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Can you recommend some good websites/brokers for buying/selling stocks in India? | Indiabulls. Low brokerage (If you bargain) I'm user of it and I'm getting 25paisa for delivery and 5 paisa for intraday. All transactions can be done online. Also they provide an stand alone application PowerIndiabulls, which is too good and appraised by many users as best in the industry. Not sure about it, but I think Powerindiabulls application is the answer for this. Please have a look at their website for more details. |
“Infinite Banking” or “Be Your Own Bank” via Whole Life Insurance…where to start? | Keep in mind that the only advantage that using a tax favored account gives you is tax-free growth of the cash value of the policy. This "Infinite Banking" spin isn't some sort of new revolution in money management, its just a repackaging of techniques that people have been using for years to manage tax liability with some breathless marketing spiel. Before you jump in, compute the following: Now comes the hard part: Life insurance is sold, never bought. The guy pushing this does seminars at hotels sponsored by life insurance agents. The purpose of the program is to generate sales of insurance. Be wary. If you actually have the significant amounts of money required to capitalize this, there are much better ways to get an income stream from that money -- you need a good financial advisor. And if you have a huge tax liability and a scheme like this somehow makes sense, find someone who does it for a living in your state who isn't a crook. |
What are the advantages of paying off a mortgage quickly? | I used to think that paying off ahead of time made sense, but I no longer do, at least in most cases. The upside is that you can get a return on your money equal to the mortgage interest rate (it's less than that in the US, where mortgage interest is deductible, so it's roughly the mortgage interest rate * 1 - your marginal income tax rate). There are a few downsides. The biggest is that cash is the most liquid asset you can have; you can get at it with no restrictions. If you put that cash into your house, you are converting that into an asset with a lot of restrictions; you can't get at it without fees, nor can you get at it if you don't have a job, which is when you would need it most. So, you are putting your money in a hard-to-get-at place for a small interest rate. I don't think it is worthwhile. (edit) One complication is PMI. If you are currently paying PMI, it may make sense to put money towards the mortgage until you get to 20% and can get rid of the PMI. |
How to prevent myself from buying things I don't want | I use cash exclusively. I go to the cash machine once a week and withdraw the money I want to spend in one week (so I have to plan if I want to buy something expensive). Otherwise I leave the card at home. As bonus you get anonymity, i.e. big brother cannot track you. |
Why are some long term investors so concerned about their entry price? | It has got to do with the irrationality of humans. The so called long term investor is in it for the long term, they are not worried about market fluctuations nor timing the market. But yet they will aim to try to get a bargain when they buy in. It is contradictory in a way. Think about it; if I buy a stock and it drops by 30% I am not worried because I am in it for the long term, but I am worried about getting 1% off when I buy it. They usually tend to buy when the stock starts falling. However, what they don’t realise is when a stock starts falling there is no telling when it will stop. So even if they get a bargain for that day, it is usually quickly wiped out a few days later. Instead, of waiting for the price to find support and start recovering, they are eager to buy what they think is a bargain. I think this type of long term investing is very risky, and the main reason is because the investor has no plan. They just try to buy so called bargain stocks and hold them until they need the money (usually in retirement). But what happens if the stock price is lower when they want to retire than when they bought it? I hope no long term investor was trying to retire in 2008. If they simply had a plan to indicate when they would buy and under what conditions they would sell, and have a risk management plan in place, then maybe they could reduce their risk somewhat and conserve their capital. A good article to read on this is What's Wrong With Long-Term Investing. |
Income Tax form in India for freelancing | ITR1 or ITR2 needs to be filed. Declare the income through freelancing in the section "income from other sources" |
How many stocks will I own in n years if I reinvest my dividends? | Your example shows a 4% dividend. If we assume the stock continues to yield 4%, the math drops to something simple. Rule of 72 says your shares will double in 18 years. So in 18 years, 1000 shares will be 2000, at whatever price it's trading. Shares X (1.04)^N years = shares after N years. This is as good an oversimplification as any. |
Is it ever logical to not deposit to a matched 401(k) account? | Some have suggested you can put the money in the 401k then take a loan to pay off the student loan debt. Some things to consider before doing that: Check your 401k plan first. Some plans allow you to continue paying on a loan if you leave the company, some do not. If you have to change jobs before you pay back the 401k loan, you may only have 90 days to completely pay the loan or the IRS will treat this as an early withdrawal, which means taxes and penalties. If you don't have another job lined up, this is going to make things much worse since you will have lost your income and may owe even more to the government (depending on your state, it may be up to 50% of the remaining amount). There are ways to work with some student debt loans to defer or adjust payments. There is no such option with a 401k plan. This may change your taxes at the end of the year. Most people can deduct student loan interest payments. You cannot deduct interest paid to your 401k loan. You are paying the interest to yourself though. It may hurt your long term growth potential. Currently loans on 401k loans are in the 4% range. If you are able to make more than 4% inside of your 401k, you will be losing out on that growth since that money will only be earning the interest you pay back. It may limit flexibility for a few years. When people fall on hard times, their 401k is their last resort. Some plans have a limit on the number of loans you can have at one time. You may need a loan or a withdrawal in the future. Once you take the money out for a loan, you can't access it again. See the first bullet about working with student loan vendors, they typically have ways to work with you under hard circumstances. 401k loans don't. Amortization schedule. Many 401k loans can only be amortized for a max of 5 years, if you currently have 10 year loans, can you afford to pay the same debt back in 1/2 the time at a lower rate? You will have to do the math. When considering debt other than student loans (such as credit cards), if you fall on hard times, you can always negotiate to reduce the amount you owe, or the debt can be discharged (with tax penalties of course). They can't make you take money out. Once it is out, it is fair game. Just to clarify, the above isn't saying you shouldn't do it under any circumstances, it is a few things you need to evaluate before making that choice. The 401k is supposed to be used to help secure your financial future when you can't work. The numbers may work out in the short term, but do they still work out in the long term? Most credit cards require minimum payments high enough to pay back in 7-10 years, so does shortening that to 5 (or less) make up for the (probably early) years of compounding interest for your retirement? I think others have addressed some of this so I won't do the math. I can tell you that I have a 401k loan, and when things got iffy at my job for, it was a very bad feeling to have that over my head because, unlike other debts, there isn't much you can do about it. |
What are the best software tools for personal finance? | KMyMoney Pros: Cons: |
What is the best way to get a “rough” home appraisal prior to starting the refinance process? | It's extremely easy to get a rough valuation of your home. Just phone a real estate agent. Virtually any real estate agent will come and value your home free. Even if you say outright "I'm not considering selling, I just want a valuation" they will probably do it, because for them getting contacts of people who might one day want to sell their home is all-important. Even if a few turn you down, some will do it. You might say that an agent isn't going to be as accurate as an appraiser, and you are right. There is also an expectation that they will evaluate higher than the real value, to persuaade you to sell. That probably isn't a big issue, and it's something you can compensate for. And even an appraiser is going to be based somewhat on speculation. You might try to do this calculation yourself, but an agent has access to the actual sale prices of nearby houses - you can't get that information. You only have access to the asking prices. And did I mention they will do it for free? |
Offered a job: Should I go as consultant / independent contractor, or employee? | To be honest I don't know how any of this work in the US so my answer will be of very limited value to yourself, I suspect, but when it comes to the UK if you're going to get the same pay gross either way than being independent makes very little sense. Running your own business is hassle, is generally more risky (although possibly not in your case) and costs money. Some of the most obvious costs are the added NI, probably the need for an accountant, at around £1200 p/a for basic accountancy service, you are obliged by law to have liability insurance and you probably want professional indemnity insurance, this will be around £600 p/a minmum, and so on and so forth. On top of that, oficially anyway, as a contractor, you really shouldn't be getting any benefits from the client, and so health insurance, company car, even parking are all meant to be arranged by, and paid by, your company, and can't (or rather - shouldn't) be charged to the client. So - I would say - if you're seriously thinking about setting up a consultancy company, and this client is first of many - set up a company, but take into account the sums you need to earn. If you're really thinking about employment - be an employee. |
Forex independent investments | Unless you are buying a significant value of your goods in USD then the relative strength of USD versus your local currency will have little to no effect on what the value of your investments is worth to you. In fact only (de|in)flation will effect your purchasing power. If your investments are in your local currency and your future expenses (usage of the returns on the investments) will be in your local currency FX has no effect. To answer your question, however, since all investments involve flows of money there can be no investment (other than perhaps gold which is really a form of currency) that isn't bound to at least one currency. In general investments are expected to be valued against the investor's home currency (I tend to call it "fund currency" as I work with hedge funds) as the return on the investment will be paid out in the fund currency and returns will be compared on the same basis. If investments are to be made internationally then it is necessary to reduce, or "hedge" the exchange rate risk. This is normally done using FX swaps or futures that allow an exchange rate in the future to be locked in today. Far from being unbound from FX moves these derivatives are closely bound to any moves but crucially are bound in the opposite direction to the hoped for FX move. an example of this would be if I'm investing 100GBP (my local currency) in a US company XYZ corp which I expect to do well. Suppose I get 200USD for my 100GBP and so buy 1 * 200USD shares in XYZ. No matter what happens to XYZ stock any move in GBP/USD will affect my P&L so I buy a future that allows me to exchange 200USD for 100GBP in 6 month's time. If GBP rises I can sell the future and make money on both the higher exchange rate and the increase in XYZ corp. If GBP falls I can keep the future until maturity and exchange the 200USD from XYZ corp for 100GBP so I only take the foreign exchange hit on any profits. If I expect my profits to be 10USD I can even buy futures such that I can lock in the exchange rate for 110USD in 6 months so that I will lose even less of my profit from the exchange rate move. |
Can I deduct interest and fees on a loan for qualified medical expenses? | IRS Publication 502: Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. Loan interest and fees do not meet this definition. Your loan interest and fees are a cost of the payment method you chose (a loan), not a cost of medical treatment. The IRS makes clear where loan interest is deductible. Publication 936 discusses home mortgage interest deductions, and Publication 970 specifically discusses student loan interest deductions. Considering Publication 502's definition of a medical expense, combined with the absence of a publication discussing medical expense loan interest deductions, one must conclude that medical loan interest and fees are not deductible. |
Could an ex-employee of a company find themself stranded with shares they cannot sell (and a tax bill)? | they are entirely free to do whatever they want with the shares. In particular, they can sell them to whomever they choose No. Restrictions on who can sell when and to whom are a common thing with startups. "Publicly traded" companies are regulated in a much stricter way than private companies, so until the IPO the sales are limited to the OTC markets. But even that can be restricted by bylaws - for example ownership can only be limited to a group of investors approved by the board. As an employee - your grant was approved by the board, but when you come to sell, the buyer was not and the company may not agree to vet them. Bottom line is that it is not illegal to impose all kinds of restrictions on what the employees can do with their shares, as long as the shares are not listed on a public stock exchange (even after the company goes IPO with one class, other classes may remain restricted). |
