for most people, it doesn't work out that way. You will only itemize deductions if they exceed your standard deduction. The IRS allows you to either "itemize" your deductions (where you list each deduction you can take) or take the "standard deduction". Consider a married couple filing jointly in 2011. Their standard deduction is $11,400. They are in the 28% tax bracket. They donate $100 of old clothes to the Goodwill, and are looking forward to deducting that on your taxes, and getting $28 of that back. If that's their only deduction, though, they'd have to give up the standard deduction to take the itemized deduction. Not worth it. Suppose instead they have $11,500 of deductions in 2011. Now we're talking, right? No. The tax impact of itemizing is only $28, since they only exceeded the standard deduction by $100. The cost of having a tax accountant fill out the itemization form probably offsets that small gain. There's also all the time that went in to tracking those deductions over the year. Not worth it. Tax deductions only become worthwhile when they significantly exceed the standard deduction. You need some big ticket items to get past the itemized deduction threshold. For most people, this only happens when they have a mortgage, as the interest on a residence is deductible. Folks love to suggest that having a mortgage is a good deal, because the interest is deductible. However, since you have to exceed the standard deduction before it makes sense to itemize, it's not likely to be a big win. For most people: TL;DR: Give to charity because you want that charity to have your money. Tax implications are minimal; let your accountant sort it out. Disclaimer: I am not an accountant.
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Where can I invest for the Short Term and protect against Inflation?
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Your goals are mutually exclusive. You cannot both earn a return that will outpace inflation while simultaneously having zero-risk of losing money, at least not in the 2011 market. In 2008, a 5+% CD would have been a good choice. Here's a potential compromise... sacrifice some immediate liquidity for more earnings. Say you had $10,000 saved: In this scheme, you've diversified a little bit, have access to 50% of your money immediately (either through online transfer or bringing your bonds to a teller), have an implicit US government guarantee for 50% of your money and low risk for the rest, and get inflation protection for 75% of your money.
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Tax on Stocks or ETF's
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If you sell a stock, with no distributions, then your gain is taxable under §1001. But not all realized gains will be recognized as taxable. And some gains which are arguably not realized, will be recognized as taxable. The stock is usually a capital asset for investors, who will generate capital gains under §1(h), but dealers, traders, and hedgers will get different treatment. If you are an investor, and you held the stock for a year or more, then you can get the beneficial capital gain rates (e.g. 20% instead of 39.6%). If the asset was held short-term, less than a year, then your tax will generally be calculated at the higher ordinary income rates. There is also the problem of the net investment tax under §1411. I am eliding many exceptions, qualifications, and permutations of these rules. If you receive a §316 dividend from a stock, then that is §61 income. Qualified dividends are ordinary income but will generally be taxed at capital gains rates under §1(h)(11). Distributions in redemption of your stock are usually treated as sales of stock. Non-dividend distributions (that are not redemptions) will reduce your basis in the stock to zero (no tax due) and past zero will be treated as gain from a sale. If you exchange stock in a tax-free reorganization (i.e. contribute your company stock in exchange for an acquirer's stock), you have what would normally be considered a realized gain on the exchange, but the differential will not be recognized, if done correctly. If you hold your shares and never sell them, but you engage in other dealings (short sales, options, collars, wash sales, etc.) that impact those shares, then you can sometimes be deemed to have recognized gain on shares that were never sold or exchanged. A more fundamental principle of income tax design is that not all realized gains will be recognized. IRC §1001(c) says that all realized gains are recognized, except as otherwise provided; that "otherwise" is substantial and far-ranging.
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Is this comparison of a 15-year vs. a 30-year mortgage reasonable?
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I think your analysis is very clear, it's a sensible approach, and the numbers sound about right to me. A few other things you might want to think about: Tax In some jurisdictions you can deduct mortgage interest against your income tax. I see from your profile that you're in Texas, but I don't know the exact situation there and I think it's better to keep this answer general anyway. If that's the case for you, then you should re-run your numbers taking that into account. You may also be able to make your investments tax-advantaged, for example if you save them in a retirement account. You'll need to apply the appropriate limits for your specific situation and take an educated guess as to how that might change over the next 30 years. Liquidity The money you're not spending on your mortgage is money that's available to you for other spending or emergencies - i.e. even though your default assumption is to invest it and that's a sensible way to compare with the mortgage, you might still place some extra value on having more free access to it. Overpayments Would you have the option to pay extra on the mortgage? That's another way of "investing" your money that gets you a guaranteed return of the mortgage rate. You might want to consider if you'd want to send some of your excess money that way.
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How does owning a home and paying on a mortgage fit into family savings and investment?
