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Gold futures' margin | The initial and overnight margin requirements are set by the exchanges (who calculate them using the Standard Portfolio of Analysis of Risk, or 'SPAN' system), and positions are market to market according to these at the end of the trading session. To find these margin requirements you will need to consult the website of the exchange on which the contract you are trading is issued (i.e. if you're trading on the London Metal Exchange it's no good looking at the Chicago Mercantile Exchange's margin requirements as a previous answer suggests!). However, for positions entered and exited within the same day, the daytrade margin rate will apply. This is set by your broker rather than the exchange, and can be as little as 10% of the exchange requirement. You can find a useful comparison of different margin types and requirements in the article I have published here: Understanding Margin for Futures Trading. |
At what point is it most advantageous to cease depositing into a 401k? | The only time to stop saving money for retirement is when you have enough money to retire tomorrow. Not all of your "retirement savings" need to be in a 401k, it is just better if you can. Be sure to get as much as you can from the employer matching program. Unfortunately some employer matching programs discourage you from putting in too much. I've been able to max out the 401k contribution a number of times, which helps. Remember: you are likely to live to 100, so you better save enough to live that long. I don't trust social security to be there. I recommend saving so that you end up with "enough to be comfortable" -- this is usually about 25x your current income - PLUS inflation between now and when you plan to retire (age 62 is a good target). It is worth knowing your "retirement savings number". If you are making $100K per year now, you need to target $2.5M - PLUS allowance for inflation between now and when you plan to retire. This usually means you need to also arrange to make more money as well as save as much as you can and to use passive investing. Finance advisors are not worth it if you have less than $1M to invest. |
How to divide a mortgage and living area fairly? | I think what you have here is actually TWO agreements with your sister, and explicitly splitting it into two agreements will bring some clarity. The first is ownership of and responsibility for the building. The second is each of your personal use of a unit. Here's what you do: Treat ownership as if you're not living there. Split the down payment, the monthly mortgage, taxes and insurance, responsibility for cost of maintenance, etc. as well as the ownership and benefit of the building 70%/30%. Put all that in a contract. Treat it like a business. Second, lease those units to yourselves as if you were tenants. And yes, I means even with leases. This clarifies your responsibilities in a tenant capacity. More to the point, each of you pays rent at the going rate for the unit you occupy. If rent from all three units equals the monthly expenses, nothing more needs to be done. If they're more than the monthly expenses, then each of you receives that as business income on that 70%/30% breakdown. If those three rents are less than the monthly expenses, then each of you are required to make up the difference, again at 70%/30%. Note: if any of those expenses are utilities, then they should be apportioned via the rent -- just as you would if you'd rented out the whole building to strangers. 2nd note: all that can be done with ledger entries, rather than moving money around, first as rent, then as expense payments, then as payouts. But, I think it will benefit all of you to explicitly pay rent at first, to really clarify your dual relationship as joint owners and as tenants. Final note: I think this is a stickier situation than you may think it is. Familial relationships have been destroyed both by going into business together, and by renting to family members. You're doing both, and mixing the two to boot. I'm not saying it will destroy your relationship, but that there's a solid risk there. Relationship destruction comes from assumptions and vague verbal agreements. Therefor, for the sake of all of you, put everything in writing. A clear contract for the business side, and clear leases for the tenant side. It's not about trust -- it's about understood communication and positive agreement on all important points. |
Is investing in financial markets a gamble? | I read about the 90-90-90 rule aka 90% of the people lose 90% of the money in 90 days. Anything that happens in 90 days or less is speculation (effectively gambling), not investment. And the 90-90-90 thing sounds around right for inexperienced amateurs going up against professionals in that space. I don't know anyone who actually made significant amount money by investing in stocks or other financial products except those appearing in TVs. Lots and lots and lots of people do. I heard that people who actually encourage common people to invest in stocks are stock brokers and fund managers who actually gain by the fact that more people invest. No. It's true that lots of people will give you advice to by specific stocks or financial instruments that will earn them comission or fees, but the basic idea of investing in the stock market is very sound; ultimately, it's based on the ability of companies to create value and pay dividends. Could you please give some valid reasons to invest in stocks or other financial market. Thank you. Well, what else can you do with your money? Put it in an interest-bearing bank account? Effectively, you'll still be investing in the stock market, the bank is just taking most of the returns in exchange for guaranteeing that you'll never lose money even temporarily. |
Accepting high volatility for high long-term returns | Modern portfolio theory has a strong theoretical background and its conclusions on the risk/return trade-off have a lot of good supporting evidence. However, the conclusions it draws need to be used very carefully when thinking about retirement investing. If you were really just trying to just pick the one investment that you would guess would make you the most money in the future then yes, given no other information, the riskiest asset would be the best one. However, for most people the goal retirement investing is to be as sure as possible to retire comfortably. If you were to just invest in a single, very risky asset you may have the highest expected return, but the risk involved would mean there might be a good chance you money may not be there when you need it. Instead, a broad diversified basket of riskier and safer assets leaning more toward the riskier investments when younger and the safer assets when you get closer to retirement tends to be a better fit with most people's retirement goals. This tends to give (on average) more return when you are young and can better deal with the risk, but dials back the risk later in life when your investment portfolio is a majority of your wealth and you can least afford any major swings. This combines the lessons of MPT (diversity, risk/return trade-off) in a clearer way with common goals of retirement. Caveat: Your retirement goals and risk-tolerance may be very different from other peoples'. It is often good to talk to (fee-only) financial planner. |
Purchasing options between the bid and ask prices, or even at the bid price or below? | This sometimes happens to me. It depends on how liquid the option is. Normally what I see happening is that the order book mutates itself around my order. I interpret this to mean that the order book is primarily market makers. They see a retail investor (me) come in and, since they don't have any interest in this illiquid option, they back off. Some other retail investor (or whatever) steps in with a market order, and we get matched up. I get a fill because I become the market maker for a brief while. On highly liquid options, buy limits at the bid tend to get swallowed because the market makers are working the spread. With very small orders (a contract or two) on very liquid options, I've had luck getting quick fills in the middle of the spread, which I attribute to MM's rebalancing their holdings on the cheap, although sometimes I like to think there's some other anal-retentive like me out there that hates to see such a lopsided book. :) I haven't noticed any particular tendency for this to happen more with puts or calls, or with buy vs sell transactions. For a while I had a suspicion that this was happening with strikes where IV didn't match IV of other strikes, but I never cared enough to chase it down as it was a minor part of my overall P/L. |
Should I sell a 2nd home, or rent it out? | One piece of information you didn't mention is how much you paid for the original home. If you hold onto that home for too long you will have to pay capital gains on the difference between sale price and original price. This can be a TON of money, thousands of dollars easily. The rule is: If you lived in a home for 2 out of the past 5 years, you don't have to pay the capital gains tax. So if you just moved, you have 3 years to sell. Perhaps as a compromise you can try renting it for 3 years and then selling it a few months before the deadline. |
Why is day trading considered riskier than long-term trading? | Day trading is an attempt to profit on high frequency signal changes. Long term investing profits on low frequency changes. What is the difference? High Frequency Signal = the news of the day. This includes things like an earnings report coming out, panic selling, Jim Cramer pushing his "buy buy buy" button, an oil rig blowing up in the ocean, a terrorist attack in some remote region of the globe, a government mandated recall, the fed announcing an interest rate hike, a competitor announcing a new product, hurricanes, cold winters, a new health study on child obesity, some other company in the same sector missing their earnings, etc. Think daily red and green triangles on CNBC: up a buck, down a buck. Low Frequency Signal = The long term effectiveness of a company to produce and sell a product efficiently plus the sum of the high frequency signal over a long period of time. Think 200 day moving average chart of a stock. No fast changes, just, long term trends. Over time, the high frequency changes tend to negate each other. To me, long term investing is wiser because the low frequency signal is dominated by a companies ability to function well over time. That in turn is driven by the effectiveness of its leadership coupled with the skill and motivation of its employees. You are betting on the company and its people. Pseudo-random shorterm forces, which you can't control, play less of a role. The high frequency signal, on the other hand, is dominated by sporadic and unpredictable forces that typically can't be controlled by the company. It has some tinge of randomness about it. Trying to invest on that random component is not investing at all, it is gambling (akin to "investing" in that next coin flip coming up heads) I understand the allure of high frequency trading. Look at the daily chart of a popular stock and focus on the up and down ticks. Mathematically, you could make a killing if you could just stack all those upticks on top of each other. If only it was that easy. |
How decreasing the prime interest rate helps to offset decreasing oil prices | You may be missing how countries like Canada may have oil be more of the GDP than countries like the US. In Canada, the lower oil prices may mean more of an economic slowdown with oil companies laying off staff, canceling projects and some companies probably going under as some provinces like Alberta are highly dependent on oil prices to drive most of the economy. In contrast, the US isn't quite as rich in Energy sources and thus may not have the same issues would be my guess. Context matters here. If the rate change helps everybody, doesn't that include the oil producing companies? I'd like to think so using basic logic. What if the main reason for lowering rates was the economic fallout of the decrease in oil prices? Consider that the there would be the question of, "Why do this now?" that has to be answered and the only main change is lower oil prices on a macroeconomic level. |
Why are banks providing credit scores for free? | Two possible reasons: You can tell which scenario it is based on the credit history they provide you. If you look at the history and they show you your scores for each month, even though you didn't initiate it, then they are auto checking it each month. If the historical dates are only on the dates you clicked on the button, they are only checking when you manually click on it. As for the why they provide it, a few years back it was a desirable feature. Now they all do it just to keep pace with everyone else. Note that most banks only provide a single scoring model from one bureau (but different banks use different bureaus). |
