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Should I consolidate loans and cards, or just cards, leaving multiple loans? | My answer is similar to Ben Miller's, but let me make some slightly different points: There is one excellent reason to get a consolidation loan: You can often get a lower interest rate. If you are presently paying 19% on a credit card and you can roll that into a personal loan at 13.89%, you'll be saving over 5%, which can add up. I would definitely not consolidate a loan at 12.99% into a loan at 13.89%. Then you're just adding 1% to your interest rate. What's the benefit in this? Another good reasons for a consolidation loan is psychological. A consolidation loan with fixed payments forces you to pay that amount every month. You say you have trouble with credit cards. It's very easy to say to yourself, "Oh, just this month I'm going to pay just the minimum so I can use my cash for this other Very Important Thing that I need to buy." And then next month you find something else that you just absolutely have to buy. And again the next month, and the next, and your determination to seriously pay down your debt keeps getting pushed off. If you have a fixed monthly payment, you can't. You're committed. Also, if you have many credit cards, juggling payments on all of them can get complex and confusing. It's easy to lose track of how much you owe and to budget for payments. At worst, when there are many bills to pay you may forget one. (Personally I now have 3 bank cards, an airline card, and 2 store cards, and managing them is getting out of hand. I have good reasons for having so many cards: the airline card and the store cards give me special discounts. But it's confusing to keep track of.) As to adding $3,000 to the consolidation loan: Very, very bad idea. You are basically saying, "I have to start seriously paying down my debt ... tomorrow. Today I need a some extra cash so I'm going to borrow just a little bit more, but I'm going to get started paying it off next month." This is a trap, and the sort of trap that leads people into spiraling debt. Start paying off debt NOW, not at some vague time in the future that never seems to come. |
Why do 10 year-old luxury cars lose so much value? | They are overpriced to begin with. One reason is the fact that they are luxury cars. A second, related reason, is that they tend to push the technology envelope. All cars depreciate drastically the minute they are driven off the lot. This a good argument for buying a car that is 1-2 years old. The higher you are, the more you can fall. Repairs and maintenance are typically still expensive on these cars, due to relative rarity and the lack of necessary expertise. Here is where that advanced technology bites you. This is a reason that a 5 year old Civic may be worth more than than a 10 year old Benz. It may simply not be worth the hassle of maintaining/repairing a luxury car. This is especially true for an aging luxury car. There are some people that only buy domestic, precisely because of the maintenance costs. Also, a 10 year old car is still a 10 year old car, regardless of the make. (There are a few notable exceptions, like the NSX.) Hondas and Toyotas have a great reputation for reliability and (long-term) total cost of ownership. "Better" is a subjective issue, that depends on a variety of variables. A Civic is certainly not better in terms of technology, comfort, etc. But, it is likely better in terms of maintenance, reliability, etc. Which "better" you focus on, is up to you. |
How risky are penny stocks? | Consider firstly that they're penny stocks for a reason - the company just isn't worth much. Yes, it could take off but this happenstance is rarer than you think. Next, there is the problem of how you'd find out what the good stocks to invest in are. Here in the UK, reliable news about stocks outside the FTSE indexes (AIM) is hard to come by. Also consider than there isn't the supply and demand for these stocks in the same way as there is in the main indexes. Even if you were to make a tidy profit over time, you might lose what you made in the delay selling the stock. Start-ups also have the problem of poor cash reserves so new employees are often given stock options in lieu of cash which further depresses the share price. I read a report once that said that only 1 in 10 penny shares yields a worthwhile return. I just don't like these odds so I tend to avoid. |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | I'll take an alternate route: honesty + humor. Say something like this with a smile and a laugh, like you know they're crazy, but they maybe don't know it yet. "Are you crazy? Co-signing a loan can put us both in a lot of potential danger. First, you shouldn't get a loan that you can't afford/attain on your own, and second, I'd be crazy to agree to be liable for a loan that someone else can't get on their own. You want something bad enough, you get your credit rating in order, or you save up the money - that's how I bought (my car/house/trip to Geneva). I'd be happy to point you in the right direction if you want to put a plan together." You're offering help, but not the kind that puts you in danger. Declining to co-sign a loan can't damage your relationship with this person as much as failure to pay will. |
Is a car loan bad debt? | What's missing in your question, so Kate couldn't address, is the rest of your financial picture. If you have a fully funded emergency account, are saving for retirement, and have saved up the $15K for the car, buy in cash. If you tell me that if the day after you buy the car in cash, your furnace/AC system dies, that you'd need to pay for it with an $8K charge to a credit card, that's another story. You see, there's more than one rate at play. You get close to zero on you savings today. You have a 1.5% loan rate available. But what is your marginal cost of borrowing? The next $10K, $20K? If it's 18% on a credit card, I personally would find value in borrowing at sub-2.5% and not depleting my savings. On the other side, the saving side, does your company offer a 401(k) with company match? I find too many people obsessing over their 6% debt, while ignoring a 100% match of 4-6% of their gross income. For what it's worth, trying to place labels on debt is a bit pointless. Any use of debt should be discussed 100% based on the finances of the borrower. |
Which forex brokerage should I choose if I want to fund my account with over a million dollars? | Oanda.com is a very respectable broker. They don't offer ridiculous leverage options of 200 to 1 that prove the downfall of people starting out in Forex. When I used them a few years back, they had good customer service and some nice charting tools. |
Optimal number of credit cards for a given length of credit history | I have found that between the Discover card and a Visa/Master Card a person has everything covered. In my case the Discover card had the best deal (cash back) and the Visa/Master Card took care of those times a vendor didn't take Discover. One big Box store (Costco) did trip us up, so we did end up getting an American Express card. But Costco is dropping that requirement in 2016. One advantage of only having a few cards is that the increase in your total credit line will be split among fewer cards. In your question the highest max limit on one card is $2500, what will you do if you have to take a flight at the last minute and the Airline ticket is more than that? If you need a higher limit, ask for one of your existing cards to raise it; don't go out and get another card. If you see that one of the companies that you already have a card with has a better card, you can ask them to convert your account to that better card. Yes higher total limit does help your utilization ratio portion of the score. But there is some opinion that they also look at the utilization ratio per card. So hitting one card to nearly the max can hurt your score. Three caveats about the number of cards: |
60% Downpayment on house? | Strictly by the numbers, putting more than 20% down is a losing proposition. With interest rates still near all time lows, you're likely able to get a mortgage for less than 4%. The real rate of a return on the market (subtracting inflation and taxes) is going to be somewhere around 5-6%. So by this math, you'd be best off paying the minimum to get out of PMI, and then investing the remainder in a low fee index fund. The question becomes how much that 1-2% is worth to you vs how much the job flexibility is worth. It boils down to your personal risk preference, life conditions, etc. so it is difficult to give good advice. The 1-2% difference in your rate of return is not going to be catastrophic. Personally, I would run the numbers with your fiance. Build a spreadsheet tracking your estimated net worth under the assumption that you make a 20% down payment and invest the rest. Then hold all other factors equal, and re-build the spreadsheet with the higher down payment. Factor in one of you losing your job for a few years, or one of you taking off for a while to raise the kids. You can make a judgement call based how the two of you feel about those numbers. |
Payroll taxes on exercised stock options | The trickiest thing is the federal tax. It's typical to withhold 25% federal on this type of event. If your federal marginal rate was already towards the top of that bracket, you'll owe the missing 3% as you enter the 28% bracket. Nothing awful, just be aware. |
Should I pay cash or prefer a 0% interest loan for home furnishings? | If you can set up automatic payments (like direct debits in the UK) and you can be disciplined enough to not spend the money on something else then this can be a good way of building/improving your credit rating. Banks / Lenders like it when they see you have previously taken, and repaid, credit. This can help you get better finance deals etc. in the future. Update: as noted in the comments France had a different financial system and people do not have credit ratings, so this point isn't valid in France |
Stock exchanges open on Saturday | According to Wikipedia as well as this stock market trading-hours website, the Tehran Stock Exchange is open Saturday through Wednesday. |
Stock market vs. baseball card trading analogy | Actually, this is a pretty good analogy to certain types of stocks, specifically tech and other "fad" stocks. Around the turn of the century, there were a lot of "Bobs" buying tech stocks (like they would baseball cards), for tech stocks' sakes. That's what drove the internet and tech stock bubbles of high valuations. At other times, the tech stocks are bought and sold mainly by "Steve's" for business reasons such as likely (not merely possible) future appreciation, and command a much lower valuation. |
What is “beta” for an investment or a portfolio, and how do I use it? | I don't think either of these answers are accurate. A beta of 0 means that your stock/portfolio does not change accordingly or with the market, rather it acts independent. A beta above 0 means the stock follows what the market does. Which means if the market goes up the stock goes up, if the market goes down, the stock goes down. If the stock's beta is more than 1 the stock will go up more if the market goes up, or go down more if the market goes down. Inversely if the stock is less than 0 the stock will follow the market inversely. So if the market goes up, the stock goes down. If the market goes down, the stock goes up. Again a greater negative beta, the more this relationship will be exaggerated. |
How to acquire skills required for long-term investing? | Far and away the most valuable skill in investing, in my opinion, is emotional fortitude. You need to have the emotional stability and confidence to trust your decision making and research to hold on down days. |
