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Will a stop order get triggered if the floor is hit and trading is halted? | During a circuit breaker, no trading occurs. These policies have been implemented to maintain exchange liquidity since the NYSE nearly went bankrupt during the 1987 crash because many members had become insolvent. If an order is filled before the halt, it will stand unless busted. During the Flash Crash, many orders were busted. |
What are the common moving averages used in a “Golden Cross” stock evaluation? | Technical analysis is insufficient. You're halfway to figuring it out if you start to question why a 50 day moving average vs 200 vs 173. Invest in companies that are attractively valued vs. their sales/growth/divends/anythingelsereal |
Why invest in becoming a landlord? | Let me add a few thoughts that have not been mentioned so far in the other answers. Note that for the decision of buying vs. renting a home i.e. for personal use, not for renting out there's a rule of thumb that if the price for buying is more than 20 year's (cold) rents it is considered rather expensive. I don't know how localized this rule of thumb is, but I know it for Germany which is apparently the OP's country, too. There are obviously differences between buying a house/flat for yourself and in order to rent it out. As others have said, maintenance is a major factor for house owners - and here a lot depends on how much of that you do yourself (i.e. do you have the possibility to trade working hours for costs - which is closely related to financial risk exposure, e.g. increasing income by cutting costs as you do maintenance work yourself if you loose your day-time job?). This plays a crucial role for landlords I know (they're all small-scale landlords, and most of them do put in substantial work themselves): I know quite a number of people who rent out flats in the house where they actually live. Some of the houses were built with flats and the owner lives in one of the flats, another rather typical setup is that people built their house in the way that a smaller flat can easily be separated and let once the kids moved out (note also that the legal situation for the landlord is easier in that special case). I also know someone who owns a house several 100 km away from where they live and they say they intentionally ask a rent somewhat below the market price for that (nice) kind of flat so that they have lots of applicants at the same time and tenants don't move out as finding a new tenant is lots of work and costly because of the distance. My personal conclusion from those points is that as an investment (i.e. not for immediate or future personal use) I'd say that the exact circumstances are very important: if you are (stably) based in a region where the buying-to-rental-price ratio is favorable, you have the necessary time and are able to do maintenance work yourself and there is a chance to buy a suitable house closeby then why not. If this is not the case, some other form of investing in real estate may be better. On the other hand, investing in further real estate closeby where you live in your own house means increased lump risk - you miss diversification into regions where the value of real estate may develop very differently. There is one important psychological point that may play a role with the observed relation between being rich and being landlord. First of all, remember that the median wealth (without pensions) for Germany is about 51 k€, and someone owning a morgage-free 150 k€ flat and nothing else is somewhere in the 7th decile of wealth. To put it the other way round: the question whether to invest 150 k€ into becoming a landlord is of practical relevance only for rich (in terms of wealth) people. Also, asking this question is typically only relevant for people who already own the home they live in as buying for personal use will typically have a better return than buying in order to rent. But already people who buy for personal use are on average wealthier (or at least on the track to become more wealthy in case of fresh home owners) than people who rent. This is attributed to personal characteristics and the fact that the downpayment of the mortgage enforces saving behaviour (which is typically kept up once the house is paid, and is anyways found to be more pronounced than for non-house-owners). In contrast, many people who decide never to buy a home fall short of their initial savings/investment plans (e.g. putting the 150 k€ into an ETF for the next 21 years) and in the end spend considerably more money - and this group of people rarely invests into directly becoming a landlord. Assuming that you can read German, here's a relevant newspaper article and a related press release. |
How does one typically exit (close out) a large, in-the-money long put option position? | While open interest usually correlates to volume, the mark of liquidity is the bid ask spread. Even when trading options with spreads as large as an ask 2x the bid, a more realistic price that traders are willing to accept lies somewhere in the middle. Any option can easily be exited at intrinsic value: underlying price - exercise price for calls, exercise price - underlying price for puts. For illiquid options, this will be the best price obtained. For longer term options, something closer to the theoretical price is still possible. If an underlying is extremely liquid, yet the options aren't quite then options traders will be much more ready to trade at the theoretical price. For exiting illiquid options, small, < 4 contracts, and infrequent, > 30 minute intervals, orders are more likely to be filled closer to the theoretical price; however, if one's sells are the only trades, traders on the other side will take note and accept ever lowering implied volatilities. With knowledge of what traders will accept, it is always more optimal to trade out of options rather than exercise because of the added costs and uncertainty involved with exercising and liquidating. |
Why are American-style options worth more than European-style options? | I'm sorry, but your math is wrong. You are not equally likely to make as much money by waiting for expiration. Share prices are moving constantly in both directions. Very rarely does any stock go either straight up or straight down. Consider a stock with a share price of $12 today. Perhaps that stock is a bad buy, and in 1 month's time it will be down to $10. But the market hasn't quite wised up to this yet, and over the next week it rallies up to $15. If you bought a European option (let's say an at-the-money call, expiring in 1 month, at $12 on our start date), then you lost. Your option expired worthless. If you bought an American option, you could have exercised it when the share price was at $15 and made a nice profit. Keep in mind we are talking about exactly the same stock, with exactly the same history, over exactly the same time period. The only difference is the option contract. The American option could have made you money, if you exercised it at any time during the rally, but not the European option - you would have been forced to hold onto it for a month and finally let it expire worthless. (Of course that's not strictly true, since the European option itself can be sold while it is in the money - but eventually, somebody is going to end up holding the bag, nobody can exercise it until expiration.) The difference between an American and European option is the difference between getting N chances to get it right (N being the number of days 'til expiration) and getting just one chance. It should be easy to see why you're more likely to profit with the former, even if you can't accurately predict price movement. |
How often do stocks become worthless? | The only thing that makes a stock worthless is when the company goes out of business. Note that bankruptcy, by itself, does not mean the company is closing. It could successfully restructure its affairs and come out of bankruptcy with a better outlook. Being a small or unprofitable business may cause a company's to trade in the "penny stock" range, but there is still some value there. Since most dying companies will pass through the penny stock phase, you may be able to track down what you're looking for by finding companies who have been (or are about to be) delisted. Delisting is not death, it's just the point at which the company's shares no longer meet the qualifications to be traded on a particular exchange. If you find old stock certificates in your grandmother's sock drawer, they may be a treasure, or they may be worthless pieces of paper if the company changed its ownership and Grandma didn't know about it. |
Is it common in the US not to pay medical bills? | Is it common in the US not to pay medical bills? Or do I misunderstood what had been said? I would feel comfortable saying that most people who face medical bills don't pay them. They are unable. If they were able, they would have gotten medical insurance. In America, something like 55% of individuals do not have even $500 of savings, so when a big medical bill rolls in especially on top of lost work hours, they don't have a lot of options. Hospitals charge reasonable prices to insurance companies and Medicare. These fees are negotiated in advance and reflect the hospital's actual costs. This is called "usual, reasonable and customary". Hospitals charge a wildly inflated, criminally outrageous "cash price" to the uninsured. For instance back when Medicare paid about $175 for an ambulance ride, a friend was billed $1100 for the exact same thing. The hospital aims to scare the living daylights out of the patient (caring nothing about what that does to their health!) Perfect world, the patient pays them the $1100 instead of paying their rent. If the patient puts up a fight, they hope to haggle them down to something like $400, remember it really costs $175. This tactic is a huge profit-center for hospitals, even the "charity" hospitals, and they feel justified because so many uninsured don't pay at all (the hospital considers them "deadbeats".) Well, patients don't pay because cash prices are unreachable, so they just give up. Anyway, your friends are correct, don't even think of paying those cash billing amounts. Research and find out what Medicare pays, offer 60% of that, and haggle it to 100%. And sleep well knowing you paid what is fair. Not all services are as overpriced as my example, but most are at least 50% too high. The hospital does send you all the bills as a formality, even while they submit them to your insurance company. And then the insurance company usually pays them, so it is correct to "not pay that bill". A lot of medical offices will check with your insurance company even before you leave the office, and ask you to immediately pay anything the insurance won't cover. For instance they often have "co-pays" where you pay $20 and they pay the rest. To be clear: if your insurance company negotiates a rate with the hospital, say $185 for the ambulance ride, that is your price, which you are entitled to as a member of that insurance system. A lot of people get their livelihood from the inefficiency in medical insurance and billing. Their political power is why it's so hard for America to install a simpler system (or even replace Obamacare in an ideal political environment). It is also a big part of why America spends 18% of GDP on healthcare instead of 7-11% like our European peers who do not have to account for every gauze or rebill multiple insurers. Sorting out "who pays" would be expensive even if everyone did pay. |
How to refuse a Clearxchange payment? | Your bank uses ClearXchange, not you. It is not a website where you open an account, like many others, but an inter-bank transfer system based on email addresses, kind of like free wire transfers between everyone. You don't have to set anything up, just accept the payment, and the money appears in your account (assuming the client used the email address your bank has on file for you). However, if you still don't want it, you can just ignore it. There is a timeout when his transaction gets auto-cancelled, and he gets his money back. Here is an example text from the 'fine print' (my highlighting): "[...]We will continue our attempts by sending a second notice of a transfer to the recipient, and providing the recipient a period of nine (9) succeeding Business Days to register in the Service, or the person-to-person payment service of clearXchange, Zelle or a Network Bank. At the end of this period, if the recipient still has not registered, the transfer request will be Cancelled. The sender may cancel the transfer at any time during this ten (10) day period if the recipient is not registered at the time of cancellation.[...]" (https://chaseonline.chase.com/Public/Misc/LAContent.aspx?agreementKey=chasenet_la) |
Vanguard Mutual Funds — Diversification vs Share Class | There's really no right or wrong answer here because you'll be fine either way. If you've investing amounts in the low 5 figures you're likely just getting started, and if your asset allocation is not optimal it's not that big a deal because you have a long time horizon to adjust it, and the expense ratio differences here won't add up to that much. A third option is Vanguard ETFs, which have the expense ratio of Admiral Shares but have lower minimums (i.e. the cost of a single share, typically on the order of $100). However, they are a bit more advanced than mutual funds in that they trade on the market and require you to place orders rather than just specifying the amount you want to buy. A downside here is you might end up with a small amount of cash that you can't invest, since you can initially only buy whole numbers of ETFs shares. So what I'd recommend is buying roughly the correct number of ETFs shares you want except for your largest allocation, then use the rest of your cash on Admiral Shares of that (if possible). For example, let's say you have $15k to invest and you want to be 2/3 U.S. stock, 1/6 international stock, and 1/6 U.S. bond. I would buy as many shares of VXUS (international stock ETF) and BND (U.S. bond ETF) as you can get for $2500 each, then whatever is left over (~$10k) put into VTSAX (U.S. stock Admiral Shares mutual fund). |
