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How can I get a mortgage I can't afford? | You might also want to talk directly to a bank. If your credit report is clean, they may have some discretion in making the loan. Note - the 'normal' fully qualified loan has two thresholds, 28% (of monthly income) for housing costs, 36% for all debt servicing. A personal, disclosed loan from a friend/family which is not secured against the house, would count as part of the other debt, as would a credit card. While I don't recommend using a credit card for this purpose, the debt fits in that 28-36 gap. As Kevin points out below, not all paths are equally advisable. Nor are rules of thumb always true. Not having the OP's full details, income, assets, price of house, etc, this is just a list of things to consider. The use of a 401(k) loan in the US can be a great idea for some, bad mistake for others. This format doesn't make it easy to go into great detail, and I'm sure the 401(k) loan issue has been asked and answered in other questions. With respect to Kevin, if he wrote 'usually', I'd agree, but never say 'never.' |
Options for dummies. Can you explain how puts & calls work, simply? | I'm normally a fan of trying to put all the relevant info in an answer when possible, but this one's tough to do in one page. Here's the best way, by far to learn the basics: The OIC (Options Industry Council) has a great, free website to teach investors at all levels about options. You can set up a learning path that will remember which lessons you've done, etc. And they're really, truly not trying to sell you anything; their purpose is to promote the understanding and use of options. |
Right account for local purchases, loan EMI, and investments | What is the best and most economical way for me to pay the loan EMIs directly? (whether from a Singapore account or a NRE/NRO account) It is advisable to have it via the NRE account as this would be easier. If you already have funds in NRO account, you can use that before you use the funds from NRE account. For all expenses I make in India (e.g shopping, general expenses in India visits) what account should I be using, ideally? Is the route to transfer into NRE then NRO and then withdraw from NRO? Whatever is convenient. Both are fine. If I plan to make any investments in SIPs/Stock markets, should I link my NRE account with a demat account and directly use that? If I sell the shares will the earnings come back into NRO or NRE? You need to open a DEMAT PINS Account and link it to NRE account. You are sell and repatriate the funds without any issue from PINS account. Related question Indian Demat account |
Determining the basis for capital gain [duplicate] | If you make money in currency speculation (as in your example), that is a capital gain. A more complicated example is if you were to buy and then sell stocks on the mexican stock exchange. Your capital gain (or loss) would be the difference in value in US dollars of your stocks accounting for varying exchange rates. It's possible for the stocks to go down and for you to still have a capital gain, and vice versa. |
Why call option price increases with higher volatility | Understanding the BS equation is not needed. What is needed is an understanding of the bell curve. You seem to understand volatility. 68% of the time an event will fall inside one standard deviation. 16% of the time it will be higher, 16%, lower. Now, if my $100 stock has a STD of $10, there's a 16% chance it will trade above $110. But if the STD is $5, the chance is 2.3% per the chart below. The higher volatility makes the option more valuable as there's a highr chance of it being 'in the money.' My answer is an over simplification, per your request. |
How can a person with really bad credit history rent decent housing? | Having been recently evicted she is unlikely to find any one willing to rent to her at anything close to reasonable terms. Any landlord that would consider it is likely to require a huge deposit. Her best solution may be a hotel/motel with weekly/monthly rates. It is generally much easier to get someone out of a hotel/motel for non payment than it is an actual apartment with a lease and landlord-tenant laws. But when you pay they take care of all utilities, and you can receive mail and register them as your permanent address for finding employment. Any other place that is willing to take someone who they know is a high risk for nonpayment/eviction is probably not going to be the type of place you want your children. |
Tracking the Madrid Interbank Offered Rate (MIBOR) and the Euro Interbank Offered Rate (EURIBOR) | You can find both here: http://www.bde.es/tipos/tipose.htm |
What does “no adjustments” mean? | Typically that applies if the broker Form 1099-B reports an incorrect basis to the IRS. If the Form 1099-B shows incorrect basis relative to your records, then you can use 8949, column (g) to report the correct basis. The 8949 Instructions provide a brief example. http://www.irs.gov/pub/irs-prior/i8949--2013.pdf Although you have an obligation to report all income, and hence to report the true basis, as a practical matter this information will usually be correct as presented by the broker. If you have separate information or reports relating to your investments, and you are so inclined, then you can double-check the basis information in your 1099-B. If you aren't aware of basis discrepancies, then the adjustments probably don't apply to you and your investments can stick to Schedule D. |
What is a Discount Called in the Context of a Negative Interest Rate? | Negative Yields on Bonds is opposite of Getting profit on your investment. This is some kind of new practice from world wide financial institute. the interest rate is -0.05% for ten years. So a $100,000 bond under those terms would be "discounted" to $100,501, give or take. No, actually what you are going to get out from this investment is after 10 years when this investment is mature for liquidation, you will get return not even your principle $100,000 , but ( (Principle $100,000) minus (Negative Yields @ -0.05) Times ( 10 Years ) ) assume the rates are on simple annual rate. Now anyone may wander why should someone going to buy this kind of investment where I am actually giving away not only possible profit also losing some of principle amount! This might looks real odd, but there is other valid reason for issuing / investing on such kind of bond. From investor prospective: Every asset has its own 'expense' for keeping ownership of it. This is also true for money/currency depending on its size. And other investment possibility and risk factor. The same way people maintain checking account with virtually no visible income vs. Savings account where bank issue some positive rate of interest with various time factor like annually/half-yearly/monthly. People with lower level of income but steady on flow choose savings where business personals go for checking one. Think of Millions of Ideal money with no secure investment opportunity have to option in real. Option one to keeping this large amount of money in hand, arranging all kind of security which involve extra expense, risk and headache where Option two is invest on bond issued by Government of country. Owner of that amount will go for second one even with negative yields on bonds where he is paying in return of security and risk free grantee of getting it back on time. On Issuing Government prospective: Here government actually want people not to keep money idle investing bonds, but find any possible sector to invest which might profitable for both Investor + Grater Community ultimately country. This is a basic understanding on issue/buy/selling of Negative interest bearing bond on market. Hope I could explain it here. Not to mention, English is not my 1st language at all. So ignore my typo, grammatical error and welcome to fix it. Cheers! |
Why are American Express cards are not as popular as Visa or MasterCard? | I have a merchant account and accept Visa, Mastercard, and Discover but not AMEX. I don't take AMEX because they want me to go through another approval process (on top of what was required to get merchant status) and their fees are a percent or two higher than the other cards. This doesn't sound like a lot - but for a business that grosses $1M per year, an extra 2 percentage points is $20K. I don't gross $1M, but the additional cost for me to take AMEX would still use the word "thousand" and I don't see any reason to jump through extra hoops and fill out more forms for the privilege of giving extra money away. I haven't found anyone yet who wanted to pay me with AMEX who can't pay me with another card or a check instead. |
College student lacking investment experience: How to begin investing money? | If you have wage income that is reported on a W2 form, you can contribute the maximum of your wages, what you can afford, or $5500 in a Roth IRA. One advantage of this is that the nominal amounts you contribute can always be removed without tax consequences, so a Roth IRA can be a deep emergency fund (i.e., if the choice is $2000 in cash as emergency fund or $2000 in cash in a 2015 Roth IRA contribution, choice 2 gives you more flexibility and optimistic upside at the risk of not being able to draw on interest/gains until you retire or claim losses on your tax return). If you let April 15 2016 pass by without making a Roth IRA contribution, you lose the 2015 limit forever. If you are presently a student and partially employed, you are most likely in the lowest marginal tax rate you will be in for decades, which utilizes the Roth tax game effectively. If you're estimating "a few hundred", then what you pick as an investment is going to be less important than making the contributions. That is, you can pick any mutual fund that strikes your fancy and be prepared to gain or lose, call it $50/year (or pick a single stock and be prepared to lose it all). At some point, you need to understand your emotions around volatility, and the only tuition for this school is taking a loss and having the presence of mind to examine any panic responses you may have. No reason not to learn this on "a few hundred". While it's not ideal to have losses in a Roth, "a few hundred" is not consequential in the long run. If you're not prepared at this time in your life for the possibility of losing it all (or will need the money within a year or few, as your edit suggests), keep it in cash and try to reduce your expenses to contribute more. Can you contribute another $100? You will have more money at the end of the year than investment choice will likely return. |
What does “100% stock dividend” mean? | A 100% stock dividend means that you get one share of the "stock dividend" for every share you own. For example, Google did this in 2014 when they gave all of their Class A shareholders one class C share for every Class A that they owned. If the 100% stock dividend is for the exactly the same stock, it is basically the same as a 2-for-1 stock split. If, however, the 100% stock dividend is to give you a different stock, then this is typically due to a corporate reorganization or demerger/spinoff event. Some countries have different tax treatments for the events - for example, with demergers in Australia, Class Rulings need to be obtained from the Australian Taxation Office to declare demergers as tax free. A recent demerger was in Australia as South32, demerged from BHP Billiton. References: http://economix.blogs.nytimes.com/2014/04/02/the-many-classes-of-google-stock/ http://www.bhpbilliton.com/investors/shareholderinfo/demerger-taxation-information |
Home owners association for houses, pro/cons | I think it depends a lot on your idea of how you should relate to your neighbors. Personally, I think that I should be allowed to do just about whatever I want with my property, and I grant my neighbor the same right. If my neighbor wants to paint his house purple with orange stripes and fill his front lawn with pink flamingos, I think that's his right. If I don't like it, I don't have to look at his house. (I would draw the line at things that I cannot avoid by simply looking the other way, like running jet engines in his back yard at 2 in the morning, as I could not avoid the noise. Or dumping toxic waste on the street, as it will cause health problems. Etc.) Others think it IS their business what their neighbor does with his property and want to be able to control it. They want someone who has the authority to force everyone in the neighborhood to paint their house in colors deemed acceptable, to meet certain requirements for yard work. And that's what Home Owners Associations are for: to require that everyone in the neighborhood maintain their property according to a standard set by the HOA, which should theoretically represent the wishes of the majority. Of course the price you pay for giving you the right to tell your neighbor what kind of fence he is allowed to have is that now your neighbors can tell you what kind of fence you can have. Advocates of HOAs often say that they are necessary to protect property values. Personally I think this is something of a circular argument: I must have the right to prevent my neighbor from doing something that, in my opinion, makes his house ugly, not because I necessarily have no choice but to stare out my window at his house all day and be repulsed by it, but because someday I may want to sell my house to someone who will have no choice but to stare out the window at his house all day and be repulsed by it and so will not want to buy my house. Of course if we all just minded our own business, this wouldn't be an issue. Okay, this was pretty much an anti-HOA post, but I did TRY to state the other side of it. |
Does dollar cost averaging apply when moving investments between fund families? | The first step I would do is determine the asset class mixture for your current portfolio and the mixture for your new one. If they are the same and all you are doing is changing the funds that you use to invest in that mixture of asset class then just do the change all at once. In this case there is no market risk as you are just swapping funds (hopefully to ones that you feel will better track the underlying asset classes). If you are also changing your asset class mixture, then it depends on how large the change is. I would still do the whole change at once. But if you are worried about fluctuations then you could slowly rebalance into your final position by taking a couple of intermediary steps. I would still change all of the fund first but maybe in a mix closer to your current asset mix and then over the next couple of months adjust the ratios to reach your final desired asset mix. |
Landlord living in rental unit - tax implications? | A tenant is a tenant regardless of your relationship to them, and as long as the property is classified as an investment property, you can claim depreciation and regular business losses just as you would on any property with any tenant. |