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Have you ever tried adding up all your mortgage payments over the years? That sum, plus all the money that you put as a down payment (including various fees paid at closing) plus all the repair and maintenance work etc) is the amount that you have "invested" in your house. (Yes, you can account for mortgage interest deductions if you like to lower the total a bit). Do you still feel that you made a good "investment"?
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Why is auto insurance ridiculously overpriced for those who drive few miles?
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There are several aspects to this but at a high level it boils down to A lot goes in to insurance rating and risk projecting. You can't adjust a single variable and expect a proportional change in your premium, 7,000 miles per year just won't be 70% of the cost of 10,000 miles per year, because there are a lot of other things in play as well. To further address premium adjustments. Consider this: Even if your liability coverage did scale with perfect correlation to your mileage (using the same 70% from above, 7,000 miles per year versus 10,000 miles per year) then your premium composition is: $200 to $170 is 15%. No change will have a direct linear correlation to your total premium because there are different component pieces of the total premium. Fixed costs may be built in to the amounts for other component pieces of the premium, for example maybe no line of coverage ever has a cost below $X. Obviously these numbers are all made up Additionally, and also less considered is the fact that your liability also scales because of a lot of factors that have nothing to do with you. It might be the other cars that are on the road, it might be that more densely populated areas have more fender benders. For example if you live in Beverly Hills you have a much higher likelihood of accidentally bumping a $70-$80-$90-$100k+ car than you do in say, rural Wisconsin. If your zip code is gentrifying and everyone starts buying Mercedes, your liability coverage increases. You can not adjust one single variable and decide that you are lower risk than all insurers think you are. If you shop this coverage and all insurers are within a nominal margin of pricing for the same coverage levels, there isn't much to argue with; you are simply riskier than you think you are and the variable you are focused on is not as meaningful as you think it is.
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Company asking for card details to refund over email
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A bona-fide company never needs your credit card details, certainly not your 3-digit-on-back-of-card #, to issue a refund. On an older charge, they might have to work with their merchant provider. But they should be able to do it within the credit card handling system, and in fact are required to. Asking for details via email doesn't pass the "sniff test" either. To get a credit card merchant account, a company needs to go through a security assessment process called PCI-DSS. Security gets drummed into you pretty good. Of course they could be using one of the dumbed-down services like Square, but those services make refunds ridiculously easy. How did you come to be corresponding on this email address? Did they initially contact you? Did you find it on a third party website? Some of those are fraudulent and many others, like Yelp, it's very easy to insert false contact information for a business. Consumer forums, even moreso. You might take another swing at finding a proper contact for the company. Stop asking for a cheque. That also circumvents the credit card system. And obviously a scammer won't send a check... at least not one you'd want! If all else fails: call your bank and tell them you want to do a chargeback on that transaction. This is where the bank intervenes to reverse the charge. It's rather straightforward (especially if the merchant has agreed in principle to a refund) but requires some paperwork or e-paperwork. Don't chargeback lightly. Don't use it casually or out of laziness or unwillingness to speak with the merchant, e.g. to cancel an order. The bank charges the merchant a $20 or larger investigation fee, separate from the refund. Each chargeback is also a "strike"; too many "strikes" and the merchant is barred from taking credit cards. It's serious business. As a merchant, I would never send a cheque to an angry customer. Because if I did, they'd cash the cheque and still do a chargeback, so then I'd be out the money twice, plus the investigation fee to boot.
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Does reading financial statements (quarterly or annual reports) really help investing?
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I agree with @STATMATT. Financial statements are the only thing that Warren Buffett & Charlie Munger read. To answer your question though, really depends on what type of investor you are and what information are you trying to extract. It is essential for the Buffett style (buy & hold). But if you are a short term or technical investor then I don't see it being of much value.
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Should I get a personal loan to pay on my mortgage to go “above water” to qualify for a refinance?
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It depends on how long it will take you to pay off the personal loan, the rate for the personal loan, the refi rate you think you can get, how much principal you will have to add to get the refi (may have gone up since then). Since you did not provide all the necessary details, the general answer is to sketch out your total payments (mortgage + personal loan) with and without the refi over the life of the mortgage and see if you end up with more money in your pocket with the refi. My overall impression based on the details you did provide is that you will probably find it worthwhile to do the refi.
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Cheapest USD to GBP transfer
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Use a remitting service such as Ria Money Transfer. Almost all these services allow you to transfer upto $2999 at a time. So, you would be able to transfer the entire amount of $4500 within 2 business days(There is a monthly limit too, but it will definitely be more than $4500). There are no fees to use these services, but they do scrape off a bit on the currency rate. As of today you are getting 624 GBP for $1000 whereas the market rate is $641.95. You still save roughly $17 and 4 transactions, which adds up to more than $100. Here is a link to Ria's website. Other services, include Xoom, Western Union, Money Dart and Money Gram.