Company revenue increased however stock price did not | It's great that you have gotten the itch to learn about the stock market. There are a couple of fundamentals to understand first though. Company A has strong, growing, net earnings and minimal debt, it's trading for $100 per share. Company B has good revenue but high costs of goods and total liabilities well in excess of total assets, it's trading for $0.10 per share. There is no benefit to getting 10,000 shares or 10 shares for your $1,000. Your goal is to invest in companies that have valuable products and services run by competent management teams. Sure, the number of shares you own will dictate what percentage of the company you own, and in a number of cases, your voting power. But even a penny stock will have a market capitalization of several million dollars so voting power isn't really a concern for your $1,000 investment. There is a lot more in the three basic financial statements (Income Statement, Balance Sheet, Statement of Cash Flows) than revenue. Seasoned accountants can have a hard time parsing out where money is coming from and where it's going. In general there are obvious red flags, like a fast declining cash balance against a fast growing liabilities balance or expenses exceeding revenue. While some of these things are common among new and high growth companies, it's not the place for a new investor with a small bankroll. A micro-cap company (penny stocks are in this group) will receive rounds of financing via issuing preferred convertible shares which may include options on more shares. For a company worth $20mm a $5mm financing round can materially change the finances of a company, and will likely dilute your holdings in common stock. Small growth companies need new financing frequently to fund their growth strategies. Revenue went up, great... why? Did you open another store? Did you open another sales office? Did the revenue increase this quarter based on substantially the same operation that existed last quarter or have you increased the capacity of your operation? If you increased the capacity of your operation what was the cost of the increase and did revenue increase as expected? Can you expect revenue to continue to grow at this rate or was it a one time windfall from an unusual order? Sure, there are spectacular gains to be had in penny stocks. XYZ Pharma Research (or whatever) goes from $0.05 to $0.60 and you've turned your $1,000 in to $12,000. This is a really unlikely event... Buying penny stocks is akin to buying lottery tickets. Unless you are a high ranking employee at the company capable of making decisions, or one of the investors buying the preferred shares mentioned in point 3, or are one of the insiders of a pump and dump scam on the stock, penny common stocks are not a place to invest. One could argue that even a company insider should probably avoid buying common stock. Just to illustrate the points above, you mention: Doing some really heavy research into this stock has made me question the whole penny stock market. Based on your research what is the enterprise value of the company? What were the gross proceeds of the last financing round, how many shares were issued and were there any warrants attached? What do you perceive to be heavy research? What background do you have in finance/accounting to give weight to your ability to perform such research? Crawl. Walk. Then run. Don't kid yourself in to thinking that since you have some level of education you understand the contracts involved in enterprise finance. |
JCI headache part 1: How to calculate cost basis / tax consequences of JCI -> TYC merger? | The $47.67 per share figure is the trading price, or fair market value, of the OLD Johnson Controls, and should not be used to figure your gain nor to figure your basis in the new Johnson Controls International. Your new basis is the total of the gross proceeds received; that is, the cash plus the fair market value of the new shares, which was $45.69 per share. (I am not referring to cash-in-lieu for fractional shares, but the $5.7293 per share received upon the merger.) A person holding 100 shares of the old Johnson Controls would have received $572.93, plus 83.57 shares of the new company. Ignoring the fractional share, for simplicity's sake, gross proceeds would equal 83 x $45.69 = $3792.72 in fair market value of shares, plus the cash of $572.93, for a total of $4365.20. This is your basis in the 83 new shares. Regarding the fractional share, since new basis is at fair market value, there should be no gain or loss recognized upon its sale. |
When is it better to rent and when is better buy in a certain property market? | No magic answers here. Housing is a market, and the conditions in each local market vary. I think impact on cash flow is the best way to evaluate housing prices. In general, I consider a "cheap" home to cost 20% or less of your income, "affordable" between 20-30% and "not affordable" over 30%. When you start comparing rent vs. buy, there are other factors that you need to think about: Renting is an easy transaction. You're comparing prices in a market that is usually pretty stable, and your risk and liability is low. The "cost" of the low risk is that you have virtually no prospects of recouping any value out of the cash that you are laying out for your home. Buying is more complex. You're buying a house, building equity and probably making money due to appreciation. You need to be vigilant about expenses and circumstances that affect the value of your home as an investment. If you live in a high-tax state like New York, an extra $1,200 in property taxes saps over $16,000 of buying (borrowing) power from a future purchaser of your home. If your HOA or condo association is run by a pack of idiots, you're going to end up paying through the nose for their mistakes. Another consideration is your tastes. If you tend to live above your means, you're not going to be able to afford necessary maintenance on the house that you paid too much for. |
Should I pay off my student loans or keep it in the bank? [duplicate] | Basically you have 4 options: Use your cash to pay off the student loans. Put your cash in an interest-bearing savings account. Invest your cash, for example in the stock market. Spend your cash on fun stuff you want right now. The more you can avoid #4 the better it will be for you in the long term. But you're apparently wise enough that that wasn't included as an option in your question. To decide between 1, 2, and 3, the key questions are: What interest are you paying on the loan versus what return could you get on savings or investment? How much risk are you willing to take? How much cash do you need to keep on hand for unexpected expenses? What are the tax implications? Basically, if you are paying 2% interest on a loan, and you can get 3% interest on a savings account, then it makes sense to put the cash in a savings account rather than pay off the loan. You'll make more on the interest from the savings account than you'll pay on interest on the loan. If the best return you can get on a savings account is less than 2%, then you are better off to pay off the loan. However, you probably want to keep some cash reserve in case your car breaks down or you have a sudden large medical bill, etc. How much cash you keep depends on your lifestyle and how much risk you are comfortable with. I don't know what country you live in. At least here in the U.S., a savings account is extremely safe: even the bank goes bankrupt your money should be insured. You can probably get a much better return on your money by investing in the stock market, but then your returns are not guaranteed. You may even lose money. Personally I don't have a savings account. I put all my savings into fairly safe stocks, because savings accounts around here tend to pay about 1%, which is hardly worth even bothering. You also should consider tax implications. If you're a new grad maybe your income is low enough that your tax rates are low and this is a minor factor. But if you are in, say, a 25% marginal tax bracket, then the effective interest rate on the student loan would be more like 1.5%. That is, if you pay $20 in interest, the government will then take 25% of that off your taxes, so it's the equivalent of paying $15 in interest. Similarly a place to put your money that gives non-taxable interest -- like municipal bonds -- gives a better real rate of return than something with the same nominal rate but where the interest is taxable. |
When investing, is the risk/reward tradeoff linear? | If a market is efficient then risk/reward should be linear. In simple markets like stocks and bonds, everyone thinks the same way and the risk/reward calculation is simple, so everyone can have an accurate idea of the risk/reward ratio, unless the company has serious undisclosed problems. But in other markets like derivatives and mortgage bonds, few people understand what they're buying so the risks remain hidden. Someone might think a company will do well, so they buy an derivative on that company. But no one understands risk/reward calculations on derivatives, so the risk/reward on the derivative could be way off the price on the derivative. |
What is title insurance, and should I get title insurance for my home? | When we got our mortgage in the state of Washington, in the United States, we had to get title insurance before our lender would loan the money. This ensures that the person selling us the house actually owns the title, clean and clear. If there are any surprises, the insurance covers us (or the lender, really). |
What does a contract's worth mean? | The amount stated is the total amount of money the customer will be paying to the company. How much profit that will translate into is dependent on the type of contract. Some types of contracts: Cost plus fixed fee: they are paid what it costs to complete the contract plus a fee on top of that. That fee represents their profits. The costs will include salary, benefits, overhead, equipment, supplies. Firm fixed price: They perform the service, and they get paid a fixed amount. If their costs are higher than they forecast, then they may lose money. If they can be more efficient than they forecast, then they make more money. Time and materials: They are paid for completing each sub-task based on the number of hours it takes to complete each sub task, plus materials. This is used to hire a company to maintain a fleet of trucks. If the trucks are used a lot they will need more standard maintenance, plus additional repairs based on the type of use. They pay X for labor and Y for materials for an oil change, but A for labor and B for materials for a complete engine rebuild. There are many variations on these themes. Some put the risk on the customer, some on the company. How and when the company is paid is based on the terms of the contract. Some pay X% a month, others pay based on meeting milestones. Some pay based on the number of tasks completed in each time period. Some contracts run for a specific period of time, others have an initial period plus option years. The article may or may not specify if the quoted amount is the minimum amount of the contract or the maximum amount. The impact on the stock price is much more complex. Much more needs to be known about the structure of the contract, and who will be providing the service to determine if there will be profits. Some companies will bid to lose money, if it will serve as a bridge to another contract or to fill a gap that will allow them to delay layoffs. |
Should I pay more than 20% down on a home? | The primary reason to put 20% down on your home is to avoid paying PMI (private mortgage insurance). Anyone who buys a house with a down-payment of under 20% is required to pay for this insurance (which protects the lender in case you default on your loan). PMI is what enables people to buy homes with as little as 3-5% down. I would recommend against paying more than 20%, because having liquidity for emergency funds, or other investments will give you the sort of flexibility that's good to have when the economy isn't so great. Depending on whether the house you purchase is move-in ready or a fixer-upper, having funds set aside for repairs is a good idea as well. |
Risk and reward of a synthetic option position | But if underlying goes to 103 at expiration, both the call and the put expire worthless If the stock closes at 103 on expiration, the 105 put is worth $2, not worthless. |
standard method for learning more about a specific sector? (particularly biotech sector) | The important piece here is not necessarily understanding intimate details of biological engineering per se, but rather understanding how the business operates as a singular unit. It is also important to understand the business case for a firm, the evolution of demand for its products/services and the cost of its revenue. To understand a particular sector of the market, you should begin by studying how that sector interacts with and is influenced by the larger market and economy as a whole, both domestic and abroad. From there, you should study individual companies and again see how they interact with one another, the sector, market, etc. Many biotech firms have a different offering and meet different business and consumer demands. Some are near term solutions to existing problems, some long. It is important to see how the firms collectively interact with the consumer base and then differentiate on an individual level. |
If the co-signer on my car loan dies, can the family take the car from me like they're threatening to? | My grandmother passed away earlier this year. When I got my car 3 years ago, I did not have good enough credit to do it on my own or have her as a co-signer. We had arranged so that my grandmother was buying the car and I was co-signing. A similar situation was happening and I went to my bank and took out a re-finance loan prior to her passing. I explained to them that my grandmother was sick and on her death bed. They never once requested a power of attorney or required her signature. I am now the sole owner of the vehicle. |
Ethics and investment | Peer to peer lending such as Kiva, Lending Club, Funding Circle(small business), SoFi(student loans), Prosper, and various other services provide you with access to the 'basic form' of investing you described in your question. Other funds: You may find the documentary '97% Owned' fascinating as it provides an overview of the monetary system of England, with parallels to US, showing only 3% of money supply is used in exchange of goods and services, 97% is engaged in some form of speculation. If speculative activities are of concern, you may need to denounce many forms of currency. Lastly, be careful of taking the term addiction too lightly and deeming something unethical too quickly. You may be surprised to learn there are many people like yourself working at 'unethical' companies changing them within. |
