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How to get the lowest mortgage rate on a new purchase? | Start with the bank where you have your checking and savings account. They can streamline some of the paperwork, because they can see how much you make, and have access to several years worth of bank statement. Legitimate mortgage companies do publish their rates. But there is no guarantee that you will qualify for the best rate without them knowing your credit score, salary, and down payment information. There is no way to know that you have the best rate because of the time lag involved. You will pick the best one you can work with, but the rates can change every day. Even when you lock in the rates, other companies can drift lower. Once you have started down the application process you will reach a point where switching companies will cost you time and money. Once you decide to purchase a house, the contract usually only gives you a few weeks to prove that you have financing in place. Therefore you will have to start the process before deciding on the house. Some advance work is needed to give you an idea of the maximum monthly payment you can afford, which will then based on the rate and down payment determine the maximum house you can buy. I have had good luck with my credit union, but there is no guarantee that yours will be competitive. Keep in mind that while rates are very important, some people also value customer service, and also like that the mortgage won't be sold to out of town investors. |
What prevents interest rates from rising? | A lot of loans are taken out on a fixed rate basis, so the rate is part of the contract and is therefore covered by contract law. If the loan is taken out on a variable basis then in principle the rate can rise within the terms of the contract. If a particular lender tries to raise its rates out of line with the market then its customers will seek alternative, cheaper, loans and pay off their expensive loan if they can. If rates rise sharply in general due to unusual politico-economic circumstances then those with variable rate loans can find themselves in severe trouble. For example the base rate in the UK (and therefore variable mortgage rates closely tied to it) spiked sharply in the late 80s which caused severe stress to a lot of borrowers and undoubtedly pushed some into financial difficulties. |
Didn't apply for credit card but got an application denied letter? | Do you have any ties to your old address? In particular are you the LANDLORD? This could have been a precursor application to test identity evidence and setup a mortgage. The perps may even have legally changed their name to yours and even be living in, or close to the house if it is a share house to intercept this kind of mail. Otherwise someone's database may have been breached, so it is important you try to work out where this information used in the application came from. If they are an illegal you may be racking up Council Tax somewhere or end up paying income tax on their earnings. In any case your character has probably now been damaged. So do follow it up right smartly. |
Why are daily rebalanced inverse/leveraged ETFs bad for long term investing? | If you want to make a profit from long term trading (whatever "long term" means for you), the best strategy is to let the good performers in your portfolio run, and cull the bad ones. Of course that strategy is hard to follow, unless you have the perfect foresight to know exactly how long your best performing investments will continue to outperform the market, but markets don't always follow the assumption that perfect information is available to all participants, and hence "momentum" has a real-world effect on prices, whether or not some theorists have chosen to ignore it. But a fixed strategy of "daily rebalancing" does exactly the opposite of the above - it continuously reduces the holdings of good performers and increases the holdings of bad. If this type of rebalancing is done more frequently than the constituents of benchmark index are adjusted, it is very likely to underperform the index in the long term. Other issues in a "real world" market are the impact of increased dealing costs on smaller parcels of securities, and the buy/sell spreads incurred in the daily rebalancing trades. If the market is up and down 1% on alternate days with no long tern trend, quite likely the fund will be repeatedly buying and selling small parcels of the same stocks to do its daily balancing. |
If I invest in securities denominated in a foreign currency, should I hedge my currency risk? | Like most other investment decisions - it depends. Specifically in this case it depends upon your view of the FX (Foreign Exchange) market over the next few years, and how sensitive you are to losses. As you correctly note, a hedge has a cost, so it detracts from your overall return. But given that you need to repatriate the investment eventually to US Dollars, you need to be aware of the fluctuations of the dollar versus other currencies. If you believe that over your time horizon, the US dollar will be worth the same as now or less, then you should not buy the hedge. If the dollar is the same - the choice is/was obvious. If you believe the US dollar will be weaker in the future, that means that when you repatriate back to US dollars, you will purchase more dollars with your foreign currency. If on the other hand, you believe the US Dollar will get stronger, then you should certainly lock in some kind of hedge. That way, when your foreign currency would have effectively bought fewer US, you will have made money on the hedge to make up the difference. If you choose not to hedge now, you can likely hedge that exposure at any time in the future, separate from the initial investment purchase buy buying/selling the appropriate FX instrument. Good Luck |
When will the U.K. convert to the Euro as an official currency? | Not anytime soon, I suspect, but not necessarily for financial reasons. I found this interesting, including the link to the five tests, but I think that this topic is only partially judged through financial eyes, there's a lot of political issues around this with national identity/immigration issues already in the spot light as well as political aspirations. If there will be a call in the near future to join the Euro, how would that reflect on the financial industry in the UK from a PR perspective? and on the political leadership and how it managed the financial crisis? I believe that it is in the interest of all the people in the high positions to show the country getting back on track rather than making ground shaking moves. But what do I know....:-) |
How to calculate tax amounts withheld on mixed pre-tax and Roth 401(k) contributions, and match? | Your 401k IRA will now have three different sub-accounts, the one holding your Traditional (pre-tax) 401k contributions, the one holding your Roth 401k contributions, and the one holding the employer match contributions (which, as has been pointed out to you, cannot be considered to be Roth 401k contributions). That is, it is not true that So my next month's check shows $500+$500 going to the regular 401k, and $82+$82 going to the Roth 401k. Your next month's paystub will show $500 going into the regular 401k, $100 going into the Roth 401k, and if employer matching contributions are listed on the paystub, it will still show $600 going into the employer match. If you have chosen to invest your 401k in mutual funds (or stocks), shares are purchased when the 401k administrator receives the money and are also segregated in the three subaccounts. If you are paid monthly, then you will know on a month-by-month basis how many shares you hold in the three separate subaccounts, and there is no end-of-year modification of how many shares were purchased with Roth 401k contributions versus how many were purchased with pretax contributions or with employer matching funds as you seem to think. |
Average Price of a Stock | I would have to disagree with the other responders. In technical analysis of stock charts, various short and long term moving averages are used to give an indication of the trend of the stock in the short and long term, as compared to the current price. I would prefer to use the term moving average (MA) rather than average as the MA is recalculated every day (or at appropriate frequencies for your data) on the period you are using. I would also expand on the term "moving average". There are two that are commonly used Going back to the question, of the value of this number, For example if the current price is above the 200 day EWMA and also above the 30 day EWMA, then the stock is broadly trending upwards. Conversely if current price is below the 200 day EWMA and also below the 30 day EWMA, then the stock is broadly trending downwards. These numbers are chosen on the basis of the market you are trading in, the volatility and other factors. For another example of how a number of moving averages are used together, please have a read of Daryl Guppy's Multiple Moving Average, though this does not use moving averages as large as 200 days. |
Is it possible for the average person to profit on the stock market? | Below is a list of rules that will help you to decide what types of products you should be investing in: |
What would be a wise way to invest savings for a newly married couple? | I agree with @Pete that you may be well-advised to pay off your loans first and go from there. Even though you may not be "required" to make payments on your own loan based on your income, that debt will play a large factor in your borrowing ability until it is gone, which hinders your ability to move toward home ownership. If you are in a fortunate enough position to totally pay off both your loan and hers from cash on hand then you should. It would still leave you with more than $112,000 and no debt, which is a big priority and advantage for a young couple. Mind you, this doesn't keep you from starting an investment plan with some portion of the remaining funds (the advice to keep six months' income in the bank is very wise) through perhaps a mutual fund if you don't want to directly manage the investments yourself. The advantage of mutual funds is the ability to choose the level of risk you're willing to take and let professionals manage how to achieve your goals for you. You can always make adjustments to your funds as your circumstances change. Again, I'd emphasize ridding yourself of the student loan debt as the first move, then looking at how to invest the remainder. |
Getting Cash from Credit Card without Fees | While I think this is generally inadvisable, there are sites and communities dedicated to "points churning" credit card reward programs. In general, no there is no easy way to get cash from a credit card, and receive the spending rewards, and not pay fees well in excess of your rewards value. However, there are people who figure out ways to do this kind of thing. Like buying prepaid Visa cards $500 at a time from drug stores on a 5% bonus rewards month. Or buying rolls of $1 coins from the US treasury with free shipping. The issue is the source of the fees. When you spend money on your card the merchant pays a fee. When you get cash from an ATM not only is there no merchant remitting a fee there is an ATM operator and a network both charging fees. |
Restricted Stock Grants - How to prepare tax return when you sell to cover taxes | You don't. When you sell them - your cost basis would be the price of the stock at which you sold the stocks to cover the taxes, and the difference is your regular capital gain. |
Does it make any sense to have individual stocks, bonds, preferred shares | Sure, with some general rules of thumb: what is the minimum portfolio balance to avoid paying too much for transaction fees? Well, the fee doesn't change with portfolio balance or order size, so I don't know what you're trying to do here. The way to have less transaction fees is to have less transactions. That means no day-trading, no option rolling, etc. A Buy-and-hold strategy (with free dividend reinvestment if available) will minimize transaction fees. |
Do I need a business credit card? | I finally got one to separate my business and personal expenses. It will make accounting at the end of the year a lot easier. |
