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Would I qualify for a USDA loan?
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How realistic is it that I will be able to get a home within the 250,000 range in the next year or so? Very unlikely in the next year. The debt/income ratio isn't good enough, and your credit score needs to show at least a year of regular payments without late or default issues before you can start asking for mortgages in this range. You don't mention how long you've been employed at these incomes, this can also count against you if you haven't both been employed for a full year at these incomes. They will look even more unfavorably on the employment situation if they aren't both full time jobs, although if you have a full year's worth of paychecks showing the income is regular then that might mitigate the full time/part time issue. next year or so? If you pay down your high interest debt (car, credit cards), and maintain employment (keep your check stubs and tax returns, the loan officer will want copies), then there's a slight chance. And, from this quick snap shot of our finances, does it look like we would be able to qualify for a USDA loan? Probably not. Mostly for the same reasons - the only time a USDA loan helps is when you would be able to get a regular loan if you had the down payment. Even with an available down payment of 50k, you wouldn't be able to get a regular loan, therefore it's unlikely that you'd qualify for a USDA loan. If you are anxious to get into a house, choose something much smaller, in the 100k-150k range. It would improve your debt/loan ratio enough that you might then qualify for a USDA loan. However, I think you'd still have issues if you haven't both been employed at this rate of income for at least a year, and have made regular payments on all your debts for at least a year. I'll echo what others have suggested, though, strengthen your credit, eliminate as much of your high interest debt as you can (car, credit cards), and keep your jobs for a year or two. Start a savings plan so you can contribute a small down payment - at least 3-5% of the desired home price - when you are in a better position to buy. During this time keep track of your paycheck stubs, you may need them to prove income over the time period your loan officer will request. Note that even with a USDA loan you still have to pay closing costs, and those can run several thousand dollars, so don't expect to be able to come to the table with no cash. Lastly, there's good reason to be very conservative regarding house cost and size. If you can, consider buying the house as if you only had the 46k per year. Move the debt to the person making the lower income, and if you buy the house in the name of the person only making 46k per year, then the debt/loan ratio looks very positive. Further it may be that the credit history of that person is better, and the employment history is better. If one of you has better history in these ways, then you might have a better chance if only one of you buys the house. Banks can't tell you about this, but it does work. Keep in mind, though, that if you two part ways it could be very unhappy since one would be left with all the debt and the house would be in the other's name. Not a great situation to be in, so make sure that you both carefully consider the risks associated with the decisions made.
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Why do P/E ratios for a particular industry tend to cluster around particular values?
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This falls under value investing, and value investing has only recently picked up study by academia, say, at the turn of the millennium; therefore, there isn't much rigorous on value investing in academia, but it has started. However, we can describe valuations: In short, valuations are randomly distributed in a log-Variance Gamma fashion with some reason & nonsense mixed in. You can check for yourself on finviz. You can basically download the entire US market and then some, with many financial and technical characteristics all in one spreadsheet. Re Fisher: He was tied for the best monetary economist of the 20th century and created the best price index, but as for stocks, he said this famous quote 12 days before the 1929 crash: "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months." - Irving Fisher, Ph.D. in economics, Oct. 17, 1929 EDIT Value investing has almost always been ignored by academia. Irving Fisher and other proponents of it before it was codified by Graham in the mid 20th century certainly didn't help with comments like the above. It was almost always believed that it was a sucker's game, "the bigger sucker" game to be more precise because value investors get destroyed during recession/collapses. So even though a recessionless economy would allow value investors and everyone never to suffer spontaneous collapses, value investors are looked down upon by academia because of the inevitable yet nearly always transitory collapse. This expresses that sentiment perfectly. It didn't help that Benjamin Graham didn't care about money so never reached the heights of Buffett who frequently alternates with Bill Gates as the richest person on the planet. Buffett has given much credibility, and academia finally caught on around in 2000 or so after he was proven right about a pending tech collapse that nearly no one believed would happen; at least, that's where I begin seeing papers being