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Why do more floating shares mean less volatility for the stock? | More shares mean less volatility because it takes a larger number of trades, a larger number of shares per trade, or a combination of both to raise or lower the stock price. Institutional investors (mutual funds, pensions, hedge funds, other investment firms, etc) are the sorts of organizations with the large amounts of money needed to move a stock price one way or the other. But the more floating shares there are in a company, the harder it is for one or two firms to move a stock price. A company with fewer floating shares wouldn't require as many trades (or as many shares per trade) to see wider swings in price. When it comes to stock price, insider trading isn't the same as manipulation. In the (surprisingly few) cases of insider trading that are prosecuted, it tends to be an individual (or small group) with early access to information that the broader market doesn't have being able to buy or sell ahead of the broader market. Their individual sales are seldom if ever enough to noticeably move a stock price. They're locking in profit or limiting a loss. Manipulation might (but doesn't always) precede insider trading, if misinformation (or truth) is released for the purpose of creating a situation that can be profited from via a trade or trades. |
Why should I trust investment banks' ratings? | Investment banks will put out various reports and collect revenues from that along with their banking activity. I don't read them or care to read them myself. If banks can make money from something, they will likely do it, especially if it is legal. To take the Tesla stock question for a moment: Aren't you ruling out that yesterday was the day that Tesla was included in the Nasdaq 100 and thus there may be some people today exiting because they tried to cash in on the index funds having to buy the stock and bid it up in a sense? Or as @littleadv points out there could be those tracking the stocks not in the index that would have been forced to sell for another idea here. The Goldman note is a possible explanation but there could well be more factors in play here such as automated trading systems that seek to take advantage of what could be perceived as arbitrage opportunities. There can be quick judgments made on things which may or may not be true in the end. After all, who knows exactly what is causing the sell-off. Is it a bunch of stop orders being triggered? Is it people actually putting in sell order manually? Is it something else? There are lots of questions here where I'm not sure how well one can assign responsibility here. |
Are forward curves useful tools for trading decisions and which informations can be gathered from them? | As far as trading is concerned, these forward curves are the price at which you can speculate on the future value of the commodity. Basically, if you want to speculate on gold, you can either buy the physical and store it somewhere (which may have significant costs) or you can buy futures (ETFs typically hold futures or hold physical and store it for you). If you buy futures, you will have to roll your position every month, meaning you sell the current month's futures and buy the next month's. However, these may not be trading at the same price, so each time you roll your position, you face a risk. If you know you want to hold gold for exactly 1 year, then you can buy a 1-year future, which in this case according to your graph will cost you about $10 more than buying the front month. The forward curve (or sometimes called the futures term structure) represents the prices at which gold can be bought or sold at various points in the future. |
Home loan: loss payable clause in favor of lender for home insurance? | Here's a good rule of thumb. In any situation where you are required to purchase insurance (Auto Liability, Property Mortgage Insurance, etc.) you can safely assume that you aren't the primary beneficiary. You are being required to buy that insurance to protect someone else's investment. |
Is it safe to take a new mortgage loan in Greece? | No it is not safe to take out a new mortgage - loan or anything credit related or any investment - in greece. Growing political risk, bonds have junk credit rating. You will be underwater on your mortgage the day you apply for it. And you better believe that the buyers will be dry once you realize that it doesn't make sense to keep paying the mortgage. If you want to have some assets, there are more liquid things you can own, in your case: paper gold. Just rent. |
Is it better to pay an insurance deductible, or get an upgrade? | I'm going to guess you're on Verizon and your wife has an iPhone. I just went through this exact same situation with my mom's phone last week. When you're off contract with Verizon you're saving $25/month on your plan (at least, I am), so staying off contract is big. If you do the monthly payment you're paying full retail over 2 years, without interest, so you do stay off contract at least. Here's the thing, as long as it's a 16GB iPhone 5 or better, you're going to be able to Craigslist it for the cost of the deductible, no problems. To me that makes the decision pretty easy to make. As long as you can Craigslist it for more than the deductible, get the insurance replacement. Then when you want a new phone you can sell your old one. Since you can sell the phone, I think that makes the comparison between the deductible and deciding to pay off the $100 now and start payments on the new phone less relevant. The real comparison I'd suggest looking at is the value of the phone and the deductible. |
How can foreign investor (residing outside US) invest in US company stocks? | (Note: out of my depth here, but in case this helps...) While not a direct answer to your question, I'll point out that in the inverse situation - a U.S. investor who wants to buy individual stocks of companies headquartered outside US - you would buy ADRs, which are $-denominated "wrapper" stocks. They can be listed with one or multiple brokerages. One alternative I'd offer the person in my example would be, "Are you really sure you want to directly buy individual stocks?" One less targeted approach available in the US is to buy ETFs targeted for a given country (or region). Maybe there's something similar there in Asia that would eliminate the (somewhat) higher fees associated with trading foreign stocks. |
Why buy bonds in a no-arbitrage market? | Bonds can increase in price, if the demand is high and offer solid yield if the demand is low. For instance, Russian bond prices a year ago contracted big in price (ie: fell), but were paying 18% and made a solid buy. Now that the demand has risen, the price is up with the yield for those early investors the same, though newer investors are receiving less yield (about 9ish percent) and paying higher prices. I've rarely seen banks pay more variable interest than short term treasuries and the same holds true for long term CDs and long term treasuries. This isn't to say it's impossible, just rare. Also variable is different than a set term; if you buy a 10 year treasury at 18%, that means you get 18% for 10 years, even if interest rates fall four years later. Think about the people buying 30 year US treasuries during 1980-1985. Yowza. So if you have a very large amount of money you will store it in bonds as its much less likely that the US treasury will go bankrupt than your bank. Less likely? I don't know about your bank, but my bank doesn't owe $19 trillion. |
Why can I see/trade VIX but not S&P/TSX 60 VIX? | S&P/TSX 60 VIX (CAD) is an equation and as the implied volatility of two close to the money TSX 60 options change, the output changes. This is why the intra-day price fluctuates on a graph like a traded product. Although VIXC can't be traded, it can still be used as an important signal for traders. The excerpt is from slide 12, more information can be found here. https://www.m-x.ca/f_publications_en/vixc_presentation_en.pdf Futures (stage 2) Options, ETFs, OTC Products (stage 3) have not been implemented. |
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? | The ex-dividend date, prevents this, but people are still able to do this and this is an investment strategy. There are some illiquid and immature markets where prices don't adjust. In the options market people are able to find mispriced deep in the money calls to take advantage of the ex-dividend date. It is called dividend capture using covered calls. |
Options for Cash only Buyout due to Company Merger | What are my options, if any, in how to deal with a buyout that forced me to sell, and accept cash only for my Florida USA company shares? Options are limited; |
Why is being “upside down” on a mortgage so bad? | I think part of why it is perceived is so bad is because the fluctuations in housing prices are relatively large, especially compared to the amount needed to put a down payment. This is not an uncommon scenario: And this is not even being underwater, just being even. Imagine how much worse it feels if your dream of home ownership has turned into just a pile of debt. |
Is a car loan bad debt? | A car loan might be considered "good" debt, if the following circumstances apply: If, on the other hand, you only qualify for a subprime loan, or you're borrowing to buy a needlessly expensive car, that's probably not a good idea. |
Job Offer - Explain Stock Options [US] | An option is a financial instrument instrument that gives you the right, but not the obligation, to do some transaction in the future at a given price. An employee stock option is a kind of "call option" -- it gives you the right, but not the obligation, to buy the stock at a certain price (the "exercise price", usually set as the price of the stock when the option was granted). The idea is that you would "exercise" the option (buy the stock at the given price as provided by the option), if the value of the stock is higher than the exercise price, and not if it is lower. The option is gifted to you. But that does not mean you get any stock. If and when you choose to exercise the option, you would buy the stock with your own money. At what time you can exercise the option (and how many shares you can exercise at a given time) will be specified in the agreement. Usually, you can only exercise a particular share after it has "vested" (according to some vesting schedule), and you lose the ability to exercise after you no longer work for the company (plus perhaps a grace period), or after the option expires. |
Exercise ISO or NSO in solo 401k? | You have a Solo 401(k). You can fund it with cash, or I believe, with shares of your own company. You can't pull in other assets such as the ISOs from another employer. I see why that's desirable, but it's not allowed. You wrote "this will mitigate all tax complications with employee stock options." But - you can't transfer the ISOs from your job into your Solo 401(k). As littleadv notes, it's self dealing. Once the ISO is exercised there's no hiding the gain into that 401(k). |
