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Where to find Vanguard Index Funds? | No, some of Vanguard's funds are index funds like their Total Stock Market Index and 500 Index. In contrast, there are funds like Vanguard PRIMECAP and Vanguard Wellington that are actively managed. There are index funds in both open-end and exchange-traded formats. VTI is the ticker for Vanguard's Total Stock Market ETF while VTSMX is an open-end mutual fund format. VOO would be the S & P 500 ETF ticker while VFINX is one of the open-end mutual fund tickers, where VIIIX has a really low expense ratio but a pretty stiff minimum to my mind. As a general note, open-end mutual funds will generally have a 5 letter ticker ending in X while an ETF will generally be shorter at 3 or 4 letters in length. |
ETF's for early retirement strategy | I think the dividend fund may not be what youre looking for. You mentioned you want growth, not income. But I think of dividend stocks as income stocks, not growth. They pay a dividend because these are established companies that do not need to invest so much in capex anymore, so they return it to shareholders. In other words, they are past their growth phase. These are what you want to hold when you have a large nest egg, you are ready to retire, and just want to make a couple percent a year without having to worry as much about market fluctuations. The Russel ETF you mentioned and other small caps are I think what you are after. I recently made a post here about the difference between index funds and active funds. The difference is very small. That is, in any given year, many active ETFs will beat them, many wont. It depends entirely on the market conditions at the time. Under certain conditions the small caps will outperform the S&P, definitely. However, under other conditioned, such as global growth slowdown, they are typically the first to fall. Based on your comments, like how you mentioned you dont want to sell, I think index funds should make up a decent size portion of your portfolio. They are the safest bet, long term, for someone who just wants to buy and hold. Thats not to say they need be all. Do a mixture. Diversification is good. As time goes on dont be afraid to add bond ETFs either. This will protect you during downturns as bond prices typically rise under slow growth conditions (and sometimes even under normal conditions, like last year when TLT beat the S&P...) |
Investing $50k + Real Estate | My spouse will only be entering medical school within 2 years at the earliest, and will likely be there for about 4-5 years. If she get's into the school she wants we would not have to move This is probably the biggest return on investment that you can get. Sure, you could invest what you have in the market and take out tens or hundreds of thousands of dollars on "cheap" medical school loans, but consider this: Figure out how much you need for all 4-5 years, and develop a plan to make sure you can cash-flow the entire education. Bootstrapping a software company has potential for high rewards, but a much greater risk. you could get 10X back or you could lose it all. With your income, you've got plenty of time to save for college, so I don't see that as a huge win now. I would also dump the lease - you can probably get a much better car for $16k that the five-year old one you have when the lease is up. (or get a similar car for less money). With no debt and a good income you do not need a credit score. The lease probably didn't help it that much anyways - you're paying more for the lease than any benefit you would get by a higher score. |
What should a 21 year old do with £60,000 ($91,356 USD) inheritance? | What a lovely position to find yourself in! There's a lot of doors open to you now that may not have opened naturally for another decade. If I were in your shoes (benefiting from the hindsight of being 35 now) at 21 I'd look to do the following two things before doing anything else: 1- Put 6 months worth of living expenses in to a savings account - a rainy day fund. 2- If you have a pension, I'd be contributing enough of my salary to get the company match. Then I'd top up that figure to 15% of gross salary into Stocks & Shares ISAs - with a view to them also being retirement funds. Now for what to do with the rest... Some thoughts first... House: - If you don't want to live in it just yet, I'd think twice about buying. You wouldn't want a house to limit your career mobility. Or prove to not fit your lifestyle within 2 years, costing you money to move on. Travel: - Spending it all on travel would be excessive. Impromptu travel tends to be more interesting on a lower budget. That is, meeting people backpacking and riding trains and buses. Putting a resonable amount in an account to act as a natural budget for this might be wise. Wealth Managers: "approx. 12% gain over 6 years so far" equates to about 1.9% annual return. Not even beat inflation over that period - so guessing they had it in ultra-safe "cash" (a guaranteed way to lose money over the long term). Give them the money to 'look after' again? I'd sooner do it myself with a selection of low-cost vehicles and equal or beat their return with far lower costs. DECISIONS: A) If you decided not to use the money for big purchases for at least 4-5 years, then you could look to invest it in equities. As you mentioned, a broad basket of high-yielding shares would allow you to get an income and give opportunity for capital growth. -- The yield income could be used for your travel costs. -- Over a few years, you could fill your ISA allowance and realise any capital gains to stay under the annual exemption. Over 4 years or so, it'd all be tax-free. B) If you do want to get a property sooner, then the best bet would to seek out the best interest rates. Current accounts, fixed rate accounts, etc are offering the best interest rates at the moment. Usual places like MoneySavingExpert and SavingsChampion would help you identify them. -- There's nothing wrong with sitting on this money for a couple of years whilst you fid your way with it. It mightn't earn much but you'd likely keep pace with inflation. And you definitely wouldn't lose it or risk it unnecessarily. C) If you wanted to diversify your investment, you could look to buy-to-let (as the other post suggested). This would require a 25% deposit and likely would cost 10% of rental income to have it managed for you. There's room for the property to rise in value and the rent should cover a mortgage. But it may come with the headache of poor tenants or periods of emptiness - so it's not the buy-and-forget that many people assume. With some effort though, it may provide the best route to making the most of the money. D) Some mixture of all of the above at different stages... Your money, your choices. And a valid choice would be to sit on the cash until you learn more about your options and feel the direction your heart is pointing you. Hope that helps. I'm happy to elaborate if you wish. Chris. |
What does it mean if a company pays a quarterly dividend? How much would I get quarterly? | Google is a poor example since it doesn't pay a dividend (and doesn't expect to), so let's use another example with easy numbers. Company X has a stock price of $100, and it pays a quarterly dividend (many companies do). Let's assume X pays a dividend of $4. Dividends are always quoted in annual terms, as is dividend yield. When a company says that they pay "quarterly dividends," it means that the company pays dividends every quarter, or every 3 months. BUT, if a company has a $4 dividend, you will not receive $4 every quarter per share. You will receive $4/4 = $1 per share, every quarter. So over the course of a fiscal year, or 4 quarters, you'll get $1 + $1 + $1 + $1 = $4 per share, which is the annual dividend. The dividend yield = annual dividend/stock price. So in this case, company X's div. yield will be $4/$100 * 100 = 4%. It's important to note that this is the annual yield. To get the quarterly yield, you must divide by 4. It's also important to note that the yield fluctuates based on stock price, but the dividend payment stays constant unless the company states an announcement. For a real world example, consider Intel Corp. (TICKER: INTC) http://finance.yahoo.com/q?s=INTC The share price is currently $22.05, and the dividend is $0.84. This makes the annual yield = $0.84/$22.05 * 100 = 3.80%. Intel pays a quarterly dividend, so you can expect to receive $0.21 every quarter for every share of Intel that you own. Hope that clears it up! |
what is the point of the part b late enrollment penalty? | The point of the enrollment penalty is basically the same as the ACA penalty. Any sort of health insurance - or really, any insurance - is funded by creating a risk pool of high and low risk people and pricing it so that the overall payments cover the total risk. That means, however, that on average the low risk people end up paying more than their share - more than it would have cost them, without the insurance, excepting any provider agreements to charge less (which is significant in the health insurance business). (Of course some of them do end up using more than they pay - but not on average, assuming the risk was calculated accurately.) While there isn't really a completely low risk pool in Medicare, there is a significant difference in utilization (=cost) between younger (65-70) and older enrollees. As such, for many health 65 year olds, it would be beneficial to not enroll in Medicare right away - delay a few years, if they're fully healthy, and wait until they are less healthy. Since Medicare won't turn you away for pre-existing conditions, that's a risk some would take. In order to accommodate for that, Medicare effectively says, "If you didn't help subsidize the costs of the high users when you were younger, you need to pay more to make up for that fact" - hence the enrollment penalty. The New York Times explains this in part in a 2006 article discussing Part D (which was new that year, and has a similar penalty): The purpose of the late enrollment penalty is to encourage people to sign up as soon as possible, before they have significant drug costs. |
What are some sources of information on dividend schedules and amounts? | I have 3 favorite sites that I use. http://www.nasdaq.com/symbol/mcd/dividend-history - lists the entire history of dividends and what dates they were paid so you can predict when future dividends will be paid. http://www.dividend.com/dividend-stocks/services/restaurants/mcd-mcdonalds/ - this site lists key stats like dividend yield, and number of years dividend has increased. If the next dividend is announced, it shows the number of days until the ex-dividend date, the next ex-div and payment date and amount. If you just want to research good dividend stocks to get into, I would highly recommend the site seekingalpha.com. Spend some time reading the articles on that site under the dividends section. Make sure you read the comments on each article to make sure the author is not way off base. Finally, my favorite tool for researching good dividend stocks is the CCC Lists produced by Seeking Alpha's David Fish. It is a giant spreadsheet of stocks that have been increasing dividends every year for 5+, 10+, or 25+ years. The link to that spreadsheet is here: http://dripinvesting.org/tools/tools.asp under "U.S. Dividend Champions". |
How is Discover different from a Visa or a MasterCard? | From the business side of credit cards, Discover and American Express carry their own risk. AmEx has lent their logo to banks such as Bank of America (BofA) to use the AmEx transaction network, but the financial risk and customer service is provided by BofA. Visa and MasterCard let banks use their logo and process through their respective networks for a fee. The financial risk of fraud, non-payment from merchants, etc is the risk that the individual banks carry. |
Tenant wants to pay rent with EFT | The mode of payment mentioned by your bank is called the ACH(Automatic Clearing House) which means that anyone(Trusted payment gateway owners like banks themselves) can process payments. There can be a fraud declared against any payment that you have made and you can get every single penny back. This amount can not be withdrawn in cash at all. However for your situation I would suggest that you ask your bank to block any transactions above the amount of a specific sum, this way they will require your authorization to finalize the payment. You should feel safe after this. Also no one can access any other account apart from the one whose details you are giving out so do not worry about this guy(or anyone else for that matter) to be able to access your other accounts. Hope this helps. (I have experience in payment gateways so I do understand these procedures.) Cheers!! |
