Question stringlengths 15 166 | Answer stringlengths 3 10.6k |
|---|---|
Is keeping old credit cards and opening new credit cards with high limits and never using an ideal way to boost credit scores? | Your plan will work to increase your total credit capacity (good for your credit score) and reduce your utilization (also good). As mentioned, you will need to be careful to use these cards periodically or they will get closed, but it will work. The question is whether this will help you or not. In addition to credit capacity and utilization, your credit score looks at things like These factors may hurt you as you continue to open accounts. You can easily get to the stage where your score is not benefitting much from increased capacity and it is getting hurt a lot by pulls and low average age. BTW you are correct that closing accounts generally hurts your score. It probably reduces average age, may reduce maximum age, reduces your capacity, and increases your utilization. |
Is the stock market a zero-sum game? | Suppose everybody stopped all economic activity right now. No more work for others, no payments, no trade in kind or otherwise. Would average wealth stay the same? Of course not. Economic activity is not a zero sum game. Most of our economic activity is organized in the form of companies. If the companies manage to make more profits by doing useful things more efficiently, or when they find new useful things to do for profit, then not only the company's value grows but also the sum total of all useful things produced in the economy. That means it's not zero sum. When stock prices go up, that is often because the companies really have become more valueable. |
Frustrated Landlord | If you're sinking 1k/year into it, and the value is rising by $100k in 15 years, or $6k/year, you have a fine investment. Ignore the wife, she just wants something even better. |
VAT and duties payable when importing personal goods from Switzerland and the Channel Islands to the EU? | http://www.hmrc.gov.uk/customs/tax-and-duty.htm#3 explains the Import VAT situation quite well. As for who enforces and collects it, if you're talking about buying online and having it shipped to you then you'll notice on the parcel a Customs sticker declaring the contents and value. It is the responsibility of the courier company to collect any duty due from you and pass it on to HMRC. In practice what this means is that you receive a card or note from the courier saying "we're impounding your package until you pay the import duty" and they usually charge a fee on top of the duty itself. Of course you can always go out there yourself and bring something back, but then it is your responsibility to declare it at the customs checkpoint when you enter the country. |
How does start-up equity end up paying off? | The details of how you can convert your 5% equity share to cash or stocks will be detailed in writing in the legal agreement you have already signed. If you do not have any signed written agreement, there is no 5%. Since 0% of anything is zero, you can expect to get $0 some time within the next few years. Lastly, if the person running the business, tells you that there is 5% equity for you, even though it is not in writing, that is extremely unlikely to be the case. This is because the Seller of the equity has no obligation whatsoever to pay you. In fact, they are obligated by their other agreements with actual shareholders not to dilute their equity without good cause. So, odds are, if your agreement is not in writing, not only will it not be honored, but it probably can't be honored. |
Most important skills needed to select profitable stocks | You need to have 3 things if you are considering short-term trading (which I absolutely do not recommend): The ability to completely disconnect your emotions from your gains and losses (yes, even your gains but especially your losses). The winning/losing on a daily basis will cause you to start taking unnecessary risk in order to win again. If you can't disconnect your emotions, then this isn't the game for you. The lowest possible trading costs to enter and exit a position. People will talk about 1% trading costs; that rule-of-thumb doesn't apply anymore. Personally, my trading costs are a total 13.9 basis points to enter and exit a $10,000 position and I think it's still too high (that's just a hair above one-eighth of 1% for you non-traders). The ability to "gut-check" and exit a losing position FAST. Don't hesitate and don't hope for it to go up. GTFO. If you are serious about short-term trading then you must close all positions on a daily basis. Don't do margin in today's market as many valuations are high and some industries are not trending as they have in the past. The leverage will kill you. It's not a question of "if", it's a when. You're new. Don't trade anything larger than a $5,000 position, no matter what. Don't hold more than 10% of your portfolio in the same industry. Don't be afraid to sit on 50% cash or more for months at a time. Use money market funds to park cash because they are T+1 settlement and most firms will let you trade the stock without cash as long as you effect the money market trade on the same day since stock settlement is T+3. |
Are long-term bonds risky assets? | AAA bonds are safe, as far as the principal goes. If you buy long term bonds today (at very low rates) and the interest rate goes up to 10% in 5 years, the current value of the bonds will decrease. But if you hold the bonds till maturity, you will almost certainly (barring MBS scenarios) get the expected principal and interest on the bonds. If you decide to sell a long-term bond before it matures, it will probably be worth less than you paid for it if interest rates have risen since you bought it. |
What type of insurance would protect you against the Amazon 1p bug? | I believe the appropriate recourse in this scenario is to bring a court case for breach of contract. The 1p repricing issue has been admitted as an error out of scope of the purpose of the software. |
How to protect your parents if they never paid Social Security? | I am unsympathetic. His mother made a conscious choice to evade taxes that would have provided her with at least a minimal security when she was too old to work. First while as business owner she should have been paying self employment tax on the income they made through the restaurant and his other merchant activities. Second while working in her own career selling Mary Kay and side work she should have paid her taxes on her income from that. There is a part of me that says good on you for getting by with out getting caught. But her ultimate failure was to plan for her future. She should have known she would be ineligible for SSI and saved for her retirement. Instead she choose to spend her money while benefiting from the government services that the rest of us pay taxes for. Now we will provide her with medicaid as well as welfare benefits. She has placed her son in the unenviable situation of having to either provide for his mother because she failed to do the minimum planning for herself or turn his back on her. He might be able to find a sympathetic prosecutor who would prosecute her for tax evasion. The government would take care of her needs(food and housing) and she would get her medical care taken care of. He could also move to Alaska. The oil industry provide residents of Alaska with a stipend, there is lots of work for people willing to work hard, and the compensation for that work is pretty good and would likely put him in a position where he is able to provide care for his mother. |
Paying taxes on income earned in the US, but from a company based in Norway | If you are paid by foreigners then it is quite possible they don't file anything with the IRS. All of this income you are required to report as business income on schedule C. There are opportunities on schedule C to deduct expenses like your health insurance, travel, telephone calls, capital expenses like a new computer, etc... You will be charged both the employees and employers share of social security/medicare, around ~17% or so, and that will be added onto your 1040. You may still need a local business license to do the work locally, and may require a home business permit in some cities. In some places, cities subscribe to data services based on your IRS tax return.... and will find out a year or two later that someone is running an unlicensed business. This could result in a fine, or perhaps just a nice letter from the city attorneys office that it would be a good time to get the right licenses. Generally, tax treaties exist to avoid or limit double taxation. For instance, if you travel to Norway to give a report and are paid during this time, the treaty would explain whether that is taxable in Norway. You can usually get a credit for taxes paid to foreign countries against your US taxes, which helps avoid paying double taxes in the USA. If you were to go live in Norway for more than a year, the first $80,000/year or so is completely wiped off your US income. This does NOT apply if you live in the USA and are paid from Norway. If you have a bank account overseas with more than $10,000 of value in it at any time during the year, you owe the US Government a FinCEN Form 114 (FBAR). This is pretty important, there are some large fines for not doing it. It could occur if you needed an account to get paid in Norway and then send the money here... If the Norwegian company wires the money to you from their account or sends a check in US$, and you don't have a foreign bank account, then this would not apply. |
How to make use of EUR/USD fluctuations in my specific case? | This is called currency speculation, and it's one of the more risky forms of investing. Unless you have a crystal ball that tells you the Euro will move up (or down) relative to the Dollar, it's purely speculation, even if it seems like it's on an upswing. You have to remember that the people who are speculating (professionally) on currency are the reason that the amount changed, and it's because something caused them to believe the correct value is the current one - not another value in one direction or the other. This is not to say people don't make money on currency speculation; but unless you're a professional investor, who has a very good understanding of why currencies move one way or the other, or know someone who is (and gives free advice!), it's not a particularly good idea to engage in it - while stock trading is typically win-win, currency speculation is always zero-sum. That said, you could hedge your funds at this point (or any other) by keeping some money in both accounts - that is often safer than having all in one or the other, as you will tend to break even when one falls against the other, and not suffer significant losses if one or the other has a major downturn. |
Why do employers require you to spread your 401(k) contributions throughout the year to get the maximum match? | If one makes say, $10K/mo, and the company will match the first 5% dollar for dollar, a 10%/mo deposit of $1K/mo will see a $500/mo match. If the employee manages to request 90% get put into the 401(k), after 2 months, he's done. If the company wished, they could continue the $500/mo match, I agree. They typically don't and in fact, the 'true up' you mention isn't even required, one is fortunate to get it. Many companies that match are going the other way, matching only after the year is over. Why? Why does any company do anything? To save money. I used to make an attempt to divide my deposit over the year to max out the 401(k) in December and get the match real time, not a true up. |
Saving $1,000+ per month…what should I do with it? | In your situation I suggest: In terms of what to spend it on, one tax preparer I knew said he would ask his wealthy clients (ones with real net worth) what they spent their money on, and it was almost always travel. We agree, memories from our trips are ones that last a lifetime. I can't say much else you buy gives you the same long term payback in your personal life. |
Problems with Enterprise Value and better valuation techniques | This is a tough question SFun28. Let's try and debug the metric. First, let's expand upon the notion share price is determined in an efficient market where prospective buyers and sellers have access to info on an enterprises' cash balance and they may weigh that into their decision making. Therefore, a desirable/undesirable cash balance may raise or lower the share price, to what extent, we do not know. We must ask How significant is cash/debt balance in determining the market price of a stock? As you noted, we have limited info, which may decrease the weight of these account balances in our decision process. Using a materiality level of 5% of net income of operations, cash/debt may be immaterial or not considered by an investor. investors oftentimes interpret the same information differently (e.g. Microsoft's large cash balance may show they no longer have innovative ideas worth investing in, or they are well positioned to acquire innovative companies, or weather a contraction in the sector) My guess is a math mind would ignore the affect of account balances on the equity portion of the enterprise value calculation because it may not be a factor, or because the affect is subjective. |
Does it make any sense to directly contribute to reducing the US national debt? | The US national debt isn't the problem. If the Bush-era tax cuts had been allowed to expire then US debt would have been paid off reasonably quickly. The CBO’s “baseline” budget forecast, which assumes that the cuts do indeed expire as planned, sees the deficit falling from 9.1% of GDP in 2010 to 2.5% in 2014. These are just the debts the US has already incurred. The problem is the future entitlements the US is promising to its soon-to-be-retired generation of Baby Boomers. Medicare, health insurance, and so on are all future costs that can be calculated fairly accurately when considering the size and earnings of the work-force relative to the size, longevity and health of the newly-retired. Governments can "solve" the problems of entitlements simply be reneging on their promises. The concern that investors have is that either entitlements will be paid by raising taxes (and so cutting profits and investment returns) or countries will simply default on their existing debts as their tax receipts run out. As Europe has shown (from French workers rioting about having to retire at 62, to British students rioting about paying their tuition fees), breaking promises has consequences for elected politicians too. Europe is already going rather painfully through this process of economic restructuring. The US will eventually come round as well. Just don't expect it to be painless. So keep your money and invest it wisely. No doubt that tax collectors will be round in a while to take their cut so you can make your contribution. |