published delving into value concepts. If one looks harder, academia's even taken the torch and discovered some very useful tools. Yes, investment firms and fellow value investors kept up the information publishing, but they are not academics. The days of professors throwing darts at the stock listings and beating active managers despite most active managers losing to the market anyways really held back this side of academia until Buffett entered the fray and embarrassed them all with his club's performance, culminating in the Superinvestors article which is still relatively ignored. Before that, it was the obsession with beta, the ratio of a security's variance to its covariance to the market, a now abandoned theory because it has been utterly discredited; the popularizers of beta have humorously embraced the P/B, not giving the satisfaction to Buffet by spurning the P/E. Tiny technology firms receive ridiculous valuations because a long-surviving tiny tech firm usually doesn't stay small for long thus will grow at huge rates. This is why any solvent and many insolvent tech firms receive large valuations: risk-adjusted, they should pay out huge on average. Still, most fall by the wayside dead, and those 100 P/S valuations quickly crumble. Valuations are influenced by growth. One can see this expressed more easily with a growing perpetuity: Where P is price, i is income, r is the rate of return, and g is the growth rate of i. Rearranging, r looks like: Here, one can see that a higher P relative to i will dull the expected rate of return while a higher g will boost it. It's fun for us value investor/traders to say that the market is totally inefficient. That's a stretch. It's not perfectly inefficient, but it's efficient. Valuations are clustered very tightly around the median, but there are mistakes that even us little guys can exploit and teach the smart money a lesson or two. If one were to look at a distribution of rs, one'd see that they're even more tightly packed. So while it looks like P/Es are all over the place industry to industry, rs are much more well clustered. Tech, finance, and discretionaries frequently have higher growth rates so higher P/Es yet average rs. Utilities and non-discretionaries have lower growth rates so lower P/Es yet average rs.
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What are my options to deal with Student Loan debt collectors?
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@littleadv has said most of what I'd say if they had not gotten here first. I'd add this much, it's important to understand what debt collectors can and cannot do, because a lot of them will use intimidation and any other technique you can think of to get away with as much as you will let them. I'd start with this PDF file from the FTC and then start googling for info on your state's regulations. Also it would be a very very good idea to review the documents you signed (or get a copy) when you took out the loan to see what sort of additional penalties etc you may have already agreed to in the event you default. The fee's the collector is adding in could be of their own creation (making them highly negotiable), or it might be something you already agreed to in advance(leaving you little recourse but to pay them). Do keep in mind that in many cases debt collectors are ausually llowed at the very least to charge you simple interest of around 10%. On a debt of your size, paid off over several years, that might amount to more than the $4K they are adding. OTOH you can pretty much expect them to try both, tacking on 'fees' and then trying to add interest if the fees are not paid. Another source of assistance may be the Department of Education Ombudsman: If you need help with a defaulted student loan, contact the Department of Education's Ombudsman at 877-557-2575 or visit its website at www.fsahelp.ed.gov. But first you must take steps to resolve your loan problem on your own (there is a checklist of required steps on the website), or the Ombudsman will not assist you.
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Are there guidelines for whom you should trust for financial advice (online, peer, experts, only myself, etc)
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You need to understand how various entities make their money. Once you know that, you can determine whether their interests are aligned with yours. For example, a full-service broker makes money when you buy and sell stocks. They therefore have in interest in you doing lots of buying, and selling, not in making you money. Or, no-fee financial advisors make their money through commissions on what they sell you, which means their interests are served by selling you those investments with high commissions, not the investments that would serve you best. Financial media makes their money through attracting viewers/readers and selling advertising. That is their business, and they are not in the business of giving good advice. There are lots of good investments - index funds are a great example - that don't get much attention because there isn't any money in them. In fact, the majority of "wall street" is not aligned with your interests, so be skeptical of the financial industry in general. There are "for fee" financial advisors who you pay directly; their interests are fairly well aligned with yours. There is a fair amount of good information at The Motley Fool
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401k with paltry match or SPY ETF?