Advice for college student: Should I hire a financial adviser or just invest in index funds? | Though @mehassee mentioned it in a comment, I would like to emphasize the point that the financial planner (CFP) you talked to said that he was a fiduciary. A fiduciary has an obligation to act in your best interests. According to uslegal.com, "When one person does agree to act for another in a fiduciary relationship, the law forbids the fiduciary from acting in any manner adverse or contrary to the interests of the client, or from acting for his own benefit in relation to the subject matter". So, any of these Stack Exchange community members may or may not have your best interest at heart, but the financial advisor you talked to is obligated to. You have to decide for yourself, is it worth 1% of your investment to have someone legally obligated to have your best financial interest in mind, versus, for example, someone who might steer you to an overpriced insurance product in the guise of an investment, just so they can make a buck off of you? Or versus wandering the internet trying to make sense of conflicting advice? In my opinion, a fiduciary (registered CFP) is probably the best person to answer your questions. |
Executing a stop loss at the purchase price? | You will lose out on your spread, you always pay a spread. Also, if you are looking at a strategy for using stop losses, try taking into account the support lines if you are going long. So, if the stock is on an upward trend but is dropping back from profit taking, your best best is to take a position closest to the next support line. You place your stop just below the support. this will give you the best chance of a winning position as most technical analysts will have looking towards the support as a buy back area. Obviously, in a bear market the opposite is true. If you have taken your position and the market move past the first resistance line, then bring your stop to just below that line as once resistance is broken, it then becomes support. You then have a profitable position with profit locked in. Leave the position to break the next resistance and repeat. |
What happens to my savings if my country defaults or restructures its debt? | The biggest risk you have when a country defaults on its currency is a major devaluation of the currency. Since the EURO is a fiat currency, like almost all developed nations, its "promise" comes from the expectation that its union and system will endure. The EURO is a basket of countries and as such could probably handle bailing out countries or possibly letting some default on their sovereign debt without killing the EURO itself. A similar reality happens in the United States with some level of regularity with state and municipal debt being considered riskier than Federal debt (it isn't uncommon for cities to default). The biggest reason the EURO will probably lose a LOT of value initially is if any nation defaults there isn't a track record as to how the EU member body will respond. Will some countries attempt to break out of the EU? If the member countries fracture then the EURO collapses rendering any and all EURO notes useless. It is that political stability that underlies the value of the EURO. If you are seriously concerned about the risk of a falling EURO and its long term stability then you'd do best buying a hedge currency or devising a basket of hedge currencies to diversify risk. Many will recommend you buy Gold or other precious metals, but I think the idea is silly at best. It is not only hard to buy precious metals at a "fair" value it is even harder to sell them at a fair value. Whatever currency you hold needs to be able to be used in transactions with ease. Doesn't do you any good having $20K in gold coins and no one willing to buy them (as the seller at the store will usually want currency and not gold coins). If you want to go the easy route you can follow the same line of reasoning Central Banks do. Buy USD and hold it. It is probably the world's safest currency to hold over a long period of time. Current US policy is inflationary so that won't help you gain value, but that depends on how the EU responds to a sovereign debt crisis; if one matures. |
How can I get the most value from my employer's ESPP? | A 15% discount does not necessarily mean it is a good investment. The stock price can go down at any point. 15% discount might mean you are getting a little better deal than the average cat. |
I'm halfway through a 5-year purchase financing deal on my car. It's expensive. Can I sell it and get a cheaper car? | You say "it's expensive". I'm going to interpret this as "the monthly payments are too high". Basically, you need to get your old loan paid off, presumably by selling the car you have now. This is the tough part. If you sold the car now, how much would you get for it? You can use Kelley Blue Book to figure out what the car is roughly worth. That's not a guarantee that it will actually sell for that much. Look in your local classifieds to see what similar cars are selling for. (Keep in mind that you will usually get less for your old car if you trade it in versus sell it yourself.) Now, if you owe more than your car is worth, you're in a really tight spot. If you don't get enough money when you sell it, you are still stuck with the remainder of the loan. In that case, it is usually best to just stick with the car you have, and be more cautious about payments and loan length the next time you finance a car. Penalties: Most car loans don't have any kind of early repayment penalty. However, you should check your loan paperwork just to make sure. |
How does the market adjust for fees in ETPs? | The market doesn't really need to adjust for fees on ETF funds that are often less than 1/10th of a percent. The loss of the return is more than made up for by the diversification. How does the market adjust for trading fees? It doesn't have to, it's just a cost of doing business. If one broker or platform offers better fee structures, people will naturally migrate toward the lower fees. |
Is there any benefit to investing in an index fund? | when the index is altered to include new players/exclude old ones, the fund also adjusts The largest and (I would say) most important index funds are whole-market funds, like "all-world-ex-US", or VT "Total World Stock", or "All Japan". (And similarly for bonds, REITS, etc.) So companies don't leave or enter these indexes very often, and when they do (by an initial offering or bankruptcy) it is often at a pretty small value. Some older indices like the DJIA are a bit more arbitrary but these are generally not things that index funds would try to match. More narrow sector or country indices can have more of this effect, and I believe some investors have made a living from index arbitrage. However well run index funds don't need to just blindly play along with this. You need to remember that an index fund doesn't need to hold precisely every company in the index, they just need to sample such that they will perform very similarly to the index. The 500th-largest company in the S&P 500 is not likely to have all that much of an effect on the overall performance of the index, and it's likely to be fairly correlated to other companies in similar sectors, which are also covered by the index. So if there is a bit of churn around the bottom of the index, it doesn't necessarily mean the fund needs to be buying and selling on each transition. If I recall correctly it's been shown that holding about 250 stocks gives you a very good match with the entire US stock market. |
What is the future of 401(k) in terms of stability and reliability? | My guess is that the point is that yields on bonds and cash equivalents is so low that inflation will cause the inflation-adjusted returns to be negative. There is something to be said for how much inflation can eat out of investment returns. At the same time, I would note the occupation of the person making that post along with what biases this person likely has. "Entrepreneur, Started & sold several cos, Author 11 books (latest "Choose Yourself!") , Angel Inv., JamesAltucher.com" would to me read as someone that isn't who I'd turn for investment advice when it comes to employer-sponsored plans. Be careful of what you blindly follow as sometimes that is how wolves lead the sheep to slaughter. |
How does a CFD work behind the scenes? | There are several ways that the issuers profit from CFDs. If the broker has trades on both sides (buy and sell) they can net the volumes off against each other and profit off the spread whilst using the posted margins to cover p&l from both sides. Because settlement for most securities is not on the same day that the order is placed they can also buy the security with no intention of taking delivery and simply sell it off at the end of day to pass delivery on to someone else. Here again they profit from the spread and that their volumes give them really low commissions so their costs are much lower than the value of the spread. If they have to do this rather than netting the position out the spreads will be wider. Sometimes that may be forced to buy the security outright but that is rare and the spreads will be even wider so that they can make a decent profit. |
Are Index Funds really as good as “experts” claim? | Comparing index funds to long-term investments in individual companies? A counterintuitive study by Jeremy Siegel addressed a similar question: Would you be better off sticking with the original 500 stocks in the S&P 500, or like an index fund, changing your investments as the index is changed? The study: "Long-Term Returns on the Original S&P 500 Companies" Siegel found that the original 500 (including spinoffs, mergers, etc.) would do slightly better than a changing index. This is likely because the original 500 companies take on a value (rather than growth) aspect as the decades pass, and value stocks outperform growth stocks. Index funds' main strength may be in the behavior change they induce in some investors. To the extent that investors genuinely set-and-forget their index fund investments, they far outperform the average investor who mis-times the market. The average investor enters and leaves the market at the worst times, underperforming by a few percentage points each year on average. This buying-high and selling-low timing behavior damages long-term returns. Paying active management fees (e.g. 1% per year) makes returns worse. Returns compound on themselves, a great benefit to the investor. Fees also compound, to the benefit of someone other than the investor. Paying 1% annually to a financial advisor may further dent long-term returns. But Robert Shiller notes that advisors can dissuade investors from market timing. For clients who will always follow advice, the 1% advisory fee is worth it. |
Why are daily rebalanced inverse/leveraged ETFs bad for long term investing? | In addition to the excellent answers here I might suggest a reason for investing in leveraged funds and the original purpose for their existence. Lets say you run a mutual fund that is supposed to track the performance of the S&P 500. If you have cash inflows and outflows from your fund due to people investing and selling shares of your fund you may have periods where not all funds are invested appropriately because some of the funds are in cash. Lets say 98% of your funds are invested in the securities that reflect the stocks in the S&P 500. You will will miss matching the S&P 500 because you have 2% not invested in some money market account. If you take 1/3 of the cash balance and invest in a triple leveraged fund or take 1/2 of the funds and invest in a double leveraged fund you will more accurately track the index to which your fund is supposed to track. I am not sure what percentage mutual fund owners keep in cash but this is one use that I know these ETFs are used for. The difference over time that compounding effects have on leveraged funds is called Beta Slippage. There are many fine articles explaining it at you can find one located at this link. |
What is a negotiable security and how are they related to derivatives? | negotiability is a legal concept that permits free transfer of a security without the requirement of prior consent of the issuer. that means the issuer must pay the current holder of the security, irrespective of who he is. negotiability also protects a good faith buyer of the instrument from adverse ownership claims of purported prior holders of the instrument. it is not related to "negotiating" the price or whatnot. A negotiable security means the current owner does not have to be concerned about acquiring the asset via a bad chain of title b/c he can always assert that he is a "holder in due course" defense against such claims, and have absolute security in his ownership right over the asset. securities and derivatives are different. securities are transferrable instruments representing a direct claim on the issuer for the value of the security, whether debt or equity ownership. derivatives are bilateral contracts, which can only be entered into with the consent of both parties, and can only be transferred by such consent. derivatives represent a claim against the parties of to the derivative that depends on some economic reference which is outside of the financial condition of the two parties to the contract, such as interest rates, FX rates, commodity prices, etc. |
