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institutional ownership — why is it so convoluted | The reason for such differences is that there's no source to get this information. The companies do not (and cannot) report who are their shareholders except for large shareholders and stakes of interest. These, in the case of GoPro, were identified during the IPO (you can look the filings up on EDGAR). You can get information from this or that publicly traded mutual fund about their larger holdings from their reports, but private investors don't provide even that. Institutional (public) investors buy and sell shares all the time and only report large investments. So there's no reliable way to get a snapshot picture you're looking for. |
Can anybody explain “cut their exposure to equities” and “fat and flat range” for me, please? | Someone's (or, a bank's) "exposure to equities" refers to the amount of value which has a risk that fluctuates with the equities market (ie: the stock market). In very broad terms, I think it might make sense to say that exposure to equities could mean, for example, owning many rental properties, if the rental market was "highly correlated" with the equities market. That is - if house prices go down when the equities market goes down, and if that relationship is very strong, then owning a house means you are exposed to the equities market. However, in the sense it is used there, it seems to mean direct exposure to equities - ie: owning stocks and stock-based funds. |
How do I report this cash bonus/tip on income tax return? | How do I report this on our income tax return? You should include it on Line 7 of your Form 1040. Additionally, you should report the extra payment to your employer if it was greater that $20. You can use From 4070 to do this if your employer does not provide you with a form. And finally, you are right, you should Form 4137 to report any tips that you include on your Form 1040 in order to pay the required social security and medicare taxes. Credit is due to glibdud and Nathan L for constructive feedback! Thanks! |
What is an “International Equity”? | International equity are considered shares of companies, which are headquartered outside the United States, for instance Research in Motion (Canada), BMW (Germany), UBS (Switzerland). Some investors argue that adding international equities to a portfolio can reduce its risk due to regional diversification. |
Are Index Funds really as good as “experts” claim? | Picking yourself is just what all the fund managers are trying to do, and history shows that the majority of them fails the majority of the time to beat the index fund. That is the core reason of the current run after index funds. What that means is that although it doesn’t sound so hard, it is not easy at all to beat an index consistently. Of course you can assume that you are better than all those high-paid specialists, but I would have some doubt. You might be luckier, but then you might be not. |
Can I convert spread option into regular call or put? | Just so I'm clear- the end result is a long call, and you think the stock is going up. There is nothing wrong with that fundamentally. Be aware though: That's a negative theta trade. This means if your stock doesn't increase in price during the remaining time to expiration of your call option, the option will lose some of its value every day. It may still lose some of its value every day, depending on how much the stock price increases. The value of the call option just goes down and down as it approaches maturity, even if the stock price stays about the same. Being long a call (or a put) is a tough way to make money in the options market. I would suggest using an out-of-the-money butterfly spread. The potential returns are a bit less. However, this is a cheap positive theta trade so you avoid time decay on the value of the option. |
If a stock is selling for less than book value, is the company headed for bankruptcy? | An answer can be found in my book, "A Modern Approach to Graham and Dodd Investing," p. 89 http://www.amazon.com/Modern-Approach-Graham-Investing-Finance/dp/0471584150/ref=sr_1_1?s=books&ie=UTF8&qid=1321628992&sr=1-1 "If a company has no sustained cash flow over time, it has no value...If a company has positive cash flow but economic earnings are zero or less, it has a value less than book value and is a wasting asset. There is enough cash to pay interim dividends, bu the net present value of the dividend stream is less than book value." A company with a stock trading below book value is believed to be "impaired," perhaps because assets are overstated. Depending on the situation, it may or may not be a bankruptcy candidate. |
How exactly does dealing in stock make me money? | If you buy a stock and it goes up, you can sell it and make money. But if you buy a stock and it goes down, you can lose money. |
I received $1000 and was asked to send it back. How was this scam meant to work? | Possible ways they could make money (or think they could): I would go back through your transaction history and see if it's disappeared. Even with an assumed-rubbish interface finding a reversal of the transaction should be easy as you know the amount. I wouldn't spend it for a very long time if it is still there, just in case my last bullet applies. Given what they knew about you (phone number and account details) I'd be wary enough to keep an eye on all my accounts, possibly wary enough to consider credit monitoring in case they try to open other accounts with your details. Although of course plenty of people have legitimate reasons to have this information - if you've written a cheque the account details will be on it, and you might well be in the phone book or otherwise searchable. |
How can you possibly lose on investments in stocks? | For whatever it's worth. Judging from the comments in the other answers, I think everyone is addressing your question, "How can you possibly lose money," there are a lot of ways to possibly lose money in the stock market. Here are my thoughts. This is a chart of the S&P 500 from about 1996 to about 2012. At the top from the first arrow the entire S&P500 index fell about 45%. From the top of the second arrow the entire S&P500 index fell about 52%. It is really easy to look at our sustained bull market and feel invincible. And while I'll concede that not every company in the index fell over these two periods, bear in mind that the S&P500 index is a collection of the 500 largest companies in the United States, and the entire index lost half it's value twice. As the companies contained in the index shrink in value, they were replaced by companies that are the new biggest 500 in the country, then those fell too, and so on and so forth until the entire index lost half. Value is a funny thing because it isn't necessarily tied to the performance of the business (look at the current rosy valuations of all these non-earnings tech-companies). It could be that a company is still performing very well but there are just no buyers for the stock. So, how can you lose money in the stock market? Very easily. In A practical sense, it's when you need the money and can no longer weather the storm. People who went out for retirement around 2000 couldn't sit around and wait until 2007 for their account values to be replenished. This is why you roll off your stock exposure as you age. As you get older you don't have time and if you stop having income you can find yourself selling your assets at the least opportune time. |
Understanding a Trailing Limit if Touched Order | I don't think user4358's explanation is correct. A trailing LIT Sell Order adjusts downwards, i.e. if you place the order with an Aux price (in TWS it's trigger price) of 105.00 and a trailing amount of 6.00 then, assuming the ask is 100.00, TWS will add the trailing amount to the ask price and if it's less than the trigger price it will adjust. So in my example, if the market (ask) goes straight up to 105.00, nothing will be adjusted, the trigger is touched and the limit order will be placed (see below). If on the the other hand the market goes down to 99.00 then trlng amt + ask is 105.00, if it goes further down to 98.00 then the trigger price will be adjusted to 104.00 (because it's less than the current trigger), and so on. For the LIT part you have either an absolute limit price you can enter, or you have an offset limit which will be subtracted from the trigger price, in which case it is adjusted as well. So back to my example, the trigger is now 104.00 and the limit offset is say 1.00, so my limit order would be placed at 103.00 if the ask ever touches 104.00, and that in turn is only visible if the bid touches 103.00 (because it's limit-if-touched). For a buy just use the same explanation with some swapped roles, the trigger price adjust upwards when the trailing amount plus bid is larger than the current trigger, and the limit offset will be added to the trigger price. Edit Also quite succinct and worth having a look at: http://www.interactivebrokers.com/en/trading/orders/trailingLimitTouched.php Guesswork, highly subjective As for why this might be good, well, you have to believe in momentum strategies, i.e. a market that goes down, will continue to go down, if you believe that and you believe in mean reversion as well, then a trailing limit order can assist you in not buying/selling impulsively, but closer to the mean. I've never used it that way though. What I have done, even just now to get the explanation right, is to place trailing buy and sell orders simultaneously. You will find that you can just go in with coarse estimates and because the adjustments will go towards each other, you will end up with a narrowing band of trigger prices (as opposed to trailing stop orders which will give you a widening band of trigger prices). If you believe in overshooting and equilibria then this can be one easy way to profit from it. I've just sold EURUSD for 1.26420 and bought it back at 1.26380 with a trailing amount of 5pips and a limit offset of 2pips within the time of writing this. |
Mortgage company withholding insurance proceeds | Fire insurance, as you have discovered, is a complete ripoff. Most people pay fire insurance all their lives with no benefit whatsoever, and those such as yourself who are lucky enough to get a payout find that it is completely insufficient to replace their loss. I once computed the actual beneficial net present financial value of my fire insurance policy and it came out to $40 per month. The cost was $800 per month. That is typical. Homeowners pay $500 to $800 per year for something that is worth $30 to $50 per year. Ironically banks would actually make more money from mortgages if they did not require mortgagees to buy insurance, but nevertheless they insist on it. It is not about logic, but about fear and irrationality. When I paid off my mortgage and gained ownership of my home the first thing I did was cancel my fire insurance. I now invest the money I would have wasted on insurance, making money instead of losing it. Being compelled to throw money down the toilet on fire insurance is one of the hidden costs of a homeowners mortgage in the United States. In your situation, the main option is to borrow the money to rebuild the house using the land as collateral, if the land is valuable enough. Of course, you still owe the money for your original mortgage on your now (non-existent) home. So, to get a home, you will have to have the income to service two mortgages. A loan officer at a reputable bank can tell you whether you have the income necessary to support two mortgages. If you were maxed out on your original mortgage, then you may not have enough income and you are screwed. In that case you will have to go back to renting and gradually paying off your old mortgage. (If it were me, I would sue the insurance company pro se as a way to get the necessary money to rebuild the home, because insurance companies roll over like a $20 hooker when they get sued. Juries hate insurance companies. But I am unusual in that I love courtrooms and suing people. Most people are terrified of courtrooms though, so it may not be an option for you.) |
How is the Dow divisor calculated? | Have you actually read the Wikipedia article? To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a divisor, the Dow Divisor. The divisor is adjusted in case of stock splits, spinoffs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. Early on, the initial divisor was composed of the original number of component companies; which made the DJIA at first, a simple arithmetic average. The present divisor, after many adjustments, is less than one (meaning the index is larger than the sum of the prices of the components). That is: DJIA = sum(p) / d where p are the prices of the component stocks and d is the Dow Divisor. Events such as stock splits or changes in the list of the companies composing the index alter the sum of the component prices. In these cases, in order to avoid discontinuity in the index, the Dow Divisor is updated so that the quotations right before and after the event coincide: DJIA = sum(p_old) / d_old = sum(p_new) / d_new The Dow Divisor was 0.14602128057775 on December 24, 2015.[40] Presently, every $1 change in price in a particular stock within the average, equates to a 6.848 (or 1 ÷ 0.14602128057775) point movement. Knowing the old prices, new prices (e.g. following a split), and old divisor, you can easily compute the new divisor... Edit: Also, the detailed methodology is published by SP Indices (PDF). Edit #2: For simplicity's sake, assume the DJIA is an index that contains 4 stocks, with a price of $100.00 each. One of the stocks splits 2:1, meaning the new price/share is $50.00. Plugging the numbers into the above equation, we can determine the new Dow Divisor: 400 / 4 = 350 / d => d = 3.5 |
