Question stringlengths 14 166 | Answer stringlengths 3 10.6k |
|---|---|
Investing tax (savings) | You'd want the money to be "liquid" and ready for you to use when tax time comes around. You also don't want to lose "principal", i.e. if you put it into stocks and have the value of what you put in be less than what you invested—which is possible—when you need the money, again, at tax time. That doesn't leave you with many good choices or an amazingly good way to profit from investing your savings that you put aside for taxes. CDs are steady but will not give you much interest and they have a definite deposit timeframe 6 months, 1 yr, 2 yrs and you can't touch it. So, the only reasonable choice you have left is an interest bearing checking or savings account with up to 1% interest (APR)—as of this writing Ally Bank offers 1% interest in an online interest savings acct.—which will give you some extra money on your deposits. This is what I do. |
Why do stores and manufacturers use mail in rebates? A scam, or is there a way to use them effectively? | Not so much a scam, if you fill the required paperwork and actually take time to mail it in assuming it's done correctly; you will get your money. That being said, having a mail-in rebate program is usually a win-win for the seller. While they may have to pay a small fee to a third party who handles the rebate almost always this influences a potential buyer to choose a specific product over the alternative. The seller knows very well that very few people will actually go through with it. And yes, they do often make the process needlessly complicated and long as a deterrent. Plus, let's be real, no one likes sending out physical letters anymore. From a marketing standpoint the mail-in rebate is a brilliant idea. However, it's usually more of an annoyance for the consumer. |
What is the p/e ratio? | PE ratio is the current share price divided by the prior 4 quarters earnings per share. Any stock quote site will report it. You can also compute it yourself. All you need is an income statement and a current stock quote. |
If there's no volume discount, does buying in bulk still make sense? | Let me add a counterpoint. I don't know about you, but for some psychological reason, when I know I have an abundance of something I tend to be less frugal about the way I consume it. For example: When there is a six pack of cokes in the fridge I feel like I am more prone to not drink them up so quickly so I have some for later on. However, if I knew I had 3 more cases in the pantry, I seem to go through a lot more of them. |
How and Should I Invest (As a college 18 year old with minimal living expenses)? | I'd suggest you keep putting money in your savings account and start investing after you land that first big job. As another answer mentioned, unless you're fortunate enough to have all of your tuition and living expenses paid for, an emergency fund is an invaluable tool for a college student. And the bigger the better. Your laptop gets stolen or your car's air conditioner (or heater) dies -- both of these things happened to me in college -- and it would have been a much bigger deal for me if I didn't have some money tucked away. |
How much more than my mortgage should I charge for rent? | I think you are trying to figure out what will be a break-even rental rate for you, so that then you can decide whether renting at current market rates is worth it for you. This is tricky to determine because future valuations are uncertain. You can make rough estimates though. The most uncertain component is likely to be capital appreciation or depreciation (increase or decrease in the value of your property). This is usually a relatively large number (significant to the calculation). The value is uncertain because it depends on predictions of the housing market. Future interest rates or economic conditions will likely play a major role in dictating the future value of your home. Obviously there are numerous other costs to consider such as maintenance, tax and insurance some of which may be via escrow and included in your mortgage payment. Largest uncertainty in terms of income are the level of rent and occupancy rate. The former is reasonably predictable, the latter less so. Would advise you make a spreadsheet and list them all out with margins of error to get some idea. The absolute amount you are paying on the mortgage is a red herring similar to when car dealers ask you what payment you can afford. That's not what's relevant. What's relevant is the Net Present Value of ALL the payments in relation to what you are getting in return. Note that one issue with assessing your cost of capital is, what's your opportunity cost. ie. if you didn't have the money tied up in real estate, what could you be earning with it elsewhere? This is not really part of the cost of capital, but it's something to consider. Also note that the total monthly payment for the mortgage is not useful to your calculations because a significant chunk of the payment will likely be to pay down principal and as such represents no real cost to you (its really just a transfer - reducing your bank balance but increasing your equity in the home). The interest portion is a real cost to you. |
Can I get a mortgage from a foreign bank? | You definitely used to be able to (see this BBC article from 2006), and I would imagine that you still can, although I also imagine that it would be more difficult than it used to be, as with all mortgages. EDIT: And here's an article from last year about Chinese banks targeting the UK mortgage market. |
Do US mutual funds and ETFs pay taxes on dividends? | Mutual funds don't pay taxes themselves, they distribute any dividends or capital gains to the shareholders. Thus, if you hold a mutual fund in a tax-advantaged account like a 401k or IRA then the distribution isn't a taxable event while in a regular taxable account you would have to pay taxes on the distributions. From Forbes: There can be foreign companies on US stock exchanges that would still work the same way. Unilever for example is an Anglo-Dutch multinational listed on the NYSE as "UN." |
Is inflation a good or bad thing? Why do governments want some inflation? | In general the consensus is that a small amount of inflation (usually 1.5-2% per year) is desirable. That is why the Federal Reserve sets its inflation target in that range. The reasons why are quite complex though. One reason is "wage stickiness" - ie., the observed phenomenon that employers don't like to cut wages. Having a small rate of inflation means that when wages are steady in nominal terms, they are actually falling in real terms. This gives employers more flexibility. |
Company asking for card details to refund over email | If it is a well known company that wants to give you a refund, I would not worry about giving them your credit card number. However, I would never type my credit card number into an e-mail message. E-mail messages are very insecure, and can be read by many people along its way to the destination. They also can be archived in many places, meaning that your number will continue to be posted out there for someone to grab in the future. If you need to give this company your credit card number, do it over the phone. Having said that, ultimately you are not generally responsible for fraudulent charges if your card number is stolen and misused. I've had so many fraudulent charges, despite my being relatively careful with my number, that I don't really worry much anymore about losing my number. I just check my statement for false charges, and when they happen, the bank cancels the charge and issues me a new number. It has happened to either my wife or I maybe 5 times over the last two years. |
How can I estimate the value of private stock behind employee stock options? | Okay, I'm going to give you my opinion based on experience; not any technical understanding. The options - by themselves - are pretty meaningless in terms of determining their value. The business plan going forward, their growth expectations, the additional options to be authorized, the additional preferred stock offers they anticipate, even current estimated value of the company are some of the pieces of data you will be needing. I also want to say something cynical, like "to hell with the stock options give me cold hard" but that's just me. (My experience two-times so far has shown stock options to be worth very very little.) |
How does the world - in aggregate - generate a non-zero return? | It appears that you have bought into the Communist lie. Milton Friedman lats it all out so well. No transaction ever occurs unless both sides in the transaction benefit. Let's say you are out for a walk. While walking you feel hungry. You find two quarters ($0.50) in your pocket. You enter the nearest convenience store and look for a snack cake to buy. You find a Twinky selling for 40 cents. You pay for the Twinky and leave the store while eating it. You also leave with a dime in your pocket. To you the Twinky is worth 50 cents as you would have paid what you had to obtain one. So made 10 cents profit on the deal. The shopkeeper sold his merchandise for 40 cents but it only cost him 25 cents to obtain the Twinky. He made 15 cents profit on the deal. You wanted the snack more than you wanted the money. The shopkeeper wanted the money more than the snack. You both got what you valued more. You both profited by the transaction. That is why Capitalism works. Value (worth) is in the eye of the beholder. Remember: no transaction occurs unless both sides profit. Edit: once again I ask: if you give me a negative vote please explain with a comment. |
Should my husband's business pay my business? | It depends on the finances involved, but particularly if you're not billing anything right now and may have no revenue this year, it's probably a good idea to bill his company. This is in part because some deductions or other tax treatments are only allowed if you have revenue and/or income. The biggest example I can think of is the Solo 401k - you can only contribute up to your self employed income. If you're planning to contribute to one (and you should, they're amazingly powerful tools for saving for retirement and for reducing your tax burden), you will have to have some revenue in order to have something to pay yourself with. I don't believe you have to charge him, though, if it makes more tax sense not to (for example, if his business is operating at a loss and cannot benefit from expensing it, but you'd then have to pay taxes on your own income from it). |
How to handle missing W2 from failed direct deposit only company? | Yes, there's a way. I actually wrote a blog post about it. Its a new service from the IRS which allows you pulling your account online. IRS also has an instruction page just for this case here. |
Is it wise to invest small amounts of money short-term? | I would agree with the other answers about it being a bad idea to invest in stocks in the short term. However, do consider also long-term repairs. For example, you should be prepared to a repair happening in 20 years in addition to repairs happening in a couple of months. So, if it is at all possible for you to save a bit more, put 2% of the construction cost of a typical new house (just a house, not the land the house is standing on) aside every year into a long-term repair fund and invest it into stocks. I would recommend a low-cost index fund or passive ETF instead of manually picking stocks. When you have a long-term repair that requires large amounts of money but will be good for decades to come, you will take some money out of the long-term repair fund. Where I live, houses cost about 4000 EUR per square meter, but most of that is the land and building permit cost. The actual construction cost is about 2500 EUR per square meter. So, I would put away 50 EUR per square meter every year. So, for example, for a relatively small 50 square meter apartment, that would mean 2500 EUR per year. There are quite many repairs that are long-term repairs. For example, in apartment buildings, plumbing needs to be redone every 40 years or so. Given such a long time period, it makes sense to invest the money into stocks. So, my recommendation would be to have two repair funds: short-term repairs and long-term repairs. Only the long-term repair fund should be invested into stocks. |
