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If I believe a stock is going to fall, what options do I have to invest on this? | What financial instruments are there that are profitable when an underlying assets falls? The instrument you are looking for is called an Option, specifically a Put Option. It allows you, within the validity date, to sell ('Put') the respective shares to the option giver, at the predefined Strike Price. For example, let's assume APPL trades currently at 100 $ per share, and you think they will go down a lot. You buy one Put Option for 100 shares (they always come for larger amounts like 100s) for a Strike Price of 90 $, and pay 5 $ for it (it would be cheap if nobody believes they will fall that much). Note the last sentence under 2. - it is rather easy and very common when trading options to make complete losses. You have been warned. Are they available for IPOs? They could be available for IPOs, even before the IPO. However, someone has to put them out (some large bank, typically), which is some effort, and they would only do that if they expect enough interest and volume in the trade. most of the time, there will be no such options on the market. Are they available for foreign stocks?Yes, but again only selectively - only if the stock is well known and interesting enough for a broad audience. |
How do you find reasonably priced, quality, long lasting clothing? | On the quality angle a big part of it is experience, but the biggest thing is careful observation. You have to take a close, critical look at any article of clothing. (This holds true for just about any purchase.) As far as finding them for reasonable prices it's the usual thing: sales and buying them second-hand. Finally, regarding maintenance: |
Investing Superannuation Australia | You can make a start to learn how to make better investing decisions by learning and understanding what your current super funds are invested in. Does the super fund give you choices of where you can invest your funds, and how often does it allow you to change your investment choices each year? If you are interested in one area of investing over others, eg property or shares, then you should learn more on this subject, as you can also start investing outside of superannuation. Your funds in superannuation are taxed less but you are unable to touch them for another 30 to 35 years. You also need to consider investing outside super to help meet your more medium term goals and grow your wealth outside of super as well. If you are interested in shares then I believe you should learn about both fundamental and technical analysis, they can help you to make wiser decisions about what to invest in and when to invest. Above is a chart of the ASX200 over the last 20 years until January 2015. It shows the Rate Of Change (ROC) indicator below the chart. This can be used to make medium to long term decisions in the stock market by investing when the ROC is above zero and getting out of the market when the ROC is below zero. Regarding your aggressiveness in your investments, most would say that yes because you are still young you should be aggressive because you have time on your side, so if there is a downturn in your investments then you still have plenty of time for them to recover. I have a different view, and I will use the stock market as an example. Refer back to the chart above, I would be more aggressive when the ROC is above zero and less aggressive when the ROC is below zero. How can you relate this to your super fund? If it does provide you to change your investment choices, then I would be invested in more aggressive investments like shares when the ROC crosses above zero, and then when the ROC moves below zero take a less aggressive approach by moving your investments in the super fund to a more balanced or capital guaranteed strategy where less of your funds are invested in shares and more are invested in bonds and cash. You can also have a similar approach with property. Learn about the property cycles (remember super funds usually invest in commercial and industrial property rather than houses, so you would need to learn about the commercial and industrial property cycles which would be different to the residential property cycle). Regarding your question about SMSFs, if you can increase your knowledge and skills in investing, then yes switching to a SMSF will give you more control and possibly better returns. However, I would avoid switching your funds to a SMSF right now. Two reasons, firstly you would want to increase your knowledge as mentioned above, and secondly you would want to have at least $300,000 in funds before switching to a SMSF or else the setup and compliance costs would be too high as a percentage of your funds at the moment ($70,000). You do have time on your side, so whilst you are increasing your funds you can use that time to educate yourself in your areas of interest. And remember a SMSF is not only an investment vehicle whilst you are building your funds during your working life, but it is also an investment vehicle when you are retired and it becomes totally tax free during this phase, where any investment returns are tax free and any income you take out is also tax free. |
Why do some companies offer 401k retirement plans? | The company itself doesn't benefit. In most cases, it's an expense as the match that many offer is going to cost the company some percent of salary. As Mike said, it's part of the benefit package. Vacation, medical, dental, cafeteria plans (i.e. both flexible spending and dependent care accounts, not food), stock options, employee stock purchase plans, defined contribution or defined benefit pension, and the 401(k) or 403(b) for teachers. Each and all of these are what one should look at when looking at "total compensation". You allude to the lack of choices in the 401(k) compared to other accounts. Noted. And that lack of choice should be part of your decision process as to how you choose to invest for retirement. If the fess/selection is bad enough, you need to be vocal about it and request a change. Bad choices + no match, and maybe the account should be avoided, else just deposit to the match. Note - Keith thanks for catching and fixing one typo, I just caught another. |
How should one refuse to father in law (Chinese) when he wants to borrow money? | In these situations, one solution is to use the "I was just about to ask you the same thing..." response. This is kind of a famous way to deal with people asking you for money, whether it's someone asking to borrow "$10 at lunch time" or "$3000 for a car" or the like. So: Person X asks you for money, say $2000. Your reply: Ah, that's bad luck, I was just about to ask you the same thing... Follow this immediately - just keep talking - by launching in to a really incredibly detailed discussion of why you need to borrow money (pick a slightly larger amount, slet's ay $3500). Just "keep talking" and don't let the other person get a word in. Go in to great detail about just what you need the $3500 for and why. It's a good trick. |
How do I screen for stocks that are near to their 52 weeks low | Although is not online, I use a standalone version from http://jstock.sourceforge.net It got drag-n-drop boxes, to let me design my own indicators. However, it only contain technical analysis information, not fundamental analysis information. It does come with tutorial http://jstock.sourceforge.net/help_stock_indicator_editor.html#indicator-example, on how to to build an indicator, to screen "Stock which Its Price Hits Their 14 Days Maximum" |
If gold's price implodes then what goes up? | It's not clear that anything needs to go up if gold goes down. In a bubble, asset prices can just collapse, without some other asset increasing to compensate. Economies are not a zero-sum game. On the other hand, gold may fall when people decide they don't need to hoard some store of value that, to their minds, never changes. It could very well indicate that there is more confidence in the broader economy. I am not a gold bug, so I don't much see the point in "investing" in something that is non-productive and also inedible, but to each his own. |
What factors make someone buy or sell a stock? | Stock price is determined by the buyers and sellers, correct? Correct! "Everything is worth what its purchaser will pay for it"-Publius Syrus What causes people to buy or sell? Is it news? earnings? stock analysis and techniques? All of these things influence investors' perception of how much a stock is worth. If AMZN makes a lot of money one quarter, then the price might go up. But maybe public perception of AMZN changes because of a large scandal. This could cause the share price to decline even with the favorable earnings report. Why do these 'good' or 'bad' news make people want to buy/sell a stock? People invest to make money. If it looks like a company is going to take a turn for the worst, people will sell. If it looks like the company has a bright, cash-laden future in front of them, people will buy. News is one of the many factors people use to determine how well a company will do. Theoretically could a bunch of people short AMZN and drive down the price regardless of how well it is doing? Say investors wanted to boycott AMZN in order to drive down the cost and get some cheap shares. This is pretty silly, but say for the sake of the argument that everyone who owned AMZN decided to sell their shares and no other investor was willing to buy the shares for less than $0.01, then AMZN shares would be "worth" $0.01 in that aspect. That is extremely unlikely to happen, though, for two reasons: |
What can I replace Microsoft Money with, now that MS has abandoned it? | Uh, Quicken is virtually identical to MS Money. If you liked money and don't want to change, use that. |
ISA trading account options for US citizens living in the UK | NL7 is most likely right. With the rise of regulatory burden some financial institutions are refusing to do business for which they are at risk of not being compliant (because of complexity) or where being compliant is to onerous. Would suggest you have a look at Good luck |
Everyone got a raise to them same amount, lost my higher pay than the newer employees | You didn't get laid off or have your hours cut back when the minimum wage was raised? I guess you have much to be grateful for, including a higher hourly rate. An excellent record is its own reward. When you finish your degree you will be grateful for the good habits you have established. You won't ever lose a nights sleep looking back and thinking "I wish I didn't do the right thing." It's sad that there isn't a more immediate reward for doing more than average, but that's life, doing the right thing over a long period of time does eventually lead to the reward you're looking for. Sometimes those rewards aren't tangible. |
I am Brasilian resident, how to buy shares on NYSE? | There are ETFs listed on the Brazilian stock market. Specifically there is one for S&P500 - SPXI11, which might fulfill your requirements, though as one commenter has observed, it doesn't answer your original question. |
What is the point of the stock market? What is it for, and why might someone want to trade or invest? | I rather like The Ascent of Money, by Niall Ferguson. This comes in several formats. There's a video version, a written version (ISBN-13: 978-1594201929), and an audio version. This book covers the history of financial instruments. It covers the rise of money, the history of bonds and stocks, insurance and hedge funds, real-estate, and the spread of finance across the world. It is a great introduction to finance, though its focus is very definitely on the history. It does not cover more advanced topics, and will not leave you with any sort of financial plan, but it's a great way to get a broad overview and historical understanding of money and markets. I strongly recommend both the video and the written or audio version. |
An online casino owes me money and wants to pay with a wire transfer. Is this safe? | Someone online asking for your bank account info never has your best interests at heart. They can send you a check and while it may take a while to really clear, they can't use it to suck money out of your account. Be very cautious. |
Online stock screener to find stocks that are negatively correlated to another stock/index? | There are lists with Top 1,000 Most and Less correlated stocks for different markets, I think you'll find the solution here: https://unicornbay.com/tools/most-less-correlated-assets |