Can a dealer keep my deposit (on a non-existant car) if my loan is not approved? | Without the contract it's hard to say for sure, but Consumer Reports indicates that it's pretty easy to lose these deposits; they're not as well protected as other deposits or purchases (depending on your state and other details). You should make an effort to comply with all of the requests from the financing arm promptly, and in particular you should probably highlight that you could afford to pay for the car in cash (and be prepared to show bank/money market/investment statements to back that up). Credit is mostly a numbers game, but there is a human on the other side making the decision (assuming you're remotely close) and that makes a big difference. I would be prepared to walk away from your deposit if they come back and offer you a 5% APR or similar (and you're uncomfortable with the loan at that rate) - over 5 years, a $20k loan at 5% APR will cost you several thousand dollars; it might be worth it even if they don't give you your deposit back. And if you're clearly ready to walk away from the deposit, that might cause them to negotiate in better faith. Some tips, both from that article and my general experience: |
How should I value personal use television for donation? | Is it a tube television, digital, analog, what? Tube televisions are no longer made in (or imported to) the U.S., and if it's an analog set then it would require a digital converter just for anyone to use it for watching broadcast signals, since analog television signals are gone and have been replaced by DTV. That makes all the difference in the world as far as valuation. If it doesn't have resale value to begin with then I doubt you can put a real value on it for donation purposes. |
Including the region where you live in your investment portfolio? | Diversification is a risk-mitigation strategy. When you invest in equities, you generally get a higher rate of return than a fixed income investment. But you have risks... a single company's market value can decline for all sorts of reasons, including factors outside of the control of management. Diversification lets you spread risk and concentrate on sectors that you feel offer the best value. Investing outside of your currency zone allows you to diversify more, but also introduces currency risks, which require a whole other level of understanding. Today, investing in emerging markets is very popular for US investors because these economies are booming and US monetary policy has been weakening the dollar for some time. A major bank failure in China or a flip to a strong dollar policy could literally implode those investments overnight. At the end of the day, invest in what you understand. Know the factors that can lower your investment value. |
How to share income after marriage and kids? | I started this off as a comment to Joe's answer, but it got rather messy in that form so I'll just post it as a separate answer instead. I suggest that you read Joe's answer first. I believe you are overthinking this. First, you really should be discussing the matter with your girlfriend. We can provide suggestions, but only the two of you can decide what feels right for the two of you. Strangers on the Internet can never have as complete a picture of your financial situations, your plans, and your personalities, as the two of you together. That said, here's a starting point that I would use as input to such a discussion: As you can see, a common theme to all of this is transparency and communication. There is a reason for this: a marriage without proper communication can never work out well in the long term. I don't know about Germany specifically, but disagreements about money tends to be a major reason in couples splitting up. By setting your lives up for transparency in money matters from the beginning, you significantly reduce the risk of this happening to you. Scott Hanselman discusses a very similar way of doing things, but phrases it differently, in Relationship Hacks: An Allowance System for Adults. |
Can I withdraw cash from selling investments before the settlement date? | No, you cannot withdraw the money until settlement day. Some brokers will allow you to trade with unsettled funds, but you cannot withdraw it until it is settled. Think about it, when you buy stock you have to pay for them by T+3, so if you sell you actually don't receive the funds until T+3. |
The Big Short - shorting vs CDS | To be able to truly short something you technically need to be able to borrow the security so you can sell it. There needs to be a system for borrowing in place to be able to do this which is very robust for large U.S. stocks but doesn't exist for CDOs mainly due to the complex legal structures around them. However, the word "short" is commonly used in finance to mean profiting from a loss of value of something. So the use in the movie title, though a bit confusing, was fine. Credit Default Swaps are not technically insurance as you don't need own the thing you are "insuring" (and for a few other reasons). However, I agree with the movie that thinking of them as insurance is a pretty good way to understand them. As you are playing a monthly premium to for a contract that pays out when something goes very wrong. However, the movie was a little fast a loose as CDS of various types were regularly traded well before the bubble even started. Though maybe not that particular type of CDS. So while they may have been "expensive" it was the easiest route and reasonable idea. |
Why is the stock market price for a share always higher than the earnings per share? | Imagine a stock where the share price equals the earnings per share. You pay say $100 for a share. In the next year, the company makes $100 per share. They can pay a $100 dividend, so now you have your money back, and you still own the share. Next year, they make $100 per share, pay a $100 dividend, so now you have your money back, plus $100 in your pocket, plus you own the share. Wow. What an incredible investment. |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | Millionaire, Shmillionaire! Let's do this calculation Bruno Mars style (I wanna be a Billionaire...) If my calculations are correct, in the above scenario, at age 80, you would have more than a billion in the bank, after taxes. |
Solid reading/literature for investment/retirement/income taxes? | For the mechanices/terms of stock investing, I recommend Learn to Earn by Peter Lynch. I also like The Little Book of Common Sense Investing by John Bogle. It explains why indexing is the best choice for most people. For stock picking, a good intro is The Little Book of Value Investing by Chris Brown. And then there is The Intelligent Investor by Ben Graham. IMO, this is the bible of investing. |
Trading : how to deal with crashes (small or big) | You can buy out of the money put options that could minimize your losses (or even make you money) in the event of a huge crash. Put options are good in that you dont have to worry about not getting filled, or not knowing what price you might get filled with a stop-loss order, however, put options cost money and their value decays over time. It's just like buying insurance, you always have to pay up for it. |
How can I buy and sell the same stock on the same day? | you need minimum of 25k otherwise youll reach a limit. you have to wait 3 days for the sale to clear unless youre on margin. dont buy anything based on idiots on twitter or the internet. however, theres some good people to follow though that know what theyre doing. dont listen to this guy saying that etrade or those platforms arent fast enough. they all offer level 2 prices so i dont know what hes talking about. successful day traders arent buying and selling a stock every single day. theres not always something to buy and sell...unless youre just gambling, and in that case just go to the casino and lose your money there. |
Will progressively investing with moderate-to-high risk help secure a future? | I always thought high-risk investing is hit or miss, but this is working out very well with the stocks I've chosen High risk investing IS hit and miss. We are in an historic bull market. Do not pat yourself on the back too hard, the bear can be around any corner and your high risk strategy will then be put to the test. |
Best Time to buy a stock in a day | One of the biggest laws in economics is that if an opportunity is very profitable and is very easily exploitable even by complete beginners, then it will very soon stop being profitable. That's how the market works. If you buy stock when it is at the lowest, then you are making money, but most of the time someone else is losing money. And if there was a magic hour of the day when buying would be the most profitable, then soon everybody would want to buy at that time and no one would want to sell anything, so the scheme would collapse. |
How to calculate car insurance quote | Question 1: Yes Question 2: There is no simple formula. Car insurance is mostly Statistics, because you have so many millions of cases that the variance is really low. This also means that, because the cost can be estimated so precisely, it is difficult to make an offer better than the competitors. For that reason every insurance company makes there own, arbitrary, segmentation of the data which leads them identify low risk groups they can offer a bonus to. Common ones are type of car or and driving experience, but it could be anything that is not forbidden by anti-discrimination-laws. Also additional perks like towing insurance etc. may give them an opportunity do differentiate themselves or to make easy profit. In fact it is a common tactic to offer prices that make close to no profit to fill up your book, then raise tariffs in then following years an make you profit with those who are to lazy to switch. |
How does cash ISA & share ISA mix together | There are two different types of ISA; the "Cash ISA" for cash savings, and the "Stocks and Shares ISA" for stock market investing. You can transfer funds between these two different types of ISA. If your current cash ISA provider does not provide stocks and shares ISAs, then there may be a fee involved when transferring funds between two different providers. If I am reading your notation correctly, you have contributed the full allowance of GBP15,240 in both the current tax year and the previous tax year. Each year you can contribute GBP15,240 (currently) to your ISAs and this can be done in any combination of cash ISA and stocks and shares ISA. For example, you could put GBP5,240 into your cash ISA and GBP10,000 into your stocks and shares ISA. Regarding your questions : It is also important to understand that once you withdraw money from an ISA, it does not affect your previous contributions or allowances. For example, if you have used your full contribution allowance for the current year and chose to withdraw some funds, then you have still used your full contribution allowance and so you cannot redeposit these funds. |
E*Trade commission | The commission is per trade, there is likely a different commission based on the type of security you're trading, stock, options, bonds, over the internet, on the phone, etc. It's not likely that they charge an account maintenance fee, but without knowing what kind of account you have it's hard to say. What you may be referring to is a fund expense ratio. Most (all...) mutual funds and exchange traded funds will charge some sort of expense costs to you, this is usually expressed as a percent of your holdings. An index fund like Vanguard's S&P 500 index, ticker VOO, has a small 0.05% expense ratio. Most brokers will have a set of funds that you can trade with no commission, though there will still be an expense fee charged by the fund. Read over the E*Trade fee schedule carefully. |
What is the correct pronunciation of CAGR? | I always hear people pronounce it to rhyme with "bagger". |