What assets would be valuable in a post-apocalyptic scenario? | Bullets, canned goods, and farm supplies that don't need gas (e.g. seed, feed, plows). |
super confused about bid and ask size. help | In the stock market many participants enter orders that are not necessarily set at the current market price of the stock (i.e. they are not market orders, they are limit orders). They can be lower than the market price (if they want to buy) or they can be higher than the market price (if they want to sell). The set of orders at each point of time for a security is called the order book. The lowest selling price of the order book is the offer or ask, the higher buying price is the bid. The more liquid is a security, the more orders will be in the order book, and the narrower will be the bid-ask spread. The depth of the order book is the number of units that the order book can absorb in any direction (buy or sell). As an example: imagine I want to buy 100 units at the lowest offer, but the size of the lowest offer is only 50 units, and there is not any further order, that means the stock has little depth. |
Using P/E Ratio of an ETF to decide on asset mix | P/E is a useful tool for evaluating the price of a company, but only in comparison to companies in similar industries, especially for industries with well-defined cash flows. For example, if you compared Consolidated Edison (NYSE:ED) to Hawaiian Electric (NYSE:HE), you'll notice that HE has a significantly higher PE. All things being equal, that means that HE may be overpriced in comparison to ED. As an investor, you need to investigate further to determine whether that is true. HE is unique in that it is a utility that also operates a bank, so you need to take that into account. You need to think about what your goal is when you say that you are a "conservative" investor and look at the big picture, not a magic number. If conservative to you means capital preservation, you need to ensure that you are in investments that are diversified and appropriate. Given the interest rate situation in 2011, that means your bonds holding need to be in short-duration, high-quality securities. Equities should be weighted towards large cap, with smaller holdings of international or commodity-associated funds. Consider a target-date or blended fund like one of the Vanguard "Life Strategy" funds. |
Owner-Financed home sale or Land Contract — how to handle the transaction and the ongoing entity? | Great question, but I'm thinking you'll want to get a professional who can look at your specific situation and do it right. I wouldn't go solely on advice here. Having said that, though, my decidedly non-professional advice: The other alternative is to take a bit of a profit hit, and demand that the seller pay cash. Then the transaction becomes much easier and quicker. But again, I urge you to have a pro look at this! |
What are the marks of poor investment advice? | (1) I think the phrase "Variable Annuity" is a glowing red flag. A corollary to that is that any strategy that uses insurance for a purpose (e.g. tax avoidance) other than protecting against loss rates at least a yellow flag. (2) The other really obvious indicator is a return that is completely out of whack with the level of risk they are saying the investment has. For example, if someone promises a 10% annual return that is "Completely Safe" or "Very low risk", Run. (3) If it is advertised on tv/radio, or all your friends are talking about it at parties. Stay away. Example: Investing in Gold Coins or the hot Tech IPO. (4) The whole sales pitch relies on past returns as proof that the investment will do well without any real discussion of other reasons it will continue to to well. Beware the gambler's fallacy. (5) Finally, be very wary of anyone who has some sort of great investment plan that they will teach you if you just pay $X or go to their seminar. Fee based advice is fine, but people selling a get rich quick vehicle typically know the real way to get rich is to get suckers to pay for their seminars. |
What should I be aware of as a young investor? | Just don't buy any kind of paper and you will be fine :-) And don't forget most of these 'blue-chip companies' sell marketing garbage which have no real market. Finally, make all decissions slooooowly and after extensive research. |
I cosigned for a friend who is not paying the payment | I'm sorry you are going through this, but what you are dealing with is exactly is how cosigning works. It is among other reasons why you should never cosign a loan for someone unless you are 100% prepared to pay the loan on their behalf. Unfortunately, the main "benefit" to cosigning a loan is to the bank - they don't care who makes payments, only that someone does. It is not in their interest to educate purchasers who can easily get themselves into the situation you are in. What your options are depends a fair bit on the type of loan it is. The biggest problem is that normally as cosigner you cannot force your friend to do anything. If it is for a car, your best bet is to convince them to sell the car and hopefully recoup more than the cost of the loan. Many workplaces have some sort of free service to provide counseling/guidance on this sort of thing. Look into your employee benefits as you may have some free services there. You can sue your friend in small claims court, but keep in mind: It also depends on how big the loan is relative to your income. While it might feel good to sue your friend in small claims court, if it's for $500 it probably isn't worthwhile - but if your friend just stopped paying off their $30k vehicle assuming you will pay for it, even though they can pay for it themselves? |
Why isn't money spent on necessities deductible from your taxes? | The answer is simple. You can generally claim a deduction for an expense if that expense was used to derive an income. Of course social policy sometimes gets in the way and allows for deductions where they usually wouldn't be allowed. Your rent is not tax deductible because this expense is not used to derive your income. If however you were working from your home, example - you had a home based business, and you dedicated a part of your home for your work, say an office, then part of your rent may then become tax deductible. |
Buy tires and keep car for 12-36 months, or replace car now? | New tires will increase the resale value of the car; while not by the full cost of the tires, it will not be entirely a sunk cost. You'd need to factor that in and find out how much the new tires increase the resale value of the car to determine how much they would truly cost you. However, I suspect they would cost you less than a $25,000 car a year early would. That new car would cost some amount over time - it sounds like you buy a new car every 8 years or so? So it would cost you $25/8 = $3.3k/year. That would, then, be the overall cost of the new car a year early - $3.3k (as it would mean one less year out of your old car, so assuming it was also $25k/8 year or similar, that year becomes lost and thus a cost). |
Beginning investment | I am a huge fan of jim Cramer and while you may not get CNBC in Australia you can prolly catch jim cramers podcasts If you have an iPod or iPhone which really will help your financial literacy a bit. Here's my advice . Set up a IRA or tax advantaged accounts if they exist in Australia (sorry I only know usa markets really well). Then you can pick investments to go in there or in a different investment account. I am a huge fan of index funds in particular Etf index funds because they are still very liquid. I prefer the free or no commission funds by Charles scwabb but vanguard is also very good or maybe even better. A few great funds are the vanguard total stock market fund (it invests in every company in the world) and any fund that mirrors the s&p 500 or the Russell 2000 midcap. Another good idea just to make room to save money is make a budget with your wife. I like the other post about planning in reverse . Setting up a budget to see your expenses and then make automatic pay dedications that go into savings or different accounts for savings. |
What's best investment option? Mutual fund or Property [duplicate] | nan |
I got my bank account closed abruptly how do I get money out? | This is very possibly a scam. The way the scam works is that the scammers send you a letter and demand you call the telephone number. But the telephone number belongs to the scammers, not the bank. When you call the number, they will 'authenticate' you by asking you a bunch of questions. They will then have enough information to call the bank and pretend to be you, and transfer out all of your money. What you need to do is to find the telephone number for your bank without making use of this letter. For example, look at a previous bank statement, or find the telephone number on the bank's website. Call that number and discuss this letter. If you have already called the number in the letter and if you have the slightest reason to believe it is not valid, stop reading. This is an emergency. Immediately call a legitimate number at the bank. Explain the situation and note that you believe your information has been compromised. Why are you still reading? Do it now. |
What does an x% inflation rate actually mean? | Inflation is a reflection on the expansion of the money supply, aka debt, being created by a central bank. Fiat currencies usually inflate, because there is no limit to the amount of debt that can be created. The consequences of reckless money supply expansion can be seen throughout history, see Zimbabwe, though there have been many others...Brazil, Argentinia, etc... |
How can my dad (grandpa) transfer shares to my 2 year old son? | A UTMA may or may not fit your situation. The main drawbacks to a UTMA account is that it will count against your child for financial aid (it counts as the child's asset). The second thing to consider is that taxes aren't deferred like in a 529 plan. The last problem of course is that when he turns 18 he gets control of the account and can spend the money on random junk (which may or may not be important to you). A 529 plan has a few advantages over a UTMA account. The grandparents can open the account with your son as the beneficiary and the money doesn't show up on financial aid for college (under current law which could change of course). Earnings grow tax free which will net you more total growth. You can also contribute substantially more without triggering the gift tax ~$60k. Also many states provide a state tax break for contributing to the state sponsored 529 plan. The account owner would be the grandparents so junior can't spend the money on teenage junk. The big downside to the 529 is the 10% penalty if the money isn't used for higher education. The flip side is that if the money is left for 20 years you will also have additional growth from the 20 years of tax free growth which may be a wash depending on your tax bracket and the tax rates in effect over those 20 years. |
Investing in dividend-yielding stocks with money borrowed from margin account? | Is it safe to invest in a portfolio of dividend stocks yielding 7-9% with the money borrowed at 3-4% from one of these brokerages? Yes and no. It depends on your risk profile! Any investment has its risks of losing your capital, but not investing is a guaranteed risk, as you will be guaranteed to fall behind the rate of inflation. Regarding investing on margin, this can increase your gains but can also increase your loses. Regarding the stock market - when investing in stocks you should not only look at the dividend rate but also the capital gain or loss potential. Remember in regards to investing on margin, if the share price drop too much you can get a margin call no matter how much dividend you are getting. It is no use gaining 9% in dividend yield per year if you are losing 15% or more in capital each year. Also, what is the risk of the dividend rate being cut back or dividends not being paid at all in the future? These are some of the risks you should consider before investing and derive a risk management plan as part of your investment plan before you invest. No investment is totally safe or risk free, but it is less risky than not investing at all, as long as you understand the risks involved and have a risk management plan in place as part of your overall investment plan. |