If I sell a stock that I don't have, am I required to buy it before a certain amount of time? | Answers here are correct but I'll offer an extremely (overly) simple explanation that should help you in understanding the more detailed answers. When most people own stock they do so through a broker. Unless you jump through some hoops, the broker keeps the shares in the name of the brokerage. This is called holding the stock in street name. When you sell short through a brokerage, the broker is letting you borrow a certain number of shares owned by someone else and sell them for cash now. At some point, you need to repay this loan with the same number of shares you borrowed. Ideally, you want the stock to drop to $0. The reason you might be forced to purchase the stock is that the actual owner(s) of the stock want to sell. If the broker has too many people wanting to sell, you will need to repay some of all of the loan (in shares) i.e. purchasing shares at the current market price. |
Why I can't view my debit card pre-authorized amounts? | No money is stolen. They don't show you the hold for whatever reason (not so good a bank?), but the money is still yours. You just cannot use it, but it is still on your account. These holds usually go away after a week. In certain cases (like a security deposit) it may take up to 30 days. You can request from the merchant to cancel the hold if it is no longer necessary. They'll have to be proactive on that, and some merchants wouldn't want the hassle. It is however a known issue. When I was working in the banking industry, we would routinely receive these hold cancellation requests from merchants (hotels and car rentals). |
Most common types of financial scams an individual investor should beware of? | Anything where the initial step of someone trying to get you into anything financial is to send you an e-mail. There are valid situations in which e-mails may be used to introduce you to a financial product or offer, such as if you have signed up for an electronic newsletter that includes such information. But in that particular case, the e-mail isn't the first step; rather, whatever caused you to sign up for the newsletter was. Even in a valid, legitimate scenario, you should obviously still perform due diligence and research the offer before committing any of your money. But the odds that someone is contacting you out of the blue via e-mail with a legitimate financial offer are tiny. The odds that a lawyer, a banker or someone similar in a remote country would initially contact you via e-mail are yet smaller; I'd call those odds infinitesimal. Non-zero, but unlikely enough that it is probably more likely that you would win the grand prize in the state lottery four times in a row. Keep in mind that responding in any way to spam e-mails will simply confirm to the sender that your e-mail address is valid and is being read. That is likely to cause you to receive more spam, not less, no matter the content of your response. Hence, it is better to flag the e-mail as spam or junk if your e-mail provider offers that feature, or just delete it if they don't. The same general principles as above also apply to social media messaging and similar venues, but the exact details are highly likely to differ somewhat. |
How can a school club collect money using credit cards? | You should check with the Office of Student Affairs (or equivalent) at your University to see if you can accept Credit Cards. Many will only allow you to accept student organization dues paid in cash, check, or money order. Many universities will also provide your organization with basic operating funds, if you request it. Your first point of contact should be your faculty adviser, though. Your best bet would be to just use cash. Learn where the nearest ATMs are. If you are set on using credit cards, set up a PayPal account and just use it to reimburse the person who fronts the money (cover the markup). Everyone will have to have a PayPal account set up, linked to their credit card. You can avoid fees by using a bank account. If you're so inclined, you can set up a Business account and have a PayPal Debit Card, but you'll want to check with your adviser / University by-laws to see if you're allowed. Don't expect any of these to work as website implementations. As you're a University group, you will undoubtedly be meeting in person such that an exchange of cash/check/money order would be trivial In short, you'll need to check into the rules of your University. Credit cards generally carry processing fees, charged to the merchant, which (on its own) carries some tax implications. |
Does a company's stock price give any indication to or affect their revenue? | If the company reported a loss at the previous quarter when the stock what at say $20/share, and now just before the company's next quarterly report, the stock trades around $10/share. There is a misunderstanding here, the company doesn't sell stock, they sell products (or services). Stock/share traded at equity market. Here is the illustration/chronology to give you better insight: Now addressing the question What if the stock's price change? Let say, Its drop from $10 to $1 Is it affect XYZ revenue ? No why? because XYZ selling ads not their stocks the formula for revenue revenue = products (in this case: ads) * quantity the equation doesn't involve capital (stock's purchasing) |
Asking price went through the roof | As folks have explained in the comments: |
The Benefits/Disadvantages of using a credit card | Using the card but paying it off entirely at each billing cycle is the only "Good" way to use a credit card. If you feel like you will be tempted to buy more than you can pay back don't use credit. As far as furnishing the apartment, the best thing to do would be to save and pay cash, but if you want to use credit the credit available at stores would be a far better deal than carrying it on a card. |
What's the difference between Term and Whole Life insurance? | Whole life is life insurance that lasts your whole life. Seriously. Since the insurance company must make a profit, and since they know they will always pay out on a whole life policy, whole life tends to be very expensive, and has lower "death" benefits than a term policy. Some of these policies are "paid-up" policies, meaning that they are structured so that you don't have to pay premiums forever. But what it amounts to is that the insurance company invests your premiums, and then pays you a smaller "dividend," much like banks do with savings accounts. Unless you are especially risk-averse, it is almost always a better decision to get an inexpensive term policy, and invest the money you save yourself, rather than letting the insurance company invest it for you and reap most of the benefits. If you are doing things properly, you won't need life insurance your whole life, as retirement investments will eventually replace your working income. |
Is Amazon's offer of a $50 gift card a scam? | Based on my personal experience with that particular offer, I can say that it's not really a scam. I signed up for an Amazon Credit Card to get $70 off a purchase, but then never used the card. In fact, I never even called to activate it! After a few months, I then called to cancel it. I did not see a significant hit to my credit. However if you do shop frequently at Amazon it may be in your best interest to use their card, because it has other discounts associated with it. |
Why and why would/wouldn't a company split their stock? | The reason to do a stock split is to get the price of the stock down to an affordable range. If your stock costs $100,000 per share, you are seriously cutting in to the number of people who can afford to buy it. I can think of two reasons NOT to do a stock split. The biggest is, Why bother? If your stock is trading at a reasonable price, why change anything? It takes time and effort, which equals money, to do a stock split. If this serves no purpose, you're just wasting that effort. The other reason is that you don't want to drive your stock price down too low. Low prices are normally associated with highly speculative start-up companies, and so can give a wrong impression of your company. Also, low prices make it difficult for the price to reflect small changes. If your stock is trading at $10.00, a 1/2 of 1% change is 5 cents. But if it's trading at $1.50, a 1/2 of 1% change is a fraction of a penny. Does it go up by that penny or not? You've turned a smooth scale into a series of hurdles. |
Are there any risks from using mint.com? | Here's a very simple answer, ask your broker/bank. Mine uses ofx. When asked if they would reimburse me for any unauthorized activity, the answer was no. Simple enough, the banks that use it don't feel its secure enough. |
Was this a good deal on a mortgage? | The price of the loan may be justified if you're considered a high-risk applicant for some reason (e.g. you're putting very little money in initial payment), and if it includes all the associated expenses. What is more relevant to your situation is that you're probably better off renting. Think about it: your $300'000 house will require some repairs in those 30 years (let's estimate those at $100'000). That means in 30 years you'll build $200'000 of equity spending $720'000 on it. Of course this assumes that the value of the house will remain constant. You're effectively be throwing away $520'000, or more than $1'400 a month. If you can rent a place for $1'400 a month or less, you'll build more equity by renting that place for 30 years and saving the excess money in a bank account. If you consider the interest that money in your bank account will earn you (e.g. 3% annually), you'll build more than $200'000 equity in 30 years even if you spend as much as $1'650 on your rent and save only $350 a month. |
Boyfriend is coowner of a house with his sister, he wants to sell but she doesn't | Time for a lawyer. Essentially, regardless of the situation "it's not right" for him to be paying the mortgage and only get half the value out of the equity in the house. All other things aside, no court I can think of would allow that. The "could happens" are many, but the most common include; Keep in mind that if he keeps paying the mortgage ling enough most courts will end up giving him ownership outright. Essentially, they will say he has already bought her out by paying her half of the debt. Unfortunately, any way he goes he is going to need to take action. When there is a missed mortgage payment, a bad tax year, or some other legal issue (some one is injured on the property), the last thing he is going to want is for the courts to decide the issue for him. For example, John breaks an arm while climbing a tree on the property line. John takes the owners of the property to court. "He" says "but my sister owns half" and the courts decide then and there that because he's been paying the mortgage alone he owns the house alone. Seems like a win, except now he owns the liability alone, and owns John $1,000,000 for a silly lawsuit alone. Point is this. Ownership of property comes with risks and responsibilities. "He" really needs to get those risks and responsibilities under control so he can mitigate them, or he could end up in a very nasty situation in the years to come. |
What is Fibonacci values? | This is how I've understood this concept. Fibonacci nos/levels/ratios/%s is based on concept of sequential increment. You may find lot of info about Fibonacci on net. In stock market this concept is used to predict psychological level. While a trend is form, usually price tend to accumulate/consolidate at these level. How the percentage/ ratio make impact is - check any long trend...Now draw a fibbo retracement from immediate previous high and connect it's low. You will see new levels of intermediate trend. In broader term you will find after reversal a leg (trend) is formed, then body and then head which is smaller; then price reverses. The first leg that forms if it refuses to break 23.6% or 38.2% then the previous trend may continue. 50% is normal; usually this level is indecision phase. Even 61.8% is seen as indecision but it is crucial level as it is breakout level towards 100%. Now if the stock retraces 100% then it is sign a new big trend is forming. Now for day trader 23.6%,38.2% and 50% level are very crucial from trading purpose. This concept is so realistic that every level is considered and respected. Suppose if a candle or bar starts at 23.6% level and crosses 38.2% and directly hits 50%. Then the next bar or candle will revert and first hit 38.2% and then continue with the trend. It means price comes back, forms it area at this level and then continue whichever direction the force directs it. You never trade fibo alone, you need help of oscillators or other tools to confirm it. |
Is this mortgage advice good, or is it hooey? | Sounds fishy - taking out more debt to pay the main mortgage down faster? There are a couple of issues I can see: I would think that a much more sensible strategy with a lot less risk is to save up extra cash and send your lender a check every quarter or six months. |
Price movement behaviour before earnings announcements | In principle, the stock price should see no change in the days leading up to an earnings announcement, and then at the moment of the announcement, the stock price should move in the direction of the earnings surprise (relative to the market's belief of what earnings were going to be). In practice, stock prices tend to drift a little in the direction of the surprise shortly before the announcement and the associated price jump. This could be because smart investors were able to replicate the computations to predict the announcement or because information gets illegally leaked ahead of the announcement. So I guess your bullet point B is a likely scenario. Note that hedging activity in the options market will not affect stock price one way or another. Options transfer risk from one party to another but net to zero. Intense hedging activity may be able to push up the price of options (increasing the implied volatility), but it shouldn't affect the price of a stock one way or the other. For this reason, bullet point A is not the case. Note that price behavior after the announcement is also interesting: it seems to take some time to reach the correct price instead of jumping directly to it as economists would predict. This phenomenon is known as post earnings announcement drift. |