Filing a corporation tax return online? | When in doubt, you should always seek the advice of a professional tax preparer or your accountant. (Many agents/accountants will gladly review your tax preparations to ensure you haven't missed something. That's quicker and cheaper than paying them to do it all.) Having said that... This Illinois resource has detailed information about S-corps: Of relevance to your situation: |
Is this follow-up after a car crash a potential scam? | You have to realize that you're trying to have your cake and eat it too. You want to do things "unofficially" by not reporting the accident (to insurance companies and/or police), but you want to do it "officially" in that you want to have legal recourse if they try to hit you up for more money. The only way to have it both ways is to trust the other person. From a financial perspective, ultimately you need to decide if the monetary cost of your raised insurance premiums, etc., outweighs the cost of whatever money the other party in the accident will try to squeeze out of you (factoring in the likelihood that they will do so). You also would need to factor in the likelihood that, rather than trying to scam you, they'll pursue legal action against you. In short, from a purely monetary perspective, if the legitimate cost of repairs is $700 and the cost to you of doing it by the book via insurance is $2000, you should be willing to be scammed for up to $1300, because you'll still come out ahead. Of course, there are psychological considerations, like whether someone unscrupulous enough to scam you will stop at $1300. But those numbers are the baseline for whatever outcome calculations you want to do. On the more qualitative side of things, it is possible they're trying to scam you, but also possible they're just trying to hustle you into doing everything quickly without thinking about it. They may not be trying to gouge you monetarily, they just want to pressure you so they get their money. I agree with other answerers here that the ideal way would be for them to send you an actual bill after repairs are complete. However, you could ask them to send you a written copy of the repair shop estimate, along with a written letter in which they state that they will consider payment of that amount to resolve the issue and won't pursue you further. The legal strength of that is dubious, but at least you have some documentation that you didn't just try to stiff them. If they won't give you some form of written documentation, I would read that as a red flag, bite the bullet, and contact your insurance company. |
What is the tax liability from an inheritance from a trust and reported on a K-1 form? | You don't need to submit a K-1 form to anyone, but you will need to transcribe various entries on the K-1 form that you will receive onto the appropriate lines on your tax return. Broadly speaking, assets received as a bequest from someone are not taxable income to you but any money that was received by your grandmother's estate between the time of death and the time of distribution of the assets (e.g. interest, mutual fund distributions paid in cash, etc) might be passed on to you in full instead of the estate paying income tax on this income and sending you only the remainder. If so, this other money would be taxable income to you. The good news is that if the estate trust distributions include stock, your basis for the stock is the value as of the date of death (nitpickers: I am aware that the estate is allowed to pick a different date for the valuation but I am trying to keep it simple here). That is, if the stock has appreciated, your grandmother never paid capital gains on those unrealized capital gains, and you don't have to pay tax on those capital gains either; your basis is the appreciated value and if and when you sell the stock, you pay tax only on the gain, if any, between the day that Grandma passed away and the day you sell the stock. |
A calculator that takes into account portfolio rebalancing? | My answer is Microsoft Excel. Google "VBA for dummies" (seriously) and find out if your brokerage offers an 'API'. With a brief understanding of coding you can get a spreadsheet that is live connected to your brokers data stream. Say you have a spreadsheet with the 1990 value of each in the first two columns (cells a1 and b1). Maybe this formula could be the third column, it'll tell you how much to buy or sell to rebalance them. then to iterate the rebalance, set both a2 and b2 to =C1 and drag the formula through row 25, one row for each year. It'll probably be a little more work than that, but you get the idea. |
Using multiple bank accounts | I live near historic Concord, Massachusetts, and frequently drive past Walden Pond. I'm reminded of Henry David Thoreau's words, "Simplify, simplify, simplify." In my opinion, fewer is better. 2 checkbooks? I don't see how that makes budgeting any easier. The normal set of expenses are easily kept as one bucket, one account. The savings 2&3 accounts can also be combined and tracked if you really want to think of them as separate accounts. Now, when you talk about 'Retirement' that can be in tax-wise retirement accounts, e.g. 401(k), IRA, etc. or post tax regular brokerage accounts. In our situation, the Schwab non-retirement account was able to handle emergency (as money market funds) along with vacation/rainy day, etc, in CDs of different maturities. As an old person, I remember CDs at 10% or higher, so leaving money in lower interest accounts wasn't good. Cash would go to CDs at 1-5 year maturities to maximize interest, but keep money maturing every 6-9 months. Even with the goal of simplifying, my wife and I each have a 401(k), an IRA, and a Roth IRA, I also have an inherited Roth, and I manage my teen's Roth and brokerage accounts. That's 9 accounts right there. No way to reduce it. To wrap it up, I'd go back to the first 4 you listed, and use the #4 checking attached to the broker account to be the emergency fund. Now you're at 3. Any higher granularity can be done with a spreadsheet. Think of it this way - the day you see the house you love, will you not be so willing to give up that year's vacation? |
For very high-net worth individuals, does it make sense to not have insurance? | There are 2 maxims that help make sense of insurance: Following those 2 rules, "normal" insurance makes sense. Can't afford to replace your car? insure it. Can afford to lose your TV? Don't insure it. People with a net worth in the low millions have very similar insurance needs to the middle class. For example, they might be able to afford a new car when they total it, but they probably can't afford to pay for the long term care of the person they accidentally ran over. Similarly, they probably need to insure their million dollar house, just like average people insure more affordable housing. "Very wealthy" people still have the same basic choices, but for different assets. If you are a billionaire, then you might not bother to insure your $30k childhood home or your fleet vehicles, but you probably would insure your $250m mansion, your $100m yacht and your more pricey collectible cars. It's also worth noting that "very wealthy" people are at much higher risk of being sued for negligence or personal injury. As such, they are more likely to purchase personal liability or umbrella insurance coverage to protect against such risks. Multi-million-dollar personal injury suits would never be filed against a poorer person simply because they couldn't afford to pay even the plaintiff's lawyer fees when they lost the court case. Insurance also makes sense when the insurance company is likely to (grossly) underestimate the risk they are taking. For example, if I am a really bad driver, but i have a clean record thanks to my army of lawyers, then insurance might actually be a good deal for me even on average. To take the "very wealthy" stereotypes to the extreme, perhaps my eccentric billionaire neighbor and I are in an escalating feud which I think will result in my butler "accidentally" running his car into my neighbor's precious 1961 Ferrari. |
What does “a stock pays a dividend of 3%” mean? | It means a 3% return on the value of the stock. If a stock has a $10 share price, the dividend would be $0.30. Normally though, the dividends are announced as a fixed amount per share, because the share price fluctuates. If a percentage were announced, then the final cost would not be known as the share priced could change radically before the dividend date. |
Where can I find historical United States treasury note volume? | The Securities Industry and Financial Markets Association (SIFMA) publishes these and other relevant data on their Statistics page, in the "Treasury & Agency" section. The volume spreadsheet contains annual and monthly data with bins for varying maturities. These data only go back as far as January 2001 (in most cases). SIFMA also publishes treasury issuances with monthly data for bills, notes, bonds, etc. going back as far as January 1980. Most of this information comes from the Daily Treasury Statements, so that's another source of specific information that you could aggregate yourself. Somewhere I have a parser for the historical data (since the Treasury doesn't provide it directly; it's only available as daily text files). I'll post it if I can find it. It's buried somewhere at home, I think. |
Is This A Scam? Woman added me on LinkedIn first, then e-mailed offering me millions of dollars [duplicate] | It is absolutely a scam. Anyone who tells you they can give you a large amount of money for free is trying to scam you. Additional warning signs include: |
How does historical data get adjusted for dividends, exactly? | If you download the historical data from Yahoo, you will see two different close prices. The one labeled 'Close' is simply the price that was quoted on that particular day. The one labeled 'Adj Close' is the close price that has been adjusted for any splits and dividends that have occurred after that date. For example, if a stock splits 10:1 on a particular date, then the adjusted close for all dates prior to that split will have been divided by 10. If a dividend is paid, then all dates prior will have that amount subtracted from their adjusted quote. Using the adjusted close allows you to compare any two dates and see the true relative return. |
Where can publicly traded profits go but to shareholders via dividends? | Where can publicly traded profits go but to shareholders via dividends? They can be retained by the company. |
What assets would be valuable in a post-apocalyptic scenario? | Barton Biggs's book Wealth, War and Wisdom aims to answer the question of what investments are best-suited to preserving value despite large-scale catastrophes by looking at how various investments and assets performed in countries affected by WWII. In Japan, stocks and urban land turned out to be good investments; in France, farm land and gold did better. Stocks outperformed bonds in nearly every country. Phil Greenspun recently wrote a review of the book. |
What are the real risks in “bio-technology” companies? | Note: My sister works for one of the largest clinical development, testing, and commercialization companies so I know some of the key issues but not all. This answer does not constitute advice on any particular stock or other instrument. This is mostly well researched opinion. The problem with biotech companies (and a few other areas of technology) is that a lot of money is spent, and debt incurred, on ensuring that products are effective and safe to go to market. At any stage these tests can fail and the product is essentially worthless. At this stage the developers will have learnt a lot about the drug and how it is as efficacious as it is and so the next iteration of the potential drug will be better and hopefully less likely to cause complications and harmful side effects. The process of gaining approval for this second iteration is just as expensive, if not more so, than the last. This means that they are spending a lot of money on the drug and, for small biotech companies concentrating on one or few drugs, will have little to no income generation to offset this. If the money runs out before they get the product out they are bankrupt even if the drug is perfect. A second issue is that they are not the only firm looking for a cure. They might have a very good drug that works very well but another company may have a better one in the pipeline that will either take their monopoly position or take all of their business based on the relative cost and efficacy. The longer it takes them to get through testing, the more likely it is that this will happen and the more likely it is that the competing drug will be first to market and receive all of the free publicity that goes with that. In this case the risk is that they have a product (eventually) but no market for it and so will again run out of money. Another consideration is what the cure is actually worth. Prevention and awareness is already reducing the number of (wealthy) western people who have HIV and so the market size is falling where the most profit can be made. In order to get any return on your investment a profit will be required. Where HIV rates are rising is in poor countries in Africa, Asia, and south America where the price at which people could afford to buy a cure is likely to be lower than even the break even price for the firm. In this case you have a monopoly and a drug that works but no one can afford to buy it for a price that you can accept and still make a profit. Biotech is a very risky, but potentially lucrative, area because there are just so many risks at every stage. Price volatility occurs on rumour and questionable statements from the company (who are always trying to be positive so that their funding doesn't dry up) and even relatively small trades can move the market a large amount as few people want to sell an investment with so much potential. There are also some charged political positions with regard to HIV and AIDS, so a shift in political power could also derail a biotech firm that is researching this kind of drug. |
