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What caused this drop? | I'm going to guess that you found this because of a stock screener. This company went through a 1:20 reverse split on June 30, so every 20 shares outstanding became a single share. Where before you had 20 shares worth $100 you now have 1 share worth $100, the value of the company doesn't change because of a split. This company was never trading for $30+ per share. Reverse splits are typical of a floundering company trading on an exchange that has a minimum share price requirement. While reverse splits don't change the value of the company, just the number of shares outstanding and the price per share, no healthy company performs a reverse split. Reverse splits are generally a massive signal to jump ship... The company seems to be trading for $1 right now, why the value fell from a pre-split $1.65 ($33/20) to $1 is anyone's guess; how the company ever got to $1.65 is also anyone's guess. But looking at the most recent 10-Q there are numerous causes for concern: Note 2. Capital Stock On March 6, 2017, the Company issued as compensation for services provided a total of 650,000 common shares with a fair value of $390,000 to a third party. The fair value of the shares was based on the price quoted on the OTC pink sheets on the grant date. this indicates a share price of $0.60 ($390,000/650,000) as of 3/6/2017, just to reinforce that the google price chart doesn't show the true past but a past adjusted for the split Results of Operations The three months ended March 31, 2017 compared to the three months ended March 31, 2016 For the three months ended March 31, 2017 compared to the three months ended March 31, 2016, total revenues were $0 and $0, respectively, and net losses from operations were $414,663 and $26,260, respectively. The net losses were attributable to costs attributable to operating as a public company, in particular, common stock with a valuation of $390,000 that was issued to an investor relations firm in the first quarter of 2017. Going Concern As of March 31, 2017, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our proposed business. We have suffered recurring losses from operations since our inception. In addition, we have yet to generate an internal cash flow from our business operations or successfully raised the financing required to develop our proposed business. As a result of these and other factors, our independent auditor has expressed substantial doubt about our ability to continue as a going concern. Liquidity and Capital Resources We had no cash as of the date of March 31, 2017. Additionally, since there is no balance sheet in the last 10-Q (another bad sign), the last annual report 10-K has this balance sheet: So the company: So why did the stock value plummet? It's anyones' guess but there is no shortage of ways to justify it. In fact, it's reasonable to ask how is this company still worth $3mm ($1 * 3mm shares outstanding)... |
I have a loan with a 6.5% interest rate. Should I divert money into my 401(k) instead of prepaying? | Having a loan also represents risk. IMHO you should retire the loan as soon as feasible in most cases. JoeTaxpayer, as usual, raises a good point. With numbers as he is quoting, it is tolerable to have a loan around on a asset such as a home. While he did not mention it, I am sure that his rate is fixed. If the interest rate is variable: pay it off. If it is a student loan: pay it off. If you can have it retired quickly: pay it off and get the bank off your payroll. If it is consumer debt: pay it off. |
What purchases, not counting real estate, will help me increase my cash flow? | Mutual funds can be relatively low risk and a good starting point. Really it depends on you. What are your goals? This is a pretty open ended question. These can all be low risk and provide some return. Note "Less Knowledge" is never a good qualifier for an investment. Your money is your business and you are entitled to know what your business is up to. |
Why do credit cards have minimum limits? | They have a minimum to discourage applications for that particular card. Every application costs them money because they have to pay the credit agencies to pull the applicant's credit history. So one way they save money and reduce their cost of business is to discourage people from applying if they're not creditworthy enough for that product. Credit card companies tailor their products into different income/credit brackets. Those who have less creditworthiness would be better suited for a different product than what you're referring, similar to those with greater creditworthiness. |
Why are interest rates on saving accounts so low in USA and Europe? | There is really much simpler explanation for the interest rate differences in different countries. It is the interest rate arbitrage. It is a very well explored economic concept, so you can look it up on the Internet, in case you want to know more. 1) Interest rates for the same currency in different countries Basically, as one smart person here pointed out, there is only one price of money in free market economy. It happens, because investors can move their money unrestrictedly anywhere in the World to capitalize on the local interest rates advantage. For instance, if I can take a loan in the USA at 3-4% annual interest and receive 5-6% annual income on my dollar deposit in Russia, I would take a loan in the US and open a deposit in Russia to enjoy a risk free interest rate differential income of 2% (5-6% - 3-4% ~ 2%). So, would any reasonable person. However, in real World very few banks in Russia or anywhere would pay you an an interest rate higher than it can borrow money at. It'd probably lose money if it'd do so. Anyways, the difference between the risk free rate and interest rate on the dollar deposit can be attributed to the risk premium of this particular bank. The higher expected return, the greater risk premium. If there is a positive difference in the interest rates on the dollar deposits in different countries, it will almost entirely accounted for the risk premium. It is generally much riskier to keep money in, say Russian bank, than American. That's why investors want greater return on their dollar deposits in Russian banks than in American. Of course, if you'd want to park your USD in Russian bank you'd also have to consider transaction costs. So, as you may have already guessed, there is no free lunch. 2) Interest rates in different currencies for different countries If we are talking about the interest rates in different sovereign currencies, it is a somewhat similar concept, only there is more risk if you keep money in local currency (risk premium is much higher). Probably, the biggest component of this risk is inflation (that is only attributed to the prices in local currency). For that reason, current interest rates on deposits in Russian Rubles are at 10-12%, but only 1-3% in the US Dollars. An economic concept that discusses this phenomenon in great detail is Interest Rate Parity. Hope this was helpful. P.S. It doesn't look quite realistic that you can get an 8% annual income for USD deposit in Russia with the interest rates in the U.S. being at 1-2%. At present moment, a 30-year mortgage annual interest rate in the US is at ~2-3% and an annual interest rates for dollar deposits in Sberbank (one of the safest Russian banks = very little risk premium) is at 1-3%. So, arbitrage is impossible. |
Website for managing personal cash inflow and outflow, applicable to India? | There are sites in India that offer this, http://www.intuit.in/ is one such site. Apart from this some banks like ICICI offer this to limited extent. |
Are wash sale rules different for stocks and ETFs / Mutual Funds? | No, there's nothing special in mutual funds or ETFs. Wash sale rules apply to any asset. |
Is there a significant danger to market orders as opposed to limit orders? | The risk of market orders depends heavily on the size of the market and the exchange. On big exchange and a security which is traded in hue numbers you're likely that there are enough participants to give you a "fair" price. Doing a market order on a security which is hardly dealed you might make a bad deal. In Germany Tradegate Exchange and the sister company the bank Tradegate AG are known to play a bit dirty: Their market is open longer than Frankfurt (Xetra) and has way lower liquidity. So it can happen that not all sell or buy orders can be processes on the Exchange and open orders are kept. Then Tradegate AG steps in with a new offer to full-fill these trades selling high or buying low. There is a German article going in details on wiwo.de either German or via Google Translate |
Do I even need credit cards? | People have credit cards for various reasons depending upon their personal situation and uses You don't need to have a Credit Card if you don't have a reason to. But most people do. |
What am I actually buying when trading in CFDs | CFDs (Contracts for Difference) are basically a contract between you and the broker on the difference in price of the underlying between the time you open a position and close a position. You are not actually buying the underlying. With share CFDs, the outcome is a bit like buying the underlying shares on margin. You pay interest for every day you hold the CFDs overnight for long CFDs. However, with short positions, you get paid interest for every day you hold your short position overnight. Most people use CFDs for short term trading, however they can be used for medium to longer term trading just as you would hold a portfolio on margin. What you have to remember is that because you are buying on margin you can lose more than your initial contract amount. A way to manage this risk is by using position sizing and stop loses. With your position sizing, if you wanted to invest $10,000 in a particular share trading at $10 per share, you would then buy 1000 shares or 1000 CFDs in that share. Your initial expense with the CFDs might be only $1000 (at a margin rate of 10%). So instead of increasing your risk by having an initial outlay of $10,000 with the CFDs you limit your risk to the same as you were buying the shares directly. |
Why buy bonds in a no-arbitrage market? | It is my understanding that banks pay less than the going rate on savings accounts and require that the person who takes out a loan pay more than the going rate. That is how the bank gets its money. Usually the going rate is affected by the current inflation rate (but that has not been true for the last few weeks). So that means that, typically, the money you have in the bank is, gradually, losing purchasing power as the bank typically pays you less than the inflation rate. So if you want your money to keep pace with inflation (or do a bit better) then you should buy bonds. |
Why do some people say a house “not an investment”? | The below assessment is for primary residences as opposed to income properties. The truth is that with the exception of a housing bubble, the value of a house might outpace inflation by one or two percent. According to the US Census, the price of a new home per square foot only went up 4.42% between 1963 and 2008, where as inflation was 4.4%. Since home sizes increased, the price of a new home overall outpaced inflation by 1% at 5.4% (source). According to Case-Shiller, inflation adjusted prices increased a measly .4% from 1890-2004 (see graph here). On the other hand your down payment money and the interest towards owning that home might be in a mutual fund earning you north of eight percent. If you don't put down enough of a down payment to avoid PMI, you'll be literally throwing away money to get yourself in a home that could also be making money. Upgrades to your home that increase its value - unless you have crazy do-it-yourself skills and get good deals on the materials - usually don't return 100% on an investment. The best tend to be around 80%. On top of the fact that your money is going towards an asset that isn't giving you much of a return, a house has costs that a rental simply doesn't have (or rather, it does have them, but they are wrapped into your rent) - closing costs as a buyer, realtor fees and closing costs as a seller, maintenance costs, and constantly escalating property taxes are examples of things that renters deal with only in an indirect sense. NYT columnist David Leonhart says all this more eloquently than I ever could in: There's an interactive calculator at the NYT that helps you apply Leonhart's criteria to your own area. None of this is to say that home ownership is a bad decision for all people at all times. I'm looking to buy myself, but I'm not buying as an investment. For example, I would never think that it was OK to stop funding my retirement because my house will eventually fund it for me. Instead I'm buying because home ownership brings other values than money that a rental apartment would never give me and a rental home would cost more than the same home purchase (given 10 years). |
