Question stringlengths 14 166 | Answer stringlengths 3 17k |
|---|---|
Recommended education path for a future individual investor? | It depends on whether you want a career as a fund manager/ analyst or if you want to be an investor/ trader. A fund manager will have many constraints that a private investor doesn’t have, as they are managing other people’s money. If they do invest their own money as well they usually would invest it differently from how they invest the fund's money. Many would just get someone else to invest their money for them, just as a surgeon would get another surgeon to operate on a family member. My suggestion to you is to find a job you like doing and build up your savings. Whilst you are building up your savings read some books. You said you don’t know much about the financial markets, then learn about them. Get yourself a working knowledge about both fundamental and technical analysis. Work out which method of analysis (if not both) suits you best and you would like to know more about. As you read you will get a better idea if you prefer to be a long term investor or a short term trader or somewhere in-between or a combination of various methods. Now you will start to get an idea of what type of books and areas of analysis you would like to concentrate on. Once you have a better idea of what you would like to do and have gained some knowledge, then you can develop your investment/trading plan and start paper trading. Once you are happy with you plan and your paper trading you can start trading with a small account balance (not more than $10,000 and preferably under $5,000). No matter how well you did with paper trading you will always do worse with real money at first due to your emotions being in it now. So always start off small. If you want to become good at something it takes time and a lot of hard work. You can’t go from knowing nothing to making a million dollars per year without putting in the hard yards first. |
Why would a long-term investor ever chose a Mutual Fund over an ETF? | There is little difference between buying shares in your broker's index fund and shares of their corresponding ETF. In many cases the money invested in an ETF gets essentially stuffed right into the index fund (I believe Vanguard does this, for example). In either case you will be paying a little bit of tax. In the ETF case it will be on the dividends that are paid out. In the index fund case it will additionally be on the capital gains that have been realized within the fund, which are very few for an index fund. Not a ton in either case. The more important tax consideration is between purchase and sale, which is the same in either case. I'd say stick it wherever the lowest fees are. |
Does an employee have the right to pay the federal and state taxes themselves instead of having employer doing it? | No, even businesses pay taxes quarterly. So if you formed Nathan, LLC, or otherwise became self employed, you'd still have to file quarterly estimates and make tax payments. This would cause taxes to be a much more high touch part of your life. However, you should ensure that you're claiming the proper exemptions etc to avoid excessive withholding. |
Why would I choose a 40-Year depreciation instead of the standard 27.5-Year? | There are specific cases where you are required to use ADS: Required use of ADS. You must use ADS for the following property. Listed property used 50% or less in a qualified business use. See chapter 5 for information on listed property. Any tangible property used predominantly outside the United States during the year. Any tax-exempt use property. Any tax-exempt bond-financed property. All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. See publication 946. If none of those apply to your property - you may elect ADS. Why would you elect ADS when you're not required to use it? If you can't think of a reason, then don't elect it. For most people the shorter the depreciation period - the more they can deduct (or accumulate in passive losses) each year, and that is usually the desirable case. If you plan on selling in 10 years, keep in mind the depreciation recapture and consider whether the passive losses (offsetting regular income) are worth the extra tax in this case. |
May 6, 2010 stock market decline/plunge: Why did it drop 9% in a few minutes? | Trading error at Citi |
Why is the total 401(k) contribution limit (employee + employer) so high? | Some 401k plans allow you to make "supplemental post-tax contributions". basically, once you hit the pre-tax contribution limit (17.5k$ in 2014), you are then allowed to contribute funds on a post-tax basis. Because of this timing, they are sometimes called "spillover" contributions. Usually, this option is advertised as a way of continuing to get company match even if you accidentally hit the pre-tax limit. But if you actually pay attention to your finances, it is instead a handy way to put away additional tax-advantaged money. That said, you would only want to use this option if you already maxed out your pre-tax and Roth options since you don't get the traditional tax break on contributions or the Roth tax break on the earnings. However, when you leave the company, you can transfer the post-tax money directly into a Roth IRA when you transfer the pre-tax money, match, and earnings into a traditional IRA. |
While working overseas my retirement has not gone into a retirement account. Is it going to kill me on the FAFSA? | According to the FAFSA info here, they will count your nonretirement assets when figuring the EFC. The old Motley Fool forum question I mentioned in my comment suggests asking the school for a "special circumstances adjustment to your FAFSA". I don't know much about it, but googling finds many pages about it at different colleges. This would seem to be something you need to do individually with whatever school(s) your son winds up considering. Also, it is up to the school whether to have mercy on you and accept your request. Other than that, you should establish whatever retirement accounts you can and immediately begin contributing as much as possible. Given that the decision is likely to be complicated by your foreign income, you should seek professional advice from an accountant versed in such matters. |
Why do companies have a fiscal year different from the calendar year? | In addition to the company-specific annual business cycle reasons and company-specific historical reasons mentioned in the other answers, there is another reason. Accounting firms tend to be very busy during January (and February and March) when most companies are closing and auditing their calendar-year books. If a company chooses its fiscal year to end at a different time of year, the accounting firms are more available, and the auditing costs might be lower. |
How to motivate young people to save money | I recommend pulling up a retirement calculator and having an honest conversation about how long term savings works, and the power of compound interest. Just by playing around with the sliders on an online calculator, you can demonstrate how the early years are the most important. Depending on how much they make now and are considering saving, delaying 5-10 years can easily leave 6-7 figures on the table. If it's specifically a child or close family member, I recommend pulling up your retirement account. Talk with them about how you managed it, and how much you were putting in. Perhaps show them how much is the principal and how much is interest. If you did well, tell them how. If you didn't do as well as you liked, tell them what you would have done differently. Finally, discuss a bit of psychology. Even if they don't have a professional job and are making minimum wage, getting into the habit of saving makes it easier when they eventually make more. A couple of dollars a month isn't much, but getting into the habit makes it easier to save a couple hundred dollars a month later on. |
Opportunity to buy Illinois bonds that can never default? | If Illinois cannot go bankruptcy This is missing a few, very important words, "...under current law." The United States changed the law so as to allow Puerto Rico to go into a form of bankruptcy. So you cannot rely on a lack of legal support for bankruptcy to protect any bond investments you might make in Illinois. It is entirely possible for the federal government to add a law enabling a state to discharge its debts through a bankruptcy process. That's why the bonds have been downgraded. They are still fine now, but that could change at any time. I don't want to dive too deep into the politics on this stack, but I could quite easily see a bargain between US President Donald Trump and Democrats in Congress where he agreed to special privileges for pension debts owed to former employees in exchange for full discharge of all other debts. That would lead to a complete loss of value for the bonds that you are considering. There still seem to be other options now, but they seem to be getting closer and closer to that. |
Any Experience with the Gone Fishin' Portfolio? | Yes, the "based on" claim appears to be true – but the Nobel laureate did not personally design that specific investment portfolio ;-) It looks like the Gone Fishin' Portfolio is made up of a selection of low-fee stock and bond index funds, diversified by geography and market-capitalization, and regularly rebalanced. Excerpt from another article, dated 2003: The Gone Fishin’ Portfolio [circa 2003] Vanguard Total Stock Market Index (VTSMX) – 15% Vanguard Small-Cap Index (NAESX) – 15% Vanguard European Stock Index (VEURX) – 10% Vanguard Pacific Stock Index (VPACX) – 10% Vanguard Emerging Markets Index (VEIEX) – 10% Vanguard Short-term Bond Index (VFSTX) – 10% Vanguard High-Yield Corporates Fund (VWEHX) – 10% Vanguard Inflation-Protected Securities Fund (VIPSX) – 10% Vanguard REIT Index (VGSIX) – 5% Vanguard Precious Metals Fund (VGPMX) – 5% That does appear to me to be an example of a portfolio based on Modern Portfolio Theory (MPT), "which tries to maximize portfolio expected return for a given amount of portfolio risk" (per Wikipedia). MPT was introduced by Harry Markowitz, who did go on to share the 1990 Nobel Memorial Prize in Economic Sciences. (Note: That is the economics equivalent of the original Nobel Prize.) You'll find more information at NobelPrize.org - The Prize in Economics 1990 - Press Release. Finally, for what it's worth, it isn't rocket science to build a similar portfolio. While I don't want to knock the Gone Fishin' Portfolio (I like most of its parts), there are many similar portfolios out there based on the same concepts. For instance, I'm reminded of a similar (though simpler) portfolio called the Couch Potato Portfolio, made popular by MoneySense magazine up here in Canada. p.s. This other question about asset allocation is related and informative. |
When is it better to rent and when is better buy in a certain property market? | Besides the long-term concern about which is cheaper, which has already been addressed by other answers, consider your risk exposure. Owning property has financial risks associated with it, just like owning stocks or bonds. The risk-related downsides of owning a home as an asset include: The risk-related upsides of owning a home as an asset include: Taking on some risk can save you (or earn you) money in the long run (that's why people buy risky stocks, after all) but consider how well you're equipped to handle that risk before you rush out to buy on a naive analysis of what's cheaper. |
How to sell a stock in a crashing market? | What is essential is that company you are selling is transparent enough. Because it will provide additional liquidity to market. When I decide to sell, I drop all volume once at a time. Liquidation price will be somewhat worse then usual. But being out of position will save you nerves for future thinking where to step in again. Cold head is best you can afford in such scenario. In very large crashes, there could be large liquidity holes. But if you are on upper side of sigmoid, you will be profiting from selling before that holes appear. Problem is, nobody could predict if market is on upper-fall, mid-fall or down-fall at any time. |
What to do with old company's 401k? [duplicate] | I suggest rolling it over to the 401(k) with your new employer. Particularly if they match any percentage of your contribution, it would be in your interest to take as much of that money as possible. When it comes to borrowing money from your 401(k), it looks like the issues AbraCadaver mentioned only apply if you don't pay back the money (http://www.kiplinger.com/article/real-estate/T010-C000-S002-borrowing-from-your-retirement-plan-to-buy-a-home.html). The reasonable argument against taking money out of your 401(k) to buy a home is that it leaves a dent in your retirement nest egg (and its earning power) during key earning years. On the plus side for borrowing from your 401(k), it's very low interest--and it's interest you're paying back to yourself over a 5-year period. At its current value, the most you could borrow from your 401(k) is $35K. If you're fortunate in where you live, that could be most or all of the downpayment. In my own experience, my wife borrowed against her 401(k) balance for the earnest money when we purchased a new home. Fortunately for us, an investor snapped up my previous home within 4 days of us listing it, so she was able to pay back her loan in full right away. |
Do I have to pay the internet installation charges for my home's company internet? | It appears so. I suppose you could try saying that you don't want to pay for it and won't have Internet installed, but that could be detrimental to your career. There is no law that says your company has to pay for your Internet unless you have some kind of contract with them that says you will. If anything, your best option might be to try to claim it is a business expense and deduct it on your taxes. |