Paying extra on a mortgage. How much can I save? [duplicate] | How much can I save? Depends on inflation and what other investment opportunities you have. It could end up costing you millions. Can I pay $12,000 extra once a year or $1000 every month - which option is better? It depends on how risk adverse you are. The first option does sound better, but for a 30 year mortgage, is it that significant? How much of your time is it going to cost you to do it every month? What is keeping you from doing it every day? How much is your time worth to you. Giving the bank its money sooner is always better than giving it it's money from a saving interest perspective. When is the best time to pay? See above. |
What's behind the long secular bull market in U.S. Treasuries? | In a secular bull market, strong investor sentiment drives prices higher, as participants, over time, are net buyers. Secular markets are typically driven by large-scale national and worldwide events... demographic/ population shifts, governmental policies... bear market periods occur within the longer interval, but do not reverse the trend. There are still many reasons to buy the long bond, despite the lack of yield (nearly flat term structure of interest rates). Despite the recent credit ratings agency downgrades of U.S. sovereign risk, the T-bond offers greater relative security than many alternatives. If Germany were NOT part of the EU, its government bonds would be issued by the Bundesbank, denominated in Deutsche Marks. German government bonds would probably be a better choice than the U.S. Treasury's 30-year bond. Long-term maturity U.S. Treasuries are in demand by investment and portfolio managers because: |
Investment in mutual fund in India for long term goals | Buy only 'Direct' Plans, not regular. - Demat providers won't sell Direct plans, that you can do it through https://www.mfuindia.com Make sure expense ratio < 2.5% (With direct plans it will be much lesser) I hope these points will help you to take a better decision. |
Should I change 401k investment options to prepare for rising interest rates? | As others have pointed out your bond funds should have short durations, preferably not more than about 2 years. If you are in a bond fund for the long haul meaning you do not have to draw on your bond fund a short time after interest rates have gone up, it is not a big issue. The fund's holdings will eventually turn over into higher interest bearing paper. If bonds do go down, you might want to add more to the fund(s) (see my comment on age-specific asset allocation below). Keep in mind that some stocks are interest sensitive, for example utility stocks which are used as an income source and their dividends compete with rates on CDs which are much safer. Right now CD rates are very low. This could change. It's possible that we may be in an unusually sensitive interest rate period that might have large effects on the stock market, yet to be determined. The reason is that rates have been so low for such a long time that folks that normally would have obtained income streams from bonds have turned to dividend bearing stocks. Some believe that recent market rises are due to such people seeking dividends to enhance cash inflows. If, and emphasis on if, this is true, we could see a sharp drop in the market as sell offs occur as those who want cash streams move from stocks to ultra safe, government insured CDs. Only time will tell if this is going to play out. If retirement for you is 15+ years in the future and the market goes down (bonds or equities), good stuff - it's a buying opportunity in whatever category has dropped. Most important is to keep an eye on your asset allocation and make sure it is appropriate to your age. You did not state the percentages in each category, so further discussion is impossible on that topic. With more than 15 years to go, I personally would be heavily weighted on the equity side, mostly mid-cap and some small equity funds or ETFs in both domestic and international markets. As you age, shuffle some equities into fixed income (bonds, CDs and the like). Work up an asset allocation plan - start thinking about it now. Don't wait. |
Which practice to keep finances after getting married: joint, or separate? | My wife and I have a different arrangement. I like to track everything down to the transaction level. She doesn't want everything tracked. We have everything joint and I track everything except she has one credit card where I do not see the statements only the total. She is more comfortable, because she can buy things without me seeing the price for individual transactions. |
Has anyone compared an in-person Tax Advisor to software like Turbo Tax? | I have fairly simple tax returns and my experience was that TurboTax software produced roughly the same result as human accountant and costs much less. The accountant was never able to find any deductions that the program couldn't find. Of course, if you have business, etc. you probably need an accountant to help you navigate all the rules, requirements, etc. But for simple enough cases I found that the additional pay is not justified. |
Should I finance a new home theater at 0% even though I have the cash for it? | I have abused 0% interest programs time and time again, but only because my wife and I are assiduous about paying our bills on time. We've mostly taken advantage of it with bigger purchases that we've done through Lowe's or Home Depot (eg - washing machines, carpeting, stove, fridge), but its been well worth it. There are two rules that we set for ourselves whenever we do a 0% interest program -- 1) We have the money already in savings so that we can easily pay it off at any time 2) We agree to pay our monthly bill on time There's nothing quite like using another person's money to buy your things, while keeping your money to gain interest in a savings account. |
In which country can I set up a small company so that I pay a lower rate of corporate tax? | There are countries out there that are known as tax havens, where they offer companies low or no taxes on earned revenue. I haven't looked into this in over a decade, but recall that countries like the Cayman Islands, Switzerland, Ireland, and Nauru, to name a few fit that tag. But like bstpierre stated, there's a reason why the IBM's of the world can pull that off easier then us mere mortals. They have the financial clout to make sure they have accountants that dot every i, cross every t, and close every loophole that would give an "in" to the folks at the IRS, CRA, Inland Revenue, or who have you. |
What does it mean to be a “high fee” or “low fee” 401k? | Every 401(k) has managers to make the stock choices. They all have different rates. You want to see that fidelity or Vangard is handling your 401(k).(and I am sure others) If you have a mega bank managing your funds or an insurance company odds are you are paying way to high management fees. So find out, the management fees should be available should be less than 1%. They can get as high as 2%...Ouch |
Investing in income stocks for dividends - worth it? | is it worth it? You state the average yield on a stock as 2-3%, but seem to have come up with this by looking at the yield of an S&P500 index. Not every stock in that index is paying a dividend and many of them that are paying have such a low yield that a dividend investor would not even consider them. Unless you plan to buy the index itself, you are distorting the possible income by averaging in all these "duds". You are also assuming your income is directly proportional to the amount of yield you could buy right now. But that's a false measure because you are talking about building up your investment by contributing $2k-$3k/month. No matter what asset you choose to invest in, it's going to take some time to build up to asset(s) producing $20k/year income at that rate. Investments today will have time in market to grow in multiple ways. Given you have some time, immediate yield is not what you should be measuring dividends, or other investments, on in my opinion. Income investors usually focus on YOC (Yield On Cost), a measure of income to be received this year based on the purchase price of the asset producing that income. If you do go with dividend investing AND your investments grow the dividends themselves on a regular basis, it's not unheard of for YOC to be north of 6% in 10 years. The same can be true of rental property given that rents can rise. Achieving that with dividends has alot to do with picking the right companies, but you've said you are not opposed to working hard to invest correctly, so I assume researching and teaching yourself how to lower the risk of picking the wrong companies isn't something you'd be opposed to. I know more about dividend growth investing than I do property investing, so I can only provide an example of a dividend growth entry strategy: Many dividend growth investors have goals of not entering a new position unless the current yield is over 3%, and only then when the company has a long, consistent, track record of growing EPS and dividends at a good rate, a low debt/cashflow ratio to reduce risk of dividend cuts, and a good moat to preserve competitiveness of the company relative to its peers. (Amongst many other possible measures.) They then buy only on dips, or downtrends, where the price causes a higher yield and lower than normal P/E at the same time that they have faith that they've valued the company correctly for a 3+ year, or longer, hold time. There are those who self-report that they've managed to build up a $20k+ dividend payment portfolio in less than 10 years. Check out Dividend Growth Investor's blog for an example. There's a whole world of Dividend Growth Investing strategies and writings out there and the commenters on his blog will lead to links for many of them. I want to point out that income is not just for those who are old. Some people planned, and have achieved, the ability to retire young purely because they've built up an income portfolio that covers their expenses. Assuming you want that, the question is whether stock assets that pay dividends is the type of investment process that resonates with you, or if something else fits you better. I believe the OP says they'd prefer long hold times, with few activities once the investment decisions are made, and isn't dissuaded by significant work to identify his investments. Both real estate and stocks fit the latter, but the subtypes of dividend growth stocks and hands-off property investing (which I assume means paying for a property manager) are a better fit for the former. In my opinion, the biggest additional factor differentiating these two is liquidity concerns. Post-tax stock accounts are going to be much easier to turn into emergency cash than a real estate portfolio. Whether that's an important factor depends on personal situation though. |
Should you diversify your bond investments across many foreign countries? | The Vanguard Emerging Market Bond Index has a SEC yield of 4.62%, an expense ratio of 0.34%, a purchase fee of 0.75%, and an average duration of 6.7 years. The Vanguard Emerging Market Bond Index only invests in US Dollar denominated securities, so it is not exposed to currency risk. The US Intermediate Term Bond Index Fund has a SEC yield of 2.59%, an expense ratio of 0.1% and an average duration of 6.5 years. So after expenses, the emerging market bond fund gives you 1.04% of extra yield (more in subsequent years as the purchase fee is only paid once). Here are the results of a study by Vanguard: Based on our findings, we believe that most investors should consider adding [currency risked] hedged foreign bonds to their existing diversified portfolios. I think a globally diversified bond portfolio results in a portfolio that's more diversified. |
Can gold prices vary between two places or country at the same time? | I don't know about an actual example now, but in the past, India had restrictions on how much gold you could bring into the country from abroad, and there were heavy customs duties. Thus, gold smuggling was a huge business, because by avoiding the duties, people could stand to make a lot of money. At some point in 90s, India made changes in these laws so that smuggling was not as profitable. |
