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How to make use of EUR/USD fluctuations in my specific case? | Remember that converting from EU to USD and the other way around always costs you money, at least 0.5% per conversion. Additionally, savings accounts in EU and USA have different yields, you may want to compare which country offers you the best yields and move your money to the highest yielding account. |
How can one get their FICO/credit scores for free? (really free) | Credit Sesame monitors your credit score for free. My understanding is that they make their money off of credit card referrals. |
Why is mortgage interest deductible in the USA for a house you live in? | It's a scam pushed through to benefit the banking system. Tax payments become income for the banks. Any alleged benefits for property holders are ultimately reduced by increased property prices, capital gains tax and estate taxes |
In what cases can a business refuse to take cash? | They don't have to take cash if they reasonably told you in advance they don't take cash, because they made fair effort to prevent you from incurring a debt. They don't have to take cash if the transaction hasn't yet happened (not a debt) or if it can be easily undone at no cost to either party - such as a newspaper subscription they can just stop delivering. Both of these reasons are limited by the rules against discrimination, see below. They don't have to take cash if it's impracticable. For instance a transit bus when fares first went to $1.00, it took years to fund new fareboxes able to take paper money. You don't have to take a mortgage payment in pennies. Liquor stores don't have to take $100 bills. (it requires them to keep too much change in the till, which makes them a robbery target). Trouble arises when it appears there's an ulterior motive for the rule. Suppose a Landlord Jim requires rent to be paid with EFT. Rent-controlled Marcie tells the judge "It's a scheme to oust me, he knows I'm unbanked". Jim counters "No. I got mugged last month because criminals know when I collect cash rents." It will turn on whether Jim can show good-faith effort to work with his unbanked tenants to find other ways to pay. If Jim does a particularly bad job of this, he could find himself paying Marcie's legal bills! Even worse if the ulterior motive is discrimination. Chet the plumber hates Muslims. Alice the feed supplier hates the Amish. So they decide to take credit cards only, knowing those people's religions don't allow them. Their goose is cooked once they can't show any other reasonable reason to refuse cash. |
Will I get taxed on withdrawals from Real Cash Economy games? | Income from a hobby is tax exempt under Dutch law. To consider whether it's hobby, a few rules are applied such as: How much time do you spend on the activity? And is the hourly wage low? Obviously, having a boss is a sure sign of it not being a hobby. The typical example is making dolls and selling them on a crafts fair. If you travel the country and sell each weekend on a different fair, that's a lot of time. If you only sell them on the fair in your home town, it's a hobby. Situation 3 is the most difficult. If you just happened to luck out, it's still a hobby. If you spent significant time to improve the value of your holdings, e.g. by trading in-game, then it might be seen as work. In the latter case, you simply file it as "income from other sources, not yet taxed". For the purpose of determining income from a hobby, you may deduct actual expenses. So, in your case they'd look at the net income of $-1000, which is not unusual for a hobby. It wouldn't be any different if you took up horse riding, decided that you didn't like it, and sell your horse at a loss. |
Employee stock option plan with undefined vesting? | An option without the vesting period and the price at which one can exercise the option is of not much value. If vesting is determined by board, then at any given point in time they can change the vesting period to say 3, 5, 10 years any number. The other aspect is at what price you are allowed to exercise the option, ie if the stock is of value 10, you may be given an option to buy this at 10, 20 or 100. This has to be stated upfront for you to know the real value. On listing if the value is say 80, then if you have the option to exercise at 10, or 20 you would make money, else at 100 you loose money and hence choose not to exercise the option. However your having stuck around the company for "x" years in anticipation of making money would go waste. Without a vesting period or the price to exercise the option, they are pretty much meaningless and would depend on the goodwill of the founders |
Are quarterly earnings released first via a press release on the investor website, via conference call, or does it vary by company? | Companies release their earnings reports over news agencies like Reuters, Dow Jones and Bloomberg before putting them on their website (which usually occurs a few minutes after the official dissemination of the report). This is because they have to make sure that all investors get the news at the same time (which is kind of guaranteed when official news channels are used). The conference call is usually a few hours after the earnings report release to discuss the results with analysts and investors. |
23 and on my own, what should I be doing? | Assuming the numbers in your comments are accurate, you have $2400/month "extra" after paying your expenses. I assume this includes loan payments. You said you have $3k in savings and a $2900 "monthly nut", so only one month of living expenses in savings. In my opinion, your first goal should be to put 100% of your extra money towards savings each month, until you have six months of living expenses saved. That's $2,900 * 6 or $17,400. Since you have $3K already that means you need $14,400 more, which is exactly six months @ $2,400/month. Next I would pay off your $4K for the bedroom furniture. I don't know the terms you got, but usually if you are not completely paid off when it comes time to pay interest, the rate is very high and you have to pay interest not just going forward, but from the inception of the loan (YMMV--check your loan terms). You may want to look into consolidating your high interest loans into a single loan at a lower rate. Barring that, I would put 100% of my extra monthly income toward your 10% loan until its paid off, and then your 9.25% loan until that's paid off. I would not consider investing in any non-tax-advantaged vehicle until those two loans (at minimum) were paid off. 9.25% is a very good guaranteed return on your money. After that I would continue the strategy of aggressively paying the maximum per month toward your highest interest loans until they are all paid off (with the possible exception of the very low rate Sallie Mae loans). However, I'm probably more conservative than your average investor, and I have a major aversion to paying interest. :) |
How does the U.S. wash sale replacement stock rule work? | From Pub 550: More or less stock bought than sold. If the number of shares of substantially identical stock or securities you buy within 30 days before or after the sale is either more or less than the number of shares you sold, you must determine the particular shares to which the wash sale rules apply. You do this by matching the shares bought with an equal number of the shares sold. Match the shares bought in the same order that you bought them, beginning with the first shares bought. The shares or securities so matched are subject to the wash sale rules. You must match "beginning with the first shares bought." If only activity 1 & 4 happened, you'd have bought and sold stock with no wash sale. If you remove activity 1 & 4 from consideration because they are a "normal" or non-wash sale transaction, then the Activity 2 or Activity 3 trigger a wash sale. The shares in lot 1 are sold for disallowed loss, so the disallowed basis would be added to shares in lot 2 because lot 2 was purchased before lot 3. (hat tip to user662852 who had much better wording) Second example: Activity 5, 7, and 8 all together would not be a wash sale. The addition of activity 6 creates a wash sale. The shares in Activity 5 are sold for a disallowed loss in Activity 7 & 8 because of the wash sale triggering purchase in Activity 6. Activity 6 is where you add the disallowed basis because they are the "first shares bought" that cause the wash sale rule to be triggered. |
According to yahoo finance, Vanguard's Dividend Growth Fund does not appear to have dividend growth. Why is that? | I think you are mixing up forward looking statements with the actual results. The funds objective The fund invests primarily in stocks that tend to offer current dividends. It focuses on high-quality companies that have prospects for long-term total returns as a result of their ability to grow earnings and their willingness to increase dividends over time Obviously in 1993 quite a few companies paid the dividends and hence VDIGX was able to give dividends. Over the period of years in some years its given more and in some years less. For example the Year 2000 it gave $ 1.26, 1999 it gave $ 1.71 and in 1998 it gave $ 1.87 The current economic conditions are such that companies are not making huge profts and the one's that are making prefer not to distribute dividends and hold on to cash as it would help survive the current economic conditions. So just to clarify this particular funds objective is to invest in companies that would give dividends which is then passed on to fund holders. This fund does not sell appreciated stocks to convert it into dividends. |
What to do with an expensive, upside-down car loan? | If you can't sell it, refinance the bugger. Even if you can knock the interest rate down to 8% and take out a 3-year loan, you'll save about $100 per month. Or really kill the payment (but pay more interest) by taking out another 6-year. A 6-year at 9% on $12k is only $215/month. My credit union routinely advertises specials on car loans. It shouldn't be difficult to get out of the usurious loan you have now. As for others' advice about getting another job, having been a PhD student I hesiate to suggest that you get another one, because your job is probably your life right now. But can your wife (or even you) start a blog on a subject that interests you? A few posts a week add up over time, and pretty soon you have a real asset that can be another basket to put your eggs in. |
Understanding the synthetic long put option | A long put - you have a small initial cost (the option premium) but profit as the stock goes down. You have no additional risk if the shock rises, even a lot. Short a stock - you gain if the stock drops, but have unlimited risk if it rises, the call mitigates this, by capping that rising stock risk. The profit/loss graph looks similar to the long put when you hold both the short position and the long call. You might consider producing a graph or spreadsheet to compare positions. You can easily sketch put, call, long stock, short stock, and study how combinations of positions can synthetically look like other positions. Often, when a stock has no shares to short, the synthetic short can help you put your stock position in place. |
What does quantitative easing 2 mean for my bank account? | IMO, QE2 will likely have no perceptible impact in the near term. Keeping all of your savings in a bank guarantees that you will lose money to inflation & taxes. I'd suggest consulting a financial advisor -- preferably someone who understands issues facing someone with assets in the US and Canada. In terms of what portion of your savings should be in USD vs. CAD, that's going to depend on your situation. I'd probably want more assets in the place that I'm living in for the next several years. |
What's an economic explanation for why greeting cards are so expensive? | I actually have a bit of experience with the supplier side of this. Having worked with other people attempting to get the business launched, I can shed a bit of insight. The primary reason for the pricing is that there simply isn't enough competition to warrant dropping the price any lower than it already is. Large companies such as Hallmark will typically buy card designs at 5% of the card's selling price. With their existing distribution network, this makes bringing in new and varied designs much easier for large companies that are already well established. Having talked with such designers in the past, someone working full time producing designs makes on average 30-60k annually from this, which is worth it to someone who doesn't want to jump through the hoops of actually getting into the business independently. The primary issue stifling competition is actually getting your product into stores. There are topics here that I cannot discuss due to NDA, but I can break down the overall outline for you: You need to start with a large number of designs, with enough variety that companies think could sell well. If you bring a handful of designs with you, no company is going to take your business venture seriously enough. You need to find a company that can stamp out a large production process for you. The company is going to need to be nice enough to take smaller purchase orders on the magnitude of several hundred cards, but also be capable of scaling that production to several hundreds of thousands of cards very quickly. For cards specifically, most companies want you to ship custom racks with your cards. Some companies may provide their own racks for stocking your product, but not all of them will. This will also cost a lot of money up front. You need to find a buyer for a company you want to sell your product to. This is important, and what killed our original business plans. Think Wal-Mart, Target, or even CVS Pharmacy. These big companies are going to have people who's entire job is to buy new products to put on their shelves. This is where networking is key, you need to find people with connections to these buyers if you're not already well established with them. You will also likely fail several times, either getting outright ignored, or through a broker that can't meet expectations. For example, we had a broker that introduced us to a buyer for a large store chain, and after several months of work we found out that this broker was just pulling our strings. Typically a company will want to test your product in a handful of stores to see if it will sell. For example, Target may want to test your product in 100-200 stores over 3 months and expect your product to sell at a minimum rate. Finally, you need to be able to scale your production. Suddenly you'll be asked to go from supplying 100 stores to supplying 1,800 stores with a deadline in 2 weeks. Buyers will even turn you down at this point if they don't think you can meet the production. All of this work takes at least a year, and typically takes several years to go from an initial product to having your product in every store. Without breaking the numbers down too much, we could make a profit of ~$1.60 for every $3 card that sold. That number doesn't cover the cost of racks and other overhead, that's just the per-card profit. Even then, people are more likely to go view the Hallmark or other big-name cards over your offering. Only when another company becomes a big powerhouse to be competitive will these companies be forced to drop their prices. |