Risks associated with investing in dividend paying stocks for short term income. Alternatives? | I wouldn't focus too much on dividends itself; at the end of the day what matters is total gain, because you can convert capital gain into income by selling your assets (they have different tax implications, but generally capital gains tend to be more tax efficient). I think the more important question is how much volatility you can tolerate. Since your investment horizon is short & your risk tolerance is low (as in if you suddenly get much lower income than you planned from your investment you'll be in trouble), you probably want assets that have low volatility. To achieve that, I'd consider the following if I were you: tl;dr If I were you I'd just hold a general investment portfolio with a lower risk profile rather than focusing on dividend generating assets. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | Mathematically speaking there would be a point where the expected value EV of purchasing every possible ticket would be favorable but only if you take in account both the jackpot payout and the lesser payouts of all the wining tickets however practically speaking since the powerball has a liability payout limit which means they dont have to pay out more money than they took in you cant beat the house ( or the government) |
Wash sale rule with dividend reinvestment | I was not able to find any authority for the opinion you suggest. Wash sale rules should, IMHO, apply. According to the regulations, you attribute the newly purchased shares to the oldest sold shares for the purposes of the calculation of the disallowed loss and cost basis. (c) Where the amount of stock or securities acquired within the 61-day period is less than the amount of stock or securities sold or otherwise disposed of, then the particular shares of stock or securities the loss from the sale or other disposition of which is not deductible shall be those with which the stock or securities acquired are matched in accordance with the following rule: The stock or securities acquired will be matched in accordance with the order of their acquisition (beginning with the earliest acquisition) with an equal number of the shares of stock or securities sold or otherwise disposed of. You can resort to the claim that you have not, in fact, entered into the contract within 30 days, but when you gave the instructions to reinvest dividends. I don't know if such a claim will hold, but to me it sounds reasonable. This is similar to the rules re short sales (in (g) there). In this case, wash sale rules will not apply (unless you instructed to reinvest dividends within the 30 days prior to the sale). But I'd ask a tax professional if such a claim would hold, talk to a EA/CPA licensed in your state. |
What options do I have at 26 years old, with 1.2 million USD? | The amount of money you have should be enough for you to live a safe but somewhat restricted life if you never worked again - but it could set you up for just about any sort of financial goal (short of island buying) if you do just about any amount of work. The basic math for some financial rules of thumb to keep in mind: If your money is invested in very low-risk ways, such as a money market fund, you might earn, say, 3% in interest every year. That's $36k. But, if you withdraw that $36k every year, then every year you have the same principal amount invested. And a dollar tomorrow can't buy as much as a dollar today, because of inflation. If we assume for simplicity that inflation is 1% every year, then you need to contribute an additional $12k to your principal balance every year, just so that it has the same buying power next year. This leaves you with a net $24k of interest income that you can freely spend every year, for the rest of your life, without ever touching your principal balance. If your money is invested more broadly, including equity investments [stocks], you might earn, say, 7% every year. Some years you might lose money on your investments, and would need to draw down your principal balance to pay your bills. Some years you might do quite well - but would need to remain conservative and not withdraw your 'excess' earnings every year, because you will need that 'excess' to make up for the bad years. This would leave you with about $74k of income every year before inflation, and about $62k after inflation. But, you would be taking on more risk by doing this. If you work enough to pay your daily bills, and leave your investments alone to earn 7% on average annually, then in just 10 years your money would have doubled to ~ $2.4 Million dollars. This assumes that you never save another penny, and spend everything you make. It's a level of financial security that means you could retire at a drop of the hat. And if don't start working for 20 years [which you might need to do if you spend in excess of your means and your money dries up], then the same will not be true - starting work at 45 with no savings would put you at a much greater disadvantage for financial security. Every year that you work enough to pay your bills before 'retirement' could increase your nest egg by 7% [though again, there is risk here], but only if you do it now, while you have a nest egg to invest. Now in terms of what you should do with that money, you need to ask yourself: what are your financial goals? You should think about this long and hard (and renew that discussion with yourself periodically, as your goals will change over time). You say university isn't an option - but what other ways might you want to 'invest in yourself'? Would you want to go on 'sabbatical'-type learning trips? Take a trade or learn a skill? Start a business? Do you want to live in the same place for 30 years [and thus maybe you should lock-down your housing costs by buying a house] or do you want to travel around the world, never staying in the same place twice [in which case you will need to figure out how to live cheaply and flexibly, without signing unnecessary leases]. If you want to live in the middle of nowhere eating ramen noodles and watching tv, you could do that without lifting a finger ever again. But every other financial goal you might have should be factored into your budget and work plan. And because you do have such a large degree of financial security, you have a lot of options that could be very appealing - every low paying but desirable/hard-to-get job is open to you. You can pursue your interests, even if they barely pay minimum wage, and doing so may help you ease into your new life easier than simply retiring at such a young age [when most of your peers will be heavy into their careers]. So, that is my strongest piece of advice - work now, while you're young and have motivation, so that you can dial back later. This will be much easier than the other way around. As for where you should invest your money in, look on this site for investing questions, and ultimately with that amount of money - I suggest you hire a paid advisor, who works based on an hourly consultation fee, rather than a % management fee. They can give you much more directed advice than the internet (though you should learn it yourself as well, because that will give you the best piece of mind that you aren't being taken advantage of). |
Why would people sell a stock below the current price? | People in this case, are large institutional investors. The "bid ask" spread is for "small traders" like yourself. It is put out by the so-called specialists (or "market makers") and is typically good for hundreds or thousands of shares at a time. Normally, 2 points on a 50 stock is a wide spread, and the market maker will make quite a bit of money on it trading with people like yourself. It's different if a large institution, say Fidelity, wants to sell, say 1 million shares of the stock. Depending on market conditions, it may have trouble finding buyers willing to buy in those amounts anywhere near 50. To "move" such a large block of stock, they may have to put the equivalent of K-Mart's old "Blue Light Special" on, several points below. |
Going long vs short, mechanisms involved | My instinct says that there should be no difference. Your instincts are right. Your understanding of math is not so much. You sold $100K at the current price of 7500000RUB, but ended up buying at 3500000, you earned 3500000RUB. That's 100% in USD (50% in RUB). You bought 7500000RUB for the current price of $100K, but sold later for $200K. You earned $100K (100% in USD), which at that time was equal 3500000RUB. You earned 3500000RUB. That's 50% in RUB. So, as your instincts were saying - no difference. The reason percentages are different is because you're coming from different angles. For the first case your currency is RUB, for the second case your currency is USD, and in both cases you earned 100%. If you use the same currency for your calculations, percentages change, but the bottom line - is the same. |
Will there always be somebody selling/buying in every stock? | When there are no buyers, you can't sell your shares, and you'll be stuck with them until there is some interest from other investors. In this link describes clearly: http://www.investopedia.com/ask/answers/03/053003.asp |
I am under 18 years old, in the US, my parents have terrible credit, how can I take out a loan? | Depending on the state this might not be possible. Loans are considered contracts, and various states regulate how minors may enter into them. For example, in the state of Oregon, a minor may NOT enter into a contract without their parent being on the contract as well. So you are forced to wait until you turn 18. At that time you won't have a credit history, and to lenders that often is worse than having bad credit. I can't help with the car (other than to recommend you buy a junker for $500-$1,000 and just live with it for now), but you could certainly get a secured credit card or line of credit from your local bank. The way they are arranged is, you make a deposit of an amount of your choosing (generally at least $200 for credit cards, and $1,000 for lines of credit), and receive a revolving line with a limit of that same amount. As you use and pay on this loan, it will be reported in your credit history. If you start that now, by the time you turn 18 you will have much better options for purchasing vehicles. |
Do I have to explain the source of *all* income on my taxes? | @RonJohn's answer for pallet of $20's is right for the specific case. For the general case of all income, it depends on whether or not the the source of the income was potentially criminal. https://www.forbes.com/sites/timtodd/2015/11/16/a-win-for-the-5th-amendment-at-the-tax-court/ I am not a lawyer, but reading that article, one needs to provide the total amount, but not the source if there's a risk of self-incrimination. |
Do companies that get taken-over have to honour the old gift card/certificate? | I know this is old, but Joe Taxpayer is wrong. When you dissolve a corporation in selling it, all liabilities go with the old owners and the new owners, smartly starting with a new corporation and taxpayer ID, start with a clean slate. The only way this is not true is if the new owners did not change a thing legally and kept everything the same, other than there names, which would be entirely insane if you asked any lawyer in the country. Gift cards are a touchy situation, if not negotiated in the deal, by law the new owners DO NOT have to take them. Yes, it's good PR, but when there's a considerable amount of money out there it could bury the new owners by giving away free stuff. |
Is it ever logical to not deposit to a matched 401(k) account? | Whether or not it is logical probably depends on individual circumstance. When you take on (or maintain) debt, you are choosing to do two things: The first is clear. This is what you describe very well in your answer. It is a straightforward analysis of interest rates. The fixed cost of the debt can then be directly compared to expected return on investments that are made with the newly available cash flow. If you can reasonably expect to beat your debt interest rate, this is an argument to borrow and invest. Add to this equation an overwhelming upside, such as a 401k match, and the argument becomes very compelling. The second cost listed is more speculative in nature, but just as important. When you acquire debt, you are committing your future cash flow to payments. This exposes you to the risk of too little financial margin in the future. It also exposes you to the risk of any negatives that come with non-payment of debt (repossession, foreclosure, credit hit, sleeping at night, family tension, worst-case bankruptcy) Since the future tends to be difficult to predict, this risk is not so easy to quantify. Clearly the amount and nature of the debt is a large factor here. This would seem to be highly personal, with different individuals having unique financial or personal resources or income earning power. I will never say someone is illogical for choosing to repay their debts before investing in a 401k. I can see why some would always choose to invest to the match. |
Is there a way to take advantage of nice numbers? | You'd need millions of dollars to trade the number of shares it would take to profit from these penny variations. What you bring up here is the way high frequency firms front-run trades and profit on these pennies. Say you have a trade commission of $5. Every time you buy you pay $5, every time you sell you pay $5. So you need a gain in excess of $10, a 10% gain on $100. Now if you wanted to trade on a penny movement from $100 to $100.01, you need to have bought 1,000 shares totaling $100,000 for the $0.01 price movement to cover your commission costs. If you had $1,000,000 to put at risk, that $0.01 price movement would net you $90 after commission, $10,000,000 would have made you $990. You need much larger gains at the retail level because commissions will equate to a significant percentage of the money you're investing. Very large trading entities have much different arrangements and costs with the exchanges. They might not pay a fee on each transaction but something that more closely resembles a subscription fee, and costs something that more closely resembles a house. Now to your point, catching these price movements and profiting. The way high frequency trading firms purportedly make money relates to having a very low latency network connection to a particular exchange. Their very low latency/very fast network connection lets them see orders and transact orders before other parties. Say some stock has an ask at $101 x 1,000 shares. The next depth is $101.10. You see a market buy order come in for 1,000 shares and place a buy order for 1,000 shares at $101 which hits the exchange first, then immediately place a sell order at $101.09, changing the ask from $101.00 to $101.09 and selling in to the market order for a gain of $0.09 per share. |