Is the need to issue bonds a telltale sign that the company would have a hard time paying coupons? | Apple is currently the most valuable company in the world by market capitalisation and it has issued bonds for instance. Amazon have also issued bonds in the past as have Google. One of many reasons companies may issue bonds is to reduce their tax bill. If a company is a multinational it may have foreign earnings that would incur a tax bill if they were transferred to the holding company's jurisdiction. The company can however issue bonds backed by the foreign cash pile. It can then use the bond cash to pay dividends to shareholders. Ratings Agencies such as Moody's, Fitch and Standard & Poor's exist to rate companies ability to make repayments on debt they issue. Investors can read their reports to help make a determination as to whether to invest in bond issues. Of course investors also need to determine whether they believe the Ratings Agencies assesments. |
US Banks offering Security Tokens in 2012 | Charles Schwab and HSBC offer security tokens. |
What is the fastest way to retire, using passive income on real estate | It is worth noting first that Real Estate is by no means passive income. The amount of effort and cost involved (maintenance, legal, advertising, insurance, finding the properties, ect.) can be staggering and require a good amount of specialized knowledge to do well. The amount you would have to pay a management company to do the work for you especially with only a few properties can wipe out much of the income while you keep the risk. However, keshlam's answer still applies pretty well in this case but with a lot more variability. One million dollars worth of property should get you there on average less if you do much of the work yourself. However, real estate because it is so local and done in ~100k chunks is a lot more variable than passive stocks and bonds, for instance, as you can get really lucky or really unlucky with location, the local economy, natural disasters, tenants... Taking out loans to get you to the million worth of property faster but can add a lot more risk to the process. Including the risk you wouldn't have any money on retirement. Investing in Real Estate can be a faster way to retirement than some, but it is more risky than many and definitely not passive. |
How much is inflation? | There is a thing called the consumer price index (CPI) There is a basket of goods that the people who keep the index basically shop for. It is much more detailed for the sake of accuracy, but bottom line is they shop for the same stuff each year. They measure the difference from year to year and that gives you a pretty good idea of inflation from a regular person point of view. http://www.inflationdata.com/Inflation/Consumer_Price_Index/HistoricalCPI.aspx But it isn't without its faults, people bicker about the methodology and what constitutes the index. http://www.investopedia.com/articles/07/consumerpriceindex.asp?viewed=1 |
Upward Spike in US Treasuries despite S&P Downgrade in August 2011 | The only resources or references you need are a chart showing you what happened in those months. The exuberance for US treasuries comes from the fact that there are no better options than them for putting cash. There are better sovereign debt instruments around the world depending on your goals, but they do not offer the same liquidity. US dollars and US Treasuries are equivalents in this context, so no matter if the wealthy speculator removed their cash from the stock market and put it in a bank or directly bought US treasuries (or their futures), this would increase the demand for treasuries. S&P Downgraded US treasures due to political instability in the United States, since inefficiencies in the country's political structure can prevent the Treasury from paying treasury holders (aka a default). Speculators know that this doesn't effect the United States resources and revenue collection schemes, as there is ample wealth public and private available to back the treasury bonds. |
Paid part of my state refund back last year; now must declare the initial amount as income? | If you get 1099-G for state tax refund, you need to declare it as income only if you took deduction on state taxes in the prior year. I.e.: if you took standard deductions - you don't need to declare the refund as income. If you did itemize, you have to declare the refund as income, and deduct the taxes paid last year on your schedule A. If this year you're not itemizing - you lost the tax benefit. If it was not clear from my answer - the taxes paid and the refund received are unrelated. The fact that you paid tax and received refund in the same year doesn't make them in any way related, even if both refer to the same taxable year. |
When does a low PE ratio not indicate a good stock? | Some companies have a steady, reliable, stream of earnings. In that case, a low P/E ratio is likely to indicate a good stock. Other companies have a "feast or famine" pattern, great earnings one year, no earnings or losses the following year. In that case, it is misleading to use a P/E ratio for a good year, when earnings are high and the ratio is low. Instead, you have to figure out what the company's AVERAGE earnings may be for some years, and assign a P/E ratio to that. |
What does “interest rates”, without any further context, generically refer to? | The generic representative of interest rates is the 10 year treasury bond rate. (USA). As an approximation most other interest rates do tend to move up and down with the treasury rate, but with more or less sensitivity. Another prominently discussed interest rate is the short term loan rate established by the Federal Reserve for loans it makes to banks. |
Which student loans to pay off first: Stafford or private? | At the current rates, stated in the question, I would push additional funds towards your Stafford loans as their higher interest rates will incur interest charges almost 3 times faster than your private loans. With my loans I have not seen much information regarding private loans jumping the interest rate close to the 6.8% any time in the coming years (if others have insight to this I look forward to the comments). Due to the private loans being variable there is an element of risk to their rates increasing. Another way to look at it may be to prorate your amount of extra payments according to their interest rate. $1,000 x 0.068 /(0.068 + 0.025) = $731.18 Toward your Stafford Loans $1,000 x 0.025 /(0.068 + 0.025) = $268.82 Toward your Private Loans |
How effective are hotel condos for investment properties? | I agree with Joe Taxpayer that a lot of details are missing to really evaluate it as an investment... for context, I own a few investment properties including a 'small' 10+ unit apartment complex. My answer might be more than you really want/need, (it kind of turned into Real Estate Investing 101), but to be fair you're really asking 3 different questions here: your headline asks "how effective are Condo/Hotel developments as investments?" An answer to that is... sometimes, very. These are a way for you-the investor-to get higher rents per sq. ft. as an owner, and for the hotel to limit its risks and access additional development funding. By your description, it sounds like this particular company is taking a substantial cut of rents. I don't know this property segment specifically, but I can give you my insight for longer-term apartment rentals... the numbers are the same at heart. The other two questions you're implying are "How effective is THIS condo/hotel development?" and "Should you buy into it?" If you have the funds and the financial wherewithal to honestly consider this, then I am sure that you don't need your hand held for the investment pros/cons warnings of the last question. But let me give you some of my insight as far as the way to evaluate an investment property, and a few other questions you might ask yourself before you make the decision to buy or perhaps to invest somewhere else. The finance side of real estate can be simple, or complicated. It sounds like you have a good start evaluating it, but here's what I would do: Start with figuring out how much revenue you will actually 'see': Gross Potential Income: 365 days x Average Rent for the Room = GPI (minus) Vacancy... you'll have to figure this out... you'll actually do the math as (Vacancy Rate %) x GPI (equals) Effective Potential Income = EPI Then find out how much you will actually pocket at the end of the day as operating income: Take EPI (minus) Operating expenses ... Utilities ... Maintenace ... HOA ... Marketing if you do this yourself (minus) Management Expenses ... 40% of EPI ... any other 'fees' they may charge if you manage it yourself. ... Extra tax help? (minus) Debt Service ... Mortgage payment ... include Insurances (property, PMI, etc) == Net Operating Income (NOI) Now NOI (minus) Taxes == Net Income Net Income (add back) Depreciation (add back) sometimes Mortgage Interest == After-tax Cash Flows There are two "quickie" numbers real estate investors can spout off. One is the NOI, the other is the Cap Rate. In order to answer "How effective is THIS development?" you'll have to run the numbers yourself and decide. The NOI will be based on any assumptions you choose to make for vacancy rates, actual revenue from hotel room bookings, etc. But it will show you how much you should bring in before taxes each year. If you divide the NOI by the asking price of your unit (and then multiply by 100), you'll get the "Cap Rate". This is a rough estimate of the rate of return you can expect for your unit... if you buy in. If you come back and say "well I found out it has a XX% cap rate", we won't really be qualified to help you out. Well established mega investment properties (think shopping centers, office buildings, etc.) can be as low as 3-5 cap rates, and as high as 10-12. The more risky the property, the higher your return should be. But if it's something you like, and the chance to make a 6% return feels right, then that's your choice. Or if you have something like a 15% cap rate... that's not necessarily outstanding given the level of risk (uncertain vacancies) involved in a hotel. Some other questions you should ask yourself include: How much competition is there in the area for short-term lodging? This could drive vacancies up or down... and rents up or down as well How 'liquid' will the property (room) be as an asset? If you can just break even on operating expense, then it might still make sense as an investment if you think that it might appreciate in value AND you would be able to sell the unit to someone else. How much experience does this property management company have... (a) in general, (b) running hotels, and (c) running these kinds of condo-hotel combination projects? I would be especially interested in what exactly you're getting in return for paying them 40% of every booking. Seasonality? This will play into Joe Taxpayer's question about Vacancy Rates. Your profile says you're from TX... which hints that you probably aren't looking at a condo on ski slopes or anything, but if you're looking at something that's a spring break-esque destination, then you might still have a great run of high o during March/April/May/June, but be nearly empty during October/November/December. I hope that helps. There is plenty of room to make a more "exact" model of what your cash flows might look like, but that will be based on assumptions and research you're probably not making at this time. |
If I make over 120k a year, what are my options for retirement plans? | First off, high five on the paycheck. There are a few retirement issues to deal with. 401k issues - At that income level, you will probably fall into the "Highly Compensated Employee" category, which means things get a little more complicated, both for you and your employer. (Wikipedia link) IRA issues - As you already realized, you make too much to directly open and contribute to a Roth IRA. You can open a Traditional IRA, however. Your income is already over the limit for Traditional IRA deduction (bummer), so it would seem there is little point to opening an IRA at all. However, there is a way to take advantage of a Roth IRA, even at your income level. It is possible to convert a Traditional IRA into a Roth IRA. There used to be income limits on the ability to do the conversion, which would have normally made this off limits to you. Starting in 2010, the income limit is removed, so you can do this. Basically, you open a Traditional IRA, max it out, then convert it to a Roth. Since there was no income deduction, you shouldn't have to pay any more taxes. (link) Disclaimer: I've never tried this, nor do I know anyone who has, so you might want to research it a bit more before you try it yourself. |
How to value employee benefits? | Health insurance varies wildly per state and per plan and per provider - but check them out to have a baseline to know what it should cost if you did it yourself. Don't forget vacation time, too: many contract/comp-only jobs have no vacation time - how much is that 10 or 15 days a year worth to you? It effectively means you're getting paid for 2080 hours, but working 2000 (with the 2 week number). Is the comp-only offer allowing overtime, and will they approve it? Is the benefits-included job salaried? If it's truly likely you'll be working more than a normal 40 hour week on a routine basis (see if you can talk to other folks that work there), an offer that will pay overtime is likely going to be better than one that wouldn't .. but perhaps not in your setting if it also loses the PTO. |
