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How to calculate how much a large stock position is really worth? | Something like cost = a × avg_spreadb + c × volatilityd × (order_size/avg_volume)e. Different brokers have different formulas, and different trading patterns will have different coefficients. |
How do brokers make money from margin accounts? | Your broker will charge you commissions and debit interest on your "overdraft" of $30,000. However it is very likely that your contract with the broker also contains a rehypothecation clause which allows your broker to use your assets. Typically, with a debt of $30,000, they would probably be entitled to use $45-60,000 of your stocks. In short, that means that they would be allowed to "borrow" the stocks you just bought from your account and either lend them to other clients or pledge them as collateral with a bank and receive interest. In both cases they will make money with your stocks. See for example clause #14 of this typical broker's client agreement. Applied to your example: In other words they will make $60 + $450 + $1,800 = $2,310 the first year. If the stock is expensive to borrow and they manage to lend it, they will make a lot more. There are by the way a few important consequences: |
Why should we expect stocks to go up in the long term? | I feel something needs to be addressed The last 100 years have been a period of economic prosperity for the US, so it's no surprise that stocks have done so well, but is economic prosperity required for such stock growth? Two world wars. The Great Depression. The dotcom bust. The telecom bust. The cold war. Vietnam, Korea. OPEC's oil cartel. The Savings and Loans crisis. Stagflation. The Great Recession. I could go on. While I don't fully endorse this view, I find it convincing: If the USA has managed 7% growth through all those disasters, is it really preposterous to think it may continue? |
Should I get a personal loan to pay on my mortgage to go “above water” to qualify for a refinance? | It depends on how long it will take you to pay off the personal loan, the rate for the personal loan, the refi rate you think you can get, how much principal you will have to add to get the refi (may have gone up since then). Since you did not provide all the necessary details, the general answer is to sketch out your total payments (mortgage + personal loan) with and without the refi over the life of the mortgage and see if you end up with more money in your pocket with the refi. My overall impression based on the details you did provide is that you will probably find it worthwhile to do the refi. |
Can a trade happen “in between” the bid and ask price? | I can think of the following situations in which one could see a trade occur between the visible best bid & offer: 1) on a public exchange, people have posted hidden limit orders with either bid prices above the best visible bid or offers below the best visible offer, and incoming orders have executed against this hidden liquidity[1]; 2) some orders may have been matched in dark pools which offer "mid-point matching" where buy and sell orders are matched using the mid-point of the best available publicly posted bid and offer as the reference price, and which executed trades are then reported to the public markets; or 3) some internalising broker has traded off exchange directly with a client and is now reporting the trade to the public as is often required. Now how exactly any of the above situations indicates that a "trend is about to come to an end", I do not know. [1] Exchanges often match orders on a price/visibility/time basis, whereby the orders are prioritised by price (better prices get to trade first), then by visibility (visible orders get to trade first) then by time (first come, first serve). |
Can we cash a check under business name? | All banks in the US that I have ever worked with will allow you to deposit checks if: In your case, you have 3 options: |
Can paying down a mortgage be considered an “investment”? | Paying down your mortgage saves lots of interest. With a long term mortgage you end up paying twice us much to the bank than the sales price of the house. Even low mortgage interests are higher than short term bonds. The saving of those interest are as much an investment as the interest you get from a bond. However, before paying off a mortgage other higher interest loans should be paid off. Also it should be considered if the mortgage interest create a tax reduction in the comparison with any other options. |
Is it worth it to buy TurboTax Premier over Deluxe if I sold investments in a taxable account? | Here are the lists for the tax forms that Deluxe and Premier include. I think you'll be fine with Deluxe because it sounds like all you need is the Schedule D/8949 forms. Deluxe actually includes most investment related forms. |
Why do stock exchanges close at night? | I believe there are electronic exchanges that run continuously, but the older ones don't want to change their practices since some people may have strategies which (claim they) are based on this behavior so there would be a lot of unhappy people if it was altered. The pause doesn't seem to do any harm. There are alternatives if you dislike it. Don't try to fix what isn't broken. |
How to calculate S corporation distribution from past K-1s? | Phil's answer is correct. Just to add to his response: Distributions are not taxable events -- you already paid your taxes, so you can take out $50k or $52k and the IRS is not concerned. You can simply write yourself a check for any amount you choose! To answer your specific question: to match your K1 losses and profit exactly, you could take out $50k. But that might leave the business strapped for cash. One way to decide how much to take out is to use your balance sheet. Look at your retained earnings (or just look at the business bank account balance), subtract however much cash you think you need to keep on hand for operations, and write yourself a check for the rest. |
What is 'consolidating' debt and why do people do it? | Debt consolidation is basically getting all your debt into one loan. This is possibly more convenient, and lets you close the other accounts (in the case of credit cards, preventing you from incurring any more debt). Ideally, your consolidated debt will have a better interest rate, so it saves you money as well. If you're defaulting on your debt already, you're likely combining this process with some negotiation with your existing creditors. |
What's an economic explanation for why greeting cards are so expensive? | (At least in the UK) a company named Card Factory has been very successful in undercutting the competition using the classic pile 'em high and sell 'em cheap strategy with less glamorous high-street locations than 'traditional' stores. Interestingly it doesn't seem to have spawned either competition at their price point or lowered the general prices for greetings cards even in low-margin businesses like supermarkets. A quick glance at their annual report suggests they're doing reasonably well with this approach. |
What are some good ways to control costs for groceries? | Probably my biggest cost saving is to make my own sandwiches for lunch. I take this one step further by buying joints of meat to roast and slice for the filling. This not only tastes better but is quite a bit cheaper. For example today I roasted a 5 kg ham (about 11 lbs), it cost me £16 to buy (around $25), but I've sliced it, wrapped the slices in foil and frozen them. I've made around 20 packs, each pack has enough ham for sandwiches for me and my wife for a day. I also do this with beef, chicken and turkey and just get a pack of whatever we fancy out of the freezer the night before so it's defrosted enough to make sandwiches in the morning. |
How is stock price determined? | Yes, stock price is determined by the last trade price. There are always going to be people who have put in a price to buy a stock (called a bid price) and people who have put in a price to sell a stock (called an ask price). Based on your example, if the last trade price for the stock was $1.23, then you might have the following bid prices and ask prices: So if you put in a limit order to buy 100 shares at $100, you would buy the 40 shares at $1.23, the 15 shares at $1.24, and the 45 shares $1.25. The price of the stock would go up to $1.25. Conversely, if you put in a limit order to sell 100 shares at $0.01 (I don't think any broker would allow a sell price of $0.00), you would sell 30 shares at $1.22, 20 shares at $1.21, and 50 shares at $1.20. The price of the stock would go down to $1.20. |
Does it make sense to buy a house in my situation? | Short answer: NO. Do NOT buy a house. Houses are a "luxury" good (see Why is a house not an investment?). Although the experience of the early 2000s seemed to convince most people otherwise, houses are not an investment. Historically, it has usually been cheaper to rent, because owning a house has non-pecuniary benefits such as the ability to change things around to exactly the way you like them. Consult a rent vs. buy calculator for your area to see if your area is exceptional. I also would not rely on the mortgage interest deduction for the long term, as it seems increasingly likely the Federal government will do away with it at some point. The first thing you must do is eliminate your credit card and other debts. Try to delay paying your lawyers and anyone else who is not charging you interest (or threatening to harm you in other ways) as long as possible. Save enough money to maintain your current standard of living for 6 months should you lose your job, then put the rest in your 401(k). Another word of advice: learn to live with less. Your kids do not need separate bedrooms. Hopefully one day the time will come when you can afford a larger house, but it should not be your highest priority. You and your kids will all be worse off in the end should you have unexpected financial difficulties and you have overextended yourself to buy a house. Now that your credit score is up, see if you can renegotiate your credit card loans or negotiate a new loan with lower interest. |
How can I check my credit score? | Since no one else answered this part of your question yet: Checking your own credit score or report will not affect it in any way. It only hurts you when someone looks it up to run a credit check at your request for the purpose of possibly getting a loan, for example a car dealership. This only hurts it a tiny bit, and is not worth worrying about unless you are going to 20 different car dealerships who each do a check. However, it is a good idea not to let them run your credit until you are seriously ready to buy a car. In fact, it is better to just get financing somewhere else and not let them run it at all. |