Getting financial advice: Accountant vs. Investment Adviser vs. Internet/self-taught? | Do I need an Investment Adviser? No, but you may want to explore the idea of having one. Is he going to tell me anything that my accountant can't? Probably. How much expertise are you expecting from your accountant here? Do you think your accountant knows everything within the realms of money from taxes, insurance products, investments and all your choices and what would work or wouldn't? Seems like it could be a tall order to my mind. My accountant did say to come to him for advice on investment/business issues. So, he is willing, but is he able? Not asking about his competence, but rather "is there something that only an Investment Adviser can provide, by law, that an accountant can't"? Not that I know though don't forget how much expertise are you expecting here from one person. Is this person intended to answer all your money questions? But isn't that something that my accountant could/should do? Perhaps though how well are you expecting one person to be aware of so much stuff? I want you to know all the tax law so I can minimize taxes, maximize my investment returns, cover me with adequate insurance, and protect my savings seems like a bit much to put on one entity. Do I need either of them? Won't the Internet and sites like this one suffice? Need no. However, how much time are you prepared to spend learning the basics of strategies that work for you? How much money are you prepared to put into things to learn what works and doesn't? While it is your decision, consider how to what extent do you diagnose your medical issues through the internet versus going to see a doctor? Be careful of how much of a do it yourself approach you want to go here and recognize that there are multiple approaches that may work. The question is which trade-offs are OK for you. |
Starting a side business slowly | This is a great question! I've been an entrepreneur and small business owner for 20+ years and have started small businesses in 3 states that grew into nice income streams for me. I've lived off these businesses for 20+ years, so I know it can be done! First let me start by saying that the rules, regulations, requirements and laws for operating a business (small or large) legally, for the most part, are local laws and regulations. Depending on what your business does, you may have some federal rules to follow, but for the most part, it will be your locality (state, county, city) that determines what you'll have to do to comply and be "legal". Also, though it might be better in some cases to incorporate (and even required in some circumstances), you don't always have to. There are many small businesses (think landscapers, housekeepers, babysitters, etc.) that get income from their "business operations" and do so as "individuals". Of course, everyone has to pay taxes - so as long as you property record your income (and expenses) and properly file your tax returns every year, you are "income tax legal". I won't try to answer the income tax question here, though, as that can be a big question. Also, though you certainly can start a business on your own without hiring lawyers or other professionals (more on that below), when it comes to taxes, I definitely recommend you indeed plan to hire a tax professional (even if it's something like H&R Block or Jackson Hewitt, etc). In some cities, there might even be "free" tax preparation services by certain organizations that want to help the community and these are often available even to small businesses. In general, income taxes can be complicated and the rules are always changing. I've found that most small business owners that try to file their own taxes generally end up paying a lot more taxes than they're required to, in essence, they are overpaying! Running a business (and making a profit) can be hard enough, so on to of that, you don't need to be paying more than you are required to! Also, I am going to assume that since it sounds like it would be a business of one (you), that you won't have a Payroll. That is another area that can be complicated for sure. Ok, with those generics out of the way, let me tackle your questions related to starting and operating a business, since you have the "idea for your business" pretty figured out. Will you have to pay any substantial amount of money to attorneys or advisors or accountants or to register with the government? Not necessarily. Since the rules for operating a business legally vary by your operating location (where you will be providing the service or performing your work), you can certainly research this on your own. It might take a little time, but it's doable if you stick with it. Some resources: The state of Florida (where I live) has an excellent page at: http://www.myflorida.com/taxonomy/business/starting%20a%20business%20in%20florida/ You might not be in Florida, but almost every state will have something similar. What all do I need to do to remain on the right side of the law and the smart side of business? All of the answers above still apply to this question, but here are a few more items to consider: You will want to keep good records of all expenses directly related to the business. If you license some content (stock images) for example, you'll want to document receipts. These are easy usually as you know "directly". If you subscribe to the Apple Developer program (which you'll need to if you intend to sell Apps in the Apple App Stores), the subscription is an expense against your business income, etc. You will want to keep good records of indirect costs. These are not so easy to "figure out" (and where a good accountant will help you when this becomes significant) but these are important and a lot of business owners hurt themselves by not considering these. What do I mean? Well, you need an "office" in order to produce your work, right? You might need a computer, a phone, internet, electricity, heat, etc. all of which allow you to create a "working environment" that allows you to "produce your product". The IRS (and state tax authorities) all provide ways for you to quantify these and "count them" as legitimate business expenses. No, you can't use 100% of your electric bill (since your office might be inside your home, and the entire bill is not "just" for your business) but you are certainly entitled to some part of that bill to count as a business expense. Again, I don't want to get too far down the INCOME TAX rabbit hole, but you still need to keep track of what you spend! You must keep good record of ALL your income. This is especially important when you have money coming in from various sources (a payroll, gifts from friends, business income from clients and/or the App Stores, etc.) Do not just assume that copies of your bank deposits tell the whole story. Bank statements might tell you the amount and date of a deposit, but you don't really know "where" that money came from unless you are tracking it! The good news is that the above record keeping can be quite easy with something like Quicken or QuickBooks (or many many other such popular programs.) You will want to ensure you have the needed licenses (not necessarily required at all for a lot of small businesses, especially home based businesses.) Depending on your business activity, you might want to consider business liability insurance. Again, this will depend on your clients and/or other business entities you'll be dealing with. Some might require you to have some insurance. Will be efforts even be considered a business initially until some amount of money actually starts coming in? This might be a legal / accountant question as to the very specific answer from the POV of the law and taxing authorities. However, consider that not all businesses make any money at all, for a long time, and they definitely "are a business". For instance, Twitter was losing money for a long time (years) and no one would argue they were not a business. Again, deferring to the attorneys/cpas here for the legal answer, the practical answer is that you're performing "some" business activity when you start creating a product and working hard to make it happen! I would consider "acting as" a business regardless! What things do I need to do up-front and what things can I defer to later, especially in light of the fact that it might be several months to a couple years before any substantial income starts coming in? This question's answer could be quite long. There are potentially many items you can defer. However, one I can say is that you might consider deferring incorporation. An individual can perform a business activity and draw income from it legally in a lot of situations. (For tax purposes, this is sometimes referred to as "Schedule-C" income.) I'm not saying incorporation is a bad thing (it can shield you from a lot of issues), but I am saying that it's not necessary on day 1 for a lot of small businesses. Having said that, this too can be easy to do on your own. Many companies offer services so you can incorporate for a few hundred dollars. If you do incorporate, as a small business of one person, I would definitely consider a tax concept called an "S-Corp" to avoid paying double taxes.) But here too, we've gone down the tax rabbit hole again. :-) |
Does this sound like a great idea regarding being a landlord and starting a real estate empire? | A lot of people do this. For example, in my area nice townhouses go for about $400K, so if you have $80,000 you can buy one and rent it. Here are the typical numbers: So you would make $350 per month or $4,200 per year on $80,000 in capital or about 5% profit. What can go wrong: (1) The property does not rent and sits vacant. You must come up with $2100 in mortgage payments, taxes, and insurance every month without fail or default. (2) Unexpected expenses. A new furnaces costs over $5,000. A new roof costs $7,000. A new appliance costs $600 to $2000 depending on how upscale your property is. I just had a toilet fixed for a leaky plunger. It cost me $200. As you can see maintenance expenses can quickly get a lot higher than the $50 shown above... and not only that, if you fix things as cheaply as possible (as most landlords do), not only does that decrease the rentability of the property, but it causes stuff to break sooner. (3) Deadbeats. Some people will rent your property and then not pay you. Now you have a property with no income, you are spending $2100 per month to pay for it, AND you are facing steep attorney fees to get the deadbeats evicted. They can fight you in court for months. (4) Damage, wear and tear. Whenever a tenant turns over there is always a lot of broken or worn stuff that has to be fixed. Holes in the wall need to be patched. Busted locks, broken windows, non-working toilets, stains on the carpet, stuck doors, ripped screens, leaky showers, broken tiles, painting exterior trim, painting walls, painting fences, etc. You can spend thousands every time a tenant changes. Other caveats: Banks are much more strict about loaning to non home owners. You usually have to have reserve income. So, if you have little or no income, or you are stretched already, it will be difficult to get commercial loans. For example, lets say your take-home pay is $7,000 and you have no mortgage at all (you rent), then it is fine, the bank will loan you the money. But lets say you only have $5,000 in take home pay and you have an $1,800 mortgage on your own home. In that case it is very unlikely a bank will allow you to assume a 2nd mortgage on a rental property. The more you try to borrow, the more reserve income the bank will require. This tends to set a limit on how much you can leverage. |
Unemployment Insurance Through Options | That's not unemployment insurance. Because it's perfectly possible, and even likely, that your industry will do badly but you'll keep your job, or that your industry will do well but you'll lose your job anyway. Any bet you make to insure yourself against unemployment has to be individually about you -- there are no suitable proxies. |
What is a “Junk Bond”? | From wikipedia: In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade at the time of purchase. These bonds have a higher risk of default or other adverse credit events, but typically pay higher yields than better quality bonds in order to make them attractive to investors. In terms of your second question, you have the causality backwards. They are called junk bonds because they have a higher risk of default. |
What is the purpose of the wash sale rule? | Equal sized gains and losses in alternating years would lead to an unjust positive tax. On the contrary. If I can take my gains at the long term rate (15%) in even years, but take losses in odd years, up to $3000, or let them offset short term gains at ordinary rate, I've just gamed the system. What is the purpose of the wash sale rule? Respectfully, we here can do a fine job of explaining how a bit of tax code works. And we can suggest the implication of those code bits. But, I suspect that it's not easy to explain the history of particular rules. For wash sale, the simple intent is to not let someone take a loss without actually selling the stock for a time. You'd be right to say the +/- 30 days is arbitrary. I'd ask you to keep 2 things in mind if you continue to frequent this board - |
Got a large cash sum, wanna buy stocks. Should I buy all at once, or spread it over time? | When you hear advice to buy index funds, that usually comes with two additional pieces of investment discipline advice that are important: These two elements are important to give you relative predictability in your outcome 20 years from now. In this old blog post of mine I linked to Warren Buffett talking about this, also mentioned it in a comment on another answer: http://blog.ometer.com/2008/03/27/index-funds/ It's perfectly plausible to do poorly over 20 years if you buy 100% stocks at once, without dollar-cost averaging or rebalancing. It's very very very plausible to do poorly over 10 years, such as the last 10 in fact. Can you really say you know your financial situation in 20-30 years, and for sure won't need that money? Because predictability is important, I like buying a balanced fund and not "pure stocks": http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ (feel a little bad linking to my blog, but retyping all that into this answer seems dumb!) Here's another tip. You can go one step past dollar cost averaging and try value averaging: http://www.amazon.com/Value-Averaging-Strategy-Investment-Classics/dp/0470049774 However, chances are you aren't even going to be good about rebalancing if it's done "by hand," so personally I would not do value averaging unless you can find either a fund or a financial advisor to do it for you automatically. (Finance Buff blog makes a case for a financial advisor, in case you like that more than my balanced fund suggestion: http://thefinancebuff.com/the-average-investor-should-use-an-investment-advisor-how-to-find-one.html) Like rebalancing, value averaging makes you buy more when you're depressed about the market and less when it's exciting. It's hard. (Dollar cost averaging is easily done by setting up automatic investment, of course, so you don't have to do it manually in the way you would with value averaging.) If you read the usual canonical books on index funds and efficient markets it's easy to remember the takeaway that nobody knows whether the market will go up or down, and yes you won't successfully time the market. But what you can do successfully is use an investment discipline with risk control: assume that the market will fluctuate, that both up and down are likely and possible, and optimize for predictability in light of that. Most importantly, optimize to take your emotions and behavior out of the picture. Some disciplines for example are: there are dozens out there, many of them snake oil, I think these I mentioned are valid. Anyway, you need some form of risk control, and putting all your money in stocks at once doesn't give you a lot of risk control. There's no real need to get creative. A balanced fund that uses index funds for equity and bond portions is a great choice. |
