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I have an extra 1000€ per month, what should I do with it?
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1: Low fees means: a Total Expense Ratio of less than 0,5%. One detail you may also want to pay attention to whether the fund reinvests returns (Thesaurierender Fonds) which is basically good for investing, but if it's also a foreign-based fund then taxes get complicated, see http://www.finanztip.de/indexfonds-etf/thesaurierende-fonds/
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What is the meaning of Equal Housing Lender? Do non-banks need to display it?
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At the top result of the Google search, on the Google results page it's sumarized as applicable to every lender participating in FDIC: The terms equal housing lender and equal opportunity lender are synonymous and refer to all banks insured by the Federal Deposit Insurance Corporation in the United States. Such banks are prohibited from discriminating on the basis of race, color, religion, national origin, sex, handicap, or familial status.
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ESPP: Share vs Payroll withholding
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Note that you're asking about withholding, not about taxing. Withholding doesn't mean this is exactly the tax you'll pay: it means they're withholding a certain amount to make sure you pay taxes on it, but the tax bill at the end of the year is the same regardless of how you choose to do the withholding. Your tax bill may be higher or lower than the withholding amount. As far as tax rate, that will be the same regardless - you're just moving the money from one place to the other. The only difference would be that your tax is based on total shares under the plan - meaning that if you buy 1k shares, for example, at $10, so $1,500 discounted income, if you go the payroll route you get (say) $375 withheld. If you go the share route, you either get $375 worth of stock (so 38 shares) withheld (and then you would lose out on selling that stock, meaning you don't get quite as much out of it at the end) or you would ask them to actually buy rather more shares to make up for it, meaning you'd have a slightly higher total gain. That would involve a slightly higher tax at the end of it, of course. Option 1: Buy and then sell $10000 worth, share-based withholding. Assuming 15% profit, and $10/share at both points, then buy/sell 1000 shares, $1500 in profit to take into account, 38 shares' worth (=$380) withheld. You put in $8500, you get back $9620, net $1120. Option 2: Buy and then sell $13500 worth, share based withholding. Same assumptions. You make about $2000 in pre-tax profit, meaning you owe about $500 in tax withholding. Put in $11475, get back $13000, net $1525. Owe 35% more tax at the end of the year, but you have the full $1500 to spend on whatever you are doing with it. Option 3: Buy and then sell $1000 worth, paycheck withholding. You get the full $10000-$8500 = $1500 up front, but your next paycheck is $375 lighter. Same taxes as Option 1 at the end of the year.
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Free, web-based finance tracking with tag/label support?
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hledger fits your criteria, have you tried it ? Here's the web interface.
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Why invest for the long-term rather than buy and sell for quick, big gains?
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Someone entering a casino with $15 could employ a very simple strategy and have a better-than-90% chance of walking out with $16. Unfortunately, the person would have a non-trivial chance (about one in 14) of walking out with $0. If after losing $15 the person withdrew $240 from the bank and tried to win $16, the person would have a better-than-90% chance of succeeding and ending up ahead (holding the original $15, plus the additional $240, plus $1) but would have at that point about a one in 14 chance from that point of losing the $240 along with the original $15. Measured from the starting point, you'd have about a 199 out of 200 chance of gaining $1, and a one out of 200 chance of losing $240. Market-timing bets are like that. You can arrange things so you have a significant chance of making a small profit, but at the risk of a large downside. If you haven't firmly decided exactly how much downside you are willing to accept, it's very easy to simultaneously believe you don't have much money at risk, but that you'll be able to win back anything you lose. The only way you can hope to win back anything you lose is by bringing a lot more money to the table, which will of course greatly increase your downside risk. The probability of making money for the person willing to accept $15 of downside risk to earn $1 is about 93%. The probability of making money for the person willing to accept $255 worth of risk is about 99.5%. It's easy to see that there are ways of playing which have a 99.5% chance of winning, and that there are ways of playing that only have a 15:1 downside risk. Unfortunately, the ways of playing that have the smaller risk don't have anything near a 99.9% chance of winning, and those that have a better chance of winning have a much larger downside risk.
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What happens to people without any retirement savings?
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This is a good question and you seemed troubled by this and this person's choices in life. And that is the rub, they are choices. They know how to make them, they know the consequences, and they know how to work around them. Its a skill you probably don't have (and don't want to have). In the end they will survive. If you go to a fast food store in a popular retirement location you will see plenty of elderly people working. They might live in low income housing, receive some financial assistance, and utilize other charities such a food banks. They might depend on family and friends. There is also the ugly, it is not a fairy tale that some supplement their diets with pet food. There is of course social security. The amount is very low for most workers, but the amount is almost inconsequential. They would spend it all anyway and still be short despite the predictability of the income and a time frame with predictable expenses. Budgeting is a skill. So I have a friend that deals with this himself, and is helping an elder relation. He and his wife provide some help, but when it started there was a endless stream of requests. His policy now is: No more help unless he works out a budget with the person requesting help. I've used his ideas myself, and by using this it becomes clear on who is in actual need and who is just looking for the next handout. You can feel good about yourself for helping an actual needy person or guiltless say no.
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Is my wash sale being calculated incorrectly?
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Strangely enough, you have a wash sale, but, for the fact that you sold the shares and then more than 30 days passed, you can take the loss. I mistakenly used the phrase "and ended the year with no shared of the stock" elsewhere, and was corrected, as one can sell at a loss up to 12/31, and have until the end of January to create a wash condition. In your case, the facts in June combined with you ending the year with no shares removes any doubt, a wash sale, but one that's fully closed out. Note - while Vicky's answer is correct, it should go on to say that once the stock is not owned for 30 days, the wash sale loss is permitted.
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What should I do with my $25k to invest as a 20 years old?
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I recommend a Roth IRA. At your age you could turn 25K into a million and never pay taxes on these earnings. Of course there are yearly limits (5.5k) on the amount your can contribute to a Roth IRA account. If you haven't filed your taxes this year yet ... you can contribute 5.5K for last year and 5.5K for this year. Open two accounts at a discount brokerage firm. Trades should be about $10 or less per. Account one ... Roth IRA. Account two a brokerage account for the excess funds that can't be placed in the Roth IRA. Each year it will be easy transfer money into the Roth from this account. Be aware that you can't transfer stocks from brokerage acct to Roth IRA ... only cash. You can sell some stocks in brokerage and turn that into cash to transfer. This means settling up with the IRS on any gains/losses on that sale. Given your situation you'd likely have new cash to bring to table for the Roth IRA anyway. Invest in stocks and hold them for the long term. Do a google search for "motley fool stock advisor" and join. This is a premium service that picks two stocks to invest in each month. Invest small amounts (say $750) in each stock that they say you should buy. They will also tell you when to sell. They also give insights into why they selected the stock and why they are selling (aka learning experience). They pick quality companies. So if the economy is down you will still own a quality company that will make it through the storm. Avoid the temptation to load up on one stock. Follow the small amount rule mentioned above per stock. Good luck, and get in the market.
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Why is everyone saying how desperately we need to save money “in this economy”?
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You ask a few different, though not unrelated, questions. Everywhere you turn today, you hear people talk about how much they need to save or how important it is to find a good deal on things "in this economy". They use phrases like "now more than ever" and "in these uncertain times". It seems to be a lot of doom and gloom. Some of this is marketing spiel. You may notice that when the economy goes south the number of ads for the cheaper alternatives goes north. (e.g. hair clippers, discount grocery stores, discount just about anything) Truth is, we should always be looking for ways to save money on goods and services we purchase. The question is, what is acceptable to you for your desired lifestyle. (And, is that desired lifestyle reasonable for your income, age and personal situation.) Generally speaking, the harder times are the more we find discounted/cheaper alternatives acceptable. Is there really a good reason that people should be saving more than spending right now? How much you are putting away is a personal matter. I can still remember my dad griping whenever he couldn't save half of his paycheck. That said, putting away half your paycheck may lead to a rather austere lifestyle. This, of course, depends on the size of your paycheck and your desired lifestyle. You could be raking it, living simply and potentially put away more than half your income with relative ease. If you have a stable job, and a decent cash reserve, is it anymore "dangerous" to make a large purchase now than it was seven years ago? Who knows? Honestly, no one. Predicting the future is a fool's errand. (If you are interested in reading more on this view point, I suggest The Black Swan.) You mention the correct approach in this question. Ensure that you have liquid assets (cash or cash equivalents, i.e. money that you can draw on immediately and isn't credit) which covers at least 3-6 months of your necessary expenses (rent/mortgage, bills, car payments, food). (There is no reason that you couldn't try to increase this to 1 year, especially "in this economy.") You should also strive to have money available for emergencies that don't necessarily include loss of income. Of course, make sure you're putting away for retirement, as appropriate for your retirement goals. After that should come discretionary items, including investing, entertainment, the large purchase you mentioned, etc. You should never use money that you may need immediately (5-10 years) for investing. This doesn't necessarily include the large purchase you are contemplating. For example, if you are considering purchasing a home, the down-payment may be one of the items for which you need money in the "immediate" future. Is it really only because of unemployment numbers? This is probably the big one that is the focus of everyone's attention. That said, the human attention span is limited. We have a natural need to simplify things. This is one of the reasons that we tend to focus on a few, hopefully important, things. However, the unemployment numbers are not that the only thing of concern. Credit is still pretty hard to come by these days. The overall economy is still hurting, even if we are technically no longer in a recession. There are also concerns about U.S. government borrowing, consumer spending, recent trucking numbers, etc. (It may not be obvious, but trucking is used as a barometer of economic activity. If there aren't as many trucks carting goods across the country, it probably means that there is less economic activity.) The headline number these days is unemployment, as most census workers have now been returned to the pool. To answer the overall question, we should always be saving money, in good times or in bad. Be that by squeezing more value out of our purchases or by putting some money away. We should always try to reduce our risks, by having an emergency "cash" cushion. We should always be saving for retirement. Truth be told, it is probably more important to put money away in good times, before the hardships hit.
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Accounting equation: does income really decrease equity?
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If your income stream goes up, it would usually increase both your "income" term and your "assets" term since that money sits in your bank account as an asset. (Even more likely a combination of assets and expenses go up if you have cost associated with the increase in income.) In this case, they balance in the equation and your equity doesn't change. The question as you posed it is true mathematically, but the "paradox" happens because you're not taking into account where the money form the increased income falls in other terms of the equation.