Is it worth it to buy TurboTax Premier over Deluxe if I sold investments in a taxable account? | Here are the lists for the tax forms that Deluxe and Premier include. I think you'll be fine with Deluxe because it sounds like all you need is the Schedule D/8949 forms. Deluxe actually includes most investment related forms. |
How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap! | Try a gym for a month before you sign up on any contracts. This will also give you time to figure out if you are the type who can stick with a schedule to workout on regular basis. Community centres are cost effective and offer pretty good facilities. They have monthly plans as well so no long term committments. |
Are there special exceptions to the rule that (US) capital gains taxes are owed only when the gain materializes? | This is really an extended comment on the last paragraph of @BenMiller's answer. When (the manager of) a mutual fund sells securities that the fund holds for a profit, or receives dividends (stock dividends, bond interest, etc.), the fund has the option of paying taxes on that money (at corporate rates) and distributing the rest to shareholders in the fund, or passing on the entire amount (categorized as dividends, qualified dividends, net short-term capital gains, and net long-term capital gains) to the shareholders who then pay taxes on the money that they receive at their own respective tax rates. (If the net gains are negative, i.e. losses, they are not passed on to the shareholders. See the last paragraph below). A shareholder doesn't have to reinvest the distribution amount into the mutual fund: the option of receiving the money as cash always exists, as does the option of investing the distribution into a different mutual fund in the same family, e.g. invest the distributions from Vanguard's S&P 500 Index Fund into Vanguard's Total Bond Index Fund (and/or vice versa). This last can be done without needing a brokerage account, but doing it across fund families will require the money to transit through a brokerage account or a personal account. Such cross-transfers can be helpful in reducing the amounts of money being transferred in re-balancing asset allocations as is recommended be done once or twice a year. Those investing in load funds instead of no-load funds should keep in mind that several load funds waive the load for re-investment of distributions but some funds don't: the sales charge for the reinvestment is pure profit for the fund if the fund was purchased directly or passed on to the brokerage if the fund was purchased through a brokerage account. As Ben points out, a shareholder in a mutual fund must pay taxes (in the appropriate categories) on the distributions from the fund even though no actual cash has been received because the entire distribution has been reinvested. It is worth keeping in mind that when the mutual fund declares a distribution (say $1.22 a share), the Net Asset Value per share drops by the same amount (assuming no change in the prices of the securities that the fund holds) and the new shares issued are at this lower price. That is, there is no change in the value of the investment: if you had $10,000 in the fund the day before the distribution was declared, you still have $10,000 after the distribution is declared but you own more shares in the fund than you had previously. (In actuality, the new shares appear in your account a couple of days later, not immediately when the distribution is declared). In short, a distribution from a mutual fund that is re-invested leads to no change in your net assets, but does increase your tax liability. Ditto for a distribution that is taken as cash or re-invested elsewhere. As a final remark, net capital losses inside a mutual fund are not distributed to shareholders but are retained within the fund to be written off against future capital gains. See also this previous answer or this one. |
Why don't market indexes use aggregate market capitalization? | would constantly fluctuate and provide an indication of how well the market is doing. The index is there to tell if you made profit or loss by investing in the market. Using a pure total market cap will only tell you "Did IPO activity exceed bankruptcy and privatization activity". |
Is it worth buying real estate just to safely invest money? | Neither you nor others have mentioned the costs of being a homeowner. First, there are monetary costs. If you own a house, you have to pay taxes. They will vary by jurisdiction, but are usually not zero. You also need insurance, which again comes with monthly rates. Then, once in a while, you'll be hit with unpleasant lump sum payments. In 30 years, the mortgage is over and you own the house - but by that time, it will probably need a new roof. That's in the price range of a new car. And over that time, you'll rack up several other repairs which your landlord covers when you rent. Another thing which feels less like an expense emotionally but ends up thinning your wallet is the cosmetic changes you make just because it's your own home. You wouldn't put marble floors in the bathroom if you rent, but you might be tempted to if you live in the house. It might be even worth it from a life satisfaction point of view, but we are talking finance right now, and that's a minus. And then there are the opportunity costs. A house binds you geographically. You may pass up on a nice job offer because your house is too far away, for example. Or you might experience liquidity problems, because a house is difficult to turn into money in a hurry. If you are able to do so, it is usually a much larger sum than you need, and you are paying the costs inherent in that large transaction. These are just examples, you can probably come up with more costs. Then, it is not sure how much money you can get of the house if you change your mind. Say you take this job at the other end of the country, or you become a parent of four and need more space. At the time you decide to sell, the market may have gone down due to the overall state of the economy, or to the house location's popularity, or your own house may have turned undesirable (what if you get a mold infestation which would only go away if you strip it to the concrete and rebuild?) You could let it to renters, but that's a hassle of its own. It takes time to find renters, it may be expensive (income tax, regulations like Energieausweis in Germany), it is risky (if they don't pay, you might not see money even if you sue them). Then there is the problem that prices reflect not some kind of "true" value, but the intersection of supply and demand. And the home market is not as efficient as in a first semester microeconomics textbook. The buyers of private homes deal in small volumes, have little knowledge in the market, pay intermediaries' cuts, and are emotionally attached to the idea of "owning my own house". This drives demand up and creates higher prices than if you had perfectly rational actors on both sides. People pay money for the feeling of being home owners, so those who forego spending on that feeling have more money to invest in something else. Owning something always causes expenses. You have to calculate the savings of having the house vs. the expenses of having it, before you can decide if it is a good deal or not. If you only calculate one side of the equation, you'll be badly mistaken. |
How to help a financially self destructive person? | Wow. Just ... wow. We all must start where we are, I guess. The past is the past. There almost certainly isn't a cheap way to fix this. You're already on the hook for $4k per month. Your money is enabling her behavior. You'd rather not enable her behavior, but the money is part of the consequences of your divorce, so into her bank account it goes. Those who control how much alimony your ex-wife receives might reach the conclusion she needs more. That's not a hard conclusion for them to make. It's not their money. The living conditions are hurting your kids, and that's unfortunate, but that's also part of the consequences of your divorce. If it's deemed that your kids are better off not visiting her, then you might be relieved of paying child support (since you're supporting them at that point) but you might still be supporting her until some trigger is met, which might be never. (You know those details better than I do, of course.) If she's already lost her house, filed for bankruptcy, borrowed money from people that she hasn't paid back, and gets a check from you each month and still has utilities shut off, she'll continue to deteriorate financially until she hits rock bottom. Then, and only then, will she see the need to fix her behavior. Now, the (possibly) million dollar question for you is, "Where is rock bottom?" Do what you can to make that happen sooner rather than later, because you'll likely be subsidizing her all the way down, and part of the way back up. You've lost most of the leverage you once had to change her behavior, but try every way you can. You might hit the jackpot. |
How are long-term/short-term capital gains tax calculated on restricted stock? | Fidelity has a good explanation of Restricted Stock Awards: For grants that pay in actual shares, the employee’s tax holding period begins at the time of vesting, and the employee’s tax basis is equal to the amount paid for the stock plus the amount included as ordinary compensation income. Upon a later sale of the shares, assuming the employee holds the shares as a capital asset, the employee would recognize capital gain income or loss; whether such capital gain would be a short- or long-term gain would depend on the time between the beginning of the holding period at vesting and the date of the subsequent sale. Consult your tax adviser regarding the income tax consequences to you. So, you would count from vesting for long-term capital gains purposes. Also note the point to include the amount of income you were considered to have earned as a result of the original vesting [market value then - amount you paid]. (And of course, you reported that as income in 2015/2016, right?) So if you had 300 shares of Stock ABC granted you in 2014 for a price of $5/share, and in 2015 100 of those shares vested at FMV $8/share, and in 2016 100 of those shares vested, current FMV $10/share, you had $300 in income in 2015 and $500 of income in 2016 from this. Then in 2017 you sold 200 shares for $15/share: |
Social Trading Platforms Basically Front Running? | I don't think you can really classify it as front running. Technically, the only information, that the alleged front runner in this case has over the followers is the knowledge of the trade itself. Knowledge of the trade may indeed be share price sensitive information (for some high volume traders or those respected and with many followers) but it's not really like they can't know about it before everyone else; parity isn't possible in this case. If an company/organisation (i.e. the social trading platform say) responsible for disseminating the details/log of a trader to a following (or individuals working for said company/organisation), were to act on the trading data before dissemination then THEY would be guilty of front running. The alleged front runner may profit from the following of course, but that's only really occurring due to the publication of information that is share price sensitive, and such information generally has to be published by law (if it is by law so classified) so it's difficult to find too much fault. There has to be a certain amount of consideration on the part of any trader as to who is more the fool, the fool or the fool that follows them? |
Judge market efficiency from raw price action | The shortest-hand yet most reliable metric is daily volume / total shares outstanding. A security with a high turnover rate will be more efficient than a lower one, ceteris paribus. The practical impacts are tighter spread and lower average percentage change between trades. A security with a spread of 0% and an average change of 0% between trades is perfectly efficient. |
How much would it cost me to buy one gold futures contract on Comex? | In order to understand how much you might gain or lose from participating in the futures markets, it is important to first understand the different ways in which the slope of the futures markets can be described. In many of the futures markets there is a possibility of somebody buying a commodity at the spot price and selling a futures contract on it. In order to do this they need to hold the commodity in storage. Most commodities cost money to hold in storage, so the futures price will tend to be above the spot price for these commodities. In the case of stock index futures, the holder receives a potential benefit from holding the stocks in an index. If the futures market is upward sloping compared to the spot price, then it can be called normal. If the futures market is usually downward sloping compared to the spot price then it can be called inverted. If the futures market is high enough above the spot price so that more of the commodity gets stored for the future, then the market can be called in contango. If the futures market is below the point where the commodity can be profitably stored for the future, and the market can be called in backwardation. In many of these cases, there is an implicit cost that the buyer of a future pays in order to hold the contract for certainly time. Your question is how much money you make if the price of gold goes up by a specific amount, or how much money you lose if the price of gold goes down by the same specific amount. The problem is, you do not say whether it is the spot price or the futures price which goes up or down. In most cases it is assumed that the change in the futures price will be similar to the change in the spot price of gold. If the spot price of gold goes up by a small amount, then the futures price of gold will go up by a small amount as well. If the futures price of gold goes up by a small amount, this will also drive the spot price of gold up. Even for these small price changes, the expected futures price change in expected spot price change will not be exactly the same. For larger price changes, there will be more of a difference between the expected spot price change in expected future price change. If the price eventually goes up, then the cost of holding the contract will be subtracted from any future gains. If the price eventually goes down, then this holding cost should be added to the losses. If you bought the contract when it was above the spot price, the price will slowly drift toward the spot price, causing you this holding cost. If the price of gold does not change any from the current spot price, then all you are left with is this holding cost. |
