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Getting a mortgage while self-employed | Would it be worth legitimizing his business or is it too late at this point? To be blunt, you're asking if we recommend that he stop breaking the law. The answer is obviously yes, he should be declaring his income. And it would probably benefit him to get on the same page as his employer (or client) so they can both start obeying the law together. Once he's filed a tax return for 2016 that would certainly help his cause as far as a lender is concerned, and as soon as he can provide some recent pay stubs (or paid invoices) he should be ready to move forward on the mortgage based on that additional income. |
which types of investments should be choosen for 401k at early 20's? | I can't find a decent duplicate, so here are some general guidelines: First of all by "stocks" the answers generally mean "equities" which could be either single stocks or mutual funds that consist of stocks. Unless you have lots of experience that can help you discern good stocks from bad, investing in mutual funds reduces the risk considerably. If you want to fine-tune the plan, you can weigh certain categories higher to change your risk/return profile (e.g. equity funds will have higher returns and risk than fixed income (bond) funds, so if you want to take a little more risk you can put more in equity funds and less in fixed income funds). Lastly, don't stress too much over the individual investments. The most important thing is that you get as much company match as you can. You cannot beat the 100% return that comes from a company match. The allocation is mostly insignificant compared to that. Plus you can probably change your allocation later easily and cheaply if you don't like it. Disclaimer: these are _general_ guidelines for 401(k) investing in general and not personal advice. |
What is the field “Folio” in an accounting book for? | It's used as a reference column: In journals folio coloumn is used to mention the reference or “address” of ledger in which the journal entry has been posted thus giving an easy access and also easily understanding whether all the entries has been posted in the relevant accounts or not. |
give free budgeting advice | They've asked you, so your advice is welcome. That's your main concern, really. I'd also ask them how much, and what kind of advice. Do they want you to point them to good websites? On what subjects? Or do they want more personal advice and have you to look over their bank accounts and credit card statements, provide accountability, etc.? Treat them the same way you'd want to be treated if you asked for help on something that you were weak on. |
Why doesn't change in accounts receivable on balance sheet match cash flow statement? | QUICK ANSWER What @Mike Haskel wrote is generally correct that the indirect method for cash flow statement reporting, which most US companies use, can sometimes produce different results that don't clearly reconcile with balance sheet shifts. With regards to accounts receivables, this is especially so when there is a major increase or decrease in the company's allowances for doubtful accounts. In this case, there is more to the company's balance sheet and cash flow statements differences per its accounts receivables than its allowances for doubtful accounts seems responsible for. As explained below, the difference, $1.25bn, is likely owing more to currency shifts and how they are accounted for than to other factors. = = = = = = = = = = DIRTY DETAILS Microsoft Corp. generally sells to high-quality / high-credit buyers; mostly PC, server and other devices manufacturers and licensees. It hence made doubtful accounts provisions of $16mn for its $86,833mn (0.018%) of 2014 sales and wrote off $51mn of its carrying balance during the year. Its accounting for "Other comprehensive income" captures the primary differences of many accounts; specifically in this case, the "foreign currency translation" figure that comprises many balance sheet accounts and net out against shareholders' equity (i.e. those assets and liabilities bypass the income statement). The footnotes include this explanation: Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are recorded to other comprehensive income (“OCI”) What all this means is that those two balance sheet figures are computed by translating all the accounts with foreign currency balances (in this case, accounts receivables) into the reporting currency, US dollars (USD), at the date of the balance sheets, June 30 of the years 2013 and 2014. The change in accounts receivables cash flow figure is computed by first determining the average exchange rates for all the currencies it uses to conduct business and applying them respectively to the changes in each non-USD accounts receivables during the periods. For this reason, almost all multinational companies that report using indirect cash flow statements will have discrepancies between the changes in their reported working capital changes during a period and the dates of their balance sheet and it's usually because of currency shifts during the period. |
What happens to class action awards for a stock in an IRA? | In most cases, if you are a member of the class the law-firm will contact you via postal mail to notify you of the class action and give you an opportunity to opt-in or opt-out of participating in any settlement that happens. More often than not, they take the opt-out approach, meaning that if you don't say you want out of the class it is assumed that you agree with the complaints as defined in the class action and would like to receive your portion of the money if there is a settlement. If you haven't gotten such a letter and you think you should have, it is a good idea to contact the law firm. How do you find the law firm? Usually some Googling on "class action" and the name of the defendant company will get you there. Also, check the legal section of the classifieds of the local newspaper, they sometimes advertise them there. Typically they aren't hard to find because it is in the law firm's best interest to have everyone sign on to their class action for a number of reasons including: If you have a lot of people who are supposedly aggrieved, it makes the defendant look more likely to be guilty, and more participants can equate to higher settlement amounts (for which the law firm gets a percentage). That is why you see non-stop ads on daytime TV for lawyers marketing class action cases and looking for people who took this drug, or had that hip implant. Once a settlement occurs and you are a member of that class, there are a number of ways you might get your piece including: - A credit to your account. - A check in the mail. - A coupon or some other consideration for your damages (lame) - A promise that they will stop doing the bad thing and maybe some changes (in your favor) on the terms of your account. A final note: Don't get your hopes up. The lawyers are usually the only ones who make any substantial money from these things, not the class members. I've been paid settlements from lots of these things and it is rare for it to be more than $25, but the time the spoils are divided. I've gotten NUMEROUS settlements where my share was less than a dollar. There are some decent resources on ClassAction.com, but beware that although the site has some good information, it is primarily just an ad for a lawfirm. Also, note that I am not affiliated with that site nor can I vouch for any information contained there. They are not an impartial source, so understand that when reading anything on there. |
How to calculate how far a stock price can drop before a broker would issue a margin call? | With your numbers, look at it this way - You borrowed $50. When the stock is $100, you are at 50% margin. What's most important, is that there's margin interest charged, so the amount owed will increase regardless of the stock price. When calculating your return or loss, the interest has to be accounted for or your numbers will be wrong. For a small investor, margin rates can run high, and often, will offset much of your potential gain. What good is a $100 gain if you paid $125 in margin interest? |
Does longterm investment in index funds still make sense in a reality of massive algotrading? | Why wouldn't you expect a long-term profit? Say you buy 100 shares of company X, selling for$1/share today. You hold it for 20 years, after which it's worth $10/share (in inflation-adjusted dollars). So you've made a profit, only making two trades (buy & sell). What the algorithmic traders have done with short-term trades during those 20 years is irrelevant to you. Now expand the idea. You want some diversification, so instead of one stock, you buy a bit of all the stocks on whatever index interests you, and you just hold them for the same 20 years. How has what the short-term traders done in the intervening time affected you? |
How can small children contribute to the “family economy”? | Another suggestion I heard on the radio was to give the child the difference between the name brand they want, and the store brand they settle on. Then that money can be accumulated as savings. Saving money is as important a feature of the family economy as earning money. Be careful with what you have a child do for reward vs what you have them do as a responsibility. Don't set a dangerous precedent that certain work does not need to be done unless compensation is on the table. You might have a child who relies on external motivations only to do things, which can make school work and future employment hard. I would instead have my child do yard work, but while doing it explain opportunity costs of doing the work yourself vs hiring out. I would show my kid how saving money earns interest, and how that is essentially free money. |
How does “taking over payments” work? | I think this phrase originates from when it was common to have an assumable mortgage. In that case, you would "take over payments" and the loan would become yours. From Investopedia: Assumable Mortgage: A type of financing arrangement in which the outstanding mortgage and its terms can be transferred from the current owner to a buyer. By assuming the previous owner's remaining debt, the buyer can avoid having to obtain his or her own mortgage. |
Transfer money from a real estate sale in India to the US | If you are using the money to invest in a property (even abroad) then you can claim tax exemption. while some people will tell you that the reinvestment should be in India only, it have been ruled that the property can be purchased abroad too.. |
Can capital expenses for volunteer purposes be deducted from income? | I would suggest to buy your own printer, and calculate the cost for a page including the wear to the printer. Then either deduce these printing expenses, or ask the charity to reimburse you. This is not much different than when you would go to a copyshop, those easily charge 10-30c per page, with your own printer you can probably get it around 5-10c per page, including paper, toner, drum, and amortization. The advantage is that when you do use the printer for other purposes, you wont get into any problems with who owns the printer or deductions. |
What is the US Fair Tax? | You asked about the challenges. The transition itself is the biggest one. For people to get used to the tax at the register vs at their paycheck. For a great number of people to find new work. I don't know the numbers, but anyone involved with personal income taxes would be out of work. Sales tax is already part of the process in most states, bumping it to a federal tax wont add too much in overhead. I make no moral judgment, but consider, most prostitutes and drug dealers are avoiding income tax, but they still are buying the same goods in stores you and I are. This proposed tax reduces the collection noncompliance, and brings more people into "the system". Another factor some may not like is the ability to affect behavior by picking and choosing what to promote, via deductions, such as home buying or charity. |
How to convince someone they're too risk averse or conservative with investments? | Introduce him to the concept of Inflation Risk, and demonstrate that being too conservative with your investments might be a very risky strategy as well. |