Why would you ever turn down a raise in salary? | I recently was offered $1/hr raise. I turned it down because 1.)I had been looking for other jobs and the extra $150 per month wasn't enough money to keep me from exploring other options so it would look bad to take a raise and leave a month later. You never want to burn bridges. 2.) Raises aren't given out everyday. The business I work for is having financial troubles and the $1/hr was probably the best they could do at the time. If business picks up and they can afford to give me more money they won't do it because the record will show that I just got a raise. One good extra is that your boss will be flabergasted that you just turned down a raise and you may gain a lot of respect from your superiors. Don't confuse strategically turning down a raise and letting others sway your opinion because they don't wanna cough up the cash. |
Do credit ratings (by Moody's, S&P, and Fitch) have any relevance? | The problems with ratings and the interpretation of ratings is that they are retrospective, and most people read them as prospective. They basically tell you that debtor is solvent right now. What does that mean? It means that the ratings are based on the audited financial statements of a company, government or other organization issuing debt. So, in the best case scenario where the rating agency is acting properly, they are still dependent on folks with fiduciary responsibility telling the truth. And even if they are telling the "truth", accounting rules make it possible to obscure problems for years in some cases. Municipal goverments are a great example of this... the general obligation bonds cities and even states with deep structural budget problems still get good ratings, because they are solvent and have sufficient operating cash to meet obligations today. But towards the end of a 30-year bond's life, that may not be the case anymore unless they dramatically alter their budgets. At the end of the day, ratings are one aspect of due diligence. They are useful screening devices, but you need to understand who you are lending money to by purchasing bonds and diversify your holdings to protect your wealth. The problem, of course, is when the trustees of your pension fund invests in garbage assets after getting a sales pitch on the beach in Hawaii, then conveniently place all of the blame for that bad investment on the rating agency. You unfortunately have zero control over that. |
How should I pay off my private student loans that have a lot of restrictions? | You might try to refinance some of those loans. It sounds like you are serious about minimizing interest expense, if you think you will be able to pay those loans in full within five years you might also try a loan that is fixed for five years before becoming variable. If you do not think you can repay the loans in full before that time, you should probably stick with the fixed rates that you have. It may even be profitable to refinance those loans through another lender at the exact same fixed rate because it gets around their repayment tricks that effectively increase your interest on those two smaller loans. |
I'm 18. How to build good monthly income at my 20's? | It looks like you need a lot more education on the subject. I suggest you pick up a book on investing and portfolio management to get a first idea. Dividend yields are currently way below 5% on blue chips. Unlike coupons from fixed income instruments (which, in the same risk category, pay a lot less), dividend yields are not guaranteed and neither is the invested principal amount. In either case, your calculation is far away from reality. Sure, there are investments (such as the mentioned direct investments in companies or housings in emerging economies) that can potentially earn you two digit percentage returns. Just remember: risk always goes both ways. A higher earning potential means higher loss potential. Also, a direct investment is a lot less liquid than an investment on a publicly quoted high turnover market place. If you suddenly need money, you really don't want to be pressed to sell real estate in an emerging market (keyword: bid ask spread). My advice: the money that you can set aside for the long term (10 years plus), invest it in stock ETFs, globally. Everything else should be invested in bond funds or even deposits, depending on when you will need the access. As others have pointed out, consider getting professional advice. |
Long term saving: Shares, Savings Account or Fund | Congratulations on a solid start. Here are my thoughts, based on your situation: Asset Classes I would recommend against a long-term savings account as an investment vehicle. While very safe, the yields will almost always be well below inflation. Since you have a long time horizon (most likely at least 30 years to retirement), you have enough time to take on more risk, as long as it's not more than you can live with. If you are looking for safer alternatives to stocks for part of your investments, you can also consider investment-grade bonds/bond funds, or even a stable value fund. Later, when you are much closer to retirement, you may also want to consider an annuity. Depending on the interest rate on your loan, you may also be able to get a better return from paying down your loan than from putting more in a savings account. I would recommend that you only keep in a savings account what you expect to need in the next few years (cushion for regular expenses, emergency fund, etc.). On Stocks Stocks are riskier but have the best chance to outperform versus inflation over the long term. I tend to favor funds over individual stocks, mostly for a few practical reasons. First, one of the goals of investing is to diversify your risk, which produces a more efficient risk/reward ratio than a group of stocks that are highly correlated. Diversification is easier to achieve via an index fund, but it is possible for a well-educated investor to stay diversified via individual stocks. Also, since most investors don't actually want to take physical possession of their shares, funds will manage the shares for you, as well as offering additional services, such as the automatic reinvestments of dividends and tax management. Asset Allocation It's very important that you are comfortable with the amount of risk you take on. Investment salespeople will prefer to sell you stocks, as they make more commission on stocks than bonds or other investments, but unless you're able to stay in the market for the long term, it's unlikely you'll be able to get the market return over the long term. Make sure to take one or more risk tolerance assessments to understand how often you're willing to accept significant losses, as well as what the optimal asset allocation is for you given the level of risk you can live with. Generally speaking, for someone with a long investment horizon and a medium risk tolerance, even the most conservative allocations will have at least 60% in stocks (total of US and international) with the rest in bonds/other, and up to 80% or even 100% for a more aggressive investor. Owning more bonds will result in a lower expected return, but will also dramatically reduce your portfolio's risk and volatility. Pension With so many companies deciding that they don't feel like keeping the promises they made to yesterday's workers or simply can't afford to, the pension is nice but like Social Security, I wouldn't bank on all of this money being there for you in the future. This is where a fee-only financial planner can really be helpful - they can run a bunch of scenarios in planning software that will show you different retirement scenarios based on a variety of assumptions (ie what if you only get 60% of the promised pension, etc). This is probably not as much of an issue if you are an equity partner, or if the company fully funds the pension in a segregated account, or if the pension is defined-contribution, but most corporate pensions are just a general promise to pay you later in the future with no real money actually set aside for that purpose, so I'd discount this in my planning somewhat. Fund/Stock Selection Generally speaking, most investment literature agrees that you're most likely to get the best risk-adjusted returns over the long term by owning the entire market rather than betting on individual winners and losers, since no one can predict the future (including professional money managers). As such, I'd recommend owning a low-cost index fund over holding specific sectors or specific companies only. Remember that even if one sector is more profitable than another, the stock prices already tend to reflect this. Concentration in IT Consultancy I am concerned that one third of your investable assets are currently in one company (the IT consultancy). It's very possible that you are right that it will continue to do well, that is not my concern. My concern is the risk you're carrying that things will not go well. Again, you are taking on risks not just over the next few years, but over the next 30 or so years until you retire, and even if it seems unlikely that this company will experience a downturn in the next few years, it's very possible that could change over a longer period of time. Please just be aware that there is a risk. One way to mitigate that risk would be to work with an advisor or a fund to structure and investment plan where you invest in a variety of sector funds, except for technology. That way, your overall portfolio, including the single company, will be closer to the market as a whole rather than over-weighted in IT/Tech. However, if this IT Consultancy happens to be the company that you work for, I would strongly recommend divesting yourself of those shares as soon as reasonably possible. In my opinion, the risk of having your salary, pension, and much of your investments tied up in the fortunes of one company would simply be a much larger risk than I'd be comfortable with. Last, make sure to keep learning so that you are making decisions that you're comfortable with. With the amount of savings you have, most investment firms will consider you a "high net worth" client, so make sure you are making decisions that are in your best financial interests, not theirs. Again, this is where a fee-only financial advisor may be helpful (you can find a local advisor at napfa.org). Best of luck with your decisions! |