How to interpret these explanatory graphs (about option strategies)? | The blue line is illustrating the net profit or loss the investor will realise according to how the price of the underlying asset settles at expiry. The x-axis represents the underlying asset price. The y-axis represents the profit or loss. In the first case, the investor has a "naked put write" position, having sold a put option. The strike price of the put is marked as "A" on the x-axis. The maximum profit possible is equal to the total premium received when the option contract was sold. This is represented by that portion of the blue line that is horizontal and extending from the point above that point marked "A" on the x-axis. This corresponds to the case that the price of the underlying asset settles at or above the strike price on the day of expiry. If the underlying asset settles at a price less than the strike price on the day of expiry, then the option with be "in the money". Therefore the net settlement value will move from a profit to a loss, depending on how far in the money the option is upon expiry. This is represented by the diagonal line moving from above the "A" point on the x-axis and moving from a profit to a loss on the y-axis. The diagonal line crosses the x-axis at the point where the underlying asset price is equal to "A" minus the original premium rate at which the option was written - i.e., net profit = zero. In the second case, the investor has sold a put option with a strike price of "B" and purchase a put option with a strike price "A", where A is less than B. Here, the reasoning is similar to the first example, however since a put option has been purchase this will limit the potential losses should the underlying asset move down strongly in value. The horizontal line above the x-axis marks the maximum profit while the horizontal line below the x-axis marks the maximum loss. Note that the horizontal line above the x-axis is closer to the x-axis that is the horizontal line below the x-axis. This is because the maximum profit is equal to the premium received for selling the put option minus the premium payed for buying the put option at a lower strike price. Losses are limited since any loss in excess of the strike price "A" plus the premium payed for the put purchased at a strike price of "A" is covered by the profit made on the purchased put option at a strike price of "A". |
Which dividend bearing stock should be chosen by price? | A 20% dividend yield in most companies would make me very suspicious. Most dividend yields are in the 2-3% range right now and a 20% yield would make me worry that the company was in trouble, the stock price had crashed and the dividend was going to be cut, the company was going to go out of business or both. |
Should I try to negotiate a signing bonus? | I was able to request a modest advance on my salary when I started my first job out of college, for essentially the same reason. Alternatively, you might consider requesting a small personal loan from friends or family. If you have a credit card that can cover things like grocery expenses for that period, this may also be the appropriate time to use it. Buy cheap food, like lentils and beans. :P In the future, once you earn some money, you should keep around a few months' worth of essential expenses in a saving account to avoid this situation. :) |
Recommendation on Options Back Testing tool please | As JoeTaxpayer says, there's a lot you can do with just the stock price. Exploring that a bit: Stock prices are a combination of market sentiment and company fundamentals. Options are just a layer on top of that. As such, options are mostly formulaic, which is why you have a hard time finding historical option data -- it's just not that "interesting", technically. "Mostly" because there are known issues with the assumptions the Black-Scholes formula makes. It's pretty good, and importantly, the market relies on it to determine fair option pricing. Option prices are determined by: Relationship of stock price to strike. Both distance and "moneyness". Time to expiration. Dividends. Since dividend payments reduce the intrinsic value of a company, the prospect of dividend payments during the life of a call option depresses the price of the option, as all else equal, without the payments, the stock would be more likely to end up in the money. Reverse the logic for puts. Volatility. Interest rates. But this effect is so tiny, it's safe to ignore. #4, Volatility, is the biggie. Everything else is known. That's why option trading is often considered "volatility trading". There are many ways to skin this cat, but the result is that by using quoted historical values for the stock price, and the dividend payments, and if you like, interest rates, you can very closely determine what the price of the option would have been. "Very closely" depending on your volatility assumption. You could calculate then-historical volatility for each time period, by figuring the average price swing (in either direction) for say the past year (year before the date in question, so you'd do this each day, walking forward). Read up on it, and try various volatility approaches, and see if your results are within a reasonable range. Re the Black-Scholes formula, There's a free spreadsheet downloadable from http://optiontradingtips.com. You might find it useful to grab the concept for coding it up yourself. It's VBA, but you can certainly use that info to translate in your language of choice. Or, if you prefer to read Perl, CPAN has a good module, with full source, of course. I find this approach easier than reading a calculus formula, but I'm a better developer than math-geek :) |
Snowball debt or pay off a large amount? | Pay the Best Buy first. Most of these "Do not pay until..." deals require you to retire the entire debt by the deadline, or they will charge you deferred interest for the entire period. So, if this was a six-month deal, they're going to hit you for an extra $300 in December. |
What is a financial security? | First, realize that Wikipedia is written by individuals, just like this board has thousands of members. The two definition were written and edited by different people, most likely. Think Venn diagram. The definition for financial instruments claims that it's the larger set, and securities is contained in a subset. Comparing the two, it seems pretty consistent. Yes, Securities include derivatives. Transferable is close to tradable, although to me tradable implies a market as compared to private transfers. I don't believe there's an opposite, per se, but there's 'other stuff.' My house has value, but is not a security. My coffee cup has no value. Back to the concept of Venn. There aren't really opposites, just items falling outside the set we're discussing. I'd caution, this is a semantic exercise. If you know what you're buying, a stock, a bond, a gold bar, etc, whether it's a financial instrument or security doesn't matter to you. |
Are PINs always needed for paying with card? | Security in the merchant services system is mainly handled in two ways: 1) Before transactions are done, the business itself must go through an application process similar (but not identical) to getting a loan. Some high risk businesses must pay higher fees due to the increased likelihood of customer complaints. 2) When a customer disputes a transaction, that's a mark against the business. Get too many of these disputes, and your priviledge of accepting credit cards will be revoked, meaning you won't be able to again. It's in the merchant's best interest to verify customer's identity, because disputes cost them money directly. It's in the servicer's best interest to verify the businesses integrity, because fraud drives up the cost for everyone else. As a whole, it's quite a reactionary system, yet in practice it works remarkably well. |
In a competitive market, why is movie theater popcorn expensive? | I think this question has more to do with the business model of cinema. If I remember correctly. Most of the money from ticket sales goes back to the studios. Something like the newer a movie is the greater percentage goes back to the movie studios and the older a movie is the greater percentage of ticket price goes to the cinema. So high priced popcorn and candy is often the only place where the individual theaters make any money. This may not be true for every movie but I believe it was the case for films like James Cameron's Avatar. |
Repaying Debt and Saving - Difficult Situation | Given the listed expenses, this problem will not have a nice solutions. So lets quickly go through them and see when the most pressing ones can be dealt with: Solved within 1 year: 900 Solved within a few years: 1300: 900+400 You may be able to save a couple of hundred on the rest, but just take a minute to look at the above. Within 1 year she will be able to 'break even' and within a few years she will be able to live fairly comfortably. She will eat through her funds in about 10 months, which should coincide with the end of the tuition costs. If you could just sponsor her a little bit, or just be there for her in case of unexpected expenses, she should make it till the end of the year after which things are looking up and she will have a healthy surplus each month. Soon you and your sister can probably help her build up a nice buffer quickly, after which her worries should be over. |
Is it unreasonable to double your investment year over year? | Not at all impossible. What you need is Fundamental Analysis and Relationship with your investment. If you are just buying shares - not sure you can have those. I will provide examples from my personal experience: My mother has barely high school education. When she saw house and land prices in Bulgaria, she thought it's impossibly cheap. We lived on rent in Israel, our horrible apartment was worth $1M and it was horrible. We could never imagine buying it because we were middle class at best. My mother insisted that we all sell whatever we have and buy land and houses in Bulgaria. One house, for example, went from $20k to EUR150k between 2001 and 2007. But we knew Bulgaria, we knew how to buy, we knew lawyers, we knew builders. The company I currently work for. When I joined, share prices were around 240 (2006). They are now (2015) at 1500. I didn't buy because I was repaying mortgage (at 5%). I am very sorry I didn't. Everybody knew 240 is not a real share price for our company - an established (+30 years) software company with piles of cash. We were not a hot startup, outsiders didn't invest. Many developers and finance people WHO WORK IN THE COMPANY made a fortune. Again: relationship, knowledge! I bought a house in the UK in 2012 - everyone knew house prices were about to go up. I was lucky I had a friend who was a surveyor, he told me: "buy now or lose money". I bought a little house for 200k, it is now worth 260k. Not double, but pretty good money! My point is: take your investment personally. Don't just dump money into something. Once you are an insider, your risk will be almost mitigated and you could buy where you see an opportunity and sell when you feel you are near the maximal real worth of your investment. It's not hard to analyse, it's hard to make a commitment. |
Should I learn to do my own tax? | If you've been using TurboTax, let me suggest a compromise: Let TTax fill out the forms, but then print them out and go through it again by hand. If you don't get the same numbers, investigate why. If you do, you can probably conclude that you could do it by hand if you really want to, especially if you have the previous year's returns as a reference. (I've gone through every version of this from before personal tax software existed thru hand-constructed spreadsheets to commercial software and e-filing (federal only; I refuse to pay for something that reduces THEIR work). I can't use the free online version -- my return's got complications it won't handle -- and I'm uncomfortable putting that much data on a machine I don't control, so I'm still buying software each year. I COULD save the money, but it's worth a few bucks to me to make the process less annoying.) Late edit: Note that a self-constructed spreadsheet is one answer to the annoyance of pencil and paper -- you're still doing all the data manipulation yourself, but you're recording HOW you manipulated it as you go, and if numbers change you don't have to redo all the work. And it avoids raw math errors. It does require that you enter all the formulas rather than just their results, and figuring out how to express some things in stylesheet form can be a nuisance, but it isn't awful... and once you've done it (assuming you got it right) updating it for the next year is usually not hard unless you've introduced a completely new set of issues. |