Pay down on second mortage when underwater? | There are programs out there which will let you refinance even when underwater, under the Government's HARP program. You are overpaying by nearly $7,000 per year compared to a refinance to 4.5%. A classic example of how the bubble hurt people who overextended themselves a bit as housing shot up. The bank risks a $50K loss if you default or short sell this property. I'd go in and sit down with a branch manager and ask what they can do to recast the loan to a lower rate as you are ready, wiling and able to keep the house and make your payments. Good luck. |
What to do if a state and federal refund is denied direct deposit? | It is not allowed to pay refunds to anyone other than the taxpayer. This is due to various tax return fraud schemes that were running around. Banks are required to enforce this. If the direct deposit is denied, a check will be issued. In her name, obviously. What she does with it when she gets it is her business - but I believe that tax refund checks may not be just "endorsed", the bank will likely want to see her when you deposit it to your account, even if it is endorsed. For the same reason. |
0% APR first 12 months on new credit card. Can I exceed that 30% rule of thumb and not hurt my credit score? | I cannot stress this enough, so I'll just repeat it: Don't plan your finances around your credit score. Don't even think about your credit score at all. Plan a budget an stick to it. Make sure you include short and long term savings in your budget. Pay your bills on time. Use credit responsibly. Do all of these things, and your credit rating will take care of itself. Don't try to plan your finances around raising it. On the subject of 0% financing specifically, my rule of thumb is to only ever use it when I have enough money saved up to buy the thing outright, and even then only if my budget will still balance with the added cost of repaying the loan. Other people have other rules, including not taking such loans at all, and you should develop a rule that works for you (but you should have a rule). One rule shouldn't have is "do whatever will optimize your credit score" because you shouldn't plan your finances around your credit score. All things considered, I think the most important thing in your situation is to make sure that you don't let the teaser rate tempt you into making purchases you wouldn't otherwise make. You're not really getting free money; you're just shifting around the time frame for payment, and only within a limited window at that. Also, be sure to read the fine print in the credit agreement; they can be filled with gotchas and pitfalls. In particular, if you don't clear the balance by the end of the introductory rate period, you can sometimes incur interest charges retroactively to the date of purchase. Make sure you know your terms and conditions cold. It sounds like you're just getting started, so best of luck, and remember that Rome wasn't built in a day. Patience can be the most effective tool in your personal finance arsenal. p.s. Don't plan your finances around your credit score. |
What makes a Company's Stock prices go up or down? | It's been said before, but to repeat succinctly, a company's current share price is no more or less than what "the market" thinks that share is worth, as measured by the price at which the shares are being bought and sold. As such, a lot of things can affect that price, some of them material, others ethereal. A common reason to own stock is to share the profits of the company; by owning 1 share out of 1 million shares outstanding, you are entitled to 1/1000000 of that company's quarterly profits (if any). These are paid out as dividends. Two key measurements are based on these dividend payments; the first is "earnings per share", which is the company's stated quarterly profits, divided by outstanding shares, with the second being the "price-earnings ratio" which is the current price of the stock divided by its EPS. Your expected "yield" on this stock is more or less the inverse of this number; if a company has a P/E ratio of 20, then all things being equal, if you invest $100 in this stock you can expect a return of $5, or 5% (1/20). As such, changes in the expected earnings per share can cause the share price to rise or fall to maintain a P/E ratio that the pool of buyers are willing to tolerate. News that a company might miss its profit expectations, due to a decrease in consumer demand, an increase in raw materials costs, labor, financing, or any of a multitude of things that industry analysts watch, can cause the stock price to drop sharply as people look for better investments with higher yields. However, a large P/E ratio is not necessarily a bad thing, especially for a large stable company. That stability means the company is better able to weather economic problems, and thus it is a lower risk. Now, not all companies issue dividends. Apple is probably the most well-known example. The company simply retains all its earnings to reinvest in itself. This is typically the strategy of a smaller start-up; whether they're making good money or not, they typically want to keep what they make so they can keep growing, and the shareholders are usually fine with that. Why? Well, because there's more than one way to value a company, and more than one way to look at a stock. Owning one share of a stock can be seen quite literally as owning a share of that company. The share can then be valued as a fraction of the company's total assets. Sounds simple, but it isn't, because not every asset the company owns has a line in the financial statements. A company's brand name, for instance, has no tangible value, and yet it is probably the most valuable single thing Apple owns. Similarly, intellectual property doesn't have a "book value" on a company's balance sheet, but again, these are huge contributors to the success and profitability of a company like Apple; the company is viewed as a center of innovation, and if it were not doing any innovating, it would very quickly be seen as a middleman for some other company's ideas and products. A company can't sustain that position for long even if it's raking in the money in the meantime. Overall, the value of a company is generally a combination of these two things; by owning a portion of stock, you own a piece of the company's assets, and also claim a piece of their profits. A large company with a lot of material assets and very little debt can be highly valued based solely on the sum of its parts, even if profits are lagging. Conversely, a company more or less operating out of a storage unit can have a patent on the cure for cancer, and be shoveling money into their coffers with bulldozers. |
Online tools for monitoring my portfolio gains/losses in real time? | I use Google Finance too. The only thing I have problem with is dividend info which it wouldn't automatically add to my portfolio. At the same time, I think that's a lot to ask for a free web site tool. So when dividend comes, I manually "deposit" the dividend payment by updating the cash amount. If the dividend comes in share form, I do a BUY at price 0 for that particular stock. If you only have 5 stocks, this additional effort is not bad at all. I also use the Hong Kong version of it so perhaps there maybe an implementation difference across country versions. Hope this helps. CF |
What are a few sites that make it easy to invest in high interest rate mutual funds? | Any investment company or online brokerage makes investing in their products easy. The hard part is choosing which fund(s) will earn you 12% and up. |
What's a good personal finance management web app that I can use in Canada? | I use MoneyStrands (formerly called Expensr), but mostly just to track expenses and look at reports on my spending habits. It has some really pretty charts, with the ability to drill down into categories and sub-categories, or graph monthly spending for any custom date range. It does a half-decent job of auto-categorizing the imported bank transactions, and you can set up additional rules for common vendors, but I still have to do some manual work after each import. It does a good job of integrating my credit cards, bank accounts, and I can even manually add cash transactions. It has some basic budgeting capabilities, but they're not very useful for someone who needs to carefully budget thier monthly spending. Another one I've heard about is mint.com, but it only supports American banks (last I heard, anyway). |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | In some cases, it might be rational to pay low-interest debt first, because the consequences of defaulting on that debt are worse. Consider this simplified example. Suppose you have two debts: a low-interest mortgage, secured by your house, and a high-interest unsecured credit card debt, both of which are within a few years of being paid off. There is a chance that sometime between now and then, something will happen to disrupt your income (e.g. medical problems), and it won't be possible to make the payments on either loan. Defaulting on the credit card loan will result in a lower credit score and calls from collection agencies. Defaulting on the mortgage will result in the foreclosure or forced sale of your house, at best forcing you to move, and at worst leaving you homeless, at a time when you are also facing other (e.g. medical) problems. So you might rationally judge that losing your house is much worse than bad credit. Therefore, you might rationally conclude that it would be better to direct extra income toward paying down the mortgage, to increase the chances that, if and when an income disruption might occur, the mortgage would already be paid off. In other words, you shorten the window of time where income disruption results in foreclosure. You might decide that this increased security is worth the extra interest you will pay, compared to the strategy where you pay the high-interest loan first. This is a fairly special situation, but you asked "Why might it be a good idea to do this?", and I am just giving an example where it could rationally be considered a good idea. (Of course, in a real-life version of this example, there might be other options available, such as refinancing the mortgage. If you like, you could imagine a more extreme example where the lower-interest debt is owed to Joey Knuckles the loanshark, who will come and break your kneecaps if you miss a payment.) |
Treatment of web domain ownership & reselling for tax purposes: Capital asset, or not? | I must say that this is a question that you should hire a professional tax adviser (EA/CPA licensed in your State) to answer. It is way above our amateurs' pay-grade. That said, I'll tell you what I personally think on the issue. I'm not a licensed tax adviser, and nothing that I write here can be used in any way as a justification for any action. Read the full disclaimer in my profile. I believe you're right to treat those as assets. You bought them as an investment, and you intend to sell them for profit. Here the good news for you end. As we decided to define the domains as an asset, we need to decide what type of asset it is. I believe you're holding a Sec. 197 asset. This is because domain is essentially akin to franchise and trademark, and as such falls under the Sec. 197 definition. That means that your amortization period is 15 years. Your expenses related to these domains should also be amortized, on the same schedule. When you sell a domain, you can deduct the portion that you have not yet deducted from the amortization schedule from your proceeds. Keep in mind passive loss limitations, since losses from assets held as investment cannot offset Schedule C income. |
What are the downsides that prevent more people from working in high-income countries, and then retiring in low-income (and cost of living) ones? | There are two parts to the hack you describe. One is moving to a high-cost, high-pay country to work, and the other is moving to a low-cost, low-pay country to retire. As Dilip mentioned in a comment, the first part is not so easy in many cases. You can't just take a plane to the USA and start making big bucks immediately. In the first place, it's illegal to work without special visa permissions. Even if you manage to secure that permission (or take the risk of trying to work illegally), there's no guarantee you'll get a job, let alone a high-paying one. The same is true in most other high-paying countries. As for the second part, that takes considerable willpower as well. After spending X years getting used to a country, investing time and money, you must then have the resolve to uproot your life a second time and move to another country. For the most part, countries are expensive for a reason. Even if you in principle reject the cost-benefit tradeoffs of a particular country, it can be difficult to give up some of those benefits when the time comes (e.g., trains running on time, reliable electricity, donut shops, or whatever). You might "get soft" or become co-opted by the rich-country rat race and find it difficult to extricate yourself. All of these problems are compounded if, as in many cases, you happened to start a family while in the expensive country. At the least, moving would require uprooting not just you but your family. Also, quality of education is often one of the main reasons people immigrate permanently to expensive countries. Even a person who personally would prefer to retire to a cheaper country may be unwilling to transplant their children into that country's education system. (Of course, they could wait until the children are self-supporting, but that makes the wait longer, and may result in them living far away from their children, which they may not want.) As JoeTaxpayer notes, the same reasons may work on smaller levels, even within a country. In theory it's perfectly possible to power through a brief, lucrative career in Silicon Valley and then retire to Idaho, but it doesn't seem to happen as often as the plain numbers might suggest. A simple way to put it might be that the kind of person who would be happy living in a cheap environment often cannot or will not endure a lengthy "tour of duty" in an expensive environment. Either you like the expensive environment and stay, or you leave, not as a planned lifehack, but because you realize you don't like it. |