How to account for Capital Gains (Losses) in double-entry accounting? | First, the balance sheet is where assets, liabilities, & equity live. Balance Sheet Identity: Assets = Liabilities (+ Equity) The income statement is where income and expenses live. General Income Statement Identity: Income = Revenue - Expenses If you want to model yourself correctly (like a business), change your "income" account to "revenue". Recognized & Realized If you haven't yet closed the position, your gain/loss is "recognized". If you have closed the position, it's "realized". Recognized Capital Gains(Losses) Assuming no change in margin requirements: Margin interest should increase margin liabilities thus decrease equity and can be booked as an expense on the income statement. Margin requirements for shorts should not be booked under liabilities unless if you also book a contra-asset balancing out the equity. Ask a new question for details on this. Realized Capital Gains(Losses) Balance Sheet Identity Concepts One of the most fundamental things to remember when it comes to the balance sheet identity is that "equity" is derived. If your assets increase/decrease while liabilities remain constant, your equity increases/decreases. Double Entry Accounting The most fundamental concept of double entry accounting is that debits always equal credits. Here's the beauty: if things don't add up, make a new debit/credit account to account for the imbalance. This way, the imbalance is always accounted for and can help you chase it down later, the more specific the account label the better. |
How exactly does a country devalue its currency? | Currencies that are pegged or fixed require that foreign currencies are held by the central issuer at a proportional amount. This is analogous to having a portfolio of currencies that the central bank issues shares from - in the form of its own currency. We will continue with this analogy, if the central bank says these "shares" are worth $1, but the underlying components of the portfolio are worth $0.80 and decreasing, then it is expensive for the central bank to maintain its peg, and eventually they will have to disregard the peg as people start questioning the central bank's solvency. (People will know the $1 they hold is not really worth what the central bank says it is, because of the price changes people experience in buying goods and services, especially when it comes to imports. Shadow economies will also trade using a currency more reflective of labor, which happens no matter what the government's punishments are for doing so). Swiss National Bank (central bank) did this in early 2015, as it experienced volatility in the Euro which it had previously been trying to keep it's currency pegged to. It became too expensive for it to keep this peg on its own. The central bank can devalue its currency by adjusting the proportions of the reserve, such as selling a lot of foreign currency X, buying more of currency Y. They can and do take losses doing this. (Swiss National Bank is maintaining a large loss) They can also flood their economy with more of their currency, diluting the value of each individual 1 dollar equivalent. This is done by issuing bonds or monetizing goods and services from the private sector in exchange for bonds. People colloquially call this "printing money" but it is a misnomer in this day and age where printers are not relevant tools. The good and service goes onto the central bank's balance book, and the company/entity that provided the service now has a bond on its book which can be immediately sold to someone else for cash (another reading is that the bond is as good as cash). The bond didn't previously exist until the central bank said it did, and central banks can infinitely exchange goods and services for bonds. Bond monetization (also called Quantitative Easing) is practiced by the Federal Reserve in the United States, Bank of Japan, European Central Bank and now the Central Bank of the Republic of China |
How Emini/Minifuture price is set against its underlaying instrument? | The market sets prices and the way JP Morgan or any other bank or organization determines the price it's willing to deal in would be proprietary business information. |
Are Certificates of Deposit worth it compared to investing in the stock market? | This all depends on your timeline and net worth. If you're short on time before you plan to start spending it or have a large net worth, parking some of your money in CDs is a good idea. If you have lots of time or not much net worth, then index funds are a better bet. Equity or dividend index funds are the way to go when you have 10+ years before you reach your goal. CDs major downside is that they don't beat inflation 1 - 3% a year. This is why you only use them when it's absolutely critical you hold onto every penny of the principal. The reason is because with CDs your 10k is actually losing its value (not the principal) the longer you leave it in CDs. I generally wouldn't recommend CDs unless you are in or approaching your 60s or have assets over 500k. Even still I would limit the use of CDs to no more than 20%. I would view them as catastrophic loss protection. |
How can a person with really bad credit history rent decent housing? | Explain the situation to a landlord and offer to prepay a few months of rent in advance as a guarantee. This may or may not work, but being honest and committed may just be the answer. |
Buying a house for a shorter term | When on this topic, you'll often hear general rules of thumb. And, similar to the 'only buy stocks if you plan to hold more than X years' there are going to be periods where if you buy at a bottom right before the market turns up, you might be ahead just months after you buy. I'd say that if you buy right, below market, you're ahead the day you close. Edit - I maintain, and have Schiller providing supporting data) that real estate goes up with inflation in the long term, no more, no less. If the rise were perfectly smooth, correlated 100% month to month, you'd find it would take X years to break even to the costs of buying, commission and closing costs. If we call that cost about 8%, and inflation averages 3, it points to a 3 year holding period to break even. But, since real estate rises and falls in the short term, there are periods longer than 4 years where real estate lags, and very short periods where it rises faster than the costs involved. The buy vs rent is a layer right on top of this. If you happen upon a time when the rental market is tight, you may buy, see the house decline 10% in value, and when the math is done, actually be ahead of the guy that rented. |
When can we exercice an option? | If you're talking about ADBE options, that is an American style option, which can be exercised at any time before expiration. You can exercise your options by calling your broker and instructing them to exercise. Your broker will charge you a nominal fee to do so. As an aside, you probably don't want to exercise the option right now. It still has a lot of time value left, which you'll lose if you exercise. Just sell the option if you don't think ADBE will keep going up. |
Purchasing options between the bid and ask prices, or even at the bid price or below? | People must simply be willing to match your orders if they know about it. You can sniff orders out if you can see them or predict them. For instance, you can look at an order book and decide who you want to get filled at, especially if you are looking at different quotes from different exchanges. So you can get a "better" fill just by looking at what someone is willing to pay to enter/exit their order as well as what exchange they placed their order through, and send an order to that specific exchange to match them. You (or a program) can just watch the level 2's and place an order as soon as you see one you like. The orders on the level2's do not reveal ALL interested market participants. Also many brokers have difficulty updating options quotes. Finally, options & market volatility can inflate or decrease the price of options by large percentages very quickly. |
Possible to use balance transfers to avoid interest with major credit cards? | Sure of course you can do balance transfers like this but you are way late to the party and it has gotten to be pretty challenging finding new cards to transfer balances to. Before the current financial crisis in the US you could get enormous amounts of credit (2-5 times a person's annual income) and transfer balances to your bank account to collect interest . There were a bunch of ways to the transfer everything from direct deposit to your bank account to a balance transfer check payable to yourself to overpaying another credit card and requesting a refund. Over paying another account sets off a lot of red flags now days but other methods still work. The financial atmosphere has changed a lot and there are very few available cards with no balance transfer fees or capped fees and the interest rates are a lot lower now so it really isn't worth doing. |
Should I buy ~$2200 of a hot stock or invest elsewhere? | Can you afford to lose the $2200? If not, the answer is don't buy the stock. No one can tell you if a stock will continue to go up. But the general rule is that the more hype there is on a stock, the more likely it is that it's reached a top and is due for a downward correction soon. Also note that the more expectation there is for a company, the more negatively the market will react if the company's earnings report comes in even slightly below expectation, or if the company hints at a slowdown in the future. If that buyback doesn't happen you mentioned, expect the stock to drop a lot. Only a really positive surprise news announcement will make it continue to rise on earnings day. If you really want to buy this stock, my advice would be to learn about chart patterns and other basic technical analysis to have at least some idea of whether the stock is due for a correction soon. (If you see it grow in a hockey-stick shape upward, it probably is.) |
Advice on strategy for when to sell | Consider trailing stop losses maybe 5% below your profit target, if you want a simplistic answer. |
My tenant wants to pay rent through their company: Should this raise a red flag? | Maybe you should consider setting up a Taxpayer Identification Number (TIN) for your business dealings as a landlord and consider providing that instead of your SSN for this type of thing. I am assuming (if this is legitimate) they want it so they can send you a 1099 as they might be obligated to do if they are claiming the rent as a business expense. Also, I'd suggest having the tenant tell their employer to contact you directly. There is no need for the tenant in this situation to also get your SSN/TIN. |
Investments other than CDs? | You're losing money. And a lot of it. Consider this: the inflation is 2-4% a year (officially, depending on your spending pattern your own rate might be quite higher). You earn about 1/2%. I.e.: You're losing 3% a year. Guaranteed. You can do much better without any additional risk. 0.1% on savings account? Why not 0.9%? On-line savings account (Ally, CapitalOne-360, American Express, E*Trade, etc) give much higher rates than what you have. Current Ally rates are 0.9% on a regular savings account. 9 times more than what you have, with no additional risk: its a FDIC insured deposit. You can get a slightly higher rate with CDs (0.97% at the same bank for 12 months deposit). IRA - why is it in CD's? Its the longest term investment you have, that's where you can and should take risks, to maximize your compounding returns. Not doing that is actually more risky to you because you're guaranteeing compounding loss, of the said 3% a year. On average, more volatile stock investments have shown to be not losing money over periods of decades, even if they do lose money over shorter periods. Rental - if you can buy a property that you would pay the same amount of money for as for a comparable rental - you should definitely buy. Your debt will be secured by the property, and since you're paying the same amount or less - you're earning the equity. There's no risk here, just benefits, which again you chose to forgo. In the worst case if you default and walk away from the property you lost exactly (or less) what you would have paid for a rental anyway. 14 years old car may be cheaper than 4 years old to buy, but consider the maintenance, licensing and repairs - will it not some up to more than the difference? In my experience - it is likely to. Bottom line - you think you're risk averse, but you're exactly the opposite of that. |