Is it better to miss the dividend and buy the undervalued stock? | The stock tends to drop by the amount of the dividend -- or if you prefer to think of it this way, the stock price has been pushed up by the amount of the dividend before it was paid out. Really, all this shift does is factor out the impending dividend's effect on the real purchase cost of the stock. As such it's pretty much irrelevant except that, of course, the dividend is short-term gain that you have to pay taxes on almost immediately. Which also tends to get figured into the price folks are willing to pay for the stock. Conclusion: no, there's no real opportunity here. There's a slight tax reason to avoid buying right before dividends are paid, but that's about it. Basic principle: If it's simple and obvious,the market has already accounted for it. |
What kind news or information would make the price of a stock go up? | You should not trade based on what news is just released, if you try you will be too slow to react most of the time. In many cases the news is already priced into the stock during the anticipation of the news being released. Other times as soon as the news is released the price will gap up or down in response to the news. Some times when you think that the news is good, like new record profits have been achieved, but the share price goes down instead of up. This may be due to the expectation of the record profits by analysts to be 20% more than last year, but the company only achieves 10% more than last year. So the news is actually seen as bad because, even though record profits, it hasn't met expectations. The same can happen in the other direction, a company may make a loss and the share price goes up. This may be because it was expected to make a 50% loss but only made a 20% loss due to cost cutting, so this is seen as a good thing and the price can shoot up, especially if it had been beaten down for months. An other example is when the Federal Reserve in the USA put up interest rates earlier this month. Some may have seen this as bad news and expected share prices to fall, but instead prices rallied. This was actually seen as good news, firstly because it had been expected for a long time, and secondly and more importantly because a small rise in interest rates after many years of near zero rates is a sign of the economy finally starting to improve. If the economy is improving, that means more people will have jobs, more people will be spending more money, companies will start to make higher revenues and start to expand, which means higher profits and higher share prices. A better way to trade is to have a written trading plan and use technical analysis to develop a set of buy and sell criteria that you follow to the tea. Then back test your trading plan through various market conditions to make sure you get a positive expectancy. |
Bollinger Bands and TRENDING market | Bollinger Bands are placed standard deviations away from the moving average. Therefore if the price is volatile, the bands diverge from the mean. During consolidation the bands would converge. They do not provide a clear indication of whether the price is trending or not. |
Why is routing number called ABA/ABN number? | With number of Banks increasing every country at some point in time adopted an Identification code. In US these are called ABA number because they are allocated by American Bankers Association, in UK Sort Codes ... like wise for other countries. See list here http://en.wikipedia.org/wiki/Bank_code In some countries the numbers are given by Central Bank. To enable internationl payments, the SWIFT body apart from message formats, allocated a SWIFT BIC [Bank identification Code] so that Banks can be globally identified. Currently IBAN being adopted in Europe & Australia to identify an Account [at a Bank] Uniquely across globe. In essence these number help uniquely identify a Location/Bank/Branch. The clearing house route the payments or collection instruments to the correct Bank on the basis of this number. |
Gigantic point amount on rewards card - what are potential consequences? | I can't give you proper legal advice, but if I called their customer service and used half an hour of my time to wait and explain the situation in detail, and their official response was "just use the points," I would do just that. Of course you would have stronger legal standing if you had recorded their answer, or had it in writing from them. But I don't think spending these points will come crashing down on you. And morally I see absolutely no problem with spending these points; it is not as if you are stealing from someone else. These points can usually be given away in any kind of crazy manner. Sometimes there are lotteries or events where they give away 100,000 points for new customers who open up an account on a specific weekend. Sometimes they give points to customers who want to terminate their contracts as an attempt to coax them into staying. They have given you a lot of points and don't really care. As a result you are probably staying their customer forever – and will most likely tell this story to many friends. This is free advertising for them. Heck, maybe they would even make a news story out of this some day, it could be good publicity. Everyone is essentially getting these points "for free" but in fact the company has a business case by improving their image and customer retention with these points. So you can spend these points with a sound mind morally. Legally you would have to contact a lawyer, but I think chances for legal repercussions are small if you have done your duty, informed them and their customer service basically said it's ok. |
New car price was negotiated as a “cash deal”. Will the price change if I finance instead? | So there are a few angles to this. The previous answers are correct in saying that cash is different than financing and, therefore, the dealer can rescind the offer. As for financing, the bank or finance company can give the dealership a "kickback" or charge a "fee" based on the customer's credit score. So everyone saying that the dealers want you to finance....well yes, so long as you have good credit. The dealership will make the most money off of someone with good credit. The bank charges a fee to the dealership for the loan to a customer with bad credit. Use that tactic with good credit...no problem. Use that tactic with bad credit.....problem. |
Why are historical prices of stocks different on different websites? Which one should I believe? | On Monday, the 27th of June 2011, the XIV ETF underwent a 10:1 share split. The Yahoo Finance data correctly shows the historic price data adjusted for this split. The Google Finance data does not make the adjustment to the historical data, so it looks like the prices on Google Finance prior to 27 June 2011 are being quoted at 10 times what they should be. Coincidentally, the underlying VIX index saw a sudden surge on the Friday (24 June) and continued on the Monday (27 June), the date that the split took effect. This would have magnified the bearish moves seen in the historic price data on the XIV ETF. Here is a link to an article detailing the confusion this particular share split caused amongst investors. It appears that Google Finance was not the only one to bugger it up. Some brokers failed to adjust their data causing a lots of confusion amongst clients with XIV holdings at the time. This is a recurring problem on Google Finance, where the historic price data often (though not always) fails to account for share splits. |
Is it ever a good idea to close credit cards? | Credit scoring has changed recently and the answer to this question will have slightly changed. While most points made here are true: But now (as of July 2017) it is possible having a large available credit balance can negatively effect your credit score directly: ... VantageScore will now mark a borrower negatively for having excessively large credit card limits, on the theory that the person could run up a high credit card debt quickly. Those who have prime credit scores may be hurt the most, since they are most likely to have multiple cards open. But those who like to play the credit card rewards program points game could be affected as well. source |
Why is retirement planning so commonly recommended? | You don't have to retire. But the US government and other national governments have programs that allow you to set aside money when you are young to be used when you are older. To encourage you to do this, they reduce your taxes either now or when your are older. They also allow your employer to match your funds. In the US they have IRAs, 401Ks, and Social Security. You are not required to stop working while tapping into these funds. Having a job and using these funds will impact your taxes, but your are not forbidden from doing both. Decades ago most retirement funds come from pensions and Social Security. Most people are going to reach their senior years without a pension, or with only a very small pension because they had one in one of their early jobs. So go ahead, gamble that you will not need to save for retirement. Then hope that decades later you were right about it, because you can't go back in time and fix your choice. Some never save for retirement, either because they can't or they think they can't. Many that don't save end up working longer than they imagined. Some work everyday until they die, or are physically unable to work. Sometimes it is because they love the job, but often it is because they cannot afford to quit. |
Is there a dollar amount that, when adding Massachusetts Sales Tax, precisely equals $200? | Yes, it's a simple calculation. (x+0.0625x)=200 or x=200/1.0625 = $188.24 Technically $188.24 plus tax comes to $200.01. I would just eat the extra $0.01. |
What does negative Total Equity means in McDonald's balance sheet? | what does negative Total Equity means in McDonald's balance sheet? It means that their liabilities exceed their total assets. Usually is means that a company has accumulated losses over time, but that's just one explanation. But, isn't McDonald a very healthy company, and never lost money? Just because a company has "always" money does not mean it's a healthy company. It may have borrowed a lot of money in order to operate, and now the growth is not able to keep up with the debt load. In McDonald's case, the major driver in the equity change is the fact that they have bought back over $20 Billion in stock over the past few years, which reduces assets and equity. If they had instead paid off debt, their equity would not be negative, but their debt may be so cheap (in terms of interest rate) that it made more financial sense to buy back stock instead of paying off debt. There are too many variables to assess that in this forum. |
Stock portfolio value & profit in foreign currency | I think this will do the trick: |
Do people tend to spend less when using cash than credit cards? | One study found that, while people using gift certificates bought no more items than those who used cash, they tended to spend more per item. In "Study 3" the paper "Monopoly money: The effect of payment coupling and form on spending behavior", sets up a case where shoppers are given $50 in cash and $50 in gift certificates (the leftover of which can be exchanged for cash). They were asked to choose different brands and types of items to buy. They study found that There was no difference in the number of items purchased as a function of payment form for scrip However means across all product categories show that participants spent more per item when they were given [the gift certificate] |