What is the effect of a cancelled stock order on a stock and the market? | That article, like almost any article written by a non-expert and quoting only "research" from lobbying groups, hugely misses the point. The vast majority of orders that end up being cancelled are cancelled as a standard part of exchanges' official market-maker programs. Each exchange wants you and me to know that it has liquidity -- that when we go to buy or sell some stock, there will be someone waiting on the other side of the trade. So the exchange pays (via lowered fees or even rebates) hundreds of registered market makers to constantly have orders resting in each product's order book within a few ticks of the current NBBO or the last trade price. That way, if everyone else should suddenly disappear from the market, you and I will still be able to trade our shares for a price somewhat close to the last trade price. But market makers who are simply acting in this "backstop" role don't actually want to have their orders filled, because those orders will almost always lose them money. So as prices rise and fall (as much as tens of times per second), the market makers need to cancel their resting orders (so they don't get filled) and add new ones at new prices (so they meet their obligations to the exchange). And because the number of orders resting in any given product's order book is vastly larger than the number of actual trades that take place in any given time period, naturally the number of cancellations is also going to hugely outweigh the number of actual trades. As much as 97% to 3% (or even more). But that's completely fine! You and I don't have to care about any of that. We almost never need the market makers to be there to trade with us. They're only there as a backstop. There's almost always plenty of organic liquidity for us to trade against. Only in the rare case where liquidity completely dries up do we really care that the registered market makers are there. And in those cases (ideally) the market makers can't cancel their orders (depending on how well the exchange has set up its market maker program). So, to answer your question, the effect of standard order cancellation on a stock is essentially none. If you were to visualize the resting orders in a product's book as prices moved up and down, you would essentially see a Gaussian distribution with mean at the last trade price, and it would move up and down with the price. That "movement" is accomplished by cancellations followed by new orders. P.S. As always, keep in mind that your and my orders almost never actually make it to a real stock exchange anymore. Nowadays they are almost always sent to brokers' and big banks' internal dark pools. And in there you and I have no idea what shenanigans are going on. As just one example, dark pools allow their operators and (for a fee) other institutional participants access to a feature called last look that allows them to cancel their resting order as late as after your order has been matched against it! :( Regarding the question in your comment ... If Alice is sending only bona fide orders (that is, only placing an order at time T if, given all the information she has at time T, she truly wants and intends for it to be filled) then her cancellation at a later time actually adds to the effectiveness of and public perception of the market as a tool for price discovery (which is its ultimate purpose). [In the following example imagine that there are no such things as trading fees or commissions or taxes.] Let's say Alice offers to buy AAPL at $99.99 when the rest of the market is trading it for $100.00. By doing so she is casting her vote that the "fair value" of a share of AAPL is between $99.99 and $100.00. After all, if she thought the fair value of a share of AAPL was higher -- say, between $100.00 and $100.01 -- then she should be willing to pay $100.00 (because that's below fair value) and she should expect that other people in the market will not soon decide to sell to her at $99.99. If some time later Alice does decide that the fair value of AAPL is between $100.00 and $100.01 then she should definitely cancel her order at $99.99, for exactly the reason discussed above. She probably won't get filled at $99.99, and by sitting there stubbornly she's missing out (potentially forever) on the possibility to make a profit. Through the simple act of cancelling her $99.99 order, Alice is once again casting a vote that she no longer thinks that's AAPL's fair value. She is (very slightly) altering the collective opinion of the entire market as to what a share of AAPL is worth. And if her cancellation then frees her up to place another order closer to her perceived fair value (say, at $100.00), then that's another vote for her honest optinion about AAPL's price. Since the whole goal of the market is to get a bunch of particpants to figure out the fair value of some financial instrument (or commodity, or smart phone, or advertising time, etc.), cancellations of honest votes from the past in order to replace them with new, better-informed honest votes in the present can only be a good thing for the market's effectiveness and perceived effectiveness. It's only when participants start sending non-honest votes (non bona fide orders) that things start to go off the rails. That's what @DumbCoder was referring to in his comment on your original question. |
15 year mortgage vs 30 year paid off in 15 | I just wanted to point out that the most "leverage" for pre-paying occurs at the very beginning of the mortgage, and declines rapidly after that. So, your very best scenario is to get the 30-year, and make one extra payment entirely to principal the first month of every year. This causes the amortization to drop by 96 payments, to about 22 years. I don't know of any other way that you can get nearly 4 times value for your money (22 payments extra to save 96 payments later). After that, reducing from 22 to 15 years takes more of your money for the same result, but do it if you want. I actually did this, and it put me way ahead when I sold the house about 12 years later. |
How to account for startup costs for an LLC from personal money? | You don't even need to formally loan the LLC any money. You pay for the setup costs out of pocket, and then once the LLC is formed, you reimburse yourself (just like with an expense report). Essentially you submit an expense report to the LLC for the startup costs, and the LLC pays out a check to you, categorized for the startup expenses. |
Should I invest in the world's strongest currency instead of my home currency? | The best thing is to diversify across multiple currencies. USD and EUR seem reliable. But not 100% reliable to keep all your investments in this types of currencies. Invest part of your savings in USD, part - in EUR, and part in your home country's currency. Apart from investing I recommend you to have certain sum in cash and certain on your bank account. |
Additional credit card with different limit on same account? | Generally not. Since authorized user cards are the same account and the difference between the two (the original and the AU card) are minimal. Note, there's nothing technically stopping banks from offering this as a feature, two cards do have identifiers that indicate they're separate cards, but the banks concern for your needs stops at how much they can bleed from you, and "helping you control your spending" is not part of that. |
When is an IPO considered failure? | Just skimming through the Wikipedia article on airberlin, I notice there is more to the story than simply "airberlin's IPO failed, so they postponed it and did it anyways." 3 points to keep in mind about IPOs: 1) An IPO is the mechanism for taking a private company and setting it up for shares to be owned by "the public". 2) The process of selling shares to the public often allows original owners and/or early investors to "cash out". Most countries (including member nations of the EU) limit some transactions like pre-IPO companies to "accredited investors". 3) Selling shares to the public also can allow the company to access more funds for growth. This is particularly important in a capital-intensive business like an airline; new B737-MAX costs >$110M. New A320neo costs >$105M USD. Ultimately, the question of a successful IPO depends on how you define success. Initially, there was a lot of concern that the IPO was set up with too much focus on goal #2... allowing the management & owners to cash out. It looks like the first approach was not meeting good opinions in the market during 2006. A major concern was that the initial approach focused on management only cashing out its shares and no money actually going to the company to support its future. The investment bankers restructured the IPO, including the issuance of more new shares so that more $ could end up in the company's accounts, not just in the accounts of the management. If anything, it's still a pretty successful IPO given that the shares were successfully listed, the company collected the money it needed to invest and grow, and the management still cashed out. |
Can I use FOREX markets to exchange cash? | Because the standard contract is for 125,000 euros. http://www.cmegroup.com/trading/fx/g10/euro-fx_contractSpecs_futures.html You don't want to use Microsoft as an analogy. You want to use non financial commodities. Most are settled in cash, no delivery. But in the early 80's, the Hunt brothers caused a spectacular short squeeze by taking delivery sending the spot price to $50. And some businesses naturally do this, buying metal, grain, etc. no reason you can't actually get the current price of $US/Euro if you need that much. |
How can I buy and sell the same stock on the same day? | If you're going to be a day trader, you really need to know your stuff. It's risky, to say the least. One of the most important elements to being successful is having access to very fast data streams so that you can make moves quickly as trends stat to develop in the markets. If you're planning on doing this using consumer-grade sites like eTrade, that's not a good idea. The web systems of many of the retail brokerage firms are not good enough to give you data fast enough for you to make good, timely decisions or to be able to execute trades way that day traders do in order to make their money. Many of those guys are living on very thin margins, sometimes just a few cents of movement one way or the other, so they make up for it with a large volume of trades. One of the reasons you were told you need a big chunk of money to day trade is that some firms will rent you out a "desk" and computer access to day trade through their systems if you're really serious about it. They will require you to put up at least a minimum amount of money for this privilege, and $25k may not be too far out of the ballpark. If you've never done day trading before, be careful. It doesn't take much to get caught looking the wrong way on a trade that you can't get out of without losing your shirt unless you're willing to hold on to the stock, which could be longer than a day. Day trading sounds very simple and easy, but it isn't. You need to learn about how it works (a good book to read to understand this market is "Flash Boys" by Michael Lewis, besides being very entertaining), because it is a space filled with very sophisticated, well-funded firms and individuals who spend huge sums of money to gain miniscule advantages in the markets. Be careful, whatever you do. And don't play in day trading with your retirement money or any other money you can't afford to walk away from. I hope this helps. Good luck! |
Why are prices in EUR for consumer items often the same number as original USD price, but the GBP price applies the actual exchange rate? | The simplest answer would be: Because they can. Why charge less for something if people will pay more? One example are Apple products. While there the price number is not exactly the same in EUR and USD, they are so close that, effectively, the EUR product is more expensive. Many things go into a price. There might be reasons for products in the EU being more expensive to produce or distribute. Or people in the EU might be in general more willing to pay more for a certain product. In that case, a company would forgo profits when they offered it cheaper. Also, prices are relative. Is the USD price the "correct" one and the exchange rate should dictate what the EUR price is? Or vice versa? |
Why do banks finance shared construction as mortgages instead of financing it directly and selling the apartments in a building? | The most succinct answer is "Banks are in the Money business". Not construction, not real estate, not any of the other things they may find find themselves sometimes being dragged (foreclosure) or tempted (construction) into. "Money" is their core competence, and as good business people they recognize that straying outside that just dilutes their focus. |
How to understand expenses matter relative to investment type for mutual funds? | The net return reported to you (as a percentage) by a mutual fund is the gross return minus the expense ratio. So, if the gross return is X% and the expense ratio is Y%, your account will show a return of (X-Y)%. Be aware that X could be negative too. So, with Y = 1, If X = 10 (as you might get from a stock fund if you believe historical averages will continue), then the net return is 9% and you have lost (Y/X) times 100% = 10% of the gross return. If X = 8 (as you might get from a bond fund if you believe historical averages will continue), then the net return is 7% and you have lost (Y/X) times 100% = 12.5% of the gross return. and so on and so forth. The numbers used are merely examples of the returns that have been obtained historically, though it is worth emphasizing that 10% is an average return, averaged over many decades, from investments in stocks, and to believe that one will get a 10% return year after year is to mislead oneself very badly. I think the point of the illustrations is that expense ratios are important, and should matter a lot to you, but that their impact is proportionately somewhat less if the gross return is high, but very significant if the gross return is low, as in money-market funds. In fact, some money market funds which found that X < Y have even foregone charging the expense ratio fee so as to maintain a fixed $1 per share price. Personally, I would need a lot of persuading to invest in even a stock fund with 1% expense ratio. |