Dividend yield for multiple years? | I've recently discovered that Morningstar provides 5yr avgs of a few numbers, including dividend yield, for free. For example, see the right-hand column in the 'Current Valuation' section, 5th row down for the 5yr avg dividend yield for PG: http://financials.morningstar.com/valuation/price-ratio.html?t=PG®ion=usa&culture=en-US Another site that probably has this, and alot more, is YCharts. But that is a membership site so you'll need to join (and pay a membership fee I believe.) YCharts is supposedly pretty good for long-term statistical information and trend graphs for comparing and tracking stocks. |
Why would a car company lend me money at a very low interest rate? | They aren't actually. It appears to be a low interest rate, but it doesn't cover their true cost of capital. It is a sales tactic where they are raising the sticker price/principal of the car, which is subsidizing the true cost of the loan, likely 4% or higher. It would be hard to believe that the true cost of a car loan would be less than for a mortgage, as with a mortgage the bank can reclaim an asset that tends to rise in value, compared to a used car, which will have fallen in value. This is one reason why you can generally get a better price with cash, because there is a margin built in, in addition to the fact that with cash they get all their profit today versus a discount of future cash flows from a loan by dealing with a bank or other lending company. So if you could see the entire transaction from the "inside", the car company would not actually be making money. The government rate is also so low that it often barely covers inflation, much less operating costs and profit. This is why any time you see "0% Financing!", it is generally a sales tactic designed to get your attention. A company cannot actually acquire capital at 0% to lend to you at 0%, because even if the nominal interest rate were 0%, there is an opportunity cost, as you have observed. A portion of the sticker price is covering the real cost, and subsidizing the monthly payment. |
Should I negotiate a lower salary to be placed in a lower tax bracket? | No. In a marginal tax system, only additional dollars that push you into a higher bracket are taxed at that higher rate. If you would pay 15% on $73800, then when you earn over $73800, you will still only pay 15% of the $73800, plus 25% of the extra amount over $73800. As far as a marginal income tax affects things, you cannot decrease your net income by increasing your salary. (There can be other potential reasons to keep your income down besides income taxes, as asked in this question, but as the answer there suggests, these often aren't great reasons either.) As far as I know, every income tax system that has differing tax rates works this way. That is, I'm not aware of any country with an income tax system where you can decrease your net earnings by moving into a higher bracket. |
Anyone please explain the meaning of turnover in this pic? | The Business Dictionary has three definitions of "turnover". When it comes to share dealing, the most likely one is the total value of shares traded on the stock exchange in a given period. |
What would happen if the Euro currency went bust? | Krugman (Nobel prize in Economy) has just said: Greek euro exit, very possibly next month. Huge withdrawals from Spanish and Italian banks, as depositors try to move their money to Germany. 3a. Maybe, just possibly, de facto controls, with banks forbidden to transfer deposits out of country and limits on cash withdrawals. 3b. Alternatively, or maybe in tandem, huge draws on ECB credit to keep the banks from collapsing. 4a. Germany has a choice. Accept huge indirect public claims on Italy and Spain, plus a drastic revision of strategy — basically, to give Spain in particular any hope you need both guarantees on its debt to hold borrowing costs down and a higher eurozone inflation target to make relative price adjustment possible; or: 4b. End of the euro. And we’re talking about months, not years, for this to play out. http://krugman.blogs.nytimes.com/2012/05/13/eurodammerung-2/ |
Re-financing/consolidating multiple student loans for medical school? | Actually, a few lenders now will offer a consolidation loan that will consolidate both Federal and private student loans. One example is Cedar Ed, http://cedaredlending.com/PrivateConsolidationLoan.htm |
What are some way to transfer money from Hong Kong to India on a monthly basis? | Western Union, Money to India, Remit to India are some of the services that specilize in remittance and would be cheaper than an International Wire. There is not tax for transfering your own money earner outside India into India. Edit: The business of Remittance is bought into the Service Tax Net by Govt. It is seen that Banks are offering this as a service and hence the tax to Banks which is passed on to customers. 0.12% of tax on the converted amount. IE if you transfer Rs 1,00,000/- you would need to pay a tax of Rs 120/-. Above Rs 1,00,000 the incremental rate is 0.06% |
Buying from an aggressive salesperson | As described by the other answers, there are pretty harmless explanations for that behaviour. You could be slightly worried because he gave you exceptionally good deals for both instruments, but that's neither here nor there. Maybe he simply prices all items way up to be able to give a great discount on either sale. You can't ever know; the actual price you pay in the end is what counts. What I would do: If I expect in advance (or if I notice during the negotiation) that I am put under pressure in this way, I usually try to do exactly the same, in reverse. That is, I take a minute to explain up front that I will not, under any circumstance, buy right now, but that this is a purely informational event. I will make sure not to have my money/card with me. Any high-end salesman worth his sale should have no problem with that at all. Money aside, you are shopping for something that will mean a lot to you. The salesman is not some peddler of arbitrary wares. Everybody understands that not only do you not want to pay too high a price, but also that you want to really get the item you want, and want to be happy with it for a long time. This is a tough decision, often, and if the salesman cannot, or does not want to respect that, then it would be a clear signal for me that dubious things are going on. In fact, you would probably be unhappier if you got the wrong item for a great price than if you got a great item for a slightly too-high price. That is something you should probably not tell the salesman ;), but can keep in mind. So getting the greatest deal of all times is probably not so high on your priority list. |
How expensive is it to keep minimal cash at a brokerage? | You're trying to mitigate the risk of having your investments wiped out by fraud committed by your broker by using margin loans to buy stock secured by other, non-cash assets in your account. The solution that you are proposing does not make any sense at all. You mitigate a very low probability/high impact risk by doing something that comes with a high probability/medium impact risk. In addition to interest costs, holding stocks on margin subjects you to the very real risk of being forced to sell assets at inopportune times to meet margin calls. Given the volatility that the markets are experiencing in 2011, there is a high risk that some irrational decision in Greece could wipe you out. If I were worried about this, I would: If you have enough money that SIPC protection limits are an issue, you desperately need a financial adviser. Do not implement any strategy involving margin loans until you talk to a qualified adviser. |
What can we learn from when the trading volume is much higher/lower than average? | You should not look at volume in isolation but look at it together with other indicators and/or the release of news (good or bad). When there is lower than average volume this could be an indication that the stock is in a bit of a holding pattern, possibly waiting for some company or economic news to come out (especially when accompanied by small changes in price). It could also mean that trading in a certain direction is drying up and the trend is about to end (this could be accompanied with a large move in price). When there is higher than average volume (2 to 3 times more or higher), this could be due to the release of company results, company or economic news, or the start or end of a trend (especially if accompanied by a gap). A large increase in volume accompanied by a large fall in price (usually a gap down) may also be an indication the stock has gone ex-dividend. There could be a range of reasons for variations in volume to the average volume. That is why you need to look at other indicators, company reporting and news, and economic news in combination with the volume changes to get a grasp of what is really happening. |
Is there such a thing as “stock insurance”? | Yes, you can insure against the fall in price of stock by purchasing a put option. You pay for a put and if the price of the share falls below the "strike price" of the put, then you can exercise the put. On exercise, the person who sold you the put contract agrees to buy the stock for the strike price, even though that strike price is higher than the market price. You can adjust the level of insurance by buying put options at higher or lower prices, or buying fewer put options than shares you own (leaving some shares uninsured). Alternatively, you can minimize your risk exposure by investing in an index or other fund, which gives you partial ownership in a large number of shares. That means on any given day, lots of shares do worse and lots of shares do better. You can reduce the need for insurance by purchasing a lower-risk, lower-growth financial product. |
First time homeowner and getting a mortgage? | Check with you local bank where you have an account. Sometimes they can offer a discount that results in a good rate. I just refinanced a month ago with Bank Of America and their rates were very competitive. What set them aside from the rest was their low closing fees. Otherwise I would shop around on bankrate.com and it will show you results of both local and online mortgage brokers. It will list the rates and expected fees. The also list an average national rate so you can compare the rate you are considering and see if there could be a better deal elsewhere. |
Investing in low cost index fund — does the timing matter? | If you're worried about investing all at once, you can deploy your starting chunk of cash gradually by investing a bit of it each month, quarter, etc. (dollar-cost averaging). The financial merits and demerits of this have been debated, but it is unlikely to lose you a lot of money, and if it has the psychological benefit of inducing you to invest, it can be worth it even if it results in slightly less-than-optimal gains. More generally, you are right with what you say at the end of your question: in the long run, when you start won't matter, as long as you continue to invest regularly. The Boglehead-style index-fund-based theory is basically that, yes, you might save money by investing at certain times, but in practice it's almost impossible to know when those times are, so the better choice is to just keep investing no matter what. If you do this, you will eventually invest at high and low points, so the ups and downs will be moderated. Also, note that from this perspective, your example of investing in 2007 is incorrect. It's true that a person who put money in 2007, and then sat back and did nothing, would have barely broken even by now. But a person who started to invest in 2007, and continued to invest throughout the economic downturn, would in fact reap substantial rewards due to continued investing throughout the post-2007 lows. (Happily, I speak from experience on this point!) |