Does it make sense to buy a house in my situation? | I think your best course of action depends on the likely outcome of the divorce proceedings. The alimony/child support payments are controlled externally. I don't like to plan around things that I have no control over. In your shoes, I would probably avoid buying until things are settled down. |
Have plenty of cash flow but bad credit | Sign up with credit karma. It will give you two scores for free and will show you credit cards you have a good chance in being approved for. Plus it will evaluate your score showing you the 6 items that effect your score and give you steps to improve them or tell you how long you have to wait until they roll off. Plus I would look at a credit union and see if they have any "fresh start" programs. You should be well on your way. the thing that is probably hurting your credit is your utilization. If you can just use 10% of your available credit. |
What is a good way to save money on car expenses? | Ride a bicycle or walk for short trips (< 5mi–10mi, depending on your level of comfort). Nothing saves as much on car expenses as simply driving less. |
A little advice please…car loan related | Suggested way to make the decision to repair or buy: Figure out what it will cost to repair your car. (If necessary, pay a garage to evaluate it "as if your daughter was interested in buying it".) Then think about whether you would pay that much to buy a car just like yours but without those problems. If the answer is yes, fixing it us probably your most cost-effective choice, even if it is a big bill. If the answer is no, consider a used car, and again have the mechanic check it for any lurking horrors before committing to buy it. That avoids the "proprty-line tax" where a new car loses a significant percentage of its value the moment it leaves the dealership. An almost-toy car us virtually indistinguishable from a new car, costs much less, and realistically has about the same expected life span. I bought a new car once -- at about $300 over the dealer's real (as opposed to sticker) cost, since I was willing to take the one he was stuck with from the previous model year. (Thank you, Consumer Reports, for providing the dealer's cost info and making this a five-minute transaction.) If it hadn't suffered flood damage I'd probably still be driving it, and even so I sorta regret not pricing what it would have cost go completely replace the engine. If you really plan to drive it until it is completely unrepairable, you may be able to justify a new car... But realistically buying a one- or two-year-old car would have been a better choice. |
How can we determine how much income our savings could generate if we purchase an annuity? | Annuity calculation formulas can be found here. http://en.wikipedia.org/wiki/Annuity_(finance_theory). In addition, as suggested in the comments, there are many sites that have calculators. Having said that, a simple financial mechanism that is followed by many is to invest a portion of the fund in regular income instruments, for example Govt. or corporate bonds that pay a regular coupon/interest and some in diversified instruments like gold, stock etc. The exact proportion is dependent on may factors, like mortality, inflation, lifestyle, health care requirements, other expenses. The regular income provides the day to day expenses on a monthly/yearly basis, while the other instruments hedge against inflation and provide growth. |
Why is stock dilution legal? | Theoretically, when a company issues more shares, it does not affect the value of your shares. The reason is that when a company issues and sells more shares, the proceeds from the sale of those shares goes back into the company. Using your example, you have 10 out of 100 shares of the company, for a 10% stake. Let's say that the shares are valued at $1,000 each, meaning that the market value of the company is $100,000, and your stake is worth $10,000. Now the company issues 100 more shares at $1,000 each. The company receives $100,000 from new investors, and now the company is worth $200,000. Your stake is now only 5% of the company, but it is still worth $10,000. The authorized share capital is the amount of shares that a company has already planned on selling. When you buy stock in a company, you can look up how many shares exist, so you know what your percent stake in the company is. When a company wants to sell more shares, this is called an increase of authorized share capital. In order to do this, the company generally needs the approval of a majority of the existing shareholders. |
Where to find out conversion ratio between General Motors bonds and new GM stock? | Looks like the result got decided recently, with a little uncertainty about exactly how much is the total allowed claims: http://www.wilmingtontrust.com/gmbondholders/plan_disclosure.html http://www.wilmingtontrust.com/gmbondholders/pdf/GUC_Trust_Agreement.pdf They give the following example: Accordingly, pursuant to Section 5.3 of the GUC Trust Agreement, a holder of a Disputed Claim in the Amount of $2,000,000 that was Allowed in the amount of $1,000,000 (A) as of the end of the first calendar quarter would receive: Corresponding to the Distribution to the Holders of Initial Allowed Claims: Corresponding to the First Quarter Distribution to Holders of Units: Total: |
Why would anyone buy a government bond? | There are a few other factors possible here: Taxes - Something you don't mention is what are the tax rates on each of those choices. If the 4% gain is taxed at 33% while the 3% government bond is taxed at 0% then it may well make more sense to have the government bond that makes more money after taxes. Potential changes in rates - Could that 4% rate change at any time? Yield curves are an idea here to consider where at times they can become inverted where short-term bonds yield more than long-term bonds due to expectations about rates. Some banks may advertise a special rate for a limited time to try to get more deposits and then change the rate later. Beware the fine print. Could the bond have some kind of extra feature on it? For example, in the US there are bonds known as TIPS that while the interest rate may be low, there is a principal adjustment that comes as part of the inflation adjustment that is part how the security is structured. |
What does F[YY]e mean in reporting | It means it's estimate and not final numbers and generally used for future years |
1040 Schedule A Un-Reimbursed Business Expense Reporting | It would be unusual but it is possible that the expenses could be very high compared to your income. The IRS in pub 529 explains the deduction. You can deduct only unreimbursed employee expenses that are: Paid or incurred during your tax year, For carrying on your trade or business of being an employee, and Ordinary and necessary. An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary. The next part lists examples. I have cut the list down to highlight ones that could be large. You may be able to deduct the following items as unreimbursed employee expenses. Damages paid to a former employer for breach of an employment contract. Job search expenses in your present occupation. Legal fees related to your job. Licenses and regulatory fees. Malpractice insurance premiums. Research expenses of a college professor. Rural mail carriers' vehicle expenses. Tools and supplies used in your work. Work clothes and uniforms if required and not suitable for everyday use. Work-related education. If the term of employment was only part of the year, one or more of the these could dwarf your income for the year. Before deducting something that large be sure you can document it. I believe the IRS computers would flag the return and I wouldn't be surprised if they ask for additional proof. |
Loan to son - how to get it back | Seems fair. I think this is a real subjective thing. Financially lets get rid of that line before interest rates get too high. Maybe have him pay you the $200 he is paying towards the interest each month. |
Am I liable for an auto accident if I'm a cosigner but not on the title, registration, or insurance policy? | It might be possible to sue you successfully if someone brought evidence that your brother was absolutely totally unsuitable to drive a car because of some character flaw, and without your financial help he wouldn't have been able to afford a car. So helping a brother to buy a car, if that brother is a drinking alcoholic, or has only a faked driver's license and you know it, that could get you into trouble. A not unsimilar situation: A rental car company could probably be sued successfully if they rented a car to someone who they knew (or maybe should have known) was disqualified from driving and that person caused an accident. |
Why does gold have value? | To start with gold has value because it is scarce, durable, attractive and can be made into jewellery. But that does not explain its current value. In the current economic climate, it is difficult for many investors to get a positive return on conventional investments such as equities or bonds. I theorise that, in such conditions, investors decide to park their money in gold simply because there are few other good options. This in itself drives the price of gold up, making it a better investment and causing a speculative boom. As you will see here, here, and here the gold price is negatively correlated with stock market indices. |
Should I get cash from credit card at 0% for 8 months and put it on loans? | If there is any fee at all on the cash advance, and zero interest on the student loans (for now), it's not worth it mathematically. And for only 8 months of "free" money, it's rare for it to be worth it overall. You need to save a significant amount either by having a good net interest rate (e.g., saving 20% on another card and not paying any interest on the new loan) or by saving a lot on principal (e.g., paying off $100k now and not paying the interest on that for the next 8 months). I wouldn't worry about it hurting your credit score unless your credit is going to be evaluated during the time you're maxing your card. Part of your score (20-30% IIRC) is your credit utilization ratio, which is how much you have available vs. how much you're using. It's separate from the part that accounts for history, so it's only relevant at the time you're looked up. |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | Car rental agencies typically accept only credit cards for the rental (you can pay at the end with debit, but the securing during the rental must be a credit card - or a high cash deposit). Hotel advance-bookings - even if many months in the future - will work fine with a credit card, but - as explained by others - on a debit card, it would directly affect your cash flow (you basically have to prepay instead of just leave the credit card number on file. The same is sometimes true for other advance booking, like cruises, tours, etc. |
Should I make extra payments to my under water mortgage or increase my savings? | I'd pile up as much cash as you can in a savings account - you will need money for the move (even if it's just gas money) and it's going to be hard to predict where house prices are going so you might or might not be underwater when it comes time to sell the house. Or you might be so deep underwater by then that the extra money doesn't make much of a difference anymore anyway. Once you're actually in the process of selling the house, you can figure out if you can (or need to) use the savings to cover the shortfall, closing costs or if you just built up a little wealth during the time you put the money aside. |