What can I do with “stale” checks? Can I deposit/cash them? | You should write a demand letter immediately, send the letter by certified mail, and then wait 30 days. Here is a sample demand letter for the state of california that you can send: http://www.courts.ca.gov/11151.htm It seems like most of the demand letters assumed that you tried to cash the check and incurred a service fee. Personally, I wouldn't risk incurring even most cost. Instead, after 30 days, I would take him to small claims court and show all the evidence you have (checks, receipts, and letters of correspondence). |
Can I make my savings keep in check with or beat inflation over a long time period via index funds? | Question 2 Some financial institutions can provide a way to invest small amounts with low or no cost fees over a period of time (like monthly, weekly, etc). For instance, a few brokerages have a way to buy specific ETFs for no cost (outside of the total expense ratio). Question 3 When someone says that investing is like buying a lottery ticket, they are comparing an event that almost always has at least a 99.9% of no return (large winnings) to an event that has much better odds. Even if I randomly pick a stock in the S&P 500 and solely invest in it, over the course of a given year, I do not face a 99.9% chance of losing everything. So comparing the stock market to a lottery, unless a specific lottery has much better odds (keep in mind that some of these jackpots have a 99.9999999% of no return) is not the same. Unfortunately, nothing truly safe exists - risk may mutate, but it's always present; instead, the probability of something being safe and (or) generating a return may be true for a given period of time, while in another given period of time, may become untrue. One may argue that holding cash is safer than buying an index fund (or stock, ETF, mutual fund, etc), and financially that may be true over a given period of time (for instance, the USD beat the SPY for the year of 2008). Benjamin Franklin, per a biography I'm reading, argued that the stock market was superior to gold (from the context, it sounds like the cash of his day) because of what the stock market represents: essentially you're betting on the economic output of workers. It's like saying, in an example using oil, that I believe that even though oil becomes a rare resource in the long run, human workers will find an alternative to oil and will lead to better living standards for all of us. Do civilizations like the Mongolian, Roman, and Ottoman empires collapse? Yes, and would holding the market in those days fail? Yes. But cash and gold might be useless too because we would still need someone to exchange goods with and we would need to have the correct resources to do so (if everyone in a city owns gold, gold has little value). The only "safe bet" in those days would be farming skill, land, crops and (or) livestock because even without trading, one could still provide some basic necessities. |
Online Personal finance with QIF import | Unfortunately I don't think any of the online personal finance applications will do what you're asking. Most (if not all) online person finance software uses a combination of partnerships with the banks themselves and "screen scraping" to import your data. This simplifies things for the user but is typically limited to whenever the service was activated. Online personal finance software is still relatively young and doesn't offer the depth available in a desktop application (yet). If you are unwilling to part with historical data you spent years accumulating you are better off with a desktop application. Online Personal Finance Software Pros Cons Desktop Personal Finance Software Pros Cons In my humble opinion the personal finance software industry really needs a hybrid approach. A desktop application that is synchronized with a website. Offering the stability and tools of a desktop application with the availability of a web application. |
Saving up for an expensive car | The question is how does $16,000/year for 6.5 years fit into your budget. Or to put it another way, what won't you be spending that money on? Housing, food, vacations, retirement fund, investments (though you can invest your car fund in the meantime), building a hefty emergency fund, kids college funds, saving for a down payment on a home, charity, etc... are all other places that money could go. I don't know what your needs are today let alone 6.5 years into the future, but I'd encourage you to consider all your financial goals and evaluate where this expense would fit. It seems your plan is to save up to the total cost of the car and then buy it in cash. That's a valid strategy, but it means you'll have no car (unless you already own one) for 6.5 years. Do you need a car? If so, what will you drive in the meantime (and even if you already own another car outright, you'll have gas and maintenance expenses)? If you don't need a car, then $100,000 is a rather extravagant purchase for something we just established you don't need. Would you be happier having this expensive car in 6.5 years, or having a series of less expensive cars starting now? Or buying a used model of the expensive car sooner? Or having no car at all? Also, a lot can change in 6.5 years. Cars will evolve and there'll be different models and options available. Maybe your salary will have doubled, or maybe you'll be unemployed. You could be living in a different city, have a different commute, and maybe you'll need a minivan to haul kids around or live in a place with bad winters and want a 4-wheel-drive. You'll also need to be prepared for the additional expenses that generally come with expensive cars, such as higher insurance and maintenance rates, and parking could be costly if you live in an expensive city. The other option, of course, if the car is truly something you need, want, and can afford, would be to save up a sizable down payment and finance the rest so you can get the car sooner. Finally, there's nothing wrong with saving your money for 6.5 years, building up that fund, and then reevaluating what makes the most sense for you at that time. Maybe it will the car, maybe something else, but the nice thing about having savings is that it gives you more options. |
What things should I consider when getting a joint-mortgage? | Your lack of numbers makes the question a difficult read. What I'm hearing is "I want a house requiring a mortgage 8X my income." This alone is enough to suggest it's a bad deal. On a personal note, when my wife and I bought our house, it was 2.5X our income. 20% down, so the mortgage was exactly 2X income. And my wife was convinced we were in over our heads. The use of a partner who will take a portion of the profit is interesting, but doesn't change the fact that you are proposing to live in a house that costs far too much for you. If you are determined to buy such a house, I'd suggest you do it with the plan to rent out a room or two to roommates. If you are living in an area where the cost of buying is so high, the demand for rentals is likely high as well. Absent a plan to bring ion more income, I see no good coming from this. Heed the warnings posted in the other two answers as well. |
Real Estate: Please review my recent investment (with numbers from recent purchase) | Okay so I am going to break this answer into a couple sections: Okay so first things first. Did you get a good deal? This is challenging to answer for a number of reasons. First, a good deal is relative to the buyers goals. If you're attempting to buy an asset that provides passive income then maybe you met your goal and got a good deal. If you're attempting to buy an asset that provides long term growth, and you purchased above market (I'm speculating of course) then you may have made a bad deal. So how do you determine if you got a good deal? Does your "Gross Rental Multiplier" equal that or is less than that of the average GRM in your area. The lower the better. So how do you use the GRM to determine if you're getting a good deal? Divide your purchase price by the average city (or area) GRM and that will tell you what you should be getting annually in rent. You can also use the GRM to determine if a future purchase is over or under priced. Just replace purchase price with asking price. Alright, so these are the tools you can use to decide if you made a bad business deal or not. There are many ways to skin a cat so to speak. These are the tools I use BEFORE I purchase a home. Many people are penny wise and pound foolish. Take your time when making large purchases. It's OKAY to say PASS. Okay next thing is this new purchase you're looking at. The number one rule when working a franchise is you don't open a second store until you have a perfect working model to go off of. If you've never had to file a tax return for your current rental. Then you need to wait. If you've never read your local and state rental laws. Then you need to WAIT. If you've never had to leave an event early, wake up in the middle of the night, or get a text while you're on a date from one of your tenants. THEN YOU NEED TO WAIT. Give it a year or two. Just learn the unknown about rental properties. Use your first as your test bed. It's WAY more cheaper then if you make a bad mistake and roll it over multiple properties. Finally I will leave you with this. No one on this site, myself included, knows everything there is to know about real estate. Anyone that claims they do, send their ass packing. This is a complex COMPLEX business. There is always something to learn and if you don't have the passion to continue learning then hand it off to someone who does. There is tax law, rental law, city repair law, contract law and this doesn't even include the stuff that makes you money, like knowing how to leverage low or no money down loans. Please take some time and go out and learn. Good luck! -AR |
What is the purpose of the wash sale rule? | Overall the question is one of a political nature. However, this component can have objective answers: "What behavior is trying to be prevented?" There are mechanisms by which capital gains can be deferred (1031 like-kind exchange, or simply holding a long position for years) or eliminated by the estate step up in basis. With these available, mechanisms that enable basis-reduction are ripe for abuse. On the other hand, if this truly bothers you then if you meet the IRS qualifications of a day trader, you may elect to use "mark to market" accounting, eliminating this entirely as a concern. Special rules for traders of securities |
$65000/year or $2500 every two weeks: If I claim 3 exemptions instead of zero, how much would my take home pay be? | Take a look at IRS Publication 15. This is your employer's "bible" for withholding the correct amount of taxes from your paycheck. Most payroll systems use what this publication defines as the "Percentage Method", because it requires less data to be entered into the system in order to correctly compute the amount of withholding. The computation method is as follows: Taxes are computed "piecewise"; dollar amounts up to A are taxed at X%, and then dollar amounts between A and B are taxed at Y%, so total tax for B dollars is A*X + (B-A)*Y. Here is the table of rates for income earned in 2012 on a daily basis by a person filing as Single: To use this table, multiply all the dollar amounts by the number of business days in the pay period (so don't count more than 5 days per week even if you work 6 or 7). Find the range in which your pay subject to withholding falls, subtract the "more than" amount from the range, multiply the remainder by the "W/H Pct" for that line, and add that amount to the "W/H Base" amount (which is the cumulative amount of all lower tax brackets). This is the amount that will be withheld from your paycheck if you file Single or Married Filing Separately in the 2012 TY. If you file Married Filing Jointly, the amounts defining the tax brackets are slightly different (there's a pretty substantial "marriage advantage" right now; withholding for a married person in average wage-earning range is half or less than a person filing Single.). In your particular example of $2500 biweekly (10 business days/pp), with no allowances and no pre-tax deductions: So, with zero allowances, your employer should be taking $451.70 out of your paycheck for federal withholding. Now, that doesn't include PA state taxes of 3.07% (on $2500 that's $76.75), plus other state and federal taxes like SS (4.2% on your gross income up to 106k), Medicare/Medicaid (1.45% on your entire gross income), and SUTA (.8% on the first $8000). But, you also don't get a refund on those when you fill out the 1040 (except if you claim deductions against state income tax, and in an exceptional case which requires you to have two jobs in one year, thus doubling up on SS and SUTA taxes beyond their wage bases). If you claim 3 allowances on your federal taxes, all other things being equal, your taxable wages are reduced by $438.45, leaving you with taxable income of $2061.55. Still in the 25% bracket, but the wages subject to that level are only $619.55, for taxes in the 25% bracket of $154.89, plus the withholding base of $187.20 equals total federal w/h of $342.09 per paycheck, a savings of about $110pp. Those allowances do not count towards other federal taxes, and I do not know if PA state taxes figure these in. It seems odd that you would owe that much in taxes with your withholding effectively maxed out, unless you have some other form of income that you're reporting such as investment gains, child support/alimony, etc. With nobody claiming you as a dependent and no dependents of your own, filing Single, and zero allowances on your W-4 resulting in the tax withholding above, a quick run of the 1040EZ form shows that the feds should owe YOU $1738.20. The absolute worst-case scenario of you being claimed as a dependent by someone else should still get you a refund of $800 if you had your employer withhold the max. The numbers should only have gotten better if you're married or have kids or other dependents, or have significant itemized deductions such as a home mortgage (on which the interest and any property taxes are deductible). If you itemize, remember that state income tax, if any, is also deductible. I would consult a tax professional and have him double-check all your numbers. Unless there's something significant you haven't told us, you should not have owed the gov't at the end of the year. |