My bank wants to lower my credit limit on my credit card. Will this impact me negatively? | Will having a lower credit limit, which I will still never reach, negatively impact my ability to get a mortgage in future? This would increase your utilization, the percentage of your total available credit that you use at any one time. Because it decreases the divisor, your total available credit, while not changing the dividend, the amount of your credit that you use. In the United States, you generally want utilization to be between 8% and 30%. So if this increases your utilization, it could hurt your credit score (or if your utilization is low enough, possibly help it). I do not know if the rule is the same in the United Kingdom or not, but this site claims that it is at least similar. 22% is an OK utilization, assuming you have no other debt. But a utilization of 17% is closer to 8% and may be better. It may be worth calling them to keep your credit limit where it is if they don't ask too much from you. |
My university has tranfered me money by mistake, and wants me to transfer it back | Really a very straightforward situation, and subsequently, answer. Call the university pursors that you normally deal with, ask them to document the last 3 months of disbursements and highlight the incorrect one(s). If the money is already spent out, ask them if they can apply it to future disbursements via adjusting entries, and call it a day. If not, and you CAN pay it back, go to your bank and ask them to figure it out...which they should be able to do, having the original sender's info. |
Why do governments borrow money instead of printing it? | I believe there are two ways new money is created: My favorite description of this (money creation) comes from Chris Martenson: the video is here on Youtube. And yes, I believe both can create inflation. In fact this is what happened in the US between 2004 and 2007: increasing loans to households to buy houses created an inflation of home prices. |
How much power does a CEO have over a public company? | The shareholders elect the board of directors who in turn appoint a CEO. The CEO is responsible for the overall running of the company. To answer your specific questions: Yes, Steve Jobs could make decisions that are harmful to the well-being of the company. However, it's the responsibility of the board of directors to keep his decisions and behavior in check. They will remove him from his position if they feel he could be a danger to the company. |
Taxes for citizen of EU country #1 living in EU country #2 and working from home for non-EU country #3? | There are just too many variables here... Will you legally be considered a permanent resident from the moment you move? Will you work from home as a contractor or as an employee? Those are not questions you can answer yourself, they really depend on your circumstances and how the tax authorities will look at them. I strongly encourage you to speak to an advisor. Very generally spoken, at your place of residence you pay taxes for your worldwide income, at the place of your work base (which is not clear if this really would be Turkey) you pay taxes on the income generated there. If it's one and the same country, it's simple. If not, then theoretically you pay twice. However, most countries have double taxation treaties to avoid just that. This usually works so that the taxes paid abroad (in Turkey) would be deducted from your tax debt at your place of residence. But you might want to read the treaty to be sure how this would be in your specific case (all treaties are publicly available), and you should really consider speaking to a professional. |
How does my broker (optionsXpress) calculate probabilities that the stock will hit a certain price? | This chart concerns an option contract, not a stock. The method of analysis is to assume that the price of an option contract is normally distributed around some mean which is presumably the current price of the underlying asset. As the date of expiration of the contract gets closer the variation around the mean in the possible end price for the contract will decrease. Undoubtedly the publisher has measured typical deviations from the mean as a function of time until expiration from historical data. Based on this data, the program that computes the probability has the following inputs: (1) the mean (current asset price) (2) the time until expiration (3) the expected standard deviation based on (2) With this information the probability distribution that you see is generated (the green hump). This is a "normal" or Gaussian distribution. For a normal distribution the probability of a particular event is equal to the area under the curve to the right of the value line (in the example above the value chosen is 122.49). This area can be computed with the formula: This formula is called the probability density for x, where x is the value (122.49 in the example above). Tau (T) is the reciprocal of the variance (which can be computed from the standard deviation). Mu (μ) is the mean. The main assumption such a calculation makes is that the price of the asset will not change between now and the time of expiration. Obviously that is not true in most cases because the prices of stocks and bonds constantly fluctuate. A secondary assumption is that the distribution of the option price around the mean will a normal (or Gaussian) distribution. This is obviously a crude assumption and common sense would suggest it is not the most accurate distribution. In fact, various studies have shown that the Burr Distribution is actually a more accurate model for the distribution of option contract prices. |
Is there a good options strategy that has a fairly low risk? | Check out this site: http://www.m-x.ca/produits_options_actions_en.php (Under the Trading Strategies). If you have a background in math or eco or are comfortable with graphs, I suggest you graph the payoffs of each of these strategies. It will really help you understand it. If you need help with this, let me know and I can draw a couple out for you. Your question is rather vague but also complicated however I will try to answer it. First off, many investors buy options to hedge against a current position in a stock (already own the stock). But you can also try to make money off of options rather than protecting yourself. Let's suppose you anticipate that a stock will increase in value so you want to capitalize on this. Suppose further that you have a small amount of money to invest, say $100. Suppose the stock is currently at $100 so that you can only afford 1 share. Suppose there is a call option out there with strike $105 that costs you only $1. Let's compare two scenarios: The stock increases to $120 at the maturity date of the option. So, you made a lot more money with the same initial investment. The amount of money you put in is small (i.e. can be perceived as low risk). However, if the stock price ended up being $104.90 then your options are worthless (i.e. can be perceived as high risk). HTH. |
What is the opposite of a sunk cost? A “sunk gain”? | liquid asset A sunk cost may turn out to be a loss or it may make you a profit, but what makes it "sunk" is: you can't get it back. The opposite is a cost that you can later redeem, which makes it "liquid". |
Why do banks finance shared construction as mortgages instead of financing it directly and selling the apartments in a building? | Assumption - you live in a country like Australia, which has "recourse" mortgages. If you buy the apartment and take out a mortgage, the bank doesn't care too much if your apartment gets built or not. If the construction fails, you still owe the bank the money. |
Highest market cap for a company from historical data | In common with many companies, Microsoft has been engaging in share buyback programmes, where it buys its own shares in the market and then cancels them. It's often a more tax-efficient way to distribute profits to the shareholders than paying a dividend. So there were more Microsoft shares in circulation in 1999 than there are now. See here for information. |
What does a well diversified self-managed investment portfolio look like? | I would like to first point out that there is nothing special about a self-managed investment portfolio as compared to one managed by someone else. With some exceptions, you can put together exactly the same investment portfolio yourself as a professional investor could put together for you. Not uncommonly, too, at a lower cost (and remember that cost is among the, if not the, best indicator(s) of how your investment portfolio will perform over time). Diversification is the concept of not "putting all your eggs in one basket". The idea here is that there are things that happen together because they have a common cause, and by spreading your investments in ways such that not all of your investments have the same underlying risks, you reduce your overall risk. The technical term for risk is generally volatility, meaning how much (in this case the price of) something fluctuates over a given period of time. A stock that falls 30% one month and then climbs 40% the next month is more volatile than one that falls 3% the first month and climbs 4% the second month. The former is riskier because if for some reason you need to sell when it is down, you lose a larger portion of your original investment with the former stock than with the latter. Diversification, thus, is reducing commonality between your investments, generally but not necessarily in an attempt to reduce the risk of all investments moving in the same direction by the same amount at the same time. You can diversify in various ways: Do you see where I am going with this? A well-diversed portfolio will tend to have a mix of equity in your own country and a variety of other countries, spread out over different types of equity (company stock, corporate bonds, government bonds, ...), in different sectors of the economy, in countries with differing growth patterns. It may contain uncommon classes of investments such as precious metals. A poorly diversified portfolio will likely be restricted to either some particular geographical area, type of equity or investment, focus on some particular sector of the economy (such as medicine or vehicle manufacturers), or so on. The poorly diversified portfolio can do better in the short term, if you time it just right and happen to pick exactly the right thing to buy or sell. This is incredibly hard to do, as you are basically working against everyone who gets paid to do that kind of work full time, plus computer-algorithm-based trading which is programmed to look for any exploitable patterns. It is virtually impossible to do for any real length of time. Thus, the well-diversified portfolio tends to do better over time. |
Federal taxes for nonresident alien whose only income in 2016 was a 2015 state tax return | I believe you have to file a tax return, because state tax refund is considered income effectively connected with US trade or business, and the 1040NR instructions section "Who Must File" includes people who were engaged in trade or business in the US and had a gross income. You won't end up having to pay any taxes as the income is less than your personal exemption of $4050. |
Historically how do share prices perform after mass selling after an employee reward scheme? | Like others have already said, it may cause an immediate dip due to a large and sudden move in shares for that particular stock. However, if there is nothing else affecting the company's financials and investors perceive no other risks, it will probably bounce back a bit, but not back to the full value before the shares were issued. Why? Whenever a company issues more stock, the new shares dilute the value of the current shares outstanding, simply because there are now more shares of that stock trading on the market; the Earnings Per Share (EPS) Ratio will drop since the same profit and company value has to be spread across more shares. Example: If a company is valued at $100 dollars and they have 25 shares outstanding, then the EPS ratio equates to $4 per share (100/25 = 4). If the company then issues more shares (stock to employees who sell or keep them), let's say 25 more shares, then shares outstanding increase to 50, but the company's value still remains at $100 dollars. EPS now equates to $2 per share (100/50 = 2). Now, sometimes when shareholders (especially employees...and especially employees who just received them) suddenly all sell their shares, this causes a micro-panic in the market because investors believe the employees know something bad about the company that they don't. Other common shareholders then want to dump their holdings for fear of impending collapse in the company. This could cause the share price to dip a bit below the new diluted value, but again if no real, immediate risks exist, the price should go back up to the new, diluted value. Example 2: If EPS was at $4 before issuing more stock, and then dropped to $2 after issuing new stock, the micro-panic may cause the EPS to drop below $2 and then soon rebound back to $2 or more when investors realize no actual risk exists. After the dilution phase plays out, the EPS could actually even go above the pre-issuing value of $4 because investors may believe that since more stock was issued due to good profits, more profits may ensue. Hope that helps! |