Why do only a handful of Canadian companies have options trading on their stocks? | Corporations are removed from the options markets. They can neither permit nor forbid others from trading them, local laws notwithstanding. No national options market is as prolific as the US's. In fact, most countries don't even have options trading. Some won't even allow options but rather option-like derivatives. Finance in Canada is much more tightly regulated than the US. This primer on Canadian option eligibility shows how much. While US eligibility is also stringent, the quotas are far less restrictive, so a highly liquid small company can also be included where it would be excluded in Canada for failing the top 25% rule. |
Is insurance worth it if you can afford to replace the item? If not, when is it? | Can you afford to replace it? What does that mean? Even if insuring means overpaying, it does spread the risk. NB: This example is not about the Applecare program, which I think is a waste of money for many people. Others have explained very well if it would work for you or not. I have a Macbook but no Applecare. I have an expensive smartphone with insurance for dropping and water damage, but not theft. After one year I cancel this insurance. I don't have $200K in my bank account. |
Margin Call Question | The initial position is worth 40000. You post 50% margin, so you deposited 20000 and borrowed 20000. 6% of 20000 is 1200. |
How to prevent myself from buying things I don't want | I believe that your dilemma comes from not having clearly defined consequences of buying it. On one side you want it and you can afford it, but on the other side there is nothing solid. Just some vague dislike of spending money and guilt of buying something "useless". You're basically guilt tripping yourself into not buying it, and guilt tripping is always bad. What you need is clear-cut consequence. Something like "I can buy X but then I won't get Y and Z". And for that you need a clearly laid out budget, just to know how much you can spend. Money that go into things that are absolutely required, money that go into various saving plans, etc - and after that you're left with some clear amount that should be spent on making yourself happier. Making yourself happier is not something you should feel guilty about, it's actually one of purposes of life. Making yourself happy is only bad if it's hurting other areas of your life (and even that is relative, because there is always some extent of degradation you're willing to accept or you have already accepted). There is absolutely no point in saving every single penny you can, because that will make you live long and unhappy life and die without enjoying your riches. |
Is losing money in my 401K normal? | My two cents: I am a pension actuary and see the performance of funds on a daily basis. Is it normal to see down years? Yes, absolutely. It's a function of the directional bias of how the portfolio is invested. In the case of a 401(k) that almost always mean a positive directional bias (being long). Now, in your case I see two issues: The amount of drawdown over one year. It is atypical to have a 14% loss in a little over a year. Given the market conditions, this means that you nearly experienced the entire drawdown of the SP500 (which your portfolio is highly correlated to) and you have no protection from the downside. The use of so-called "target-date funds". Their very implication makes no sense. Essentially, they try to generate a particular return over the elapsed time until retirement. The issue is that the market is by all statistical accounts random with positive drift (it can be expected to move up in the long term). This positive drift is due to the fact that people should be paid to take on risk. So if you need the money 20 years from now, what's the big deal? Well, the issue is that no one, and I repeat, no one, knows when the market will experience long down moves. So you happily experience positive drift for 20 years and your money grows to a decent size. Then, right before you retire, the market shaves 20%+ of your investments. Will you recoup these damages? Most likely yes. But will that be in the timeframe you need? The market doesn't care if you need money or not. So, here is my advice if you are comfortable taking control of your money. See if you can roll your money into an IRA (some 401(k) plans will permit this) or, if you contribute less that the 401(k) contribution limit you make want to just contribute to an IRA (be mindful of the annual limits). In this case, you can set up a self-directed account. Here you will have the flexibility to diversify and take action as necessary. And by diversify, I don't mean that "buy lots of different stuff" garbage, I mean focus on uncorrelated assets. You can get by on a handful of ETFs (SPY, TLT, QQQ, ect.). These all have liquid options available. Once you build a base, you can lower basis by writing covered calls against these positions. This is allowed in almost all IRA accounts. In my opinion, and I see this far too often, your potential and drive to take control of your assets is far superior than the so called "professionals or advisors". They will 99% of the time stick you in a target date fund and hope that they make their basis points on your money and retire before you do. Not saying everyone is unethical, but its hard to care about your money more than you will. |
Paid cash for a car, but dealer wants to change price | On the surface this sounds ridiculous, which makes me suspect that there might be something that the dealer intends to cling on to; otherwise it sounds like the dealer should be ashamed to even call your son about its own incompetence. I'd recommend politely refusing the request since said mistake didn't happen on your end, and wait to see if the dealer comes back with some sort of argument. |
Chase bank not breaking large bills for non-account holders | Yes it is (legal). There is of course no law requiring any business you walk in to break your money. What made you think there would be? Being a bank in the US (and in other countries) has some legal consequences, but none of them relates to 'having to do business with anyone that walks in', neither 'having to break bills for people' (not even for established customers). Yes, it was historically commonplace for most banks to do all money-breaking for free, but that does not establish any obligation to do it. Maybe the FED is required to do that, but that won't help you if you don't live near either. |
Why would a company issue a scrip dividend and how will this issue affect me? | Yes. Instead of paying a cash dividend to shareholders, the company grants existing shareholders new shares at a previously determined price. I'm sorry, but scrip issues are free (for all ordinary shareholders) and are in proportion to existing share holding. No payment is required from shareholders. So instead of having 10 $1 shares, the shareholder (if accepts) now could have 20 50p shares, if it was a one-for-one scrip issue. |
How should I be contributing to my 401(k), traditional or Roth? | The Finance Buff discusses why the Roth 401k is often disadvantaged compared to a Traditional 401k in the article The Case Against the Roth 401k, including the following reasons (paraphrased): Contributions to the 401k come from the "top" of your highest tax bracket rate but withdrawals fill in from the "bottom". For example, suppose you are in the 28% tax bracket. Every marginal dollar you contribute to the Traditional 401k reduces your tax burden by .28 cents. However, when withdrawing, the first $10,150 of income is tax-free (from standard deduction and exemption, 2014 numbers; $20,300 for married couples, joint filing). The next dollars are at the 10% tax bracket, and so on. This is an advantage for the Traditional 401k only if you earn less when withdrawing than you did when contributing, a reasonable assumption. Avoid High State Income Tax. There are many states that have low or no state income tax. If you live in a state with a high income tax, paying tax now through the Roth 401k reduces the benefit of moving to a state with a lower income tax rate. Avoid triggering credit phaseouts. Many tax credits (e.g. student loan interest, child tax credit, Hope credit, Roth IRA eligibility, etc.) begin phasing out as your income increases. Contributing to the Traditional 401k can help you realize more of those credits when you starting running up against those limits. As described in the article, if these items don't apply, contributing to the Roth 401k can be a valuable component of tax diversification. |
When to trade in a relatively new car for maximum value | So this has been bugging me for a while, because I am facing a similar dilemma and I don't think anyone gave a clear answer. I bought a 2012 kia soul in 2012. 36 months financing at 300/mo. Will be done with my car loan in 2015. I plan on keeping it, while saving the same amount of money 300/mo until I buy my next car. But, I also have an option of trading it in for the the next car. Question: should I trade it in in 2015. should I keep it for 2 years more? 3 years more, before I buy the next car? What makes most financial sense and savings. I tried to dig up some data on edmunds - the trade-in value and "true cost to own" calculator. The make and model of my car started in 2010, so I do not have historical data, as well as "cost to own" calculator only spans 5 years. So - this is what I came up with: Where numbers in blue are totally made up/because I don't have the data for it. Granted, the trade-in values for the "future" years are guesstimated - based on Kia Soul's trade-in values from previous years (2010, 2011, 2012) But, this is handy, and as it gets closer to 2015 and beyond, I can re-plug in the data where it is available and have a better understanding of the trade-in vs keep it longer decision. Hope this helps. If the analysis is totally off the rocker, please let me know - i'll adjust it/delete it. Thank you |
Why do people build a stock portfolio if one could get a higher return from bank interest than dividend per annum? | Stock prices aren't constant; they rise and fall. The overall return on a share is the combination of the dividends paid plus the change in value of the share. Some companies pay no dividend at all yet investors still buy their shares because they believe the share price will rise. People invest in stocks because they believe that the overall return will exceed what they can get from cash in the bank. As to options they do offer higher potential profits but they also offer higher potential losses. Different investors have different appetites for risk. Many are comfortable with the risk of mainstream stock investing but not with that of options trading. |
Exercise an out of the money option | For listed options in NYSE,CBOE, is it possible for an option holder to exercise an option even if it is not in the money? Abandonment of in-the-money options or the exercise of out-of-the-money options are referred as contrarian instructions. They are sometimes forbidden, e.g. see CME - Weekly & End-of-Month (EOM) Options on Standard & E-mini S&P 500 Futures (mirror): In addition to offering European-style alternatives (which by definition can only be exercised on expiration day), both the weekly and EOM options prohibit contrarian instructions (the abandonment of in-the-money options, or the exercise of out-of-the-money options). Thus, at expiration, all in-the-money options are automatically exercised, whereas all options not in-the-money are automatically abandoned. |
Should I exclude bonds from our retirement investment portfolio if our time horizon is still long enough? | This is always a judgement call based on your own tolerance for risk. Yes, you have a fairly long time horizon and that does mean you can accept more risk/more volatility than someone closer to starting to draw upon those savings, but you're old enough and have enough existing savings that you want to start thinking about reducing the risk a notch. So most folks in your position would not put 100% in stocks, though exactly how much should be moved to bonds is debatable. One traditional rule of thumb for a moderately conservative position is to subtract your age from 100 and keep that percentage of your investments in stock. Websearch for "stock bond age" will find lots of debate about whether and how to modify this rule. I have gone more aggressive myself, and haven't demonstrably hurt myself, but "past results are no guarantee of future performance". A paid financial planning advisor can interview you about your risk tolerance, run some computer models, and recommend a strategy, with some estimate of expected performance and volatility. If you are looking for a semi-rational approach, that may be worth considering, at least as a starting point. |
Is it worth it to reconcile my checking/savings accounts every month? | Banks make mistakes. Reconciling your account with your bank statement is the way to catch the errors. |
What prevents interest rates from rising? | There do not appear to be any specific legal measures to prevent bankruptcies. In fact, they seems to be part of the means for which rates are raised, for the consequent aim of lowering inflation. See: The Budgetary Implications of Higher Federal Reserve Board Interest Rates by Dean Baker, Center for Economic and Policy Research. The Federal Reserve Board (Fed) is widely expected to start raising interest rates some time in 2015. The purpose of higher interest rates is to slow the economy and prevent inflation. This is done by reducing the rate of job creation and thereby reducing the ability of workers to achieve wage gains. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | Another unmentioned reason: flexibility and liquidity. There is a fundamental difference between installment and revolving debt, such that it could be rational to pay revolving debt before an amortizing loan. Lets say you have 100K in cash, a 100K mortgage at 4% and 4 25K credit cards at maximum balance and a 0% promotional rate (at least for now). If you pay off the mortgage, you may not get liquidity if you need it. This path is not necessarily reversible. If you pay off the credit cards, you have 100K of credit available to you. You can reverse to the case of having 100K in cash, and 200K in debt. |