Highstreet bank fund, custom ETF or Nutmeg? | And it's only as cheap as 1.78% if you stay with them 10 years! They'd love that. You can kind of tell they really want to lock you in for over 4 years. I also think it's daylight robbery, but as a self execution investor I tend to have to talk myself out of that belief by default to be fair. One can wonder too, why are there even 2 fixed (percentage wise) fees? They are desperate not to have one number that is too big sounding, either the advisor fee is a rip off because they have to do all the same analysis regardless, or you could take the view that it's the only valid fee as you're paying for a slice of something, where as the other fee is what? A share of the fixed costs? Well, isn't advising as essential as anything else? I actually think Nutmeg is OK, I've not used them or dealt with them in any way but they are, to a greater or lesser degree, what I've wished for to recommend to friends who don't want to DIY, which is a cheaper next generation online investment facility, and their fees drop significantly over 100K. Going by their claimed past performance and fee structure, whilst I'd like them to be cheaper, I personally think they are not a bad choice in the market. |
Should I put more money down on one property and pay it off sooner or hold on to the cash? | My figuring (and I'm not an expert here, but I think this is basic math) is: Let's say you had a windfall of $1000 extra dollars today that you could either: a. Use to pay down your mortgage b. Put into some kind of equity mutual fund Maybe you have 20 years left on your mortgage. So your return on investment with choice A is whatever your mortgage interest rate is, compounded monthly or daily. Interest rates are low now, but who knows what they'll be in the future. On the other hand, you should get more return out of an equity mutual fund investment, so I'd say B is your better choice, except: But that's also the other reason why I favour B over A. Let's say you lose your job a year from now. Your bank won't be too lenient with you paying your mortgage, even if you paid it off quicker than originally agreed. But if that money is in mutual funds, you have access to it, and it buys you time when you really need it. People might say that you can always get a second mortgage to get the equity out of it, but try getting a second mortgage when you've just lost your job. |
Credit card fee and taxes | Credit card fees on a credit card used for personal expenses are not tax deductible. Credit card fees on a business credit card are deductible on schedule C (or whatever form you're using to report business income and expenses). If you are using the same card for both business and personal ... well, for starters, this is a very bad idea, because it creates exactly the question you're asking. If that's what you're doing, stop, and get separate business and personal cards. If you have separate business and personal cards -- and use the business card only for legitimate business expenses -- then the answer is easy: You can claim a schedule C deduction for any service charges on the business card, and you cannot claim any deduction for any charges on the personal card. In general, though, if you have an expense that is partly business and partly personal, you are supposed to figure out what percentage is business, and that is deductible. In an admittedly brief search, I couldn't find anything specifically about credit cards, but I did find this similar idea on the IRS web site: Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part. For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you can deduct 70% of the interest as a business expense. The remaining 30% is personal interest and is not deductible. Refer to chapter 4 of Publication 535, Business Expenses, for information on deducting interest and the allocation rules. (https://www.irs.gov/businesses/small-businesses-self-employed/deducting-business-expenses) So, PROBABLY, you could add up all the charges you made on the card, figure out how much was for business and how much for personal, calculate the business percentage, and then deduct this percentage of the service fees. If the amount involved is not trivial, you might want to talk to an accountant or a lawyer. |
Married, 55, grown kids: Should I buy life insurance, or invest in stocks? The ultimate decision | The following is from Wikipedia - Term life insurance (with very minor editing) Because term life insurance is a pure death benefit, its primary use is to provide coverage of financial responsibilities, for the insured. Such responsibilities may include, but are not limited to, consumer debt, dependent care, college education for dependents, funeral costs, and mortgages. Term life insurance is generally chosen in favor of permanent life insurance because it is usually much less expensive (depending on the length of the term). Many financial advisors or other experts commonly recommend term life insurance as a means to cover potential expenses until such time that there are sufficient funds available from savings to protect those whom the insurance coverage was intended to protect. For example, an individual might choose to obtain a policy whose term expires near his or her retirement age based on the premise that, by the time the individual retires, he or she would have amassed sufficient funds in retirement savings to provide financial security for their dependents. This suggests the questions "why do you have this policy?" also "how many term life policies do you need?" or "how much insurance do you need?" Clearly you will be better off investing the premiums in the market. Your beneficiaries may be better off either way (depends when you die and to a lesser extent on market performance). If you are not able to retire now but expect to be able to later, you should strongly consider having sufficient insurance to provide income replacement for your spouse. This is a fairly common why. |
Does reading financial statements (quarterly or annual reports) really help investing? | Yes, especially if you are a value investor. The importance and relevance of financial statements depends on the company. IMO, the statements of a troubled "too big to fail" bank like Citibank or Bank of America are meaningless. In other industries, the statements will help you distinguish the best performers -- if you understand the industry. A great retail example was Bed, Bath and Beyond vs. Linens and Things. Externally, the stores appeared identical -- they carried the same product and even offered the same discounts. Looking at the books would have revealed that Linens and Things carried an enormous amount of debt that fueled rapid growth... debt that killed the company. |
Are stores that offer military discounts compensated by the government? | This story is about military grocery stores - i.e.: grocery stores for military personnel on military bases. There are no discounts for military personnel in a regular grocery store. But they may have subsidised prices in grocery stores located inside a military installation, and these are those stores that the story is talking about. |
How does giving to charity work? | If you don't have much money, and more important, don't itemize, donations are strictly between you and your karma. If you itemize (from a combination of mortgage interest, property tax, and state tax), by donating used goods, you can get some return on your taxes, and feel good about yourself. When I donate at charity time (December for me) I don't look at every $1000 check as a $250 benefit back to me, although that's the effect. I care deeply about the charity's cause and have personally visited each of them. You want to drop $50 to some huge agency that's funding cancer research? No objection. But when I visit a Veteran's Center or School for the Blind, I can see the good work my money is doing. |
Is it a good investment for a foreigner to purchase a flat/apartment in China? | It is a lousy investment to purchase an apartment in China. Chinese citizens purchase apartments in China because, well... here's how China works: There's some fundamentals driving Chinese property values higher, but mostly it's a bubble caused by those reasons. |
Why would preferred shares have less potential for capital gain compared to common stock? | True blue preferred shares are considered loose hybrids of credit and equity. They are more senior than common equity in bankruptcy liquidation but pay out a dividend which is not mandatory. Financial institutions issue the bulk of genuine preferred shares because of their need for more flexibility than a bond but not so much that they can afford the cost to shareholders by diluting common equity. Since it is a credit-like security that receives none of the income from operations but merely pays out a potentially unpredictable yet fixed amount of income, it will perform much more like a bond, rising when interest rates fall and vice versa, and since interest rates do not move to the extent of common equity valuations, preferreds' price variances will correspond much more to bonds than common equities. If the company stops paying the preferred dividend or looks to become in financial trouble, the price of the preferred share should be expected to fall. There are more modern preferred however. It has now become popular to fund intermediate startups with convertible preferred shares. Because these are derivatives based upon the common equity, they can be expected to be much more variant. |
Where can I find information on the percentage of volume is contributed by shorts? | I believe that it's not possible for the public to know what shares are being exchanged as shorts because broker-dealers (not the exchanges) handle the shorting arrangements. I don't think exchanges can even tell the difference between a person selling a share that belongs to her vs. a share that she's just borrowing. (There are SEC regulations requiring some traders to declare that trades are shorts, but (a) I don't think this applies to all traders, (b) it only applies to the sells, and (c) this information isn't public.) That being said, you can view the short interest in a symbol using any of a number of tools, such as Nasdaq's here. This is often cited as an indicator similar to what you proposed, though I don't know how helpful it would be from an intra-day perspective. |
Are there any market data providers that provide a query language? | You can give YQL a try. I'm not sure it can do the query you want, but for example you can do: (try it here) And this best thing about it - it's free. |
Distribution rules LLC vs. S-Corp | It's actually the other way around. Distributions in an LLC are usually based on each member's equity share, although the operating agreement can specify how often such distributions are made. Shareholders in a corporation can receive dividends, but those are determined by the corporation's board and can vary depending on the class of stock each shareholder owns. Preferred-class shareholders, who may hold a smaller overall fraction of the company's outstanding shares than the common stock shareholders, may receive disproportionately larger dividends per share than common stock shareholders, which is one of the (many) reasons that preferred stock is a better choice when it is available. Take, for instance, what Berkshire Class "A" shareholders receive in dividends per year compared to Class "B" shareholders. Here's a good link from LegalZoom that can explain what you're asking about: Explanation of LLC distributions I hope this helps. Good luck! |
Canadian personal finance software with ability to export historical credit card transactions? | Yodlee and Mint are good solutions if you don't mind your personal financial information being stored "in the cloud". I do, so I use Quicken. Quicken stores whatever you give to it for as long as you want: so the only question is how to get the credit card transactions you want into it? All my financial institutions allow me to view my credit card statements for a year back, and download them in a form Quicken can read. So you can have a record of your transactions from a year ago right now, and in a year you will have two year's worth. |
If there's no volume discount, does buying in bulk still make sense? | If they don't spoil, you can still get some marginal benefit if buying in bulk means you avoid the need for a trip to the shops to get a replacement. If the item is a commodity that you will use eventually you are unlikely to lose out as the prices tend to remain fairly stable. There's also the inconvenience factor, I like to have plenty of some items so I'm not caught short, consider how important your furnace is in mid winter, or the inconvenience of running out of an item right when you need it. |
Data source for historical intra-day bid/ask price data for stocks? | Check the answers to this Stackoverflow question https://stackoverflow.com/questions/754593/source-of-historical-stock-data a number of potential sources are listed |