How much does a landlord pay in taxes? | how much taxes would I pay on my income from the rent they would pay me? The same as on any other income. California doesn't have any special taxes for rental/passive income. Bothe CA and the Federal tax laws do have special treatment, but it is for losses from rental. Income is considered unearned regular income and is taxed at regular brackets. Would I be able to deduct the cost of the mortgage from the rental income? The cost of mortgage, yes. I.e.: the interest you pay. Similarly you can deduct any other expense needed to maintain the property. This is assuming you're renting it out at FMV. If not, would I pay the ordinary income tax on that income? In particular, would I pay CA income tax on it, even though the property would be in WA? Yes. Don't know how WA taxes rental income, but since you are a California tax resident - you will definitely be taxed by California on this, as part of your worldwide income. |
Why is silver so volatile compared to the S&P 500? | Silver is a commodity. It's valuable for certain kinds of manufacturing, jewelry, and as a speculative financial instrument or hedge against the dollar. The S&P 500 includes companies which make money off of mining, manufacturing, medicine, media, technology, banking, dining, agriculture... There's a lot more variety there. |
Tax advantages of using 529 plans to save for child's education? | There are several variables to consider. Taxes, fees, returns. Taxes come in two stages. While adding money to the account you can save on state taxes, if the account is linked to your state. If you use an out of state 529 plan there is no tax savings. Keep in mind that other people (such as grandparents) can set aside money in the 529 plan. $1500 a year with 6% state taxes, saves you $90 in state taxes a year. The second place it saves you taxes is that the earnings, if they are used for educational purposes are tax free. You don't pay taxes on the gains during the 10+ years the account exists. If those expenses meet the IRS guidelines they will never be taxed. It does get tricky because you can't double dip on expenses. A dollar from the 529 plan can't be used to pay for an expenses that will be claimed as part of the education tax credit. How those rules will change in the next 18 years is unknown. Fees: They are harder to guess what will happen over the decades. As a whole 401(k) programs have had to become more transparent regarding their fees. I hope the same will be true for the state run 529 programs. Returns: One option in many (all?) plans is an automatic change in risk as the child gets closer to college. A newborn will be all stock, a high school senior will be all bonds. Many (all?) also allow you to opt out of the automatic risk shift, though they will limit the number of times you can switch the option. Time horizon Making a decision that will impact numbers 18 years from now is hard to gauge. Laws and rules may change. The existence of tax breaks and their rules are hard to predict. But one area you can consider is that if you move states you can roll over the money into a new account, or create a second account in the new state. to take advantage of the tax breaks there. There are also rules regarding transferring of funds to another person, the impact of scholarships, and attending schools like the service academies. The tax breaks at deposit are important but the returns can be significant. And the ability shelter them in the 529 is very important. |
Should I pay a company who failed to collect VAT from me over 6 months ago? | Note: I am not a lawyer. This is my personal opinion and interpretation. First, your source is European Law, which obviously doesn't apply outside of the EU. The EU cannot make laws that bind entities in other countries; so you cannot claim that the VAT was needed to be mentioned. Second, if you owe something, you owe it; it doesn't matter if it was forgotten to be mentioned. At best, you can say that under those circumstances you don't want the software anymore, and i would assume you can send it back and get your money back (minus a fee for having it used for a while...) - this gets quite difficult to calculate clearly, so it's probably not a good avenue to follow for you. As the company has to send the VAT to your country (they will not be allowed to keep a dime of it, and have to bear the complete cost for the handling), it is a debt you have to your government; they are just the entity responsible for collecting it. Still, if you just ignore them, they will probably suck it up, and your government will also not do a thing to you. If they only have your email address, they have no way of knowing if you even still have/use this address; for all they know, it could be you never got it. They also cannot simply charge your card, as they probably don't have the card data any more (they are not supposed to keep it after the transaction is complete, and they thought it was complete at the time). All in all, you should be safe to ignore it. It's between you and your god/consciousness, if you feel obliged to pay it, as technically you owe it. |
Where should I invest to hedge against the stock market going down? | If you were certain you would probably do best by short selling an ETF that tracked the index for the market you think was about to tank. You'd certainly make a lot more money on that strategy than precious metals. If you were feeling super confident and want to make your money earn even more, you could also buy a bunch of put options on those same ETF funds. Obligatory Warning: Short selling and options can be extremely risky. While most investments cap your potential losses to your total investment, a short sale has no theoretical limit to the amount of money you can lose. |
Why is day trading considered riskier than long-term trading? | It's important to distinguish between speculation and investing. Buying something because you hope to make money on market fluctuations is speculation. Buying something and expecting to make money because your money is providing actual economic value is investing. If Person A buys 100 shares of a stock with the intent of selling them in a few hours, and Person B buys 100 shares of the same stock with the intent of holding on to it for a year, then obviously at that point they both have the same risk. The difference comes over the course of the year. First, Person B is going to be making money from the economic value the company provides over the whole year, while the only way Person A can make money is from market fluctuation (the economic value the company provides over the course of an hour is unlikely to be significant). Person B is exposed to the risk of buying the stock, but that's counterbalanced by the profit from holding the stock for a year, while Person A just has the risk. Second, if Person A is buying a new stock every hour, then they're going to have thousands of transactions. So even though Person B assumed just as much risk as Person A for that one transaction, Person A has more total risk. |
Possibility of donations in an educational site | You can have a way for people to pay, i.e. some kind of payment gateway. Run as Business: Best create a company and get the funds there. This would be treated as income of the website and would be taxed accordingly. One can deduct expenses for running the website, etc. Run as Charity: Register as one, however the cause should be considered as charitable one by the tax authorities. Only then the donations would be tax free. |
How safe is a checking account? | If the checking account is in a FDIC insured bank or a NCUA insured Credit Union then you don't have to worry about what happens if the bank goes out of business. In the past the government has made sure that any disruption was minimal. The fraud issue can cause a bigger problem. If they get a hold of your debit card, they can drain your account. Yes the bank gives you fraud protection so that the most you can lose is $50 or $500; many even make your liability $0 if you report it in a timely manor. But there generally is a delay in getting the money put back in your account. One way to minimize the problem is to open a savings account,it also has the FDIC and NCUA coverage . The account may even earn a little interest. If you don't allow the bank to automatically provide an overdraft transfer from savings to checking account, then the most they can temporarily steal is your checking account balance. Getting a credit card can provide additional protection. It also limits your total losses if there is fraud. The bill is only paid once a month so if they steal the card or the number, they won't be able to drain the money in the bank account. The credit card, if used wisely can also start to build a positive credit file so that in a few years you can get a loan for a car or a place to live. Of course if they steal your entire wallet with both the credit and the debit card... |
“Inflation actually causes people not to spend”… could it be true? | We need to be careful what we are talking about here. Inflation on a economy-level scale at an expected rate will not change consumer habits because the price increase is manageable. You have to realize that prices are not increasing in isolation: wages will have to rise along too. High inflation that is expected will increase consumption of durable goods, as people attempt to 'get rid of their money' before the price changes on them. A good example of this was post-WWI germany, where hyperinflation was so bad that offices began to pay their employees twice daily, so they could adjust their wages, and so that their employees could go out during lunch and after work to buy something with the money before the price changed on them. Unexpected inflation may cause a temporary dip in spending until wages adjust, however consumers still need to buy, so they will likely push for higher wages, leading to consumption to stay about level. There is another effect to inflation as well: People who have savings will have their savings eroded over time if the economy is inflationary. To preserve their wealth, they will invest it. In a deflationary environment, money will increase in value simply by being hoarded, so they will be less willing to invest it. Deflation also increases the cost of interest on a loan, while inflation decreases it. So the overall effect is for an increase in spending under inflation, and a decrease under deflation. The person you have quoted is quite wrong. Price increases in a particular sector will cause consumer spending to decrease but this is a bad example, as it is not inflation, but rather a supply/demand problem of a particular consumer good. They are applying a micro-economic model (price increases of a single good) to a macroeconomic problem (price increases in the entire economy) when price increases at a global scale have the opposite effects. A good theoretical test of this is: what would happen if everyone in the US suddenly had twice as much money? (Ignoring international trade, of course). The answer: prices will double, and nothing else will change. The reason is, people will have more money to spend, but will require more money for their services, so in the end it all cancels out. |
Average Price of a Stock | That metric is not very useful for anything other than very extremely long trading periods. Most strategies or concerned with price movement over much shorter time frames, 15 mins, 1 hr, 4 hr, daily, weekly, monthly. The MA or moving average is a trend following lagging indicator used to smooth out price fluctuations and more accurately reflect the price of trading instrument such as a stock (AAPL), commodity, or currency pair. Traders are generally concerned with current market trends and price action of the instrument they are trading. As such, an extremely long MA (average daily price, over a period of 365 days) are generally not that important. |
What's a normal personal debt / equity ratio for a highly educated person? | Average person's life I'm going to say there is no normal debt level. Here's the standard life pattern: So it really depends on your situation, it's way too spread out to quote a "normal" figure. Cost of debt vs Gain from assets and Risk of income You need to strike a sweet spot based on: Someone who is more educated in finance will probably be able to run a tighter and more aggressive financial strategy, whereas someone who is educated in, say, creative media may not be able to do as good of a job. Running your life as a business Someone here mentioned this, I think it's very true. Unless you intend on living day to day, with no financial strategies, much of our lives parallel businesses. Both need to pay tax, both look for low risk high growth strategies, and both will (hopefully) have a purpose that goes beyond bringing in $$$. |