What are the real risks in “bio-technology” companies? | The risk is that everything could go wrong in any phase at any time or they could run out of cash and go bankrupt waiting for results. Then there is the FDA that might take forever in approving their drug, or not approve it at all. Human trials could go horribly wrong. The company may be incompetent in bringing a product to market (after FDA rubberstamping), there might not be a market for their particular METHOD of treatment (is it a pill, or is it a torture device you have to strap yourself into for 5 hours a day). And maybe they are never able to make a profit with all the debt they have taken to stay afloat. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | There are a number of bona fide reasons to consider here. If there is a cost to discharging a security packet, or a mortgage, it may not be convenient if we are advanced in the repayment schedule. Early exit fees may apply, or the interest may be "pre-determined". As a rule of thumb, when we are talking about rates above 10% p.a. then arrangements should be short (bridging finance - keep it short and charge 'em heaps), and for personal arrangements, small. |
Are bonds really a recession proof investment? | You're mixing up two different concepts: low-risk and recession-proof. I'll assume I don't need to explain risk: there is always risk, regardless what form you keep your assets in. With bonds, the interest rate is supposed to reflect the risk. If a company offers bonds with too low an interest rate for the risk level, few people will buy them. While if a company offers bonds with too high an interest rate for the level of risk, they are gypping themselves. So a bond is a slightly more transparent investment from a risk assessment perspective, but that doesn't mean the risk is necessarily low: if you buy a bond with a 20% effective annual yield, that means there is quite a high risk that the underlying company will fold (unless inflation is in the double-digit range as well, in which case a 20% yield is not that much). Whereas with a stock, no parameter directly tells you anything about the risk. Recession-proof is not the same thing as low-risk. Recession-proof refers to investing in (or holding debt for) industries that perform better in a recession. http://www.investopedia.com/articles/stocks/08/industries-thrive-on-recession.asp. |
Making enquiries about shares | Is anything possible, and if so, how? Because of the circumstances, there is nothing you can do. You do not have the ISIN, nor are you a part-owner of the account. The information you would need is: As always, good luck. |
Trading on forex news, Interactive Brokers / IDEALPRO, and slippage | In my experience thanks to algorithmic trading the variation of the spread and the range of trading straight after a major data release will be as random as possible, since we live in an age that if some pattern existed at these times HFT firms would take out any opportunity within nanoseconds. Remember that some firms write algorithms to predict other algorithms, and it is at times like those that this strategy would be most effective. With regards to my own trading experience I have seen orders fill almost €400 per contract outside of the quoted range, but this is only in the most volatile market conditions. Generally speaking, event investing around numbers like these are only for top wall street firms that can use co-location servers and get a ping time to the exchange of less than 5ms. Also, after a data release the market can surge/plummet in either direction, only to recover almost instantly and take out any stops that were in its path. So generally, I would say that slippage is extremely unpredictable in these cases( because it is an advantage to HFT firms to make it so ) and stop-loss orders will only provide limited protection. There is stop-limit orders( which allow you to specify a price limit that is acceptable ) on some markets and as far as I know InteractiveBrokers provide a guaranteed stop-loss fill( For a price of course ) that could be worth looking at, personally I dont use IB. I hope this answer provides some helpful information, and generally speaking, super-short term investing is for algorithms. |
How to properly collect money from corporate sponsors? | http://www.legalzoom.com/business-management/starting-your-business/turn-your-calling Answering this, but I expect an expert to give an answer with some insight too There are many more steps, but not having done them personally I suggest you read the legalzoom.com site. |
Can I use same stock broker to buy stocks from different stock markets? | In the US there is only one stock market (ignoring penny stocks) and handfuls of different exchanges behind it. NYSE and NASDAQ are two different exchanges, but all the products you can buy on one can also be bought on the other; i.e. they are all the same market. So a US equities broker cannot possibly restrict access to any "markets" in the US because there is only one. (Interestingly, it is commonplace for US equity brokers to cheat their customers by using only exchanges where they -- the brokers -- get the best deals, even if it means your order is not executed as quickly or cheaply as possible. This is called payment for order flow and unfortunately will probably take an Act of Congress to stop.) Some very large brokers will have trading access to popular equity markets in other countries (Toronto Stock Exchange, Mexico Stock Exchange, London Stock Exchange) and can support your trades there. However, at many brokers or in less popular foreign markets this is usually not the case; to trade in the average foreign country you typically must open an account with a broker in that country. |
Can I write off time I spent working on my business? | No, you cannot write off time, period. You should price the time spent into your product. I, occasionally, work on side projects of my own and forgo the possibility of earning direct income for that time. Income not earned is income not taxed, so there's nothing to deduct. |
Extra cash - go towards mortgage, or stock? | the math makes sense to invest instead of paying down, but... how much would you borrow at 3.5%, to invest the money into the stock market? It's the same question, just turned around. |
If gold's price implodes then what goes up? | It's not clear that anything needs to go up if gold goes down. In a bubble, asset prices can just collapse, without some other asset increasing to compensate. Economies are not a zero-sum game. On the other hand, gold may fall when people decide they don't need to hoard some store of value that, to their minds, never changes. It could very well indicate that there is more confidence in the broader economy. I am not a gold bug, so I don't much see the point in "investing" in something that is non-productive and also inedible, but to each his own. |
What would the broker do about this naked call option? | The broker would give you a margin call and get you to deposit more funds into your account. They wouldn't wait for the stock price to reach $30, but would take this action much earlier. More over it is very unrealistic for any stock to go up 275% over a few hours, and if the stock was this volatile the broker would be asking for a higher margin to start with. What I am really worried about is that if there were any situation like this you are not considering what you would do as part of your risk management strategy. Before writing the option you should already have an exit point at which you would buy back the option to limit your losses. |
Should I get a personal loan to pay on my mortgage to go “above water” to qualify for a refinance? | It depends on how long it will take you to pay off the personal loan, the rate for the personal loan, the refi rate you think you can get, how much principal you will have to add to get the refi (may have gone up since then). Since you did not provide all the necessary details, the general answer is to sketch out your total payments (mortgage + personal loan) with and without the refi over the life of the mortgage and see if you end up with more money in your pocket with the refi. My overall impression based on the details you did provide is that you will probably find it worthwhile to do the refi. |
Comparing/reviewing personal health insurance plans for the self-employed | I was in your situation a few years ago and I discovered something that worked perfectly for me - a local health insurance broker. I met with her, discussed my needs, reviewed the options with her, then acted. She received a commission from the insurer, so it cost me nothing. I would certainly follow a similar approach again. |
Is it bad etiquette to use a credit or debit card to pay for single figure amounts at the POS | It's fine. Some people (including myself) charge any amount, no matter how small. I think charging small amounts is encouraged by no longer having to sign for small amounts (Not sure if this is state-by-state, though). Somewhere, the transfering of digital money is being paid for - either in the merchant fees, an ATM fee, or my time in going to a bank or ATM where I will not be charged a fee. |
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? | You have to be the owner of record before the ex-dividend date, which is not the same day as the date the dividend is paid. This also implies that if you sell on or after the ex-dividend date, you'll still get the dividend, even if you no longer own the stock. Keep in mind, also, that the quoted price of the stock (and on any open orders that are not specifically marked as "do not reduce") on its ex-dividend date is dropped by the amount of the dividend, first thing in the morning before trading starts. If you happen to be the first order of the day, before market forces cause the price to move, you'll end up with zero gain, since the dividend is built into the price, and you got the same value out of it -- the dividend in cash, and the remaining value in stock. As pointed out in the comments (Thanks @Brick), you'll still get a market price for your trade, but the price reduction will have had some impact on the first trade of the day. Source: NYSE Rule 118.30 Also, remember that the dividend yield is expressed in annualized terms. So a 3% yield can only be fully realized by receiving all of the dividend payments made by the company for the year. You can, of course, forget about individual companies and just look for dividends to create your own effective yield over time. But, see the final point... Finally, if you keep buying and selling just to play games with the dividends, you're going to pay far more in transaction fees than you will earn in dividends. And, depending on your individual circumstances, you may end up paying more in capital gains taxes. |
American taxes if living outside the US and get paid by US company on a US bank account | Technically, if you earn in US (being paid there, which means you have a work visa) and live in other country, you must pay taxes in both countries. International treaties try to decrease the double-taxation, and in this case, you may pay in your country the difference of what you have paid in US. ie. your Country is 20% and USA is 15%, you will pay 5%, and vice-versa. This works only with certain areas. You must know the tax legislation of both countries, and I recommend you seek for advisory. This site have all the basic information you need: http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion Good luck. |
Can I use my Roth IRA to start a business? | Read the Forbes article titled IRA Adventures. While it's not the detailed regulations you certainly need, the article gives some great detail and caution. You may be able to do what you wish, but it must be structured to adhere to specific rules to avoid self dealing. Those rules would be known by the custodians who would help you set up the right structure, it's well buried within IRS regs, I'm sure. Last, in general, using IRA funds to invest in the non-traditional assets adds that other layer of risk, that the investment will be deemed non-allowed and/or self-dealing. So, even if you have the best business idea going, be sure you get proper council on this. |