What should we consider when withdrawing a large amount of money from a bank account? | You state "Any info will be appreciated", so here's some background information on my answer (you can skip to my answer): When I worked for banks, I was required to submit suspicious activity to the people above me by filling out a form with a customer's name, SSN, account number(s) and ID. You may hear in media that it is $10K or sometimes $5K. The truth is that it could be lower than that, depending on what the institution defines as suspicious. Every year we were required to take a "course" which implied that terrorists and criminals use cash regularly - whether we agree or disagree is irrelevant - this is what the course implied. It's important to understand that many people use cash-only budgets because it's easier than relying on the banking system which charges overdraft fees for going over, or in some cases, you pay more at merchants because of card usage (some merchants give discounts for cash). If someone has a budget of $10K a month and they choose to use cash, that's perfectly fine. Also, why is it anyone's business what someone does with their private property? This created an interesting contrast among differently aged Americans - older Americans saw the banking system as tyrannical busybodies whereas young Americans didn't care. This is part of why I eventually left the banking system; I felt sick that I had to report this information, but it's amazing how quick everyone is to accept the new rules. Notice how one of the comments asks you what you intend to do with the money, as if it's any of their business. Welcome to the New America©! My answer: If you withdraw $100,000, here is what will more than likely happen: Now, watch the anger at this answer because I'm telling you the truth. This article will explain why. Your very question had a negative 1, as if asking what you're asking is wrong (see the absurdity)! If Joseph Stalin ran for president in the United States, the majority of Americans would welcome him. You have good reason to be concerned; others at this site have noticed this as well. |
Where to invest proceeds from home sale to be used to buy new house within five years? | For a two year time frame, a good insured savings account or a low-cost short-term government bond fund is most likely the way I would go. Depending on the specific amount, it may also be reasonable to look into directly buying government bonds. The reason for this is simply that in such a short time period, the stock market can be extremely volatile. Imagine if you had gone all in with the money on the stock market in, say, 2007, intending to withdraw the money after two years. Take a broad stock market index of your choice and see how much you'd have got back, and consider if you'd have felt comfortable sticking to your plan for the duration. Since you would likely be focused more on preservation of capital than returns during such a relatively short period, the risk of the stock market making a major (or even relatively minor) downturn in the interim would (should) be a bigger consideration than the possibility of a higher return. The "return of capital, not return on capital" rule. If the stock market falls by 10%, it must go up by 11% to break even. If it falls by 25%, it must go up by 33% to break even. If you are looking at a slightly longer time period, such as the example five years, then you might want to add some stocks to the mix for the possibility of a higher return. Still, however, since you have a specific goal in mind that is still reasonably close in time, I would likely keep a large fraction of the money in interest-bearing holdings (bank account, bonds, bond funds) rather than in the stock market. A good compromise may be medium-to-high-yield corporate bonds. It shouldn't be too difficult to find such bond funds that can return a few percentage points above risk-free interest, if you can live with the price volatility. Over time and as you get closer to actually needing the money, shift the holdings to lower-risk holdings to secure the capital amount. Yes, short-term government bonds tend to have dismal returns, particularly currently. (It's pretty much either that, or the country is just about bankrupt already, which means that the risk of default is quite high which is reflected in the interest premiums demanded by investors.) But the risk in most countries' short-term government bonds is also very much limited. And generally, when you are looking at using the money for a specific purpose within a defined (and relatively short) time frame, you want to reduce risk, even if that comes with the price tag of a slightly lower return. And, as always, never put all your eggs in one basket. A combination of government bonds from various countries may be appropriate, just as you should diversify between different stocks in a well-balanced portfolio. Make sure to check the limits on how much money is insured in a single account, for a single individual, in a single institution and for a household - you don't want to chase high interest bank accounts only to be burned by something like that if the institution goes bankrupt. Generally, the sooner you expect to need the money, the less risk you should take, even if that means a lower return on capital. And the risk progression (ignoring currency effects, which affects all of these equally) is roughly short-term government bonds, long-term government bonds or regular corporate bonds, high-yield corporate bonds, stock market large cap, stock market mid and low cap. Yes, there are exceptions, but that's a resonable rule of thumb. |
Does gold's value decrease over time due to the fact that it is being continuously mined? | does it mean uncontrolled severe deflation/inflation is more likely to occur compared to "normal" currencies such as USD, EUR etc? Look at the chart referenced in the link in your question. It took approximately 50 years for annual production of gold to double from 500 tons to 1000 tons. It took approximately 40 years for annual production to double from 1000 tons to 2000 tons. Compare that to the production of US dollars by the Federal Reserve (see chart below obtained from here). US dollar production doubled in DAYS. Which one do you think will lead to uncontrolled inflation/deflation? Update: Why did I include a chart of the FED's balance sheet? Because this is the way newly printed money is introduced - the FED will purchase something from banks (mortgage-backed securities, US treasuries, etc.) with newly printed money. The banks can then loan this money to people who then deposit the money into other banks who loan those deposits to other people and so on. This is how the fractional reserve process expands the money supply. This is why I did not include a chart of the money supply since that is counting the same money multiple times. If I deposited 100 newly minted coins into a bank and that bank proceeded to loan out 80 of my coins where 80 are deposited into another bank who then proceeds to loan out 60 of the coins, and so on....the production of coins only changed by the initial 100 that I minted - not by the fractional reserve multiple. There are historical examples of inflation with gold and silver as duff has pointed out. None of them come close in magnitude to the inflation experienced with government fiat money. |
Multiple mortgage pre-approvals and effects on credit score | The problem is not the credit score; it is the "competing" inquiries. Multiple inquiries will be considered as one if done withing a short time period (2 month, IIRC) and for the same kind of credit, because people do shop for rates, you're not the first one to do that. So don't worry about that. What you should be worrying about is banks asking questions about these inquiries, which is an annoying (at least for me) technicality. You'll have to explain to each of the banks that you want a pre-approval from that you're going to take the mortgage from them, and not from anyone else. In writing, with your signature notarized. Which is OK because it's done (the signature and notarizing) at closing, but you'll have to "convince" them that they're the chosen ones to get approved. Other than that it's pretty simple. I've done that (including the declaration that I'm not going to take any loans based on the other "competing" inquiries), and it worked fine when I took the original mortgage, and when I refinanced it later in a similar "shopping" fashion. Do it closer to the actual bidding, because closing does take at least 3-4 weeks, and the rate lock is usually for 30-60 days, so not much time to shop if you take that road. |
To rebalance or not to rebalance | In theory, investing is not gambling because the expected outcome is not random; people are expecting positive returns, on average, with some relationship to risk undertaken and economic reality. (More risk = more returns.) Historically this is true on average, that assets have positive returns, and riskier assets have higher returns. Also it's true that stock market gains roughly track economic growth. Valuation (current price level relative to "fundamentals") matters - reversion to the mean does exist over a long enough time. Given a 7-10 year horizon, a lot of the variance in ending price level can be explained by valuation at the start of the period. On average over time, business profits have to vary around a curve that's related to the overall economy, and equity prices should reflect business profits. The shorter the horizon, the more random noise. Even 1 year is pretty short in this respect. Bubbles do exist, as do irrational panics, and milder forms of each. Investing is not like a coin flip because the current total number of heads and tails (current valuation) does affect the probability of future outcomes. That said, it's pretty hard to predict the timing, or the specific stocks that will do well, etc. Rebalancing gives you an objective, automated, unemotional way to take advantage of all the noise around the long-term trend. Rather than trying to use judgment to identify when to get in and out, with rebalancing (and dollar cost averaging) you guarantee getting in a bit more when things are lower, and getting out a bit more when things are higher. You can make money from prices bouncing around even if they end up going nowhere and even if you can't predict the bouncing. Here are a couple old posts from my blog that talk about this a little more: |
How is Butterfly Trade Strategy good if the mid Strike price is already past? | One way to look at a butterfly is to break it into two trades. A butterfly is actually made up of two verticals... One is a debit vertical: buy 490 put and sell the 460 put. The other is a credit vertical: sell a 460 put and buy a 430 put. If someone believes Apple will fall to 460, that person could do a few things. There are other strategies but this just compares the three common ones: 1) Buy a put. This is expensive and if the stock only goes to 460 you overpay for it. 2) Buy a put vertical. This is less expensive because you offset the price of your put. 3) Buy a butterfly. This is cheapest of the three because you have the vertical in #2 as well as a credit vertical on top of that to offset your cost. The reason why someone would use the butterfly is to pay less upfront while capitalizing on a fall to 460. Of the three, this would be the better strategy to use if that happens. But REMEMBER that this only applies if the trader is right and it goes to 460. There is always a trade off for every strategy that the trader must be aware of. If the trader is wrong, and Apple goes to say 400, the put (#1) would make the most money and the butterfly(#3) would lose money while the vertical (#2) would still gain. So that is what you're sacrificing to get the benefits of the butterfly. Also helps to draw a diagram to compare the strategies. |