Mortgage company withholding insurance proceeds | My question is, how do you rebuild a home, without the money to rebuild the home? I ignorantly thought that was why we paid for insurance. The reason that you have insurance is so as to keep the mortgage lender from losing money. That's why you buy the insurance through the mortgage lender and they get paid. Without the insurance, you'd have no home but still have a mortgage. You'd either have to pay off a mortgage with no house or have to declare bankruptcy to shed the mortgage. You essentially have two paths. If you (or the builder/suppliers) can afford to float the cost, you can rebuild the original house. You'll eventually get the $161,000 and can pay off the builder and suppliers. This may involve taking out a construction mortgage to refinance the original mortgage. Presumably the construction mortgage would be with a different lender. The other path is that you can sell the existing property as is, and use the insurance and proceeds to pay off the existing mortgage. Then you'd have no house and no mortgage. You start over and buy a house with a mortgage. It's possible that your insurance payoff isn't enough to pursue either path. Then your option is to get the insurer to make a bigger payoff. This may involve suing them. Note that you may be able to talk the government into suing the insurer for you. They do have regulators who can review things. If you can't get government action, there are lawyers who will do the suing and take their fees out of their winnings. |
401k vs. real estate for someone who is great at saving? | Apples and oranges. The stock market requires a tiny bit of your time. Perhaps a lot if you are interested in individual stocks, and pouring through company annual reports, but close to none if you have a mix of super low cost ETFs or index fund. The real estate investing you propose is, at some point, a serious time commitment. Unless you use a management company to handle incoming calls and to dispatch repair people. But that's a cost that will eat into your potential profits. If you plan to do this 'for real,' I suggest using the 401(k), but then having the option to take loans from it. The ability to write a check for $50K is pretty valuable when buying real estate. When you run the numbers, this will benefit you long term. Edit - on re-reading your question Rental Property: What is considered decent cash flow? (with example), I withdraw my answer above. You overestimated the return you will get, the actual return will likely be negative. It doesn't take too many years of your one per year strategy to wipe you out. Per your comment below, if bought right, rentals can be a great long term investment. Glad you didn't buy the loser. |
A University student wondering if investing in stocks is a good idea? | Contrary to most other advise given here, I'd recommend (in your situation) not to invest in stock (yet). There are some 'hidden' cost to investing that will eat your profit and in the end, that's why you are investing. Banks will charge for buying, selling and maintaining stock as well as for cashing dividends. Depending on which bank or intermediary these costs will rise. So, my advise is to start playing with stock creating a virtual portfolio and track that. Just as duffbeer says, start saving. Also look at my answer here. |
Would there be tax implications if I used AirBnB as opposed to just renting out a unit normally? | It actually depends on the services provided. If you're renting through AirBnB, you're likely to provide much more services to the tenants than a traditional rental. It may raise it to a level when it is no longer a passive activity. See here, for starters: Providing substantial services. If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Use Form 1065, U.S. Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. For information, see Publication 334, Tax Guide for Small Business. Also, you may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. For a discussion of “substantial services,” see Real Estate Rents in Publication 334, chapter 5 |
Are stores that offer military discounts compensated by the government? | This story is about military grocery stores - i.e.: grocery stores for military personnel on military bases. There are no discounts for military personnel in a regular grocery store. But they may have subsidised prices in grocery stores located inside a military installation, and these are those stores that the story is talking about. |
In today's low interest environment, is it generally more economical to buy or lease a new car in the US? | It's my understand that leasing is never the better overall deal, with the possible exception of a person who would otherwise buy a brand new car every 2 or 3 years, and does not drive a lot of miles. Note: in the case of a company car, Canadian taxes let you deduct the entire lease payment (which clearly has some principal in it) if you lease, while if you buy you can only deduct the interest, and must depreciate the car according to their schedule. This can make leasing more attractive to those buying a car through a corporation. I don't know if this applies in the US. The numbers you ran through in class presumably involved calculating the interest paid over the term of the loan. Can you not just redo the calculation using actual interest and lease numbers from a randomly chosen current car ad? I suspect if you do, you will discover leasing is still not the right choice. |
Where do online stock brokers get their real-time data from? | Generally Google gets their data, directly from the exchanges (Nasdaq, NYSE). This is really expensive -- tens of thousands of dollars a month just for the license from the exchange, and lots of telecom costs on top of that. |
Why do people buy insurance even if they have the means to overcome the loss? | Insurance is a funny product. As you said, it is a little like gambling. When I buy term life insurance, I'm essentially betting that I'm going to die within the next 20 years, and the insurance company is betting that I'm not. I'm hoping to lose that bet! Besides all of the reasons that other answers mentioned, I think part of the reason is psychological. As in my example, I'm setting up a kind of a win-win situation for myself here. Let's go with car insurance, a less-morbid example than my first example. If I don't get into a car accident, great! If I do get into a car accident, then the traumatic event is at least offset by the fact that the financial impact to me is minimal. Win-win. |
Ghana scam and direct deposit scam? | Of course, it is a scam. Regardless of how the scam might work, you already know that the person on the other end is lying, and you also know that people in trouble don't contact perfect strangers out of the blue by e-mail for help, nor do they call up random phone numbers looking for help. Scammers prey on the gullibility, greed, and sometimes generosity of the victims. As to how this scam works, the money that the scammer would be depositing into your father's account is not real. However, it will take the bank a few days to figure that out. In the mean time, your father will be sending out real money back to the scammer. When the bank figures out what is going on, they will want your father to pay back this money. |
When transferring money between two parties, under what circumstances is it considered taxable income? | A loan is not a taxable income. Neither is a gift. Loans are repaid with interest. The interest is taxable income to the lender, and may or may not be deductible to the borrower, depending on how the loan proceeds were used. Gifts are taxable to the donor (the person giving the gift) under the gift tax, they're not a taxable income to the recipient. Some gifts are exempt or excluded from gift tax (there's the annual exemption limit, lifetime exclusion which is correlated to the estate tax, various specific purpose gifts or transfers between spouses are exempt in general). If you trade for something of equal value, is that considered income? Yes. Sale proceeds are taxable income, however your basis in the item sold is deductible from it. If you borrow a small amount of money for a short time, is that considered income? See above. Loan proceeds are not income. does the friend have to pay taxes when they get back their $10? No, repayment of the loan is not taxable income. Interest on it is. Do you have to pay taxes if you are paid back in a different format than originally paid? Form of payment doesn't matter. Barter trade doesn't affect the tax liability. The friend sold you lunches and you paid for them. The friend can deduct the cost of the lunches from the proceeds. What's left - is taxable income. Everything is translated to the functional currency at the fair market value at the time of the trade. you are required to pay taxes on the gross amount Very rarely taxes apply to gross income. Definitely not the US Federal Income taxes for individuals. An example of an exception would be the California LLC taxes. The State of California taxes LLCs under its jurisdiction on gross proceeds, regardless of the actual net income. This is very uncommon. However, the IRC (the US Federal Tax Code) is basically "everything is taxable except what's not", and the cost of generating income is one of the "what's not". That is why you can deduct the basis of the asset from your gross proceeds when you sell stuff and only pay taxes on the net difference. |
How much (paper) cash should I keep on hand for an emergency? | Coming from an area that is hurricane prone, and seeing what happens to local businesses during evacuations/power outages/gas shortages, I think what you already have on hand should be sufficient. And it sounds like that's exactly what you're budgeting for. I'd say 2 weeks worth of fuel and food costs, with the budget for each in line with riding out a natural disaster. True "Preppers" would say keep your money in gold buried in the backyard surrounded by land mines, but that's not perhaps what you're looking for. It is not uncommon for gas stations and grocery stores to revert to cash only sales, especially if they're not big chain operations. If the internet is out, or power is spotty, they may not be able to process CCs. Again, think smaller or more rural businesses. I have seen gas stations switch to cash only during gas shortages as well to help limit how much fuel people were buying. $250 should get you through fine unless you drive a tank and need steak every night. You could probably go with less, but it's entirely dependent on your needs. As Joe rightly stated in his answer, if it's desperate enough times that you can't use a CC or debit card, cash may not even be useful to you. |
Mortgage or not? | Here is something that should help your decision: Currently you are 57, suppose that means that you will still work for 10 years, and then be retired for another 20 before you sell the house. Your retirement account is nearly flat, so you will have to support yourself with your own income. If there are no surprises, you and your wife could expect to earn 1.16 million over the next 10 years. There will be interest on your savings, but also inflation, so to simplify I will ignore both. That means you will have an average of 40k (gross?) per year available to live from during the next 30 years. If you get a mortgage where you only pay nett 3% interest (no payback of the loan), that would cost you 6k per year on interest (based on 350k-150k), if you also want to pay back the 200k difference within 30 years, it would totally be close to 13k in annual interest+payback. Now consider whether you would rather live on 40k per year in your current place, or on a lower amount in a bigger place. Personally I would not choose to make a 200k investment at this point, perhaps after trying to live on a budget for a while. (This has the additional benefit that you can even build some cash reserve before buying anything.) |