What things are important to consider when investing in one's company stock? | Check how long you have to hold the stock after buying it. If you can sell reasonably soon and your company is reasonably stable, you're unlikely to lose and/or be taxed and/or pay enough in fees to lose more than the 30% "free money" they're giving you. Whether you hold it longer than the minimum time depends partly on whether you think you can better invest the money elsewhere, and partly on how you feel about having both your salary and (part of) your investments tied to the company's success? The company would like you to "double down" that way, in the theory that it may make you mors motivated... but some investment councelors would advise keeping that a relatively small part of your total investments, basically for the same reasons you are always advised to diversify. |
Is losing money in my 401K normal? | My two cents: I am a pension actuary and see the performance of funds on a daily basis. Is it normal to see down years? Yes, absolutely. It's a function of the directional bias of how the portfolio is invested. In the case of a 401(k) that almost always mean a positive directional bias (being long). Now, in your case I see two issues: The amount of drawdown over one year. It is atypical to have a 14% loss in a little over a year. Given the market conditions, this means that you nearly experienced the entire drawdown of the SP500 (which your portfolio is highly correlated to) and you have no protection from the downside. The use of so-called "target-date funds". Their very implication makes no sense. Essentially, they try to generate a particular return over the elapsed time until retirement. The issue is that the market is by all statistical accounts random with positive drift (it can be expected to move up in the long term). This positive drift is due to the fact that people should be paid to take on risk. So if you need the money 20 years from now, what's the big deal? Well, the issue is that no one, and I repeat, no one, knows when the market will experience long down moves. So you happily experience positive drift for 20 years and your money grows to a decent size. Then, right before you retire, the market shaves 20%+ of your investments. Will you recoup these damages? Most likely yes. But will that be in the timeframe you need? The market doesn't care if you need money or not. So, here is my advice if you are comfortable taking control of your money. See if you can roll your money into an IRA (some 401(k) plans will permit this) or, if you contribute less that the 401(k) contribution limit you make want to just contribute to an IRA (be mindful of the annual limits). In this case, you can set up a self-directed account. Here you will have the flexibility to diversify and take action as necessary. And by diversify, I don't mean that "buy lots of different stuff" garbage, I mean focus on uncorrelated assets. You can get by on a handful of ETFs (SPY, TLT, QQQ, ect.). These all have liquid options available. Once you build a base, you can lower basis by writing covered calls against these positions. This is allowed in almost all IRA accounts. In my opinion, and I see this far too often, your potential and drive to take control of your assets is far superior than the so called "professionals or advisors". They will 99% of the time stick you in a target date fund and hope that they make their basis points on your money and retire before you do. Not saying everyone is unethical, but its hard to care about your money more than you will. |
Where can I find a company's earnings history for free? | www.earnings.com is helpful thinkorswim's thinkDesktop platform has a lot of earnings information tied with flags on their charts they are free. |
Is gold subject to inflation? [duplicate] | Gold isn't constant in value. If you look at the high price of $800 in January of 1980 and the low of $291 in 2001, you lost a lot of purchasing power, especially since money in 2001 was worth less than in 1980. People claim gold is a stable store of value but it isn't. |
Effect on Bond asset allocation if Equity markets crash? | what will happen to the valuation of Tom's bond holdings after the equity crash? This is primarily opinion based. What will happen is generally hard to predict. Bond Price Bump due to Demand: Is a possible outcome; this depends on the assumption that the bonds in the said country are still deemed safe. Recent Greece example, this may not be true. So if the investors don't believe that Bonds are safe, the money may move into Real Estate, into Bullion [Gold etc], or to other markets. In such a scenario; the price may not bump up. Bond Price Decline due to Rising Interest Rates: On a rising interest rates, the long-term bonds may loose in value while the short term bonds may hold their value. Related question How would bonds fare if interest rates rose? |
Inherited Stock | Since you reference SS, I surmise you are in the US. Stock you inherit gets a stepped up basis when it's inherited. (so long as it was not contained within a tax deffered retirement account.) When you sell, the new basis is taken from that day you inherited it. It should be minimal compared to your desire to diversify. |
Changing Bank Account Number regularly to reduce fraud | We change it every so often to reduce fraud. This is idiocy. They receive regular payments. They are asking the people who pay them to regularly change where their money is being sent. This increases their exposure to fraud dramatically as each time the account is changed, there is a risk it will be changed to an account they do not control. This is a huge red flag. Confirm that this is authentic and, if so, insist that they sign an agreement accepting all liability for the risks this crazy policy causes, otherwise, you should refuse to go through the effort of confirming new accounts and risking typing or communication errors on a regular basis. This is definitely a "what were they thinking?!" kind of thing. If it's not fake entirely. (This answer assumes that you were given a correct explanation, that they change it regularly believing that will reduce fraud.) |
How to avoid getting back into debt? | First, you've learned a very good lesson that quite a few people miss out on: notice how easy it is to get out of debt when you get a windfall of money? The trouble is that if a person doesn't have the behavior to maintain their position, they will end up in the same place. Many lottery winners end up being poor in the long run because their behavior is the problem, not their finances. If you feel that you're going to end up in debt again, this means simply that somewhere in your finances, your expenses exceed your income. Simply put, there's only two fundamental things that can be done: You can do one or the other, or both. Over budgeting, I prefer automation - automate your bills and spending by setting up a bill and spending account and when the money's gone, it's gone (you can tell yourself at that point, "I have to find another source of income before I spend more"). This not only helps you show where your money is going now, it also puts a constraint on your spending, which sounds like most of the problem currently. Many of my friends and I make our saved/invested money VERY HARD to access, so that we can't get it immediately (like putting it in an account that will require three or four days to get to). The purpose of this is to shape your behavior into actions of either increasing your income, decreasing your spending, or both. |
How should my brother and I structure our real estate purchase? | We’re buying the home right over $200,000 so that means he will only need to put down (as a ‘gift’) roughly $7000. I'm with the others, don't call this a gift unless it is a gift. I'd have him check with the bank that previously refused him a mortgage if putting both of you on a mortgage would allay their concerns. Your cash flow would be paying the mortgage payment and if you failed to do so, then they could fall back on his. That may make more sense to them, even if they would deny each of you a loan on your own. This works for them because either of you is responsible for the whole loan. It works for him because he was already willing to be responsible for the whole loan. And your alternative plan makes you responsible for the whole loan, so this is just as good for you. At what percentage would you suggest splitting ownership and future expenses? Typically a cash/financing partnership would be 50/50, but since it’s only a 3.5% down-payment instead of 20% is that still fair? Surprisingly enough, a 3.5% down-payment that accumulates is about half the equity of a 20% down-payment. So your suggestion of a 25%-75% split makes sense if 20% would give a 50%-50% split. I expected it to be considerably lower. The way that I calculated it was to have his share increase by his equity share of the "rent" which I set to the principal plus interest payment for a thirty year loan. With a 20% down-payment, this would give him 84% equity. With 3.5%, about 40% equity. I'm not sure why 84% equity should be the equivalent of a 50% share, but it may be a side effect of other expenses. Perhaps taking property taxes out would reduce the equity share. Note that if you increase the down-payment to 20%, your mortgage payment will drop substantially. The difference in interest between 3.5% and 20% equity is a couple hundred dollars. Also, you'll be able to eliminate any PMI payment at 20%. It could be argued that if he pays a third of the monthly mortgage payment, that that would give him the same 50% equity stake on a 3.5% down-payment as he would get with a 20% down-payment. The problem there is that then he is effectively subsidizing your monthly payment. If he were to stop doing that for some reason, you'd have what is effectively a 50% increase in your rent. It would be safer for you to handle the monthly payment while he handles the down-payment. If you couldn't pay the mortgage, it sounds like he is in a position to buy out your equity, rent the property, and take over the mortgage payment. If he stopped being able to pay his third of the mortgage, it's not evident that you'd be able to pick up the slack from him much less buy him out. And it's unlikely that you'd find someone else willing to replace him under those terms. But your brother could construct things such that in the face of tragedy, you'd inherit his equity in the house. If you're making the entire mortgage payment, that's a stable situation. He's not at risk because he could take over the mortgage if necessary. You're not at risk because you inherit his equity share and can afford the monthly payment. So even in the face of tragedy, things can go on. And that's important, as otherwise you could lose your equity in the house. |
Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan? | You seem to think that you are mostly paying interest in the first year because of the length of the loan period. This is skipping a step. You are mostly paying interest in the first year because your principle (the amount you owe) is highest in the first year. You do pay down some principle in that first year; this reduces the principle in the second year, which in turn reduces the interest owed. Your payments stay the same; so the amount you pay to principle goes up in that second year. This continues year after year, and eventually you owe almost no interest, but are making the same payments, so almost all of your payment goes to principle. It is a bit like "compounded interest", but it is "compounded principle reduction"; reducing your principle increases the rate you reduce it. As you didn't reduce your principle until the 16th year, this has zero impact on the interest you owed in the first 15 years. Now, for actual explicit numbers. You owe 100,000$ at 3% interest. You are paying your mortgage annually (keeps it simpler) and pay 5000$ per year. The first year you put 3000$ against interest and 2000$ against principle. By year 30, you put 145$ against interest and 4855$ against principle. because your principle was tiny, your interest was tiny. |
Single employee - paying for health insurance premiums with pre-tax money | The answer likely depends a bit on which state you are in, but this should be true for most states. I don't know anything about Pennsylvania specifically unfortunately. The Affordable Care Act created the SHOP marketplace, which allows small businesses to effectively form larger groups for group coverage purposes. SHOP stands for Small Business Health Options Program, and requires only one common-law employee on payroll. This would effectively allow you to offer group coverage without having a group. Talk to your tax accountant for more details, as this is still very new and not necessarily well understood. There are some other options, all of which I would highly suggest talking to a tax accountant about as well. HRAs (health reimbursement accounts) allow the employer to set aside pre-tax funds for the employee to use for approved medical expenses; they're often managed by a benefits company (say, Wageworks, Conexis, etc.). That would allow your employee to potentially pick a higher deductible health plan which offers poorer coverage on the individual marketplace (with after-tax dollars) and then supplement with your HRA. There are also the concept of Employer Payment Plans, where the employer reimburses the employee for their insurance premiums, but those are not compatible with the ACA for the most part - although there seems to be a lot of disagreement as to whether it's possible to have something effectively the same work, see for example this page versus this for example. |
Personal credit card for business expenses | You should be careful about mingling your personal money and that of the business, even if it is a sole prop right now. It is a good habit to keep separate business and personal bank/credit accounts just so that when you change to an LLC, it is simpler for you to separate what belongs to the company and what is yours personally. What you're doing makes it more difficult (although only marginally so) to itemize business deductions that were paid with an ostensibly personal credit account. The better habit to get into now is keeping that distinct separation between personal and business. That being said, there's nothing illegal in what you're doing, but it would make an accountant cringe, that's for sure. (chuckle) Hope this helps. Good luck! |
Stock grant, taxes, and the IRS | I went through this too. There's a safe-harbor provision. If you prepay as estimated tax payments, 110% of your previous year's tax liability, there's no penalty for underpayment of the big liquidity-event tax liability. https://www.irs.gov/publications/p17/ch04.html That's with the feds. Your state may have different rules. You would be very wise indeed to hire an accountant to prepare your return this year. If I were you I'd ask your company's CFO or finance chief to suggest somebody. Congratulations, by the way. |
How to rebalance a passive portfolio if I speculate a war is coming? | At a risk of stating the obvious: a passive portfolio doesn't try to speculate on such matters. |
What dictates the costs of creating an options contract? (Commissions breakdown) | I'm not positive my answer is complete, but from information on my broker's website, the following fees apply to a US option trade (which I assume you're concerned with given fee in dollars and the mention of the Options Clearing Corporation): They have more detail for other countries -- see https://www.interactivebrokers.co.uk/en/index.php?f=commission&p=options1 for North America. Use the sub-menu near the top of the page to pick Europe or Asia. The brokerage-charged commission for this broker is as low as $0.25 per contract with a $1.00 minimum. Though I've been charged less than $1 to STO an options position, as well as less than $1 to BTC an options position, so not sure about that minimum. Regarding what I read as your overall underlying question (why are option fees so high), in my research this broker has one of the cheapest commission rates on options I've ever seen. When I participate in certain discussions, I'm routinely told that these fees are unbelievable and that $5.95, $7.95, or even $9.95 are considered low fees. I've heard this so much, and discussed commissions with enough people who've refused to switch brokers, that I conclude there just isn't enough competition to drive prices lower. If most people won't switch brokers to go from $9.95 to $1 per trade, there simply isn't a reason to lower rates. |
Why do stocks split? | Stock splits are typically done to increase the liquidity of stock merely by converting every stock of the company into multiple stocks of lower face value. For example, if the initial face value of the stock was $10 and the stock got split 10:1, the new face value of the stock would be $1 each. This has a proportional effect on the market value of the stock also. If the stock was trading at $50, after the split the stock should ideally adjust to $5. This is to ensure that despite the stock split, the market capitalization of the company should remain the same. Number of Shares * Stock Price = Market Capitalization = CONSTANT |
Money market account for emergency savings | Most emergencies are less than 1,000 in nature. As such I would keep at least that amount in a checking/savings account at the bank from which you pay your bills or can get cash from. This amount may increase so you can avoid low balance fees, or because of the nature of your life style and income. Beyond that, you can search for yield. I personally like online savings accounts like Amex Personal Savings, Ally or others. Money market accounts will work equally well. There you can keep the bulk of your emergency savings and large purchase savings. Keep in mind you still won't earn much. A 40K emergency fund will only earn you $38/month at Ally. |
Are these scenarios considered as taxable income? | For case 1, there is no tax due as you sold the book for less than your cost basis. If you had sold for more than $100, then you would have had a profit. For case 2, that depends on the value of the gift card with respect to the value of your fare. Most likely that gift card is less than the cost of the fare. And in that case it would generally be treated as a reduction in the purchase price. The same way that rebates and cash back on credit card are treated. Note if for some reason a 1099 was generated that would change the situation and you would need to consult a tax professional. Since that would indicate that the other party to the transaction had a different view of the situation. |
US tax for a resident NRI | If you are tax-resident in the US, then you must report income from sources within and without the United States. Your foreign income generally must be reported to the IRS. You will generally be eligible for a credit for foreign income taxes paid, via Form 1116. The question of the stock transfer is more complicated, but revolves around the beneficial owner. If the stocks are yours but held by your brother, it is possible that you are the beneficial owner and you will have to report any income. There is no tax for bringing the money into the US. As a US tax resident, you are already subject to income tax on the gain from the sale in India. However, if the investment is held by a separate entity in India, which is not a US domestic entity or tax resident, then there is a separate analysis. Paying a dividend to you of the sale proceeds (or part of the proceeds) would be taxable. Your sale of the entity containing the investments would be taxable. There are look-through provisions if the entity is insufficiently foreign (de facto US, such as a Subpart-F CFC). There are ways to structure that transaction that are not taxable, such as making it a bona fide loan (which is enforceable and you must pay back on reasonable terms). But if you are holding property directly, not through a foreign separate entity, then the sale triggers US tax; the transfer into the US is not meaningful for your taxes, except for reporting foreign accounts. Please review Publication 519 for general information on taxation of resident aliens. |
Why buy insurance? | First of all, insurance never covers the cost of the item, it is almost always a partial payout at best. For example, a typical house in the Northeast US where I live that costs $300,000 will have the actual house valued at maybe $100,00 and rest of the value will be in the land. Therefore, the insured value will typically be $100,000. The only problem is that to actually rebuild the house might easily cost $250,000. So, your idea that some kinds of insurance allows the beneficiary to recoup their loss is usually never true. As you say, from an actuarial point of view insurance is a sheer waste of money. For example, a typical house has maybe a 0.5% chance of burning down every year. In other words out of 2000 houses, maybe 1 will burn down every year. So, lets say you got $100,000 of insurance on your house. Then the value of that policy would be $100,000 / 2000 = $50 per year. An insurance company will charge around $700 per year for the policy. That means you are basically flushing $650 down the toilet every year to maintain that policy. The reason why they do this is what blankip says above, they are buying "peace of mind", a psychological product. In other they imagine they are somehow safe. So, even though they are losing money, paying it makes them feel as though they are not losing money. It's delusional, but then again most people have a lot of delusions of which insurance is just one of many. |
W8-BEN for an Indian Citizen | According to the Form W-8BEN instructions for Part II, Line 10: Line 10. Line 10 must be used only if you are claiming treaty benefits that require that you meet conditions not covered by the representations you make on line 9 and Part III. For example, persons claiming treaty benefits on royalties must complete this line if the treaty contains different withholding rates for different types of royalties. In tax treaties, some of the benefits apply to every resident of a foreign country. Other benefits only apply to certain groups of people. Line 10 is where you affirm that you meet whatever special conditions are necessary in the treaty to obtain the benefit. If you are claiming that Article 15 of the U.S.-India Tax Treaty, you could use Line 10 to do this. It is important to remember that this form goes to the company paying you; it does not actually get sent to the IRS. Therefore, you can ask the company themselves if filling out Line 9 only will result in them withholding nothing, or if they would need you to fill out Line 10. |