Can dividends be exploited? | In an ideal world Say on 24th July the share price of Apple was $600. Everyone knows that they will get the $ 2.65 on 16th August. There is not other news that is affecting the price. You want to go in and buy the shares on 16th Morning at $600 and then sell it on 17th August at $600. Now in this process you have earned sure shot $2.65/- Or in an ideal world when the announcement is made on 24th July, why would I sell it at $600, when I know if I wait for few more days I will get $2.65/- so i will be more inclined to sell it at $602.65 /- ... so on 16th Aug after the dividend is paid out, the share price will be back to $600/- In a real world, dividend or no dividend the share price would be moving up or down ... Notice that the dividend amount is less than 1% of the stock price ... stock prices change more than this percentage ... so if you are trying to do what is described in paragraph one, then you may be disappointed as the share price may go down as well by more than $2.65 you have made |
How smart is it really to take out a loan right now? | but I can't help but feel that these low rates are somehow a gimmick to trick people into taking out loans Let me help you: it's not a feeling. That's exactly what it is. Since the economy is down, people don't want to jeopardize what they have, and keep the cash in their wallets. But, while keeping the money safe in the pocket, it makes the economy even worse. So in order to make people spend some money, the rates go down so that the cost of money is lower. It also means that the inflation will be on the rise, which is again a reason not to keep money uninvested. So yes, the rates are now very low, and the housing market is a buyers' market, so it does make sense to take out a loan at this time (provided of course that you can actually repay it over time, and don't take loans you can't handle). Of course, you shouldn't be taking loans just because the rates are low. But if you were already planning on purchasing a house - now would be a good time to go on with that. |
Should my husband's business pay my business? | Just from my own experience (I am not an accountant): In addition to counting as 'business income' (1040 line 12 [1]) your $3000 (or whatever) will be subject to ~15% self-employment tax, on Schedule SE. This carries to your 1040 line ~57, which is after all your 'adjustments to income', exemptions, and deductions - so, those don't reduce it. Half of the 15% is deductible on line ~27, if you have enough taxable income for it to matter; but, in any case, you will owe at least 1/2 of the 15%, on top of your regular income tax. Your husband could deduct this payment as a business expense on Schedule C; but, if (AIUI) he will have a loss already, he'll get no benefit from this in the current year. If you do count this as income to you, it will be FICA income; so, it will be credited to your Social Security account. Things outside my experience that might bear looking into: I suspect the IRS has criteria to determine whether spousal payments are legit, or just gaming the tax system. Even if your husband can't 'use' the loss this year, he may be able to apply it in the future, when/if he has net business income. [1] NB: Any tax form line numbers are as of the last I looked - they may be off by one or two. |
Why is being “upside down” on a mortgage so bad? | Sample Numbers: Owe $100k on house. House (after 'crash') valued at: $50K. Reason for consternation: What rational person pays $100k for property that is only worth half that amount? True Story: My neighbor paid almost $250K (a quarter-of-a-million dollars - think about that..) for a house that when he walked (ran!) away from it was sold by the bank for $88K. Unless he declares bankruptcy (and forgoes all his other assets, including retirement savings) he still owes the bank the difference. And even with bankruptcy, he may still owe the bank - this should cause anyone to be a bit concerned about being up-side down in a mortgage loan. |
Is 0% credit card utilization worse than 1-20% credit card utilization for any reason other than pure statistics? | Going off hearsay here. I believe your question is. "Does not having a credit card lower your credit score" If that is the question then in the UK at least the answer appears to be yes. Having a credit card makes you less of a risk because you have proven that you can handle a little bit of debt and pay it back. I have a really tiny credit history. Never had a credit card and the only people who will lend to me are my own bank because they can actually see my income / expenditure. When I have queried my bank and at stores offering credit they have said that no credit history isn't far off a bad credit record. Simply having a credit card and doing the odd transactions show's lenders you are at least semi-responsible and is seen as a positive. Not having a credit card and not having much else for that matter makes you an unknown and an unknown is a risk in the eyes of lenders. |
Transfering money from NRE to saving account is taxable or not | There are quite a few things here; Edit: If you are away for 2.5 Years, you are NRE. Your situation is slightly tricky in the sense that you are getting a salary in India for doing work outside. Please consult a professional CA who can advise you better. If you were not getting an Indian salary, then whatever you earn outside India is non-taxable and you can transfer it into your NRE account. As per regulations an NRI cannot hold a savings account. Point 3 is more applicable if you are on a short visit. |
Where should I be investing my money? | Don't be too scared of investing in the market. It has ups and downs, but over the long haul you make money in it. You can't jump in and out, just consistently add money to investments that you 1) understand and 2) trust. When I say understand, what I mean is you can follow how the money is generated, either because a company sells products, a government promises to pay back the bond, or compounding interest makes sense. You don't need to worry about the day to day details, but if you don't understand how the money is made, it isn't transparent enough and a danger could be afoot. Here are some basic rules I try (!) to follow The biggest trick is to invest what you can, and do so consistently. You can build wealth by earning more and spending less. I personally find spending less a lot easier, but earning more is pretty easy with some simple investment tools. |
How late is Roth (rather than pretax) still likely to help? | Years before retirement isn't related at all to the Pretax IRA/Roth IRA decision, except insomuch as income typically trends up over time for most people. If tax rates were constant (both at income levels and over time!), Roth and Pretax would be identical. Say you designate 100k for contribution, 20% tax rate. 80k contributed in Roth vs. 100k contributed in Pretax, then 20% tax rate on withdrawal, ends up with the same amount in your bank account after withdrawal - you're just moving the 20% tax grab from one time to another. If you choose Roth, it's either because you like some of the flexibility (like taking out contributions after 5 years), or because you are currently paying a lower marginal rate than you expect you will be in the future - either because you aren't making all that much this year, or because you are expecting rates to rise due to political changes in our society. Best is likely a diversified approach - some of your money pretax, some posttax. At least some should be in a pretax IRA, because you get some tax-free money each year thanks to the personal exemption. If you're working off of 100% post-tax, you are paying more tax than you ought unless you're getting enough Social Security to cover the whole 0% bucket (and probably the 10% bucket, also). So for example, you're thinking you want 70k a year. Assuming single and ignoring social security (as it's a very complicated issue - Joe Taxpayer has a nice blog article regarding it that he links to in his answer), you get $10k or so tax-free, then another $9k or so at 10% - almost certainly lower than what you pay now. So you could aim to get $19k out of your pre-tax IRA, then, and 51k out of your post-tax IRA, meaning you only pay $900 in taxes on your income. Of course, if you're in the 25% bucket now, you may want to use more pretax, since you could then take that out - all the way to around $50k (standard exemption + $40k or so point where 25% hits). But on the other hand, Social Security would probably change that equation back to using primarily Roth if you're getting a decent Social Security check. |
Is there a resource for knowing when Annual and Quarterly Reports are coming out? | https://www.google.com/search?q=quarterly+and+annual+financial+report+calendar&oq=quarterly+and+annual+financial+report+calendar&aqs=chrome..69i57.9351j0j7&sourceid=chrome&ie=UTF-8 The third result on Google is: https://www.bloomberg.com/markets/earnings-calendar/us The fourth result on Google is: https://finance.yahoo.com/calendar/earnings |
If I'm cash-flow negative, should I dollar-cost-average the money from my bonus over the entire year? | Essentially, your question is "lump sum vs DCA" and your tags reflect that. In the long run, lump sum, say a Jan 2 deposit each year, will beat DCA by about 1/2 the average annual market return. $12,000 will see a 10% return, vs, $1,000/month over the year seeing 6%. What hurts is when the market tanks in the first half of the year and you think DCA would have helped. This is a 'feeling' issue, not a math problem. But. By the time you have $100K invested, the difference of DCA vs lump sum with new money fades, as new deposits are small compared to the funds invested. By then, you need to know your target allocation and deposit to keep that allocation with new money. |
Am I still building a credit score if I use my credit card like a debit card? | Regardless of how it exactly impacts the credit score, the question is does it help improve your credit situation? If the score does go up, but it goes up slowly that was a lot of effort to retard credit score growth. Learning to use a credit card wisely will help you become more financially mature. Start to use the card for a class of purchases: groceries, gas, restaurants. Pick one that won't overwhelm your finances if you lose track of the exact amount you have been charging. You can also use it to pay some utilities or other monthly expenses automatically. As you use the card more often, and you don't overuse it, the credit card company will generally raise your credit limit. This will then help you because that will drop your utilization ratio. Just repeat the process by adding another class of charges to you credit card usage. This expanded use of credit will in the long run help your score. The online systems allow you to see every day what your balance is, thus minimizing surprises. |
Should I invest in real estate to rent, real estate to live in, or just stocks and bonds to earn 10-15%? | You are in your mid 30's and have 250,000 to put aside for investments- that is a fantastic position to be in. First, let's evaluate all the options you listed. Option 1 I could buy two studio apartments in the center of a European capital city and rent out one apartment on short-term rental and live in the other. Occasionally I could Airbnb the apartment I live in to allow me to travel more (one of my life goals). To say "European capital city" is such a massive generalization, I would disregard this point based on that alone. Athens is a European capital city and so is Berlin but they have very different economies at this point. Let's put that aside for now. You have to beware of the following costs when using property as an investment (this list is non-exhaustive): The positive: you have someone paying the mortgage or allowing you to recoup what you paid for the apartment. But can you guarantee an ROI of 10-15% ? Far from it. If investing in real estate yielded guaranteed results, everyone would do it. This is where we go back to my initial point about "European capital city" being a massive generalization. Option 2 Take a loan at very low interest rate (probably 2-2.5% fixed for 15 years) and buy something a little nicer and bigger. This would be incase I decide to have a family in say, 5 years time. I would need to service the loan at up to EUR 800 / USD 1100 per month. If your life plan is taking you down the path of having a family and needed the larger space for your family, then you need the space to live in and you shouldn't be looking at it as an investment that will give you at least 10% returns. Buying property you intend to live in is as much a life choice as it is an investment. You will treat the property much different from the way something you rent out gets treated. It means you'll be in a better position when you decide to sell but don't go in to this because you think a return is guaranteed. Do it if you think it is what you need to achieve your life goals. Option 3 Buy bonds and shares. But I haven't the faintest idea about how to do that and/or manage a portfolio. If I was to go down that route how do I proceed with some confidence I won't lose all the money? Let's say you are 35 years old. The general rule is that 100 minus your age is what you should put in to equities and the rest in something more conservative. Consider this: This strategy is long term and the finer details are beyond the scope of an answer like this. You have quite some money to invest so you would get preferential treatment at many financial institutions. I want to address your point of having a goal of 10-15% return. Since you mentioned Europe, take a look at this chart for FTSE 100 (one of the more prominent indexes in Europe). You can do the math- the return is no where close to your goals. My objective in mentioning this: your goals might warrant going to much riskier markets (emerging markets). Again, it is beyond the scope of this answer. |