Retirement Savings vs. Student Loan payments | You can play with the numbers all you like (and that's good), however, here is a different way to look at it. The debt you have is risk. It limits your choices and eats your cash flow. Without the debt, you can invest at a much greater rate. It frees up you cash flow for all the things you might want to do, or decide in the future you might want to do. Right now is the easiest time for you to focus on debt repayment. It sounds like you are not married and have no children. It is much easier now to cut back your lifestyle and concentrate on paying off this $50k of student debt. This will get harder as your responsibility increases. Build up a small amount of cash for emergencies and put the rest at the debt. You can keep contributing to your 401k to the match if you want. This will give you 2 benefits: Patience. When you actually DO start investing, you will have a new appreciation for the money you are using. If you sacrifice to pay off $50k now, you wont look at money the same for the rest of your life. Drive. If you see the debt as a barrier to achieving your goals, you will work harder to get out of debt. These are all things I would tell my 23 year-old self if i could go back in time. Good luck! |
Is paying off your mortage a #1 personal finance priority? | Paying off your mortgage early being good is a myth. It is great for the chronic overspenders to have their mortgage paid off so when they rack up credit card bills and get behind, well they still hae a place to stay. But for those who are more logical with their money paying off your mortgage early in current conditions makes no sense. You can get a 30 year loan well below 4%. Discounting taxes for your average family you would have a rate floating below 3%. So reasons that paying off your mortgage should be almost LAST (given current low long-term interest rates): The first thing you should do is take care of any high interest debt. I would say that anything more than 7-8%, including all credit card debt should be focus #1. putting money into your retirement savings is #1. You will earn way more than 3% over the long-run. you can earn a higher return in the market. Even with a very conservative portfolio you can clear 5-6%, which will still clear more than 3% after taxes. for those who say you can't be sure about the market... well if the market did bad for 30 years in a row no one will have money and the house will also be worthless. if a disaster happens to your house and you own it, your money is gone. In many cases you would be able to declare bankruptcy and let the bank take the property as is. there are just too many examples but if you are paying off your house early, you lose the flexible/liquid money that you now have tied up in the house. Now the reasons for paying down your mortgage are really easy too: you don't trust your spending habits you want to move up in houses and you want to make sure that you have at least 20% down on future house to skip PMI. |
Why do banks finance shared construction as mortgages instead of financing it directly and selling the apartments in a building? | Remember that risk should correlate with returns, in an investment. This means that the more risk you take on, the more return you should be receiving, in an efficient marketplace. That's why putting your money in a savings account might earn you <1% interest right now, but putting money in the stock market averages ~7% returns over time. You should be very careful not to use the word 'interest' when you mean 'returns'. In your post, you are calling capital gains (the increase in value of owned property) 'interest'. This may be understating in your head the level of risk associated with property ownership. In the case of the bank, they are not in the business of home construction. Rather than take that risk themselves, they would rather finance many projects being done by construction companies that know the business. The bank has a high degree of certainty of getting its money back, because its mortgages are protected by the value of the property. Part of the benefit of an efficient marketplace is that risk gets 'bought' by individuals who want it. This means that people with a low-risk tolerance (such as banks, people on fixed incomes, seniors, etc.) can avoid risk, and people with a high risk tolerance (stock investors, young people with high income, etc.) can take on that risk for higher average returns. The bank's reasoning should remind you of the risk associated with property ownership: increases in value are not a sure thing. If you do not understand the risk of your investment, you cannot be certain that you are being well compensated for that risk. Note also that most countries place regulations on their banks that limit the amount of their funds that can be placed in 'higher risk' asset classes. Typically, this something along the lines of "If someone places a deposit with your bank, you can only invest that deposit in a low-risk debt-based asset [ie: you can take money deposited by customer A and use it to finance a mortgage for customer B]". This is done in an attempt to prevent collapse of the financial sector, if risky investments start failing. |
How much cash on hand should one have? | You seem to have a grasp of the basic principles involved, but your estimation of the risk you are taking seems a bit low. Your non-investment reserves are unlikely to cover your expenses for more than a month, so the chance that you would need to sell investments to cover additional expenses is high. You mention that I am flexible with the 'cash on hand' amount. For instance, for about three months I put a very tight spending/investing freeze on my life because I knew I'd be leaving jobs and moving (I already had the other job lined up). Those savings presumably went toward moving expenses, as your usual savings were insufficient. In the event that you are laid off suddenly, you might find yourself in the same position again, with added unplanned expenses like fees for breaking a lease. Your current plan involves selling investments to cover the gap. Based on your age you have probably only invested in a predominantly positive market, so the chance that you might need to sell investments for cash seems like a reasonable trade-off for the added potential gains. Your perception might change if the markets go south and you are forced to sell into a down market, possibly at a significant loss. You also don't indicate if your investments are currently sufficient to cover an extended period of unemployment. You are taking on a lot of risk under your current plan. Essentially you are trading possible investment gains for flexibility and time. By making small changes like saving at least enough to move as you did previously, you can give yourself time to react to job loss or other unexpected financial need. Rather than give the traditional emergency funds advice, I suggest you look at the broader picture. The total amount of savings/risk is up to you, but you should consider your current savings as insufficient to rely on as a safety net. |
What's an economic explanation for why greeting cards are so expensive? | It cost a lot of money to pay the poet to make wording, designers/photographers to make the post-cards and miscellaneous staff (Executives, HR, shareholders etc.) These cost are thrown onto the buyers. |
Is it better for a public company to increase its dividends, or institute a share buyback? | In some sense, the share repurchasing program is better if the company does not foresee the same profit levels down the road. Paying a dividend for several years and then suddenly not paying or reducing a dividend is viewed as a "slap in the face" by investors. Executing a share repurchase program one year and then not the next is not viewed as negatively. From an investor's standpoint, I would say a dividend is preferred over a share repurchase program for a similar reason. Typically companies that pay a dividend have been doing so for quite some time and even increasing it over time as the company increases profits. So, it can be assumed that if a company starts paying a dividend, it will do so for the long-run. |
What options do I have at 26 years old, with 1.2 million USD? | Windfalls can disappear in a heartbeat if you're not used to managing large amounts of money. That said, if you can read a bank statement and can exercise a modicum of self control over spending, you do not need a money manager. (See: Leonard Cohen) First, spend $15 on J.L. Collins' book The Simple Path to Wealth. https://www.goodreads.com/book/show/30646587-the-simple-path-to-wealth. Plan to spend about 4% of your wealth annually (4% of $1.2 million = $48,000) Bottom line: ALWAYS live within your means. Own your own home free and clear. Don't buy an annuity unless you have absolutely no self control. If it feels like you're spending money too fast, you almost certainly are. |
Do Online Currency Exchanges' registration with the government guarantee safety and reliability? | Government registering of financial institutions usually is to make the government safe (eg FINTRAC is watching for money laundering and financing terrorism) rather than to make it's customers safe. Most governments have many levels of registrations and regulatory bodies. The most stringent requirements are usually obligatory only for banks, and they indeed often include precautions for insuring customer's deposits. Even this insurances have limits, eg in most EU countries the state guarantees deposits up to 100kEUR. If you deposit more and the bank flops - you lose everything over the limit. Companies like forex or currency exchanges usually make their best effort to avoid as many regulations as possible, just because it's costly. If a given company does have guarantee funds and/or customer insurance, it should be advertised and explained on their website. However the whole issue of trust is misguiding. You don't have to "trust" in your grocery store to shop there. There is no government guarantee that the vegetables sold will be tasty. If you buy and the product fells short of your expectations, you call it a loss and start shopping elsewhere. Financial services are no different than any other product. I recommend to your aunt to start small and see how it works. If a service turns out well, she can increase the amount sent through exchange and decrease amount sent through bank. But still, it's always prudent to send eg $1000 every week instead of $4000 once a month. It's more time consuming and cumbersome than having your bank do it - but it's the safety and convenience you're paying premium for. |
How to find if a public company has taken out a loan? | Somewhat. The balance sheet will include liabilities which as Michael Kjörling points out would tell you the totals for the debt which would often be loans or bonds depending on one's preferred terminology. However, if the company's loan was shorter than the length of the quarter, then it may not necessarily be reported is something to point out as the data is accurate for a specific point in time only. My suggestion is that if you have a particular company that you want to review that you take a look at the SEC filing in full which would have a better breakdown of everything in terms of assets, liabilities, etc. than the a summary page. http://investor.apple.com/ would be where you could find a link to the 10-Q that has a better breakdown though it does appear that Apple doesn't have any bonds outstanding. There are some companies that may have little debt due to being so profitable in their areas of business. |
Buy a parking spot and rent it out, or invest savings in an interest-bearing account? | From strictly a gross revenue point of view, the parking spot is going to yield a higher rate (5.4%) versus a 3% savings account, assuming you have it rented all year. Your break-even point (not considering other expenses) is 7-8 months of rent per year. So, what are things to consider? Here's a few to start with. The parking spot is a nice investment in that you get a decent return, and the potential for appreciation. The savings account/CD will give you a fixed return with no risk. To support your decision, make sure you understand all of the costs and understand all of the downside risk. If you're 50 and this is alot of money to you, be conservative. If you're 25 and have a good job, you can afford to chase the yield. |
Specifically when do options expire? | 4PM is the market close in NYC, so yes, time looks good. If "out of the money," they expire worthless. If "in the money," it depends on your broker's rules, they can exercise the option, and you'll need to have the money to cover on Monday or they can do an exercise/sell, in which case, you'd have two commissions but get your profit. The broker will need to tell you their exact procedure, I don't believe it's universal. |
So the vending machine tore my $5 in pieces. What now? | There is usually contact information for the owner of the machine printed somewhere on it. Call that number. If it is in a business you could always try the clerk. Whether you get your money back is up to that person, I suppose. |
Does lender care what I use the money for? | When you borrow from a bank, there are secured loans, as with a mortgage, or unsecured lines of credit, usually a more reasonable amount of money, but also based on income. You just asked about a private loan. It depends on the person and your relationship. If you need money to pay the rent, you might not be the best person to lend money to. If you ask a friend or relative, they may lend you money without asking its purpose. |
Should I invest in my house, when it's in my wife's name? | It is my opinion that part of having a successful long-term relationship is being committed to the other person's success and well-being. This commitment is a form of investment in and of itself. The returns are typically non-monetary, so it's important to understand what money actually is. Money is a token people exchange for favors. If I go to a deli and ask for a sandwich. I give them tokens for the favor of having received a sandwich. The people at the deli then exchange those tokens for other favors, and that's the entire economy: people doing favors for other people in exchange for tokens that represent more favors. Sometimes being invested in your spouse is giving them a back rub when they've had a hard day. The investment pays off when you have a hard day and they give you a back rub. Sometimes being invested in your spouse is taking them to a masseuse for a professional massage. The investment pays off when they get two tickets to that thing you love. At the small scale it's easy to mostly ignore minor monetary discrepancies. At the large scale (which I think £50k is plenty large enough given your listed net worth) it becomes harder to tell if the opportunity cost will be worth making that investment. It pretty much comes down to: Will the quality-of-life improvements from that investment be better than the quality-of-life improvements you receive from investing that money elsewhere? As far as answering your actual question of: How should I proceed? There isn't a one-size fits all answer to this. It comes down to decisions you have to make, such as: * in theory it's easy to say that everyone should be able to trust their spouse, but in practice there are a lot of people who are very bad at handling money. It can be worthwhile in some instances to keep your spouse at an arms length from your finances for their own good, such as if your spouse has a gambling addiction. With all of that said, it sounds like you're living in a £1.5m house rent-free. How much of an opportunity cost is that to your wife? Has she been freely investing in your well-being with no explicit expectation of being repaid? This can be your chance to provide a return on her investment. If it were me, I'd make the investment in my spouse, and consider it "rent" while enjoying the improvements to my quality of life that come with it. |