Interest on Amount Exceeding CC Balance? | In the US, if your monthly statement was issued by the credit card company on January 1 and it showed a balance of $1000, then a payment must be made towards that balance by January 25 or so, not February 1 as you say, to keep the card in good standing. The minimum payment required to keep the card in good standing is specified in your monthly statement, and failure to meet this requirement can trigger various consequences such as an increase in the interest rate charged by the credit card company. With regard to interest charges, whether your purchase of $2000 on January 3 is charged interest or not depends entirely on what happened the previous two months. If you had paid both your monthly statements dated November 1 and December 1 of the previous year in full by the their respective due dates of November 25 and December 25, and the $1000 balance on the January 1 statement is entirely due to purchases (no cash advances) made in December, then you will not be charged interest on your January purchase of $2000 as long as you pay it off in full by February 25 (the charge will appear on your February 1 statement). But, if you had not paid your December 1 statement in full by December 25, then that $1000 billed to you on January 1 will include purchases made during December finance charges on the unpaid balance from the previous month plus finance charges on the purchases made during December. The finance charges will continue to accumulate during January until such time as you pay off the bill in full (these charges will appear on your February 1 statement), hopefully by the due date of January 25. But even if you pay off that $1000 in full on January 25, your charge of $2000 on January 3 will start to accumulate finance charges as of the day it hits the account and these finance charges will appear on your February 1 statement. If you paid off that $1000 on January 10, say, then maybe there will be no further finance charges on the $2000 purchase on January 3 after January 10 but now we are getting into the real fine print of what your credit card agreement says. Ditto for the case when you pay off that $1000 on January 2 and made the $2000 charge on January 3. You most likely will not be charged interest on that $2000 charge but again it depends on the fine print. For example, it might say that you will be charged interest on the average of the daily balances for January, but will not be charged interest on purchases during the February cycle (unless you miss the February 25 payment and the whole cycle starts all over again). As a general rule, it takes two monthly cycles of payment in full by the due date before one gets into the state of no finance charges for new purchases and effectively an "interest-free" loan of $2000 from January 3 (date of purchase) till February 25 (due date of payment). Matters become more complicated when cash advances are taken from a credit card which are charged interest from the day they are taken but don't trigger finance charges on new purchases or the so-called "zero percent balance transfer offers" are accepted. |
How should I think about stock dividends? | Different stocks balance dividend versus growth differently. Some have relatively flat value but pay a strong dividend -- utility stocks used to be examples of that model, and bonds are in some sense an extreme version of this. Some, especially startups, pay virtually no dividends and aim for growth in the value of the stock. And you can probably find a stock that hits any point between these. This is the "growth versus income" spectrum you may have heard mentioned. In the past, investors took more of their return on investment as dividends -- conceptually, a share of the company's net profits for the year reflecting the share's status as partial ownership. If you wanted to do so, you could use the dividend to purchase more shares (via a dividend reinvestment plan or not), but that was up to you. These days, with growth having been strongly hyped, many companies have shifted much more to the growth model and dividends are often relatively wimpy. Essentially, this assumes that everyone wants the money reinvested and will take their profit by having that increase the value of their shares. Of course that's partly because some percentage of stockholders have been demanding growth at all costs, not always realistically. To address your specific case: No, you probably aren't buying Microsoft because you like its dividend rate; you're buying it in the hope it continues to grow in stock value. But the dividend is a bit of additional return on your investment. And with other companies the tradeoff will be different. That's one of the things, along with how much you believe in the company, that would affect your decision when buying shares in specific companies. (Personally I mostly ignore the whole issue, since I'm in index funds rather than individual stocks. Picking the fund sets my overall preference in terms of growth versus income; after that it's their problem to maintain that balance.) |
What should I do with the 50k I have sitting in a European bank? | Unfortunately I do not have much experience with European banks. However, I do know of ways to earn interest on bank accounts. CDs (Certificates of Deposit) are a good way to earn interest. Its basically a savings account that you cannot touch for a fixed rate of time. You can set it from an average of 6 months to 12 months. You can pull the money out early if there is an emergency as well. I would also look into different types of bank accounts. If you go with an account other than a free one, the interest rate will be higher and as long as you have the minimum amount required you should not be charged. Hope I was able to help! |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | The credit card may have advantages in at least two cases: In some instances (at least in the US), a merchant will put a "hold" on a credit card without charging it. This happens a lot at hotels, for example, which use the hold as collateral against damages and incidental charges. On a credit card this temporarily reduces your credit limit but never appears on your bill. I've never tried to do it on a debit card, but my understanding is that they either reject the debit card for this purpose or they actually make the withdrawal and then issue a refund later. You'll actually need to account for this in your cash flow on the debit card but not on the credit card. If you get a fraudulent charge on your credit card, it impacts that account until you detect it and go through the fraud resolution process. On a debit card, the fraudulent charge may ripple through the rest of your life. The rent payment that you made by electronic transfer or (in the US) by check, for example, is now rejected because your bank account is short by the amount of the fraud even if you didn't use the debit card to pay it. Eventually this will probably get sorted out, but it has potential to create a bigger mess than is necessary. Personally, I never use my debit card. I consider it too risky with no apparent benefit. |
Where can I find open source portfolio management software? | Take a look at this: http://code.google.com/p/stock-portfolio-manager/ It is an open source project aimed to manage your stock portfolio. |
How exactly does a country devalue its currency? | Does some official tell the Foreign Exchange the the new exchange rate for the yuan is 0.98 * the current exchange rate? For China (and other countries with fixed/controlled exchange rates) - that's exactly how it happens. Does it just print more? This is the way to go for fully convertible currencies (like the USD, EUR, GBP, and handful of others, there're about 20 in the world). Flood the market and as with any commodity - flooding the market leads to a price drop. Obviously "just print more" is much harder to do than picking up the phone and saying "Now you're buying/selling dollars at this price and if you don't I'll have you executed". |
How to categorize credit card payments? | Using the Transfer category is the best place to put these categories, as that accurately reflects what the transaction is. If you have your credit card and bank account linked in Mint, the debit and credit to both accounts will net to $0 in the category. I would not recommend using "Hide from budget and trends" as sometimes multiple (erroneous) transactions pop up and having a category that should but, in error, does not net to $0 will raise your attention to possibly duplicate transactions. You can ask Mint to always categorize certain transactions in certain ways. On any of your payments, if you click "Edit Details" and then select the Transfer category, you can ask Mint to always make that classification: |
What home improvements are tax deductible? | Home Improvements that improve the home's Energy Efficiency are currently eligible for federal tax credits. This includes renewable energy equipment (solar panels, etc.) and Nonbusiness Energy Property Tax Credit. The credit is 30% of the cost. From Intuit Turbo Tax: Energy Tax Credit: Equipment and materials can qualify for the Nonbusiness Energy Property Credit only if they meet technical efficiency standards set by the Department of Energy. The manufacturer can tell you whether a particular item meets those standards. For this credit, the IRS distinguishes between two kinds of upgrades. The first is "qualified energy efficiency improvements," and it includes the following: •Home insulation •Exterior doors •Exterior windows and skylights •Certain roofing materials The second category is "residential energy property costs." It includes: •Electric heat pumps •Electric heat pump water heaters •Central air conditioning systems •Natural gas, propane or oil waterheaters •Stoves that use biomass fuel •Natural gas, propane or oil furnaces •Natural gas, propane or oil hot water boilers •Advanced circulating fans for natural gas, propane or oil furnaces |
Why is it important to research a stock before buying it? | The following is only an overview and does not contain all of the in-depth reasons why you should look more deeply. When you look at a stock's financials in depth you are looking for warning signs. These may warn of many things but one important thing to look for is ratio and growth rate manipulation. Using several different accounting methods it is possible to make a final report reflect a PE ratio (or any other ratio) that is inconsistent with the realities of the company's position. Earnings manipulation (in the way that Enron in particular manipulated them) is more widespread than you might think as "earnings smoothing" is a common way of keeping earnings in line (or smooth) in a recession or a boom. The reason that PE ratio looks so good could well be because professional investors have avoided the stock as there appear to be "interesting" (but legal) accounting decisions that are of concern. Another issue that you don't consider is growth. earnings may look good in the current reporting period but may have been stagnant or falling when considered over multiple periods. The low price may indicate falling revenues, earnings and market share that you would not be aware of when taking only your criteria into account. Understanding a firm will also give you an insight into how future news might affect the company. If the company has a lot of debt and market interest rates rise or fall how will that effect their debt, if another company brings out a competing product next week how will it effect the company? How will it effect their bottom line? How much do they rely on a single product line? How likely is it that their flagship product will become obsolete? How would that effect the company? Looking deeply into a company's financial statements will allow you to see any issues in their accounting practices and give you a feel for how they are preforming over time, it will also let you look into their cost of capital and investment decisions. Looking deeply into their products, company structure and how news will effect them will give you an understanding of potential issues that could threaten your investment before they occur. When looking for value you shouldn't just look at part of the value of the company; you wouldn't just look at sales of a single T-shirt range at Wallmart when deciding whether to invest in them. It is exactly the same argument for why you should look at the whole of the company's state when choosing to invest rather than a few small metrics. |
What software do you recommend for Creating a To-The-Penny, To-The-Day Budget? | I wrote a little program one time to try to do this. I think I wrote it in Python or something. The idea was to have a list of "projected expenses" where each one would have things like the amount, the date of the next transaction, the frequency of the transaction, and so on. The program would then simulate time, determining when the next transaction would be, updating balances, and so on. You can actually do a very similar thing with a spreadsheet where you basically have a list of expenses that you manually paste in for each month in advance. Simply keep a running balance of each row, and make sure you don't forget any transactions that should be happening. This works great for fixed expenses, or expenses that you know how much they are going to be for the next month. If you don't know, you can estimate, for instance you can make an educated guess at how much your electric bill will be the next month (if you haven't gotten the bill yet) and you can estimate how much you will spend on fuel based on reviewing previous months and some idea of whether your usage will differ in the next month. For variable expenses I would always err on the side of a larger amount than I expected to spend. It isn't going to be possible to budget to the exact penny unless you lead a very simple life, but the extra you allocate is important to cushion unexpected and unavoidable overruns. Once you have this done for expenses against your bank account, you can see what your "low water mark" is for the month, or whatever time period you project out to. If this is above your minimum, then you can see how much you can safely allocate to, e.g. paying off debt. Throwing a credit card into the mix can make things a bit more predictable in the current month, especially for unpredictable amounts, but it is a bit more complicated as now you have a second account that you have to track that has to get deducted from your first account when it becomes due in the following month. I am assuming a typical card where you have something like a 25 day grace period to pay without interest along with up to 30 days after the expense before the grace period starts, depending on the relationship between your cut-off date and when the actual expense occurs. |