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Should I buy stocks of my current employer because of its high dividend yield?
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Dividend yield is not the only criteria for stock selection. Companies past performance, management, past deals, future expansion plans, and debt equity ratio should be considered. I would also like to suggest you that one should avoid making any investment in the companies that are directly affected by frequent changes in regulations released by government. All the above mentioned criteria are important for your decision as they make an impact on your investment and can highly affect the profits.
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Is there a standard check format in the USA?
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Many years ago, I worked on software that had to print the date, payee, and amounts on pre-printed checks. Other than the MICR line (which had a particular placement with respect to the bottom edge and required a particular font in a particular point size), most aspects of the check layout and format were up to the particular check provider. Then there was a desire to start using optical character recognition to further automate check handling. A standard came out, that most checks I see now seem to follow. The standard dictated the exact dollar sign glyph to be printed to the left of the amount box. This glyph was used by the OCR to locate the amount. There were specific tolerances for where you could print/write the amount relative to that dollar sign. There were also some requirements for the box containing the amount to have some clearance from the noisy backgrounds pre-printed on many checks. But what font you used inside the amount box was, as far as I could tell, unspecified. After all, customers could always hand-write the amount. Interestingly, the part of the check where you spell out the amount is known as the "legal amount." If the amount in numerals and the amount in words don't match, the spelled version takes precedence, legally. (The theory being that it's easier to doctor the numerals to change the apparent value of the check than it is to change the words.) I always found it ironic that the layout standard to enable OCR standard was focused on reading the numerals rather than the legal amount. OCR has come a long way since then, so I wouldn't be surprised if, nowadays, both amounts are read, even on hand-written checks. A little search shows that current (voluntary) standards are put out by the ANSI X9 group.
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How do I build wealth?
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Many CEOs I have heard of earn a lot more than 200k. In fact a lot earn more than 1M and then get bonuses as well. Many wealthy people increase there wealth by investing in property, the stock market, businesses and other assets that will produce them good capital growth. Oh yeh, and luck usually has very little to do with their success.
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View asset/holdings breakdown within fund
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according to the SEC: Shareholder Reports A mutual fund and a closed-end fund respectively must provide shareholders with annual and semi-annual reports 60 days after the end of the fund’s fiscal year and 60 days after the fund’s fiscal mid-year. These reports contain updated financial information, a list of the fund’s portfolio securities, and other information. The information in the shareholder reports will be current as of the date of the particular report (that is, the last day of the fund’s fiscal year for the annual report, and the last day of the fund’s fiscal mid-year for the semi-annual report). Other Reports A mutual fund and a closed-end fund must file a Form N-Q each quarter and a Form N-PX each year on the SEC’s EDGAR database, although funds are not required to mail these reports to shareholders. Funds disclose portfolio holdings on Form N-Q. Form N-PX identifies specific proposals on which the fund has voted portfolio securities over the past year and discloses how the fund voted on each. This disclosure enables fund shareholders to monitor their funds’ involvement in the governance activities of portfolio companies. which means that sixty days after the end of each quarter they will tell you what they owned 60 days ago. This makes sense; why would they want to tell the world what companies they are buying and selling.
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Why is the volume highest at the beginning and end of a trading day?
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One of the fundamental of technical analysis suggests that holding a security overnight represents a huge commitment. Therefore it would follow that traders would tend to close their positions prior to market close and open them when it opens.
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Can one be non-resident alien in the US without being a resident anywhere else?
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You may be considered a resident for tax purposes. To meet the substantial presence test, you must have been physically present in the United States on at least: 31 days during the current year, and 183 days during the 3 year period that includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count: All of the days you were present in the current year, and One-third of the days you were present in the first year before the current year, and One-sixth of the days you were present in the second year before the current year. If you are exempt, I'd check that ending your residence in Germany doesn't violate terms of the visa, in which case you'd lose your exempt status. If you are certain that you can maintain your exempt status, then the income would definitively not be taxed by the US as it is not effectively connected income: You are considered to be engaged in a trade or business in the United States if you are temporarily present in the United States as a nonimmigrant on an "F," "J," "M," or "Q" visa. The taxable part of any U.S. source scholarship or fellowship grant received by a nonimmigrant in "F," "J," "M," or "Q" status is treated as effectively connected with a trade or business in the United States. and your scholarship is sourced from outside the US: Generally, the source of scholarships, fellowship grants, grants, prizes, and awards is the residence of the payer regardless of who actually disburses the funds. I would look into this from a German perspective. If they have a rule similiar to the US for scholarships, then you will still be counted as a resident there.
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What's the point of a benchmark?
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Some years your portfolio may perform better than the benchmark, and some years it may be the other way around. Without a benchmark you will never know. And by the way if you choose poorly, you will never beat the benchmark. If the benchmark goes up 20% but your fund/investment only went up 3% you did make money, but you might want to reevaluate your strategy.
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Why does gold have value?
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It has semantic value (because we culturally believe gold is valuable). There is a very important point here. Gold and many other coin metals. This "semantic value" is enshrined in law through the special tax status of coin metals. You can buy a kilo of gold and not pay sales tax. You can't buy a kilo of iron or tin and do the same. This is the important part because investors shouldn't care about semantics. I read that the taxable status varies by state or nation, so you need to be very careful. It's possible to evade taxes without realizing it. It also doesn't necessarily exempt you from the form of gold. An ingot should be tax exempt. A collector's coin may or may not be, depending on your local laws and the difference between the value of the weight of the gold, and the value of the form of the coin.
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How can I make a profit by selling a stock short?
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How so? If i sell short, then i make a profit only if the price goes down so i can buy back at a lower price. Yes, but if the price is going up then you would go long instead. Shorting a stock (or any other asset) allows you to profit when the price is going down. Going long allows you to profit when the price is going up. In the opposite cases, you lose money. In order to make a profit in either of those situations, you have to accurately assess which way the price will trade over the period of time you are dealing with. If you make the wrong judgment, then you lose money because you'll either sell for a lower price than you bought (if you went long), or have to buy back at a higher price than you sold for (if you went short). In either case, unless the trader can live with making a short-term loss and recouperating it later, one needs a good stop-loss strategy.
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No-line-of-credit debit card?
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Having worked at a financial institution, this is a somewhat simple, two-part solution. 1) The lendor/vendor/financial institution simply turns off the overdraft protection in all its forms. If no funds are available at a pin-presented transaction, the payment is simply declined. No fee, no overdraft, no mess. 2) This sticking point for a recurring transaction, is that merchants such as Netflix, Gold's Gym etc, CHOOSE to allow payments like this, BECAUSE they are assured they are going to get paid by the financial institution. It prevents them from having issues. Only a gift card will not cost you more money than you put in, BUT I know of several institutions, that too many non-payment periods can cause them to cease doing business with you in the future. TL:DR/IMO If you don't want to pay more than you have, gift cards are the way to go. You can re-charge them whenever you choose, and should you run into a problem, simply buy a new card and start over.
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Will I get taxed on withdrawals from Real Cash Economy games?
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Situation #1: I keep playing, and eventually earn 1000 PED. I withdraw this. Will I get taxed? If so, by how much? This is probably considered an "award", so whatever your country taxes for lottery/gambling winnings would be applicable. If there's no specific taxation on this kinds of income - then it is ordinary income. Situation #2: I deposit $5000, play the game, lose some money and withdraw PED equal to $4000. Will I get taxed? If so, by how much? Since it is a game, it is unlikely that deducting losses from your income would be allowed. However, the $4000 would probably not be taxed as income (since you are getting your own money back). Situation #3: I deposit $5000 and use this to buy in-game items. I later sell these items for massive profits (200%+, this can happen over the course of 2 years for sure). I withdraw $10000. Will I get taxed? If so, by how much? Either the same as #1 (i.e.: ordinary income) or as capital gains (although tax authority may argue that this was not a for-profit investment, and capital gains treatment shouldn't be applicable). Will I get taxed on withdrawals from Real Cash Economy games? And do the taxes apply to the full withdrawal, or only on the profits? Or only on the profits above a certain amount? Generally income taxes only apply on income. So if you paid $10000 and got back $12000 - only the $2000 is considered income. However some countries may tax full amounts under certain conditions. Such taxes are called "franchise taxes". For a proper tax advice consult with the locally licensed tax adviser.
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Live in Florida & work remote for a New York company. Do I owe NY state income tax?
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This question came up again (Living in Florida working remotely - NY employer withholds NYS taxes - Correct or Incorrect?) and the poster on the new version didn't find the existing answers to be adequate, so I'm adding a new answer. NYS will tax this income if the arrangement is for the convenience of the employee. If the arrangement is necessary to complete the work, then you should have no NYS tax. New York state taxes all New York-source salary and wage income of nonresident employees when the arrangement is for convenience rather than by necessity (Laws of New York, § 601(e), 20 NYCRR 132.18). Source: http://www.journalofaccountancy.com/issues/2009/jun/20091371.html Similar text can also be found here: http://www.koscpa.com/newsletter-article/state-tax-consequences-telecommuting/ The NYS tax document governing this situation seems to be TSB-M-06(5)I. I looked at this page from NYS that was mentioned in the answer by @littleadv. That language does at first glance seem to lead to a different answer, but the ruling in the tax memo seems to say that if you're out of state only for your convenience then the services were performed in NYS for NYS tax purpose. From the memo: However, any allowance claimed for days worked outside New York State must be based upon the performance of services which of necessity, as distinguished from convenience, obligate the employee to out-of- state duties in the service of his employer.
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How do I find out the Earnings Per Share of a Coca Cola Co Share?
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Market cap should be share price times number of shares, right? That's several orders of magnitude right there...
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How to get rid of someone else's debt collector?
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Step 1)I answer the phone saying it is illegal to call my cell phone and I want all further communications in writing. Put this number on the do not call list and reverse search the number they dialed. Step 2) I say that whoever changed their number and how long I have owned the number and I call forward when they don't stop. I forward calls through google voice and mark them as spam. They get a sorry number was disconnected recording. Step 3) REALLY HARSH. I say the person passed away only if they aren't deterred enough by the previous efforts or they get cross into extreme harassment. Usually Step 1 is enough to stop the calls no matter who they ask for.
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Why do some people go through contortions to avoid paying taxes, yet spend money on expensive financial advice, high-interest loans, etc?
