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Difference between a mortgage and buy-to-let in UK | Another factor that makes Buy to let more expensive is the risk involved. With a buy to let you are dependent on finding a tenant that will keep regular payments. if the property is left empty you need to finance the mortgage yourself putting you under financial strain and raising risk. Also as Chis mentioned they are regarded as a business enterprise, If the mortgage was to be taken by a business that would be very high risk for a bank as the business could dissolve leaving the bank out of pocket. Because of this it can be very difficult to get a buy to let through a business unless you are moving from a personal portfolio. For a regular mortgage these risks don't exist so this is reflected in lower interest repayments. It's because of these differences in risk that banks created buy to let so they can better manage those risks. |
Multiple accounts stagnant after quitting job. | What is my best bet with the 401K? I know very little about retirement plans and don't plan to ever touch this money until I retire but could this money be of better use somewhere else? You can roll over a 401k into an IRA. This lets you invest in other funds and stocks that were not available with your 401k plan. Fidelity and Vanguard are 2 huge companies that offer a number of investment opportunities. When I left an employer that had the 401k plan with Fidelity, I was able to rollover the investments and leave them in the existing mutual funds (several of the funds have been closed to new investors for years). Usually, when leaving an employer, I have the funds transferred directly to the place my IRA is at - this avoids tax penalties and potential pitfalls. The student loans.... pay them off in one shot? If the interest is higher than you could earn in a savings account, then it is smarter to pay them off at once. My student loans are 1.8%, so I can earn more money in my mutual funds. I'm suspicious and think something hinky is going to happen with the fiscal cliff negotiations, so I'm going to be paying off my student loans in early 2013. Disclaimer: I have IRA accounts with both Fidelity and Vanguard. My current 401k plan is with Vanguard. |
How does a bank make money on an interest free secured loan? | Very good answers as to how 0% loans are typically done. In addition, many are either tied to a specific large item purchase, or credit cards with a no interest period. On credit card transactions the bank is getting a fee from the retailer, who in turn is giving you a hidden charge to cover that fee. In the case of a large purchase item like a car, the retailer is again quite likely paying a fee to cover what would be that interest, something they are willing to do to make the sale. They will typically be less prone to deal as low a price in negotiation if you were not making that deal, or at times they may offer either a rebate or special low to zero finance rates, but you don't get both. |
How to transfer money to yourself internationally? | Hmmm... As far as I know wire transfers are still the best option. If you make sure your US account accepts international wires for free (like TD Bank does) you'll have eliminated most of the costs (assuming your foreign bank doesn't charge too much for wiring the funds in the first place). Also, if your able to, you could consider wiring 6 or so months at the same time. I'm not familiar with XE.com but it seems it's not set up for transferring money so much as for trading currencies. While you could probably use it to transfer funds if you'd link both your accounts it seems a rather complicated way to go about things. Paypal could be an option if they'd allow you to set up an account in each country (or if you have a relative that could help out), but it gets more expensive than wire-transfers quickly. As for getting the best exchange rate... I've given up on that a long time ago and have accepted that as the cost of living internationally :). |
How to pay with cash when car shopping? | Ask the dealer to drive to the bank with you, if they really want cash. |
For a mortgage down-payment, what percentage is sensible? | The typical down-payment was expected to be 20%. The idea being that if one could not save 1/5 of the cost of a house, they were not responsible enough to ensure repayment of the loan. It is hard to say whether this is truly a relevant measure. However, in the absence of other data points, it is pretty decent. It typically requires a fair amount of time to amass that much money and it does demonstrate some restraint. (e.g. it is easily the cost of a decent new car or some other shiny "toy.") Income is not necessarily a good measure, on its own. I am certainly more responsible with my spending when I have less money to spend. (Lately, I have been feeling like my father, scrutinizing every single purchase down to the penny.) |
Do I have to explain the source of *all* income on my taxes? | Appears to be a hypothetical question and not really worth answering but... Must it be explained.. no, not until audited. It's saying that for everything reported on a tax return, people have to include an explanation for everything, which you do not, unless you want to make some type of 'disclosure' which is a different matter. Must it be reported.. Yes, based on info presented. All income is taxable unless "specifically exempted" per the US Tax code or court cases. Gift vs Found Income... it's not 'found' income as someone gave (gifted) the money to him. Generally, gifts received are not taxable and don't have to be reported. |
How do I figure out the next step in deciding to sell my home to the market or to a uniquely interested buyer? | We considered similar big renovations when putting our house on the market. The answer turns out to be pretty simple; unless you do renovation-type work as your day job, or have really good friends in the residential contracting business, sell as-is. You will virtually never get back the full price of bringing in a gen-con to renovate any space in your home; you do that when you want to spend the extra to make your home exactly what you wanted, so you can live in it for decades and get the enjoyment out of it. If you're trying to turn a profit with the renovation, like house-flippers do professionally, you look for easy repairs/renos, buy good-looking but inexpensive materials, and do the labor yourself. Whether you sell to the market or to a specifically-interested buyer is your call, but I will caution you that a specifically-interested buyer is going to be looking for a deal, or a steal. When marketing our house, we met with three different realtors. The first one was very overoptimistic about what we could list for (basically assuming that we could get the same price as a fully-upgraded version of our same floor plan with a pool out back). She also had a to-do list a mile long, and my wife and I both noticed that she looked very apprehensive about the house when looking around, even as she reassured us that selling it would be no trouble. We eventually realized why she was so apprehensive, and fired her before we got even halfway through her to-dos, which included major landscaping, new kitchen floors and countertops, etc, which would have cost us thousands and would not have gotten the house price even close to the target. The second one took a look at our half-finished refinish and told us to stop everything we were doing to update the minor stuff like paint and fixtures, saying we were putting lipstick on a pig; she would market the house to some cash buyers she knew personally, for about 80% of the list price our first realtor quoted, and implied that we should be kissing her boots for finding us a buyer willing to take the house off our hands at all. During the tour, she pointed out "problems" with the house that weren't even there, like foundation issues such as sloping floors, in an attempt to scare us into going with her strategy. We sniffed that out pretty quickly, showed her the door at the end of the initial consult and never called back. This, by the way, is the kind of thing you want to avoid; unless your home is really dilapidated or torn apart with unfinished major renos, it should have decent value on the market and you shouldn't have to resort to a cash buyer looking for a flip or a rental property on the cheap. Just like Goldilocks, our third choice was just right. He saw all the same comparables, toured our house, and recommended that we offer about $20k less than the fully-upgraded version (but still about $20k more than the second realtor was estimating), targeting a "real" buyer and not an investor or flipper, but at a price that would make the lack of upgrades more acceptable. We finished the paint and finish projects we started, brought in a weekend's worth of scheduled showings, and our house was under contract for full price within 3 days, giving us the extra $20k worth of down payment to put into our new house. In summary, I highly recommend a realtor, because the one we eventually listed with worked his butt off on the business side while we fixed up the house. However, make sure you find the right one; realtors are ultimately in business for themselves, and their ultimate interest is in getting your house sold and getting you into a new one. That is what gets them paid. Some of them will do it the right way, working the deal with other realtors and their prospective buyers to get you what you need. Others will take the easy way out, at your expense, either giving you bad advice about how to present and price your home so that you end up on the market for 6 months with no offers, or handing your house to their business buddies at a discount. |
What size “nest egg” should my husband and I have, and by what age? | Here's another answer on the topic: Saving for retirement: How much is enough? An angle on it this question made me think of: a good approach here is to focus on savings rate (which you can control) rather than the final number (which you can't, plus it will fluctuate with the markets and make you nervous). For example, focus on saving at least 10% of your income annually (15% is much safer). If you focus on the final number: The way it works in the real world is that you save as much as you can, but there are lots of random factors and unknowns. Some people end up having to work a lot longer than they hoped to. Others end up able to retire early. Others retire on time but have to spend less than they hoped. But the one thing you can often control (as long as you have an income and no catastrophes, anyway) is that you spend less than you make. |
What is the best, low risk investment I can make now? | TL;DR - go with something like Barry Ritholtz's All Century Portfolio: 20 percent total U.S stock market 5 percent U.S. REITs 5 percent U.S. small cap value 15 percent Pacific equities 15 percent European equities 10 percent U.S. TIPs 10 percent U.S. high yield corp bonds 20 percent U.S. total bond UK property market are absurdly high and will be crashing a lot very soon The price to rent ratio is certainly very high in the UK. According to this article, it takes 48 years of rent to pay for the same apartment in London. That sounds like a terrible deal to me. I have no idea about where prices will go in the future, but I wouldn't voluntarily buy in that market. I'm hesitant to invest in stocks for the fear of losing everything A stock index fund is a collection of stocks. For example the S&P 500 index fund is a collection of the largest 500 US public companies (Apple, Google, Shell, Ford, etc.). If you buy the S&P 500 index, the 500 largest US companies would have to go bankrupt for you to "lose everything" - there would have to be a zombie apocalypse. He's trying to get me to invest in Gold and Silver (but mostly silver), but I neither know anything about gold or silver, nor know anyone who takes this approach. This is what Jeremy Siegel said about gold in late 2013: "I’m not enthusiastic about gold because I think gold is priced for either hyperinflation or the end of the world." Barry Ritholtz also speaks much wisdom about gold. In short, don't buy it and stop listening to your friend. Is buying a property now with the intention of selling it in a couple of years for profit (and repeat until I have substantial amount to invest in something big) a bad idea? If the home price does not appreciate, will this approach save you or lose you money? In other words, would it be profitable to substitute your rent payment for a mortgage payment? If not, you will be speculating, not investing. Here's an articles that discusses the difference between speculating and investing. I don't recommend speculating. |
Should I sell and rebuy stocks before the end of the year to trigger a gain and offset capital losses? | You have multiple issues buried within this question. First, we don't know your tax bracket. For my answer, I'll assume 25%. This simply means that in 2016, you'll have a taxable $37,650 or higher. The interesting thing is that losses and gains are treated differently. A 25%er's long term gain is taxed at 15%, yet losses, up to $3000, can offset ordinary income. This sets the stage for strategic tax loss harvesting. In the linked article, I offered a look at how the strategy would have resulted in the awful 2000-2009 decade producing a slight gain (1%, not great, of course) vs the near 10% loss the S&P suffered over that time. This was by taking losses in down years, and capturing long term gains when positive (and not using a carried loss). Back to you - a 15%er's long term gain tax is zero. So using a gain to offset a loss makes little sense. Just as creating a loss to offset the gain. The bottom line? Enjoy the loss, up to $3000 against your income, and only take gains when there's no loss. This advice is all superseded by my rule "Don't let the tax tail wag the investing dog." For individual stocks, I would never suggest a transaction for tax purposes. You keep good stocks, you sell bad ones. Sell a stock to take a short term loss only to have it recover in the 30 day waiting period just once, and you'll learn that lesson. Learn it here for free, don't make that mistake at your own expense. |
How can a U.S. citizen open a bank account in Europe? | Tackling your last point, all banks in the EU should be covered to around €100,000. The exact figure varies slightly between countries, and generally only private deposits are covered. In the UK it's the FSCS that covers private deposits, to a value of £85,000, see this for more information on what's covered. In France (for a euro denominated example), there's coverage up to €100,000 provided by Fonds de Garantie des Dépôts, see this (in French) for full details. There's a fairly good Wikipedia Article that covers all this too. I'll let someone else chime in on the mechanics of opening something covered by the schemes though! |