In the stock market, why is the “open” price value never the same as previous day's “close”? | A stock's price does not move in a completely continuous fashion. It moves in discrete steps depending on who is buying/selling at given prices. I'm guessing that by opening bell the price for buying/selling a particular stock has changed based on information obtained overnight. A company's stock closes at $40. Overnight, news breaks that the company's top selling product has a massive defect. The next morning the market opens. Are there any buyers of the stock at $40? Probably not. The first trade of the stock takes place at $30 and is thus, not the same as the previous day's close. |
What happened when the dot com bubble burst? | To add to the already existing answers, most of the dotcom companies used an accounting sheningan so profusely that everything looked rosy. To account for revenues, what dotcom companies did was, get into a barter transaction with another dotcom company by selling advertising space and stuff on each other's website. So the final outcome was each had quite a substantial amount of revenue while in reality there wasn't any revenue earned. This cooked up their books to look quite rosy to investors who then poured in their money, without realizing they were pouring money into a black hole. As someone mentioned Cisco, which sells networking gear and was heavily dependent on the dotcom boost. So when everything went bust, its stock price also crashed heavily. This was for the losers, but some good ones did sail through. Dotcom companies which had substance took a hit, in fact everybody did, during the bust but more than made up for it later on when investors realized they are valuable. |
What part of buying a house would make my net worth go down? | One way to think of net worth is to think if you sold everything you owned, how big of a pile of money would be standing next to you (assuming your net worth is positive). If you started with $100K and then bought a house worth $100K you would have $0 in the bank and a house. If you sold that house for $100K you would pay the realtor 6% (typically) or $6K leaving you with $94K. This means the act of buying your house has reduced your net worth by $6K. I asked a related question about how to value your home in your net worth. |
What is the purpose of endorsing a check? | So the bank can (theoretically) compare that signature to the ID you provide, showing that the names and signatures match and that you are the person to whom the check was written. |
Hypothetical: can taxes ever cause a net loss on otherwise-profitable stocks? | This was the day traders dilemma. You can, on paper, make money doing such trades. But because you do not hold the security for at least a year, the earnings are subject to short term capital gains tax unless these trades are done inside a sheltered account like a traditional IRA. There are other considerations as well: wash sale rules and number of days to settle. In short, the glory days of rags to riches by day trading are long gone, if they were ever here in the first place. Edit: the site will not allow me to add a comment, so I am putting my response here: Possibly, yes. One big 'gotcha' is that your broker reports the proceeds from your sales, but does not report your outflows from your buys. Then there is the risk you take by the broker refusing to sell the security until the transaction settles. Not to mention wash sale rules. You are trying to win at the 'buy low, sell high' game. But you have a 25% chance, at best, of winning at that game. Can you pick the low? Maybe, but you have a 50% chance of being right. Then you have to pick the high. And again you have a 50% chance of doing that. 50% times 50% is 25%. Warren Buffet did not get rich that way. Buffet buys and holds. Don't be a speculator, be a 'buy and hold' investor. Buy securities, inside a sheltered account like a traditional IRA, that pay dividends then reinvest those dividends into the security you bought. Scottrade has a Flexible Reinvestment Program that lets you do this with no commission fees. |
Name first on car loan can you also be the cosigner | I want to first state that I'm not an attorney and this is not a response that would be considered legal advice. I'm going to assume this was a loan was made in the USA. The OP didnt specify. A typical auto loan has a borrower and a co-borrower or "cosigner". The first signer on the contract is considered the "primary". As to your question about a primary being a co-borrower my answer would be no. Primary simply means first signer and you can't be a first signer and a co-borrower. Both borrower and co-borrower, unless the contract specifies different, are equally responsible for the auto loan regardless if you're a borrower or a co-borrower (primary or not primary). I'm not sure if there was a situation not specified that prompted the question. Just remember that when you add a co-borrower their positive and negative financials are handled equally as the borrower. So in some cases a co-borrower can make the loan not qualify. (I worked for an auto finance company for 16 years) |
Paying extra on a mortgage. How much can I save? [duplicate] | If you're truly ready to pay an extra $1000 every month, and are confident you'll likely always be able to, you should refinance to a 15 year mortgage. 15 year mortgages are typically sold at around a half a point lower interest rates, meaning that instead of your 4.375% APR, you'll get something like 3.875% APR. That's a lot of money over the course of the mortgage. You'll end up paying around a thousand a month more - so, exactly what you're thinking of doing - and not only save money from that earlier payment, but also have a lower interest rate. That 0.5% means something like $25k less over the life of the mortgage. It's also the difference in about $130 or so a month in your required payment. Now of course you'll be locked into making that larger payment - so the difference between what you're suggesting and this is that you're paying an extra $25k in exchange for the ability to pay it off more slowly (in which case you'd also pay more interest, obviously, but in the best case scenario). In the 15 year scenario you must make those ~$4000 payments. In the 30 year scenario you can pay ~$2900 for a while if you lose your job or want to go on vacation or ... whatever. Of course, the reverse is also true: you'll have to make the payments, so you will. Many people find enforced savings to be a good strategy (myself among them); I have a 15 year mortgage and am happy that I have to make the higher payment, because it means I can't spend that extra money frivolously. So what I'd do if I were you is shop around for a 15 year refi. It'll cost a few grand, so don't take one unless you can save at least half a point, but if you can, do. |
Is it possible to quantify the probability of sudden big movements for a high-volume stock? | The P/E is currently 20. In hindsight, it's easy to see that when it was 50, not long ago, it was very overpriced. They were not adding customers or increasing revenue as they should have to sustain that P/E level. Probability? I suppose this can happen with any company that has both a high P/E and non-diversified business. Why did you think this company was large and stable? Their marketing blunders simply pricked the bubble level pricing these guys had. (Disclaimer - I am actually a happy customer of Netflix. For $8/mo, I get 6-8 DVDs and neither spend gas nor time to get them. Others who grew used to free streaming feel otherwise) |
Scam or Real: A woman from Facebook apparently needs my bank account to send money | This is either laundering money or laundering non-money. All the other answers point out how a cheque or bank transfer will take days to actually clear. That is a red herring! There are lots of ways to illegally transfer real money out of existing accounts. Stolen cheque books, stolen banking details (partly in connection with stolen smartphones and credit cards) and cards, money transfers from other people duped in a similar manner as you are: it is much easier to steal money than invent it, and it takes quite longer until stolen rather than invented money will blow up at the banks. All of those payments will likely properly clear but not leave you in actual legal possession of money. People will notice the missing money and notify police and banks and you will be on the hook for paying back all of it. Cheques and transfers from non-existing accounts, in contrast, tend to blow up very fast and thus are less viable for this kind of scam as the time window for operating the scam is rather small. Whether or not the cheque actually clears is about as relevant of whether or not the Rolls Royce you are buying for $500 because the owner has an ingrown toe nail and cannot press down the accelerator any more has four wheels. Better hope for the Rolls to be imaginary because then you'll only be out of $500 and that's the end of it. If it is real, your trouble is only starting. |
At Vanguard, can I transfer shares from regular investment account to a Roth IRA? | Since you are paying taxes on the distributions from your mutual funds anyway, instead of reinvesting the distributions back into the mutual funds, you could receive them as cash, then contribute them to your Roth IRA once you are able to open one. |
What cost basis do I report on the 1099? | You wouldn't fill out a 1099, your employer would or possibly whoever manages the stock account. The 1099-B imported from E-Trade says I had a transaction with sell price ~$4,500. Yes. You sold ~$4500 of stock to pay income taxes. Both the cost basis and the sale price would probably be ~$4500, so no capital gain. This is because you received and sold the stock at the same time. If they waited a little, you could have had a small gain or loss. The remainder of the stock has a cost basis of ~$5500. There are at least two transactions here. In the future you may sell the remaining stock. It has a cost basis of ~$5500. Sale price of course unknown until then. You may break that into different pieces. So you might sell $500 of cost basis for $1000 with a ~$500 capital gain. Then later sell the remainder for $15,000 for a capital gain of ~$10,000. |
Why do people buy stocks that pay no dividend? | I don't know why there is so much confusion on such a simple concept. The answer is very simple. A stock must eventually pay dividends or the whole stock market is just a cheap ponzi scheme. A company may temporarily decided to reinvest profits into R&D, company expansion, etc. but obviously if they promised to never pay dividends then you can never participate in the profits of the company and there is simply no intrinsic value to the stock. For all of you saying 'Yeah but the stock price will go up!', please people get a life. The only reason the price goes up is in anticipation of dividend yield otherwise WHY would the price go up? "But the company is worth more and the stock is worth more" A stocks value is not set by the company but by people who buy and sell in the open market. To think a stock's price can go up even if the company refuses to pay dividends is analogous to : Person A says "Hey buy these paper clips for $10". But those paper clips aren't worth that. "It doesn't matter because some fool down the line will pay $15". But why would they pay that? "Because some fool after him will pay $20" Ha Ha! |