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Should I buy a house because Mortgage rates are low
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The simple answer is that you are correct. You should not purchase a house until you are financially stable enough to do so. A house is an asset that you must maintain, and it can be expensive to do so. Over the long term, you will generally save money by purchasing. However, in any given year you may spend much more money than a similar rental situation - even if the rent is higher than your mortgage payment. If you are financially stable with good cash savings or investments plus a 20% down payment, then anytime is a good time to buy if that is part of your financial plan. As of now in 2016, is is safe to assume that mortgage rates would/should not get back to 10%? Does this mean that one should always buy a house ONLy when mortgage rates are low? Is it worth the wait IF the rates are high right now? The mortgage rates are not the primary driver for your purchase decision. That might be like saying you should buy everything on sale at Target... because it's on sale. Don't speculate on future rates. Also, keep in mind that back when rates were high, banks were also giving much better savings/CD rates. That is all connected. Is refinancing an option on the table, if I made a deal at a bad time when rates are high? You need to make sure you get a loan that allows it. Always do a break-even analysis, looking at the money up-front you spend to refi vs the savings-per-year you will get. This should give you how many years until the refi pays for itself. If you don't plan on being in the house that long, don't do it. How can people afford 10% mortgage? Buying a house they can afford, taking into consideration the entire payment+interest. It should be a reasonable amount of your monthly income - generally 25% or less. Note that this is much less than you will be 'approved' for by most lenders. Don't let good rates suck you into a deal you will regret. Make sure you have the margin to purchase and maintain a home. Consider where you want to be living in 5 years. Don't leave so little financial breathing room that any bump will place you at risk of foreclosure. That said, home ownership is great! I highly recommend it.
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Getting financial advice: Accountant vs. Investment Adviser vs. Internet/self-taught?
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An accountant should be able to advise on the tax consequences of different classes of investments/assets/debts (e.g. RRSP, TFSA, mortgage). But I would not ask an accountant which specific securities to hold in these vehicles, or what asset allocation (in terms of geography, capitalization, or class (equity vs fixed income vs derivatives vs structured notes etc). An investment advisor would be better suited to matching your investments to your risk tolerance.
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Teaching school kids about money - what are the real life examples of math, budgeting, finance?
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If these are children that may be employed, in a few years, it may well be worth walking them through some basics of the deductions around employment, some basic taxes, uses of banks, and give them enough of a basis in how the economy of the world works. For example, if you get a job and get paid $10/hour, that may sound good but how much do various things eat at that so your take-home pay may be much lower? While this does presume that the kids will get jobs somewhere along the way and have to deal with this, it is worth making this part of the education system on some level rather than shocking them otherwise. Rather than focusing on calculations, I'd be more tempted to consider various scenarios like how do you use a bank, what makes insurance worth having(Life, health, car, and any others may be worth teaching on some level), and how does the government and taxes fit into things. While I may be swinging more for the practical, it is worth considering if these kids will be away in college or university in a few years, how will they handle being away from the parents that may supply the money to meet all the financial needs?
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Boyfriend is coowner of a house with his sister, he wants to sell but she doesn't
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How did the house pass to them? Was it held in Trust? Were they both jointly listed on the deed? If no to both, then the house should have gone into probate..assuming this is going on in the US...where the probate court would reassign ownership. Until this happens the house cannot be sold and is formally owned by the estate. I agree with the former post suggesting you find an estate attorney in the area to see if this dispute can be amicably settled. Tying it up in litigation will be EXPENSIVE and take a great deal of time
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Tax On Unsold Mined Bitcoin
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And directly from IRS notice 2014-21 FAQ: Q-1: How is virtual currency treated for federal tax purposes? A-1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. Q-6: Does a taxpayer have gain or loss upon an exchange of virtual currency for other property? A-6: Yes. If the fair market value of property received in exchange for virtual currency exceeds the taxpayer’s adjusted basis of the virtual currency, the taxpayer has taxable gain. The taxpayer has a loss if the fair market value of the property received is less than the adjusted basis of the virtual currency.… Q-8: Does a taxpayer who “mines” virtual currency (for example, uses computer resources to validate Bitcoin transactions and maintain the public Bitcoin transaction ledger) realize gross income upon receipt of the virtual currency resulting from those activities? A-8: Yes, when a taxpayer successfully “mines” virtual currency, the fair market value of the virtual currency as of the date of receipt is includible in gross income. See Publication 525, Taxable and Nontaxable Income, for more information on taxable income.