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To some extent, I suppose, most people are okay with paying Some taxes. But, as they teach in Intro to Economics, "Decisions are made on the margin". Few are honestly expecting to get away with paying no taxes at all. They are instead concerned about how much they spend on taxes, and how effectively. The classic defense of taxes says "Roads and national defense and education and fire safety are all important." This is not really the problem that people have with taxes. People have problems with gigantic ongoing infrastructure boondoggles that cost many times what they were projected to cost (a la Boston's Big Dig) while the city streets aren't properly paved. People don't have big problems with a city-run garbage service; they have problems with the garbagemen who get six-figure salaries plus a guaranteed union-protected job for life and a defined-benefit pension plan which they don't contribute a penny to (and likewise for their health plans). People don't have a big problem with paying for schools; they have a big problem with paying more than twice the national average for schools and still ending up with miserable schools (New Jersey). People have a problem when the government issues bonds, invests the money in the stock market for the public employee pension plan, projects a 10% annual return, contractually guarantees it to the employees, and then puts the taxpayers on the hook when the Dow ends up at 11,000 instead of ~25,000 (California). And people have a problem with the attitude that when they don't pay taxes they're basically stealing that money, or that tax cuts are morally equivalent to a handout, and the insinuation that they're terrible people for trying to keep some of their money from the government.
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Why do mutual fund trading limitations exist? e.g. 90 day transfer limits?
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Mutual funds (that are not exchange-traded funds) often need to sell some of their securities to get cash when a shareholder redeems some shares. Such transactions incur costs that are paid (proportionally) by all the shareholders in the fund, not just the person requesting redemption, and thus the remaining shareholders get a lower return. (Exchange-traded funds are traded as if they are shares of common stock, and a shareholder seeking a redemption pays the costs of the redemption). For this reason, many mutual funds do not allow redemptions for some period of time after a purchase, or purchases for some period of time after a redemption. The periods of time are chosen by the fund, and are stated in the prospectus (which everyone has acknowledged has been received before an investment was made).
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As an employer, how do I start a 401k or traditional IRA plan?
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If you are the sole owner (or just you and your spouse) and expect to be that way for a few years, consider the benefits of an individual 401(k). The contribution limits are higher than an IRA, and there are usually no fees involved. You can google "Individual 401k" and any of the major investment firms (Fidelity, Schwab, etc) will set one up free of charge. This option gives you a lot of freedom to decide how much money to put away without any plan management fees. The IRS site has all the details in an article titled One-Participant 401(k) Plans. Once you have employees, if you want to set up a retirement plan for them, you'll need to switch to a traditional, employer-sponsored 401k, which will involve some fees on your part. I seem to recall $2k/yr in fees when I had a sponsored 401(k) for my company, and I'm sure this varies widely. If you have employees and don't feel a need to have a company-wide retirement plan, you can set up your own personal IRA and simply not offer a company plan to your employees. The IRA contribution limits are lower than an individual 401(k), but setting it up is easy and fee-free. So basically, if you want to spend $0 on plan management fees, get an individual 401(k) if you are self-employed, or an IRA for yourself if you have employees.
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How to plan in a budget for those less frequent but mid-range expensive buys?
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I use a "sinking" fund. If you want to buy a $1000 bicycle, you put $100 per month into a savings account. 10 months from now, you can buy your $1000 bicycle. If you get a $500 windfall, you can either put it in the sinking fund and buy the item earlier. If you lose some income, you can put $50 per month in the fund.
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Can I sell a stock immediately?
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Yes you can, provided if buyers are available. Normally high liquidty stocks can be sold at market prices a little higher or lower.
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Is foreign stock considered more risky than local stock and why?
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Foreign stocks have two extra sources of risk attached to them; exchange rate and political. Exchange rate risk is obvious; if I buy a stock in a foreign currency and there is a currency movement that makes that investment worth less I lose money no matter what the stock does. This can be offset using exchange rate swaps. (This is ceteris paribus, of course; changes in exchange rate can give a comparative advantage to international and exporting companies that will improve the fundamentals and so increase the price of the stock relative to a local firm. The economics of the firms in particular are not explored in this answer as it would get too complicated and long if I did.) Political risk relates not only to the problems surrounding international politics such as a country deciding that foreign nationals may no longer own shares in their national industries or deciding to seize foreign nationals' assets as happens in some areas. Your home country may also decide to apply sanctions to the country in which you are invested thus making it impossible to get your money back even though the foreign country will allow you to redeem them or sell. Diplomatic relations and trade agreements tend to be difficult. There are further problems in lack of understanding of foreign countries' laws, tax code, customs etc. relating to investments and the necessity to find legal representation in a country you may never have visited if there are issues. There is also a hidden risk in that, as an individual investor, you are not likely to be reading the local financial news for that country regularly enough to spot company specific issues arising. By the time these issues get into international media its far too late as all of the local investors have sold out of their positions already. The risks are probably no different if you have the time to monitor international relations and the foreign country's news, and have FX swaps in place to counteract FX risk as the funds and investment banks do but as an individual investor the time required is not feasible.
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Definitions of leverage and of leverage factor
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This would clear out a lot more. 1) Leverage is the act of taking on debt in lieu of the equity you hold. Not always related to firms, it applies to personal situations too. When you take a loan, you get a certain %age of the loan, the bank establishes your equity by looking at your past financial records and then decides the amount it is going to lend, deciding on the safest leverage. In the current action leverage is the whole act of borrowing yen and profiting from it. The leverage factor mentions the amount of leverage happening. 10000 yen being borrowed with an equity of 1000 yen. 2) Commercial banks: 10 to 1 -> They don't deal in complicated investments, derivatives except for hedging, and are under stricter controls of the government. They have to have certain amount of liquidity and can loan out the rest for business. Investment banks: 30 to 1 -> Their main idea is making money and trade heavily. Their deposits are limited by the amount clients have deposited. And as their main motive is to get maximum returns from the available amount, they trade heavily. Derivatives, one of the instruments, are structured on underlyings and sometimes in multiple layers which build up quite a bit of leverage. And all of the trades happen on margins. You don't invest $10k to buy $10k of a traded stock. You put in, maybe $500 to take up the position and borrow the rest of the amount per se. It improves liquidity in the markets and increases efficiency. Else you could do only with what you have. So these margins add up to the leverage the bank is taking on.
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Was this a good deal on a mortgage?
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The key question is whether this number includes taxes and insurance. When you get a mortgage in the U.S., the bank wants to be sure that you are paying your property taxes and that you have homeowners insurance. The mortgage is guaranteed by a lien on the house -- if you don't pay, the bank can take your house -- and the bank doesn't want to find out that your house burned down and you didn't bother to get insurance so now they have nothing. So for most mortgages, the bank collects money from the borrower for the taxes and insurance, and then they pay these things. This can also be convenient for the borrower as you are then paying a fixed amount every month rather than being hit with sizeable tax and insurance bills two or three times a year. So to run the numbers: As others point out, mortgage rates in the US today are running 3% to 4%. I just found something that said the average rate today is 3.6%. At that rate, your actual mortgage payment should be about $1,364. Say $1,400 as we're taking approximate numbers. So if the $2,000 per month does NOT include taxes and insurance, it's a bad deal. If it does, then not so bad. You don't say where you live. But in my home town, property taxes on a $300,000 house would be about $4,500 per year. Insurance is probably another $1000 a year. And if you have to get PMI, add another 1/2% to 3/4%, or $1500 to $2250 per year. Add those up and divide by 12 and you get about $600. Note my numbers here are all highly approximate, will vary widely depending on where the house is, so this is just a general ballpark. $1400 + $600 = $2000, just what you were quoted. So if the number is PITI -- principle, interest, taxes, and insurance -- it's about what I'd expect.
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Get financial reports on Canadian companies
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www.sedar.com is the official site that provides access to most public securities documents and information filed by public companies and investment funds with the Canadian Securities Administrators (CSA) in the SEDAR filing system. Now, I'm guessing - I think the doc is MDA - Management’s Discussion and Analysis of Financial Condition and Results of Operations. At least this is what appears listed for many companies.
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Free/open source Unix software that pulls info from all my banks/brokers/credit cards?
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As far as I can tell there are no "out-of-the-box" solutions for this. Nor will Moneydance or GnuCash give you the full solution you are looking for. I imaging people don't write a well-known, open-source, tool that will do this for fear of the negative uses it could have, and the resulting liability. You can roll-you-own using the following obscure tools that approximate a solution: First download the bank's CSV information: http://baruch.ev-en.org/proj/gnucash.html That guy did it with a perl script that you can modify. Then convert the result to OFX for use elsewhere: http://allmybrain.com/2009/02/04/converting-financial-csv-data-to-ofx-or-qif-import-files/
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Should I buy a house because Mortgage rates are low
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As of now in 2016, is is safe to assume that mortgage rates would/should not get back to 10%? What would the rates be in future is speculation. It depends on quite a few things, overall economy, demand / supply, liquidity in market etc ... Chances are less that rates would show a dramatic rise in near future. Does this mean that one should always buy a house ONLy when mortgage rates are low? Is it worth the wait IF the rates are high right now? Nope. House purchase decision are not solely based on interest rates. There are quite a few other aspects to consider, the housing industry, your need, etc. Although interest rate do form one of the aspect to consider specially affordability of the EMI. Is refinancing an option on the table, if I made a deal at a bad time when rates are high? This depends on the terms of current mortgage. Most would allow refinance, there may be penal charges breaking the current mortgage. Note refinance does not always mean that you would get a better rate. Many mortgages these days are on variable interest rates, this means that they can go down or go up. How can people afford 10% mortgage? Well if you buy a small cheaper [Less expensive] house you can afford a higher interest rate.
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Do market shares exhaust?
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Everyone has a price. If nobody is selling shares, then increase the price you will buy them for. And then wait. Somebody will have some hospital bills to pay for eventually. I buy illiquid investments all the time, and thats typically what happens. Great companies do not have liquidity problems.
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Ways to trade the Euro debt crisis
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The way I am trading this is: I am long the USD / EUR in cash. I also hold USD / EUR futures, which are traded on the Globex exchange. I am long US equities which have a low exposure to Europe and China (as I expect China to growth significantly slower if the European weakens). I would not short US equities because Europe-based investors (like me) are buying comparatively "safe" US equities to reduce their EUR exposure.