What would be the signs of a bubble in silver? | If markets were perfectly efficient, the price should reflect everything that is currently known about the future of a commodity. If it is known that silver is currently under-valued, then investors would be buying it -- driving the price up. Conversely, if silver is currently over-valued, then investors would be selling and the price would be going down. Added to that is emotion. If the price is currently trending up, then people expect it to keep going up, and the price continues to rise. Until enough people think it can't go any higher and start selling, which drives the price down. Since this is driven by emotion, it cannot be predicted when this will happen. |
Calculate investment's interest rate to break-even insurance cost [duplicate] | I believe the following formula provides a reasonable approximation. You need to fill in the following variables: The average annual return you need on investing the 15% = (((MP5 - MP20) * 12) + (.0326 * .95 * PP / Y)) / (PP *.15) Example assuming an interest rate of 4% on a 100K home: If you invest the $15K you'll break even if you make a 9.86% return per year on average. Here's the breakdown per year using these example numbers: Note this does not consider taxes. |
How to trade at Athens Stock Exchange (ASE) | Saxo Bank offers direct access to Athens Stock Exchange. Interactive Brokers is your next best bet, and as you probably already noticed, they do not have a free platform. They are open to US and non-US citizens. Although they do not currently have direct exposure to individual companies on the Athens Stock Exchange, the various european exchanges they do provide direct market access for will give a lot of exposure. There are a few Greek companies that trade on non-Greek stock exchanges, if you want exposure. There are also Greek ETFs which bundle several companies together or try to replicate Greek company indices. |
What can cause rent prices to fall? | In the US, the government effectively sets a price floor for rents with a concept called "prevailing rent" for government subsidy. Even the crappiest, minimally compliant hovel is ultimately worth whatever the government will issue housing vouchers for. Rent can and does fluctuate for the higher end of the market. Basically in most places the available, cheap credit has a negative impact on rent prices, and tighter, costlier credit increases demand and rents. Local economic events have an impact too. If the company closes in a company town, people leave. |
Free Historical Commodity Prices in txt? | At indexmundi, they have some historical data which you can grab from their charts: It only has a price on a monthly basis (at least for the 25 year chart). It has a number of things, like barley, oranges, crude oil, aluminum, beef, etc. I grabbed the data for 25 years of banana prices and here's an excerpt (in dollars per metric ton): That page did not appear to have historical prices for gold, though. |
Extra cash - go towards mortgage, or stock? | the math makes sense to invest instead of paying down, but... how much would you borrow at 3.5%, to invest the money into the stock market? It's the same question, just turned around. |
I am the sole owner of an LLC. Does it make a difference if I file as an S-Corp or a sole-member LLC? | I'm assuming that when you say "convert to S-Corp tax treatment" you're not talking about actually changing your LLC to a Corporation. There are two distinct pieces of the puzzle here. First, there's your organizational form. Your state, which is where the business is legally formed and recognized, creates the LLC or Corporation. "S-Corp" doesn't come into play here: your company is either an LLC or a Corporation. (There are a handful of other organizational types your state might have, e.g. PLLC, Limited Partnership, etc.; none of these are immediately relevant to this discussion). Second, there's the tax treatment you receive by the IRS. If your company was created by the state as an LLC, note that the IRS doesn't recognize LLCs as a distinct organizational type: you elect to be taxed as an individual (for single member LLCs), a partnership (for multiple member LLCs), or as a corporation. The former two elections are "pass through" -- there's no additional level of taxation on corporate profits, everything just passes through to the owners. The latter election introduces a tax on corporate profits. When you elect pass-through treatment, a single-member LLC files on Schedule C; a multiple-member LLC will prepare a form K-1 which you will include on your 1040. If your company was created by the state as a Corporation (not an LLC), you could still elect pass-through taxation if your company qualifies under the rules in Subchapter S (i.e. "an S-Corp"). States do not recognize "S-Corp" as part of the organizational process -- that's just a tax distinction used by the IRS (and possibly your state's tax authorities). In your case, if you are a single-member LLC (and assuming there are no other reasons to organize as a corporation), talking about "S-Corp tax treatment" doesn't make any sense. You'll just file your schedule C; in my experience it's fairly simple. (Note that this is based on my experience of single- and multiple-member LLCs in just two states. Your state may have different rules that affect state-level taxation; and the rules may change from year to year. I've found that hiring a good CPA to prepare the forms saves a good bit of stress and time that can be better applied to the business.) |
Resources to begin trading from home? | As JoeTaxpayer has commented, the markets are littered with the carcasses of those who buy into the idea that markets submit readily to formal analysis. Financial markets are amongst the most complex systems we know of. To borrow a concept from mathematics - that of a chaotic system - one might say that financial markets are a chaotic system comprised of a nested structure of chaotic subsystems. For example, the unpredictable behaviour of a single (big) market participant can have dramatic effects on overall market behaviour. In my experience, becoming a successful investor requires a considerable amount of time and commitment and has a steep learning curve. Your actions in abandoning your graduate studies hint that you are perhaps lacking in commitment. Most people believe that they are special and that investing will be easy money. If you are currently entertaining such thoughts, then you would be well advised to forget them immediately and prepare to show some humility. TL/DR; It is currently considered that behavioural psychology is a valuable tool in understanding investors behaviour as well as overall market trends. Also in the area of psychology, confirmation bias is another aspect of trading that it is important to keep in mind. Quantitative analysis is a mathematical tool that is currently used by hedge funds and the big investment banks, however these methods require considerable resources and given the performance of hedge funds in the last few years, it does not appear to be worth the investment. If you are serious in wanting to make the necessary commitments, then here are a few ideas on where to start : There are certain technical details that you will need to understand in order to quantify the risks you are taking beyond simple buying and holding financial instruments. For example, how option strategies can be used limit your risk; how margin requirements may force your hand in volatile markets; how different markets impact on one another - e.g., the relationship between bond markets and equity markets; and a host of other issues. Also, to repeat, it is important to understand how your own psychology can impact on your investment decisions. |
Is CLM a stock or an ETF? | Ask your trading site for their definition of "ETF". The term itself is overloaded/ambiguous. Consider: If "ETF" is interpreted liberally, then any fund that trades on a [stock] exchange is an exchange-traded fund. i.e. the most literal meaning implied by the acronym itself. Whereas, if "ETF" is interpreted more narrowly and in the sense that most market participants might use it, then "ETF" refers to those exchange-traded funds that specifically have a mechanism in place to ensure the fund's current price remains close to its net asset value. This is not the case with closed-end funds (CEFs), which often trade at either a premium or a discount to their underlying net asset value. |
Is CLM a stock or an ETF? | Cornerstone Strategic Value Fund, Inc. is a diversified, closed-end management investment company. It was incorporated in Maryland on May 1, 1987 and commenced investment operations on June 30, 1987. The Fund’s shares of Common Stock are traded on the NYSE MKT under the ticker symbol “CLM.”[1] That essentially means that CLM is a company all of whose assets are held as tradable financial instruments OR EQUIVALENTLY CLM is an ETF that was created as a company in its own right. That it was founded in the 80s, before the modern definition of ETFs really existed, it is probably more helpful to think of it by the first definition as the website mentions that it is traded as common stock so its stock holds more in common with stock than ETFs. [1] http://www.cornerstonestrategicvaluefund.com/ |
How do third-party banks issue car loans? | I have had it two way now: I got pre-approval from my credit union which just so happened to be one of the bigger vehicle lenders in the metro area. What I found out was that the dealership (which was one of the bigger ones in the metro area) had a computer system that looked up my deal with the credit union. Basically, I signed some contracts and the CU and the dealership did whatever paperwork they needed to without me. I bought a used car and drove it off of the lot that night, and I didn't ever go back (for anything financial) Both my wife and her sister received blank checks that were valid up to a certain amount. In the case of my sister in law, she signed the check, the dealership called to confirm funds and she drove off. In the case of my wife, she ended up negotiating a better deal with dealer finance, but I was assured she only had to sign the check, get it verified and drive the car home. |
What can I do with “stale” checks? Can I deposit/cash them? | Find smaller payments he can make. Maybe a % of each client he takes payment from. Consult with a lawyer or google buisness contract elements and find fill them out and see what he can do. If the checks are no good bouncing them isn't going to help anything. Nor is getting a judgment from a small claims court. He can still not pay(though stays on his credit for 25 years), file for bankruptcy, etc. |
Can the purchaser of a stock call option cancel the contract? | You bought the right – but not the obligation – to buy a certain number of shares at $15 from whomsoever sold you the option, and you paid a premium for it. You can choose whether you want to buy the shares at $15 during the period agreed upon. If you call for the shares, the other guy has to sell the shares to you for $15 each, even if the market price is higher. You can then turn around and promptly resell the purchased shares at the higher market price. If the market price never rises above $15 at any time while the option is open, you still have the right to buy the shares for $15 if you choose to do so. Most rational people would let the option expire without exercising it, but this is not a legal requirement. Doing things like buying shares at $15 when the market price is below $15 is perfectly legal; just not very savvy. You cannot cancel the option in the sense of going to the seller of the option and demanding your premium money back because you don't intend to exercise the option because the market price is below $15. Of course, if the market price is above $15 and you tell the seller to cancel the contract, they will be happy to do so, since it lets them off the hook. They may or may not give you the premium back in this case. |
Double-entry bookkeeping: When selling an asset, does the money come from, Equity or Income? | There are basically two approaches, based on how detailed you want to be in your own personal accounting: Obviously the more like a business or like "real" accounting you want to be, the more complex you can make it, but in general I find that the purpose of personal accounting is (1) to track what I own, and (2) to ensure I have documented anything I need to for tax purposes, and as long as you're meeting those goals any reasonable approach is workable. |
Do I need to write the date on the back of a received check when depositing it? | Changed to answer match the edited version of the question No, you do not need to write the date of your endorsement, but you can choose to do so if you want to. The bank stamp on the back will likely have the date and perhaps even the exact time when the check was deposited. The two lines are there in case you want to write something like "For deposit only to Acct# uvwxyz" above your signature (always a good idea if you are making the deposit by sending the paper check (with or without a deposit slip) by US mail or any other method that doesn't involve you handing the check to a bank teller). If you are wanting to get encash the check, that is, get cash in return for handing the check over to the bank instead of depositing the check in your account, then the rules are quite a bit different. |