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PayPal wants me to “add a bank account”, another funding source. Credit card isn't working. Why?
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Visit paypalblows.org to find out more reasons. PayPal wants your bank account info on file before they allow you to take payment. So setup a bank account strictly for this service, and if they give you trouble or suspend your account, simply never use them again and tell others of your experience. I think the only reason why PayPal wants a bank account is so they can dip into it and take chargeback money.
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Is insurance worth it if you can afford to replace the item? If not, when is it?
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As a rule, purchasing fairly priced (minus a spread) insurance on items you can afford to replace is a bad idea. However, in addition to the points mentioned in the previous answers, one should note that many types of insurance are UNDERpriced because on average people do not make claims even though they are entitled to them. If you purchase something moderately priced at Best Buy and get the extended warranty and it breaks down a year later, you will be unlikely to even remember that you purchased the insurance much less go through the trouble of making a claim. More likely you will just go buy a replacement or whatever the latest and greatest iteration is. It's like homeowner's insurance--an amazing number of things is covered but no one ever makes claims, so it is cheap. If you are a person who remembers and utilizes warranties and insurance, there are many types of insurance that will save you money in expectation. The other thing is that you know more about your own riskiness than the insurer does. I had a girlfriend who bought super comprehensive insurance on her crappy old car. I was quite stern with her about it but could not change her mind. She totaled it a few months later. They bought her a replacement. She got in a more serious accident with that car and got yet another one in addition to payment of her medical care, which did not even go to her health care insurance. Yes, her rates went up, but not fast enough to deal with how risky she was. Another example: I used to carry an e-book reader around in my shirt pocket and read it any time I had a chance. Cheap item and not that delicate, but since I had it with me all the time and used it constantly, it was a big risk for the store. The extended warranty would have been a great idea. In short, avoid extended warranties and insurance on things you can afford to lose unless you know that you are high risk or are otherwise more likely than average to make a claim.
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What intrinsic, non-monetary value does gold have as a commodity?
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The answer is that other than a small number of applications (the approx. 10% of gold production that goes to 'industrial uses') gold does not have intrinsic value beyond being pretty and rare (and useful for making jewelry.) There are a number of 'industrial' applications and uses for gold (see other answers for a list) but the volume consumed this way is fairly small, especially relative to the capacity to mine new gold and reclaim existing gold. If you removed investment, and jewelry usage (especially culturally driven jewelry usage) then there's no way the remaining uses for industry and dentistry could sustain the price levels we currently see for gold. Furthermore, and perhaps more importantly, the best data I can find for this shows the total number of tons consumed for industrial uses has been shrinking for several years now, and that was prior to recent price increases, so it is difficult to tie that reduced demand to increasing prices. And one might postulate in a 'collapsed society' you seem to be referring to in your question, that a lot of the recent industrial demand (e.g. the '50 cents of gold in each cellphone') could quite possibly disappear entirely. The argument many people use for gold having value is usually 'been used as money for thousands of years'. But this confuses gold having a value of its own with the reasons why something makes a useful currency. Gold has a large number of characteristics that make it an ideal currency, and of all the elements available it is perhaps the best physical element to serve as a currency. BUT just as with a dollar bill, just because it is a good currency, does NOT give it an intrinsic value. Any currency is only worth what someone will trade you for it. The value is set by the economy etc., not the medium used as a currency. So yes, people will probably always use gold as money, but that doesn't make the money worth anything, it's just a medium of exchange. Incidentally two other things should be noted. The first is that you have a problem when the medium itself used for a currency becomes worth more than the face value. Hence why we stopped using silver in coins, and there were concerns over pennies due to the price of copper. This leads to the second point, which is that currently, gold is TOO RARE to suffice as a world currency, hence why all countries went off the gold standard years ago. The size of national and global economies was growing faster than the supply of gold, and hence it was becoming impossible to have enough gold to back all the currencies (inflation concerns aside).
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What forms of payment am I compelled to accept?
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I think cash, travelers checks (little iffy about this one: they're legal tender cash equivalents), and money orders are the only ones that you'd be a little weird to not accept. You certainly don't have to accept regular checks, credit cards, or barter. In the end though, you don't HAVE to accept anything. Accept only small bills, accept only checks from certain banks, accept only the diners card. Your sale, your rules.
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Sell Stock using Limit
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if I put a limit sell at $22.00 now, will it not sell until it's at $22.00 and I will continue to keep the stock? Basically yes. But note that brokers generally don't allow such limit orders to persist indefinitely. The default may even be that they're only valid until the end of the day, and usually the maximum validity is 30 or 60 days.