Homeowners: How can you protect yourself from a financial worst-case scenario? | If you have doubts about the long term prospects at your employer or jobs in your area, you may want to keep the option of moving to find a new job open while you save up for a larger down payment on a house. While there are insurance products out there that claim to cover your mortgage, they often have loopholes which make them difficult to collect on. Insurance companies are in business to make money and premiums are high when it's likely that people will try to collect. Splitting those premiums into your mortgage and your own self-insured unemployment fund (i.e. an emergency fund in a money market bank account) will usually be a better deal. As always, make sure you have term life insurance for a family and long term disability insurance just in case something really bad happens in the near term. Buying a home is a better financial decision when you know you'll be in an area for at least 5 years. Saving until you have 20% down on place that you can afford to pay off in 15 years (even if you take a 30 year loan) will be a lot cheaper and less stressful. |
How to prevent myself from buying things I don't want | Nathan's answer was a +1 from me. The answer is not always simple. Having the money available is surely the first step. Using Pete's process aligns with this. Another thought is depending where you are in your finances, delay by a day for every $100 in cost. e.g. For a $1000 purchase, sleep on it for 10 days. Adjust the number for your circumstance. |
How to acquire skills required for long-term investing? | I feel that OP's question is fundamentally wrong and an understanding of why is important. The stock market, as a whole, in the USA has an average annualized return of 11%. That means that a monkey, throwing darts at a board, can usually turn 100K into over three million in thirty-five years. (The analog I'm drawing is a 30-year old with 100K randomly picking stocks will be a multi-millionaire at 65). So to be "good" at investing in the stock market, you need to be better than a monkey. Most people aren't. Why? What mistakes do people make and how do you avoid them? A very common mistake is to buy high, sell low. This happened before and after the 08's recession. People rushed into the market beforehand as it was reaching its peak, sold when the market bottomed out then ignored the market in years it was getting 20+% returns. A Bogle approach for this is to simply consistently put a part of your income into the market whether it is raining or shining. Paying high fees. Going back to the monkey example, if the monkey charges you a 2% management fees, which is low by Canadian standards, the monkey will cost you one million dollars over the course of the thirty-five years. If the monkey does a pretty good job it is a worthy expenditure. But most humans, including professional stock pickers, are worst than a monkey at picking stocks. Another mistake is adjusting your plan. Many people, when the market was giving bull returns before the 08's crash happily had a large segment of their wealth in stocks. They thought they were risk tolerant. Crash happened, they moved towards bonds. Then bonds returns were comically low while stocks soared. Had they had a plan, almost any consistent plan, they'd have done better. Another genre of issues is just doing stupid things. Don't buy that penny stock. Don't trade like crazy. Don't pay 5$ commission on a 200$ stock order. Don't fail to file your taxes. Another mistake, and this burdens a lot of people, is that your long-term investments are for long-term investing. What a novel idea. You're 401K doesn't exist for you to get a loan for a home. Many people do liquidate their long-term savings. Don't. Especially since people who do make these loans or say "I'll pay myself back later" don't. |
Optimal way to use a credit card to build better credit? | nan |
Why does selling and then rebuying stock not lead to free money? | There are a few people that do this for a living. They are called "market makers" or "specialists" in a particular stock. First of all, this requires a lot of capital. You can get burned on a few trades, a process known as "gambler's ruin," but if you have enough capital to weather the storm, you can make money. Second, you have to be "licensed" by the stock market authorities, because you need to have stock market trading experience and other credentials. Third, you are not allowed to buy and sell at will. In order to do your job, you have to "balance the boat," that is buy, when others are selling, and sell, when others are buying, in order to keep the market moving in two directions. It's a tough job that requires a lot of experience, plus a license, but a few people can make a living doing this. |
As a 22-year-old, how risky should I be with my 401(k) investments? | At twenty-two, you can have anywhere between 100%-70% of your securities portfolio in equities. It is reasonable to start at 100% and reduce over time. The one thing that I would mention with that is that your target at retirement should be 70% stocks/30% bonds. You should NEVER have more than 30% bonds. Why? Because a 70/30 mix is both safer than 100% bonds and will give a higher return. Absent some market timing strategy (which as an amateur investor, you should absolutely avoid) or some complicated balancing scheme, there is never a reason to be at more than 30% bonds. A 50/50 mix of stocks and bonds or a 100% bonds ratio not only returns less than the 70/30 mix, it is actually riskier. Why? Because sometimes bonds fall. And when they do, stocks generally gain. And vice versa. Because of this behavior, the 70/30 mix is less likely to fall than 50% or 100% bonds. Does that mean that your stock percentage should never drop below 70%? No. If your portfolio contains things other than stocks and bonds, it is reasonable for stocks to fall below 70%. The problem is that when you drop stocks below 70%, you should drop bonds below 30% as well. So you keep the stock to bond ratio at 7:3. If you want to get a lower risk than a 70/30 mix, then you should move into cash equivalents. Cash equivalents are actually safer than stocks and bonds either individually or in combination. But at twenty-two, you don't really need more safety. At twenty-two, the first thing to do is to build your emergency fund. This should be able to handle six months of expenses without income. I recommend making it equal to six months of your income. The reason being that it is easy to calculate your income and difficult to be sure of expenses. Also, you can save six months of income at twenty-two. Are you going to stay where you are for the next five years? At twenty-two, the answer is almost certainly no. But the standard is the five year time frame. If you want a bigger place or one that is closer to work, then no. If you stay somewhere at least five years, then it is likely that the advantages to owning rather than renting will outweigh the costs of switching houses. Less than five years, the reverse is true. So you should probably rent now. You can max out your 401k and IRA now. Doing so even with a conservative strategy will produce big returns by sixty-seven. And perhaps more importantly, it helps keep your spending down. The less you do spend, the less you will feel that you need to spend. Once you fill your emergency fund, start building savings for a house. I would consider putting them in a Real Estate Investment Trust (REIT). A REIT will tend to track real estate. Since you want to buy real estate with the results, this is its own kind of safety. It fell in value? Houses are probably cheap. Houses increasing in price rapidly? A REIT is probably growing by leaps and bounds. You do this outside your retirement accounts, as you want to be able to access it without penalty. |
Can we compare peer-to-peer loans to savings accounts? | Peer to peer lending isn't FDIC insured. You can lose all your investment with peer to peer lending, whereas you will not lose your deposited money in a savings account, even if it doesn't grow very fast. |
What low-fee & liquid exchange-traded index funds / ETFs should I consider holding in a retirement portfolio? | @bstpierre gave you an example of a portfolio similar to IFA's 70 portfolio. Please, look other variants of example portfolios there and investigate which would suit to you. Although the example portfolios are not ETF-based, required by the op, you can rather easily check corresponding components with this tool here. Before deciding your portfolio, fire up a spreadsheet (samples here) and do calculations and do not underestimate things below: Bogleheads have already answered this type of questions so why not look there? Less reinventing the wheel: google retirement portfolios site:bogleheads.org. I am not making any recommendations like other replies because financial recommendations devalue. I hope I steered you to the right track, use less time to pick individual funds or stocks and use more time to do your research. |
Why are stop order called “stop” when it is in fact a “start” condition? | A stop order can be used to both enter or exit a position. A stop loss is used to set the price you want to get out if the price reaches that level. Whilst a stop buy or entry order is used to get into a position if the price reaches your desired level for entry. The stop order just means that you want to place your order at that level, you then need to specify if you are buying to open, selling to open, buying to close or selling to close your position at the stop level. |
Transfering money from NRE to saving account is taxable or not | Meagrely transferring money within your own accounts doesn't result in any tax, however legally once you are an NRI you cannot operate a savings account at all as per Reserve Bank Guidelines found here One option is for you to transfer to a joint account held by a close relative of yours with you and this would be tax free in India. |
When will Canada convert to the U.S. Dollar as an official currency? | The conspiracy buffs think this is already in the works. If you are interested, Google this fictional currency called the "Amero." Or you could just look up the snopes article on Amero. |
Multiple hard inquiry for a single loan from car dealer? | This is normal with the dealer's financing. To add more details to littleadv's answer, what happens is when you get the financing through the dealer, at first, they will try to do the loan on your behalf with local banks in your area. This is why you see several hard inquiries; one from each back. If none of these banks wants to take the loan, then dealer's financing entity will take the loan. This was my exact experience with Hyundai. In addition, don't get surprise if you start receiving letters saying that your loan was rejected. The dealer will send the loan requests simultaneously, and some of the banks might deny the loan. This also happened to me, and I have been owning my car for around a year. Still, make sure that the letters matches with the credit inquiries. |
In what state should I register my web-based LLC? | Is it really necessary? If $800 / year registration fee is too much to you, an LLC is apparently not something you need right now. Many people conduct web-based business online on personal terms. My suggestion is that you focus on your business first and try to grow it as much as you can before you get down to a company. |
Can stock market gains be better protected under an LLC arrangement? | The thing you get wrong is that you think the LLC doesn't pay taxes on gains when it sells assets. It does. In fact, in many countries LLC are considered separate entities for tax properties and you have double taxation - the LLC pays its own taxes, and then when you withdraw the money from the LLC to your own account (i.e.: take dividends) - you pay income tax on the withdrawal again. Corporate entities usually do not have preferential tax treatment for investments. In the US, LLC is a pass-though entity (unless explicitly chosen to be taxed as a corporation, and then the above scenario happens). Pass-through entities (LLCs and partnerships) don't pay taxes, but instead report the gains to the owners, which then pay taxes as if the transaction was their personal one. So if you're in the US - investing under LLC would have no effect whatsoever on your taxes, or adverse effect if you chose to treat it as a corporation. In any case, investing in stocks is not a deductible expense, and as such doesn't reduce profits. |
Foreign Earned Income Exclusion - Service vs. Product? | Fear tactics posted above, likely by IRS agents. Yes, you qualify based on the residence test. You perform your work outside the US. You gather business data in a foreign country. The income is excluded. |
Do real nappies (reusable / cloth diapers) really save money? | I only used disposable diapers for my baby's first month. However, I now use half disposable diapers (for part-time daycare) and half cloth. My son is now 1 year and during a normal weekday, I go through 4 disposable diapers and 3-4 cloth diapers (this count includes a double thick cloth diaper for night). On the weekend, I use about 7-8 cloth diapers a day. For disposable, I buy Costco's Kirkland brand diapers which gives me about 200 diapers for $50. I tend to go through one pack every other month. For cloth, I bought FuzziBunz One-Size Diapers. These are pretty expensive diapers (about $19/each) but I wanted ones that would last over multiple children (I chose these over the BumGenius because I thought snaps would last longer than velcro). I bought 24 new cloth diapers which means I wash diapers every 2-3 days. A couple of weeks ago I totaled up my receipts for cloth and disposable diapers and determined that I will recoup my diaper costs at around 16 months of part-time use. Notes: |