What is the minimum lot size (number of shares) for the London Stock Exchange? | Good question! It seems to me that there is no minimum order size for shares trading on the LSE. Please note, I couldn't find an definite answer, but: According to the "International Order Book" document (see: http://www.londonstockexchange.com/traders-and-brokers/rules-regulations/change-and-updates/stock-exchange-notices/2010/n2210_attach1.pdf) from the LSE (page 7): Question 7: Would respondents support a revision of the minimum order size of 50 units? Whilst there was limited support for a low value based minimum order size the majority of respondents requested its complete removal. This was incorporated into the September 2010 quarterly review as per Service Announcement 001/100910 and as from 20 September 2010, the minimum order size in all IOB securities has been 1 unit Even though not all trading on the LSE is performed on this IOB system, it would be very wierd if the international stocks can be traded in any size, while domestic stocks will have an minimum size. Further, consider looking to the times and sales of various stocks (here you can find an example http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/exchange-insight/trade-data.html?page=0&fourWayKey=GB0006731235GBGBXSET1&formName=frmRow&upToRow=-1). Those trades also suggest that there is no minimum order size (for example, I just saw an executed trade with an size of 13). At last, look at the Interactive Brokers (no relationship with) Exchange List at http://www.interactivebrokers.com/en/trading/exchanges.php?exch=lse&showcategories=&ib_entity=llc. Here you can click on various stock names, and in the popup window that opens, look for 'size parameters' and the size increment. I could only find stocks with an size increment of 1 (i.e. you can trade anything with a minimum of 1 stock, and more needs to be in steps of 1 stock). Even though I couldn't find official information on the LSE site (like a leaflet for beginners or such), it does seem to me that you can trade any size you want on LSE. Please note that mutual funds and illiquid OTC stocks which don't have an continuous market can have different rules, so double-check with your broker. |
Mutual Fund with Dividends | Generally value funds (particularly large value funds) will be the ones to pay dividends. You don't specifically need a High Dividend Yield fund in order to get a fund that pays dividends. Site likes vanguards can show you the dividends paid for mutual funds in the past to get an idea of what a fund would pay. Growth funds on the other hand don't generally pay dividends (or at least that's not their purpose). Instead, the company grows and become worth more. You earn money here because the company (or fund) you invested in is now worth more. If you're saying you want a fund that pays dividends but is also a growth fund I'm sure there are some funds like that out there, you just have to look around |
Is engaging in stocks without researching unwise? | I don't see balance sheet in what you're looking at, and I'd definitely suggest learning how to read a balance sheet and looking at it, if you're going to buy stock in a company, unless you know that the recommendations you're buying on are already doing that and you're willing to take that risk. Also, reading past balance sheets and statements can give you an idea about how accurate the company is with their predictions, or if they have a history of financial integrity. Now, if you're going the model portfolio route, which has become popular, the assumption that many of these stock buyers are making is that someone else is doing that for them. I am not saying that this assumption is valid, just one that I've seen; you will definitely find a lot of skeptics, and rightly so, about model portfolios. Likewise, people who trade based on what [Person X] does (like Warren Buffett or David Einhorn) are assuming that they're doing the research. The downside to this is if you follow someone like this. Yeah, oops. I should also point out that technical analysis, especially high probability TA, generally only looks at history. Most would define it as high risk and there are many underlying assumptions with reading the price movements by high probability TA types. |
Calculate investment's interest rate to break-even insurance cost [duplicate] | I wouldn't call it apples and oranges. This is literally an opportunity cost calculation. You can safely assume S&P500 will perform at least 11% over any 10 year period. Since failing companies are delisted and replaced with new growing companies, the market should continue to grow. No, it's not guaranteed. Lets use an aggressive number for inflation, 4%, leaving a 7% ROR estimate for S&P500. I assume OP has better credit than me, assume a rate around 3.5%. So it looks like net 3.5% ROR. The PMI erases that. You have to continue paying it until you pay off the loan. Put 20% down, get a 15 year fixed at lowest rate. Pay it off quicker. |
Do budgeting % breakdowns apply globally? | The exact percentages depend on many things, not just location. For example, everyone needs food. If you have a low income, the percentage of your income spent on food would be much higher than for someone that has a high income. Any budgeting guidelines that you find are just a starting point. You need to look at your own income and expenses and come up with your own spending plan. Start by listing all of the necessities that you have to spend on. For example, your basic necessities might be: Fund those categories, and any other fixed expenses that you have. Whatever you have left is available for other things, such as: and anything else that you can think of to spend money on. If you can save money on some of the necessities above, it will free up money on the discretionary categories below. Because your income and priorities are different than everyone else, your budget will be different than everyone else, too. If you are new to budgeting, you might find that the right budgeting software can make the task much easier. YNAB, EveryDollar, or Mvelopes are three popular choices. |
How to transfer personal auto lease to business auto lease? | See what the contract says about transfers or subleases. A lease is a credit agreement, so the lessor may not allow transfers. You probably ought to talk to an accountant about this. You can probably recognize most of the costs associated with the car without re-financing it in another lease. |
UK Contractor with Limited Company | I know a guy on a much higher rate than me, about £500 per day, and he claims to pay around 18% tax which has me bewildered He will be showing expenses, which are deductible. Check with your accountant about expenses, which can be legally claimed as expenses. This is the main benefit of operating through a limited company. Legtimate business expenses can be claimed, which you cannot do if you are a permanent employee. Your friend might also be claiming false expenses, with a shady accountant. If HMRC does decide to give a call, he might have to pay n times the money he has saved till now. And my suggestion is always ask your accountant first. He(she) knows the legal stuff, so he(she) would give you the legally correct options. If you aren't comfortable with him(her), you can always change accountants. holiday pay, sick pay and job security You miss those that is why you are paid at a rate much higher than an employee. benefit of a limited company You can arrange your salary to pay no PAYE and take the rest as dividends. You willn't have to pay PAYE on that. Secondly if you have a partner(s), all of you can be paid dividends without paying PAYE(if you don't cross the threshold). |
What is a rule of thumb for accruing debt on a rental property? | To start, I hope you are aware that the properties' basis gets stepped up to market value on inheritance. The new basis is the start for the depreciation that must be applied each year after being placed in service as rental units. This is not optional. Upon selling the units, depreciation is recaptured whether it's taken each year or not. There is no rule of thumb for such matters. Some owners would simply collect the rent, keep a reserve for expenses or empty units, and pocket the difference. Others would refinance to take cash out and leverage to buy more property. The banker is not your friend, by the way. He is a salesman looking to get his cut. The market has had a good recent run, doubling from its lows. Right now, I'm not rushing to prepay my 3.5% mortgage sooner than it's due, nor am I looking to pull out $500K to throw into the market. Your proposal may very well work if the market sees a return higher than the mortgage rate. On the flip side I'm compelled to ask - if the market drops 40% right after you buy in, will you lose sleep? And a fellow poster (@littleadv) is whispering to me - ask a pro if the tax on a rental mortgage is still deductible when used for other purposes, e.g. a stock purchase unrelated to the properties. Last, there are those who suggest that if you want to keep investing in real estate, leverage is fine as long as the numbers work. From the scenario you described, you plan to leverage into an already pretty high (in terms of PE10) and simply magnifying your risk. |
Looking for an ROI formula, brain is broken today | The monthly repayments of the initial $ 300,000 loan can be calculated using this formula: source: Finance Formulas The monthly payment is It is not readily apparent how the formula works, but it is derived by induction from this summation, in which the sum of the discounted future payments are set equal to the present value of the loan: For the second part of the question, reinvestments are stopped after 9 months, after four investments of $ 26,374.77 * 3 = $ 79,124.31. And presumably each loan is repaid in 3 years, since 45 - 9 = 36 months. Calculating the repayments for these loans: The total returned for all four loans is: |
Are Credit Cards a service to banks? | Credit cards are a golden goose for banks, as they get to issue high-interest loans and simultaneously generate alot of fee income. Debit cards aren't quite as good, but they still generate substantial fee income -- ~2% of every credit/non-PIN debit transaction goes to the bank and credit card network. Credit histories exist because they are the most effective tool available to predict whether you will pay back your loans or not. You don't need a credit history to buy most things, you need a credit history to get a large loan. Think of it from perspective of a lender: Credit scoring is the bank's way screening out people who are expensive to do business with. It's objective, doesn't discriminate on the basis of race, sex or other factors, and you have recourse if the rating agencies have incorrect information. |
Buying my first car out of college | I support the strategy to buy a less expensive car at the outset and then save for that more expensive car. You mentioned that you would be able to save $9000 by the time you had to start making payments. That sounds like a great budget for car shopping. For $9k you can get a dependable used car. If you find the right high-yield savings account you can get around 2% on your $500/month direct deposit. That's a difference of about 5% when you add in the 2.9% interest that you would have been paying on the loan. (You can't find such a low risk investment that would yield 5% these days.) Also, at that rate (2%) you would have $27k saved up in less than 52 months, or over $31k in 60 months. Then you could buy a BMW with cash! And I'm sure they would give you a cash discount. Alternatively you could be just finishing paying off the loan and might already be looking at the next car you'll take a loan out for. The point is not that you have to completely deprive yourself for the rest of your life. But by not taking out a loan you were certainly come out ahead in 5-10 years time. Also, one common mistake that new grads make is thinking that they are rich right out of college. Yes, you definitely have a nice salary and "could afford it" by most people's standards. I have a coworker that graduated and started work a year ago. He first bought a brand new Subaru. Why Subaru I do not know, but that is what he thought he wanted. After driving the car for a few months he decided for a few reasons that it was not what he wanted. So he sold the car (for a loss) and bought a slightly used Nissan Z. He has since decided that he needs a more practical car for day to day driving to minimize the abuse that his Z takes. So he has bought another car. This time a low budget Honda. Had he started with a low budget car he could be driving the same car to work right now, but have a good chunk of savings for a new car instead of a loan and a car that he drives only occasionally. |
Short Selling Specific to India | In India the Short is what is called in other markets call as "Naked Short" [I think I got the right term]. It means that you can only short sell intra day and by the end of the day you have to buy back the shares [at whatever price, if you don't; the exchange will do it by force the next day]. In other markets the Intra day shorts are not allowed and one can short for several days by borrowing shares from someone else [arranged by broker] India has a futures market, so you can sell/buy something today with the execution date of one month. This is typically a fixed day of the month [I think last Thursday] |