How do the wealthy pay for things? | I was once the personal assistant to two wealthy NYC sisters. They did not pay for anything. For example, if we were riding the subway, I would pay, and be reimbursed by the Company. They had multiple residences and investment properties. Each property was purchased through a separate Limited Liablity Corporation, and paid for by the Company. When they purchased, donated or sold art, it was through their family Foundation. Their income primarily came from a draw of funds from the family estate, although one of them worked as an architect, which provided further income. |
Which US market indexes (Dow/DJIA, S&P500, NASDAQ) include reinvested dividends? | .INX (the S&P 500 index itself) does not include reinvested dividens. You can figure total return by going to Yahoo finance, historical data. Choose the start year, and end year. You should find that data for SPY (going back to 1993) will show an adjusted close, and takes dividends into account. This isn't perfect as SPY has a .09% expense ratio, but it's better than just the S&P index. One of the more popular Dow ETF is DIA, this will let you similarly track the Dow while accounting for dividends. |
Where does the stock go in a collapse? | Just before a crash or at the start of the crash most of the smart money would have gotten out, the remaining technical traders would be out by the time the market has dropped 10 to 15%, and some of them would be shorting their positions by now. Most long-term buy and hold investors would stick to their guns and stay in for the long haul. Some will start to get nervous and have sleepless nights when the markets have fallen 30%+ and look to get out as well. Others stay in until they cannot stand it anymore. And some will stick it out throughout the downturn. So who are the buyers at this stage? Some are the so called bargain hunters that buy when the market has fallen over 30% (only to sell again when it falls another 20%), or maybe buy more (because they think they are dollar cost averaging and will make a packet when the price goes back up - if and when it does). Some are those with stops covering their short positions, whilst others may be fund managers and individuals looking to rebalance their portfolios. What you have to remember during both an uptrend and a downtrend the price does not move straight up or straight down. If we take the downtrend for instance, it will have lower lows and lower highs (that is the definition of a downtrend). See the chart below of the S&P 500 during the GFC falls. As you can see just before it really started falling in Jan 08 there was ample opportunity for the smart money and the technical traders to get out of the market as the price drops below the 200 MA and it fails to make a higher peak. As the price falls from Jan 08 to Mar 08 you suddenly start getting some movement upwards. This is the bargain hunters who come into the market thinking the price is a bargain compared to 3 months ago, so they start buying and pushing the price up somewhat for a couple of months before it starts falling again. The reason it falls again is because the people who wanted to sell at the start of the year missed the boat, so are taking the opportunity to sell now that the prices have increased a bit. So you get this battle between the buyers (bulls) and seller (bears), and of course the bears are winning during this downtrend. That is why you see more sharper falls between Aug to Oct 08, and it continues until the lows of Mar 09. In short it has got to do with the phycology of the markets and how people's emotions can make them buy and/or sell at the wrong times. |
I can make a budget, but how can I get myself to consistently follow my budget? | It's simple, really: Practice. Fiscal responsibility is not a trick you can learn look up on Google, or a service you can buy from your accountant. Being responsible with your money is a skill that is learned over a lifetime. The only way to get better at it is to practice, and not get discouraged when you make mistakes. |
Receive money from US Client to Myself in India by selling services | Depending on how tech savvy your client is you could potentially use bitcoin. There is some take of indian regulators stopping bitcoin exchanges, meaning it might be hard to get your money out in your local country but the lack of fees to transfer and not getting killed on the exchange rate every time has a huge impact, especially if your individual transaction sizes are not huge. |
Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”? | Here in Australia a stock price is usually highest just before a dividend and lowest just after a dividend. If you buy just after the dividend then you missed out until next time. There may be many other reasons why a stock may exhibit yearly, quarterly and monthly cycles. |
My friend wants to put my name down for a house he's buying. What risks would I be taking? | You should only loan money to friends or relatives if you are fully accepting the possibility of never ever getting that money back. And in this situation it can happen that you will be forced to give him a very large loan if something bad ever happens to him. (Paying the monthly rates instead of him and expecting he will someday pay it back to you is technically the same as loaning him money). Something might happen in the future which will result in him not paying his monthly payments. Maybe not now, but in 5 years. Or 10. The economy might change, he might be out of a job, his personal values might change. A house mortgage is long term, and during that time a lot can happen. |
How can a credit card company make any money off me? I have a no-fee card and pay my balance on time | Maybe they don't make much, but they make some for sure. In addition to what duffbeer703 says, they also have a warm body at the end of the line and will sell your contact info (or at least access to your eyeballs) to marketers. They stuff advertisements into your bill for example. If nothing else, you are brand value for them as they can convince merchants (who get charged monthly) that X billion people carry their card and that merchant would be missing out on sales by not accepting their product. If you have a rewards card that pays you for using it, the merchant has higher corresponding fees. |
Debt collector has wrong person and is contacting my employer | Assuming you're in the US, you can file complaints against financial institutions (including debt collectors) through the Consumer Financial Protection Bureau. The link to debt collector complaints is: http://www.consumerfinance.gov/Complaint/#debt-collection |
Opening a Roth IRA account, what is the fee structure for Vanguard, Scottrade and TIAA-CREF | This answer is somewhat incomplete as I don't have definitive conclusions about some parts of your question. Your question includes some very specific subquestions that may best be answered by contacting the investment companies you're considering. I don't see any explicit statement of fees for TIAA-CREF either. I suggest you contact them and ask. There is mention on the site of no-transaction-fee funds (NTF), but I wasn't able to find a list of such funds. Again, you might have to ask. Vanguard also offers some non-Vanguard funds without transaction fees. If you go the Vanguard page on other mutual funds you can use the dropdown on the right to select other fund companies. Those with "NTF" by the name have no transaction fees. Scottrade also offers NTF funds. You can use their screener and select "no load" and "no transaction fee" as some of your filters. You are correct that you want to choose an option that will offer a good lineup of funds that you can buy without transaction fees. However, as the links above show, Vanguard and TIAA-CREF are not the only such options. My impression is that almost any firm that has their own funds will sell them (or at least some of them) to you without a transaction fee. Also, as shown above, many places will sell you other companies' funds for free too. You have plenty of options as far as free trades, so it really depends on what funds you like. If you google for IRA providers you will find more than you can shake a stick at. If you're interested in low-cost index funds, Vanguard is pretty clearly the leader in that area as their entire business is built around that concept. TIAA-CREF is another option, as is Fideltiy (which you didn't mention), and innumerable others. Realistically, though, you probably don't need a gigantic lineup of funds. If you're juggling money between more than a handful of funds, your investment scheme is probably needlessly complex. The standard advice is to decide on a broad allocation of money into different asset classes (e.g., US stocks, US bonds, international stocks, international bonds), find a place that offers funds in those areas with low fees and forget about all the other funds. |
If I get a bill (e.g. for internet service), is that a debt I owe? If no, what are the practical difference between a bill and a debt? | From accounting perspective, an unpaid bill for internet services, according to the Accruals Concept, is recorded as a liability under 'Current Liabilities' section of the Balance Sheet. Also as an expense on the Income Statement. So to answer your question it is both: a debt and an expense, however this is only the case at the end of the period. If you manage to pay it before the financial period ends this is simply an expense that is financed by cash or other liquid Asset on the Balance Sheet such as prepayment for example. For private persons you are generally given some time to pay the bill so it is technically a debt (Internet Provider would list you as a debtor on their accounts), but this is not something to worry about unless you are not considering to pay this bill. In which case your account may be sold as part of a factoring and you will then have a debt affecting your credit rating. |
Any experience with maxing out 401(k)? | To answer the first part of your question: yes, I've done that! I did even a bit more. I once had a job that I wasn't sure I'd keep and the economy wasn't great either. In case my next employer wouldn't let me contribute to a 401(k) from day one, and because I didn't want to underfund my retirement and be stuck with a higher tax bill - I "front-loaded" my 401(k) contributions to be maxed out before the end of the year. (The contribution limits were lower than $16,500/year back then :-)) As for the reduced cash flow - you need of course a "buffer" account containing several months worth of living expenses to afford maxing out or "front-loading" 401(k) contributions. You should be paying your bills out of such buffer account and not out of each paycheck. As for the reduced cash flow - I think large-scale 401(k)/IRA contributions can crowd out other long-term saving priorities such as saving for a house down payment and the trade-off between them is a real concern. (If they're crowding out basic and discretionary consumer expenses, that's a totally different kind of problem, which you don't seem to have, which is great :-)) So about the trade-off between large-scale 401(k) contributions and saving for the down payment. I'd say maxing out 401(k) can foster the savings culture that will eventually pay its dividends. If, after several years of maxing out your 401(k) you decide that saving for the house is the top priority, you'll see money flow to the money-market account marked for the down payment at a substantial monthly rate, thanks to that savings culture. As for the increasing future earnings - no. Most people I've known for a long time, if they saved 20% when they made $20K/year, they continued to save 20% or more when they later made $100K/year. People who spent the entire paycheck while making $50K/year, always say, if only I got a raise to $60K/year, I'd save a few thousand. But they eventually graduate to $100K/year and still spend the entire paycheck. It's all about your savings culture. On the second part of your question - yes, Roth is a great tool, especially if you believe that the future tax rates will be higher (to fix the long-term budget deficits). So, contributing to 401(k) to maximize the match, then max out Roth, as others suggested, is a great advice. After you've done that, see what else you can do: more 401(k), saving for the house, etc. |
As a 22-year-old, how risky should I be with my 401(k) investments? | Current evidence is that, after you subtract their commission and the additional trading costs, actively managed funds average no better than index funds, maybe not as well. You can afford to take more risks at your age, assuming that it will be a long time before you need these funds -- but I would suggest that means putting a high percentage of your investments in small-cap and large-cap stock indexes. I'd suggest 10% in bonds, maybe more, just because maintaining that balance automatically encourages buy-low-sell-high as the market cycles. As you get older and closer to needing a large chunk of the money (for a house, or after retirement), you would move progressively more of that to other categories such as bonds to help safeguard your earnings. Some folks will say this an overly conservative approach. On the other hand, it requires almost zero effort and has netted me an average 10% return (or so claims Quicken) over the past two decades, and that average includes the dot-bomb and the great recession. Past results are not a guarantee of future performance, of course, but the point is that it can work quite well enough. |
How can I judge loan availability? | It sounds like your current loan is in your name. As such, you are responsible for paying it. Not your family, you. It also sounds like the loan payments are regularly late. That'll likely drastically affect your credit rating. Given what you've said, it doesn't surprise me that you were declined for a credit card. With the information on your credit report, you are a poor risk. Assuming your family is unable to pay loan on time (and assuming you aren't willing to do so), you desperately need to get your name off the loan. This may mean selling the property and closing out the loan. This won't be enough to fix your credit, though. All that will do is stop making your credit worse. It'll take a few years (five years in Canada, not sure how many years in India) until this loan stops showing up on your credit report. That's why it is important to do this immediately. Now, can a bank give you a loan or a credit card despite bad credit? Yes, absolutely. It all depends on how bad your credit is. If the bank is willing to do so, they'll most likely charge a higher interest rate. But the bank may well decide not to give you a loan. After all, your credit report shows you don't make your loan payments on time. You may also want to request your own copy of your credit report. You may have to pay for this, especially if you want to see your score. This could be valuable information if you are looking to fix your finances, and may be worth the cost. If you are sure it's just this one loan, it may not be necessary. Good luck! Edit: In India CIBIL is the authority that maintains records. Getting to know you exact score will help. CIBIL offers it via TransUnion. The non-payment will keep appearing on your record for 3 years. As you don't have any loans, get a credit card from a Bank where you have Fixed Deposits / PPF Account as it would be easier to get one. It can then help you build the credit. |