How much time does a doctor's office have to collect balance from me? | They have forever to collect a balance from you. Furthermore they can add whatever penalties and fees they wish to increase that balance. Worst of all, they don't have to remind you or send you bills or any other notification. You owed it when you left the office. (There very well could be local laws that require notifications, but that isn't really the issue here.) That dentist has every right to deny you service until you settle the account. Forever. The statute of limitations on collecting that debt via court: http://www.bankrate.com/finance/savings/when-does-your-debt-expire.aspx Which covers the rules on HOW LONG they have to collect the debt. Owing the money is one thing, but the rules and tools that you creditor has to collect the debt are another. You are probably worried about them suing you. But if you don't pay the debt (or settle in some way), that dentist can refuse to provide services to you, even if they write off the debt. Ways you can be punished by your dentist for not paying the bill are: Depending on your jurisdiction and/or type of debt, they typically only report it on your credit (if they are reporting at all) for 7 years. Even if you pay and settle the account, it will still be reported on your credit report for 7 years. The difference is how it is reported. They can report that "user133466 is a super reliable person who always pays debts on time". They can say "user133466 is a flake who pays, but takes a while to pay". Or they can say "user133466 is a bad person to provide services before collecting money, because user133466 don't pay bills". Other people considering lending you money are going to read these opinions and decide accordingly if they want to deal with you or not. And they can say that for 7 years. The idea of credit reporting is that you settle up as soon as possible and get your credit report to reflect the truth. One popular way to collect a debt to is to sue you for it. There, each state has a different time period on how long a creditor has to sue you for a debt. http://www.bankrate.com/finance/credit-cards/state-statutes-of-limitations-for-old-debts-1.aspx If you pay part of the debt, that will often reset the clock on the statute of limitations, so be sure any partial or negotiated settlements state very clearly, in writing, that payment is considered payment in full on the debt. Then you keep that record forever. There are other interesting points in the Fair Debt Collection Practices Act. See Debt collectors calling? Know your rights. They can only contact you in certain ways, they must respond to you in certain ways, and they have limits on what they can say, who they can say it to, and when they can say it. There are protections from mean or vicious bill collectors, but that doesn't sound like who you are dealing with. I don't know that the FDCPA is a tool you need to use in this case. You should negotiate your debt and try your best to settle up. From your post, both parties dropped the ball, and both parties should give a little. You should pay no or minor late fees, and the doctor should report your credit positively when you do so. If you both made honest mistakes, they both parties should acknowledge that and be fair, and not defensive. This is not legal advice. But you owe the debt, so you should settle up. I don't think it is fair for you to not pay because they didn't mail you a paper. However I also do not think it is fair for the doctor to run up fees and not remind you of the bill. Finally, you didn't bring up insurance or many other details. Those details can change the answer. |
Losing Money with Norbert's Gambit | There's a possibility to lose money in exchange rate shifts, but just as much chance to gain money (Efficient Market Hypothesis and all that). If you're worried about it, you should buy a stock in Canada and short sell the US version at the same time. Then journal the Canadian stock over to the US stock exchange and use it to settle your short sell. Or you can use derivatives to accomplish the same thing. |
Borrowing money and then investing it — smart or nart? | The biggest concern is how you get $250,000 in unsecured credit. It's unlikely that you will be loaned that amount at a percentage lower than what you expect to earn. Unsecured credit lines are rarely lower than 10% and usually approach 20%. On top of that, for a bank to approve you for that credit line, you have to have a high credit score and an income to support the payments on that credit line. But lets suspend disbelief and assume that you can get the money you want on loan. You would then be expected to pay back that 10%, but investments don't go up uniformly. Some years they go up 15-20% and other years they go down 10%. What do you do if you have to sell some of your investments in a down year? That money is no longer invested, and you can't recover it with the following up year because you had to take too much out to cover the loan payments. You'll be out of money long before the loan is repaid because you can expect there will be bad years in the stock market that will eat away at your investment. There were a lot of people who took their money out of the market after the crash of 2008. If they had left their money in through 2009, they would have made all that money back, but if you have a loan to pay you have to pull money out in the bad years as well as the good years. Unless you have a lucky streak of all good years, you're doomed. |
Are traders 100% responsible for a stock's price changes? | Yes, the value of a stock is completely, 100% determined by what people are willing to pay for it in conjunction with what people who have it are willing to sell it for. If something really bad happened to a company, like their only factory burned to the ground, and the traders didn't care, then I guess, in that scenario, the value of the stock would not change. But you can spin all sorts of hypotheticals of that sort. If dogs could talk, would German Shepherds speak German? Etc. Any answer is pretty meaningless because the premise is wildly unlikely. As CQM notes, "traders" in this context means everyone who buys or sells stock. If you buy stock, that includes you. They're not some mystical cabal somewhere. If you see a stock listed at, whatever, $50, and you are not willing to pay more than $40 for it, then you refuse to buy, and so you tend to force the price down. If you're not a billionaire, then your impact on the market is tiny, but the market is made up of millions of people each with tiny influence. Note that all this is true not just of the stock market, but of every product on the market. A product is worth whatever the owner is willing to sell it for and people are willing to pay. This is what determines the price of everything from houses to toasters. It's a little theory I've invented that I like to call, "the law of supply and demand". :-) |
Will I receive a 1099-B if I bought stocks but didn't sell? | A purchase of a stock is not a taxable event. No 1099 to worry about. Welcome to Money.SE |
Which U.S. online discount broker is the best value for money? | For self-service type online customers, OptionsXpress gives me far better trading features(like technicals advanced conditions) and tools, ACH money management & scheduling, fullfillment too. $9 stock trades. I don't know if they yet share Schwab's (their new parent company?) commission-free ETFs getting so trendy nowadays. |
Why do sole proprietors in India generally use a current account? | Current account offers a lot of benefits for sole proprietors. Think of it like bank account for a company. The bank provides a host of facilities for the company. A sole proprietor does not have enough value as that of a company for a bank but needs similar services. Thus Indian banks offer a toned down version of the account offered to a company. Current account offer very good overdraft ( withdrawing money even if balance is zero). This feature is very useful as business cycles and payment schedules can be different for each supplier/customer the sole proprietor does business with. Imagine the sole proprietor account has balance of zero on day 0. customer X made payment by cheque on day 1. Cheques will get credited only on Day 3 (Assume Day 2 is a national holiday or weekend). Sole proprietor gave a cheque to his supplier on day 0. The supplier deposited the cheque on Day 0 and the sole proprietor's bank will debit the the proprietor's account on day 1. As customer's cheque will get credited only day 3, the overdraft facility will let the proprietor borrow from the bank Interestingly, current accounts were offered long before Indian banks started offering customized accounts to corporate customers. The payment schedule mentioned in my example is based on a clearing system > 10 years ago. Systems have become much simpler now but banks have always managed to offer something significantly extra on lines similar to my example above to proprietor over a savings bank account |
ACH processing time of day | It depends on the bank and network. Banks are to provide outgoing data at the certain time for the processing by the central clearing house (the Federal Reserve system, for ACH), which then distributes incoming data back to the banks. All this has to be done between the closing of the business day and the opening of the next one. If the transaction hasn't completed the full path during that time - it will wait at the position it was stuck at until the next cycle - next night. That's why sometimes ACH transactions take more than 1 day to complete (if, for example, multiple Fed banks have to be involved). |
Why credit cards are sold through banks and not from Visa or MasterCard directly | Visa and Mastercard are not consumer-oriented companies. They do not consider individual consumers as their direct clients, and do not sell directly to them. Instead, their clients are financial institutions who participate in their networks (which is what they're selling). The institutions target the individual consumers (merchants and credit card holders). American Express, for example, has a different business model. AX doesn't only sell network services to financial institutions, but also services to individual consumers. You can get a AX credit card/merchant account directly with AX, or through their client bank. |
Why do 10 year-old luxury cars lose so much value? | The answer is very simple. Part of the luxury is having the cutting edge technology with the very latest features. The price premium is not just from increased build quality; it's simply a perception. Additionally, 10 years takes its toll on a car. The smooth suspension gets rougher over time, and all the little features start to break down. Part of the price of that car factors in the expense of expected repairs. That's true of every car, but the repairs are more expensive when there are lots of gadgets to break down, especially on imports. |
How to read Google Finance data on dividends | The dividend is for a quarter of the year, three months. 80 cents is 3.9% of $20.51. Presumably the Div/yield changes as the stock price changes. On Yahoo, they specify that the yield is based on a particular stated date. So it's only the exact number if the stock trades at the price on that date. |
Non-owner car insurance and registration | this is a bit unusual, but not unheard of. i have known more than one car whose owner was not its driver. besides the obvious risk that the legal owner of the car will repossess it, this seems fairly safe. your insurance should cover any financial liability that you incur during an accident. even if the car is repossessed by the owner, you are only out the registration fees. i would suggest you avoid looking this gift horse in the grill. her father on the other hand might be in for some drama and financial mess if he has a falling-out with his "friend". this arrangement reminds me of divorces where one spouse owns the car, but the other drives it and pays the loan. usually, when the relationship goes south, one spouse is forced to sell the car at a loss. |
Income tax on my online drop-shipping business (India) | Please consult a tax advisor. You may be voilating the FEMA [Foreign Exchange Management Act] and can land into trouble. Further what you are doing can land up into various other acts as illegal including AML. Further if there is income generated by Indian citizen in India, he is still liable to pay tax, irrespective of whether you get the funds back into India. Edit: AML is Anti Money Laundering. Your transaction is sure to raise AML triggers as it looks like converting Black Money to White in round about way. Once the triggers are raised, RBI division will investigate further to verify what you are doing. If you are able to prove that this is a valid transaction, you would be OK on AML front. How will Income Tax Know? - If they don't know does not mean you are not liable for tax. - Any suspicious transactions would get investigated and sooner or later Income Tax would know about it and can cause a serious problem. - It is irrelevant where you have kept the money, if you have earned something, its taxable. For it not to be taxable you need to conduct this business differently. Please consult a tax adviser who will advice you on the tax-ability of this type of transaction. |
Why buy insurance? | The definition of insurance is the transfer of risk. Thus, you're paying for transferring of a risk (of an item/property) to the insurer (carrier), so that they bear the financial burden of a loss/accident and not you. You could always self-insure, but a lot of times, insurance is cheaper, since due to the "Law of Large Numbers" the insurer can just charge a premium that is small percentage in comparison to the cost of self-insuring. |