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Pay off credit cards in one lump sum, or spread over a few months?
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Should I allow the credit cards to be paid out of escrow in one lump sum? Or should I take the cash and pay the cards down over a few months. I have heard that it is better for your credit score to pay them down over time. Will it make much of a difference? Will the money you save by increasing your credit score (assuming this statement is true) be larger than by eliminating the interest payments for the credit card payments over "a few months" (13% APR at $24,000 is $3120 a year in interest; $260 a month, so if "a few months" is three, that would cost over $700 - note that as you pay more principal the overall amount of interest decreases, so the "a year" in interest could go down depending on the principal payments). Also, on a related note regarding credit score, it doesn't look good to have more than a third of a credit line available balance exceeded (see number 2 here: http://credit.about.com/od/buildingcredit/tp/building-good-credit.htm).
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Is there a mathematical formula to determine a stock's price at a given time?
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Try to find the P/E ratio of the Company and then Multiply it with last E.P.S, this calculation gives the Fundamental Value of the share, anything higher than this Value is not acceptable and Vice versa.
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Is there any instrument with real-estate-like returns?
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Similarly to buying property on your own, REITs cannot get to good returns without leveraging. If you buy an investment property 100% cash only - chances are that 10% ROI is a very very optimistic scenario. If you use leveraging (i.e.: take out a mortgage) - you're susceptible to interest rate changes. REITs invest in properties all around all the time. They invest in mortgages themselves as well (In the US, that's the only security REITs can hold without being disqualified). You can't expect all that to be cash-only, there have to be loans and financing involved. When rates go up - financing costs go up. That brings net income down. Simple math. In the US, there's an additional benefit to investing in REIT vs directly holding real estate: taxes. REITs pay dividends, which have preferential (if qualified) taxation. You'll pay capital gains taxes on the dividends if you hold the fund long enough. If you own a rental property directly, your income after all the expenses is taxed at ordinary rates, which would usually be higher. Also, as you mentioned, you can use them as margin, and they're much much more liquid than holding real estate directly. Not to mention you don't need to deal with tenants or periods where you don't have any, or if local real-estate market tanks (while REITs are usually quite diversified in kinds of real estate they hold and areas). On the other hand, if you own real estate, you can leverage it at lower rates than margin (with HELOCs etc), and it provides some safety net in case of a stock market crash (which REITs are somewhat susceptible to). You can also live in your property, if needed, which is something that's hard to do with REITs....
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Selling put and call Loss Scenario Examples
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Here's a simple example for a put, from both sides. Assume XYZ stock trades at $200 right now. Let's say John writes a $190 out of the money put on XYZ stock and sells this put to Abby for the premium, which is say $5. Assume the strike date, or date of settlement, is 6 months from now. Thus Abby is long one put option and John is short one put option (the writer of the option is short the option). On settlement date, let's assume two different scenarios: (1) If the price of the stock decreases by $50, then the put that Abby bought is 'in the money'. Abby's profit can be calculated as being strike price 190 - current stock price 150 - premium paid 5 = $35 So not including any transaction fees, that is a $35 dollar return on a $5 investment. (2) If the price of the stock increases by $50, then the put that Abby bought is worthless and her loss was 100%, or her entire $5 premium. For John, he made $5 in 6 months (in reality you need collateral and good credit to be able to write sizable option positions).
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What's a good free checking account?
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Here's a hack for getting the "free" checking that requires direct deposit. Some effort to set up, but once everything is in place, it's all autopilot. (If your transfer into savings is higher than your transfer out of savings, you'll build up a nice little stash over time.) I don't know if there are deposit amounts or frequencies that you must have to qualify for the free account, if these are public or secret, or if this works everywhere. If anyone else has experience using this kind of hack, please leave a comment.
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Why does the share price tend to fall if a company's profits decrease, yet remain positive?
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You are omitting how the company made 120 million in the previous year and may be facing a shrinking market and thus have poor future prospects. If the company is shrinking, what will the shares be worth down the road. Remember companies like AOL or Blackberry? There was a time they had big profits before things changed which is the part you aren't considering here. If the company has lost something big on its earnings, e.g. the oil wells it owned have run out of reserves or the patents on its key drugs have expired, then there could be the perception that the company won't be able to compete in the future to continue to deliver earnings. Some companies may well end up going broke as one could look at GM for a company that used to be one of the largest car companies in the world and yet it ended up going broke.
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Is it legal for a landlord to report a large payment to a tenant using Form 1099?
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I believe it's not only legal, but correct and required. A 1099 is how a business reports payments to others, and they're required by the IRS to send them for payments of $600 or more (for miscalleneous payments like this). The payment is an expense to the landlord and income to you, and the 1099 is how that's documented (although note that if they don't send you a 1099, it's still income to you and you still need to report it as such). It's similar to getting a 1099-INT for interest payments or a 1099-DIV for dividend payments. You'll get a 1099-MISC for a miscellaneous payment. If you were an employee they'd send you a W-2, not a 1099.
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Remote jobs and incidental wage costs: What do I have to consider?
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An employee costs the company in four ways: Salary, taxes, benefits, and capital. Salary: The obvious one, what they pay you. Taxes: There are several taxes that an employer has to pay for the privilege of hiring someone, including social security taxes (which goes to your retirement), unemployment insurance tax (your unemployment benefits if they lay you off), and workers compensation tax (pays if you are injured on the job). (There may be other taxes that I'm not thinking of, but in any case those are the main ones.) Benefits: In the U.S. employers often pay for medical insurance, sometimes for dental, life, and disability. There's usually some sort of retirement plan. They expect to give you some number of vacation days, holidays, and sick days where they pay you even though you're not working. Companies sometimes offer other benefits, like discounts on buying company products, membership in health clubs, etc. Capital: Often the company has to provide you with some sort of equipment, like a computer; furniture, like a chair and desk; etc. As far as the company is concerned, all of the above are part of the cost of having you as an employee. If they would pay a domestic employee $60,000 in salary and $20,000 in taxes, then assuming the same benefits and capital investment, if a foreign employee would cost them $0 in taxes they should logically be willing to pay $80,000. Any big company will have accountants who figure out the total cost of a new employee in excruciating detail, and they will likely be totally rational about this. A smaller company might think, "well, taxes don't really count ..." This is irrational but people are not always rational. I don't know what benefits they are offering you, if any, and what equipment they will provide you with, if any. I also don't know what taxes, if any, a U.S. company has to pay when hiring a remote employee in a foreign country. If anybody on here knows the answer to that, please chime in. Balanced against that, the company likely sees disadvantages to hiring a foreign remote employee, too. Communication will be more difficult, which may result in inefficiency. My previous employer used some contractors in India and while there were certainly advantages, the language and time zone issues caused difficulties. There are almost certainly some international bureaucratic inconveniences they will have to deal with. Etc. So while you should certainly calculate what it would cost them to have a domestic employee doing the same job, that's not necessarily the end of the story. And ultimately it all comes down to negotiations. Even if the company knows that by the time they add in taxes and benefits and whatever, a domestic employee will cost them $100,000 a year, if they are absolutely convinced that they should be able to hire an Austrian for $60,000 a year, that might be the best offer you will get. You can point out the cost savings, and maybe they will concede the point and maybe not.
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Efficient markets hypothesis and performance of IPO shares after lock-up period
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Who's to say it wasn't priced into the markets, at least to some degree? Without any information on the behaviour of holders pre-expiry, no one can know if they've been shorting the stock in advance of selling on expiry day. And with the float being such a small proportion of the total issuance, there's always the risk of sudden fluctuations picking up big momentum - which could easily explain the 7% drop on expiry day. Add into all this uncertainty, the usual risks of shorting (e.g. limited upside, unlimited downside), and the observed phenomena aren't by any means killer blows of the Efficient Market Hypothesis. That's not to say that such evidence doesn't necessarily exist - just that this isn't it.
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Which shareholders cause news-driven whole market stock swings?
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The people who cause this sort of sell-off immediately are mostly speculators, short-term day-traders and the like. They realize that, because of the lowered potential for earnings in the future, the companies in question won't be worth as much in the future. They will sell shares at the elevated price, including sometimes shares that they borrow for the explicit purpose of selling (short selling), until the share price is more reasonable. Now, the other question is why the companies in question won't sell for as much in the future: Even if every other company in the world looks less attractive all at once (global economic catastrophe etc) people have other options. They could just put the money in the bank, or in corporate bonds, or in mortgage bonds, or Treasury bonds, or some other low-risk instrument, or something crazy like gold. If the expected return on a stock doesn't justify the price, you're unlikely to find someone paying that price. So you don't actually need to have a huge sell-off to lower the price. You just need a sell-off that's big enough that you run out of people willing to pay elevated prices.
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Why is day trading considered riskier than long-term trading?
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Over a period of time greater than 10 years (keep in mind, 2000-2009 ten year period fails, so I am talking longer) the market, as measured by the S&P 500, was positive. Long term, averaging more than 10%/yr. At a 1 year horizon, the success is 67 or so percent. It's mostly for this reason that those asking about investing are told that if they need money in a year or two, to buy a house for instance, they are told to stay out of the market. As the time approaches one day or less, the success rate drops to 50/50. The next trade being higher or lower is a random event. Say you have a $5 commission. A $10,000 trade buy/sell is $10 for the day. 250 trading days costs you $2500 if you get in and out once per day. You need to be ahead 25% for the year to break even. You can spin the numbers any way you wish, but in the end, time (long time spans) is on your side.
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What is a good 5-year plan for a college student with $15k in the bank?
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Fifteen thousand dollars is not a whole lot of cash. It should probably be kept liquid. To that end, savings accounts and certificates of deposit (CDs) are typically used. (There are also money market funds, but I am not sure that makes sense once trading costs are figured into the equation.) I would set some of that money aside, for an emergency fund. (Start with at least 6 months of realistic living expenses and also consider a fund for unforeseen emergencies.) I would consider using 2-3 thousand to setup a retirement account. The rest, I would place into CD ladders, so that it is somewhat accessible.
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Asking price went through the roof
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As folks have explained in the comments:
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How much (paper) cash should I keep on hand for an emergency?