Is it possible to trade US stock from Europe ? | Any large stockbroker will offer trading in US securities. As a foreign national you will be required to register with the US tax authorities (IRS) by completing and filing a W-8BEN form and pay US withholding taxes on any dividend income you receive. US dividends are paid net of withholding taxes, so you do not need to file a US tax return. Capital gains are not subject to US taxes. Also, each year you are holding US securities, you will receive a form from the IRS which you are required to complete and return. You will also be required to complete and file forms for each of the exchanges you wish to received market price data from. Trading will be restricted to US trading hours, which I believe is 6 hours ahead of Denmark for the New York markets. You will simply submit an order to the desired market using your broker's online trading software or your broker's telephone dealing service. You can expect to pay significantly higher commissions for trading US securities when compared to domestic securities. You will also face potentially large foreign exchange fees when exchaning your funds from EUR to USD. All in all, you will probably be better off using your local market to trade US index or sector ETFs. |
How to find a public company's balance sheet and income statement? | The websites of the most publicly traded companies publish their quarterly and annual financials. Check the investor relations sections out at the ones you want to look at. |
Clothing Store Credit Card Account closed but not deleted | You have little chance of getting it deleted. I have the same situation, I closed mine in 2006, and the login still works. Keep the paperwork that you closed it (or print a PDF of the site showing so), and forget about it. If someone is trying to cheat, re-opening it should be the same difficulty as making a new one in your name, so it is not really an additional risk. You could also set the username and password both to a long random string, and not keep them. That soft-forces you to never login again. Note that it will also stay on your credit record for some years (but that's not a bad thing, as it is not in default; in the contrary). The only negative is that if you apply for credit, you might be ashamed of people seeing you ever having had a Sears or Macy's card or so. |
Why is early exercise generally not recommended for an in-the-money option? | For a deep in the money, it almost makes no difference because the intrinsic value, the price of the option, is seldom far above the liquidation value, the price of the underlying less the strike price. For an at the money, ceteris paribus, an early exercise would immediately cut the value of the option to 0; however, life is not so simple as JB King has shown. Purely theoretically, for an at or near the money option, an early exercise will be an instantaneous cost because the value after exercise is less than the previously trading or implied option price. |
Is Investments by Bodie just an expanded version of Essentials of Investments? | Reading the descriptions on Amazon.com it appears Investments is a graduate text and Elements of Investments is the undergraduate version of the text. |
Ways to save for child's college education where one need not commit to set contributions? [duplicate] | 529 plans. They accumulate earnings over time and by the time your child goes to college you will be able to withdraw funds for college TAX FREE. The best part about 529s is that there are several different options you can choose from, and you aren't limited to the plans sponsored by your state, you can use whichever plan works best for you. For example, I live in South Carolina and use Utah's Educational Savings Plan because it has no minimum amount to open one up and it has low fees. Hope this helped. Good luck with your search! |
How's the graph of after/pre markets be drawn? | the data source is the same as the live market trading. pre and after market trading are active markets and there are actual buyers and sellers getting their orders matched. |
Buying a multi-family home to rent part and live in the rest | Think carefully about the added expenses. It may still make sense, but it probably won't be as cheap as you are thinking. In addition to the mortgage and property taxes, there is also insurance and building maintenance and repairs. Appliances, carpets, and roofs need to be replaced periodically. Depending on the area of the country there is lawn maintenance and now removal. You need to make sure you can cover the expenses if you are without a tenant for 6 months or longer. When tenants change, there is usually some cleaning and painting that needs to be done. You can deduct the mortgage interest and property taxes on your part of the building. You need to claim any rent as income, but can deduct the other part of the mortgage interest and taxes as an expense. You can also deduct building maintenance and repairs on the rental portion of the building. Some improvements need to be depreciated over time (5-27 years). You also need to depreciate the cost of the rental portion of the building. This basically means that you get a deduction each year, but lower the cost basis of the building so you owe more capital gains taxes when you sell. If you do this, I would get a professional to do your taxes at least the first year. Its not hard once you see it done, but there are a lot of details and complications that you want to get right. |
Invest in (say, index funds) vs spending all money on home? | Here in the UK, the rule of thumb is to keep a lot of equity in your home if you can. I assume here that you have a lot of savings you're considering using. If you only have say 10% of the house price you wouldn't actually have a lot of choice in the matter, the mortgage lender will penalise you heavily for low deposits. The practical minimum is 5%, but for most people a 95% mortgage is just silly (albeit not as silly as the 100% or greater mortgages you could get pre-2008), and you should take serious individual advice before considering it. According to Which, the average in the UK for first-time buyers is 20% (not the best source for that data I confess, but a convenient one). Above 20% is not at all unusual. You'll do an affordability calculation to figure out how much you can borrow, which isn't at all the same as how much you should borrow, but does get you started. Basically you, decide how much a month you can spend on mortgage payments. The calculation will let you put every penny into this if you choose to, but in practice you'll want some discretionary income so don't do that. decide the term of the mortgage. For a young first-time buyer in the UK I think you'd typically take a 25-year term and consider early repayment options rather than committing to a shorter term, but you don't have to. Mortgage lenders will offer shorter terms as long as you can afford the payments. decide how much you're putting into a deposit make subtractions for cost of moving (stamp duty if applicable, fees, removals aka "people to lug your stuff"). receive back a number which is the house price you can pay under these constraints (and of course a breakdown of what the mortgage principle would be, and the interest rate you'll pay). This step requires access to lender information, since their rates depend on personal details, deposit percentage, phase of the moon, etc. Our mortgage advisor did multiple runs of the calculation for us for different scenarios, since we hadn't made up our minds entirely. Since you have not yet decided how much deposit to make, you can use multiple calculations to see the effect of different deposits you might make, up to a limit of your total savings. Putting up more deposit both increases the amount you can borrow for a given monthly payment (since mortgage rates are lower when the loan is a lower proportion of house value), and of course increases the house price you can afford. So unless you're getting a very high return on your savings, £1 of deposit gets you somewhat more than £1 of house, and the calculation will tell you how much more. Once you've chosen the house you want, the matter is even simpler: do you prefer to put your savings in the house and borrow less and make lower payments, or prefer to put your savings elsewhere and borrow more and make higher payments but perhaps have some additional income from the savings. Assuming you maintain a contingency fund, a lower mortgage is generally considered a good investment in the UK, but you need to check what's right for you and compare it to other investments you could make. The issue is complicated by the fact that residential property prices are rising quite quickly in most areas of the UK, and have been for a long time, meaning that highly-leveraged property investment appears to be a really good idea. This leads to the imprudent, but tempting, conclusion that you should buy the biggest house you can possibly afford and watch its value rises. I do not endorse this advice personally, but it's certainly true that in a sharply rising house market it's easier to get away with buying a bigger house than you need, than it is to get away with it in a flat or falling market. As Stephen says, an offset mortgage is a no-brainer good idea if the rate is the same. Unfortunately in the UK, the rate isn't the same (or anyway, it wasn't a couple of years ago). Offset mortgages are especially good for those who make a lot of savings from income and for any reason don't want to commit all of those savings to a traditional mortgage payment. Good reasons for not wanting to do that include uncertainty about your future income and a desire to have the flexibility to actually spend some of it if you fancy :-) |
Mortgage or not? | In addition to the other answers, I think you would also need to account for the increased utility and maintenance costs on the more expensive house. Typically it is recommended to budget 1% to 4% the cost of the home per year for routine maintenance. While it likely won't cost that much every year, you will have those expensive items come up (e.g. roof, HVAC) that come up periodically. The larger house will also cost more to heat/cool. Depending on where you live could also have increased property taxes. |
How do I go about finding an honest & ethical financial advisor? | You want a fee-only advisor. He charges like an architect or plumber: by the hour or some other "flat fee". That is his only compensation. He is not paid on commission at all. He is not affiliated with any financial services company of any kind. His office is Starbucks. He does not have a well lit office like the commission broker down the street. He does not want you to hand him your money - it stays in the brokerage account of your choice (within reason - some brokerage accounts are terrible and he'll tell you to get out of those). He never asks for the password to your brokerage account. Edit: The UK recently outlawed commission brokers. These guys were competitive "sales types" who thrive on commissions, and probably went into other sales jobs. So right now, everyone is clamoring for the few proper financial advisors available. High demand is making them expensive. It may not be cost-effective to hire an advisor; you may need to learn it yourself. It's not that hard. Ever hear of a plumber who works totally for free, and makes his money selling you wildly overpriced pipe? That's what regular "financial advisors" are. They sell products that are deliberately made unnecessarily complex. The purpose is first, to conceal sales commissions and high internal fees; and second to confuse you, so the financial world feels so daunting that you feel like you need their help just to navigate it. They're trying to fry your brain so you'l just give up and trust them. Products like whole life and variable annuities are only the poster children for how awful all of their financial products are. These products exist to fleece the consumer without quite breaking the law. Of course, everyone goes to see them because they have well lit offices in every town, and they're free and easy to deal with. Don't feel like you need to know everything about finance to invest. You don't need to understand every complex financial product that the brokerage houses bave dreamed up: they are designed to conceal and confuse, as I discuss above, and you don't want them. The core of it is fairly simple, and that's all you really need to know. Look at any smaller university and how they manage their endowments. If whole life, annuities and those complex financial "products" actually worked, university endowments would be full of them. But they're not! Endowments are generally made of investments you can understand. Partly because university boards are made of investment bankers who invented those products, and know what a ripoff they are. Some people refuse to learn anything. They are done with college and refuse to learn anything more. I hope that's not you. Because you should learn the workings of everything you're investing in. If you don't understand it, don't buy itl And a fee-only financial advisor won't ask you to. 1000 well-heeled, well-advised university endowments seek the most successful products on the market... And end up choosing products you can understand. That's good news for you. |