Why does FlagStar Bank harass you about payments within grace period? | All standard mortgage promissory notes mandate payments are due on the first of every month; I can almost guarantee the note you signed has this provision. Most lenders offer a grace period of generally 15 days before they assess a late charge, but the payment IS late on the 2nd. People have become incorrectly accustomed to believe that the payment is due between the 1st and 15th. If they are servicing your loan for another investor (FNMA, FHMLC, a private investor, etc.), they may have contractual requirements to begin collection activities by a certain date. So they are within the rights you granted them. If these calls really bug you, you can start to adjust your cashflow so you can perhaps make your payment a few days ahead of the first each month. |
Brief concept about price movement of a particular stock [duplicate] | The problem with predicting with accuracy what a stock price will do in any given situation is that there are two main factors that affect a stocks price. The first factor is based somewhat in math as it takes into account numbers such as supply and demand, earnings per share, expected earnings, book value, debt ratio and a wide variety of other numbers. You can compile all those numbers into a variety of formulas and come up with a rational estimate of what the stock should sell for. This is all well and good and if the market were entirely rational it would rarely make news because it would be predictable and boring. This is where our second factor throws a wrench in the works. The second factor affecting stock price is emotional. There are many examples of people's emotions affecting stock price but if you would like a good example look up the price fluctuations of Apple (AAPL) after their last couple earnings reports. Numerically their company looks good, their earnings were healthy, their EPS is below average yet their price fell following the report. Why is that? There really isn't a rational reason for it, it is driven by the emotions behind unmet expectations. In a more general sense sometimes price goes down and people get scared and sell causing further decline, sometimes people get excited and see it as opportunity to buy in and the price stabilizes. It is much more difficult to anticipate the reaction the market will have to people's emotional whims which is why predicting stock price with accuracy is near impossible. As a thought along the same line ask yourself this question; if the stock market were entirely rational and price could be predicted with accuracy why is there such a wide range of available strike prices available in the options market? It seems that if stock price could be predicted with anything remotely reassembling accuracy the options market need a much smaller selection of available strike prices. |
How do ETF fees get applied? | The ETF price quoted on the stock exchange is in principle not referenced to NAV. The fund administrator will calculate and publish the NAV net of all fees, but the ETF price you see is determined by the market just like for any other security. Having said that, the market will not normally deviate greatly from the NAV of the fund, so you can safely assume that ETF quoted price is net of relevant fees. |
What is the most common and profitable investment for a good retirement in Australia? | In Australia anyone thinking about retirement should be concentrating on superannuation. Contribution is compulsory (I think the current minimum contribution rate is 9.5% of salary) and both contributions and investment returns are very tax efficient. The Government site is quite comprehensive - http://www.australia.gov.au/topics/economy-money-and-tax/superannuation - have a read and come back with any specific questions. |
Buying a house, how much should my down payment be? | How much should my down payment be? Ideally 20% of the purchase price because with 20% of the purchase price, you don't have to pay a costly private mortgage insurance (PMI). If you don't have 20% down and come across a good property to purchase, it is still a good idea to go forward with purchasing with what you are comfortable with, because renting long term is generally never a good idea if you want to build wealth and become financially independent. How much should I keep in my emergency fund? People say 3-12 months of living expenses. Keep in mind though, in most cases, if you lose your job, you are entitled to unemployment benefits from the government. How long should my mortgage be? 30 year amortization is the best. You can always opt to pay more each month. But having that leverage with a 30 year loan can allow you to invest your savings in other opportunities, which can yield more than mortgage interest. Best of luck! |
Money Saved on finance charges | Avoiding a cost (interest) isn't quite the same as income. There is no entry, nothing for you to consider for this avoided interest. What you do have is an expense that's no longer there, and you can decide to use that money elsewhere each month. |
GnuCash: Reimbursable expenses paid by credit card | GNUCash won't show 'Credit Card' type accounts in "Process Payment", as of v.2.6.1. A workaround is to create another account of type A/Payable. Then, transfer the operations you want to pay via "Process Payment" to this new account. It should be visible now. A drawback is that you have split your current Credit Card debt, which makes it harder to track. Alternatively you may wish to only use this new account for all your credit card related expenses. Another alternative is processing payments for these purchases manually to keep the 'credit card' accounts consistent. |
What if 40% of the remaining 60% Loan To Value (ratio) is not paid, or the borrower wants to take only 60% of the loan? | The loan-to-value ratio (LTV Ratio) is a lending risk assessment ratio that financial institutions and others lenders examine before approving a mortgage. It sounds like your lender has a 60% requirement. Remember the home is the collateral for the loan. If you stop making payments, they can take the house back from you. That number is less than 100% to accommodate changing market prices, the cost of foreclosure, repairing and reselling the home. They may be a safety factor built in depending on the home's location. If you want to buy a $1.8 million dollar home you will have to come up with 40% down payment. That down payment is what reduces the risk for the lender. So no, there is no way to cheat that. Think about the transaction from the view of the lender. Note: in some areas, you can still get a loan if you don't have the required down payment. You just have to pay a monthly mortgage insurance. It's expensive but that works for many home buyers. A separate insurance company offers a policy that helps protect the lender when there isn't enough deposit paid. Update: Er, no. Keep it simple. The bank will only loan you money if it has collateral for the loan. They've built in a hefty safety margin to protect them in case you quit paying them your monthly payments. If you want to spend the money on something else, that would work as long as you provide collateral to protect the lender. You mention borrowing money for some other purpose then buying a home. That would be fine, but you will have to come up with some collateral that protect the lender. If you wanted to buy a new business, the bank would first ask for an appraisal of the value of the assets of the business. That could be applied to the collateral safety net for the lender. If you wanted to buy a business that had little appraisal value, then the bank would require more collateral from you in other forms. Say you wanted to borrow the money for an expensive operation or cosmetic surgery. In that case there is no collateral value in the operation. You can't sell anything from the surgery to anybody to recover costs. The money is spent and gone. Before the bank would loan you any money for such a surgery, they would require you to provide upfront collateral. (in this case if you were to borrow $60,000 for surgery, the bank would require $100,000 worth of collateral to protect their interest in the loan.) You borrow money, then you pay it back at a regular interval at an agreed upon rate and schedule. Same thing for borrowing money for the stock market or a winning horse at the horse race. A lender will require a hard asset as collateral before making you a loan... Yes I know you have a good tip on a winning horse,and you are bound to double your money, but that's not the way it works from a lender's point of view. It sounds like you are trying to game the system by playing on words. I will say quit using the "40% to 60%" phrase. That is just confusing. The bank's loan to value is reported as a single number (in this case 60%) For every $6000 you want to borrow, you have to provide an asset worth $10,000 as a safety guarantee for the loan. If you want to borrow money for the purchase of a home, you will need to meet that 60% safety requirement. If you want to borrow $1,000,000 cash for something besides a home, then you will have to provide something with a retail value of $1,666,667 as equity. I think the best way for you to answer your own question is for you to pretend to be the banker, then examine the proposal from the banker's viewpoint. Will the banker alway have enough collateral for whatever it is you are asking to borrow? If you don't yet have that equity, and you need a loan for something besides a home, you can always save your money until you do have enough equity. Comment One. I thought that most lenders had a 75% or 80% loan to value ratio. The 60% number seems pretty low. That could indicate you may be a high risk borrower, or possibly that lender is not the best for you. Have you tried other lenders? It's definitely worth shopping around for different lenders. Comment Two. I will say, it almost sounds like you aren't being entirely honest with us here. No way someone with a monthly income who can afford a $1.8 Million home would be asking questions like this. I get that English probably isn't your first language, but still. The other thing is: If you are truly buying a $1.8 Million dollar home your real estate agent would be helping you find a lender that will work with you. They would be HIGHLY motivated to see this sale happen. All of your questions could be answered in ten minutes with a visit to your local bank (or any bank for that matter.) When you add up the costs and taxes and insurance on a 30 fixed loan, you'd have a monthly mortgage payment of nearly $10,500 a month or more. Can you really afford that on your monthly income? |
Is there a measure that uses both cost of living plus income? | The key term you're looking for is "purchasing power parity", which considers the local prices of goods and services when making comparisons between countries. For example, you can look up the GDP by PPP per capita to get a sense of much people on average incomes can buy in each country. Of course, average incomes may not be too relevant to your own specific circumstances, but nonetheless you can look at the PPP data itself to figure out how to translate specific numbers between two currencies. However, note that the "basket" of goods used to calculate this measure itself has a significant impact on the results. Comparing prices of food and electronic equipment respectively will often give very different answers. |
How much time would I have to spend trading to turn a profit? | Very subjective question. some may do it in the first year, some lose money all their life. Some make a fortune and then lose it. Investing time is only a small part of it. some people can never do it just because investing is not for everyone. Just like any other business. or you can invest into t-bill and CDs, you'll be profitable from day one. |
Is an ITM option bought/sold to close in addition to being assigned? | The option is exercised. The option is converted into shares. That is an optional condition in closing that contract, hence why they are called options. |
How should I think about stock dividends? | At 19 years old you can and should be investing to see your money grow over the years. Reinvesting the dividends does get to be pretty significant because they compound over many years. Historically this dividend compounding accounts for about half of the total gains from stocks. At 70 years old I am not investing to see my money grow, although that's nice. I am investing to eat. I live on the dividends, and they tend to come in fairly reliably even as the market bounces up and down. For stocks selected with this in mind I get about 4% per year from the dividends. |
Outstanding car bill, and I am primary but have not driven it for 2 years | What can you do? Pay the loan or face the debt collectors. The finance company don't care who now keeps the car, or who drives it. There's money outstanding on the loan, and your signature on the loan form. That's why co-signing a loan for someone else so often ends in tears. |
Insurance for a house which is not homeowners insurance? | What you need will depend on a number of factors that aren't clear from the question. This coverage is simply called "Vacant home insurance", but not all companies are willing to offer this coverage. Unfortunately, in New York, insurers can also legally drop your standard homeowners' coverage if they become aware that your property has become vacant for 30 days or more. The Insurer's Concerns Typically, a "standard" homeowners policy will have an exclusion clause for vacant homes. The insurance company's concern is that without someone in the home, they will be at risk for break-ins, squatters and vandalism. If you've ever seen "Flip Men" on Spike, you'll know this is a serious concern (great show, by the way). They will use a risk model to calculate an estimated risk for the property (this is why a seasonal vacation home in a sparsely-populated area is often less of a concern than a family home in an urban area). If they estimate the risk to be low, some insurance companies will allow to you buy back that exclusion so that vacant properties are covered. In your case, they have probably decided that either: Your Options First, you need to find a company that is comfortable with taking on the extra risk of a vacant home. This will vary quite a bit by location, but the main ones are Farmer's (they use the Foremost brand name in New York) and Castle Rock. There are lots of insurance agencies that also advertise these products, but most of them are middlemen and use one of these two companies to actually write the coverage. Additionally, since this is a specialty policy, make sure you understand all of the details of the policy, and how they vary from a regular policy including: How to Reduce your Premium costs These are general tips from the Murray Group's website (an independent broker in NY) on how to lower the additional cost of vacant coverage: This may sound expensive, but these steps will all reduce the risk of something really bad happening when you're not there. Additionally, do you know anyone you completely trust (relative, unemployed friend) that might want to live in your old house rent-free for a while? This could work out for you if they are willing to keep the place 100% clean around the clock so that you can show the house at any time. If you have additional/specific questions, you should be able to find an independent insurance broker in your area that would be willing to advise you on your specific situation for a flat fee. Best of luck with getting the home covered and sold quickly! |