Where to find the full book of outstanding bids/asks for a stock? | For starters, that site shows the first 5 levels on each side of the book, which is actually quite a bit of information. When traders say the top of the book, they mean just the first level. So you're already getting 8 extra levels. If you want all the details, you must subscribe to the exchange's data feeds (this costs thousands of dollars per month) or open an account with a broker who offers that information. More important than depth, however, is update frequency. The BATS site appears to update every 5 seconds, which is nowhere near frequently enough to see what's truly going on in the book. Depending on your use case, 2 levels on each side of the book updated every millisecond might be far more valuable than 20 levels on each side updated every second. |
Are banks really making less profit when interest rates are low? | Banks make less profit when "long" rates are low compared to "short" rates. Banks lend for long term purposes like five year business loans or 30 year mortgages. They get their funds from (mostly) "short term" deposits, which can be emptied in days. Banks make money on the difference between 5 and 30 year rates, and short term rates. It is the difference, and not the absolute level of rates, that determines their profitability. A bank that pays 1% on CDs, and lends at 3% will make money. During the 1970s, short rates kept rising,and banks were stuck with 30 year loans at 7% from the early part of the decade, when short rates rose to double digits around 1980, and they lost money. |
What are these fees attached to mutual fund FSEMX? | FSEMX has an annual expense ratio of 0.1% which is very low. What that means is that each month, the FSEMX will pay itself one-twelfth of 0.1% of the total value of all the shares owned by the shareholders in the mutual fund. If the fund has cash on hand from its trading activities or dividends collected from companies whose stock is owned by FSEMX or interest on bonds owned by FSEMX, the money comes out of that, but if there is no such pot (or the pot is not large enough), then the fund manager has the authority to sell some shares of the stocks held by FSEMX so that the employees can be paid, etc. If the total of cash generated by the trading and the dividend collection in a given year is (say) 3% of the share value of all the outstanding mutual fund, then only 2.9% will be paid out as dividend and capital gain distribution income to the share holders, the remaining 0.1% already having been paid to FSEMX management for operating expenses. It is important to keep in mind that expenses are always paid even if there are no profits, or even if there are losses that year so that no dividends or capital gains distributions are made. You don't see the expenses explicitly on any statement that you receive. If FSEMX sells shares of stocks that it holds to pay the expenses, this reduces the share value (NAV) of the mutual fund shares that you hold. So, if your mutual fund account "lost" 20% in value that year because the market was falling, and you got no dividend or capital gains distributions either, remember that only 19.9% of that loss can be blamed on the President or Congress or Wall Street or public-sector unions or your neighbor's refusal to ditch his old PC in favor of a new Mac, and the rest (0.1%) has gone to FSEMX to pay for fees you agreed to when you bought FSEMX shares. If you invest directly in FSEMX through Fidelity's web site, there is no sales charge, and you pay no expenses other than the 0.1% annual expense ratio. There is a fee for selling FSEMX shares after owning them only for a short time since the fund wants to discourage short-term investors. Whatever other fees finance.yahoo.com lists might be descriptive of the uses that FSEMX puts its expense ratio income to in its internal management, but are not of any importance to the prudent investor in FSEMX who will never encounter them or have to pay them. |
How do you calculate the P/E ratio by industry? | You could sum the P/E ratio of all the companies in the industry and divide it by the number of companies to find the average P/E ratio of the industry. Average P/E ratio of industry = Sum of P/E ratio of all companies in Industry / Number of companies in industry |
“Business day” and “due date” for bills | I don't believe Saturday is a business day either. When I deposit a check at a bank's drive-in after 4pm Friday, the receipt tells me it will credit as if I deposited on Monday. If a business' computer doesn't adjust their billing to have a weekday due date, they are supposed to accept the payment on the next business day, else, as you discovered, a Sunday due date is really the prior Friday. In which case they may be running afoul of the rules that require X number of days from the time they mail a bill to the time it's due. The flip side to all of this, is to pick and choose your battles in life. Just pay the bill 2 days early. The interest on a few hundred dollars is a few cents per week. You save that by not using a stamp, just charge it on their site on the Friday. Keep in mind, you can be right, but their computer still dings you. So you call and spend your valuable time when ever the due date is over a weekend, getting an agent to reverse the late fee. The cost of 'right' is wasting ten minutes, which is worth far more than just avoiding the issue altogether. But - if you are in the US (you didn't give your country), we have regulations for everything. HR 627, aka The CARD act of 2009, offers - ‘‘(2) WEEKEND OR HOLIDAY DUE DATES.—If the payment due date for a credit card account under an open end consumer credit plan is a day on which the creditor does not receive or accept payments by mail (including weekends and holidays), the creditor may not treat a payment received on the next business day as late for any purpose.’’. So, if you really want to pursue this, you have the power of our illustrious congress on your side. |
Do I need to pay Income Tax if i am running a escrow service in India | This may be closed as not quite PF, but really "startup" as it's a business question. In general, you should talk to a professional if you have this type of question, specifics like this regarding your tax code. I would expect that as a business, you will use a proper paper trail to show that money, say 1000 units of currency, came in and 900 went out. This is a service, no goods involved. The transaction nets you 100, and you track all of this. In the end you have the gross profit, and then business expenses. The gross amount, 1000, should not be the amount taxed, only the final profit. |
Start Investing - France | I am not interested in watching stock exchange rates all day long. I just want to place it somewhere and let it grow Your intuition is spot on! To buy & hold is the sensible thing to do. There is no need to constantly monitor the stock market. To invest successfully you only need some basic pointers. People make it look like it's more complicated than it actually is for individual investors. You might find useful some wisdom pearls I wish I had learned even earlier. Stocks & Bonds are the best passive investment available. Stocks offer the best return, while bonds are reduce risk. The stock/bond allocation depends of your risk tolerance. Since you're as young as it gets, I would forget about bonds until later and go with a full stock portfolio. Banks are glorified money mausoleums; the interest you can get from them is rarely noticeable. Index investing is the best alternative. How so? Because 'you can't beat the market'. Nobody can; but people like to try and fail. So instead of trying, some fund managers simply track a market index (always successfully) while others try to beat it (consistently failing). Actively managed mutual funds have higher costs for the extra work involved. Avoid them like the plague. Look for a diversified index fund with low TER (Total Expense Ratio). These are the most important factors. Diversification will increase safety, while low costs guarantee that you get the most out of your money. Vanguard has truly good index funds, as well as Blackrock (iShares). Since you can't simply buy equity by yourself, you need a broker to buy and sell. Luckily, there are many good online brokers in Europe. What we're looking for in a broker is safety (run background checks, ask other wise individual investors that have taken time out of their schedules to read the small print) and that charges us with low fees. You probably can do this through the bank, but... well, it defeats its own purpose. US citizens have their 401(k) accounts. Very neat stuff. Check your country's law to see if you can make use of something similar to reduce the tax cost of investing. Your government will want a slice of those juicy dividends. An alternative is to buy an index fund on which dividends are not distributed, but are automatically reinvested instead. Some links for further reference: Investment 101, and why index investment rocks: However the author is based in the US, so you might find the next link useful. Investment for Europeans: Very useful to check specific information regarding European investing. Portfolio Ideas: You'll realise you don't actually need many equities, since the diversification is built-in the index funds. I hope this helps! There's not much more, but it's all condensed in a handful of blogs. |
Can I negotiate a credit card settlement by stopping payments? | This strategy will have long lasting effects since negative items can persist for many years, making financing a home difficult, the primary source of household credit. It is also very risky. You can play hard, but then the creditor may choose you to be the one that they make an example out of by suing you for a judgement that allows them to empty your accounts and garnish your wages. If you have no record of late payments, or they are old and/or few, your credit score will quickly shoot up if you pay down to 10% of the balance, keep the cards, and maintain that balance rate. This strategy will have them begging you to take on more credit with offers of lower interest rates. The less credit you take on, the more they'll throw at you, and when it comes time to purchase a home, more home can be bought because your interest rates will be lower. |
How long should I keep an uncleared transaction in my checkbook? | With a check, there are limits on cashing the stale check, but that is set by the banks involved. With a debit card transaction, it will be up the the debit card company and your bank. Imagine a situation where a person finds an old check and tries to cash it at their bank. If the bank considers the check stale, they might reject it, or put a longer hold on the check. When the check writers bank gets the transaction, they will also decide what to do. If they reject it, the first bank will reverse the transaction. You can't count on a 90 day, or 180 day limit; most banks will ask you to put a stop payment on an old check that you don't want cashed. This is especially important step if you write a replacement check. Because there is no check number to put a stop payment on, in fact the temporary hold will fall off after a few days. There doesn't appear to be a way to stop an old transaction. Be careful if you do contact the restaurant, you could end up double paying for the meal if they swipe your card again. Your best option may be just to keep the transaction as pending. |
What to do when paying for an empty office space? | Generally speaking, yes, you're obliged to pay rent for the remainder of the lease term. But the landlord is obliged to mitigate damages, so if you can find a suitable tenant the landlord has to let you out of the lease. |