What makes a Company's Stock prices go up or down? | It's been said before, but to repeat succinctly, a company's current share price is no more or less than what "the market" thinks that share is worth, as measured by the price at which the shares are being bought and sold. As such, a lot of things can affect that price, some of them material, others ethereal. A common reason to own stock is to share the profits of the company; by owning 1 share out of 1 million shares outstanding, you are entitled to 1/1000000 of that company's quarterly profits (if any). These are paid out as dividends. Two key measurements are based on these dividend payments; the first is "earnings per share", which is the company's stated quarterly profits, divided by outstanding shares, with the second being the "price-earnings ratio" which is the current price of the stock divided by its EPS. Your expected "yield" on this stock is more or less the inverse of this number; if a company has a P/E ratio of 20, then all things being equal, if you invest $100 in this stock you can expect a return of $5, or 5% (1/20). As such, changes in the expected earnings per share can cause the share price to rise or fall to maintain a P/E ratio that the pool of buyers are willing to tolerate. News that a company might miss its profit expectations, due to a decrease in consumer demand, an increase in raw materials costs, labor, financing, or any of a multitude of things that industry analysts watch, can cause the stock price to drop sharply as people look for better investments with higher yields. However, a large P/E ratio is not necessarily a bad thing, especially for a large stable company. That stability means the company is better able to weather economic problems, and thus it is a lower risk. Now, not all companies issue dividends. Apple is probably the most well-known example. The company simply retains all its earnings to reinvest in itself. This is typically the strategy of a smaller start-up; whether they're making good money or not, they typically want to keep what they make so they can keep growing, and the shareholders are usually fine with that. Why? Well, because there's more than one way to value a company, and more than one way to look at a stock. Owning one share of a stock can be seen quite literally as owning a share of that company. The share can then be valued as a fraction of the company's total assets. Sounds simple, but it isn't, because not every asset the company owns has a line in the financial statements. A company's brand name, for instance, has no tangible value, and yet it is probably the most valuable single thing Apple owns. Similarly, intellectual property doesn't have a "book value" on a company's balance sheet, but again, these are huge contributors to the success and profitability of a company like Apple; the company is viewed as a center of innovation, and if it were not doing any innovating, it would very quickly be seen as a middleman for some other company's ideas and products. A company can't sustain that position for long even if it's raking in the money in the meantime. Overall, the value of a company is generally a combination of these two things; by owning a portion of stock, you own a piece of the company's assets, and also claim a piece of their profits. A large company with a lot of material assets and very little debt can be highly valued based solely on the sum of its parts, even if profits are lagging. Conversely, a company more or less operating out of a storage unit can have a patent on the cure for cancer, and be shoveling money into their coffers with bulldozers. |
Evidence for Technical Analysis [duplicate] | To answer your original question: There is proof out there. Here is a paper from the Federal Reserve Bank of St. Louis that might be worth a read. It has a lot of references to other publications that might help answer your question(s) about TA. You can probably read the whole article then research some of the other ones listed there to come up with a conclusion. Below are some excerpts: Abstract: This article introduces the subject of technical analysis in the foreign exchange market, with emphasis on its importance for questions of market efficiency. “Technicians” view their craft, the study of price patterns, as exploiting traders’ psychological regularities. The literature on technical analysis has established that simple technical trading rules on dollar exchange rates provided 15 years of positive, risk-adjusted returns during the 1970s and 80s before those returns were extinguished. More recently, more complex and less studied rules have produced more modest returns for a similar length of time. Conventional explanations that rely on risk adjustment and/or central bank intervention do not plausibly justify the observed excess returns from following simple technical trading rules. Psychological biases, however, could contribute to the profitability of these rules. We view the observed pattern of excess returns to technical trading rules as being consistent with an adaptive markets view of the world. and The widespread use of technical analysis in foreign exchange (and other) markets is puzzling because it implies that either traders are irrationally making decisions on useless information or that past prices contain useful information for trading. The latter possibility would contradict the “efficient markets hypothesis,” which holds that no trading strategy should be able to generate unusual profits on publicly available information—such as past prices—except by bearing unusual risk. And the observed level of risk-adjusted profitability measures market (in)efficiency. Therefore much research effort has been directed toward determining whether technical analysis is indeed profitable or not. One of the earliest studies, by Fama and Blume (1966), found no evidence that a particular class of TTRs could earn abnormal profits in the stock market. However, more recent research by Brock, Lakonishok and LeBaron (1992) and Sullivan, Timmermann an d White (1999) has provided contrary evidence. And many studies of the foreign exchange market have found evidence that TTRs can generate persistent profits (Poole 6 (1967), Dooley and Shafer (1984), Sweeney (1986), Levich and Thomas (1993), Neely, Weller and Dittmar (1997), Gençay (1999), Lee, Gleason and Mathur (2001) and Martin (2001)). |
Why should one only contribute up to the employer's match in a 401(k)? | Early this year I wrote an article Are you 401(k)o’ed? I described the data from a 401(k) expense survey and the punchline was that the average large retirement plan (over 1000 participants) expense was 1.08%, and for smaller plans it rose to 1.24%. As I commented below, if one's goal is to make deposits with income that avoid a tax of 25%, and hope to withdraw it at retirement at 15%, it doesn't take long for a 1% fee to completely negate the benefit of pretax savings. These numbers are averages, in the same article, I mention (ok, I brag) that my company plan has an S&P fund that costs .05%. That's 1% over 20 years. The sound bite of "deposit to the match" needs to be followed by "depending on the choice of investments and their expenses" within the 401(k). Every answer here has added excellent points, fennec's last sentence shouldn't be ignored, there's a phaseout for IRA deductibility, and another for Roth eligibility. For Married filing joint, IRA deduction starts to be lost at $92K, and Roth deposit disallowed at $173K. This adds a bit to the complexity of the decision, but doesn't change the implication of the 1%+ 401(k) fees. |
What are the benefits to underwriters in a secondary offering? | Your impression about banks and bankers is very wrong. Wall street banks can and often do lose in transactions. In fact, banks go bankrupt and/or require massive bailouts to survive because they sometimes lose a ton of money. The business of investment banking often involves bearing risk for customers, which, by definition, means they lose some of the time. Generally the risks they take on individual transactions are not large enough to bring the whole bank down, but sometimes they are. Banking is a job like any other, except that it has more risk than most. Anyway, to your point, how do underwriters make money on shares that fall in value before the sale? On the commission. The issuing company will normally pay the investment bank a percentage of the funds raised in the offering, regardless of the price. Of course, it's possible for the bank to still lose money if their contract stipulates a minimum price and they are not able to meet it. In that case, the bank may lose on that offering, contradicting your preconceived notion. By the way, one other question implicit in your post: Why was the secondary offering considered bad news? If the CEO and other insiders have private information that indicates that the stock is overvalued, then doing a secondary offering at the inflated price will greatly enrich them. Because this happens some times, investors are wary about secondary offerings. This makes companies that would otherwise do a secondary offering shy away from it, even if shares are not overpriced. Therefore if a company is doing a secondary offering, the market is likely to worry that the stock is overvalued even at a reduced price. |
Payroll reimbursments | As @Dilip suggested in the comments, the problem is the accountability of the reimbursement plans. In order for the reimbursement to be non-taxable, there has to be a reimbursement plan and policy set up by the employer, it has to be done per receipt, and accounted for correctly. If the employer just cuts you a check - the conditions may not be met, and as such - the reimbursement becomes taxable. In your case, it seems like the employer has not set up a proper (accountable) reimbursement plan, thus your reimbursements are taxable. @Joe pointed out that since the employer also doesn't withhold taxes (as he should), you may have an unexpected tax bill on April 15. This Chron article describes the distinction between the accountable and non-accountable plans. Only with the accountable plans the reimbursements are non-taxable. |
Can an International student of F1 VISA accept money in her US bank account on behalf of someone else? | There might be a problem. Some reporting paperwork will have to be done for the IRS, obviously, but technically it will be business income zeroed out by business expense. Withholding requirements will shift to your friend, which is a mess. Talk to a licensed tax adviser (EA/CPA) about these. But the immigration may consider this arrangement as employment, which is in violation of the visa conditions. You need to talk to an immigration attorney. |
What's so hard about a mutual fund manager pricing their mutual fund? | Given that a mutual fund manager knows, at the end of the day, precisely how many shares/units/whatever of each investment (stock, equity, etc.) they own, plus their bank balance, It is calculating this given. There are multiple orders that a fund manager requests for execution, some get settled [i.e. get converted into trade], the shares itself don't get into account immediately, but next day or 2 days later depending on the exchange. Similarly he would have sold quite a few shares and that would still show shares in his account. The bank balance itself will not show the funds to pay as the fund manager has purchased something ... or the funds received as the fund manager has sold something. So in general they roughly know the value ... but they don't exactly know the value and would have to factor the above variables. That's not a simple task when you are talking about multiple trades across multiple shares. |
Is the stock market a zero-sum game? | No, the stock market and investing in general is not a zero sum game. Some types of trades are zero sum because of the nature of the trade. But someone isn't necessarily losing when you gain in the sale of a stock or other security. I'm not going to type out a technical thesis for your question. But the main failure of the idea that investing is zero sum is the fact the a company does not participate in the transacting of its stock in the secondary market nor does it set the price. This is materially different from the trading of options contracts. Options contracts are the trading of risk, one side of the contract wins and one side of the contract loses. If you want to run down the economic theory that if Jenny bought her shares from Bob someone else is missing out on Jenny's money you're free to do that. But that would mean that literally every transaction in the entire economy is part of a zero sum game (and really misses the definition of zero sum game). Poker is a zero sum game. All players bet in to the game in equal amounts, one player takes all the money. And hell, I've played poker and lost but still sometimes feel that received value in the form of entertainment. |
How do I find a good mutual fund to invest 5K in with a moderately high amount of risk? | Vanguard has a lot of mutual fund offerings. (I have an account there.) Within the members' section they give indications of the level of risk/reward for each fund. |
CD interest rate US vs abroad, is there a catch? | Part 1 Quite a few [or rather most] countries allow USD account. So there is no conversion. Just to illustrare; In India its allowed to have a USD account. The funds can be transfered as USD and withdrawn as USD, the interest is in USD. There no conversion at any point in time. Typically the rates for CD on USD account was Central Bank regulated rate of 5%, recently this was deregulated, and some banks offer around 7% interest. Why is the rate high on USD in India? - There is a trade deficit which means India gets less USD and has to pay More USD to buy stuff [Oil and other essential items]. - The balance is typically borrowed say from IMF or other countries etc. - Allowing Banks to offer high interest rate is one way to attract more USD into the country in short term. [because somepoint in time they may take back the USD out of India] So why isn't everyone jumping and making USD investiments in India? - The Non-Residents who eventually plan to come back have invested in USD in India. - There is a risk of regulation changes, ie if the Central Bank / Country comes up pressure for Forex Reserves, they may make it difficut to take back the USD. IE they may impose charges / taxes or force conversion on such accounts. - The KYC norms make it difficult for Indian Bank to attract US citizens [except Non Resident Indians] - Certain countries would have explicit regulations to prevent Other Nationals from investing in such products as they may lead to volatility [ie all of them suddenly pull out the funds] - There would be no insurance to foreign nationals. Part 2 The FDIC insurance is not the reason for lower rates. Most countires have similar insurance for Bank deposits for account holdes. The reason for lower interst rate is all the Goverments [China etc] park the excess funds in US Treasuries because; 1. It is safe 2. It is required for any international purchase 3. It is very liquid. Now if the US Fed started giving higher interest rates to tresaury bonds say 5%, it essentially paying more to other countries ... so its keeping the interest rates low even at 1% there are enough people [institutions / governemnts] who would keep the money with US Treasury. So the US Treasury has to make some revenue from the funds kept at it ... it lends at lower interest rates to Bank ... who in turn lend it to borrowers [both corporate and retail]. Now if they can borrow cheaply from Fed, why would they pay more to Individual Retail on CD?, they will pay less; because the lending rates are low as well. Part 3 Check out the regulations |