How exactly is implied volatility assigned to an option's strike price? | As I understand it, Implied Volatility represents the expected gyrations of an options contract over it's lifetime. No, it represents that expected movement of the underlying stock, not the option itself. Yes, the value of the option will move roughly in the same direction the value of the stock, but that's not what IV is measuring. I even tried staring at the math behind the Options pricing model to see if that could make more sense for me but that didn't help. That formula is correct for the Black-Scholes model - and it is not possible (or at least no one has done it yet) to solve for s to create a closed-form equation for implied volatility. What most systems do to calculate implied volatility is plug in different values of s (standard deviation) until a value for the option is found that matches the quoted market value ($12.00 in this example). That's why it's called "implied" volatility - the value is implied from market prices, not calculated directly. The thing that sticks out to me is that the "last" quoted price of $12 is outside of the bid-ask spread of $9.20 to $10.40, which tells me that the underlying stock has dropped significantly since the last actual trade. If the Implied Vol is calculated based on the last executed trade, then whatever algorithm they used to solve for a volatility that match that price couldn't find a solution, which then choose to show as a 0% volatility. In reality, the volatility is somewhere between the two neighbors of 56% and 97%, but with such a short time until expiry, there should be very little chance of the stock dropping below $27.50, and the value of the option should be somewhere around its intrinsic value (strike - stock price) of $9.18. |
As an investing novice, what to do with my money? | 3-5 years is long enough of a timeframe that I'd certainly invest it, assuming you have enough (which $10k is). Even conservatively you can guess at 4-5% annual growth; if you invest reasonably conservatively (60/40 mix of stocks/bonds, with both in large ETFs or similar) you should have a good chance to gain along those lines and still be reasonably safe in case the market tanks. Of course, the market could tank at any time and wipe out 20-30% of that or even more, even if you invest conservatively - so you need to think about that risk, and decide if it's worth it or not. But, particularly if your 3-5 year time frame is reasonably flexible (i.e., if in 2019 the market tanks, you can wait the 2-3 years it may take to come back up) you should be investing. And - as usual, the normal warnings apply. Past performance is not a guarantee of future performance, we are not your investment advisors, and you may lose 100% of your investment... |
Pay off car or use money for down payment | The best thing to do is pay off the car. Adding more variables to a negotiation with a car dealer (in this case, a trade in), is always going to go in their favor. This is why people recommend negotiating a price down first, before ever mentioning to the dealer you want to do a trade in or financing. |
Is there any way to buy a new car directly from Toyota without going through a dealership? | You can buy a new Toyota from a non-dealer, but not from Toyota directly as they have no retail distribution capability. There is no need to buy directly from Toyota if you want to get a new car without going through a dealer. In many cases people buy new cars but have to sell them immediately for one reason or another. |
Should I file a change of address with the IRS? | The most important thing to do when moving is to change your address with the post office. This will forward most mail for a year, and even automatically send change of address notices to many businesses that send mail to you. If you do this, and the IRS needs to send you something over the next year, you'll get it. The IRS does have a procedure for changing your address, and you would want to do this if you are expecting something from the IRS and are unable to do a change of address with the post office for some reason. But if you do forward your mail and you aren't expecting a refund check, I don't think it is necessary. The IRS will get your new address when you file your return next year. |
Are there any rules against penalizing consumers for requesting accurate credit reporting? | I think you're off base here. The bureaus only remove information if the creditor cannot verify any dispute within 30 days, or if the information's super old. If the creditor can provide corrected information, then the credit bureau is required to apply it to its own database. A dispute can be about the entire account, or it can be about payment status within a given span (or spans) of time. Of course, it's the consumer who has to initiate the dispute. |
what are the pros and cons of structured deposits? | With reference to the UK: Structured deposits should not be confused with structured products. Structured deposits are often, quite simple deposit accounts. You place your money into what is essentially a deposit account, and are therefore guaranteed not to lose your capital as with any other deposit account. The attraction is that you could earn more than you would in a normal deposit account, often around double, due to indirect exposure to the markets. Another benefit is that structured deposits can form part of your annual cash ISA allowance, so the returns can be tax free. These products are popular with those who have savings which they are happy to deposit away for between 3 and 6 years, and are looking for better rates of return than standard cash ISAs or savings accounts. The main drawback is that you may not receive anything other than your original deposit. That poses a minimal risk if your savings are earning less than 1% currently. See my article at financialandrew.blogspot.co.uk/2013/03/fed-up-with-low-returns-from-cash-isas.html for a more rounded overview of the structured deposits. |
Where do I-Bonds fit into personal finance plans? | tl,dr: I-bonds do not fit well into most personal finance plans. First the questions (succinct reference): I like your thought process weighing your liquidity and risk versus your return. This is very important. However, I think you might be sidetracked a bit by I-Bonds. I-Bonds are not generally good for personal investment as they are not marketable when necessary, have redemption penalties and hold lower overall yields in general. Finally, they are significantly harder to trade as you can buy and hold a TIPS ETF and get exposure to all maturities and get the current competitive rate all in one purchase. Inflation protection is in general an interesting problem. While inflation-protected bonds sound like they are great for inflation protection (after all it is in the name), they may not be the best instruments for long/medium term protection. It is really important to remember that inflation protected bonds have significantly lower returns and one form of inflation protection is to just have more money in the future. TIPS really protect against large inflation changes as normal bonds have the future expected inflation already baked in their higher rates. Also, when you own a stock you own part of a company and inflation will increase the value of the company relative to the inflated currency. Foreign stocks can give even more protection if you think inflation in your local currency is going to be higher then the foreign currency. Stocks in the past have had significantly higher return overall than inflation protected bonds but have higher risk as well. As a medium term, low-risk portfolio, it is worth looking into some combination of TIPS, normal bonds and a small to medium allocation of local/foreign stocks all done through low-fee mutual funds or index ETFs. |
Does the bid/ask concept exist in dealer markets? | Why would there not be a bid and ask? Dealers make their money in the spread between what they buy it from one entity for and what they sell it to another entity for. This doesn't mean they have to do it auction-style, but they'll still have a different buy price from a sell price, hence "bid" and "ask". |
First Time Home Buyers - Down Payment, PMI and Points | 1 - For FHA loans PMI is required for mortages where there is not at least 20% equity. Bank Financed Non-FHA loans may have other standards. If you are getting an FHA loan ,if possible put down 20% so that you do not have to pay PMI. That said your PMI costs should be reduced by the size of your down payment since the PMI covers the difference between your equity value (Based on the appraisal at time of purchase) and 20% equity value of the home. So if you buy a home for 425k(assuming 100% appraisal price) 20% equity would be 85k. So if you put 10% down you would be paying PMI until you accrue an addition 42500 in equity. And you will be paying PMI on that for about 12 years(typical on 30 year mortgage) or until you refinance(having home appraised at higher value than purchase price where you would have 20% equity). There are ways to get out of PMI early but few banks are willing to help you through the hoops unless you refinance(and pay more closing costs). 2 - Different banks offer better rates or other benefits for paying points. We paid $300 for a 1.5% reduction in our interest rate (less than 1%) but it was called a point. We were offered a few other points (.25% for 2500 and an one time on demand interest rate adjustment for ~3k) but declined but they may make more sense on a 425k home than our more modest one. You can talk to a banker about this now, get preapproved(which helps with getting offers accepted sometimes), and find out more details about the mortgage they will offer you. This meeting should be free(I would say will but some bank would charge just to prove me wrong) and help answer your questions more authoritatively than anyone here can. 3 - The costs will come out of your down payment. So if you put down 42.5k down your costs will come out of that. So you will probably end up with 30~35k being applied towards your purchase price with the rest going for costs. You can tell the banker you want to put 10% towards the price and the banker will give you a down payment probably around 50k to cover costs etc. (My figures are hopefully intentionally high better to find out that it will cost less than my guesstimate than get your hopes up just to find out the costs are higher than expected.) |
Can you explain “time value of money” and “compound interest” and provide examples of each? | Time Value of Money - The simple calculation for this is FV = PV * (1+r)^N which reads The Future Value is equal to the Present Value times 1 plus the interest rate multiplied by itself by the number of periods that will pass. A simple way to look at this is that if interest rates were 5%/yr a dollar would be worth (1.05)^N where N is the number of years passing. The concept of compound interest cannot be separated from the above. Compounding is accounting for the interest on the interest that has accrued in prior periods. If I lend you a dollar at 6% simple interest for 30 years, you would pay me back $1 + $1.80 or $2.80. But - 1.06^30 = 5.74 so that dollar compounded at 6% annually for 30 years is $5.74. Quite a difference. Often, the time value of money is discussed in light of inflation. A dollar today is not the same dollar as 30 years ago or 30 years hence. In fact, inflation has eroded the value of the dollar by a factor of 3 over the past 30 years. An average item costing $100 would now cost $300. So when one invests, at the very least they try to stay ahead of inflation and seek additional return for their risk. One quirk of compounding is the "rule of 72." This rule states that if you divide the interest rate into the number 72 the result is the number of years to double. So 10% per year will take about 7.2 years to double, 8%, 9 years, etc. It's not 100% precise, but a good "back of napkin" calculation. When people talk about the total payments over the thirty year life of a mortgage, they often ignore the time value of money. That payment even ten years from now has far less value than the same payment today. |
Why is the bid-ask spread considered a cost? | Your assets are marked to market. If you buy at X, and the market is bidding at 99.9% * X then you've already lost 0.1%. This is a market value oriented way of looking at costs. You could always value your assets with mark to model, and maybe you do, but no one else will. Just because you think the stock is worth 2*X doesn't mean the rest of the world agrees, evidenced by the bid. You surely won't get any margin loans based upon mark to model. Your bankers won't be convinced of the valuation of your assets based upon mark to model. By strictly a market value oriented way of valuing assets, there is a bid/ask cost. more clarification Relative to littleadv, this is actually a good exposition between the differences between cash and accrual accounting. littleadv is focusing completely on the cash cost of the asset at the time of transaction and saying that there is no bid/ask cost. Through the lens of cash accounting, that is 100% correct. However, if one uses accrual accounting marking assets to market (as we all do with marketable assets like stocks, bonds, options, etc), there may be a bid/ask cost. At the time of transaction, the bids used to trade (one's own) are exhausted. According to exchange rules that are now practically uniform: the highest bid is given priority, and if two bids are bidding the exact same highest price then the oldest bid is given priority; therefore the oldest highest bid has been exhausted and removed at trade. At the time of transaction, the value of the asset cannot be one's own bid but the highest oldest bid leftover. If that highest oldest bid is lower than the price paid (even with liquid stocks this is usually the case) then one has accrued a bid/ask cost. |