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How does historical data get adjusted for dividends, exactly?
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According to Active Equity Management by Zhou and Jain: When a stock pays dividend, the adjusted price in Yahoo makes the following adjustment: Let T be the ex-dividend date (the first date that the buyers of a stock will not receive the dividend) and T-1 be the last trading day before T. All prices before T are adjusted by a multiplier (C_{T-1} - d_T)/C_{T-1}, where C_{T-1} is the close price at T-1 and d_T is the dividend per share. This, of course means that the price before T decreases.
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Are junk bonds advisable to be inside a bond portfolio that has the objective of generating stable income for a retiree?
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Corporate bonds have gotten very complicated in the last 20 years to the point where individual investors are at significant disadvantages when lending money. Subordinated debentures, covenants, long maturities with short call features, opaque credit analysis, etc. Interest rates are so low now that investors (individual & professionals) are forced further out the risk & maturity spectrum for yield. It's a very crowded and busy street.....stay out of the traffic. Really you are better off owning a low cost bond fund that emulates the Barclays Corp/Gov index, or similar. That said, junk bonds may be useful to you if you can tolerate losing money when companies default....you've got to look in the mirror. Choose a fund that is diverse, Treasuries, agencies, corps both high and low.....and don't go for the highest yield.
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Mortgage or not?
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Short answer: No. Longer answer: The only reason to move would be to get out of the condo and into a SFR of equal cost because condos can be quite difficult to sell and you don't really want that potential burden later on. Moving is expensive though and you can't afford to spend more when you are already living on the financial edge. Speaking of living on the edge, that's a recipe for disaster. I make, ratio-wise, a similar sort of income. Even accounting for the generous college tuition, you should be able to save at least $20K per year...at a bare minimum. And if you were careful, I figure you should be able to save $40K/year. You need to figure out where you are dumping all of your money and cut WAY back on spending and focus entirely on saving money. 1) Stop eating out. Make your own meals. I average about $2 per meal per person - no junk food. Eating out is 6 to 30 times as expensive as making meals at home. Do the math: $10 * 2 people * number of times you eat out per week * 52 ($1,040 per year for each time/week!) vs $2 * 2 people * 21 (3 meals per day) * 52 ($4,368 per year for both of you...maximum). Now I know some meals are more expensive to prepare, but the math is not unrealistic - I spend about $140 per month on groceries and make the bulk of my own food. Eating out is sticker shock for me. The food I prepare is nutritionally balanced and complete. Now I'm not a complete health-nut. I love the occasional deep-fried treat or hamburger, but those are "once every couple of months" sort of things, which makes them special. 2) Stop going to Starbucks or wherever you habitually go. It takes fuel to get there. It's also expensive when you get there. Bring your own drink if you are hanging out with friends. 3) Drop golf. Or whatever expensive sport you are sinking money into. Invest in some cheap running clothes and focus on cardio-based workouts. Heart health is more important than anything else. If you can't live without your sport, then find an alternate sport that is "equal"-ish in challenge but a ton cheaper to play. For example, if you like playing golf, play discgolf instead (most cities have courses) - there's no cost beyond a couple of discs and the challenge is still there. 4) Drop entertainment. Movies at the theater are expensive. Drop your cable subscription (you are getting financially raped for $1,500/year). Get a Netflix subscription and find shows via free online streaming services. Buy some dominoes, card games, and a couple of classic board games. Keep entertainment simple and cheap. 5) Drop your cell phone's data plan. Republic Wireless is the only decent cellular provider and even their $12/month plan is living a luxury lifestyle. If you spend more than $10/month/person for phone service, you are spending too much. 6) Stop driving everywhere. Gas is expensive. Cars are expensive. If you have more than two cars, sell the extras. If your car is worth more than $20,000, sell it and get something cheaper. 7) Stop drinking alcohol. Alcohol impairs mental functions, is addictive, smells terrible, and is ridiculously expensive. There's no actual need to consume it either. By the way, don't go and make major financial changes without the wife's sign-off. Finances are the #1 reason for divorce. So get her "OK" on this stuff. Hopefully you already knew that. The above are just some common financial pitfalls where people sink thousands and thousand of dollars and gain nothing. You can still have a full and complete life with just a minimum of the above. There is no excuse for living on the edge financially. Your story is one I'm going to share with those who give me the same excuse because they are "poor". You are "I want to punch you in the face" wealthy and you spend every last penny because you think that's how money works. You are wrong. One final piece of advice: Find a financial adviser. It is clear to me that you've been managing money wrong your whole life. A financial adviser will look at your situation and help you far more than someone on the Internet ever can. If you attend a church, many churches have the excellent Crown Financial Ministries program available which teaches sound financial management principles. The education system doesn't show people how to manage money, but that's not an excuse either. Once you dig yourself out of the financial hole you've dug for yourself, you can pass the knowledge on how to correctly manage money onto other people.