Is my financial plan for buying a house logically sound | As a rental, this is not an ideal set of numbers. You manage to show a $255 'gain' but $275 is from payment to principal. So, from the start, you're out $20/wk. This ignores the $170K down payment, which has an opportunity cost, however you calculate it. You can assign the same rate as the mortgage, and it's nearly $10K/yr. Or the rate you feel your choice of stock market or alternate investment would rise. Either way, you can't ignore this money. Your mortgage rate isn't fixed. A 1% rise and it would jump to $1663 ($842/week) Ideally, a rental property is cash positive without counting principal paydown or even the tax refund. It's a risky proposition to buy and count on everything going right. I didn't mean to scare you off with "1%" but you should research the costs of repair and maintenance. Last year my Heat/AC system needed replacement. US$10K. This year, it's time to paint, and replace rotting trim, $7000. In the US we have property tax that can range from 1-2% of the house value. If you don't have this tax, that's great, just please confirm this. |
How do I invest and buy/sell stocks? What does “use a broker” mean? | I'm posting this because I think I can do a better job of explaining and detailing everything from start to stop. :) A "broker" is just someone who connect buyers and sellers - a middleman of sorts who is easy to deal with. There are many kinds of brokers; the ones you'll most commonly hear about these days are "mortgage broker" (for arranging home loans) and "stockbroker". The stockbroker helps you buy and sell stock. The stockbroker has a connection to one or more stock exchanges (e.g. Nasdaq, NYSE) and will submit your orders to them in order to fulfill it. This way Nasdaq and NYSE don't have to be in the business of managing millions of customer accounts (and submitting tax information about those accounts to the government and what-not) - they just manage relationships with brokerages, which is much easier for them. To invest in a stock, you will need to: In this day and age, most brokers that you care about will be easily accessed via the Internet, the applications will be available on the Internet, and the trading interface will be over the Internet. There may also be paper and/or telephone interfaces to the brokerage, but the Internet interface will work better. Be aware that post-IPO social media stock is risky; don't invest any money if you're not prepared for the possibility of losing every penny of it. Also, don't forget that a variety of alternative things exist that you can buy from a broker, such as an S&P 500 index fund or exchange-traded corporate bond fund; these will earn you some reward over time with significantly less risk. If you do not already have similar holdings through a retirement plan, you should consider purchasing some of these sooner or later. |
Transfer $50k to another person's account (in California, USA) | It will not be a problem; people regularly move larger sums. It will be reported to law authorities as large enough to be potentially of interest, but since you can explain it that's fine. |
I earn $75K, have $30K in savings, no debt, rent from my parents who are losing their home. Should I buy a home now or save? | For the vast majority, "buying" a house via a mortgage is not an investment. I use quotes around buying because from a technical perspective you don't own anything until you've paid it off; this is often an important point that people forget. It's highly unlikely you'll make more on it than the amount you put into it (interest, repairs, etc). Even with relatively low interest rates. The people who successfully invest in homes are those that use actual cash (not borrowed) to buy a home at well below market value. They then clean it up and make enough repairs to make it marketable and sell it shortly there after. Sometimes these people get hosed if the housing market tumbles to the point that the home is now worth less than the amount they put into it. This is especially problematic if they used bank loans to get the process going. They were actually the hardest hit when the housing bubble popped several years ago. Well, them and the people who bought on interest only loans or had balloon payments. Whereas the people who use a mortgage are essentially treating it like a bank account with a negative interest rate. For example, $180k loan on a 30 yr fixed at 4% will mean a total payout of around $310k, excluding normal repairs like roofs, carpet, etc. Due to how mortgage's work, most of the interest is collected during the first half of the loan period. So selling it within 2 to 5 years is usually problematic unless the local housing market has really skyrocketed. Housing markets move up and down all the time due to a hundred different things completely out of your control. It might be a regional depression, weather events, failed large businesses, failed city/local governments, etc. It could go up because businesses moved in, a new highway is built, state/local taxes decline, etc. My point is, homes are not long term investments. They can be short term ones, but only in limited circumstances and there is a high degree of risk involved. So don't let that be a driving point of your decision. Instead you need to focus on other factors. Such as: what is really going on with the house you are currently in? Why would they lose it? Can you help out, and, should you help out? If things are precarious, it might make more sense to sell that home now and everyone move into separate locations, possibly different rentals or apartments. If they are foreclosed on then they will be in a world of financial hurt for a long time. If we ignore your parents situation, then one piece of advice I would give you is this: Rent the cheapest apartment you can find that is still a "safe" place to live in. Put every dollar you can into some type of savings/investment that will actually grow. Stay there for 5+ years, then go pay cash for a nice home. Making $75k a year while single means that you don't need much to live on. In other words, live extremely cheap now so you can enjoy a fantastic living experience later that is free from financial fear. You should be able to put $30k+ per year aside going this route. edit: A bit of support data for those that somehow think buying a home on a mortgage is somehow a good investment: Robert Shiller, who won a Nobel prize in economics and who predicted the bursting of the housing bubble, has shown that a house is not a good investment. Why? First, home prices (adjusted for inflation) have been virtually unchanged for the past 100 years. (link 1, link 2) Second, after you add in the costs of maintenance alone then those costs plus what you've paid for the home will exceed what you get out of it. Adding in the cost of a mortgage could easily double or even triple the price you paid which makes things even worse. Maintenance costs include things like a new roof, carpet/flooring, water heater, appliances, etc. Yes, a home might cost you $100k and you might sell it for $200k after 15 years. However during that time you'll likely replace the roof ($10k to $20k), replace appliances ($2k to $5k), water heater ($1k), carpet/flooring ($5k to $20k), paint ($3k to $6k), and mortgage related costs (~$60k - assuming 30 yr fixed @4%). So your "costs" are between $180k and $200k just on those items. There are many more that could easily escalate the costs further. Like a fence ($5k+), air conditioner ($5k+), windows, etc. The above is assuming the home actually appreciates in value faster than inflation: which they historically haven't over the long term. So you have to consider all of the costs ultimately paid to purchase and maintain the home vs the costs of renting during the same time period. Point is: do your research and be realistic about it. Buying a home is a huge financial risk. |
Why is the fractional-reserve banking not a Ponzi scheme? | The Ponzi/Madoff schemes were closed loops, so the only source of the so-called "interest" on the money was the contributions of future investors. The economy is more like a living thing, and the availability of capital allows people to develop new ways to do things in a more productive way. Agriculture is a great example -- for most of human history the overwhelming majority of human labor was dedicated to producing food. Now that proportion is dramatically smaller -- the descendants of farmers 100 years ago are doctors and computer programmers... professions that could not exist. Fractional reserve banking makes the economy more efficient by putting capital that would otherwise be hoarded in circulation. Money is a medium of exchange, so the more it turns over, the better it is. Genoa and Britain pioneered this concept centuries ago, and were able to defeat larger rivals in large part because of the economic advantages that the practice brought to bear. That's not to say that banking doesn't come with its warts as well. I'd suggest reading "A Free Nation Deep in Debt", which does a good job of explaining how we got to where we are today. |
What is the incentive for a bank to refinance a mortgage at a lower rate? | Banks make money on load origination fees. The "points" you pay or closing costs are the primary benefit to the banks. A vast majority of the time risks associated with the mortgage are sold to another party. FYI, the same is true with investment banks. In general, the transaction costs (which are ignored by modern finance theory) are the main thing running the incentives for the industry. |
What are institutional investors? | Professional investors managing large investment portfolios for "institutions" -- a college, a museum, a charitable organization, et cetera. I'm not sure whether those managing investments for a business are considered institutional investors or not. The common factor tends to be large to immense portfolios (let's call it $100M and up, just for discussion) and concern with preserving that wealth. Having that much money to work with allows some investment strategies that don't make sense for smaller investors, and makes some others impractical to impossible. These folks can make mistakes too; Madoff burned a lot of charities when his scam collapsed. |
Which US market indexes (Dow/DJIA, S&P500, NASDAQ) include reinvested dividends? | .INX (the S&P 500 index itself) does not include reinvested dividens. You can figure total return by going to Yahoo finance, historical data. Choose the start year, and end year. You should find that data for SPY (going back to 1993) will show an adjusted close, and takes dividends into account. This isn't perfect as SPY has a .09% expense ratio, but it's better than just the S&P index. One of the more popular Dow ETF is DIA, this will let you similarly track the Dow while accounting for dividends. |
Is the I.T. function in banking considered to be on the expense side, as opposed to revenue side? | I must point that without the IT - no-one in the bank generates any revenue. Not to mention the fraud prevention and informational security. To the best of my knowledge - IT in banks and financial institutoins are paid very well for their services, and they earn every penny of it. IT is not just online banking or computer support. IT is the whole underlying infrastructure of the modern banking. Investor without the proper links to the stock exchanges will go elsewhere, loans that cannot be evaluated fast enough (using of course the IT infrastructure) will be taken from someone else, CD's for which the interest is calculated manually will probably not be as attractive as the CD's managed by the computers at the bank next door, credit and debit transactions, ACH, direct deposit, etc - cannot be done without IT. So IT is not expense, IT is infrastructure (and that is "operations" in the budget books). Every function of the bank that generates revenue - relies and depends on it. |
Can a shareholder be liable in case of bankruptcy of one of the companies he invested in? | The answer depends on whether the company involved has 'limited liability'. Most, but not all public and listed companies and corporations have this, but not all so it is worth checking and understanding what you are getting involved with. The expression 'limited liability' means that the owners (shareholders) of a company have a liability up to the amount of the face value of the shares they hold which they have not yet paid for. The difference is usually minor but basically it means that if you buy $10 of shares you have no liability, but if the company gives you $10 of shares, and you pay them (in cash or kind) $5, then you still have a liability of $5. If the company fails, the debtors can come after you for that liability. An 'unlimited liability' company is a different animal altogether. Lloyds insurance is probably the most famous example. Lloyds worked by putting together consortiums to underwrite risk. If the risk doesn't happen, the consortium keeps the premiums, if it does, they cover the loss. Most of the time they are very profitable but not always. For example, the consortiums which covered asbestos caused the bankruptcies of a great many very wealthy people. |
Funneling money from a Traditional IRA to a Roth IRA using Options: Is my method possible and tax legal? | I am not a lawyer, but I can't think of a reason this is illegal (something that would be illegal would be to "trade with yourself" across the accounts to try to manipulate stock or option prices). I don't think you're "funneling," you're doing "asset location" which is a standard tax planning strategy. http://news.morningstar.com/articlenet/article.aspx?id=154126&t1=1303874170 discusses asset location. I'd be more concerned about whether it makes sense. |