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Answers: 1. Is this a good idea? Is it really risky? What are the pros and cons? Yes, it is a bad idea. I think, with all the talk about employer matches and tax rates at retirement vs. now, that you miss the forest for the trees. It's the taxes on those retirement investments over the course of 40 years that really matter. Example: Imagine $833 per month ($10k per year) invested in XYZ fund, for 40 years (when you retire). The fund happens to make 10% per year over that time, and you're taxed at 28%. How much would you have at retirement? 2. Is it a bad idea to hold both long term savings and retirement in the same investment vehicle, especially one pegged to the US stock market? Yes. Keep your retirement separate, and untouchable. It's supposed to be there for when you're old and unable to work. Co-mingling it with other funds will induce you to spend it ("I really need it for that house! I can always pay more into it later!"). It also can create a false sense of security ("look at how much I've got! I got that new car covered..."). So, send 10% into whatever retirement account you've got, and forget about it. Save for other goals separately. 3. Is buying SPY a "set it and forget it" sort of deal, or would I need to rebalance, selling some of SPY and reinvesting in a safer vehicle like bonds over time? For a retirement account, yes, you would. That's the advantage of target date retirement funds like the one in your 401k. They handle that, and you don't have to worry about it. Think about it: do you know how to "age" your account, and what to age it into, and by how much every year? No offense, but your next question is what an ETF is! 4. I don't know ANYTHING about ETFs. Things to consider/know/read? Start here: http://www.investopedia.com/terms/e/etf.asp 5. My company plan is "retirement goal" focused, which, according to Fidelity, means that the asset allocation becomes more conservative over time and switches to an "income fund" after the retirement target date (2050). Would I need to rebalance over time if holding SPY? Answered in #3. 6. I'm pretty sure that contributing pretax to 401k is a good idea because I won't be in the 28% tax bracket when I retire. How are the benefits of investing in SPY outweigh paying taxes up front, or do they not? Partially answered in #1. Note that it's that 4 decades of tax-free growth that's the big dog for winning your retirement. Company matches (if you get one) are just a bonus, and the fact that contributions are tax free is a cherry on top. 7. Please comment on anything else you think I am missing I think what you're missing is that winning at personal finance is easy, and winning at personal finance is hard
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Why might it be advisable to keep student debt vs. paying it off quickly?
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Liquidity Say you have $50k in student loan debt. You come into a large amount of money and throw $10k at it. Yes, it's now down to $40k, saving you a lot of money in interest over the long run, but it's money you can no longer 'use'. Now if you invest that same $10k instead, you still potentially have access to it if needed. Paying $10k towards a debt at a 5% interest rate has essentially the same rate of return as investing the $10k at a 5% return. You're 'making' the same amount of money either way. But if you say, get laid off or need money for medical expenses or a down payment on a house, you can tap into that $10k investment if needed. It is a liquid asset.
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With respect to insider trading, what is considered “material information”?
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Some history: In the US, this is very tightly controlled and regulated. Although stock market securities insider trading is a relatively new crime around the world (20-30 year old), the United States is exceptional for offering the longest sentences for it, although it is still far more lucrative than and carries lower sentences than something like petty larceny. The perception of illegal insider trading has changed in the US over the years, although it is based on much older fraud statutes the regulators and the courts have only really developed modern case law against insider trading in the past 20-30 years. The US relies on its vast network of registered broker-dealers to detect and report abnormal trading activity and the regulator (SEC) can quickly obtain emergency court orders from rent-a-judges (Administrative Law Judges) to freeze trader's assets to prevent them from withdrawing, or quickly enacting sanctions. So this reality helps deter trading on material inside information. So for someone that needs to get an information advantage on the market, it is [simply] necessary for them to rationalize how this information could be inferred from public sources. Similarly there is a thin line between non-public information and public information, the "lab experiment" example would be material insider information, but the fact that there will be litigation over a company's key patents may be "public" as soon as the lawyer submits the complaint to the court system. It is also worth noting that there are A LOT of financial products trading in the capital markets, and illegal insider trading laws only applies to trading of shares of a company. So if a major holder in gold is about to liquidate all their holdings, being short gold futures is not subject to civil and criminal sanctions. Hope this helps. The above examples should help you understand what kind of information is material inside information and what kind is not, and how it is relevant to trading decisions.