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How to record a written put option in double-entry accounting?
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Because you've sold something you've received cash (or at least an entry on your brokerage statement to say you've got cash) so you should record that as a credit in your brokerage account in GnuCash. The other side of the entry should go into another account that you create called something like "Open Positions" and is usually marked as a Liability account type (if you need to mark it as such). If you want to keep an accurate daily tally of your net worth you can add a new entry to your Open Positions account and offset that against Income which will be either negative or positive depending on how the position has moved for/against you. You can also do this at a lower frequency or not at all and just put an entry in when your position closes out because you bought it back or it expired or it was exercised. My preferred method is to have a single entry in the Open Positions account with an arbitrary date near when I expect it to be closed and each time I edit that value (daily or weekly) so I only have the initial entry and the current adjust to look at which reduces the number of entries and confusion if there are too many.
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Should I open a credit card when I turn 18 just to start a credit score?
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No, don't open a credit card. Get used to paying cash for everything from the beginning. The best situation you can be in is not to have any credit. When it comes time to buy a house, put down %30 percent and your 0 credit score won't matter. This will keep you within your means, and, with governments gathering more and more data, help preserve your anonimity.
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Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely?
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I really don't feel co-signing this loan is in the best interests of either of us. Lets talk about the amount of money you need and perhaps I can assist you in another way. I would be honest and tell them it isn't a good deal for anybody, especially not me. I would then offer an alternative "loan" of some amount of money to help them get financing on their own. The key here is the "loan" I offer is really a gift and should it ever be returned I would be floored and overjoyed. I wouldn't give more than I can afford to not have. Part of why I'd be honest to spread the good word about responsible money handling. Co-signed loans (and many loans themselves) probably aren't good financial policy if not a life & death or emergency situation. If they get mad at me it won't matter too much because they are family and that won't change.
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Filing taxes on stocks
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You need to talk to an accountant who practices tax accounting, preferaby someone who is an Enrolled Agent (EA) with the IRS, and possibly an attorney who specializes in tax law. There are multiple issues here, and the executor of your father's estate might need to be involved here too. Presumably you were a minor in 2007 since the transactions took place in a custodial account, and perhaps you were a dependent of your father in 2007. So, were the transactions reported on your father's 2007 income tax return? or did he file a separate income tax return in your name? You say you have a W2 for 2007. So you were earning some income in 2007? This complicates matters. It is necessary to determine who has the responsibility to file income tax returns for a minor with earned income. Above all, I urge you to not file income tax returns on your own or using a tax return preparation program, or after talking to a tax return preparation service (where you will likely get someone who works on a seasonal basis and is unlikely to be familiar with tax law as of 2007).
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Is it a gift or not?
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Part of 'consideration', I imagine, would be the obligation of either party to follow through on an agreement, not only fair market value. Look at the thought experiment from the opposite perspective. If you did not pay him $150 (maybe just $50 or even $0), would you be breaking a contractual obligation to him? If he left after 2 hours because he forgot about a family event and did not finish your move, would he be breaking a contractual obligation to you even if you gave him $150? It seems it can be considered a gift (Update: in all cases) There was no agreement of what either party viewed as full consideration in a mutual exchange. To put it another way: From your examples, there is no evidence that the performance of either party hinged on receiving mutual consideration from the other. More Updates from comments: Patterns Matter Similarly to how the IRS may determine W2 employee vs independent contractor, patterns do matter. If your friend has a pattern of helping people move in exchange for tens of thousands of dollars in gifts every year, the IRS would view that in a different light. A waitress/waiter has a pattern of accepting 'gifts' of tips in exchange for good service as a part of their established job duties. If you gifted your friend with $150/week when they watched your kids every Monday-Wednesday, that would be different. You are establishing a pattern, and I would suggest you may be establishing mutual consideration. In that case, consult a professional if you are worried. Amounts Matter This is why the gift tax exemption was created. The IRS does not care about the amounts in question here. It is too much of a burden to track and account for transactions that are this questionable and this small. You gift your friend with a $20k car? Now you need to pay attention. Consult your CPA. You gift your friend $1k for helping build your new deck? The IRS does not care. Intent Matters Even in the first case, it is not necessarily true that your friend considers $150 to be mutual consideration for his services. Would he open a business where he offers that rate to the general public? I doubt it. He intends to gift you services out of his own free will, not because there will be an equitable exchange of value. The intent of both parties is to give a gift. There is no evidence that would suggest otherwise to the IRS, it seems, even if they cared in the first place.