18 year old making $60k a year; how should I invest? Traditional or Roth IRA? | With this level of income, you might consider a Solo 401(k). It would allow you a much higher level of contributions and is more appropriate for your savings than the limited IRA deposits. It also offers a considerable number of options not available for IRAs. A loan for example. |
Can I fully deduct capital losses against discounted capital gains? | The short answer is no - the CGT discount is only applied against your net capital gain. So your net capital gain would be: $25,000 - $5,000 = $20,000 Your CGT discount is $10,000 You will then pay CGT on $10,000 Of course you could sell ABC in this financial year and sell DEF next financial year. If you had no other share activities next financial year than that net capital loss can be carried forward to a future year. In that case your net capital gain this year would be $25,000 Your CGT discount is $12,500 You will then pay CGT on $12,500 Next year if oyu sell DEF, you'll have a $5000 net capital loss which you can carry forward to a future year as an offset against capital gains. Reference: https://www.ato.gov.au/General/Capital-gains-tax/Working-out-your-capital-gain-or-loss/Working-out-your-net-capital-gain-or-loss/ |
If a stock has only buyers and no sellers how does its price go up? | Depending on what currency the price is quoted in and is originally sold, currency fluctuation can also carry over onto the price in your currency. An example for that would be bitcoin prices which sometimes show heavy ups and downs in one currency, but seem totally stable in another and can be tracked back to changed exchange rates between currencies. Also like others have said, prices on stocks are not actually fixed. You can offer to buy or sell at any price. Only if 2 people want to buy or sell for the same price there will actually be a transaction. |
What is the role of a manager in a passively managed index fund? | There is trading, and while it can be automated, someone has to define the rules for the automated system. Why not call that person the manager? |
Are real estate prices memory-less? | No, at least not with specific houses. When I bought my current house, our realtor looked at the previous selling price of this house, along with the prices at which it had been placed on the market. These values influenced the amount we offered for the house. I'm sure it also influenced the amount the house had been listed at. |
Why do stocks priced above $2.00 on the ASX sometimes move in $0.005 increments? | Like in the US, more flexibility is extended to hidden orders. Australia has taken an aggressive approach to hidden orders in the direction of lower ticks. Aussies have a rich financial that evolved differently than the Dutch custom more familiarly known in the UK and US. They, like Chicago evolved out of commodities trade rather than trade. When commodities are worth nearly nothing per unit, larger precision comes naturally. For the Dutch, it was the opposite. A single ship would trade in 1/64 share or for the largest vessels, 1/128 share. Here, there's no point to high precision. New York, founded by the Dutch specialized in logistics just the same. To a man with a hammer, everything looks like a nail, so both Chicago, Australia, and other financial systems built by commodities rather than trade have extended the higher precision logic to everything else, and pricing is fantastic. It should not be a surprise why Australia has taken a lead in pushing infinite precision. |
How do you choose which mortgage structure is appropriate when buying a home? | Down payment: Emphatically avoid PMI if at all possible; it's pouring money down the drain. Do 20% down if you can, or pay off enough to bring you above 20% and ask for PMI to be removed as soon as you can. Beyond that it's a matter of how much risk you want to accept and how long you'll own the place, and you'll have to run the numbers for the various alternatives -- allowing for uncertainty in your investments -- to guide your decision. Do not assume you will be able to make a profit when you sell the house; that's the mistake which left many people under water and/or foreclosed on. Do not assume that you will be able to sell it quickly; it can take a year of more. Do not assume immediate or 100% occupancy it you rent it out; see many other answers here for more realistic numbers.... and remember that running a rental is a business and has ongoing costs and hassles. (You can contract those out, but then you lose a good percentage of the rent income.) Double mortgage is another great way to dig yourself into a financial hole; it can be a bigger cost than the PMI it tries to dodge and is definitely a bigger risk. Don't. |
Bitcoin Cost Basis Purchases | As long as the IRS treats bitcoin as property, then whenever you use bitcoin to buy anything you are supposed to consider the capital gain or capital loss. There is no "until it's converted to fiat". You are paying local sales tax and capital gains, or paying local sales tax and reporting capital loss. As long as you are consistent, you can use either the total cost basis, or individual lot purchases. The same as other property like stocks (except without stock specific regulations like wash-sale rules :D ). There are a lot of perks or unintentional loopholes for speculators, with the property designation. There are a lot of disadvantages for consumers trying to use it like a currency. Someone mixing investment and spending funds across addresses is going to have complicated tax issues, but fortunately the exchanges have records of purchase times and prices, which you can compare with the addresses you control. Do note, after that IRS guideline, another federal agency designated Bitcoin as a commodity, which is a subset of "property" with its own more favorable but different tax guidelines. |
What is the easiest way to back-test index funds and ETFs? | yAnother potential tool for you would be a Monte Carlo Simulator. here's one http://financial-dictionary.thefreedictionary.com/Business+Fundamentals I know that past performance is no guarantee..... but I think it's in many cases not exactly a flawed tool, and especially with respect to money managers a good way to find good ones. If a manager has shown an ability over time to consistently beat the market, yes he might be due for a bad day, but you'd generally expect that they should be able to continue that trend. I'd apply the same logic to pundits. If their track record sucks, and they constantly seem to whipsaw you with their advice, why listen to them other than |
Layman's guide to getting started with Forex (foreign exchange trading)? | I definitely can recommend you a site called babypips. Their beginner course section is great to get a good overview what you "could" do in FOREX trading. For starting out I definitely recommend a dummy account! (NEVER use real money in the beginning!) |
Does it make sense to talk about an ETF or index in terms of technical indicators? | With the disclaimer that I am not a technician, I'd answer yes, it does. SPY (for clarification, an ETF that reflects the S&P 500 index) has dividends, and earnings, therefore a P/E and dividend yield. It would follow that the tools technicians use, such as moving averages, support and resistance levels also apply. Keep in mind, each and every year, one can take the S&P stocks and break them up, into quintiles or deciles based on return and show that not all stock move in unison. You can break up by industry as well which is what the SPDRs aim to do, and observe the movement of those sub-groups. But, no, not all the stocks will perform the way the index is predicted to. (Note - If a technician wishes to correct any key points here, you are welcome to add a note, hopefully, my answer was not biased) |
Why is it rational to pay out a dividend? | Paying out dividends and financing new projects with debt also lessens the agency problem. The consequences of a failed project are greater when debt is used, so the manager now has a greater incentive to see that the project is a success. This, in addition to the paid divided is a benefit to the shareholder. If equity wasn't paid out and instead used for the project then the manager may not be so interested in its success. And if it's a failure then the shareholders are worse off. |
Rules for SEP contributions in an LLC? | From Schwab - What are the eligibility requirements for a business to establish a SEP-IRA? Almost any type of business is eligible to establish a SEP-IRA, from self-employed individuals to multi-person corporations (including sole proprietors, partnerships, S and C corporations, and limited liability companies [LLCs]), tax-exempt organizations, and government agencies. What are the contribution limits? You may contribute up to 25% of compensation (20% if you’re self-employed3) or $49,000 for 2011 and $50,000 for 2012, whichever is less. If we set the PC aside, you and the son have an LLC renting office space, this addresses the ability of the LLC to offer the retirement account. |
How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap! | Look for discounts from a health insurance provider, price club, professional memberships or credit cards. That goes for a lot of things besides health memberships. My wife is in a professional woman's association for networking at work. A side benefit is an affiliate network they offer for discounts of lots of things, including gym memberships. |
Why is auto insurance ridiculously overpriced for those who drive few miles? | Other people lie to the companies about how many miles they drive, so they can't take the mileage figures literally. You aren't specifying whether you want liability only, or more-comprehensive insurance. Stuff happens when you aren't driving. Cars get stolen. Other drivers hit parked cars and leave. Trees fall on parked cars. Move to Virginia where insurance is not required. Just pay $500 a year for not having insurance, and be careful. |
What are some sources of information on dividend schedules and amounts? | I second the Yahoo! Finance key stats suggestion, but I like Morningstar even better: http://quote.morningstar.com/stock/s.aspx?t=roic They show projected yield, based on the most recent dividend; the declared and ex-dividend dates, and the declared amount; and a table of the last handful of dividend payments. Back to Yahoo, if you want to see the whole dividend history, select Historical Prices, and from there, select Dividends Only. http://finance.yahoo.com/q/hp?s=ROIC&a=10&b=3&c=2009&d=00&e=4&f=2012&g=v |
What are some good ways to control costs for groceries? | If you are willing to use one main credit card for shopping, use a grocery points rewards card like PC Financial Mastercard. Pay for the groceries using the card to earn points and use those points to reduce costs. The only limitation is that you must shop at Loblaws, Superstore, No Frills, Zehrs, Fortinos. It works out to $1 = 10 points and 20,000 points = $20. So that works out to spend $1 to earn back $0.01. |
Paid cash for a car, but dealer wants to change price | As others have said, if the dealer accepted payment and signed over ownership of the vehicle, that's a completed transaction. While there may or may not be a "cooling-off period" in your local laws, those protect the purchaser, not (as far as I know) the seller. The auto dealer could have avoided this by selling for a fixed price. Instead, they chose to negotiate every sale. Having done so, it's entirely their responsibility to check that they are happy with their final agreement. Failing to do so is going to cost someone their commission on the sale, but that's not the buyer's responsibility. They certainly wouldn't let you off the hook if the final price was higher than you had previously agreed to. He who lives by the fine print shall die by the fine print. This is one of the reasons there is huge turnover in auto sales staff; few of them are really good at the job. If you want to be kind to the guy you could give him the chance to sell you something else. Or perhaps even offer him a $100 tip. But assuming the description is correct, and assuming local law doesn't say otherwise (if in any doubt, ask a lawyer!!!), I don't think you have any remaining obligation toward them On the other hand, depending on how they react to this statement, you might want to avoid their service department, just in case someone is unreasonably stupid and tries to make up the difference that was. |
Is unrealized gain part of asset? | There's an expression, "stock prices have no memory." Apple trades at about $115. Why would I carry my shares at anything but $115 even though I paid say $75 a share, while you just bought it at $115? The only difference, perhaps, is that if I hold them in a non retirement account, I might track the net I'd have, post tax. |