Why do some people say a house “not an investment”? | The below assessment is for primary residences as opposed to income properties. The truth is that with the exception of a housing bubble, the value of a house might outpace inflation by one or two percent. According to the US Census, the price of a new home per square foot only went up 4.42% between 1963 and 2008, where as inflation was 4.4%. Since home sizes increased, the price of a new home overall outpaced inflation by 1% at 5.4% (source). According to Case-Shiller, inflation adjusted prices increased a measly .4% from 1890-2004 (see graph here). On the other hand your down payment money and the interest towards owning that home might be in a mutual fund earning you north of eight percent. If you don't put down enough of a down payment to avoid PMI, you'll be literally throwing away money to get yourself in a home that could also be making money. Upgrades to your home that increase its value - unless you have crazy do-it-yourself skills and get good deals on the materials - usually don't return 100% on an investment. The best tend to be around 80%. On top of the fact that your money is going towards an asset that isn't giving you much of a return, a house has costs that a rental simply doesn't have (or rather, it does have them, but they are wrapped into your rent) - closing costs as a buyer, realtor fees and closing costs as a seller, maintenance costs, and constantly escalating property taxes are examples of things that renters deal with only in an indirect sense. NYT columnist David Leonhart says all this more eloquently than I ever could in: There's an interactive calculator at the NYT that helps you apply Leonhart's criteria to your own area. None of this is to say that home ownership is a bad decision for all people at all times. I'm looking to buy myself, but I'm not buying as an investment. For example, I would never think that it was OK to stop funding my retirement because my house will eventually fund it for me. Instead I'm buying because home ownership brings other values than money that a rental apartment would never give me and a rental home would cost more than the same home purchase (given 10 years). |
Personal credit card for business expenses | Early on, one might not be able to get credit for their business. For convenience, and the card perks, it makes sense to use the personal card. But for sake of a clean paper trail, I'd choose 1 card and use it exclusively, 100% for the business. Not one card here, one card there. |
At what point should I go into credit card debt? | Financially, it simply doesn't make sense to go into debt here. It may be that living on credit cards for a while gives you a chance to recover psychologically, but financially, it doesn't make sense. But, let's consider the larger picture here. You are unmotivated and directionless, and may be suffering from depression. That sucks; very many of us have been there. I'd write in great detail, except this site is about finance, so let's limit the scope a little. You've had therapy. It hasn't produced meaningful change. Stop with that therapy; it's not cost-effective. Financially speaking, your goal should be to get back on your feet. You should only be willing to take on credit card debt if it is very, very directly helping you accomplish this. Maybe that means a different therapist. Maybe that means paying for medication, which can often be breathtakingly effective. Heck, maybe that's a suit, something you put on each morning for a couple of hours to focus on getting a job. Maybe that means some other approach. But you should only be willing to take on debt that directly helps you get back on your feet. Should you be willing to continue as you are now, taking on credit card debt for your living expenses? No, definitely not. Credit cards charge obscene amounts of interest, and the evidence is that your current approach is not working. Going into debt in this case makes as much sense as it did for me to continue working for an employer who wasn't paying me. That is, none at all (financially). All that said, I strongly encourage you to get whatever help will work for you. Your finances are important, but they aren't everything. |
Can I cash a cashier's check at any bank? | Cashiers check is as good as cash. I use them all the time as banks don't carry over 2-3k anymore. I can bring the cashiers check anywhere and thus cash it for u without an account. It's basically a piece of paper that says these funds are set aside from the issuers account just for and only for the check. That's why it's accepted anywhere. It's a gurantee from one bank to another that the funds are there waiting to be transferred. The whole point of the check is so the funds are available immediately. The bank will call the issuing bank verify the Check is real and than cash it immediately. You don't pay a fee to buy the cashiers check just to wait for it to clear like a normal free check. Its immediate and just as good as cash. I use them weekly/monthly for amounts from 5k up to over 100k. |
Is the “Bank on Yourself” a legitimate investment strategy, or a scam? | Oddly enough, I started to research the "Bank on Yourself" strategy today as well (even before I'd ran across this question!). I'd heard an ad on the radio for it the other day, and it caught my attention because they claimed that the strategy isn't prone to market fluctuations like the stock market. It seemed in their radio ad that their target market was people who had lost serious money in their 401k's. So I set about doing some research of my own. It seems to me that the website bankonyourself.com gives a very superficial overview of the strategy without truly ever getting to the meat of it. I begin having a few misgivings at the point that I realized I'd read through a decent chunk of their website and yet I still didn't have a clear idea of the mechanism behind it all. I become leery any time I have to commit myself to something before I can be given a full understanding of how it works. It's shady and reeks of someone trying to back you into a corner so they can bludgeon you with their sales pitch until you cry "Mercy!" and agree to their terms just to stop the pain (which I suspect is what happens when they send an agent out to talk to you). There were other red flags that stood out to me, but I don't feel like getting into them. Anyway, through the use of google I was able to find a thread on another forum that was a veritable wealth of knowledge with regard to the mechanism of "Bank on Yourself" how it works. Here is the link: Bank on Yourself/Infinite Banking... There are quite a few users in the thread who have excellent insights into how all of it works. After reading through a large portion of the thread, I came away realizing that this strategy isn't for me. However, it does appear to be a potential choice for certain people depending upon their situation. |
Does keeping 'long-term' safety net in bonds make sense? | I am understanding the OP to mean that this is for an emergency fund savings account meant to cover 3 to 6 months of living expenses, not a 3-6 month investment horizon. Assuming this is the case, I would recommend keeping these funds in a Money Market account and not in an investment-grade bond fund for three reasons: |
W2 vs 1099 Employee status | In general that's illegal. If you're a W2 employee, you don't miraculously become a 1099 contractor just because they pay you more. If your job doesn't change - then your status doesn't change just because they give you a raise. They can be sued (by you, and by the IRS) for that. Other issues have already been raised by other respondents, just wanted to point out this legal perspective. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | If you have a debt that has very low interest now, but you are aware that it's not going to stay that way (0% introductory APR on a credit card, for example), it can make sense to pay that off before the higher rate kicks in. |
How do you quantify investment risk? | Another approach would be more personalized, which is to measure the risk of missing your goals, rather than measuring the risk of an investment in some abstract sense. Financial planners do this for example with Monte Carlo simulation software (see http://en.wikipedia.org/wiki/Monte_Carlo_method). They would put in a goal such as not running out of money before you die, with assumptions such as the longest you might live and how much you'll withdraw every year. You'd also assume an asset allocation. The Monte Carlo simulation then generates random market movements over the time period, considering historical behavior of your asset allocation, and each run of the simulation would either succeed (you are able to support yourself until death) or fail (you run out of money). The risk measure is the percentage of simulation runs that fail. You can do this to plan saving for retirement in addition to planning withdrawals; then your goal would be to have X amount of money in real after-inflation dollars, perhaps, and success is if you end up with it, and failure is if you don't. The great thing about this risk measure is that it's relevant and personal; "10% chance of being impoverished at age 85," "20% chance of having to work an extra decade because you don't have enough at 65," these kinds of answers. Which is a lot easier to act on than "the variance is 10" or "the beta is 1.5" - would you rather know your plan has a 90% chance of success, or know that you have a variance of 10? Both numbers are probably just guesses, but at least the "chance of success" measure is actionable and relevant. Some tangential thoughts FWIW: |
What is the average cost of a portfolio on a trading site? | It sounds for the most part you are a 'buy and hold' type investor and continue to contribute monthly. I follow the same philosophy and continue to contribute monthly as well. I use Questrade.com as my online broker. For trading it costs a penny per share with a minimum cost of $4.95 (so if you only buy 100 shares you will still pay $4.95) up to a maximum of $9.95 per trade (so if you buy 10,000 shares you only pay $9.95. Three trades at $4.95 per month across the year would be $178.20. This is assuming you are trading less then 495 share each trade. So switching to Questrade would save you an additional $111.80 per year! Multiply over number of year before you retire plus compound interest which could accrue and that can quite a bit of extra savings. You pay nothing else to Questrade either. No management fees, etc. You manage the accounts. |
Do I have to explicitly apply for claim of tax rebate u/s 87A in India | If my salary slip says that I will be paying x INR tax this financial year. Then how much minimum investment I need to do to avoid any tax? This rebate is not directly linked to investments. If your total Gross is less than Rs 5 lacs, from the total tax computed, you can claim a rebate of upto Rs 5000. Does salary slip considers this rebate amount? This depends on the company policy. Companies may already factor in the rebate and deduct less tax. However it is important to claim this when you file the Returns, else it would show up as excess tax. There is no provision in the company form 16 to show this. Further if your taxable income becomes more than Rs 5 lacs, due to say other income, you will not be eligible for this rebate and have to pay tax. Do I have to explicitly specify this claim under 87A in my ITR? Yes you have to. If you company has already factored this while deducting tax you will not get any refunds. If the company has not factored this, you will have to claim refund. If above is true, and x is not calculated by considering this rebate amount, As indicated, this is not directly linked to investments. Will this increment of tax rebate from 2000INR to 5000INR will be applicable immediately This is applicable for financial year 2016-2017 for which you would be filing returns in 2017. Edit: If you say Gross salary is say Rs 6 lacs. If you invest 1.5 lacs in 80C. Your Net taxable income is Rs 4.5 lacs. The tax on 4.5 lacs Normal individual less than 60 years will be 10% of 2 lacs. i.e. Rs 20,000. You can then claim Rs 5000 as deduction under 87A and pay only Rs 15,000 [20000-15000]. If your Gross salary is say Rs 2.8 lacs. You don't do any investments, your Net taxable income is Rs 2.8 lacs. The tax would be Rs 3000. You can claim rebate under 87A and not pay any tax. |
Is it possible for me to keep my credit card APR at 0% permanently? | No. There is no incentive for the card issuer to permanently loan you money for free (Even though they make a small amount of money with every transaction). Yes, there are many credit cards that offer introductory 0% APR, often lasting for a year, some even two years. In theory, you could keep applying for new cards with these terms, and continually transfer the balance to the new card (Though you would probably incur a fee for doing so). |