How can I deposit a check made out to my business into my personal account? | If you sign the check "For Deposit Only", the bank will put it in your account. You may need to set up a "payable name" on the account matching your DBA alias. However, having counted offerings for a church on several occasions, I know that banks simply have no choice but to be lax about the "Pay to the Order Of" line on checks. Say the church's "legal name" for which the operating funds account was opened is "Saint Barnabas Episcopal Church of Red Bluff". You'll get offering checks made out to "Saint Barnabas", "Saint B's", "Episcopal Church of Red Bluff", "Red Bluff Episcopal", "Youth Group Fund", "Pastor Frank", etc. The bank will take em all; just gotta stamp em with the endorsement for the church. Sometimes the money will be "earmarked" based on the payable line; any attempt to pay the pastor directly will go into his "discretionary fund", and anything payable to a specific subgroup of the church will go into their asset account line, but really all the cash goes directly to the same bank account anyway. For-profit operations are similar; an apartment complex may get checks payable to the apartment name, the management company name, even the landlord. I expect that your freelance work will be no different. |
what are the pros and cons of structured deposits? | Say we are in 'normal times.' Passbook rates are 5% or so. Longer rates, 6-7%. I offer you a product with these terms, for $10,000 I will return a "Guaranteed" $10,000 in 6 years and based on the stock market, 1% for every 2% the S&P is up beyond 10% at maturity. As the seller of this product, I take $6666, and buy a fixed investment, 6 years at 7% in treasuries will return the $10000. Really. I then take the $3334 and buy out of the money calls on the S&P each year to capture the gains, if any, and to deliver on my promise. This is one example of a structured deposit offering. They can have nearly any terms one can imagine. Tied to any product. S&P, Crude Oil, Gold. Whatever. |
What do brokers do with bad stock? | For every seller, there's a buyer. Buyers may have any reason for wanting to buy (bargain shopping, foolish belief in a crazy business, etc). The party (brokerage, market maker, individual) owning the stock at the time the company goes out of business is the loser . But in a general panic, not every company is going to go out of business. So the party owning those stocks can expect to recover some, or all, of the value at some point in the future. Brokerages all reserve the right to limit margin trading (required for short selling), and during a panic would likely not allow you to short a stock they feel is a high risk for them. |
How do markets “factor in” a future event? | At the most fundamental level, every market is comprised of buyers and selling trading securities. These buyers and sellers decide what and how to trade based on the probability of future events, as they see it. That's a simple statement, but an example demonstrates how complicated it can be. Picture a company that's about to announce earnings. Some investors/traders (from here on, "agents") will have purchased the company's stock a while ago, with the expectation that the company will have strong earnings and grow going forward. Other agents will have sold the stock short, bought put options, etc. with the expectation that the company won't do as well in the future. Still others may be unsure about the future of the company, but still expecting a lot of volatility around the earnings announcement, so they'll have bought/sold the stock, options, futures, etc. to take advantage of that volatility. All of these various predictions, expectations, etc. factor into what agents are bidding and asking for the stock, its associated derivatives, and other securities, which in turn determines its price (along with overall economic factors, like the sector's performance, interest rates, etc.) It can be very difficult to determine exactly how markets are factoring in information about an event, though. Take the example in your question. The article states that if market expectations of higher interest rates tightened credit conditions... In this case, lenders could expect higher interest rates in the future, so they may be less willing to lend money now because they expect to earn a higher interest rate in the future. You could also see this reflected in bond prices, because since interest rates are inversely related to bond prices, higher interest rates could decrease the value of bond portfolios. This could lead agents to sell bonds now in order to lock in their profits, while other agents could wait to buy bonds because they expect to be able to purchase bonds with a higher rate in the future. Furthermore, higher interest rates make taking out loans more expensive for individuals and businesses. This potential decline in investment could lead to decreased revenue/profits for businesses, which could in turn cause declines in the stock market. Agents expecting these declines could sell now in order to lock in their profits, buy derivatives to hedge against or ride out possible declines, etc. However, the current low interest rate environment makes it cheaper for businesses to obtain loans, which can in turn drive investment and lead to increases in the stock market. This is one criticism of the easy money/quantitative easing policies of the US Federal Reserve, i.e. the low interest rates are driving a bubble in the stock market. One quick example of how tricky this can be. The usual assumption is that positive economic news, e.g. low unemployment numbers, strong business/residential investment, etc. will lead to price increases in the stock market as more agents see growth in the future and buy accordingly. However, in the US, positive economic news has recently led to declines in the market because agents are worried that positive news will lead the Federal Reserve to taper/stop quantitative easing sooner rather than later, thus ending the low interest rate environment and possibly tampering growth. Summary: In short, markets incorporate information about an event because the buyers and sellers trade securities based on the likelihood of that event, its possible effects, and the behavior of other buyers and sellers as they react to the same information. Information may lead agents to buy and sell in multiple markets, e.g. equity and fixed-income, different types of derivatives, etc. which can in turn affect prices and yields throughout numerous markets. |
Why doesn't Graham consider gold as an investment? | During Graham's career, gold and currency were the same thing because of the gold standard. Graham did not advise investing in currencies, only in bonds and stocks, the latter only for intelligent speculation. Graham died a couple of years after Nixon closed the gold window, ending the gold standard. Gold may be thought of as a currency even today, as endowments and other investors use it as a store of value or for diversification of risks. However, currency or commodities investing does not seem Graham-like. How could you reliably estimate intrinsic value of a currency or commodity, so that you can have a Graham-like margin of safety after subtracting the intrinsic value from the market value? Saying that gold is "clearly underpriced in today's market" is just hand-waving. A Graham analysis such as "net net" (valuing stocks by their current tangible assets net of all liabilities) is a quantitative analysis of accounting numbers audited by CPAs and offers a true margin of safety. |
Should I keep most of my banking, credit, and investment accounts at the same bank? | For personal accounts, I can't imagine that this is too much of a problem. The only concern that I can think of (for American banks) is that FDIC only insures you up to $100,000 if the bank were to go belly-up. If you're getting over that amount of money, you may want to "diversify" a little more. |
Day trading definition | If I buy 10 stocks on Monday and sell the same on Tuesday (different trading day) would I be considered a day trader? No. It is only counting if you buy something and then sell that same something during the same trading session. And that counter only lasts for 5 days, things that happened outside of that time period get removed from the counter. If the counter reaches a number (three to five, depending on the broker), then you are labelled as a pattern day trader, and will have your trading capabilities severely restricted unless you have an account size greater than $25,000 |
Is it possible for me to keep my credit card APR at 0% permanently? | If you pay your statement balance in full before the due date you will never pay a cent in interest no matter what your interest rate is.* In fact, I don't even know what my interest rates are. Credit card companies offer this sort of thing in the hopes you will spend more than you can afford to pay completely in those first 15 months. * Unless you use a cash advance, with those you will accrue interest immediately upon receiving the cash sometimes with an additional fee on top. |
My employer doesn't provide an electronic pay stub and I need one to get a car loan | You have a few options and sometimes challenges help us improve our situation. First, you can not borrow to buy a car. Reducing the massive depreciation that cars undergo will help you be wealthier. It is hard to find a good use car that you can buy for cash, but it will play out best for your finances in the long run. If your heart is set on borrowing, I would encourage you to go to the bank/credit union where you have your checking account. They will see your history of deposits and may grant you a loan based on that. Also you are likely to get a better deal from the bank than from the car dealer. Thirdly, you can simply go to your employer's HR department and ask them. Surely someone has applied for a loan during the company's history. What did they do for them? |
Should we prepay our private student loans, given our particular profile? | You're in good shape as long as your income stays. Your only variable-rate debt now is your private student loan. I think you'd be wise to pay that down first, and you sense that already. Worst-case, in the event of a bankruptcy, student loans usually cannot be discharged, so that isn't a way out. Once that loan is gone, apply what you were paying to your other student loan to knock that out. You might investigate refinancing your home (to another 30-year fixed). You may be able to shave a half-percent off if your credit is stellar. Given the size of the mortgage, this could be several thousand out of pocket, so consider that when figuring out potential payback time. Consider using any "free time" to starting up a side business (I'm assuming you both have day jobs but that may not be a correct assumption). Start with what you know well. You and your wife are experts in something, and have passion about something. Go with that. Use the extra income from that to either pay down your debts faster, or just reinvest in the business so that you can offset the income on your taxes. Again, you're in good shape. Just do what you can to protect and grow your income streams. |
Is there a good rule of thumb for how much I should have set aside as emergency cash? | While I certainly agree with the principle of paying down debt, there is some value in having a healthy cash cushion. If an emergency expense were to come up, and your credit has been cut-off or reduced to the point where you have no excess credit, then having real cash on hand is critical. I would perform the following thought-experiment: What if my available credit had been cut off? How much would I need in cash to survive for 1 month, 3 months, 5 months, etc.? Consider what time period you'd be comfortable with, and set that amount as your minimum desired cash on hand. While it may seem extreme to not have access to credit at all, during the credit crisis many banks and lenders "tightened" their lending: reducing credit limits, closing lines of credit, calling loans, raising rates, etc. Suze Orman recommends cash savings equivalent to 8 months living expenses. That doesn't mean 8 months salary, but 8 months of what it would take to live on. At one point, in the midst of the economic crisis, I thought that made sense. The Simple Dollar blog considers Suze's recommendation and the idea of emergency fund vs. debt repayment. Worth reading: Is Suze Right? Do Emergency Funds Now Trump Debt Repayment?. |
Not paying cash for a house | You could use the money to buy a couple of other (smaller) properties. Part of the rent of these properties would be used to cover the mortgage and the rest is income. |