Investments beyond RRSP and TFSA, in non-registered accounts? | You haven't looked very far if you didn't find index tracking exchange-traded funds (ETFs) on the Toronto Stock Exchange. There are at least a half dozen major exchange-traded fund families that I'm aware of, including Canadian-listed offerings from some of the larger ETF providers from the U.S. The Toronto Stock Exchange (TSX) maintains a list of ETF providers that have products listed on the TSX. |
Canceling credit cards - insurance rate increase? | You can't ask insurers to use a particular score -- they have a state-approved underwriting model that they must follow consistently. Insurance companies make money by not paying claims, and poor credit score (including limit access to credit) increases the probability that you will file a small claim. Why? If you get into a minor accident (say $750 of damage) and have a $500 deductible, you are much less likely to file a claim to get $250 if you have access to a cash or credit lines to make the repairs yourself. If you feel that you are going to be penalized for closing credit card accounts, the solution is simple -- don't close them. Other than an event where you need to sever a relationship with a co-owner of an account (ie, you break up with your significant other, dissolve a business, etc) or avoid paying an annual fee, there is no advantage to you closing a revolving credit account, ever. If you cannot control your spending, throw the card in the shredder. Eventually, the credit card company will close your account for inactivity, which affects your credit to a lesser degree. (The big exception is if you carry sufficient balances on other cards, your credit utilization ratio goes up materially.) |
why the currency data(such as USD/JPY) is different from different source | A day is a long time and the rate is not the same all day. Some sources will report a close price that averages the bid and ask. Some sources will report a volume-weighted average. Some will report the last transaction price. Some will report a time-weighted average. Some will average the highest and lowest prices for the interval. Different marketplaces will also have slightly different prices because different traders are present at each marketplace. Usually, the documentation will explain what method they use and you can choose the source whose method makes the most sense for your application. |
1040 or 1040NR this time? | Since you were a nonresident alien student on F-1 visa then you will be considered engaged in a trade or business in the USA. You must file Form 1040NR. Here is the detailed instruction by IRS - http://www.irs.gov/Individuals/International-Taxpayers/Taxation-of-Nonresident-Aliens |
How to make money from a downward European market? | If you want to make money while European equities markets are crashing and the Euro itself is devaluing: None of these strategies are to be taken lightly. All involve risk. There are probably numerous ways that you can lose even though it seems like you should win. Transaction fees could eat your profits, especially if you have only a small amount of capital to invest with. The worst part is that they all involve timing. If you think the crash is coming next week, you could, say, buy a bunch of puts. But if the crash doesn't come for another 6 months, all of your puts are going to expire worthless and you've lost all of your capital. Even worse, if you sell short an index ETF this week in advance of next week's impending crash, and some rescue package arrives over the weekend, equity prices could spike at the beginning of the week and you'd be screwed. |
In Australia, how to battle credit card debt? | To confirm: you say you have credit card debt of $18,000 with min. repayment of $466.06, plus on top of this you are also paying off a car loan and another personal loan. From my calculations if your monthly interest on your credit card is $237, the interest on your credit card should be about 15.8% p.a. Is this correct? Balance Transfer If you did a balance transfer of your $18,000 to a new credit card with 0% for 14 months and keep your repayments the same ($466) you would have saved yourself a bit over $3020 in interest over those 14 months. Your credit card balance after 14 months would be about $11,471 (instead of $14,476 with your current situation). If your interest after the 14 months went back to 15.8% you would be able to pay the remaining $11,471 in 2.5 more years (keeping repayments at $466), saving 10 months off your repayments and a total of $4,781 in interest over 3 years and 8 months. The main emphasis here is that you are able to keep your repayments at least the same so you are able to pay off the debt quicker, and that your interest rate on the new credit card after the 14 months interest free is not more than your current interest rate of 15.8%. Things you should be careful about if you take this path: Debt Consolidation In regards to a Debt Consolidation for your personal loan and credit card (and possibly your car loan) into a single lower interest rate loan can be a good idea, but there are some pitfalls you should consider. Manly, if you are taking out a loan with a lower interest rate but a longer term to pay it off, you may end up paying less in monthly repayments but will end up paying more interest in the long run. If you do take this course of action try to keep your term to no longer than your current debt's terms, and try to keep your repayments as high as possible to pay the debt off as soon as possible and reduce any interest you have to pay. As you already have you credit card and personal loan with CBA talk to them to see what kind of deal they can give you. Again be wary of the fine print and read the PDS of any products you are thinking of getting. Refer to ASIC - Money Smart website for more valuable information you should consider before taking out any debt consolidation. Other Action You Can Take If you are finding that the repayments are really getting out of hand and no one will help you with any debt consolidation or reducing your interest rates on your debts, as a last resort you can apply for a Part 9 debt agreement. But be very careful as this is an alternative to bankruptcy, and like bankruptcy a debt agreement will appear on your credit file for seven years and your name will be listed on the National Personal Insolvency Index forever. Further Assistance and Help If you have trouble reading any PDS, or want further information or help regarding any issues I have raised or any other part of your financial situation you can contact Centrelink's Financial Information Service. They provide a free and confidential service that provides education and information on financial and lifestyle issues to all Australians. |
Why do people buy insurance even if they have the means to overcome the loss? | This person could buy another car at any moment without any money problems, so I don't really see any point in insuring, especially with such a ridiculously high price compared to the extremely low risk. Convenience. If you self-insure, then an accident means that you have to make arrangements to get the car towed, fixed, evaluated, etc. If you buy insurance, your insurer would prefer to do all that. They argue with the mechanic over prices, the lawyer over liability, etc. And of course, rich people need more liability insurance than other people, not less. So part of that $1400 is probably money that your friend would have to pay regardless. |
Is Amazon's offer of a $50 gift card a scam? | These kinds of credit card offers are incredibly common. More often you will get a certain reward if you spend $X within Y days of getting the card. In many cases you can take advantage of them with very little downside. However, are you responsible enough to have a credit card and be able to pay off the balance every month? If not the interest charges could quickly wipe out the $50 bonus you get. And hard inquiries and new accounts could potentially affect your credit score, particularly if you don't have a well-established credit history. There's also the chance you get denied in which case you add a hard inquiry to your credit report for no gain. |
Passing money through a different account to avoid cash pay-in fees | Let me do the math. .6% * (not large) = really tiny. Since "not large" = "small" , etc. I suggest that even a small chance that you need to explain this to anyone in the future is a sign to avoid the risk. Yes, there are times that it's illegal. A real estate office may not deposit escrow funds into anything but a segregated escrow account. In your case, even if legal, it messes up 'the books' and can cost you more in grief than the 'tiny amount' saves you in cash. |
Standard Deviation with Asset Prices? | Almost every online datasources provide historical prices on given company / index's performance; from this, you can easily calculate "standard deviation" by yourself. With that said, standard deviation presumes a fixed set of data. Most public corporations have data spanning multiple decades, during which a number of things have changed: For these reasons, I have doubts on simplistic measures, such as "standard deviation" measuring any reality on the underlying vehicle. Professional investors usually tend to more time-point data, such as P/E ratio. |
Are there any countries where citizens are free to use any currency? | Wikipedia has a list of countries which ban foreign exchange use by its citizens. It's actually quite short but does include India and China. Sometimes economic collapse limits enforcement. For example, after the collapse of the Zimbabwean dollar (and its government running out of sufficient foreign exchange to buy the paper necessary to print more), the state turned a blind eye as the US dollar and South African rand became de facto exchange. Practicality will limit the availability of foreign exchange even in free-market economies. The average business can't afford to have a wide range of alternative currencies sitting around. Businesses which cater to large numbers of addled tourists sometimes offer one or two alternative currencies in the hopes of charging usurous rates of exchange. Even bureaux de change sometimes require you to order your "rarer" foreign exchange in advance. So, while it may be legal, it isn't always feasible. |
Responsible investing - just a marketing trick? | You are correct that, barring an equity capital raise, your money doesn't actually end up in the company. However, interest in their stock can help a company in other ways; Management/board members hopefully own shares or options themselves, thus knowing that "green" policies are favorable for the stock price (as your fund might buy shares) can be quite an incentive for them to go green(er). Companies with above average company share performance are also often viewed as financially healthy and so creditors tend to charge lower interest for companies with good share performance. Lastly, a high share price makes a company difficult to take over (as all those shares have to be acquired) and at the same time makes it easier for the company to perform takeovers themselves as they can finance such acquisitions by issuing more of their own shares. There is also the implication that money flowing towards such green companies is money flowing out of/away from polluting companies, for these "dirty" companies the inverse of the previous points can hold true. Of course on the other hand there is quite an argument to be made that large enough "green" funds should actually buy substantial positions in companies with poor environmental records and steer the company towards greener policies but that might be a hard sell to investors. |
I'm 23, living at home, and still can't afford my own property. What could I do? | When I was 23, the Toronto housing market was approaching a record high, and I thought, "I must buy a place or I'll be locked out." And I did. Bad decision. I should have waited and saved my money. For the record, I thought I would never recover, but I did. Patience grasshopper. In actual fact the U.K. housing market is probably approaching a low, and you have a job that is paying you well enough. BUT the lesson I learned wasn't about buying at a high or a low, it was about the need never to let external factors rush your decision making. Your decisions have to make sense for your own unique situation. If you're living at home and you have domestic bliss, mum and dad aren't crimping your style (if you know what I mean), then, enjoy it. Your credit balance sounds understandable. It's not fatal. But it's a budget killer. Make adjustments (somehow/anyhow) so that you are paying it down month by month. Take it down to £0. You will feel amazing once you do it. After that, use the money that you were paying onto your credit card and start saving it. Whether you ultimately use the money for a house down-payment or your retirement, doesn't matter. Just get into the situation where you're saving. |