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What is the meaning of “writing put options”?
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Suppose you're writing a put with a strike price of 80. Say the share's(underlying asset) price goes down to 70. So the holder of the put will exercise the option. Ie he has a 'right to sell' a share worth 70 for rs 80. Whereas a put option writer has an 'obligation to buy' at rs 80 a share trading at rs 70. Always think from the perspective of the holder. If the holder exercises the option, the writer will suffer a loss. Maximum loss he suffers will be the break even FSP, which is Strike price reduced by the premium paid.. If he doesn't exercise the option the writer will make a profit, which can maximum be the put premium received.
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Is it legal to receive/send “gifts” of Non-Trivial Amounts to a “friend”?
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In almost all cases, gifts from employers are considered taxable compensation, based on the employer-employee nature of the relationship. Furthermore, cash gifts are always considered to be intended as wages, regardless of how you receive the money. Furthermore, regardless of whether you expect to receive anything in return (such as contractual consideration) or whether the amounts are large enough to be declared as taxable personal gifts, it is likely that the IRS would consider these payments to be "disguised wages", as these payments would fail several tests that the IRS uses to determine whether benefits provided by the employer are non-taxable, including: I'd recommend reviewing IRS publication 535 here, as well as publication 15-B here for more on what constitutes taxable wages & benefits. It seems very unlikely to me that you could make a persuasive legal defense in which you claimed to be working full-time for $60.00 per year and just happened to be receiving large personal gifts of $130,000.00. In my opinion it seems much more likely that these payments would be found to be taxable wages for services rendered.
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An online casino owes me money and wants to pay with a wire transfer. Is this safe?
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I don't know which online casino we are talking about, but I would venture to say that online casinos, in general, are probably not the most trustworthy of businesses. Caution is certainly in order. That having been said, this isn't an e-mail from a stranger that contacted you out of the blue; you obviously trust them enough to have deposited some money with them, and it seems that they now owe you money. Let's assume for the moment that they are legitimate, and that they sincerely want to pay out your winnings. If they are to pay you via a wire transfer, they would need your account number and routing number. (This information is on every check that you write.) In addition, if this is an international transfer, they would also need your bank's SWIFT number, or possibly an IBAN code. It does seem odd that they would pay you a partial payment with a check, but the rest has to be done via a wire transfer. You could request that they send the remainder as a check, but I would imagine that if they refuse to send you a check, there is nothing you can do about it. If you decide to go ahead with the wire transfer, you could open up a new savings account with your bank first. Then you could provide the account number for this new account, and if they are intending to clean out your account, there will be nothing in it. (For extra protection, when you set up the account, you could ask the bank if they can set up a savings account that will accept incoming wire deposits, but no outgoing electronic withdrawals.) Either way, when you deposit the check you have and you receive this wire transfer, don't spend this money for a while. Just let it sit in your account (you could transfer it to your main account, if you like), and wait a few weeks. That way, if there is a problem with these payments and your bank insists on the money back, you will not be in trouble. If they send you more than they owe you and ask for some of it back, it will be a clear indication of a scam. Don't send them any money back. After a few weeks, you should be in the clear. Good luck. By the way, online gambling is a terrible idea. The fact that you don't trust the casino to pay out should tell you a lot about this industry. After you receive these winnings (or even if you don't), the best advice I can give you is to stop gambling.