Do shares purchased on FTSE AIM move with company to other markets? | Any shares you buy when a company is listed on one market will remain yours if the company moves to another market. Markets and exchanges like AIM are just venues for dealing in shares - indeed you can deal in those shares anywhere else that will allow you as well as on the AIM. The benefit of being listed in a market is that trade in the shares will be more "liquid" - there's more likely to be people who want to buy and sell them at any given time. The bigger concern would be what happens if the company does badly and drops out of the AIM entirely. You'd still be able to sell your shares to any willing buyer, but finding that buyer might get harder. |
Why is the breakdown of a loan repayment into principal and interest of any importance? | The breakdown between how much of your payment is going toward principal and interest is very important. The principal balance remaining on your loan is the payoff amount. Once the principal is paid off, your loan is finished. Each month, some of your payment goes to pay off the principal, and some goes to pay interest (profit for the bank). Using your example image, let's say that you've just taken out a $300k mortgage at 5% interest for 30 years. You can click here to see the amortization schedule on that loan. The monthly payment is $1610.46. On your first payment, only $360 went to pay off your principal. The rest ($1250) went to interest. That money is lost. If you were to pay off your $300k mortgage after making one payment, it would cost you $299,640, even though you had just made a payment of $1250. Interest accrues on the principal balance, so as time goes on and more of the principal has been paid, the interest payment is less, meaning that more of your monthly payment can go toward the principal. 15 years into your 30-year mortgage, your monthly payment is paying $762 of your principal, and only $849 is going toward interest. Your principal balance at that time would be about $203k. Even though you are halfway done with your mortgage in terms of time, you've only paid off about a third of your house. Toward the end of your mortgage, when your principal balance is very low, almost all of your payment goes toward principal. In the last year, only $513 of your payments goes toward interest for the whole year. You can think of your monthly loan payment as a minimum payment. If you continue to make the regular monthly payments, your mortgage will be paid off in 30 years. However, if you pay more than that, your mortgage will be paid off much sooner. The extra that you pay above your regular monthly payment all goes toward principal. Even if you have no plans to pay your mortgage ahead of schedule, there are other situations where the principal balance matters. The principal balance of your mortgage affects the amount of equity that you have in your home, which is important if you sell the house. If you decide to refinance your mortgage, the principal balance is the amount that will need to be paid off by the new loan to close the old loan. |
Do Americans really use checks that often? | Typically your paychecks are direct deposited into your bank account and you receive a paycheck stub telling you how much of your money went where (taxes, insurance, 401k, etc.). Most people use debit or credit cards for purchases. I personally only use checks to transfer money to another person (family, friend, etc.) than a business. And even then, there's PayPal. |
How to reconcile these contradictory statements about the effect of volume on stock price? | The first statement is talking about a sudden sharp increase in volume (double or more of average volume) with a sudden increase in price. In other words, there has been a last rush to buy the stock exhausting all the current bulls (buyers), so the bears (sellers) take over, at least temporarily. Whilst the second statement is talking about a gradual increase in volume as the price up trends (thus the use of a volume oscillator). In other words (in an uptrend), the bulls (buyers) are gradually increasing in numbers sending the price higher, and new buyers keep entering the market. (The opposite is the case for a down-trend). |
Borrow from 401k for down payment on rental property? | the most important information that you provided was "I'm 25 years old". You have a few years to save for a rental property. Taking a loan against your 401k only invites a lot of paperwork and a good deal of risk. Not only the "if I lose my job I have to pay it back (in 60 days)", but it effectively locks you into your current job because changing jobs also causes the same repayment consequences. Do you really love your job that much that you would stick with it for the loan you have? (rhetorical) One could argue that real estate is a good way to diversify away from the stock market (assuming you have your 401k invested in stocks). Another way to get the same diversification is to invest in REITs through your 401k. Owning rental property isn't something to rush into. You really have to like it.The returns and headaches that accompany it can be a drag and it's harder to get out of then stocks. |
Why use ROI if I can use effective compount interest? | Yes though I'd likely put a caveat on that. If you take short-term investments and extrapolate the results to get an annual result this can be misleading. For example, if a stock goes up 10% in a month, assuming this will continue for the next 11 months may not be a great idea. Thus, beware of how much data do you have in making these calculations. When looking at long-term investments, the compound annual growth rate can be quite useful for comparison. |
How do I find an ideal single fund to invest all my money in? | A single fund that reflects the local currency would be an index fund in the country. Look for mutual funds which provide for investing on the local stock index. The fund managers would handle all the portfolio balancing for you. |
How to avoid getting back into debt? | Draw up a budget and see where most of you expenses go to. See if you can cut any not essential expenses. If this doesn't help much you will need to increase your income. Ways to do this without going into debt may be to get a job, ask your parents for money, sell some of your non essential things, tutor fellow students or students in earlier years, just to name a few. Basically, if you want to stay out of debt you income needs to be higher than your expenses. So you either need to reduce your expenses, increase your income, or both. Without further information from yourself it would be quite hard to direct you in the right direction. |
Difference between a mortgage and buy-to-let in UK | Residential mortgages normally explicitly state that the property cannot be let without explicit permission, whereas BTL mortgages typically require that the property be let. There are other differences. Residential mortgages are regulated, which means that consumers have a degree of protection from mis-selling; most BTLs are not, as landlords are expected to know what they're doing. Affordability of residential mortgages are based on your income, since that is how you are going to pay for them. BTLs are (mostly) assessed based on the property's rental income, since it's that that will fund the mortgage. Finally, residential mortgages are typically done on a repayment basis, so that at the end of the term, you've paid off the entire loan, whereas BTLs are typically interest-only, on the assumption that you'll either sell the property, or remortgage, at the end of the term. (I've used words like "typically" a lot to give an overall picture of the differences. Obviously it's a bit more complicated than that, and there are exceptions to a lot of the above descriptions.) |
How to sell a worthless option | The market maker will always take it off your hands. Just enter a market sell order. It will cost you a commission to pull the loss into this year. But that's it. |
Should I pay half a large balance this month before I get my CC statement? | It will reduce the credit ding you will take but why does it matter? Next cycle when it's paid off your credit score will go back to where it was. Unless you're looking for a loan right now and your credit is marginal why worry about it? |
Under what circumstance will the IRS charge you a late-payment penalty for taxes? | The IRS provides a little more information on the subject on this FAQ: Will I be charged interest and penalties for filing and paying my taxes late?: If you did not pay your tax on time, you will generally have to pay a late-payment penalty, which is also called a failure to pay penalty. Some guidance on what constitutes "reasonable cause" is found on the IRS page Penalty Relief Due to Reasonable Cause: The IRS will consider any sound reason for failing to file a tax return, make a deposit, or pay tax when due. Sound reasons, if established, include: Note: A lack of funds, in and of itself, is not reasonable cause for failure to file or pay on time. However, the reasons for the lack of funds may meet reasonable cause criteria for the failure-to-pay penalty. In this article from U.S. News and World Report, it is suggested that the IRS will generally waive the penalty one time, if you have a clean tax history and ask for the penalty to be waived. It is definitely worth asking them to waive the penalty. |
why do I need an emergency fund if I already have investments? | My take on this is that this reduces your liquidity risk. Stocks, bonds and many other investment vehicles on secondary markets you may think of are highly liquid but they still require that markets are open and then an additional 3-5 business days to settle the transaction and for funds to make their way to your bank account. If you require funds immediately because of an emergency, this 3-5 business days (which gets longer as week-ends and holidays are in the way) can cause a lot of discomfort which may be worth a small loss in potential ROI. Think of your car breaking down or a water pipe exploding in your home and having to wait for the stock sale to process before you can make the payment. Admittedly, you have other options such as margin loans and credit cards that can help absorb the shock in such cases but they may not be sufficient or cause you to pay interest or fees if left unpaid. |
What retirement plans/options should i pick for a relatively unstable career path? | Your retirement plan shouldn't necessarily be dictated by your perceived employment risks. If you're feeling insecure about your short-term job longevity and mid-career prospects, you will likely benefit from a thoughtful and robust emergency fund plan. Your retirement plan is really designed to fund your life after work, so the usual advice to contribute as much as you can as early as you can applies either way. While a well-funded retirement portfolio will help you feel generally more secure in the long run (and worst case can be used earlier), a good emergency fund will do more to address your near-term concerns. Both retirement and emergency fund planning are fundamental to a comprehensive personal finance plan. This post on StackExchange has some basic info about your retirement options. Given your spare income, you should be able to fully fund an IRA and your 401K every year with some left over. Check the fees in your 401K to determine if you really want to fully fund the 401K past employer matching. There are several good answers and info about that here. Low-cost mutual funds are a good choice for starting your IRA. There is a lot of different advice about emergency funds (check here) ranging from x months salary in savings to detailed planning for each of your expenses. Regardless of which method you chose, it is important to think about your personal risk tolerance and create a plan that addresses your personal needs. It's difficult to live life and perform well at work if you're always worried about your situation. A good emergency plan should go a long way toward calming those fears. Your concern about reaching mid-life and becoming obsolete or unable to keep up in your career may be premature. Of course your mind, body, and your abilities will change over the years, but it is very difficult to predict where you will be, what you will be doing, and whether your experience will offset any potential decrease in your ability to keep up. It's good to think ahead and consider the "what-ifs", but keep in mind that those scenarios are not preordained. There isn't anything special about being 40 that will force you into a different line of work if you don't want to switch. |
Why is everyone saying how desperately we need to save money “in this economy”? | This was called Financial repression by Edward S. Shaw and Ronald I. McKinnon from Stanford (https://en.wikipedia.org/wiki/Financial_repression). Financial repression is the situation, when government is stealing from people, who rely heavily on saving, rather then on spending. Meaning that your saving rates will be a lot worse then inflation rate. Financial markets are artificially hot and interest rates artificially low (average historical interest rate is 10%). This could be a possible predictor state to hyper-inflation. |
Does implied volatility always rise as earnings announcements approach? | Changes in implied volatility are caused by many things, of course, and it is tough to isolate the effect you are describing, but let's try to generalize for a moment. Implied volatility is generally a measure of how much expect uncertainty there is about the future price of the stock. Uncertainty generally is higher in periods including earnings announcements because it is significant new information about the company's fortunes can make for significant changes in the price. However, you could easily have the case where the earnings are good and for some reason the market is very certain that the earnings will be good and near a certain level. In that case the price would rise, but the implied volatility could well be lower because the market believes that there will be no significant new information in the earnings announcement. |
Credit card issued against my express refusal; What action can I take? | I would go speak to the bank manager. With Wells, you have to make sure it is the bank manager and not a service manager or something you are talking to (I learned that a few months ago). Tell her/him exactly what happened in detail and that you want the credit card closed and the credit inquiry removed from your credit report. Further, say that once all of that is done, you will decide whether to continue banking with them and whether any legal action is appropriate. If they give you any kind of push back, I'd get advice from a lawyer. The truth is they did open an account against your expressed wishes and it required them to check your credit so it does constitute fraud unless they can produce a signed document saying you agreed to the card. Edit: I just saw that this happened about a year ago. It may have been easier if you had done something at the time and may be more difficult if you've used the card in the meantime. |