How to incorporate dividends while calculating annual return of a Stock | You simply add the dividend to the stock price when calculating its annual return. So for year one, instead of it would be |
How risky is it to keep my emergency fund in stocks? | I do this very thing, but with asset allocation and risk parity in mind. I disagree with the cash or bust answers above, but many of the aforementioned facts are valuable and I don't mean to undermine them in anyway. That said, let's look at two examples: Option 1: All-in For the sake of argument let's say you had $100k invested in the SPY (S&P 500 ETF) in early 2007, and you kept it there until today. Your lowest balance would have been about $51k, and at this point the possibility of you losing your job was probably at a peak. Today you would be left with $170k assuming no withdrawal. Option 2: Risk Parity BUT if you balanced your investments with a risk parity approach, using negatively correlated asset classes you avoid this dilemma. If you had invested 50% in XLP (Consumer Staples Sector ETF) and 50% in TLT ( Long Term Treasury ETF) your investments low point would have been $88k, and your lowest annual return would be +0.69%. Today you would be left with $214k assuming no withdrawals. I chose option #2 and it hasn't failed me yet, even in 2016 so far the results are steady and reliably given the reward. My general opinion is simple: when you have money always grow it. Just be sure to cover your ass and prepare for rain. Backtesting for this was done at portfoliovisualizer.com, the one caveat to this approach is that inflation and a lack of international exposure are a risk here. |
What is the difference between fund and portfolio? | Oddly enough, in the USA, there are enough cost and tax savings between buy-and-hold of a static portfolio and buying into a fund that a few brokerages have sprung up around the concept, such as FolioFN, to make it easier for small investors to manage numerous small holdings via fractional shares and no commission window trades. A static buy-and-hold portfolio of stocks can be had for a few dollars per trade. Buying into a fund involves various annual and one time fees that are quoted as percentages of the investment. Even 1-2% can be a lot, especially if it is every year. Typically, a US mutual fund must send out a 1099 tax form to each investor, stating that investors share of the dividends and capital gains for each year. The true impact of this is not obvious until you get a tax bill for gains that you did not enjoy, which can happen when you buy into a fund late in the year that has realized capital gains. What fund investors sometimes fail to appreciate is that they are taxed both on their own holding period of fund shares and the fund's capital gains distributions determined by the fund's holding period of its investments. For example, if ABC tech fund bought Google stock several years ago for $100/share, and sold it for $500/share in the same year you bought into the ABC fund, then you will receive a "capital gains distribution" on your 1099 that will include some dollar amount, which is considered your share of that long-term profit for tax purposes. The amount is not customized for your holding period, capital gains are distributed pro-rata among all current fund shareholders as of the ex-distribution date. Morningstar tracks this as Potential Capital Gains Exposure and so there is a way to check this possibility before investing. Funds who have unsold losers in their portfolio are also affected by these same rules, have been called "free rides" because those funds, if they find some winners, will have losers that they can sell simultaneously with the winners to remain tax neutral. See "On the Lookout for Tax Traps and Free Riders", Morningstar, pdf In contrast, buying-and-holding a portfolio does not attract any capital gains taxes until the stocks in the portfolio are sold at a profit. A fund often is actively managed. That is, experts will alter the portfolio from time to time or advise the fund to buy or sell particular investments. Note however, that even the experts are required to tell you that "past performance is no guarantee of future results." |
Can I write off time spent learning my trade - Two-Man S-Corp | I'm not sure what you mean by "writing off your time," but to answer your questions: Remember that, essentially, you are a salaried employee of a corporation. So if you are spending time at your job, even if you are not billing anything to a client, you are earning your salary. If there are costs involved with these activities (maybe class fees, a book purchase, or travel expenses), the corporation should be paying the costs as business expenses. However, the logistics of this, whether the corporation writes a business check to the vendor directly, or you put the expenses on a personal credit card and are reimbursed with an expense check from the corporation, don't matter. Your accountant can show you the right way to do this. |
What is the best source of funding to pay off debt? | First of all a big thumbs up for Ben's answer. A few small things you can do to help you on your way. Hopefully you are not more in debt that 6 months of salary in debt because that is a really tough road. first thing you need to do is get some professional help. The National Foundation for Credit Counseling (NFCC) offers free or low-cost debt counseling to help you through the process. Visit them at NFCC.org or call 1-800-388-2227 to find a local affiliate office near you. You might want to only use cash for a while. If not and you have a credit card with no balance always use that card because it will be interest free. Remember if you use credit cards as a payment system and not credit, you actually get free interest. If you roll even a penny over into the next statement you are paying interest day one of each purchase. Pay credit cards with highest interest rate first an pay minimums to others This one I like the best. As you get money pay your credit card. You interest is being compounded daily. Pay your cards when you have money, not when they are due. Have a mindset that reminds how much something is really going to cost you If you plan on taking 3 years to get out of debt and you buy something for $100 that is really costs you $156.08 Three years of compound 16% interest. 5b. Conversely if you sell something for $100 on eBay that is like selling something for $156.08. |
When are equal-weighted index funds / ETFs preferable to market-cap-weighted funds? | Equal weighted indexes are not theoretically meant to be less volatile or less risky; they're just a different way to weigh stocks in an index. If you had a problem that hurt small caps more than large caps, an equal weighted index will be hurt more than a market-cap weighted one. On the other hand, if you consider that second rung companies have come up to replace the top layer, it makes sense to weigh them on par. History changes on a per-country basis - in India, for instance, the market's so small at the lower-cap end that big money chases only the large caps, which go up more in a liquidity driven move. But in a more secular period (like the last 18 months) we see that smaller caps have outperformed. |
Why invest in becoming a landlord? | with 150K € to invest to "become a landlord" you have several options: Pay for 100% of one property, and you then will make a significant percentage of the monthly rent as profit each month. That profit can be used to invest in other things, or to save to buy additional properties. At the end of the 21 years in your example, you can sell the flat for return of principal minus selling expenses, or even better make a profit because the property went up in value. Pay 20% down on 5 flats, and then make a much a smaller profit per flat each month due to the mortgage payment for each one. At the end of the 21 years sell the flats. Assuming that a significant portion of the mortgage is paid off each flat will sell for more than the mortgage balance. Thus you will have 5 nice large profits when you sell. something in between 1 and 5 flats. Each has different risks and expenses. With 5 rental properties you are more likely to use a management company, which will add to your monthly cost. |
I'm only spending roughly half of what I earn; should I spend more? | Heck no, don't spend more! I saved a ton of money when I got my first real job. You won't always be able to do this. Save a bundle while you can. |
Where can I find the dividend history for a stock? | You can go to the required company's website and check out their investor section. Here is an example from GE and Apple. |
Pay Yourself With Credit Card Make Money With Cash Back [duplicate] | The idea is old as dirt, and some millions of people had it before you. Credit card swipes cost you between 2.4 and 4.5%, depending on the cards, the provider, and the amounts, plus potentially a fixed small amount per swipe. Of course, a 2% cash back card cost more than 2% to swipe; and a 3% cash back card cost more than 3% to swipe; those guys are not morons. |
Stock dividends effect on dividend received by shareholder | Dividend rate is "dividend per share" over a specified time period, usually a year. So in the first example, if the company paid a $1/share dividend over the year before the stock dividend the shareholder would receive $100, while if it paid the $1/share the year after the stock dividend the shareholder would receive $105. The company could have achieved the same thing by paying total dividends of $1.05/share, which is what the last phrase of the last quoted paragraph is saying. Here's an Investopedia page on dividend rate. Also, what you're calling "payout ratio" is really "dividend yield". "Payout ratio" is how much of the company's net earnings are paid out in dividends. That's all in the US, I could see the terms being used differently outside the US. |
Why pay estimated taxes? | Your logic is not wrong. But the risk is more significant than you seem to assume. Essentially you are proposing taking a 2.6% loan to buy stocks. Is that a good strategy? On average, probably. But if your stocks crash you might have significant liabilities. In 1929, the Dow Jones dropped 89%. In 1989, >30%. In 2008-9, 54%. This is a huge risk if this is money that you owe in taxes. If you operate the same system year after year the chance of it going horribly wrong increases. |
Death and Capital Gains Taxes (United States) | My understanding is that when you die, the stocks are sold and then the money is given to the beneficiary or the stock is repurchased in the beneficiaries name. This is wrong, and the conclusion you draw from michael's otherwise correct answer follows your false assumption. You seem to understand the Estate Tax federal threshold. Jersey would have its own, and I have no idea how it works there. If the decedent happened to trade in the tax year prior to passing, normal tax rules apply. Now, if the executor chooses to sell off and liquidate the estate to cash, there's no further taxable gain, a $5M portfolio can have millions in long term gain, but the step up basis pretty much negates all of it. If that's the case, the beneficiaries aren't likely to repurchase those shares, in fact, they might not even know what the list of stocks was, unless they sifted through the asset list. But, that sale was unnecessary, assets can be divvied up and distributed in-kind, each beneficiary getting their fraction of the number of shares of each stock. And then your share of the $5M has a stepped up basis, meaning if you sell that day, your gains are near zero. You might owe a few dollars for whatever the share move in the time passing between the step up date and date you sell. I hope that clarifies your misunderstanding. By the way, the IRS is just an intermediary. It's congress that writes the laws, including the tangled web of tax code. The IRS is the moral equivalent of a great customer service team working for a company we don't care for. |
Is sales tax for online purchases based on billing- or shipping address? | From my understanding as a seller, and having read through Amazon's 8 page calculation methodology document, the default is the ship to address, however the seller still has the option to charge the tax or not, only charge the state rate and local (city, county, district, etc.) rate(s), or even set their own self-determined default tax rate. In other words, the seller has a lot of control in determining what rate they use and the billing and shipping addresses may not even matter. Just remember that whatever tax you pay to Amazon, your state will probably still hold you responsible for calculating and reporting any additional use tax, based on your location. And if the seller does overcharge for tax you may have a right to request a refund from them. |