What US tax laws apply to a 13 year old game developer? | After doing a little research, I was actually surprised to find many internet resources on this topic (including sites from Intuit) gave entirely incorrect information. The information that follows is quoted directly from IRS Publication 929, rules for dependents First, I will assume that you are not living on your own, and are claimed as a "dependent" on someone else's tax return (such as a parent or guardian). If you were an "emancipated minor", that would be a completely different question and I will ignore this less-common case. So, how much money can you make, as a minor who is someone else's dependent? Well, the most commonly quoted number is $6,300 - but despite this numbers popularity, this is not true. This is how much you can earn in wages from regular employment without filing your own tax return, but this does not apply to your scenario. Selling your products online as an independent game developer would generally be considered self-employment income, and according to the IRS: A dependent must also file a tax return if he or she: Had wages of $108.28 or more from a church or qualified church-controlled organization that is exempt from employer social security and Medicare taxes, or Had net earnings from self-employment of at least $400. So, your first $400 in earnings triggers absolutely no requirement to file a tax return - blast away, and good luck! After that, you do not necessarily owe much in taxes, however you will need to file a tax return even if you owe $0, as this was self-employment income. If you had, for instance, a job at a grocery store, you could earn up to $6,300 without filing a return, because the store would be informing the IRS about your employment anyway - as well as deducting Medicare and Social Security payments, etc. How much tax will you pay as your income grows beyond $400? Based upon the IRS pages for Self-Employment Tax and Family Businesses, while you will not likely have to pay income tax until you make $6,300 in a year, you will still have to pay Social Security and Medicare taxes after the first $400. Roughly this should be right about 16% of your income, so if you make $6000 you'll owe just under $1000 (and be keeping the other $5000). If your income grows even more, you may want to learn about business expense deductions. This would allow you to pay for things like advertisement, software, a new computer for development purposes, etc, and deduct the expenses out of your income so you pay less in taxes. But don't worry - having such things to wonder about would mean you were raking in thousands of dollars, and that's an awfully good problem to have as a young entrepreneur! So, should you keep your games free or try to make some money? Well, first of all realize that $400 can be a lot harder to make when you are first starting in business than it probably sounds. Second, don't be afraid of making too much money! Tax filing software - even totally free versions - make filing taxes much, much easier, and at your income level you would still be keeping the vast majority of the money you earn even without taking advantage of special business deductions. I'd recommend you not be a afraid of trying to make some money! I'd bet money it will help you learn a lot about game development, business, and finances, and will be a really valuable experience for you - whether you make money or not. Having made so much money you have to pay taxes is not something to be afraid of - it's just something adults like to complain about :) Good luck on your adventures, and you can always come back and ask questions about how to file taxes, what to do with any new found wealth, etc! |
How to spend more? (AKA, how to avoid being a miser) | Unless your stinginess has reach truly compulsive levels, it should be enough to consciously remind yourself of the value of your time when you make purchase decisions or find yourself chasing minor savings. Another way might be to deliberately give yourself a monthly or weekly budget that you're allowed to "waste" on luxuries and conveniences without worrying. |
I have $12k in a Chase checking account, but want to start earning interest/saving/investing/etc to make more money. What should I do? | Alright so you have $12,000 and you want to know what to do with it. The main thing here is, you're new to investments. I suggest you don't do anything quick and start learning about the different kinds of investment options that can be available to you with returns you might appreciate. The most important questions to ask yourself is what are your life goals? What kind of financial freedom do you want, and how important is this $12,000 dollars to you in achieving your life goals. My best advice to you and to anyone else who is looking for a place to put their money in big or small amounts when they have earned this money not from an investment but hard work is to find a talented and professional financial advisor. You need to be educated on the options you have, and keep them in lines of what risks you are willing to take and how important that principal investment is to you. Investing your money is not easy at all, and novices tend to lose their money a lot. The same way you would ask a lawyer for law advice, its best to consult a financial planner for advice, or so they can invest that money for you. |
Should I finance a new home theater at 0% even though I have the cash for it? | I think most people have already answered this one pretty well. (It's usually worth it, as long as you pay it off before the interest kicks in, and you don't get hit with any fees.) I just wanted to add one thing that no one else has pointed out: Applying for the loan usually counts as a hard pull on your credit history. It also changes your Debt-to-income ratio (DTI). This can negatively impact your credit score. Usually, the credit score impact for these (relatively) small loans isn't that much. And your score will rebound over time. However, if it makes your score drop below a certain threshold, (e.g. FICO dips below 700), it could trip you up if you are also applying for other sources of credit in the immediate future. Not a big deal, but it is something to keep in mind. |
How should one structure a portfolio given the possibility that a Total Stock Market Index might decline and not recover for a long time? | John Bogle never said only buy the S&P 500 or any single index Q:Do you think the average person could safely invest for retirement and other goals without expert advice -- just by indexing? A: Yes, there is a rule of thumb I add to that. You should start out heavily invested in equities. Hold some bond index funds as well as stock index funds. By the time you get closer to retirement or into your retirement, you should have a significant position in bond index funds as well as stock index funds. As we get older, we have less time to recoup. We have more money to protect and our nervousness increases with age. We get a little bit worried about that nest egg when it's large and we have little time to recoup it, so we pay too much attention to the fluctuations in the market, which in the long run mean nothing. How much to pay Q: What's the highest expense ratio that one should pay for a domestic equity fund? A: I'd say three-quarters of 1 percent maybe. Q: For an international fund? A: I'd say three-quarters of 1 percent. Q: For a bond fund? A: One-half of 1 percent. But I'd shave that a little bit. For example, if you can buy a no-load bond fund or a no-load stock fund, you can afford a little more expense ratio, because you're not paying any commission. You've eliminated cost No. 2.... |
How hard for US customers make payments to non-resident freelancer by wire transfer? | Can you tell me please, is it really hard to make international wire transfer for payment my job and can i resolve this problem without using third party services? This is mostly a barrier, the form at times is quite complicated. For Russia, one has to enter "Purpose of remittance" ... at times select intermediate banks, give BIC and other details. This can become unnerving to people who are not used to it. The other option you can try is set-up a credit card gateway and get funds via cards. |
Does U.S. tax code call for small business owners to count business purchases as personal income? | It sounds like something is getting lost in translation here. A business owner should not have to pay personal income tax on business expenses, with the caveat that they are truly business expenses. Here's an example where what you described could happen: Suppose a business has $200K in revenue, and $150K in legitimate business expenses (wages and owner salaries, taxes, services, products/goods, etc.) The profit for this example business is $50K. Depending on how the business is structured (sole proprietor, llc, s-corp, etc), the business owner(s) may have to pay personal income tax on the $50K in profit. If the owner then decided to have the business purchase a new vehicle solely for personal use with, say, $25K of that profit, then the owner may think he could avoid paying income tax on $25K of the $50K. However, this would not be considered a legitimate business expense, and therefore would have to be reclassified as personal income and would be taxed as if the $25K was paid to the owner. If the vehicle truly was used for legitimate business purposes then the business expenses would end up being $175K, with $25K left as profit which is taxable to the owners. Note: this is an oversimplification as it's oftentimes the case that vehicles are partially used for business instead of all or nothing. In fact, large items such as vehicles are typically depreciated so the full purchase price could not be deducted in a single year. If many of the purchases are depreciated items instead of deductions, then this could explain why it appears that the business expenses are being taxed. It's not a tax on the expense, but on the income that hasn't been reduced by expenses, since only a portion of the big ticket item can be treated as an expense in a single year. |
Does buying and selling a stock OR holding onto it make a company look better? | Share prices change (or not) when shares are bought and sold. Unless he's sitting on a large percentage of the total shares, the fact that he isn't selling or buying means he's having no effect ar all on the stock price, and unless there's a vote war going on in the annual meeting his few stockholder votes aren't likely to have much effect there either (though there's always the outside chance of his being a tiebreaker). On the other hand, there's nothing inherently wrong with holding shares for a very long time and just taking the dividends ("clipping coupons"). Buy-and-hold is a legitimate strategy. Basically: His reason is wrong, but his action may be right, and you should probably just not ask. |
Everyone got a raise to them same amount, lost my higher pay than the newer employees | Why do you think you are entitled to "fairness"? In this world you get what you get. I am pretty sure your employer is not paying you for how you "feel" either. And by-the-way turning up on time and not leaving early is not exceptional behaviour; it is expected behaviour. Bottom line: do you add more value to your employer's business then the new hires? If so, ask for a raise, if not find a way to add more value and then ask for a raise or keep doing what you're doing and accept what you get. |
Will my Indian debit card work in the U.S.? | I recommend that you first try to use your card at a store in your home country, just to make sure that the point-of-sale features are enabled. After you've verified that, you need to contact your bank and ask them if the card will work in both ATMs and in stores in the U.S. They may need to enable it to work in another country. If you are going to be living in the U.S. for a while, you should consider opening an American bank account after you get there. If you don't want a credit card, you should be able to get a debit card here. |
Pay off credit card debt or earn employer 401(k) match? | I would definitely be putting in enough to get the most out of the match. Only reasons I can think of not too would be: Other than that, not investing in the 401(k) is turning down free money. Edit based on feedback in comments. The only time I would advocate number 1 is if you are intensely committed to getting out of debt, were on a very tight budget and had eliminated all non-essential spending. In that situation only, I think the mental benefit of having that last debt paid off would be worth more than a few dollars in interest. |