Best return on investment for new home purchase | I encourage you to think of this home purchase decision as a chance to buy into a community that you want your children to grow up in. Try to find a place where you will be happy for the next 20 years, not just the next 2 or 7 years. In your situation, option 1 seems like a bad idea. It will create an obstacle to having children, instead of establishing a place for them to grow up in. Option 2 is close to "buying a house on a layaway plan". It offers the most financial flexibility. It also could result in the best long-term outcome, because you will buy in an established area, and you will know exactly what quality house you will have. But you and your fiancé need to ask yourselves some hard questions: Are you willing to put up with the mess and hassles of remodelling? Are you good at designing such projects? Can you afford to pay for the projects as they occur? Or if you need to finance them, can you get a HELOC to cover them? Especially if you and your fiancé do much of the work yourselves, break down the projects into small enough pieces that you can quickly finish off whatever you are working on at the time, and be happy living in the resulting space. You do not want to be nagging your husband about an unfinished project "forever" -- or silently resenting that a project never got wrapped up. I posted some suggestions for incrementally finishing a basement on the Home Improvement Stack Exchange. If you are up to the job of option 2, it is less risky than option 3. Option 3 has several risks: You don't know what sort of people will live in the neighborhood 5 - 20 years from now. Will the homes be owner-occupied? Or rentals? Will your neighbors care about raising children well? Or will lots of kids grow up in broken homes? Will the schools be good? Disappointing? Or dangerous? Whereas in an established neighborhood, you can see what the neighborhood is currently like, and how it has been changing. Unless you custom-build (or remodel), you don't control the quality of the construction. Some neighborhoods built by Pulte in the last 10 years were riddled with construction defects. You will be paying up-front for features you don't need yet. You might never need some of them. And some of them might interfere with what you realize later on might be better. In stable markets, new homes (especially ones with lots of "upgrades") often decline in value during the first few years. This is because part of the value is in the "newness" and being "up-to-date" with the latest fads. This part of the value wears off over time. Are the homes "at the edge of town" already within reasonable walking distance of parks, schools, church, grocery stores, et cetera? Might the commute from the "edge of town" to work get worse over the next 5 - 20 years? |
Why would a company with a bad balance sheet be paying dividends? | One reason a company might choose to pay a dividend is because of the desire of influential stockholders to receive the dividend. In the case of Ford, for example, there are 70 million shares of Class B stock which receive the same dividend per share as do the common stock holders. Even though there are 3.8 billion shares of common stock, the Class B owners (which are Ford family) hold 40% of the voting power and so their desires are given much weight. The Class B owners prefer regular dividends because if enough were to sell their Class B shares, all Class B shares (as a block) would have their voting power drop from 40% to 30%, and with further sales all special voting would be lost and each Class B share would be equivalent to a common share in voting power. Hence the Class B owners, both for themselves and for all of the family members holding Class B, avoid selling shares and prefer receiving dividends. |
What are the marks of poor investment advice? | To evaluate any advice, this lists some of the things to consider: There are good advisors out there. There are also Bernie Madoffs who give the entire industry a black eye. In the end, the best path is to educate yourself, read as much as you can before you invest. Better to lose a bit by staying out of the market than to lose it all by getting scammed. |
What options do I have at 26 years old, with 1.2 million USD? | You need to find a fiduciary advisor pronto. Yes, you are getting a large amount of money, but you'll probably have to deal with higher than average health expenses and lower earning potential for years to come. You need to make sure the $1.2 million lasts you, and for that you need professional advice, not something you read on the Internet. Finding a knowledgeable advisor who has your interests at heart at a reasonable rate is the key here. These articles are a good start on what to look for: http://www.investopedia.com/articles/financialcareers/08/fiduciary-planner.asp https://www.forbes.com/sites/janetnovack/2013/09/20/6-pointed-questions-to-ask-before-hiring-a-financial-advisor/#2e2b91c489fe http://www.investopedia.com/articles/professionaleducation/11/suitability-fiduciary-standards.asp You should also consider what your earning potential is. You rule out college but at 26, you can have a long productive career and earn way more money than the $1.2 million you are going to get. |
Is insurance worth it if you can afford to replace the item? If not, when is it? | Another factor to consider is that resale value of the laptop is quite bit more if it is still under warranty. This would apply to people who replace their laptop often. It is higher because the purchaser can be assured they are not getting a lemon. I determined this by comparing prices on ebay before selling my computer. Of course, if you keep your laptop longer than the warranty, this means nothing. But for me it meant I could sell my old laptop quickly and for a better price. Because I used my laptop for work and totally depended on it, even one day of downtime would cost me a lot, so it was worthwhile to keep a relatively new laptop under warranty. Also, for those using Apple Care, there is an undocumented perk: Apple covered an out of warranty repair on a time capsule under my apple care for my laptop even tho they were not purchased at the same time. |
Long(100%)-Short(-100%) investment explanation | There is no difference. When dealing with short positions, talking about percentages become very tricky since they no longer add up to 100%. What does the 50% in your example mean? Unless there's some base amount (like total amount of the portfolio, then the percentages are meaningless. What matters when dealing with long and short positions is the net total - meaning if you are long 100 shares on one stock trade and short 50 shares on another, then you are net long 50 shares. |
Should I fund a move by borrowing or selling other property assets? | It is a lot easier to make money when you are not in debt. If you can sell the apartment, get rid of your existing mortgage and buy the new house outright, that is probably the best course of action. |
Are these scenarios considered as taxable income? | You can always reduce the income by the direct expenses required to earn it, and figure out whether it is ultimately a net profit or loss. The net profit is taxable income. The loss may be tax deductible if the underlying thing is tax deductible. For the book, the $50 revenue required a $100 expense, so that's a $50 net loss. You don't owe any income tax since it's a loss. You could take the loss as a tax deduction if you have a business trading books, or if buying the book would be tax deductible for some reason. Note that in the latter case you can only deduct the $50 not the $100. For the airline ticket, it is to compensate you for the losses you took as a result if the delayed flight. So you tally up the $22 meal you had in the airport waiting for news, the $110 on the motel room you rented or forfeited, any other way you can peg a cash value to any losses you took. Total them up, again, a net loss is only deductible if the travel is already deductible. Note that if the actual expenses (book, flight) were tax deductible for some reason, the cash-back reduces the amount of your tax deduction, so it has the same effect as the sale/gift being taxable income. |
How to evaluate an annuity | You can get no load annuities through some no-load financial companies like Vanguard so to start with I'd see how what she is being offered compares with something that comes free of a sales load. I'd also question that fixed rate, seems pretty impossible to me, which makes me think there is some catch or 'gotcha' that we are not seeing that either brings down that rate, or makes it delusional (they are kidding themselves) or deceptive in some way. In any case it's setting off my 'too good to be true' alarm at full volume, along with the 'shark attack' alarm as well. (I would strongly suspect the 'advisor' is advising the product that makes the most money for him, NOT what is in your mother's best interest) A fixed annuity is an insurance product, not a security, because the insurance company must credit the annuity holder’s account with the specified interest rate for the contractually-stipulated time period, regardless of market fluctuations in actual interest rates. It is the insurance company that bears the investment risk, which it does by investing the annuity holder’s purchase proceeds in fixed-income instruments that the company hopes will provide sufficient return to fulfill its contractual representations to the holder. THIS is why there is no prospectus (it's not a 'security' they are not required to provide one by SEC) because the risk is entirely with the company. Obviously as pointed out in the comments, the company could easily go out of business (especially of they sell a lot of these and can't find a way to get that kind of return on the invested money). Now, ask yourself, if I was the insurance company, would I be comfortable guaranteeing that level of return over that much time if I intend to make a profit from it, pay sales comissions, and stay in business? In terms of 'will they stay in business' I'd have a hard look at their ratings, and go compare where that is on the total range for AM Best (they are lowest 'secure' rating, next thing down is in the 'vulnerable' category) and Standard and Poors (4 places down from their best rating, next thing down is 'marginal' followed by 'poor') You might also want to see if you can get any idea of historical ratings, is this company's ratings falling, or rising? Personally, for the amount of money involved, I'd want a company with MUCH higher ratings than these guys.. THEN maybe someone could say 'no risk', but with those ratings? an no, I don't think so! BTW I'd check over what this bozo (um sorry, that's not fair to clowns) is recommending she do with her own funds as well. For example is he recommending she take something that is already tax sheltered such as an IRA and investing the stuff inside that in an annuity (kind of pointless to 'double shelter' the money, or lock it up for a period of time when she may be required to make withdrawals) make sure you don't see something there that is actually against what is in her best interest and is only done to make him a comission. |
Where do web sites get foreign exchange currency rate / quote information? | The prices quoted are for currency pairs traded on the foreign exchange market. For currencies traded on these exchanges, the exchange rates of a given currency pair are determined by the market, so supply and demand, investor confidence, etc. all play a role. EBS and Reuters are the two primary trading platforms in the foreign exchange market, and much of the data on exchange rates comes from them. Websites will usually get their data either from these sources directly or from a data provider that in turn gets it from EBS, Reuters, or another data source like Bloomberg or Haver Analytics. These data sources aren't free, however. In the US, many contracts, transactions, etc. that involve exchange rates use the exchange rate data published by the Federal Reserve. You might see this in contracts that specify to use "the exchange rate published by the Federal Reserve at 12 pm (noon) on date --some date--". You can also look at the Federal Reserve Economic Data, which maintains data series of historical daily, weekly, and monthly exchange rates for major currency pairs. These data are free, although they aren't realtime. Data for each business day is mostly updated the next business day. |
Options vs Stocks which is more profitable | More perspective on whether buying the stock ("going long") or options are better. My other answer gave tantalizing results for the option route, even though I made up the numbers; but indeed, if you know EXACTLY when a move is going to happen, assuming a "non-thin" and orderly option market on a stock, then a call (or put) will almost of necessity produce exaggerated returns. There are still many, many catches (e.g. what if the move happens 2 days from now and the option expires in 1) so a universal pronouncement cannot be made of which is better. Consider this, though - reputedly, a huge number of airline stock options were traded in the week before 9/11/2001. Perversely, the "investors" (presumably with the foreknowledge of the events that would happen in the next couple of days) could score tremendous profits because they knew EXACTLY when a big stock price movement would happen, and knew with some certainty just what direction it would go :( It's probably going to be very rare that you know exactly when a security will move a substantial amount (3% is substantial) and exactly when it will happen, unless you trade on inside knowledge (which might lead to a prison sentence). AAR, I hope this provides some perspective on the magnitude of results above, and recognizing that such a fantastic outcome is rather unlikely :) Then consider Jack's answer above (his and all of them are good). In the LONG run - unless one has a price prediction gift smarter than the market at large, or has special knowledge - his insurance remark is apt. |
How do I adjust to a new social class? | And specifically regarding prices of housing, what factors drive prices in that regard? I mean, the houses are roughly the same... but almost 3 times as expensive. Rent, like so many things, is tied to supply and demand. On the demand side, rent is tied to income. People tend to buy as much house as they can afford, given that mortgage interest is deductible and public schools, financed through property tax, performs better in valuable neighborhoods. Raise the minimum wage and economists expect rents to go up accordingly. When employers and pensions offer COLA adjustments, it feeds into a price loop. During the past ten years, there was also some "animal spirits" / irrational behavior present; people feared that if they didn't buy now, home prices would outpace their growth in income. So even though it didn't make sense at the time, they bought because it would make even less sense later (if you assume prices only go up). There's also the whole California has nicer weather angle to explain why people move to SF or LA. On the supply side, it's all about housing stock. In your old town, you could find vacant lots or farmland in less than 5 minute's drive from anywhere. There's far less room for growth in say, the SF Bay area or NYC. There's also building codes that restrict the growth in housing stock. I'm told Boulder, CO is one such place. You would think that high prices would discourage people from moving or working there, but between the university and the defense contractors triangle, they seem to have an iron grip on the market. (Have you ever seen a cartoon where a character gets a huge bill at a restaurant, and their eyes shoot out of their eye sockets and they faint? Yeah... that's how I felt looking at some of the places around here...) Remember, restaurants have to cover the same rent problem you do. And they have higher minimum wages, and taxes, etc. Moreover, food has to be imported from miles away to feed the city, likely even from out of state. In California, there's also food regulations that in effect raise the prices. If people are footing those higher bills, I wouldn't be surprised if they're racking up debt in the process, and dodging the collectors calling about their Lexus, or taking out home equity loans to cover their lifestyle. |