Main source of the shares/stocks data on the web | To expand on keshlam's answer: A direct feed does not involve a website of any kind. Each exchange publishes its order/trade feed(s) onto a packet network where subscribers have machines listening and reacting. Let's call the moment when a trade occurs inside an exchange's matching engine "T0". An exchange then publishes the specifics of that trade as above, and the moment when that information is first available to subscribers is T1. In some cases, T1 - T0 is a few microseconds; in other (notorious) cases, it can be as much as 100 milliseconds (100,000x longer). Because it's expensive for a subscriber to run a machine on each exchange's network -- and also because it requires a team of engineers devoted to understanding each exchange's individual publication protocols -- it seems unlikely that Google pays for direct access. Instead Google most likely pays another company who is a subscriber on each exchange around the world (let's say Reuters) to forward their incoming information to Google. Reuters then charges Google and other customers according to how fast the customer wants the forwarded information. Reuters has to parse the info it gets at T1, check it for errors, and translate it into a format that Google (and other customers) can understand. Let's say they finish all that work and put their new packets on the internet at time T2. Then the slow crawl across the internet begins. Some 5-100 milliseconds later your website of choice gets its pre-processed data at time T3. Even though it's preprocessed, your favorite website has to unpack the data, store it in some sort of database, and push it onto their website at time T4. A sophisticated website might then force a refresh of your browser at time T4 to show you the new information. But this forced refresh involves yet another slow crawl across the internet from where your website is based to your home computer, competing with your neighbor's 24/7 Netflix stream, etc. Then your browser (with its 83 plugins and banner ads everywhere) has to refresh, and you finally see the update at T5. So, a thousand factors come into play, but even assuming that Google is doing the most expensive and labor-intensive thing it can and that all the networks between you and Google and the exchange are as short as they can be, you're not going to hear about a trade -- even a massive, market-moving trade -- for anywhere from 500 milliseconds to 5 seconds after T0. And in a more realistic world that time will be 10-30 seconds. This is what Google calls "Realtime" on that disclaimer page, because they feel they're getting that info to you as fast as they possibly can (for free). Meanwhile, the computers that actually subscribe to an exchange heard about the trade way back at time T1 and acted on that information in a few microseconds. That's almost certainly before T2 and definitely way way before T3. The market for a particular instrument could change direction 5 times before Google even shows the first trade. So if you want true realtime access, you must subscribe to the exchange feed or, as keshlam suggests, sign up with a broker that provides its own optimized market feeds to you. (Note: This is not an endorsement of trading through brokers.) |
Does high inflation help or hurt companies with huge cash reserves? | This is a reasonable question about inflation. I would just like to note that inflation is nearly zero at the moment. And interest rates are very low. For a stable enterprise, borrowing cash is very easy right now. Naturally, things could change in a year. But the reason a company like Microsoft (but not just them) might hoard cash right now is that it gives them weight for buying up smaller firms, muscling rivals, and signaling their comfort level with the way things look for them. It could also be because they are out of ideas for what to invest in, and/or are waiting for conditions to change before making any big decisions. But with an interest rate at close to zero, and an inflation rate at close to zero, at the moment, inflation is not going to be a consideration in evaluating such a company. |
How smart is it to really be 100% debt free? | If you can borrow for an asset that gives you income that's more than the cost of carrying the debt, then go for it. But the kinds of debts you have now aren't those kinds of debt, so get rid of them. |
How do Transfer Agents/Share Registrars get the names of beneficiary shareholders | In the United States, the stock certificate is updated to include beneficiary information. I expect it to be similar with other markets. TOD (Transfer on Death) From: http://www.nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter3-2.html (emphasis added) If you have a brokerage account, contact the broker for instructions. Most likely, the broker will send you a form on which you’ll name beneficiaries to inherit your account. From then on, the account will be listed in your name, with the beneficiary’s name after it, like this: “Evelyn M. Meyers, TOD Jason Meyers.” If you have the actual stock certificates or bonds in your possession (most people don’t), you must get new certificates issued, showing that you now own the stock in beneficiary form. Ask your broker for help; if that doesn’t work, contact the transfer agent for the stock. You can get the address from your broker or the investor relations office of the corporation. The transfer agent will probably have you send in the certificates, a form called a stock or bond power (some stock certificates have the power printed on the back), and a letter explaining what you want to do. |
I'm 23, living at home, and still can't afford my own property. What could I do? | When I was 23, the Toronto housing market was approaching a record high, and I thought, "I must buy a place or I'll be locked out." And I did. Bad decision. I should have waited and saved my money. For the record, I thought I would never recover, but I did. Patience grasshopper. In actual fact the U.K. housing market is probably approaching a low, and you have a job that is paying you well enough. BUT the lesson I learned wasn't about buying at a high or a low, it was about the need never to let external factors rush your decision making. Your decisions have to make sense for your own unique situation. If you're living at home and you have domestic bliss, mum and dad aren't crimping your style (if you know what I mean), then, enjoy it. Your credit balance sounds understandable. It's not fatal. But it's a budget killer. Make adjustments (somehow/anyhow) so that you are paying it down month by month. Take it down to £0. You will feel amazing once you do it. After that, use the money that you were paying onto your credit card and start saving it. Whether you ultimately use the money for a house down-payment or your retirement, doesn't matter. Just get into the situation where you're saving. |
How to read bond yield quotes? What do the time, coupon, price, yield, and time mean? | The first thing that it is important to note here is that the examples you have given are not individual bond prices. This is what is called the "generic" bond price data, in effect a idealised bond with the indicated maturity period. You can see individual bond prices on the UK Debt Management Office website. The meaning of the various attributes (price, yield, coupon) remains the same, but there may be no such bond to trade in the market. So let's take the example of an actual UK Gilt, say the "4.25% Treasury Gilt 2019". The UK Debt Management Office currently lists this bond as having a maturity date of 07-Mar-2019 and a price of GBP 116.27. This means that you will pay 116.27 to purchase a bond with a nominal value of GBP 100.00. Here, the "nominal price" is the price that HM Treasury will buy the bond back on the maturity date. Note that the title of the bond indicates a "nominal" yield of 4.25%. This is called the coupon, so here the coupon is 4.25%. In other words, the treasury will pay GBP 4.25 annually for each bond with a nominal value of GBP 100.00. Since you will now be paying a price of GBP 116.27 to purchase this bond in the market today, this means that you will be paying 116.27 to earn the nominal annual interest of 4.25. This equates to a 3.656% yield, where 3.656% = 4.25/116.27. It is very important to understand that the yield is not the whole story. In particular, since the bond has a nominal value of GBP100, this means that as the maturity date approaches the market price of the bond will approach the nominal price of 100. In this case, this means that you will witness a loss of capital over the period that you hold the bond. If you hold the bond until maturity, then you will lose GBP 16.27 for each nominal GBP100 bond you hold. When this capital loss is netted off the interest recieved, you get what is called the gross redemption yield. In this case, the gross redemption yield is given as approximately 0.75% per annum. NB. The data table you have included clearly has errors in the pricing of the 3 month, 6 month, and 12 month generics. |
What is most time-efficient way to track portfolio asset allocation? | If you have enough assets at T Rowe Price, you get what I think is a scaled back version of the portfolio tracker for free. |
how stock market sale work? | As stock prices have declined, the net worth of people has come down. Imagine owning a million shares of a stock worth $100/share. This is worth $100,000,000. Now, if the stock is suddenly trading at $50/share then some would say you have lost $50,000,000. The value of the stock is less. The uncertainty is always there as there are differences between one day's close and another day's open possibly. The sale price is likely to be near the last trade is what is being used here. If you place a market order to sell your stock, the price may move between the time the order is placed and when it is filled. There are limit orders that could be used if you want to control the minimum price you get though you give up that the order has to be filled as otherwise people could try to sell shares for millions of dollars that wouldn't work out well. |
Why are credit cards preferred in the US? | The real reason credit cards are so popular in the US is that Americans are lazy and broke, and the credit card companies know how to market to that. Have you ever heard of the $30k millionaires? These were individuals that purchased as if they were some of the wealthy elite, but had no real money to back it up. American society has pushed the idea of "living on credit" for quite some time now. An idea that is even furthered by watching the US government operate solely on credit. (Raise the debt ceiling much?) Live in America for more than six months and you will be bombarded with "Pre-Approved Deals" with low introductory rates that are designed to sucker the average consumer into opening multiple accounts that they don't need. Then, they try and get you to carry a balance by allowing low minimum payments that could take in the neighborhood of 20 years to pay off, depending on carried balance. This in turn pads the credit companies' pockets with all of the interest you now pay on the account. The few truly wealthy Americans do not purchase on credit. |
Why use accounting software like Quickbooks instead of Excel spreadsheets? | I would add to your reasons: Would you mow an entire lawn with a string trimmer just because you can, or would you buy a lawnmower? Use the right tool for the job. |
Buy car vs lease vs long term rent for 10 years period | If you plan to keep this asset for ten years then you can take the deprecation of its cost over that time period. For simplicity lets treat that as 120 monthly payments. So at a purchase price of $60,000 you are committing around $500 per month not including vehicle maintenance. I typically allocate around 20 percent of the purchase price of my vehicles for future maintenance costs. Since you have the cash to purchase this outright you have an option not afforded to most people. This adds for additional consideration. Here is an example. You purchase a $60,000 car and put $10,000 down. You finance $50,000 at 2.84% over 60 months. Your total finance cost is $53,693 if you do not miss any payments. The question here is can you make more than $3,693 on the $50,000 that you would retain in this situation over a five year period? I know that I most certainly can and is an excellent example of why I finance my vehicles. Obviously this all goes out the window if you do not have the credit for top rates. I have also negotiated a vehicle maintenance plan with the dealership at the time of my vehicle purchases. Most dealerships offer this service, the key here is negotiating. On my last truck I was able to get an all inclusive maintenance policy for 72 months for 8% of the purchase price. Your mileage will vary with manufacturer and dealership. As described in the comments above it is never beneficial for an individual to lease. You end up paying more for the newer models. I consider that to be a lifestyle choice as it is most certainly not a sound financial decision. |