What's the process to buy an old house to tear it down and create a new one? | Thank you for your response KeithB and Ross. I was researching more about this and looks like I have to follow all these steps (please, correct me if I'm wrong): |
Investing/business with other people's money: How does it work? | Basically, you either borrow money, or get other people to invest in your business by buying stock or something analogous. Sometimes you can get people to "park" money with you. For example, many people deposit money in a bank checking account. They don't get any interest or other profit from this, they just do it because the bank is a convenient place to store their money. The bank then loans some percentage of this money out and keeps the interest. I don't doubt that people have come up with more clever ways to use other people's money. Borrowing money for an investment or business venture is risky because if you lose money, you may be unable to pay it back. On the other hand, investors expect a share of the profit, not just a fixed interest rate. |
GAAP or non-GAAP numbers in nasdaq.com? | You're interpreting things correctly, at least at a high level. Those numbers come from the 10Q filing and investor summary from Microsoft, but are provided to NASDAQ by Zacks Investment Research, as noted on the main page you linked to. That's a big investment data firm. I'm not sure why they reported non-GAAP Microsoft numbers and not, say, AAPL numbers; it's possible they felt the non-GAAP numbers reflect things better (or have in the past) for some material reason, or it's possible they made a typo, though the last three quarters at least all used non-GAAP numbers for MSFT. MSFT indicates that the difference in GAAP and non-GAAP revenue is primarily deferred revenue (from Windows and Halo). I did confirm that the SEC filing for MSFT does include the GAAP number, not the non-GAAP number (as you'd expect). I will also note that it looks like the 10Q is not the only source of information. Look at ORCL for example: they had in the March 2016 report (period ending 2/29/16) revenues of .50/share GAAP / .64/share non-GAAP. But the NASDAQ page indicates .59/share for that quarter. My suspicion is that the investment data firm (Zack's) does additional work and includes certain numbers they feel belong in the revenue stream but are not in the GAAP numbers. Perhaps MS (and Oracle) have more of those - such as deferred software revenues (AAPL has relatively little of that, as most of their profit is hardware). |
First time consultant, doubts on Taxation | This is how a consulting engagement in India works. If you are registered for Service Tax and have a service tax number, no tax is deducted at source and you have to pay 12.36% to service tax department during filing (once a quarter). If you do not have Service tax number i.e. not registered for service tax, the company is liable to deduct 10% at source and give the same to Income Tax Dept. and give you a Form-16 at the end of the financial year. If you fall in 10% tax bracket, no further tax liability, if you are in 30%, 20% more needs to be paid to Income Tax Dept.(calculate for 20% tax bracket). The tax slabs given above are fine. If you fail to pay the remainder tax (if applicable) Income Tax Dept. will send you a demand notice, politely asking you to pay at the end of the FY. I would suggest you talk to a CA, as there are implications of advance tax (on your consulting income) to be paid once a quarter. |
How does start-up equity end up paying off? | The details of how you can convert your 5% equity share to cash or stocks will be detailed in writing in the legal agreement you have already signed. If you do not have any signed written agreement, there is no 5%. Since 0% of anything is zero, you can expect to get $0 some time within the next few years. Lastly, if the person running the business, tells you that there is 5% equity for you, even though it is not in writing, that is extremely unlikely to be the case. This is because the Seller of the equity has no obligation whatsoever to pay you. In fact, they are obligated by their other agreements with actual shareholders not to dilute their equity without good cause. So, odds are, if your agreement is not in writing, not only will it not be honored, but it probably can't be honored. |
What argument(s) support the claim that long-term housing prices trend upward? | Several people have mentioned the obvious: inflation. But let's assume we are talking about real (inflation adjusted) prices. One argument is that populations keep rising while the land does not change. So the price of homes in desirable places gets pushed up and people move to second-best locations, pushing those prices up, etc. Similar Malthusian argument holds for raw materials (steel, granite, fine wood, etc.). Another argument is that the economy has a long-term upward trajectory (that's the assumption). So each generation, as a whole, has more disposable real income than the previous. As disposable income increases, people tend to put more and more money into their homes, pushing prices up. True for all goods, of course, but it may be more true for real estate than for other types of goods. |
Do algorithmic traders make money from short-term or long-term gains? | Algorithmic trading essentially banks on the fact that a price will fluctuate in tiny amounts over short periods of time, meaning the volatility is high in that given time frame. As the time frame increases the efficiency of algorithmic trading decreases and proper investment strategies such as due diligence, stock screening, and technical analysis become the more efficient methods. Algorithms become less effective as the time frame increases due to the smoothing effect of volatility over time. Writing an algorithm that could predict future long-term prices would be an impossible feat because as the time frame is scaled up there are far less price fluctuations and trends (volatility smooths out) and so there is little to no benchmark for the formulas. An algorithm simply wouldn't make sense for a long-term position. A computer can't predict, say, the next quarter, an ousted CEO, a buyout, or anything else that could effect the price of the security, never mind the psychology behind it all. Vice versa, researching a company's fundamentals just to bank on a 0.25% daily swing would not be efficient. Tax advantages or not, it is the most efficient methods that are preferred for a given time-scale of trading. |
Paying Tax on Stocks Trading | The answer to your question doesn't depend on who you trade with but what country you live in. If you live outside of the US, you will have to pay tax on dividends... sometimes. This depends on the tax treaty that your country has with the US. Canada, Australia, UK and a few other countries have favorable tax treaties with the US that allow you to not be double taxed. You must look into the tax treaty that your home country has with the US to answer the question. Each country is different. |
Can you explain why it's better to invest now rather than waiting for the market to dip? | With a long enough time horizon, no matter when you buy, equities almost always outperform cash and bonds. There's an article here with some info: http://www.fool.co.uk/investing-basics/how-when-and-where-to-invest/ Holding period where shares have beaten cash There was a similar study done which showed if you picked any day in the last 100 years, no matter if the market was at a high or low, after 1 year your probability of being in profit was only 0.5, but after 10-20 years it was almost certainly 1.0. Equities compound dividends too, and the best place to invest is in diversified stock indices such as the S&P500, FTSE100, DOW30 or indices/funds which pay dividends. The best way to capture returns is to dollar cost average (e.g. place a lump sum, then add $x every month), to re-invest dividends, and oh, to forget about it in an IRA or SIPP (Self invested pension) or other vehicle which discourages tampering with your investment. Yes, values rise and fall but we humans are so short sighted, if we had bought the S&P in 2007 and sold in 2009 in fear, we would have missed out on the 25% gain (excluding dividends) from 2007-2014. That's about 3% a year gain even if you bought the 2007 high -beating cash or bonds even after the financial crisis. Now imagine had you dollar cost averaged the entire period from 2007-2014 where your gain would be. Your equity curve would have the same shape as the S&P (with its drastic dip in 2009) but an accelerated growth after. There are studies if you dig that demonstrate the above. From experience I can tell you timing the market is nigh impossible and most fund managers are unable to beat the indices. Far better to DCA and re-invest dividends and not care about market gyrations! .. |
What considerations are there for making investments on behalf of a friend? | Pool their money into my own brokerage account and simply split the gains/losses proportional to the amount of money that we've each contributed to the account. I'm wary of this approach due to the tax implications and perhaps other legal issues so I'd appreciate community insight here. You're right to be wary. You might run into gift tax issues, as well as income tax liability and appropriation of earnings. Not a good idea at all. Don't do this. Have them set up their own brokerage account and have them give me the login credentials and I manage the investments for them. This is obviously the best approach from a tracking and tax perspective, but harder for me to manage; to be honest I'm already spending more time than I want to managing my own investments, so option 1 really appeals to me if the drawbacks aren't prohibitive. That would also require you to be a licensed financial adviser, at least to the best of my understanding. Otherwise there's a lot of issues with potential liability (if you make investments that lose money - you might be required to repay the losses). You should do this only with a proper legal and tax advice - from an attorney and/or CPA/EA licensed in your state. There are proper ways to do this (limited partnership or LLC, for example), but you have to cover your ass-ets with proper operating agreements in place that have to be reviewed by legal counsel of each of the members/partners, |
What is this type of risk-free investment called? | These products are real, but they aren't risk free: 1) The bank could go under in that time. (Are the investments FDIC insured?) 2) Your money is locked up for 5 years, probably with either no way to get it back out or a stiff penalty for early withdrawal, so you risk having a better investment opportunity come along and not having the liquidity to take advantage of it. 3) If the market does go down and you get 100% of your principal back, the endless ratchet of inflation practically guarantees that $10K will be worth less 5 years from now than it is today, so you risk losing purchasing power even if you're not losing any nominal quantity of money. It's still a fairly low-risk investment option, particularly if it's tied to something that you have reason to believe will increase in value significantly faster than inflation in the next 5 years. |
What's the difference when asked for “debit or credit” by a store when using credit and debit cards? | Credit in debit way - the card simply functions like a debit card for that transaction - pulling cash from your checking account. No difference. You've simply discovered the fact that some banks are using the same piece of plastic for two functions, debit which draws funds directly from your checking, and credit which offers you time to pay a bill the comes in some time later. It's a personal choice. |
Choosing which ESPP stocks to sell? | the difference would be taxes... Lets say you have two lots, one with a 10 dollar gain, and one with a 20 dollar gain. And lets say you decide to sell one lot this year, and the other lot in 10 years. AND, lets say that it turns out the stock price is exactly the same in ten years as it is when you sell the first lot. In all likelyhood, you'll have more income, and therefore you are likely to be in a different marginal tax rate. If you believe that you're more likely to pay more taxes in 10 years, then sell the lot with the higher gain now. If you believe you're more likely to pay more taxes now, then sell the lot with the lower gain now. |
What is a good 5-year plan for a college student with $15k in the bank? | First thing to do right now, is to see if there's somewhere equally liquid, equally risk free you can park your cash for higher rate of return. You can do this now, and decide how much to move into less liquid investments on your own pace. When I was in grad school, I opened a Roth IRA. These are fantastic things for young people who want to keep their options open. You can withdraw the contributions without penalty any time. The earnings are tax free on retirement, or for qualified withdrawls after five years. Down payments on a first home qualify for example. As do medical expenses. Or you can leave it for retirement, and you'll not pay any taxes on it. So Roth is pretty flexible, but what might that investment look like? It in depends on your time horizon; five years is pretty short so you probably don't want to be too stock market weighted. Just recognize that safe short term investments are very poorly rewarded right now. However, you can only contribute earnings in the year they are made, up to a 5000 annual maximum. And the deadline for 2010 is gone. So you'll have to move this into an IRA over a number of years, and have the earnings to back it. So in the meanwhile, the obvious advice to pay down your credit card bills & save for emergencies applies. It's also worth looking at health and dental insurance, as college students are among the least likely to have decent insurance. Also keep a good chunk on hand in liquid accounts like savings or checking for emergencies and general poor planning. You don't want to pay bank fees like I once did because I mis-timed a money transfer. It's also great for negotiating when you can pay in cash up front; my car insurance for example, will charge you more for monthly payments than for every six months. Or putting a huge chunk down on a car will pretty much guarantee the best available dealer financing. |