Types of investments with built-in puts or similar safety features | Many mutual funds include such mechanisms. However, the higher fees for those funds (when compared to simple index funds) may cancel out any improvement the hedging strategy offers. |
Is it possible to get life insurance as a beneficiary before the person insured dies? | I recall the following business from the AIDS crisis: viatical settlement But because there were life-extending treatments developed in the 1990s, many third parties which engaged in these took a bath and it's not as common. |
Why do people always talk about stocks that pay high dividends? | It has little to do with money or finance. It's basic neuroscience. When we get money, our brains release dopamine (read Your Money and Your Brain), and receiving dividends is "getting money." It feels good, so we're more likely to do it again. What you often see are rationalizations because the above explanation sounds ... irrational, so many people want to make their behavior look more rational. Ceteris paribus a solid growth stock is as good as a solid company that pays dividends. In value-investing terms, dividend paying stocks may appear to give you an advantage in that you can keep the dividends in cash and buy when the price of the security is low ("underpriced"). However, as you realize, you could just sell the growth stock at certain prices and the effect would be the same, assuming you're using a free brokerage like Robin Hood. You can easily sell just a portion of the shares periodically to get a "stream of cash" like dividends. That presents no problem whatsoever, so this cannot be the explanation to why some people think it is "smart" to be a dividend investor. Yes, if you're using a brokerage like Robin Hood (there may be others, but I think this is the only one right now), then you are right on. |
Should I get cash from credit card at 0% for 8 months and put it on loans? | There are two issues here: arithmetic and psychology. Scenario 1: You are presently paying an extra $500 per month on your student loan, above the minimum payments. Your credit card company offers a $4000 cash advance at 0% for 8 months. So you take the cash advance, pay it toward the student loan, and then instead of paying the extra $500 per month toward the student loan you use that $500 for 8 months to repay the cash advance. Net result: You pay 0% interest on the loan, and save roughly 8 months times $4000 times the interest on the student loan divided by two. (I say "divided by two" because it's not the difference between $4000 and zero, but between $4000 and the $500 you would have been paying off each month.) Clearly you are better off. If you are NOT presently paying an extra $500 on the student loan -- or even if you are but it is a struggle to come up with the money -- then the question becomes, can you reasonably expect to be able to pay off the credit card before the grace period runs out? Interest rates on credit cards are normally much higher than interest rates on student loans. If you get the cash advance and then can't repay it, after 8 months you are paying a very steep interest rate, and anything you saved on the student loan will quickly be lost. What I mean by "psychological" is that you have to have the discipline to really repay the credit card within the grace period. If you're not very confidant that you can do that, this plan could go bad very quickly. Personally, I've thought about doing things like this many times -- cash advances against credit cards, home equity loans, etc, all give low-interest money that could be used to pay off a higher-interest debt. But it's easy to get into trouble doing things like this. It's easy to say to yourself, Well, I don't need to put ALL the money toward that other debt, I could keep a thousand or so to buy that big screen TV I really need. Or to fail to pay back the low-interest loan on schedule because other things keep coming up that you spend your money on instead, whether frivolous luxuries or true emergencies. And there's always the possibility that something will happen to mess up your finances, from a big car repair bill to losing your job. You don't want to paint yourself into a corner. Finally, maxing out your credit cards hurts your credit rating. The formulas are secret, but I understand that if you use more than half your available credit, that's a minus. How much it hurts you depends on lots of factors. |
How to find cheaper alternatives to a traditional home telephone line? | Try to use VOIP service provider or web enabled conference calling services in your home phone. Now a days communication technologies have seen a boost as well as integration of different formats and platforms which easily reduces phone bills of a user. Service such as UberConference, Skype, Webinar etc enables audio/video as well as web conferencing feature for their user. Service tiers such as free plans, basic plans and business plans allow user to use these conference calling services per their need. Have a look at any such service and use it as an alternative of your home phone line. |
Are those “auto-pilot” programs a scam or waste of time? | Genuine (nearly) passive income can be had from some kinds of investing. Index funds are an example of a mostly self-managing investment. Of course investment involves some risk (the income is essentially paying you for taking that risk) and returns are reasonable but proportional to the risk -- IE, not spectacular unless the risk is high. If someone is claiming they can get you better than market rate of return, look carefully at what they are getting out of it and what the risks are. Fees subtract directly from your gains, and if they claim there is no additional risk, they need to prove that. You are giving someone your money. Be very sure you are going to get it back. If it isn't self-evident where the income comes from, it's probably a scam. If someone is using the term "auto-pilot", it is almost certainly a scam. If they are talking about website advertising and the like, it is far from autopilot if you want to make any noticable amount of money (though you may make money for them). |
Can I get a discount on merchandise by paying with cash instead of credit? | I bought a car a few years ago. The salesman had the order, I knew the car I wanted and we had a price agreed on. When I refused the payment plan/loan, his manager came over and did a hard sell. "99% of buyers take the financing" was the best he could do. I told him I was going to be part of the 1%. With rates so low, his 2 or 3% offer was higher than my own cost of money. He went so far as to say that I could just pay it off the first month. Last, instead of accepting a personal check and letting me pick up the car after it cleared, he insisted on a bank check to start the registration process. (This was an example of one dealer, illustrating the point.) In other cases, for a TV, a big box store (e.g. Best Buy) isn't going to deal for cash, but a small privately owned "mom and pop" shop might. The fees they are charged are pretty fixed, they don't pay a higher fee cause I get 2% cash back, vs your mastercard that might offer less. |
First time homeowner and getting a mortgage? | First of all, think of anyone you know in your circle locally who may have gotten a mortgage recently. Ask him, her, or them for a recommendation on what brokers they found helpful and most of all priced competitively. Second of all, you may consider asking a real estate agent. Note that this is generally discouraged because agents sometimes (and sometimes justifiably) get a bad reputation for doing anything to get themselves the highest commission possible, and so folks want to keep the lender from knowing the agent. Yet if you have a reputable, trustworthy agent, he or she can point you to a reputable, trustworthy broker who has been quoting your agent's other clients great rates. Third of all, make sure to check out the rates at places you might not expect - for example, any credit unions you or your spouse might have access to. Credit unions often offer very competitive rates and fees. After you have 2-3 brokers lined up, visit them all within a short amount of time (edit courtesy of the below comments, which show that 2 weeks has been quoted but that it may be less). The reason to visit them close together is that in the pre-approval process you will be getting your credit hard pulled, which means that your score will be dinged a bit. Visiting them all close together tells the bureaus to count all the hits as one new potential credit line instead of a couple or several, and so your score gets dinged less. Ask about rates, fees (they are required by law to give you what is called a Good Faith Estimate of their final fees), if pre-payment of the loan is allowed (required to re-finance or for paying off early), alternative schedules (such as bi-weekly or what a 20 year mortgage rate might be), the amortization schedule for your preferred loan, and ask for references from past clients. Pick a broker not only who has the best rates but also who appears able to be responsive if you need something quickly in order to close on a great deal. |
When a stock price goes down, does the money just disappears into thin air? | Cash changes hands when you buy or sell the stock. While you own the stock, you own it, not cash, so there is no cash to go anywhere. You spent your money when you bought. The seller got that money. It's gone. You hope that when you sell the stock, someone will give you more money for it than you spent. But they may give you less. Money doesn't magically appear either way, it comes from the buyer. After selling, you have the money -- however much you sold for -- and no longer have the stock. NOTE that this means the current value of a share of stock is interesting, but not really very relevant, unless you are actively buying or selling. What your portfolio is worth on paper is nothing more than an approximate snapshot at the moment you retrieve the data. It is not a promise of what will actually happen when you do sell. |
How to invest 100k | The best way to invest in college for your kid is to buy an investment property and rent it out. You might think I am really crazy to ask you to you to buy a real estate property when everyone is running from real estate. Go where others are running away from it. Look where others are not looking. Find out the need for a decent rental property in your city or county and start following the real estate market to understand the real activities including the rental market. I would say follow it for 6 months before jumping in with any investment. And manage your property with good tenants until your kid is ready to go to college. By the time your kid is ready for college, the property would have been paid off by the rents and you can sell the property to send your kid to college. |
Where can I open a Bank Account in Canadian dollars in the US? | Canada, like other second-rate economies with weak currencies, provides USD accounts. It is not the same vice versa. It is rare to find a direct deposit foreign currency account in the US as it is the world-leading currency. |
At what interest rate should debt be used as a tool? | This post has a great discussion on the topic. Basically, there is no single interest rate above which you should pay off and below which you should keep. You have to keep in mind factors such as |
I have about 20 000 usd. How can invest them to do good in the world? | I'd suggest you to separate "doing good" from "earning profit". Look at the guys like Warren Buffett and Bill Gates (or Carnegie and Ford for that matters). They understand that you can't reconcile the two goals, so they donate for free what they earned for profit. If you want to make a social impact with your money, you can check the charity programs that have a confirmed record of a positive impact on people's lives. Non-profits that studied such programs publish their results extensively: AidGrade compiles this research and suggests direct donations to the programs that demonstrated best outcomes per dollar invested: |