Should I buy a home or rent in my situation? | Another reason, and to me the main reason not to buy a house if you're in your early 20s (regardless of your income), is mobility. If you rent, you can move pretty much whenever you want after the first year of your rental lease is up, even before then in some cases. If your fiancee finishes school and gets a great job offer in another city or state, you can move there pretty quickly. When you own a house, that is much harder to do. Your having two kids makes it harder in either case, but at this point in your lives you really don't know where your future will take you, geographically speaking, and renting gives you the option of moving easily if you have to. |
Can I default on my private student loans if I was an international student? | What are the consequences if I ignore the emails? That would depend on how much efforts the collection agency is ready to put in. I got a social security number when I took up on campus jobs at the school and I do have a credit score. Can they get a hold of this and report to the credit bureaus even though I don't live in America? Possibly yes, they may already be doing it. Will they know when I come to America and arrest me at the border or can they take away my passport? For this, they would have to file a civil case in the court and get an injunction to arrest you. Edit: Generally it is unlikely that the court may grant an arrest warrant, unless in specific cases. A lawyer advise would be more appropriate. End Edits It is possible that the visa would also get rejected as you would have to declare previous visits and credit history is not good. |
What's the difference between buying bonds and buying bond funds for the long-term? | Yes, bond funds are marked to market, so they will decline as the composition of their holdings will. Households actually have unimpressive relative levels of credit to equity holdings. The reason why is because there is little return on credit, making it irrational to hold any amount greater than to fund future liquidity needs, risk adjusted and time discounted. The vast majority of credit is held by insurance companies. Pension funds have large stakes as well. Banks hold even fewer bonds since they try to sell them as soon as they've made them. Insurance companies are forced to hold a large percentage of their floats in credit then preferred equity. While this dulls their returns, it's not a large problem for them because they typically hold bonds until maturity. Only the ones who misprice the risk of insurance will have to sell at unfavorable prices. Being able to predict interest rates thus bond prices accurately would make one the best bond manager in the world. While it does look like inflation will rise again soon just as it has during every other US expansion, can it be assured when commodity prices are high in real terms and look like they may be in a collapse? The banking industry would have to produce credit at a much higher rate to counter the deflation of all physical goods. Households typically shun assets at low prices to pursue others at high prices, so their holdings of bonds ETFs should be expected to decline during a bond collapse. If insurance companies find it less costly to hold ETFs then they will contribute to an increase in bond ETF supply. |
How to pay taxes on YouTube if I'm a dependent? | The Form 1040 (U.S. tax return form) Instructions has a section called "Do You Have To File?". Below a certain income, you are not required to file a tax return and pay any tax. This amount of income at which you are required to file depends on several things, including your dependency status (you are a dependent of your parents), your marital status, and other factors. The instructions have charts that show what these numbers are. You would fall under Chart B. Assuming that you are under age 65, unmarried, and not blind, you only have to file when you reach the following conditions: Your unearned income was over $1,050. Your earned income was over $6,300. Your gross income was more than the larger of— $1,050, or Your earned income (up to $5,950) plus $350. (Note: Income from YouTube would count as "earned income" for the purposes above.) However, if you are producing your own videos and receiving revenue from them, you are technically self-employed. This means that the conditions from Chart C also apply, which state: You must file a return if any of the five conditions below apply for 2015. As a self-employed person, you can deduct business expenses (expenses that you incur in producing your product, which is this case is your videos). Once your revenue minus your expenses reach $400, you will need to file an income tax return. |
Can I exchange rental property for REIT stock with 1031? | would buying the stock of a REIT qualify as a 'Like-Kind' exchange? Short answer, no. Long answer, a 1031 (Starker) exchange only applies to real estate. From the Wikipedia page on the topic: To qualify for Section 1031 of the Internal Revenue Code, the properties exchanged must be held for productive use in a trade or business, or for investment. Stocks, bonds, and other properties are listed as expressly excluded by Section 1031 of the Internal Revenue Code, although securitized properties are not excluded. A REIT, being stock in a real estate company, is excluded from Section 1031. |
Real estate agent best practice | There are people that make up a small segment of the population that have an unsatisfied need to see the insides of other people's houses. There's also a segment of the population that don't quite understand the "big picture" of how service professions work... for example, any group of friends going into a restaurant and requesting a table and sitting at it for over an hour, but feel they don't need to leave a tip because they only ordered espressos or shared a desert. Sure, you're paying for the service of a service professional, but it should also include their time and resources you consume outside of the actual service but many don't have that perspective. Why should I pay you if you aren't providing your actual "service" to me even though I'm consuming your time and resources that would be earning you your expected salary otherwise, is their justification. So when you encounter an individual from both small segments of the population mentioned above, the result is the problem your wife faces with perspective buyers. I look at the Agent / Buyer relationship from a different perspective when I encounter these no-harm intended individuals. I don't see it as the buyer is hiring the agent... for if that was the case, a contract of some sorts would be involved detailing the menu of services provided by the agent with associated costs, the buyer would make selections from the menu, pay the costs, and services rendered. but that's not how it works. so its important to understand the perspective of the agent looking to hire the buyer.. you're not paying the buyer to be your client, but you are looking to select the prospective buyer that's going to generate cash flow. In a commissions based work force that is also your main source of income, you have to look at prospective clients as that.. simply prospects..but who are a vital component of your salary. So when allocating your time and resources, especially if you're dealing with several prospects, you literally have to turn away these cold leads who are just looking for design tips and paint color pattern suggestions and you as their escort. If I was in the shoe-making business, i wouldn't hire a walk-in, give him access to materials and work space with the assumption that if its to his liking, it'll generate profit towards my salary needs, if the only thing he's interested in doing is looking around at all the other shoes, a behavior that requires my presence, time, and resources. You almost can't even justify it as "looking at it as possible income in the future" if it's costing you revenue now, whether its in the form of having to neglect actual buyers or you could be investing your time in things that would impact salary needs, such as advance course work (attending optional trainings offered by your broker), or investing time finding more serious leads. |
Recent college grad. Down payment on a house or car? | Don't buy the new car. Buy a $15k car with $5k down and a 3 year loan and save up the rest for your car. A $500/mo car payment is nuts unless you're making alot of money. I've been there, and it was probably the dumbest decision that I have ever made. When you buy a house, you end up with all sorts of unexpected expenses. When you buy a house AND are stuck in a $500/mo payment, that means that those unexpected expenses end up on a credit card. |
Take advantage of rock bottom oil prices | Probably the easiest way for individual investors is oil ETFs. In particular, USO seems to be fairly liquid and available. You should check carefully the bid/ask spreads in this volatile time. There are other oil ETFs and leveraged and inverse oil ETFs exist as well, but one should heed the warnings about leveraged ETFs. Oil futures are another possibility though they can be more complicated and tough to access for an individual investor. Note that futures have a drift associated with them as well. Be careful close or roll any positions before delivery, of course, unless you have a need for a bunch of actual barrels of oil. Finally, you can consider investing in commodities ETFs or Energy stocks or stock ETFs that are strongly related to the price of oil. As Keshlam mentions, care is advised in all these methods. Many people thought oil reached its bottom a few weeks back then OPEC decided to do nothing and the price dropped even further. |
Why do gas stations charge different amounts in the same local area? | Location, Location, Location. The closer to the highway, the more they can charge. People want to go less than a mile from the exit to get gas. Therefore they save time, but spend more money. That is understandable, so the gas station takes advantage of the situation. |
How does owning a home and paying on a mortgage fit into family savings and investment? | 1) How does owning a home fit into my financial portfolio? Most seem to agree that at best it is a hedge against rent or dollar inflation, and at worst it should be viewed as a liability, and has no place alongside other real investments. Periods of high inflation are generally accompanied with high(er) interest rates. Any home is a liability, as has been pointed out in other answers; it costs money to live in, it costs money to keep in good shape, and it offers you no return unless you sell it for more than you have paid for it in total (in fact, as long as you have an outstanding mortgage, it actually costs you money to own, even when not considering things like property taxes, utilities etc.). The only way to make a home an investment is to rent it out for more than it costs you in total to own, but then you can't live in it instead. 2) How should one view payments on a home mortgage? How are they similar or different to investing in low-risk low-reward investments? Like JoeTaxpayer said in a comment, paying off your mortgage should be considered the same as putting money into a certificate of deposit with a term and return equivalent to your mortgage interest cost (adjusting for tax effects). What is important to remember about paying off a mortgage, besides the simple and not so unimportant fact that it lowers your financial risk over time, is that over time it improves your cash flow. If interest rates don't change (unlikely), then as long as you keep paying the interest vigilantly but don't pay down the principal (assuming that the bank is happy with such an arrangement), your monthly cost remains the same and will do so in perpetuity. You currently have a cash flow that enables you to pay down the principal on the loan, and are putting some fairly significant amount of money towards that end. Now, suppose that you were to lose your job, which means a significant cut in the household income. If this cut means that you can't afford paying down the mortgage at the same rate as before, you can always call the bank and tell them to stop the extra payments until you get your ducks back in the proverbial row. It's also possible, with a long history of paying on time and a loan significantly smaller than what the house would bring in in a sale, that you could renegotiate the loan with an extended term, which depending on the exact terms may lower your monthly cost further. If the size of the loan is largely the same as or perhaps even exceeds the market value of the house, the bank would be a lot more unlikely to cooperate in such a scenario. It's also a good idea to at the very least aim to be free of debt by the time you retire. Even if one assumes that the pension systems will be the same by then as they are now (some don't, but that's a completely different question), you are likely to see a significant cut in cash flow on retirement day. Any fixed expenses which cannot easily be cut if needed are going to become a lot more of a liability when you are actually at least in part living off your savings rather than contributing to them. The earlier you get the mortgage paid off, the earlier you will have the freedom to put into other forms of savings the money which is now going not just to principal but to interest as well. What is important to consider is that paying off a mortgage is a very illiquid form of savings; on the other hand, money in stocks, bonds, various mutual funds, and savings accounts, tends to be highly liquid. It is always a good idea to have some savings in easily accessible form, some of it in very low-risk investments such as a simple interest-bearing savings account or government bonds (despite their low rate of return) before you start to aggressively pay down loans, because (particularly when you own a home) you never know when something might come up that ends up costing a fair chunk of money. |