Does a bid and ask price exist for indices like the S&P500? | The equation you show is correct, you've simply pointed out that you understand that you buy at the 'ask' price, and later sell at the 'bid.' There is no bid/ask on the S&P, as you can't trade it directly. You have a few alternatives, however - you can trade SPY, the (most well known) S&P ETF whose price reflects 1/10 the value or VOO (Vanguard's offering) as well as others. Each of these ETFs gives you a bid/ask during market hours. They trade like a stock, have shares that are reasonably priced, and are optionable. To trade the index itself, you need to trade the futures. S&P 500 Futures and Options is the CME Group's brief info guide on standard and mini contracts. Welcome to SE. |
How to pay for Alzheimer's care? | The cost of Alzheimer's care depends on the facility that provides this care. Specialized facilities usually have higher costs than general geriatric care ones. Though there are several ways to cover the cost: I think you'd better read the article http://www.autumngrove.com/blog/how-to-pay-for-alzheimers-care/ or learn their brochure http://www.autumngrove.com/wp-content/uploads/cost-of-assisted-living.pdf |
Mortgage vs. Cash for U.S. home buy now | Buying now with a mortgage gets you: Waiting to buy with all cash gets you: These are also some of the pros or cons for the rent or buy dilemma that Paul mentioned in comments to the OP. This is a very complex, multi-faceted question, that would not respond well to being put into any equation or financial model. Most people answer the question with "buy the home now with a mortgage" if they can pay for the down payment. This is why the mortgage industry exists. The people who would want to finance now rather than buy with all cash later would not only be analyzing the question in terms of financial health but also in terms of general well being. They might consider the tremendous pride that comes with home ownership and living under a roof of one's own. Who can say that those people are wrong? |
How to gift money anonymously to an individual after collection thru a donation site? | Regarding the tax implications half of your question ... There seem to be a lot of articles that say there's not yet any established law concerning the tax treatment of crowdsourced funds. Since your objective is gift-giving rather than business purposes, it would seem that the gift tax rules would apply, and gift taxes are charged to the donor not the donee. (But I am not a tax attorney.) |
meaning of qualifying/disqualifying distribution as separate from capital gains implications | A qualifying distribution seems guaranteed to fall under long term capital gains. But a disqualifying distribution could also fall under long term capital gains depending on when it is sold. So what's the actual change that occurs once something becomes a qualifying as opposed to a disqualifying distribution? Yes a qualifying distribution always falls under long term capital gain. The difference between qualifying and disqualifying is how the "bargain element" of benefit is calculated. In case of disqualifying distribution it is always the discount offered, Irrespective of the final sale price of the stock. In case of qualifying distribution it is lower of actual discount or profit. Thus if you sell the stock at same price or slightly lower price than the price on exercise date, your "bargain element" is less. This is not the case with disqualifying distribution. |
Why would a central bank or country not want their currency to appreciate against other currencies? | I wrote about the dynamic of why either of a lower or higher exchange rate would be good for economies in Would dropping the value of its currency be good for an economy? A strong currency allows consumers to import goods cheaply from the rest of the world. A weak currency allows producers to export goods cheaply to the rest of the world. People are both consumers and producers. Clearly, there have to be trade-offs. Strong or weak mean relative to Purchasing Power Parity (i.e. you can buy more or less of an equivalent good with the same money). Governments worrying about unemployment will try and push their currencies weaker relative to others, no matter the cost. There will be an inflationary impact (imported inputs cost more as a currency weakens) but a country running a major surplus (like China) can afford to subsidise these costs. |
How to understand a volatility based ETF like VXX | To understand the VXX ETF, you need to understand VIX futures, to understand VIX futures you need to understand VIX, to understand VIX you need to understand options pricing formulas such as the "Black Scholes" formula Those are your prerequisites. Learn at your own pace. Short Answer: When you buy VXX you are buying the underlying are front month VIX futures. Limited by the supply of the ETF's NAV (Net Asset Value) units. It is assumed that the ETF manager is actually buying and selling more VIX front month futures to back the underlying ETF. Long Answer: Assume nobody knows what an options contract should be worth. Therefore formulas have been devised to standardize how to price an options contract. The Black-Scholes formula is widely used, one of the variables in this formula is "Implied Volatility", which basically accounts for the mispricing of options when the other variables (Intrinsic Value, delta, gamma, theta...) don't completely explain how much the option is worth. People are willing to pay more for options when the perception is that they will be more profitable, "implied volatility" tracks these changes in an option's demand, where the rest of the black-scholes formula creates a price for an option that will always be the same. Each stock in the market that also trades standardized options will have implied volatility which can be computed from the price of those options. The "Volatility Index" (VIX), looks at the implied volatility of MANY STOCK's options contracts. Specifically the "implied volatility of out the money puts on the S&P 500". If you don't know what that quoted part of the sentence means, then you have at least five other individual questions to ask before you re-read this answer and understand the relevance of these followup questions: Why would people buy out-the-money puts on the S&P 500? Why would people pay more for out-the-money puts on the S&P 500 on some days and pay less for them on other days? This is really the key to the whole puzzle. Anyway, now that we have this data, people wanted to speculate on the future value of the VIX. So VIX futures contracts began trading and with it there came a liquid market. There doesn't need to be anything physical to back a financial product anymore. A lot of people don't trade futures, retail investors have practically only heard of "the stock market". So one investment bank decided to make a fund that only holds VIX futures that expire within a month. (front month futures). They split that fund up into shares and listed it on the stock market, like alchemy the VXX was formed. Volatility studies are fascinating, and get way more complex than this now that the VXX ETF also has liquid options contracts trading on it too, and there are leveraged VIX ETF funds that also trade options |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | 'If i co-sign that makes me 100% liable if for any reason you can't or won't pay. Also this shows up on a credit report just like it's my debt. This limits the amount i can borrow for any reason. I don't want to take on your debt, that's your business and i don't want to make it mine'. |
Separated spouse filed for SNAP benefits as single. Does this affect ability to file taxes jointly? | The IRS isn't going to care how you filed for benefits - they're effectively the high man on the totem pole. The agency that administers the SNAP program is the one who might care. File the 1040 correctly, and then deal with SNAP as you note. Do deal with SNAP, though; otherwise they might be in trouble if SNAP notices the discrepancy in an audit of their paperwork. Further, SNAP doesn't necessarily care here either. SNAP defines a household as the people who live together in a house and share expenses; a separated couple who neither shared expenses nor lived together would not be treated as a single household, and thus one or both would separately qualify. See this Geeks on Finance article or this Federal SNAP page for more details; and ask the state program administrator. It may well be that this has no impact for him/her. The details are complicated though, particularly when it comes to joint assets (which may still be joint even if they're otherwise separated), so look it over in detail, and talk to the agency to attempt to correct any issues. Note that depending on the exact circumstances, your friend might have another option other than Married Filing Jointly. If the following are true: Then she may file as "Head of Household", and her (soon-to-be) ex would file as "Married Filing Separately", unless s/he also has dependents which would separately allow filing as Head of Household. See the IRS document on Filing Status for more details, and consider consulting a tax advisor, particularly if she qualifies to consult one for free due to lower income. |
Questions about government bonds that have already matured | I am assuming that you are talking about US Savings Bonds: Here is a page that talks about maturity dates of US Savings bonds. If They aren'tSavings bonds but are another type ofUS Government Bond Assuming they are Savings bonds, here is information regarding redeeming of bonds. How do I redeem my EE/E Bonds? Electronic bonds: Log in to Treasury Direct and follow the directions there. The cash amount can be credited to your checking or savings account within one business day of the redemption date. Paper bonds You can cash paper EE/E Bonds at many local financial institutions. We don't keep a list of banks that redeem bonds, so check with banks in your area. What will I need to redeem a paper bond? Before taking in the bonds to redeem them, it's usually a good idea to check with the financial institution to find out what identification and other documents you'll need. When you present your paper bonds, you'll be asked to show your identity. You can do this by being a customer with an active account open for at least 6 months at the financial institution that will be paying the bonds, or presenting acceptable identification such as a valid driver's license if the >redemption value of the bonds is less than $1,000. If you are not listed as the owner or co-owner on the bond, you'll have to show that you >are entitled to cash in the bond. The treasury direct website also discusses converting bonds, rules regarding using them for education, how often they are credited with interest |
Is there such a thing as a deposit-only bank account? | There is such a thing as Deposit Only. This will allow the individual's account to function only for collection of monetary deposits. NO ONE will be able to withdraw...only deposit. The account holder may still physically withdraw at their banking institution. Think of it as taking your account from a "public" profile to a "private" profile. Doing this is beneficial for ppl who may have been scammed into a program or product where there account is bieng fraudulently overdrafted, or simply to protect your funds from bieng drafted without your approval or despite your requests for ceasing the drafts. When making your account a deposit only account it's a good idea to open a NEW account at a Different banking institution, because some banks will still allow an account that is "attached" to the deposit only account to be drafted from it. WIth the new account you can utilize that one for paying day to day bills and just transfer funds from the deposit only account to the new account. A deposit only account is also a good way to build up a nice nest egg for yourself or even a young adult! source- Financial Adivsor 4years- |
How do I handle fund minimums as a beginning investor? | I like Keshlam's answer and would like to add a few notes: While your enthusiasm to invest is admirable learning patience is a key aspect of wealth building and keeping. |
How can one get their FICO/credit scores for free? (really free) | I get my credit scores from all three bureaus for free - no gimmick. I use a combination of banks that offer this service to get my scores. I wrote about this sometime back in my blog. For credit report, the only place to go is AnnualCreditReport.com. I space it out so that I get one every 4 months since there is a once a year restriction per bureau. |
Is short selling a good hedging strategy during overzealous market conditions? | The problem with short would be that even if the stock eventually falls, it might raise a lot in the meantime, and unless you have enough collateral, you may not survive till it happens. To sell shares short, you first need to borrow them (as naked short is currently prohibited in US, as far as I know). Now, to borrow you need some collateral, which is supposed to be worth more that the asset you are borrowing, and usually substantially more, otherwise the risk for the creditor is too high. Suppose you borrowed 10K worth of shares, and gave 15K collateral (numbers are totally imaginary of course). Suppose the shares rose so that total cost is now 14K. At this moment, you will probably be demanded to either raise more collateral or close the position if you can not, thus generating you a 4K loss. Little use it would be to you if next day it fell to 1K - you already lost your money! As Keynes once said, Markets can remain irrational longer than you can remain solvent. See also another answer which enumerates other issues with short selling. As noted by @MichaelPryor, options may be a safer way to do it. Or a short ETF like PSQ - lists of those are easy to find online. |