Are there Cashflow Positive Investment Properties in the USA? | Americans are snapping, like crazy. And not only Americans, I know a lot of people from out of country are snapping as well, similarly to your Australian friend. The market is crazy hot. I'm not familiar with Cleveland, but I am familiar with Phoenix - the prices are up at least 20-30% from what they were a couple of years ago, and the trend is not changing. However, these are not something "everyone" can buy. It is very hard to get these properties financed. I found it impossible (as mentioned, I bought in Phoenix). That means you have to pay cash. Not everyone has tens or hundreds of thousands of dollars in cash available for a real estate investment. For many Americans, 30-60K needed to buy a property in these markets is an amount they cannot afford to invest, even if they have it at hand. Also, keep in mind that investing in rental property requires being able to support it - pay taxes and expenses even if it is not rented, pay to property managers, utility bills, gardeners and plumbers, insurance and property taxes - all these can amount to quite a lot. So its not just the initial investment. Many times "advertised" rents are not the actual rents paid. If he indeed has it rented at $900 - then its good. But if he was told "hey, buy it and you'll be able to rent it out at $900" - wouldn't count on that. I know many foreigners who fell in these traps. Do your market research and see what the costs are at these neighborhoods. Keep in mind, that these are distressed neighborhoods, with a lot of foreclosed houses and a lot of unemployment. It is likely that there are houses empty as people are moving out being out of job. It may be tough to find a renter, and the renters you find may not be able to pay the rent. But all that said - yes, those who can - are snapping. |
Is there a way I can get bid/ask price data on the NSE in real time? | Buy Data products from NSE. You will get historical order book. The Live order book may not be available. https://www.nseindia.com/supra_global/content/dotex/data_products.htm This link has all the data products that NSE can provide |
US citizen married to non-resident alien; how do I file taxes? | Congrats on the upcoming wedding! Here is the official answer to this question, from the IRS. They note that you can choose to treat your spouse as a US resident for tax purposes and file jointly if you want to, by attaching a certain declaration to your tax return. Though I'm not a tax expert, if your partner has significant income it seems like this might increase your taxes due. You can also apply for an SSN (used for tax filings, joint or separate return) at a social security office or US consulate, by form SS-5, or file form W-7 with the IRS to get a Taxpayer Identification Number which is just as useful for this purpose. Without that, you can write "Non Resident Alien" (or "NRA") in the box for your partner's SSN, and mail in a paper return like that. See IRS Publication 17 page 22 (discussions on TurboTax here, here, etc.). |
I have $12k in a Chase checking account, but want to start earning interest/saving/investing/etc to make more money. What should I do? | Alright so you have $12,000 and you want to know what to do with it. The main thing here is, you're new to investments. I suggest you don't do anything quick and start learning about the different kinds of investment options that can be available to you with returns you might appreciate. The most important questions to ask yourself is what are your life goals? What kind of financial freedom do you want, and how important is this $12,000 dollars to you in achieving your life goals. My best advice to you and to anyone else who is looking for a place to put their money in big or small amounts when they have earned this money not from an investment but hard work is to find a talented and professional financial advisor. You need to be educated on the options you have, and keep them in lines of what risks you are willing to take and how important that principal investment is to you. Investing your money is not easy at all, and novices tend to lose their money a lot. The same way you would ask a lawyer for law advice, its best to consult a financial planner for advice, or so they can invest that money for you. |
I need a car for 2 years. Buy or lease (or something else)? | Have you considered getting a bike? you would be able to ride it in Europe the same as over here because of no left right bias, also cost wise they are much much cheaper to run. |
The Intelligent Investor: Northern Pacific Railway example | Without reading the source, from your description it seems that the author believes that this particular company was undervalued in the marketplace. It seems that investors were blinded by a small dividend, without considering the actual value of the company they were owners of. Remember that a shareholder has the right to their proportion of the company's net value, and that amount will be distributed both (a) in the form of dividends and (b) on liquidation of the company. Theoretically, EPS is an indication of how much value an investor's single share has increased by in the year [of course this is not accurate, because accounting income does not directly correlate with company value increase, but it is a good indicator]. This means in this example that each share had a return of $10, of which the investors only received $1. The remainder sat in the company for further investment. Considering that liquidation may never happen, particularly within the time-frame that a particular investor wants to hold a share, some investors may undervalue share return that does not come in the form of a dividend. This may or may not be legitimate, because if the company reinvests its profits in poorer performing projects, the investors would have been better off getting the dividend immediately. However some value does need to be given to the non-dividend ownership of the company. It seems the author believes that investors failing to consider value of the non-dividend part of the corporation's shares in question led to an undervaluation of the company's shares in the market. |
Specifically when do options expire? | Here is the answer from my brokerage: Regular equity monthly options expire on the 3rd Friday of every month. The last time to trade them is by market close at 4 PM Eastern time. The weekly options will expire on the Friday of that week, also with a last trading time of 4 PM Eastern time. Options that expire in the money by .01 or more are automatically exercised. If you are long an option that is out of the money at expiration, it will expire worthless. If you are short an option, even if it expires out of the money, you are still at risk for possible assignment since the long option holder always has the right to exercise an option prior to expiration.* |
Stock Option Value correlated to net worth of company | I'm guessing you're talking about options given to employees. The company can issue stock options at whatever strike price it wants. The difference between the strike price and the actual market value is considered income to the employee. You can get the options at $0 strike just as well (although companies generally just give RSUs instead in this case). |
Additional credit card with different limit on same account? | You can look into getting a business credit card. When I had my Chase business credit card, I could add authorized users to the main account and set a spending limit on each card. |
Does an issue of bonus shares improve shareholder value? | It sounds like "bonus shares" are the same as a stock dividend. Stock dividends are equivalent to a stock split except for accounting treatment (good explanation here: http://www.accountingcoach.com/online-accounting-course/17Xpg05.html). As an investor, the only likely effect of a stock dividend is to make it more complex to keep track of cost basis and do your taxes. There's no economic effect, it's just rearranging accounting numbers. |
How do margins on tracker mortgages (variable rate mortages) vary over time? | how do these margins vary over time Depends on a lot of factors. The bank's financial health, bank's ongoing business activities, profits generated from it's other businesses. If it is new to mortgages, it mightn't take a bigger margin to grow its business. If it is in the business for long, it might not be ready to tweak it down. If the housing market is down, they might lower their margin's to make lending attractive. If their competitors are lowering their margins, the bank in question might also. Do they rise when the base rate rises, or fall, or are they uncorrelated? When rates rise(money is being sucked out to curb spending), large amount of spending decreases. So you can imagine margins will need to decrease to keep the mortgage lending at previous levels. Would economic growth drive them up or down? Economic growth might make them go up. Like in case 1, base rates are low -> people are spending(chances are inflation will be high) -> margins will be higher(but real value of money will be dependent on inflation) Is there any kind of empirical or theoretical basis to guess at their movement? Get a basic text book on macroeconomics, the rates and inflation portion will be there. How the rates influence the money supply and all. It will much more sense. But the answer will encompass a mixture of all conditions and not a single one in isolation. So there isn't a definitive answer. This might give you an idea of how it works. It is for variable mortgage but should be more or less near to what you desire. |
Can I use stop limit orders on vanguard orders to prevent loss? | You've laid out a strategy for deciding that the top of the market has passed and then realizing some gains before the market drops too far. Regardless of whether this strategy is good at accomplishing its goal, it cannot by itself maximize your long-term profits unless you have a similar strategy for deciding that the bottom of the market has passed. Even if you sell at the perfect time at the top of the market, you can still lose lots of money by buying at the wrong time at the bottom. People have been trying to time the market like this for centuries, and on average it doesn't work out all that much better than just plopping some money into the market each week and letting it sit there for 40 years. So the real question is: what is your investment time horizon? If you need your money a year from now, well then you shouldn't be in the stock market in the first place. But if you have to have it in the market, then your plan sounds like a good one to protect yourself from losses. If you don't need your money until 20 years from now, though, then every time you get in and out of the market you're risking sacrificing all your previous "smart" gains with one mistimed trade. Sure, just leaving your money in the market can be psychologically taxing (cf. 2008-2009), but I guarantee that (a) you'll eventually make it all back (cf. 2010-2014) and (b) you won't "miss the top" or "miss the bottom", since you're not doing any trading. |
What are the economic benefits of owning a home in the United States? | It is almost a sure thing that the housing market will crash again hugely.For this reason I prefer to own several houses that way when it does no one can ask for their money back and leave me homeless. Current economics suggest a fall of between 40-60% from 2011 prices meaning that if you have bought a house in the last 12 years you can wave bye bye to any and all equity, and this will happen very soon. I recommend saving your money and buying a house outright (like I did 3 times) from someone who has spent 12 years or so paying a mortgage. |
How can I deposit a check made out to my business into my personal account? | I have checked with Bank of America, and they say the ONLY way to cash (or deposit, or otherwise get access to the funds represented by a check made out to my business) is to open a business account. They tell me this is a Federal regulation, and every bank will say the same thing. To do this, I need a state-issued "dba" certificate (from the county clerk's office) as well as an Employer ID Number (EIN) issued by the IRS. AND their CHEAPEST business banking account costs $15 / month. I think I can go to the bank that the check is drawn upon, and they will cash it, assuming I have documentation showing that I am the sole proprietor. But I'm not sure.... What a racket!! |