Optimal Asset Allocation | When you have multiple assets available and a risk-free asset (cash or borrowing) you will always end up blending them if you have a reasonable objective function. However, you seem to have constrained yourself to 100% investment. Combine that with the fact that you are considering only two assets and you can easily have a solution where only one asset is desired in the portfolio. The fact that you describe the US fund as "dominating" the forign fund indicates that this may be the case for you. Ordinarily diversification benefits the overall portfolio even if one asset "dominates" another but it may not in your special case. Notice that these funds are both already highly diversified, so all you are getting is cross-border diversification by getting more than one. That may be why you are getting the solution you are. I've seen a lot of suggested allocations that have weights similar to what you are using. Finding an optimal portfolio given a vector of expected returns and a covariance matrix is very easy, with some reliable results. Fancy models get pretty much the same kinds of answers as simple ones. However, getting a good covariance matrix is hard and getting a good expected return vector is all but impossible. Unfortunately portfolio results are very sensitive to these inputs. For that reason, most of us use portfolio theory to guide our intuition, but seldom do the math for our own portfolio. In any model you use, your weak link is the expected return and covariance. More sophisticated models don't usually help produce a more reasonable result. For that reason, your original strategy (80-20) sounds pretty good to me. Not sure why you are not diversifying outside of equities, but I suppose you have your reasons. |
Start a Holding Company? | If you are trying to invest in closely held / private companies (things that don't trade on the stock market), you will run into a variety of regulatory problems. For various reasons, most private companies only raise funds with accredited investors. To be an accredited investor you basically have to have $1,000,000 in net worth - NOT including your primary residence, OR you have to make over $200,000 a year for the last two years and expect to keep making that much. This is a class distinction the Federal government created, you will see different but similar wealth and investment classes worldwide. So your best most organized opportunities are left out, unless you do qualify as an accredited investor. There are tons of other companies, things you will find locally, that will let you invest in their smaller time operations. (Think like a local yoga studio looking for $20,000 and willing to split the profits with you). But the problem here is lack of accountability, where partners skip town or just stop answering your calls, and the legal remedies cost you more than your claim. That being said there are people that provide capital to smaller publicly traded companies on the bulletin boards and pink sheets. They have opportunities do much better than the actual stock market investors in these companies, because you can negotiate contracts that let you cash out in their inevitable financing death spirals with very little risk to you. You can do these things as an individual or as a holding company, but the holding company will limit your liability to the amount your holding company invested, instead of your personal assets, in case your financing starts to incur liability with the company. |
How can I raise finance to build a home for my family | As I see it, there are 2 potential solutions - Joining with another person or 2, and buying a house with multiple bedrooms. I am in the US, and I've seen immigrants living in tight accommodations that would seem unacceptable to most of us. But, with the combined incomes, they were able to buy the house and quickly pay for it, and then buy another. $800/mo is about $5/hr. Below US minimum wage. Use your skills to take on additional work on line. A virtual assistant position can increase your income quite a bit. Keep in mind, as someone on the other side of the world, my advice may not be practical for you, these are just my thoughts. |
Why is there such disparity of max contribution limits between 401K accounts and regular IRA accounts? | The investments offered in 401K are usually limited to a selection of mutual funds offered by a 401K provider. The 401K providers and the mutual funds charge fees. The mutual fund industry has a lobbying group that will push for increased 401K contributions to direct money into their mutual funds to collect fees. The top 401 K provider in 2005 was fidelity. It managed $337 billion in 401Ks of which $334 billion was directed into mutual funds. Although I would have to use some of the same providers to open an IRA, I would not have to invest in the providers' mutual funds when I open an IRA. I can buy a stock and hold onto it for 10, 20, 50 years inside of my IRA. Thus, the only fee the investment company would collect from me would be from when I purchased the stock and when I sold the stock. Not nearly as profitable as mutual fund fees. |
Why invest for the long-term rather than buy and sell for quick, big gains? | On Black Friday, 1929,the market fell from over 350 to just above 200. If you were following your plan then you would buy in at about 200. But look what the market did for two years after Black Friday. It went down to about 50. You would have lost around 75% of your capital. |
How to file income tax returns for profits from ESPP stock? | I did this for the last tax year so hopefully I can help you. You should get a 1099-B (around the same time you're getting your W-2(s)) from the trustee (whichever company facilitates the ESPP) that has all the information you need to file. You'll fill out a Schedule D and (probably) a Form 8949 to describe the capital gains and/or losses from your sale(s). It's no different than if you had bought and sold stock with any brokerage. |
Trouble sticking to a budget when using credit cards for day to day transactions? | Easy... Use cash, or keep a ledger. |
Saving for retirement without employer sponsored plan | Variable Annuities would be one option though there are SEC warnings about them, for an option that is tax-deferred and intended to be used for long-term investing such as retirement. There is a bit of a cost to gain the tax-deferral which may not always make them worthwhile. |
Can I sell a stock immediately? | If you place a market order, you are guaranteed to sell your stock unless the stock is in a trading halt. A market order does not guarantee the price you sell the stock at. If you place a market order, even if the stock is very illiquid a market maker will guarantee a market, but will not guarantee a price. |
Did my salesman damage my credit? What can I do? | At one point in my life I sold cars and from what I saw, three things stick out. Unless the other dealership was in the same network, eg ABC Ford of City A, and ABC Ford of City B, they never had possession of that truck. So, no REAL application for a loan could be sent in to a bank, just a letter of intent, if one was sent at all. With a letter of intent, a soft pull is done, most likely by the dealership, where they then attached that score to the LOI that the bank has an automated program send back an automatic decline, an officer review reply, or a tentative approval (eg tier 0,1,2...8). The tentative approval is just that, Tentative. Sometime after a lender has a loan officer look at the full application, something prompts them to change their offer. They have internal guidelines, but lets say an app is right at the line for 2-3 of the things they look at, they chose to lower the credit tier or decline the app. The dealership then goes back and looks at what other offers they had. Let's say they had a Chase offer at 3.25% and a CapOne for 5.25% they would say you're approved at 3.5%, they make their money on the .25%. But after Chase looks into the app and sees that, let's say you have been on the job for actually 11 months and not 1 year, and you said you made $50,000, but your 1040 shows $48,200, and you have moved 6 times in the last 5 years. They comeback and say no he is not a tier 2 but a tier 3 @ 5.5%. They switch to CapOne and say your rate has in fact gone up to 5.5%. Ultimately you never had a loan to start with - only a letter of intent. The other thing could be that the dealership finance manager looked at your credit score and guessed they would offer 3.5%, when they sent in the LOI it came back higher than he thought. Or he was BSing you, so if you price shopped while they looked for a truck you wouldn't get far. They didn't find that Truck, or it was not what they thought it would be. If a dealership sees a truck in inventory at another dealer they call and ask if it's available, if they have it, and it's not being used as a demo for a sales manager, they agree to send them something else for the trade, a car, or truck or whatever. A transfer driver of some sort hops in that trade, drives the 30 minutes - 6 hours away and comes back so you can sign the Real Application, TODAY! while you're excited about your new truck and willing to do whatever you need to do to get it. Because they said it would take 2-5 days to "Ship" it tells me it wasn't available. Time Kills Deals, and dealerships know this: they want to sign you TODAY! Some dealerships want "honest" money or a deposit to go get the truck, but reality is that that is a trick to test you to make sure you are going to follow through after they spend the gas and add mileage to a car. But if it takes 2 days+, The truck isn't out there, or the dealer doesn't have a vehicle the other dealership wants back, or no other dealership likes dealing with them. The only way it would take that long is if you were looking for something very rare, an odd color in an unusual configuration. Like a top end model in a low selling color, or configuration you had to have that wouldn't sell well - like you wanted all the options on a car except a cigarette lighter, you get the idea. 99.99% of the time a good enough truck is available. Deposits are BS. They don't setup any kind of real contract, notice most of the time they want a check. Because holding on to a check is about as binding as making you wear a chicken suit to get a rebate. All it is, is a test to see if you will go through with signing the deal. As an example of why you don't let time pass on a car deal is shown in this. One time we had a couple want us to find a Cadillac Escalade Hybrid in red with every available option. Total cost was about $85-90k. Only two new Red Escalade hybrids were for sale in the country at the time, one was in New York, and the other was in San Fransisco, and our dealership is in Texas, and neither was wanting to trade with us, so we ended up having to buy the SUV from one of the other dealerships inventory. That is a very rare thing to do by the way. We took a 25% down payment, around $20,000, in a check. We flew a driver to wherever the SUV was and then drove it back to Texas about 4 days later. The couple came back and hated the color, they would not take the SUV. The General Manager was pissed, he spent around $1000 just to bring the thing to Texas, not to mention he had to buy the thing. The couple walked and there was nothing the sales manager, GM, or salesman could do. We had not been able to deliver the car, and ultimately the dealership ate the loss, but it shows that deposits are useless. You can't sell something you don't own, and dealerships know it. Long story short, you can't claim a damage you never experienced. Not having something happen that you wanted to have happen is not a damage because you can't show a real economic loss. One other thing, When you sign the paperwork that you thought was an application, it was an authorization for them to pull your credit and the fine print at the bottom is boiler plate defense against getting sued for everything imaginable. Ours took up about half of one page and all of the back of the second page. I know dealing with car dealerships is hard, working at them is just as hard, and I'm sorry that you had to deal with it, however the simplest and smoothest car deals are the ones where you pay full price. |
Employer-Paid relocation as taxable income? | If all of the relocation expenses are paid by your employer to the moving companies, then you should not have any tax liability for those payments. Relocation expenses should be treated as normal business expenses by your employer. Note I emphasize "should" because it's possible that your employer "could" consider it income to you, but companies generally do not go out of their way to classify normal business expenses as income since it costs both them and you more money in taxes. As a side note, the reason your company is paying these expenses directly is probably to lessen the likelihood of these expenses being questioned in an audit (in comparison to if they cut you a reimbursement check which could get more scrutiny). |
Filing Taxes for Two Separate Jobs Being Worked at the Same Time? | Welcome to the wonderful but oft confusing world of self-employment. Your regular job will withhold income for you and give you a W2, which tells you and the government how much is withheld. At the end of the year uber will give you and the government a 1099-misc, which will tell you how much they paid you, but nothing will be withheld, which means you will owe the government some taxes. When it comes to taxes, you will file a 1040 (the big one, not a 1040EZ nor 1040A). In addition you will file a schedule C (self-employed income), where you will report the gross paid to you, deduct your expenses, and come up with your profit, which will be taxable. That profit goes into a line in the 1040. You need to file schedule SE. This says how much self-employment tax you will pay on your 1099 income, and it will be more than you expect. Self employment tax is SS/Medicare. There's a line for this on the 1040 as well. You can also deduct half of your self-employment tax on the 1040, there's a line for it. Now, you can pay quarterly taxes on your 1099 income by filing 1040-ES. That avoids a penalty (which usually isn't that large) for not withholding enough. As an alternative, you can have your regular W2 job withhold extra. As long as you don't owe a bunch at tax time, you won't be a fined. When you are self-employed your taxes aren't as simple. Sorry. You can either spend some time becoming an expert by studying the instructions for the 1040, pay for the expensive version of tax programs, or hire someone to do it for you. Self-employed taxes are painful, but take advantage of the upsides as well. You can start a solo 401(k) or SEP IRA, for example. Make sure you are careful to deduct every relevant business expense and keep good records in case you get audited. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | It may be the case that some of your debts have a flat regular fee in addition to the interest, which will go away when the debt is completely paid. For example, my mortgage has an approximately $400/year "package fee" as well as its (quite low) interest. When I finish paying the mortgage, I won't have to pay that fee anymore, so it is theoretically possible that spending extra money on paying off my mortgage would be better than spending it on paying off some other debt. I think it's unlikely that it would actually ever be my optimal move in practice, but the point is, there may be an advantage, financial or otherwise, to getting rid of a particular debt, other than merely removing the burden of interest. Those are special situations, though, and in the majority of cases, starting with the highest interest loan will be the right move. |