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Who receives the money when one company buys another?
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Monsanto is a publicly traded company that trades under the ticker MON. The stock is owned by a wide range of owner around the world. The buyout offer from Bayer is an all cash offer. Bayer will buy all shares of MON at about $128/share. So if I owned 100 shares of MON, I would receive $12,800 or so for my shares. The deal has not yet been approved by regulators, which is why the stock price is hovering around $104/share today.
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Which Roth IRA is the best for a 21 year old who has about $1500?
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You're young. Build a side business in your spare time. Invest in yourself. Fail a few times when you have some time to recover financially. Use the money that you would have let sit in some account and develop your skills, start up an LLC, and build up the capacity to get some real returns on your money. Be a rainmaker, not a Roth taker.
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Is it possible to influence a company's actions by buying stock?
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You can execute block trades on the options market and get exercised for shares to create a very large position in Energy Transfer Partners LP without moving the stock market. You can then place limit sell orders, after selling directly into the market and keep an overhang of low priced shares (the technical analysis traders won't know what you specifically are doing, and will call this 'resistance'). If you hit nice even numbers (multiples of 5, multiples of 10) with your sell orders, you can exacerbate selling as many market participants will have their own stop loss orders at those numbers, causing other people to sell at lower and lower prices automatically, and simultaneously keep your massive ask in effect. If your position is bigger than the demand then you can keep a stock lower. The secondary market doesn't inherently affect a company in any way. But many companies have borrowed against the price of their shares, and if you get the share price low enough they can get suddenly margin called and be unable to service their existing debt. You will also lose a lot of money doing this, so you can also buy puts along the way or attempt to execute a collar to lower your own losses. The collar strategy is nice because it is unlikely that other traders and analysts will notice what you are doing, since there are calls, puts and share orders involved in creating it. One person may notice the block trade for the calls initially, but nobody will notice it is part of a larger strategy with multiple legs. With the share position, you may also be able to vote on some things, but that solely depends on the conditions of the shares.
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What's the catch with biweekly mortgage payments?
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Making extra principal payments will reduce the term of your loan. I wouldn't sign up for a biweekly schedule, just do it yourself so you have more flexibility. A simple spreadsheet will allow you to play "What if?" and make it clear that extra principal payments are most effective early in the term of the loan. My wife and I paid off our home in less than 10 years with this approach. Some will say that the opportunity costs of not using that money for something else outweighs the gains. I would say that not having a mortgage has a positive impact on your cash flow and your assets (you own the home), which combine to create more opportunity, not less. That being said, It should be obvious that paying off higher interest debt first is the priority, (Paying off a zero percent interest car loan early is just foolish)
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Are personal finance / money management classes taught in high school, anywhere?
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It's not a full credit course but part time comic James Cunningham has speaking tour that promotes personal finance in high schools.
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Is it safe to accept money in the mail?
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The US Postal Service to my recollection recommends only mailing cash or items with cash-like characteristics using Registered Mail service. Registered mail is expensive and a pain in the butt for everyone, as it requires an audit trail for each individual who touches the mailing. If you're doing a lot of business and word gets out that you're accepting cash payments via the mail, you'll probably attract unwanted attention from the tax authorities as well. It's fairly unusual.
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Making enquiries about shares
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Is anything possible, and if so, how? Because of the circumstances, there is nothing you can do. You do not have the ISIN, nor are you a part-owner of the account. The information you would need is: As always, good luck.
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Why do card processing companies discourage “cash advance” activities
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I thought this was because credit card companies charge the retailer a fee to accept credit card payments. If you spend $100, the retailer pays $1 (or whatever percentage they have negotiated) to the credit card provider. Handing over $100 cash and paying $1 fee to Visa means a loss to the retailer. The same transaction on $100 worth of product means the loss is accepted out of the profit margin which the retailer accepts to attract custom.