How to convince someone they're too risk averse or conservative with investments? | (Leaving aside the question of why should you try and convince him...) I don't know about a very convincing "tl;dr" online resource, but two books in particular convinced me that active management is generally foolish, but staying out of the markets is also foolish. They are: The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk by William Bernstein, and A Random Walk Down Wall Street: The Time Tested-Strategy for Successful Investing by Burton G. Malkiel Berstein's book really drives home the fact that adding some amount of a risky asset class to a portfolio can actually reduce overall portfolio risk. Some folks won a Nobel Prize for coming up with this modern portfolio theory stuff. If your friend is truly risk-averse, he can't afford not to diversify. The single asset class he's focusing on certainly has risks, most likely inflation / purchasing power risk ... and that risk that could be reduced by including some percentage of other assets to compensate, even small amounts. Perhaps the issue is one of psychology? Many people can't stomach the ups-and-downs of the stock market. Bernstein's also-excellent follow-up book, The Four Pillars of Investing: Lessons for Building a Winning Portfolio, specifically addresses psychology as one of the pillars. |
23 and on my own, what should I be doing? | Okay, since you work hourly there are two substantial changes you can make: 1) Move out of Astoria and closer to Jersey City, such as, to Jersey City. Move out of NYC into Jersey!? Heresy! But that ship sailed when you started working there. 2) Work more hours now that you aren't spending 2 hours and 30 minutes of your life commuting. You can make an extra $125 per day, in theory. Since this is $625 more a week, and $2500 a month, it is a substantial change you can make. Presupposing that your current contract has more hours to work. |
How to change a large quantity of U.S. dollars into Euros? | To transfer US$30,000 from the USA to Europe, ask your European banker for the SWIFT transfer instructions. Typically in the USA the sending bank needs a SWIFT code and an account number, the name and address of the recipient, and the amount to transfer. A change of currency can be made as part of the transfer. The typical fee to do this is under US$100 and the time, under 2 days. But you should ask (or have the sender ask) the bank in the USA about the fees. In addition to the fee the bank may try to make a profit on the change of currency. This might be 1-2%. If you were going to do this many times, one way to go about it is to open an account at Interactive Brokers, which does business in various countries. They have a foreign exchange facility whereby you can deposit various currencies into your account, and they stay in that currency. You can then trade the currencies at market rates when you wish. They are also a stock broker and you can also trade on the various exchanges in different countries. I would say, though, they they mostly want customers already experienced with trading. I do not know if they will allow someone other than you to pay money into your account. Trading companies based in the USA do not like to be in the position of collecting on cheques owed to you, that is more the business of banks. Large banks in the USA with physical locations charge monthly fees of $10/mo or more that might be waived if you leave money on deposit. Online banks have significantly lower fees. All US banks are required to follow US anti-terrorist and anti-crime regulations and will tend to expect a USA address and identity documents to open an account with normal customers. A good international bank in Europe can also do many of these same sorts of things for you. I've had an account with Fortis. They were ok, there were no monthly fees but there were fees for transactions. In some countries I understand the post even runs a bank. Paypal can be a possibility, but fees can be high ~3% for transfers, and even higher commissions for currency change. On the other hand, it is probably one of the easiest and fastest ways to move amounts of $1000 or less, provided both people have paypal accounts. |
Do I need another health insurance policy? | While I can't say how it is in the Philippines, my wife the insurance broker leads me to believe that individual insurance is more expensive than group coverages in the US almost always. So much so that people will go to great extents to form any sort of business just to insure themselves. If however it is cheaper, can't you simply opt out of your employer's plan? If you can opt out, will your employer give you any of the money they aren't paying for your insurance? If you can't opt out, or if you paycheck doesn't grow, I can't see why you would want additional coverage especially at such a young age. Should you lose your job in the near future and you worry about, go get the insurance then. EDIT One big advantage is if you get personal insurance, you might need to get an exam to qualify, and it is likely the younger you are the better you will qualify. But again, you already have insurance that covers you so I would advise keeping the group policy is probably better. |
Do I have to explain the source of *all* income on my taxes? | This is a case where you sit down with an advisor or two. There are legal, and tax issues. When you deposit the cash, or buy a car with it, the large cash transaction will trigger a notice to the US Government. So they will eventually find out. Before you get to that point you need to know what obligations and consequences you will be facing. Because you don't know if it was a gift, or found money, or if the owner will be back looking for you to return it; therefore you need expert advice. |
Who puts out buy/sell orders during earnings reports or other scheduled relevant information? | The early bird catches the worm. The first person who makes use of the information gains! That is why hedge funds pay billions of dollars to place their routers right at the center of wall street. Moreover, the information is not always correct. The article you are reading may be a rumor spread by someone on wall street.Then there is speculation and that is factored into the price. For example:- In spite of all the bad news from Greece, the market still continued to rise. This was because, everyone had an idea about what was going to happen and the price was factored in way before Greece actually defaulted. The game is way more complicated than it seems. If everyone sat down and read reports, opportunities to make millions of dollars would have been lost in those few seconds. (Please note:- I do not mean reading reports is bad) |
Finding Debt/Equity Ratio with Market Value of Equity | In order to calculate the ratio you are looking for, just divide total debt by the market capitalization of the stock. Both values can be found on the link you provided. The market capitalization is the market value of equity. |
Could there be an interest for a company to make their Share price fall? | I'm sure Nintendo made that statement to stem what will clearly be an upset during the next quarterly report. This statement was simply a reminder to investors to avoid the stick price climbing ever higher only to crash when the financial situation of the company isn't significantly different from the prior quarter. This is just spelling out the reality of Nintendo's involvement with the Pokemon brand and Pokemon Go game and the fact that the games release and associated income was already included in the guidance released last quarter. Nintendo's stock has just about doubled and there likely won't be associated income to support that come the quarterly report. |
Understanding taxes when buying goods at a store | Grocery food is not subject to sales tax in Maryland, but some food is taxed depending on category or preparation. So you must have had a combination of grocery and taxable foods. One of the cheaper items you purchased was subject to a whopping penny of sales tax. http://taxes.marylandtaxes.com/Individual_Taxes/Taxpayer_Assistance/Individual_Tax_FAQs/Use_Tax_FAQs/q4.shtml In general, food sales are subject to Maryland's 6 percent sales and use tax unless a person operating a substantial grocery or market business sells the food for consumption off the premises and the food is not a taxable prepared food. A grocery or market business is considered to be "substantial" if the sales of grocery or market food items total at least 10 percent of all food sales. |
Ideal investments for a recent college grad with very high risk tolerance? | Congratulations on being in this position. Your problem - which I think that you identified - is that you don't know much about investing. My recommendation is that you start with three goals: The Motley Fool (www.fool.com) has a lot of good information on their site. Their approach may or may not align with what you want to do; I've subscribed to their newsletters for quite a while and have found them useful. I'm what is known as a value investor; I like to make investments and hold them for a long time. Others have different philosophies. For the second goal, it's very important to follow the money and ask how people get paid in the investment business. The real money in Wall Street is made not by investment, but by charging money to those who are in the investment business. There are numerous people in line for some of your money in return for service or advice; fees for buying/selling stocks, fees for telling you which stocks to buy/sell, fees for managing your money, etc. You can invest without spending too much on fees if you understand how the system works. For the third goal, I recommend choosing a few stocks, and creating a virtual portfolio. You can then then get used to watching and tracking your investments. If you want a place to put your money while you do this, I'd start with an S&P 500 index fund with a low expense ratio, and I'd buy it through a discount broker (I use Scottrade but there are a number of choices). Hope that helps. |
Why don't market indexes use aggregate market capitalization? | They do but you're missing some calculations needed to gain an understanding. Intro To Stock Index Weighting Methods notes in part: Market cap is the most common weighting method used by an index. Market cap or market capitalization is the standard way to measure the size of the company. You might have heard of large, mid, or small cap stocks? Large cap stocks carry a higher weighting in this index. And most of the major indices, like the S&P 500, use the market cap weighting method. Stocks are weighted by the proportion of their market cap to the total market cap of all the stocks in the index. As a stock’s price and market cap rises, it gains a bigger weighting in the index. In turn the opposite, lower stock price and market cap, pushes its weighting down in the index. Pros Proponents argue that large companies have a bigger effect on the economy and are more widely owned. So they should have a bigger representation when measuring the performance of the market. Which is true. Cons It doesn’t make sense as an investment strategy. According to a market cap weighted index, investors would buy more of a stock as its price rises and sell the stock as the price falls. This is the exact opposite of the buy low, sell high mentality investors should use. Eventually, you would have more money in overpriced stocks and less in underpriced stocks. Yet most index funds follow this weighting method. Thus, there was likely a point in time where the S & P 500's initial sum was equated to a specific value though this is the part you may be missing here. Also, how do you handle when constituents change over time? For example, suppose in the S & P 500 that a $100,000,000 company is taken out and replaced with a $10,000,000,000 company that shouldn't suddenly make the index jump by a bunch of points because the underlying security was swapped or would you be cool with there being jumps when companies change or shares outstanding are rebalanced? Consider carefully how you answer that question. In terms of histories, Dow Jones Industrial Average and S & P 500 Index would be covered on Wikipedia where from the latter link: The "Composite Index",[13] as the S&P 500 was first called when it introduced its first stock index in 1923, began tracking a small number of stocks. Three years later in 1926, the Composite Index expanded to 90 stocks and then in 1957 it expanded to its current 500.[13] Standard & Poor's, a company that doles out financial information and analysis, was founded in 1860 by Henry Varnum Poor. In 1941 Poor's Publishing (Henry Varnum Poor's original company) merged with Standard Statistics (founded in 1906 as the Standard Statistics Bureau) and therein assumed the name Standard and Poor's Corporation. The S&P 500 index in its present form began on March 4, 1957. Technology has allowed the index to be calculated and disseminated in real time. The S&P 500 is widely used as a measure of the general level of stock prices, as it includes both growth stocks and value stocks. In September 1962, Ultronic Systems Corp. entered into an agreement with Standard and Poor's. Under the terms of this agreement, Ultronics computed the S&P 500 Stock Composite Index, the 425 Stock Industrial Index, the 50 Stock Utility Index, and the 25 Stock Rail Index. Throughout the market day these statistics were furnished to Standard & Poor's. In addition, Ultronics also computed and reported the 94 S&P sub-indexes.[14] There are also articles like Business Insider that have this graphic that may be interesting: S & P changes over the years The makeup of the S&P 500 is constantly changing notes in part: "In most years 25 to 30 stocks in the S&P 500 are replaced," said David Blitzer, S&P's Chairman of the Index Committee. And while there are strict guidelines for what companies are added, the final decision and timing of that decision depends on what's going through the heads of a handful of people employed by Dow Jones. |
What is the rationale behind stock markets retreating due to S&P having a negative outlook on the USA? | I think a big part of the issue is ignorance. For instance, the US govt cannot default on its loans, yet you keep hearing people speak as if it could. The US govt also does not have to borrow to pay for anything, it creates its own money whenever it wants. These 2 facts often evade many people, and they feel the US govt should act like a household, business, or a state govt. This disconnect leads to a lot of confusion, and things like "fiscal crisis". Just remember Rahm Emanuel - don't let a crisis go to waste. Disclaimer: this is not to say the US should create money whenever it wants without thought. However, the simple fact is it can. For those interested in more, check out Modern Monetary Theory (MMT). Its economic study in a world not based on gold standard, or convertible currency (fiat currency). |