What will my taxes be as self employed? | The amount of the income taxes you will owe depends upon how much income you have, after valid business expenses, also it will depend upon your filing status as well as the ownership form of your business and what state you live in. That said, you will need to be sure to make the Federal 1040ES quarterly prepayments of your tax on time or there will be penalties. You also must remember that you will be needing to file a schedule SE with your 1040. That is for the social security taxes you owe, which is in addition to your income taxes. With an employer/employee situation, the FICA withhoding you have seen on your paycheck are matched by the same payment by your employer. Now that you are self-employed you are responcible for your share and the employer share as well; in this situation it is known as self-employment tax. the amount of it will be the same as your share of FICA and half of the employer's share of FICA taxes. If you are married and your wife also is working self-employed, then she will have to files herown schedule SE along with yours. meaning that you will pay based on your business income and she will pay baed on hers. your 1040Es quarterly prepayment must cover your income tax and your combined (yours and hers) Self Employment taxes. Many people will debate on the final results of the results of schedule SE vrs an employee's and an employer's payments combined. If one were to provides a ball park percentage that would likely apply to you final total addition to your tax libility as a result of needing schedule SE would tend to fluctuate depending upon your total tax situation; many would debate it. It has been this way since, I first studied and use this schedule decades ago. For this reason it is best for you to review these PDF documents, Form 1040 Schedule SE Instructions and Form 1040 Schedule SE. As for your state income taxes, it will depend on the laws of the state you are based in. |
DJIA components multipliers | You can create something like that by: You'll have to determine the PE ratio manually from the financial statements. To get the PE ratio for each company, you can try the Edgar database, though I doubt it goes as far back as 1950. This blog has a graph of the DJIA PE ratio from 1929 - 2009. |
Are there alternatives to double currency account to manage payments in different currencies? | Yes, there is indeed a great alternative for all European residents: getting a Revolut account. Revolut is a fully-online bank who's main benefits include the lack of fees (with some limits) and a great exchange rate for all currency operations (better than what you would get at any brick and mortar bank in Europe). In your particular scenario it would work as following: This is what I personally use to handle a salary in EUR while living in Czech Republic. Things might change in the future once they run out of investor money, but for now it's the only solution I know for converting currencies without a loss. |
Using Fibonacci Extensions to set profit targets? | fibonacci levels (retracements,expansions, arcs) are all arbitrary numbers with no statistical significance. that said thousands of traders world over use, view and depend on fib numbers in their trading ranging from forex, stock commodities etc the point is if it's traded a fibonacci number has been used on it, because of this unanimity on their significance & application the fibonacci's thus act as valid anchors since so many traders are looking at the same levels (self-fulfilling prophecy). the values of the fib numbers are all equally significant i.e the 23.6. 38.2, 50, or 61.8 are statistically all equally likely to occur. you just have to be vigilant as your trade approaches the fib levels. |
How to share income after marriage and kids? | What equal percentage of both you and your girlfriend's income will cover the essential household expenses? Although we earned different amounts, both of us turned over half our income over to the household. Between us this percentage slice from each of our earnings neatly covered all the essentials. The amounts contributed were different, but the contributions where nonetheless equal. Beyond this the financial relationship was fast and loose. |
Learning investing and the stock market | It is great that you want to learn more about the Stock Market. I'm curious about the quantitative side of analyzing stocks and other financial instruments. Does anyone have a recommendation where should I start? Which books should I read, or which courses or videos should I watch? Do I need some basic prerequisites such as statistics or macro and microeconomics? Or should I be advanced in those areas? Although I do not have any books or videos to suggest to you at the moment, I will do some more research and edit this answer. In order to understand the quantitative side of analyzing the stock market to have people take you serious enough and trust you with their money for investments, you need to have strong math and analytical skills. You should consider getting a higher level of education in several of the following: Mathematics, Economics, Finance, Statistics, and Computer Science. In mathematics, you should at least understand the following concepts: In finance, you should at least understand the following concepts: In Computer Science, you should probably know the following: So to answer your question, about "do you need to be advanced in those areas", I strongly suggest you do. I've read that books on that topics are such as The Intelligent Investor and Reminiscences of A Stock Operator. Are these books really about the analytics of investing, or are they only about the philosophy of investing? I haven't read the Reminiscences of A Stock Operator, but the Intelligent Investor is based on a philosophy of investing that you should only consider but not depend on when you make investments. |
Setting up general ledger/tax reporting for a Real Estate Rental LLC in GnuCash | No, GnuCash doesn't specifically provide a partner cash basis report/function. However, GnuCash reports are fairly easy to write. If the data was readily available in your accounts it shouldn't be too hard to create a cash basis report. The account setup is so flexible, you might actually be able to create accounts for each partner, and, using standard dual-entry accounting, always debit and credit these accounts so the actual cash basis of each partner is shown and updated with every transaction. I used GnuCash for many years to manage my personal finances and those of my business (sole proprietorship). It really shines for data integrity (I never lost data), customer management (decent UI for managing multiple clients and business partners) and customer invoice generation (they look pretty). I found the user interface ugly and cumbersome. GnuCash doesn't integrate cleanly with banks in the US. It's possible to import data, but the process is very clunky and error-prone. Apparently you can make bank transactions right from GnuCash if you live in Europe. Another very important limitation of GnuCash to be aware of: only one user at a time. Period. If this is important to you, don't use GnuCash. To really use GnuCash effectively, you probably have to be an actual accountant. I studied dual-entry accounting a bit while using GnuCash. Dual-entry accounting in GnuCash is a pain in the butt. Accurately recording certain types of transactions (like stock buys/sells) requires fiddling with complicated split transactions. I agree with Mariette: hire a pro. |
Market index analysis and techniques | Volume and prices are affected together by how folks feel about the stock; there is no direct relationship between them. There are no simple analysis techniques that work. Some would argue strongly that there are few complex analysis techniques that work either, and that for anyone but full-time professionals. And there isn't clear evidence that the full-time professionals do sufficiently better than index funds to justify their fees. For most folks, the best bet is to diversify, using low-overhead index funds, and simply ride with the market rather than trying to beat it. |
What happens after a counterparty defaults on a derivative trade? | The answer is in your question: derivatives are contracts so are enforced in the same way as any other contract. If the counterparty refuses to pay immediately they will, in the first instance be billed by any intermediary (Prime Broker etc.) that facilitated the contract. If they still refuse to pay the contract may stipulate that a broker can "net off" any outstanding payments against it or pay out using deposited cash or posted margins. The contract will usually include the broker as an interested party and so they can, but don't need to, report a default (such that this is) to credit agencies (in some jurisdictions they are required to by law). Any parties to the trade and the courts may use a debt collection agency to collect payments or seize assets to cover payment. If there is no broker or the counterparty still has not paid the bill then the parties involved (the party to the trade and any intermediaries) can sue for breach of contract. If they win (which would be expected) the counterparty will be made to pay by the legal system including, but not limited to, seizure of assets, enforced bankruptcy, and prison terms for any contempts of court rulings. All of this holds for governments who refuse to pay derivatives losses (as Argentina did in the early 20th century) but in that case it may escalate as far as war. It has never done so for derivatives contracts as far as I know but other breaches of contract between countries have resulted in armed conflict. As well as the "hard" results of failing to pay there are soft implications including a guaranteed fall in credit ratings that will result in parties refusing to do business with the counterparty and a separate loss of reputation that will reduce business even further. Potential employees and funders will be unwilling to become involved with such a party and suppliers will be unwilling to supply on credit. The end result in almost every way would be bankruptcy and prison sentences for the party or their senior employees. Most jurisdictions allow for board members at companies in material breach of contract to be banned from running any company for a set period as well. edit: netting off cash flows netting off is a process whereby all of a party's cash flows, positive and negative, are used to pay each other off so that only the net change is reflected in account balances, for example: company 1 cash flows netting off the total outgoings are 3M + 500k = 3.5M and total incomings are 1.2M + 1.1M + 1.2M = 3.5M so the incoming cash flows can be used to pay the outgoing cash flows leaving a net payment into company1's account of 0. |
How to invest in stocks without using an intermediary like a broker? Can shares be bought direct? | In theory you can buy shares directly from someone else who owns them. In practise, if the stock is listed on an exchange, they are unlikely to own them directly, they are likely to own them through an intermediary. You will have to pay fees to that intermediary to transfer the shares to your name. There are thousands of small companies owned by the guy who started it and a few other investors. You can buy stock in that kind of company directly from the existing owners, as long as they are willing to sell you some. It's a super-high risk investment strategy, though. This is the kind of deal that happens on Dragons Den. |
Malaysian real estate: How to know if the market is overheated or in a bubble? | I think the only sure way to know if there is a bubble is to wait till it bursts and buy then. If it would be easy to tell there wouldn't be any bubbles. |
It's possible to short a stock without paying interest? | As others have said: unless you can find someone willing to make a zero-interest loan, the answer is no. If you can figure out how to turn a "0% for first N months" credit card offer onto a leveraged investment or something of that sort -- seems unlikely -- maybe. |
Is there any way to pay online in a country with no international banking system | According to Paypal, they support transactions in Ethiopia: https://www.paypal.com/webapps/mpp/country-worldwide https://developer.paypal.com/docs/classic/api/country_codes/ However those appear to be limited to transferring money out of the country. (link) There is an article here (link) which talks about how to transfer money from paypal back to your bank in Ethiopia. It sounds like you have to set up a US bank account, withdraw the funds to that then somehow transfer the money from their to your bank. NOTE: I have no relationship to any of the sites above, nor do I know if the information is accurate or the trustworthiness of those businesses. |