What's the general principle behind choosing saving vs. paying off debt? | It has to do with return. I don't know if Canada has a matching feature on retirement accounts, but in the US many companies will match the first X% you put in. So for me, my first $5000 or so is matched 100%. I'll take that match over paying down any debt. Beyond that, of course it's a simple matter of rate of return. Why save in the bank at 2% when you owe at 10-18%? One can make this as simple or convoluted as they like. My mortgage is a tax deduction so my 5% mortgage costs me 3.6%. I've continued to invest rather than pay the mortgage too early, as my retirement account is with pre-tax dollars. So $72 will put $100 in that account. Even in this last decade, bad as it was, I got more than 3.6% return. |
Pros/cons of borrowing money using a mortgage loan and investing it in a low-fee index fund? | Risk is the problem, as others have pointed out. Your fixed mortgage interest rate is for a set period of time only. Let's say your 3% might be good for five years, because that's typical of fixed-rate mortages in Canada. So, what happens in five years if your investment has dropped 50% due to a prolonged bear market, and interest rates have since moved up from 3% to 8%? Your investment would be underwater, and you wouldn't have enough to pay off the loan and exit the failed strategy. Rather, you might just be stuck with renewing the mortage at a rate that makes the strategy far less attractive, being more likely to lose money in the long run than to earn any. Leverage, or borrowing to invest, amplifies your risk considerably. If you invest your own money in the market, you might lose what you started with, but if you borrow to invest, you might lose much more than you started with. There's also one very specific issue with the example investment you've proposed: You would be borrowing Canadian dollars but investing in an index fund of U.S.-based companies that trade in U.S. dollars. Even if the index has positive returns in U.S. dollar terms, you might end up losing money if the Canadian dollar strengthens vs. the U.S. dollar. It has happened before, multiple times. So, while this strategy has worked wonderfully in the past, it has also failed disastrously in the past. Unless you have a crystal ball, you need to be aware of the various risks and weigh them vs. the potential rewards. There is no free lunch. |
Should one only pursue a growth investing approach for Roth IRAs | If you are inside of a ROTH IRA you are not getting taxed on any gain. Dividends, distributions, interest payment, or capital gains are never taxed. This, of course, assumes you wait until age 59.5 to do ROTH withdrawals on your gains. |
How much more than my mortgage should I charge for rent? | I think the mortgage must not be in the equation at all in order to determine how much to charge. Of course you want to cover your mortgage but the renting price is determined only by how much the renter is willing to pay (offer and demand) and not your mortgage (some people don't even have a mortgage). In other words I think you should be charging a price based on similar rented houses. |
Which dividend bearing stock should be chosen by price? | Price doesn't mean anything. Price is simply total value (market capitalization) divided by number of shares. Make sure you consider historical dividends when hunting for big yields. It's very possible that the data you're pulling is only the annualized yield on the most recent dividend payment. Typically dividends are declared in dollar terms. The total amount of the dividend to be issued is then divided by the number of shares and paid out. Companies rarely (probably never but rarely to avoid the peanut gallery comments about the one company that does this) decide dividend payments based on some proportion of the stock price. Between company A and company B paying approximately the same historical yield, I'd look at both companies to make sure neither is circling the tank. If both look strong, I'd probably buy a bit of both. If one looks terrible buy the other one. Don't pick based on the price. |
Any tips for asset allocation across multiple retirement accounts? | I have a similar situation -- five different accounts between me and my wife. Just as you and @Alex B describe, I maintain my asset allocation across the combination of all accounts. I also maintain a spreadsheet to track the targets, deviations from the targets, amounts required to get back in balance, and overall performance. I (mostly) don't use mutual funds. I have selected, for each category, 1 or 2 ETFs. Choosing index ETFs with low expense ratios and a brokerage with cheap or free trades keeps expenses low. (My broker offers free ETF trades if you buy off their list as long as you aren't short-term trading; this is great for rebalancing for free 2 or 3 times a year.) Using ETFs also solves the minimum balance problem -- but watch out for commissions. If you pay $10 to buy $500 worth of an ETF, that's an immediate 2% loss; trade a couple of times a year and that ETF has to gain 5% just to break even. One issue that comes up is managing cash and avoiding transaction fees. Say your IRA has all the growth stock funds and your Roth has the bonds. Stocks do well and bonds do poorly, so you sell off some stocks, which creates a bunch of cash in your IRA. Now you want to buy some bonds but you don't have enough cash in your Roth, so you buy the bonds in your IRA. Not a problem at first but if you don't manage it you can end up with small amounts of various funds spread across all of your accounts. If you're not careful you can end up paying two commissions (in two different accounts) to sell off / purchase enough of a category to get back to your targets. Another problem I had is that only one account (401k) is receiving deposits on a regular basis, and that's all going into an S&P 500 index fund. This makes it so that my allocation is off by a fair amount every quarter or so -- too much in large cap equities, not enough of everything else. My solution to this going forward is to "over-rebalance" a couple of times a year: sell enough SPY from my other accounts so that I'm under-allocated in large caps by the amount I expect to add to my 401k over the next 3 months. (So that in six months at my next rebalancing I'm only 3 months over-allocated to large caps -- plus or minus whatever gains/losses there are.) |
Is it bad practice to invest in stocks that fluctuate by single points throughout the day? | The strategy has intrinsic value, which may or may not be obstructed in practice by details mentioned in other answers (tax and other overheads, regulation, risk). John Bensin says that as a general principle, if a simple technical analysis is good then someone will have implemented it before you. That's fair, but we can do better than an existence proof for this particular case, we can point to who is doing approximately this. Market makers are already doing this with different numbers. They quote a buy price and a sell price on the same stock, so they are already buying low and selling high with a small margin. If your strategy works in practice, that means you can make low-risk money from short-term volatility that they're missing out on, by setting your margin at approximately the daily price variation instead of the current bid-offer spread. But market makers choose their own bid-offer spread, and they choose it because they think it's the best margin to make low-risk money in the long run. So you'd be relying that: |
In which country can I set up a small company so that I pay a lower rate of corporate tax? | There are countries out there that are known as tax havens, where they offer companies low or no taxes on earned revenue. I haven't looked into this in over a decade, but recall that countries like the Cayman Islands, Switzerland, Ireland, and Nauru, to name a few fit that tag. But like bstpierre stated, there's a reason why the IBM's of the world can pull that off easier then us mere mortals. They have the financial clout to make sure they have accountants that dot every i, cross every t, and close every loophole that would give an "in" to the folks at the IRS, CRA, Inland Revenue, or who have you. |
Does an owner of a bond etf get an income even if he sells before the day of distribution? | Bond ETFs are traded like normal stock. It just so happens to be that the underlying fund (for which you own shares) is invested in bonds. Such funds will typically own many bonds and have them laddered so that they are constantly maturing. Such funds may also trade bonds on the OTC market. Note that with bond ETFs you're able to lose money as well as gain depending on the situation with the bond market. The issuer of the bond does not need to default in order for this to happen. The value of a bond (and thus the value of the bond fund which holds the bonds) is, much like a stock, determined based on factors like supply/demand, interest rates, credit ratings, news, etc. |
What ways are there for us to earn a little extra side money? | Congratulations to you and good luck and good health with the baby. I had a friend in a similar situation, and I told him that he could do quite well by putting out the word to an upper-middle-class neighborhood that he was available to setup routers, home networks, etc. I suggested that he could start at a low enough wage that people would see the beneficial tradeoff to having him come over for a few hours versus doing it themselves. After a few months, he hired someone to take the extra work he was receiving, and directed the more routine requests his employee. He had a full-time job plus all the extra work he wanted. Most people who hire him simply want someone they would trust in their home, and his service spread by word-of-mouth. He also got to meet many people who liked him and were impressed by his work ethic, resulting in many good connections if he ever wanted to pursue other employment. My friend was an IT professional, the best support person at our tech-heavy firm, so he wasn't giving his time away. He did enjoy doing it, and he did enjoy the extra money. On an hourly basis, especially once he added the assistant, he was making more on the side than he did at his job. However, I believe he did start lower than that. Good luck! |
What's the best application, software or tool that can be used to track time? | Surprised nobody has mentioned Freshbooks yet. It's lightweight, easy to use, and free for low-end use (scaling up price-wise as you scale up). |
Does longterm investment in index funds still make sense in a reality of massive algotrading? | What the automation mostly does is make short-term trading that much more difficult. Day trading is a zero-sum game, so if they win more, everyone else wins less. Long term trading (years to decades) is a positive-sum game; the market as a whole tends to move upward for fairly obvious reasons (at its basis it's still investing, which in turn is based on lending, and as long as folks make fairly rational decisions about how much return they demand for their investment and the companies are mostly producing profits there will be a share of the profit coming back to the investors as dividends or increased share value or both. Day-to-day churn in individual stocks gets averaged out by diversification and time, and by the assumption that if you've waited that long you can wait a bit longer if necessary for jitters to settle out. Time periods between those will partake of some mix of the two. |
Why is it that stock prices for a company seem to go up after a layoff? | If the market believes that the company is overstaffed, then management acknowledging the issue and resolving the problem can result in the price going up. It can also mean that external events drove the price up, and the bad news was lost in the other issues of the day. Sometimes layoffs are a sign of the company entering a long downward spiral; in other cases it is a sign of the beginning recovery. The layoffs can also be viewed as good news if they weren't as big as some experts feared. You have to look at the exact situation to understand why news x impacts the companies price. |
Why do credit cards have minimum limits? | It discourages people from obtaining a high-limit card simply to show off, because the bank's forcing them to use it or lose it. |
If a stock doesn't pay dividends, then why is the stock worth anything? | While there are many very good and detailed answers to this question, there is one key term from finance that none of them used and that is Net Present Value. While this is a term generally associate with debt and assets, it also can be applied to the valuation models of a company's share price. The price of the share of a stock in a company represents the Net Present Value of all future cash flows of that company divided by the total number of shares outstanding. This is also the reason behind why the payment of dividends will cause the share price valuation to be less than its valuation if the company did not pay a dividend. That/those future outflows are factored into the NPV calculation, actually performed or implied, and results in a current valuation that is less than it would have been had that capital been retained. Unlike with a fixed income security, or even a variable rate debenture, it is difficult to predict what the future cashflows of a company will be, and how investors chose to value things as intangible as brand recognition, market penetration, and executive competence are often far more subjective that using 10 year libor rates to plug into a present value calculation for a floating rate bond of similar tenor. Opinion enters into the calculus and this is why you end up having a greater degree of price variance than you see in the fixed income markets. You have had situations where companies such as Amazon.com, Google, and Facebook had highly valued shares before they they ever posted a profit. That is because the analysis of the value of their intellectual properties or business models would, overtime provide a future value that was equivalent to their stock price at that time. |