Should I deduct or capitalize the cost to replace a water heater in my rental property? (details Below) | You may be able to choose. As a small business, you can expense certain depreciable assets (section 179). But by choosing to depreciate the asset, you are also increasing the cost-basis of the property. Are you planning to sell the property in the next couple of years? Do you need a higher basis? Section 179 - Election to expense certain depreciable business assets |
Why do stocks gap up after a buyout is announced? | The price gaps up because the offer is for a price above the current price. Therefore people want to buy now before the price jumps to the offer level. Of course it does depend on the tone of the announcement, which party is making the announcement, and are they announcing an offer or a deal. If the price is $10, and the offer is for $12; then the price may quickly jump. The early buyers will make the most quick money. They hope that the deal is done quickly, or if not the final price ends up higher. There are risks. The company could reject the offer. The due diligence could expose a problem. The regulators could reject the deal based on anti-trust issues. The deal could take many months to complete. Or the final deal could be for shares in the new company. The risks are one reason people sell after the deal/offer is announced. In other cases the seller finally is seeing a profit, or a smaller loss and wants out while they can. |
Typical discount for cash purchase on $1+ million homes? | First, I assume you understand that 'Cash Offer' doesn't mean you really show up with cash (in a duffel bag...), but is an expression that designates that you don't need a mortgage approval, but have the money in your accounts. The advantages for the seller are With both cases depending on the seller's situation, there can't be a generic answer, and the 'discount' will be all over the place between zero and several percent. |
What is the meaning of Equal Housing Lender? Do non-banks need to display it? | If a bank is evaluating a persons qualifications to qualify for a loan they have to follow the FDIC and HUD guidelines for equal opportunity credit. If they offer mortgages they will use the phrase equal housing. from the lending club website (fine print area): 2 This depiction is a summary of the processes for obtaining a loan or making an investment. Loans are issued by WebBank, an FDIC insured Utah-chartered industrial bank located in Salt Lake City, Utah, Equal Housing Lender. Investors do not invest directly in loans. Investors purchase Member Dependent Notes from Lending Club. Loans are not issued to borrowers in IA and ID. Individual borrowers must be a US citizen or permanent resident and at least 18 years old. Valid bank account and social security number/FEIN are required. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. LendingClub notes are issued pursuant to a Prospectus on file with the SEC. You should review the risks and uncertainties described in the Prospectus related to your possible investment in the notes. Currently only residents of the following states may invest in Lending Club notes: AR, AZ, CA, CO, CT, DE, FL, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, ME, MN, MO, MS, MT, NE, NH, NV, NY, OK, RI, SC, SD, TN, TX, UT, VA, VT, WA, WI, WV, or WY. Our mailing address is: Lending Club, 71 Stevenson, Suite 300, San Francisco, CA 94105. |
I'm 13. Can I buy supplies at a pet store without a parent/adult present? | Perhaps a technicality, but minors do not have the legal capacity to bind a contract. Making a purchase from a store is a contract. I'm not a lawyer and there may be case law to the contrary or that creates exceptions, but my understanding is that purchases made by a minor may be void if later challenged. JohnFx's answer is true from a practical sense. But if you get turned away at a store, understand that they're probably just being careful to avoid headaches later. |
Can compensation income from an employee stock purchase plan be negative? | The sentence you quoted does not apply in the case where you sell the stock at a loss. In that case, you recognize zero ordinary income, and a capital loss (opposite of a gain) for the loss. Reference: http://efs.fidelity.com/support/sps/article/article2.html |
Do I not have a credit score? | Generally, if you have a loan, you have a credit score. But since you have never had a loan before, then it is likely that you do not have a credit score. You should not be worried if you aren't planning on applying for credit and/or loans. If you are wanting to purchase a house, car, or even just having a credit card, you should work on obtaining a secure loan so then you can establish history. Most of the time you have to pay to view your credit score. By law, you can obtain a free copy of your credit report, which it sounds like you have at annualcreditreport.com, which only shows your payment history, but in order to view your credit score, you generally have to pay for it. |
What does it mean to be a “high fee” or “low fee” 401k? | Every 401(k) has managers to make the stock choices. They all have different rates. You want to see that fidelity or Vangard is handling your 401(k).(and I am sure others) If you have a mega bank managing your funds or an insurance company odds are you are paying way to high management fees. So find out, the management fees should be available should be less than 1%. They can get as high as 2%...Ouch |
Why are there so many stock exchanges in the world? | Nearly every country has its own exchange because so many countries have their own currency, and currency permeates every part of an exchange's business. Generally, an exchange will support transaction and settlement only in local currency. Securities (except those that explicitly enable FX trading) are denominated and will trade in a single currency-- you can only buy a share of IBM in U.S. dollars. Securities trading always seeks to be a clean, frictionless, scalable process, and adding cross-currency translation to the mix would just complicate things. So it's one exchange, one currency. In most countries, citizens and even businesses are largely restricted to having bank accounts in local currency. There are various political reasons for this, but there it is: it is difficult or impossible to open a domestic bank account in a foreign-denominated currency. A public company headquartered in a given country will be required to publish financial statements in local currency, will be more likely to do business with the local citizenry and businesses in that currency, and so will likely look for investors from that same pool-- which generally means listing in local currency, which means on an exchange in that country. There are exceptions, of course. Big multinationals do business all over the world, and many seek investors all over the world as well. Mechanisms have been created to permit this (American Depositary Receipts or ADRs, for example). But once again, cross-currency translation makes things more complicated, so ADRs and their like are only practical for very big international players. As to why there may be many exchanges in a single country, IMO Nick R has it right. Read "Flash Boys"; many market makers profit from trading between exchanges, and so have an interest in there being many of them. And in the U.S., regulators have expressed an interest in "innovation" in the exchange space, and so permit them. There is also an argument to be made against having a single "Too Big To Fail" exchange just like the argument for banks, but I wouldn't call that a "reason" for the current state of affairs. |
Working Capital Definition | As you say, if you delay paying your bills, your liabilities will increase. Like say your bills total $10,000 per month. If you normally pay after 30 days, then your short-term liabilities will be $10,000. If you stretch that out to pay after 60 days, then you will be carrying two months worth of bills as a short-term liability, or $20,000. Your liabilities go up. Assume you keep the same amount of cash on hand after you stretch out your payments like this as you did before. Now your liabilities are higher but your assets are the same, so your working capital goes down. For example, suppose you kept $25,000 in the bank before this change and you still keep $30,000 after. Then before your working capital was $25,000 minus $10,000, or $15,000. After it is $25,000 minus $20,000, or only $5,000. So how does this relate to cash flow? While presumably if the company has $10,000 per month in bills, and their bank balance remains at $25,000 month after month, then they must have $10,000 per month in income that's going to pay those bills, or the bank balance would be going down. So now if they DON'T pay that $10,000 in bills this month, but the bank account doesn't go up by $10,000, then they must have spent the $10,000 on something else. That is, they have converted that money from an on-going balance into cash flow. Note that this is a one-time trick. If you stretch out your payment time from 30 days to 60 days, then you are now carrying 2 months worth of bills on your books instead of 1. So the first month that you do this -- if you did it all at once for all your bills -- you would just not pay any bills that month. But then you would have to resume paying the bills the next month. It's not like you're adding $10,000 to your cash flow every month. You're adding $10,000 to your cash flow the month that you make the change. Then you return to equilibrium. To increase your cash flow every month this way, you would have to continually increase the time it takes you to pay your bills: 30 days this month, 45 days the next, 60 the next, then 75, 90, etc. Pretty soon your bills are 20 years past due and no one wants to do business with you any more. Normally people see an action like this as an emergency measure to get over a short-term cash crunch. Adopting it as a long-term policy seems very short-sighted to me, creating a long-term relationship problem with your suppliers in exchange for a one-shot gain. But then, I'm not a big corporate finance officer. |
Exercising an option without paying for the underlying | Unless you want to own the actual shares, you should simply sell the call option.By doing so you actual collect the profits (including any remaining time-value) of your position without ever needing to own the actual shares. Please be aware that you do not need to wait until maturity of the call option to sell it. Also the longer you wait, more and more of the time value embedded in the option's price will disappear which means your "profit" will go down. |
How to share income after marriage and kids? | I won't answer in a detailed manner because most people at this site like answers with certain bias' on these questions, like pool resources always relative to which partner is asking. If you follow the above advice, you are hoping things work out. Great! What if they don't? It will be very messy. Unlike most of my peers, I did NOT follow the above advice and had a very clean exit with both of us feeling very good (and no lawyers got involved either; win-win for both of us with all the money we saved). One assumption people make is the person with the lowest income has the strictest limits. This is not always true; I grew up in poverty, but have a very high income and detest financial waste. I can live on about €12,000 a year and even though my partner made a little less, my partner liked to spend. Counter intuitive, right? I was supposed to be the spender because I had a large income, but I wasn't. Also, think about an example with food - sharing expenses. Is it fair for one partner to split whey protein if one partner consumes it, but the other doesn't (answer: in my view, no)? My advice based on your questions: Balance the frugal vs. spendthrift mentality rather than income ratios. If you're both frugal, then focus on income ratios - but one may be more frugal than the other and the thought of spending €300 a month on housing is just insane to a person like me, whereas to most it's too little. Are you both exactly the same with this mentality - and be honest? Common costs that you both agree on can be easily split 50-50 and you can often benefit from economies of scale (like internet, cell phone). Both of us feel very strongly about being financially independent and if possible we both don't want to take money from each other. This is so healthy for a relationship. My partner and I split and we both still really love each other. We're headed in different directions, but we did not want to end bitterly. What you wrote is part of why we ended so well; we both were very independent financially. Kids are going to be a challenge because they come with expenses that partners don't always agree on. What do you and her think of childcare, for instance? You really want to know all this upfront; again a frugal vs. spendthrift mindset could cause some big tensions. |