End-of-season car sales? | Manufacturers sometimes give incentives to car dealers to ensure that the prior year models are sold out before the year is up. However, dealers are usually pretty smart on only ordering the cars they know they can sell before this happens. Also, manufacturers are usually pretty good about only producing enough vehicles to cover demand. Honestly, you aren't likely to see these incentives materialize unless the manufacturer really screwed up. If that happens then three things occur. First is that manufacturers give a hidden incentive to the dealers. Dealers won't publicize this, even internally. If the cars are still not moving after a month, then the dealers will tell the salespeople that those cars have a specific "bonus" on them. If those cars still don't sell, then the bonus inflates quite a bit and dealers begin advertising that car at a deep discount on the radio. It's pretty much guaranteed to sell at that point. Barring those circumstances, the deal you get on a brand new car, late in the model year, is likely to be the same you could have gotten early in the model year. Honestly, if you want the best deal possible, look at the date of the inspection sticker on the car. If it is close to the 3 month mark then the dealer will bend over backwards to sell the car as the finance costs are racking up on it. They'll often sell that one at heavy discounts. |
Will getting a second credit card help my credit rating? | This very much depends how you use that second line of credit and what your current credit is. There are of course many more combinations buy you can probably infer the impact based on these cases. Your credit score is based on your likely hood of being profitable to a creditor should they issue you credit. This is based on your history of your ability to manage your credit. Having more credit and managing it well shows that you have a history of being responsible with greater sums of money available. If you use the card responsibly now then you are more likely to continue that trend than someone with a history of irresponsibility. Having a line but not using it is not a good thing. It costs the creditor money for you to have an account. If you never use that account then you are not showing that you can use the account responsibly so if you are just going to throw the card in a safe and never access it then you are better off not getting the card in the first place. |
Deductible expenses paid with credit card: In which tax year would they fall? | According to this discussion, there was a Tax Court ruling that likened deductibility for charitable giving by credit card to business expenses incurred by businesses operating under cash-basis accounting. (The point is made by Larry Hess on that site.) Short answer: According to this argument, you can claim the deduction when the charge is incurred. You don't have to wait until you pay it back. (Again this is for cash basis.) Publication 538 states that "under the cash method of accounting, you generally deduct business expenses in the tax year you pay them." I think the ruling above was meant to clarify when the expense is "paid". In my totally unofficial opinion, I suppose this makes sense. If I go to Office Depot to buy a box of envelopes, I walk out with the envelopes at the same time regardless of whether I paid cash or swiped a credit card. I wouldn't walk out thinking: "HA! I haven't actually paid for these yet." If the shoplifting alarm went off at the door and I was asked if I had bought those, I'd say yes, right? If this doesn't convince you, you can always get professional tax advice. |
For a major expensive home renovation (e.g. addition, finished basement, or new kitchen) should one pay cash or finance with a loan? Would such a loan be “good” debt? | The number one reason to borrow is quite simple; when you have no other choice. The primary reason to do this is when renovations or additions must be made in a timeframe that precludes you being able to save enough money to pay cash. Harmanjd's example of a kid on the way with no space to put him is a very good hypothetical. Disaster recovery is another; insurance doesn't cover everything and can sometimes be slow to pay out, and even if the payoff will rebuild the house exactly the way it was, these situations are deceptively good opportunities to improve on what you had. Since you already have to call in the contractors to demo and rebuild, the cost to do that is sunk, and the incremental cost of improvements or even additional square footage is relatively minor. Other acceptable reasons to borrow are: When cost of capital is very cheap. A typical amortized HELOC is pretty expensive when paid on-schedule, but if you can pay it off very early (i.e. when you sell the home next month) or you get a good deal on the interest rate (a subsidized disaster recovery loan, perhaps; you have to be careful with these as they're not intended to turn a burnt-down hovel into a McMansion) the cost of borrowing can be acceptable even if you had cash savings for the project. You have other uses for the cash that can offset cost of borrowing. This generally requires the first point to be true as well, as it's a general rule that borrowing $10,000 costs you more than you would gain by investing $10,000, but there are situations in which the reverse can be true (if you have $10k in oil or major tech stocks right now, it would probably be a bad move to liquidate them for home improvements if you can get a HELOC at less than 6%). You can realize a net gain in home value from the reno. These situations are rare in cases of an already livable home; "flippers", which make their living on renovating homes for a profit, generally choose homes with obvious but easy-to-fix problems that depress home value because they look worse than they are. If you bought your home without any such problems, you probably paid something close to market value at the time, and so you're probably behind the curve. However, if you (or your family in the case of an estate transfer) have owned the home for a long time, long enough for things to fall WAY out of date, then you can catch up a lot of market value with one renovation, where if the home had had two or three renovations along the way a reno now wouldn't gain you as much value. |
How do I cash in physical stock certificates? (GM 1989) | I'm afraid you're not going to get any good news here. The US government infused billions of dollars in capital as part of the bankruptcy deal. The old shares have all been cancelled and the only value they might have to you are as losses to offset other gains. I would definitely contact a tax professional to look at your current and previous returns to create a plan that best takes advantage of an awful situation. It breaks my heart to even think about it. |
How much is university projected to cost in Canada in 18 years? | For a Canadian university education, an October 2009 article at Canada.com says: [...] The study estimates the total price tag of an undergraduate degree at a whopping $137,013 for students living away from home and $101,426 for those staying at home. [...] |
If the U.S. defaults on its debt, what will happen to my bank money? | You must mean the current debt ceiling debacle. The meaning of it is: US government is constantly borrowing money (by issuing treasury bonds) and constantly repaying some of the bonds that come to maturity, and also has other obligations it has to meet by law all the time - such as Social Security checks, bonds interest, federal employees' salaries and pensions, etc. By law, total amount of money that can be borrowed at the same time is capped. That means, there can be situation where the government needs to borrow money to pay, say, interest on existing bonds, but can not, since the limit is reached. Such situation is called a default, since the government promised to pay the interest, but is unable to do so. That does not mean the government has no money at all and will completely collapse or couldn't raise money on the market if it were permitted by law to do so (currently, the market is completely willing to buy the debt issued by US government, and with interest that is not very high, though of course that may change). It also does not mean the economy ceases to function, dollars cease to have value or banks instantly go bankrupt. But if the government breaks its promises to investors, it has various consequences such as raising the costs of borrowing in the future. Breaking promises to other people - like Social Security recipients - would also look bad and probably hurt many of them. Going back to your bank account, most probably nothing would happen to the money you store there. Even if the bank had invested 100% of the money in US treasury bonds (which doesn't really happen) they still can be sold on the open market, even if with some discount in the event of credit rating downgrade, so most probably your account would not be affected. As stated in another answer, even if the fallout of all these calamities causes a bank to fail, there's FDIC and if your money is under insured maximums you'll be getting your money back. But if your bank is one of the big ones, nothing of the sort would happen anyway - as we have seen in the past years, government would do practically anything to not allow any big bank failures. |
Pay off car loan entirely or leave $1 until the end of the loan period? | If I were you, I would pay off the car loan today. You already have an excellent credit score. Practically speaking, there is no difference between a 750 score and an 850 score; you are already eligible for the best loan rates. The fact that you are continuing to use 5 credit cards and that you still have a mortgage tells me that this car loan will have a negligible impact on your score (and your life). By the way, if you had told me that your score was low, I would still tell you to pay off the loan, but for a different reason. In that case, I would tell you to stop worrying about your score, and start getting your financial life in order by eliminating debt. Take care of your finances by reducing the amount of debt in your life, and the score will take care of itself. I realize that the financial industry stresses the importance of a high score, but they are also the ones that sell you the debt necessary to obtain the high score. |
Contract job (hourly rate) as a 1099: How much would I be making after taxes? | Does your spouse work? That's one factor that can put your income into a higher bracket. The one difference to note is you will pay 2x the social security portion, so even though not "federal" tax, its right off the top nearly 13%. I'm not familiar with your states tax. It's really worth dropping the $75 on a copy of the software and running your own exact numbers. |
Best way to start investing, for a young person just starting their career? | First, congratulations on even thinking about investing while you are still young! Before you start investing, I'd suggest you pay off your cc balance if you have any. The logic is simple: if you invest and make say 8% in the market but keep paying 14% on your cc balance, you aren't really saving. Have a good supply of emergency fund that is liquid (high yielding savings bank like a credit union. I can recommend Alliant). Start small with investing. Educate yourself on the markets before getting in. Ignorance can be expensive. Learn about IRA (opening an IRA and investing in the markets have (good)tax implications. I didn't do this when I was young and I regret that now) Learn what is 'wash sales' and 'tax loss harvesting' before putting money in the market. Don't start out by investing in individual stocks. Learn about indexing. What I've give you are pointers. Google (shameless plug: you can read my blog, where I do touch upon most of these topics) for the terms I've mentioned. That'll steer you in the right direction. Good luck and stay prosperous! |