Capital gains tax when I sell my home if I use a portion of it for an AirBnB | Getting the first year right for any rental property is key. It is even more complex when you rent a room, or rent via a service like AirBnB. Get professional tax advice. For you the IRS rules are covered in Tax Topic 415 Renting Residential and Vacation Property and IRS pub 527 Residential Rental Property There is a special rule if you use a dwelling unit as a personal residence and rent it for fewer than 15 days. In this case, do not report any of the rental income and do not deduct any expenses as rental expenses. If you reach that reporting threshold the IRS will now expect you to to have to report the income, and address the items such as depreciation. When you go to sell the house you will again have to address depreciation. All of this adds complexity to your tax situation. The best advice is to make sure that in a tax year you don't cross that threshold. When you have a house that is part personal residence, and part rental property some parts of the tax code become complex. You will have to divide all the expenses (mortgage, property tax, insurance) and split it between the two uses. You will also have to take that rental portion of the property and depreciation it. You will need to determine the value of the property before the split and then determine the value of the rental portion at the time of the split. From then on, you will follow the IRS regulations for depreciation of the rental portion until you either convert it back to non-rental or sell the property. When the property is sold the portion of the sales price will be associated with the rental property, and you will need to determine if the rental property is sold for a profit or a loss. You will also have to recapture the depreciation. It is possible that one portion of the property could show a loss, and the other part of the property a gain depending on house prices over the decades. You can expect that AirBnB will collect tax info and send it to the IRS As a US company, we’re required by US law to collect taxpayer information from hosts who appear to have US-sourced income. Virginia will piggyback onto the IRS rules. Local law must be researched because they may limit what type of rentals are allowed. Local law could be state, or county/city/town. Even zoning regulations could apply. Also check any documents from your Home Owners Association, they may address running a business or renting a property. You may need to adjust your insurance policy regarding having tenants. You may also want to look at insurance to protect you if a renter is injured. |
Insurance company sent me huge check instead of pharmacy. Now what? | You mentioned depositing the check and then sending a personal check. Be sure to account for time, since any deposit over $10,000 the money will be made available in increments, so it may take 10-14 days to get the full amount in your account before you could send a personal check. I would not recommend this option regardless, but if you do, just a heads up. |
Should I buy a house because Mortgage rates are low | As of now in 2016, is is safe to assume that mortgage rates would/should not get back to 10%? What would the rates be in future is speculation. It depends on quite a few things, overall economy, demand / supply, liquidity in market etc ... Chances are less that rates would show a dramatic rise in near future. Does this mean that one should always buy a house ONLy when mortgage rates are low? Is it worth the wait IF the rates are high right now? Nope. House purchase decision are not solely based on interest rates. There are quite a few other aspects to consider, the housing industry, your need, etc. Although interest rate do form one of the aspect to consider specially affordability of the EMI. Is refinancing an option on the table, if I made a deal at a bad time when rates are high? This depends on the terms of current mortgage. Most would allow refinance, there may be penal charges breaking the current mortgage. Note refinance does not always mean that you would get a better rate. Many mortgages these days are on variable interest rates, this means that they can go down or go up. How can people afford 10% mortgage? Well if you buy a small cheaper [Less expensive] house you can afford a higher interest rate. |
Who could afford a higher annual deductible who couldn't afford a higher monthly payment? | Your title question, Who could afford a higher premium who couldn't afford a higher monthly payment?, contrasts premium with monthly payment, but those are the same thing. In the body of your question, you list monthly payment and deductible, which is entirely different. The deductible is paid only if you need that much medical care in any one year. Most years a person in good health pays little because of the deductible. Thus, the higher deductible options offer catastrophic health insurance without giving much in the way of reimbursement for regular medical expenses. Note - the original question has been edited since. |
How to invest 100k | How to spend the money is up to you. That includes spending money on your house. (This is a safer way to look at it than an "investment". Not that it can't ever be treated as such, but that doing so often makes it easy to justify bad decisions and overspending on the house.) So with regards to the mortgage: So if it's not a monstrously huge deal, you might prefer to avoid default. Now, how to invest the rest while waiting to spend it, now... |
Peer to peer lending business model (i.e. Lending Club) | This is all answered in the prospectus. The money not yet invested (available/committed to a note but not yet funded) is held in pooled trust account insured by FDIC. Money funded is delivered to the borrower. Lending Club service their notes themselves. Read also my reviews on Lending Club. |
When is the right time to buy a new/emerging technology? | The short answer is that it's never the right time to buy an emerging technology. As long as the technology is emerging, you should expect that newer revisions will be both better and less expensive. With solar, specifically, there are some tax credits to help the early adopters that may help you on the cost/benefit analysis, but in the end, you still have to decide whether the benefits outweigh the costs now, and if not, whether that will change in the near future. For me, part of the solar benefit is the ability to generate electricity when the power goes out. That option does require local battery storage, however. One of the benefits of using Musk's solar tiles instead of actual slate is the weight of the quartz tiles which is much lower than the weight of real slate. In many cases a slate roof is heavy enough to require major reinforcement of the roof trusses before installation. The lower weight also saves significantly on shipping costs. This is where Musk can lower costs enough to be competitive to some of the materials he hope to compete with. |
Where can I trade FX spot options, other than saxobank.com? | Oanda.com trades spot forex and something they call box options, it's not quite what you are looking for, but maybe worth looking up. |
I'm in the U.S. What are vehicles to invest in international stocks? | You can look into specific market targeted mutual funds or ETF's. For Norway, for example, look at NORW. If you want to purchase specific stocks, then you'd better be ready to trade on local stock exchanges in local currency. ETrade allows trading on some of the international stock exchanges (in Asia they have Hong Kong and Japan, in Europe they have the UK, Germany and France, and in the Americas they have the US and Canada). Some of the companies you're interested in might be trading there. |
What should I do with $4,000 cash and High Interest Debt? | If it were me, I would pay off the 23%er. That is as long as you don't borrow anymore. Please consider "your hair on fire" and get that 26%er paid off as soon as possible. From my calculations your big CC is sitting at 26% has a balance of 20K. Holy cow girl, what in the world? The goal here is to have that paid off in less than one year. Get another job, work more than you have in your life. Others may disagree as it is more efficient to pay down the 26%er. However, if you pay it all of within the year the difference only comes to $260. If you gain momentum, which is important in changing your financial life, that $260 will be meaningless. With focus, intensity, and momentum you can get this mess cleaned up sooner than you think. However, if you are going to continue to rack up credit card debt at these rates, it does not matter what you do. |
What investments work for these goals? | Assuming this will be a taxable account (since you want to pull income off of it, although this will lower wealth growth), you could open a brokerage account at some place like Vanguard (free on their ETFs) and look at tax efficient index fund ETFs (such as total stock market or their 500 fund), including some international (foreign tax credit is nice in taxable) and muni funds for the (tax advantaged) income, although CDs are likely better for the income at this point. |
Full-time work + running small side business: Best business structure for taxes? | I have a very similar situation doing side IT projects. I set up an LLC for the business, created a separate bank account, and track things separately. I then pay myself from the LLC bank account based on my hours for the consulting job. (I keep a percentage in the LLC account to pay for expenses.) I used to do my taxes myself, but when I created this arrangement, I started having an accountant do them. An LLC will not affect your tax status, but it will protect you from liability and make things more accountable come tax time. |
What is network marketing? | Network Marketing (also called multi-level marketing) isn't necessarily a skill that you learn in a course. It's a type of business model that's used by companies like Avon, Southern Living, Mary Kay, etc. It's also used in many scams (called pyramid schemes, but the aforementioned companies are using the pyramid structure, too). A lot. See here for a high-level explanation (pay attention to the pyramid scheme bit): http://www.entrepreneur.com/encyclopedia/network-marketing If you want to get into a Network Marketing venture, join a reputable company and start doing it. They will provide you with all of the training you need. Your "manager" will make money based on how well you do. If you can in turn recruit other individuals to start selling, then you make money off their sales, and you "manager" makes money off their sales. Hence the pyramid label. Reputable companies charge very little to join, you set your own schedule, and don't have any hard quotas to live up to. Do your research! If they make you a promise that sounds too good to be true, it is. |
Why does gold have value? | Gold has very useful physical properties for some engineering applications. Even tiny amounts of gold can substantially improve products, so it can be worthwhile to pay high prices per ounce for gold. For example: Gold can be "beaten" or electroplated to produce very thin shiny coatings. Entire roofs (of famous buildings) have been covered with "gold leaf", at a cost that was small compared to the supporting structure. A very thin layer of electroplated gold provides better protection against corrosion than a much thicker layer of electroplated nickel. Even if gold costs thousands of times more per ounce than nickel, it is cheaper to use gold as an anti-corrosion layer than nickel (for use in military-grade naval electronics). A thin layer of electroplated gold greatly increases the electrical current-carrying capacity of a thin copper wire. |