What are the pros and cons of buying an item on installments with zero percent interest? | I personally take the zero percent financing plans any day. I have done this with my car and the iphone 6s. The vendors are trying to make it more attractive for you to "afford" the product. It could show up on your credit report and impact the amount of money you can borrow in the future (e.g getting a home loan). The other thing I do is make sure the monthly payments are automatically paid from my bank account so I don't miss any payments |
Determine share price from S-1 for company that was bought before going public | To add to @keshlam's answer slightly a stock's price is made up of several components: the only one of these that is known even remotely accurately at any time is the book value on the day that the accounts are prepared. Even completed cashflows after the books have been prepared contain some slight unknowns as they may be reversed if stock is returned, for example, or reduced by unforeseen costs. Future cashflows are based on (amongst other things) how many sales you expect to make in the future for all time. Exercise for the reader: how many iPhone 22s will apple sell in 2029? Even known future cashflows have some risk attached to them; customers may not pay for goods, a supplier may go into liquidation and so need to change its invoicing strategy etc.. Estimating the risk on future cashflows is highly subjective and depends greatly on what the analyst expects the exact economic state of the world will be in the future. Investors have the choice of investing in a risk free instrument (this is usually taken as being modelled by the 10 year US treasury bond) that is guaranteed to give them a return. To invest in anything riskier than the risk free instrument they must be paid a premium over the risk free return that they would get from that. The risk premium is related to how likely they think it is that they will not receive a return higher than that rate. Calculation of that premium is highly subjective; if I know the management of the company well I will be inclined to think that the investment is far less risky (or perhaps riskier...) than someone who does not, for example. Since none of the factors that go into a share price are accurately measurable and many are subjective there is no "right" share price at any time, let alone at time of IPO. Each investor will estimate these values differently and so value the shares differently and their trading, based on their ever changing estimates, will move the share price to an indeterminable level. In comments to @keshlam's answer you ask if there is enough information to work out the share price if a company buys out the company before IPO. Dividing the price that this other company paid by the relative ownership structure of the firm would give you an idea of what that company thought that the company was worth at that moment in time and can be used as a surrogate for market price but it will not and cannot accurately represent the market price as other investors will value the firm differently by estimating the criteria above differently and so will move the share price based on their valuation. |
Can the Philadelphia Center City District Tax be deducted on my Schedule-A? | My basic rule of thumb is that if the the bill come from a government office of taxation, and that if you fail to pay the amount they can put a tax lien on the property it is a tax. for you the complication is in Pub530: Assessments for local benefits. You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Local benefits include the construction of streets, sidewalks, or water and sewer systems. You must add these amounts to the basis of your property. You can, however, deduct assessments (or taxes) for local benefits if they are for maintenance, repair, or interest charges related to those benefits. An example is a charge to repair an existing sidewalk and any interest included in that charge. If only a part of the assessment is for maintenance, repair, or interest charges, you must be able to show the amount of that part to claim the deduction. If you cannot show what part of the assessment is for maintenance, repair, or interest charges, you cannot deduct any of it. An assessment for a local benefit may be listed as an item in your real estate tax bill. If so, use the rules in this section to find how much of it, if any, you can deduct. I have never seen a tax bill that said this amount is for new streets, and the rest i for things the IRS says you can deduct. The issue is that if the Center City tax bill is a separate line or a separate bill then does it count. I would go back to the first line of the quote from Pub 530: You cannot deduct amounts you pay for local benefits that tend to increase the value of your property. Then I would look at the quote from the CCD web site: The Center City District (CCD) is a business improvement district. Our mission is to keep Philadelphia's downtown, called Center City, clean, safe, beautiful and fun. We provide security, cleaning and promotional services that supplement, but do not replace, basic services provided by the City of Philadelphia and the fundamental responsibilities of property owners. CCD also makes physical improvements to the downtown, installing and maintaining lighting, > signs, banners, trees and landscape elements. and later on the same page: CCD directly bills and collects mandatory payments from properties in the district. CCD also receives voluntary contributions from the owners of tax-exempt properties that benefit from our services. The issues is that it is a business improvement district (BID), and you aren't a business: I did find this document from the city of Philadelphia explain how to establish a BID: If the nature of the BID is such that organizers wish to include residential properties within the district and make these properties subject to the assessment, it may make sense to assess these properties at a lower level than a commercial property, both because BID services and benefits are business-focused, and because owner-occupants often cannot treat NID assessments as tax-deductible business expenses, like commercial owners do. Care must be taken to ensure that the difference in commercial and residential assessment rates is equitable, and complies with the requirements of the CEIA. from the same document: Funds for BID programs and services are generated from a special assessment paid by the benefited property owners directly to the organization that manages the BID’s activities. (Note: many leases have a clause that allows property owners to pass the BID assessment on to their tenants.) Because they are authorized by the City of Philadelphia, the assessment levied by the BID becomes a legal obligation of the property owner and failure to pay can result in the filing of a lien. I have seen discussion that some BIDS can accept tax deductible donations. This means if a person itemizes they can deduct the donation. I would then feel comfortable deducting the tax because: If you can't deduct it that would mean the only people who can't deduct it are home owners. So deduct it. (keep in mind I am not a tax professional) |
Is there a way I can get bid/ask price data on the NSE in real time? | Yes apply for live and dynamic data (you may have to pay for this depending on your broker and your country) and look at the market depth. |
What is a checking account and how does it work? | A checking account is one that permits the account holder to write demand drafts (checks), which can be given to other people as payment and processed by the banks to transfer those funds. (Think of a check as a non-electronic equivalent of a debit card transaction, if that makes more sense to you.) Outside of the ability to write checks, and the slightly lower interest rate usually offered to trade off against that convenience, there really is no significant difference between savings and checking accounts. The software needs to be designed to handle checking accounts if it's to be sold in the US, since many of us do still use checks for some transactions. Adding support for other currencies doesn't change that. If you don't need the ability to track which checks have or haven't been fully processed, I'd suggest that you either simply ignore the checking account feature, or use this category separation in whatever manner makes sense for the way you want to manage your money. |
What is the equation for an inflation adjusted annuity held in perpetuity? | EDIT: After reading one of the comments on the original question, I realized that there is a much more intuitive way to think about this. If you look at it as a standard PV calculation and hold each of the cashflows constant. Really what's happening is that because of inflation the discount rate isn't the full value of the interest rate. Really the discount rate is only the portion of the interest rate above the inflation rate. Hence in the standard perpetuity PV equation PV = A / r r becomes the interest rate less the inflation rate which gives you PV = A / (i - g). That seems like a much better way to get to the answer than all the machinations I was originally trying. Original Answer: I think I finally figured this out. The general term for this type of system in which the payments increase over time is a gradient series annuity. In this specific example since the payment is increasing by a percentage each period (not a constant rate) this would be considered a geometric gradient series. According to this link the formula for the present value of a geometric gradient series of payments is: Where P is the present value of this series of cashflows. A_1 is the initial payment for period 1 (i.e. the amount you want to withdraw adjusted for inflation). g is the gradient or growth rate of the periodic payment (in this case this is the inflation rate) i is the interest rate n is the number of payments This is almost exactly what I was looking for in my original question. The only problem is this is for a fixed amount of time (i.e. n periods). In order to figure out the formula for a perpetuity we need to find the limit of the right side of this equation as the number of periods (n) approaches infinity. Luckily in this equation n is already well isolated to a single term: (1 + g)^n/(1 + i)^-n}. And since we know that the interest rate, i, has to be greater than the inflation rate, g, the limit of that factor is 0. So after replacing that term with 0 our equation simplifies to the following: Note: I don't do this stuff for a living and honestly don't have a fantastic finance IQ. It's been a while since I've done any calculus or even this much algebra so I may have made an error in the math. |
How do I deal with a mistaken attempt to collect a debt from me that is owed by someone else? | I can only speak for germany/europe. Inkasso companies/lawyer would write a letter with a bill, those letters have register numbers. If in doubt, one would call the company, ask who is the debtor/what is the origin of the bill. I certainly would not react on a phone call. However, if an official entity or lawyer is contacting you, you have to take action asap, at least calling them. |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | My view is from the Netherlands, a EU country. Con: Credit cards are more risky. If someone finds your card, they can use it for online purchases without knowing any PIN, just by entering the card number, expiration date, and security code on the back. Worse, sometimes that information is stored in databases, and those get stolen by hackers! Also, you can have agreed to do periodic payments on some website and forgot about them, stopped using the service, and be surprised about the charge later. Debit cards usually need some kind of device that requires your PIN to do online payments (the ones I have in the Netherlands do, anyway), and automated periodic payments are authorized at your bank where you can get an overview of the currently active ones. Con: Banks get a percentage of each credit card payment. Unlike debit cards where companies usually pay a tiny fixed fee for each transaction (of, say, half a cent), credit card payments usually cost them a percentage and it comes to much more, a significant part of the profit margin. I feel this is just wrong. Con: automatic monthly payment can come at an unexpected moment With debit cards, the amount is withdrawn immediately and if the money isn't there, you get an error message allowing you to pay some other way (credit card after all, other bank account, cash, etc). When a recent monthly payment from my credit card was due to be charged from my bank account recently, someone else had been paid from it earlier that day and the money wasn't there. So I had to pay interest, on something I bought weeks ago... Pro: Credit cards apparently have some kind of insurance. I've never used this and don't know how it works, but apparently you can get your money back easily after fraudulent charges. Pro: Credit cards can be more easily used internationally for online purchases I don't know how it is with Visa or MC-issued debit cards, but many US sites accept only cards that have number/expiration date/security code and thus my normal bank account debit card isn't useable. Conclusion: definitely have one, but only use it when absolutely necessary. |
IRA contributions in a bear (bad) market: Should I build up cash savings instead? | You should consider dollar cost averaging your investments. Retirement account is perfect for that - it's long term with periodic deposits. Overall, by investing in stocks now for a long term, you'll benefit more because the stocks are at their low(er) point. |
When can you adjust for (and re-allow) a disallowed year-end (December) wash-sale loss? | Disallowed losses are created when you buy a stock */- 30 days of a sale at a loss. When you sell and have no shares left, the loss is taken. You can't have no shares and leftover disallowed loss. |