At what interest rate should debt be used as a tool? | It's tough to borrow fixed and invest risk free. That said, there are still some interesting investment opportunities. A 4% loan will cost you 3% or less after tax, and the DVY (Dow high yielders) is at 3.36% but at a 15% favored rate, you net 2.76% if my math is right. So for .5%, you get the fruits of the potential rise in dividends as well as any cap gains. Is this failsafe? No. But I believe that long term, say 10 years or more, the risk is minimal. |
Getting Cash from Credit Card without Fees | You said: Use a credit card (to get my 3% Cash back) to withdraw cash ... Then you said: Is there any way to do this without paying a cash advance fee (or any fees in general)? Right there you have stated the inconsistency. Withdrawing cash using a credit card is a cash advance. You may or may not be charged a fee for doing the cash advance, but no credit card will offer you cash back on a cash advance, so you can't earn your 3% by using cash advances. As others have mentioned, you can sometimes get close by using the card to purchase things that are almost like cash, such as gift cards. But you have to make a purchase. |
Will the stock market continue to grow forever? | Yes! Look at any graph or chart covering the last 100 years. The graph goes up. It will continue to grow unless there is an extinction event and the population gets reduced. Corporations will continue to grow to meet the needs of the ever expanding population. |
Currently sole owner of a property. My girlfriend is looking to move in with me and is offering to pay 'rent'. Am I at risk here? | I have been renting rooms out of my house for over 7 years now. When renting to non-family, the arrangement is usually successful. People leave for various reasons, an occasionally I will ask someone to move out if they are not working out. In the USA, this works well because by keeping things formal (rental agreements, etc) you actually have a great business with lots of deductions that end up reducing you net income quite a bit. However, US law makes a big distinction about whether or not you're renting to family/relatives, specifically around whether or not they are paying full-market rent for their room. If not, then you are subsidizing them which could disqualify your property (or at least the portion they are using) from being legitimately rented -- and thus no tax deductions for said activity. The other risk, -- again, in the USA -- is the possibility of a long-term relationship falling under rules of common-law marriage. This is rare unless children are involved. A couple who have children, married or not, may have the courts get involved to oversee the division of assets with regards to ensuring the children have a place to live and adequate financial support. For the UK, I would think the laws would be roughly similar. Check out this website for more a detailed review. https://www.citizensadvice.org.uk/family/living-together-marriage-and-civil-partnership/living-together-and-marriage-legal-differences/ |
Do I pay a zero % loan before another to clear both loans faster? | This is a case where human nature and arithmetic lead to different results. Depending on the your income, the effective interest rate on the mortgage is probably right around 2.5%. So purely by arithmetic, the absolute cheapest way to go is to put the $11k to the bigger car loan, then pay off the mortgage, then the smaller car loan. The Debt Snowball is more effective however, because it works better for people. Progress is demonstrated quickly, which maintains (and often enhances) motivation to continue. I can say as a case in point, having tried both methods, that if does indeed work. So, I am with you ... pay off the car loan first, and roll that payment into the bigger car loan. If you add no extra dollars, you should get the small loan paid off in 6 to 8 months and the bigger car loan in another 16 to 18 months. It sounds like from your message that you have another $1500 or so a month. If that is the case ... small loan paid off in two months, bigger loan paid off in another year. If you stick with the Ramsay program, you then build an emergency fund and start investing. Good luck! |
Earning salary from USA remotely from New Zealand? | Can the companies from USA give job to me (I am from New Zealand)? Job as being employee - may be tricky. This depends on the labor laws in New Zealand, but most likely will trigger "nexus" clause and will force the employer to register in the country, which most won't want to do. Instead you can be hired as a contractor (i.e.: being self-employed, from NZ legal perspective). If so, what are the legal documents i have to provide to the USA for any taxes? If you're employed as a contractor, you'll need to provide form W8-BEN to your US employer on which you'll have to certify your tax status. Unless you're a US citizen/green card holder, you're probably a non-US person for tax purposes, and as such will not be paying any tax in the US as long as you work in New Zealand. If you travel to the US for work, things may become tricky, and tax treaties may be needed. Will I have to pay tax to New Zealand Government? Most likely, as a self-employed. Check how this works locally. As for recommendations, since these are highly subjective opinions that may change over time, they're considered off-topic here. Check on Yelp, Google, or any local NZ professional review site. |
Can we estimate the impact of a large buy order on the share price? | If you look at a trade grid you can see how this happens. If there are enough bids to cover all shares currently on the sell side at a certain price, those shares will be bought and increased price quotes will be shown for the bids and ask. If there are enough bids to cover this price, those will get bought and higher prices will be shown and this process will repeat until the sell side has more power than the buy side. It seems like this process is going on all day long with momentum either on the upside or downside. But I think that much of this bidding and selling is automatic and is being done by large trading firms and high tech computers. I also feel that many of these bids and asks are already programmed to appear once there is a price change. So once one price gets bought, computers will put in higher bids to take over asks. It's like a virtual war between trading firms and their computers. When more money is on the buy side the stock will go up, and vice versa. I sort of feel like this high-frequency trading is detrimental to the markets and doesn't really give everyone a fair shot. Retail investors do not have the resources and knowledge in order to do this sort of high frequency trading. It also seems to go against certain free market principles in my opinion. |
I'm only spending roughly half of what I earn; should I spend more? | Looks like you don't want to participate in the consumerist rush but feel that you just have to do that too. First of all, you don't have to do what you don't want. Then there're researches showing that joy from a compulsive purchase only lasts for a short period of time and then you are left with a relatively useless item in your house. So it's one thing if you really wanted that cool full-electronic sewing machine (or whatever DIY item you might want) to be able to repair all the stuff and craft all the nice things you wanted, but it's another thing if you look at the item and can't decide whether you really need it. The latter scenario is you struggling with the consumerism rush. If you feel really happy and can save half of what you earn just save the difference - it won't hurt. Having a good sum of money saved is really helpful in many scenarios. |
As a 22-year-old, how risky should I be with my 401(k) investments? | At 50 years old, and a dozen years or so from retirement, I am close to 100% in equities in my retirement accounts. Most financial planners would say this is way too risky, which sort of addresses your question. I seek high return rather than protection of principal. If I was you at 22, I would mainly look at high returns rather than protection of principal. The short answer is, that even if your investments drop by half, you have plenty of time to recover. But onto the long answer. You sort of have to imagine yourself close to retirement age, and what that would look like. If you are contributing at 22, I would say that it is likely that you end up with 3 million (in today's dollars). Will you have low or high monthly expenses? Will you have other sources of income such as rental properties? Let's say you rental income that comes close to covering your monthly expenses, but is short about 12K per year. You have a couple of options: So in the end let's say you are ready to retire with about 60K in cash above your emergency fund. You have the ability to live off that cash for 5 years. You can replenish that fund from equity investments at opportune times. Its also likely you equity investments will grow a lot more than your expenses and any emergencies. There really is no need to have a significant amount out of equities. In the case cited, real estate serves as your cash investment. Now one can fret and say "how will I know I have all of that when I am ready to retire"? The answer is simple: structure your life now so it looks that way in the future. You are off to a good start. Right now your job is to build your investments in your 401K (which you are doing) and get good at budgeting. The rest will follow. After that your next step is to buy your first home. Good work on looking to plan for your future. |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | I was hoping to comment on the original question, but it looks to me like the asker lives in the EU, where credit cards are a lot less common and a lot of the arguments (car rental, building up of credit etc) brought forward by people living in the US just don't apply. In fact especially airlines (and other merchants) will charge you extra when using a credit card instead of a debit card and this can add up fairly quickly. I hold a credit card purely for travelling outside the EU and occasionally I will travel for work and make my own arrangements, then it can come in handy as I am able to reclaim my expenses before I have to pay my credit card bill (in this case I will also claim the extra credit card fees from my employer). This however is for my personal convenience and not strictly necessary. (I could fill out a bunch of paperwork and claim the costs from my employer as an advance.) In the EU I find that if my VISA debit card will not work in a shop, neither will my credit card, so on that note it's pretty pointless. So to answer the asker question: If you live (and travel) in the EU you don't need a credit card, ever. If you travel to the US, it would be advantageous to get one. Occasionally banks will offer you a credit card for free and there's no harm in taking it (apart from the fact that you have one more card to keep track off), but if you do, set up a direct debit to pay it off automatically. And as other people have said: Don't spend money you don't have. If you are not absolutely sure you can't do this, don't get a credit card. |
Retirement Savings vs. Student Loan payments | You can play with the numbers all you like (and that's good), however, here is a different way to look at it. The debt you have is risk. It limits your choices and eats your cash flow. Without the debt, you can invest at a much greater rate. It frees up you cash flow for all the things you might want to do, or decide in the future you might want to do. Right now is the easiest time for you to focus on debt repayment. It sounds like you are not married and have no children. It is much easier now to cut back your lifestyle and concentrate on paying off this $50k of student debt. This will get harder as your responsibility increases. Build up a small amount of cash for emergencies and put the rest at the debt. You can keep contributing to your 401k to the match if you want. This will give you 2 benefits: Patience. When you actually DO start investing, you will have a new appreciation for the money you are using. If you sacrifice to pay off $50k now, you wont look at money the same for the rest of your life. Drive. If you see the debt as a barrier to achieving your goals, you will work harder to get out of debt. These are all things I would tell my 23 year-old self if i could go back in time. Good luck! |
How to improve credit score and borrow money | I had to apply for an American Express card, which was also rejected. Then I had searched for a Marbles Credit Card Stop applying for credit cards/loans. Doing so is just making your credit rating worse. Credit agencies will downgrade your credit rating if they see lots of signs of credit checking. It's a sign you're desperately looking for credit, which you are...! 44.9% APR This is very expensive credit. You can get personal loans on the high street for 3-4%. 44.9% is really bad value. You're simply going to make the situation worse. Am I taking off a loan from website as amingos loans to help me build up my credit rating Again this is 44% interest! You also need a guarantor. So you're not only going to get yourself in trouble but a family member too: don't do this! This will only help your credit rating if you pay it back successfully, which given your situation seems like a risk. Contact the Money Advice Service or the National Debt Line. Explain your situation in detail to them. They are a government-backed service designed for people in your situation. They will offer practical advice and can even help negotiate with your creditors, etc. Here's some general advice about getting out of debt from Money Saving Expert Traditional debt help says 'never borrow your way out of a debt problem'. But this ignores the varying cost of different debts. The MoneySaving approach is: "Never borrow more to get out of a debt problem." |