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Coming from an area that is hurricane prone, and seeing what happens to local businesses during evacuations/power outages/gas shortages, I think what you already have on hand should be sufficient. And it sounds like that's exactly what you're budgeting for. I'd say 2 weeks worth of fuel and food costs, with the budget for each in line with riding out a natural disaster. True "Preppers" would say keep your money in gold buried in the backyard surrounded by land mines, but that's not perhaps what you're looking for. It is not uncommon for gas stations and grocery stores to revert to cash only sales, especially if they're not big chain operations. If the internet is out, or power is spotty, they may not be able to process CCs. Again, think smaller or more rural businesses. I have seen gas stations switch to cash only during gas shortages as well to help limit how much fuel people were buying. $250 should get you through fine unless you drive a tank and need steak every night. You could probably go with less, but it's entirely dependent on your needs. As Joe rightly stated in his answer, if it's desperate enough times that you can't use a CC or debit card, cash may not even be useful to you.
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How to tell if an option is expensive
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One way is to compare the implied volatility with the realised volatility over a period similar to the time left to expiry. However there are plenty of reasons why the implied may be higher than the historical, for example because the market volatility has increased overall or because the underlying company is going to report their results before the option expires.
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New to Stock Trading
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Investopedia got some good tutorials on stocks and a good simulator to play around without loosing hard earned money. http://www.investopedia.com/university/stocks/ http://www.investopedia.com/simulator/
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What would be the signs of a bubble in silver?
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@fennec is right, no one knows. Here's a link that may help: http://pragcap.com/silver-prices-display-some-bubbly-characteristics I don't follow markets enough to comment, but I have read enough of Cullen's stuff to know he's not off his rocker.
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Should I pay a company who failed to collect VAT from me over 6 months ago?
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Note: I am not a lawyer. This is my personal opinion and interpretation. First, your source is European Law, which obviously doesn't apply outside of the EU. The EU cannot make laws that bind entities in other countries; so you cannot claim that the VAT was needed to be mentioned. Second, if you owe something, you owe it; it doesn't matter if it was forgotten to be mentioned. At best, you can say that under those circumstances you don't want the software anymore, and i would assume you can send it back and get your money back (minus a fee for having it used for a while...) - this gets quite difficult to calculate clearly, so it's probably not a good avenue to follow for you. As the company has to send the VAT to your country (they will not be allowed to keep a dime of it, and have to bear the complete cost for the handling), it is a debt you have to your government; they are just the entity responsible for collecting it. Still, if you just ignore them, they will probably suck it up, and your government will also not do a thing to you. If they only have your email address, they have no way of knowing if you even still have/use this address; for all they know, it could be you never got it. They also cannot simply charge your card, as they probably don't have the card data any more (they are not supposed to keep it after the transaction is complete, and they thought it was complete at the time). All in all, you should be safe to ignore it. It's between you and your god/consciousness, if you feel obliged to pay it, as technically you owe it.
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Is paying off your mortage a #1 personal finance priority?
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Math says invest in the Market (But paying off your mortgage early is a valid option if you are very risk averse.) You are going to get a better return by investing in the stock market. In the US in 2015/2016, mortgages are 3%-4%, and give you a tax break. The rate of return on the stock market is ~10%, (closer to 6% after you subtract out inflation, taxes, fees, etc.) Since 10 > 3, (or 6% > 4%, to use the pessimistic numbers) investing in the market is the better deal. But... The market has risk, and your mortgage does not. If you are very risk averse paying off the mortgage may make sense. As an example: Family A has a single "breadwinner", who works a low skilled job. Family B has 2 working spouses, both in high skill white collar positions. These two families are going to have wildly different risk tolerances. It may make sense for family A to "invest" its extra money in paying off the mortgage, after they have tackled high interest debt, built an emergency fund, maxed the 401k, etc. Personally I would not: in the US you cannot recoup pre-payments if you lose your job. If I was very risk averse, I would keep my extra money as cash, so I could pay my mortgage after I lost my job. It is never going to make sense for family B to pay the mortgage early. At that point, any decision to pre-pay is going to be based on emotion and not logic.
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What does the phrase “To make your first million” mean?
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When people are crowing about their achievements, they often take liberties with those achievements. Vitalik's interpretation -- net worth, is probably what you would naturally come to mind. But when someone is bragging, that could mean anything -- $1M of total revenue.
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How can I determine if my rate of return is “good” for the market I am in?
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First add the inflation, then minus your expenses for the year. If you are better than that, you have done "good". For example: - 1.)You have $10,000 in 2014. 2.) You need $1,000 for your expenses in 2014, so you are left with $9000. 3.) Assuming the inflation rate is at 3 percent, the $10,000 that you initially had is worth $10,300 in 2015. 4.) Now, if you can get anything over 10,300 with the $9,000 that you have you are in a better position than you were last year i.e(10300-9000)/9000 - i.e 14.44%. So anything over 14.44 percent is good. Depending on where you live, living costs and inflation may vary, so please do the calculation accordingly since this is just an example. Cheers
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Why are credit cards preferred in the US?
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There are several reasons why credit cards are popular in the US: On the other hand, debit cards do not have any of these going for them. A debit card doesn't make much money for the bank unless you overdraw or something, so banks don't have incentive to push you to use them as much. As a result they don't offer rewards other benefits. Some people say the ability to spend more than you have is a downside of a credit card. But it's really an upside. The behavior of doing that when it isn't needed is bad, but that's not the card's fault, it's the users'. You can get a credit card with a very small limit if this is an issue for you. The question I find interesting is why debit cards are more popular in your home country. I can't think of any advantage they offer besides free cash back. But most people in the US don't use cash much either. I have to think in your home country the banks have a different revenue model or perhaps your country isn't as eager to offer tons of easy credit to everyone as the US is.
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Given advice “buy term insurance and invest the rest”, how should one “invest the rest”?
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Buy term and invest the rest is in fact the easiest plan. Just buy the term insurance based on your current and expected needs. Review those needs every few years, or after a life event (marriage, divorce, kids, buying a house...) For the invest the rest part: invest in your 401K, IRA or the equivalent. There are index funds, or age based funds that can help the inexperienced. Those index funds have low costs; the age based funds change as you get older. The biggest issue with the whole life type products is that what your care about for the term insurance doesn't mean that the company has a good investment program. You also want to have the ability to decide to change insurance companies or investment companies without impacting the other.
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How does a stock operate when it is listed between two exchanges?
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Say a stock is listed in Nasdaq, and the same company has a stock listed in Tsx. Does the Nasdaq price affect the Tsx price as trading commences? Not directly. Basically, an exchange is a market, and the price is defined only by supply and demand in that market. However, any substantial price differential for a commodity traded in multiple market creates an arbitrage opportunity, and there are many traders whose job it is exactly to find and use such opportunities. Their activity in turn has the effect of reducing the price differentials to the point where transaction costs make them unprofitable. With high-frequency traders around, the time for a price differential to disappear is nowadays measured in milliseconds. If a trader buys from one exchange, will it affect the price of the other? Only through the mechanism mentioned above. Are there any benefits to being listed in two exchanges? It increases the liquidity of a stock.
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why is the money withdrawn from traditional IRA taxed at the ordinary income tax rate?
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This is actually (to me) an interesting point to note. While the answer is "that's what Congress wrote," there are implications to note. First, for many, the goal of tax deferral is to shift 25% or 28% income to 15% income at retirement. With long term gains at 15%, simply investing long term post tax can accomplish a similar goal, where all gain is taxed at 15%. Looking at this from another angle, an IRA (or 401(k) for that matter) effectively turns long term gains into ordinary income. It's a good observation, and shouldn't be ignored.
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What should I do with my $25k to invest as a 20 years old?
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Waiting for the next economic downturn probably isn't the best plan at this point. While it could happen tomorrow, you may end up waiting a long time. If you would prefer not to think much about your investment and just let them grow then mutual funds are a really good option. Make sure you research them before you buy into any and make sure to diversify, as in buy into a lot of different mutual funds that cover different parts of the market. If you want to be more active in investing then start researching the market and stick to industries you have very good understanding of. It's tough to invest in a market you know nothing about. I'd suggest putting at least some of that into a retirement savings account for long term growth. Make sure you look at both your short term and long term goals. Letting an investment mature from age 20 through to retirement will net you plenty of compound interest but don't forget about your short term goals like possible cars, houses and families. Do as much research as you can and you will be fine!
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Is it possible for the average person to profit on the stock market?
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There's a huge difference between "can an anverage person make a profit on the stock market" and "can an average person get rich off the stock market". It is certainly possible for an average person to profit, but of course you are unlikely to profit as much as the big Wall Street guys. An S&P 500 index fund, for instance, would be a pretty good way to profit. People with high-powered tools may make a lot of money picking individual stocks, and may even make some choices that help them when the market is down, but it's difficult to see how they could consistently make money over the long term without the S&P 500 also going up. The same applies, to varying extents, to various other index funds, ETFs, and mutual funds. I agree with littleadv that there is no single "right" thing for everyone to do. My personal take is that index funds are a good bet, and I've seen a lot of people take that view on personal finance blogs, etc. (for whatever that's worth). One advantage of index funds that track major indexes (like the S&P 500) is that because they are and are perceived as macro-indicators of the overall economic situation, at least you're in the same boat as many other people. On one level, that means that if you lose money a lot of other investors are also losing money, and when large numbers of people start losing money, that makes governments take action, etc., to turn things around. On another level, the S&P 500 is a lot of big companies; if it goes down, some of those big companies are losing value, and they will use their big-company resources to gain value, and if they succeed, the index goes up again and you benefit. In other words, index funds (and large mutual funds, ETFs, etc.) make investing less about what day-trading wonks focus on, which is trying to make a "hot choice" for a large gain. They make it more about hitching your wagon to an extremely large star that is powered by all the resources of extremely large companies, so that when those companies increase their value, you gain. The bigger the pool of people whose fortunes rise and fall with your own, the more you become part of an investment portfolio that is (I can't resist saying it) "too big to fail". That isn't to say that the S&P 500 can't lose value from time to time, but rather that if it does go down big and hard and stay there, you probably have bigger problems than losing money in the stock market (e.g., the US economy is collapsing and you should begin stockpiling bullets and canned food).