Which Earnings Figure for Graham's “Stock Selection for the Defensive Investor”? | In the Income Statement that you've linked to, look for the line labeled "Net Income". That's followed by a line labeled "Preferred Dividends", which is followed by "Income Available to Common Excl. Extra Items" and "Income Available to Common Incl. Extra Items". Those last two are the ones to look at. The key is that these lines reflect income minus dividends paid to preferred stockholders (of which there are none here), and that's income that's available to ordinary shareholders, i.e., "earnings for the common stock". |
Trading US stocks from India | You can easily go to somebody like icici ask for the demat section and enable overseas stock trading. |
Expecting to move in five years; how to lock mortgage rates? | Outside of broadly hedging interest rate risk as I mentioned in my other answer, there may be a way that you could do what you are asking more directly: You may be able to commit to purchasing a house/condo in a pre-construction phase, where your bank may be willing to lock in a mortgage for you at today's rates. The mortgage wouldn't actually be required until you take ownership from the builder, but the rates would be set in advance. Some caveats for this approach: (1) You would need to know the house/condo you want to move into in advance, and you would be committing to that move today. (2) The bank may not be willing to commit to rates that far in advance. (3) Construction would likely take far less than 5 years, unless you are buying a condo (which is the reason I mention condos specifically). (4) You are also committing to the price you are paying for your property. This hedges you somewhat against price fluctuation in your future area, but because you currently own property, you are already somewhat hedged against property price fluctuation, meaning this is taking on additional risk. The 'savings' associated with this plan as they relate to your original question (which are really just hedging against interest rate fluctuations) are far outweighed by the external pros and cons associated with buying property in advance like this. By that I mean - if it was something else you were already considering, this might be a (small) tick in the "Pro" column, but otherwise is far too committal / complex to be considered for interest rate hedging on its own. |
Why are stop order called “stop” when it is in fact a “start” condition? | Historically they were conceived as a way to cut losses when the market turned against you. You would tell your broker something like "buy me 100 shares of Anaconda and stop me if it goes below $110" You can read references to this in old books like Reminiscences of a Stock Operator, the ABC of Options pricing, or the Day Trader's Bible. |
Filing a corporation tax return online? | When in doubt, you should always seek the advice of a professional tax preparer or your accountant. (Many agents/accountants will gladly review your tax preparations to ensure you haven't missed something. That's quicker and cheaper than paying them to do it all.) Having said that... This Illinois resource has detailed information about S-corps: Of relevance to your situation: |
How can you possibly lose on investments in stocks? | Easiest thing ever. In fact, 99% of people are loosing money. If you perform worse then 10% annually in cash (average over 5-10 years), then you better never even think about trading/investing. Most people are sitting at 0%..-5% annually. They win some, loose some, and are being outrun by inflation and commissions. In fact, fall of market is not a big deal, stock indexes are often jump back in a few months. If you rebalance properly, it is mitigated. Your much bigger enemy is inflation. If you think inflation is small, look at gold price over past 20 years. Some people, Winners at first, grow to +10%, get too relaxed and start to grow already lost position. That one loose trade eats 10% of their portfolio. Only there that people realize they should cut it off, when they already lost their profits. And they start again with +0%. This is hard thing to accept, but most of people are not made for that type of business. Even worse, they think "if I had bigger budget, I would perform better", which is kind of self-lie. |
(Arizona) Bought a car with financing, do I take it to DMV/DOT? | Based on your description of what you were given, then you should not need to contact DMV/DOT However if you are not comfortable with that answer then contact/visit the dealer, you can ask them how long it normally takes, and do you pick up the real plates at the dealer, DMV, or will they be mailed to you. Also call them if the temporary plates will run out in a few days, to make sure everything is good to go. One other note. If the dealer is in one state, and you live in another they can give you temporary plate for their state but may not be able to file for the real plates in your state. Once everything is finalized go online to DMV and make sure that the car registration is OK. A few years ago the dealer gave me real plates, they gave me a registration good for two years. But the info sent to DMV was corrupted: the VIN was in the system, but the description was wrong and the plates were listed as none. This was only noticed when I tried to re-register the car two years later. In fact according to DMV the plates on the car were listed as never issued. If I had ever been pulled over it would have taken hours to resolve. |
What percent of my salary should I save? | Its been years since I lived there, but I found Seattle to be pretty expensive. Housing costs seem out of line with expected salaries. Coming from Puerto Rico you might be shocked how expensive it is to live there, and also how infrequently you see the sun. Your question is highly subjective. One person would need 100K to cover those things you are talking about, while others would need less then 30K. Also where you live in the Seattle area makes a difference. Will you be in Redmond or Bothell? Housing costs vary considerably. One nice thing about that part of the country is can be very inexpensive to vacation. A fishing license, a packed lunch, and a bit of gas is all that is necessary to really enjoy that part of the country. Back in the day I used to ski Steven's Pass during the week, and the lift tickets were a 1/3 of the weekend rate. Having hiking/camping gear and or a bicycle is also a good way to enjoy life. Bottom line I would make a budget, and go from there. If you intend on retiring in PR, then you would need a lot less then if you choose to remain in Seattle so even that is subjective. Perfect Example, Marysville, which is way out of town so a commute would be a problem. However, unlike many parts south of Seattle, it is safe and nice. ~200K for a 1200 sq ft home. Holy cow. Here in Orlando, figure about 130K for the same home with less of a commute. And you will see the sun more than 5 days per year. |
Did basically all mutual funds have a significant crash in 2008? | I will solely address your fear because from what I read you fear investing in something that could possibly go down in the future. This is almost identical to market timing, so let's use the SPY as an example. Look at the SPY on Yahoo Finance, specifically in 2011. The market experienced a little bit of a pull back during the year, and some "analysts" claimed that it would fall below 600 (read this). In fact, a co-worker of mine said that he feared buying the S&P 500 in 2011 (as well as in 2010), so he bought gold (compare the two from 2011 to now - to put it bluntly he experienced 50% less gain than I did). Did the S&P 500 ever fall below 600 in that timeframe, or according to the linked analyst (there were plenty of similar predictions then)? No. If you avoid doing something because you're afraid it could drop, technically, you should be just as afraid of it rising (Fear of Losing Everything, FOLE, vs. Fear of Missing Out, FOMO - both are real). That's not to say invest out of fear, but that fear cuts both ways, and generally, we only look at it from one side. Retirement investing should be a boring, automated process where, ideally, we don't try and time the market (though some will try, and like in 2011, fail). If you can't help your fear, you can always approach retirement investing with automated re-balancing where you hold some money in "less risky" forms and others in "higher risk" forms and automate a rebalance every month or quarter. |
If our economy crashes, and cash is worthless, should i buy gold or silver | Neither. Food, fuel, and tools. Books on how to make and use basic tools -- the books published for farmers who want to kluge their own solutions might be helpful. Heck, help defend a library; it will be beyond price as soon as things settle out a bit. Having skills like blacksmithing and knowing how to teach could go a long way. SF really has explored this in better detail than we could possibly cover here. |
company market capitalization to total (annual) stock market capitalization | This depends. Quite a few stock exchanges / country report total capitalisation in terms of free float. I.E total shares that can be traded, ignoring the promoters shares. The market cap reported by company takes all shares. |
Should I use an NRE or NRO account to transfer money from India to the US? Any reports needed? | Deposits into NRE account can only be done from funds outside India. So your brother cannot deposit into your NRE account. He can deposit in NRO account or directly wire transfer the funds. Both these require some paper work depending on the amount. |
I'm only spending roughly half of what I earn; should I spend more? | Heck no, don't spend more! I saved a ton of money when I got my first real job. You won't always be able to do this. Save a bundle while you can. |
Should I lease, buy new, or buy used? | Welcome to Personal Finance and Money. This answer will depend a lot on what is most important to the buyer, for example, whether it is important to always be in a newer car, to save money, or strike a balance between the two. There are trade-offs and I don't think there is one right answer for all circumstances. Leasing Leasing does make financial sense for at least two types of people I'm aware of: The company I work for provides company cars to sales executives, which we lease. We lease because it wouldn't be appropriate for a salesperson to meet a client in a car that clearly appears used. Similarly, I know people who value being in a newer car all the time, and for them, leasing makes more financial sense then buying a new car every 2-3 years, and selling their old car which is now 2-3 years old and has depreciated significantly. They understand that they are paying more to always be able to be in a newer car. I used to work with a manager who, every time the new model of the car he owned came out, would see the car and buy it on the spot, even though he already owned last year's model, and he didn't need two cars. He just couldn't help himself; he felt he had to have the new model. It's no use sermonizing about how he "should" learn to save money by just being content with what he had. In reality, if he is going to buy the new model every year no matter what, he should lease rather than buy. From my experience, I would only recommend leasing if you would otherwise be buying a new car on a regular basis, and the lease would be less expensive. This is probably the most cost effective way to maintain the highest possible quality, but would cost much more than buying and holding a new car or buying a value used car. I don't see reliability as much of a factor here since the seller will have a very good idea of how much maintenance will cost, but you will pay a premium to be able to pay a fixed cost for maintenance instead of risking a worse-than-average experience. Buying New According to Edmunds and BIGResearch, only a relatively small number of people are ever in the market for a new car at a given point in time. While you do pay quite a bit more to own a brand new car instead of the same car that is 2-3 years old, there are several reasons I'm aware of why people buy new cars: Number 4 is probably the biggest reason, and many people are willing to pay for the certainty of knowing that the miles are correct, the parts are new, the car is in good working condition, etc. Additionally, some makes of cars have much higher resale values than others (such as Hondas), meaning that there isn't as large of a drop in price between a new car and a used car. Many people consider buying a new car the best way to ensure they get the best reliability since they know the initial condition of the car and can care for it meticulously from that point on. This can especially make sense when the buyer intends to keep the car for the like of the car as the buyer will then benefit from having no car payments once it is paid off. Buying Used Buying a used car is the most affordable option, but for a given quality of car the reliability can be a significant potential pitfall. It can be very difficult for a non-professional to tell whether they are getting a good value. Additionally, it is hard for an owner who wants to sell a used car in excellent condition to get the true value of the car, and much easier for an unscrupulous seller to to get the market price by selling to an unaware buyer (the "lemons" problem in economics). You could buy an inspected car with a limited warranty from a retail seller like CarMax or a dealership, but you often pay a significant premium that cancels out much of the biggest reason to buy used - saving money. However, there is an opportunity to save money when buying used if you're willing to compromise on the condition of the car (if you don't care whether a car has hail damage, for example), or if you are able to wait until you find a motivated/distressed seller who needs to sell quickly and is willing to sell at a discount. If cost is your primary priority, buying a used car is likely the best option, but I would recommend the following in all circumstances: If the seller isn't willing to offer both of these, I would walk away. When buying used, you will also need to consider maintenance, which will vary significantly based on the make and model of the car as well as the condition, which is another risk you need to be willing to take on if you choose to buy used. |