Investing in the stock market during periods of high inflation | The relation between inflation and stock (or economic) performance is not well-understood. Decades ago, economists thought inflation corresponded with periods of high growth and good real returns, but since then we have had periods of low inflation and high growth and high inflation with low growth. It is generally understood among current economists that inflation levels (especially expected inflation) are neither indicative nor causative of real stock returns. Many things can affect inflation, and economic performance is only a minor one. Many things can cause economic performance, and inflation is only a minor one. It's not clear whether the overall relation between inflation and real stock returns is positive or negative. Notice, however, that in principle stock returns are real. That is, the money companies make is in inflated dollars so profit and dividends for a company whose prospects have not changed should go up and down at the same rate as inflation. This would mean if inflation goes up by 5% and nothing else changes, you would expect stock prices to go up by the same proportion so you wouldn't have strong feelings about inflation one way or the other. In real life stock prices will go up by either more or less than 5% but I'm not comfortable saying which, on average. Bottom line: current levels of inflation can't really be used to predict real stock returns, so you shouldn't let current inflation guide your decision about whether to buy stock. |
Is there a term for the risk of investing in an asset with a positive but inferior return? | I'm sorry for adding another answer @MatthewFlaschen but it is too long for a comment. It depends on the situation. Say you buy shares of the Apple Inc. and want to know what is the lost opportunity cost. You need to find out what other opportunities are. In other words what are the other possible types of investments you consider. For example in theory you could try to invest in any company from S&P 500, but is it really possible (I don’t mean investing directly in index) . Are you really capable of researching each company. So in your case you would consider only a few companies as alternative solutions. Also after different time period each choice may be your lost opportunity cost. To measure the risk you have to: In conclusion I want to say that my goal was to picture in general how the process looks. Also this is just an exemplary answer. All is about in what finance field you are interested. For example in one field you use Internal Rate of Return and in other Value at Risk. Opportunity cost is to vague to exactly tell how measure its risk of wrong anticipation. It connects in every finance field and in every field you have different ways do deal with it. If you specify your question more, maybe someone will provide a better answer. |
Margin when entered into a derivative contract | Derivatives derive their value from underlying assets. This is expressed by the obligation of at least one counterparty to trade with the other counterparty in the future. These can take on as many combinations as one can dream up as it is a matter of contract. For futures, where two parties are obligated to trade at a specific price at a specific date in the future (one buyer, one seller), if you "short" a future, you have entered into a contract to sell the underlying at the time specified. If the price of the future moves against you (goes up), you will have to sell at a loss. The bigger the move, the greater the loss. You go ahead and pay this as well as a little extra to be sure that you satisfy what you owe due to the future. This satisfaction is called margin. If there weren't margin, people could take huge losses on their derivative bets, not pay, and disrupt the markets. Making sure that the money that will trade is already there makes the markets run smoothly. It's the same for shorting stocks where you borrow the stock, sell it, and wait. You have to leave the money with the broker as well as deposit a little extra to be sure you can make good if the market moves to a large degree against you. |
Why do I get a much better price for options with a limit order than the ask price? | There are people whose strategy revolves around putting orders at the bid and ask and making money off people who cross the spread. If you put an order in between the current bid/ask, people running that type of strategy will usually pick it off, viewing it as a discount to the orders that they already have on the bid/ask. Often these people are trading by computer, so your limit order may get hit so quickly that it appears instantaneous to you. In reality, you were probably hit by a limit order placed specifically to fill against yours. |
I have $12k in a Chase checking account, but want to start earning interest/saving/investing/etc to make more money. What should I do? | First thing's first: migrate your savings to an interest-bearing savings account (such as from Ally Bank). While it still lags behind inflation, 0.84% is still better than 0.00%. Short-term CDs are also an option. I've personally thought about experimenting with peer-to-peer lending, but a few thousand in savings isn't all that much in the grand scheme of things, and you don't want it tied up in a risky, speculative loan when you might need it the most. As the others have said, the general savings rules apply too: pay off high-interest debt, divert more money into your 401k (especially if you aren't hitting the match yet), then work on either whittling down other debts or saving more for a big purchase in the future. |
What size “nest egg” should my husband and I have, and by what age? | I would focus first on maxing out your RRSPs (or 401k) each year, and once you've done that, try to put another 10% of your income away into unregistered long term growth savings. Let's say you're 30 and you've been doing that since you graduated 7 years ago, and maybe you averaged 8% p.a. return and an average of $50k per year salary (as a round number). I would say you should have 60k to 120k in straight up investments around age 30. If that's the case, you're probably well on your way to a very comfortable retirement. |
I might use a credit card convenience check. What should I consider? | I tried this a few months ago when I got one from Chase for 0%. Thought it might be fun to play with, maybe make some money with the interest elsewhere over the 6 months. Read the term and called Chase for more information on these and didn't see any issues at first. The big thing that got me was that the rest of my account (not the money from the convenience check) was converted so that interests accrued on a daily basis even if you paid it all off at the end of the month. So even though I was making the required payments that would normally not incur any interest, just by having the convince check balance on my account I was being charged the interest for my normal credit card charges over the month. The amount of charges came out to only be around $10-$20, so wasn't much of a loss really. But something to keep in mind when using these, (I tried it with 0% APR and still couldn't get away from the interest). If I had needed the money this would still be an excellent way to go. But if your trying to beat Chase with this game, it doesn't work... Although if you don't use the card for anything other than the convenience check it's free money (or cheap @ 3.99% in your case) Everything in my account went back to normal after it was paid off, so no harm really, but some things to keep in mind at least. |
How to improve credit score and borrow money | No you should not borrow money at 44.9%. I would recommend not borrowing money except for a home with a healthy deposit (called down payment outside UK). in December 2016, i had financial crisis So that was like 12 days ago. You make it sound like the crisis was a total random event, that you did nothing to cause it. Financial crises are rarely without fault. Common causes are failure to understand risk, borrowing too much, insuring too little, improper maintenance, improper reserves, improper planning, etc... Taking a good step or two back and really understanding the cause of your financial crisis and how it could be avoided in the future is very useful. Talk to someone who is actually wealthy about how you could have behaved differently to avoid the "crisis". There are some small set of crises that are no fault of your own. However in those cases the recipe to recovery is patience. Attempting to recover in 12 days is a recipe for further disaster. Your willingness to consider borrowing at 44% suggests this crisis was self-inflicted. It also indicates you need a whole lot more education in personal finance. This is reinforced by your insatiable desire for a high credit score. Credit score is no indication of wealth, and is meaningless until you desire to borrow money. From what I read, you should not be borrowing money. When the time comes for you to buy a home with a mortgage, its fairly easy to have a high enough credit score to borrow at a good rate. You get there by paying your bills on time and having a sufficient deposit. Don't chase a high credit score at the expense of building real wealth. |
Are credit histories/scores international? | Currently the credit history are not International but are local. Many countries don't have a concept of credit history yet. Having said that, if you are moving to US, depending on your history in your country, you can ask the same bank to provide you with a card and then start building history. For example in India I had a card with Citi Bank and when I moved to US for a short period, I was given a card based on my India Card, with equivalent credit in USD. If you are moving often internationally, it would make sense to Bank with a leading bank that provide services in geographies of your interest [Citi, HSBC, etc] and then in a new country approach these institutions to get you some starting credit for you to build a history. |
If I plan to buy a car in cash, should I let the dealer know? | Ideally you would negotiate a car price without ever mentioning: And other factors that affect the price. You and the dealer would then negotiate a true price for the car, followed by the application of rebates, followed by negotiating for the loan if there is to be one. In practice this rarely happens. The sales rep asks point blank what rebates you qualify for (by asking get-to-know-you questions like where you work or if you served in the armed forces - you may not realize that these are do-you-qualify-for-a-rebate questions) before you've even chosen a model. They take that into account right from the beginning, along with whether they'll make a profit lending you money, or have to spend something to subsidize your zero percent loan. However unlike your veteran's status, your loan intentions are changeable. So when you get to the end you can ask if the price could be improved by paying cash. Or you could try putting the negotiated price on a credit card, and when they don't like that, ask for a further discount to stop you from using the credit card and paying cash. |
Does my net paycheck decrease as the year goes on due to tax brackets filling up? | If your payroll payments are the same each period, you will generally have the same net pay per period. Some things that can cause variations: If your employer puts special payments in a specific paycheck (such as a quarterly or annual bonus, or a vacation payout) this can increase the percentage held from that specific paycheck. The IRS publishes lookup tables, and your payroll system should withhold the amount in the lookup table. If you get a raise midyear, your new payroll withholding rate may increase based on the gross pay amount. http://www.irs.gov/pub/irs-pdf/p15.pdf |
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? | If you are living together 'casually' (no formal partnership agreement) then my option would be to ask her politely to as she has offered make a contribution by buying the groceries or some such which you share. A 'voluntary contribution' not an enforceable one. Just as between flat mates where only one is the actual tenant of the flat but the tenancy allows 'sharing' . Check your tenancy allows you to share lodgings. PS An old Scots saying is "never do business with close family". I.e do not charge your wife or living in partner rent. It mixes emotional domestic life with a formal business life which can set feuds going in case of a break up or dispute. If you enter into child bearing relationship or parent hood or formal partnership or marriage then all this changes at some time in the future. |
Using property to achieve financial independence | Will buying a flat which generates $250 rent per month be a good decision? Whether investing in real estate is a good decision or not depends on many things, including the current and future supply/demand for rental units in your particular area. There are many questions on this site about this topic, and another answer to this question which already addresses many risks associated with owning property (though there are also benefits to consider). I just want to focus on this point you raised: I personally think yes, because rent adjusts with inflation and the rise in the price of the property is another benefit. Could this help me become financially independent in the long run since inflation is getting adjusted in it? In my opinion, the fact that rental income general adjusts with 'inflation' is a hedge against some types of economic risk, not an absolute increase in value. First, consider buying a house to live in, instead of to rent: If you pay off your mortgage before your retire, then you have reduced your cost of accommodations to only utilities, property taxes, and repairs. This gives you a (relatively) known, fixed requirement of cash outflows. If the value of property goes up by the time you retire - it doesn't cost you anything extra, because you already own your house. If the value of property goes down by the time you retire, then you don't save anything, because you already own your house. If you instead rent your whole life, and save money each month (instead of paying off a mortgage), then when you retire, you will have a larger amount of savings which you can use to pay your monthly rental costs each month. By the time you retire, your cost of accommodations will be the market price for rent at that time. If the value of property goes up by the time you retire - you will have to pay more on rent. If the value of property goes down by the time you retire, you will save money on rent. You will have larger savings, but your cash outflow will be a little bit less certain, because you don't know what the market price for rent will be. You can see that, because you need to put a roof over your own head, just by existing you bear risk of the cost of property rising. So, buying your own home can be a hedge against that risk. This is called a 'natural hedge', where two competing risks can mitigate each-other just by existing. This doesn't mean buying a house is always the right thing to do, it is just one piece of the puzzle to comparing the two alternatives [see many other threads on buying vs renting on this site, or on google]. Now, consider buying a house to rent out to other people: In the extreme scenario, assume that you do everything you can to buy as much property as possible. Maybe by the time you retire, you own a small apartment building with 11 units, where you live in one of them (as an example), and you have no other savings. Before, owning your own home was, among other pros and cons, a natural hedge against the risk of your own personal cost of accommodations going up. But now, the risk of your many rental units is far greater than the risk of your own personal accommodations. That is, if rent goes up by $100 after you retire, your rental income goes up by $1,000, and your personal cost of accommodations only goes up by $100. If rent goes down by $50 after you retire, your rental income goes down by $500, and your personal cost of accommodations only goes down by $50. You can see that only investing in rental properties puts you at great risk of fluctuations in the rental market. This risk is larger than if you simply bought your own home, because at least in that case, you are guaranteeing your cost of accommodations, which you know you will need to pay one way or another. This is why most investment advice suggests that you diversify your investment portfolio. That means buying some stocks, some bonds, etc.. If you invest to heavily in a single thing, then you bear huge risks for that particular market. In the case of property, each investment is so large that you are often 'undiversified' if you invest heavily in it (you can't just buy a house $100 at a time, like you could a stock or bond). Of course, my above examples are very simplified. I am only trying to suggest the underlying principle, not the full complexities of the real estate market. Note also that there are many types of investments which typically adjust with inflation / cost of living; real estate is only one of them. |