How did my number of shares get reduced? | How can they reduce the number of shares I hold? They may have purchased them. You don't say what stock it is, so we can only speculate. Let's say that the stock is called PENNY. So they may have taken your 1600 PENNY shares and renamed them to 1600 PENNYOLD shares. Then they created a new $5 PENNY share and gave you .2357 shares of that in exchange for your 1600 PENNYOLD shares. This suggests that your old shares were worth $1.1785 or less than a tenth of a cent each. As an example, MYLAN did this in 2015 as part of their tax inversion (moved official headquarters from the US to Europe). They did not change the number of shares at that time, but MYLAN is not a penny stock. This is the kind of thing that might happen in a bankruptcy. A reverse split (where they give you one share in exchange for more than one share) is also possible, although you received an odd amount for a reverse split. Usually those produce rounder numbers. A number like .2357 sounds more like a market price, as those can be bizarre. |
Why could rental costs for apartments/houses rise while buying prices can go up and down? | I am from Australia, so my answer is based on my experience over here, however it should be similar for the USA. Generally, what determines both the price of houses/apartments and the rents for them is supply and demand. When there is high demand and low supply prices (or rents) generally go up. When there is low demand and high supply prices (or rents) usually go down. What can sometimes happen when house prices go down, is that the demand can drop but so can supply. As the prices drop, developers will make less money on building new houses, so stop building new houses. Other developers can go bankrupt. As less people (including investors) are buying houses, and more people (including investors) try to sell their existing houses, there will be more people looking to rent and less rental properties available to rent. This produces a perfect storm of high demand and low supply of rental properties, causing rents to rise strongly. When the property prices start to go up again as demand increases, there is a shortfall of new properties being built (due to the developers not building during the downturn). At this time developers start to build again but there is a lag time before the new houses can be completed. This lack of supply puts more pressure on both house prices and rents to go up further. Until equilibrium between supply and demand is realised or an oversupply of rental properties exists in the market, rents will continue to rise. |
Can PE ratio of stocks be compared to other investments? | In the long run (how long?) a shares price always reverts to being its proportional amount of the company's residual equity plus the net present value of its expected future cash flows. Or at least that's the theory. In practice PE ratio is used not as a way of measuring what the stock price itself will do but what the fundamental value of holding that share is compared to its price. It is a way of measuring what a company is worth compared to its price and comparing it against other companies to find companies where the underlying value of the company is underrepresented by the price. Comparing PE ratios within the same industry or sector is the most valid use for this (other than comparing previous years of the same company) and the validity of the comparison drops as the structure of the firm you are comparing with gets more different to that of the company. Each industry has its own "typical" average PE ratio and these differ wildly between industries so in a great many cases even comparing PE ratios between similar stocks in different industries isn't valid. Any weird pseudo PE ratio that you create for other instruments will be meaningless. In general the best way to compare investments across multiple instruments is by comparing returns. when comparing stocks to other instruments you may want to use the return on stock price or the return on capital employed (ROCE) depending on whether you want to compare the trading performance or the fundamental performance. |
Does Apple have $0 of treasury stock? | Treasury stock is not really represented in the Balance Sheet as a "Treasury stock" line item in the assets. Some companies will break out Treasury Shares as a line item in the "Shareholders Equity" heading of the balance sheet but Apple hides it in the "Shares Issued and Outstanding" counts under the "Shareholders Equity" heading. As of the most recent Q2 2017 quarterly report There are 5,205,815,000 shares issued against 5,336,166,000 shares outstanding. This indicates that Apple is retaining about 130,351,000 shares in treasury. On the Q1 10-Q you can see that Apple had 5,255,423,000 shares issued which indicates roughly 49mm shares were repurchased by the end of Q2. You can roughly verify this by looking at page 18 of the Q2 filing in the summary of the share repurchase program. Repurchased as part of an Accelerated Share Repurchase arrangement bleeds between quarters but from February 2017 through May 2017 there have been 17.5mm shares repurchased. 31mm shares were also repurchased on the open market in Q2. The "shares issued" total is on a downward trend as part of Apple's share repurchase initiative that has been underway for the last couple of years. |
Why does FlagStar Bank harass you about payments within grace period? | They call you because that is their business rules. They want their money, so their system calls you starting on the 5th. Now you have to decide what you should do to stop this. The most obvious is to move the payment date to before the 5th. Yes that does put you at risk if the tenant is late. But since it is only one of the 4 properties you own, it shouldn't be that big of a risk. |
What do brokers do with bad stock? | Market makers, traders, and value investors would be who I'd suspect for buying the stock that is declining. Some companies stocks can come down considerably which could make some speculators buy the stock at the lower price thinking it may bounce back soon. "Short sellers" are out to sell borrowed stocks that if the stock is in free fall, unless the person that shorted wants to close the position, they would let it ride. Worthless stocks are a bit of a special case and quite different than the crash of 1929 where various blue chip stocks like those of the Dow Jones Industrials had severe declines. Thus, the companies going down would be like Apple, Coca-Cola and other large companies that people would be shocked to see come down so much yet there are some examples in recent history if one remembers Enron or Worldcom. Stocks getting delisted tend to cause some selling and there are some speculators may buy the stock believing that the shares may be worth something only to lose the money possibly as one could look at the bankrupt cases of airlines and car companies to study some recent cases here. Circuit breakers are worth noting as these are cases when trading may be halted because of a big swing in prices that it is believed stopping the market may cause things to settle down. |
How to shop for mortgage rates ? | Pre-qualification is only a step above what you can do with a rate/payment calculator. They don't check your credit history and credit score; they don't ask for verification of your income; or verify that you have reported your debts correctly. They also don't guarantee the interest rate. But if you answer truthfully, and completely, and nothing else changes you have an idea of how much you can afford factoring in the down payment, and estimates of other fees, taxes and insurance. You can get pre-quaified by multiple lenders; then base your decision on rates and fees. You want to get pre-approved. They do everything to approve you. You can even lock in a rate. You want to finalize on one lender at that point because you will incur some fees getting to that point. Then knowing the maximum amount you can borrow including all the payments, taxes, insurance and fees; you can make an offer on a house. Once the contract is accepted you have a few days to get the appraisal and the final approval documents from the lender. They will only loan you the minimum of what you are pre-approved for and the appraisal minus down-payment. Also don't go with the lender recommended by the real estate agent or builder; they are probably getting a kick-back based on the amount of business they funnel to that company. |
Options profit calculation and cash settlement | The other two answers seem basically correct, but I wanted to add on thing: While you can exercise an "American style" option at any time, it's almost never smart to do so before expiration. In your example, when the underlying stock reaches $110, you can theoretically make $2/share by exercising your option (buying 100 shares @ $108/share) and immediately selling those 100 shares back to the market at $110/share. This is all before commission. In more detail, you'll have these practical issues: You are going to have to pay commissions, which means you'll need a bigger spread to make this worthwhile. You and those who have already answered have you finger on this part, but I include it for completeness. (Even at expiration, if the difference between the last close price and the strike price is pretty close, some "in-the-money" options will be allowed to expire unexercised when the holders can't cover the closing commission costs.) The market value of the option contract itself should also go up as the price of the underlying stock goes up. Unless it's very close to expiration, the option contract should have some "time value" in its market price, so, if you want to close your position at this point, earlier then expiration, it will probably be better for you to sell the contract back to the market (for more money and only one commission) than to exercise and then close the stock position (for less money and two commissions). If you want to exercise and then flip the stock back as your exit strategy, you need to be aware of the settlement times. You probably are not going to instantly have those 100 shares of stock credited to your account, so you may not be able to sell them right away, which could leave you subject to some risk of the price changing. Alternatively, you could sell the stock short to lock in the price, but you'll have to be sure that your brokerage account is set up to allow that and understand how to do this. |
“Business day” and “due date” for bills | I don't believe Saturday is a business day either. When I deposit a check at a bank's drive-in after 4pm Friday, the receipt tells me it will credit as if I deposited on Monday. If a business' computer doesn't adjust their billing to have a weekday due date, they are supposed to accept the payment on the next business day, else, as you discovered, a Sunday due date is really the prior Friday. In which case they may be running afoul of the rules that require X number of days from the time they mail a bill to the time it's due. The flip side to all of this, is to pick and choose your battles in life. Just pay the bill 2 days early. The interest on a few hundred dollars is a few cents per week. You save that by not using a stamp, just charge it on their site on the Friday. Keep in mind, you can be right, but their computer still dings you. So you call and spend your valuable time when ever the due date is over a weekend, getting an agent to reverse the late fee. The cost of 'right' is wasting ten minutes, which is worth far more than just avoiding the issue altogether. But - if you are in the US (you didn't give your country), we have regulations for everything. HR 627, aka The CARD act of 2009, offers - ‘‘(2) WEEKEND OR HOLIDAY DUE DATES.—If the payment due date for a credit card account under an open end consumer credit plan is a day on which the creditor does not receive or accept payments by mail (including weekends and holidays), the creditor may not treat a payment received on the next business day as late for any purpose.’’. So, if you really want to pursue this, you have the power of our illustrious congress on your side. |