How does one determine the width of a candlestick bar? | You could theoretically use any time period unit, but 1 minute and 30 minute seem to be the most common and useful. Especially for active traders. This also has the added advantage of giving you useful insight into the trade volumes throughout the day; assuming that is also included on the chart. I think most include that as a bar chart across the bottom. Here is a great example for crude oil on dailyfx: https://www.dailyfx.com/crude-oil Notice that the chart has time options at the top left which include 1 minute, 30 minutes, 1 hour, and 1 day. |
Do I need to invest to become millionaire? | I get the sense that this is a "the world is unfair; there's no way I can succeed" question, so let's back up a few steps. Income is the starting point to all of this. That could be a job (or jobs), or running your own business. From there, you can do four things with your income: Obviously Spend and Give do not provide a monetary return - they give a return in other ways, such as quality of life, helping others, etc. Save gives you reserves for future expenses, but it does not provide growth. So that just leaves Invest. You seem to be focused on stock market investments, which you are right, take a very long time to grow, although you can get returns of up to 12% depending on how much volatility you're willing to absorb. But there are other ways to invest. You can invest in yourself by getting a degree or other training to improve your income. You can invest by starting a business, which can dramatically increase your income (in fact, this is the most common path to "millionaire" in the US, and probably in other free markets). You can invest by growing your own existing business. You can invest in someone else's business. You can invest in real estate, that can provide both value appreciation and rental income. So yes, "investment" is a key aspect of wealth building, but it is not limited to just stock market investment. You can also look at reducing expenses in order to have more money to invest. Also keep in mind that investment with higher returns come with higher risk (both in terms of volatility and risk of complete loss), and that borrowing money to invest is almost always unwise, since the interest paid directly reduces the return without reducing the risk. |
Value of a call option spread | The Explanation is correct. The Traders buys the 1st call and profits linearly form 40$ onwards. At at 45 the short call kick in and neutralizes any further profit on the first call. |
Does it make sense to buy an index ETF (e.g. S&P 500) when the index is at an all-time high? | Here is, from Yahoo Finance, the S&P 500 over the last ~60 years (logarithmic scale): The behavior since ~2000 has been weird, by historical standards. And it's very easy, looking at that graph, to say "yes! I would have made so much money had I invested in March '09!". Of course, back in March '09, it wasn't so clear that was the bottom. But, yes, over the last 10 years or so, you could have made more money by adopting a rule that you'll accumulate cash in a FDIC (or similar) insured savings account, and dump it into an S&P index fund/ETF when the index is n% off its high. Of course, if you look at the rest of the chart, that strategy looks a lot less promising. Start in the early 80's, and you'd have held cash until the crash in 2000. Except for the recent weirdness, the general trend in the S&P 500 (and stock markets in general) has been upward. In other words, to a first-order approximation, the S&P 500 is always at an all-time high. That's just the general trend. |
Formula that predicts whether one is better off investing or paying down debt | I ended up writing a simulation in R. Here is my code: It produces a plot like this: This code assumes you have a lump sum and either wish to pay down a loan or invest it all immediately. Feedback welcome. |
How can one go short in Uber? | Pay someone a fee to borrow their private Uber shares, then sell those private shares to someone else, then find someone else you can buy their private shares from for less than the net of the proceeds you made selling the borrowed shares you sold plus the fees you've paid to the first person and return your newly purchased shares back to the person you initially borrowed the shares from. On a serious note, Uber is private; there is no liquid public market for the shares so there is no mechanism to short the company. The valuations you see might not even be legitimate because the company's financials are not public. You could try to short a proxy for Uber but to my knowledge there is no public "rideshare"/taxi service business similar enough to Uber to be a reasonably legitimate proxy. |
Why deep in the money options have very low liquidity | There is less liquidity because they are less volatile. Option traders aren't exactly risk averse (read: are degenerate gamblers) and the other market participants that use options don't have much use for deep in the money options. Also, just trade more liquid assets and equities if you want liquid options. At-the-money options, and at-the-money options strategies have hundreds and thousand percent payoffs on relatively mundane price changes in the underlying asset. |
3-year horizon before trading up to next home: put windfall in savings, or pay off mortgage? | You may have to both save your windfall in a savings account and use it to pay down your mortgage. Almost every mortgage has some sort of pay-down option that allows you to pay off a percentage of the original principal without penalty. Any amounts above that will be penalized, most likely by the amount of interest the lending institution would have collected. Ask your lender what the penalties are and what penalty-free pay-down options you have. Knowing that and how much you will receive each quarter by selling the company stock will tell you how much of your money you need to put against your house and your savings account. |
Understanding SEC Filings | The most important filings are: Form 10-K, which is the annual report required by the U.S. Securities and Exchange Commission (SEC) and Form 10-Q, for the interim quarters. |
Making an offer on a property - go in at market price? | Firstly, the agent doesn't work for you. He works for himself. It's in his interest not to get you a house at the lowest cost but to sell you a house. The higher the price the higher his commission is, or the higher the probability that the seller will sell it meaning less work for him. It depends on the market what price you should give. If I were you, I would do my own research about this area and not just trust the agent's assessment of it being a "seller's" market. Not sure where we are talking about but as you know, house prices have fallen a lot in the last few years and the economy isn't doing that well. It also depends on yourself. Every house is different and there's an emotional attachment to buying property. How much do you really want this house? Would it matter if you didn't get it? Are you prepared to keep looking? If this is your dream house, then maybe it is worth offering a bit more to ensure that you get it. If not, and you are prepared to wait, then yeah, I would shoot a little lower and see what they say. One thing I will say though is generally even if you give them a low offer, unless they're getting lots of other offers or they have to sell urgently, alot of the times the seller will come back and try to negotiate with you anyway. After all, it's business and they're there to get the highest price. |
Is the MBA an overrated degree/qualification? | It depends on what you want it for If it is just salary then maybe not, for instance, some MBA programs may suggest their graduates make $100,000 per year, but you work in an oil field barely finishing high school and make $300,000 a year. If you go for the MBA right now, you may miss your chance to work in the oil industry for another few years (or weeks), but at the same time, the MBA lasts forever (although, real world experience is also relevant) and it may give you a leg up when you are 50 years old in the unemployment line (or maybe not, because you are overqualified) everything in life is a cost/benefit analysis Passing the GRE lasts for five years, so keep that in mind |
Should we buy a house, or wait? | Some highly pessimistic things worth noting to go alongside all the stability and tax break upside that homes generally provide: Negative equity is no joke and basically the only thing that bankrupts the middle classes consistently en masse. The UK is at the end of a huge housing bull run where rents are extremely cheap relative to buying (often in the 1% range within the M25), Brexit is looming and interest rates could well sky rocket with inflation. Borrowing ~500k to buy a highly illiquid asset you might have to fire sale in case of emergency/job loss etc for 300k in a few years when lots of (relatively) cheap rental housing is available to rent risk free, could be argued to be a highly lopsided and dangerous bet vs the alternatives. Locking in 'preferential' mortgage rates can be a huge trap: low interest rates generally increase asset values. If/when they rise, assets fall in value as the demand shrinks, making you highly exposed to huge losses if you need to sell before it is paid off. In the case of housing this can be exceptionally vicious as the liquidity dramatically dries up during falls, meaning fire sales become much more severe than they are for more liquid assets like stock. Weirdly and unlike most products, people tend to buy the very best house they can get leverage for, rather than work out what they need/want and finding the best value equivalent. If a bank will lend you £20 a day to buy lunch, and you can just afford to pay it, do you hunt out the very best £20 lunch you can every day, or do you make some solid compromises so you can save money for other things etc? You seem to be hunting very close to the absolute peak amount you can spend on these numbers. Related to above, at that level of mortgage/salary you have very little margin for error if either of you lose jobs etc. Houses are much more expensive to maintain/trade than most people think. You spend ~2-5% every time you buy and sell, and you can easily spend 2-20k+ a year depending what happens just keeping the thing watertight, paid for, liveable and staying up. You need to factor this in and be pessimistic when you do. Most people don't factor in these costs to the apparent 'index' rise in house values and what they expect to sell for in x years. In reality no buy and hold investor can ever realise even close to the quoted house price returns as they are basically stocks you have to pay 5% each time you buy or sell and then 1-20% percent a year to own - they have to rise dramatically over time for you to even break even after all the costs. In general you should buy homes to make memories, not money, and to buy them at prices that don't cause you sleepless nights in case of disasters. |
Where to park money low-risk on interactivebrokers account? | The standard low-risk/gain very-short-term parking spot these days tends to be a money market account. However, you have only mentioned stock. For good balance, your portfolio should consider the bond market too. Consider adding a bond index fund to diversify the basic mix, taking up much of that 40%. This will also help stabilize your risk since bonds tend to move opposite stocks (prperhaps just because everyone else is also using them as the main alternative, though there are theoretical arguments why this should be so.) Eventually you may want to add a small amount of REIT fund to be mix, but that's back on the higher risk side. (By the way: Trying to guess when the next correction will occur is usually not a winning strategy; guesses tend to go wrong as often as they go right, even for pros. Rather than attempting to "time the market", pick a strategic mix of investments and rebalance periodically to maintain those ratios. There has been debate here about "dollar-cost averaging" -- see other answers -- but that idea may argue for investing and rebalancing in more small chunks rather than a few large ones. I generally actively rebalance once a year or so, and between those times let maintainng the balance suggest which fund(s) new money should go into -- minimal effort and it has worked quite well enough.,) |
Why can't a US state default, but a EU state can? | But do you know about a US state risking to go default now or in the past? Ultimately, a US state could go into default. However, I doubt that such a scenario would be allowed to transpire. This seems to happen to California with some regularity. That is, risking default. What would happen is not quite well known: "There is no provision for a state to go bankrupt," Kyser said. "I don't think anyone really knows what will happen or even if the state will go into receivership if it does default. I can tell you this, officials are looking at all the (current) laws." (source) I believe that the answer to your question is that it could happen, but likely would not be allowed to occur. The nature of the EU and US are quite different. The individual states forming the US are not separate nations. For better or for worse, the US is a stronger federation than the EU. (Something that is lamented at times when the Feds mess with the purview of the locals.) |