Explain: “3% annual cost of renting is less than the 9% annual cost of owning” | The 3% and 9% figures are based on the cost of borrowing money and all the other ownership costs associated with real estate. From the same article: http://patrick.net/housing/crash1.html Because it's usually still much cheaper to rent than to own the same size and quality house, in the same school district. In rich neighborhoods, annual rents are typically only 3% of purchase price while mortgage rates are 4% with fees, so it costs more to borrow the money as it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 8% of purchase price, which is more than twice the cost of renting and wipes out any income tax benefit. Imagine you are renting a house. If the cost of your annual rent is lower than X then renting is obviously the best idea from a monetary calculation. If rent is greater than Y being a landlord makes more sense. In the middle it is debatable, and the non-monetary reasons need to be considered. |
Are wash sale rules different for stocks and ETFs / Mutual Funds? | No, there's nothing special in mutual funds or ETFs. Wash sale rules apply to any asset. |
I have an extra 1000€ per month, what should I do with it? | If I were you, I would save 200 euros for retirement each month and another 800 I would stash away with the hope to start investing soon. I think you have to invest a bigger lump sum, then 1000 euros. It makes sense to invest at least 30K to see any tangible results. My acquaintances started from 50K and now see pretty handsome returns. Investing is profitable, as long as you approach it smartly. Also, do not ever hire an overly expensive financial consultant - this expenses will never pay off. Of course, check their credentials and reputation... But never pay much to these guys. Not worth it. |
Bank denying loan after “subject-to” appraisal: What to do? | I'm not sure about your first two options. But given your situation, a variant of option three seems possible. That way you don't have to throw away your appraisal, although it's possible that you'll need to get some kind of addendum related to the repairs. You also don't have your liquid money tied up long term. You just need to float it for a month or two while the repairs are being done. The bank should be able to preapprove you for the loan. Note that you might be better off without the loan. You'll have to pay interest on the loan and there's extra red tape. I'd just prefer not to tie up so much money in this property. I don't understand this. With a loan, you are even more tied up. Anything you do, you have to work with the bank. Sure, you have $80k more cash available with the loan, but it doesn't sound like you need it. With the loan, the bank makes the profit. If you buy in cash, you lose your interest from the cash, but you save paying the interest on the loan. In general, the interest rate on the loan will be higher than the return on the cash equivalent. A fourth option would be to pay the $15k up front as earnest money. The seller does the repairs through your chosen contractor. You pay the remaining $12.5k for the downpayment and buy the house with the loan. This is a more complicated purchase contract though, so cash might be a better option. You can easily evaluate the difficulty of the second option. Call a different bank and ask. If you explain the situation, they'll let you know if they can use the existing appraisal or not. Also consider asking the appraiser if there are specific banks that will accept the appraisal. That might be quicker than randomly choosing banks. It may be that your current bank just isn't used to investment properties. Requiring the previous owner to do repairs prior to sale is very common in residential properties. It sounds like the loan officer is trying to use the rules for residential for your investment purchase. A different bank may be more inclined to work with you for your actual purchase. |
Advice on low-risk long-term strategy for extra cash? | Look at a mixture of low-fee index funds, low-fee bond funds, and CDs. The exact allocation has to be tailored to your appetite for risk. If you only want to park the money with essentially no risk of loss then you need FDIC insured products like CDs or a money market account (as opposed to a money market fund which is not FDIC insured). However as others have said, interest rates are awful now. Since you are in your early 30's, and expect to keep this investment for 10+ years, you can probably tolerate a bit of risk. Also considering speaking to a tax professional to determine the specific tax benefits/drawbacks of one investment strategy (funds and CDs) versus another (e.g. real estate). |
What are some important factors to consider before investing in a stock/index fund and why? | Goal - What is it that you are saving or investing to have: Educational costs, retirement, vacation, home, or something else. Dollar figure and time period would be the keys here. Risk tolerance - What kind of risks are you prepared to accept with the investment choices you are making? What kind of time commitment do these investments have and are you prepared to spend the time necessary for this to work? This is about how wild are the swings as well as what beliefs do you have that may play a role here. Strategy - Do you know what kind of buy and sell conditions you have? Do you know what kind of models you are following? This is really important to have before you buy something as afterward you may have buyer's remorse that may cause more problems in a sense. Record keeping - Do you know what kinds of records you'll need for tax purposes? Do you know how long to hold onto records? Those would be the main ones to my mind. |
Working abroad in Australia, what is involved financially and administratively? | We don't seem to have (m)any expats or Australians on the site yet, but I'll share what I have learned. I'm taking advantage of your profile information listing you as a software developer. A friend of mine is currently doing a study of national IT professional societies for his MBA project. One of his goals is to understand which funding models are effective in the absence of mandatory licensing. (Consider: Most developers don't need to be a member of an organization in order to practice.) Such organizations you or others may be familiar with are the British Computer Society (BCS), the Canadian Information Processing Society (CIPS), or in the U.S. the Association for Computing Machinery (ACM) and IEEE Computer Society (IEEE-CS). To the point: My friend told me recently that the Australian Computer Society (ACS) makes money by assisting the Australian government in determining immigration eligibility. So I went to the ACS site and started digging: "The Australian Computer Society (ACS) is the designated professional assessing authority for persons seeking to apply for Skilled Migration as IT (Computing) Professionals [...]" See ACS's Pre-application Skills Assessment (PASA) page. That page also links out to the Australian Government's Department of Immigration and Citizenship, in particular to a document titled General Skilled Migration (PDF). Here are some interesting points I discovered, relating just to fees: The government recommends if you do want professional help to use a registered migration agent. There will be fees for such an agent. See MARA - What does it cost to use an Agent? Currently: AUD1500 - AUD4000, or ~ £850 - ~ £2270. There will be a fee for the immigration application process itself. See Professionals and other Skilled Migrants visa charges - outside Australia. Currently: total of AUD 6035, or ~ £3420. Also: "You also need to have your skills assessed by the relevant assessing authority as suitable for working in your nominated occupation." (page 7) ... and you need to do that before you even apply. The ACS Costs and Charges page shows a cost of AUD 400, or ~ £225, for the PASA (General) application. So, I think the answer is yes, you'd certainly want to have ample savings to cover the red tape stuff; perhaps ~ £6000 judging from the above alone. Add your travel, moving, and living expenses, etc. Best of luck! Australia sounds exciting. (Have you considered Canada? ;-) |
How are the best way to make and save money at 22 years old | Get an education. A bachelor's degree preferably, but AA or even a certificate are fine too. It will increase your earning potential significantly and over your lifetime it will earn you a lot of money. You make around $30,000 a year now, median salary for someone with a bachelors in the humanities is around $45,000. If you degree is in the STEM field, that goes up to $55,000 - $65,000 range. Second best option is to start a small business of some kind that does not require substantial investment. Handyman comes to mind as an example or some sort of billing service maybe? I would not recommend self directed investment in the stock market - most people lose money and since you don't have a lot of money to invest, commissions and fees will eat up a significant portion of it. I would usually recommend a CD but interest rates it's not really worth it. |
Is gold really an investment or just a hedge against inflation? | Gold is a commodity. It has a tracked price and can be bought and sold as such. In its physical form it represents something real of signifigant value that can be traded for currency or barted. A single pound of gold is worth about 27000 dollars. It is very valuable and it is easily transported as opposed to a car which loses value while you transport it. There are other metals that also hold value (Platinum, Silver, Copper, etc) as well as other commodities. Platinum has a higher Value to weight ratio than gold but there is less of a global quantity and the demand is not as high. A gold mine is an investement where you hope to take out more in gold than it cost to get it out. Just like any other business. High gold prices simply lower your break even point. TIPS protects you from inflation but does not protect you from devaluation. It also only pays the inflation rate recoginized by the Treasury. There are experts who believe that the fed has understated inflation. If these are correct then TIPS is not protecting its investors from inflation as promised. You can also think of treasury bonds as an investment in your government. Your return will be effectively determined by how they run their business of governing. If you believe that the government is doing the right things to help promote the economy then investing in their bonds will help them to be able to continue to do so. And if consumers buy the bonds then the treasury does not have to buy any more of its own. |
If stock price drops by the amount of dividend paid, what is the use of a dividend | I'm fairly convinced there is no difference whatsoever between dividend payment and capital appreciation. It only makes financial sense for the stock price to be decreased by the dividend payment so over the course of any specified time interval, without the dividend the stock price would have been that much higher were the dividends not paid. Total return is equal. I think this is like so many things in finance that seem different but actually aren't. If a stock does not pay a dividend, you can synthetically create a dividend by periodically selling shares. Doing this would incur periodic trade commissions, however. That does seem like a loss to the investor. For this reason, I do see some real benefit to a dividend. I'd rather get a check in the mail than I would have to pay a trade commission, which would offset a percentage of the dividend. Does anybody know if there are other hidden fees associated with dividend payments that might offset the trade commissions? One thought I had was fees to the company to establish and maintain a dividend-payment program. Are there significant administrative fees, banking fees, etc. to the company that materially decrease its value? Even if this were the case, I don't know how I'd detect or measure it because there's such a loose association between many corporate financials (e.g. cash on hand) and stock price. |