Having trouble with APR calculation | I have answered your question in detail here https://stackoverflow.com/questions/12396422/apr-calculation-formula The annuity formula in FDIC document is at first finding PVIFAD present value annuity due factor and multiplying it with annuity payment and then dividing it by an interest factor of (1+i) to reduce the annuity to an ordinary annuity with end of period payments They could have simply used PVIFA and multiplying it with annuity payment to find the present value of an ordinary annuity In any case, you should not follow the directions in FDIC document to find interest rate at which the present value of annuity equals the loan amount. The method they are employing is commonly used by Finance Professors to teach their students how to find internal rate of return. The method is prone to lengthy trial and error attempts without having any way of knowing what rate to use as an initial guess to kick off the interest rate calculations So this is what I would suggest if you are not short on time and would like to get yourself familiar with numerical methods or iterative techniques to find internal rate of return There are way too many methods at disposal when it comes to finding interest rates some of which include All of the above methods use a seed value as a guess rate to start the iterative calculations and if results from successive calculations tend to converge within a certain absolute Error bound, we assume that one of the rates have been found as there may be as many rates as the order of the polynomial in this case 36 There are however some other methods that help find all rates by making use of Eigenvalues, but for this you would need a lengthy discourse of Linear Algebra One of the methods that I have come across which was published in the US in 1969 (the year I was born :) ) is called the Jenkins Traub method named after the two individuals who worked jointly on finding a solution to all roots of a polynomial discarding any previous work on the same subject I been trying to go over the Jenkins Traub algorithm but am having difficulty understanding the complex nature of the calculations required to find all roots of the polynomial In summary you would be better of reading up on this site about the Newton Raphson method to find IRR |
Why is the buy price different from the sell price of a stock? [duplicate] | When there is a difference between the two ... no trading occurs. Let's look at an example: Investor A, B, C, and D all buy/sell shares of company X. Investor A wants to sell 10 shares at $20 a share (Ask price $20 x10). Investor B wants to buy 15 shares at $10 a share (Bid price $10 x15). Since the bid price and ask price are different, no sale is made. Next Investor C comes along and wants to sell 5 shares at $14 (Ask price $14 x5). Still no sale. Investor D comes along and wants to buy 5 shares for $14 each. So a sale is finally made. At this point, the stock quote moves to $14. The ask price is $20 x10 and the bid price is $10 x15. No further trading will occur until another investor is willing to buy at $20 or sell at $10. Another discussion of this topic is shown on this post. |
Looking at Options Liquidity: what makes some stocks so attractive for options traders? | The penny pilot program has a dramatic effect on increasing options liquidity. Bids can be posted at .01 penny increments instead of .05 increments. A lot of money is lost dealing with .05 increments. Issues are added to the penny pilot program based on existing liquidity in both the stock and the options market, but the utility of the penny pilot program outweighs the discretionary liquidity judgement that the CBOE makes to list issues in that program. The reason the CBOE doesn't list all stocks in the penny pilot program is because they believe that their data vendors cannot handle all of the market data. But they have been saying this since 2006 and storage and bandwidth technology has greatly improved since then. |
Online Foreign Exchange Brokerages: Which ones are good & reputable for smaller trades? | The following have been recommended to me for the UK: When I was doing my investigations, all had good reputations but Interactive Investor looked to have the nicer service and their fees seemed a bit more reasonable. TD Waterhouse has the advantage of a number of sites serving local markets (TD Ameritrade for the US, for instance). |
Should I consolidate loans and cards, or just cards, leaving multiple loans? | First of all, congratulations on admitting your problem and on your determination to be debt-free. Recognizing your mistakes is a huge first step, and getting rid of your debt is a very worthwhile goal. When considering debt consolidation, there are really only two reasons to do so: Reason #1: To lower your monthly payment. If you are having trouble coming up with enough money to meet your monthly obligations, debt consolidation can lower your monthly payment by extending the time frame of the debt. The problem with this one is that it doesn't help you get out of debt faster. It actually makes it longer before you are out of debt and will increase the total amount of interest that you will pay to the banks before you are done. So I would not recommend debt consolidation for this reason unless you are truly struggling with your cashflow because your minimum monthly payments are too high. In your situation, it does not sound like you need to consolidate for this reason. Reason #2: To lower your interest rate. If your debt is at a very high rate, debt consolidation can lower your interest rate, which can reduce the time it will take to eliminate your debt. The consolidation loan you are considering is at a high interest rate on its own: 13.89%. Now, it is true that some of your debt is higher than that, but it looks like the majority of your debt is less than that rate. It doesn't sound to me that you will save a significant amount of money by consolidating in this loan. If you can obtain a better consolidation loan in the future, it might be worth considering. From your question, it looks like your reasoning for the consolidation loan is to close the credit card accounts as quickly as possible. I agree that you need to quit using the cards, but this can also be accomplished by destroying the cards. The consolidation loan is not needed for this. You also mentioned that you are considering adding $3,000 to your debt. I have to say that it doesn't make sense at all to me to add to your debt (especially at 13.89%) when your goal is to eliminate your debt. To answer your question explicitly, yes, the "cash buffer" from the loan is a very bad idea. Here is what I recommend: (This is based on this answer, but customized for you.) Cut up/destroy your credit cards. Today. You've already recognized that they are a problem for you. Cash, checks, and debit cards are what you need to use from now on. Start working from a monthly budget, assigning a job for every dollar that you have. This will allow you to decide what to spend your money on, rather than arriving at the end of the month with no idea where your money was lost. Budgeting software can make this task easier. (See this question for more information. Your first goal should be to put a small amount of money in a savings account, perhaps $1000 - $1500 total. This is the start of your emergency fund. This money will ensure that if something unexpected and urgent comes up, you won't be so cash poor that you need to borrow money again. Note: this money should only be touched in an actual emergency, and if spent, should be replenished as soon as possible. At the rate you are talking about, it should take you less than a month to do this. After you've got your small emergency fund in place, attack the debt as quickly and aggressively as possible. The order that you pay off your debts is not significant. (The optimal method is up for debate.) At the rate you suggested ($2,000 - 2,500 per month), you can be completely debt free in maybe 18 months. As you pay off those credit cards, completely close the accounts. Ignore the conventional wisdom that tells you to leave the unused credit card accounts open to try to preserve a few points on your credit score. Just close them. After you are completely debt free, take the money that you were throwing at your debt, and use it to build up your emergency fund until it is 3-6 months' worth of your expenses. That way, you'll be able to handle a small crisis without borrowing anything. If you need more help/motivation on becoming debt free and budgeting, I recommend the book The Total Money Makeover by Dave Ramsey. |
One of my stocks dropped 40% in 2 days, how should I mentally approach this? | Like @chirs, I'm of the opinion that you might want to buy more. I've done this a couple of times, price dropped a bunch, and I said, heck, I bought some last week, and this week I can get twice as much stock for about the same price. Brought down my average cost per share, and when the company was taken private, I actually didn't lose money - unlike some other people I know, who only bought at one price, watched the drop, and held on awaiting a recovery (which didn't happen in time before the big money swooped in on it). But to do this, you need to keep cash reserves (that, like @afforess says, you can afford to lose all of) on hand, awaiting buying opportunities. This, too, is a cost - an opportunity cost. |
Should I invest in my house, when it's in my wife's name? | It is my opinion that part of having a successful long-term relationship is being committed to the other person's success and well-being. This commitment is a form of investment in and of itself. The returns are typically non-monetary, so it's important to understand what money actually is. Money is a token people exchange for favors. If I go to a deli and ask for a sandwich. I give them tokens for the favor of having received a sandwich. The people at the deli then exchange those tokens for other favors, and that's the entire economy: people doing favors for other people in exchange for tokens that represent more favors. Sometimes being invested in your spouse is giving them a back rub when they've had a hard day. The investment pays off when you have a hard day and they give you a back rub. Sometimes being invested in your spouse is taking them to a masseuse for a professional massage. The investment pays off when they get two tickets to that thing you love. At the small scale it's easy to mostly ignore minor monetary discrepancies. At the large scale (which I think £50k is plenty large enough given your listed net worth) it becomes harder to tell if the opportunity cost will be worth making that investment. It pretty much comes down to: Will the quality-of-life improvements from that investment be better than the quality-of-life improvements you receive from investing that money elsewhere? As far as answering your actual question of: How should I proceed? There isn't a one-size fits all answer to this. It comes down to decisions you have to make, such as: * in theory it's easy to say that everyone should be able to trust their spouse, but in practice there are a lot of people who are very bad at handling money. It can be worthwhile in some instances to keep your spouse at an arms length from your finances for their own good, such as if your spouse has a gambling addiction. With all of that said, it sounds like you're living in a £1.5m house rent-free. How much of an opportunity cost is that to your wife? Has she been freely investing in your well-being with no explicit expectation of being repaid? This can be your chance to provide a return on her investment. If it were me, I'd make the investment in my spouse, and consider it "rent" while enjoying the improvements to my quality of life that come with it. |
how do capital gains work if you don't know the original purchase price? | There are two scenarios to determine the relevant date, and then a couple of options to determine the relevant price. If the stocks were purchased in your name from the start - then the relevant date is the date of the purchase. If the stocks were willed to you (i.e.: you inherited them), then the relevant date is the date at which the person who willed them to you had died. You can check with the company if they have records of the original purchase. If it was in "street name" - they may not have such records, and then you need to figure out what broker it was to hold them. Once you figured out the relevant date, contact the company's "investor relationships" contact and ask them for the adjusted stock price on that date (adjusted for splits/mergers/acquisitions/whatever). That would be the cost basis per share you would be using. Alternatively you can research historical prices on your favorite financial information site (Google/Yahoo/Bloomberg or the stock exchange where the company is listed). If you cannot figure the cost basis, or it costs too much - you can just write cost basis as $0, and claim the whole proceeds as gains. You'll pay capital gains tax on the whole amount, but that may end up being cheaper than conducting the investigation to reveal the actual numbers. |
What differentiates index funds and ETFs? | I'm assuming the question is about how to compare two ETFs that track the same index. I'd look at (for ETFs -- ignoring index funds): So, for example you might compare SPY vs IVV: SPY has about 100x the volume. Sure, IVV has 2M shares trading, so it is liquid "enough". But the bigger volume on SPY might matter to you if you use options: open interest is as much as 1000x more on SPY. Even if you have no interest in options, the spreads on SPY are probably going to be slightly smaller. They both have 0.09% expense ratios. When I looked on 2010-9-6, SPY was trading at a slight discount, IVV was at a slight premium. Looking for any sort of trend is left as an exercise to the reader... Grab the prospectus for each to examine the rules they set for fund makeup. Both come from well-known issuers and have a decent history. (Rather than crazy Uncle Ed's pawn shop, or the Central Bank of Stilumunistan.) So unless you find something in the SPY prospectus that makes you queasy, the higher volume and equal expense ratios would seem to suggest it over IVV. The fact that it is at a (tiny) discount right now is a (tiny) bonus. |
Will a credit card issuer cancel an account if it never incurs interest? | I've got a card that I've had for about 25 years now. The only time they charged me interest I showed it was their goof (the automatic payment failed because of their mistake) and they haven't cancelled it. No annual fee, a bit of cash back. The only cards I've ever had an issuer close are ones I didn't use. |