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TDAmeritrade Quote Summary TREE vs APRN
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I suspect this is related to the fact that Blue Apron completed its IPO very recently and insider shares are likely still under a lockup period. So in the case of APRN stock only the 30mm shares involved in the IPO are trading until the insider lockup expires which is usually about 90 days.
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Pension or Property: Should I invest in more properties, or in a pension?
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I think the real answer to your question here is diversification. You have some fear of having your money in the market, and rightfully so, having all your money in one stock, or even one type of mutual fund is risky as all get out, and you could lose a lot of your money in such a stock-market based undiversified investment. However, the same logic works in your rental property. If you lose your tennant, and are unable to find a new one right away, or if you have some very rare problem that insurance doesn't cover, your property could become very much not a "break even" investment very quickly. In reality, there isn't any single investment you can make that has no risk. Your assets need to be balanced between many different market-investments, that includes bonds, US stocks, European stocks, cash, etc. Also investing in mutual funds instead of individual stocks greatly reduces your risk. Another thing to consider is the benefits of paying down debt. While investments have a risk of not performing, if you pay off a loan with interest payments, you definitely will save the money you would have paid in interest. To be specific, I'd recommend the following plan -
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How does giving to charity work?
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For many people, giving to charity will have minimal effect on their taxes. Non-profits love to attract donations by saying the money is tax deductible, but for most people, it doesn't work out that way. You will only itemize deductions if they exceed your standard deduction. The IRS allows you to either "itemize" your deductions (where you list each deduction you can take) or take the "standard deduction". Consider a married couple filing jointly in 2011. Their standard deduction is $11,400. They are in the 28% tax bracket. They donate $100 of old clothes to the Goodwill, and are looking forward to deducting that on your taxes, and getting $28 of that back. If that's their only deduction, though, they'd have to give up the standard deduction to take the itemized deduction. Not worth it. Suppose instead they have $11,500 of deductions in 2011. Now we're talking, right? No. The tax impact of itemizing is only $28, since they only exceeded the standard deduction by $100. The cost of having a tax accountant fill out the itemization form probably offsets that small gain. There's also all the time that went in to tracking those deductions over the year. Not worth it. Tax deductions only become worthwhile when they significantly exceed the standard deduction. You need some big ticket items to get past the itemized deduction threshold. For most people, this only happens when they have a mortgage, as the interest on a residence is deductible. Folks love to suggest that having a mortgage is a good deal, because the interest is deductible. However, since you have to exceed the standard deduction before it makes sense to itemize, it's not likely to be a big win. For most people: TL;DR: Give to charity because you want that charity to have your money. Tax implications are minimal; let your accountant sort it out. Disclaimer: I am not an accountant.
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Can future rental income be applied to present debt-to-income ratio when applying for second mortgage?
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Generally speaking, no they won't. In this case, though I haven't done it myself, I was recommended to put the mortgage on the real estate after it's been leased out and has a contract on it. Then, yes, they will use it for that. But, ex-ante don't expect any bank to count on income from it because, at that point, there's zero guarantee you'll get it leased, and even if you do, at what rate.
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What things should I consider when getting a joint-mortgage?
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It may clarify your thinking if you look at this as two transactions: I am an Australian so I cannot comment on US tax laws but this is how the Australian Tax Office would view the transaction. By thinking this way you can allocate the risks correctly, Partnership Tenancy Two things should be clear - you will need a good accountant and a good lawyer. I do not agree that there is a conflict of interest in the lawyer acting for both parties - his role should only be for advice and to document what the two of you agree to. If you end up in dispute, then you need two lawyers.
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Are there cons to paying monthly bills with a rewards card and then paying it off monthly?
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Pitfalls of paying plastic That being said, you can also find cards that have better than the 1% it looks like you are getting. I have a card that gives 2% cash back on Gas Stations, Utilities (including stuff like AT&T) and Food Stores (Walmart included). There are also limited time deals from cards - my fiance's discover has 5% cash back Oct/Nov/Dec on Online purchases. Make sure to remain diligent, keep your balances low and don't get hit with interest rates or fees (I had HORRIBLE credit and I refused to get a card with an annual fee). Why pay full price with cash, when you can get 2-5% cash back?