For a major expensive home renovation (e.g. addition, finished basement, or new kitchen) should one pay cash or finance with a loan? Would such a loan be “good” debt? | Good debt is very close to an oxymoron. People say student loans are "good debt," but I beg to differ. The very same "good debt" that allowed me to get an education is the very same "bad debt" that doesn't allow me to take chances in my career - meaning, I would prefer to have a 'steady' job over starting a business. (That's my perogative, of course, but I am not willing to take that 'risk.' /endtangent @Harmanjd provided the two really good reason for using cash over borrowing. We have a tendency in this culture to find reasons to borrow. It is better for you to make a budget, based on what you want, and save up for it. Make a "dream list" for what you want, then add up the costs for everything. If that number makes your head hurt, start paring down on things you 'want.' Maybe you install just a wine cooler instead of a wine cooler and a beer tap, or vice-versa. And besides, if something comes up - you can always stop saving money for this project and deal with whatever came up and then resume saving when you're done. Or in the case of the kitchen, maybe you do it in stages: cabinets one year, countertops the next, flooring the year after that, and then the appliances last. You don't have to do it all at once. As someone who is working toward debt freedom, it feels nice whenever we have one less payment to budget for every month. Don't burden yourself to impress other people. Take your time, get bids for the things you can't (or won't) do yourself, and then make a decision that's best for your money. |
Is there a Canadian credit card which shows holds? | As for PC Mastercard like stated by @nullability, VISA Desjardins list the "Pending Authorizations" almost instantly (the time it's take to get back home) in AccesD (Their Web portal for managing accounts). |
Can one get a house mortgage without buying a house? | As a legal contract, a mortgage is a form of secured debt. In the case of a mortgage, the debt is secured using the property asset as collateral. So "no", there is no such thing as a mortgage contract without a property to act as collateral. Is it a good idea? In the current low interest rate environment, people with good income and credit can obtain a creditline from their bank at a rate comparable to current mortgage rates. However, if you wish to setup a credit line for an amount comparable to a mortgage, then you will need to secure it with some form of collateral. |
How much cash on hand should one have? | Less than 2 1/2% of all US currency actually exists. The rest is digital entries. In a financial crisis you'll need lots of rare cash. Twenty dollar bills are the best choice. Stash as many as you can afford to. Best to stash in a anchored security safe. And for goodness sakes, don't tell anyone. |
Ongoing things to do and read to improve knowledge of finance? | For learning about finances my main two financial resources are this site, and the Motley Fool. My secondary sources are keeping up with columns by my favourite economic journalists - in the press in the US, Australia, England, and India. Regarding your comment about feeling green on the basics despite the reading - you're not alone. I've been interested in financials for better than 10 years, but there are a lot of questions on this site where I say to myself, "I've no idea of what the answer could be, what are our resident experts saying?" Having said that, there are some topics where I feel as though I can weigh in - and they tend to be where I have a little book knowledge and a lot of personal experience. |
How can I diversify $7k across ETFs and stocks? | nan |
Yahoo Finance - Data inconsistencies between historic and current data | You might have better luck using Quandl as a source. They have free databases, you just need to register to access them. They also have good api's, easier to use than the yahoo api's Their WIKI database of stock prices is curated and things like this are fixed (www.quandl.com/WIKI ), but I'm not sure that covers the London stock exchange. They do, however, have other databases that cover the London stock exchange. |
How did Bill Gates actually make his money? | Bill was the founder of Microsoft, so he did indeed have a large number of shares as the company was growing exponentially. He has previously donated a large share of his fortune to the Bill and Melinda Gates foundation, so his fortune would be even greater were it not for the philanthropy. He is still a large holder of Microsoft stock at about $12B according to your link, but it wouldn't be wise to hold his entire fortune in one company, so he has diversified. You can see that his investment portfolio at Cascade includes ~$28B in Televisa and ~$7B in Berkshire Hathaway. http://www.tickerspy.com/pro/Bill-Gates---Cascade-Investment And you can keep track of whether he stays at the top by watching the bloomberg billionaires list. http://www.bloomberg.com/billionaires/ |
I'm upside down on my car loan and need a different car, what can I do? | There are a few things you should keep in mind when getting another vehicle: DON'T use dealership financing. Get an idea of the price range you're looking for, and go to your local bank or find a local credit union and get a pre-approval for a loan amount (that will also let you know what kind of interest rates you'll get). Your credit score is high enough that you shouldn't have any problems securing a decent APR. Check your financing institution's rules on financing beyond the vehicle's value. The CU that refinanced my car noted that between 100% and 120% of the vehicle's value means an additional 2% APR for the life of the loan. Value between 120% and 130% incurred an additional 3% APR. Your goal here is to have the total amount of the loan less than or equal to the value of the car through the sale / trade-in of your current vehicle, and paying off whatever's left out of pocket (either as a down-payment, or simply paying off the existing loan). If you can't manage that, then you're looking at immediately being upside-down on the new vehicle, with a potential APR penalty. |
Retirement planning: Pension or personal saving/investing? | You can never depend ONLY on pension. You must get financial education and invest your money. I recommend you to read The Intelligent Investor by Benjamin Graham...it's the bible of Warren Buffet. Besides, you don't need to be a Billionaire for retiring and be happy. I recommend you to get education in ETFs. I quote The Intelligent Investor by Benjamin Graham p. 131. According to Ibboston Associates, the leading financial research firm, if you had invested $12,000 in the Standard & Poor's 500-stock index at the beginning of september 1929, 10 years later you would have had only $7,223 left. But if you had started with a paltry $100 and simply invested another $100 every single month, then by August 1939, your money would have grown to $15,571! That's the power of disciplined buying-even in the face of the Great Depression and the worst bear market of all time. You are still young to make even bolder investments. But seriously you can never depend ONLY on pension. You won't regret learning how to invest your money, it doesn't matter if it's in the stock market, real state market, whatever market... Knowing what to do with your money is priceless. I hope this helps. Happy profits! |
How to check the paypal's current exchange rate? | The Paypal 'classic' site option has now been removed and you will not know what you will be charged UNTIL YOU COMMIT TO BUY. Paypal told me today ( brexit day 24th ) that their site is NOT connected to the Ebay site so when Ebay tells me '$77.00 approximately £52.43' for an item I would in fact pay £59.62. You will Not be aware of this UNTIL you commit to by. Paypal informs me there are no plans to restore the 'classic' option Paypal site. |
What does PMI mean? | Private Mortgage Insurance. It's money that you pay to an insurance company to make the lender whole in the event that you go into default. It's a real waste of money for you. If you are trying to finance more than 80% of the value of a home, a standard mortage is likely to require that you get PMI. Nowadays there are other options which involve paying substantially more interest. |
Why does the stock market index get affected when a terrorist attack takes place? | While JB King says some useful things, I think there is another fundamental reason why stock markets go down after disasters, either natural or man-made. There is a real impact on the markets - in the case of something like 9/11 due to closed airport, higher security costs, closer inspections on trade goods, tighter restrictions on visas, real payments for the rebuilding of destroyed buildings and insurance payouts for killed people, and eventually the cost of a war. But almost as important is the uncertainty and risk. Nobody knew what was going to happen in the days and weeks after an attack like that. Is there going to be another one a week later, or every week for the next year? Will air travel become essentially impractical? Will international trade be severely restricted? All those would have a huge, massive effect on the economy. You may argue that those things are very unlikely, even after something like 9/11. But even a small increase in the likelihood of a catastrophic economic crash is enough to start people selling. There is another thing that drives the market down. Even if most people are sure that there won't be a catastrophic economic crash, they know that other people think there might be and so will sell. That will drive the market down. If they know the market is going down, then sensible traders will start to sell, even if they think there is zero risk of a crash. This makes the effect worse. Eventually prices will drop so far that the people who don't think there is a crash will start to buy, so they can make a profit on the recovery. But that usually doesn't happen until there has been a substantial drop. |
Why should we expect stocks to go up in the long term? | Companies are expected to make a profit, otherwise there is no point to their existence and no motivation for investment. That profit comes back to shareholders as growth and/or dividend. If a company is doing well and has a healthy profit to turn back into investment to facilitate increased future earnings, it increases shareholder equity and share price. If a company is doing well and has a healthy profit to pay out in dividend, it makes the shares more attractive to investors which pushes the price up. Either way, shares go up. Share prices drop when companies lose money, or there are market disturbances affecting all companies (recessions), or when individual companies fail. Averaged over all companies over the long term (decades), stocks can be reasonably expected to go up. |
Why do stores and manufacturers use mail in rebates? A scam, or is there a way to use them effectively? | Chiming in with other answers that incriminate market segmentation attempts, I would like to offer this Seth Godin video where (among other things) he speaks about breakage, the art of making coupon redemption so difficult that most people get it wrong and do not redeem them. Oh, and when comparing/deciding which/whether to buy, I always use the up-front price. Don't want to encourage the wrong behavior. |
How do I cash in physical stock certificates? (GM 1989) | which means the current total is $548,100. Is that correct? Yep Unfortunately the "current" GM stock is different than the GM stock of 1989. GM went bankrupt in 2011. It's original stock changed to Motors Liquidation Company (MTLQQ) and is essentially worthless today. There was no conversion from the old stock to the new stock. What do I do with these certificates? Can I bring them to my bank, or do I need to open an account with a stock company like Fidelity? See here for some instructions on cashing them in (or at least registering them electronically). I've never dealt with physical stocks, but I presume that a broker is going to charge you something for registering them vs. direct registration, though I have no idea how much that would be. I read somewhere that I only have to pay taxes when I cash out these stocks. But are these rules any different because I inherited the stocks? You will pay capital gains tax on the increase in value from the time your father died to the time you sell the shares. If that time is more than one year (and the stock has gone up in value) you will pay a 15% tax on the total increase. If you have held them less than one year, they will be short-term capital gains which will count as regular income, and you will pay whatever your marginal tax rate is. If you sell the stock at a loss, then you'll be able to deduct some or all of that loss from your income, and may be able to carry forward losses for a few years as well. I did not catch that the stock you mention was GM stock. GM went bankrupt in 2011, so it's likely that the stock you own is worthless. I have edited the first answer appropriately but left the other two since they apply more generally. In your case the best you get is a tax deduction for the loss in value from the date your father died. |
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