Does investing money in other currencies help pad losses in case of a stock market crash? | If the equity market in the USA crashed, its very likely equity markets everywhere else would crash. The USA has a high number of the world's largest businesses and there are correlations between equity markets. So you need to think of equities as a global asset class, not regional. Your question is then a question about the correlation between equity markets and currency markets. Here's a guess: If equity markets crashed, you would see a lot of panic selling of stocks denominated in many currencies, but probably the most in USD, due to the large number of the world's largest businesses trading on US stock exchanges. Therefore, when the rest of the world sells US equities they receive cash USD, which they might sell for their local currency. That selling pressure would cause USD to fall. But, when equity markets crash there's a move to safety of the bond markets. The world's largest bond markets are denominated in which currency? Probably USD. So those who receive USD for their equities are going to spend that USD on bonds. In which case there is probably no correlation between equity markets and currency markets at all. A quick google search shows this kind of thing |
Is it ever a good idea to close credit cards? | Assuming that a person has good financial discipline and is generally responsible with spending, I think that having a few hundred or thousand dollars extra of available credit is usually worth more to that person for the choice/flexibility it provides in unforeseen circumstance, versus the relatively minor hit that could be taken to their credit score. |
Why do gas stations charge different amounts in the same local area? | This is known as "Zone Pricing" or "Geographical Pricing". http://articles.latimes.com/2005/jun/19/business/fi-calprice19 Such price variations may seem odd, but they are not unique to Anaheim. On any given day, in any major U.S. city, a single brand of gasoline will sell for a wide range of prices even when the cost to make and deliver the fuel is the same. The primary culprit is zone pricing, a secret and pervasive oil company strategy to boost profits by charging dealers different amounts for fuel based on traffic volume, station amenities, nearby household incomes, the strength of competitors and other factors. It's a controversial strategy, but the courts have thus far deemed it legal, and the Federal Trade Commission recently said the effect on consumers was ambiguous because some customers got hurt by higher prices while others benefited from lower ones. http://en.wikipedia.org/wiki/Geographical_pricing Zone pricing, as practiced in the gasoline industry in the United States, is the pricing of gasoline based on a complex and secret weighting of factors, such as the number of competing stations, number of vehicles, average traffic flow, population density, and geographic characteristics. This can result in two branded gas stations only a few miles apart selling gasoline at a price differential of as much as $0.50 per gallon. But the short answer is "because they can". It's legal, provided that some people are paying less while others are paying more. Essentially the larger, richer audience is subsidizing the product for other areas. It's not terribly different than the way most drugs are priced in the world. |
Is it possible to make money by getting a mortgage? | the mortgage interest deduction alone couldn't make this work, but if you realize less income by living off the mortgage funds, then it could definitely reduce your taxes by much more than the cost of the mortgage interest. particularly, if you are waiting for some future cut-off date (e.g. turning 59.5 and getting access to roth funds, turning 70 and getting social security, simply doing a roth conversion with strategic recharacterization at age 40 and waiting 5 years to get the money out penalty-free, etc.). and that future date could be quite far off if you only use a small fraction of the total mortgage each year. plus, it is fairly reasonable to assume that equity market returns will outpace mortgage rates, especially if you are "rich" and don't need to worry about living on the street even if the market hits unprecedented lows. while i find most financial advisers to be incompetent (most people really...), i wouldn't write this guy off, just because he left out the specific details that made the strategy work for one particular client. |
Buying a multi-family home to rent part and live in the rest | Others have already made good points, so I'll just add a few more: You say that if you bought it, your mortgage, insurance, and taxes minus the rental income from the bottom floor would leave you with costs of 1/4 of your current rent. That means you're getting a fantastic deal on the purchase price. I suspect you may be underestimating some of those costs. So, get exact figures on the mortgage, insurance and taxes and do the math. If it is that good, go for it, just make sure to get that home inspection (in case there's major problems and they're trying to get out while the gettin's good) Also, some advice: Be prepared to cover that entire monthly cost for a few months. Units can stand empty for a while. Also, you may want to rent out slowly - a good tenent found after a couple months is much better than a bad tenent found quickly. Also, have some money set aside for maintenence. As a renter, you've never really had to think about that before, but as a homeowner you do. As a landlord, it's even more important - you can not fix something in your own home for a while if you needed to wait, but in a tenent unit, you have to fix it immediately. Finally, taxes: You do get to deduct interest, and so on, but it'll work a little differently than you think. You'll have to split it in half (if the units are the same size) and deduct half the interest as a normal homeowner deduction, the other half as a business expense. Same for PMI, insurance, and property taxes. If you do maintenance that effects both units, like fixing the roof, half will be deductible, the other half not. However, maintenance that only affects the tenant unit is fully deductible. You can claim depreciation, but only for half. So, your starting amount you can depreciate would be (purchase price - land value)/2. Same thing here - half is your home, the other half is a business. Note that some things you'd think of as maintenance costs actually can't be deducted, only depreciated over time. Take that leaky roof, for example. If you replaced it instead of repairing it, you could not deduct your replacement costs. It counts as an improvement, and gets added to your cost-basis, where you depreciate it along with (half!) the house. If your tenant's refrigerator went out, and you replaced it, you couldn't deduct that either. However you can depreciate all of it on another schedule (seperate from home depreciation). If you repaired it instead, you can deduct all of it immediately. Taxes suck. |
Tax for Basket with Coupon containing two different VAT rates | The vendor needs to do this using apportionment, according to the VAT rules for mixed supplies: If you make mixed supplies and the individual supplies are not liable to VAT at the same rate then you need to work out the tax value of each supply in order to calculate how much tax is due. If the tax value is based on the total price you charge (see paragraph 7.3) you do this by splitting that price between the supplies. This is called an apportionment ... There is no special method of apportionment ... However, your calculations must be fair and you must be able to justify them. It is usually best to use one of the methods shown in section 32. The section 32 referred to really relates to apportioning use between business and non-business purposes, but it implies that splitting up the total price in proportion to the original prices would probably be fair. So in your example the vendor might split the £5 discount equally between the spoon and the carrycot as they had the same gross cost, and pay VAT as if each had cost £7.50 gross. The vendor could also do it in proportion to their net (pre-VAT) prices and thus apportion a bit more of the discount to the carrycot than the spoon, but as this would lead to them paying slightly more tax overall they probably wouldn't choose to. However, none of this is likely to be too relevant to a consumer, since in the UK prices must be presented as the gross (VAT-inclusive) amounts and so the discounts will also apply to those amounts. It will of course affect how much of the purchase price the vendor ends up paying on to the government and thus might indirectly affect what discounts the vendor is willing to offer. |
In the USA, why is the Free File software only available for people earning less than $62k? | Regardless of the source of the software (though certainly good to know), there are practical limits to the IRS 1040EZ form. This simplified tax form is not appropriate for use once you reach a certain level of income because it only allows for the "standard" deduction - no itemization. The first year I passed that level, I was panicked because I thought I suddenly owed thousands. Switching to 1040A (aka the short form) and using even the basic itemized deductions showed that the IRS owed me a refund instead. I don't know where that level is for tax year 2015 but as you approach $62k, the simplified form is less-and-less appropriate. It would make sense, given some of the great information in the other answers, that the free offering is only for 1040EZ. That's certainly been true for other "free" software in the past. |
What's the best use for this money? Its only a small amount but can make a big difference to me | First and foremost, it's about changing habits. It seems like you've learned a painful lesson with the car financing. That's a good start. I'd work on developing the habit of making a budget every month before you spend a penny. As for this money, I would pay off the Apple loan and put the rest in savings. Then pay off the entire credit card balance the month before the rate increases. The point of putting the money in savings is not about making the small amount of interest. You need to get in the habit of having money in an emergency fund and paying for unexpected emergencies out of that, not just throwing it on a credit card. Ideally, budget over the next few months to pay off the credit card out of your income, not out of savings. |
What are the risks of Dividend-yielding stocks? | Yep, there just is no free lunch. So called high dividend stocks are usually from companies that have stable cash flows but relatively little or moderate growth potential. Utility companies come to mind, let's take telecommunications as an example. Such stocks, usually, indeed are considered more conservative. In a bull market, they won't make high jumps, and in a bear market they shouldn't experience deep falls. I mean, just because the stock market fell by 10%, you're not going to stop using your phone. The stock might suffer a bit but the divided is still yielding you the same. However, fundamental data can have a significant impact. Let's say a recession hits the country of the telco. People might not get the newest iPhone and lock in to an expensive contract anymore, they might use cheaper forms of communication, they might stop paying bills, go bankrupt etc. This will have a severe impact on the company's cash flow and thus hit the stock in a double whammy: One, the dividend is gone. Two, the price will fall even further. There are basically two scenarios after that. Either the recession is temporary and your stock became a regular growth stock that at some point might bounce back and re-establish at the previous levels. Or the economy has contracted permanently but regained stability in which case you will again have a stock with a high dividend yield but based on a lower price. In conclusion: High dividend stocks make sense in a portfolio. But never consider their income to be safe. Reduce your risk by diversifying. |
Why do banks insist on allowing transactions without sufficient funds? | The laws about this changed in 2010 with the new Overdraft Protection Law HR 1261. § 140B. (c) Consumer consent opt-In.—A depository institution may charge overdraft coverage fees with respect to the use of an automatic teller machine or point of sale transaction only if the consumer has consented in writing, in electronic form, or in such other form as is permitted under regulations of the Bureau. Now when you sign up for a bank account you have to opt in to overdraft coverage (the bank transfers funds from other accounts to cover overdrafts), or overdraft protection (the bank simply bounces NSF checks). I'm pretty sure you could always set this option on your account, but banks were defaulting everyone's account that didn't think to ask such that overdrafts got paid and incurred fees. The law now prohibits them from using that as the default option. |
How should I utilize my money as I begin grad school? | For some ideas on investing priority guidelines, see Oversimplify it for me: the correct order of investing. Congratulations on being debt free! My advice to you is to do what you can to remain debt free. You could certainly invest the money; it will earn much more over the long-term in a stock mutual fund than it would left in a savings account. However, if you need any of this money in the next few years, it would be a shame if it lost money in the short-term. How much do you need to finish grad school? Don't invest that money in the stock market, because you will need it over the next few years. Likewise, think about other expenses that are coming up. Will your car need to be replaced in the next couple of years? Will you have enough income to meet your living expenses while you are in grad school, or will you need some of this to money to help with that? Finally, it would be good to keep some extra as an emergency fund, so you can easily pay for any unexpected expenses that come up. If you can make it through grad school debt free, you will be much better off than if you invest all the money but take out student loans in the process. After you've accounted for all of that, whatever is left of the money could definitely be invested. If your goal is to start a retirement fund, an index mutual fund invested inside a Roth IRA is a great place to start. |