Why don't companies underestimate their earnings to make quarterly reports look better? | Stating poor estimates in advance will lower your share price to compensate for thge extras boost it gets later ... And may run afoul of stock manipulation laws. More pain than gain likely. |
Why do grocery stores in the U.S. offer cash back so eagerly? | The reason is, stores want customers to use cash. By giving us cash, we are more likely to use cash next time. I feel a little guilty when using my bank card at the store because I know I'm giving about 2-3% of the sale to the bank. Unless I don't really like where I'm shopping (ie Walmart), I try to use cash if I have it. I doubt these large stores pay extra for supplying the cash portion. They just need to keep the cash onhand. In other countries, do they not mind paying banks a percentage of each transaction? That's a huge loss for retailers. (I also heard tipping isn't popular in some countries, maybe the lack of regard for vendors is related somehow??) Oh, plus, it's a value added service. A customer is more likely to return to a store if they provide this service. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | I think playing certain kinds of lottery is as economically sound as buying certain kinds of insurance. A lottery is an inverted insurance. Let me elaborate. We buy insurance for at least two reasons. The first one is clear: We pay a fee to protect ourselves from a risk which we don't want to (or cannot) bear. Although on average buying insurance is a loss, because we pay all the insurance's office buildings and employee's salaries, it still is a reasonable thing to do. (But it should also be clear that it is unreasonable to buy insurance for risks one could easily bear oneself.) The second reason to buy insurance is that it puts us at ease. We don't have to be afraid of theft or of a mistake we make which would make us liable or of water damage to our house. In that sense we buy freedom of sorrow for a fee, even if the damage wouldn't in fact ruin us. That's totally legitimate. Now I want to make the argument that buying a lottery ticket follows the same logic and is therefore not economically unreasonable at all. While buying a lottery ticket is on average a loss, it provides us with a chance to obtain an amount of money we would normally never get. (Eric Lippert made this argument already.) The lottery fee buys us a small chance of something very valuable, much as the insurance frees us from a small risk of something very bad. If we don't buy the ticket, we may have 0% chance of becoming (extremely) rich. If we buy one, we clearly have a chance > 0%, which can be considered an improvement. (Imagine you'd have a 0.0000001% chance to save the life of a loved one with a ticket who'd be 100% doomed otherwise. You'd bite.) Even the second argument, that an insurance puts us at ease, can be mirrored for lotteries. The chance to win something may provide entertainment in our otherwise dull everyday life. Considering that playing the lottery only makes sense for the chance to obtain more money than otherwise possible, one should avoid lotteries which have lots of smaller prizes because we are not really interested in those. (It would be more economical to save the money for smaller amounts.) We ideally only want lotteries which lean on the big money prizes. |
Can I negotiate a credit card settlement by stopping payments? | This would be on your credit for ~8 years. If it goes according to your plan, it will take 6 months to a year to do the settlement by getting behind enough to let it go to collections and then settling. The write-off will then be on your credit record for 7 years before it "falls off". Your cash out refinance would have to cover you for at least the next 8 years to be valuable. And you have a lot of assumptions to get there: In short, there's one way (or only a few ways) this works out well in your favor. There are many ways that this has the chance to hurt you. I don't like "investments" with those kind of odds. |
Where can I find the dividend history for a stock? | Google Finance gives you this information. |
I'm upside down on my car loan and need a different car, what can I do? | There are a few things you should keep in mind when getting another vehicle: DON'T use dealership financing. Get an idea of the price range you're looking for, and go to your local bank or find a local credit union and get a pre-approval for a loan amount (that will also let you know what kind of interest rates you'll get). Your credit score is high enough that you shouldn't have any problems securing a decent APR. Check your financing institution's rules on financing beyond the vehicle's value. The CU that refinanced my car noted that between 100% and 120% of the vehicle's value means an additional 2% APR for the life of the loan. Value between 120% and 130% incurred an additional 3% APR. Your goal here is to have the total amount of the loan less than or equal to the value of the car through the sale / trade-in of your current vehicle, and paying off whatever's left out of pocket (either as a down-payment, or simply paying off the existing loan). If you can't manage that, then you're looking at immediately being upside-down on the new vehicle, with a potential APR penalty. |
Can I withdraw from my Roth IRA retirement account to fund a startup? | There are two methods of doing this Pulling out the money and paying the penalty if any, and going on your way. Having the Roth IRA own the business, and being an employee. If you go with the second choice, you should read more about it on this question. |
Who owned my shares before me? | A lot will depend on wether you have in your possession the physical share documents or just numbers in your brokerage portfolio. Electronic shares are not traceable as they do not exist as individual entities. ETrade certainly knows who bought how much, but no concept of which ones. Lets say ET buys 1000 shares of Acme, their database looks like this: Now they sell 400 shares to Bob: Bob sells 200, Alice buys 100: ( skipped one transaction for brevity ) Did Alice get 100 shares out of ET's original 1000, or did she get 100 shares that were previously owned by Bob? Or 27 from ET and 73 from ET? Another, less exact way to picture the process is one share is 1ml of liquid. If you return 50ml to the pot it becomes indistinguishable from the rest. |
I'm about to be offered equity by my employer. What should I expect? | Yes, what they said. You don't mention where you are on the totem pole. Are you reporting to the top dog, or are you 3 levels down? Not to be a downer, but until you know your cut, I'd not get too excited either way. 1000 shares/options of a LinkedIn turned to nearly $100K. Nothing to sneeze at, to be sure, but not enough to retire, nor bother contacting a lawyer. The details of the equity should be spelled out clearly, nothing against Lawyers, but it's likely to be wasted money. |
How does an index rearrange its major holdings | An index will drop a company for several reasons: A fund decides how close they want to mirror the index. Some do so exactly, others only approximate the index. |
How can I get a wholesaler ID number? | Small businesses are often governed by local regulations and state law. In a low liability small quantity arena, you should be able to get away with a DBA (doing business as) arrangement, such as DBA "Jay's Gem's". A small business license may come with a state Tax ID and satisfy your supplier, but a Federal EIN can be obtained from the IRS, and may be necessary to apply for the business license. It wouldn't hurt to talk to the local chamber of commerce or state small business agencies if you have questions about local requirements. |
Why should we expect stocks to go up in the long term? | Does it make sense for stocks to earn a premium indefinitely? Yes. There is good reason to think that the stock market will make money indefinitely: the stock market is the primary mechanism through which investors bear market risk, which requires compensation. If you think of all the owners of firms (stockholders and bondholders, generally) the risk premium that stocks earn stocks is the way bondholders pay equityholders to bear the risk that they do not wish to. Will stock prices always go up in the long run? As long as companies pay out less in dividends than their profit, prices will go up. That could change if we were to change our corporate culture and/or tax practices so that firms paid out more in dividends. However, for the purposes of your question, I think it doesn't matter much whether the investor makes money as dividends or capital gains. Does the 5-7% guess apply only to the US market? I didn't write (nor read) the books in question, but most likely that is a global number. The US dominates the global equity market, so it's often a good proxy. However, international returns taken together have no less risk and earn no less over long horizons in general. The particular examples you have pointed out are special cases that only apply to a part of the global economy and a particular time period. There are plenty of examples of stock markets and time periods that did much better than the US market to offset your examples. Is 5-7% a reasonable long-term estimate of equity returns? Equity will always earn more in expectation than risk-free securities will. How much more depends on major economic factors. 5-7% has been a good estimate for the market risk premium for many, many decades (stocks should earn this plus whatever the risk-free rate is). However, that is just an empirical observation, not a rule. It can change. Some day technological progress could slow down or stop, we could run out of important resources in a way that we can't compensate for, our population permanently could stop growing, aliens could invade, etc. Down the road it is certainly possible for expected equity returns to go down and never go back up again. This would result from a permanent, global, economic shift that I think would be pretty obvious. That is, you wouldn't have to look at stock prices to know it was happening. |
Repairs to a house in order to rent it that were paid by the beneficiary, but is still owned by a Trust | The Trustee has allowed me to act as his "agent", continuing to pay bills, and take care of much of the administrative affairs for my mother's estate since I did all of it for years before she passed away. I was not paid for any of this work. ... The expenses were more than $30K last year, and there is still a punch list to go this year. The trust should reimburse your expenses and deduct them on the trust tax return. Since the Trust owned the property in 2015, and I will receive ownership this month, can last year's expenses incurred for the Trust be deducted again future income for my property this year? Not exactly. The trust will file its own tax return and will report the income/loss attributed to the beneficiaries per the trust rules. What is attributed to you will flow to your Schedule E. From there you own it and if it is a passive activity where the loss is limited - you can carry it forward and offset with future gain. The trustee will have to deal with all the paperwork. Do 1099-misc forms need to be filed for the contractors who worked to get it ready for rental? It is my understanding that since 2010 (and before 2010) landlords who are not in real-estate trade or business are not required to send out 1099. But it won't hurt if you do, also. In any case - for all of these issues you should talk to a tax adviser (EA/CPA licensed in your State). |
How to amend an amended return? | File a 2nd amended return that corrects the mistake I made on the 1st amended return This. Pay the $500 before April 27th and try to get it back later This. |