Can I contribute to an IRA from investment income? | Traditional IRA contributions can be made if you have compensation and the amount of the contribution is limited to the smaller of your compensation and $5500 ($6000 if age 50 or more). Note that compensation (which generally means earnings form working) is not just what appears on a W-2 form as salary or wages; it can be earnings from self-employment too, as well as commissions, alimony etc (but not earnings from property, pensions and annuities, certain types of partnership income) You must also not have attained age 70.5 in the year for which the contribution is made. Even if you don't have any compensation of your own, you can nonetheless make a Traditional IRA contribution if your spouse has compensation as long as you are filing a joint tax return with your spouse. For spouses filing a joint return, the limits are still the same $5500/$6000 for each spouse, and the sum total of Traditional IRA contributions for both spouses also must not exceed the sum total of earned income of both spouses. The age limits etc are all still applicable. Note that none of this says anything about whether the contributions are deductible. Everyone meeting the above requirements is eligible to make contributions to a Traditional IRA; whether the contributions can be deducted from current income depends on the income: those with high enough incomes cannot deduct the contribution. This is different from Roth IRAs to which people with high incomes are not permitted to make a contribution at all. Finally, the source of the cash you contribute to the IRA can be the proceeds of the stock sale if you like; you are not required to prove that the cash received from compensation is what you sent to the IRA custodian. Read Publication 590 (available on the IRS website www.irs.gov) if you need an authoritative reference. |
Does Joel Greenblatt's “Magic Formula Investing” really beat the market? | Probably not. Once the formula is out there, and if it actually seems to work, more and more investors chase the same stocks, drive the price up, and poof! The advantage is gone. This is the very reason why Warren Buffett doesn't announce his intentions when he's buying. If people know that BRK is buying, lots of others will follow. |
Car insurance (UK) excludes commute to and from work, will not pay on claim during non-commute | You should start by making a written complaint to the insurance company itself. You have two angles of attack: What was discussed when she was sold the policy. Make sure you set out exactly what you believe you were told and highlight that they didn't ask about commuting (assuming that's the case). Ask them to preserve any recordings they have of the call and to send you a copy. The nature of the journey where the accident happened. From the description - unless it was part of a journey to and from work - there's no good reason for them to classify it as commuting. Make sure you make good written notes now of anything that happened verbally - phone calls etc, and keep doing this as the process goes along. If that written complaint doesn't work, your next step is to go to the Financial Ombudsman, who are a neutral adjudication service. If the Ombudsman doesn't support your case, you could go to court directly, but it'll be expensive and a lot of effort, and by this stage it'd be unlikely you would win. The Ombudsman's rejection wouldn't count against you directly, but it'd be a strong indication that your case is weak. See https://www.moneyadviceservice.org.uk/en/articles/making-a-complaint-about-an-insurance-company for a more detailed walk-through. |
What will my taxes be as self employed? | The amount of the income taxes you will owe depends upon how much income you have, after valid business expenses, also it will depend upon your filing status as well as the ownership form of your business and what state you live in. That said, you will need to be sure to make the Federal 1040ES quarterly prepayments of your tax on time or there will be penalties. You also must remember that you will be needing to file a schedule SE with your 1040. That is for the social security taxes you owe, which is in addition to your income taxes. With an employer/employee situation, the FICA withhoding you have seen on your paycheck are matched by the same payment by your employer. Now that you are self-employed you are responcible for your share and the employer share as well; in this situation it is known as self-employment tax. the amount of it will be the same as your share of FICA and half of the employer's share of FICA taxes. If you are married and your wife also is working self-employed, then she will have to files herown schedule SE along with yours. meaning that you will pay based on your business income and she will pay baed on hers. your 1040Es quarterly prepayment must cover your income tax and your combined (yours and hers) Self Employment taxes. Many people will debate on the final results of the results of schedule SE vrs an employee's and an employer's payments combined. If one were to provides a ball park percentage that would likely apply to you final total addition to your tax libility as a result of needing schedule SE would tend to fluctuate depending upon your total tax situation; many would debate it. It has been this way since, I first studied and use this schedule decades ago. For this reason it is best for you to review these PDF documents, Form 1040 Schedule SE Instructions and Form 1040 Schedule SE. As for your state income taxes, it will depend on the laws of the state you are based in. |
Data source for historical intra-day bid/ask price data for stocks? | This amazing site will answer all your data questions. You will need some patience and willingness to spend to get the data that you want. A lot of data is available for free too` https://www.quandl.com/ |
Are U.S. salaries typically measured/reported before tax, or after tax? | In the U.S., virtually all salaries are expressed as "gross salaries", which are before the taxes that the individual must pay on their income. The numbers shown in the links are almost certainly gross salary figures. However, the "gross salary" is not the entire "total compensation" number, which is the total value of all compensation and benefits that the employee receives for his work. Total compensation includes not only salary and bonuses, but the cost or value of any employer-paid healthcare, retirement, company car, expense account, stock options, and other valuable goods or services. That's still not the total amount of money the company has to pay to have you; there are employer-paid payroll taxes totaling 6.2% of your gross salary, plus practical costs like the cost of your computer, cubicle or office furniture, and the portion of utility costs that keep you well-lit, clean and comfortable. This complete number is called "total employee cost", and the general rule of thumb is that it's double your gross cash compensation (salary + bonuses). Lastly, $100k in California isn't worth as much, in real terms, as $100k in other parts of the U.S. The cost of living in California, especially in Silicon Valley where the majority of the people who make six figures by being C++ programmers are located, is ridiculously expensive. There are other tech hubs in the U.S., like DFW, Austin TX, Atlanta GA, St Louis MO, Raleigh NC, etc where people earn less, but also spend less to live and so can use more of their salary in a "discretionary" manner. |
What is the point of owning a stock without dividends if it cannot be resold? | If that condition is permanent -- the stock will NEVER pay dividends and you will NEVER be able to sell it -- then yes, it sounds to me like this is a worthless piece of paper. If there is some possibility that the stock will pay dividends in the future, or that a market will exist to sell it, then you are making a long-term investment. It all depends on how likely it is that the situation will change. If the investment is small, maybe it's worth it. |
Unmarried Couple Splitting up with Joint Ownership of Home | Because you're not married, its a partnership agreement, and unless there's a written contract, either the two of you agree on how to handle the home, or it's off to court you go. If you were both supposed to pay for the home, and he failed to for a a while, that would put him in breach of contract which I would think gives you a good position in court. On the other hand, if you are at all concerned about your safety from this louse, remember, he knows exactly where the house is. |
Auto Insurance: Adding another car to the existing policy (GEICO) | When adding a new or used car to the policy I have found that it is best to call the company in advance. I let them know I will be adding a car to the policy in the next few days, but I have no idea of the VIN or other info. I have a policy with a different company and they have told me that I am automatically covered as long as I provide the VIN and other details within 30 days. The next business day after the purchase I provide everything they need, and a new bill is generated. When removing a car from the policy it has worked the same way, a new bill is generated when removing the car. Depending on the timing and amounts they have either credited my account or sent a check. They should have no problem removing a car that was accidentally on the policy. It might be that they charge you a days coverage. When you call them about the refund, ask if the coverage for an additional vehicle is automatic, that way you don't have to provide the info until after you get the car home. |
What is a Discount Called in the Context of a Negative Interest Rate? | Negative Yields on Bonds is opposite of Getting profit on your investment. This is some kind of new practice from world wide financial institute. the interest rate is -0.05% for ten years. So a $100,000 bond under those terms would be "discounted" to $100,501, give or take. No, actually what you are going to get out from this investment is after 10 years when this investment is mature for liquidation, you will get return not even your principle $100,000 , but ( (Principle $100,000) minus (Negative Yields @ -0.05) Times ( 10 Years ) ) assume the rates are on simple annual rate. Now anyone may wander why should someone going to buy this kind of investment where I am actually giving away not only possible profit also losing some of principle amount! This might looks real odd, but there is other valid reason for issuing / investing on such kind of bond. From investor prospective: Every asset has its own 'expense' for keeping ownership of it. This is also true for money/currency depending on its size. And other investment possibility and risk factor. The same way people maintain checking account with virtually no visible income vs. Savings account where bank issue some positive rate of interest with various time factor like annually/half-yearly/monthly. People with lower level of income but steady on flow choose savings where business personals go for checking one. Think of Millions of Ideal money with no secure investment opportunity have to option in real. Option one to keeping this large amount of money in hand, arranging all kind of security which involve extra expense, risk and headache where Option two is invest on bond issued by Government of country. Owner of that amount will go for second one even with negative yields on bonds where he is paying in return of security and risk free grantee of getting it back on time. On Issuing Government prospective: Here government actually want people not to keep money idle investing bonds, but find any possible sector to invest which might profitable for both Investor + Grater Community ultimately country. This is a basic understanding on issue/buy/selling of Negative interest bearing bond on market. Hope I could explain it here. Not to mention, English is not my 1st language at all. So ignore my typo, grammatical error and welcome to fix it. Cheers! |