Legitimate unclaimed property that doesn't appear in any state directory? | So while these companies are not a scam, 30% feels pretty darn high. How about you negotiate a much lower rate? 10% or 15%? Here is why: You will spend time and effort (which technically isn't free) to find the money. I bet you can find it if you look hard enough. But you could also just collect it and give this company a cut for their expertise. However if 30% bugs you (and it would bug me) then consider their reality. They spent money to find the funds and contact you. HOWEVER, that is a sunk cost. It is already spent. You can find it on your own and they get zip. Or you negotiate a lower percentage, they get enough to cover their costs and make some profit and you save a ton of time. Since they took the time to explain themselves here, they are either scammers trying to bully you into compliance, or they are legit. It is field that people might look down on, but it isn't criminal. I would look for the money if it were me, but I feel I have enough free time that it would be worth it. |
How do I research if my student loan company is doing something illegal? | The thing to recall here is that auto-pay is a convenience, not a guarantee. Auto-pay withdrawals, notices that a bill is due, all of these are niceties that the lender uses to try to make sure you consistently pay your bill on time, as all businesses enjoy steady cash flows. Now, what all of these "quality of life" features don't do is mitigate your responsibility, as outlined when you first took out the loan, to pay it back in a timely manner and according to the terms and conditions of the loan. If your original contract for the loan states you shall make "a payment of $X.XX each calendar month", then you are required to make that payment one way or another. If auto-pay fails, you are still obligated to monitor that and correct the payment to ensure you meet your contractual obligation. It's less than pleasant that they didn't notify you, but you were already aware you had an obligation to pay back the loan, and knew what the terms of the loan were. Any forgiveness of interest or penalties for late fees is entirely up to the CSR and the company's internal policies, not the law. |
Good books for learning about tax strategy/planning | J.K. Lasser's Your Income Tax is, remarkably, a great read. It's a line by line review of the tax forms, and offers commentary and examples for every scenario. Of course, it's updated every year to reflect new rules and numbers. I actually read it from cover to cover the first year I started working. It's not going to offer convoluted strategies to use, but, you'll understand your tax return well enough to respond to the advice you encounter elsewhere. To mhoran's point - "Don't let the tax tail wag the investing dog." Taxes are important, but should take a back step to earning and investing. Those who didn't sell at the height of the dotcon bubble "to avoid the big tax bill" only saw in hindsight that paying taxes is part of success not failure. |
Can I make my savings keep in check with or beat inflation over a long time period via index funds? | If I invest in index funds or other long term stocks that pay dividend which I reinvest, they don't need to be worth more per share for me to make a profit, right? That is, if I sell part of the stocks, it's GOOD if they're worth more than I bought them at, but the real money comes from the QUANTITY of stocks that you get by reinvesting your dividends, right? I would say it is more the other way around. It is nice to get dividends and reinvest them, but overall the main gain comes from the stocks going up in value. The idea with index funds, however, is that you don't rely on any particular stock going up in value; instead you just rely on the aggregate of all the funds in the index going up. By buying lots of stocks bundled in an index fund, you avoid being too reliant on any one company's performance. Can I invest "small amounts" (part of paycheck) into index funds on a monthly basis, like €500, without taking major "transaction fees"? (Likely to be index fund specific... general answers or specific answers using popular stocks welcomed). Yes, you can. At least in the US, whether you can do this automatically from your paycheck depends on whether you employer has that set up. I don't know that work in the Netherlands. However, at the least, you can almost certainly set up an auto-invest program that takes $X out of your bank account every month and buys shares of some index fund(s). Is this plan market-crash proof? My parents keep saying that "Look at 2008 and think about what such a thing would do to your plan", and I just see that it will be a setback, but ultimately irrelevant, unless it happens when I need the money. And even then I'm wondering whether I'll really need ALL of my money in one go. Doesn't the index fund go back up eventually? Does a crash even matter if you plan on holding stocks for 10 or more years? Crashes always matter, because as you say, there's always the possibility that the crash will occur at a time you need the money. In general, it is historically true that the market recovers after crashes, so yes, if you have the financial and psychological fortitude to not pull your money out during the crash, and to ride it out, your net worth will probably go back up after a rough interlude. No one can predict the future, so it's possible for some unprecedented crisis to cause an unprecedented crash. However, the interconnectedness of stock markets and financial systems around the world is now so great that, were such a no-return crash to occur, it would probably be accompanied by the total collapse of the whole economic system. In other words, if the stock market dies suddenly once and for all, the entire way of life of "developed countries" will probably die with it. As long as you live in such a society, you can't really avoid "gambling" that it will continue to exist, so gambling on there not being a cataclysmic market crash isn't much more of a gamble. Does what I'm planning have similarities with some financial concept or product (to allow me to research better by looking at the risks of that concept/product)? Maybe like a mortgage investment plan without the bank eating your money in between? I'm not sure what you mean by "what you're planning". The main financial products relevant to what you're describing are index funds (which you already mentioned) and index ETFs (which are basically similar with regard to the questions you're asking here). As far as concepts, the philosophy of buying low-fee index funds, holding them for a long time, and not selling during crashes, is essentially that espoused by Jack Bogle (not quite the inventor of the index fund, but more or less its spiritual father) and the community of "Bogleheads" that has formed around his ideas. There is a Bogleheads wiki with lots of information about the details of this approach to investing. If this strategy appeals to you, you may find it useful to read through some of the pages on that site. |
What is a trust? What are the different types of trusts? | From a more technical point of view, a trust is a legal relationship between 3 parties: Trusts can take many forms. People setup trusts to ensure that property is used in a specific way. Owning a home with a spouse is a form of a trust. A pension plan is a trust. Protecting land from development often involves placing it in trust. Wealthy people use trusts for estate planning for a variety of reasons. There's no "better" or "best" trust on a general level... it all depends on the situation that you are in and the desired outcome that you are looking for. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | yes and no its definitely not charitable as they are making money of off you but depending on the outside conditions if you had to pay a mortgage on that condo with only 35k in payments to start off it would more than likely exceed 500 dollars a month however there would always be a point were the mortgage would end and it dosent sound like thats going to be the case with you paying your parents so it depends on how long your going to have that condo and how much mortgage would have been. |
Online tools for monitoring my portfolio gains/losses in real time? | The trick is real time. I like to wake up in the morning, turn on my computer and see at a glance the gain or loss data on each of my stock and bond at that moment. Companies like Ameritrde offer them, but you have to enroll and trade stock in them. |
Would you withdraw your money from your bank if you thought it was going under? | To the average consumer, the financial health of a bank is completely irrelevant. The FDIC's job is to make it that way. Even if a bank does go under, the FDIC is very good at making sure there is little/no interruption in service. Usually, another bank just takes over the asset of the failing bank, and you don't even notice the difference. You might have a ~24 hour window where your local ATM doesn't work. I also really question the "FDIC is broke" statement. The FDIC has access to additional funding beyond the Deposit Insurance Fund mentioned in your link. It also has the ability to borrow from the Treasury. If you look into the FDIC's report a bit closer, the amount in the "Provision for Insurance Losses" is not just money spent on failing banks. It also includes money that has been set aside to cover anticipated failures and litigation. Saying the FDIC is "broke" is like saying I am "broke" because my checking account balance went down after I moved some money into a rainy-day fund. Failure of the FDIC would signal a failure of our financial system and the government that backs it. If the FDIC fails, your petty checking account would be meaningless anyway. The important things would be non-perishable food, clean water, and guns/ammo. That said, it will be interesting to see the latest quarterly report for the FDIC when it is released next week. The article implies things will look a little better for the FDIC, but we'll see. |
How to measure a currencies valuation or devaluation in relevance to itself | The measure of change of value of a currency in relation to itself is inflation (or deflation). |
Didn't apply for credit card but got an application denied letter? | This can be a case of someone trying to use your identity to obtain credit. I would put a fraud alert on my credit immediately. I went through something similar... got denial letters for credit I didn't apply to. A few months later I get hit with a credit ding from a pay day loan company that apparently allowed the thief to get a loan who obviously didn't pay it back. I had no contact with this company before they put the lates on my credit and it took over a year to get this cleaned up. Apparently this loan was obtained about a week after I got the first denial letter so if I put a fraud alert on immediately it would have most likely stopped this fraudulent pay day loan before it happened. |
Why GOOG is “After Hours” while FB is “Pre-market”? | Pre-Market trading activity is shown on the site from 4:15 - 9:30 AM (actual trading starts at 4:00 AM EST) The NASDAQ Stock Market Trading Sessions (Eastern Time) Pre-Market Trading Hours from 4:00 a.m. to 9:30 a.m. Market Hours from 9:30 a.m. to 4:00 p.m. After-Market Hours from 4:00 p.m. to 8:00 p.m. Read more: http://www.nasdaq.com/about/trading-schedule.aspx#ixzz38OtcISrq In this case GOOG did not trade in the Pre-market until that time and FB was. |
Options “Collar” strategy vs regular Profit/Loss stops | consider capital requirements and risk timeframes. With options, the capital requirements are far smaller than owning the underlying securities with stops. Options also allow one to constrain risk to a timeframe of ones own choosing (the expiration date of the contract). If you own or are short the underlying security, there is no time horizon. |
Planning to invest in stock, age 16 | First of all, since you're 16 - you will not invest in anything. You cannot, you're a minor. You cannot enter contracts, and as such - you cannot transact in property. Your bank accounts are all UGMA accounts. I.e.: your guardian (or someone else who's the trustee on the account) will be the one transacting, not you. You can ask them to do trades, but they don't have to. They must make decisions in your best interest, which trades may not necessarily be. If however they decide to make trades, or earn interest, or make any other decision that results in gains - these are your gains, and you will be taxed on them. The way taxes work is that you're taxed on income. You're free to do with it whatever you want, but you're taxed on it. So if you realized gains by selling stocks, and reinvested them - you had income (the gains) which you did with whatever you felt like (reinvested). The taxman doesn't care what you did with the gains, the taxman cares that you had them. For losses it is a bit more complicated, and while you can deduct losses - there are limitations on how much you can deduct, and some losses cannot be deducted at all when realized (like wash sale losses or passive activity losses). When you have stock transactions, you will probably need to file a tax return reporting the transactions and your gains/losses on them. You may end up not paying any tax at all, but since the broker is reporting the transactions - you should too, if only to avoid IRS asking why you didn't. This, again, should be done by your guardian, since you personally cannot legally sign documents. You asked if your gains can affect your parents' taxes. Not exactly - your parents' taxes can affect you. This is called "Kiddie Tax" (unofficially of course). You may want read about it and take it into account when discussing your investments with your guardian/parents. If kiddie tax provisions apply to you - your parents should probably discuss it with their tax adviser. |