Is insurance worth it if you can afford to replace the item? If not, when is it? | As many other posters have pointed out, unless you know (and your insurer doesn't) that because of any reason you are more likely than the average to damage your computer, insuring it doesn't really make a lot of sense if you can comfortably replace it should the worst happen. In this particular case of a laptop, insurance is especially unattractive because computers depreciate fairly quickly. If you break it... ...and you're insured, you will get the very same laptop you bought more than a year ago. ...and you're not insured, you can choose to either find the same laptop at a substantially lower price (Apple does not really lower prices that much but you can probably get a refurbished unit, just like you could get with AppleCare) or spend the original amount in a newer and more powerful laptop. |
Debit cards as bad as credit cards? | If your goal is to make it harder for you to use to make impulse purchases then YES. Having to always have cash for purchases will make you less likely to make impulse purchases you don't really need. |
Interest payments for leveraged positions | I think to some extent you may be confusing the terms margin and leverage. From Investopedia Two concepts that are important to traders are margin and leverage. Margin is a loan extended by your broker that allows you to leverage the funds and securities in your account to enter larger trades. In order to use margin, you must open and be approved for a margin account. The loan is collateralized by the securities and cash in your margin account. The borrowed money doesn't come free, however; it has to be paid back with interest. If you are a day trader or scalper this may not be a concern; but if you are a swing trader, you can expect to pay between 5 and 10% interest on the borrowed money, or margin. Going hand-in-hand with margin is leverage; you use margin to create leverage. Leverage is the increased buying power that is available to margin account holders. Essentially, leverage allows you to pay less than full price for a trade, giving you the ability to enter larger positions than would be possible with your account funds alone. Leverage is expressed as a ratio. A 2:1 leverage, for example, means that you would be able to hold a position that is twice the value of your trading account. If you had $25,000 in your trading account with 2:1 leverage, you would be able to purchase $50,000 worth of stock. Margin refers to essentially buying with borrowed money. This must be paid back, with interest. You also may have a "margin call" forcing you to liquidate assets if you go beyond your margin limits. Leverage can be achieved in a number of ways when investing, one of which is investing with a margin account. |
Capital gains tax: Retirement vehicle (IRA, 401k) vs. anything else? | Ben Miller's answer is very thorough, and I up voted it. I believe that the ability to rebalance without tax implications is very import, but there are two aspects of the question that were not covered: The 401K in many cases comes with a company match. Putting enough money into the fund each year to maximize the match, give you free money that is not available in the non-retirement accounts. The presence of that match is to encourage employees to contribute: even if they are tying up their funds until retirement age; and they are into a plan with only a handful of investment options; and they may have higher expenses in the 401K. The question also had a concern about the annual limits for the 401K (18,000) and the IRA (5,500). The use of a retirement account doesn't in any way limit your ability to invest in non-retirement accounts. You can choose to invest from 0 to 23,500 in the retirement accounts and from 0 to unlimited into the non-retirement accounts. Double those amounts if you are married. |
Sleazy Bait and Switch Marketing — Is this legal? | This is completely disgusting, utterly unethical, deeply objectionable, and yes, it is almost certainly illegal. The Federal Trade Commission has indeed filed suit, halted ads, etc in a number of cases - but these likely only represent a tiny percentage of all cases. This doesn't make what the car dealer's do ok, but don't expect the SWAT team to bust some heads any time soon - which is kind of sad, but let's deal with the details. Let's see what the Federal Trade Commission has to say in their article, Are Car Ads Taking You for a Ride? Deceptive Car Ads Here are some claims that may be deceptive — and why: Vehicles are available at a specific low price or for a specific discount What may be missing: The low price is after a downpayment, often thousands of dollars, plus other fees, like taxes, licensing and document fees, on approved credit. Other pitches: The discount is only for a pricey, fully-loaded model; or the reduced price or discount offered might depend on qualifications like the buyer being a recent college graduate or having an account at a particular bank. “Only $99/Month” What may be missing: The advertised payments are temporary “teaser” payments. Payments for the rest of the loan term are much higher. A variation on this pitch: You will owe a balloon payment — usually thousands of dollars — at the end of the term. So both of these are what the FTC explicitly says are deceptive practices. Has the FTC taken action in cases similar to this? Yes, they have: “If auto dealers make advertising claims in headlines, they can’t take them away in fine print,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “These actions show there is a financial cost for violating FTC orders.” In the case referenced above, the owners of a 20+ dealership chain was hit with about $250,000 in fines. If you think that's a tiny portion of the unethical gains they made from those ads in the time they were running, I'd say you were absolutely correct and that's little more than a "cost of doing business" for unscrupulous companies. But that's the state of the US nation at this time, and so we are left with "caveat emptor" as a guiding principle. What can you do about it? Competitors are technically allowed to file suit for deceptive business practices, so if you know any honest dealers in the area you can tip them off about it (try saying that out loud with a serious face). But even better, you can contact the FTC and file a formal complaint online. I wouldn't expect the world to change for your complaint, but even if it just generates a letter it may be enough to let a company know someone is watching - and if they are a big business, they might actually get into a little bit of trouble. |
What things should I consider when getting a joint-mortgage? | It may clarify your thinking if you look at this as two transactions: I am an Australian so I cannot comment on US tax laws but this is how the Australian Tax Office would view the transaction. By thinking this way you can allocate the risks correctly, Partnership Tenancy Two things should be clear - you will need a good accountant and a good lawyer. I do not agree that there is a conflict of interest in the lawyer acting for both parties - his role should only be for advice and to document what the two of you agree to. If you end up in dispute, then you need two lawyers. |
Should I finance a new home theater at 0% even though I have the cash for it? | Pay cash. You have the cash to pay for it now, but God forbid something happen to you or your wife that requires you to dip into that cash in the future. In such an event, you could end up paying a lot more for your home theater than you planned. The best way to keep your consumer credit card debt at zero (and protect your already-excellent credit) is to not add to the number of credit cards you already have. At least in the U.S., interest rates on saving accounts of any sort are so low, I don't think it's worthwhile to include as a deciding factor in whether not you "borrow" at 0% instead of buying in cash. |
Personal loan to a friend procedure | If this isn't a case where you would be willing to forgive the debt if they can't pay, it's a business transaction, not a friend transaction. Establish exactly what the interest rate will be, what the term of the loan is, whether periodic payments are required, how much is covered by those payments vs. being due at the end of the term as a balloon payment, whether they can make additional payments to reduce the principal early... Get it all in writing and signed by all concerned before any money changes hands. Consider having a lawyer review the language before signing. If the loan is large enough that it might incur gift taxes, then you may want to go the extra distance to make it a real, properly documented, intra-family loan. To do this you must charge (of at least pay taxes on) at least a certain minimal interest rate, and they have to make regular payments (or you can gift them the payments but you still won't up paying tax on the interest income). In this case you definitely want a lawyer to draw up the papers, I think. There are services on the web Antioch specialize in helping to set this up properly, and which offer services such as bookkeeping and monthly billing (aT extra cost) to make it less hassle for the lender. If the loan will be structured as a mortgage on the borrower's house -- making the interest deductible for the borrower in the US -- there are additional forms that need to be filled. The services can help with that too, for appropriate fees. Again, this probably wants experts writing the agreement, to make sure it's properly written for where you and the borrower live. Caveat: all the above is assuming USA. Rules may be very different elsewhere. I've done a formal intractability mortgage -- mostly to avoid gift tax -- and it wasn't too awful a hassle. Your mileage will vary. |
How to report Canadian income from a small contract job? | It's pretty easy. In the Interview Setup for Ufile, check the box for "Self-employment business income". Then during the process of filling everything out, you'll get a Self-Employment screen. It'll ask for the name of your business, but just put your own name since you don't have one. For the 6-digit classification code, click the ? button and look through the list for the industry that best matches the one for whom you wrote the technical report. Or you can go with 711500: Independent artists, writers and performers. It doesn't really matter that much so don't worry if it's a poor match. It will also ask you for your income and expenses. I don't know exactly what costs you might have incurred to write your report, but you can likely claim a very tiny amount of "home office" expenses. Costs like rent (or mortgage interest + property tax), utilities, and home insurance can be claimed, but they have to be pro-rated for the time you were actually doing the work, and are based on the amount of space you used for the work. For example, if you paid $1000 rent and $200 utilities for the month in which the work was done, and it took you 20 of the 31 days in that month to actually do the work, and you used a room that makes up about 10% of the square footage of your home, then you can claim: $1200 * 20/31 * 0.1 = $77.42 for your home office expenses. If you also used that room for non-business purposes during that time, then you reduce it even further. Say, if the room was also used for playing video games 50% of the time, then you'd only claim $38.71 |
Does an index have a currency? | There's no need for an index to have a currency as its purpose is not to act as an asset but rather to signal investors about the performance of a collection of stocks. An index can be price-weighted, meaning that its value equals the (arithmetic) average of the prices of each stock in the index. With no stock splits, the return on this index is the same as the return on a portfolio composed of one share of each stock. If there is a stock split, however instead of dividing by the number of stocks, as you normally would when taking the arithmetic average, you divide it by the number that will make the value of the index pre-stock-split (arithmetic average) equal to the value post stock split. Then use that dividing number for all periods until a new stock split occurs. An index can be value-weighted, meaning that its changes in value track the percentage changes in total market capitalization of the stocks in the index. Price weighted indexes ignore for "firm size" and percentage changes in price weighted indexes are not robust to stock-splits. Value weighted indexes take "firm size" into account and are robust to stock-splits. DJIA is price-weighted. S&P 500 is value-weighted. |