Getting Cash from Credit Card without Fees | This was actually (sort of) possible a few years ago. The US Mint, trying to encourage use of dollar coins, would sell the coins to customers for face value and no shipping. Many people did exactly what you are proposing: bought hundreds/thousands of dollars worth of coins with credit cards, reaped the rewards, deposited the coins in the bank, and paid off the credit cards. See here, for example. Yeah, they don't have that program any more. Of course, this sort of behavior was completely predictable and painfully obvious to the credit card companies, who, as far as I know, never let users net rewards on cash advances. They're trying to make money after all, unlike the Mint, which, uh, well... |
Why do governments borrow money instead of printing it? | The government could actually do either one to expand the money supply as necessary to keep up with rising productivity / an increased labor supply. The question is merely political. In the case of the US, printing money involves convincing politicians to spend it. While we currently run a deficit, there is a large lobby within the US who are incredibly anti-deficit, and are fighting against this for no good reason. If the money supply were left in their hands, we would end up with a shrinking money supply and rapid deflation. On the other hand, the Fed can simply bypass the politicians, and control the money supply directly by issuing bonds. It's easier for them, they don't have to explain it to voters (only to economists), and it gives them more direct control without any messy political considerations like which programs to expand or cut. |
Tutoring Business Payroll Management | This is going to depend on the tax jurisdiction and I have no knowledge of the rules in Illinois. But I'd like to give you some direction about how to think about this. The biggest problem that you might hit is that if you collect a single check and then distribute to the tutors, you may be considered their employer. As an employer, you would be responsible for things like This is not meant as an exhaustive list. Even if not an employer, you are still paying them. You would be responsible for issuing 1099 forms to anyone who goes above $600 for the year (source). You would need to file for a taxpayer identification number for your organization, as it is acting as a business. You need to give this number to the school so that they can issue the correct form to you. You might have to register a "Doing Business As" name. It's conceivable that you could get away with having the school write the check to you as an individual. But if you do that, it will show up as income on your taxes and you will have to deduct payments to the other tutors. If the organization already has a separate tax identity, then you could use that. Note that the organization will be responsible for paying income tax. It should be able to deduct payments to the tutors as well as marketing expenses, etc. If the school will go for it, consider structuring things with a payment to your organization for your organization duties. Then you tell the school how much to pay each tutor. You would be responsible for giving the school the necessary information, like name, address, Social Security number, and cost (or possibly hours worked). |
Are there any catches with interest from banks? Is this interest “too good to be true”? | The 1.09% is per year, not per month, so you will be getting about 1K per year just for sitting around on your backside. Some important things. It is almost certain that you can earn a better interest rate elsewhere, if you are prepared to leave your 100K untouched. For example, even in Natwest you can earn 3.2% over the next year if you buy a fixed rate bond. For 100K that is certainly worth looking at. Or maybe put 90K in a fixed rate bond and leave 10K in an instant access account. Taxes should not be a problem since you can earn around 7K before you start paying taxes. However be aware that in the UK most bank accounts deduct tax at source. That means they send the tax they think you should have paid to the government, and you then have to claim it back from them. Accounts for young people may work differently. Ask your bank. |
Does this sound like a great idea regarding being a landlord and starting a real estate empire? | This is a well worn path and not a bad idea. There are quite a few pitfalls but there are a lot of resources to learn for other people's mistakes. Having a plan and doing your research should help you avoid most of them. Here is some general advice to help get you started on the right foot. Know the market you are investing in. The city should have more than one major employer. The population should be rising and hopefully there are other positive economic indicators. Check the city's and state's chamber of commerce for useful information. You do not want to be stuck holding a bunch of upside down property in Detroit. Accurately calculate expenses. Set aside money for repairs. budget 5% of the rent or 100 a month for repairs if no repairs happen that money goes into the repair fund for the future. Set aside money for capital expenditures if the roof has a 10 years of life left in 10 years you better be ready to replace it same with any major appliances. Your area should have a baseline vacancy rate 5-8% in my area. That says out of a year your property will be vacant for around 6% of the year or 21 days for turnover. You should build that cushion into the budget as well setting aside a portion of the rent to cover that lean period. Some property management will offer "eviction insurance" which is basically them enforcing that savings. Financing maybe difficult a lot of banks like to see 25% down payments on investments. You will also face higher interest rates for investment properties. Banks generally also like to see enough money to cover 6 months worth of expenses in your account for all property. Some banks will not give financing for investment property to someone without 1-2 years of landlord experience. All in all finding money will be hard when you gets started and your terms may be less than ideal. (hopefully make around 3 - 5k a year in profit) If that includes loan pay-down and is not just cash-flow you are probably in the right ballpark. I can find $100-$200 dollars cash-flow a month on single family home in my area. Once loan pay-down is included your numbers are close. It sounds like you have a good attitude and a good plan. A book that I really enjoyed and I think may be useful is "Start Small, Profit Big in Real Estate" by Jay DeCima. I think of it as required reading for do-it-yourself real estate investors. Good luck and happy investing |
I spend too much money. How can I get on the path to a frugal lifestyle? | There are a lot of great suggestions here on how to get and keep your finances in shape. But I have to say, I disagree with some on the starting point. The first step to living frugal is to convince yourself that it is worth it. That it is the way to go and the way you want to manage your finances. As @DrFredEdison and @fennec stated, the reason we frugal people don't spend wildly is because of what we believe. So I would suggest buying a book or video/audio series from someone like Dave Ramsey who will encourage and motivate you to spend wisely and show you practical ways to get started. With that said I do agree with a lot of the practical suggestions that have been given here. |
How to understand adding or removing “liquidity” in stock markets with market/non-market orders? | Not all limit orders add liquidity, but all market orders remove liquidity presuming there is liquidity to remove. A liquidity providing order is one that is posted to the limit book. If an order, even a limit order, is filled before being posted to the limit book, it removes liquidity. Liquidity is measured by a balance and abundance of quantities posted on the limit book and the best spread between the lowest ask and the highest bid. |
GBP savings, what to do with them if leaving the U.K. in about 2 years time? | Key point here is to remember that GBP isnt falling a lot, it has fallen a lot already. If you havent liquidated your position in pounds by now at a higher rate I would personally not bother switching to another currency right now. The pound is near its 10 year low(nearing 2008 capital 'C' Crisis levels) and despite what fear mongers may short the market for, the sun will shine after Brexit as well. Britain has a solid economy and that hasnt fundamentally changed, so even if the pound hasnt seen the absolute periodic lowest point yet(which may still come as brexit talks become more prevalent/near their end), it will eventually pull back up. In essence, you have more to lose acting in panic now than waiting to exchange for a better than today's rate at some point until the eventual Brexit(probably in March 2019) or at any point afterwards(if you wont be needing those savings when you move). |
Is there any way to buy a new car directly from Toyota without going through a dealership? | You can buy a new Toyota from a non-dealer, but not from Toyota directly as they have no retail distribution capability. There is no need to buy directly from Toyota if you want to get a new car without going through a dealer. In many cases people buy new cars but have to sell them immediately for one reason or another. |
Can't the account information on my checks be easily used for fraud? | That's accurate. Here is another risk with the current checking system, which many people are not aware of: Anyone who knows your checking account number can learn what your balance in that account is. (This is bank-specific, but it is possible at the major banks I've checked.) How does that work? Many banks have a phone line where you can dial up and interact with an automated voice response system, for various customer service tasks. One of the options is something like "merchant check verification". That option is intended to help a merchant who receives a check to verify whether the person writing the check has enough money in their account for the check to clear. If you select that option in the phone tree, it will prompt you to enter in the account number on the check and the amount of the check, and then it will respond by telling you either "there are currently sufficient funds in the account to cash this check" or "there are not sufficient funds; this check would bounce". Here's how you can abuse this system to learn how much someone has in their bank account, if you know their account number. You call up and check whether they've enough money to cash a $10,000 check (note that you don't actually have to have a check for $10,000 in your hands; you just need to know the account number). If the system says "nope, it'd bounce", then you call again and try $5,000. If the system says "yup, sufficient funds for a $5,000 check", then you try $7,500. If it says "nope, not enough for that", you try $6,250. Etcetera. At each step, you narrow the range of possible account balances by a factor of two. Consequently, after about a dozen or so steps, you will likely know their balance to within a few dollars. (Computer scientists know this procedure by the name "binary search". The rest of us may recognize it as akin to a game of "20 questions".) If this bothers you, you may be able to protect your self by calling up your bank and asking them how to prevent it. When I talked to my bank (Bank of America), they told me they could put a fraud alert flag on your account, which would disable the merchant check verification service for my account. It does mean that I have to provide a 3-digit PIN any time I phone up my bank, but that's fine with me. I realize many folks may terribly not be concerned about revealing their bank account balance, so in the grand scheme of things, this risk may be relatively minor. However, I thought I'd document it here for others to be aware of. |
What happens to an options contract during an all stock acquisition? | According to this article: With an all-stock merger, the number of shares covered by a call option is changed to adjust for the value of the buyout. The options on the bought-out company will change to options on the buyer stock at the same strike price, but for a different number of shares. Normally, one option is for 100 shares of the underlying stock. For example, company A buys company B, exchanging 1/2 share of A for each share of B. Options purchased on company B stock would change to options on company A, with 50 shares of stock delivered if the option is exercised. This outcome strongly suggests that, in general, holders of options should cash out once the takeover is announced, before the transactions takes place. Since the acquiring company will typically offer a significant premium, this will offer an opportunity for instant profits for call option holders while at the same time being a big negative for put option holders. However, it is possible in some cases where the nominal price of the two companies favours the SML company (ie. the share prices of SML is lower than that of BIG), the holder of a call option may wish to hold onto their options. (And, possibly, conversely for put option holders.) |