If a company has already IPO'ed and sold its shares, what is the incentive to keep making money? | A company doesn't offer up 100% of its shares to the market. There's a float amount of varying significance, maybe 30% of the shares are put up for public offer. Generally some amount of current shareholders will pledge some or all of their shares for offer to the public. This may be how the venture capital, private equity or other current investors cash out their initial investment. The company may issue new shares in order to raise money for some initiative. It may be a combination of existing shares and new. Additionally, a company may hold some "treasury shares" on its balance sheet. In this instance fluctuations in the share price directly affect the health of the balance sheet. As far as incentive goes, stock options to management and C-Suite employees keep everyone interested in an increasing stock price. |
Investment strategy for a 20 year old with about 30k in bank account | Thank you for your service. My first suggestion since your car is a planned for the near future is keep that amount in savings and just pay cash. There are plenty of attractive offers to entice you to finance your vehicle but there really is no compelling reason to do it considering the savings you have. Second I would keep an additional portion of savings as a rainy day emergency fund. How much is based mostly on what you feel comfortable with. The number of possible emergencies that can come up is limited and your expenses are limited which is normal given your age. This fund might be for something such as emergency travel for a sick family member, cover a deductible for an auto accident, whatever unforseen event might occur (hence the name emergency fund). What investments you are comfortable with will be determined by risk tolerance. While in the military individual stocks that are aggressive risky investments may not be a good idea because of the extra attention they require and you can't really babysit a portfolio while deployed but there are many good low or no cost mutual funds or ETFs that you could get into. I would look into setting up a recurring purchase with a set dollar amount monthly so you will continue to accumulate whatever option you are investing in regularly even if you are deployed. Which fund or ETF you pick will depend on your goals and risk tolerance but you could very easily pick several for diversity. Good luck and thank you again for your service. |
A good investment vehicle for saving for a mortgage down payment? | Assuming this'll be a taxable account and you're an above-average wage earner, the following seem to be biggest factors in your decision: tax-advantaged income w/o retirement account protection - so I'd pick a stock/stocks or fund that's designed to minimize earnings taxable at income and/or short-term gains rates (e.g. dividends) declining risk profile - make sure you periodically tweak your investment mix over the 2-3 year period to reduce your risk exposure. You want to be near savings account risk levels by the end of your timeline. But make sure you keep #1 in mind - so probably don't adjust (by selling) anything until you've hit the 1-year holding mark to get the long-term capital gains rates. In addition to tax-sensitive stock & bond funds at the major brokerages like Fidelity, I'd specifically look at tax-free municipal bond funds (targeted for your state of residence) since those generally pay better than savings on after tax basis for little increase in risk (assuming you stick w/ higher-rated municipalities). |
What should I do with my money? | My advice would be to invest that 50k in 25% batches across 4 different money markets. Batch 1: Lend using a peer-to-peer account - 12.5k The interest rates offered by banks aren't that appealing to investors anymore, at least in the UK. Peer to peer lending brokers such as ZOPA provide 5% to 6% annual returns if you're willing to hold on to your investment for a couple of years. Despite your pre-conceptions, these investments are relatively safe (although not guaranteed - I must stress this). Zopa state on their website that they haven't lost any money provided from their investors since the company's inception 10 years ago, and have a Safeguard trust that will be used to pay out investors if a large number of borrowers defaulted. I'm not sure if this service is available in Australia but aim for an interest rate of 5-6% with a trusted peer-to-peer lender that has a strong track record. Batch 2: The stock market - 12.5k An obvious choice. This is by far the most exciting way to grow your money. The next question arising from this will likely be "how do I pick stocks?". This 12.5k needs to be further divided into 5 or so different stocks. My strategy for picking stock at the current time will be to have 20% of your holdings in blue-chip companies with a strong track record of performance, and ideally, a dividend that is paid bi-anually/quarterly. Another type of stock that you should invest in should be companies that are relatively newly listed on the stock market, but have monopolistic qualities - that is - that they are the biggest, best, and only provider of their new and unique service. Examples of this would be Tesla, Worldpay, and Just-eat. Moreover, I'd advise another type of stock you should purchase be a 'sin stock' to hedge against bad economic times (if they arise). A sin stock is one associated with sin, i.e. cigarette manufacturers, alcohol suppliers, providers of gambling products. These often perform good while the economy is doing well, but even better when the economy experiences a 2007-2008, and 2001-dotcom type of meltdown. Finally, another category I'd advise would be large-cap energy provider companies such as Exxon Mobil, BP, Duke Energy - primarily because these are currently cheaper than they were a few months ago - and the demand for energy is likely to grow with the population (which is definitely growing rapidly). Batch 3: Funds - 12.5k Having some of your money in Funds is really a no-brainer. A managed fund is traditionally a collection of stocks that have been selected within a particular market. At this time, I'd advise at least 20% of the 12.5k in Emerging market funds (as the prices are ridiculously low having fallen about 60% - unless China/Brazil/India just self destruct or get nuked they will slowly grow again within the next 5 years - I imagine quite high returns can be had in this type of funds). The rest of your funds should be high dividend payers - but I'll let you do your own research. Batch 4: Property - 12.5k The property market is too good to not get into, but let's be honest you're not going to be able to buy a flat/house/apartment for 12.5k. The idea therefore would be to find a crowd-funding platform that allows you to own a part of a property (alongside other owners). The UK has platforms such as Property Partner that are great for this and I'm sure Australia also has some such platforms. Invest in the capital city in areas as close to the city's center as possible, as that's unlikely to change - barring some kind of economic collapse or an asteroid strike. I think the above methods of investing provide the following: 1) Diversified portfolio of investments 2) Hedging against difficult economic times should they occur And the only way you'll lose out with diversification such as this is if the whole economic system collapses or all-out nuclear war (although I think your investments will be the least of your worries in a nuclear war). Anyway, this is the method of investing I've chosen for myself and you can see my reasoning above. Feel free to ask me if you have any questions. |
Why are capital gains taxed at a lower rate than normal income? | I think this question is very nearly off-topic for this site, but I also believe that a basic understanding of the why the tax structure is what it is can help someone new to investing to understand their actual tax liability. The attempt at an answer I provide below is from a Canadian & US context, but should be similar to how this is viewed elsewhere in the world. First note that capital gains today are much more fluid in concept than even 100 years ago. When the personal income tax was first introduced [to pay for WWI], a capital gain was viewed as a very deliberate action; the permanent sale of property. Capital gains were not taxed at all initially [in Canada until 1971], under the view that income taxes would have been paid on income-earning assets all along [through interest, dividends, and rent], and therefore taxing capital gains would be a form of 'double-taxation'. This active, permanent sale was also viewed as an action that an investor would need to work for. Therefore it was seen as foolish to prevent investors from taking positive economic action [redistributing their capital in the most effective way], simply to avoid the tax. However today, because of favourable taxation on capital gains, many financial products attempt to package and sell capital gains to investors. For example, many Canadian mutual funds buy and sell investments to earn capital gains, and distribute those capital gains to the owners of the mutual fund. This is no longer an active action taken by the investor, it is simply a function of passive investing. The line between what is a dividend and what is a capital gain has been blurred by these and similar advanced financial products. To the casual investor, there is no practical difference between receiving dividends or capital gain distributions, except for the tax impact. The notional gain realized on the sale of property includes inflation. Consider a rental property bought in 1930 for $100,000, and sold in 1960 for $180,000, assuming inflation between 1930 and 1960 was 70%. In 1960 dollars, the property was effectively bought for 170k. This means the true gain after accounting for inflation is only $10k. But, the notional gain is $80k, meaning a tax on that capital gain would be almost entirely a tax on inflation. This is viewed by many as being unfair, as it does not actually represent true income. I will pause to note that any tax on any investment at all, taxes inflation; interest, for example, is taxed in full even though it can be almost entirely inflationary, depending on economic conditions. A tax on capital gains may restrict market liquidity. A key difference between capital gains and interest/rent/dividends, is that other forms of investment income are taxed annually. If you hold a bond, you get taxed on interest from that bond. You cannot gain value from a bond, deferring tax until the date it matures [at least in Canada, you are deemed to accrue bond interest annually, even if it is a 0 coupon bond]. However, what if interest rates have gone down, increasing the value of your bond, and you want to sell it to invest in a business? You may choose not to do this, to avoid tax on that capital gain. If it were taxed as much as regular income, you might be even more inclined to never sell any asset until you absolutely have to, thus restricting the flow of capital in the market. I will pause here again, to note that laws could be enacted to minimize capital gains tax, as long as the money is reinvested immediately, thus reducing this impact. Political inertia / lobbying from key interests has a significant impact on the tax structure for investments. The fact remains that the capital gains tax is most significantly an impact on those with accrued wealth. It would take significant public support to increase capital gain tax rates, for any political party to enact such laws. When you get right down to it, tax laws are complex, and hard to push in the public eye. The general public barely understands that their effective tax rate is far lower than their top marginal tax rate. Any tax increases at all are often viewed negatively, even by those who would never personally pay any of that tax due to lack of investment income. Therefore such changes are typically made quietly, and with some level of bi-partisan support. If you feel the capital gains tax rules are illogical, just add it to the pile of such tax laws that exist today. |