Is a fixed-price natural gas or electricity contract likely to save money? | I have some numbers to share that may help. I've been tracking my home's natural gas consumption in a spreadsheet for years. Much of that time I'd only been interested in the quantity used – to measure my home's efficiency after certain upgrades – but in 2006 I also started tracking the "Gas Supply Charge" costs from my local utility, Enbridge, in Ontario, Canada. My numbers are for the gas commodity only (i.e. excluding delivery and customer charges.) I've never been on a fixed-price contract, so the numbers are supposed to be reflective of market rates. However, the numbers do differ from real "spot prices" because Enbridge estimates gas costs up-front and then applies a "gas cost adjustment" at later dates if their estimate was wrong. Natural gas cost per cubic meter for Chris's home http://img686.imageshack.us/img686/6406/naturalgascosts3priorye.png Since 2006, natural gas prices have been generally falling. The last cost I have on file, from my November 2009 bill, is 12.9 cents per cubic meter – being ~20 cents gas supply rate, less gas cost adjustment of ~7 cents. My average cost over that nearly 4 year period, January 2006 through November 2009, was 38.4 cents per cubic meter. Considering the current 5-year fixed rate I found is about 29 cents per cubic meter, there is a substantial premium to locking in when compared to current market rates. However, one can see that during the last 4 years, market prices did substantially exceed that rate for quite some time. Furthermore, when I last looked at those 5-year fixed rates perhaps a year or more ago, I couldn't find a company charging less than 39 cents per cubic meter. So, contract rates have fallen as well. Consequently, if we are at a natural gas price low and the economy is to recover, I tend to agree with Cart's answer and suggest it could be a good time to consider a fixed-rate contract. But, do your own due diligence and read the fine print if you go for it. UPDATE: In the interest of full disclosure, shortly after I did my own research above, I signed up for my first ever fixed-rate natural gas contract. :-) |
Is it impossible to get a home loan with a poor credit history after a divorce? | I am sorry for your troubles, but impressed with your problem solving skills. Keep going, things will get better. Your best hope is to find a place that does manual underwriting. If they do computer generated stuff, then you will be kicked for sure. If you can show 20% down, and have some savings, and have some history of paying bills, then you might be approved. Here in Florida, RP Funding still does manual underwriting. Another one that is mentioned is Church Hill mortgage. Also you might check with local credit unions. Of course your best bet to be approved is to be open and state upfront the challenges. You have to find someone that has the ability to think, has the ability to see passed the challenges, and has the authority to do so. |
How to file tax for the sale of stocks from form 1099B? | You report each position separately. You do this on form 8949. 7 positions is nothing, it will take you 5 minutes. There's a tip on form 8949 that says this, though: For Part I (short term transactions): Note. You may aggregate all short-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the total directly on Schedule D, line 1a; you are not required to report these transactions on Form 8949 (see instructions). For Part II (long term transactions): Note. You may aggregate all long-term transactions reported on Form(s) 1099-B showing basis was reported to the IRS and for which no adjustments or codes are required. Enter the total directly on Schedule D, line 8a; you are not required to report these transactions on Form 8949 (see instructions). If the 1099B in your case shows basis for each transaction as reported to the IRS - you're in luck, and don't have to type them all in separately. |
Is it true that the price of diamonds is based on a monopoly? | diamonds are intrinsically worthless -- and therefore have quite little resale value It may be true that De Beers has a near monopoly on diamond supply, but they are still a scarce resource, so their supply is still very limited. They do have resale value - that's one reason why diamond jewelry is stolen so often. There's just not a huge secondary market for diamonds that I know of (unlike cars, for example). You can sell diamond jewelry at pawn shops or online brokers, but you probably only get a fraction of their retail value. They are not intrinsically worthless. They do have value in the industrial sector as powerful cutters, although synthetic diamonds are much more prevalent in this market. Their value in industry is much lower than their worth as jewelry. Think about gold - it does not have a monopolic supplier but it still has a relatively very high value. |
How much total salary to allocate to defer $17,500 to 401(k)? | You're on the right track, and yes, that small difference is subject to income taxes. Do you use a payroll service? I do the same thing and use my payroll software to tweak the salary until the paycheck is just a few dollars every month (we run payroll once a month), with the rest going to the 401(k) and payroll taxes. So we're rounding up just a bit just so there's an actual paycheck with a positive number, and a bit does get withheld for fed/state income tax. Also keep in mind you can make a company match. If your plan is a solo 401(k) with just you and your wife as the sole employees, consider the 25% match for both of you. The match is not subject to payroll taxes because it is a company expense. IRS web page: http://www.irs.gov/Retirement-Plans/One-Participant-401(k)-Plans |
How to use a stop and limit order together? | You need to use one of each, so a single order wouldn't cover this: The stop-loss order could be placed to handle triggering a sell market order if the stock trades at $95 or lower. If you want, you could use a stop-limit order if you have an exit price in mind should the stock price drop to $95 though that requires setting a price for the stop to execute and then another price for the sell order to execute. The limit sell order could be placed to handle triggering a sell if the stock rises above $105. On the bright side, once either is done the other could be canceled as it isn't applicable anymore. |
Does reading financial statements (quarterly or annual reports) really help investing? | Reading financial statements is important, in the sense that it gives you a picture of whether revenues and profits are growing or shrinking, and what management thinks the future will look like. The challenge is, there are firms that make computers read filings for them and inform their trading strategy. If the computer thinks the stock price is below the growth model, it's likely to bid the stock up. And since it's automated it's moving it faster than you can open your web browser. Does this mean you shouldn't read them? In a sense, no. The only sensible trading strategy is to assume you hold things for as long as their fundamentals exceed market value. Financial statements are where you find those fundamentals. So you should read them. But your question is, is it worth it for investors? My answer is no; the market generally factors information in quickly and efficiently. You're better off sticking to passive mutual funds than trying to trade. The better reason to learn to read these filings is to get a better sense of your employer, potential employers, competitors and even suppliers. Knowing what your margins are, what your suppliers margins and acquisitions are, and what they're planning can inform your own decision making. |
What does a contract's worth mean? | $400M is the gross "check" the company will receive as payment for the project. The contract will specify payment schedule. And it can range from a payment per milestone achieved to a pay in full on completion. The profit will hopefully be positive, but it's not impossible for a bid to underestimate the full cost, resulting in no profit at all. In theory, if you knew the expected profit from the deal, you should be able to estimate the value it adds to the company's value. |
Convention for adding ishares (ETFs) into personal accounts | What account you put it in depends on why you have those different accounts. First, if you have them due to regulatory requirements, then you of course must follow said regulations. I doubt that's the case here. Otherwise, you might be splitting based on how they trade (ETFs trade as stocks) or you could be splitting based on how you build a portfolio out of them. When you build a non-speculative stock portfolio, you typically want to limit your holdings in a single stock to a fairly small portion of your portfolio (say, 3%) to limit your exposure to bad stuff happening to a single company. That doesn't apply nearly a much to mutual funds, especially index funds. ETFs are much more like mutual funds here. You can also, of course, create an ETF account and put them there. You also say you have a market index account, what is that used for? |
How dividend payout happens | The ex-dividend date is the first date on which you may sell without losing your dividend. In this case that date is August 5th (thanks, Victor). The price opens on the ex-dividend date lower than it closed on the previous day (by the amount of the dividend). Therefore you may sell any time on August 5th (including during pre-market trading) and still get the dividend. You must be the owner of the stock as of the end of after-hours trading on the 4th (and therefore overnight) in order to get the dividend. Intel's Dividend Dates The record date isn't important to your trading decision. |
Is the Chrysler extended warranty coverage worth it? | I haven't looked at that warranty in detail, but generally speaking this should help. What is GAP insurance? In the case of a total loss/write off gap insurance covers the outstanding finance after your regular insurance pay out. The two won't match up usually because of the depreciation right after you buy the car. For example, if you take out $20,000 finance and buy a car, then write it off after six months, your insurance company may only value it at $16,000 but it's unlikely you will have cleared $4,000 from your finance. Gap insurance will pay out the difference and settle the debt. Will Chrysler change the engine, if it comes to bhore? Yes, unless they identify misuse or deliberate damage. For instance, if you do 1000 miles and the engine explodes, it's a mechanical fault that the warranty would cover. If they open up the engine/look at diagnostics and find it's been thrashed to within an inch of it's life, they may claim it was your driving which has destroyed the engine and you would have to prove it was an underlying fault and would have blown either way. Will car dents be covered with this bumper to bumper insurance? Not likely, as I mentioned in the last point, if it's your fault it wouldn't be covered. I think you may be confusing the terms insurance and warranty at this point. Insurance would cover your dents but a warranty only covers the manufacturer's faults, even in the case of extended warranties. What does basic mean in terms of warranty? Sounds obvious, but whatever Chrysler want it to mean! There's no legal definition of 'basic' so you would need to check the documents thoroughly or ask them to explain exactly what is and isn't covered. If they're reluctant, it's probably because 'basic' covers very little... |
Which type of investments to keep inside RRSP? | Everything else can be held inside or outside your registered account depending on your investment or tax needs |
Why is gold not a good investment? | I think what the person meant to say is that Gold is not a one stop solution. There's nothing wrong with having Gold in an otherwise diversified portfolio but you need to be aware about the potential downsides: The problem with gold is that its value nowadays depends mainly on investor confidence, or the lack of it (actual demand for gold cannot explain the rise in value gold had after the crisis). If people are afraid the world and currencies with it will go to hell, the gold price will go up. Why? Because if currencies seize to exist, Gold will still be accepted. It can replace currencies. What many people tend to forget: let's consider the extreme example and currencies really cease to exist and all hell breaks lose. What good are gold bars at the bank, or even at home, for that matter? You'll be better off with gold coins to use in barter and to pay off marauders. But that's not about investing anymore, that's survivalism. |
Do I pay a zero % loan before another to clear both loans faster? | While, from a money-saving standpoint, the obviously-right course of action is to make only the minimum payment on the 0% loan, there are potentially legal reasons to try to pay off a car loan early. With a mortgage, you are the legal owner of the property and any action by the lender beyond imposing fees (e.g. foreclosure) requires going through the proper legal channels. On the other hand, in most jurisdictions, you are not the legal owner of a car purchased on a loan, and a missed or even lost payment can result in repossession without the lender even having to go to court. So from a risk-aversion standpoint, there's something to be said for getting rid of car loans as soon as you can. |
Investing in low cost index fund — does the timing matter? | Yes timing does matter. Using a simple Rate of Change indicator over the past 100 days and smoothed out with a 50 day Moving Average, I have plotted the S&P 500 since the start of 2007. The idea is to buy when the ROC indicator crosses above the zero line and sell when the ROC indicator crosses below the zero line. I have compared the results below of timing the markets from the start of 2007 to dollar cost averaging starting from the start of 2007 and investing every 6 months. $80k is invested in both cases. For the timing the market option $80k was invested at the start of 2007, then the total figure was sold out when a sell signal was given, then the total amount reinvested when a new buy signal was given. For the DCA option $5000 was invested every 6 months starting from the start of 2007 until the last investment at the start of July 2014. The results are below: Timing the markets results in more than double the returns (not including dividends and brokerage). Edit It has been brought up that I haven't considered tax in my Timing the Market option. So I have updated my timing the market spread-sheet to take into account both long-term and short-term CGT in the USA for someone on the highest tax bracket. The results are below: The result is still almost a 2x higher returns for the timing the markets option. Also note that even with the DCA option you will have to sell one day and pay CGT on any profits there. However, the real danger with the DCA option is if you need to sell during a market downturn and not make any profits at all. |