Where can one graph portfolio performance over time? | I use Yahoo Finance to plot my portfolio value over time. Yahoo Finance uses SigFig to link accounts (I've linked to Fidelity), which then allows you to see you exact portfolio and see a plot of its historical value. I'm not sure what other websites SigFig will allow you to sync with, but it is worth a try. Here is what the plot I have looks like, although this is slightly out of date, but still gives you an idea of what to expect. |
Is it true that 90% of investors lose their money? | It depends on the market that you participate in. Stock markets are not zero sum as JoeTaxpayer explained. On the other hand, any kind of derivative markets (such as options or futures) are indeed zero sum, due to the nature of the financial instruments that are exchanged. Those markets tend to be more unforgiving. I don't have evidence for this, but I believe one of the reasons that investors so often lose their money is psychology. The majority of us as humans are not wired to naturally make the kinds of rigorous and quick decisions that markets require, especially if day trading. Some people can invest time and energy to improve themselves and get over that. Those are the ones who succeed. |
Is accident insurance worth it for my kids who play sports | The general answer to any "is it worth it" insurance question is "no," because the insurance company is making a profit on the insurance.* To decide if you want the insurance, you need to figure out how much you can afford to pay if something happens, how much they cover, and how badly you want to transfer your risk to them. If you won't have trouble coming up with the $4000 deductible should you need to, then don't get this extra insurance. * I did not mean to imply that insurance is always a bad idea or that insurance companies are cheating their customers. Please let me explain further. When you buy any product from a business, that business is making a profit. And there is nothing wrong with that at all. They are providing a service and should be compensated for their efforts. Insurance companies also provide a service, but unlike other types of businesses, their product is monetary. You pay them money now, and they might pay you money later. If they pay you more money then you spent, you came out ahead, and if you spend more money then they give you, it was a loss for you. In order for the insurance company to make a profit, they need to bring in more money than they pay out. In fact, they need to bring in a lot more money then they pay out, because in addition to their profit, they have all the overhead of running a business. As a result, on average, you will come out behind when you purchase insurance. This means that when you are on the fence about whether or not to purchase any insurance product, the default choice should be "no." On average, you are financially better off without insurance. Now, that doesn't mean you should never buy insurance. As mentioned by commenter @xiaomy, insurance companies spread risk across all of their customers. If I am in a situation where I have a risk of financial ruin in a certain circumstance, I can eliminate that risk by purchasing insurance. For example, I have term life insurance, because if I were to pass away, it would be financially catastrophic for my family. (I'm hoping that the insurance company makes 100% profit on that deal!) I also continue to buy expensive health insurance because an unexpected medical event would be financially devastating. However, I always decline the extended warranty when I buy a $300 appliance, because I don't have any trouble coming up with another $300 in the unlikely event that it breaks, and I would rather keep the money than contribute to the profits of an insurance company unnecessarily. In my original answer above, I pointed out how you would determine whether or not to purchase this particular insurance product. This product pays out a bunch of relatively small amounts for certain events, up to a limit of $4000. Would this $4000 be hard for you to come up with if you needed to? If so, get the insurance. But if you are like me and have an emergency fund in place to handle things like this, then you are financially better off declining this policy. |
Which practice to keep finances after getting married: joint, or separate? | I feel there are two types of answer: One: the financial. Suck all the emotion out of the situation, and treat the two individuals as individuals. If that works for the two of you, fantastic. Two: the philosophical. You're married, it's a union, so unify the funds. If that works for you, fantastic. Personally, my partner and I do the latter. The idea of separate pots and separate accounts and one mixed fund etc makes no sense to us. But that's us. The first step for you in deciding on an approach is to know yourselves as people - and everything else will follow. |
Rent home temporarily with new owner occupied loan | I'm assuming this is the US. Is this illegal? Are we likely to be caught? What could happen if caught? If you sign an occupancy affidavit at closing that says you intend to move in within 60-days, with no intention of doing so, then you'll be committing fraud, specifically mortgage/occupancy fraud, a federal crime with potential for imprisonment and hefty fines. In general, moving in late is not something that's likely to be noticed, if the lender is getting their money then they probably don't care. Renting it out prior to moving in seems much riskier, especially if you live in a city/state that requires rental licensing, or are depending on rental income to carry the mortgage. No idea how frequently people are caught/punished for this type of fraud, but it hardly seems worth finding out. |
Over contributing to workplace pension or private pension | Firstly (and this part is rather opinion-based) I would absolutely not think of making more pension contributions when you are currently totaling 6% of salary as "over contributing". There are some who argue that you should be putting a minimum of 20% away for retirement throughout your working life; you don't say how old you are / how close to retirement you are, but a common rule of thumb is to halve your age and put away that % of your salary into your pension. So I would certainly start with upping those contributions. I actually don't think it makes much difference whether you go for just your workplace pension versus a separate private one - in general you end up paying management fees that are a % of the value, so whether it is in one place or split doesn't cost any less. The "all eggs in one basket" syndrome is a possible argument but equally if you change jobs a few times and end up with half a dozen pension pots it can be very hard to stay on top of them all. If you end up with everything in one pot and then transfer it when you change jobs, it's easier to manage. Other options: ISA as you mentioned; on the plus side these are tax free. On the minus side, you can either go for a cash ISA which at the moment has very low rates of return, and/or a stocks and shares ISA which exposes you to risks in the stock market. If you have debt, consider paying it off early / overpaying. Student loans may or may not be the exception to this depending on your personal situation. Certainly if you have a mortgage you can save a vast amount by overpaying early. Other investments - stocks and shares, BTL housing, fine wines, Bitcoin, there are almost limitless possibilities. But it makes sense to max out the tax-efficient options before you look into these. |
Why have I never seen a stock split? | If you want to see one split, well, a reverse split anyway, keep an eye on TZA, FAZ, BGZ, and any Direxion fund. These funds decay continuously forever. Once they get close to $10-$15 or so, they reverse-split them back to the $30-$50 range and the process starts over. This happens about once a year. A few years ago I sent Direxion an email asking what happens when they run out of shares to reverse split and the reply was that's its an open fund where shares can be created or redeemed at will. That still didn't answer the question of what happens when they run out of shares. If they create new shares, the price will drop below the $10 level where many fund managers aren't allowed to buy. |
Why don't market indexes use aggregate market capitalization? | would constantly fluctuate and provide an indication of how well the market is doing. The index is there to tell if you made profit or loss by investing in the market. Using a pure total market cap will only tell you "Did IPO activity exceed bankruptcy and privatization activity". |
what are the pros and cons of structured deposits? | With reference to the UK: Structured deposits should not be confused with structured products. Structured deposits are often, quite simple deposit accounts. You place your money into what is essentially a deposit account, and are therefore guaranteed not to lose your capital as with any other deposit account. The attraction is that you could earn more than you would in a normal deposit account, often around double, due to indirect exposure to the markets. Another benefit is that structured deposits can form part of your annual cash ISA allowance, so the returns can be tax free. These products are popular with those who have savings which they are happy to deposit away for between 3 and 6 years, and are looking for better rates of return than standard cash ISAs or savings accounts. The main drawback is that you may not receive anything other than your original deposit. That poses a minimal risk if your savings are earning less than 1% currently. See my article at financialandrew.blogspot.co.uk/2013/03/fed-up-with-low-returns-from-cash-isas.html for a more rounded overview of the structured deposits. |
What should I do with my freshly opened LLC in California after I've moved? | There's no reason to keep the California LLC if you don't intend to do business in California. If you'll have sales in California then you'll need to keep it and file taxes accordingly for those sales. You can just as easily form a new LLC in Washington state and even keep the same name (if it's available in Washington, that is). Keeping the California LLC just creates paperwork for whatever regulatory filings California will require for no purpose at all. As for your question about it looking suspicious that you just set up an LLC and then are shutting it down, nobody's going to care, to be honest. As with your situation, plans change, so it isn't really all that unusual. If you're concerned the government will say something, don't. |
Post tax versus pretax (ESPP versus straight investment) | This answer assumes that your purpose for using the ESPP is to generate a relatively safe 15% return on that portion of your income. Frequently before there were Roth 401K options the advice was: This advice was especially good for the younger workers because they wanted to have a Roth account but didn't want to miss the 401K match. As Roth 401K accounts were introduced that advice changed somewhat because it was possible to get the benefit of the Roth and still get the maximum match. for your situation what I would propose is: contribute to the 401K enough to get the maximum match. Contribute as much as you want or are allowed into the ESPP. Take the proceeds and contribute to an IRA or Roth IRA. If you reach the IRA max you have to decide if you will scale back the ESPP to contribute more to the 401K. |
5/1 ARM: Lifetime cap, First Adjustment Cap, Margin, and Annual Cap? | Interest rates are at a record low and the government is printing money. You can get a fixed rate loan at a rate equal to inflation in a healthy economy. Unless you know that you are moving in < 5 years, why would you expose yourself to interest rate risk when rates are about as close to zero as they can be? If your thought with respect to mitigating interest rate risk is: "What's the big deal, I'll just refinance!", think again, because in a market where rates are climbing, you may not be able to affordably refinance at the LTV that you'll have in 5-7 years. From 1974-1991, 30 year mortgages never fell below 9%, and were over 12% from 1979 to 1985. Think about what those kinds of rates -- which reduce a new homeowner's buying power by over 40%, would do to your homes value. |
How to keep control of shared expenses inside marriage? | Call me old fashioned, but that sounds less like a marriage and more like a business partnership. Maybe there are business tools that would be useful. |
What options do I have at 26 years old, with 1.2 million USD? | When I was in a similar situation (due to my stocks going up), I quit my job and decided that if I live somewhat frugally, I wouldn't have to work again (I haven't). But I fell victim to some scams, didn't invest wisely, and tried to play as a (minor) philantropist. Bad move. I still have enough money to live on, and want to buy a home of my own, but with the rise in real estate costs in ALL the "good" major cities my options are very limited. There is a LOT of good advice being given here; I wish someone had given me that kind of advice years ago. $1,200,000 sounds like a lot but it's not infinity. Side comment: I've seen lots of articles that claim to help you figure out how much money you need in retirement but why do they all start out by asking you "how much money do you need in retirement?" |
No transaction fee ETF trades - what's the catch? | what is the mechanism by which they make money on the funds that I have in my account? Risk drives TD Ameritrade to look for profits, Turukawa's storytelling about 100,000$ and 500$ is trivial. The risk consists of credit risk, asset-liability risk and profit risk. The third, based on Pareto Principle, explains the loss-harvesting. The pareto distribution is used in all kind of decentralized systems such as Web, business and -- if I am not totally wrong -- the profit risk is a thing that some authorities require firms to investigate, hopefully someone could explain you more about it. You can visualize the distribution with rpareto(n, shape, scale) in R Statistics -program (free). Wikipedia's a bit populist description: In the financial services industry, this concept is known as profit risk, where 20% or fewer of a company's customers are generating positive income while 80% or more are costing the company money. Read more about it here and about the risk here. |