Is there a general guideline for what percentage of a portfolio should be in gold? | I think most financial planners or advisors would allocate zero to a gold-only fund. That's probably the mainstream view. Metals investments have a lot of issues, more elaboration here: What would be the signs of a bubble in silver? Also consider that metals (and commodities, despite a recent drop) are on a big run-up and lots of random people are saying they're the thing to get in on. Usually this is a sign that you might want to wait a bit or at least buy gradually. The more mainstream way to go might be a commodities fund or all-asset fund. Some funds you could look at (just examples, not recommendations) might include several PIMCO funds including their commodity real return and all-asset; Hussman Strategic Total Return; diversified commodities index ETFs; stuff like that has a lot of the theoretical benefits of gold but isn't as dependent on gold specifically. Another idea for you might be international bonds (or stocks), if you feel US currency in particular is at risk. Oh, and REITs often come up as an inflation-resistant asset class. I personally use diversified funds rather than gold specifically, fwiw, mostly for the same reason I'd buy a fund instead of individual stocks. 10%-ish is probably about right to put into this kind of stuff, depending on your overall portfolio and goals. Pure commodities should probably be less than funds with some bonds, stocks, or REITs, because in principle commodities only track inflation over time, they don't make money. The only way you make money on them is rebalancing out of them some when there's a run up and back in when they're down. So a portfolio with mostly commodities would suck long term. Some people feel gold's virtue is tangibility rather than being a piece of paper, in an apocalypse-ish scenario, but if making that argument I think you need physical gold in your basement, not an ETF. Plus I'd argue for guns, ammo, and food over gold in that scenario. :-) |
Can saving/investing 15% of your income starting age 25, likely make you a millionaire? | I see a lot of answers calculcating with incomes that are much higher than yours, here is something for your situation: If you would keep your current income for the rest of your life, here is approximately how things would turn out after 40 years: All interest is calculated relative to the amount in your portfolio. Therefore, lets start with 1 dollar for 40 years: With your current income, 15% would be 82.5 dollar. At 12% this would over 40 years get you almost 1 million dollar. I would call a required return of more than 12% not 'likely'. The good news, is that your income will likely increase, and especially if this happens fast things will start to look up. The bad news is, that your current salary is quite low. So, it basically means that you need to make some big jumps in the next few years in order to make this scenario likely. If you can quickly move your salary towards ranges that are more common in the US, then 15% of your income can build up to a million before you retire. However, if you just follow gradual growth, you would need to get quite lucky to reach a million. Note that even if reaching a million appears unlikely, it is probably still a good idea to save! |
Should Emergency Funds be Used for Infrequent, but Likely, Expenses? | Which of these categories are emergency funds meant to cover? Emergency funds are for emergencies, which to me means expenses that are unanticipated and can't be covered out of "normal" cash-flow. Oil changes are not an "emergency" and should be part of your normal budget. Car/house repairs and doctor visits might be an emergency depending on the severity and the urgency (e.g. do I need to fix this now or can I save up and fix it?) For known, predictable expenses that are infrequent (Christmas, birthdays, car insurance, home insurance/taxes if it's not part of your mortgage payment), I use an escrow account. I calculate how much I'll need for all of those things put together over the year and set aside a fixed amount each paycheck to ensure that I have enough to cover each item. You could do something similar for minor doctor visits, car repairs, etc. Estimate how much you might spend and set aside some money each month. If you find you're spending more than you thought, just increase the amount. You can use envelopes for each type of expense, have a separate checking account for those, whatever. The point is to set it aside and make sure you have enough left over to cover your known expenses. The whole point of an emergency fund is to be able to pay cash for emergencies rather than borrowing to pay them and dealing with interest, late fees, etc. |
Is it a good idea to teach children that work is linearly related to income? | As a parent I think you absolutely have to teach them that income is related to work because (for most people at least) it's a more fundamental principle than budgeting, investments, interest, etc. Once they've learned that the primary source of income is work, then you can start teaching them what to do with it, i.e. how to budget, economise, save, invest, etc. |
Why is it good to borrow money to buy a house? | You can explore the scenarios in which it is better to rent or to buy using this application: http://demonstrations.wolfram.com/BuyOrRentInvestmentReturnCalculator/ In the possibly unlikely scenario shown below, at the term of the mortgage (20 years) the tenant and the buyer have practically the same return on investment. At this point the tenant's savings would be sufficient to buy a house equivalent to the buyer's, and this would be the advisable course of action (based on the figures alone). |
Why I cannot find a “Pure Cash” option in 401k investments? | Your employer decides what options you have in the 401k. You can talk to your HR about that. There are requirements for diversity of various types of investments, money-market funds is being one of them. That is the investment account equivalent of cash. While it is not really cash but rather short term bonds - the term is generally very short and the risk is very limited. You can't earn much there, and you can't lose much there - so for all intents and purposes you can treat is as a cash-equivalent. |
Extra cash - go towards mortgage, or stock? | It's six of one a half dozen of another. Investing the cash is a little more risky. You know exactly what you'll get by paying down your mortgage. If you have a solid emergency fund it's probably most advisable to pay down your mortgage. If your mortgage is 3% and your investment makes 3.5% you're talking about a taxable gain of 0.5% on the additional cash. Is that worth it to you? Sure, the S&P has been on a tear but remember, past results are not a guarantee of future performance. |
What to do if my aging father is sustaining a hobby that is losing several thousand dollars every month? | You've already counted the cost. It will cost your family ~$10,000 per month until your father dies, or until there's no money left, to enable him to pretend that he is a successful business owner. I'd ask him when he thinks business is going to pick up again. He may be honest with himself. Or, ask him to consider what will happen if he outlives the money that's going out the door. Ask him if he would like to be bankrupt on top of needing to close his business. (I don't view asking those questions as being unloving, by the way.) |
Is it accurate to say that if I was to trade something, my probability of success can't be worse than random? | Don't compare investing with a roll of the dice, compare it with blackjack and the decision to stand or hit, or put more money on the table (double down or increase bet size) , based on an assessment of the state of the table and history. A naive strategy of say "always hitting to 16" isn't as awful as randomly hitting and standing (which, from time to to time will draw to 21 fair and square) , but there's a basic strategy that gets close to 50% and by increasing or decreasing bet based on counting face cards can get into positive expectations. Randomly buying and selling stock is randomly hitting. Buying a market index fund is like always hitting to 16. Determining an asset allocation strategy and periodically rebalancing is basic strategy. Adjusting allocations based on business cycle and economic indicators is turning skill into advantage. |
Why don't more people run up their credit cards and skip the country? | I take it the premise of the question is that we're assuming the person isn't worried about the morals. He's a criminal out for a quick buck. And I guess we're assuming that wherever you go, they wouldn't arrest you and extradite you back to the U.S. As others have noted, you can't just walk into a bank the day you graduate high school or get out of prison or whatever and get a credit line of $100,000. You have to build up to that with an income and a pattern of responsible behavior over a period of many years. I don't have the statistics handy but I'd guess most people never reach a credit limit on credit cards of $100,000. Maybe many people could get that on a home equity line of credit, but again, you'd have to build up that equity in your house first, and that would take many years. Then, while $100,000 sounds like a lot of money, how long could you really live on that? Even in a country with low cost of living, it's not like you could live in luxury for the rest of your life. If you can get that kind of credit limit, you probably are used to living on a healthy income. Sure, you could get a similar lifestyle for less in some other countries, but not for THAT much less. If you know a place where for $10,000 a year you can live a life that would cost $100,000 per year in the U.S., I'd like to know about it. Even living a relatively frugal life, I doubt the money would last more than 4 or 5 years. And then what are you going to do? If you come back to the U.S. you'd presumably be promptly arrested. You could get a job in your new country, but you could have done that without first stealing $100,000. Frankly, if you're the sort of person who can get a $100,000 credit limit, you probably can live a lot better in the U.S. by continuing to work and play by the rules than you could by stealing $100,000 and fleeing to Haiti or Eritrea. You might say, okay, $100,000 isn't really enough. What if I could get a $1 million credit limit? But if you have the income and credit rating to get a $1 million credit limit, you probably are making at least several hundred thousand per year, probably a million or more, and again, you're better off to continue to play by the rules. The only way that I see that a scam like this would really work is if you could get a credit limit way out of proportion to any income you could earn legitimately. Like somehow if you could convince the bank to give you a credit limit of $1 million even though you only make $15,000 a year. But that would be a scam in itself. That's why I think the only time you do hear of people trying something like this is when they USED to make a lot of money but have lost it. Like someone has a multi-million dollar business that goes broke, he now has nothing, so before the bank figures it out he maxes out all his credit and runs off. |
Is it preferable to move emergency savings/retirement into offset mortgage? | Assuming no constraints on how much you can move (or how frequently) into and out of your offset mortgage account, the question becomes one of what rate of return you expect from your long-term savings/emergency cash fund. The rate you are getting from the offset mortgage account is known; since it reduces the principal amount owing and thus reduces interest charges, the return is the mortgage rate (though I would not be surprised if the offset mortgage account contract has bells and whistles reducing the effective rate, saying something like 3 pounds reduction of principal for every 5 pounds you put in). So, as a movie character once said, "Do you feel lucky today?" If so, move money from your offset mortgage account to savings, and earn more. If not, move money in the opposite direction. A "guaranteed" 2% return on the offset mortgage account might be better than taking a risk on the vagaries of the stock market, and even the possibility of loss in your long term savings account. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | If the balance on the low rate loan is very high (say, an IBR student loan at 6% that accumulates interest every year), and the balance on the high rate loan (say, a CC at 18%) is comparatively very small, then you'd want to make sure that you've at least "stopped the bleeding" on the high balance loan before starting to pay off the CC. |