Is buying a lottery ticket considered an investment? | I am reminded of a dozen year old dialog. I asked my 6 year old, "If we call a tail a leg, how many legs does a dog have?" She replied, "Four, you can call it anything you want, but the dog still has four legs." Early on in my marriage, my wife was heading out to the mall, and remarked that she was "going to invest in a new pair of shoes." I explained to her that while I was happy she would have new shoes to wear, words have meaning, and unless she was going to buy the ruby red slippers Dorothy wore in the Wizard of Oz, or Elvis' Blue Suede Shoes, her's were not expected to rise in value and weren't an investment. Some discussion followed, and we agreed even the treadmill, which is now 20 years old, was not an 'investment' despite the fact that it saved us more than its cost in a combined 40 years of gym memberships we did not buy. In the end, no one who is financially savvy calls a lottery ticket an investment, and few who buy them acknowledge that it's simply throwing money away. |
Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan? | A few years ago I had a 5 year car loan. I wanted to prepay it after 2 years and I asked this question to the lender. I expected a reduction in the interest attached to the car loan since it didn't go the full 5 years. They basically told me I was crazy and the balance owed was the full amount of the 5 year car loan. This sounds like you either got a bad car loan (i.e. pay all the interest first before paying any principal), a crooked lender, or you were misunderstood. Most consumer loans (both car loans and mortgages) reduce the amount of interest you pay (not the _percentage) as you pay down principal. The amount of interest of each payment is computed by multiplying the balance owed by the periodic interest rate (e.g. if your loan is at 12% annual interest you'll pay 1% of the remaining principal each month). Although that's the most common loan structure, there are others that are more complex and less friendly to the consumer. Typically those are used when credit is an issue and the lender wants to make sure they get as much interest up front as they can, and can recover the principal through a repossession or foreclosure. It sounds like you got a precomputed interest loan. With these loans, the amount of interest you'd pay if you paid through the life of the loan is computed and added to the principal to get a total loan balance. You are required to pay back that entire amount, regardless of whether you pay early or not. You could still pay it early just to get that monkey off your back, but you may not save any interest. You are not crazy to think that you should be able to save on interest, though, as that's how normal loans work. Next time you need to borrow money, make sure you understand the terms of the loan (and if you don't, ask someone else to help you). Or just save up cash and don't borrow money ;) |
Anonymous CC: Does “Entropay” really not hand my personal data over to a company - are there alternatives? | Do you guys know any options that are accessible to any global citizen? Prepaid and stored value cards are anonymous. For an arbitrary reason, the really anonymous ones only allow you to load $500 but there is no regulation that dictates this amount. In the USA, these cards are exempt from being declared at border crossings. Not because they look like credit cards, but because they are exempt by the US Treasury and Customs. The cons is that there are generally fees to use them. US DOJ has done research showing that some groups take advantage of the exemption moving upwards of $50,000 a day between borders, but Congress is fine with this exemption and the burden is always on the government to determine "illicit origin". Stigmatizing how money is moved is only a 30 year old phenomenon, but many free nations do not really have capital controls, they only care that you pay taxes and that the integrity of their stock markets are upheld. Aside from that there are no qualms about anonymity, except from your neighbors but they dont matter for a global citizen. In theory, the UK should have more flexibility in anonymity options, such as stored value cards with higher limits. |
Mortgage refinancing fees | 2.5%? Whoa, you are being robbed there. Straight-up, stripped-down, and bent-over-a-table robbed. Never agree to "fees". If they don't want to do the work to give you a loan, there are other lenders who do. Rarely agree to "points". If you know -- and I don't mean "think", I mean "know" -- if you know that you are going to hold that loan much longer than it would take to repay those points, then maybe. For example, if they are charging one point to lower your rate 0.25%, you want to be totally sure you will stay in the house at least four years, and probably more like six or eight years before moving or refinancing. It's more-or-less OK to pay for the appraisal. If something goes wrong with the loan application, the appraisal will be valid for a few more months, you can try again. I once had 14% cash for a down-payment. The loan officer said if I could come up with 15%, the rate would be reduced by 0.25%. To get the money, I took a "reverse point", which paid me 1% but raised my the rate by 0.25%. The loan officer, who wasn't too bright, asked, "Why did you do that? The two things cancel each other out." "I did it," I explained, "because you paid me 1% of the value of my house to sign my name twice." |
Dispute credit card transaction with merchant or credit card company? | As a rule of thumb, go in the order of proximity to the transaction. This would typically mean: Side note: I own a website that provides an online service that accepts PayPal and credit cards (via PayPal), and I personally have experience with all 3 of the above options. I can tell you from the merchant's point of view that I would also prefer the same order. I've had people contact my customer service department asking for a refund and we always immediately comply. Some people never contact us and just file a dispute directly with PayPal, and although refunding through the PayPal dispute is just as easy as refunding directly, it always makes me ask, "Why didn't they just contact us first?" One time we had a customer skip us and PayPal, and filed a dispute directly with their Credit Card. The CC company contacted PayPal and PayPal contacted us. The process was the same from my point of view, I just clicked a button saying issue refund. But my $5 refund cost me an additional $20 due to the CC dispute. Now that I know this I will never approve a CC dispute again. Anytime one happens I would just issue a refund directly, and then notify the dispute that their CC has already been refunded, which should end the dispute. |
Job Offer - Explain Stock Options [US] | Since the 2 existing answers addressed the question as asked. Let me offer a warning. You have 10,000 options at $1. You've worked four years and the options are vested. The stock is worth $101 when you get a job offer (at another company) which you accept. So you put up $10k and buy the shares. At this moment, you put up $10K for stock worth $1.01M, a $1M profit and ordinary income. You got out of the company just in time. For whatever reason, the stock drops to $21 and at tax time you realize the $1M gain was ordinary income, but now the $800k loss is a capital loss, limited to $3000/yr above capital gains. In other words you have $210k worth of stock but a tax bill on $1M. This is not a contrived story, but a common one from the dotcon bubble. It's a warning that 'buy and hold' has the potential to blow up in your face, even if the shares you buy retain some value. |
What is this fund? | SMID CAP FUND is Fidelity's way of saying SMALL to MID CAP FUND. Small to Medium is self explanatory. Cap is capitalization, and it basically means how much the sum of all the existing shares of the company are worth. Fidelity names the funds inside their 401k plans according to who provides the fund. They also provide management resources for funds chosen by your employer. There should be more available about the fund you're interested in on your Fidelity 401(k) site. |
Virtual currency investment | I don't know much about paypal or bitcoin, but I can provide a little information on BTC(Paypal I thought was just a service for moving real currency). BTC has an exchange, in which the price of a bitcoin goes up and down. You can invest in to it much like you would invest in the stock market. You can also invest in equipment to mine bitcoins, if you feel like that is worthwhile. It takes quite a bit of research and quite a bit of knowledge. If you are looking to provide loans with interest, I would look into P2P lending. Depending on where you live, you can buy portions of loans, and receive monthly payments with the similiar risk that credit card companies take on(Unsecured debt that can be cleared in bankruptcy). I've thrown a small investment into P2P lending and it has had average returns, although I don't feel like my investment strategy was optimal(took on too many high risk notes, a large portion of which defaulted). I've been doing it for about 8 months, and I've seen an APY of roughly 9%, which again I think is sub-optimal. I think with better investment strategy you could see closer to 12-15%, which could swing heavily with economic downturn. It's hard to say. |
Does investing in a company support it? | As said by others, buying shares of a company will not support it directly. But let's think about two example companies: Company A, which has 90 % stocks owned by supporters, and Company B, which has only 1 % of stocks owned by supporters. Both companies release bad news, for example profits have decreased. In Company B, most investors might want to sell their stock quickly and the price will plummet. In Company A, the supporters continue believing in the company and will not want to sell it. The price will drop less (usually, but it can drop even more if the sellers of Company A are very desperate to get rid of the stock). So, why is it important for the company to have a high stock price? In the short-term, it's not important. One example is that the company can release more stocks and receive more financing by doing that. Other reasons are listed here: http://www.investopedia.com/articles/basics/03/020703.asp |
How long can a company keep the money raised from IPO of its stocks? | You realize that most of the money raised through the IPO process doesn't go into the company's bank account? Those shares were shares that were held by the investors and original owners and it's those prior pre-IPO shareholders that got their money back along with a tidy profit. The cash on its books was there before the IPO, and after. The IPO process was more about a change in stock owners ship than anything else. Edit - as the SEC disclosure mentioned in comments below states, the Facebook IPO raised $6.7B for facebook's use, the rest of the transaction was from the investors selling their shares. Mark Zuckerberg still owns more than 55% of shares outstanding. The $6.7B is still about 10% of the company value. Nothing to ignore, but clearly, 'most' of the money from the IPO didn't go to the company. |