Does freedom to provide services allow me contracting in Germany without paying taxes there (but in my home EU country)? | Also within Germany the tax offices usually determine which tax office is responsible for you by asking where you were more than 180 days of the year (if e.g. you have a second flat where you work). That's a default value, though: in my experience you can ask to be handled by another tax office. E.g. I hand my tax declaration to my "home" tax office (where also my freelancing adress is), even though my day-job is 300 km away. So if you work mostly from Poland and just visit the German customer a few times, you are fine anyways. Difficulties start if you move to Germany to do the work at your customer's place. I'm going to assume that this is the situation as otherwise I don't think the question would have come up. Close by the link you provided is a kind of FAQ on this EU regulation About the question of permanent vs. temporary they say: The temporary nature of the service is assessed on a case-by-case basis. Here's my German-Italian experience with this. Background: I had a work contract plus contracts for services and I moved for a while to Italy. Taxes and social insurance on the Italian contracts had to be paid to Italy. Including tax on the contract for services. Due to the German-Italian tax treaty, there is no double taxation. Same for Poland: this is part of EU contracts. By the way: The temporary time frame for Italy seemed to be 3 months, then I had to provide an Italian residence etc. and was registered in the Italian health care etc. system. Due to the German-Italian tax treaty, there is no double taxation. Same for Poland: this is part of EU contracts. Besides that, the German tax office nevertheless decided that my "primary center of life" stayed in Germany. So everything but the stuff related to the Italian contracts (which would probably have counted as normal work contracts in Germany, though they is no exact equivalent to those contract types) was handled by the German tax office. I think this is the relevant part for your question (or: argumentation with the German tax office) of temporary vs. permanent residence. Here are some points they asked: There is one point you absolutely need to know about the German social insurance law: Scheinselbständigkeit (pretended self-employment). Scheinselbständigkeit means contracts that claim to be service contracts with a self-employed provider who is doing the work in a way that is typical for employees. This law closes a loophole so employer + employee cannot avoid paying income tax and social insurance fees (pension contributions and unemployment insurance on both sides - health insurance would have to be paid in full by the self-employed instead of partially by the employer. Employer also avoids accident insurance, and several regulations from labour law are avoided as well). Legally, this is a form of black labour which means that the employer commits a criminal offense and is liable basically for all those fees. There is a list of criteria that count towards Scheinselbständigkeit. Particularly relevant for you could be |
What is the best asset allocation for a retirement portfolio, and why? | This turned out be a lot longer than I expected. So, here's the overview. Despite the presence of asset allocation calculators and what not, this is a subjective matter. Only you know how much risk you are willing to take. You seem to be aware of one rule of thumb, namely that with a longer investing horizon you can stand to take on more risk. However, how much risk you should take is subject to your own risk aversion. Honestly, the best way to answer your questions is to educate yourself about the individual topics. There are just too many variables to provide neat, concise answers to such a broad question. There are no easy ways around this. You should not blindly rely on the opinions of others, but rather use your own judgment to asses their advice. Some of the links I provide in the main text: S&P 500: Total and Inflation-Adjusted Historical Returns 10-year index fund returns The Motley Fool Risk aversion Disclaimer: These are the opinions of an enthusiastic amateur. Why should I invest 20% in domestic large cap and 10% in developing markets instead of 10% in domestic large cap and 20% in developing markets? Should I invest in REITs? Why or why not? Simply put, developing markets are very risky. Even if you have a long investment horizon, you should pace yourself and not take on too much risk. How much is "too much" is ultimately subjective. Specific to why 10% in developing vs 20% in large cap, it is probably because 10% seems like a reasonable amount of your total portfolio to gamble. Another way to look at this is to consider that 10% as gone, because it is invested in very risky markets. So, if you're willing to take a 20% haircut, then by all means do that. However, realize that you may be throwing 1/5 of your money out the window. Meanwhile, REITs can be quite risky as investing in the real estate market itself can be quite risky. One reason is that the assets are very much fixed in place and thus can not be liquidated in the same way as other assets. Thus, you are subject to the vicissitudes of a relatively small market. Another issue is the large capital outlays required for most commercial building projects, thus typically requiring quite a bit of credit and risk. Another way to put it: Donald Trump made his name in real estate, but it was (and still is) a very bumpy ride. Yet another way to put it: you have to build it before they will come and there is no guarantee that they will like what you built. What mutual funds or index funds should I investigate to implement these strategies? I would generally avoid actively managed mutual funds, due to the expenses. They can seriously eat into the returns. There is a reason that the most mutual funds compare themselves to the Lipper average instead of something like the S&P 500. All of those costs involved in managing a mutual fund (teams of people and trading costs) tend to weigh down on them quite heavily. As the Motley Fool expounded on years ago, if you can not do better than the S&P 500, you should save yourself the headaches and simply invest in an S&P 500 index fund. That said, depending on your skill (and luck) picking stocks (or even funds), you may very well have been able to beat the S&P 500 over the past 10 years. Of course, you may have also done a whole lot worse. This article discusses the performance of the S&P 500 over the past 60 years. As you can see, the past 10 years have been a very bumpy ride yielding in a negative return. Again, keep in mind that you could have done much worse with other investments. That site, Simple Stock Investing may be a good place to start educating yourself. I am not familiar with the site, so do not take this as an endorsement. A quick once-over of the material on the site leads me to believe that it may provide a good bit of information in readily digestible forms. The Motley Fool was a favorite site of mine in the past for the individual investor. However, they seem to have turned to the dark side, charging for much of their advice. That said, it may still be a good place to get started. You may also decide that it is worth paying for their advice. This blog post, though dated, compares some Vanguard index funds and is a light introduction into the contrarian view of investing. Simply put, this view holds that one should not be a lemming following the crowd, rather one should do the opposite of what everyone else is doing. One strong argument in favor of this view is the fact that as more people pile onto an investing strategy or into a particular market, the yields thin out and the risk of a correction (i.e. a downturn) increases. In the worst case, this leads to a bubble, which corrects itself suddenly (or "pops" thus the term "bubble") leading to quite a bit of pain for the unprepared participants. An unprepared participant is one who is not hedged properly. Basically, this means they were not invested in other markets/strategies that would increase in yield as a result of the event that caused the bubble to pop. Note that the recent housing bubble and resulting credit crunch beat quite heavily on the both the stock and bond markets. So, the easy hedge for stocks being bonds did not necessarily work out so well. This makes sense, as the housing bubble burst due to concerns over easy credit. Unfortunately, I don't have any good resources on hand that may provide starting points or discuss the various investing strategies. I must admit that I am turning my interests back to investing after a hiatus. As I stated, I used to really like the Motley Fool, but now I am somewhat suspicious of them. The main reason is the fact that as they were exploring alternatives to advertising driven revenue for their site, they promised to always have free resources available for those unwilling to pay for their advice. A cursory review of their site does show a decent amount of general investing information, so take these words with a grain of salt. (Another reason I am suspicious of them is the fact that they "spammed" me with lots of enticements to pay for their advice which seemed just like the type of advice they spoke against.) Anyway, time to put the soapbox away. As I do that though, I should explain the reason for this soapboxing. Simply put, investing is a risky endeavor, any way you slice it. You can never eliminate risk, you can only hope to reduce it to an acceptable level. What is acceptable is subject to your situation and to the magnitude of your risk aversion. Ultimately, it is rather subjective and you should not blindly follow someone else's opinion (professional or otherwise). Point being, use your judgment to evaluate anything you read about investing. If it sounds too good to be true, it probably is. If someone purports to have some strategy for guaranteed (steady) returns, be very suspicious of it. (Read up on the Bernard Madoff scandal.) If someone is putting on a heavy sales pitch, be weary. Be especially suspicious of anyone asking you to pay for their advice before giving you any solid understanding of their strategy. Sure, many people want to get paid for their advice in some way (in fact, I am getting "paid" with reputation on this site). However, if they take the sketchy approach of a slimy salesmen, they are likely making more money from selling their strategy, than they are from the advice itself. Most likely, if they were getting outsized returns from their strategy they would keep quiet about it and continue using it themselves. As stated before, the more people pile onto a strategy, the smaller the returns. The typical model for selling is to make money from the sale. When the item being sold is an intangible good, your risk as a buyer increases. You may wonder why I have written at length without much discussion of asset allocation. One reason is that I am still a relative neophyte and have a mostly high level understanding of the various strategies. While I feel confident enough in my understanding for my own purposes, I do not necessarily feel confident creating an asset allocation strategy for someone else. The more important reason is that this is a subjective matter with a lot of variables to consider. If you want a quick and simple answer, I am afraid you will be disappointed. The best approach is to educate yourself and make these decisions for yourself. Hence, my attempt to educate you as best as I can at this point in time. Personally, I suggest you do what I did. Start reading the Wall Street Journal every day. (An acceptable substitute may be the business section of the New York Times.) At first you will be overwhelmed with information, but in the long run it will pay off. Another good piece of advice is to be patient and not rush into investing. If you are in a hurry to determine how you should invest in a 401(k) or other such investment vehicle due to a desire to take advantage of an employer's matching funds, then I would place my money in an S&P 500 index fund. I would also explore placing some of that money into broad index funds from other regions of the globe. The reason for broad index funds is to provide some protection from the normal fluctuations and to reduce the risk of a sudden downturn causing you a lot pain while you determine the best approach for yourself. In this scenario, think more about capital preservation and hedging against inflation then about "beating" the market. |
Can a bunch of wealthy people force Facebook to go public? | @Alex B's answer hits most of it, but leaves out one thing: most companies control who can own their non-public shares, and prohibit transfers, sales, or in some cases, even ongoing ownership by ex-employees. So it's not that hard to ensure you stay under 500 investors. Remember that Sharespost isn't an exchange or clearinghouse; it's basically a bulletin board with some light contract services and third-party escrow services. I'd guess that many of the companies on their "hot" list explicitly prohibit the sale of their non-public shares. |
What's a good way to find someone locally to help me with my investments? | Dave Ramsey has a list of ELPs (Endorsed Local Providers) of which I've only heard good things. You can request an investment ELP here. |
Algorithmic trading in linux using python | A couple options that I know of: Interactive Brokers offers a "paper trading" mode to its account holders that allows you to start with a pretend stack of money and place simulated trades to test trading ideas. They also provide an API that allows you to interface with their platform programmatically for retrieving quotes, placing orders, and the such. As you noted, however, it's not free; you must hold a funded brokerage account in order to qualify for access to their platform. In order to maintain an account, there are minimums for required equity and monthly activity (measured in dollars that you spend on commissions), so you won't get access to their platform without having a decent amount of skin in the game. IB's native API is Java-based; IbPy is an unofficial wrapper that makes the interface available in Python. I've not used IB at all myself, but I've heard good things about their API and its accessibility via IbPy. Edit: IB now supports Python natively via their published API, so using IbPy is no longer needed, unless you wish to use Python 2.x. The officially supported API is based on Python 3. TD Ameritrade also offers an API that is usable by its brokerage clients. They do not offer any such "paper trading" mode, so you would need to "execute" transactions based on quotes at the corresponding trade times and then keep track of your simulated account history yourself. The API supports quote retrieval, price history, and trade execution, among other functions. TDA might be more attractive than IB if you're looking for a low-cost link into market data, as I believe their minimum-equity levels are lower. To get access, you'll need to sign up for an API developer account, which I believe requires an NDA. I don't believe there is an official Python implementation of the API, but if you're a capable Python writer, you shouldn't have trouble hooking up to the published interfaces. Some caveats: as when doing any strategy backtesting, you'll want to be sure to be pessimistic when doing so, so your optimism doesn't make your trades look more successful than they would be in the real world. At a minimum, you'll want to ensure that your simulations transact at the posted bid/ask prices, not necessarily the last trade's price, as well as any commissions and fees associated with the trade. A more robust scheme would also take into account the depth of the order book (also known as level 2 quotes), which can cause additional slippage in the prices at which you buy/sell your security. An even more robust scheme would take into account the potential latency of trade execution, looking at all prices over some time period that covers the maximum expected latency and simulating the trade at the worst-possible price. |