Does longterm investment in index funds still make sense in a reality of massive algotrading? | There is a difference between trading which is short term focussed and investing which is longterm focussed. On the long term what drives stock prices is still the overall economy and the performance of the underlying business aspects. I do not think that any trading algorithms will change this. These are more concerned with short term profits regardless of the underlying business economics. Therefore I think that longterm investing using index funds is still a viable strategy for most private investors. |
Working as a freelancer overseas, but US Citizen, what is my tax situation? | This person must pay taxes in both the overseas country and in the U.S. This is unusual; generally, only the U.S. demands this. Depending on the specific country, he would likely not be taxed twice as the U.S. generally recognises tax paid in a different country. Note there are some gotchas, though. For example, although Canada has a generally higher tax scheme than the U.S., you may still end up owing tax if you use the Tax-Free Savings Account system in Canada, as that is not recognised in the U.S. As to whether or not this person should form a company, that is far too broad a question. It's going to depend in large part on the tax situations of the countries involved. This person needs to consult an accountant specialising in this situation. That is, on personal versus business tax and on tax involving U.S. citizens. Yes, this person can and indeed must file and pay taxes in the U.S., from outside the U.S. |
Where do stock traders get realtime updates on Fed announcements? Is there a feed I could scrape? | Bloomberg terminal is a pretty standard way nowadays to get this information (and a lot more) pretty much in real time. |
I am the sole owner of an LLC. Does it make a difference if I file as an S-Corp or a sole-member LLC? | Be careful of the other answers here. Many are wrong or partially wrong. The question implies that you knew this, but for everyone else's benefit, you can keep you LLC organization and still elect to be treated as a S-Corp by the IRS just for tax purposes. You do this by filing Form 2553 with the IRS. (You can also, by the way, elect to be taxed as a "regular" C-Corp if you want, although that's probably not advantageous. See Form 8832.) The advantage of electing to be treated as an S-Corp is that income beyond what constitutes a "reasonable salary" are not subject to social security and medicare taxes as they would when paid was wages or counted as self-employment income on Schedule C. Depending on what you need to pay yourself to meet the "reasonable salary" test, your overall income, and other factors about your business, this could result in tax savings. Contrary to other answers here, making this election will not force you to create a board of directors. You are still an LLC for all purposes except taxes, so whatever requirements you had in organization and governance at the state level will not change. You will have to file a "corporate" tax return on Form 1120S (and likely some corresponding state tax form), so that is additional paperwork, but this "corporate" return does not mean the S-Corp pays taxes itself. With a couple of exceptions, the S-Corp pays no taxes directly (and therefore does not pay at the corporate tax rate). Instead the S-Corp apportions its income, expenses, and deductions to the owner(s) on Schedule K. The owners get their portion reported from the S-Corp on Schedule K1 and then include that on their personal Form 1040 to pay tax at their personal rate. In addition to filing Form 1120S, you will have to handle payroll taxes, which will create some additional administrative work and/or cost. Using a payroll service for this will likely be your best option and not terribly expensive. You've also got the issue of determining your reasonable salary within the rules, which is the subject of other questions on this site and other IRS guidance. |
Any extra fees charged by passive stock and bond ETFs on top of the standard fees? | Brokers will have transaction fees in addition to the find management fees, but they should be very transparent. Brokering is a very competitive business. Any broker that added hidden fees to their transactions would lose customers very quickly to other brokers than can offer the same services. Hedge funds are a very different animal, with less regulation, less transparency, and less competition. Their fees are tolerated because the leveraged returns are usually much higher. When times are bad, though, those fees might drive investors elsewhere. |
After consulting HR Block, are you actually obligated to file your taxes with them, if they've found ways to save you money? | It sounds like they want to enter you into a contract in which they are allowed to charge a flat fee for filing contingent on money saving results from a tax review service, paid in full. Like those who answered before I have no legal experience. IRS Circular 230 defines the ethics for tax practitioners and the definition of a tax practitioner is broad enough (effective Aug 2011) to include those who are not EAs, CTRPs, CPAs as long as the person is compensated to prepare or assist in a substantial part of the preparation of a document pertaining to a taxpayer's liability for submission to the IRS. Section 10.27 Fees: (b)(2)A practitioner may charge a contingent fee for services rendered in connection with the Service’s examination of, or challenge to — (i) An original tax return Paragraph c defines what a contingent fee is basically a fee that depends on the specific result attained, in this case saving you money. In the section above 'Service's examination' is an audit in plain speak. If your 2013 return has not been submitted and you have not received a written notice for examination, H&R block can not charge a contingent fee, period. Furthermore, H&R Block cannot hold your tax documents, upon your request, they must return all original tax documents like W2s and 1099s ( they don't have to return the tax forms an employee prepared). Like I said above, I'm not a lawyer, unless I missed a key detail, I don't believe they were permitted to charge you a filing fee contingent on saving you money. |
In the event of a corporate spin-off, how can I calculate the correct cost basis for each company's shares? | From my understanding: Original Holding: Siemens - 10,000 units at 80 Euros/unit Cost = 800,000 euros Spin-off: Every 10 Siemens get 1 OSRAM On July 5th, 2013: Siemens closing - 78 Euros On Monday, July 8th: Ex-date (opening) - 75 Euros Hence: Market value for:- 1. Siemens: 75 * 10,000 = 750,000 euros 2. OSRAM: (10,000 / 10) * (78 - 75) = 3,000 euros Total Market value = 780,000 + 3,000 = 753,000 euros Ratio for: 1. Siemens = 750,000 / 753,000 = 0.996015936 2. OSRAM = 3,000 / 753,000 = 0.003984063 Cost for: 1. Siemens = 800,000 * 0.996015936 = 796,812.75 2. OSRAM = 3,187.25 |
Is trading stocks easier than trading commodities? | One reason why you may have gotten this advice is that stocks have an expected real return over time, while commodities do not. Therefore, when gambling on individual stocks, odds are in your favor that they will ultimately go up over time. You may do better or worse than the market as a whole, but they will likely go up as the whole market, on average, rises over time. Commodities, on the other hand, have no expected real return. It is more zero-sum. In fact, after costs, a real loss should be expected on average, making gambling in here more risky. |
What suggested supplemental income opportunities exist for a 70 year old Canadian retiree? | My initial thoughts would be an ESL teacher or a private tutor for various subjects would likely be the easiest ones to consider. Possibly there are some people that could use the help in their education that would work well. |
How are people able to spend more than what they make, without going into debt? | If you make $10 in salary, $5 in interest on savings, and $10 in dividends, your income is $25, not $10. If you have a billion dollars in well-invested assets, you can take a loan against those assets and the interest payment on the loan will be smaller than the interest you earn on the assets. That means your investment will grow faster than your debt and you have a net positive gain. It makes no sense to do this if the value of your asset is static. In that case, you would be better off just to withdraw from the asset and spend it directly, since a loan against that static asset will result in you spending your asset plus interest charges. If you have a good enough rate of return on your investment, you may actually be able to do this in perpetuity, taking out loan after loan, making the loan payments from the loan proceeds, while the value of your original asset pool continues to grow. At any given time, though, a severe downturn in the market could potentially leave you with large debts and insufficient value in your assets to back the debt. If that happens, you won't be getting another loan and the merry-go-round will stop spinning. It's a bit of a Ponzi scheme, in a way. The U.S. government has done exactly this for a long time and has gotten away with it because the dollar has been the world's reserve currency. You could always get a loan against the value of the U.S. currency in the past. Those days may be dwindling, with more countries choosing alternative currencies to conduct business with and the dollar becoming comparatively weaker into the foreseeable future. If you have savings, you can spend more than you make, which will put you into debt, then you can draw down your savings to pay that debt, and at the end of the month you will be out of debt, but have less in savings. You cannot do this forever. Eventually, you run out of savings. If you have no savings, you immediately go into debt and stay there when you spend more than you make. This is simple arithmetic. If you have no savings, but you own assets (real estate, securities, a collection of never-opened Beatles vinyl records, a bicycle), then you could spend more than you make, and be in debt, but have the potential to liquidate assets to pay off all or part of the debt. This depends on finding a buyer and negotiating a price that helps you enough to make a real difference. If you have a car, and you owe $10 on it, but you can only find a buyer willing to pay $8 for the car, that doesn't help you unless you can refinance the $2 and your new payment amount is lower than the old payment amount. But then you're still $2 in debt on the car even though you no longer possess it, and you've still increased your debt by spending more than you made. If you stay on this path, sooner or later you will not have any assets left and you will be in debt, plain and simple. As a wrinkle in the concrete example, let's say you have stock options with your employer. This is a form of a "call." You could also purchase a call through a broker in the stock market, or for a commodity in the futures market. That means you pay up front for the right to buy a specific amount of an asset at a fixed price (usually with an expiration date). You don't own the stock, you just have the right to buy it at the call price, regardless of the current market value when you buy it. In the case of employee stock options, your upfront cost is in the form of a vesting schedule. You have to remain employed for a set time before a specific number of stocks become eligible for you to purchase at your option price (the stocks "vest" on a certain date). Remain employed longer, and more stocks may vest, depending on your contract. If you quit or are terminated before that date, you forfeit your options. If you stick around through your vesting schedule, you pay real money to buy the stock at your option price. It only makes sense to do this if the market value of the stock is higher than your option price. If the current market value is lower than your option price, you're better off just buying the asset at the current market value, or waiting and hoping that the value increases before your contract expires. You could drive yourself into debt by spending more than you make, but still have a chance to eliminate your debt by exercising your call/option and then re-selling the asset if it is worth more than what you pay for it. But you may have to wait for a vesting period to elapse before you can exercise your option (depending on the nature of your contract). During this waiting period, you are in debt, and if you can't service your debt (i.e. make payments acceptable to your creditors) your things could get repossessed. Oh, don't forget that you'll also pay a brokerage fee to sell the asset after you exercise your option. Further, if you have exhausted your savings and nobody will give you a loan to exercise your stock (or futures) options, then in the end you would be even further in debt because you already paid for the call, but you are unable to capitalize it and you'll lose what you already paid. If you can get a loan to exercise your option, but you're a bad credit risk, chances are good that the lender will draft a contract requiring you to immediately pay back the loan proceeds plus a fee out of the proceeds of re-selling the stock or other asset. In fact the lender might even draft a contract assigning ownership of your options to them, and stipulating that they'll pay you what's left after they subtract their fee. Even if you can get a traditional loan, you will pay interest over time. The end result is that your debt has still cost you very real money beyond the face value of the debt. Finally, if the asset for which you have a call has decreased in value lower than the current market value, you would be better off buying it directly in the market instead of exercising your option. But you'll pay transaction fees to do that, and the entire action would be pure speculation (or "investment"), but not an immediate means to pay off your debt. Unless you have reliable insider trading information. But then you risk running afoul of the law. Frankly it might be better to get a loan to pay off your debt than to buy an "investment" hoping the value will increase, unless you could guarantee that the return on your investment would be bigger than the cumulative interest and late fees on your debt (or the risk of repossession of your belongings). Remember that nothing you owe a debt on is actually yours, not your house, not your car, not your bicycle, not your smartphone. Most of the time, your best course of action is to make minimum payments on your lowest-interest debts and make extra payments on your highest interest debt, up to the highest total payment you can tolerate (set something aside in a rainy day fund just in case). As you pay off the highest-interest debt, shift the amount you were paying on that debt to make extra payments on your next highest-interest debt until that one is paid off, and repeat on down the line until you're out of debt, then live within your means so that you don't find yourself working at McDonald's because you don't have a choice when you're in your 80's. |