What are some factors I should consider when choosing between a CPA and tax software | I'm glad keshlam and Bobby mentioned there are free tools, both from the IRS and private software companies. Also search for Volunteer Income Tax Assistance (VITA) in your area for individual help with your return. A walk-in tax clinic strength is tax preparation. CPAs and EAs provide a higher level of service. For example, they compile and review your prior year's return and your current year, although that is not relevant to your current situation. EAs and CPAs are allowed to represent you before the IRS. They can directly meet or contact the IRS and navigate audits and other requests on your behalf. Outside of tax season, an accountant can help you with tax planning and other taxable events. Some people do not hire a CPA or EA until they need representation. Establishing a relationship and familiarity with an accountant now can save time and money if you do anticipate you will need representation later. Part of what makes the tax code complicated is it can use very specific definitions of a common word. Furthermore, the specific definition of a phrase or word can change between publications. Also, the tax code uses all-encompassing definitions and provide detailed and lengthy lists that are not exhaustive; you may not find your situation listed or described in the tax code, yet you are responsible for reporting your taxable events. The best software cannot navigate you through your tax situation like an accountant. Lastly, some of the smartest people I have met are accountants and to get the most out of meeting with them you should be as familiar as possible with your position. The more familiar you are with accounting, the more advanced knowledge they can share with you. In short, you will probably need an accountant when: You need to explain yourself before the IRS (representation), you are encountering varying definitions in the tax code that have an impact on your return, or you have important economic activities that you are unsure of appropriate tax treatment. |
Ordering from Canada, charged in CAD or USD? | Typically, businesses always charge their 'home' currency, so if the shop is in Canada, you will pay Canadian Dollars. Normally you don't have any choices either. Your credit card company will convert it to your currency, using the current international currency exchange rate (pretty good), plus a potential fee between 0 and 5% - depending on your credit card (not so good). If it is a significant amount, or you plan to do that more than once, and if you have multiple credit cards, check first to see which one has the lowest international fee; 0% is not uncommon, but neither is 3 or 4%. If it's a 10$ thingy, it's probably not worth the time; but 4% of 1000 is already 40$... As of right now, the currency exchange rate is 1.33, so you would pay ~75 USD; plus the potential fee, 0$ - 4$. Understand that this exchange rate is floating continuously; it probably won't change much, but it will change. |
Can an unmarried couple buy a home together with only one person on the mortgage? | In this case can the title of the home still be held by both? Yes, it is possible to have additional people on title that are not on the mortgage. Would the lender (bank) have any reservations about this since a party not on the mortgage has ownership of the property? Possibly, but there is a very simple way to avoid this. Clayton could simply purchase the home himself, and add Emma to the title after closing by recording a quitclaim deed. The lender can't stop that, and from their point of view it's actually better, since they have two people to go after in the case of default. (But despite it being better they often make it difficult to purchase Tip, when you have an attorney draft the quitclaim document, have them draft the reverse document too. (Emma relinquishing the property back to Clayton.) There is usually no extra charge for this and then you have it if you need it. For example, you may need to file the reverse forms if you want to refinance. As a side note, I agree with Grade 'Eh' Bacon's and Pete B.'s in recommending that Clayton and Emma do not do this. Once they are married the property will either be automatically jointly owned, or a spouse can be added to the title easily, and until they are married there are no pros but many cons to doing this. Reasons not to do it: As a side note, in a comment it was proposed: ...suppose Clayton loves Emma so much that he wants her name to be on the house... I understand the desire to do this from an emotional point of view, but realize this does not make sense from a financial point of view. |
Frustrated Landlord | Renting your property out at less than market rates is a form of charity. Your heart says that this is the right thing to do, your bank account says no. And so does your wife. This isn't a question for the Money stack exchange, I think ... But since you are asking here: |
Paying off mortgage or invest in annuity | I am in the process of writing an article about how to maximize one's Social Security benefits, or at least, how to start the analysis. This chart, from my friends at the Social Security office shows the advantage of waiting to take your benefit. In your case, you are getting $1525 at age 62. Now, if you wait 4 years, the benefit jumps to $2033 or $508/mo more. You would get no benefit for 4 years and draw down savings by $73,200, but would get $6,096/yr more from 64 on. Put it off until 70, and you'd have $2684/mo. At some point, your husband should apply for a spousal benefit (age 66 for him is what I suggest) and collect that for 4 years before moving to his own benefit if it's higher than that. Keep in mind, your generous pensions are likely to push you into having your social security benefit taxed, and my plan, above will give you time to draw down the 401(k) to help avoid or at least reduce this. |
If something is coming into my account will it be debit or credit in my account? | The bank "credit's" your account for money coming into it. In double entry accounting, you always have a debit and a credit to balance the accounts. As an Example: for $500 that the bank credited to your checking account, you would post a debit to Cash and a Credit to Income Earned. The accounting equation is: Assets = Liabilities + Owner's Equity $500 = $500 Cash is the "Asset" side of the equation, Income is part of Owner's Equity, and so is the Credit side... to make the equation balanced. |
Should you keep your stocks if you are too late to sell? | You should distinguish between the price and the value of a company: "Price is what you pay, value is what you get". Price is the share price you pay for one share of the company. Value is what a company is worth (based on fundamental analysis, one of the principles of value investing). I would recommend selling the stock only if the company's value has deteriorated due to fundamental changes (e.g. better products from competitors, declining market) and its value is lower than the current share price. |
Can I rely on my home equity to finance large home repairs? | Yes, a HELOC is great for that. I just had my roof done last month (~$15K, "ugh") and pretty much every major contractor in my area had a 0% same-as-cash for at least 12 months. So that helps - any balance that I don't bank by 11/15/2015 will be on the HELOC. |
How exactly is implied volatility assigned to an option's strike price? | As I understand it, Implied Volatility represents the expected gyrations of an options contract over it's lifetime. No, it represents that expected movement of the underlying stock, not the option itself. Yes, the value of the option will move roughly in the same direction the value of the stock, but that's not what IV is measuring. I even tried staring at the math behind the Options pricing model to see if that could make more sense for me but that didn't help. That formula is correct for the Black-Scholes model - and it is not possible (or at least no one has done it yet) to solve for s to create a closed-form equation for implied volatility. What most systems do to calculate implied volatility is plug in different values of s (standard deviation) until a value for the option is found that matches the quoted market value ($12.00 in this example). That's why it's called "implied" volatility - the value is implied from market prices, not calculated directly. The thing that sticks out to me is that the "last" quoted price of $12 is outside of the bid-ask spread of $9.20 to $10.40, which tells me that the underlying stock has dropped significantly since the last actual trade. If the Implied Vol is calculated based on the last executed trade, then whatever algorithm they used to solve for a volatility that match that price couldn't find a solution, which then choose to show as a 0% volatility. In reality, the volatility is somewhere between the two neighbors of 56% and 97%, but with such a short time until expiry, there should be very little chance of the stock dropping below $27.50, and the value of the option should be somewhere around its intrinsic value (strike - stock price) of $9.18. |
Comparison between buying a stock and selling a naked put | Why do all this work yourself? Pay a modest price to have a professional do this for you. Look at the tickers PUTX, PUTW. |
Why is routing number called ABA/ABN number? | With number of Banks increasing every country at some point in time adopted an Identification code. In US these are called ABA number because they are allocated by American Bankers Association, in UK Sort Codes ... like wise for other countries. See list here http://en.wikipedia.org/wiki/Bank_code In some countries the numbers are given by Central Bank. To enable internationl payments, the SWIFT body apart from message formats, allocated a SWIFT BIC [Bank identification Code] so that Banks can be globally identified. Currently IBAN being adopted in Europe & Australia to identify an Account [at a Bank] Uniquely across globe. In essence these number help uniquely identify a Location/Bank/Branch. The clearing house route the payments or collection instruments to the correct Bank on the basis of this number. |
What do the terms par value, purchase price, call price, call date, and coupon rate mean in the context of bonds? | Unless stated otherwise, these terms apply to all bonds. The par value or face value of a bond refers to the value of the bond when it's redeemed at maturity. A bond with a par value of $10,000 simply means that if you purchase the bond and hold it until the maturity date specified in the contract, you receive $10,000. The purchase price, however, is exactly that: it's what you paid for the bond. Bonds may sell below, at, or above par. Continuing the example from above, if you paid $9,800 for a bought a bond with a $10,000 par value, you bought the bond below par. A bond selling below par is said to be selling at a discount. For bonds selling above bar, they're selling at a premium. If the purchase price and the par value are the same, the bond is selling at par. These terms apply to callable bonds only, which are bond contracts that allow the issuer of the bond (in the case of municipal bonds, the institution or agency who created the contract) to buy back from bond holders at a given date (the call date) and at a given price (the call price) before the bond reaches maturity and pays the holder the full par value. Yes, the coupon rate is essentially the interest paid. It's usually represented as a percent of the par value, so if the $10,000 in the example above had a 5% coupon rate, this means that it paid out 0.05 * 10,000 = $500 each year. Usually, this payment is made as two semi-annual payments of $250. Some bonds are zero-coupon bonds, which means exactly what you would think; they don't make any coupon payments. U.S. Treasury Bills are one example of a zero-coupon bond. All of these factors are linked, because the coupon rate, callable provisions, and par value, along with the overall economic environment, can affect the purchase price of a bond. |
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