What are some signs that the stock market might crash? | There are some economic signs as there are in all economic and business cycles, such as interest rates rising. However, a more effective way is to actually look at price action itself. The definition of an uptrend is higher highs followed by higher lows. The definition of a downtrend is lower lows followed by lower highs. So if you are looking to invest for the long term you can look at the weekly or even the monthly chart of the market say over the past 10, 15 or 20 years. Using these definitions on say the S&P500 if the price continues to make higher highs and higher lows then stay in the market. If the price makes a lower high than the previous high, then this is a warning sign that the trend may be about to end. The trend has not broken yet but it is a warning sign that it could be ending soon. If the price makes a higher low next followed by a higher high, then the trend continues and you just need to keep an eye on things. If, however, the price makes a lower low after the lower high this is a signal that the uptrend is over and you should get out of the market. If the price makes a lower low directly after a higher high, then be cautious and wait for confirmation that the uptrend is over. If you then get a lower high this is confirmation that the uptrend is over, you would then sell if prices drop below the previous low. If you invest in individual shares then you should keep an eye on the charts for the index and individual shares as well. The index chart will give you an indication if the uptrend is over for the whole market, then you can be more cautious in regards to the individual shares. You can then plan exit points on each individual share if their trends are broken too. If you have stop losses employed and the trend reverses on the index, this would be a good time to tighten your stop losses on individual shares. You can then buy back into the market when you determine that the downtrend is broken and prices start to show higher highs and higher lows again. Will there be occasions when the uptrend reverses and then after a short period starts trending up again, yes there might be, but the worse that will happen is that you pay a bit of extra brokerage to get out and then back into the market, and you might have to pay some capital gains tax on any profits made. But remember no one ever went broke making a profit. The most important thing to remember when investing is to conserve and protect your capital. I would rather pay some extra brokerage and some capital gains tax than see my portfolio drop by 50% or more, then take 5 years or more to recover. And remember, paying tax is a good thing, it means you made money. If you don't want to pay any tax it means you will never make any profits, because if you make profits you will have to pay tax one day. |
Comprehensive tutorial on double-entry personal finance? | I had to implement a simplistic double-entry accounting system, and compiled a list of resources. Some of them are more helpful than others, but I'll share them all with you. Hope this helps! Simplifying accounting principles for computer scientists: http://martin.kleppmann.com/2011/03/07/accounting-for-computer-scientists.html See this excellent article on how Debits and Credits work: http://accountinginfo.com/study/je/je-01.htm See this article for an example Chart of Accounts with lots of helpful descriptions: http://www.netmba.com/accounting/fin/accounts/chart/ Excellent PDF by Martin Fowler on Accounting Patterns using an event-drive system: http://www.martinfowler.com/apsupp/accounting.pdf Additional useful resources by Martin Fowler: http://martinfowler.com/articles.html#ap Ideas on using Domain-Driven-Design (DDD): https://stackoverflow.com/questions/5482929/how-to-use-object-oriented-programming-with-hibernate Double Entry Accounting in Relational Databases: http://homepages.tcp.co.uk/~m-wigley/gc_wp_ded.html Double Entry Accounting in Rails: http://www.cuppadev.co.uk/dev/double-entry-accounting-in-rails/ Joda-Money: http://joda-money.sourceforge.net/ Joda-Money Notes: http://joda-money.svn.sourceforge.net/viewvc/joda-money/JodaMoney/trunk/Notes.txt?revision=75&view=markup Blog entry with good comments: http://www.jroller.com/scolebourne/entry/joda_money Related Blog Entry: http://www.jroller.com/scolebourne/entry/serialization_shared_delegates JMoney: http://jmoney.sourceforge.net/wiki/index.php/Main_Page JMoney QIF Plugin: http://jmoney.sourceforge.net/wiki/index.php/Qif_plug-in Ledger on GitHub: https://github.com/jwiegley/ledger/tree/master/src/ Implementing Money class in Java: http://www.objectivelogic.com/resources/Java%20and%20Monetary%20Data/Java%20and%20Monetary%20Data.pdf Martin Fowler's implementation in Patterns of Enterprise Application Architecture page 489, View partial content in Google Books: http://books.google.com/books?id=FyWZt5DdvFkC&printsec=frontcover&dq=Patterns+of+Enterprise+Application+Architecture&source=bl&ots=eEFp4xYydA&sig=96x5ER64m5ryiLnWOgGMKgAsDnw&hl=en&ei=Kr_wTP6UFJCynweEpajyCg&sa=X&oi=book_result&ct=result&resnum=7&ved=0CEQQ6AEwBg#v=onepage&q&f=false XML based API for an accounting service, might get some ideas from it: http://www.objacct.com/Platform.aspx |
Why ever use a market order? | The purpose of a market order is to guarantee that your order gets filled. If you try to place a limit order at the bid or ask, by the time you enter your order the price might have moved and you might need to keep amending your limit order in order to buy or sell, and as such you start chasing the market. A market order will guarantee your order gets executed. Also, an important point to consider, is that market orders are often used in combination with other orders such as conditional orders. For example if you have a stop loss (conditional order) set at say 10% below your buy price, you might want to use a market order to make sure your order gets executed if the price drops 10% and your stop loss gets triggered, making sure that you get out of the stock instead of being stuck with a limit order 10% below your buy price whilst the stock keeps falling further. |
Is it OK to use a credit card on zero-interest to pay some other credit cards with higher-interest? | good vs "bad" debt in the context of that post. At least in the UK this can be a good tactic to reduce the cost of credit card debt. Some things to consider |
How do I determine how much rent I could charge for a property or location? | Check out the property websites to get an idea of how much, the property in question, could yield as rent. Most give a range and you can get a good idea of it. Just one example from zoopla. Likewise you can refer mouseprice or rightmove and get yourself an idea. Property websites do a lot of data crunching to do an update, but their figure is only a guide. |
Rent home temporarily with new owner occupied loan | I'm assuming this is the US. Is this illegal? Are we likely to be caught? What could happen if caught? If you sign an occupancy affidavit at closing that says you intend to move in within 60-days, with no intention of doing so, then you'll be committing fraud, specifically mortgage/occupancy fraud, a federal crime with potential for imprisonment and hefty fines. In general, moving in late is not something that's likely to be noticed, if the lender is getting their money then they probably don't care. Renting it out prior to moving in seems much riskier, especially if you live in a city/state that requires rental licensing, or are depending on rental income to carry the mortgage. No idea how frequently people are caught/punished for this type of fraud, but it hardly seems worth finding out. |
When should I open a “Line of credit” at my bank? | The only really good reason to open a line of credit is that you want to buy something that you don't have money for. That's got its own risks - see plenty of other places to see warnings about not borrowing too much. The only other reason is that you might want to use a line of credit as your emergency fund. The usual way of doing this is to keep the money in an easily acccessible savings account - but such accounts usually pay rather now interest, and there is an argument for instead investing your emergency money in a higher-interest but less-accessible fund and using a line of credit to tide you over until you can extract the money. I'm worried about the comment that you can "deduct my interest on my tax returns". That is usually only possible if you are borrowing money to invest. It sounds as if your banker is going to persuade you to not only open a line of credit, but then invest that money in something. Be aware that this kind of 'leveraging' is much higher risk than investing money you already own. |
Could someone explain this scenario about Google's involvement in the wireless spectrum auction? | If history is any guide, Page’s idealistic impulses could result in a vaster, more sprawling company. The following is an example of one of Page’s idealistic impulses (wanting people to share spectrum) which could result in a vaster, more sprawling company (if they hadn't been outbid, Google would have expanded by buying a business asset i.e. spectrum which they didn't need). I've no experience with bidding. I don't understand what's happening at all An 'auction' is a way to sell something. Instead of offering it for sale at a fixed price, you offer it 'to the highest bidder'. Someone (e.g. Google) says, "I'll offer you [some amount: e.g. a million dollars] for it." If no-one else exceeds that bid, then you say 'sold' and Google has bought it. Alternatively someone else comes along with a higher bid, "I'll offer you two million dollars for it," in which case they're the new high bidder, and you'll sell it to them unless the process repeats itself with anyone counter-offering an even higher bid. See also http://en.wikipedia.org/wiki/Auction and http://en.wikipedia.org/wiki/Spectrum_auction The "Disadvantages" section of this article alleges (currently without a citation) that: Despite the apparent success of spectrum auctions, an important disadvantage limiting both efficiency and revenues is demand reduction and collusive bidding. The information and flexibility in the process of auction can be used to reduce auction prices by tacit collusion. When bidder competition is weak and one bidder holds an apparent advantage to win the auction for specific licenses, other bidders will often choose not to the bid for higher prices, hence reducing the final revenue generated by the auction.[citation needed] In this case, the auction is best thought of as a negotiation among the bidders, who agree on who should win the auction for each discrete bit of spectrum. Google's bid made that impossible (or, at least, ensured that the winning bid would be at least as high as the minimum which was set by Google's bid). |
Why does money value normally decrease? | It is in circles. Today Money is fiat money. From economic stand point a moderate inflation is good. It there is near zero inflation or deflation, then economy would come to standstill and would stagnate. Hence everything has to becomes expensive. This keeps the economy in motion. House or Gold does increase in value otherwise one would not have purchased them. If you are saying on buying a house, you keep it with someone and after a period of time you get one extra room or keep an ounce of gold and after some years it becomes 2 ounce, well it does increase but differently. There reason there aren't many such schemes is because quantifying it is difficult. It would normally fetch more money than one had bought it for. |
Why Are Credit Card Rates Increasing / Credit Limits Falling? | Of course your situation is very hurtful at a personal level, and I sympathize. I just don't get your point about being driven further into debt? It would seem that with a lower credit score you are prevented from taking on more debt. That can absolutely be hurtful especially to someone who runs a business that relies on short term credit. As for why they do this, they do it to reduce their risk - they don't want to lend more money, they are afraid that you will lose your job and default. Of course it is not as personal as I am writing it, not for you (they don't target you personally - they target your credit profile) and not for them (it is a matter of how the market views the debt and how much they can trade on such debt, not what they want to do personally). As for the TARP bailouts not releasing enough credit - this is reality. Goverment always thinks it can influence the situation more than it actually can. In order to unfreeze credit there needs to be a growing economy that makes the risk look acceptable. No amount of Goverment nudging will really change that more than marginally. By the way, legislation like this (forcing credit card companies to not raise their rates) can lead to credit restrictions. By artifically forcing the rates down the risk has to be ballanced somewhere - so it will be ballanced by lowering credit lines or by other means. Like any price control, if you restrict the price, it causes shortages. Intrest rates are the price of credit. |
“Inflation actually causes people not to spend”… could it be true? | Not always. You always consider economic factors in conjunction with each other rather than in isolation, which leads to weird assumptions. People spending isn't what you should look at always. When inflation is high, means government is spending. Government is spending on public projects, creating employment, increasing salaries, doling out loans. So you are putting money into the economy and into people's hands. Everybody will be spending, so it will also drive demand(Demand Pull inflation). But there are differences among economists regarding Cost push inflation, which is a dangerous phenomena. At the same time the interest rates, which are a monetary tool for central banks to increase(decrease) the money flow in the economy, are low. Under low interest rate conditions, businesses take loans to invest in projects. Because interest rates are low, people find it logical to spend now than spend later. As interest rates are low, there is an expectation that they cannot earn more in savings than investing in products which will generate benefits in the near term. These all goes on in cycles and after a period of inflation, you will see government taking action to rein in inflation. It will increase interest rates to suck money out of the economy. This is when people will curb spending, because they know they will earn a higher return while saving rather than investing. |
What is the difference between a 'trader' and a 'stockbroker'? | The traditional role of a stockbroker is to arrange for the buying and selling of stock by finding buyers and sellers at an agreed upon price. The broker does not purchase the stock for himself but merely arranges for the stock to be traded. A trader is one who purchases stock with the hope of selling it for a gain. The trader will use a broker to help with the purchase and sale of a stock. |
How can all these countries owe so much money? Why & where did they borrow it from? | They borrowed it from the people, and typically to finance wars and military spending. For example, Wikipedia suggests that the Bank of England "was set up to supply money to the King. £1.2m was raised in 12 days; half of this was used to rebuild the Navy." It's a game that everyone has to play once started; if Napoleon buys an army on credit, you'll have to raise an equal amount or face quite a problem. As for why they've grown so large, it's because governments are quite skilled at owing large sums of money. Only a small portion of the debt comes due in full at a given moment, and they constantly reissue new debt via auction to keep it rolling. So as long as they can make coupon (interest) and the lump sum at maturity, it's not difficult to keep up. Imagine how much credit card debt you could rack up if you only ever had to pay interest. This game will continue for as long as people lend. And there are plenty of lenders. There's pensions, mutual funds and endowments, which find public debt typically safer than stocks. And money market funds, which target 1 dollar NAV and only invest in the "safest" AAA-rated bonds to protect it. There's central banks, which can buy and sell public debt to manipulate inflation and exchange rates. Absent some kind of UN resolution to ban lending, or perhaps a EU mandated balanced budget, these debts will likely continue to grow. You think they "collectively owe more money than can exist", but there's a lot of wealth in the world. Most nations owe less than a year's GDP. For example, the US's total wealth is in the neighborhood of 50 trillion. |