Any reason to keep IRAs separate? | Can't see why would you need to track the sources of the original funds. Can't think of a reason not to consolidate, if at all it will only make the management of your IRA more convenient, and may be even cheaper (if the fees depend on the account value...). |
Difference between a mortgage and buy-to-let in UK | In my experience buy-to-let mortgages charge a higher rate of interest than an personal residential mortgage. They are regarded as a business enterprise and presumably the banks calculate that they carry a higher risk. A bank would probably take action if the property on an ordinary mortgage was rented out, as you would be breaking their terms. Policies could be rendered void. The terms on an ordinary mortgage disallow renting out the property. |
Should I sell when my stocks are growing? | There is an approach which suggests that each weekend you should review your positions as if they were stocks to be considered for purchase on Monday. I can't offer advice on picking stocks, but it's fair to say that you need to determine if the criteria you used to buy it the first time is still valid. I own a stock trading at over $300, purchased for $5. Its P/E is still reasonable as the darn E just keeps rising. Unless your criteria is to simply grab small gains, which in my opinion is a losing strategy, an 8% move up would never be a reason to sell, in and of itself. Doing so strikes me as day trading, which I advise againgst. |
What is the best way to get a “rough” home appraisal prior to starting the refinance process? | I see your remarks regarding Zillow, but would add a question. Why not look only for recent sales? If you find homes similar to yours with recent sales, that's similar to how the appraisers do it. I've refinanced many times and each time, I looked at sales within three miles of my house. I hit the appraised price very close in my estimate, high or low compared to Zillow, but used transaction data from there.just my thought. I chose a random neighborhood, and this was the first house I clicked. The main view shows last sale date, so I'd obviously suggest the OP look for more recent ones. If turnover is that low in his neighborhood, I understand, but the comment that transactions aren't listed is factually incorrect. I'd like my 2pts back. :) |
Confirming that stocks are listed under my name | The answer to your question is "no". Unless you specifically ask to receive paper share certificates, then brokers will hold your shares with a custodian company in the broker's own nominee account. If you are able to receive paper certificates, then the registrar of the company whose shares you own will have a record of your name, however this is exceptionally rare these days. Using a stockbroker means that your shares will be held in the broker's nominee account. A nominee company is a custodian charged with the safekeeping of investors’ securities. It should be a separate entity from the broker itself. In essence, the nominee is the legal owner of the securities, while you retain actual ownership as the beneficiary. Your broker can move and sell the securities on your behalf – and gets to handle all the lovely paperwork – but the assets still belong to you. They can’t be claimed by the broker’s creditors if things get messy. The main reason for this kind of set-up is cost, and this is why brokers are able to offer relatively low dealing costs to their clients. You can, if you wish, ask your broker for an account that deals with paper share certificates. However, few brokers will offer such an account and it will mean that you incur much higher dealing costs and may mean that you cannot sell you shares without first submitting the paper certificates back to your stock broker. Note that the stock exchange plays no role in recording ownership. Nor does your broker's account with the clearing house. |
How companies choose earnings release dates, & effect on Implied Volatility | I can't speak authoritatively to your broader question about stocks in general, but in several years tracking AAPL closely, I can tell you that there's little apparent pattern to when their earnings call will be, or when it will be announced. What little I do know: - AAPL's calls tend to occur on a Tuesday more than any other day of the week - it's announced roughly a month in advance, but has been announced w/ less notice - it has a definite range of dates in which it occurs, typically somewhere in the 3rd week of the new quarter plus or minus a few days More broadly for #1: Given the underlying nature of what an option is, then yes, the day an earnings call date is announced could certainly influence the IV/price of options - but only for options that expire inside the "grey area" (~2 weeks long) window in which the call could potentially occur. Options expiring outside that grey area should experience little to no price change in reaction to the announcement of the date - unless the date was itself surprising, e.g. an earlier date would increase the premium on earlier dated options, a later date would increase the premium for later-dated options. As for #2: The exact date will probably always be a mystery, but the main factors are: - the historical pattern of earnings call dates (and announcements of those dates) which you can look up for any given company - when the company's quarter ends - potentially some influence in how long it takes the company to close out their books for the quarter (some types of businesses would be faster than others) - any special considerations for this particular quarter that affect reporting ability And finally: - a surprise of an earnings call occurring (substantively) later than usual is rarely going to be a good sign for the underlying security, and the expectation of catastrophe - while cratering the underlying - may also cause a disproportionate rise in IVs/prices due to fear |
Credit cards: How is a cash advance different from a purchase? Why are the fees so high? | Think about the credit card business model... they have two revenue generators: interest and fees from borrowers and commissions and fees to merchants. The key to a successful credit card is to both sign up lots of borrowers AND lots of merchants. Credit card fortunes have improved dramatically since the 1990's when formerly off-limits merchants like grocery stores began to accept cards. So when a credit card lets you just pull cash out of any ATM, there are a few costs they need to account for when pricing the cost for such a service: Credit card banks have managed to make cash advances both a profit center and a self-serving perk. Knowing that you can always draw upon your credit line for an emergency when cash is necessary makes you less likely to actually carry cash and more likely to just rely on your credit card. |
Making a big purchase over $2500. I have the money to cover it. Should I get a loan or just place it on credit? | Some already mentioned that you could pay with your savings and use the credit card as an emergency buffer. However, if you think there is a reasonable chance that your creditcard gets revoked and that you need cash quickly, here is a simple alternative: |
Higher auto insurance costs: keep car or switch to public transit? | So you will be saving $450 + price of commuting gas - cost of transportation + cost of commuting maintenance - the cost of recreational car rentals if decide to go without a car. For some people that cost is not enough to forego the convenience of owning a car. One factor you have not alluded too is your current financial goals. Are you attempting to live a spartan lifestyle in order to dramatically change your net worth? Give up the car. There really is more then the math you are presenting so the decision is very much based upon your behavior and your goals in life. It is very likely that owning the car will be more expensive, but it will also be less convenient. Is that cost great enough to forego the convenience? Only you can decide. |
Is the return on investment better with high or low dividends? | Let's say two companies make 5% profit every year. Company A pays 5% dividend every year, but company B pays no dividend but grows its business by 5%. (And both spend the money needed to keep the business up-to-date, that's before profits are calculated). You are right that with company B, the company will grow. So if you had $1000 shares in each company, after 20 years company A has given you $1000 in dividends and is worth $1000, while company B has given you no dividends, but is worth a lot more than $2000, $2653 if my calculation is right. Which looks a lot better than company A. However, company A has paid $50 every year, and if you put that money into a savings account giving 5% interest, you would make exactly the same money either way. |
How do rich people guarantee the safety of their money, when savings exceed the FDIC limit? | Rich people use "depositor" banks the same way the rest of us use banks; to keep a relatively small store of wealth for monthly expenses and a savings account for a rainy day. The bulk of a wealthy person's money is in investments. Money sitting in a bank account is not making you more money, and in fact as Kaushik correctly points out, would be losing value to inflation. Now, all investments have risk; that's why interest exists. If, in some alternate universe, charging interest were illegal across the board, nobody would loan money, because there's nothing to be gained and a lot to lose. You have to make it worth my while for me to want to loan you my money, because sure as shootin' you're going to use my loan to make yourself wealthier. A wealthy person will choose a set of investments that represent an overall level of risk that he is comfortable with, much like you or I would do the same with our retirement funds. Early in life, we're willing to take a lot of risk, because there's a lot of money to be made and time to recover from any losses. Closer to retirement, we're much more risk-averse, because if the market takes a sudden downturn, we lose a significant portion of our nest egg with little hope of regaining it before we have to start cashing out. The very wealthy have similar variances in risk, with the significant difference that they are typically already drawing a living from their investments. As such, they already have some risk aversion, but at the same time they need good returns, and so they must pay more attention to this balancing act between risk and return. Managing their investments in effect becomes their new job, once they don't have to work for anyone else anymore. The money does the "real work", and they make the executive decisions about where best to put it. The tools they use to make these decisions are the same ones we have; they watch market trends to identify stages of the economic cycle that predicate large movements of money to or from "safe havens" like gold and T-debt, they diversify their investments to shield the bulk of their wealth from a sudden localized loss, they hire investment managers to have a second pair of eyes and additional expertise in navigating the market (you or I can do much the same thing by buying shares in managed investment funds, or simply consulting a broker; the difference is that the wealthy get a more personal touch). So what's the difference between the very wealthy and the rest of us? Well first is simple scale. When a person with a net worth in the hundreds of millions makes a phone call or personal visit to the financial institutions handling their money, there's a lot of money on the line in making sure that person is well looked-after. If we get screwed over at the teller window and decide to close our acocunts, the teller can often give us our entire account balance in cash without batting an eyelid. Our multimillionaire is at the lower end of being singlehandedly able to alter his banks' profit/loss statements by his decisions, and so his bank will fight to keep his business. Second is the level of control. The very wealthy, the upper 1%, have more or less direct ownership and control over many of the major means of production in this country; the factories, mines, timber farms, software houses, power plants, recording studios, etc that generate things of value, and therefore new wealth. While the average Joe can buy shares in these things through the open market, their investment is typically a drop in the bucket, and their voice in company decisions equally small. Our decision, therefore, is largely to invest or not to invest. The upper 1%, on the other hand, have controlling interests in their investments, often majority holdings that allow them far more control over the businesses they invest in, who's running them and what they do. |