In the stock market, why is the “open” price value never the same as previous day's “close”? | Nobody has mentioned the futures market yet. Although the stock market closes at 4pm, the futures market continues trading 24 hours a day and 5.5 days a week. Amongst the products that trade in the future market are stock index futures. That includes the Dow Jones, the S&P 500. These are weighted averages of stocks and their sectors. You would think that the price of the underlying stock dictates the price of the average, but in this day and age, the derivative actually changes the value of the underlying stock due to a very complex combination of hedging practices. (this isn't meant to be vague and mysterious, it is "delta hedging") So normal market fluctuations coupled with macroeconomic events affect the futures market, which can ripple down to individual stocks. Very popular stocks with large market caps will most certainly be affected by futures market trading. But it is also worth mentioning that futures can function completely independently of a "spot" price. This is where things start to get complicated and long winded. The futures market factor is worth mentioning because it extends even outside of the aftermarket and pre-market hours of stock trading. |
Why do shareholders participate in shorting stocks? | Short sellers have to pay interest on the borrowings to the shareholders. Although many times brokers don't pass on these earnings to the shareholders, this is the exchange. |
$700 guaranteed to not be touched for 15 years+, should I put it anywhere other than a savings account? | (Since you used the dollar sign without any qualification, I assume you're in the United States and talking about US dollars.) You have a few options here. I won't make a specific recommendation, but will present some options and hopefully useful information. Here's the short story: To buy individual stocks, you need to go through a broker. These brokers charge a fee for every transaction, usually in the neighborhood of $7. Since you probably won't want to just buy and hold a single stock for 15 years, the fees are probably unreasonable for you. If you want the educational experience of picking stocks and managing a portfolio, I suggest not using real money. Most mutual funds have minimum investments on the order of a few thousand dollars. If you shop around, there are mutual funds that may work for you. In general, look for a fund that: An example of a fund that meets these requirements is SWPPX from Charles Schwabb, which tracks the S&P 500. Buy the product directly from the mutual fund company: if you go through a broker or financial manager they'll try to rip you off. The main advantage of such a mutual fund is that it will probably make your daughter significantly more money over the next 15 years than the safer options. The tradeoff is that you have to be prepared to accept the volatility of the stock market and the possibility that your daughter might lose money. Your daughter can buy savings bonds through the US Treasury's TreasuryDirect website. There are two relevant varieties: You and your daughter seem to be the intended customers of these products: they are available in low denominations and they guarantee a rate for up to 30 years. The Series I bonds are the only product I know of that's guaranteed to keep pace with inflation until redeemed at an unknown time many years in the future. It is probably not a big concern for your daughter in these amounts, but the interest on these bonds is exempt from state taxes in all cases, and is exempt from Federal taxes if you use them for education expenses. The main weakness of these bonds is probably that they're too safe. You can get better returns by taking some risk, and some risk is probably acceptable in your situation. Savings accounts, including so-called "money market accounts" from banks are a possibility. They are very convenient, but you might have to shop around for one that: I don't have any particular insight into whether these are likely to outperform or be outperformed by treasury bonds. Remember, however, that the interest rates are not guaranteed over the long run, and that money lost to inflation is significant over 15 years. Certificates of deposit are what a bank wants you to do in your situation: you hand your money to the bank, and they guarantee a rate for some number of months or years. You pay a penalty if you want the money sooner. The longest terms I've typically seen are 5 years, but there may be longer terms available if you shop around. You can probably get better rates on CDs than you can through a savings account. The rates are not guaranteed in the long run, since the terms won't last 15 years and you'll have to get new CDs as your old ones mature. Again, I don't have any particular insight on whether these are likely to keep up with inflation or how performance will compare to treasury bonds. Watch out for the same things that affect savings accounts, in particular fees and reduced rates for balances of your size. |
How to avoid getting back into debt? | Draw up a budget and see where most of you expenses go to. See if you can cut any not essential expenses. If this doesn't help much you will need to increase your income. Ways to do this without going into debt may be to get a job, ask your parents for money, sell some of your non essential things, tutor fellow students or students in earlier years, just to name a few. Basically, if you want to stay out of debt you income needs to be higher than your expenses. So you either need to reduce your expenses, increase your income, or both. Without further information from yourself it would be quite hard to direct you in the right direction. |
Where I can find the exact time when a certain company's stock will be available in the secondary market? | Very often, the word secondary market is used synonymously with the stock market as we all know it. In this case, the primary market would be the "closed" world of VCs, business angels, etc to which stock market investors do not have access, e.g. the securities are not trading on a public stock market. |
What is the cost of “free” trades? | In the case of Wells Fargo, I believe that free trading is linked to your overall banking relationship with the firm. So if you have a checking account with a balance of $X, or a total relationship with the bank ("relationship" is usually defined as loan balances + deposit balances) over a certain amount, they give you a plum like free stock trades. The theory behind this approach is that banks want to be a one-stop shop for you. The idea is that they can market the banks products to you over a period of years (lowering customer acquisition cost) and offer you a level of convenience that allows them to charge a premium for services. For example, many people will pay a rate or fee premium on a mortgage or car loan so that they can do all of their business in one place. In other cases, free trading is linked to marketing campaigns by funds. Charles Schwab started this with the "no transaction fee" mutual fund store many years ago -- transaction fees are actually paid for by the mutual funds who pay for placement in the program. "Free ETF trade" programs are similar. |
Investment property refinance following a low appraisal? | Definitely don't borrow from your 401K. If you quit or get laid off, you have to repay the whole amount back immediately, plus you are borrowing from your opportunity cost. The stock market should be good at least through the end of this year. As one of the commentators already stated, have you calculated your net savings by reducing the interest rate? You will be paying closing costs and not all of these are deductible (only the points are). When calculating the savings, you have to ask yourself how long you will be hanging on the property? Are you likely to be long term landlords, or do you have any ideas on selling in the near future? You can reduce the cost and principal by throwing the equivalent of one to two extra mortgage payments a year to get the repayment period down significantly (by years). In this way, you are not married to a higher payment (as you would be if you refinanced to a 15 year term). I would tend to go with a) eat the appraisal cost, not refinance, and b) throw extra money towards principal to get the term of the loan to be reduced. |
I've got $100K to invest over the next 2 to 7 years. What are some good options? | One of the things I would suggest looking into is peer-to-peer lending. I do lendingclub.com, but with a lot less money, and have only done it a short period of time. Still my return is about 13%. In your case you would probably have to commit to about 3.5 years to invest your money. Buy 3 year notes, and as they are paid off pull the money out and put into a CD or money market.. They sell notes that are 3 or 5 year and you may not want to tie your money up that long. |
How to receive packages pseudonymously? | I've done this before for startup companies where I didn't want the mailing address to really obviously be my apartment or home address. Just for appearances. What you should be Googling are terms like "private mailbox center." If I recall correctly, I used to do this with Mail Boxes Etc before they were bought by UPS. This seems to be the equivalent offering these days: https://www.theupsstore.com/mailboxes I haven't looked at a dummy office for receiving mail -- I imagine that is a bit more expensive. Unless people are delivering things in person I think that would be overkill -- the Fedex guy doesn't care if his package delivery is to a UPS mailbox center. |
What is the fair value of a stock given the bid and ask prices? Is there such a relationship? | Fair value can mean many different things depending on the context. And it has nothing to do with the price at which your market order would be executed. For example if you buy market, you could get executed below 101 if there are hidden orders, at 101 if that sell order is large enough and it is still there when your order reaches the market, or at a higher price otherwise. |
Please explain the relationship between dividend amount, stock price, and option value? | 4) Finally, do all companies reduce their stock price when they pay a dividend? Are they required to? There seems to be confusion behind this question. A company does not set the price for their stock, so they can't "reduce" it either. In fact, nobody sets "the price" for a stock. The price you see reported is simply the last price that the stock was traded at. That trade was just one particular trade in a whole sequence of trades. The price used for the trade is simply the price which the particular buyer and particular seller agreed to for that particular trade. (No agreement, well then, no trade.) There's no authority for the price other than the collection of all buyers and sellers. So what happens when Nokia declares a 55 cent dividend? When they declare there is to be a dividend, they state the record date, which is the date which determines who will get the dividend: the owners of the shares on that date are the people who get the dividend payment. The stock exchanges need to account for the payment so that investors know who gets it and who doesn't, so they set the ex dividend date, which is the date on which trades of the stock will first trade without the right to receive the dividend payment. (Ex-dividend is usually about 2 days before record date.) These dates are established well before they occur so all market participants can know exactly when this change in value will occur. When trading on ex dividend day begins, there is no authority to set a "different" price than the previous day's closing price. What happens is that all (knowledgeable) market participants know that today Nokia is trading without the payment 55 cents that buyers the previous day get. So what do they do? They take that into consideration when they make an offer to buy stock, and probably end up offering a price that is about 55 cents less than they would have otherwise. Similarly, sellers know they will be getting that 55 cents, so when they choose a price to offer their stock at, it will likely be about that much less than they would have asked for otherwise. |