After Market Price change, how can I get it at that price? | Buying stocks is like an auction. Put in the price you want to pay and see if someone is willing to sell at that price. Thing to remember about after hours trading; There is a lot less supply so there's always a larger bid/ask price spread. That's the price brokers charge to handle the stocks they broker over and above the fee. That means you will always pay more after the market closes. Unless it is bad news, but I don't think you want to buy when that happens. I think a lot of the after market trading is to manipulate the market. Traders drive up the price overnight with small purchases then sell their large holdings when the market opens. |
How much percent of my salary should I use to invest in company stock? | What most respondents are forgetting, is when a company allows its employees to purchase its shares at a discount with their salary, the employee is usually required to hold the stock for a number of years before they can sell them. The reason the company is allowing or promoting its employees to purchase its shares at a discount is to give the employees a sense of ownership of the company. Being a part owner in the company, the employee will want the company to succeed and will tend to be more productive. If employees were allowed to purchase the shares at a discount and sell them straight away, it would defeat this purpose. Your best option to decide whether or not to buy the shares is to work out if the investment is a good one as per any other investment you would undertake, i.e. determine how the company is currently performing and what its future prospects are likely to be. Regarding what percentage of pay to purchase the shares with, if you do decide to buy them, you need to work that out based on your current and future budgetary needs and your savings plan for the future. |
Why does money value normally decrease? | You expect interest because you forgo the opportunity of using the money as well as the risk of losing the money if the borrower can not pay you back. This is true also with gold - you would expect interest if you loaned someone your gold for a time period. When you deposit your money in the bank you are loaning your money to the bank who then loans the money to others. This is how the bank is able to pay interest on your accounts. |
How do I know if a dividend stock is “safe” and not a “dividend yield trap”? | Let me provide a general answer, that might be helpful to others, without addressing those specific stocks. Dividends are simply corporate payouts made to the shareholders of the company. A company often decides to pay dividends because they have excess cash on hand and choose to return it to shareholders by quarterly payouts instead of stock buy backs or using the money to invest in new projects. I'm not exactly sure what you mean by "dividend yield traps." If a company has declared an dividend for the upcoming quarter they will almost always pay. There are exceptions, like what happened with BP, but these exceptions are rare. Just because a company promises to pay a dividend in the approaching quarter does not mean that it will continue to pay a dividend in the future. If the company continues to pay a dividend in the future, it may be at a (significantly) different amount. Some companies are structured where nearly all of there corporate profits flow through to shareholders via dividends. These companies may have "unusually" high dividends, but this is simply a result of the corporate structure. Let me provide a quick example: Certain ETFs that track bonds pay a dividend as a way to pass through interest payments from the underlying bonds back to the shareholder of the ETF. There is no company that will continue to pay their dividend at the present rate with 100% certainty. Even large companies like General Electric slashed its dividend during the most recent financial crisis. So, to evaluate whether a company will keep paying a dividend you should look at the following: Update: In regards to one the first stock you mentioned, this sentence from the companies of Yahoo! finance explains the "unusually" dividend: The company has elected to be treated as a REIT for federal income tax purposes and would not be subject to income tax, if it distributes at least 90% of its REIT taxable income to its share holders. |
I got my bank account closed abruptly how do I get money out? | If you can get to a physical branch, get a cashier's check (or call them and have them send you one by mail). When they draft the cashier's check they remove the money from your account immediately and the check is drawn against the bank itself. You could hold onto that check for a little while even after your account closes and you make other arrangements for banking. If you cannot get a cashier's check, then you should try to expeditiously open a new account and do an ACH from old to new. This might take more days to set up than you have left though. |
$200k in an IRA, unallocated. What's the safest investment? | Note that long term you need to plan for possible inflation, so "a little bit of return" generally wants to be at least high enough to offset that plus "a little bit". Which is why just shoving it in a bank, while extremely safe, isn't usually the best choice. You need to make some decisions about how you trade off risk versus return, whether you will comfortable riding out a downturn while waiting for recovery, and so on. My standard advice, as someone else who knows how little he knows: It's worth spending a few hundred of those dollars to talk to a real financial planner. (NOT someone who has any interest in selling you particular products, like a broker or agent!) They can help you ask yourself the right questions about comfort and goals and timeframe to pick a strategy which suits your needs. It won't be "exciting", but it sounds luke you agree with me that this shouldn't be exciting and "market rate of return" (about 8% annually, long term) is generally good enough, with more conservative positions as you approach the point of needing that money. |
What rules govern when a new option series is issued? | Without researching the securities in question I couldn't tell you which cycle each is in, but your answer is that they have different expiration cycles. The following definition is from the CBOE website; "Expiration cycle An expiration cycle relates to the dates on which options on a particular underlying security expire. A given option, other than LEAPS®, will be assigned to one of three cycles, the January cycle, the February cycle or the March cycle." |
How does an index rearrange its major holdings | An index will drop a company for several reasons: A fund decides how close they want to mirror the index. Some do so exactly, others only approximate the index. |
How is stock price determined? | Stock price is determined by what's being asked for it, and what's being paid for it. The reported price is either a recent average, or is the last price at which a sale actually took place, depending on which you've asked for. Limit orders are an agreement between you and your brokerage, and have no direct effect on price. When and if their condition is triggered and the transaction takes place, the transaction is what's significant. |
How do I know if refinance is beneficial enough to me? | The proper answer is that you run the numbers and see whether what you'll save in interest exceeds the closing costs by enough to be interesting. Most lenders these days have calculations that can help with this on their websites and/or would be glad to help if asked. Rule of thumb: if you can reduce interest rate by 1% or more it's worth investing. |
Is there any downside to using temporary credit card numbers with subscription services? | You're knowingly providing a payment method which has insufficient funds to meet the terms of the contract, because you are too lazy to comply with the contract. That's unethical and fraudulent behavior. Will you get in trouble? I don't know. I'd suggest getting acquainted with an electronic calendar that can remind you to do things. |
What if 40% of the remaining 60% Loan To Value (ratio) is not paid, or the borrower wants to take only 60% of the loan? | Let me summarize your question for you: "I do not have the down payment that the lender requires for a mortgage. How can I still acquire the mortgage?" Short answer: Find another lender or find more cash. Don't overly complicate the scenario. The correct answer is that the lender is free to do what they want. They deem it too risky to lend you $1.1M against this $1.8M property, unless they have $700k up front. You want their money, so you must accept their terms. If other lenders have the same outlook, consider that you cannot afford this house. Find a cheaper house. |
What's the difference between TaxAct and TurboTax? | Like most software it's about what you put in to them. We use ProSeries software which is like TurboTax but $4500 with no questions. I would do your taxes on online and then have a professional do them. You then can ask any questions you may have to better understanding of what's going on. Only take copies of your documents because some unprofessional places will try to keep them. Do this each time something big changes in your life, you have a baby, buy a house or start a business. May cost more but could save you thousands in the long run. I have been doing taxes professionally for 7 years. |
How can I improve my credit score if I am not paying bills or rent? | When you say "promptly paying off the outstanding balance", do you mean you pay it off literally as soon as you have incurred the debt? It is important to actually let the debt post on a statement before you pay it off. If you pay it off before the statement posts then this won't help your credit at all. Once the statement posts you can pay the entire balance off before the due date and you will still pay no interest. Assuming you are allowing the balance to actually post on your statements, you can simply continue to do this and your credit score will improve over time as your account(s) get older and you show that you are reliable. The only other way to improve your credit score is to open more accounts. In the short term this will actually hurt your score, as it will decrease your average age of account and add an inquiry. However in the mid-long term, this will improve your score as having more accounts of a variety of types is better for your score. Having an installment loan such as an auto loan or home loan is good for your score as it is different from a credit card - however you should definitely not engage in one of these unless it makes financial sense for other reasons. Don't add debt just to build your credit score. You could just open more credit cards. Like I said it will hurt your score in the short term but improve it in the mid-long term. Open cards with a variety of benefits so you can use them for different things to get better rewards. |
Will depositing $10k+ checks each month raise red flags with the IRS? | Contractors regularly deposit checks like this; if the income is legitimate don't worry. Report it to the IRS as income whether or not the customer issues you a 1099. With deposits like this you should be making quarterly payments to the IRS for your projected income. |
Roth vs. Whole Insurance vs. Cash | Week after week, I make remarks regarding expenses within retirement accounts. A 401(k) with a 1% or greater fee is criminal, in my opinion. Whole life insurance usually starts with fees north of 2%, and I've seen as high as 3.5% per year. Compare that to my own 401(k) with charges .02% for its S&P fund. When pressed to say something nice about whole life insurance, I offer "whole life has sent tens of thousands of children to college, the children of the people selling it." A good friend would never suggest whole life, a great friend will physically restrain you from buying such a product. |