Can the Securities Investor Protection Corporation (SIPC) itself go bankrupt? | SIPC is a corporation - a legal entity separate from its owners. In the case of SIPC, it is funded through the fees paid by its members. All the US brokers are required to be members and to contribute to SIPC funds. Can it go bankrupt? Of course. Any legal entity can go bankrupt. A person can go bankrupt. A country can go bankrupt. And so can anything in between. However, looking at the history of things, there are certain assumptions that can be made. These are mere guesses, as there's no law about any of these things (to the best of my knowledge), but seeing how things were - we can try and guess that they will also be like this in the future. I would guess, that in case of a problem for the SIPC to meet its obligation, any of the following would happen (or combinations): Too big to fail - large insurance companies had been bailed out before by the governments since it was considered that their failure would be more destructive to the economy than the bailout. AIG as an example in the US. SIPC is in essence is an insurance company. So is Lloyd's of London. Breach of trust of the individual investors that can lead to a significant market crash. That's what happened in the US to Fannie Mae and Freddie Mac. They're now "officially" backed by the US government. If SIPC is incapable of meeting its obligation, I would definitely expect the US government to step in, even though there's no such obligation. Raising funds through charging other members. If the actuary calculations were incorrect, the insurance companies adjust them and raise premiums. That is what should happen in this case as well. While may not necessarily solve a cashflow issue, in the long term it will allow SIPC to balance, so that bridge loans (from the US government/Feds/public bonds) could be used in between. Not meeting obligations, i.e.: bankruptcy. That is an option, and insurance companies have gone bankrupt before. Not unheard of, but from the past experience - again, I'd expect the US government to step in. In general, I don't see any significant difference between SIPC in the US and a "generic" insurance coverage elsewhere. Except that in the US SIPC is mandatory, well regulated, and the coverage is uniform across brokerages, which is a benefit to the consumer. |
what is the best way to do a freelancing job over the summer for a student | If this will be your sole income for the year, going self-employed is the best way to do this: So, here's how to go at it: Total cash in: £2000 Total Tax paid: £0 Admin overhead: approx 3 hours. Legit: 100% :) Edit: Can you tell me that in my case what are the required fields on the invoice? If you're non-VAT registered, there are no legal requirements as to what information you need to put on the invoice -it literally can be a couple of numbers on a napkin, and still be legit. With that said, to make a professional appearance, my invoices are usually structured as follows: Left side: ( Sidenote: why client-specific incremental numbering? Why, so they can't make educated guesses to the number of clients I have at any given time :) ) Right side: Center table: And so far, none of my clients missed any fields, so this should have everything they need to :) Hope this helps, but keep in mind, all of the above is synthetic sugar on the top -ultimately, the relationship you share with your Clients is the thing you will (or will not) get paid for! Edit#2: The voices in my head just pointed out, that I've totally omitted National Insurance contributions in the above. However, and I quote HMRC: If your profits are expected to be less than £5,315 you may not have to pay Class 2 National Insurance contributions. Hence, this won't change the numbers above, either -just make sure to point this out during your registration in the office. |
What is the lifespan of a series of currency? | Currency lives no more then 50 years. US currency did not expire in last 100 years, but it was reinstated few times, last one was 2009. Note that currency is not just what you hold in your hand. Currency is system of relations of money supply (currency is not money but we forced to use standard terminology), banking rules and government policy. Currency exists as long as government wants it to. In 2009 for example, US government decided it needs new currency and just printed whole new money supply. So US dollar is now counting as "partially fresh new currency". It was reinstated. Not expired. But today's dollar is totally different from 90s and 00s. Will it be accepted after 200 years? Yes (probably). But most likely at that time there will be totally new US dollars. And new Euros, new Pounds and so on. Currency is method of transfer. You can have that physical coins you have, but as economic agent it will die very quickly. It is not only related to inflation, in fact, inflation is the least of your worries. If you count all currencies in the world which ever existed, most of them 99.99% are completely dead by now (with governments which supported it). Not even single one currency which lived more then 100 years. US dollar was reinstated in 1860, 1907, 1930, 1973, 1987, 2009 and in fact it is not single currency but dozen which were allowed to be used "for compatibility reasons". |
Why are interest rates on saving accounts so low in USA and Europe? | The 8% rate offered by Russian banks on US Dollar accounts reflects the financial problems they have. They would prefer to lend US Dollars on the international financial markets at the same rate as US banks, but loans to Russian banks are considered to be more risky. In fact, the estimated "default" risk is ~6%. Your ruble deposits at Russian banks are most likely backed by state guarantees, which reduces the risk and therefore the effective interest rate. |
How does a brokerage firm work? | Brokerages offer you the convenience of buying and selling financial products. They are usually not exchanges themselves, but they can be. Typically there is an exchange and the broker sends orders to that exchange. The main benefit that brokers offer is a simpler commission structure. Not all brokers have their own liquidity, but brokers can have their own allotment of shares of a stock, for example, that they will sell you when you make an order, so that you get what you want faster. Regarding accounts at the exchanges to track actual ownership and transfer of assets, it is not safe to assume thats how that works. There are a lot of shortcomings in how the actual exchange works, since the settlement time is 1 - 3 business days, depending on the product (so upwards of 5 to 6 actual days). In a fast market, the asset can change hands many many times making the accounting completely incorrect for extended time periods. Better to not worry about that part, but if you'd like to read more about how that is regulated look up "Failure To Deliver" regulations on short selling to get a better understanding of market microstructure. It is a very antiquated system. |
Book Value vs Market Value of PWT.TO | Have you looked at what is in that book value? Are the assets easily liquidated to get that value or could there be trouble getting the fair market value as some assets may not be as easy to sell as you may think. The Motley Fool a few weeks ago noted a book value of $10 per share. I could wonder what is behind that which could be mispriced as some things may have fallen in value that aren't in updated financials yet. Another point from that link: After suffering through the last few months of constant cries from naysayers about the company’s impending bankruptcy, shareholders of Penn West Petroleum Ltd. (TSX:PWT)(NYSE:PWE) can finally look toward the future with a little optimism. Thus, I'd be inclined to double check what is on the company books. |
Where should I park my money if I'm pessimistic about the economy and I think there will be high inflation? | Typically in a developed / developing economy if there is high overall inflation, then it means everything will rise including property/real estate. The cost of funds is low [too much money chasing too few goods causes inflation] which means more companies borrow money cheaply and more business florish and hence the stock market should also go up. So if you are looking at a situation where industry is doing badly and the inflation is high, then it means there are larger issues. The best bet would be Gold and parking the funds into other currency. |
Why does Yahoo! Finance report different prices for the same index? | Are you sure you're using the same date range? If you're using Max, then you're not, as ^FTMC goes back to 12/1/1985 while ^GDAXI only goes back to 11/1/1990. If I enter a custom date range of 11/1/1990 through 10/24/2015, I get: and: which, other than the dates it chose to use as labels on the x-axes, look identical. (I tried to add the URLs of the charts, but it looks like the Yahoo! URLs don't include the comparison symbol, which makes them useless for this answer. They're easy enough to construct though, just add the secondary symbol using the Comparison button and set the date range using the calendar button.) On your PS, I don't know, as you can see by my charts it even chose different labels when the date ranges were identical (although at least it didn't scale different dates differently), so maybe it's trying to be "smart" and choose dates based on the total amount of data available for the primary symbol, which is different in the two cases. |
How do I factor dividends and yield into the performance of a security? | Usually I've seen people treat the dividend like a separate cash flow, which is discounted if the company doesn't have a well-established dividend history. I've never really seen dividends rolled into a total return chart (except in the context of an article), probably because dividend reinvestment is a nightmare of record-keeping in a taxable account, and most folks don't do it. One of my brokers (TD Ameritrade) does allow you to plot dividend yield historically on their charts. |
Should I buy a house with a friend? | There are lots of good reasons not to do this. HOWEVER if you do decide to, there are four things you need to consider: |
Is housing provided by a university as employer reported on 1040? | Since you worked as an RA, the university should send you a W2 form. The taxable wages line in that form would be the sum of both the direct salary and employer paid benefits that are taxable. As such you should not need to do anything than enter the numbers that they provide you. |
Do the tax consequences make it worth it for me to hold ESPP stock? | Your gain is $1408. The difference between 32% of your gain and 15% of your gain is $236.36 or $1.60 per share. If you sell now, you have $3957.44 after taxes. Forget about the ESPP for a moment. Are you be willing to wager $4000 on the proposition that your company's stock price won't go down more than $1.60 or so over the next 18 months? I've never felt it was worth it. Also, I never thought it made much sense to own any of my employer's stock. If their business does poorly, I'd prefer not to have both my job and my money at risk. If you sell now: Now assuming you hold for 18 months, pay 15% capital gains tax, and the stock price drops by $1.60 to $23.40: |