Advice on replacing my savings account | Liquid cash (emergency, rainy day fund) should be safe from a loss in value. Mutual funds don't give you this, especially stock funds. You can find "high yield" savings accounts that are now at around .8% to .9% APY which is much better than .05% and will hopefully go up. Barclays US and American Express are two big banks that normally have the highest rates. Most/all Savings and Money Market accounts should be FDIC insured. Mutual funds are not, though the investment IRA, etc. holding them may be. |
Why is it rational to pay out a dividend? | The main reason, as far as I can see, is that the dividends are payments with which the shareholders may do what they want. Capital that the company has no use for does not make a significant positive return on investment, as you pointed out, yes the company could accrue interest, but that is not going to make the company large sums of cash. While the company may be great at making shoes - maybe even the best in the world - doesn't mean they are good investors. Sure they could dabble at using their capital to invest in other equities, but they don't, because they just want to focus on making shoes. If the dividend goes to the investors, they can do what they wish, be it reinvest in the company, or invest elsewhere. Other companies that may make good use of the capital, and create significant returns on it are one such example. That is the rational answer, beyond that, one of the main reasons is that people like the feeling of receiving dividends - it might not be the answer you are looking for, but many people prefer companies that pay dividends for no rational reason over companies which grow their asset value. |
Can expense ratios on investment options in a 401(k) plan contain part of the overall 401(k) plan fees? | There are several things being mixed up in the questions being asked. The expense ratio charged by the mutual fund is built into the NAV per share of the fund, and you do not see the charge explicitly mentioned as a deduction on your 401k statement (or in the statement received from the mutual fund in a non-401k situation). The expense ratio is listed in the fund's prospectus, and should also have been made available to you in the literature about the new 401k plan that your employer is setting up. Mutual fund fees (for things like having a small balance, or for that matter, sales charges if any of the funds in the 401k are load funds, God forbid) are different. Some load mutual funds waive the sales charge load for 401k participants, while some may not. Actually, it all depends on how hard the employer negotiates with the 401k administration company who handles all the paperwork and the mutual fund company with which the 401k administration company negotiates. (In the 1980s, Fidelity Magellan (3% sales load) was a hot fund, but my employer managed to get it as an option in our plan with no sales load: it helped that my employer was large and could twist arms more easily than a mom-and-pop outfit or Solo 401k plan could). A long long time ago in a galaxy far far away, my first ever IRA contribution of $2000 into a no-load mutual fund resulted in a $25 annual maintenance fee, but the law allowed the payment of this fee separately from the $2000 if the IRA owner wished to do so. (If not, the $25 would reduce the IRA balance (and no, this did not count as a premature distribution from the IRA). Plan expenses are what the 401k administration company charges the employer for running the plan (and these expenses are not necessarily peanuts; a 401k plan is not something that needs just a spreadsheet -- there is lots of other paperwork that the employee never gets to see). In some cases, the employer pays the entire expense as a cost of doing business; in other cases, part is paid by the employer and the rest is passed on to the employees. As far as I know, there is no mechanism for the employee to pay these expenses outside the 401k plan (that is, these expenses are (visibly) deducted from the 401k plan balance). Finally, with regard to the question asked: how are plan fees divided among the investment options? I don't believe that anyone other than the 401k plan administrator or the employer can answer this. Even if the employer simply adopts one of the pre-packaged plans offered by a big 401k administrator (many brokerages and mutual fund companies offer these), the exact numbers depend on which pre-packaged plan has been chosen. (I do think the answers the OP has received are rubbish). |
What does volume and huge daily price increases say about stock prices? | Stock B could be considered to be more risky because it seems to be more volatile - sharp rises on large volume increases can easily be followed by sharp drops or by further rises in the start of a new uptrend. However, if both A and B are trading on low volume in general, they can both be more on the risky side due to having relatively low liquidity, especially if you buy a large order compared to the average daily volume. But just looking at the criteria you have included in your question is not enough to determine which stock is riskier than the other, and you should look at this criteria in combination with other indicators and information about each stock to obtain a more complete picture. |
Can individual investors buy precious metals at the spot price? | The futures market allows you to take delivery at the lowest cost. Most people don't deal in 100oz gold bars and 5000oz of 1000oz silver bars though, especially at the retail level. That said, when you are at the retail level, often times you will find reputable Internet dealers offering the lowest cost of ownership. Keep in mind brand name though when you're doing this. Reputable refiners/mints will often see higher premiums versus generic, and this does matter to some extent. Quantity and weights also matter in terms of pricing; the more you buy the lower the premium. |
Are non-residents or foreigners permitted to buy or own shares of UK companies? | It's easy to own many of the larger UK stocks. Companies like British Petroleum, Glaxo, and Royal Dutch Shell, list what they call ADRs (American Depositary Receipts) on the U.S. stock exchanges. That is, they will deposit local shares with Bank of NY Mellon, JP Morgan Chase, or Citicorp (the three banks that do this type of business), and the banks will turn around and issue ADRs equivalent to the number of shares on deposit. This is not true with "small cap" companies. In those cases, a broker like Schwab may occasionally help you, usually not. But you might have difficulty trading U.S. small cap companies as well. |
Insurance broker - Online vs. physical location? | Traditional insurance agent guy here. There is no right answer in my opinion because your individual needs cannot be generalized. There are a variety of factors that influence the price charged to you including but not limited to your past claims history, geographic location, credit profile, and the carrier's book of business itself. This is just a small sampling, in reality their pricing calculations may be far more complicated. The point is there is no one-size-fits all carrier. My agency works with 15 different carriers. Sometimes we can offer the best combination of coverage and cost to a prospective client that beats their existing coverage; other times we are nowhere close to being competitive. The most important thing you can do is find a person/site/company you can trust and one that does not take advantage of you. Insurance policies are complex and "getting the best deal" may oftentimes mean lessening coverage without realizing it. So I would recommend using whatever service channel (online, phone, local agent) that's most convenient and consultative for you. And otherwise, shop around once every year or two to make sure you're still getting the most for your money. |
Do the activities of my LLC need to be limited to a particular field? | No. When you file your Articles of Organization, simply state that your business will operate under the law. You don't need to give any further specification. |
Why do so many people trade a bankrupt company's stock? | It may have some value! Investopedia has a well-written quick article on how stock holders may still get some portion of the liquidated assets. While there is generally little left for common shareholders if the price of those shares is tiny and some money does come back to shareholders there can still be significant profit to be made. As to why the trading volume is so high... there are many firms and hedge funds that specialize in calculating the value of and buying distressed debt and stock. They often compete with each other to by the stock/debt that common shareholders are trying to get rid of. In this particular case, there is a lot of popular interest, intellectual property at stake and pending lawsuits that probably boosts volume. |
If I invest in securities denominated in a foreign currency, should I hedge my currency risk? | So far we have a case for yes and no. I believe the correct answer is... maybe. You mention that most of your expenses are in dollars which is definitely correct, but there is an important complication that I will try to simplify greatly here. Many of the goods you buy are priced on the international market (a good example is oil) or are made from combinations of these goods. When the dollar is strong the price of oil is low but when the dollar is weak the price of oil is high. However, when you buy stuff like services (think a back massage) then you pay the person in dollars and the person you are paying just wants dollars so the strength of the dollar doesn't really matter. Most people's expenses are a mix of things that are priced internationally and locally with a bias toward local expenses. If they also have a mix of investments some of which are international and depend on the strength of the dollar and some are domestic and do not, then they don't have to worry much about the strength/weakness of the dollar later when they sell their investments and buy what they want. If the dollar is weak than the international goods will be more expensive, but at the same time international part of their portfolio will be worth more. If you plan on retiring in a different country or have 100% of your investments in emerging market stocks than it is worth thinking about either currency hedging or changing your investment mix. However, for many people a good mix of domestic and international investments covers much of the risk that their currency will weaken while offering the benefits of diversification. The best part is you don't need to guess if the dollar will get stronger or weaker. tl;dr: If you want your portfolio to not depend on currency moves then hedge. If you want your retirement to not depend on currency moves then have a good mix of local and unhedged international investments. |
Smartest Place to Put Tax Refund | Welcome to Money.SE. Your question is similar to a number of others. The "How do I pay my debt down?" and "How do I invest extra money?" is a bit of a continuum since there's no consensus than one should pay off the last cent of debt before investing. Oversimplify it for me: the correct order of investing offers a good look at this. You see, Pete's answer on your question is perfectly fine, but, since you make no mention of, say, a matched 401(k), I'd suggest that any answer to a question like yours should first take a step back and evaluate the bigger picture. A dollar for dollar matched 401(k) beats paying off even an 18% credit card. Absent any tangents, any thought of investing, saving for anything else, etc, my answer is simple, line up the debt, highest interest rate to lowest. Keep in mind the post-tax rate, i.e. a 6% student loan you can deduct, is an effective 4.5% if you are in the 25% bracket. |