Can I open a Solo 401(k) if I am an independent contractor but also work part-time as an employee? | I'm in a similar situation as I have a consulting business in addition to my regular IT job. I called the company who has my IRA to ask about setting up the Individual 401k and also mentioned that I contribute to my employer's 401k plan. The rep was glad I brought this up because he said the IRS has a limit on how much you can contribute to BOTH plans. For me it would be $24K max (myAge >= 50; If you are younger than 50, then the limit might be lower). He said the IRS penalties can be steep if you exceed the limit. I don't know if this is an issue for you, but it's something you need to consider. Be sure to ask your brokerage firm before you start the process. |
Is buying a home a good idea? | Buying a house may save you money compared with renting, depending on the area and specifics of the transaction (including the purchase price, interest rates, comparable rent, etc.). In addition, buying a house may provide you with intangibles that fit your lifestyle goals (permanence in a community, ability to renovate, pride of ownership, etc.). These factors have been discussed in other answers here and in other questions. However there is one other way I think potential home buyers should consider the financial impact of home ownership: Buying a house provides you with a natural 'hedge' against possible future changes in your cost of living. Assume the following: If these two items are true, then buying a home allows you to guarantee today that your monthly living expenses will be mostly* fixed, as long as you live in that community. In 2 years, if there is an explosion of new residents in your community and housing costs skyrocket - doesn't affect you, your mortgage payment [or if you paid cash, the lack of mortgage payment] is fixed. In 3 years, if there are 20 new apartment buildings built beside you and housing costs plummet - doesn't affect you, your mortgage payment is fixed. If you know that you want to live in a particular place 20 years from now, then buying a house in that area today may be a way of ensuring that you can afford to live there in the future. *Remember that while your mortgage payment will be fixed, other costs of home ownership will be variable. See below. You may or may not save money compared with rent over the period you live in your house, but by putting your money into a house, you have protected yourself against catastrophic rent increases. What is the cost of hedging yourself against this risk? (A) The known costs of ownership [closing costs on purchase, mortgage interest, property tax, condo fees, home insurance, etc.]; (B) The unknown costs of ownership [annual and periodic maintenance, closing costs on a future sale, etc.]; (C) The potential earnings lost on your down payment / mortgage principal payments [whether it is low-risk interest or higher risk equity]; (D) You may have reduced savings for a long period of time which would limit your ability to cover emergencies (such as medical costs, unexpected unemployment, etc.) (E) You may have a reduced ability to look for a better job based on being locked into a particular location (though I have assumed above that you want to live in a particular community for an extended period of time, that desire may change); and (F) You can't reap the benefits of a rental market that decreases in real dollars, if that happens in your market over time. In short, purchasing a home should be a lifestyle-motivated decision. It financially reduces some the fluctuation in your long-term living costs, with the trade-off of committed principal dollars and additional ownership risks including limited mobility. |
How can I find if I can buy shares of a specific company? | Hmm... Well there are several ways to do that: Go to any bank (or at the very least major ones). They can assist you with buying and/or selling stocks/shares of any company on the financial market. They keep your shares safe at the bank and take care of them. The downside is that they will calculate fees for every single thing they do with your money or shares or whatever. Go to any Financial broker/trader that deals with the stock market. Open an account and tell them to buy shares from company "X" and keep them. Meaning they won't trade with them if this is what you want. Do the same as point 2, but on your own. Find a suitable broker with decent transaction fees, open an account, find the company's stock code and purchase the stocks via the platform the broker uses. |
Stock Exchange in US | The easiest route for you to go down will be to consult wikipedia, which will provide a comprehensive list of all US stock exchanges (there are plenty more than the ones you list!). Then visit the websites for those that are of interest to you, where you will find a list of holiday dates along with the trading schedule for specific products and the settlement dates where relevant. In answer to the other part of your question, yes, a stock can trade on multiple exchanges. Typically (unless you instruct otherwise), your broker will route your order to the exchange where it can be matched at the most favorable price to you at that time. |
“In-the-Money” vs “Out-of-the-Money” Call Options | First, welcome to Money.SE. The selected page is awful. I don't know the value in listing different expirations at the same strike. Usually, all the strikes are grouped by month, so I'd be looking at Jan '15 across all strikes. "In the money" means the price of a stock is trading above the strike price, if a call, or below it, if a put. On 10/20 of some year, Intel was trading at $23.34. The January $25 call strike was just $0.70, and April's was $1.82. These were out of the money. The $25 puts were "in the money" by $1.66 so you could have paid $1.90 for the Jan $25 put, with $.24 of time premium. By November, the price rose and the put fell, to $.85, all time premium. As with stocks, the key thing is to only buy calls of stock that are going to go up. If a stock will fall, buy puts. Curious, what was the class discussion just before the teacher gave you this image? |
Different ways of looking at P/E Ratio vs EPS | Check your math... "two stocks, both with a P/E of 2 trading at $40 per share lets say, and one has an EPS of 5 whereas the other has an EPS of 10 is the latter a better purchase?" If a stock has P/E of 2 and price of $40 it has an EPS of $20. Not $10. Not $5. |
Would extending my mortgage cause the terms to be re-negotiated? | Run the numbers in advance. Understand what are the current rates for an additional 2nd mortgage, what are the rates for a brand new mortgage that will cover the additional funds. Understand what they are for another lender. Estimate the amount of paperwork involved in each option (new first, new 2nd, and new lender). Ask the what are the options they can offer you. Because you have estimated the costs in money and time for the different options, you can evaluate the offer they make. What they offer you can range from everything you want to nothing you would accept. What they offer will depend on several factors: Do they care to keep you as a customer?; Do they expect you to walk away?; are they trying to get rid of mortgages like the one you have?; Can they make more money with the plan they are offering you? You will be interested in the upfront costs, the monthly costs, and the amount of time required for the process to be completed. |
person on loan with cosigner | This will probably require asking the SO to sign a quitclaim and/or to "sell" him her share of the vehicle's ownership and getting it re-titled in his own name alone, which is the question you actually asked. To cancel the cosigner arrangement, he has to pay off the loan. If he can't or doesn't want to do that in cash, he'd have to qualify for a new loan to refinasnce in his name only, or get someone else (such as yourself) to co-sign. Alternatively, he might sell the car (or something else) to pay what he still owes on it. As noted in other answers, this kind of mess is why you shouldn't get into either cosigning or joint ownership without a written agreement spelling out exactly what happens should one of the parties wish to end this arrangement. Doing business with friends is still doing business. |
Does the low CAD positively or negatively impact Canadian Investors? | If you buy US stocks when the CAD is high and sell them when the CAD is lower you will make a currency gain on top of any profit or loss from the stock investments. If you buy US stocks when the CAD is low and sell when the CAD is higher any profits from gains from the stock investment will be reduced and any losses will be increased. If you are just starting out you may be better off investing in your own country to avoid any currency risk adding to your stock market risk. |
What are the downsides that prevent more people from working in high-income countries, and then retiring in low-income (and cost of living) ones? | At retirement age, your life priorities are somewhat different, and two key items come to mind. Your social circle, community and extended family contacts are highly related with your lifespan at retirement age. Loneliness kills, literally. Long distance relocation would weaken those ties exactly at the time when you most need and want them. You are also likely to need at least occasional physical assistance at random times, so living in a spot where none your friends&family can visit at a day's notice is hard. Cheaper living locations tend to have worse healthcare. Again, this doesn't matter much for a 25 year old expat, but at an age where you likely have one or multiple chronic diseases, general frailty and a very frequent need for healthcare this is a priority. This might work if you can do it as a family. I met a retired British couple in southern India, and they had a nice system where they were living in UK during the (UK) summer, and in India for the rest of the year. However, the above concerns don't disappear - when at a later time their health deterioates and one of them dies, then it would probably be better for the widow[er] to stay in UK permanently closer to their extended family and with the local healthcare system. |
What is a “closed-end fund”? How is a closed-end fund different from a typical mutual fund? | A closed-end fund is a collective investment scheme that is closed to new investment once the fund starts operating. A typical open-ended fund will allow you to buy more shares of the fund anytime you want and the fund will create those new shares for you and invest your new money to continue growing assets under management. A closed-end fund only using the initial capital invested when the fund started operating and no new shares are typically created (always exception in the financial community). Normally you buy and sell an open-end fund from the fund company directly. A closed-end fund will usually be bought and sold on the secondary market. Here is some more information from Wikipedia Some characteristics that distinguish a closed-end fund from an ordinary open-end mutual fund are that: Another distinguishing feature of a closed-end fund is the common use of leverage or gearing to enhance returns. CEFs can raise additional investment capital by issuing auction rate securities, preferred shares, long-term debt, and/or reverse-repurchase agreements. In doing so, the fund hopes to earn a higher return with this excess invested capital. |