Sanity check on choosing the term for a mortgage refinance | Have you looked at conventional financing rather than VA? VA loans are not a great deal. Conventional tends to be the best, and FHA being better than VA. While your rate looks very competitive, it looks like there will be a .5% fee for a refinance on top of other closing costs. If I have the numbers correct, you are looking to finance about 120K, and the house is worth about 140K. Given your salary and equity, you should have no problem getting a conventional loan assuming good enough credit. While the 30 year is tempting, the thing I hate about it is that you will be 78 when the home is paid off. Are you intending on working that long? Also you are restarting the clock on your mortgage. Presumably you have paid on it for a number of years, and now you will start that long journey over. If you were to take the 15 year how much would go to retirement? You claim that the $320 in savings will go toward retirement if you take the 30 year, but could you save any if you took the 15 year? All in all I would rate your plan a B-. It is a plan that will allow you to retire with dignity, and is not based on crazy assumptions. Your success comes in the execution. Will you actually put the $320 into retirement, or will the needs of the kids come before that? A strict budget is really a key component with a stay at home spouse. The A+ plan would be to get the 15 year, and put about $650 toward retirement each month. Its tough to do, but what sacrifices can you make to get there? Can you move your plan a bit closer to the ideal plan? One thing you have not addressed is how you will handle college for the kids. While in the process of long term planning, you might want to get on the same page with your wife on what you will offer the kids for help with college. A viable plan is to pay their room and board, have them work, and for them to pay their own tuition to community college. They are responsible for their own spending money and transportation. Thank you for your service. |
Primary Residence to Investment Property - Changing PMI Terms | You could be in a bit of a bind. I wouldn't push it any more until you read your loan papers very carefully. Going back to the lender for a refinance after you converted it to a rental (presumably without their knowledge) is risky. I doubt they'd let you refinance anyway, as the house is underwater. If the loan is performing then I wouldn't think they'd look too hard for reasons to upset the flow of checks by calling the loan due, but if you brazenly advertise the change of property use to them they may reconsider. Read your loan papers carefully to see what they can do before you lean on them too much. As for managing the finances on that property, I'd build up a cushion to deal with the fact that your payment is going to shoot up considerably in year 8. Also consider building up a side business to get another income stream going to compensate as well. You have a little time before it shoots up. |
HELOC vs. Parental Student Loans vs. Second Mortgage? | First of all, I'm happy that the medical treatments were successful. I can't even imagine what you were going through. However, you are now faced with a not-so-uncommon reality that many households face. Here's some other options you might not have thought of: I would avoid adding more debt if at all possible. I would first focus on the the cost side. With a good income you can also squeeze every last dollar out of your budget to send them to school. I agree with your dislike of parent loans for the same reasons, plus they don't encourage cost savings and there's no asset to "give back" if school doesn't work out (roughly half of all students that start college don't graduate) I would also avoid borrowing more than 80% of your home's value to avoid PMI or higher loan rates. You also say that you can pay off the HELOC in 5 years - why can you do that but not cash flow the college? Also note that a second mortgage may be worse that a HELOC - the fees will be higher, and you still won't be able to borrow more that what the house is worth. |
Do bond interest rate risk premiums only compensate for the amount investors might lose? | [...] are all bonds priced in such a way so that they all return the same amount (on average), after accounting for risk? In other words, do risk premiums ONLY compensate for the amount investors might lose? No. GE might be able to issue a bond with lower yield than, say, a company from China with no previous records of its presence in the U.S. markets. A bond price not only contains the risk of default, but also encompasses the servicability of the bond by the issuer with a specific stream of income, location of main business, any specific terms and conditions in the prospectus, e.g.callable or not, insurances against default, etc. Else for the same payoff, why would you take a higher risk? The payoff of a higher risk (not only default, but term structure, e.g. 5 years or 10 years, coupon payments) bond is more, to compensate for the extra risk it entails for the bondholder. The yield of a high risk bond will always be higher than a bond with lower risk. If you travel back in time, to 2011-2012, you would see the yields on Greek bonds were in the range of 25-30%, to reflect the high risk of a Greek default. Some hedge funds made a killing by buying Greek bonds during the eurozone crisis. If you go through the Efficient frontier theory, your argument is a counter statement to it. Same with individual bonds, or a portfolio of bonds. You always want to be compensated for the risk you take. The higher the risk, the higher the compensation, and vice versa. When investors buy the bond at this price, they are essentially buying a "risk free" bond [...] Logically yes, but no it isn't, and you shouldn't make that assumption. |
How smart is it really to take out a loan right now? | Are things getting better yet or are things still a mess? I have heard people say that right now is a 'good' time to take out a loan, and that it is a buyer's market in real estate. Something to consider here is what intentions do you have for the real estate you'd buy. If you intend to sell quickly, then selling into a buyer's market doesn't sound like a great idea. While real estate may be cheap, there can be the question of how long do you think this will last? How much of a burden on time and energy are you expecting to take if you do switch residences or buy an investment property? But more specifically, are there any hidden details that come with taking a loan out when interest rates are low that I should be aware of? I'd be careful to note if the rate is fixed for the entire length of the loan or does it adjust over time. If it can adjust then there is the possibility of those adjustments going up. |
Debt collector has wrong person and is contacting my employer | Debt collectors are just doing their job as many people want to evade payment by not responding and skipping their debts, and they talk tough to force people found to make their obligated payments based on what they can afford and that’s all. I’m in the UK, but I assume the process is similar. Before I begin, I worked in debt collection and I presume that the debt collection agency have requested details for a source like a college and you have been returned as a possible match as you name is identical to their debtor but with differing date of birth etc. College/University students are very nomadic in nature and addresses aren’t very helpful when they are not current, but details of a current address/employer to a very similar name would be a possible lead to debtor and the debt collector is simply acting on flawed information which is fairly rare, and cases such as these are resolved when you can simply confirm your date of birth and other details so that they can eliminate you from their chasing activities. Whilst you may feel uncomfortable about giving your details, you are not the debtor and will have to confirm this, the debt collector is only interested in collection of valid debts values, and the current letter is most likely a standard letter to get you to act assuming that you are the debtor. If you try to ignore this or only partly answer their contact by telling them not to contact your employer etc, they will assume that you are the debtor and step up pursuit by contacting at work by phone, in person, or by other means, and you employer will see you in a bad light… I would advise you to write to them a one-time only letter confirming details of your home address and insist on correspondence in writing only to that home address, in addition you should confirm your full name including full middle names, date of birth, that you have never attended the college in question, agreed to any such debt in writing, and that you are not the correct data subject as the ss number also differs. The letter should also go on to state a range of costs which require payment before you act further, ie subsequent letter $xx.xx amount attending court $xx.xx per hour(not cheap) and that if they harass you or otherwise affect your standing with your credit reference, or employer or anyone else that you ‘Will’ take further action and ‘May’ take them to your ‘Local’ court and pursue the costs list above and losses as a result of their actions including pain and suffering. Speak tough and mean business and act decisively and your message will win through, share your details with them once and above all copy your employer in so that they know this is a case of mistaken identity. You can add a large heading at the top of the letter of ‘Mistaken Identity’ to prove your point. |
Good yield vs. safer route (Checking vs. Savings) | There is no difference in safety form the perspective of the bank failing, due to FDIC/NCUA insurance. However, there is a practical issue that should be considered, if you allow payments to be automatically withdrawn from your checking account In the case of an error, all of you money may be unavailable until the error is resolved, which could be days or weeks. By having two accounts, this possibility may be reduced. It isn't a difference between checking and savings, but a benefit of having two accounts. Note that if both accounts are at the same bank, hey make take money from other accounts to cover the shortfall. That said, I've done this for years and have never had a problem. Also, I have two accounts, one at a local credit union with just enough kept in it to cover any payments, and another online account that has the rest of my savings. I can easily transfer funds between the two accounts in a couple days. |
Can my employer limit my maximum 401k contribution amount (below the IRS limit)? | Highly Compensated Employee Rules Aim to Make 401k's Fair would be the piece that I suspect you are missing here. I remember hearing of this rule when I worked in the US and can understand why it exists. A key quote from the article: You wouldn't think the prospect of getting money from an employer would be nerve-wracking. But those jittery co-workers are highly compensated employees (HCEs) concerned that they will receive a refund of excess 401k contributions because their plan failed its discrimination test. A refund means they will owe more income tax for the current tax year. Geersk (a pseudonym), who is also an HCE, is in information services and manages the computers that process his firm's 401k plan. 401(k) - Wikipedia reference on this: To help ensure that companies extend their 401(k) plans to low-paid employees, an IRS rule limits the maximum deferral by the company's "highly compensated" employees, based on the average deferral by the company's non-highly compensated employees. If the less compensated employees are allowed to save more for retirement, then the executives are allowed to save more for retirement. This provision is enforced via "non-discrimination testing". Non-discrimination testing takes the deferral rates of "highly compensated employees" (HCEs) and compares them to non-highly compensated employees (NHCEs). An HCE in 2008 is defined as an employee with compensation of greater than $100,000 in 2007 or an employee that owned more than 5% of the business at any time during the year or the preceding year.[13] In addition to the $100,000 limit for determining HCEs, employers can elect to limit the top-paid group of employees to the top 20% of employees ranked by compensation.[13] That is for plans whose first day of the plan year is in calendar year 2007, we look to each employee's prior year gross compensation (also known as 'Medicare wages') and those who earned more than $100,000 are HCEs. Most testing done now in 2009 will be for the 2008 plan year and compare employees' 2007 plan year gross compensation to the $100,000 threshold for 2007 to determine who is HCE and who is a NHCE. The threshold was $110,000 in 2010 and it did not change for 2011. The average deferral percentage (ADP) of all HCEs, as a group, can be no more than 2 percentage points greater (or 125% of, whichever is more) than the NHCEs, as a group. This is known as the ADP test. When a plan fails the ADP test, it essentially has two options to come into compliance. It can have a return of excess done to the HCEs to bring their ADP to a lower, passing, level. Or it can process a "qualified non-elective contribution" (QNEC) to some or all of the NHCEs to raise their ADP to a passing level. The return of excess requires the plan to send a taxable distribution to the HCEs (or reclassify regular contributions as catch-up contributions subject to the annual catch-up limit for those HCEs over 50) by March 15 of the year following the failed test. A QNEC must be an immediately vested contribution. The annual contribution percentage (ACP) test is similarly performed but also includes employer matching and employee after-tax contributions. ACPs do not use the simple 2% threshold, and include other provisions which can allow the plan to "shift" excess passing rates from the ADP over to the ACP. A failed ACP test is likewise addressed through return of excess, or a QNEC or qualified match (QMAC). There are a number of "safe harbor" provisions that can allow a company to be exempted from the ADP test. This includes making a "safe harbor" employer contribution to employees' accounts. Safe harbor contributions can take the form of a match (generally totaling 4% of pay) or a non-elective profit sharing (totaling 3% of pay). Safe harbor 401(k) contributions must be 100% vested at all times with immediate eligibility for employees. There are other administrative requirements within the safe harbor, such as requiring the employer to notify all eligible employees of the opportunity to participate in the plan, and restricting the employer from suspending participants for any reason other than due to a hardship withdrawal. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.