I'm thinking of getting a new car … why shouldn't I LEASE one? | Here are the reasons I did not lease my current car. When you lease, you're tied in at a monthly payment for 48 months or more. The only way to get out of that payment is to transfer the lease or buy out the lease. If you buy/finance, you can always sell the car or trade it in to get out of the payments. Or you can pay down more of the vehicle to lower the payments. Most leases calculate the cost of leasing based on the 'residual value' of the vehicle. Often these values are far lower than the actual worth of the vehicle if you owned it for those months and sold it yourself. So when you do the math, the lease costs you more -especially with today's low financing rates. |
Automate Savings by Percentage on varying paychecks? | You just need to average out the weekly hours and income over the year. So if his yearly income is $100,000 p.a. then this would average out to $2000 per week of which 15% would be $300 per week. It does not have to be exactly 15% per week as long as over the long run your saving your target 15%. If he gets a pay rise you can include this in the saving plan. Say he gets a 5% increase in pay you would increase the $300 per week by 5% to $315 per week. |
Idea for getting rich using computers to track stocks | There are many ways to trade. Rules based trading is practiced by professionals. You can indeed create a rule set to make buy and sell decisions based on the price action of your chosen security. I will direct you to a good website to further your study: I have found that systemtradersuccess.com is a well written blog, informative and not just a big sales pitch. You will see how to develop and evaluate trading systems. If you decide to venture down this path, a good book to read is Charles Wright's "Trading As A Business." It will get a little technical, as it discusses how to develop trading systems using the Tradestation trading platform, which is a very powerful tool for advanced traders and comes with a significant monthly usage fee (~$99/mo). But you don't have to have tradestation to understand these concepts and with an intermediate level of spreadsheet skills, you can run your own backtests. Here is a trading system example, Larry Connors' "2 period RSI system", see how it is evaluated: http://systemtradersuccess.com/connors-2-period-rsi-update-2014/, and this video teaches a bit more about this particular trading system: https://www.youtube.com/watch?v=i_h9P8dqN4Y IMPORTANT: This is not a recommendation to use this or any specific trading system, nor is it a suggestion that using these tools or websites is a path to guaranteed profits. Trading is a very risky endeavor. You can easily lose huge sums of money. Good luck! |
Buying an option in the money, at the money, or out of the money | 1 reason is Leverage.... If you are buying out of the money options you get much more bang for your buck if the stock moves in your favor. The flipside is it is much more likely that you would lose all of your investment. |
What is the different between 2 :1 split and 1:1 split | The 1 for 1 split could be the case where a company is being split into two parts. The new part may be spun off, or sold to another company. Any time a company splits into two parts, the ratio of the resulting companies needs to be determined. |
Might it make sense not to look into debt that is in collections? | It's your business to pay what you owe but it's not your business to determine what you owe. The "Fair Debt Collections Practices act" FDCPA proscribes certain steps creditors must go through to contact you. You appear to not have received any active contact or demand, but you can still cite the FDCPA to make it their problem. Write to the creditor's address (I assume its the hospital, the OP isn't clear), use USPS Certified Mail Return Receipt Requested, asking them to validate that you owe this debt by mail in 5 days, as is your right under the FDCPA. If they get back to you and you agree (or its reasonably plausible) you do owe it, pay it especially if it's on the order of $100. At least you will know it is settled at the source. Cross reference to your insurance claims to be sure its not double billed or a miscredited copay, but you may see many legit separate charges from one ER visit (hospital, doctor, anesthesiologist, etc) and it would not be the first time a medical billing system crapped the bed. If you don't hear anything after a few weeks, use the credit report protest process (or write to them, cc: the Federal Trade Commission) contesting the validity of this report. The creditor did not respond to your FDCPA request for validation (copy of the Return Receipt); and you otherwise believe you are current with the hospital. Per the Fair Credit Reporting act, they must investigate. Fight bureaucratic fire with fire: conduct all business by mail, and make liberal use of certified mail return receipts. Its a $6 way to telegraph you know that they have specific federal law timeliness requirements; and you have a federal timestamp signed by someone in their organization. |
Option trading: High dollar value stock option and equity exposure | Seems like you are concerned with something called assignment risk. It's an inherent risk of selling options: you are giving somebody the right, but not the obligation, to sell to you 100 shares of GOOGL. Option buyers pay a premium to have that right - the extrinsic value. When they exercise the option, the option immediately disappears. Together with it, all the extrinsic value disappears. So, the lower the extrinsic value, the higher the assignment risk. Usually, option contracts that are very close to expiration (let's say, around 2 to 3 weeks to expiration or less) have significantly lower extrinsic value than longer option contracts. Also, generally speaking, the deeper ITM an option contract is, the lower extrinsic value it will have. So, to reduce assignment risk, I usually close out my option positions 1-2 weeks before expiration, especially the contracts that are deep in the money. edit: to make sure this is clear, based on a comment I've just seen on your question. To "close out an options position", you just have to create the "opposite" trade. So, if you sell a Put, you close that by buying back that exact same put. Just like stock: if you buy stock, you have a position; you close that position by selling the exact same stock, in the exact same amount. That's a very common thing to do with options. A post in Tradeking's forums, very old post, but with an interesting piece of data from the OCC, states that 35% of the options expire worthless, and 48% are bought or sold before expiration to close the position - only 17% of the contracts are actually exercised! (http://community.tradeking.com/members/optionsguy/blogs/11260-what-percentage-of-options-get-exercised) A few other things to keep in mind: certain stocks have "mini options contracts", that would correspond to a lot of 10 shares of stock. These contracts are usually not very liquid, though, so you might not get great prices when opening/closing positions you said in a comment, "I cannot use this strategy to buy stocks like GOOGL"; if the reason is because 100*GOOGL is too much to fit in your buying power, that's a pretty big risk - the assignment could result in a margin call! if margin call is not really your concern, but your concern is more like the risk of holding 100 shares of GOOGL, you can help manage that by buying some lower strike Puts (that have smaller absolute delta than your Put), or selling some calls against your short put. Both strategies, while very different, will effectively reduce your delta exposure. You'd get 100 deltas from the 100 shares of GOOGL, but you'd get some negative deltas by holding the lower strike Put, or by writing the higher strike Call. So as the stock moves around, your account value would move less than the exposure equivalent to 100 shares of stock. |
How to spend more? (AKA, how to avoid being a miser) | I agree with JoeTaxpayer's answer. The question you should be asking is not "how do I spend more" but "how do I become happier". From what you say, it may be that you could increase your happiness simply by cutting back on these aggressive attempts to save a few bucks here and there. At the same time, if you do this, on some level your personality is probably not the type that would allow to simply "forget it". I think many frugal people are somewhat as you describe: they don't like wasting money. In such cases, often what matters is not so much the actual saving money as the feeling of saving money. Therefore, I'd suggest that you take a look at which of the "money-losing" activities you mention are really worth it. The easiest ones to drop would be things like the home-improvement project, which even you acknowledge does not save you money. If you like saving money, give yourself a pat on the back when you hire the contractor. If you want, run the numbers so you can "prove" to yourself how much money you are saving by not doing the work. For some of the other things, it may be that spending time to save a small amount can "gamify" an everyday experience and make it more interesting. For instance, comparing products to save a few bucks is not necessarily bad unless you actually don't like doing it. If spending a few hours comparing two toaster ovens on Amazon or whatever makes you feel good, go for it; it's no worse than spending a few hours watching TV. By acknowledging that you get something out of it --- the feeling of getting a bargain --- and savoring that, you can feel better about, and also potentially "get it out of your system" so that you won't feel the need to do it for every little thing. We all have our little pet obsessions, and it's possible to acknowledge that they're irrational, while still accepting them as part of your personality, and finding a way to satisfy them in a controlled manner that doesn't stress you out too much. |
Ongoing things to do and read to improve knowledge of finance? | Good luck! |
Better to have a non-registered (taxable) investment account in one/both names and/or based on income? | It should be in the name(s) of whomever puts money in the account. When filing your taxes there will be a question or space to mark the percentage of income in each others name. If you're just looking for small amounts of income splitting, then it's legal for the higher earning spouse to pay household expenses and then the lower earning spouse can save all or some of his/her income. Whether or not to have 2 accounts or not has more to do with estate planning and minimizing account fees if applicable. It can also help in a small way for asset allocation if that's based on family assets and also, minimizing commissions. |
Tax exemptions for US stocks held in a Candian account | The dividend tax credit is not applicable to foreign dividend income, so you would be taxed fully on every dollar of that income. When you sell a stock, there will be a capital gain or capital loss depending on if it gained or lost value, after accounting for the Adjusted Cost Base. You only pay income tax on half of the amount earned through capital gains, and if you have losses, you can use them to offset other investments that had capital gains (or carry forward to offset gains in the future). The dividends from US stocks are subject to a 15% withholding tax that gets paid to the IRS automatically when the dividends are issued. If the stocks are held in an RRSP, they are exempt from the withholding tax. If held in a non-registered account, you can be reimbursed for the tax by claiming the foreign tax credit that you linked to. If held in a TFSA or RESP, the withholding tax cannot be recovered. Also, if you are not directly holding the stocks, and instead buy a mutual fund or ETF that directly holds the stocks, then the RRSP exemption no longer applies, but the foreign tax credit is still claimable for a non-registered account. If the mutual fund or ETF does not directly hold stocks, and instead holds one or more ETFs, there is no way to recover the withholding tax in any type of account. |
Could the loan officer deny me even if I have the money as a first time home buyer? | My credentials: I used to work on mortgages, about 5 years ago. I wasn't a loan officer (the salesman) or mortgage processor (the grunt who does the real work), but I reviewed their work fairly closely. So I'm not an absolute authority, but I have first-hand knowledge. Contrary to the accepted answer, yes the bank is obligated to offer you a loan - if you meet their qualifications. This may sound odd, and as though it's forcing a bank to give money when it doesn't want to, but there is good reason. Back in the 1950's through 1980's, banks tended to deny loans to African Americans who were able to buy nicer homes because the loan officer didn't quite 'feel' like they were capable of paying off an expensive house, even if they had the exact same history and income as a white person who did get approved. After several rounds of trying to fix this problem, the government finally decreed that the bank must have a set, written criteria by which it will approve or decline loans, and the interest rates provided. It can change that criteria, but those changes must apply to all new customers. Banks are allowed a bit of discretion to approve loans that they may normally decline, but must have a written reason (usually it's due to some relationship with the customer's business (this condition adds a lot of extra rules), or that customer has a massive family and all 11 other siblings have gotten loans from the same loan officer - random rare stuff that can be easily documented if/when the government asks). The bank has no discretion to decline a loan at will - I've seen 98-year-olds sign a 30-year mortgage, and the bank was overjoyed because it showed that they didn't discriminate against the elderly. The customer could be a crackhead, and the bank can't turn them down if their paperwork, credit, and income is good. The most the loan officer could do is process the loan slowly and hope the crackhead gets arrested before the bank spends any more money. The regulations for employees new to the workforce are a bit less wonderful, but the bank will want 30+ days of income history (30 days, NOT 4 weeks) if you have it. BUT, if you are a fresh new employee, they can do the loan using your written and signed job offer as proof of income. However, I discourage you from using this method to buy a house. You are much, much better off renting for a while and learning the local area before you shop for a house. It's too easy to buy a house without knowing the city, then discover that you have a hideously slow drive to work and are in the worst part of town. And, you may not like the company as much, or you may not be a good fit. It's not uncommon to leave a company within a year or two. You don't want a house that anchors you to one place while you need the freedom to explore career options. And consider this: banks love selling mortgages, but they hate holding them. They want to collect that $10,000 closing fee, they couldn't care less about the 4% interest trickling in over 30 years. Once they sign the mortgage, they try to sell it to investors who want to buy high-grade debt within a month. That sale gives them all the money back, so they can use it to sell another mortgage and collect another $10,000. If the bank has its way, it has offloaded your mortgage before you send the first payment to them. As a result, it's a horrible idea to buy a house unless you expect to live there at least 5 or 10 years, because the closing costs are so high. |