Does buying and selling a stock OR holding onto it make a company look better? | Not sure I fully understand your question but my take on it is this: There a lot of people out there that admire companies and own the stock just because they like the company. For example, I know some kids who own Disney stock. They only have a share or two but they keep it because they want to say "I own a part of Disney." Realistically speaking, if they hold or sell the stock it is so minuscule to have any realizable affect on the overall value of the stock which does not really make the company look better from an investor perspective. However, if a company has people that just want to own the stock just like your uncle are indeed "better" because they must have provided a product or service that is valued intrinsically. |
After consulting HR Block, are you actually obligated to file your taxes with them, if they've found ways to save you money? | As I have worked for H&R Block I know for a fact that they record all your activity with them for future reference. If it is their opinion that you are obligated to use their service if you use some other service then this, most likely, will affect your future dealings with them. So, ask yourself this question: is reducing their income from you this year worth never being able to deal with them again in future years? The answer to that will give you the answer to your question. |
found a 1994 uncashed profit sharing retirement plan check | Checks (in the US, anyway) are only good for six months after they have been written. After that. under the US Uniform Commerical Code they are considered "stale checks" and banks need not accept them. My experience is that they generally won't -- but you probably shouldn't count on that, either when figuring out whether to try depositing an old check or figuring out how much cash you need to keep in your checking account to cover recent stale checks. The check you now hold is certainly a statement of intent to pay you and thus is a useful document to supplement other evidence that they still owe you the money -- but since checks can be cancelled and/or a replacement check may have been issued, its value for that purpose may be limited. You can try depositing it and see what happens. If that doesn't work (or you don't want to bother trying it) you can contact the retirement plan, point out that this check went uncashed, and ask them to send you a replacement. If they haven't already done so (you might want to check your own records for that), there shouldn't be any problem with this. (Note: Many business checks have a statement printed on them that they're only good for 90 days or so. If yours does, you can skip trying to cash it; just contact the retirement plan offices.) |
What can I replace Microsoft Money with, now that MS has abandoned it? | I use http://moneydance.com/ it has Mac, Windows and Linux versions and works well for my needs. |
Is Real Estate ever a BAD investment? If so, when? | All other factors being equal, owning your primary residence is almost always a good investment over the long haul. Why? Because you have to live somewhere, and rentals, especially long-term leases that are important when you have kids in school, etc., are generally in the same ballpark as a mortgage in most markets. Giving $1,500 to a landlord gets me 30 days of living somewhere. Giving $1,500 to the bank gets me a place to live and equity in an asset which requires maintenance, but always has intrinsic value. Detroit is one extreme, Manhattan or Silicon Valley is another real estate extreme... everywhere else is somewhere in the middle. What isn't always a good investment is speculating in highly elastic "investment property" like vacation condos as an amateur. It's a cyclical market, but our attention spans are too short to realize that. As most of the other answers to this question indicate, people tend to be down in the dumps and see all of the problems with real estate when the market is not very good. Conversely people only see the upside and are oblivious to problems when the market is high. |
When to sell a stock? | My theory is that for every stock you buy, you should have an exit strategy and follow it. It is too hard to let emotions rule if you let your default strategy be "let's see what happens." and emotional investing will almost never serve you well. So before buying a stock, set a maximum loss and maximum gain that you will watch for on the stock, and when it hits that number sell. At the very least, when it hits one of your numbers, consciously make a decision that you are effectively buying it again at the current price if you decide to stay in. When you do this, set a new high and low price and repeat the above strategy. |
Is it possible to sell a stock at a higher value than the market price? | You can ask for 305rs, but as long as shares are available at lower prices you won't sell. Only when your ask becomes the lowest available price will someone buy from you. See many past questions about how buyers and sellers are matched by the market. |
What's the difference between Term and Whole Life insurance? | For most people Term is the way to go. I consider life insurance a necessity not an investment. See this article on SmartMoney. |
How should I calculate the opportunity cost of using a 401(k) loan? | Make sure that when you have the loan you still contribute enough to get the company match. For example: An inability to maximize the match might need to be figured into the opportunity cost of the loan. Some companies will suspend your contributions for a specific number of months for a hardship withdraw. Make sure you understand where the money comes from for the loan. Can you count the money that the company matched but you are not vested with, when determining the maximum amount of the loan? If the money is in what is now a closed fund can you replenish the funds back into that fund if use it to fund the loan? Know what the repayment time period is of the loan. |
Why would someone buy a way out-of-the-money call option that's expiring soon? | It could be that the contracts were bought at cheaper prices such as $.01 earlier in the day. What you see there with the bid and ask is the CURRENT bid and CURRENT ask. The high ask price means there is no current liquidity, as someone is quoting a very high ask price just in case someone really wants to trade that price. But as you said, no one would buy this with a better price on a closer strike price. The volume likely occurred at a different price than listed on the current ask. |
What are the pitfalls of loaning money to friends or family? Is there a right way to do it? | There are two levels to consider here: That said, before loaning/giving anyone money ask yourself if it is good for them. If they have problems managing their money, or holding down a job, and you give them money, they are just going to come back for more later. In this type of situation, you shouldn't give/loan them money. But on the other hand, if a friend or family member has hit a rough patch and you know they are the kind of person that will be on their feet again soon, and you have nothing to lose, give them the money. |
How does the process of “assignment” work for in-the-money Options? | First, it depends on your broker. Full service firms will tear you a new one, discount brokers may charge ~nothing. You'll have to check with your broker on assignment fees. Theoretically, this is the case of the opposite of my answer in this question: Are underlying assets supposed to be sold/bought immediately after being bought/sold in call/put option? Your trading strategy/reasoning for your covered call notwithstanding, in your case, as an option writer covering in the money calls, you want to hold and pray that your option expires worthless. As I said in the other answer, there is always a theoretical premium of option price + exercise price to underlying prices, no matter how slight, right up until expiration, so on that basis, it doesn't pay to close out the option. However, there's a reality that I didn't mention in the other answer: if it's a deep in the money option, you can actually put a bid < stock price - exercise price - trade fee and hope for the best since the market makers rarely bid above stock price - exercise price for illiquid options, but it's unlikely that you'll beat the market makers + hft. They're systems are too fast. I know the philly exchange allows you to put in implied volatility orders, but they're expensive, and I couldn't tell you if a broker/exchange allows for dynamic orders with the equation I specified above, but it may be worth a shot to check out; however, it's unlikely that such a low order would ever be filled since you'll at best be lined up with the market makers, and it would require a big player dumping all its' holdings at once to get to your order. If you're doing a traditional, true-blue covered call, there's absolutely nothing wrong being assigned except for the tax implications. When your counterparty calls away your underlyings, it is a sell for tax purposes. If you're not covering with the underlying but with a more complex spread, things could get hairy for you real quick if someone were to exercise on you, but that's always a risk. If your broker is extremely strict, they may close the rest of your spread for you at the offer. In illiquid markets, that would be a huge percentage loss considering the wide bid/ask spreads. |
Taxable Website Ad Revenue | I'm not a tax advisor, but I've done freelance work, so... If any of your side-business revenue is reported on a 1099, you're now a business owner, which is why Schedule C must be filled out. As a business owner, minimum wage doesn't apply to you. All revenue is income to you, and you owe taxes on the profit, after subtracting legitimate (verifiable) business expenses. You'll want to talk to a real tax advisor if you're going to start expensing mileage, part of your house (if you use a home office), etc. Don't forget that you'll owe self-employment tax (the employer's half of your payroll tax). You can't save money on business taxes by paying yourself a wage and then counting it as an expense to the business. You'll definitely want to talk to a tax expert if you start playing around with finances as an (the) owner of the business. Income that is not reported on a 1099 should be reported as hobby income. |
Responsible investing - just a marketing trick? | A share is just a part ownership of a company. If you buy a share of a green stock in the open market, you now just own part of a green company. Just like if you buy a house, the money you paid moves to the former owner, but what you are getting is a clear asset in return that you now own. Via mutual funds/indexes this can get a little more complicated (voting rights etc tend to go to the mutual/indexing company rather than the holders of the fund), but is approximately the same thing: the fund buys assets on the open market, then holds them, buys more, or sells them on behalf of the fund investors. |
Advice for a college student interested in investment opportunities. | 2.5 years is a short period in the stock market. That means there is a significant chance it will be lower in 2.5 years, whereas it is very likely to be higher over a longer time period like 5-10 years. So if you want the funds to grow for sure then consider an online savings account, where you might earn 1-2%. If you want to do stocks anyway, but don't have any idea what fund to buy, the safest default choice is to buy an index fund that tracks the S&P 500. Vanguard's VFINX is one example. |
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