Is keeping old credit cards and opening new credit cards with high limits and never using an ideal way to boost credit scores? | Problems with your plan (in no particular order) there is a limit, once they have decided that you have enough credit they won't offer any more. If the economy changes (like it did in 2008) they can reduce the limit on existing accounts. If you don't use them, they may decide to close them. Using existing cards will encourage the bank to increase the limit on that card. opening cards can make some lenders nervous. Having a new card close to when you are applying for a mortgage or a car loan can make them less likely to lend you the max. You have to decide: Are you trying to buildup your credit limit? or your credit score? |
What is the buy-hold-sell indication based on? | To dig a little deeper, a number of analysts within (and without) Reuters are polled for their views on individual stocks and markets on buy-hold-sell. The individual analysts will be a varied bunch of fundamentalists, technical, quant and a mixture of the three plus more arcane methodologies. There may be various levels of rumors that aren't strong enough to be considered insider trading, but all of these will give an analyst an impression of the stock/market. Generally I think there isn't much value there, except from the point of view if you are a contrarian trader, then this will form a part of the input to your trading methodology. |
What is the best use of “spare” money? | Congratulations! You're making enough money to invest. There are two easy places to start: I recommend against savings accounts because they will quite safely lose your money: the inflation rate is usually higher than the interest rate on a savings account. You may have twice as much money after 50 years, but if everything costs four times as much, then you've lost buying power. If, in the course of learning about investing, you'd like to try buying individual stocks, do it only with money you wouldn't mind losing. Index funds will go down slightly if one of the companies in that index fails entirely, but the stock of a failed company is worthless. |
Exercising an option without paying for the underlying | Unless you want to own the actual shares, you should simply sell the call option.By doing so you actual collect the profits (including any remaining time-value) of your position without ever needing to own the actual shares. Please be aware that you do not need to wait until maturity of the call option to sell it. Also the longer you wait, more and more of the time value embedded in the option's price will disappear which means your "profit" will go down. |
Questioning my Realtor | even though they're only asking for 1/2 the money and have excellent credit that the mortgage company may not lend it to them if I'm over priced Yes. If the house's value, as determined by the appraisal, is less than the sale price, the bank will not finance the loan. Appraisals and the appraisal process have become much tighter since the Frannie and Freddie debacle. This fact is true regardless of amounts or credit history. Though this is happens somewhat rarely; typically if a seller and buyer agree to a price, this price is a reasonable value -- after all, that is nearly the definition of "market value". So, yes, it is true (and always true, for any financed purchase), but that shouldn't really affect your decision. If you try to sell for more than the appraisal, you will just lower the price to the appraised amount. |
If an option's price is 100% made up of its intrinsic value, is there a way to guarantee a non-loss while having a chance at a profit? | The strategy looks good on paper but in reality, the 150 call will have some time value particularly if it has got some time to mature. Let us say this time value is 0.50 , so the call costs 3.50. If the stock stays above 150 (actually above 149.50) , by the expiration of the call, you will lose this 0.50 . Then you need to keep buying calls over and over and hope one day a big down move will more than make up for all this lost premium. It is possible, but not entirely predictable. You may get lucky, but it may take many months to produce a significant move to make up for all the lost premium. If a big down move were to happen and the market had any indication of that in advance, that would be priced into the call already, so the 150 call may cost 4$ or 4.50$ if the market had wind of a big move. (a.k.a high implied volatility) |
What should I do with my paper financial documents? | Regarding your specific types: If you can't part with anything, sure, scan them. Also, there are lots of opportunities to sign up for eStatements with just about any financial provider. They want you to sign up for them, because it reduces their expenses. If you still like having paper around (I do admit that it's comforting in a way) then you can usually prune your paper a bit by statement (getting rid of T&C boilerplate, advertisements, etc.) or by consolidation (toss monthly when the quarterly consolidation statement arrives; toss the quarterly when the yearly arrives). |
Recent college grad. Down payment on a house or car? | I'd suggest buying a used car for cash, car loans are a bad idea. I bought my last car a few years ago for $8k off of craigslist, and it is still running great. Make sure you get a car checked out by a mechanic before buying (usually they'll drop it off at a mechanic you want to have take a look, or perhaps just go with you). My general rule is to not take out loans for anything which decreases in value. So a home mortgage would be fine, a car loan is not a great plan. Buy cash, and save for the next purchase. If you buy a decent used Corolla (or other small import car), you can get it for $8k, it will likely last a few years at least. That could end up costing you less than $200 per month total, or less. Much better deal in the long run. |
Friend was brainwashed by MLM-/ponzi investment scam. What can I do? | Even though this is really a psychology question, I'll try to give you an answer. You do nothing but stay away. What's going on is too small to matter. Bernie Madoff took investor's money and scammed them for $15B. That's B, billion, 9 zeros (Yes, I realize the UK Billion has 12, these are US Billion). Harry Markopolos was on to him, and presented his evidence to the government, but "No one would listen." In quotes because that's the title of the book he published on his experience. Even Barron's had an article suggesting that Madoff's returns were impossible. Eventually, it came to light. In my own experience, there was a mortgage acceleration product called "Money Merge Account." It claimed to help you pay off your mortgage in a fraction of the time "with no change to your budget." For two years or so, I was obsessed with exposing this scam, and wrote articles, nearly every week discussing every aspect of this product. Funny how even though mortgages are math that's pretty easy to explain, few sellers wanted to talk about the math. Using the same logic that you don't need to understand how a car works as long as you know how to drive. There were some people that would write to tell me I saved them the $3500 cost of that product, but mostly I argued with sellers who dismissed every word I wrote as if the math were incomprehensible to anyone but the software guys who wrote it. In the end, I had compiled a PDF with over 60 pages of my writing on the topic, and decided to call it quits. The product was recycled and now is sold as "Worth Unlimited," but the software is the same. This is all a tangent to your problem. It simply offers the fact that the big scam, Bernie, continued for a long time, and people who were otherwise intelligent, fell for his promises, and didn't want to believe otherwise. The mortgage software had many bloggers writing. Searching on the web found a lot of discussion, very easy to find. People will believe what they wish. Tell an Atheist that God exists, or a believer that He doesn't, and your words will fall on deaf ears. Unfortunately, this is no different. |
Wardrobe: To Update or Not? How-to without breaking the bank | We have a ton of student loan debt (mostly mine) and right now, I'm on a strict 'replace' only budget. I have some shirts I put elbow holes in that I'm only keeping around as a reminder to replace them. I wait until there is a deal of some sort (50% off or BOGO Free) unless I really need it - a white dress shirt for job interviews for instance. Outside of that, make it a line item in your budget and decide when you will spend it. For example, budget $60/mo for it, but only spend it when it reaches $180 or $300 or either of those amounts AND a sale (memorial day is the next big shopping sale after Easter). It is totally up to you. Waiting to replace two shirts (gray and green) and a pair of black dress pants. |
Is this legal: going long on call options and artificially increasing the price of the underlying asset seconds before expiration? | This can be done, you can be prosecuted for some forms of it, in any case there are more riskless ways of doing what you suggested. First, buying call options from market makers results in market makers buying shares at the same delta as the call option. (100 SHARES X DELTA = How many shares MM's bought). You can time this with the volume and depth of the shares market to get a bigger resulting move caused by your options purchase to get bigger quote changes in your option. So on expiration day you can be trade near at the money options back and forth between being out the money and in the money. You would exit the position into liquidity at a profit. The risk here is that you can be sitting on a big options position, where the commissions costs get really big, but you can spread this out amongst several options contracts. Second, you can again take advantage of market maker inefficiencies by getting your primary position (whether in the share market or options market) placed, and then your other position being a very large buy order a few levels below the best bid. Many market makers and algorithms will jump in front of your, they think they are being smart, but it will raise the best bid and likely make a few higher prints for the mark, raising the price of your call option. And eventually remove your large buy order. Again, you exit into liquidity. This is called spoofing. There have been some regulatory actions against people in doing this in the last few years. As for consequences, you need to put things into perspective. US capital market regulators have the most nuanced regulations and enforcement actions of worldwide capital market regulators, and even then they get criticized for being unable or unwilling to curb these practices. With that perspective American laws are basically a blueprint on what to do in 100 other country's stock exchanges, where the legislature has never gotten around to defining the same laws, the securities regulator is even more underfunded and toothless, and the markets more inefficient. Not advice, just reality. |