Investments beyond RRSP and TFSA, in non-registered accounts? | I quite like the Canadian Couch Potato which provides useful information targeted at investors in Canada. They specifically provide some model portfolios. Canadian Couch Potato generally suggests investing in indexed ETFs or mutual funds made up of four components. One ETF or mutual fund tracking Canadian bonds, another tracking Canadian stocks, a third tracking US stocks, and a fourth tracking international stocks. I personally add a REIT ETF (BMO Equal Weight REITs Index ETF, ZRE), but that may complicate things too much for your liking. Canadian Couch Potato specifically recommends the Tangerine Streetwise Portfolio if you are looking for something particularly easy, though the Management Expense Ratio is rather high for my liking. Anyway, the website provides specific suggestions, whether you are looking for a single mutual fund, multiple mutual funds, or prefer ETFs. From personal experience, Tangerine's offerings are very, very simple and far cheaper than the 2.5% you are quoting. I currently use TD's e-series funds and spend only a few minutes a year rebalancing. There are a number of good ETFs available if you want to lower your overhead further, though Canadians don't get quite the deals available in the U.S. Still, you shouldn't be paying anything remotely close to 2.5%. Also, beware of tax implications; the website has several articles that cover these in detail. |
What are my tax-advantaged investment options at a university job? | Yes. Two years after your first contribution to the SIMPLE IRA, you can roll it to a traditional IRA. You can still contribute "pre-tax", but the mechanism will be slightly different, since with an employer plan the contribution was automatically deducted from your paycheck. With an individual plan, you make the contributions yourself and then get a tax deduction when you file. Since contributions to traditional and Roth IRAs combined are capped at $5,500 if you're under 50, some sort of employer-sponsored plan might be better from a contribution standpoint. If your institution offers some sort of plan other than a 401(k), you might still want to roll to a traditional IRA, since you will have much more flexibility in the investments you choose. On the flip side, if that thought is overwhelming, having a smaller set of options might be better for your peace of mind. |
Does implied volatility always rise as earnings announcements approach? | Changes in implied volatility are caused by many things, of course, and it is tough to isolate the effect you are describing, but let's try to generalize for a moment. Implied volatility is generally a measure of how much expect uncertainty there is about the future price of the stock. Uncertainty generally is higher in periods including earnings announcements because it is significant new information about the company's fortunes can make for significant changes in the price. However, you could easily have the case where the earnings are good and for some reason the market is very certain that the earnings will be good and near a certain level. In that case the price would rise, but the implied volatility could well be lower because the market believes that there will be no significant new information in the earnings announcement. |
What is a good 5-year plan for a college student with $15k in the bank? | I just checked TCF's rates, and they only pay a miserly rate of 0.25%. Banks like Capital One or Sallie Mae pay about 1.15%, which is more than 4x, though still nothing great. Do you expect to use these funds in 5 years (e.g. for down payment on a house), or could you contribute them to an IRA? |
Open Interest vs Volume for Stock Options | What if there is only one trading day and the volume is smaller than the open interest on that one trading day. This is assuming there is no open interest before that day? I pulled this from a comment. This can't happen. We have zero open interest on day one. On day 2, I buy 10 contracts. Volume is 10 and now open interest is also 10. Tomorrow, if I don't sell, open interest starts at 10 and will rise by whatever new contracts are traded. This is an example. I removed the stock name. This happens to be the Jan'17 expiration. The 10 contract traded on the $3 strike happen to be mine. You can see how open interest is cumulative, representing all outstanding contracts. It's obvious to me the shares traded as high as $5 at some point which created the interest (i.e. the desire) to trade this strike. Most activity tends to occur near the current price. |
How do I explain why debt on debt is bad to my brother? | Talk about opportunity cost. Show a rope, and put a tag with him on the end of it. Explain that since he has max out his credit, he can no longer get more. Without more credit here are the things he can't have The key to illustrate is that all the money he makes, for the next several years is obligated to the people he has already borrowed it from. Try to have him imagine giving his entire paycheck to a bank, and then doing that for the next five years. To drive it home, point out that there are 5 super bowls, 5 college championship games, 5 final fours, 5 annual concerts he likes, 5 model years of cars, 5 or more iPhone versions in those five years. Or whatever he is into. 5 years of laptops, 5 years of fishing trips. These things are not affordable to him right now. He has already spent his money for the next 5 years, and those are the things he cannot have because he is, in fact, out of cash. Furthermore, if he continues, the credit will dry up completely and his 5 year horizon could easily become ten. To illustrate how long 5 or 10 years is, have him remember that 10 years ago he might have been in college or the military. That 5 years ago Facebook was no big thing. That 5 years ago the Razr was an awesome phone. That 5 years ago we had a different president. |
When's the best time to sell the stock of a company that is being acquired/sold? | What's your basis? If you have just made a 50% gain, maybe you should cash out a portion and hold the rest. Don't be greedy, but don't pass up an opportunity either. |
End-of-season car sales? | It completely varies by manufacturer, dealer, and time of year, but in general yes, you can get a (sometimes significant) discount on brand new last year models. In general though, it comes down to supply and demand. As an example, in April 2016 I was looking at a brand new 2016 in which the 2017 model had come out that week (I thought April was a little early for next year's model but sometimes that's a marketing tool). The sticker price of the 2017 was only $100 more than the 2016, but the 2016 was selling for $3K under MSRP, and the 2017 was selling at exactly MSRP since they only had 2 in stock. |
Do I need another health insurance policy? | Most of the points by MrChrister are valid. I can't say much for Philippines, however there is a reason for one to go with individual insurance from my experience in India. |
Advantages/disadvantages of buying stocks on dips vs buying outright? | Dollar-Cost averaging will allow you to reduce your risk while the stock prices falls provided: You must invest a fixed amount $X on a fixed time scale (i.e. every Y days). By doing this you will be able to take advantage of the lowering price by obtaining more shares per period as the price falls. But at the same time, if it starts to rise, you will already have your pig in the race. Example: Suppose you wanted to invest $300 in a company. We will do so over 3 periods. As the price falls, your average dollar cost will as well. But since you don't know where the bottom is, you cannot wait until the bottom. By trying to guess the bottom and dumping all of your investment at once you expose yourself to a higher level of risk. |
Beyond RRSP deductions, how does a high income earner save on taxes? | That's not especially high income, and while I can't speak for Canadians, most of us south of the border just pay the tax. There are tax-advantged retirement savings plans, and charitable donations are often offset by a tax credit, and there are some tax incentives for mortgages, and so on.. but generally the right answer is to just accept that the income tax money was never yours to begin with. |
Why do stock exchanges close at night? | I believe there are electronic exchanges that run continuously, but the older ones don't want to change their practices since some people may have strategies which (claim they) are based on this behavior so there would be a lot of unhappy people if it was altered. The pause doesn't seem to do any harm. There are alternatives if you dislike it. Don't try to fix what isn't broken. |
Why is “cheque cashing” a legitimate business? | How does this get any business? You'd be surprised on how much profit these type of businesses can bring in and the number of people who cash their checks this way. They make profit off people who want their checks cashed ASAP. Usually cheques written to "cash" or something can just be cashed for free at the bank right? Yes, most banks cash your check for free. Some may not cash it right away and may require a few days to process. Some charge a small fee if the check is not from the same bank. Some personal checks may not even be processed the same day as well. Wouldn't the only cheques that people would cash at these places be bad cheques? Yes and no. Yes because it may be "easier" to try to cash a fraudulent check at these type of check cashing places. However, some places may only cash business checks and require your ID in which they write down the information in order to possibly track you down in the future. Also some places only cash a check to a certain amount. And wouldn't this mean that the business will lose a lot of money since it pays out cash but then has the cheque bounce? Of course the business loses money if the check bounces or is fake. That is why they try to minimize their losses with certain requirements that needs to met before the check can be cashed. Who uses these services exactly? Just about anyone who needs their check cashed ASAP or like ChrisW stated in his answer is trying to keep their money on the low. There is a demand for this service even though it may seem shady to you. |
How to evaluate an annuity | Guaranteed 8.2% annual return sounds too good to be true. Am I right? Are there likely high fees, etc.? You're right. Guaranteed annual return is impossible, especially when you're talking about investments for such a long period of time. Ponzi (and Madoff) schemed their investors using promises of guaranteed return (see this note in Wikipedia: In some cases returns were allegedly determined before the account was even opened.[72]). Her financial advisor doesn't charge by the hour--he takes a commission. So there's obviously some incentive to sell her things, even if she may not need them. Definitely not a good sign, if the advisor gets a commission from the sale then he's obviously not an advisor but a sales person. The problem with this kind of investment is that it is very complex, and it is very hard to track. The commission to the broker makes it hard to evaluate returns (you pay 10% upfront, and it takes awhile to just get that money back, before even getting any profits), and since you're only able to withdraw in 20 years or so - there's no real way to know if something wrong, until you get there and discover that oops- no money! Also, many annuity funds (if not all) limit withdrawals to a long period, i.e.: you cannot touch money for like 10 years from investment (regardless of the tax issues, the tax deferred investment can be rolled over to another tax deferred account, but in this case - you can't). I suggest you getting your own financial advisor (that will work for you) to look over the details, and talk to your mother if it is really a scam. |
Free service for automatic email stock alert when target price is met? | Hey guys, I found this website, it seems to do it for free, and they have many options. If let me know if you find something better than this. http://members.zignals.com/main/ |
Is foreign stock considered more risky than local stock and why? | Others have mentioned the exchange rate, but this can play out in various ways. One thing we've seen since the "Brexit" vote is that the GBP/USD has fallen dramatically, but the value of the FTSE has gone up. This is partly due to many the companies listed there operating largely outside the UK, so their value is more linked to the dollar than the pound. It can definitely make sense to invest in stocks in a country more stable than your own, if feasible and not too expensive. Some years ago I took the 50/50 UK/US option for my (UK) pension, and it's worked out very well so far. |