What is insider trading exactly? | The CEO of a public company can, and often does, buy (and sell) the stock of his company. In fact, frequently the stock of the company is part of the compensation for the CEO. What makes this legal and fair is that the CEO files with the SEC an announcement before he buys (or sells) the stock. These announcements allow us 'in the dark' people enough warning ahead of time. See, for example, the trades of UTX stock by their public officers. As for trading on information about other companies, if I am not mistaken... that is why Martha Stewart wound up in prison. So, yeah, it does happen. I hope it is caught more often than not. On a related note, have you seen the movie 'Wall Street' with Charlie Sheen and Michael Douglas? |
Can I use stop limit orders on vanguard orders to prevent loss? | You've laid out a strategy for deciding that the top of the market has passed and then realizing some gains before the market drops too far. Regardless of whether this strategy is good at accomplishing its goal, it cannot by itself maximize your long-term profits unless you have a similar strategy for deciding that the bottom of the market has passed. Even if you sell at the perfect time at the top of the market, you can still lose lots of money by buying at the wrong time at the bottom. People have been trying to time the market like this for centuries, and on average it doesn't work out all that much better than just plopping some money into the market each week and letting it sit there for 40 years. So the real question is: what is your investment time horizon? If you need your money a year from now, well then you shouldn't be in the stock market in the first place. But if you have to have it in the market, then your plan sounds like a good one to protect yourself from losses. If you don't need your money until 20 years from now, though, then every time you get in and out of the market you're risking sacrificing all your previous "smart" gains with one mistimed trade. Sure, just leaving your money in the market can be psychologically taxing (cf. 2008-2009), but I guarantee that (a) you'll eventually make it all back (cf. 2010-2014) and (b) you won't "miss the top" or "miss the bottom", since you're not doing any trading. |
Potential pitfalls of this volume trading strategy | I wouldn't be turned off due to the difficult of parsing English, for a few reasons. Firstly, you don't have to perfectly parse to find meaning. You can look for keywords and write some algorithms to approximate, and of course if you get enough of a statistical advantage (and can repeat it) you can make money. Second, it probably isn't long before third-party software is made available either to do something like this or to provide a framework for it. In fact, it probably already is available somewhere. (Note the influx of Silicon Valley types to New York as more machine intelligence is applied to trading and journalism.) Thirdly, as hinted by the mention above of journalism, there's already software using numerical data to write pretty human articles. Some are pretty robotic and you can catch them (I noticed one and searched for a key phrase to discover several very much like it, each having a different fake author name). This will mean not only a continued improvement of parsing but also more push for more data to be released in machine-readable formats, such that press releases will be increasingly parsible. Finally, to vindicate your idea, the keyword approach has been done with some success. Try this link and note the additional links on the same topic. If you have the time and processing resources, you might like to try your idea by training a neural network to find correlations of keywords (and phrases -- that's important, too) with trends in the market. |
What percentage of my company should I have if I only put money? | Question (which you need to ask yourself): How well are your friends paid for their work? What would happen if you just took your money and bought a garage, and hired two car mechanics? How would that be different from what you are doing? The money that you put into the company, is that paid in capital, or is it a loan to the company that will be repaid? |
What risks are there acting as a broker between PayPal and electronic bank transfers? | I too received a "job offer" from this CENEO outfit but mine was a proof reading position.Supposedly,I was to edit the email they were sending to U.S. customers. They needed proof reading alright,I've never seen such atrocious grammar and syntax.Half the time I could not figure out what these polaks were trying to convey. Anyway,I was getting a whole page to "proof read" daily and then, they sent me an email stating that the "position" had been eliminated.I never got the money I was owed. |
What is the process of getting your first share? | nan |
Should I sell a 2nd home, or rent it out? | If you can generate a higher ROI by renting than by cashing out and investing, then you should rent it out. Please consider your risk tolerance as well. It's always a personal decision whether to assume higher risk for a higher return. |
If I want to take cash from Portugal to the USA, should I exchange my money before leaving or after arriving? | You can find lots of answers to this question by googling. I found at least five pages about this in 30 seconds. Most of these pages seem to say that if you must convert cash, converting it in the destination country is probably better, because you are essentially buying a product (in this case, dollars), and it will cheaper where the supply is greater. There are more dollars in the USA than there are in Portugal, so you may be able to get them cheaper there. (Some of those pages mention caveats if you're trying to exchange some little-known currency, which people might not accept, but this isn't an issue if you're converting euros.) Some of those pages specifically recommend against airport currency exchanges; since they have a "captive audience" of people who want to convert money right away, they face less competition and may offer worse rates. Of course, the downside of doing the exchange in the USA is that you'll be less familiar with where to do it. I did find some people saying that, for this reason, it's better to do it in your own country where you can shop around at leisure to find the best rate. That said, if you take your time shopping around, shifts in the underlying exchange rate in the interim could erase any savings you find. It's worth noting, though, that the main message from all these pages is the same: don't exchange cash at all if you can possibly avoid it. Use a credit card or ATM card to do the exchange. The exchange rate is usually better, and you also avoid the risks associated with carrying cash. |
Do you have to be mega-rich to invest in companies pre-IPO? | There are a couple of ways to buy into a private company. First, the company can use equity crowd funding (approved under the JOBS act, you don't need to be an accredited investor for this). The offering can be within one state (i.e. Intrastate offerings) which don't have the same SEC regulations but will be governed by state law. Small companies (small assets, under $1 million) can be made under Regulation D, Rule 504. For assets under $5 million, there is Rule 505, which allows a limited number of non-accredited investors. Unfortunately, there aren't a lot of 504 and 505 issues. Rule 506 issues are common, and it does allow a few non-accredited investors (I think 35), but non-accredited investors have to be given lots of disclosure, so often companies use a Rule 506 issue but only for accredited investors. |
Should I buy my house from my landlord? | There are probably thousands of houses that you could buy. If you want to buy a house, it is very unlikely that the one you are renting right now is the best possible buy. Usually people living in the houses they own are more interested in the quality of their property and the quality of their neigborhood than people who are renting, so I'd say that you are generally better off finding a home to buy in an area where the majority own their homes. |
Why is silver so volatile compared to the S&P 500? | Silver is a commodity. It's valuable for certain kinds of manufacturing, jewelry, and as a speculative financial instrument or hedge against the dollar. The S&P 500 includes companies which make money off of mining, manufacturing, medicine, media, technology, banking, dining, agriculture... There's a lot more variety there. |
Resources to begin trading from home? | Since then I had gotten a job at a supermarket stocking shelves, but recently got fired because I kept zoning out at work This is not a good sign for day trading, where you spend all day monitoring investments. If you start focusing on the interesting math problem and ignoring your portfolio, you can easily lose money. Not so big a problem for missed buy opportunities, but this could be fatal for missed sale opportunities. Realize that in day trading, if you miss the uptick, you can get caught in a stock that is now going down. And I agree with those who say that you aren't capitalized well enough to get started. You need significantly more capital so that you can buy a diversified portfolio (diversification is your limitation, not hedging). Let's say that you make money on two out of three stocks on average. What are the chances that you will lose money on three stocks in a row? One in twenty-seven. What if that happens on your first three stocks? What if your odds at starting are really one in three to make money? Then you'll lose money more than half the time on each of your first three stocks. The odds don't favor you. If you really think that finance would interest you, consider signing up for an internship at an investment management firm or hedge fund. Rather than being the person who monitors stocks for changes, you would be the person doing mathematical analysis on stock information. Focusing on the math problem over other things is then what you are supposed to be doing. If you are good at that, you should be able to turn that into a permanent job. If not, then go back to school somewhere. You may not like your schooling options, but they may be better than your work options at this time. Note that most internships will be easier to get if you imply that you are only taking a break from schooling. Avoid outright lying, but saying things like needing to find the right fit should work. You may even want to start applying to schools now. Then you can truthfully say that you are involved in the application process. Be open about your interest in the mathematics of finance. Serious math minds can be difficult to find at those firms. Given your finances, it is not practical to become a day trader. If you want proof, pick a stock that is less than $100. Found it? Write down its current price and the date and time. You just bought that stock. Now sell it for a profit. Ignore historical data. Just monitor the current price. Missed the uptick? Too bad. That's reality. Once you've sold it, pick another stock that you can afford. Don't forget to mark your price down for the trading commission. A quick search suggests that $7 a trade is a cheap price. Realize that you make two trades on each stock (buy and sell), so that's $14 that you need to make on every stock. Keep doing that until you've run out of money. Realize that that is what you are proposing to do. If you can make enough money doing that to replace a minimum wage job, then we're all wrong. Borrow a $100 from your mom and go to town. But as others have said, it is far more realistic to do this with a starting stake of $100,000 where you can invest in multiple stocks at once and spread your $7 trading fee over a hundred shares. Starting with $100, you are more likely to run out of money within ten stocks. |
If I make over 120k a year, what are my options for retirement plans? | There are three common options for you: |
How to get a credit card as a minor? | I have a job and would like to buy equipment for producing music at home and it would be easier for me to pay for the equipment monthly I just want to address your contention that it would be easier to pay monthly, with an interest calculation. Lets say you get a credit card with a very reasonable rate of 12% and you buy $2,500 of equipment. A typical credit card minimum payment is interest charges + 1% of the principle. You can see how this is going. You've paid nearly $200 to clear about $100 off your principle. Obviously paying the minimum payment will take forever to wipe out this debt. So you pay more, or maybe you get 0% interest for a while and take advantage of that. Paying $100 per month against $2,500 at 12% per year will take 29 months and cost about $390 in interest. At $200 per month it'll take 14 months and cost $184 in interest. Also note, you'll probably get an interest rate closer to 16 or 17%. It's always easier to pay small amounts frequently than it is to pay a lot of money all at once, that ease has a cost. If you're buying the gear to start a little business, or you already have a little business going and want to upgrade some gear, great; disciplined debt handling is a wonderful skill to have in business. If you want to start yourself in to a new hobby, you should not do that with debt. If interest rates are low enough financing something can make sense. 0.9% apr on a car, sure; 15% apr on a mixing board, no. Credit card interest rates are significant and really should not be trifled with. |
(Theoretical) Paying credit cards with other credit cards | Three things prevent you from doing this: Credit cards generally don't accept other credit cards as payment. You could do this with a cash advance or balance transfer, but Cash advances and balance transfers usually have fees associated with them, negating any reward you might earn. Your card might have a no-fee balance transfer promotion going, but Cash advances and balance transfers generally aren't eligible for rewards. |
Can I be building a house with the bank forever? | No, you can't do this indefinitely. For one, you can't just take money out as home equity with no strings attached. The cash out is done as a loan (often a HELOC) or second mortgage and you have to make payments. The lender will always make sure you are able to afford the payments. At some point, you won't qualify for the loan because of insufficient income or too many previous liens on the property. While home values often go up, there's no guarantee. And your examples are more than a bit optimistic. |
Is it a good practice to keep salary account and savings account separate? | It possibly could have made sense historically when interest rates were higher. In the UK, you used to get negligible (if any) interest on a current (checking) account, but could get modest interest from a savings account, so transferring the bulk of your salary to a savings account and paying from there (or transferring back to the current account when needed) could make some sense (but even then was probably not worth the effort). Nowadays (at least in the UK), most (easy access) savings accounts pay very little interest, but there are current accounts (example list here from comparison site) that pay more interest provided you go through several hoops. Typically you have to pay your salary (or a minimum number of £000s per month) into the account, and have a minimum number of direct debits going out. Some have fees, some only last for a year. |