Can you sell stocks/commodities for any price you wish (either direct or market)? | In other words, does the market have control over sale numbers or do I? You both do, just like for the bike. You have control over the price you ask, and the buyer has control over the price they pay. If the two do not align, no sale takes place. Your question uses the words "sell" and "sale" ambiguously. You can decide to ask for any price you want. You cannot actually sell anything until someone agrees to buy what you are offering. |
Can a company block a specific person from buying its stock? | In the UK, this is the very definition of a Public Limited Company. A Limited Company can restrict how its stock is trades and who can buy and sell and when, a Public Limited Company cannot. Most stock exchanges will only allow Public Limited Company stock to be traded. Therefore a company can control who its stock holders are or be traded on a Stock Exchange. |
Joint Account for Common Earnings | Do not use a shared bank account. One of you can cash/deposit the check in your personal account and then either pay the others in the group cash or write them a check. You open yourself up to many, many problems sharing a bank account and/or money. Treat it like a business as far as income goes, but I would not recommend any type of formal business, LLC, partnership, sole proprietorship, etc. For federal taxes, you just keep track of how much "you" personally are paid and report that at the end of the year as income, most likely on a 1040EZ 1040SE, along with any other income you have. |
Should I charge my children interest when they borrow money? | This is not really the focus of your question, but it's worth noting that if you live in the United States (which your profile says you do), there are tax implications for you (but not for your children), depending on whether or not you charge your children (enough) interest. If you charge less interest than the appropriate Applicable Federal Rate (for May 2016, at least 0.67%), you must pay taxes on the interest payments you would have received from the debtor if you had charged the AFR, provided that the loan is for $10,001 or more (p. 7). This is referred to as "imputed" income. |
$65000/year or $2500 every two weeks: If I claim 3 exemptions instead of zero, how much would my take home pay be? | It will usually take a week or two for changes to your withholding to take effect in payroll. However 0 deductions will withhold more per check than 3. So if at 0 deductions you are having to pay in April then I would suggest not changing your W2 to 3 deductions. Instead in the section for extra with holding add $25 per week. This should leave you with a more manageable return in April. |
Mitigate Effects Of Credit With Tangible Money | If you have no credit history but you have a job, buying an inexpensive used car should still be doable with only a marginally higher interest rate on the car. This can be offset with a cosigner, but it probably isn't that big of a deal if you purchase a car that you can pay off in under a year. The cost of insurance for a car is affected by your credit score in many locations, so regardless you should also consider selling your other car rather than maintaining and insuring it while it's not your primary mode of transportation. The main thing to consider is that the terms of the credit will not be advantageous, so you should pay the full balance on any credit cards each month to not incur high interest expenses. A credit card through a credit union is advantageous because you can often negotiate a lower rate after you've established the credit with them for a while (instead of closing the card and opening a new credit card account with a lower rate--this impacts your credit score negatively because the average age of open accounts is a significant part of the score. This advice is about the same except that it will take longer for negative marks like missed payments to be removed from your report, so expect 7 years to fully recover from the bad credit. Again, minimizing how long you have money borrowed for will be the biggest benefit. A note about cosigners: we discourage people from cosigning on other people's loans. It can turn out badly and hurt a relationship. If someone takes that risk and cosigns for you, make every payment on time and show them you appreciate what they have done for you. |
Issuing bonds at discount - computing effective interest rate | Yes, the "effective" and "market" rates are interchangeable. The present value formula will help make it possible to determine the effective interest rate. Since the bond's par value, duration, and par interest rate is known, the coupon payment can be extracted. Now, knowing the price the bond sold in the market, the duration, and the coupon payment, the effective market interest rate can be extracted. This involves solving large polynomials. A less accurate way of determining the interest rate is using a yield shorthand. To extract the market interest rate with good precision and acceptable accuracy, the annual coupon derived can be divided by the market price of the bond. |
Where can I find definitive terms for a preferred share? | This site has the best information I could find, other than a Bloomberg terminal: Quantumonline.com QUANTUMONLINE.COM SECURITY DESCRIPTION: SCANA Corp., 2009 Series A, 7.70% Enhanced Junior Subordinated Notes, issued in $25 denominations, redeemable at the issuer's option on or after 1/30/2015 at $25 per share plus accrued and unpaid interest, and maturing 1/30/2065 which may be extended to 1/30/2080. Interest distributions of 7.70% ($1.925) per annum are paid quarterly on 1/30, 4/30, 7/30 & 10/30 to holders of record on the record date which is the business day prior to the payment date (NOTE: the ex-dividend date is at least 2 business days prior to the record date). Distributions paid by these debt securities are interest and as such are NOT eligible for the preferential 15% to 20% tax rate on dividends and are also NOT eligible for the dividend received deduction for corporate holders. Units are expected to trade flat, which means accrued interest will be reflected in the trading price and the purchasers will not pay and the sellers will not receive any accrued and unpaid interest. The Notes are unsecured and subordinated obligations of the company and will rank equally with all existing and future unsecured and subordinated indebtedness of the company. See the IPO prospectus for further information on the debt securities by clicking on the ‘Link to IPO Prospectus’ provided below. |
Is insurance worth it if you can afford to replace the item? If not, when is it? | Insurance is for events that are both and Unexpected and, for many people, catastrophic events are, for example, sickness, disability, death, car accidents, house fires, and burglaries, for which you may buy health, disability, life, auto, home, and renter's insurance. It may be catastrophic for a family relying on a very old earner for that earner to die, and you can buy life insurance up to a very old age, but the premiums will reflect the likelihood of someone of that age dying within the covered period. The more expected an event is, the more anything referred to as insurance is actually forced savings. Health insurance with no copays on regular checkups expects the insured to use them, so the cost of those checkups plus a profit for the insurance company is factored into the premiums ahead of time. A wooden pencil breaking may be unexpected. Regardless of foreseeability, no one buys insurance on wooden pencils, as the loss of a pencil is not catastrophic. What is catastrophic can be context dependent. Health-care needs are typically unforeseeable, as you don't know when you'll get sick. For a billionaire, needing health-care, while unforeseeable, the situation would not be catastrophic, and the billionaire can easily self-insure his or her health to the same extent as most caps offered by health insurance companies. If you're on a fixed budget buying a laptop, if it unexpectedly failed, that would be catastrophic to you, so budgeting in the cost of insurance or an extended warranty while buying your laptop would probably make sense. Especially if you need that $2000 laptop, spending an extra 17.5% would safeguard against you having to come out of pocket and depleting your savings to replace it, even though that brings you to a grand total of $2350 before taxes. However, if you're in that tight of a situation, I would strongly recommend you to find a less expensive option that would allow you to self-insure. If you found a used laptop for much less (I can even see Apple selling refurbished Macs for less than $1000) you might decide that your budget allows you to self-insure, and you could profit from being careful with your hardware and resolving to cover any issues with it yourself. |
How should I deal with my long term gain this year? | Long term capital gains are taxed at 15% this year, so the most you stand to save is $150. I wouldn't sell anything at a loss just to offset that, unless you planned on selling anyways. A few reasons: The Long term capital gains rate will go up to 20% next year, so your losses will be "worth more" next year than this year. Short term capital gains rates will go up next year as well, so again, better off saving your losses for next year. You must use capital losses to offset capital gains if you have them, but if you don't have any capital gains, you can use capital losses to offset ordinary income (up to a limit - $3,000 a year IIRC). So, if you just bite the bullet and pay the 15% on your gains this year, you could use your losses to offset your (likely higher rate) ordinary income next year. FYI, complete chart for capital gains tax rates is here. I also posted another answer about capital gains to this question a while back that might be useful. |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | No, I don't mix business and personal affairs. |
Is it better to ask for a raise before a spin-off / merger or after? | gef05 hit it on the head -- the books get frozen when mergers/spinoffs happen. I worked as an IT guy at a company whose mission was operating call centers -- and they didn't bother paying the phone bill! Why? the terms were already agreed upon, and the powers that be were waiting for final legal sign-off. Try to figure out who the leaders are going to be after the spinoff, and start politicking them. |
Can a CEO short his own company? | (yes, this should probably be a comment, not an answer ... but it's a bit long). I don't know what the laws are specifically about this, but my grandfather used to be on the board of a company that he helped to found ... and back in the 1980s, there was a period when the stock price suddenly quadrupled One of the officers in the company, knowing that the stock was over-valued, sold around a third of his shares ... and he got investigated for insider trading. I don't recall if he was ever charged with anything, but there were some false rumors spreading about the company at the time (one was that they had something that you could sprinkle on meat to reduce the cholesterol). I don't know where the rumors came from, but I've always assumed it was some sort of pump-and-dump stock manipulation, as this was decades before they were on the S&P 500 small cap. After that, the company had a policy where officers had to announce they were selling stock, and that it wouldn't execute for some time (1? 2 weeks? something like that). I don't know if that was the SEC's doing, or something that the company came up with on their own. |
What are some good ways to control costs for groceries? | Set aside the amount of grocery money you want to spend in a week in cash. Then buy groceries only from this money. The first week make it a generous amount so you don't get rediculous and give up. And stick to it when you are out of money (make sure you have some canned goods or something around if you run out of money a day short). And do not shop when you are hungry. |
Benjamin Graham: Minimum Size of the company | Smaller markets can actually be more volatile so it's not a good idea to lower Graham's criteria for them. The only real adjustment possible is inflation adjustment. $100 million in 1973 United States works out to $500 million today based on the difference in CPI/Inflation from 1973. This number will be different for other markets where the rate of inflation since 1973 has been different. So the real question to ask is - what is to $100 million in the United States in 1973 worth today in your market? Source: http://www.serenitystocks.com/how-build-complete-benjamin-graham-portfolio |