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What is the point of owning a stock without dividends if it cannot be resold?
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If that condition is permanent -- the stock will NEVER pay dividends and you will NEVER be able to sell it -- then yes, it sounds to me like this is a worthless piece of paper. If there is some possibility that the stock will pay dividends in the future, or that a market will exist to sell it, then you are making a long-term investment. It all depends on how likely it is that the situation will change. If the investment is small, maybe it's worth it.
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Why is short-selling considered more “advanced” than a simple buy?
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When you short a stock, you can lose an unlimited amount of money if the trade goes against you. If the shorted stock gaps up overnight you can lose more money than you have in your account. The best case is you make 100% if the stock goes to zero. And then you have margin fees on top of that. With long positions, it's the other way around. Your max loss is 100% and your gains are potentially unlimited.
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How would I go about selling the stock of a privately held company?
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SecondMarket attempts to add liquidity to privately held companies. You may be able to find a buyer there, but this is still incredibly illiquid due to accredited investor regulations constricting businesses from catering to the 99%. As around 1% of the United States population qualifies as an accredited investor.
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Why don't banks print their own paper money / bank notes?
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There is absolutely no logical reason why each nation does not own and control banking and thus the supply of money. Any system including the financial system works exactly the same way, regardless of ownership. Banking depends solely on the confidence of the customers/investors. Therefore when a sovereign nation/state has ownership of the banks, the profits are kept in-house, within the nation, which is actually a bonus, and taxes can be off-set by profits, which is another benefit. Any improvement or benefit by the private ownership of banking is a total myth.
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Query regarding international transaction between governments
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$USD, electronic or otherwise, are not created/destroyed during international transactions. If India wants to buy an F-16s, at cost $34M USD, they'll have to actually acquire $34M USD, or else convince the seller to agree to a different currency. They would acquire that $34M USD in a few possible ways. One of which is to exchange INR (India Rupees) at whatever the current exchange rate is, to whomever will agree to the opposite - i.e., someone who has USD and wants INR, or at least is willing to be the middleman. Another would be to sell some goods or services in the US (for USD), or to someone else for USD. Indian companies undoubtedly do this all the time. Think of all of those H1B workers that are in the news right now; they're all earning USD and then converting those to INRs. So the Indian government can just buy their USD for INR, directly or more likely indirectly (through a currency exchange market). A third method would be to use some of their currency stores. Most countries have significant reserves of various foreign currencies on hand, for two reasons: one to simplify transactions like this one, and also to stabilize the value of their own currency. A less stable currency can be stabilized simply by the central bank of that country owning USD, EUR, Pounds Sterling, or similar stable-value currencies. The process for an individual would be essentially the same, though the third method would be less likely available (most individuals don't have millions in cash on hand from different currencies - although certainly some would). No government gets involved (except for taxes or whatnot), it's just a matter of buying USD in exchange for INRs or for goods or services.
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Pay off debt with RRSPs, or refinance and roll into Mortgage?
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I would personally look at consolidating your debt at a lower interest rate by refinancing your mortgage. I would leave any retirement funds alone unless it was absolutely necessary to touch it with no other avenues available. However, once you have consolidated your debt into the mortgage I would pay more than the minimum amount so that you don't take too long to pay it off. I would put about 50% of the freed-up cash flow back into the repayments, that way you will be paying more debt off quicker and you will have additional cash flow to help your monthly budget. Another good point would be to go through your monthly budget to see if there is any expenses you could reduce or eliminate.
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How to share income after marriage and kids?
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nan
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How can I improve my credit score if I am not paying bills or rent?
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Any kind of credit contract such as a mobile phone contract (could be SIM only or with a handset) would also help increase your number of accounts and demonstrate a track record of responsible management and repayments. If you have a Pay As You Go phone at present consider a SIM only contract with the same network, and if your parents currently pay for your phone consider if it would be worth switching it into your own name. Also make sure that you are registered on the Electoral Role at your permanent address and have at least a minimum payment direct debit set up on your credit card (even though you state you intend to repay in full) to make sure you don't forget a payment as this will disproportionately affect your score when combined with young age and few other accounts. Lastly ensure that you have a decent amount of "head room" on your rolling credit accounts like credit cards and aren't using more than 80% of the credit available to you through your monthly spending, if necessary by asking for an increased limit from your company (and then not using it).
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Is it okay to be married, 30 years old and have no retirement?