Lump sum annuity distribution — do I owe estate tax? | There can be Federal estate tax as well as State estate tax due on an estate, but it is not of direct concern to you. Estate taxes are paid by the estate of the decedent, not by the beneficiaries, and so you do not owe any estate tax. As a matter of fact, most estates in the US do not pay Federal estate tax at all because only the amount that exceeds the Federal exemption ($5.5M) is taxable, and most estates are smaller. State estate taxes might be a different matter because while many states exempt exactly what the Federal Government does, others exempt different (usually smaller) amounts. But in any case, estate taxes are not of concern to you except insofar as what you inherit is reduced because the estate had to pay estate tax before distributing the inheritances. As JoeTaxpayer's answer says more succinctly, what you inherit is net of estate tax, if any. What you receive as an inheritance is not taxable income to you either. If you receive stock shares or other property, your basis is the value of the property when you inherit it. Thus, if you sell at a later time, you will have to pay taxes only on the increase in the value of the property from the time you inherit it. The increase in value from the time the decedent acquired the property till the date of death is not taxable income to you. Exceptions to all these favorable rules to you is the treatment of Traditional IRAs, 401ks, pension plans etc that you inherit that contain money on which the decedent never paid income tax. Distributions from such inherited accounts are (mostly) taxable income to you; any part of post-tax money such as nondeductible contributions to Traditional IRAs that is included in the distribution is tax-free. Annuities present another source of complications. For annuities within IRAs, even the IRS throws up its hands at explaining things to mere mortals who are foolhardy enough to delve into Pub 950, saying in effect, talk to your tax advisor. For other annuities, questions arise such as is this a tax-deferred annuity and whether it was purchased with pre-tax money or with post-tax money, etc. One thing that you should check out is whether it is beneficial to take a lump sum distribution or just collect the money as it is distributed in monthly, quarterly, semi-annual, or annual payments. Annuities in particular have heavy surrender charges if they are terminated early and the money taken as a lump sum instead of over time as the insurance company issuing the annuity had planned on happening. So, taking a lump sum would mean more income tax immediately due not just on the lump sum but because the increase in AGI might reduce deductions for medical expenses as well as reduce the overall amount of itemized deductions that can be claimed, increase taxability of social security benefits, etc. You say that you have these angles sussed out, and so I will merely re-iterate Beware the surrender charges. |
How much do brokerages pay exchanges per trade? | There is no one answer to this question, but there are some generalities. Most exchanges make a distinction between the passive and the aggressive sides of a trade. The passive participant is the order that was resting on the market at the time of the trade. It is an order that based on its price was not executable at the time, and therefore goes into the order book. For example, I'm willing to sell 100 shares of a stock at $9.98 but nobody wants to buy that right now, so it remains as an open order on the exchange. Then somebody comes along and is willing to meet my price (I am glossing over lots of details here). So they aggressively take out my order by either posting a market-buy, or specifically that they want to buy 100 shares at either $9.98, or at some higher price. Most exchanges will actually give me, as the passive (i.e. liquidity making) investor a small rebate, while the other person is charged a few fractions of a cent. Google found NYSEArca details, and most other exchanges make their fees public as well. As of this writing the generic price charged/credited: But they provide volume discounts, and many of the larger deals do fall into another tier of volume, which provides a different price structure. |
Why would refinancing my mortgage increase my PMI, even though rates are lower? | Is that an FHA loan you have? And you're wanting to do one of those low cost FHA re-fi's, right? The answer is that in between when you first got that loan and now, the government's changed the rules on PMI for FHA loans. It more than doubled the amount of monthly PMI you have to pay. The new rates, efective April 18th, 2011, as as follows: It used to be 0.50% per year for the 30 year. So that's why the PMI would go up. There is another rule in play too, specific to that no-cost FHA refi -- the government requires that the combined (principal+interest+pmi) monthly payment after the refi is at least 4% lower than the current payment. Note that the no-cost refi does not require a new appraisal. Some options present themselves, but only if you can show some equity in a appraisal: 1) if an appraisal shows at least 10% equity, you can go refi to a standard mortgage. You might even be able to find one that doesn't require PMI at that level. If you have 20% equity, you're golden -- no pmi. 2) See what the monthly payment will be if you refi to the 15 year FHA mortgage. Between the much lower PMI, and the much lower interest rates (15 year is usually about 0.75% less than a 30 year), it might not be much more than what you're paying now. And you'd save a huge amount of money over time, and get out from that PMI much earlier (it stops when your principal drops below 80% of the loan amount). This would require that reappraisal. |
Steps and timing of the SEIS investment (in the UK) | You make the investment in Jan 2016. Assuming the SEIS certificate is issued before 5th April 2016, then you will enter the SEIS investment on your 2015-2016 tax return and claim the relief in that year. If the certificate is not issued in time then you will enter it in the 2016-2017 tax return and get the relief then. Note: I am assuming that the startup is already registered with the SEIS scheme by someone else - because if you are asking about how to go about that, I don't think that is an issue of personal finance. |
Buy tires and keep car for 12-36 months, or replace car now? | If the car is in otherwise good shape, it's always less expensive to keep it longer. Think of it this way: you have to buy new tires no matter what. It's just a question of whether or not those new tires are attached to a new car or your current car. |
Is stock in a company considered a good or a service, or something else? | Facebook the company is probably better understood as a capital good - it is a collection of software and servers and a well-known brand name with a snazzy network effect under reasonably competent corporate governance that can produce final goods and services (mostly services) that actually have value. A share of Facebook stock is a share of ownership in that capital. See also: http://en.wikipedia.org/wiki/Capital_good which makes some concessions for the difference between capital goods and capital services, so it's kind of a fuzzy thing. |
What would the broker do about this naked call option? | Yes, it can buy back the call, but much before stock hits the $30 mark. Let us say you got 1$ from selling the call. So the total money in your account is 4$ + 1 $ = 5 $. When stock hits 10$ (your strike), the maintenance margin is 5$. As soon as stock goes past 10, your maintenance margin is violated. So broker will buy back your call (at least IB does that, it does not wait for a margin call). Now if the stock gapped up from 8 to 30,then yes, broker will buy it back at 30, so your account will have a negative balance. Assume the call cost 20$ when stock hit 30, your balance is: 5 - (30-10) = -15. Depending on broker, I suppose they will ask you to bring your account balance back up to positive. If they don't do that, they risk going out of business. |
For a mortgage down-payment, what percentage is sensible? | In Australia, you will typically be required to pay for mortgage insurance if you borrow more than 80% of the value of the property. Basically this means another ~1% on top of the regular interest rate. So it's in your interests to save until you can at least reach that point. If you can't rent and save at the same time, it suggests your finances may be too stretched for buying now to be a good idea. |
Multiple SEO companies claiming I have a past-due invoice | Reading stuff like this makes me want to go into the debt collection business. Just send letters to random people demanding money. Sounds like an easy way to make a living. What's your name and address? Just kidding. If they are sending stuff to a Virginia PO Box, close the box with no forwarding address and consider it case closed. If they are targetting you personally in New Hampshire, the best thing to do is to sue proactively before it goes to collection. New Hampshire has strict anti-debt-collection laws. Basically, what you do is go to small claims court and fill out a one-page form. Sue them for $2000, $3000 or whatever is convenient. Do not hire a lawyer. You can do this in 2 hours of your own time. Your grounds are: (1) Violation of the creditor of NH FDCA laws. According to the laws the creditor has to put all kinds of specific stuff in their threat letters. Since they are not doing this, they have violated NH FDCA. Read the FDCA so you know which specific items they are violating. (2) Extortion. Since you do not owe them any money, demanding money from you is extortion which is both criminally and civilly actionable. You sue them for mental anguish due to extortion. The validity of your claims is irrelevant. You just need to get them in court. There are two possibilities: (A) They fail to show up. In this case you win and they owe you $3000 or whatever. Not only that if they later try to collect from you send a copy of the judgement to the credit bureau or collector or whatever and that is proof you owe them no money. (B) They hire some stooge local lawyer who appears. Accept the court's offer for arbitration. When you go into arbitration with the lawyer tell him you will drop the lawsuit if they send you a check for $500 and a hand-written guarantee from him that you will never hear from his client again. Either way, you come out ahead. By the way, it is absolutely guaranteed that the enemy lawyer will accept your offer in (B) above because the SEO company is already paying him $5000 to show up to answer your lawsuit, and the lawyer does not want to hang around all morning in court waiting for the case to be heard. If he can get out of there in half an hour for only $500 he will do it. -------------------------------UPDATE If all you are getting is calls and the caller refuses to identify themself, then it is definitely an illegal scam. It is illegal in New Hampshire to make collection calls and refuse to full identify who is calling. The phone company has methods for dealing with illegal calls. First you have to file a police report. Then you call Verizon Security at 1-800-518-5507 (or whatever your phone company is). They will trace the call and identify the caller. They you can make a criminal complaint in their jurisdiction unless the call is from Pakistan or something. |
Can I pay a loan under someone else's name? (assume the dispenser of the loan is malicious) | I don't think there's anything to worry about. TFS doesn't really care who's paying, as long as the loan is being paid as agreed. Of course you're helping your dad's credit history and not your own, but I doubt TFS would give back money just because it came from your bank account. A business may claim a payment wasn't made against the loan, but you'd have the records that you did in fact pay (keep those bank statements). In theory they could sue you, in practice you'd send them the proof and they'd investigate and find the misplaced money. THAT does happen sometimes; the wrong account is credited. If it did end up in court, again you'd win because you have proof you sent payments. Even if you put the wrong loan account number to pay to, you'd have proof you in fact sent the money. If you're talking about something like a loan shark... they can do whatever they like. They won't sue you though, because again you'd have proof. That's why they'd use violence. But probably a loan shark wouldn't falsely claim you didn't pay if you did, as word would get out and the loan shark would lose business. And again, as long as they get what's agreed to, they don't care how they get it or who they get it from. |
Taking partial capital loss purely for tax purposes | Note that the rules around wash sales vary depending on where you live. For the U.S., the wash sale rules say that you cannot buy a substantially identical stock or security within 30 days (before or after) your sale. So, you could sell your stock today to lock in the capital losses. However, you would then have to wait at least 30 days before purchasing it back. If you bought it back within 30 days, you would disqualify the capital loss event. The risk, of course, is that the stock's price goes up substantially while you are waiting for the wash sale period. It's up to you to determine if the risk outweighs the benefit of locking in your capital losses. Note that this applies regardless of whether you sell SOME or ALL of the stock. Or indeed, if we are talking about securities other than stocks. |
Is it a good idea to get an unsecured loan to pay off a credit card that won't lower a high rate? | I think it depends on how you're approaching paying off the credit card. If you're doing some sort of debt snowball and/or throw all available cash at the card, it's not likely to matter much. If you're paying a set amount close to the minimum each month then you're probably better off getting a loan, use it to pay off the card and cut up the card. Well, I'd do the latter in either case... Mathematically it would matter if the interest rate on the card is 10%-15% higher than the personal loan but if you're throwing every spare dime at the card and the some, it might not matter. Another option if you have the discipline to pay the debt off quickly is to see if you can find a card with a cheap balance transfer, move the balance over and close the inflexible card. |
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