Automatic investments for cheap | For your purposes, I would recommend using direct investment in a no-load mutual fund. I mostly use Vanguard and would recommend them. They just about invented index funds, usually have the lowest (internal) expenses for index and many other funds, if you take electronic instead of paper statements there is no maintenance fee, have no transaction commission, can do periodic automatic investment from a bank account etc. A typical index fund there would require an initial $3000 investment and would have a minimum of $100 for each additional investment. If you can't come up with an initial sum of that size, you might be able to find a broker with a lower minimum and suitable free ETFs trades as others have suggested. |
List of Investments from safest to riskiest? | With every caveat that Rick said plus many many more lets have some fun. One common way to measure risk is volatility of returns roughly how much the value of your asset jumps around. Interestingly, the following ordering is fairly similar for many other common measures of risk. The first three on the list would be mostly interchangeable. Generally, putting your money in "cash" investments has no real day-to-day price variability and the main risk is that the bank won't give you your money back at the end. Money market funds are last as they can "Break the buck". To get a feel for the next few on the list I'm using previous 360 day volatility numbers for representative broad indices (asof 2014-10-27). While these volatility values can move around quite a bit, the order is actually remarkably stable. Hedge funds might seem out of place here, but remember that hedge funds can hold be long and short at the same time and this can cancel out daily variation. However, Hedge funds do have plenty of risks that may not be well accounted for by this measure. For derivatives I'll refer to back to Rick's answer. This is a measure for broad investment in these categories your particular investment in Long-term Capital Management or Argentine Bonds may vary. It is important to note that your return on your investment generally grows as you go toward more risky investments down this list as people generally expect to be rewarded in the long term for risky investments. |
When should I start saving/investing for my retirement? | Start as early as possible and you will want to kiss your younger self when you get to retirement age. I know you (and everyone else at that age) thinks that they don't make enough to start saving and leans towards waiting until you get established in your career and start making better money. Don't put it off. Save some money out of each paycheck even if it is only $50. Trust me, as little as you make now, you probably have more disposable income than you will when you make twice as much. Your lifestyle always seems to keep up with your income and you will likely ALWAYS feel like you don't have money left over to save. The longer you wait, the more you are going to have to stuff away to make up for that lost time you could have been compounding your returns as shown in this table (assuming 9.4 percent average gain annually, which has been the average return on the stock market from 1926-2010). I also suggest reading this article when explains it in more detail: Who Wants to be a millionaire? |
What happened when the dot com bubble burst? | It's tough to share exactly what happened. Go to yahoo and look at the chart for Cisco from 1990 to 2003 or so. From a split adjusted 8 cents a share, it peaked at just under $80 in March 2000, up by a factor of 1000. People were buying in thinking this stock would continue to rise at this pace, but logic says that's preposterous. By April of 2001, it was down to $14, 80% off its high, and later to drop below $10. This was a classic bubble and should be studied so you don't get caught in them. A book titled Extraordinary Popular Delusions & the Madness of Crowds was published in 1841, yes is still an interesting read. Bubbles in markets are not new, but can be recognized and avoided. Cisco at $80 had a market cap of $438B. Had it risen 1000 fold over another decade, it would have been worth $438T, but all the wealth in the US isn't even $75T, so something was wrong, very wrong. This is one story, one stock. A remarkable time. Yes, many companies went under, and the employees lost their jobs. And those who were heavy into the "dotcom" stocks lost as much as 80% (or more) of their wealth. Entire 401(k) accounts dropping this amount due to bad decisions. Those who bailed out in time survived, some doing better than others. |
What are my options to deal with Student Loan debt collectors? | You have not specified what country you are in. That radically changes everything. In case you are in Canada, there's a great blog that covers bankruptcy and student loans, at http://student-loan-bankruptcy.ca/. Fundamentally, in order to discharge government-backed student loans, you must have ceased to be a student for at least seven years prior to filing. Even then, though, the government can object, in which case you will still have to repay some or all of the loan. More generally, given that the collection agency appears to be operating in bad faith, you'll want to ensure that they send you written documentation of any offer they are extending you. If they refuse to do this, you should assume that they aren't actually offering you anything at all and you will have to pay back the full amount plus interest and penalties. Note that, in many countries, if you settle the debt (that is, pay anything less than the full amount plus interest and penalties), this will be a black mark on your credit report. In this case, if you repaid the full $16,000 and they forgave the extra $4,000, they would most likely still add a note to your credit report indicating that you did not pay the full amount that you owed, and this will negatively impact your credit rating even beyond your late payments. |
Friend was brainwashed by MLM-/ponzi investment scam. What can I do? | I believe the only thing you haven't mentioned to him is the possibility that his activity is criminally fraudulent. I would sit him down, and say something substantially similar to the following: We've talked about your investment before, and I know you believe it's fine. I just want to make sure you understand that this is very likely fraudulent activity. I know you believe in it, but you've said you don't understand how or why it works. The problem with that is that if it is a fraud you can't protect yourself from criminal prosecution because you didn't understand what you were doing. The prosecutor will ask you if you asked others to give you or the organization money, and then they will convict you based on trying to defraud others. It doesn't matter whether you did it on purpose, or just because you believed the people you are investing in. So I very strongly advise you to understand exactly what the system is, and how it works, and then make sure with a lawyer that it's legal. If it is, then hey, you've learned something valuable. But if it's not, then you will save yourself a whole lot of trouble and anguish down the road if you step away before someone you attract to the investment decides to talk to their accountant or lawyer. A civil lawsuit may be bad, but if you're criminally prosecuted it will be so much worse. Now that I've said my piece, I won't talk to you about it anymore or bother you about it. I wish you luck, and hope that things work out fine. I wouldn't talk to the police or suggest that I'd do anything of that nature, without proof then there's no real way to start an investigation anyway, and unfortunately scams like this are incredibly hard to investigate, so the police often spend little to no time on them without a high level insider giving up evidence and associates. Chances are good nothing would happen to your friend - one day the organization will disappear and he won't recover any more money - but there's a distinct possibility that when that happens, the people below him will come for him, and he won't be able to look further up the chain for help. Perhaps the threat of illegal activity will be enough to prevent him from defrauding others, but if not I think at least you can let it go, and know that you've done everything for him that might work. |
Feasibility of using long term pattern on short term investments | When structures recur at different scales, they're called "fractals", and there is something called the "fractal markets hypothesis" which attempts to analyse stock market movements as fractals and in terms of (related) chaos theory. Whether you can profit from it I have no idea. If it was easy, everyone would be doing it. Many of the non-academic pages linked in the search results (previous link) remind me of technical analysis/chartist stuff (which - to me - always seems to be a lot better at explaining things after the event than actually predicting things). |
How can I find ISIN numbers for stock options? | Because an equity option can be constructed at essentially any price by two willing counterparties on an exchange, there are not enough ISINs to represent the entire (i.e. infinite) option chain for even a single stock on a single expiration date. As a result, ISINs are not generated for each individual possible options contract. Instead the ISIN is used only to refer to the "underlying" symbol, and a separate formula is used to refer to the specific option contract for that symbol: So that code you pasted is not an ISIN but rather the standard US equity option naming scheme that you need to provide in addition to the ISIN when talking to your broker. Note that ISINs and formulas for referring to option contracts in other countries can behave quite differently. Also, there are many countries and markets that don't need ISINs because the products in question only exist on a single exchange. In those cases the exchange is pretty much free to make up whatever ID scheme it wants. P.S. Now I'm curious how option chains are identified for strike prices above $99,999. I looked up the only stock I can think of that trades above that price (BRK.A), but it doesn't seem to have an option chain (or at least Google doesn't show it) ... |
I just made $50K from selling my house. How should I invest the proceeds? | First pay off all existing debt. Then set up at least 6 month emergency fund. Freelancing exposes you to way more risks than employment. Then buy GIC's to cover and match the maturity of your expected education fees. Only 'play' with what is left. Don't over think it. Buy a low-cost (less than 0.5%) passive large-index mutual fund covering either the S&P or TSX. |
How do top investors pull out 20% ROI? | First of all, the annual returns are an average, there are probably some years where their return was several thousand percent, this can make a decade of 2% a year become an average of 20% . Second of all, accredited investors are allowed to do many things that the majority of the population cannot do. Although this is mostly tied to net worth, less than 3% of the US population is registered as accredited investors. Accredited Investors are allowed to participate in private offerings of securities that do not have to be registered with the SEC, although theoretically riskier, these can have greater returns. Indeed a lot of companies that go public these days only do so after the majority of the growth potential is done. For example, a company like Facebook in the 90s would have gone public when it was a million dollar company, instead Facebook went public when it was already a 100 billion dollar company. The people that were privileged enough to be ALLOWED to invest in Facebook while it was private, experienced 10000% returns, public stock market investors from Facebook's IPO have experienced a nearly 100% return, in comparison. Third, there are even more rules that are simply different between the "underclass" and the "upperclass". Especially when it comes to leverage, the rules on margin in the stock market and options markets are simply different between classes of investors. The more capital you have, the less you actually have to use to open a trade. Imagine a situation where a retail investor can invest in a stock by only putting down 25% of the value of the stock's shares. Someone with the net worth of an accredited investor could put down 5% of the value of the shares. So if the stock goes up, the person that already has money would earn a greater percentage than the peon thats actually investing to earn money at all. Fourth, Warren Buffett's fund and George Soros' funds aren't just in stocks. George Soros' claim to fame was taking big bets in the foreign exchange market. The leverage in that market is much greater than one can experience in the stock market. Fifth, Options. Anyone can open an options contract, but getting someone else to be on the other side of it is harder. Someone with clout can negotiate a 10 year options contract for pretty cheap and gain greatly if their stock or other asset appreciates in value much greater. There are cultural limitations that prompt some people to make a distinction between investing and gambling, but others are not bound by those limitations and can take any kind of bet they like. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.