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Tenant wants to pay rent with EFT
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How can someone use the account number to withdraw money without my consent? They can use your account number to game your banks phone support and try to phish their way into your account. Banks have gotten very good at combating this, but theoretically with just the address he lives in, your name, and a bad bank phone rep, he could get into your business. The account number would just be one more piece of information to lead with. I have 1 savings and 3 checking accounts with the same bank. Would they be able to gain access to the other accounts? Dependent on how incompetent the bad bank rep I referenced above is, sure. But the odds are incredibly low, and if anything were to happen, the bank would be falling over itself to fix it and make reparations so that you don't sue for a whole crap ton more. Is there a more secure and still free option that I have overlooked? Opening up yet another checking account solely for accounts receivable and transfer to accounts payable would keep your financial records more transparent. Also, banks are doing "money transfer by email" now, so I don't know how great that is for business transactions, but in that instance you're just giving out an email linked to a money receiving account instead of an actual account number. Paypal is also a pretty good EFT middleman, but their business practices have become shady in the past 5 years.
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Should Emergency Funds be Used for Infrequent, but Likely, Expenses?
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This is probably a very opinion-based Q&A. But anyway: My solution to such questions is to have multiple layers of emergency funds. I have one amount in a bank account that I do not like to tap, but can (and do) when I need money. This is most close to your infrequent but not completely surprising moments of cash need. I have a second layer in the form of stocks. As I understand that selling stocks should not be done when you need money, but when the stock price is good, this provides a fairly high barrier to selling it on a whim. Before I do so, especially if the stock price isn't at a local max, it would have to be an emergency. My third layer is even more fixed investment which I can't access with online brokerage. The physical aspect makes sure that it has to be a real, serious emergency before I turn that into cash. If you have such a layered approach, the question is not black and white anymore, and easier to answer.
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Stocks in India, what is the best way to get money to US
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From India Point of view; someone may put the US point of view ... As an NRI you are not supposed to hold an Ordinary Demat Account. Please have this converted to NRO NON-PINS ASAP. Related Question Indian Demat account If the shares were purchased before 1-Oct-2004, they are liable for Long Term Capital Gains tax in India.
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First time home buyer: Can you withdraw funds from a Roth 401k for a first time home purchase?
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The rules are quite different. There is no special home purchase penalty-free withdrawal. In the case that your account has been open for five years, you can withdraw the principal (but not the earnings) without penalty. You may want to talk to a professional for further details. The real question is: why do you want to borrow against your future to finance your present? Your down payment funds should come from another source than your retirement. Retirement funds should only be touched in the direst financial straights.
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Is it ever a good idea to close credit cards?
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I'd say close them if they have fees, if you're worried about fraud or if you're going to be tempted to use them. It may have an affect on your credit rating, but it shouldn't hurt you seriously. Having too many cards gives you the "opportunity" to overspend, which obviously isn't good.
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Claiming business expense from personal credit card
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or just input it in my accounting software along with receipts, and then when I'm doing taxes this would go under the investment or loses (is it somewhere along that line)? Yes, this. Generally, for the long term you should have a separate bank account and charge card for your business. I started my business (LLC) by filing online, and paying a fee for a registration, and that makes it a business cost right? Startup cost. There are special rules about this. Talk to your tax adviser. For the amounts in question you could probably expense it, but verify.
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Who can truly afford luxury cars?
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It's all about what you value personally. I'm mid-30s and drive a $40K "luxury" sports car. I also happen to wear a $6K wristwatch every day. I purchased both of these items because I thought they were beautiful when I saw them. On the flip side, because I spent 6 years living below the poverty line, I instinctively spend almost nothing on a daily basis. My food budget is less than $50 a week, and I never go out to eat. I wear my clothes and shoes and coats until they have holes, and I drove my previous car (a Toyota) into the ground. My cell phone is 5 years old. The walls of my apartment are bare. I don't have cable TV, I don't subscribe to newspapers or magazines, and I don't own a pet. In all of these cases I don't feel like I'm "sacrificing" anything; food and clothes and cell phones and pets just don't matter to me. If you truly feel that you're missing something in your life by not having a luxury car -- that owning one would be more satisfying than owning the corresponding tens of thousands of dollars -- then go for it. Just be sure to consider all the other things that money could buy before you do. Lastly, buy in cash. Don't make monthly payments unless you enjoy giving money away to the bank!
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Why use accounting software like Quickbooks instead of Excel spreadsheets?
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I would say that all of the reasons you list in your question are valid, and I would add the following... You are in the landscaping business, not the accounting business. If you manage everything in spreadsheets, at least one of you has to become the bookkeeper and leave the landscaping to the others. Spreadsheets are "agnostic" in how you use them, so you have to turn them into an accounting system, which means you're now not only more of a bookkeeper, but you're also more of a developer, too, and even less of a landscaper. Accounting software is already developed by developers who understand accounting. Using it requires you to only perform the data entry tasks, and then you can focus on the landscaping, customer service, sales and marketing, etc., things that actually contribute to your business. It is still good for you to understand basic accounting principles. Specialized accounting software will guide you through the process of learning and help you avoid making many of the costly mistakes you might have made in that learning process.
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Weekly budgets based on (a variable) monthly budget
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Try reading about budgeting. Make a list of all income coming in and all expenses going out. Eliminate any unnecessary expenses and try to increase income, which could include a part-time second job. Try to always put a portion of the income away as savings - try 10%, but if this is too hard to start with try saving at least 5% of the income.
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About eToro investments
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For eToro, just like any other brokerage firm, you can lose your entire capital. I suggest that you invest in one or more exchange-traded funds that track major indexes. If not, just put your money in fixed deposit accounts; gain a bit of interest and establish an emergency fund first before investing money that you feel you are able to lose.
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Am I exposed to currency risk when I invest in shares of a foreign company that are listed domestically?
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Yes, you're still exposed to currency risk when you purchase the stock on company B's exchange. I'm assuming you're buying the shares on B's stock exchange through an ADR, GDR, or similar instrument. The risk occurs as a result of the process through which the ADR is created. In its simplest form, the process works like this: I'll illustrate this with an example. I've separated the conversion rate into the exchange rate and a generic "ADR conversion rate" which includes all other factors the bank takes into account when deciding how many ADR shares to sell. The fact that the units line up is a nice check to make sure the calculation is logically correct. My example starts with these assumptions: I made up the generic ADR conversion rate; it will remain constant throughout this example. This is the simplified version of the calculation of the ADR share price from the European share price: Let's assume that the euro appreciates against the US dollar, and is now worth 1.4 USD (this is a major appreciation, but it makes a good example): The currency appreciation alone raised the share price of the ADR, even though the price of the share on the European exchange was unchanged. Now let's look at what happens if the euro appreciates further to 1.5 USD/EUR, but the company's share price on the European exchange falls: Even though the euro appreciated, the decline in the share price on the European exchange offset the currency risk in this case, leaving the ADR's share price on the US exchange unchanged. Finally, what happens if the euro experiences a major depreciation and the company's share price decreases significantly in the European market? This is a realistic situation that has occurred several times during the European sovereign debt crisis. Assuming this occurred immediately after the first example, European shareholders in the company experienced a (43.50 - 50) / 50 = -13% return, but American holders of the ADR experienced a (15.95 - 21.5093) / 21.5093 = -25.9% return. The currency shock was the primary cause of this magnified loss. Another point to keep in mind is that the foreign company itself may be exposed to currency risk if it conducts a lot of business in market with different currencies. Ideally the company has hedged against this, but if you invest in a foreign company through an ADR (or a GDR or another similar instrument), you may take on whatever risk the company hasn't hedged in addition to the currency risk that's present in the ADR/GDR conversion process. Here are a few articles that discuss currency risk specifically in the context of ADR's: (1), (2). Nestle, a Swiss company that is traded on US exchanges through an ADR, even addresses this issue in their FAQ for investors. There are other risks associated with instruments like ADR's and cross-listed companies, but normally arbitrageurs will remove these discontinuities quickly. Especially for cross-listed companies, this should keep the prices of highly liquid securities relatively synchronized.
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Do dark pools have to declare the volume transacted at the end of the day?
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Members of the Federal Reserve System keep track of what money a bank has (if it's not in the vault), who owns what shares of stock, who owns what bond, etc. The part of the Federal Reserve System that tracks stock ownership is the Depository Trust Company (DTC). They have a group of subsidiaries that settle various types of security transactions. DTC is a member of the U.S. Federal Reserve System, a limited-purpose trust company under New York State banking law and a registered clearing agency with the Securities and Exchange Commission. There's lots of information on their website describing this process. DTCC's subsidiary, The Depository Trust Company (DTC), established in 1973, was created to reduce costs and provide clearing and settlement efficiencies by immobilizing securities and making "book-entry" changes to ownership of the securities. DTC provides securities movements for NSCC's net settlements1, and settlement for institutional trades (which typically involve money and securities transfers between custodian banks and broker/dealers), as well as money market instruments. Black pools are trades done where the price is not shared with the market. But the DTC is the one who keeps track of who owns which shares. They have records of all net transactions2. The DTC is the counterparty for transactions. When stock moves from one entity to another the DTC is involved. As the central counterparty for the nation's major exchanges and markets, DTCC clears and settles virtually all broker-to-broker equity 1. This is the link that shows that settlements are reported on a "net basis". 2. If broker A sells 1000 shares of something to broker B at 8 and then five minutes later broker B sells the 1000 shares back to A, you cannot be sure that that total volume will be recorded. No net trading took place and there would be fees to pay for no reason if they reported both trades. Note: In dark pool trading quite often the two parties don't know each other. For shares (book-keeping records) to be exchanged it has to be done through a Clearing House.
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Cost basis allocation question: GM bonds conversion to stock & warrants
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Because the distribution date was APR 21, 2011, THAT should be the correct date for ascertainng the stock prices of the GM stock and warrants. The subsequent distributions after April should also be allocated in accordance with their distribution dates, with tax basis being reduced from the original APR 21st date's allocations, and reallocated to those subsequent distributions, taking into account any interim sales you might have made.
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Why buy insurance?
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There's an old saying among commodities producers... If it's likely to happen, but won't kill you, you hedge (save/"self-insure", options, futures). If it's not likely to happen, but would kill you, you insure. Hedging and insuring are both about managing risk. If you feel there is no risk at all, you don't need to do either. But feeling that you have no risk at all is somewhat naive.
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Is a website/domain name an asset or a liability?