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The question regarding your snapshot is fine, but the real question is what are you doing to improve your situation? As John offered, one bit of guidance suggests you have a full year's gross earnings as a saving target. In my opinion, that's on the low side, and 2X should be the goal by 35. I suggest you look back, and see if you can account for every dollar for the prior 6-12 months. This exercise isn't for the purpose of criticizing your restaurant spending, or cost of clothes, but to just bring it to light. Often, there's some low hanging fruit in this type of budgeting exercise, spending that you didn't realize was so high. I'd also look carefully at your debt. What rate is the mortgage and the student loans? By understanding the loans' rates, terms, and tax status (e.g. whether any is a deduction) you can best choose the way to pay it off. If the rates are low enough you might consider funding your 401(k) accounts a bit more and slow down the loan payments. It seems that in your 30's you have a negative net worth, but your true asset is your education and future earning potential. From a high level view, you make $180K. Taking $50K off the top (which after taxes gives you $30K) to pay your student loan, you are still earning $130K, putting you at or near top 10% of families in this country. This should be enough to afford that mortgage, and still live a nice life. In the end there are three paths, earn more (why does hubby earn half what you do, in the same field?), spend less, or reallocate current budget by changing how you are handling that debt.
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What's the best way to manage all the 401K accounts I've accumulated from my past jobs?
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I rolled mine over from the company I was at into my own brokerage house. You can't roll them into a Roth IRA, so I needed to setup a traditional IRA. There is paperwork your old jobs can provide you. I had to put in some mailing addresses, some account numbers and turn them in. My broker received it, I chose what I wanted to invest it in and that was that. No tax penalty or early withdrawal penalty. The key to avoiding penalties is to have your past employers send the money directly to another retirement fund, not send a check to you.
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Does the IRS give some help or leniency to first-time taxpayers?
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There's no such thing as "leniency" when enforcing the law. Not knowing the law, as you have probably heard, is not a valid legal defence. Tax law is a law like any other. That said, some penalties and fines can be abated if the error was done in good faith and due to a reasonable cause. First time penalties can be abated in many cases assuming you're compliant otherwise (for example - first time late filing penalty can be abated if you're compliant in the last 5 years. Not many people know about that.). Examples for a reasonable cause (from the IRS IRM 20.1.1): Reliance on the advice of a tax advisor generally relates to the reasonable cause exception in IRC 6664(c) for the accuracy-related penalty under IRC 6662. See IRM 20.1.5, Return Related Penalties, and If the taxpayer does not meet the criteria for penalty relief under IRC 6404(f), the taxpayer may qualify for other penalty relief. For instance, taxpayers who fail to meet all of the IRC 6404(f) criteria may still qualify for relief under reasonable cause if the IRS determines that the taxpayer exercised ordinary business care and prudence in relying on the IRS’s written advice. IRM 20.1.1.3.2.2.5 - Erroneous Advice or Reliance. Treas. Reg. 1.6664–4(c). There are more. IRM is the "Internal Revenue Manual" - the book of policies for the IRS agents. Of course, you should seek a professional advice when you're non-compliant and want to ask for abatement and become compliant again. Talk to a CPA/EA licensed in your state.
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Why are US target retirement funds weighted so heavily towards US stocks?
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Excellent question, though any why question can be challenging to answer because it depends on the financial products in question. At least, I haven't seen many target date retirement funds that include a high percent of foreign stocks, so below explains the ones I've seen which are primarily US stocks. The United States (before the last twenty years) has been seen as a country of stability. This is not true anymore, and it's difficult for my generation to understand because we grew up in the U.S.A being challenged (and tend to think that China and India have always been powers), but when we read investors, like Benjamin Graham (who had significant influence with Warren Buffett), we can see this bias - the U.S.A to them is stable, and other countries are "risky." Again, with the national debt and the political game in our current time, it does not feel this way. But that bias is often reflect in financial instruments. The US Dollar is still the reserve currency, though it's influence is declining and I would expect it to decline. Contrary to my view (because I could be wrong here) is Mish, who argues that no one wants to have the reserve currency because having a reserve currency brings disadvantages (see here: Bogus Threats to US Reserve Currency Status: No Country Really Wants It!; I present this to show that my view could be wrong). Finally, there tends to be the "go with what you know." Many of these funds are managed by U.S. citizens, so they tend to have a U.S. bias and feel more comfortable investing their money "at home" (in fact a famous mutual fund manager, Peter Lynch, had a similar mentality - buy the company behind the stock and what company do we tend to know best? The ones around us.). One final note, I'm not saying this mentality is correct, just what the attitude is like. I think you may find that younger mutual fund managers tend to include more foreign stocks, as they've seen that different world.
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