Stochastic Oscillator for Financial Analysis | When using the Stochastic Indicator your basic aim is to buy (go long) when the stochastic becomes oversold (goes below 20%) and then the %K line crosses above the %D line at a market low, and to sell (go short) when the stochastic becomes overbought (goes above 80%) and then the %K line crosses below the %D line at a market high. Other indicators or candlestick patters can also be used to further confirm the trade. Below is a chart of a trade I recently took on GUD.AX using the Slow Stochastic in combination with support and resistance levels as well as a candlestick pattern. When I conducted my stock search on the evening of 28th July 2015, GUD was one of the results from the search that I particularly liked. The Slow Stochastic had just made a crossover in the oversold area just as the price was bouncing off its recent lows at the support line. But what I really like about this opportunity was that there was also a bullish reversal candle (a Hammer) at this short term market bottom. The high for the day was $8.34, so I placed a stop buy order to buy the stock tomorrow if the price opened or moved above this high of today. So I would only buy if the stock hit or moved above $8.35 during the next days trading. So if the stock opened and stayed below the previous day's high I would not buy the stock and my order would be canceled at the end of the day. This is very important because it stops you from getting into trades that don't go in the direction you want. If this happens then you could check the chart again after market close to see if it is still worthwhile to place a new order for the next day. On the 29th July 2015 the stock did open higher at $8.42 (which is where my order got executed) and closed at $8.46. So I ended up buying slightly above my target price but it did move higher on the day, so a successful entry overall. I had placed my initial stop loss at $8.09 (just below the low of the previous day of $8.10). If the trade had gone against me in the following days the most I would have lost was 1% of my total account capital. My target for this trade was $9.86 (just below the resistance line near $10), which would represent a 5% gain against my total account capital (or approx. 16.7% gain on the trade). So my win to loss ratio was 5:1. As you can see from the chart, the next day gapped up at the open and prices continued moving up strongly during the day. The next day was a slightly negative day, and then a few days later, on the 5th August 2015 my target price of $9.86 was reached (with a high of $9.88 for that day), so my order was closed for a total profit of 16.7% on the face value of the trade. However, as I bought on margin (using CFDs) my actual profit on the initial margin I had invested was 167%. My total time in the trade was 7 days, and I spent about an hour in the evening doing my searches and placing my orders, then less than 10 minutes managing the trade each evening after market close. The stock did go up a bit further after my profit target was reached, but the day after that the price started to fall as the price hit the resistance line and the Slow Stochastic did a crossover in the overbought area. Overall, this was a very ideal trade and I was very happy with it. Not all my trades reach my profit targets and I may get stopped out at a smaller profit or I might make a small loss (as I move my stops up as the price moves up). The key to successful trading over the long term is to keep you losses small and let your profits run (with my longer term trend trading I don't have profit targets and let my profits run until I get stopped out, but with my shorter term trading I do use a profit target usually 5 or 6 times the size of my initial stop). If you have an average win to average loss ratio of 3:1 or higher and have a success rate of 50% winners you will make money over the long term. |
How to calculate S corporation distribution from past K-1s? | Disclaimer: I'm not a tax professional, or an expert on S-Corps. However, I do have my own S-Corp, and my decision process for taking a distribution has nothing (directly) to do with K-1 past or present, or profit and loss. If I have "extra" cash in my S-Corp, I take a distribution. Assuming I do my taxes correctly, the money will be taxed whether I take a distribution or leave it in the business. So it really comes down to how much cash the business requires to continue operating and meeting its expenses. |
What should I invest in to hedge against a serious crash or calamity? | Different risks require different hedges. You won't find a single hedge that will protect you against any risk. The best way to think about this is who would benefit if those events occurred? Those are the people you want to invest in. So if a war broke out, who would benefit? Defense contractors. Security companies. You get the idea. You also need to think about if you really need to hedge against those things now or not. For example, I wouldn't bother to hedge against global warming or peak oil. It's not like one morning you're going to wake up, turn on CNNfn and see that the stock market is down 500 points because global warming or peak oil just hit. These are things that happen gradually and you can react to them gradually as they happen. |
A guy scammed me, but he gave me a bank account number & routing number. Can I use that to take out what he owes me? | You're not focusing in the right place and neither is anyone else on this thread because this isn't about the guy owning you money... This is about you not having enough money to pay your rent. If rent wasn't due and the utility bills weren't piling up, you wouldn't be trying to justify taking money out of someone else's account. So let's triage this. Your #1 problem isn't hunting down Dr. Deadbeat's wallet. So put a pin in that for now and get to the real deal. Getting rent paid. Right? OK, you said he called "regarding a business I have". It's great that you have your own business. Are you also employed elsewhere? If you are, then you really should simply go to your employer and tell them you are in financial distress. Tell them that right now you can't cover your rent or bills and you want to know if they can help, i.e. give you an advance from your paycheck, do a withdrawal/loan from a retirement savings that's in your employee benefits package, etc... They will HELP YOU because it's in their best interest as much as it is in yours. Foregoing that, consider these thoughts... If you were to go your grandparents telling them what you told all of us here, and ask them the same "do you think it's ok to...", they would say something close to "Absolutely DO NOT touch someone else bank account EVER! It doesn't matter what information you have, how you got it, or what you think they owe you. Do NOT touch it. There's a legal system that will help you get it from them if they truly do owe it to you." I guarantee you this, withdrawing funds from an account on which you are NOT an authorized signatory is both financial theft as well as identity theft. Bonus if you do it on a computer, because you'd then be facing criminal charges that go beyond your specific legal district, i.e. you'd face criminal charges on a national level. If convicted, odds are you'd be sentenced within the penal guidelines of the Netherlands 1983 Financial Penalties Act (FPA). Ergo, you would have much much much less money in the very near future, which would feel like an eternal walk through the Hell of the court system. Ultimately, over your lifetime you would be exponentially poorer than you may think you are now. I strongly urge you to rebrand this "financial loss" as "Tuition at the School of Hard Knocks". There's one last thing... the train jumps the tracks for me during your story... This guy called you? Right?... (raised eyebrow) What kind of business do you "have"? The sense of desperation and naiveté in your urgent need for money to pay rent. The fact that you are accepting payment for services by conducting a bank transfer specifically from your clients account directly toward your own utility bills is a big red flag. Bypassing business accounting and using revenue for personal finances isn't legitimate business practices. Plus you are doing it by using the bank information of brand new client who is a TOTAL stranger. Now consider fact that this total stranger was so exceedingly generous to someone from whom he wanted personal services to be rendered. Those all tell me that he's doing something he wants the other person to do for him and he doesn't want anyone else to know. The fact that he's being so benevolent like a 'sugar daddy' tells me that he feels guilty for having someone do what he's asking them to do. Perceived financial superiority is the smoothest of smooth power tools that predators and abusers have in their bag. For instance, an outlandish financial promise is probably the easiest way to target someone who is vulnerable; and then seduce them into being their victim. Redirecting your focus on how much better life will be once your problem is solved by this cash rather than focusing on the fact that they're taking advantage of you. Offering to pay rates that are dramatically excessive is a way of buying a clean conscious, because he's doing something that will "rescue you" from a crisis. The final nail in the coffin for me was that he left so abruptly and your implied instinct suggesting his reason was a lie. It sounds like he got scared or ashamed of his actions and ran out. It paints a picture that this was sex-for-money Good luck to you. |
Why do I get a much better price for options with a limit order than the ask price? | Sounds to me like you're describing just how it should work. Ask is at 30, Bid is at 20; you offer a new bid at 25. Either: Depending on liquidity, one or the other may be more likely. This Investorplace article on the subject describes what you're seeing, and recommends the strategy you're describing precisely. Instead of a market order, take advantage of the fact that the options world truly is a marketplace — one where you can possibly get a better price just by asking. How does that work? If you use a limit order (instead of a market order) when opening a position, you can tell your broker how much you are willing to pay to enter a trade. For example, if you enter a limit price of $1.15, you can see whether the market-maker will bite. You will be surprised at how many times you will get your price (i.e., $1.15) instead of the ask price of $1.30. If your order at $1.15 is not filled after a few minutes, you can modify your order and pay the ask price by entering a market order or limit order at the ask price (that is, you can tell your broker to pay no more than $1.30). |
Do I need to be proactive about telling the tax man (HMRC) I earn more than the child benefit threshold? | unregister for child benefit but apparently If I do that then my wife will stop getting the automatic national insurance stamp each year and will lose years of state pension You probably got this wrong according to Citizen's Advice. You can choose not to receive any Child Benefit, if you don't want to pay the extra tax. However, HMRC is encouraging you to still fill out a Child Benefit claim form even if you choose not to actually receive any Child Benefit payments from them. This is because filling your claim form for Child Benefit can help you build up national insurance credits which can help protect your future state pension. This is particularly important if you've stopped work to look after children full time. It can also help protect your entitlement to other benefits such as Guardian's Allowance, and ensure your child is automatically issued with a National Insurance number before their 16th birthday. Completing a Child Benefit claim form will make it easier for payments to start again if your circumstances change and your income falls below the £50,000 limit. As for Self Assessment If you decide to continue getting Child Benefit, you'll have to fill in a self-assessment tax return. This is when you'll have to declare you were getting Child Benefit and pay the extra tax, known as the High Income Child Benefit Charge. You'll have to register for self-assessment if you are not already registered. You can choose to pay the tax charge either: The following is important though:- It is your responsibility to pay the extra tax, even if you don't hear from HMRC. SOURCE |
How to invest with a low net worth | I'm of the opinion that speculating is for young people like you, because they can afford to lose it all. Avoiding losses becomes necessary once you have to sustain a family, and manage a somewhat large retirement funds. Even if you lose all your money when speculating, you'll probably be better off later, because you make less costly mistakes once you have larger amounts of money. |
Is Amazon's offer of a $50 gift card a scam? | It's not a scam. They just want you to be an Amazon customer for many years and you'll be advertising Amazon to anyone who sees your credit card. $50 is known as the cost of "customer acquisition" and it is a very good deal for someone who may become a Prime member and spend $1000s a year on Amazon. |
Why does selling and then rebuying stock not lead to free money? | You are misunderstanding what makes the price of a stock go up and down. Every time you sell a share of a stock, there is someone else that buys the stock. So it is not accurate to say that stock prices go down when large amounts of the stock are sold, and up when large amounts of the stock are bought. Every day, the amount of shares of a stock that are bought and sold are equal to each other, because in order to sell a share of stock, someone has to buy it. Let me try to explain what actually happens to the price of a stock when you want to sell it. Let's say that a particular stock is listed on the ticker at $100 a share currently. All this means is that the last transaction that took place was for $100; someone sold their share to a buyer for $100. Now let's say that you have a share of the stock you'd like to sell. You are hoping to get $100 for your share. There are 2 other people that also have a share that they want to sell. However, there is only 1 person that wants to buy a share of stock, and he only wants to pay $99 for a share. If none of you wants to sell lower than $100, then no shares get sold. But if one of you agrees to sell at $99, then the sale takes place. The ticker value of the stock is now $99 instead of $100. Now let's say that there are 3 new people that have decided they want to buy a share of the stock. They'd like to buy at $99, but you and the other person left with a share want to sell at $100. Either one of the sellers will come down to $99 or one of the buyers will go up to $100. This process will continue until everyone that wants to sell a share has sold, and everyone who wants to buy a share has bought. In general, though, when there are more people that want to sell than buy, the price goes down, and when there are more people that want to buy than sell, the price goes up. To answer your question, if your selling of the stock had caused the price to go down, it means that you would have gotten less money for your stock than if it had not gone down. Likewise, if your buying the stock had caused it to go up, it just means that it would have cost you more to buy the stock. It is just as likely that you would lose money doing this, rather than gain money. |
Opportunity to buy Illinois bonds that can never default? | If you give money to a person or entity, and they don't have the ability to pay you back, it doesn't matter if they are legally required to pay you. |