How can one go short in Uber? | The answer to this question is related to another question: How would I invest in Uber? Given that Uber is a privately-held company, the average investor cannot directly buy stock. However, there are some indirect methods that you can use to invest in Uber, and as a result, it is also possible to indirectly short Uber. One method is to invest in (or short) companies that invest in Uber. Alphabet/Google (GOOG) owns some, as well as Microsoft (MSFT), Toyota (ADR), and other companies. Theoretically, you could short these companies, as a hit to Uber would be bad for those companies. Another method would be to look at Uber's competitors. Think about what companies would do well if Uber went under. Lyft, perhaps, although it is so similar to Uber that if one has trouble, the other may as well. Perhaps instead you might invest in a traditional taxi company, or a company that provides services to taxi companies, such as Medallion Financial Corporation (MFIN). Keep in mind that either investing or shorting any of these is not really the same as investing/shorting Uber. It provides you some exposure in Uber, but your investment is also affected by many other things that have nothing to do with Uber. For more information, see the Investopedia article Ways to Invest in Uber before It Goes Public. For the record, I don't recommend that you do any of this. |
Why is the dominant investing advice for individuals to use mutual funds, exchanged traded funds (ETFs), etc | I'll give the TLDR answer. 1) You can't forecast the price direction. If you get it right you got lucky. If you think you get it right consistently you are either a statistical anomaly or a victim of confirmation bias. Countless academic studies show that you can not do this. 2) You reduce volatility and, importantly, left-tail risk by going to an index tracking ETF or mutual fund. That is, Probability(Gigantic Loss) is MUCH lower in an index tracker. What's the trade off? The good thing is there is NO tradeoff. Your expected return does not go down in the same way the risk goes down! 3) Since point (1) is true, you are wasting time analysing companies. This has the opportunity cost of not earning $ from doing paid work, which can be thought of as a negative return. "With all the successful investors (including myself on a not-infrequent basis) going for individual companies directly" Actually, academic studies show that individual investors are the worst performers of all investors in the stock market. |
How much money should I lock up in my savings account? | Firstly well done on building a really sold base of savings. An emergency fund needs to have two key characteristics: Be enough to get you through a typical emergency event (often seen as approx. ~6 months’ salary in your style of situation assuming you have no dependents etc) Be liquid and available to you instantly if an emergency arises Once you have decided how much you will need for 1), you then generally find the best interest available on an instant access savings account and leave it there. It's important to note that because you need it very liquid and very secure you will basically never make (nor should you expect to make) any sizeable rate of interest on your emergency fund. Once this is done, whatever left should be invested in an asset/mix of assets that best fit your risk profile - of which long term bonds are a completely legitimate option, but it's hard to say without knowing more about your long term aims/liabilities/job market etc. |
Whats the difference between a qualified and an unqualified covered call? | Yes, as long as you write a call against your stock with a strike price greater than or equal to the previous day's closing price, with 30 or more days till experation there will be no effect on the holding period of your stock. Like you mentioned, unqualified covered calls suspend the holding period of your stock. For example you sell a deep in the money call (sometimes called the last write) on a stock you have held for 5 years, the covered call is classified as unqualified, the holding period is suspened and the gain or loss on the stock will be treated as short-term. Selling out of the money calls or trading in an IRA account keeps things simple. The details below have been summarized from an article I found at investorsguide.com. The article also talks about the implications of rolling a call forward and tax situations where it may be advantageous to write unqualified covered calls (basically when you have a large deferred long term loss). http://www.investorguide.com/article/12618/qualified-covered-calls-special-rules-wo/ Two criterion must be met for a covered call to be considered a qualified covered call (QCC). 1) days to expiration must be greater than 30 2) strike price must be greater than or equal to the first available in the money strike price below the previous day's closing price for a particular stock. Additionally, if the previous day's closing price is $25 or less, the strike price of the call being sold must be greater than 85% of yesterday's closing price. 2a) If the previous day's closing price is greater than 60.01 and less than or equal to $150, days to experation is between 60-90, as long as the strike price of the call is greater than 85% of the previous days close and less than 10 points in the money, you can write a covered call two strikes in the money 2c) If the previous day's closing price is greater than $150 and days till expiration is greater than 90, you can write a covered call two strikes in the money. |
What is the best way to invest in gold as a hedge against inflation without having to hold physical gold? | GLD, IAU, and SGOL are three different ETF's that you can invest in if you want to invest in gold without physically owning gold. Purchasing an ETF is just like purchasing a stock, so you're fine on that front. Another alternative is to buy shares of companies that mine gold. An example of a single company is Randgold Resources (GOLD), and an ETF of mining companies is GDX. There are also some more complex alternatives like Exchange traded notes and futures contracts, but I wouldn't classify those for the "regular person." Hope it helps! |
Possible to use balance transfers to avoid interest with major credit cards? | IMO, it's a good deal. Pre-paying 3% interest is better than accruing it at 1-2% per month. The other nice thing about it is that all of your payments hit the principal. |
At what point should I begin paying off student loans? | If you have sufficient money to support yourself until you have a career, then paying off your student loan principal on unsubsidized, federal loans, is probably your best bet. This is because interest accumulates before you're actually required to pay. If they are private, make the payment on the highest interest rate loans. |
Dividends - Why the push to reinvest? | There is a basis for that if you consider the power of compounding. So, the sooner you re-invest the dividends the sooner the time will give you results (through compounding). There is also the case of the commissions, if they are paid with a percentage of the amount invested they automatically gain more from you. Just my 2cents, though the other answers are probably more complete. |
If I were to get into a life situation where I would not be able to make regular payments, do lenders typically provide options other than default? | For insight on what will happen, I suggest looking at the situation from the lender's perspective: If your setbacks are temporary, and you are likely to get back on your feet again, they will protect their investment by making accommodations, and probably charging you extra fees along the way. If your financial hardship seems irredeemable, they probably try to squeeze you for as much as possible, and then eventually take your house, protecting their investment as best they can. If they are going to foreclose, they may be reluctant to do it quickly, as foreclosure is expensive, takes man power, and looks bad on their books. So it may get pushed off for a Quarter, or a fiscal year. But if you are asking if they'll help you out from the goodness of their heart, well, a bank has no heart, and creditors are interested in ROI. They'll take the easiest path to profit, or failing that, the path to minimum financial losses. The personal consequences to you are not their concern. Once you realize this, it may change your thinking about your own situation. If you think you have a path to financial recovery, then you need to make that clear to them, in writing, with details. Make a business case that working with you is in their own best interests. If you cannot make such a case, recognize that they'll likely squeeze you for as much as possible in penalties, fees, interest payments, etc, before eventually foreclosing on you anyway. Don't play that game. If your home is a lost cause financially, plan how to get out from it with the smallest losses possible. Don't pay more than you need to, and don't throw good money after bad. |
What happened when the dot com bubble burst? | Two big things: In many ways, the early internet people were correct -- in 2011 we are much more productive as a society than we were in 1991. (Which comes with downsides, such as high unemployment) The bubble was a result of over-estimating those improvements and under-estimating the time required to yield those productivity gains. |
What are some ways to mitigate the risks of covered calls? | If the position starts losing money as soon as it is put on, then I would close it out ,taking a small loss. However, if it starts making money,as in the stock inches higher, then you can use part of the premium collected to buy an out of money put, thereby limiting your downside. It is called a collar. |
How to rescue my money from negative interest? | You might want to talk with your financial planner about any or all of the following: as well as Some of these offer the guarantee of a minimal amount of interest, as well as the ability to take a loan out against the cash value, without lapsing the policy. They may also offer certain tax advantages depending upon your jurisdiction and situation. |
Does a stock's price represent current liquidation of all shares? | Is the stock's price at any given moment the price at which all shares could be sold to new investors? No. For the simple fact that the current bid/offer always have sizes associated. What you should be looking at is the consolidated price to buy/sell X shares (10bn doesn't really work as not everyone is willing to sell/buy). If you look at the spread of the consolidated price at your quantity level, you'd notice it would be in stark contrast to the spread of the best bid/offer but (by definition) that would be the price to buy or sell X shares to new investors. Edit Calculation of the consolidated price of X shares: You go through the order book and calculate the size-weighted average price until you covered X. Example: So the consolidated price for 3000 shares would be $39.80, the consolidated price for 2000 shares would be $39.90. |
Should I have more than one brokerage account? | I use two different brokerages, both well-known. I got a bit spooked during the financial crisis and didn't want to have all my eggs in one basket. The SIPC limits weren't so much a factor. At the time, I was more worried about the hassle of dealing with a Lehman-style meltdown. If one were to fail, the misery of waiting and filing and dealing with SIPC claims would be mitigated by having half of my money in another brokerage. In hindsight, I was perhaps a bit too paranoid. Dealing with two separate brokerages is not much of an inconvenience, though, and it's interesting to see how their web interfaces are slightly different and some things are easier to do with one vs the other. Overall, they're really similar and I can't say there's much advantage (other than my tin-foil hat tendencies) to splitting it up like that. |
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