How do euro hedged index funds work? | When you invest in an S&P500 index fund that is priced in USD, the only major risk you bear is the risk associated with the equity that comprises the index, since both the equities and the index fund are priced in USD. The fund in your question, however, is priced in EUR. For a fund like this to match the performance of the S&P500, which is priced in USD, as closely as possible, it needs to hedge against fluctuations in the EUR/USD exchange rate. If the fund simply converted EUR to USD then invested in an S&P500 index fund priced in USD, the EUR-priced fund may fail to match the USD-priced fund because of exchange rate fluctuations. Here is a simple example demonstrating why hedging is necessary. I assumed the current value of the USD-priced S&P500 index fund is 1,600 USD/share. The exchange rate is 1.3 USD/EUR. If you purchase one share of this index using EUR, you would pay 1230.77 EUR/share: If the S&P500 increases 10% to 1760 USD/share and the exchange rate remains unchanged, the value of the your investment in the EUR fund also increases by 10% (both sides of the equation are multiplied by 1.1): However, the currency risk comes into play when the EUR/USD exchange rate changes. Take the 10% increase in the price of the USD index occurring in tandem with an appreciation of the EUR to 1.4 USD/EUR: Although the USD-priced index gained 10%, the appreciation of the EUR means that the EUR value of your investment is almost unchanged from the first equation. For investments priced in EUR that invest in securities priced in USD, the presence of this additional currency risk mandates the use of a hedge if the indexes are going to track. The fund you linked to uses swap contracts, which I discuss in detail below, to hedge against fluctuations in the EUR/USD exchange rate. Since these derivatives aren't free, the cost of the hedge is included in the expenses of the fund and may result in differences between the S&P500 Index and the S&P 500 Euro Hedged Index. Also, it's important to realize that any time you invest in securities that are priced in a different currency than your own, you take on currency risk whether or not the investments aim to track indexes. This holds true even for securities that trade on an exchange in your local currency, like ADR's or GDR's. I wrote an answer that goes through a simple example in a similar fashion to the one above in that context, so you can read that for more information on currency risk in that context. There are several ways to investors, be they institutional or individual, can hedge against currency risk. iShares offers an ETF that tracks the S&P500 Euro Hedged Index and uses a over-the-counter currency swap contract called a month forward FX contract to hedge against the associated currency risk. In these contracts, two parties agree to swap some amount of one currency for another amount of another currency, at some time in the future. This allows both parties to effectively lock in an exchange rate for a given time period (a month in the case of the iShares ETF) and therefore protect themselves against exchange rate fluctuations in that period. There are other forms of currency swaps, equity swaps, etc. that could be used to hedge against currency risk. In general, two parties agree to swap one quantity, like a EUR cash flow, payments of a fixed interest rate, etc. for another quantity, like a USD cash flow, payments based on a floating interest rate, etc. In many cases these are over-the-counter transactions, there isn't necessarily a standardized definition. For example, if the European manager of a fund that tracks the S&P500 Euro Hedged Index is holding euros and wants to lock in an effective exchange rate of 1.4 USD/EUR (above the current exchange rate), he may find another party that is holding USD and wants to lock in the respective exchange rate of 0.71 EUR/USD. The other party could be an American fund manager that manages a USD-price fund that tracks the FTSE. By swapping USD and EUR, both parties can, at a price, lock in their desired exchange rates. I want to clear up something else in your question too. It's not correct that the "S&P 500 is completely unrelated to the Euro." Far from it. There are many cases in which the EUR/USD exchange rate and the level of the S&P500 index could be related. For example: Troublesome economic news in Europe could cause the euro to depreciate against the dollar as European investors flee to safety, e.g. invest in Treasury bills. However, this economic news could also cause US investors to feel that the global economy won't recover as soon as hoped, which could affect the S&P500. If the euro appreciated against the dollar, for whatever reason, this could increase profits for US businesses that earn part of their profits in Europe. If a US company earns 1 million EUR and the exchange rate is 1.3 USD/EUR, the company earns 1.3 million USD. If the euro appreciates against the dollar to 1.4 USD/EUR in the next quarter and the company still earns 1 million EUR, they now earn 1.4 million USD. Even without additional sales, the US company earned a higher USD profit, which is reflected on their financial statements and could increase their share price (thus affecting the S&P500). Combining examples 1 and 2, if a US company earns some of its profits in Europe and a recession hits in the EU, two things could happen simultaneously. A) The company's sales decline as European consumers scale back their spending, and B) the euro depreciates against the dollar as European investors sell euros and invest in safer securities denominated in other currencies (USD or not). The company suffers a loss in profits both from decreased sales and the depreciation of the EUR. There are many more factors that could lead to correlation between the euro and the S&P500, or more generally, the European and American economies. The balance of trade, investor and consumer confidence, exposure of banks in one region to sovereign debt in another, the spread of asset/mortgage-backed securities from US financial firms to European banks, companies, municipalities, etc. all play a role. One example of this last point comes from this article, which includes an interesting line: Among the victims of America’s subprime crisis are eight municipalities in Norway, which lost a total of $125 million through subprime mortgage-related investments. Long story short, these municipalities had mortgage-backed securities in their investment portfolios that were derived from, far down the line, subprime mortgages on US homes. I don't know the specific cities, but it really demonstrates how interconnected the world's economies are when an American family's payment on their subprime mortgage in, say, Chicago, can end up backing a derivative investment in the investment portfolio of, say, Hammerfest, Norway. |
United Kingdom: Where to save money for a property deposit | The chancellor announced an ISA in this week's budget intended for people saving to buy their first home. For every £200 put in the government will add £50 to the account so I would strongly encourage you to put the money into that as it is also tax free. |
Definition of equity | The word equity always refers to the ownership of something, whether it be a company or a home. The wikipedia article is differentiating companies by how they raised money for operations. Equity companies, by their definition are those that sold an interest in the company in exchange for capital. Debt based companies, again by their definition, are those that borrow money from investors, but instead of an ownership stake they promise to pay back the money presumably with interest. |
How much money should I put on a house? | I Usually would not say this but if you can just put down 20% I would do that and get a 15 year mortgage. The rates are so low on 15 year mortgage that you should be able to make more than the 3% in the market per year and make some money. I wouldn't be surprised if for 1/2 of the term of your loan you will be able to make that just in interest. Basically I have done this for my house and my rental properties. So I have put my money where my mouth is on this. I have made over 9% each of the last three years which has made me $12,000 dollars above and beyond over what I would have paid in interest per year. So it a decision that net me $36,000 for doing nothing. Now the market is going to be down some of those years so lets see how it works out but I have history on my side. Its not about timing the market its about time in the market. And 15 years in the market is a pretty safe bet albeit not as safe as just dumping you money in the mortgage. |
What assets would be valuable in a post-apocalyptic scenario? | I find these type of questions silly, but I'll bite: |
How can rebuilding a city/large area be considered an economic boost? | The problem here is that the metrics that are used to track the economy are looking for things like growth and change. In a perfect world, everyone would have exactly what they need and there would no need for economists because the economy would be static. |
Why would a company with a bad balance sheet be paying dividends? | While Ford and the other auto makers have a bad few years, some companies want to have a cash dividend. It appeals to certain investors. Others have tried to avoid dividends: Microsoft didn't start until ~2003; Apple only from mid 80's until mid 90's.; Google never has had a cash dividend. The desire to keep the dividend, or even to increase it, make some companies continue the practice; even when it doesn't make complete sense. Here is a list of stocks that have INCREASED their dividend for the last 25+ years: http://www.dividend.com/dividend-stocks/25-year-dividend-increasing-stocks.php Some have had good years, others bad years, in the last 25+ years. |
Highest market cap for a company from historical data | In common with many companies, Microsoft has been engaging in share buyback programmes, where it buys its own shares in the market and then cancels them. It's often a more tax-efficient way to distribute profits to the shareholders than paying a dividend. So there were more Microsoft shares in circulation in 1999 than there are now. See here for information. |
One of my stocks dropped 40% in 2 days, how should I mentally approach this? | Have the reasons you originally purchased the stock changed? Is the company still sound? Does the company have a new competitor? Has the company changed the way they operate? If the company is the same, except for stock price, why would you change your mind on the company now? ESPECIALLY if the company has not changed, -- but only other people's PERCEPTION of the company, then your original reasons for buying it are still valid. In fact, if you are not a day-trader, then this COMPANY JUST WENT ON SALE and you should buy more. If you are a day trader, then you do care about the herd's perception of value (not true value) and you should sell. DAY TRADER = SELL BUY AND HOLD (WITH INTELLIGENT RESEARCH) = BUY MORE |
Should I pay cash or prefer a 0% interest loan for home furnishings? | 0% furniture loans can hurt your credit rating. I was told by a bank mortgage officer (sorry I can't cite a document) that credit rating algorithms consider "consumer" loans like 0% appliance loans and certain store-specific credit cards as a negative factor, lowering your overall score. The rationalization given was that that taking that type of credit is an indicator that you have zero cash reserves. The actual algorithms are proprietary, so I don't know how you could verify this. If true, it runs counter to the conventional wisdom that getting credit and then paying it off builds your credit score. |
Rate of change of beta | This is a useful metric in that it gives you a trust factor on how reliable the beta is for future expectations It is akin to velocity and acceleration First and second order derivatives of distance / time. Erratic acceleration implies the velocity is less trustworthy Same idea for beta |
Recommended education path for a future individual investor? | My plan is that one day I can become free of the modern day monetary burdens that most adults carry with them and I can enjoy a short life without these troubles on my mind. If your objective is to achieve financial independence, and to be able to retire early from the workforce, that's a path that has been explored before. So there's plenty of sources that you might want to check. The good news is that you don't need to be an expert on security analysis or go through dozens of text books to invest wisely and enjoy the market returns. This is the Bogleheads philosophy. It's widely accepted by people in academia, and thoroughly tested. Look into it further if you want to see the rationale behind, but, to sum it up: It doesn't matter how expert you are. The idea of beating the market, that an index fund tracks, is about 'outsmarting' the rest of investors. That would be difficult, even if it was a matter of skill, but when it comes to predicting random events we're all equally clueless. *Total Expense Ratio: It gives an idea of how expensive is a given fund in terms of fees. Actively managed funds have higher TER than indexed ones. This doesn't mean there aren't index funds with, unexplainable, high TER out there. |
Should I finance a new home theater at 0% even though I have the cash for it? | I bought a Thinkpad in Dec 2007 using BillMeLater, which was working with IBM/Lenovo at that time. I was getting the notebook at the lowest price available, from the manufacturer. I had the money to pay for it -- around $1400. But I went ahead and took the offer from BillMeLater. It was essentially a 12-month zero-interest credit card balance transfer loan. Sketchy bit its very nature. They spammed my inbox with solicitations, which was annoying. But I set my bank to pay the monthly amount (or slightly over, since it decreases each month) and to make the final payoff -- all at the time of purchase. This worked just fine -- but I still had spam from BillMeLater for quite a while. I still ran a slight risk that something would go wrong, at which point I'd face interest charges -- but I would then have paid off the item plus those interest charges. Luckily I avoided that. I'm not sure I'd bother doing this again, but if the sticker price was high enough, I might be tempted.... |