What's the best way to make money from a market correction? | The best way to make money during a market correction is to be a financial services company handling transactions for people who think they can beat the market, and charging a percentage commission on each transaction, while keeping your own money somewhere nice and safe, stable and low-fee. |
How does a online only bank protect itself against fraud? | @ Daniel Anderson shared interesting insights. In my research I learned a few things Some interesting data on fraud trends AFP Payments Fraud and Control Survey 2016 As a consumer, at the very least I'd improve awareness of I'd also learn about basic types of fraud And for the techies out there, I'd recommend learning about layered security (There's no way the customer service is going to talk about this) |
How to transform dividends into capital gains? | In the US, dividends have special tax treatment similar to, but not the same as Capital Gains. No easy way to transform one to the other, the very fact that you invested your money in a company that has returned part of your capital as income means it is just that, income. Also in the US, you could invest in Master Limited Partnerships. These are companies that make distributions that are treated as a return of capital, instead of dividends. Throughout the life of the investment you receive tax forms that assign part of the operating expense/loss of the company to you as a tax payer. Then at the end of the investment life you are required to recapture those losses as Capital Gains on sale of the stock. In some ways, these investments do exactly what you are asking about. They transform periodic income into later capital gains, basically deferring tax on the income until the sale of the security. Here is an article I found about MLPs coming to the UK through an ETF: Master Limited Partnerships in the UK |
What does the term “match the market” mean? | There was a time when everyone felt their goal was to beat the respective index they followed. But of course, in aggregate, that's a mathematical impossibility. The result was that the average say large cap fund, whose benchmark index would be the S&P, would lag on average by 1-2%. A trend toward ETFs that would match the market had begun, and the current ETFs that follow the S&P are sub .1% expense. For the fact that studies (Google "Dalbar" for examples) show the typical investor lags not by 1% or 2%, but by far more for reasons of bad timing, my own statement that "I've gotten a return these past years of .06% less than the S&P" would have been seen many years ago as failure, now it's bragging. It handily beats the typical investor and yet, can be had by anyone wishing to stay the course, keep the ETF very long term. |
Quandl financial data : unexpected dividend | For MCD, the 47¢ is a regular dividend on preferred stock (see SEC filing here). Common stock holders are not eligible for this amount, so you need to exclude this amount. For KMB, there was a spin-off of Halyard Health. From their IR page on the spin-off: Kimberly-Clark will distribute one share of Halyard common stock for every eight shares of Kimberly-Clark common stock you own as of the close of business on the record date. The deal closed on 2014-11-03. At the time HYH was worth $37.97 per share, so with a 1:8 ratio this is worth about $4.75. Assuming you were able to sell your HYH shares at this price, the "dividend" in the data is something you want to keep. With all the different types of corporate actions, this data is extremely hard to keep clean. It looks like the Quandl source is lacking here, so you may need to consider looking at other vendors. |
Does cash back apply to online payments with credit card | Retail purchases are purchases made at retail, i.e.: as a consumer/individual customer. That would include any "standard" individual expenditure, but may exclude wholesale sales or purchases from merchants who identify themselves as service providers to businesses. Specifics of these limitations really depend on your card issuer, and you should inquire with the customer service at what are their specific eligibility requirements. As an example, here in the US many cards give high cash-back for gasoline purchases, but only at "retail" locations. That excludes wholesale/club sellers like Costco, for example. |
Who can truly afford luxury cars? | It comes down to individual priorities. Some people prefer to spend their money on a luxury car or SUV, rather than on computer gear, a bigger house, having three extra kids, eating in restaurants, or whatever. Some people are quite happy to take out a loan to get more expensive products, and service that loan over several years. There is also "status" attached to some makes (e.g. german marques). That comes with a status premium, which some people are prepared to pay for, or take out debt to get - and some are not. Compare (say) a base model Audi or BMW with a similarly priced non-luxury model from a Japanese competitor. The Japanese model will probably have more features (leather, large rims, safety aids, etc) than the European at the same price point - and it will be necessary to tick several options (and pay extra for them - which can amount to 30-40% extra cost) to get the luxury car with a comparable set of features. For some people, the luxury brand is worth the difference. For some it is not. |
What is the meaning of “writing put options”? | Apple closed Friday 9/23 at $403.40. This is what the Puts look like, note the 2013 expiration. (The rest is hypothetical, I am not advising this.) As a fan of Apple and feeling the stock may stay flat but won't tank, I sell you the $400 put for $64.65. In effect I am saying that I am ready willing and able to buy aapl for $400 (well, $40,000 for 100 shares) and I have enough margin in my account to do so, $20,000. If Apple keeps going up, I made my $6465 (again it's 100 shares) but no more. If it drops below $400, I only begin to lose money if it goes below $335.35. You, the put buyer are betting it will drop by this amount (more than 15% from today) and are willing to pay the price for this Put today. |
Optimal pricing of close to zero marginal cost content | With near zero marginal cost, and infinite supply, your prices are going to be decided by entry cost, competition, and what the market will bear. Generally speaking, though, there are no accurate models for getting these kinds of optimal prices in advance - your best bet is to test, experiment, and then build a business and market specific model based on what you observe. Look at the Steam network, as an example. They are in the business of selling 0 marginal cost software (games), in a market with a significant but quickly decreasing entry cost, and with solid competition. Despite being around for years in a mature market, they're still discovering unexpected optimal price points when testing how their customers behave. |
Why does it take two weeks (from ex-date) for dividends to pay out? | Why does it take two weeks (from ex-date) for dividends to pay out? For logistical and accounting purposes. This article says on the payment date: This date is generally a week or more after the date of record so that the company has sufficient time to ensure that it accurately pays all those who are entitled. It is for the same reasons that there is a often a two-week period between the time an employee submits her time sheet and the employee's pay date. The company needs time to set and send the payment while minimizing accounting errors. |
Is inflation a good or bad thing? Why do governments want some inflation? | Inflation, like trade deficits or surpluses, have winners and losers in an economy. Clear losers are people who are on a fixed income, as they often have a fixed income and a prices keep on going up, meaning they can afford less. Numerous articles on the internet discuss the inflation of the 1970s, here are Google's results. I'm not so sure that governments want "some inflation" as much as they desperately want to avoid deflation. Deflation means that the price for today's product, like a car, will decrease in price tomorrow (or a month from now) which creates a powerful incentive for people to put off a purchase until later, which brings consumer demand down in a country's economy. |
What is market capitalization? [duplicate] | Market Capitalization is the value the market attributes to the company shares calculated by multiplying the current trading price of these shares by the total amount of shares outstanding. So a company with 100 shares trading at $10 has a market cap of $1000. It is technically not the same as the value of a company (in the sense of how much someone would need to pay to acquire the company), Enterprise value is what you want to determine the net value of a company which is calculated as the market capitalization + company debt (as the acquirer has to take on this debt) - company cash (as the acquirer can pocket this for itself). The exact boundary for when a company belongs to a certain "cap" is up for debate. For a "large cap" a market capitalization of $10 billion+ is usually considered the cutoff (with $100+ billion behemoths being called "mega caps"). Anything between $10 billion and ~$1 billion is considered "mid cap", from ~$1billion to ~$200 million it's called a "small cap" and below $200 million is "nano cap". Worth noting that these boundaries change quite dramatically over time as the overall average market capitalization increases as companies grow, for example in the 80s a company with a market cap of $1 billion would be considered "large cap". The market "determines" what the market cap of company should be based (usually but certainly not always!) on the historical and expected profit a company makes, for a simple example let's say that our $1000 market cap company makes $100 a year, this means that this company's earnings per share is $1. If the company grows to make $200 a year you can reasonably expect the share price to rise from $10 to ~$20 with the corresponding increase in market cap. (this is all extremely simplified of course). |
Is the contribution towards Employment Insurance (EI) wasted if I never get fired, or are my premiums refunded? | It is not wasted: it bought you peace of mind. Perhaps you would have had peace of mind without it, because of the particular industry you are in. But people from any industry can get sick or give birth, and not all industries are as evergreen as people think. A number of my onetime programmer colleagues now drive a truck or run a farm because new programming jobs weren't as easy to get as they once were. Like any insurance, it can't be affordable if it is bought only by those who think they will need it. The premiums you pay, in addition to giving you peace of mind, lower the premiums your neighbours pay. That contributes to social harmony. When your neighbours collect EI while looking for another job, they aren't tempted to turn to crime or legal-but-not-savoury ways to earn money. You probably like that, too. The fact they didn't get to choose whether or not to contribute means that they will be covered even if they aren't prudent and forward-looking people, which again is a benefit for you. And BTW, employers pay $1.40 in premiums for every dollar you pay. And we never collect. It's not for us. But we pay it. |