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In an accounting position, a domain name would fall under an intangible asset. Copyrights and patents are intangible, while tangible assets would be buildings or land (also known as property, plant, and equipment). Noting above, you can list it as an expense for personal reasons, but that would be poor classification. Tangible and intangible assets come with expenses such as legal fees and design. In these instances, you would expense the cost, or fee, but add back that value to the tangible or intangible as it would be considered maintenance. Please read here for tax treatment of a domain name. Please read here for what an intangible asset is. Also read here on page 11 for more clarification by IFRS.
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The Benefits/Disadvantages of using a credit card
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I just want to stress one point, which has been mentioned, but only in passing. The disadvantage of a credit card is that it makes it very easy to take on a credit. paying it off over time, which I know is the point of the card. Then you fell into the trap of the issuer of the card. They benefit if you pay off stuff over time; that's why taking up a credit seems to be so easy with a credit (sic) card. All the technical aspects aside, you are still in debt, and you never ever want to be so if you can avoid it. And, for any voluntary, non-essential, payment, you can avoid it. Buy furniture that you can pay off in full right now. If that means only buying a few pieces or used/junk stuff, then so be it. Save up money until you can buy more/better pieces.
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In the event of a corporate spin-off, how can I calculate the correct cost basis for each company's shares?
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Having all of the numbers you posted is a start. It's what you need to perform the calculation. The final word, however, comes from the company itself, who are required to issue a determination on how the spin-off is valued. Say a company is split into two. Instead of some number of shares of each new company, imagine for this example it's one for one. i.e. One share of company A becomes a share each in company B and company C. This tell us nothing about relative valuation, right? Was B worth 1/2 of the original company A, or some other fraction? Say it is exactly a 50/50 split. Company A releases a statement that B and C each should have 1/2 the cost basis of your original A shares. Now, B and C may very well trade ahead of the stock splitting, as 'when issued' shares. At no point in time will B and C necessarily trade at exactly the same price, and the day that B and C are officially trading, with no more A shares, they may have already diverged in price. That is, there's nothing you can pull from the trading data to identify that the basis should have been assigned as 50% to each new share. This is my very long-winded was of explaining that the company must issue a notice through your broker, and on their investor section of their web site, to spell out the way you should assign your basis to each new stock.
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What US tax laws apply to a 13 year old game developer?
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After doing a little research, I was actually surprised to find many internet resources on this topic (including sites from Intuit) gave entirely incorrect information. The information that follows is quoted directly from IRS Publication 929, rules for dependents First, I will assume that you are not living on your own, and are claimed as a "dependent" on someone else's tax return (such as a parent or guardian). If you were an "emancipated minor", that would be a completely different question and I will ignore this less-common case. So, how much money can you make, as a minor who is someone else's dependent? Well, the most commonly quoted number is $6,300 - but despite this numbers popularity, this is not true. This is how much you can earn in wages from regular employment without filing your own tax return, but this does not apply to your scenario. Selling your products online as an independent game developer would generally be considered self-employment income, and according to the IRS: A dependent must also file a tax return if he or she: Had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. So, your first $400 in earnings triggers absolutely no requirement to file a tax return - blast away, and good luck! After that, you do not necessarily owe much in taxes, however you will need to file a tax return even if you owe $0, as this was self-employment income. If you had, for instance, a job at a grocery store, you could earn up to $6,300 without filing a return, because the store would be informing the IRS about your employment anyway - as well as deducting Medicare and Social Security payments, etc. How much tax will you pay as your income grows beyond $400? Based upon the IRS pages for Self-Employment Tax and Family Businesses, while you will not likely have to pay income tax until you make $6,300 in a year, you will still have to pay Social Security and Medicare taxes after the first $400. Roughly this should be right about 16% of your income, so if you make $6000 you'll owe just under $1000 (and be keeping the other $5000). If your income grows even more, you may want to learn about business expense deductions. This would allow you to pay for things like advertisement, software, a new computer for development purposes, etc, and deduct the expenses out of your income so you pay less in taxes. But don't worry - having such things to wonder about would mean you were raking in thousands of dollars, and that's an awfully good problem to have as a young entrepreneur! So, should you keep your games free or try to make some money? Well, first of all realize that $400 can be a lot harder to make when you are first starting in business than it probably sounds. Second, don't be afraid of making too much money! Tax filing software - even totally free versions - make filing taxes much, much easier, and at your income level you would still be keeping the vast majority of the money you earn even without taking advantage of special business deductions. I'd recommend you not be a afraid of trying to make some money! I'd bet money it will help you learn a lot about game development, business, and finances, and will be a really valuable experience for you - whether you make money or not. Having made so much money you have to pay taxes is not something to be afraid of - it's just something adults like to complain about :) Good luck on your adventures, and you can always come back and ask questions about how to file taxes, what to do with any new found wealth, etc!
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Why do 10 year Treasury bond yields affect mortgage interest rates?
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The simple answer is that, even though mortgages can go for 10, 15, 20 and 30 year terms in the U.S., they're typically backed by bonds sold to investors that mature in 10 years, which is the standard term for most bonds. These bonds, in the open market, are compared by investors with the 10-year Treasury note, which is the gold standard for low-risk investment; the U.S. Government has a solid history of always paying its bills (though this reputation is being tested in recent years with fights over the debt ceiling and government budgets). The savvy investor, therefore, knows that he or she can make at least the yield from the 10-year T-note in that time frame, with virtually zero risk. Anything else on the market is seen as being a higher risk, and so investors demand higher yields (by making lower bids, forcing the issuer to issue more bonds to get the money it needs up front). Mortgage-backed securities are usually in the next tier above T-debt in terms of risk; when backed by prime-rate mortgages they're typically AAA-rated, making them available to "institutional investors" like banks, mutual funds, etc. This forms a balancing act; mortgage-backed securities issuers typically can't get the yield of a T-note, because no matter how low their risk, T-debt is lower (because one bank doesn't have the power to tax the entire U.S. population). But, they're almost as good because they're still very stable, low-risk debt. This bond price, and the resulting yield, is in turn the baseline for a long-term loan by the bank to an individual. The bank, watching the market and its other bond packages, knows what it can get for a package of bonds backed by your mortgage (and others with similar credit scores). It will therefore take this number, add a couple of percentage points to make some money for itself and its stockholders (how much the bank can add is tacitly controlled by other market forces; you're allowed to shop around for the lowest rate you can get, which limits any one bank's ability to jack up rates), and this is the rate you see advertised and - hopefully - what shows up on your paperwork after you apply.
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IRS “convenience of the employer” test when employee lives far from the office
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If your employer does not provide you with a place to work but nevertheless expects you to get work done, then having a place to work is a condition of employment.
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Should Emergency Funds be Used for Infrequent, but Likely, Expenses?
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I would suggest that you use Emergency Funds for things that have a Low likelihood of happening but if they do happen can be devastating. I used to work as a financial advisor and the sugfestion we gave people is to have about 3 months worth of expenses in cash. This was primarily to cover things luke loss of work or some unforseen even that would prevent you from missing work for an extended period of time. Once you have your emergency fund saved do not touch it! Leave it where it is. Then tou can start working on a savings account for those items that are more likely to happen but dont have as much of a negative impact.
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Why won't my retirement account let me write a “covered put”?
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I have a Roth IRA with Scottrade, and they allow me to write cash secured puts, as well as covered calls. I can also purchase calls or puts, if I choose. When I write a cash secured put, it automatically deducts the amount required to purchase the shares at the strike price from my "cash available for transactions".
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How can rebuilding a city/large area be considered an economic boost?
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It will have some positives, and some negatives. The hardest hit will be the insurance agencies, as well as banks. Manufacturing will also take a short term hit. When insurance payments come out, then there will be a boom in construction, consumer goods, industrial goods, etc. Companies will upgrade their equipment whereas before they might have let it run for another 10-20 years or longer. After all, if you are going to buy something, you aren't going to get it used, you'll get something more modern. Of course, Japan already was one of the most modern countries in the world, so they likely won't see as many gains as other countries, but this would hold more true in a less technologically advanced society. Long term, 10-20 years down the line, when everything is rebuilt, it might have a slight positive increase in productivity, but this will be somewhat offset because Japan already is such a technological powerhouse, and on the cutting edge in many technologies. But I agree, it's quite foolish to say that it'll improve the economy of Japan, some clarification should be done to clear that one up...
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Do Americans really use checks that often?
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I still use checks to pay rent and occasionally some bills/liabilities. That said, I did notice an (elderly) lady paying by check at the supermarket a while ago. So is it really common to get a paycheck in the sense that you get a piece of paper? Yes and no. There are some people that opt for the physical paycheck. Even if they do not, there is a pay stub which serves as a record of it. My last employer went to online pay stubs and a bunch of us opted out, sticking with the good old paper in an envelope. We sure were glad of that when there were technical issues and security concerns with the online service.
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Investing using leverage
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Step 2 is wrong. Leverage is NOT necessary. It increases possible gain, but increases risk of loss by essentially the same amount. Those two numbers are pretty tightly linked by market forces. See many, many other answers here showing that one can earn "market rate" -- 8% or so -- with far less risk and effort, if one is patient, and some evidence that one can do better with more effort and not too much more risk. And yes, investing for a longer time horizon is also safer.
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Am I doing the math for this covered call/long put strategy correctly? What risks do I run with this strategy?
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FYI: GM has an earnings announcement on April 24th. I think you were trying to create a safe trade by profiting if GM's price fell within a probable range. The chart of the Iron Condor captures just about a standard deviation of movement. So as long as GM is between 31.28 - 37.22 in 34 days you keep the max profit of $110. Note this trade is a net credit, when placing it you get $110 less fees. Also by selling the deep in the money call I take it you were trying to make the most of your capital. The chart below shows a standard covered call compared to short put vertical. Note the short put vertical simulates the covered call position and it is a net credit trade as well. When you drop the order you get $111 less fees.
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How do rich people guarantee the safety of their money, when savings exceed the FDIC limit?