Where to start with personal finance? | First thing I'd say is don't start with investing. The foundation of solid finances is cash flow. Making more than you spend, reliably; knowing where your money goes; having a system that works for you to make sure you make more than you spend. Until you have that, your focus may as well be on getting there, because you can't fix much else about your finances until you fix this. A number you want to know is your percentage of income saved, and a good goal for that is about 15%, with 10-12% going to retirement savings and the rest to shorter-term goals and emergency fund and so forth. (Of course the right percentage here depends on your goals and situation, but for most people this is a kind of minimum savings rate to be in good shape.) Focus on your savings rate. This is your profitability, if you view yourself as a business. If it's crappy or negative, your finances will be a mess. Two ways to improve it are to spend less or to improve your earnings power. Doing both is even better. The book Your Money or Your Life by Dominguez and Robin is good for showing how to obsessively focus on cash flow, even though you may not share their zeal for early retirement. A simpler exercise than what they recommend: take 3 months of your checking and credit card statements, go through each expenditure and put them in a spreadsheet column, SUM() that column. Then add up 3 months of after-tax paychecks. Divide both numbers by three and compare. (The 3 months is to average out your spending, which probably varies a lot by month.) After positive cash flow and savings rate, the next thing I'd go through is insurance. Risk management for what you have. This can include checking you have all the important insurance coverages (homeowner's/renter's, auto, potentially umbrella, term life, disability, and of course health insurance, are some highlights); and also adjusting all your policies to be most cost-effective, which usually means raising the deductible if you have a good emergency fund. Often you can raise the deductible on policies you have, and use the savings to add more catastrophe coverage (such as term life if you didn't have it, or boosting the liability protection on your homeowner's, or whatever). Remember, cover catastrophes as cheaply and comprehensively as possible, but don't worry about reimbursement for non-catastrophic expenses. I like this book, Smart and Simple Financial Strategies for Busy People by Jane Bryant Quinn, because it covers all the main personal finance topics, not just investing; and because it is smart and simple. All the main stuff to think about is in the one book and the advice is solid and uncomplicated. Investing can truly be dead easy; most people would be fine with this advice: Honestly, I do micro-optimize and undermine my investing, and I'm guessing most people on this forum do. But it's not something I could defend objectively as a good use of time. It probably is necessary to do some reading to feel financially literate and confident in an investment plan, but the reading isn't really because a good plan is complicated, it's more to understand all the complicated things that you don't need to do, since that's how you'll know not to do them. ;-) Especially when salespeople and publications and TV are telling you over and over and over that you need to know a bunch of crap and do a bunch of things. People who have a profitable "business of me" are the ones who end up with a lot of money. Not people who spend a lot of time screwing with investments. (People who get rich investing invest professionally - as their "business of me" - they don't goof around with their 401k after work.) Financial security is all about your savings rate, i.e. your personal profitability. No shortcuts, other than lotteries and rich uncles. |
What happens if one brings more than 10,000 USD with them into the US? | Bad plan. This seems like a recipe for having your money taken away from you by CBP. Let me explain the biases which make it so. US banking is reliable enough for the common citizen, that everyone simply uses banks. To elaborate, Americans who are unbanked either can't produce simple identity paperwork; or they got an account but then got blacklisted for overdrawing it. These are problems of the poor, not millionaires. Outside of determined "off the grid" folks with political reasons to not be in the banking and credit systsm, anyone with money uses the banking system. Who's not a criminal, anyway. We also have strong laws against money laundering: turning cash (of questionable origin) into "sanitized" cash on deposit in a bank. The most obvious trick is deposit $5000/day for 200 days. Nope, that's Structuring: yeah, we have a word for that. A guy with $1 million cash, it is presumed he has no choice: he can't convert it into a bank deposit, as in this problem - note where she says she can't launder it. If it's normal for people in your country to haul around cash, due to a defective banking system, you're not the only one with that problem, and nearby there'll be a country with a good banking system who understands your situation. Deposit it there. Then retain a US lawyer who specializes in this, and follow his advice about moving the money to the US via funds transfer. Even then, you may have some explaining to do; but far less than with cash. (And keep in mind for those politically motivated off-the-financial-grid types, they're a bit crazy but definitely not stupid, live a cash life everyday, and know the law better than anybody. They would definitely consider using banks and funds transfers for the border crossing proper, because of Customs. Then they'll turn it into cash domestically and close the accounts.) |
What is buying pressure? | Buying pressure means there are more interested buyers than there are ready sellers putting upward pressure on prices. That might include institutional buyers who are slowly executing buy orders because they still want the best prices possible without clearing out the market. Buying pressure doesn't have to be related to volume at all. If everyone who owns shares think they are going to be worth far more than recent market prices, they will not offer them for sale. That means there is more demand to buy than there is a supply of shares to be bought. That condition can exist regardless of trading volume. |
Isn't an Initial Coin Offering (ICO) a surefire way to make tons of money? | A sure-fire way to make money? Hell no. There are tonnes of scams and money grabs out there, not to mention the fact that most ICOs are based on projects that are going nowhere. Having said that, there are many ICOs each month that will do very well in the future. The best thing to do is to shortlist a number of projects you like the sound of and then sit down and research each of them. Some of the key things to look out for, aside from whether you think the idea is a good one are: The team. Do they have a proven track record? Are they reputable? Is what they claim provable? Google team member names and check to see if they have a legit Linkedin profile. The Whitepaper. Is it clearly worded without spelling and grammar mistakes? Does it have a well defined roadmap with provable achievements to-date? The ICO format. How much are they looking to raise and is it a realistic figure? Are unsold tokens burnt? Is there a maximum contribution limit per investor? What does the competition look like? If they are first to market then this will make the startup way more attractive. The above are probably the most important things to consider though there are many other things to investigate. I have written a fairly comprehensive guide to all the things I look out for when analyzing the investability of an ICO. You might want to check it out before firing out your Bitcoin and ETH into dubious projects. |
Exotic Car Flipping as a Strategic Investment? (US-CAN) | You can greatly reduce the risk if you can line up a buyer prior to purchasing the car. That kind of thing is common in business, one example is drop shipping. Also there are sales companies that specialize in these kinds of things bringing manufacturers of goods together with customers. The sales companies never take delivery of the product, just a commission on the sales. From this the manufacturers are served as they have gained a customer for their goods. The buying company is served as they can make a "better" end product. The two parties may have not been brought together had it not been for the sales company so on some level both are happy to pay for the service. Can you find market inequalities and profit from them? Sure. I missed a great opportunity recently. I purchased a name brand shirt from a discount store for $20. Those shirts typically sell on ebay for $80. I should have cleaned out that store's inventory, and I bet someone else did as by the time I went back they were gone. That kind of thing was almost risk-less because if the shirts did not sell, I could simply return them for the full purchase price. That and I can afford to buy a few hundred dollars worth of shirts. Can you afford to float 45K CDN? What if it takes a year to sell the car? What if the economy goes sour and you are left "holding the bag"? Why are not car dealers doing exactly what you propose? Here in the US this type of thing is called "horse trading" and is very common. I've both lost and made money on these kind of deals. I would never put a significant amount of my net worth at risk. |
Are there any Social Responsibility Index funds or ETFs? | There is the iShares Jantzi Social Index Fund. |
My university has tranfered me money by mistake, and wants me to transfer it back | Call in to the bank using a publicly available number to verify the request. |
Is giving my girlfriend money for her mortgage closing costs and down payment considered fraud? | When you purchase a mortgage, you have to prove the source of your down payment. Primarily this is so that the mortgage lender knows that there are no other outstanding liens against the property. If you show that some or part of your down payment was a gift, there is no fraud, but it may affect your qualification for the mortgage. Consult a lawyer in your area to determine if there is a legal way to gift the money that is not taxed. If all else fails you could just pay the tax. Also, you should research whether your gift is above the floor of taxable gifts. |
How to motivate young people to save money | Teach them that money can help solve most (if not all the problems) in life. If they truly appreciate the value of saving every single penny, eventually they will come to realize that if you don't touch your money (waste it on useless things you don't need such as eating out) that it can grow. Also teach them the value of compounding interest, even a TFSA/high interest savings account with a modest 3-4% annual ROI can be big with yearly additions and no withdrawals for a lifetime. Tell them to take Johnny Appleseed for example. Johnny starts up his TFSA with help from mom and dad at the age of 15, let's say they put in $5000 all together. Now let's say he adds in a modest $2500 to his TFSA every year until he is 55 years old. If the TFSA has an interest rate of 4%, then when he's 55 he'll have over half a million dollars in the bank and he really didn't have to do much besides not touch it. |
How often do stocks become worthless? | Randomly selected stocks would probably become worthless at a similar rate of all businesses going out of business do. I'm not sure why you'd randomly select a stock though. Stocks in the S&P500 (or other similar index), or large-cap stocks probably become worthless at a much lower rate. |
How can I report pump and dump scams? | Start with your local police department then move on to these sites. Fill out the United States Postal Service fraud complaint form http://ehome.uspis.gov/fcsexternal/ Contact your State Attorneys General. Your state Attorney General or local office of consumer protection is also listed in the government pages of your telephone book Write to the Federal Trade Commission: spam@uce.gov If you are aware of a securities (e.g., stocks) scam, insider trading, etc., you will want to contact the SEC (Securities and Exchange Commission). http://www.consumerfraudreporting.org/SEC.php |
Why do people take out life insurance on their children? Should I take out a policy on my child? | A $10,000 life insurance policy on a child only makes sense for a family that: Thus, it could make sense: Many families are in this financial situation. A family in the combination of this financial situation and this emotional situation might be well served to seek religious counsel. If they find ways to remember loved ones without expensive funerals, they could save money on insurance. Ironically, a much larger life insurance policy for a child might make more sense. Look at it this way: What is the replacement cost of a child? A family that has only one son (and any number of daughters), or a family that has only one daughter (and any number of sons), stands to lose an obvious part of their genetic and cultural legacy if they lose that son or daughter. It is expensive to conceive, bear, and raise a child to a particular age. This cost increases as the child ages. The number of years of child-raising cost obviously increases. Also, the cost of conceiving another child can go from very small to very large (especially if fertility treatment or sterilization-reversal surgery is required). Unfortunately, most life insurance companies do not think of things this way. I am not aware of any 100,000 - 250,000 dollar children's life insurance policies on the market. |
I'm 23 and was given $50k. What should I do? | Wow, hard to believe not a single answer mentioned investing in one of the best asset classes for tax purposes...real estate. Now, I'm not advising you to rush out and buy an investment property. But rather than just dumping your money into mutual funds...over which you have almost 0 control...buy some books on real estate investing. There are plenty of areas to get into, rehabs, single family housing rentals, multifamily, apartments, mobile home parks...and even some of those can have their own specialties. Learn now! And yes, you do have some control over real estate...you control where you buy, so you pick your local market...you can always force appreciation by rehabbing...if you rent, you approve your renters. Compared to a mutual fund run by someone you'll never meet, buying stocks in companies you've likely never even heard of...you have far more control. No matter what area of investing you decide to go into, there is a learning curve...or you will pay a penalty. Go slow, but move forward. Also, all the advice on using your employer's matching (if available) for 401k should be the easiest first step. How do you turn down free money? Besides, the bottom line on your paycheck may not change as much as you think it might...and when weighed against what you get in return...well worth the time to get it setup and active. |
Online stock screener to find stocks that are negatively correlated to another stock/index? | SeekingAlpha has a section dedicated to Short ETFs as well as others. In there you will find SH, and SDS. Both of which are inverse to the S&P 500. Edit: I linked to charts that compare SH and SDS to SPY. |
OTC Markets, Time, and Trading | Depending on your broker, you can buy these stocks directly at the most liquid local exchanges. For instance, if you are US resident and want to to buy German stocks (like RWE) you can trade these stocks over InteractiveBrokers (or other direct brokers in the US). They offer direct access to German Xetra and other local markets. |
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