In the stock market, why is the “open” price value never the same as previous day's “close”? | It's done by Opening Auction (http://www.advfn.com/Help/the-opening-auction-68.html): The Opening Auction Between 07.50 and a random time between 08.00 and 08.00.30, there will be called an auction period during which time, limit and market orders are entered and deleted on the order book. No order execution takes place during this period so it is possible that the order book will become crossed. This means that some buy and sell orders may be at the same price and some buy orders may be at higher prices than some sell orders. At the end of the random start period, the order book is frozen temporarily and an order matching algorithm is run. This calculates the price at which the maximum volume of shares in each security can be traded. All orders that can be executed at this price will be filled automatically, subject to price and priorities. No additional orders can be added or deleted until the auction matching process has been completed. The opening price for each stock will be either a 'UT' price or, in the event that there are no transactions resulting form the auction, then the first 'AT' trade will be used. |
What is today's price of 15 000 Euro given 15 years ago? | What you are positioning as a loan was not a loan at all. Your father bought something to be delivered in the future. Your aunt does not want to deliver it, so she should buy it back at whatever the current market value is. What is the price that your dad believes her share of the inheritance is currently worth? Is that based on actual appraisals and some sort of objective audit? If so, your aunt doesn't have much of a case. If not, then she could seek an audit to bolster her bargaining position. How much did your aunt benefit from having a place to live for the last 15 years. Was that benefit greater than some larger amount of money at an unknown future date? That's probably why she sold her inheritance 15 years ago. Now that the inheritance looks like it is going to be available soon, she wants to trade back after having enjoyed the use of your father's money. That might be okay, but simply paying back the original sum with inflation, but without interest, doesn't seem fair to your father. She may not be able to afford to give any more than what she is offering, in which case, she might want to consider offering the original sum now and some portion of her inheritance as interest on that original sum. I'm not taking sides in this one. If it were one of my siblings, I'd be inclined to give the benefit of the doubt and take a smaller amount back if I felt that the lesson was learned (and if I felt that he/she would make wise use of my gift to him/her). I have no idea what your father's current economic situation is, nor am I aware of any other baggage that might influence his feelings about his sister. It's as likely as not that money isn't really what is bothering him, in which case, the amount she repays may have little to do with bridging the divide between them. You might need to ask different questions in the Interpersonal Skills stack if you want to help your father feel better. |
Should I open a credit card when I turn 18 just to start a credit score? | This is a good idea, but it will barely affect your credit score at all. Credit cards, while a good tool to use for giving a minor boost to your credit score and for purchasing things while also building up rewards with those purchases, aren't very good for building credit. This is because when banks calculate your credit report, they look at your long-term credit history, and weigh larger, longer-term debt much higher than short-term debt that you pay off right away. While having your credit card is better than nothing, it's a relatively small drop in the pond when it comes to credit. I would still recommend getting a credit card though - it will, if you haven't already started paying off a debt like a student or car loan, give you a credit identity and rewards depending on the credit card you choose. But if you do, do not ever let yourself fall into delinquency. Failing to pay off loans will damage your credit score. So if you do plan to get a credit card, it is much better to do as you've said and pay it all off as soon as possible. Edit: In addition to the above, using a credit card has the added benefit of having greater security over Debit cards, and ensures that your own money won't be stolen (though you will still have to report a fraudulent charge). |
Make your money work for you | In addition to the other excellent answers here, check out Mr. Money Mustache's site, it's based in the US but the basics still hold here in the UK. Another great site is the Monevator which is UK based and gives some great information on passive investing. Well done on getting to this point at your age - you've got plenty of time for the miracle of compound interest to work for you. EDIT: Once you have any existing debts paid off, take a look at passive/index investing. This could be a good way to make your £150 work for you by capturing the gains of the stock market. Invest it long-term (buy and hold) to make the most of the compound interested effect and over time that money will become something substantial - especially if you can increase payments over time as your income increases. You could also look at reducing your outgoings as recommended on the Mustache site linked above so you can increase your monthly investment amount. |
High-risk investing is better for the young? Why? | There's two reasons. One is that you have a longer time horizon, other answers cover that. The second is that for someone who is younger, most of their capital is human capital in terms of their future work output (and earnings). If you're 25 and your $20,000 portfolio gets wiped out, that's only a small amount of your total earnings. You still have 45 years in which to earn money (and invest it). If you're 65 and your $1,000,000 portfolio gets wiped out, you're in much bigger trouble. Note that this means that in certain circumstances, a younger investor would want to be more conservative. If you're 25, but got a million dollar settlement for an injury which means you can't work anymore, you want to be more conservative than your average 25-year-old. If you're 65, and just sold a business for which you get $1,000,000 in two years, you can be more aggressive with your currently invest-able portfolio. |
Should I get a auto loan to diversify my credit lines if I have the cash to pay upfront | There is no need to get an auto loan just to try and affect your credit score. It is possible to have a score over 800 without any sort of auto loan. If you can afford to pay for the vehicle up front that is the better option. Even with special financing incentives it is better to pay up front if you can. Yes it is possible to use the funds to make more if you finance with a silly low interest rate, however it's also possible to lose a job or have some other financial disaster happen and need that money for something else making it more difficult to make the payment. It may be just me but I find the peace of mind not having the payment to be worth a lot. |
Boyfriend is coowner of a house with his sister, he wants to sell but she doesn't | It seems likely that the mortgage is not in your boyfriend's name because he never would have qualified if he can't even afford utilities after paying the mortgage. It also seems unfair that his sister continues to have a 50% share of the equity if your boyfriend has been making the entire payment on the mortgage every month. What would happen if your boyfriend stopped making the payments? His sister would have no choice if the property went into foreclosure. Your boyfriend has all the leverage he needs by simply refusing to continue making the payments. Why he won't push his sister to make a deal is the real question you need to ask him. In the meantime, if he wants out, all he has to do is decide not to keep paying whether his sister feels attached or not. |
How would IRS treat reimbursement in a later year of moving expenses? | I believe moving reimbursement has to be counted as income no matter when you get it. I'd just put it under miscellaneous income with an explanation. |
Is there any drawback in putting all my 401K into a money market fund? | What you're describing is called timing the market. That is, if you correctly predict when the market will drop, you can sell before the drop, wait for the drop, then buy after the drop has occurred. Sell high, buy low. The fundamental problem with that, though, is: What ends up happening, on average, is you end up slightly behind. There's quite a lot of literature on this; see Betterment's explanation for example. Forbes (click through ad first) also has a detailed piece on the matter. Now, we're not really talking HFT issues here; and there are some structural things that some argue you can take advantage of (restrictions on some organizational investors, for example, similar to a blackjack dealer who has to hit on 16). However, everyone else knows about these too - so it's hard to gain much of an edge. Plenty of people say they can time the market right, and even yourself perhaps you timed a particular drop accurately. This tends to lead to false confidence though; how many drops that you timed badly do you remember? Ultimately, most investors end up slightly down when they attempt to time the market, because of the transaction costs (if you guess two drops, one 'right' and one 'wrong', and they have exactly opposite gains/losses before commissions, you will lose a bit on each due to commission), and because of the overall upward trend in the market (ie, if you picked at random one month a year to be out of the market, you'd lose around 10% annualized gains from doing that; same applies here). All of that aside, there is one major caveat: risk tolerance. If you are highly risk tolerant, say a 30 year old investing your 401(k), then you should stay in no matter what. If you're not - say you're 58 and retiring in a few years - then knowledge that there's a higher risk time period coming up might suggest moving to a less risky portfolio, even at the known cost of some gains. |
What can a CPA do that an EA cannot, and vice versa? | Although they may have some similar functions, CPAs and Enrolled Agents operate in two rather different areas of the accounting "space." CPAs deal with financial statements, usually of corporations. They're the people you want to go to if you are making an investment, or if you own your own business, and need statements of pretax profit and loss prepared. Although a few of them are competent in taxation, the one thing many of them are weak at is tax rules, and this is where enrolled agents come in. Enrolled agents are more concerned with personal tax liability. They can 1) calculate your income taxes, and 2) represent you in hearings with the IRS because they've taken courses with IRS agents, and are considered by them to be almost "one of us." Many enrolled agents are former IRS agents, actually. But they are less involved with corporate accounting, including things that might be of interest to stock holders. That's the CPA's province. |
Is there an academic framework for deciding when to sell in-the-money call options? | If any academic framework worked, your teachers would be the richest people on the planet. However, you must read up on macro and micro economic factors and make an educated guess where the market(or stock) would be at the date of expiry. Subtract the Strike Price from your determined price and calculate your potential profit. Then, if you are getting paid more or less the same thing as of today, sell it and switch to a safer investment till expiry (For example:- Your potential profit was $10, but you are getting $9 as of today, you can sell it and earn interest(Safer investment) for the remaining time.) Its just like buying and selling stocks. You must set a target and must have a stop loss. Sell when you reach that target, and exit if you hit the stop loss. If you have none of these, you will always be confused(Personal experience). |
When you're really young and have about 2K to start investing $ for retirement, why do some people advise you to go risky? | Those who say a person should invest in riskier assets when young are those who equate higher returns with higher risk. I would argue that any investment you do not understand is risky and allows you to lose money at a more rapid rate than someone who understands the investment. The way to reduce risk is to learn about what you want to invest in before you invest in it. Learning afterward can be a very expensive proposition, possibly costing you your retirement. Warren Buffet told the story on Bloomberg Radio in late 2013 of how he read everything in his local library on investing as a teenager and when his family moved to Washington he realized he had the entire Library of Congress at his disposal. One of Mr. Buffett's famous quotes when asked why he doesn't invest in the tech sector was: "I don't invest in what I do not understand.". There are several major asset classes: Paper (stocks, bonds, mutual funds, currency), Commodities (silver, gold, oil), Businesses (creation, purchase or partnership as opposed to common stock ownership) and Real Estate (rental properties, flips, land development). Pick one that interests you and learn everything about it that you can before investing. This will allow you to minimize and mitigate risks while increasing the rewards. |