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Rich people use "depositor" banks the same way the rest of us use banks; to keep a relatively small store of wealth for monthly expenses and a savings account for a rainy day. The bulk of a wealthy person's money is in investments. Money sitting in a bank account is not making you more money, and in fact as Kaushik correctly points out, would be losing value to inflation. Now, all investments have risk; that's why interest exists. If, in some alternate universe, charging interest were illegal across the board, nobody would loan money, because there's nothing to be gained and a lot to lose. You have to make it worth my while for me to want to loan you my money, because sure as shootin' you're going to use my loan to make yourself wealthier. A wealthy person will choose a set of investments that represent an overall level of risk that he is comfortable with, much like you or I would do the same with our retirement funds. Early in life, we're willing to take a lot of risk, because there's a lot of money to be made and time to recover from any losses. Closer to retirement, we're much more risk-averse, because if the market takes a sudden downturn, we lose a significant portion of our nest egg with little hope of regaining it before we have to start cashing out. The very wealthy have similar variances in risk, with the significant difference that they are typically already drawing a living from their investments. As such, they already have some risk aversion, but at the same time they need good returns, and so they must pay more attention to this balancing act between risk and return. Managing their investments in effect becomes their new job, once they don't have to work for anyone else anymore. The money does the "real work", and they make the executive decisions about where best to put it. The tools they use to make these decisions are the same ones we have; they watch market trends to identify stages of the economic cycle that predicate large movements of money to or from "safe havens" like gold and T-debt, they diversify their investments to shield the bulk of their wealth from a sudden localized loss, they hire investment managers to have a second pair of eyes and additional expertise in navigating the market (you or I can do much the same thing by buying shares in managed investment funds, or simply consulting a broker; the difference is that the wealthy get a more personal touch). So what's the difference between the very wealthy and the rest of us? Well first is simple scale. When a person with a net worth in the hundreds of millions makes a phone call or personal visit to the financial institutions handling their money, there's a lot of money on the line in making sure that person is well looked-after. If we get screwed over at the teller window and decide to close our acocunts, the teller can often give us our entire account balance in cash without batting an eyelid. Our multimillionaire is at the lower end of being singlehandedly able to alter his banks' profit/loss statements by his decisions, and so his bank will fight to keep his business. Second is the level of control. The very wealthy, the upper 1%, have more or less direct ownership and control over many of the major means of production in this country; the factories, mines, timber farms, software houses, power plants, recording studios, etc that generate things of value, and therefore new wealth. While the average Joe can buy shares in these things through the open market, their investment is typically a drop in the bucket, and their voice in company decisions equally small. Our decision, therefore, is largely to invest or not to invest. The upper 1%, on the other hand, have controlling interests in their investments, often majority holdings that allow them far more control over the businesses they invest in, who's running them and what they do.
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Should I open a Roth IRA or invest in the S&P 500?
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Your question indicates confusion regarding what an Individual Retirement Account (whether Roth or Traditional) is vs. the S&P 500, which is nothing but a list of stocks. IOW, it's perfectly reasonable to open a Roth IRA, put your $3000 in it, and then use that money to buy a mutual fund or ETF which tracks the S&P 500. In fact, it's ridiculously common... :)
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What would I miss out on by self insuring my car?
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If you can afford to replace your car, it is more cost effective, on average and over time, not to carry comprehensive and collision insurance. The insurance companies do make a profit, after all. However, you may be able to worry less ("What if someone steals my car if I park here?") with the insurance, and you have the knowledge the you won't have to spend your own money on a new car if something happens to this one, which may help with financial planning.
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Understanding Put Options
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Options, both puts and calls, are typically written/sold at different strike prices. For example, even though the stock of XYZ is currently trading at $12.50, there could be put options for prices ranging from $0.50 to $30.00, just as an example. There are several factors that go into determining the strike prices at which people are willing to write options. The writer/seller of an option is the person on the other side of the trade that has the opposite opinion of you. If you are interested in purchasing a put on a stock to hedge your downside, that means the writer/seller of the put is betting that you are wrong and that the stock price will rise instead.
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What industries soar when oil prices go up?
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You can look at it from a fundamental perspective to see who benefits from rising oil prices. That's a high level analysis and the devil is in the details - higher oil prices may favour electric car producers for example or discount clothes retailers vs. branded clothes manufacturers. Another approach it to use a statistical analysis. I have run a quick and dirty correlation of the various S&P sector indices against the oil prices (Crude). Based on the the results below, you would conclude that materials and energy stocks should perform well with rising oil prices. There again, it is a behaviour you would expect at the group level but it may not translate to each individual company within those groups (in particular in the materials sector where some would benefit and some would be detrimentally affected). You could get exposure to those sectors using ETFs, such as XLB and XLE in the US. Or you could run the same analysis for each stock within the S&P 500 (or whatever index you are looking at) and create a portfolio with the stocks that are the most correlated with oil prices. This is calculated over 10 years of monthly returns after removing the market component from the individual sectors. The two important columns are:
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Multiple accounts stagnant after quitting job.
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Adapted from an answer to a somewhat different question. Generally, 401k plans have larger annual expenses and provide for poorer investment choices than are available to you if you roll over your 401k investments into an IRA. So, unless you have specific reasons for wanting to continue to leave your money in the 401k plan (e.g. you have access to investments that are not available to nonparticipants and you think those investments are where you want your money to be), roll over your 401k assets into an IRA. But I don't think that is the case here. If you had a Traditional 401k, the assets will roll over into a Traditional IRA; if it was a Roth 401k, into a Roth IRA. If you had started a little earlier, you could have considered considered converting part or all of your Traditional IRA into a Roth IRA (assuming that your 2012 taxable income will be smaller this year because you have quit your job). Of course, this may still hold true in 2013 as well. As to which custodian to choose for your Rollover IRA, I recommend investing in a low-cost index mutual fund such as VFINX which tracks the S&P 500 Index. Then, do not look at how that fund is doing for the next thirty years. This will save you from the common error made by many investors when they pull out at the first downturn and thus end up buying high and selling low. Also, do not chase after exchange-traded mutual funds or ETFs (as many will likely recommend) until you have acquired more savvy or interest in investing than you are currently exhibiting. Not knowing which company stock you have, it is hard to make a recommendation about selling or holding on. But since you are glad to have quit your job, you might want to consider making a clean break and selling the shares that you own in your ex-employer's company. Keep the $35K (less the $12K that you will use to pay off the student loan) as your emergency fund. Pay off your student loan right away since you have the cash to do it.
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Books, Videos, Tutorials to learn about different investment options in the financial domain
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Those are some very broad questions and I don't think I can answer them completely, but I will add what I can. Barron's Finance and Investment Handbook is the best reference book I have found. It provides a basic description/definition for every type of investment available. It covers stocks, preferred stocks, various forms of bonds as well as mortgage pools and other exotic instruments. It has a comprehensive dictionary of finance terms as well. I would definitely recommend getting it. The question about how people invest today is a huge one. There are people who simply put a monthly amount into a mutual fund and simply do that until retirement on one side and professional day traders who move in and out of stocks or commodities on a daily basis on the other.
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I carelessly invested in a stock on a spike near the peak price. How can I salvage my investment?
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Basically, your question boils down to this: Where and how do I squeeze the stock market so that within time period X, it will make me Y dollars. (Where I'm emotionally attached to the Y figure because I recently lost it, and X is "as soon as possible".) To make money on the stock market (in a quasi-guaranteed way), you have to adjust X and Y so that they are realistic. For instance, let X be twenty-five years, and Y be "7% annual return". Small values of X are risky, unless X is on the order of milliseconds and you have a computer program working for you. To mitigate some of the risk of short term trading, you have to treat trading seriously and study like mad: study the stock market in general, and not only that, but carefully research the companies whose stocks you are buying. Work actively to discover stocks which are under-valued relative to the performance of their corporation, and which might correct upward relative to the performance of similar stocks. Always have an exit strategy for every position and stick to it. Use instruments like "trailing stops": automatic tracking which follows a price in one direction, and then produces an order to close the position when the price reverses by a certain amount.
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Should I pay off a 0% car loan?
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Between now and October, your $3,000 will earn $30 in your savings account. If you are late on a payment for your 0% loan, your interest rate will skyrocket. In my opinion, the risk is just not worth the tiny gain you are trying to achieve in the savings account. If it was me, I would pay off the loan today. A few more thoughts: There is a reason that businesses offer 0% consumer loans. They are designed to trick you into thinking that you are getting a better deal than you are. Businesses don't lose money on these loans. The price of the loan is built into the cost of the purchase, whether you are buying expensive furniture, or a car. Typically with a car, you forfeit a rebate by taking the 0% loan, essentially paying all the interest up-front. Now that you have the loan, you might be ahead a few dollars by waiting to pay it off, but only because you've already paid the interest. Don't make the mistake of thinking that you can come out ahead by buying things at 0%. It's really not free money. In the comments, @JoeTaxpayer mentioned that fear of mistakes can lead to missed rewards. I understand that; however, these 0% loans are full of small print designed to trip you up. A single mistake can negate years and years of these small gains. You don't want to be penny wise and pound foolish.
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What cost basis accounting methods are applicable to virtual currencies?
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The only "authoritative document" issued by the IRS to date relating to Cryptocurrencies is Notice 2014-21. It has this to say as the first Q&A: Q-1: How is virtual currency treated for federal tax purposes? A-1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency. That is to say, it should be treated as property like any other asset. Basis reporting the same as any other property would apply, as described in IRS documentation like Publication 550, Investment Income and Expenses and Publication 551, Basis of Assets. You should be able to use the same basis tracking method as you would use for any other capital asset like stocks or bonds. Per Publication 550 "How To Figure Gain or Loss", You figure gain or loss on a sale or trade of property by comparing the amount you realize with the adjusted basis of the property. Gain. If the amount you realize from a sale or trade is more than the adjusted basis of the property you transfer, the difference is a gain. Loss. If the adjusted basis of the property you transfer is more than the amount you realize, the difference is a loss. That is, the assumption with property is that you would be using specific identification. There are specific rules for mutual funds to allow for using average cost or defaulting to FIFO, but for general "property", including individual stocks and bonds, there is just Specific Identification or FIFO (and FIFO is just making an assumption about what you're choosing to sell first in the absence of any further information). You don't need to track exactly "which Bitcoin" was sold in terms of exactly how the transactions are on the Bitcoin ledger, it's just that you bought x bitcoins on date d, and when you sell a lot of up to x bitcoins you specify in your own records that the sale was of those specific bitcoins that you bought on date d and report it on your tax forms accordingly and keep track of how much of that lot is remaining. It works just like with stocks, where once you buy a share of XYZ Corp on one date and two shares on another date, you don't need to track the movement of stock certificates and ensure that you sell that exact certificate, you just identify which purchase lot is being sold at the time of sale.
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