Is there a register that shows the companies with notifiable interest in a stock? | There are multiple places where you can see this. Company house website On any financial news website, if you have access e.g. TESCO on FT On any 3rd party website which supply information on companies e.g. TESCO on Companycheck An observation though, FT lists down more shareholders for me than Companycheck as I pay for FT. |
What does a contract's worth mean? | $400M is the gross "check" the company will receive as payment for the project. The contract will specify payment schedule. And it can range from a payment per milestone achieved to a pay in full on completion. The profit will hopefully be positive, but it's not impossible for a bid to underestimate the full cost, resulting in no profit at all. In theory, if you knew the expected profit from the deal, you should be able to estimate the value it adds to the company's value. |
Claiming income/deductions on an illegal apartment | The IRS demands and expects to be paid tax on all taxable activity, including illegal activity. If they expect drug dealers, hit men, and smugglers to pay tax, they expect you to pay tax on your basement apartment. The flip side of this is that the IRS keeps reported tax activities confidential. They only share what is required (for example, your taxable income with your state). You can read the details in their disclosure laws. Deductions will work just as they would if your apartment was perfectly legal. In the eyes of the IRS, whether your income is legal or not is none of their business. They care only about whether it is being taxed appropriately. They will not share any information with your zoning authority without a court order. |
Is there a general guideline for what percentage of a portfolio should be in gold? | My personal gold/metals target is 5.0% of my retirement portfolio. Right now I'm underweight because of the run up in gold/metals prices. (I haven't been selling, but as I add to retirement accounts, I haven't been buying gold so it is going below the 5% mark.) I arrived at this number after reading a lot of different sample portfolio allocations, and some books. Some people recommend what I consider crazy allocations: 25-50% in gold. From what I could figure out in terms of modern portfolio theory, holding some metal reduces your overall risk because it generally has a low correlation to equity markets. The problem with gold is that it is a lousy investment. It doesn't produce any income, and only has costs (storage, insurance, commissions to buy/sell, management of ETF if that's what you're using, etc). The only thing going for it is that it can be a hedge during tough times. In this case, when you rebalance, your gold will be high, you'll sell it, and buy the stocks that are down. (In theory -- assuming you stick to disciplined rebalancing.) So for me, 5% seemed to be enough to shave off a little overall risk without wasting too much expense on a hedge. (I don't go over this, and like I said, now I'm underweighted.) |
How are shares used, and what are they, physically? | How to 'use' your shares: If you own common shares in a company (as opposed to a fund) then you have the right (but not the obligation) to excersize one vote per share on questions put before the shareholders. Usually, this occurs once a year. Usually these questions regard approval of auditors. Sometimes they involve officers such as directors on the board. You will be mailed a form to fill out and mail back in. Preferred shares usually are not voting shares,but common shares always are. By the way, I do not recommend owning shares in companies. I recommend funds instead,either ETFs or mutual funds. Owning shares in companies puts you at risk of a failure of that company. Owning funds spreads that risk around,thus reducing your exposure. There are, really, two purposes for owning shares 1) Owning shares gives you the right to declared dividends 2) Owning shares allows you to sell those shares at some time in the future. (Hopefully at a profit) One obscure thing you can do with owned shares is to 'write' (sell) covered put options. But options are not something that you need to concern yourself with at this point. You may find it useful to sign up for a free daily email from www.investorwords.com. |
What are the common income tax deductions used by “rich” salaried households? | You're asking explicitly about $250K+ wage earners. Well, believe it or not, but this is the most discriminated group of people in the US tax code. This is what is called "the upper middle class". People who still have to work for a living, but treated as if they're rich (I don't consider people who must work to keep up their life style as rich). Many of the deductions cannot be taken by them. Lets go over the list Keith made: You mentioned losses - you cannot deduct gambling losses (in excess of gambling income), and you cannot deduct passive (rental real estate, for example) losses. While for rental real estate there's a small amount of losses you could deduct, it phases out well below the $250K line (can be deducted against passive income, or when disposed of the property). 529 plans are not deductible (in fact, its a gift subject to the gift tax). Bottom line, being a high earner with wages only means you pay the most tax. You either find a way to become self employed and have a lot of business deductions on your schedule C/1120S, or switch to capital gains. You can marry an unemployed partner, it will make your life slightly easier. |
What are my options other than stock piling money in a savings account? | I think you need to understand the options better before you go around calling anything worthless... $11k in a 1% savings account gets you just over $100 each year. Obviously you're not buying Ferraris with your returns but it's $100 more than your checking account will pay you. And, you're guaranteed to get your money back. I think a CD ladder is a great way to store your emergency fund. The interest rate on a CD is typically a bit better than a regular savings account, though the money is locked away and while we seem to be on the cusp of a rate increase it might not be the best time to put the money in jail. Generally there is some sort of fee or lost interest from cashing a CD early. You're still guaranteed to get your money back. Stock trading is probably a terrible idea. If you want some market exposure I'd take half of the money and buy a low expense S&P ETF, I wouldn't put my whole savings if I were you (or if I were me). Many large brokers have an S&P ETF option that you can generally buy with no commission and no loads. Vanguard is a great option VOO, Schwab has an S&P mutual fund SWPPX, and there are others. Actively trading individual stocks is a great way to let commissions and fees erode your account. There are some startup alternatives with lower fees, but personally I would stay away from individual stock picking unless you are in school for Finance and have some interest in paying attention and you're ready to possibly never see the money again. You're not guaranteed to get your money back. There are also money market accounts. These will typically pay some interest based on exposing your funds to some risk. It can be a bit better return than a savings account, but I probably wouldn't bother. An IRA (ROTH and Traditional) is just an account wrapper that offers certain tax benefits while placing certain restrictions on the use of some or all of the money until you reach retirement age. As a college student you should probably be more concerned about an emergency fund or traveling than retirement savings, though some here may disagree with me. With your IRA you can buy CDs or annuities, or stocks and ETFs or any other kind of security. Depending on what you buy inside the IRA, you might not be guaranteed to get your money back. First you need to figure out what you'd like to use the money for. Then, you need to determine when you'd need the money for that use. Then, you need to determine if you can sleep at night while your stock account fluctuates a few percent each day. If you can't, or you don't have answers for these questions, a savings account is a really low friction/low risk place store money and combat inflation while you come up with answers for those questions. |
What resources can I use to try and find out the name of the manager for a given fund? | The fund prospectus is a good place to start. |
Is it unreasonable to double your investment year over year? | I know it may not last longer but i was able to 2.5x my wealth over last 2 years.(2016, 2017 cont) I was successfully able to convert 70k into 452k in 21months. Now at this amount, I am really worried and want to take all the profit. I agree that I have been lucky with these returns but it was not all outright luck. Now my plan is to take 100k of it and try high risk investments while investing 350k in index funds. |
Should I Pay Off my Student Loan Debts First or Invest in an Index Fund? | Pay off the debt first. Life circumstances change without notice, and starting any stage of life with a debt puts you at a disadvantage. Luckily, your debt is small. Please also consider accumulating a 6 month emergency fund before making investments. This will further protect you when life hands you a curveball. |
Ethics and investment | There are the Dow Jones Sustainability Indices. I believe the reports used to create them are released to the public. This could be a good place to start. |
Who owns historical valuations about equity such as stocks and index funds? | I expect that data may be copyright. Data that's published (e.g. on a newsfeed or web site) is subject to terms of use. Standard & Poor's web site says, about the Shiller indexes, Who do I contact at S&P to license my use of these indices? Questions regarding licensing the S&P/Case-Shiller Home Price Indices can be addressed to: Bo Chung Managing Director bo_chung@standardandpoors.com, +1.212.438.3519 As for 'recording' the information yourself, that may depend on how and where (e.g. from what source) you're recording it. If for example you tried to record prices from the Canadian MLS (Realtor's) network, they too have their own terms of use on the data they publish. Copyright laws vary from country to country (and terms of use certainly vary): for example see http://en.wikipedia.org/wiki/Feist_v._Rural which is case law about copyrighting a phone directory in the USA, and contrast that with http://en.wikipedia.org/wiki/Database_right which is European legislation. So who owns data if it is determined by free market? I guess that "determined by free market" means that buyers and sellers are publishing their offers-to-buy and their offers-to-sell, and I guess that the publisher (e.g. the stock exchange) has 'terms of use' about the data (the offers) that they're publishing. |
What is the most effective saving money method? | Envelope budgeting is pretty simple. It's easy enough that you can teach it to children, and flexible enough you can use it as an adult. The general idea is that you take your cash money (no bank accounts involved in the simple version), and stick it in envelopes marked for what it's supposed to be for. So for example, you get paid, you cash your paycheck and you put $100 in an envelope marked food. Now when you go out to eat, you go get the money out of your food envelope, and spend it on food. When your food envelope is empty you go hungry. In the simple version you have envelopes for things like "food", "candy", "toys", "games". etc. (simple version is usually taught to kids.) So you want a $60 game, and your game envelope only has $5. Well you can't get the game. You need to add more money to the game envelope. You need to eat so you have to put money there, but maybe you don't need toys. So you can divert some incoming money from toys to games. Sure it's still going to take a while to get to $60, but now with some simple kid friendly math you can see how long, and more importantly, you can make decisions on what is more important. Candy or Toys? In the adult version things are much the same. We just have more envelopes. We have Rent, Car Payment, Gas, Food, Electric. Then we need some envelopes for "savings" and "retirement". etc. Now when you get your Paycheck you prioritize your money and you stuff it in the envelopes. How much you put in each envelope is easy. Enough to pay for that thing. Savings and Retirement meet different goals. You want $6,000 savings. Well just like that game in the kid version, you're not going to get there all at once. But you can see and make decisions on what is most important. You want $1,000,000 to retire on. Sure, but that envelope is going to take a while to fill up. At it's core, the important parts are that: Let me explain the rent example, as it's the oddest. You get $500 a week, and you need $1000 for rent. This means you're spending from your envelopes. During week 1 and 2 you're spending last months week 3 and 4. You DO NOT do: This is important because if you lose your paycheck in week 3 or 4 you are homeless. Finally, in general, you stick stuff in savings envelope. And you want to reach a savings envelope goal of 6 months of your average pay checks. Once you reach this goal, then you're in good shape, and a job loss doesn't mean you're homeless. You can always just pull from savings. It's important when using these envelopes to understand that you only make the decision of what is more important when you're sticking money in, not when you're taking money out, and that you only work with the money you have right now today (in your hand). Now what you think you're going to get tomorrow. Money in the bank can be split into virtual envelopes. Money in savings can be in any vehicle, but generally you want a short term emergency envelope (savings account) and a long term envelope (CDs for example). Take a look at YNAB.com they used to provide free lessons in using their software to manage an envelope system. And the I know it's going to get comments section. The rent v.s. homeless is a real example. You should not take money from, say, the food envelope, to cover the rent. This may seem silly, but if you're doing that then you made poor decisions when deciding where the money goes. Use the emergency fund envelope to cover the rent, and next time put less money into food. It's this "rule" that makes envelope budgeting work well. You may be homeless, but you can eat, drive to work, put gas in your car, and pay your bills. Taking money from different envelopes usually results in a spiral, where you attempt to do the sensible thing, but in the end, you're worse off. Migrating to envelope budgeting (in the strict sense) is hard. The best way I have taught people to do it is to only envelope budget an increasing part of their income until their envelopes are full enough for one month. That means that you might only envelope budget 10% of your income at first. But unless your situation is such that you can cover all your bills with one paycheck, it's not going to be possible to transition without breaking the "don't take money from other envelope" rules. |