Is there any way to pay online in a country with no international banking system | If the vendor accepts cryptocurrencies, this may be your only option. It's not clear if exporting cryptocurrency violates Ethiopian law, but at least cryptocurrencies have not yet been banned. If you can find someone who can trade you cryptocurrency, you can send it anywhere. Because cryptocurrencies are still extremely price volatile, I recommend you use Ripple, the fastest I can find. It can 100% confirm transactions on average within 10 seconds. This will keep your exposure to price volatility at a minimum if you send the cryptocurrency as soon as you buy it. If you choose this route, please take precausions. Your government may retroactively ban it and pursue you. Considering the Ethiopian government's history, this is not unlikely, and banning cryptocurrencies outright is. |
What low-fee & liquid exchange-traded index funds / ETFs should I consider holding in a retirement portfolio? | If liquidity and cost are your primary objectives, Vanguard is indeed a good bet. They are the walmart of finance and the absolute best at minimizing fees and other expenses. Your main portfolio holding should be VTI, the total stock market fund. Highly liquid and has the lowest fees out there at 0.05%. You can augment this with a world-minus-US fund if you want. No need to buy sector or specific geography funds when you can get the whole market for less. Add some bond funds and alternative investments (but not too much) if you want to be fully diversified. |
How should residents of smaller economies allocate their portfolio between domestic and foreign assets? | We face the same issue here in Switzerland. My background: Institutional investment management, currency risk management. My thoughs are: Home Bias is the core concept of your quesiton. You will find many research papers on this topic. The main problems with a high home bias is that the investment universe in your small local investment market is usually geared toward your coutries large corporations. Lack of diversification: In your case: the ASX top 4 are all financials, actually banks, making up almost 25% of the index. I would expect the bond market to be similarly concentrated but I dont know. In a portfolio context, this is certainly a negative. Liquidity: A smaller economy obviously has less large corporations when compared globally (check wikipedia / List_of_public_corporations_by_market_capitalization) thereby offering lower liquidity and a smaller investment universe. Currency Risk: I like your point on not taking a stance on FX. This simplifies the task to find a hedge ratio that minimises portfolio volatility when investing internationally and dealing with currencies. For equities, you would usually find that a hedge ratio anywhere from 0-30% is effective and for bonds one that ranges from 80-100%. The reason is that in an equity portfolio, currency risk contributes less to overall volatility than in a bond portfolio. Therefore you will need to hedge less to achieve the lowest possible risk. Interestingly, from a global perspective, we find, that the AUD is a special case whereby, if you hedge the AUD you actually increase total portfolio risk. Maybe it has to do with the AUD being used in carry trades a lot, but that is a wild guess. Hedged share classes: You could buy the currency hedged shared classes of investment funds to invest globally without taking currency risks. Be careful to read exactly what and how the share class implements its currency hedging though. |
Most effective Fundamental Analysis indicators for market entry | I think by definition there aren't, generally speaking, any indicators (as in chart indicators, I assume you mean) for fundamental analysis. Off the top of my head I can't think of one chart indicator that I wouldn't call 'technical', even though a couple could possibly go either way and I'm sure someone will help prove me wrong. But the point I want to make is that to do fundamental analysis, it is most certainly more time consuming. Depending on what instrument you're investing in, you need to have a micro perspective (company specific details) and a macro perspective (about the industry it's in). If you're investing in sector ETFs or the like, you'd be more reliant on the macro analysis. If you're investing in commodities, you'll need to consider macro analysis in multiple countries who are big producers/consumers of the item. There's no cut and dried way to do it, however I personally opt for a macro analysis of sector ETFs and then use technical analysis to determine my entry and/or exit. |
how derivatives transfer risk from one entity to another | When you buy a call option, you transfer the risk to the owner of the asset. They are risking losing out on gains that may accumulate in addition to the strike price and paid premium. For example, if you buy a $25 call option on stock XYZ for $1 per contract, then any additional gain above $26 per share of XYZ is missed out on by the owner of the stock and solely benefits the option holder. |
Solid reading/literature for investment/retirement/income taxes? | For the mechanices/terms of stock investing, I recommend Learn to Earn by Peter Lynch. I also like The Little Book of Common Sense Investing by John Bogle. It explains why indexing is the best choice for most people. For stock picking, a good intro is The Little Book of Value Investing by Chris Brown. And then there is The Intelligent Investor by Ben Graham. IMO, this is the bible of investing. |
$200k in an IRA, unallocated. What's the safest investment? | Your funds are in a retirement account. Withdrawals from your IRA will be penalized if you withdraw before you turn 59.5 years old, and you appear to be decades away from that age. The general advice I would give you is to pick a "target year fund" that targets the year you turn 59.5. The stock market is more volatile, but its average gains will protect you from inflation just eating your funds. Bonds are in counterpoint to your stocks - more stable, and protecting you from the chance that stocks dip right before you want to withdraw. Target year funds start with higher amounts of stock, and gradually rebalance towards bonds over time. Thus, you take your market risks earlier while you can benefit from the market's gains, and then have stability when you actually would want to retire and depend on the savings. |
Why would a central bank or country not want their currency to appreciate against other currencies? | I wrote about the dynamic of why either of a lower or higher exchange rate would be good for economies in Would dropping the value of its currency be good for an economy? A strong currency allows consumers to import goods cheaply from the rest of the world. A weak currency allows producers to export goods cheaply to the rest of the world. People are both consumers and producers. Clearly, there have to be trade-offs. Strong or weak mean relative to Purchasing Power Parity (i.e. you can buy more or less of an equivalent good with the same money). Governments worrying about unemployment will try and push their currencies weaker relative to others, no matter the cost. There will be an inflationary impact (imported inputs cost more as a currency weakens) but a country running a major surplus (like China) can afford to subsidise these costs. |
Insurance, healthcare provider, apparent abuse, lack of transparency | I wouldn't classify your treatment as abuse. Medical billing has become more complex not less complex. You need to learn to ask even more questions regarding expenses, you probably need to see these price quotes in writing. You did several things correctly. Staying in-network generally is best because many plans have two deductible limits: In-network, and out-of-network. You need to make sure that the insurance company does credit you with having paid the new patient fee. That will qualify as an expense toward the deductible and your maximum out of pocket for the year. Some doctors offices don't send to insurance companies items that they know will not be covered, not remembering that these costs are critical under the High deductible plans with a health savings account. Doctors offices have problems determining how much the cost to you will be. It depends not just on the insurance company but also which type of plan you have, which sub-plan you have, and are you covered by more than one plan. Not to mention individual deductibles, family deductibles, and annual out-of-pocket amount. All this is wanted prior to the doctor seeing the patient. Most doctors offices will work with you, they know that each insurance plan treats each medical billing code differently, sometimes they make a mistake. Talk to them. |
Why does Charles Schwab have a Mandatory Settlement Period after selling stocks? | quid's answer explains the settlement period well. However, it should be noted that you can avoid the settlement period by opening a margin account. Any specific broker like Schwab may or may not offer margin accounts. Margin accounts allow you to borrow money to avoid the settlement period or to buy more securities than you can actually afford. Note that if you buy more securities than you can afford using margin, you expose yourself to losses potentially larger than your initial investment. If you fund your account with $50,000 and use margin to purchase $80,000 of stock which then drops in value by 80% you will have lost $64,000 and owe the broker $14,000 plus fees. |
Should I start investing in property with $10,000 deposit and $35,000 annual wage | I would strongly, strongly advise against it. Others here are answering the question of, having decided to invest in property, how one ought to ensure that one invests in the right property. What has not really been discussed here is the issue of diversification. There are a number of serious risks to property investment. In fact, it is one of the riskiest types of investment. You face more of almost every type of risk in property than maybe any other asset class. It is one thing to take on those risks as part of a diverse portfolio including other asset classes. It is quite another - extremely irresponsible - thing to take on those risks as your sole investment, when your portfolio is in its infancy. So no, do not invest in property when you lack any other investments. Absolutely not. |
Combined annual contribution limits for individuals [duplicate] | You're correct about the 401(k). Your employer's contributions don't count toward the $18k limit. You're incorrect about the IRAs though. You can contribute a maximum of $5500 total across IRA and Roth IRA, not $5500 to each. There are also limits once you reach higher levels of income. from IRS.gov: Retirement Topics - IRA Contribution Limits: For 2015, 2016, and 2017, your total contributions to all of your traditional and Roth IRAs cannot be more than: |
How to share income after marriage and kids? | I started this off as a comment to Joe's answer, but it got rather messy in that form so I'll just post it as a separate answer instead. I suggest that you read Joe's answer first. I believe you are overthinking this. First, you really should be discussing the matter with your girlfriend. We can provide suggestions, but only the two of you can decide what feels right for the two of you. Strangers on the Internet can never have as complete a picture of your financial situations, your plans, and your personalities, as the two of you together. That said, here's a starting point that I would use as input to such a discussion: As you can see, a common theme to all of this is transparency and communication. There is a reason for this: a marriage without proper communication can never work out well in the long term. I don't know about Germany specifically, but disagreements about money tends to be a major reason in couples splitting up. By setting your lives up for transparency in money matters from the beginning, you significantly reduce the risk of this happening to you. Scott Hanselman discusses a very similar way of doing things, but phrases it differently, in Relationship Hacks: An Allowance System for Adults. |