Is it possible to take advantage of exceptions to early withdrawal penalties on a 401(k)? | Your question doesn't make much sense. The exceptions are very specific and are listed on this site (IRS.GOV). I can't see how you can use any of the exceptions regularly while still continuing being employed and contributing. In any case, you pay income tax on any distribution that has not been taxed before (which would be a Roth account or a non-deductible IRA contribution). Including the employer's match. Here's the relevant portion: The following additional exceptions apply only to distributions from a qualified retirement plan other than an IRA: |
Why is it rational to pay out a dividend? | The real value of a share of stock is the current cash value of all dividends the owner will receive, plus the current cash value of the final liquidation if any. Since people with different needs may judge the current cash value of an income stream differently, there would be a market basis for people to buy and sell stocks even if everyone could predict all future payouts perfectly. If shareholders knew that a company wouldn't pay any dividends until it was liquidated in the year 2066, whereupon it would pay $2000/share, then each share would in 2016 effectively be a fifty-year zero-coupon bond with a $2000 maturity value. While some investors would be willing to trade in such an instrument, the amount of money a company could charge for such an instrument would be far lower than the money it could charge for one with payouts that were more evenly distributed through time. Since the founders of most companies want their companies to be around for a long time, that would mean that shareholders would have no expectation of their shares ever yielding anything of value within any foreseeable timeframe. Even those who would be more interested in share-price appreciation than dividends wouldn't be able to see share prices rise if there wasn't any likelihood of the stock being bought by someone who wanted the dividends. |
How can one get their FICO/credit scores for free? (really free) | As of 2014, this answer is deprecated. Read answer here for recent developments up to January 2015. You can get a free credit report yearly, but you don't get your credit score, just the content of your report. This is useful to make sure your credit history is correct, etc. To get that, visit annualcreditreport.com. Another site which will give you your score for free, really free with no strings attached, is creditkarma.com, which gives you your TransUnion credit score and full TransUnion credit report. The site is run by TransUnion and supported via advertising. At this point Equifax and Experian offer similar services via subscription, but not for free. Update 8/14/2015: CreditKarma now offers the Equifax information as part of their service. |
What does negative Total Equity means in McDonald's balance sheet? | what does negative Total Equity means in McDonald's balance sheet? It means that their liabilities exceed their total assets. Usually is means that a company has accumulated losses over time, but that's just one explanation. But, isn't McDonald a very healthy company, and never lost money? Just because a company has "always" money does not mean it's a healthy company. It may have borrowed a lot of money in order to operate, and now the growth is not able to keep up with the debt load. In McDonald's case, the major driver in the equity change is the fact that they have bought back over $20 Billion in stock over the past few years, which reduces assets and equity. If they had instead paid off debt, their equity would not be negative, but their debt may be so cheap (in terms of interest rate) that it made more financial sense to buy back stock instead of paying off debt. There are too many variables to assess that in this forum. |
Why liquidity implies tight spread and low slippage | Theoretically, it's a question of rate of return. If a desired or acceptable rate of return for market makers' capital is X, and X is determined by the product of margin & turnover then higher turnover means lower margin for a constant X. Margin, in the case of trading, is the bid/ask spread, and turnover, in the case of trading, is volume. Empirically, it has been noted in the last markets still offering such wide-varying evidence, equity options: http://faculty.baruch.cuny.edu/lwu/890/mayhew_jf2002.pdf |
What are the common income tax deductions used by “rich” salaried households? | As was stated, households earning over $250k/yr don't all get their income one way. Below that threshold, even in the six figure range, most households are in one of two categories; salary/wage/commission workers, and those living off of nest eggs/entitlements (retired, disabled, welfare). Above $250k, though, are a lot of disparate types of incomes: Now, you specifically mentioned wage earners above $250k. Wage earners typically have the same "tax havens" that most of us do; the difference is usually that they are better able to make use of them: In other words, there are many ways for a high-end wage earner to live the good life and write a lot of it off. |
How to calculate the price of a bond based with a yield to Maturity, term and annual interest? | Like all financial investments, the value of a bond is the present value of expected future cash flows. The Yield to Maturity is the annualized return you get on your initial investment, which is equivalent to the discount rate you'd use to discount future cash flows. So if you discount all future cashflows at 6% annually*, you can calculate the price of the bond: So the price of a $1,000 bond (which is how bond prices are typically quoted) would be $1,097.12. The current yield is just the current coupon payment divided by the current price, which is 70/1,097.12 or 6.38% Question 3 makes no sense, since the yield to maturity would be the same if you bought the bond at market price Question 4 talks about a "sale" date which makes me think that it assumes you sold the bond on the coupon date, but you'd have to know the sale price to calculate the rate of return. |
Accepting personal “donations” (not as a non-profit) | I would be inclined to back the 'tip jar' weblink idea, this is very prolific within the Twitch community, as a method of tipping and thereby supporting content creators. I know that there are numerous tutorials on how to set up 'tip' sites for such usage, so that may point you in the right direction. Also you could turn to crowd-funding opportunities, such as Kickstarter and others, however I am not sure on the ruling of these companies and whether you have to offer the completed project as a reward for backers (it tends to be the done thing). And depending on how serious your friends are in helping you as a fledgeling indie developer, you could investigate in setting yourself up as a limited business. This would allow your supporters to purchase shares in your business, turning them into true stakeholders, but whilst retaining the limited status of the company. However, I must stress, on this point I know very little and may be wrong (I am actually hoping someone else contradicts this so I can learn). |
Can you please explain what the information in this stock quote means? | Yes, that's what it means. Also, it tells you that the share price went up by $0.39 yesterday, which was an increase of 1.43% from the previous day's price, and that the total value of all of Microsoft's shares is $232.18 billion (from which we can deduce that there are a bit less than 10 billion Microsoft shares in total). |
Why having large capital is advantageous to trading | You wouldn't want to trade with too small amount of capital - it becomes harder and more expensive to diversify with a small account. Also, the bigger the account the more discounts and special may be offered by your broker (especially if you are a frequent trader). You are also able to trade more often, and have a buffer against a few losses in a row not wiping out your entire account. |
Is it unreasonable to double your investment year over year? | Nobody has consistently doubled their investment year after year, not even the "greats" like George Soros and Warren Buffett. Mr. Buffett's average annual returns have been over 20% for over 50 years. That's about twice the American average of 10%-11% a year. So Mr. Buffett has been "twice as good as average" for his adult life. That's like having a 200 IQ. And in a poll taken in 2000, he was rated the greatest portfolio manager of all time. No lesser person could hope to do better. What has happened is that people may double their investment in ONE year, then "give some back" the following year. Or else go through several years of "average" 10%-15% returns. The reason is that they will have an investment style that works for one particular market, but not for all markets, so they will have to wait for their "best" market, to have their "best" year. |
Reducing taxable income in US in December | Depending on the size of the donation, you may be able to reduce taxes further by donating appreciated assets, such as stock or fund shares that have gone up a lot. That lets you dodge the capital gains tax on redeeming the shares, and if you're donating to a tax-exempt organization they don't have to pay that tax either. And as @JoeTaxpayer has confirmed, you still get to deduct the current value of the donation, not just the basis value of those shares. So if you're donating anyway, this comes close to being Free Money in exchange for some slightly annoying paperwork. (Yet another benefit of long-term investing!) Of course folks in the top brackets sometimes set up their own tax-exempt foundations so they can decouple taking the tax break from deciding what to do with the donation. |
Is this investment opportunity problematic? | It would have to be made as a "gift", and then the return would be a "gift" back to you, because you're not allowed to use a loan for a down payment. This is not to evade taxes. This is to evade a credit check. The problem is that banks don't like people to have too much debt. The bank could void the loan and go after your friends for damages under certain circumstances, as this is a fraud on the bank. Perhaps you might be guilty of conspiracy to commit fraud or similar. I'm willing to assume for the sake of argument that there is zero chance of your friend not paying you back intentionally. But even so, there are still potential problems. What if your friends end up without the money to pay? Worse, what if something happens to them? This is an off-books transaction. You couldn't make a claim against the estate, as there can't be a paper trail. You'd be left out the money in those circumstances. You'd both be safer if your friends saved up for the next opportunity rather than trying to grab this one. An alternative would be to buy a share of their current rental house. That would give them the necessary money and would give you paper showing your money. It's not a gift, it's a purchase. You'd have to pay capital gains tax on the 15% profit that they're promising you. But you'd both be above board and honest. |
How to calculate cash loss over time? | If inflation is at 2% per annum, in a year you would need £102 to buy equivalent goods to what you could buy today. So if you keep your money in a drawer the buying power of your £100 in a year will be only 100/102 = 98.039% of what it is currently. |