Can travel expenses be deducted from Form 1040A if they were used to gather material for a book? | Hobby expenses are not tax deductible. Business expenses are, but only if it's a bona fide business. First they look at profitability: if you reported a net profit (i.e. paid taxes) in your first 3 years, they will believe you rant on Youtube for a living. Remember, by the time they get around to auditing you, you'll likely be well into, or through, your third year. There is an exception for farms. Other than that, if you lose money year after year, you better be able to show that you look, walk and quack like a business; and one with a reasonable business reason for delayed profitability. For instance Netflix's old business model of mailing DVDs had very high fixed infrastructure expense that took years to turn profitable, but was a very sensible model. They're fine with that. Pets.com swandived into oblivion but they earnestly tried. They're fine with that too. You can't mix all your activities. If you're an electrician specializing in IoT and smart homes, can you deduct a trip to the CES trade show, you bet. Blackhat conference, arguable. SES? No way. Now if you had a second business of a product-reco site which profited by ads and affiliate links, then SES would be fine to deduct from that business. But if this second business loses money every year, it's a hobby and not deductible at all. That person would want separate accounting books for the electrician and webmaster businesses. That's a basic "duck test" of a business vs. a hobby. You need to be able to show how each business gets income and pays expense separate from every other business and your personal life. It's a best-practice to give each business a separate checking account and checkbook. You don't need to risk tax penalties on a business-larva that may never pupate. You can amend your taxes up to 3 years after the proper filing date. I save my expense reciepts for each tax year, and if a business becomes justifiable, I go back and amend past years' tax forms, taking those deductions. IRS gives me a refund check, with interest! |
What happens when PayPal overdrafts a checking account (with an ample backup funding source available)? | PayPal will be contacting you shortly, I'm sure. You'll see the reversal on their site in a few days as well as a fee from their end I bet. |
Why is it possible to just take out a ton of credit cards, max them out and default in 7 years? | I should apply for everything I can on the same day, get approved for as many as I can First it may not sound as easy. You may hardly get 2-3 cards and not dozens. Even if you submit the applications the same day; If you still plan this and somehow get too many cards, and draw huge debt, then the Banks can take this seriously and file court case. If Banks are able to establish the intent; this can get constituted as fraud and liable for criminal proceedings. So in short if someone has the money and don't want to pay; the court can attach the wage or other assets and make the person pay. If the intent was fraud one can even be sent to jail. |
How do disputed debts work on credit reports? | If you tell the collector that the claim isn't valid, they're obliged to go back to the creditor to verify it. Sometimes that gets a real person, instead of their automatic billing system, to look at the claim, and if you're right, they'll drop it. |
What's an economic explanation for why greeting cards are so expensive? | We generally speak of the "elasticity of demand". Greeting cards are expensive because they can be. We buy them in a sentimentally weakened state, and we do not buy them by the tonne. There is also the concept of "Market Segmentation", but not so much. Essentially the price is determined by finding the "point of pain" and winding it back a little. So people will pay $5 for a card. They will not (generally) pay $5,000 unless there is a good reason (vanity ?). Why sell them for $2 ? The customers who baulk at $5 tend not to even have $2. (Market segmentation again). In short the price is always going to need to be set before the point where demand rolls off sharply, to maximise profit. |
Snowball debt or pay off a large amount? | First, make sure you have some money in a savings account that you can use instead of credit cards for making future purchases that go beyond what you have in your checking account. $1000 is a good amount to start with, so just take that out of the $5000. Then pay off the Best Buy card. You shouldn't be worried about the minimum payment. Determine what you can pay per month (say, $400), and take the minimum payments out of that. Then choose one card to get the rest of your $400, plus the remaining $1500 of your $5000. This should be the highest-interest card, mathematically, but it may or may not be your best choice; it depends on your personality. Some people get a psychological lift out of seeing debts disappear, and it gives them more motivation to keep going. Those people may be better served by paying off the smallest debts first, to get them out of the way. I'm an INTP, so it bothers me more to think that I'll be paying a little more in interest over the long term by taking that route. |
Buying a building with two flats, can I rent one out and still get a residential mortgage? | It depends on the terms of the mortgage. Generally speaking, residential mortgages specifically prohibit letting out a property without the bank's express permission -- but as you say, that tends to assume that the whole property is being let, not just a part of it. Conversely, buy-to-let mortgages generally prohibit living in the property yourself! The final arbiter as to what is allowed under a mortgage is the mortgage provider; so the safest option is to speak to one or more banks, and see what they say. (Note that if you're changing the use of part of a property from business to residential, you may need to apply for permission; check with your local council.) |
Entering the stock market in a poor economy | Buy low and sell high. Right now stocks are cheap (or at least cheapish). If you wait for better forecasts, the price will be higher. They might go down still farther, but no one knows for sure when that will happen, or where the bottom is -- despite what the talking heads on TV say. Remember that what you really care about is sell price minus purchase price (plus dividends, but I'll ignore that). What happens between the time you buy and the time you sell is irrelevant financially, but can be important psychologically. If it was me, and you are sure you won't need the money for at least 10 years, or better still 15-20, I would buy some index funds. Pick something that you are comfortable with (some are more aggressive/risky than others), and then only look at it a few times a year, if that much. Only do this as long as you are sure that you won't sell if the market drops further. That is a guaranteed way to lose money. This is what I've been doing for my retirement funds for 15 years, and its worked well so far. |
Is it legal for a landlord to report a large payment to a tenant using Form 1099? | It is legal. They're probably going to give you a 1099-MISC, which is required of businesses for many cash payments over $600 in value to all sorts of counterparties. (Probably box 3 of 1099-MISC as is typical in "cash for keys" situations where one is paid to vacate early) A 1099-MISC is not necessarily pure income, but in this case, you do have money coming in. This money isn't a return of your security deposit or a gift. The payment could possibly be construed by you as a payment to make you whole, but the accounting for this would be on you. This is not a typical situation for IRS reporting. However, if you are uncomfortable with potentially explaining to the IRS how you implemented advice from strangers over the internet, the safest course is to report it all as income. Look at it this way: you did enter into a mutual contract, where you were paid consideration to release your leasehold interests in the property. |
What is the best way to make a bet that a certain stock will go up in the medium term? | You could try to refine your options strategy: For instance you could buy the USD 750 call option(s) you mentioned and at the same time sell (short) call options with a higher strike price, which is above the share price level you expect that Apple will trade at in one year (for instance USD 1,100). By doing this, you would receive the premium of the call option(s) with the higher option, which in turn would help you finance buying your USD 750 call(s). The net effect of this trading strategy would be that you would give up the extra profit you would earn if Apple would rose above USD 1,100 (the strike price of the call option sold short). Your total risk would be even less than with your actual strategy (in my view). |
How can I stop wasting food? | Let me start out by saying I know your pain. One of the most important things to do is have the basics in stock in your larder. They are the sorts of things that keep well, and you can make great simple meals from them whenever, without having to worry about them going off in a matter of days. A simple inventory like this - http://www.thesimpledollar.com/2006/12/06/the-well-stocked-kitchen-staple-foods-you-should-always-have-on-hand/ - can make a big difference. (This list is good, but check the comments for additional suggestions. There are a few extras that commenters reckon you should have and I think they are right - I certainly have more than just what's on that list.) And remember - frozen veg may or may not be as nutritious as fresh, but they are better than nothing. |
Are quarterly earnings released first via a press release on the investor website, via conference call, or does it vary by company? | the financial information is generally filed via SEDAR (Canada) or SEC (US) before the conference call with the investment community. This can take before either before the market opens or after the market closes. The information is generally distribute to the various newswire service and company website at the same time the filing is made with SEDAR/SEC. |
How to share income after marriage and kids? | I can only share with you my happened with my wife and I. First, and foremost, if you think you need to protect your assets for some reason then do so. Be open and honest about it. If we get a divorce, X stays with me, and Y stays with you. This seems silly, even when your doing it, but it's important. You can speak with a lawyer about this stuff as you need to, but get it in writing. Now I know this seems like planning for failure, but if you feel that foo is important to you, and you want to retain ownership of foo no mater what, then you have to do this step. It also works both ways. You can use, with some limitations, this to insulate your new family unit from your personal risks. For example, my business is mine. If we break up it stays mine. The income is shared, but the business is mine. This creates a barrier that if someone from 10 years ago sues my business, then my wife is protected from that. Keep in mind, different countries different rules. Next, and this is my advise. Give up on "his and hers" everything. It's just "ours". Together you make 5400€ decide how to spend 5400€ together. Pick your goals together. The pot is 5400€. End of line. It doesn't matter how much from one person or how much from another (unless your talking about mitigating losses from sick days or injuries or leave etc.). All that matters is that you make 5400€. Start your budgeting there. Next setup an equal allowance. That is money, set aside for non-sense reasons. I like to buy video games, my wife likes to buy books. This is not for vacation, or stuff together, but just little, tiny stuff you can do for your self, without asking "permission". The number should be small, and equal. Maybe 50€. Finally setup a budget. House Stuff 200€, Car stuff 400€. etc. etc. then it doesn't matter who bought the house stuff. You only have to coordinate so that you don't both buy house stuff. After some time (took us around 6 months) you will find out how this works and you can add on some rules. For example, I don't go to Best Buy alone. I will spend too much on "house stuff". My wife doesn't like to make the budget, so I handle that, then we go over it. Things like that. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | Firstly, playing the lottery is not investing it is gambling. The odds in gambling are always against you and with the house. Secondly, no one would ever give you a payout of 3 to 1 when the odds are 50:50, unless they were looking to give away money. Even when you place your chips on either red or black on a roulette table your payout if you are correct is 100% (double your money), however the odds of winning are less than 50%, there are 18 reds, 18 blacks and 2 greens (0 and 00). Even if you place your chips on one single number, your payout will be 35:1 but your odds of winning are 1:38. The odds are always with the house. If you want to play the lotto, use some money you don't need and expect to lose, have some fun and enjoy yourself if you get any small winnings. Gambling should be looked at as a source of entertainment not a source of investing. If you take gambling more serious than this then you might have a problem. |
Where is my dividend? | Your dividend should show up in one of a few methods: (1) Cash in your trading account (2) A check mailed to you (3) A deposit to a linked bank account (4) As additional new shares in the stock, as the result of a DRIP setup. |
Should I participate in a 401k if there is no company match? | I believe @Dilip addressed your question alread, I am going to focus on your second question: What are the criteria one should use for estimating the worth of the situation? The criteria are: I hope this helps. |
When's the best time to sell the stock of a company that is being acquired/sold? | This is but one opinion. Seek others before your act. "When someone puts a million dollars in your hand, close your hand." A 50% gain in two weeks is huge. |
What percent of a company are you buying when you purchase stock? | As you can see at https://www.google.com/finance?q=NASDAQ%3AAAPL the number of apple shares at this very moment is 5.25B, so if you have 1 share you own 1 / 5.25B of the company. |
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