Deducting Hobby Expenses on my Federal Income Taxes? | I suggest to start charging slightly more than needed to cover expenses. All you need is to show profit. It doesn't have to be significant - a couple of hundred of dollars of consistent yearly profit should suffice to show a profitable business. Then you can deduct on Schedule C all the related expenses. The caveat is that the profit (after the deduction of the expenses will be a bit smaller) will be subject to not only income tax but also the self-employment tax. But at least you'll pay tax on profit that is not entirely phantom. I remember suggesting you getting a professional consultation on this matter a while ago. You should really do that - talk to a EA/CPA licensed in your state, it may be well worth the $100-200 fee they'll charge for the consultation (if at all...). |
I am not VAT registered. Do I need to buy from my supplier with excl VAT prices or incl VAT? | You only pay VAT if you buy from a VAT-registered company; if they are not registered, you don't pay. So, thinking about your supplier, if they are VAT-registered they will charge you VAT, if they are not they won't. The buyer's status makes no difference, the seller doesn't get involved in whether the buyer is able to reclaim or not (based on their VAT-registered status). |
Does Vanguard grant admiral shares only on a per-account basis? | Yes, each of Vanguard's mutual funds looks only at its own shares when deciding to upgrade/downgrade the shares to/from Admiral status. To the best of my knowledge, if you hold a fund in an IRA as well as a separate investment, the shares are not totaled in deciding whether or not the shares are accorded Admiral shares status; each account is considered separately. Also, for many funds, the minimum investment value is not $10K but is much larger (used to be $100K a long time ago, but recently the rules have been relaxed somewhat). |
Pay index fund expense ratios with cash instead of fund balance | In many cases the expenses are not pulled out on a specific day, so this wouldn't work. On the other hand some funds do charge an annual or quarterly fee if your investment in the fund is larger than the minimum but lower than a "small balance" value. Many funds will reduce or eliminate this fee if you signup for electronic forms or other electronic services. Some will also eliminate the fee if the total investment in all your funds is above a certain level. For retirement funds what you suggest could be made more complex because of annual limits. Though if you were below the limits you could decide to add the extra funds to cover those expenses as the end of the year approached. |
What's “wrong” with taking money from your own business? | It's wrong in several situations: One, the business owner counts this as a business expense, which it is not, and therefore reduces the company's profit and taxes. That would be tax avoidance and probably criminal. Two, someone who is not the sole owner counts this as a business expense, which it is not, reduces the company's profit and when profits are shared, the company pays out less money to the other owners. That's probably fraud. Third, if the owner or owners of a limited liability company draw out lots of money from the company with the intent that the company should go bankrupt with tons of debt that the owners are not going to pay, while keeping the money they siphoned off for themselves. That would probably bankruptcy fraud. Apart from being wrong, there is the obvious risk that you lose control over your company's and your own expenses, and might be in for a nasty surprise if the company has to pay out money and there's nothing left. That would be ordinary stupidity. If you have to tell your employees that you can't pay their salaries but offer them to admire your brand new Ferrari, that's something I'd consider deeply unethical. |
Excessive Credit Check from Comcast | In general, it is unusual for a credit check to occur when you are terminating a contract, since you are no longer requesting credit. If the credit check was a "hard pull" it will stay on your credit report for 2 years, but will only have an impact on your credit score for up to 12 months. If the check is a "soft pull" it has no impact on your credit score. Since you're past the 12 months boundary anyway, I wouldn't worry about it. That being said, please feel free to continue your investigation and report back if you can get Comcast to admit they performed the 2nd credit check. I'm sure we'd all be interested to hear their explanation for it. |
What part of buying a house would make my net worth go down? | Cosigning a loan for someone else will make net worth decrease, whether backed by security or not. |
The Benefits/Disadvantages of using a credit card | paying it off over time, which I know is the point of the card That may very well be the card issuer's goal, but it need not be yours. The benefits, as your question title seems to ask for - That said, use the card, but don't spend more than you have in your checking account to pay it when the bill comes. What you may want to hear - "Charge the furniture. Pay it off over the next year, even at 20%/yr, the total interest on $2000 of furniture will only be $200, if you account for the declining balance. That's $4/week for a year of enjoying the furniture." You see, you can talk yourself into a bad decision. Instead, shop, but don't buy. Lay out the plan to buy each piece as you save up for it. Consider what would happen if you buy it all on the card and then have any unexpected expenses. It just gets piled on top of that and you're down a slippery slope. |
How can you correlate a company stock's performance with overall market performance? | How can you correlate a company stock's performance with overall market performance. No you can't. There is no simple magic formulae that will result in profits. There are quite a few statistical algorithms that specialists have built, that work most of the times. But they are incorrect most of the times as well. |
Why invest in becoming a landlord? | with 150K € to invest to "become a landlord" you have several options: Pay for 100% of one property, and you then will make a significant percentage of the monthly rent as profit each month. That profit can be used to invest in other things, or to save to buy additional properties. At the end of the 21 years in your example, you can sell the flat for return of principal minus selling expenses, or even better make a profit because the property went up in value. Pay 20% down on 5 flats, and then make a much a smaller profit per flat each month due to the mortgage payment for each one. At the end of the 21 years sell the flats. Assuming that a significant portion of the mortgage is paid off each flat will sell for more than the mortgage balance. Thus you will have 5 nice large profits when you sell. something in between 1 and 5 flats. Each has different risks and expenses. With 5 rental properties you are more likely to use a management company, which will add to your monthly cost. |
If a bank has a transfer limit, what happens if another bank pushes/pulls more than that? | If bank B has a transfer limit set, you bet that there is a nice reason for that. Either risk of fraud, liability, client preferences, profiling, credit scoring, etc, etc. For a bank, the cost of denying something [1] is way lower than the potential damages and liabilities of allowing something to go through. Regarding your concerns for the ACH, here is the summarized transaction walkthrough source: An Originator– whether that’s an individual, a corporation or another entity– initiates either a Direct Deposit or Direct Payment transaction using the ACH Network. ACH transactions can be either debit or credit payments and commonly include Direct Deposit of payroll, government and Social Security benefits, mortgage and bill payments, online banking payments, person-to-person (P2P) and business-to-business (B2B) payments, to name a few. Instead of using paper checks, ACH entries are entered and transmitted electronically, making transactions quicker, safer and easier. The Originating Depository Financial institution (ODFI) enters the ACH entry at the request of the Originator. The ODFI aggregates payments from customers and transmits them in batches at regular, predetermined intervals to an ACH Operator. ACH Operators (two central clearing facilities: The Federal Reserve or The Clearing House) receive batches of ACH entries from the ODFI. The ACH transactions are sorted and made available by the ACH Operator to the Receiving Depository Financial Institution (RDFI). The Receiver’s account is debited or credited by the RDFI, according to the type of ACH entry. Individuals, businesses and other entities can all be Receivers. Each ACH credit transaction settles in one to two business days, and each debit transaction settles in just one business day, as per the Rules. Take heed of this like: The Originator initiates a direct deposit/payment transaction. In your scenario, the originator would be B. But since the transaction amount is higher than the limit, B would not even initiate the ACH transaction. The request would be denied. So the transaction would look like this: [1] Usually this cost comes down to just the processing costs of the denied transaction (and it is rather fail-fast like). For the other parties involved it may have additional costs (missed deadlines, penalties for not fulfilling an obligation, fines, etc), but for the bank that is irrelevant. |
what's the best option to save money on everyday expenses? | There is a saying in business: what gets measured gets done. Track every expense you make. Later, look over what you have learned. If 5% of your total budget is going to something frivolous, maybe you could halve it? If 1% or 0.1% is going to that frivolous expense, there's not much to be gained even by eliminating it. If you spend $200/mo on coffees, dropping those will help. If you spend $10/mo on coffees, you need to look elsewhere for your big savings. Have a target: I want to put $X into savings each month. Therefore I can only spend $Y. What do you have to change about last month's spending patterns to get down to $Y? Where are the easy targets for you? They will be different than the easy targets for me. What absolutely cannot change for you? Once you know the costs of what you're doing, you will know where it's possible to save, and where it's "worth it" to economize. |
Will getting a new credit card and closing another affect my credit? | I once called Amex to cancel a card with an annual fee. Instead, they were able to give me a different card with no fee. They were happy to do it. Of course, Amex has fantastic customer service, while Capital One is not known for it. But, its worth a five minute call, and you will retain your good score. |
Pay off car or use money for down payment | The best thing to do is pay off the car. Adding more variables to a negotiation with a car dealer (in this case, a trade in), is always going to go in their favor. This is why people recommend negotiating a price down first, before ever mentioning to the dealer you want to do a trade in or financing. |
Tax treatment of a boxed trade? | Here's how capital gains are totaled: Long and Short Term. Capital gains and losses are either long-term or short-term. It depends on how long the taxpayer holds the property. If the taxpayer holds it for one year or less, the gain or loss is short-term. Net Capital Gain. If a taxpayer’s long-term gains are more than their long-term losses, the difference between the two is a net long-term capital gain. If the net long-term capital gain is more than the net short-term capital loss, the taxpayer has a net capital gain. So your net long-term gains (from all investments, through all brokers) are offset by any net short-term loss. Short term gains are taxed separately at a higher rate. I'm trying to avoid realizing a long term capital gain, but at the same time trade the stock. If you close in the next year, one of two things will happen - either the stock will go down, and you'll have short-term gains on the short, or the stock will go up, and you'll have short-term losses on the short that will offset the gains on the stock. So I don;t see how it reduces your tax liability. At best it defers it. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.