Selling put and call Loss Scenario Examples | Here's a simple example for a put, from both sides. Assume XYZ stock trades at $200 right now. Let's say John writes a $190 out of the money put on XYZ stock and sells this put to Abby for the premium, which is say $5. Assume the strike date, or date of settlement, is 6 months from now. Thus Abby is long one put option and John is short one put option (the writer of the option is short the option). On settlement date, let's assume two different scenarios: (1) If the price of the stock decreases by $50, then the put that Abby bought is 'in the money'. Abby's profit can be calculated as being strike price 190 - current stock price 150 - premium paid 5 = $35 So not including any transaction fees, that is a $35 dollar return on a $5 investment. (2) If the price of the stock increases by $50, then the put that Abby bought is worthless and her loss was 100%, or her entire $5 premium. For John, he made $5 in 6 months (in reality you need collateral and good credit to be able to write sizable option positions). |
Equity As Part of Compensation | At the most basic level, the employee is getting a share of ownership in the company and would get a percentage of the sales price. That said, as littleadv alluded to, different share classes have different priorities and get paid in different orders. In a bankruptcy, for example, some classes almost never get paid in practice because they are so far down the ladder of priority. The first step you should take would be to try to clarify what you are getting with the company itself. Failing that, contact a financial professional or an attorney in your area who can read the terms and give you a better understanding of the contract before you sign. |
How to measure a currencies valuation or devaluation in relevance to itself | It's very hard to measure the worth of an abstract concept like money, particularly over long periods of time. In the modern era we have things like the Consumer Price Index (CPI) in the United States, where the Bureau of Labor Statistics literally sends "shoppers" out to find prices of things and surveys people to find out what they buy. This results in a variety of "indexes" which variously get reported by media outlets as "inflation" (or "deflation" if the change in value goes the other way). There are also other measurements available like the MIT Billion Prices Project which attempt to make their own reading of the "worth" of currencies. Those kinds of things are about the only ways to measure a currency's change in "value to itself" because a currency is basically only worth what one can buy with it. While it isn't "all the world's currencies combined", there is a concept of the International Monetary Fund's "Special Drawing Rights (SDR)", which is a basket of five currencies used by world central banks to help "back" each other's currencies, and is (very) occasionally used as a unit of currency for international contracts. One might be able to compare the price of one currency to that of the SDR, or even to any other weighted average of world currencies that one wanted, but I don't think it's done nearly as often as comparing currencies to the basket of goods one can buy to find "inflation". Even though one might think what would be important to measure would be overall Money Supply Inflation, much more often people care more about measuring Price Inflation. (Occasionally people worry about Wage Inflation, but generally that's considered a result of high Price Inflation.) In order to try to keep this on topic as a "personal finance" thing rather than an "economics" thing, I guess the question is: Why do you want to know? If you have some assets in a particular currency, you probably care most about what you'll be able to buy with them in the future when you want or need to spend them. In that sense, it's inflation that you're likely caring about the most. If you're trying to figure out which currency to keep your assets in, it largely depends on what currency your future expenses are likely to be in, though I can imagine that one might want to move out of a particular currency if there's a lot of political instability that you're expecting to lead to high inflation in a currency for a time. |
What are the best software tools for personal finance? | For any android device you can try: Daily Expense Manager - to track your expenses and a host of other apps to suit your specific needs. |
Why do many British companies offer a scrip dividend option in lieu of cash? | There are quite a few reasons that a company may choose to pay dividends rather than hold cash [increasing the share value]. Of couse there are equally other set of reasons why a company may not want to give dividends and hold on to cash. Related question here Please explain the relationship between dividend amount, stock price, and option value? |
A stop order won't be automatically fired in after-hours trading? | Stop orders and stop limit orders typically do not execute during extended hours after the general market session has closed. Stop orders are market orders and market orders especially are not executed during extended hours. Although there are exceptions because a broker can say one thing and do another thing with the way order types are presented to customers vs what their programming actually does. The regulatory burden is a slap on the wrist, so you need to ask the broker what their practices are. Orders created during normal market hours do not execute in extended sessions, different orders would have to be made during the extended session. Your stop order should execute if the normal market hour price stays below your stop price. So a stop limit would actually be worse here, because a stop limit will create a limit order which may never get hit (since it is above the best bid best ask) |
Payroll taxes on exercised stock options | The trickiest thing is the federal tax. It's typical to withhold 25% federal on this type of event. If your federal marginal rate was already towards the top of that bracket, you'll owe the missing 3% as you enter the 28% bracket. Nothing awful, just be aware. |
What should I do with my $25k to invest as a 20 years old? | I don't like your strategy. Don't wait. Open an investment account today with a low cost providers and put those funds into a low cost investment that represents as much of the market as you can find. I am going to start by assuming you are a really smart person. With that assumption I am going to assume you can see details and trends and read into the lines. As a computer programmer I am going to assume you are pretty task oriented, and that you look for optimal solutions. Now I am going to ask you to step back. You are clearly very good at managing your money, but I believe you are over-thinking your opportunity. Reading your question, you need a starting place (and some managed expectations), so here is your plan: Now that you have a personal retirement account (IRA, Roth IRA, MyRA?) and perhaps a 401(k) (or equivalent) at work, you can start to select which investments go into that account. I know that was your question, but things you said in your question made me wonder if you had all of that clear in your head. The key point here is don't wait. You won't be able to time the market; certainly not consistently. Get in NOW and stay in. You adjust your investments based on your risk tolerance as you age, and you adjust your investments based on your wealth and needs. But get in NOW. Over the course of 40 years you are likely to be working, sometimes the market will be up, and sometimes the market will be down; but keep buying in. Because every day you are in, you money can grow; and over 40 years the chances that you will grow substantially is pretty high. No need to wait, start growing today. Things I didn't discuss but are important to you: |
What part of buying a house would make my net worth go down? | Cosigning a loan for someone else will make net worth decrease, whether backed by security or not. |
Is it worth working at home to earn money? Can I earn more money working at home? | It completely depends on what type of work you intend to do. Are you intending to run/setup your own business? Or stay with your current employer, but work from home instead of going to the office? If thats the case, then yes it is a good idea, since you will save on commuting costs amongst other things If you are asking about working from home under one of those "work from home piecework" schemes, I would be wary. Many of them require you do an insane amount of piecework, for literally peanuts, so it might not be worth the effort (since you could earn 2, 3x as much in a supermarket shift of the same duration) |
How to calculate cost basis for stock bought before a company spinoff? (USA) | Your brokerage account statement should report the Questar cost basis adjusted for the spinoff (and would have done so starting the day the spinoff happened), shifting the portion of it over to your shiny new QEP stock based on the opening price. At what price did you buy into Questar? The Questar IR site also has a document with more detail. |
Do rental car agencies sell their cars at a time when it is risky for the purchaser? | Many Web sites and articles warn against buying former rental cars, because people renting these cars often mistreat them. Rental cars are typically driven by people over 25, these are typically people with some financial means (air travel, credit card). Additionally, rental cars are subject to frequent inspection and likely to be on tighter maintenance schedules than many owners would keep. So while some people may drive a rental harder than they would their own car, it's not typical, and not likely to result in some hidden damage that makes a rental less desirable (all else being equal) on the used-car market. Does the fact that they sell the car mean during this time suggest that they know the car's cost of further maintenance or other costs will be higher? Or is there another reason they sell at this time which, has a calculated advantage to them, but which is less than idea statistically for me, the purchaser? Rental companies buy at incredible volumes, as such, some manufacturers have programs where they will buy back used cars from the rental company at a set price and/or time. Other incentives are guaranteed depreciation, wherein the manufacturer will make up the difference if the used vehicle doesn't sell for a set percentage of it's purchase price after a set amount of time. Outside of these incentive programs, rental companies also get substantial volume discounts, and they typically are buying base models which hold value better than their higher-trim counterparts (according to KBB market analyst). So the conventional wisdom about depreciation doesn't really apply. The timing of their sales is primarily based on their purchasing arrangements and their desire to keep an up to date fleet, not on projected maintenance/repair costs. The best you can do with any used-car purchase is to test-drive, get a pre-purchase inspection, and review whatever history is available. |
In US, is it a good idea to hire a tax consultant for doing taxes? | Whether you do decide to go with a tax advisor or not, be sure to do some research on your own. When we moved to the US about 5 years ago, I did find the taxes here pretty complicated and confusing. I went ahead and read up all different tax documents and did some calculations of my own before hiring a CPA (at that point, I just wanted a second opinion to make sure I got the calculations right). However, when the office of the CPA was finished with my taxes, I found they had made a mistake! When I went back to their office to point it out, the lady just shrugged, corrected her numbers on the form and said "You seem to know a lot about this stuff already. Why are you here?" I swore to never use them again - not this particular CPA at least. Now, I am not saying all CPAs are the same - some of them are pretty darn good at their job and know what they are doing. All I am saying is it helps to be prepared and know some basic stuff. Just don't go in all blind. After all, they are also humans prone to mistakes and your taxes are your liability in the end. My suggestion is to start with a good tool that supports tax filing for non-residents. Most of them provide a step-by-step QA based tool. As you go through the steps, Google each question you don't understand. It may take more time than hiring a tax advisor directly but in the end it will all be worth it. |
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