Why can I see/trade VIX but not S&P/TSX 60 VIX? | You can trade VXX, but VIX is only an index. http://www.marketwatch.com/investing/stock/VXX?CountryCode=US |
Is an analyst's “price target” assumed to be for 12 months out? | The time horizon applicable to the price target is always specified by the broker or bank which published the research report. You will find this information in the disclaimer, which is present on every research report. Usually it is 12 months, but some firms give 6 months price targets. However, you should never rely on the price target alone and always combine it with the following details (to name a few): Are the analyst's estimate above or below consensus estimates (or company guidance), did the analyst rise or lower its estimates. What is the rating on the stock (Buy, Sell, Hold...), when did he change his rating or price target. Does the firm do business with the company? (which may influence a bullish tone and optimistic price target). |
How do I screen for stocks that are near to their 52 weeks low | You can use Google Finance Stock Screener for screening US stocks. Apparently it doesn't have the specific criterion (Last Price % diff from 52 week low) you are (were!) looking for. I believe using its api you can get it, although it won't exactly be a very direct solution. |
Tenant wants to pay rent with EFT | You can consider opening accounts either in Paypal or Google Wallet. In this way, you link your bank information to these accounts and the only information you need to provide your tenant is your e-mail id. Its safe and in this scenario -- just money transfer through bank account, there is no fee either for the sender (your tenant) or the receiver (you). |
Borrowed shares how are they tracked? | Brokerage firms are required to report the number of shares being shorted. This information is reported to the exchange (NYSE of NASDAQ) and is made public. Most financial sites indicate the number of shares being shorted for a particular stock. The image below from Yahoo finance shows 3.29 million shares of CMG were being shorted at the close of 9-28-2012. This is over 12% of the total outstanding shares of CMG. For naked short selling additional information is tracked. If the brokerage is unable to borrow shares to deliver before the settlement date of a short sale then the transaction is recorded as fails-to-deliver. No money or shares are exchanged since the brokerage is unable to deliver the shares that were agreed upon. A large amount of fails-to-deliver transactions for a stock usually indicates an excessive amount of naked shorting. When investors and brokerage firms start to aggressively short a stock they will do so without having borrowed the shares to sell. This will result in a large amount of naked short selling. When there are a large number of naked short sellers not all the sellers will be able to borrow the necessary shares before the settlement date and many fails-to-deliver transactions will be recorded. The SEC records the number of fails-to-deliver transactions. The table below summarizes the fails-to-deliver transactions from 1-1-2012 through 9-14-2012 (data obtained from here). The “Ext Amount” column shows the total dollar value of the transactions that failed ( i.e. Fail Qty * Share price ). The “Volume” column is the total number of shares traded in the same time period. The “% Volume” shows the percentage of shares that failed to deliver as a percentage of the total market volume. The table orders the data in descending order by the quantity of shares that were not delivered. Most of the companies at the top of the list no longer exist. For many of these companies, the quantity of shares that failed to deliver where many multiples of the number of shares traded during the same time period. This indicates massive naked short selling as many brokerages where unable to find shares to borrow before the settlement date. More information here. |
Is it legal if I'm managing my family's entire wealth? | You are opening up a large can of worms with how you are doing this. In very positive years, you'll have taxes based on your income, potential Alternative Minimum Tax (AMT), etc. Each of the family members may be in a lower bracket, perhaps even needing to pay zero on capital gains. Even if you are 100% honest, if you are subject to a lawsuit, these funds are all in your name, and you'd be in a tough situation explaining to a court that these assets aren't "really" yours, but belong to family. And last, the movement of large chunks of money needs to be accounted for, and can easily run afoul of gifting rules. As mhoran stated, a Power of Attorney (POA) avoids this. When my father-in-law passed, I took over my mother-in-law's finances, via POA. I sign in to my brokerage account, and her accounts are there. I can trade, deal with her Individual Retirement Account (IRA) Required Minimum Distributions (RMDs) each year, and issue checks to her long term care facility. It's all under her social security number - our money isn't intermingled. |
Personal finance in EFU and NAFA | I want to know why my investment is having loss in 4 to 5 months. As the funds invest in stock markets, the Pakistan stock market is going down in last 4-5 months from all time high. Should I liquidate my investment or wait in hope that it will grow again? This is opinion based and one cannot predict what will happen in future. The funds may grow or may loose value. If I loose all my investment value, is it insured. OR do I loose everything? The growth fund I understand is not guaranteeing any returns. in theory you can loose all the money, however practically there will be some value. If you need guaranteed returns maybe EFU Guaranteed Growth fund will be better choice. |
How to model fees from trades on online platforms? | where A1 is the number of trades. you may have to change the number 100 to 99 depending on how the 100th trade is charged. The idea is to use the if statement to determine the price of the trades. Once you are over the threshold the price is 14*number over threshold. |
Are buyouts always for higher than the market value of a stock? | Buyouts are usually for more than the ORIGINAL value of a stock. That's because the price "premium" represents an incentive for holders to "tender" their shares to the would-be buyer. Sometimes in these situations, the stock price rises above the proposed buyout price, in anticipation of a higher takeover bid from a SECOND party (that may or may not materialize). To answer the other part of the question, does a bidder have a chance of taking over a dying company for less than the market price? That is a strategy sometimes referred to as a "take under," and it has not been a notably successful strategy. That's because it goes against "human nature" (of the seller). "Where there is life, there is hope." They would seldom accept a lower price for "sure" survival, when the market is telling them that they are worth a higher price. Very few people realize that the market may disappear tomorrow. Think of all the homeowners who won't cut their price, but insist on bids that meet recent "comps." And if the company is really dying, the prospective buyer may be best served by waiting until it does, and then pick up the individual pieces at auction. |
Is it possible to make money by getting a mortgage? | I think this is possible under very special conditions. The important part of the description here is probably retired and rich. The answers so far apply to people with "normal" incomes - both in the sense of "not rich" and in the sense of "earned income." If you sit at the top tax bracket and get most of your income through things like dividends, then you might be able to win multiple ways with the strategy described. First you get the tax deduction on the mortgage interest, which everyone has properly noted is not by itself a winning game - You spend more than you save. BUT... There are other factors, especially for the rich and those whose income is mostly passive: I'm not motivated enough on the hypothetical situation to come up with a detailed example, but I think it's possible that this could work out. In any case, the current answers using "normal sized" incomes and middle tax brackets don't necessarily give the insight that you might hope if the tax payer really is unusually wealthy and retired. |
Long term drip (dividend reinvestment plan) stock | If you sold the stock for a profit, you will owe tax on that profit. Whether it is taxed as short-term or long-term capital gains depends on how long you held the stock before selling it. Presumably you're going to invest this money into mutual funds or something of that sort. Those may pay dividends which can be reinvested, and will grow in value (you hope) just as the individual stock shares would (you hope). Assuming the advice you've been given is at all reasonable, there's no need for buyer's remorse here; you're just changing your investing style to a different point on the risk-versus-return curve. (If you have to ask this question, I tend to agree that you should do more homework before playing with shares in individual companieS ... unless you're getting thess shares at employee discount, in which case you should still seriously consider selling them fairly quickly and reinvesting the money in a more structured manner. In a very real sense your job is itself an "investment" in your employer; if they ever get into trouble you don't want that to hit both your income and investments.) |
Why do companies award stock as opposed to cash? | There are a few reasons, dependent on the location of the company. The first, as you mentioned is that it means that the employee is invested in the companies success - in theory this should motivate the employee to work hard in order to increase the value of their holdings. Sometimes these have a vestment period which requires that they hold the stock for a certain amount of time before they are able to sell, and that they continue working at the company for a certain amount of time. The second, is that unlike cash, providing stocks doesn't come out of the companies liquid cash. While it is still an expense and does devalue the shares of other shareholders, it doesn't effect the daily working capital which is important to maintain to ensure business continuity. And the third, and this is for the employee, is tax reasons. In particular for substantial amounts. Of course this is dependent on jurisdiction but you can often achieve lower tax rates on receiving shares vs a cash equivalent sum, as you can draw out the money over time lowering your tax obligation each year, or other methods which aren't possible to look into now. Hope this helps. |
How to explain quick price changes early in the morning | You may simply be asking why stocks 'gap up' or 'gap down' when the stock market opens. This is because the price adjusts to news that occurred while the exchanges were closed overnight. Perhaps Asian stocks crashed, or perhaps a news story was released in the New York Times about some major company. There are thousands of factors that affect market sentiment, and the big gaps that happen at the open of every trading day is the price of the stocks catching up to those factors. |
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