ETF holding shares in itself | Lindsell Train Investment Trust could be different than the "Lindsell Train Limited", the company that runs the fund and thus you are mixing apples and oranges here since the bank isn't a listed stock. |
How did I end up with a fraction of a share? | Theoretically, yes, you can only buy or sell whole shares (which is why you still have .16 shares in your account; you can't sell that fraction on the open market). This is especially true for voting stock; stock which gives you voting rights in company decisions makes each stock one vote, so effectively whomever controls the majority of one stock gets that vote. However, various stock management policies on the part of the shareholder, brokerage firm or the issuing company can result in you owning fractional shares. Perhaps the most common is a retirement account or other forward-planning account. In such situations, it's the dollar amount that counts; when you deposit money you expect the money to be invested in your chosen mix of mutual funds and other instruments. If the whole-shares rule were absolute, and you wanted to own, for instance, Berkshire Hathaway stock, and you were contributing a few hundred a month, it could take you your entire career of your contributions sitting in a money-market account (essentially earning nothing) before you could buy even one share. You are virtually guaranteed in such situations to end up owning fractions of shares in an investment account. In these situations, it's usually the fund manager's firm that actually holds title to the full share (part of a pool they maintain for exactly this situation), and your fractional ownership percentage is handled purely with accounting; they give you your percentage of the dividends when they're paid out, and marginal additional investments increase your actual holdings of the share until you own the whole thing. If you divest, the firm sells the share of which you owned a fraction (or just holds onto it for the next guy fractionally investing in the stock; no need to pay unnecessary broker fees) and pays you that fraction of the sale price. Another is dividend reinvestment; the company may indicate that instead of paying a cash dividend, they will pay a stock dividend, or you yourself may indicate to the broker that you want your dividends given to you as shares of stock, which the broker will acquire from the market and place in your account. Other common situations include stock splits that aren't X-for-1. Companies often aren't looking to halve their stock price by offering a two-for-one split; they may think a smaller figure like 50% or even smaller is preferable, to fine tune their stock price (and thus P/E ratio and EPS figures) similar to industry competitors or to companies with similar market capitalization. In such situations they can offer a split that's X-for-Y with X>Y, like a 3-for-2, 5-for-3 or similar. These are relatively uncommon, but they do happen; Home Depot's first stock split, in 1987, was a 3-for-2. Other ratios are rare, and MSFT has only ever been split 2-for-1. So, it's most likely that you ended up with the extra sixth of a share through dividend reinvestment or a broker policy allowing fractional-share investment. |
How bad is it to have a lot of credit available but not used? | While @BrianRogers makes some good points, there are a few things you need to consider from the FICO perspective that I want to lay out simply for you: |
What could happen to Detroit Municipal bonds because of Detroit's filing for bankruptcy? | What could happen to bonds such as these because of Detroit filing for bankruptcy? Depending on how the courts process Detroit's situation, there could be that some bonds become worthless since they are so low and the city can't pay anything on those low priority debts. Others may get pennies on the dollar. There could also be the case that some bailout comes along that makes the bonds good though I'd say that is a long shot at this point. Are these bonds done for, or will bondholders receive interest payments and eventual payment? I wouldn't suspect that they are done for in the sense of being completely worthless though at the same time, I'd be very careful about buying any of them given that they are likely to be changed a great deal. Could these bonds tend to rise over time after the bankruptcy? Yes, it is possible. If there was some kind of federal or state bailout that is done, the bonds could rise. However, that is one heck of an "if" as you'd need to have someone come to guarantee the bonds in a sense. What similar situations from the past might support this idea? Not that many as this is the biggest municipal bankruptcy ever, but here are a few links that may be useful as a starting point, though keep in mind Detroit's scale is part of the story as it is such a big amount being defaulted: |
Strategies for putting away money for a child's future (college, etc.)? | Saving for school is [fundamentally] no different than saving for any other major purchase: in addition to some of the great answers already provided, here are a couple other thoughts: Just to have the [simplified] numbers handy: If you can increase that to $2000/yr, after 18 years: One final thought - I would personally avoid the 529 plans because if your child decides to not go to school (eg goes in the Coast Guard, decides to be a farmer, enters the Peace Corps, etc), you're penalized on withdrawal, whereas with any other savings/investment methodology, you won't have those penalties. |
how late can i put money into an IRA and still have it count for 2015? | The IRA contribution for the year are allowed until the tax day of that year. I.e.: you can contribute for 2015 until April 15th, 2016 (or whatever the first business day is after that, if the 15th is a holiday). You'll have to explicitly designate your contribution for 2015, since some of the IRA providers may automatically designate the current year unless you explicitly say otherwise. If that happens - it will be very hard to fix later, so pay attention when you're making the contribution. You get a couple of things from your IRA provider: Form 5498 - details your contributions for the year, account FMV, and RMD details. You can see the actual form here. You don't always get this form, if you didn't contribute anything and no RMD is required for you. Since the last day to contribute is April 15th, these forms are usually being sent out around mid-May. But you should know how much you've contributed by the tax day without it, obviously, so this is only for the IRS matching and your record-tracking. Form 1099-R includes information about distributions (including withdrawals and roll-overs). You may not get this form if you didn't take any money out of your IRA. These come out around end of January. |
Car dealers offering lower prices when financing a used car | With new cars it's usually the other way around: finance at a low APR or get cash back when you buy it outright. With used cars you usually don't know how much they have invested in the car, so it's more difficult to know how low they're willing to go. Regardless, I do think it's odd that they would knock 2K off the price if you finance with them, but not if you pay cash. The only reason they would do that is if they intend to make at least 2K in interest over the life of the loan, but they have no way of guaranteeing you won't refi. Therefore, I suspect they are bluffing and would probably close the deal if you wrote them a check (or put the cash on the table) for 2K less. However, if they won't budge and will only knock off 2K if you finance, you could finance and pay it off in full a week later. Just make sure they don't have any hidden origination fees or pay-off-early fees. |
Making $100,000 USD per month, no idea what to do with it | I know your "pain". But don't worry about investing the money right now -- leave it uninvested in the short term. You have other stuff you need to school up on. Investment will come, and it's not that hard. In the short term, focus on taxes. Do some "mock" run-throughs of your expected end-of-year taxes (use last year's forms if this year's aren't available yet). Must you pay estimated tax periodically throughout the year? The tax authorities charge hefty penalties for "forgetting" to do it or "not knowing you have to". Keep an eye out for any other government gotchas. Do not overlook this! This is the best investment you could possibly make. Max out your government sanctioned retirement funds - in the US we have employer plans like 401K or Keogh, and personal plans like the IRA. This is fairly straightforward. Avoid any "products" the financial advisors want to sell you, like annuities. Also if you have the Roth type IRA, learn the difference between that and a normal one. There are some tricks you can do if you expect to have an "off" year in the future. Charitable giving is worth considering at high income levels. Do not donate directly to charities. Instead, use a Donor Advised Fund. It is a charity of its own, which accepts your tax deductible donation, and holds it. You take the tax deduction that year. Then later, when the spirit moves, tell your DAF to donate to the charity of your choice. This eliminates most of the headaches associated with giving. You don't get on the soft-hearted sucker lists, because you tell the DAF not to disclose your address, phone or email. You don't need the charity's acknowledgement letter for your taxes, since your donation was actually to the DAF. It shuts down scams and non-charities, since the DAF confirms their nonprofit status and sends the check to their official address only. (This also bypasses those evil for-profit "fundraising companies".) It's a lot simpler than they want you to know. So-called "financial advisors" are actually salesmen working on commission. They urge you to invest, because that's what they sell. They sell financial products you can't understand because they are intentionally unduly complex, specifically to confuse you. They are trying to psych you into believing all investments are too complex to understand, so you'll give up and "just trust them". Simple investments exist. They actually perform better since they aren't burdened down with overhead and internal complexity. Follow this rule: If you don't understand a financial product, don't buy it. But seriously, do commit and take the time to learn investment. You are the best friend your money will have - or its worst enemy. The only way to protect your money from inflation or financial salesmen is to understand investment yourself. You can have a successful understanding of how to invest from 1 or 2 books. (Certainly not everything; those ingenious salesmen keep making the financial world more complicated, but you don't need any of that junk.) For instance how do you allocate domestic stocks, foreign stocks, bonds, etc. in an IRA if you're under 40? Well... how do smaller universities invest their endowments? They all want the same thing you do. If you look into it, you'll find they all invest about the same. And that's quite similar to the asset mix Suze Orman recommends for young people's IRAs. See? Not that complicated. Then take the time to learn why. It isn't stupid easy, but it is learnable. For someone in your tier of income, I recommend Suze Orman's books. I know that some people don't like her, but that segues into a big problem you'll run into: People have very strong feelings about money. Intense, irrational emotions. People get it from their parents or they get sucked into the "trust trap" I mentioned with so-called financial advisors. They bet their whole savings on whatever they're doing, and their ego is very involved. When they push you toward their salesman or his variable annuity, they want you to agree they invested well. So you kinda have to keep your head low, not listen too much to friends/family, and do your research for yourself. John Bogle's book on mutual funds is a must-read for picking mutual funds and allocating assets. Certain financial advisors are OK. They are "fee only" advisors. They deal with all their customers on a fee-only basis, and are not connected to a company which sells financial products. They will be happy for you to keep your money in your account at your discount brokerage, and do your own trading on asset types (not brands) they recommend. They don't need your password. Here's what not to do: A good friend strongly recommended his financial advisor. In the interview, I said I wanted a fee-only advisor, and he agreed to charge me $2000 flat rate. Later, I figured out he normally works on commissions, because he was selling me the exact same products he'd sell to a commission (free advice) customer, and they were terrible products of course. I fired him fast. |
What happens when they run out of letters? | NYSE started allowing four letter tickers around 2009. NASDAQ allows 4-5 letter tickers. I guess they'll keep increasing when / if needed. Companies are allowed to change tickers, although there are costs. Tickers in the US are assigned through a single entity. Companies that are new need to take something that's open. http://www.wsj.com/articles/SB124296050986346159 I see that you're in Australia, but, since there aren't really that many options to deal with the problem that you mentioned, I'd guess that you'll ultimately do the same. Not sure about how tickers are assigned there though. |
What prevents interest rates from rising? | To protect yourself from an increase in interest rates get a fixed rate loan. The loan terms: interest rate, number of payments, monthly payments will be fixed for the loan. Of course if rate for the rest of the market drops during the period of the loan, you may be able to refinance the loan. But if you can't refinance, or won't refinance, the drop in rates for the rest of the market doesn't help you. If you want to be able to have your rate float you can get a variable rate loan. Of course it can float up, or it can float down. So you take that risk. Because of that risk adjustable rate loans start at a lower rate. If the market interest rate drops far enough many people will refinance into a fixed rate loan at a lower rate than they could have gotten at the start. For adjustable rate loans the lender, during the application process, details how the rate is determined. It is pegged to be x% above some national or international interest rate that they don't have any control over. If that base rate moves then your loan rate may move. They also specify how often it will adjust, and the maximum it can adjust between each adjustments and over the entire life of the loan. That rate that starts initially lower than the fixed rate loan is the enticement that many people have to pick an adjustable rate loan. Some do it because they believe they will payoff the loan before the rates get too high, or they will see enough increase in income so they can afford the higher monthly payment if rates rise. If they are wrong about these things they may find themselves in trouble. The terms of the adjustable rate loan still have to follow the terms of the contract: the lender can't change the % offset or the source used to used to set interest rate. |