W-4 and withholding taxes for self-employed spouse | Littleadv is incorrect because receiving a 1099 means she will be taxed self-employment tax on top of federal income taxes. Your employer will automatically withhold 7.65% of payroll taxes as they pay you each paycheck and then they'll automatically pay the other half of your payroll tax (an additional 7.65%) to bring it to a total of 15.3%. In other words, because your wife is technically self employed, she will owe both sides of payroll tax which is 15.3% of $38k = $5,800 on TOP of your federal income tax (which is the only thing the W-4 is instructing them about what amount to withhold). The huge advantage to a 1099, however, is that she's essentially self-employed which means ALL of the things she needs to run her business are deductible expenses. This includes her car, computer, home office, supplies, sometimes phone, gas, maintenance, travel expenses, sometimes entertainment, etc - which can easily bring her "income" down from $38k to lets say $23k, reducing both her federal income tax AND self-employment tax to apply to $15k less (saving lets say 50% of $15k = $7.5k with federal and self employment because your income is so high). She is actually supposed to pay quarterly taxes to make up for all of this. The easy way to do this is each quarter plug YOUR total salary + bonus and the tax YOU have paid so far (check your paystubs) into TurboTax along with her income so far and all of her expenses. This will give you how much tax you can expect to have left to owe so far--this would be your first quarter. When you calculate your other quarters, do it the exact same way and just subtract what you've already paid so far that year from your total tax liability. |
How to exclude stock from mutual fund | Chris - you realize that when you buy a stock, the seller gets the money, not the company itself, unless of course, you bought IPO shares. And the amount you'd own would be such a small portion of the company, they don't know you exist. As far as morals go, if you wish to avoid certain stocks for this reason, look at the Socially Responsible funds that are out there. There are also funds that are targeted to certain religions and avoid alcohol and tobacco. The other choice is to invest in individual stocks which for the small investor is very tough and expensive. You'll spend more money to avoid the shares than these very shares are worth. Your proposal is interesting but impractical. In a portfolio of say $100K in the S&P, the bottom 400 stocks are disproportionately smaller amounts of money in those shares than the top 100. So we're talking $100 or less. You'd need to short 2 or 3 shares. Even at $1M in that fund, 20-30 shares shorted is pretty silly, no offense. Why not 'do the math' and during the year you purchase the fund, donate the amount you own in the "bad" companies to charity. And what littleadv said - that too. |
What happens if a Financial Services Company/Stockbroker goes into administration in the UK? | Nothing. Stockbrokers set up nominee accounts, in which they hold shares on behalf of individual investors. Investors are still the legal owners of the shares but their names do not appear on the company’s share register. Nominee accounts are ring-fenced from brokers’ other activities so they are financially secure. |
Best Time to buy a stock in a day | One of the biggest laws in economics is that if an opportunity is very profitable and is very easily exploitable even by complete beginners, then it will very soon stop being profitable. That's how the market works. If you buy stock when it is at the lowest, then you are making money, but most of the time someone else is losing money. And if there was a magic hour of the day when buying would be the most profitable, then soon everybody would want to buy at that time and no one would want to sell anything, so the scheme would collapse. |
Why are earning credit card rewards often tied to groceries and gas? | There absolutely is a specific model that makes this so popular with so many credit card companies, and that model is "per transaction fees". Card companies also receive cost-sharing incentives from certain merchants. There is also a psychological reasoning as an additional incentive. When you want to accept credit cards as a source of payment as a business, you generally have three kinds of fees to pay: monthly/yearly subscription fees, percentage of transaction fee, and per transaction fee. The subscription fees can be waived and sometimes are expressed as a "minimum cost", so the business pays a certain amount whether you actually have people use credit cards or not. Many of these fees don't actually make it to the credit card companies, as they just pay the service providers and middle-men processing companies. The percentage of transaction fee means that the business accepting payment via credit card must pay a percentage usually ranging from 1-3% of the total transactions they accept. So if they get paid $10,000 a month by customers in the form of credit cards, the business pays out $100-300 a month to the credit card processor - a good portion of which will make it back to the credit card issuing company, and is a major source of income for them. The per transaction fee means that every time a transaction is run involving a card, a set fee is incurred by the business (which is commonly anywhere from $0.05 to $0.30 per transaction). If that $10,000 a month business mentioned previously had 10 customers paying $1,000 each at $0.10 a transaction, that's only $1 in fees to the credit card processors/companies. But if instead that business was a grocery store with an average transaction of $40, that's $25 in fees. This system means that if you are a credit card company and want to encourage people to make a specific kind of purchase, you should encourage purchases that people make many times for relatively small amounts of money. In a perfect world you'd want them to buy $1 bottles of water 5 times a day with their credit card. If the card company had 50,000 card holders doing this, at the end of 1 year the company would have $91,250,000 spread across 91,250,000 transactions. The card company might reasonably make $0.05 per transaction and %1 of the purchase total. The Get Rewarded For Drinking More campaign might earn the card company $912,500 in percentage fees and over $4.5 million in transaction fees. Yet the company would only have to pay 3% in rewards from the percentage fees, or $2.7 million, back to customers. If the card company had encouraged using your credit card for large once-yearly purchases, they would actually pay out more money in rewards than they collect in card-use fees. Yet by encouraging people to make small transactions very often the card company earns a nice net-income even if absolutely every customer pays their balance in full, on time, and pays no annual/monthly fees for their card - which obviously does not happen in the real world. No wonder companies try so hard to encourage you to use your card all the time! For card companies to make real money they need you to use your credit card. As discussed above, the more often you use the card the better (for them), and there can be a built-in preference for small repeated transactions. But no matter what the size of transaction, they can't make the big bucks if you don't use the card at all! Selling your personal information isn't as profitable if they don't have in-depth info on you to sell, either. So how do they get you to make that plastic sing? Gas and groceries are a habit. Most people buy one or the other at least once a weak, and a very large number of us make such purchases multiple times a week. Some people even make such purchases multiple times a day! So how do people pay for such transactions? The goal of the card companies is to have you use their product to pay as much as possible. If you pay for something regularly you'll keep that card in your wallet with you, rather than it getting lost in a drawer at home. So the card companies want you to use your card as a matter of habit, too. If you use a card to buy for gas and groceries, why wouldn't you use it for other things too? Lunch, dinner, buying online? If the card company pays out more and makes less for large, less-regular purchases, then the ideal for them is to have you use the card for small regular purchase and yet still have you use the card for larger infrequent purchases even if you get reduced/no rewards. What better way to achieve all these goals than to offer special rewards on gas and groceries? And because it's not a one-time purchase, you aren't so likely to game the system; no getting that special 5% cash-back card, booking your once-per-decade dream vacation, then paying it off and cancelling it soon after - which would actually make the card company lose money on the deal. In the end, credit card companies as a whole have a business model that almost universally prefers customers who use their products regularly and preferably for small amounts a maximum number of times. They want to reduce their expenses (like rewards paid out) while maximizing their revenue. They haven't figured out a better way to do all of this so well as to encourage people to use their cards for gas and groceries - everything else seems like a losing proposition in comparison. The only time this preference differs is when they can avoid paying some or all of the cost of rewards, such as when the merchants themselves honor the rewards in exchange for reduced or zero payment from the card companies. So if you use an airline card that seems to give you 10% back in airline rewards? Well, that's probably a great deal for the card company if the airline provides that reward at their own expense to try to boost business. The card company keeps the transaction-related fees and pays out almost nothing in rewards - the perfect offer (for them)! And this assumes no shenanigans like black-out periods, "not valid with any other offers" rewards like on cars where only a fool pays full MSRP (and sometimes the rewards are tagged in this sort of way, like not valid on sale/clearance items, etc), expiring rewards, the fact that they know not everyone uses their rewards, annual fees that are greater than the rewards you'll actually be obtaining after accounting for all the other issues, etc. And credit card industries are known for their shenanigans! |
Why could rental costs for apartments/houses rise while buying prices can go up and down? | Average rent rates will typically rise and fall, and are market-dependent just like real estate. In the short term, a collapse in housing like the one we saw in 2008 can induce a spike in rental costs as people walk away or get foreclosed on, and move back into apartments. That then tends to self-adjust, as the people who had been in the apartments find a deal on a foreclosed house and move out. However, one thing I've seen to be near-constant in the apartment business is that a landlord will offer you a deal to get in, then increase the rent on you from year to year until you get fed up and move. This is a big reason I didn't have the same address for two years in a row until I bought my house. The landlord is basically betting that you won't want to deal with the hassle of moving, and so will pay the higher rent rate, even if, when you do the math, it makes more sense to move even to maintain the same rent rate. Eventually though, you do get fed up, look around, find the next good deal, and move, "resetting" your rent rate. I have never, not once in my life, seen or heard of any landlord offering a drop in rent as a "loyalty" move to keep you from going somewhere else. It's considered part of the game; retailers will price match, but most service providers (landlords, but also utility providers) expect a large amount of "churn" in their customer base as people shop around. It averages out. |
Long term investment for money | I know of no way to answer your question without 'spamming' a particular investment. First off, if you are a USA citizen, max out your 401-K. Whatever your employer matches will be an immediate boost to your investment. Secondly, you want your our gains to be tax deferred. A 401-K is tax deferred as well as a traditional IRA. Thirdly, you probably want the safety of diversification. You achieve this by buying an ETF (or mutual fund) that then buys individual stocks. Now for the recommendation that may be called spamming by others : As REITs pass the tax liability on to you, and as an IRA is tax deferred, you can get stellar returns by buying a mREIT ETF. To get you started here are five: mREITs Lastly, avoid commissions by having your dividends automatically reinvested by using that feature at Scottrade. You will have to pay commissions on new purchases but your purchases from your dividend Reinvestment will be commission free. Edit: Taking my own advice I just entered orders to liquidate some positions so I would have the $ on hand to buy into MORL and get some of that sweet 29% dividend return. |
Why do moving average acts as support and resistance? | As you point out, the moving average is just MA(k)t = (Pt-1 + … + Pt-k )/k and is applied in technical analysis (TA) to smooth out volatile (noise) price action. If it has any logic to it, you might want to think in terms of return series (Pt - Pt-1 / Pt-1) and you could hypothesize that prices are in fact predictable and will oscillate below and above a running moving average. Below is a link to a study on MA trading rules, published in the Journal of Finance, with the conclusion of predictive power and abnormal returns from such strategies. As with any decision made upon historical arguments, one should be aware of structural changes and or data mining. Simple technical trading rules and the stochastic properties of stock returns Brock, W., J. Lakonishok and B. Le Baron, 1992, Simple technical trading rules and the stochastic properties of stock returns, Journal of Finance, 47, 1731-64. MA rules betterthan chance in US stock market, 1897-1986 I don't know whether you are new to TA or not, but a great commercial site, with plenty of computer-generated signals is FinViz. |
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