Dormant company, never paid taxes, never traded in UK - should I have notified the HMRC? | You don't have to register for corporation tax until you start doing business: After you’ve registered your company with Companies House, you’ll need to register it for Corporation Tax. You’ll need to do this within 3 months of starting to do business. Since you haven't needed to do that yet, there also shouldn't be any need to tell HMRC you've stopped trading. So it should just be a question of telling Companies House - I guess it's possible they'll first want you to provide the missing accounts. |
Should I negotiate a lower salary to be placed in a lower tax bracket? | No, absolutely not. Income tax rates are marginal. The tax bracket's higher tax rate only applies to extra dollars over the threshold, not to dollars below it. The normal income tax does not have any cliffs where one extra dollar of income will cost more than one dollar in extra taxes. Moreover, you are ignoring the personal exemption and standard deduction. A gross salary of $72,000 is not the same as taxable income of $72,000. The deduction will generally be $12,200 and the exemptions will be $3,900 for you, your spouse, and any kids. So married-filing-jointly with the standard deduction will get an automatic $20,000 off of adjusted gross income when counting taxable income. So the appropriate taxable income is actually going to be more like $52,000. Note that getting your compensation package reshuffled may result in different tax treatment. But simply taking a smaller salary (rather than taking some compensation as stock options, health insurance, or fringe benefits), is not a money-saving move. Never do it. |
What is the maximum I can have stored in a traditional 401(k) and a Roth 401(k)? | I've never seen anything in any IRS publication that placed limits on the balance of a 401K, only on what you can contribute (and defer from taxes) each year. The way the IRS 'gets theirs' as it were is on the taxes you have to pay (for a traditional IRA anyway) which would not be insubstantial when you start to figure out the required minimum distribution if the balance was 14Mill.. You're required to take out enough to in theory run the thing out of money by your life expectancy.. The IRS has tables for this stuff to give you the exact numbers, but for the sake of a simple example, their number for someone age 70 (single or with a spouse who is not more than 10 years younger) is 27.4.. If we round that to 28 to make the math nice, then you would be forced to withdraw and pay taxes on around $500,000 per year. (So there would be a hefty amount of taxes to be paid out for sure). So a lot of that $500K a year going to pay taxes on your distributions, but then, considering you only contributed 660,000 pre-tax dollars in the first place, what a wonderful problem to have to deal with. Oh don't throw me in THAT briar patch mr fox! |
online personal finance software that I can host myself | You can use www.mint.com for most of your requirements. It works great for me, it's free and I'd say is secure. Hosting that kind of service just for your will be time-consuming and not necessarily more secure than most of the stuff that is readily available out there. Good luck. |
Owning REIT vs owning real estate - which has a better hypothetical ROI? | REIT's usually invest in larger properties (apartment complexes), individuals usually invest in small properties (single units, duplexes, fourplexes, etc). REIT's also invest in a lot of commercial properties - malls, commercial and business office buildings, etc. These are very different markets. Not to mention the risk spread, geographical spread, research, management and maintenance that someone has to do for REIT and it comes out of the earnings (while your own rentals you can manage yourself, if you want), etc. |
Do I even need credit cards? | Eventually you are going to need some sort of real credit history. It is possible that you will be able to evade this if you never buy a house, or if you pay cash for any house/condo/car/boat/etc that you buy. Even employers check credit history these days. I wouldn't be surprised if some medical professionals such as surgeons check it also. Obviously if you have a mortgage and car loan this doesn't apply, but I'd be curious how you acquired those unless you have substantial income and/or assets. Combine this with the fact that certain things like renting a car essentially require a credit card (because they need to put a hold on more money than they are actually going to take out of your card, so they can take that money if you don't bring the car back), and I think you should have a credit card unless you and your wife are individuals with zero impulse control, which sounds highly improbable. If your concern is the financial liability of the credit line, just keep the credit line low. |
Selling put and call Loss Scenario Examples | Here's a simple example for a put, from both sides. Assume XYZ stock trades at $200 right now. Let's say John writes a $190 out of the money put on XYZ stock and sells this put to Abby for the premium, which is say $5. Assume the strike date, or date of settlement, is 6 months from now. Thus Abby is long one put option and John is short one put option (the writer of the option is short the option). On settlement date, let's assume two different scenarios: (1) If the price of the stock decreases by $50, then the put that Abby bought is 'in the money'. Abby's profit can be calculated as being strike price 190 - current stock price 150 - premium paid 5 = $35 So not including any transaction fees, that is a $35 dollar return on a $5 investment. (2) If the price of the stock increases by $50, then the put that Abby bought is worthless and her loss was 100%, or her entire $5 premium. For John, he made $5 in 6 months (in reality you need collateral and good credit to be able to write sizable option positions). |
How does Value get rounded in figuring out Bonds Value? | With the formula you are using you assume that the issued bond (bond A) is a perpetual. Given the provided information, you can't really do more than this, it's only an approximation. The difference could be explained by the repayment of the principal (which is not the case with a perpetual). I guess the author has calculated the bond value with principal repayment. You can get more insight in the calculation from the excel provided at this website: http://breakingdownfinance.com/finance-topics/bond-valuation/fixed-rate-bond-valuation/ |
Valuation, pricing, and analysis of securities | I would differentiate between pricing and valuation a bit more: Valuation is the result of investment analysis and the result of coming up with a fair value for a company and its shares; this is done usually by equity analysts. I have never heard about pricing a security in this context. Pricing would indicate that the price of a product or security is "set" by someone (i.e. a car manufacturer sets the prices of its new cars). The price of a security however is not set by an analyst or an institution, it is solely set by the stock market (perhaps based on the valuations of different analysts). There is only one exception to this: pricing an IPO before its shares are actually traded on an exchange. In this case the underwriting banks set the price (based on the valuation) at which the shares are distributed. |
401k compound interest vs other compound interest | Growth in a 401k dodges taxes, which means more of the gains get reinvested. Effectively, it's a boosted return rate. Like any investment, a 401k can lose value. During the period before retirement, lower stock and bond prices actually help you buy more shares than you could if prices were high, so the real question is what the funds are doing at the time you start pulling money back out. That concern is why investors generally, not just 401k investors, should change their investment mix over time, to balance oossible risk against time to recover and possible reward. And if your employer matches 401k contributions to any degree, that too improves your effective gains and buffers you against some of ghe risk. Hence the general advice that if you don't fund your 401k at least enough to max out the company match, you're leaving free money on the table. |
Where to park money while saving for a car | As you're saving up for an expenditure instead of investing for the long run, I would stay away from any sort of "parking facility" where you run the risk of not having the principal protected. The riskier investments that would potentially generate a bigger return also carry a bigger downside, ie you might not be able to get the money back that you put in. I'd shop around for a CD or a MMA/regular savings account with a half-decent interest rate. And yes, I'm aware that the return you might get is probably still less than inflation. |
The difference between Islamic Banks and Western Banks | I'm not sure of the theological basis against usury in sharia law. IIRC, sharia forbids excess compensation, and the modern interpretation of this includes interest. Rules about banking are common in religious faiths. The Catholic church viewed interest as the "selling of time", and since time is a force controlled by god, charging interest was a heretical practice. For private transactions, modern Islamic banking is a relatively new phenomenon that emerged in the postwar period. I don't think this method of banking is a "house of cards", it's just different. Some US states, like California, also subject lenders to higher levels of risk. (ie. borrowers can walk) |
Why do people buy insurance even if they have the means to overcome the loss? | There are a couple of reasons that a person might choose to use insurance even if they could handle the financial loss if something went wrong. They know their risk better than the insurance company. While it might seem odd at first glance that an individual can be better at assessing risk than a large company with thousands of actuaries. There are limits to the amount of knowledge that an insurance company can have or use to price their insurance products. For instance if you were a very aggressive driver but didn't have any recent tickets or accidents because you were in college and didn't have a car on a regular basis, but now you have a job and drive 30 miles to work every day. You know your risk is relatively high but the insurance company sees you as relatively low risk and aren't able to price that extra risk into your premium. Just because a person can survive financial after losing something like a car or a house doesn't mean it isn't desirable to pay a small price to mitigate that risk. If you are using your savings to pay for an emergency then that money needs to be semi liquid in case you need it limiting your investment options. Where as if you purchase insurance you pay a small amount of money to be able to invest the rest of your money. Liquidity is a big deal particularly if you are a small business and investing into your business where your money can make your more money but you may or may not be able to access that money very easily. |
Should rented software be included on my LLC's balance sheet? | I was only able to find Maryland form 1 to fit your question, so I'll assume you're referring to this form. Note the requirement: Generally all tangible personal property owned, leased, consigned or used by the business and located within the State of Maryland on January 1, 201 must be reported. Software license (whether time limited or not, i.e.: what you consider as rental vs purchase) is not tangible property, same goes to the license for the course materials. Note, with digital media - you don't own the content, you merely paid for the license to use it. Design books may be reportable as personal tangible property, and from your list that's the only thing I think should be reported. However, having never stepped a foot in Maryland and having never seen (or even heard of) this ridiculous form before, I'd suggest you verify my humble opinion with a tax adviser (EA/CPA) licensed in the State of Maryland to confirm my understanding of this form. |