Is there software to buy and sell stocks in real time on very small moves in price? | I'm answering in a perspective of an End-User within the United Kingdom. Most stockbrokers won't provide Real-time information without 'Level 2' access, however this comes free for most who trade over a certain threshold. If you're like me, who trade within their ISA Holding each year, you need to look elsewhere. I personally use IG.com. They've recently began a stockbroking service, whereas this comes with realtime information etc with a paid account without any 'threshold'. Additionally, you may want to look into CFDs/Spreadbets as these, won't include the heavy 'fees' and tax liabilities that trading with stocks may bring. |
What is the purpose of endorsing a check? | I believe the banks are protecting themselves when they "require" your endorsement. Years ago. they used to ask for your endorsement, and not require it. If you endorse the check, it legally authorizes them to debit your account, if the check is later returned for non-sufficient funds (NSF). It mostly protects the bank, and not the customer. |
What should I do with my $25k to invest as a 20 years old? | Waiting for the next economic downturn probably isn't the best plan at this point. While it could happen tomorrow, you may end up waiting a long time. If you would prefer not to think much about your investment and just let them grow then mutual funds are a really good option. Make sure you research them before you buy into any and make sure to diversify, as in buy into a lot of different mutual funds that cover different parts of the market. If you want to be more active in investing then start researching the market and stick to industries you have very good understanding of. It's tough to invest in a market you know nothing about. I'd suggest putting at least some of that into a retirement savings account for long term growth. Make sure you look at both your short term and long term goals. Letting an investment mature from age 20 through to retirement will net you plenty of compound interest but don't forget about your short term goals like possible cars, houses and families. Do as much research as you can and you will be fine! |
How do I get into investing in stocks? | That is a loaded question but I'll give it a shot. First things first you need to determine if you are ready to invest in stocks. If you have a lot of high interest debt you would be much better served paying that off before investing in stocks. Stocks return around 8%-10% in the long run, so you'd be better off paying off any debt you have that is higher than 8%-10%. Most people get their start investing in stocks through mutual funds in their 401k or a Roth IRA. If you want to invest in individual stocks instead of mutual funds then you will need to do a lot of reading and learning. You will need a brokerage account or if you have a stock in mind they might have a dividend reinvestment plan (DRIP) that you could invest in directly with the company. You will have to compare the different brokerage firms to determine which is best for you. Since you seem to be internet savvy, I suggest you use a discount brokerage that let's you buy stocks online with cheaper commissions. A good rule of thumb is to keep commissions below 1% of the amount invested. Once you have your online brokerage account open with money in there the process of actually buying the stock is fairly straightforward. Just place an order for the amount of shares you want. That order can be a market order which means the purchase will occur at the current market price. Or you can use a limit order where you control at what price your purchase will occur. There are lots of good books out there for beginners. Personally I learned from the Motley Fool. And last but not least is to have fun with it. Learn as much as you can and welcome to the club. |
Pensions, annuities, and “retirement” | Pension in this instance seems to mean pension income (as opposed to pension pot). This money would be determined by whatever assets are being invested in. It may be fixed, it may be variable. Completely dependant on the underlying investments. An annuity is a product. In simple terms, you hnd over a lump sum of cash and receive an agreed annual income until you die. The underlying investment required to reach that income level is not your concern, it's the provider's worry. So there is a hige mount of security to the retiree in having an annuity. The downside of annuities is that the level of income may be too low for your liking. For instance, £400/£10,000 would mean £400 for every £10,000 given to the provider. That's 4% and would take 25 years to break even (ignoring inflation, opportunity cost of investing yourself). Therefore, the gamble is whether you 'outlive' the deal. You could hand over £50,000 to a provider and drop dead a year later. Your £50k got you, say, £2k and then you popped your clogs. Provider wins. Or you could like 40 years after retiring and then you end up costing the provider £80k. You win. Best way to think of an annuity is a route to guaranteed, agreed income. To secure that guarantee, there's a price to pay - and that is, a lower income rate than you might like. Hope that was the kind of reply you were hoping for. If not, edit your OP and ask again. Chris. PS. The explanation on the link you provided is pretty dire. Very confusing use of the term 'pension' and even if that were better, the explanation is still bad due to vagueness. THis is much better: http://www.bbc.co.uk/news/business-26186361 |
How to plan in a budget for those less frequent but mid-range expensive buys? | I use a "sinking" fund. If you want to buy a $1000 bicycle, you put $100 per month into a savings account. 10 months from now, you can buy your $1000 bicycle. If you get a $500 windfall, you can either put it in the sinking fund and buy the item earlier. If you lose some income, you can put $50 per month in the fund. |
What are the best software tools for personal finance? | I just switched (from the abandoned, but good MS Money) to Moneydance 2010 |
Understanding the symbols next to the Ticker | I don't understand what the D, to the right of APPLE INC, means. This means the graph below is for the "D". There is selection at top and you can change this to Minutes [5,20,60,etc], Day, Week [W], Month [M] I'm not understanding how it can say BATS when in actuality AAPL is listed on the NASDAQ. Do all exchanges have info on every stock even from other exchanges and just give them to end-users at a delayed rate? BATS is an exchange. A stock can be listed on multiple exchange. I am not sure if AAPL is also listed on BATS. However looks like BATS has agreement with major stock exchanges to trade their data and supplies this to trading.com |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | If by being a millionaire you mean dollar millionaire then I doubt that it is really that easy in Pakistani context. At present the exchange rate is 107 Pakistani rupees per US dollar so even with this exchange rate, to have a million US dollars means having 107 million rupees of wealth. Now with this maths in mind you can very well calculate how much possible it is for an average 25 years old Pakistani to have that much wealth. And by the time you have 107 million Pakistani rupees of wealth the exchange rate against the US dollar would have only gone up against Pakistani currency. That article which you have mentioned makes calculations in US context and dollar terms. However if you talk only in terms of your country's context then being a millionaire means having 1 million rupees of wealth and that is something which is quite achievable with your salary and within very short span of time. |
What is the correct way to report a tender offer fee on my taxes? | Using a different cost basis than your broker's reporting is NOT a problem. You need to keep your own records to account for this difference. Among the other many legitimate reasons to adjust your cost basis, the most popular is when you have two brokerage accounts and sell an asset in one then buy in another. This is called a Wash Sale and is not a taxable event for you. However from the perspective of each broker with their limited information you are making a transaction with tax implications and their reported 1099 will show as such. Links: https://www.firstinvestors.com/docs/pdf/news/tax-qa-2012.pdf |
Does wash sale apply if I buy stock on 2 two different dates and sell it later | Wash sale applies. If you purchase shares within 30 days of that Feb 3 sell date, the wash sale kicks in, preventing the loss on that sale, and deferring it into the new shares. |
Stock grant, taxes, and the IRS | If you have a one-time event, you are allowed to make a single estimated payment for that quarter on Form 1040-ES. People seem to fear that if they make one such payment they will need to do it forevermore, and that is not true. The IRS instructions do kind of read that way, but that's because most people who make estimated payment do so because of some repeating circumstance like being self-employed. In addition, you may qualify for one or more waivers on a potential underpayment penalty when you file your Form 1040 even if you don't make an estimated payment, and you may reduce or eliminate any penalty by annualizing your income - which is to say breaking it down by quarter rather than the full year. Check on the instructions for Form 2210 for more detail, including Schedule AI for annualizing income. This is some work, but it might be worthwhile depending on your situation. https://www.irs.gov/instructions/i2210/ch02.html |
If I have no exemptions or deductions, just a simple paycheck, do I HAVE to file taxes? | While you are required to do so as others have said, it's actually in your interest to do so. In a recent article at GlobeInvestor, Tim Cestnick discusses the benefits of filing tax returns for teens. This situation may or may not apply to you but the message is the same. The main benefits are (1) create RRSP contribution room and (2) be eligible for GST/HST credits and other possible one-shot credits (think oil royalty surplus cheques in Alberta). Excerpt: You see, when Lincoln was 14, he filed a tax return and reported $2,000 of income that year. He paid no tax thanks to the basic personal tax credit, but he created $360 of RRSP contribution room that year. Beginning in 2003, Lincoln started working part-time in his father's business. His father agreed to pay him $6,000 each summer to work in the business, to help save money for university. Lincoln didn't pay any tax on the money he earned in those summers because his basic personal tax credit was always higher than his earnings. In addition, Lincoln added to his RRSP contribution room simply by filing a tax return each year. |
Should I include retirement funds in calculating my asset allocation? | I'd imagine that it's a small portion of the population that can have much of both. If one is saving a decent amount for retirement, say 10-15%, they aren't likely to have much else, aside from the house if included. For example, when I look at my 'pie chart' I get Retirement 72%, House 22%, everything else 6%. Specific to your question, emergency funds should be just that, accessible for urgent matters, other short term needs, such as car fund, big TV fund, vacation, etc, also in non-risky cash (i.e. money funds CDs, etc) and the rest invested long term. The short need money isn't part of the long term asset allocation, to be specific. |
Invest in low cost small cap index funds when saving towards retirement? | You can simply stick with some index funds that tracks the S&P 500 and Ex-US world market. That should provide some good diversification. And of course, you should always have a portion of your money in short/mid term bond fund, rebalancing your stock/bond ratio all the way as deemed necessary. If you want to follow the The Über–Tuber portfolio, you'd better make sure that there's minimum overlapping among the underlying shares that they hold. |
I have an extra 1000€ per month, what should I do with it? | First check: Do you have all the insurances you need? The two insurances everyone should have are: Another insurance you might want to get is a contents insurance ("Hausratsversicherung"). But if you don't own any super-expensive furniture or artworks, you might also opt to self-insure and cover it with: Priority 2: Emergency fund. Due to the excellent healthcare and welfare system in Germany, this is not as important as in many other countries. But knowing that you have a few thousand € laying around in liquid assets in case something expensive breaks down can really help you sleep at night. If you decide not to pay for contents insurance, calculate what it would cost you if there is a fire in your apartment and you would have to replace everything. That's how large your emergency fund needs to be. You also need a larger emergency fund if you are a homeowner, because as a homeowner there might always be an emergency repair you have to pay for. Priority 3: Retirement. Unless there will be some serious retirement reforms in the next 40 years (and I would not bet on that!), the government-provided pension will not be enough to cover your lifestyle cost. If you don't want to suffer from poverty as a senior citizen you will have to build up a retirement plan now. Check which options your company provides ("Betriebliche Altersvorsorge") and what retirement options you have which give you free money from the government ("Riester-Rente"). Getting professional advise to compare all the options with each other can be really beneficial. Priority 4: Save for a home. In the long-run, owning a home is much cheaper than renting one. Paying of a mortgage is just like paying rent - but with the difference that the money you pay every month isn't spent. Most of it (minus interest and building maintenance costs) stays your capital! At one point you will have paid it off and then you never have to pay rent in your life. It even secures the financial future of your children and grandchildren, who will inherit your home. But few banks will give you a good interest rate if you have no own capital at all. So you should start saving money now. Invest a few hundred € every month in a long-term portfolio. You might also get some additional free money for this purpose from your employer ("Vermögenswirksame Leistungen"). |
What happens when they run out of letters? | The 3-letter tickers are from a different era.... Nowadays the usage of tickers is more of a "legacy" tradition rather than a current necessity. As such they're no longer limited to 3 characters. And the characters don't have to be related to the actual name. For example a company named Alphabet is trading on NASDAQ under the ticker "GOOGL". It has 5 characters, not 3, and (almost) none of them appear in the name of the company (used to, but not anymore). |
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