Is it wise to invest small amounts of money short-term? | I would agree with the other answers about it being a bad idea to invest in stocks in the short term. However, do consider also long-term repairs. For example, you should be prepared to a repair happening in 20 years in addition to repairs happening in a couple of months. So, if it is at all possible for you to save a bit more, put 2% of the construction cost of a typical new house (just a house, not the land the house is standing on) aside every year into a long-term repair fund and invest it into stocks. I would recommend a low-cost index fund or passive ETF instead of manually picking stocks. When you have a long-term repair that requires large amounts of money but will be good for decades to come, you will take some money out of the long-term repair fund. Where I live, houses cost about 4000 EUR per square meter, but most of that is the land and building permit cost. The actual construction cost is about 2500 EUR per square meter. So, I would put away 50 EUR per square meter every year. So, for example, for a relatively small 50 square meter apartment, that would mean 2500 EUR per year. There are quite many repairs that are long-term repairs. For example, in apartment buildings, plumbing needs to be redone every 40 years or so. Given such a long time period, it makes sense to invest the money into stocks. So, my recommendation would be to have two repair funds: short-term repairs and long-term repairs. Only the long-term repair fund should be invested into stocks. |
How should I be contributing to my 401(k), traditional or Roth? | I wrote a brilliant guest post at Don't Mess With Taxes, titled Roth IRAs and Your Retirement Income. (Note - this article now reflects 2012 rates. Just updated) Simply put, it's an ongoing question of whether your taxes will be higher now than at any point in the future. If you are in the 25% bracket now, it would take quite of bit of money for your withdrawals to put you in that bracket at retirement. In the case of the IRA, you have the opportunity to convert in any year between now and retirement if your rate that year drops for whatever reason. The simplest case is if you are now in the 25% bracket. I say go pre-tax, and track, year by year what your withdrawal would be if you retired today. At 15%, but with a good chance for promotion to the 25% bracket, start with Roth flavor and then as you hit 25%, use a combination. This approach would smooth your marginal rate to stay at 15%. To give you a start to this puzzle, in 2012, a couple has a $11,900 standard deduction along with 2 exemptions of $3800 each. This means the first $19,500 in an IRA comes out tax free at retirement. If you believe in a 4% withdrawal rate, you need a retirement account containing $500K pretax to generate this much money. This tick up with inflation, 2 years ago, it was $18,700 and $467K respectively. This is why those who scream "taxes will go up" may be correct, but do you really believe the standard deduction and exemptions will go away? Edit - and as time passes, and I learn more, new info comes to my attention. The above thoughts not withstanding, there's an issue of taxation of Social Security benefits. This creates a The Phantom Tax Rate Zone which I recently wrote about. A single person with not really too high an income gets thrust into the 46% bracket. Not a typo, 46.25% to be exact. |
What does cryptocurrency mean for governments? | Government's tax citizens and businesses in their currency. Earnings (even earnings in cryptocurrencies) are taxable income. |
How to read a chart after a split? | The share price on its own has little relevance without looking at variations. In your case, if the stock went from 2.80 to 0.33, you should care only about the 88% drop in value, not what it means in pre-split dollar values. You are correct that you can "un-split" to give you an idea of what would have been the dollar value but that should not give you any more information than the variation of 88% would. As for your title question, you should read the chart as if no split occurred as for most intents and purposes it should not affect stock price other than the obvious split. |
Making an offer on a property - go in at market price? | Both of my primary home purchases were either at, or close to asking price. My first house was during the local seller's market in 2001-2002. There were waiting lines for open houses. In hindsight we bought more home than we needed at the time but that had nothing to do with offering asking price. It was the market for the type of property (location and features) at that time. My second house was a little after the peak in 2008. The value had come down quite a bit and the property was priced on the low side versus the comps. To this day my second house still appraises higher than what we paid for it even though it was at asking price. As a third example, my brother-in-law got into a bidding war on his first home purchase and ended up buying it for above asking price. This was normal for the houses in the area he was looking at. With real estate, like other people have said, it really is important to either know the area you are looking at or to get an agent you trust and have them explain their reasons for their offer strategy through the comps. Yes agents need to make money but the good ones have been in the business a while and also live off of repeat business when you sell your house or refer friends and family to them. Agents do a lot less work when it comes to selling by the way so they would love for you to come back to them when it's time to sell. If I'm not happy with the way things are going with my agent I would have a heart to heart with them and give them a chance to correct the relationship. I've spoken to a realtor friend in the past about getting out of buyer's contracts and he told me it's a lot easier as a buyer than a seller. The buyer has most of the power during the process. The seller just has what the buyer wants. |
What to do with small dividends in brokerage account? | Some brokerages will allow you to enroll your account in a dividend reinvestment plan -- TD Ameritrade and I think Schwab for example. The way the plan works is that they would take your $4 and give you whatever fractional share of the ETF it is worth on the payment date. There are no fees associated with this purchase (or at least there are in the programs I've seen -- if you have to pay a fee, look for another brokerage). You may also be able to enroll specific securities instead of the entire account into dividend reinvestment. Call your brokerage to see what they offer. |
Is this Employee Stock Purchase Plan worth it when adding my student loan into the equation? | It's 5% free money, if you believe the company's stock is fairly valued and likely to grow and/or return reasonable dividends until you're ready to sell it. There's usually a minimum holding period of a few months to a year before these discounted shares can be sold; take that into account |
Understanding highly compensated employees within 401ks | HCE is defined as being above 120k$ or in the top 20 % of the company. The exact cutoff point might be different for each company. Typically, only the base salary is considered for that, but it's the company's (and 401(k)-plan's) decision. The IRS does not require HCE treatment; the IRS requires that 401(k) plans have a 'fair' distribution of usage between all employees. Very often, employees with lower income save (over-proportionally) less in their 401(k), and there is a line where the 401(k) plan is no longer acceptable to the IRS. HCE is a way for companies to ensure this forced balance; by limiting the amount of 401(k) savings for HCE, the companies ensure that the share of all contributions by below-HCE is appropriate. They will calculate/define the HCE cutoff point so that the required distribution is surely achieved. One of the consequences is that when you move over the HCE cutoff point, you can suddenly save a lot less in your 401(k). Nothing can be done about that. See this IRS page: https://www.irs.gov/retirement-plans/plan-participant-employee/definitions Highly Compensated Employee - An individual who: Owned more than 5% of the interest in the business at any time during the year or the preceding year, regardless of how much compensation that person earned or received, or For the preceding year, received compensation from the business of more than $115,000 (if the preceding year is 2014; $120,000 if the preceding year is 2015 or 2016), and, if the employer so chooses, was in the top 20% of employees when ranked by compensation. |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | Simple and straight-forward. "I'm sorry but I don't co-sign loans. I've heard horror stories (or had bad experiences if you actually have) about these things going bad and ruining friendships. Your friendship is more important to me than you getting this car/stereo/whatever." You could go on to explain that it's not necessarily a lack of trust in them, but the problem could be cause by things beyond either of your control. Let's say there's an error at the bank and his payment doesn't get processed on time and it hits your credit score. Next thing that happens is your credit card company sees the change in your score and jacks up the rate on your card. Neither of you did anything wrong, but now instead of him just fighting with the bank about the payment not getting processed on time, you are having to fight with your credit card company. You are both in an awkward situation. You might get pissed at him (you could make this out to be a failing on your part) even though it wasn't his fault. Or he might be embarassed to come around even though you know it wasn't his fault and aren't pissed at him. |
What is the preferred way to finance home improvements when preparing to sell your house? | I'm assuming that when you sell the house you expect to be able to pay off these loans. In that case you need a loan that can be paid off in full without penalty, but has as low an interest rate as possible. My suggestions: |
How to do a direct cash flow statement given a stock ticker | For US equities, Edgar Online is where companies post their government filings to the SEC. On Google Finance, you would look at the "SEC filings" link on the page, and then find their 10K and 10Q documents, where that information is listed and already calculated. Many companies also have these same documents posted on their Investor Relations web pages. |
Why might it be advisable to keep student debt vs. paying it off quickly? | A Tweep friend asked me a similar question. In her case it was in the larger context of a marriage and house purchase. In reply I wrote a detail article Student Loans and Your First Mortgage. The loan payment easily fit between the generally accepted qualifying debt ratios, 28% for house/36 for all debt. If the loan payment has no effect on the mortgage one qualifies for, that's one thing, but taking say $20K to pay it off will impact the house you can buy. For a 20% down purchase, this multiplies up to $100k less house. Or worse, a lower down payment percent then requiring PMI. Clearly, I had a specific situation to address, which ultimately becomes part of the list for "pay off student loan? Pro / Con" Absent the scenario I offered, I'd line up debt, highest to lowest rate (tax adjusted of course) and hack away at it all. It's part of the big picture like any other debt, save for the cases where it can be cancelled. Personal finance is exactly that, personal. Advisors (the good ones) make their money by looking carefully at the big picture and not offering a cookie-cutter approach. |
Simplifying money management | Many banks will allow you to open multiple accounts. Create a secondary checking account that has no automatic withdrawals and doesn't allow overdraft. This is the account you'll use for you discretionary spending. Get an account with a debit card and always use it as a debit card (never as a credit card, even if it allows that). Your employer may allow you to split your direct deposit so that a certain amount of money goes into this account each month. When it gets to $0, you have to stop spending. It will automatically refill when you get your paycheck. |
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