Remote jobs and incidental wage costs: What do I have to consider? | In the US we have social security taxes, where for a full time employee the company pays half and the employee pays half. When you work as a business, what we call 1099 for the form that the wages are reported on, then the contractor pays the full amount of social security tax. There are times when a contractor can negotiate a higher rate because the company does not have to pay that tax. However, most of the time the company just prefers to negotiate the rate based on your value. If you are a 60K year guy, then that is what they will pay you. From the company's perspective it does not matter what your tax rate is, only the value you can bring to the company. If you can add about 180K to the bottom line, then they will be happy to pay you 60K, and you should be happy to get it. Here in the US a contractor can expect to make about 7.5% more of an equivalent employee because of the social security tax savings to the company. However, not all companies are willing to provide that in compensation. Some companies see the legal and administrative costs of employees as normal, and the same costs with contractors as extra so they don't perceive a cost savings. There are other things that would preclude employers from giving the bump although it is logical to do so. First you will really have to feel out your employer for the attitude on the subject. Then I would make a logical case if they are open to providing extra compensation in return for tax savings. If I am an employee at 60K, you would also have to pay the government 18K. How about you pay me 75K as a contractor instead? That would be a great deal for all in the US. |
Rate of return of stock index | The return from one day to the next is based on the Day's closing price. To be clear - opening prices can be quite different from the prior day close. In your example, they are pretty close, but this is not always the case. Just pull a larger data set to observe this. The above aside, dividends are not reflected in the index, so, after a dividend has occurred, you'd need to account for this if you are looking for true total return. In 2011, the S&P closed at 1257.60 vs a 2010 year end 1257.64. The return, however was 2.11%, not zero, after accounting for the dividends. To me, articles that suggest the yearly return was zero are inaccurate and misleading. |
Details on opening a small corporation in ontario | The Canada Revenue Agency does indeed put out just the guide you want. It's at http://www.cra-arc.gc.ca/E/pub/tg/rc4070/rc4070-e.html - you should always take a good look at URLs to make sure they're really from the government and not from some for-profit firm that will charge you to fill out forms for free services. It covers ways to structure your business (probably a sole proprietor in your case), collecting and submitting GST or HST, sending in payroll remittances (if you pay yourself a T4 salary), and income tax including what you can deduct. It's a great place to start and you can use it as a source of keywords if you want to search for more details. |
Index ETF or Index mutual fund - standard brokerage account | The ETF is likely better in this case. The ETF will generally generate less capital gains taxes along the way. In order to pay off investors who leave a mutual fund, the manager will have to sell the fund's assets. This creates a capital gain, which must be distributed to shareholders at the end of the year. The mutual fund holder is essentially taxed on this turnover. The ETF does not have to sell any stock when an investor sells his shares because the investor sells the shares himself on the open market. This will result in a capital gain for the specific person exiting his position, but it does not create a taxable event for anyone else holding the ETF shares. |
How risky is it to keep my emergency fund in stocks? | I do this very thing, but with asset allocation and risk parity in mind. I disagree with the cash or bust answers above, but many of the aforementioned facts are valuable and I don't mean to undermine them in anyway. That said, let's look at two examples: Option 1: All-in For the sake of argument let's say you had $100k invested in the SPY (S&P 500 ETF) in early 2007, and you kept it there until today. Your lowest balance would have been about $51k, and at this point the possibility of you losing your job was probably at a peak. Today you would be left with $170k assuming no withdrawal. Option 2: Risk Parity BUT if you balanced your investments with a risk parity approach, using negatively correlated asset classes you avoid this dilemma. If you had invested 50% in XLP (Consumer Staples Sector ETF) and 50% in TLT ( Long Term Treasury ETF) your investments low point would have been $88k, and your lowest annual return would be +0.69%. Today you would be left with $214k assuming no withdrawals. I chose option #2 and it hasn't failed me yet, even in 2016 so far the results are steady and reliably given the reward. My general opinion is simple: when you have money always grow it. Just be sure to cover your ass and prepare for rain. Backtesting for this was done at portfoliovisualizer.com, the one caveat to this approach is that inflation and a lack of international exposure are a risk here. |
If throwing good money after bad is generally a bad idea, is throwing more money after good Ok? | The response to this question will be different depending which of the investment philosophies you are using. Value investors look at the situation the company is in and try to determine what the company is worth and what it will be worth in the future. Then they look at the current stock price and decide whether or not the stock is priced at a good deal or not. If the stock price is priced lower than they believe the company is worth, they would want to buy stock, and if the price rises above what they believe to be the true value, they would sell. These types of investors are not looking at the history or trend of what the price has done in the past, only what the current price is and where they believe the price should be in the future. Technical analysis investors do something different. It is their belief that as stock prices go up and down, they generally follow patterns. By looking at a chart of what a stock price has been in the past, they try to predict where it is headed, and buy or sell based on that prediction. In general, value investors are longer-term investors, and technical analysis investors are short-term investors. The advice you are considering makes a lot of sense if you are using technical analysis. If you have a stock that is trending down, your strategy probably tells you to sell; buying more in the hopes of turning things around would be seen as a mistake. It is like the gambler in Vegas who keeps playing a game he is losing, hoping that his luck changes. However, for the value investor, the historical price of a stock, and even the amount you currently have gained or lost in the stock, are essentially ignored. All that matters is whether or not the stock price is above or below the true value determined by the investor. For him, if the stock price falls and he believes the company still has a high value, it could be a signal to buy more. The above advice doesn't really apply for them. Many investors don't follow either of these strategies. They believe that it is too difficult and risky to try to predict the future price of an individual stock. Instead, they invest in many companies all at once using index mutual funds, believing that the stock market as a whole always heads up over a long time frame. Those investors don't care at all if the prices of stock are going up or down. They simply keep investing each month, and hold until they have another use for the money. The above advice isn't useful for them at all. No matter which kind of investing you are doing, the most important thing is to pick a strategy you believe in and follow the plan without emotion. Emotions can cause investors to make mistakes and start buying when their strategy tells them to sell. Instead of trying to follow fortune cookie advice like "Don't throw good money after bad," choose an investment strategy, make a plan, test it, and follow it, cautiously (after all, it may be a bad plan). For what it is worth, I am the third type of investor listed above. I don't buy individual stocks, and I don't look at the stock prices when investing more each month. Your description of your own strategy as "buy and hold" suggests you might prefer the same approach. |
Is it a good practice to keep salary account and savings account separate? | Personally, I keep two regular checking accounts at different banks. One gets a direct deposit totaling the sum of my regular monthly bills and a prorated provision for longer term regular bills like semi-annual car insurance premiums. I leave a buffer in the account to account for the odd expensive electrical bill or rate increase or whatever. One gets a direct deposit of the rest which I then allocate to savings and spending. It makes sense to me to separate off regular planned expenses (rent/mortgage, utility bills, insurance premiums) from spending money because it lets me put the basics of my life on autopilot. An added benefit is I have a failover checking account in the event something happens to one of them. I don't keep significant amounts of money in either account and don't give transfer access to the savings accounts that store the bulk of my money. I wear a tinfoil hat when it comes to automatic bank transfers and account access... It doesn't make sense to me to keep deposits separate from spending, it makes less sense to me to spend off of a savings account. |
Money transfer to the U.K | I'd recommend an online FX broker like XE Trade at xe.com. There are no fees charged by XE other than the spread on the FX conversion itself (which you'll pay anywhere). They have payment clearing facilities in several countries (including UK BACS) so provided you're dealing with a major currency it should be possible to transfer money "free" (of wire charges at least). The FX spread will be much better than you would get from a bank (since FX is their primary business). The additional risk you take on is settlement risk. XE will not pay the sterling amount to your UK bank account until they have received the Euro payment into their account. If XE went bankrupt before crediting your UK account, but after you've paid them your Euros - you could lose your money. XE is backed by Custom House, which is a large and established Canadian firm - so this risk is very small indeed. There are other choices out there too, UKForex is another that comes to mind - although XE's rates have been the best of those I've tried. |