How to distinguish gift from payment for the service? | Most people will never need to pay federal gift taxes. The federal gift taxes start after giving away 5.34 million over the course of your life. This number is adjusted annually for inflation. There are only two states that I know of which impose state gift taxes (Connecticut and Minnesota); in Connecticut, you need to start paying taxes if the lifetime value of your gifts exceed two million. In Minnesota, it starts at 1 million. The federal tax is paid for by the person making the gift, unless other arrangements are made. There is an annual exclusion amount of approximately $14,000. You can give up to this amount to any number of recipients and it is not considered taxable. Therefore, when you give $100 to someone, it is not a taxable event. If you do make a gift to an individual in excess of 14k, you'll need to file a gift tax return (IRS Form 709). When you file form 709, you won't need to pay taxes until the 5.34 million is exceeded. Instead, you can claim an exemption. Since most people don't exceed that amount, its rare to ever pay taxes even when exceeding the annual exclusion amount. The annual exclusion amount is adjusted each year for inflation. |
Why charge gross receipts taxes to the customer? | the state of New Mexico provides guidance in this exact situation. On page 4: Gross receipts DOES NOT include: Example: When the seller passes tax to the buyer, the seller should separate, or “back out”, that tax from the total income to arrive at "Gross Receipts," the amount reported in Column D of the CRS-1 Form. (Please see the example on page 48.) and on page 48: How do I separate (“back out”) gross receipts tax from total gross receipts? See the following examples of how to separate the gross receipts tax: 1) To separate (back out) tax from total receipts at the end of the report period, first subtract deductible and exempt receipts, and then divide total receipts including the tax for the report period by one plus the applicable gross receipts tax rate. For example, if your tax rate is 5.5% and your total receipts including tax are $1,055.00 with no deductions or exemptions, divide $1,055.00 by 1.055. The result is your gross receipts excluding tax (to enter in Column D of the CRS-1 Form) or $1,000. 2) If your tax rate is 5.5%, and your total gross receipts including tax are $1,055.00, and included in that figure are $60 in deductions and another $45 in exemptions: a) Subtract $105 (the sum of your deductions and exemptions) from $1,055. The remainder is $950. This figure still includes the tax you have recovered from your buyers. b) Divide $950 by 1.055 (1 plus the 5.5% tax rate). The result is $900.47. c) In Column D enter the sum of $900.47 plus $60 (the amount of deductible receipts)*, or $960.47. This figure is your gross receipts excluding tax. |
Can a CEO short his own company? | If we take only the title of the question "can the CEO short the stock": It was probably different before Enron, but nowadays a CEO can only make planned trades, that is trades that are registered a very long time before, and that cannot be avoided once registered. So the CEO can say "I sell 100,000 shares in exactly six months time". Then in six months time, the CEO can and must sell the shares. Anything else will get him into trouble with the SEC quite automatically. I don't know if shorting a stock or buying options can be done that way at all. So it's possible only in the sense of "it's possible, but you'll be in deep trouble". Selling shares or exercising share options may indicate that the company's business is in trouble. If the sale makes that impression and everyone else starts selling because the CEO sold his shares, then the CEO may be in trouble with the board of directors. Such a sale would be totally legal (if announced long time ahead), but just a bad move if it makes the company look bad. Shorting sales is much worse in that respect. If the CEO wants to buy a new car, he may have to sell some shares (there are people paid almost only in share options), no matter where the share price is going. But shorting shares means that you most definitely think the share price is going to drop. You're betting your money on it. That would tend to get a CEO fired, even if it was legal. |
Are low commission trading sites safe? | Generally, yes. Rather than ask, "why are these guys so cheap?", you should be asking why the big names are so expensive. :) Marketing spend plays a big role there. Getting babies to shill for your company during the super bowl requires a heck of a lot of commissions. Due to the difficulties involved in setting up a brokerage, it's unlikely that you'll see a scam. A brokerage might go bankrupt for random reasons, but that's what investor insurance is for. "Safeness" is mostly the likelihood that you'll be able to get access to your funds on deposit with the broker. Investment funds are insured by SIPC for up to $500,000, with a lower limit on cash. The specific limits vary by broker, with some offering greater protection paid for on their own dime. Check with the broker -- it's usually on their web pages under "Security". Funds in "cash" might be swept into an interest-earning investment vehicle for which insurance is different, and that depends on the broker, too. A few Forex brokers went bankrupt last year, although that's a new market with fewer regulatory protections for traders. I heard that one bankruptcy in the space resulted in a 7% loss for traders with accounts there, and that there was a Ponzi-ish scam company as well. Luckily, the more stringent regulation of stock brokerages makes that space much safer for investors. If you want to assess the reliability of an online broker, I suggest the following: It's tempting to look at when the brokerage was founded. Fly-by-night scams, by definition, won't be around very long -- and usually that means under a few months. Any company with a significant online interface will have to have been around long enough to develop that client interface, their backend databases, and the interface with the markets and their clearing house. The two brokerages you mentioned have been around for 7+ years, so that lends strength to the supposition of a strong business model. That said, there could well be a new company that offers services or prices that fit your investment need, and in that case definitely look into their registrations and third-party reviews. Finally, note that the smaller, independent brokerages will probably have stiffer margin rules. If you're playing a complex, novel, and/or high-risk strategy that can't handle the volatility of a market crash, even a short excursion such as the 2010 flash crash, stiff margin rules might have consequences that a novice investor would rather pretend didn't exist. |
Is Stock Trading legal for a student on F-1 Visa in USA? [duplicate] | You can buy and sell stocks, if you like. You'll have to pay taxes on any profits. And short-term is speculating, not investing, and has high risk |
Pros & cons in Hungary of investing retirement savings exclusively in silver? What better alternatives, given my concerns? | First is storage which is a big and a detrimental headache. Security is another big headache. Investing in precious metal has always been an investment opportunity in the countries in the east i.e. India and China because of cultural reason and due to absence of investment opportunities for the less fortunate ones. It isn't the case so in the West. Secondly what is the right an opportune moment is open to question. When the worlwide economy is up and running, that is probably the time to buy i.e. people would like to put money in use rather than store. The saying goes the other way when the economy is stagnating. Then there is also the case of waiting out the bad periods to sell your gold and silver. If you do want to buy precious metals then use a service like BullionVault, rather than doing those yourself. It takes care of the 2 big headaches, I mentioned earlier. |
Can a wealthy investor invest in or make a deal with a company before it goes public / IPO? | Yes, an investment can be made in a company before IPO. The valuation process is similar as that done for arriving at IPO or for a normal listed company. The difference may be the premium perceived for the idea in question. This would differ from one investor to other. For example, whether Facebook will be able to grow at the rate and generate enough revenues and win against competition is all a mathematical model based on projections. There are quite a few times the projection would go wrong, and quite a few times it would go correct. An individual investor cannot generally borrow from banks to invest into a company (listed or otherwise) (or for any other purpose) if he does not have any collateral that can be kept as security by the bank. An individual can get a loan only if he has sufficient collateral. The exceptions being small personal loans depending on one's credit history. The Private Equity placement arm of banks or firms in the business of private equity invest in start-up and most of the time make an educated guess based on their experience. More than half of their investments into start-ups end up as wiped out. An occasional one or two companies are ones that they make a windfall gain on. |
How to share income after marriage and kids? | Now I have been trying to figure out how to split the money that we both earn. From what I can see there are several concepts but none of them really seems ideal to me. There is nothing fair or unfair in such arrangements. It is what you both agree. You can try and make this as scientific as possible. But then there is no golden rule. For example, your girlfriend makes 2200 now and due to child, she is making 1100. The child is both of your responsibility; so you need to compensate half of her salary loss. 550 and she takes the other half. If you hire a nanny to look after you kinds, it would say cost you 500. But your girlfriend is doing that job, so she should get additional 500 from common pot. Plus due to loss of few years in looking after the children, she has a lost opportunity in career growth. i.e. she may indefinitely make less money than she can... So one gets into all kinds of theories and analysis and any arrangements will have some or the other gaps. So my suggestion, don't get too scientific about it. Just talk it out as to what you both feel how this should be and arrive it. It is something every individual has to agree. It also make sense to have the large assets [or assets that matter], like house, car etc in clear title and who gets what in case you decide to separate. Other should be incidental. |
looking for research tool to plug in and evaluate theoretical historical returns | The professional financial advisors do have tools which will take a general description of a portfolio and run monte-carlo simulations based on the stock market's historical behavior. After about 100 simulation passes they can give a statistical statement about the probable returns, the risk involved in that strategy, and their confidence in these numbers. Note that they do not just use the historical data or individual stocks. There's no way to guarantee that the same historical accidents would have occurred that made one company more successful than another, or that they will again. "Past performance is no guarantee of future results"... but general trends and patterns can be roughly modelled. Which makes that a good fit for those of us buying index funds, less good for those who want to play at a greater level of detail in the hope of doing better. But that's sorta the point; to beat market rate of return with the same kind of statistical confidence takes a lot more work. |
What does a CFP do? | CFP stands for "Certified Financial Planner", and is a certification administered by the CFP board (a non-government non-profit entity). This has nothing to do with insurance, and CFP are not insurance agents. Many States require insurance agents to be explicitly licensed by the State as such, and only licensed insurance agents can advise on insurance products. When you're looking for an insurance policy as an investment vehicle, a financial adviser (CFP, or whatever else acronym on the business card - doesn't matter) may be helpful. But in any case, when dealing with insurance - talk to a licensed insurance agent. If your financial adviser is not a licensed tax adviser (EA/CPA licensed in your State) - talk to a licensed tax adviser about your options before making any decisions. |
Why does the share price tend to fall if a company's profits decrease, yet remain positive? | It has got to do with market perceptions and expectation and the perceived future prospects of the company. Usually the expectation of a company's results are already priced into the share price, so if the results deviate from these expectations, the share price can move up or down respectfully. For example, many times a company's share price may be beaten down for increasing profits by 20% above the previous year when the expectation was that it would increase profits by 30%. Other times a company's share price may rise sharply for making a 20% loss when the expectation was that it would make a 30% loss. Then there is also a company's prospects for future growth and performance. A company may be heading into trouble, so even though they made a $100M profit this year, the outlook for the company may be bleak. This could cause the share price to drop accordingly. Conversely, a company may have made a loss of $100M but its is turning a corner after reducing costs and restructuring. This can be seen as a positive for the future causing the share price to rise. Also, a company making $100M in profits would not put that all into the bank. It may pay dividends with some, it may put some more towards growing the business, and it might keep some cash available in case cash-flows fluctuate during the year. |
How should I report my RSUs in my tax return | Here's an article on it that might help: http://thefinancebuff.com/restricted-stock-units-rsu-sales-and.html One of the tricky things is that you probably have the value of the vested shares and withheld taxes already on your W-2. This confuses everyone including the IRS (they sent me one of those audits-by-mail one year, where the issue was they wanted to double-count stock compensation that was on both 1099-B and W-2; a quick letter explaining this and they were happy). The general idea is that when you first irrevocably own the stock (it vests) then that's income, because you're receiving something of value. So this goes on a W-2 and is taxed as income, not capital gains. Conceptually you've just spent however many dollars in income to buy stock, so that's your basis on the stock. For tax paid, if your employer withheld taxes, it should be included in your W-2. In that case you would not separately list it elsewhere. |
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