Should I close unused credit cards before applying for another? | If you're looking for cause-effect, applying for another card won't matter at all if you're not paying any interest, or not looking to get another installment loan for which the rate you get depends on your credit rating. If you are looking to get another installment loan, then having more credit at your disposal might hurt a small amount. I wouldn't want to cancel your oldest card. The GEMB card looks like a good candidate if you want to cancel because you're not using it, and it's a relatively new card. |
What are the advantages/disadvantages of a self-directed IRA? | This type of account will sell you just enough rope to hang yourself. Gold is at $1400 or so. Were you around when it first hit $800 in '79/'80? I was. No one was saying "sell" only forecasts of $2000. If you bought and held, you've still not broken even to inflation let alone simple market returns. |
Pay off car loan entirely or leave $1 until the end of the loan period? | Among the other fine answers, you might also consider that owning a vehicle outright will free you from the requirement to carry insurance on the vehicle (you must still carry insurance on yourself in most states). |
Shorting Obvious Pump and Dump Penny Stocks | Assuming you have no non-public material information, it should be perfectly legal. I suspect it's not a great idea for the reasons that Joe outlined, but it should be legal. |
How does giving to charity work? | For many people, giving to charity will have minimal effect on their taxes. Non-profits love to attract donations by saying the money is tax deductible, but for most people, it doesn't work out that way. You will only itemize deductions if they exceed your standard deduction. The IRS allows you to either "itemize" your deductions (where you list each deduction you can take) or take the "standard deduction". Consider a married couple filing jointly in 2011. Their standard deduction is $11,400. They are in the 28% tax bracket. They donate $100 of old clothes to the Goodwill, and are looking forward to deducting that on your taxes, and getting $28 of that back. If that's their only deduction, though, they'd have to give up the standard deduction to take the itemized deduction. Not worth it. Suppose instead they have $11,500 of deductions in 2011. Now we're talking, right? No. The tax impact of itemizing is only $28, since they only exceeded the standard deduction by $100. The cost of having a tax accountant fill out the itemization form probably offsets that small gain. There's also all the time that went in to tracking those deductions over the year. Not worth it. Tax deductions only become worthwhile when they significantly exceed the standard deduction. You need some big ticket items to get past the itemized deduction threshold. For most people, this only happens when they have a mortgage, as the interest on a residence is deductible. Folks love to suggest that having a mortgage is a good deal, because the interest is deductible. However, since you have to exceed the standard deduction before it makes sense to itemize, it's not likely to be a big win. For most people: TL;DR: Give to charity because you want that charity to have your money. Tax implications are minimal; let your accountant sort it out. Disclaimer: I am not an accountant. |
If I go to a seminar held overseas, may I claim my flights on my tax return? | You can deduct this if the main purpose of the trip is to attend the seminar. Travel expenses relating to the attendance at conferences, seminars and other work-related events are deductible to the extent that they relate to your income-producing activities. You will need to apportion your travel expenses where you undertake both work-related and private activities. Travel costs to and from the location of the work-related event will only be deductible where the primary purpose of the travel was to attend the event. Accommodation, food and other incidental costs must be apportioned between work-related and private activities taking into account the types of activities that you did on the day you incurred the cost. You might like to consider in advance what you would tell them if they questioned this - for instance you might say (if they are true): |
How should I begin investing real money as a student? | I think you have a really good idea, kudos to it. It will be difficult to break eve, and while you stressed the fact that you are ready to part with this money, it would be interesting for you not to part with this money just for the sake of trading. You will be frustrated because you are "winning" and breaking even or even losing money in the process. Think about that. For somebody with limited experience the derivatives market carries a very high risk also as everything in this matters carries high or very high yield. Trading futures on margin can actually work but I think you will need a bit more money. Check the mini contracts of infinity futures and calculate the commissions. You will be paying more for a contract, yes. you will need more money for your maintenance margin, yes, but if you day-trade and you have a cheapo broker this will be substantially lower. Gold contracts pay about 10 to 1 so a mini contract of 33 ounces will pay you 33 dollars per 1 dollar move. Your commissions will be about 4/5 usd in a discount broker and you will need to pay some exchange house fees, maybe about 15% of your trade will be fees. Check the contract specs and costs. As somebody said before, they wouldn't recommend trading on margin but with an account of that side I wouldn't know anything else. Trading physical gold on margin could also be an option. Just my 2 cents. |
I'm 20 and starting to build up for my mortgage downpayment, where should I put my money for optimal growth? | The big question is whether you will be flexible about when you'll get that house. The overall best investment (in terms of yielding a good risk/return ratio and requiring little effort) is a broad index fund (mutual or ETF), especially if you're contributing continuously and thereby take advantage of cost averaging. But the downside is that you have some volatility: during an economic downturn, your investment may be worth only half of what it's worth when the economy is booming. And of course it's very bad to have that happening just when you want to get your house. Then again, chances are that house prices will also go down in such times. If you want to avoid ever having to see the value of your investment go down, then you're pretty much stuck with things like your high-interest savings account (which sounds like a very good fit for your requirements. |
Do money markets fluctuate during market crashes? | As the commenters have already indicated, money market mutual funds are not guaranteed to maintain principal during all market conditions, and investments in mutual funds are not insured against loss due to market changes. That said, you can run a price search on Vanguard's website and see these results: So, despite all the economic problems since 1975, VMMXX has never traded at a price other than $1.00. |
A stock just dropped 8% in minutes and now all of a sudden the only way to buy is on the ask, what does this mean? | It doesn't sound fishy at all to me. Just seems like you may be dealing with a company that has relatively light trading volume to begin with, meaning that small trades could easily make the price drop 8% (which isn't much if you're talking about a stocks in the $5 or less range. If someone sells at the bid and the bid happens to be 8% lower than the current price, that bid is now the price, hence the drop. The bid moving up afterward, just means that someone is now willing to place a higher order than what the last trade was, to try to get in. |
Should I cash out my Roth IRA to pay my mother's property tax debt, to avoid foreclosure on her home? | @foreverBroke - Ok, here are the questions - Is mom's house paid for in full? If there's any mortgage, is it current? If not, what are the numbers? Is it underwater, i.e. owe more that it's worth? Will the tax department talk to you and negotiate? Maybe let you make payments over time? If you have that kind of cash flow, the slower payment may keep you from killing your savings. We don't know your age. I do know that the early years savings, often around the first 8-12 years, are the funds that turn into half your final retirement savings due to compounding. Obviously, this a tough time emotionally, what I don't want is for you to make a financial move that is a temporary fix. Not knowing the rest of the story limits my answer. If my mom needed my help I'd want to understand the whole picture. Not that I'm a fan, but have you considered a reverse mortgage? It may be a way to keep the house but give up the equity, or some of it, on her moving out or passing. |
Will Indian young ones lose 18% of their EPF with new tax as per Budget 2016? | Are these calculations correct? These are approximate calculations and are with the assumption that entire corpus will be taxed. The assumption was valid as the wording in the budget speech was not very clear. Subsequently the finance ministry has clarified that only interest generated will be taxed and not the contribution. There are no new calculations done with this assumption. Edit: As per communication from finance ministry this proposal is on hold. |
What is the best way to help my dad consolidate his credit card debt at a lower rate? | I agree with you that you need to consolidate this debt using a loan. It may be hard to find a bank or credit organization that will give you an unsecured personal loan for that much money. I know of one, called Lending Club (Disclaimer - I'm an investor on this platform. Not trying to advertise, it's just the only place I know of off the top of my head) that facilitates loans like this, but instead of a bank financing the loan, the loan is split up accross hundreds of investors who each contribute a small amount (such as $25). They have rates anywhere between 5-30%, based on your credit profile(s), and I believe they have some loan amounts that go up to the area that you're discussing. Regarding buying the house - The best thing you can do when trying to buy a house is to save up a 20% downpayment, if at all possible. Below this amount, you may be asked to pay for 'PMI' - Private Mortgage Insurance. This is a charge that doesn't go away for quite a while (until you've paid them 20% of the appraised value of the home), where you pay a premium because you didn't have the 20% downpayment for the house. I would suggest you try to eliminate your credit card debt as soon as possible, and would recommend the same for your father. Getting your utilization down and reconsolidating the large debts with a loan will help to reduce interest charges and get you a reasonable, fixed payment. Whether you decide to pay off your own balances using your savings account is up to you; if it were me, personally, I'd do so immediately rather than trying to pay it off over time. But if you lose money to taxes by withdrawing the money from your 'tax free savings account', it may not be a beneficial situation. Treat debt, especially credit card debt, like an emergency at all times, and you'll find yourself in a better place as a result. Credit card debt and balances are and should be temporary, and their rates and fees are structured that way. If, for any reason, you expect that a credit card's balance will remain for an extended period of time, you may want to consider whether it would be advantageous for you to consolidate the debt into a loan, instead. |
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