Trade? Buy and hold? Or both? | You mentioned three concepts: (1) trading (2) diversification (3) buy and hold. Trading with any frequency is for people who want to manage their investments as a hobby or profession. You do not seem to be in that category. Diversification is a critical element of any investment strategy. No matter what you do, you should be diversified. All the way would be best (this means owning at least some of every asset out there). The usual way to do this is to own a mutual or index fund. Or several. These funds own hundreds or thousands of stocks, so that buying the fund instantly diversifies you. Buy and hold is the only reasonable approach to a portfolio for someone who is not interested in spending a lot of time managing it. There's no reason to think a buy-and-hold portfolio will underperform a typical traded portfolio, nor that the gains will come later. It's the assets in the portfolio that determine how aggressive/risky it is, not the frequency with which it is traded. This isn't really a site for specific recommendations, but I'll provide a quick idea: Buy a couple of index funds that cover the whole universe of investments. Index funds have low expenses and are the cheapest/easiest way to diversify. Buy a "total stock market" fund and a "total bond fund" in a ratio that you like. If you want, also buy an "international fund." If you want specific tickers and ratios, another forum would be better(or just ask your broker or 401(k) provider). The bogleheads forum is one that I respect where people are very happy to give and debate specific recommendations. At the end of the day, responsibly managing your investment portfolio is not rocket science and shouldn't occupy a lot of time or worry. Just choose a few funds with low expenses that cover all the assets you are really interested in, put your money in them in a reasonable-ish ratio (no one knows that the best ratio is) and then forget about it. |
Is Amazon's offer of a $50 gift card a scam? | The 'store card' that Amazon offers gives 5% back on Amazon purchases. Some time ago, when I realized how much of my spending was going through Amazon, I chose that card over this one. If you want the card, that's fine, but if you are going to play the reward game, there are far higher bonuses available for card signups. No, it's not a scam. Many stores will offer a discount at the register the day you sign up for there card. In general, the store cards should also give a discount when used at that store, or airline for that matter. |
Why buy insurance? | There's an old saying among commodities producers... If it's likely to happen, but won't kill you, you hedge (save/"self-insure", options, futures). If it's not likely to happen, but would kill you, you insure. Hedging and insuring are both about managing risk. If you feel there is no risk at all, you don't need to do either. But feeling that you have no risk at all is somewhat naive. |
In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end? | Let's look at the logical extreme. Two people get a house, no money down, 10 year mortgage. One moves out the day after the closing, and the gal left pays the full mortgage. Why in the world would the one who left be entitled to a dime? You offer no information about the downpayment or amount paid during the time both lived there. That's the data needed to do any math. |
Is the BA Avios Visa airlines rewards card worth it? | I am a proud member of the BA frequent fliers' club (Executive Club). Their service is superb. Their avios (aka miles) are quite useful. However, that is if you're not flying with British Airways, because if you do - you'll pay enormous amounts as "taxes". I've used their avios on Air Berlin, American Airlines and Iberia - several times each, and their prices are very reasonable (including trans-Atlantic flights, although I mostly used it for domestic flights in the US and EU). If you only fly BA - their club charges ridiculous amounts for taxes and you would probably want to be in one of their partners' clubs. Depending on your traveling pattern - I'd suggest American Airlines (if you travel a lot in the US) or Qantas (if you travel to far East). I'm not familiar with other partners' clubs, so can't tell. So whether or not the 50K avios worth the investment is really up to you - it depends greatly on your traveling pattern and where you can use them. If only on BA - not sure if it is worth the trouble (although you do end up with about 50%-70% discount of the regular price when you buy miles tickets). |
Freelancer in India working for Swiss Company | As you are earning an income by working in India, you are required to pay tax in India. If you contract is of freelance, then the income earned by you has to be self declared and taxes paid accordingly. There are some expenses one can claim, a CA should be able to guide you. Not sure why the Swiss comapny is paying taxes?. Are they depositing this with Income Tax, India, do they have a TAN Number. If yes, then you don't need to pay tax. But you need to get a statement from your company showing the tax paid on behalf of you. You can also verify the tax paid on your behalf via "http://incometaxindia.gov.in/26ASTaxCreditStatement.asp" you cna register. Alternatively if you have a Bank Account in India with a PAN card on their records, most Banks provide a link to directly see |
Should a high-school student invest their (relative meager) savings? | The advice to invest in yourself is good advice. But the stock market can be very rewarding over the long pull. You have about 45 years to retirement now and that is plenty long enough that each dollar put into the market now will be many dollars then. A simple way to do this might be to open a brokerage account at a reputable broker and put a grand into a very broad based all market ETF and then doing nothing with it. The price of the ETF will go up and down with the usual market gyrations, but over the decades it will grow nicely. Make sure the ETF has low fees so that you aren't being overcharged. It's good that you are thinking about investing at a young age. A rational and consistent investment strategy will lead to wealth over the long pull. |
Why are residential investment properties owned by non-professional investors and not large corporations? | Economy of scale on one side versus "person monetizing an illliquid asset" on the other. Most multifamily rental buildings are owned by professional real estate investors (as well as individuals growing an empire to become a professional real estate investor whom I will count in this group). The rental difference between a 2000 Sq foot two bedroom apartment and 2000 Sq foot two bedroom standalone house is not large. The construction cost per square foot for a standalone house is higher than for a multifamily building (of similar height and materials). Maintenance calls, landscaping, and new roofs, dealing with permits and inspections, etc are much more efficient with multifamily properties. On the supply side, most single family rentals tend to be the nonprofessional single property owner because they happen to already own the place, and for one reason or another a. Don't want to sell and b. Want to gain cash flow on the asset. |
How to learn about doing technical analysis? Any suggested programs or tools that teach it? | Recommended? There's really no perfect answer. You need to know the motivations of the participants in the markets that you will be participating in. For instance, the stock market's purpose is to raise capital (make as much money as possible), whereas the commodities-futures market's purpose is to hedge against producing actual goods. The participants in both markets have different reactions to changes in price. |
Why real estate investments are compared via “cap rate”? | Cap rate includes any interest on the mortgage and not the repayments of the mortgage. Cap rate represents the net income which is the gross rent minus all costs, including the interest on the loan. Mortgage repayments form part of your cash flow calculations not your return calculations. ROI is a calculation which works out your net income over the initial investment you made, which is you downpayment plus costs and not the value of the property. |
What type of insurance would protect you against the Amazon 1p bug? | I believe the appropriate recourse in this scenario is to bring a court case for breach of contract. The 1p repricing issue has been admitted as an error out of scope of the purpose of the software. |
Free brokerage vs paid - pros and cons | Unless you're an active trader, 30 trades per month is a number you'll probably never hit, so you might as well take advantage of the offer while you have it. But don't trade more than you normally would. Discount brokerages make money on the arbitrage between the bid and ask prices on the exchanges (legal as long as you get a price that was available on the open market - they disclose this in the fine print in your account paperwork). So they want you to trade as often as they can get you to. As you say, it's really just a mind game. There is always a cost to doing business with a bank or brokerage. They charge you fees for services and they make money on your deposits while you're not using them. So while it looks like they're paying you interest, which they are, they're not paying you all the interest they've earned using your money. So there's the cost. It was only when interest rates dropped so low that they were starting to feel it, that they started rolling out more overt fees for services. If you'll notice, the conditions that cause the fees to be waived in your account all lead to increased deposits or transactions, either directly or indirectly. If your main concern is the efficiency of your investments, which by your description appear to be rather modest, you should consider dollar-cost averaging (DCA) into a mutual fund (of which there are plenty of high quality no-load/no-fee options around), or into a stock if your brokerage offers a lower-fee DCA program for stocks (where you can often buy partial shares). |
How to share income after marriage and kids? | nan |
How does a dividend announcement affect a option straddle position | When dividend is announced the stock and option price may react to that news, but the actual payout of the dividend on the ex-dividend date is what you probably are referring to. The dividend payout affects the stock price on the ex-dividend date as the stock price will drop by the amount of paid out dividend (not taking into account other factors). This in turn drives the prices of all options. The amount of change in the option price for this event is not only dependent the dividend payout, but also on how far these are in our out of the money and what there time to expiration is. The price of a call option that is far out of the money would react less than the price of a put that would be far in the money. Therefore I would argue that these two will not necessarily offset each other. |
Homeowners: How can you protect yourself from a financial worst-case scenario? | Honestly, the best way to manage this risk is to manage your savings appropriately. Many experts recommend that maintain a reasonably liquid account with 6-9x your minimum monthly expenses for just this occurrence. I know, easier said than done. Right? As for insurance, I can only speak for what is the case in the US. Here, most mortgages will require you to get PMI insurance until you have at least 20% equity in your house. However, that insurance only protects the BANK from losing money if you can't pay. It doesn't save you from foreclosure or ruining your credit. Really, the type of insurance you are talking about is Unemployment insurance which all states in the US make available to workers via deductions from their paycheck. The best advice, I suppose, is to keep your expenses low enough to cover them with an unemployment check until you have accumulated enough savings to get through a rough patch. That may mean buying a less expensive home, or just waiting until you have saved a bigger down payment. If you didn't plan ahead, and you are already in the house, another option might be to extend your mortgage. For example from a 20 to a 30 year to reduce your payments to a manageable level. A more risky option might be to convert to a variable rate loan temporarily, which typically carries a lower interest rate. However, it might be hard to secure a new loan if you don't currently have an income. |
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