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Keeping our current home (second property) as a rental. Will it interfere with purchasing a third home?
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Even after the real estate crash, there are banks that lend money outside of the rules I'll share. A fully qualified mortgage is typically run at debt to income ratios of 28/36, where 28% of your gross monthly income can apply to the mortgage, property tax, and insurance, and the 36% is the total monthly debt (including the mortgage, etc) plus car loan student loan, etc. It's less about the total loan on the potential than about these ratios. The bank may allow for 75% of monthly rent so until rentals are running at a profit, they may seem a loss, even while just breaking even. This is just an overview, each bank may vary a bit.
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Feasibility of using long term pattern on short term investments
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Most patterns can be used on various time frames. For example you could use candle stick reversal patterns on monthly charts, weekly charts, daily charts or intra-day charts like one hour, or even one minute charts. Obviously if you are looking for longer term positions you would be looking at daily, weekly or monthly charts and if you are looking for shorter term positions you would be looking at intra-day to daily charts. You can also use a combination of time frames - for example, if you are trying to enter a trade over a long-term uptrend you could use a weekly chart to determine if the stock is currently uptrending and then use a daily chart to time your entry into the trade. Most patterns in general don't really determine how long you will be in the trade but instead usually can provide an entry trigger, a stop loss location and possibly a profit target. So in general a pattern which is being used to enter into longer term trades on weekly charts can also be used to enter shorter term trades on intra-day charts.
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Why is silver so volatile compared to the S&P 500?
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The S&P 500 represents a broadly diversified basket of stocks. Silver is a single metal. If all else is equal, more diversification means less volatility. A better comparison would be the S&P 500 vs. a commodities index, or silver vs. some individual stock.
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Should a high-school student invest their (relative meager) savings?
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If you have no immediate need for the money you can apply the Rule of 72 to that money. Ask your parent's financial advisor to invest the money. Based on the rate of return your money will double like clockwork. At 8% interest your money will double every 9 years. 45 years from now that initial investment will have doubled 5 times. That adds up pretty fast. Time is your best friend when investing at your age. Odds are you'll want to be saving for a college education though. Graduating debt free is by far the best plan.
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Filing Taxes for Two Separate Jobs Being Worked at the Same Time?
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Welcome to the wonderful but oft confusing world of self-employment. Your regular job will withhold income for you and give you a W2, which tells you and the government how much is withheld. At the end of the year uber will give you and the government a 1099-misc, which will tell you how much they paid you, but nothing will be withheld, which means you will owe the government some taxes. When it comes to taxes, you will file a 1040 (the big one, not a 1040EZ nor 1040A). In addition you will file a schedule C (self-employed income), where you will report the gross paid to you, deduct your expenses, and come up with your profit, which will be taxable. That profit goes into a line in the 1040. You need to file schedule SE. This says how much self-employment tax you will pay on your 1099 income, and it will be more than you expect. Self employment tax is SS/Medicare. There's a line for this on the 1040 as well. You can also deduct half of your self-employment tax on the 1040, there's a line for it. Now, you can pay quarterly taxes on your 1099 income by filing 1040-ES. That avoids a penalty (which usually isn't that large) for not withholding enough. As an alternative, you can have your regular W2 job withhold extra. As long as you don't owe a bunch at tax time, you won't be a fined. When you are self-employed your taxes aren't as simple. Sorry. You can either spend some time becoming an expert by studying the instructions for the 1040, pay for the expensive version of tax programs, or hire someone to do it for you. Self-employed taxes are painful, but take advantage of the upsides as well. You can start a solo 401(k) or SEP IRA, for example. Make sure you are careful to deduct every relevant business expense and keep good records in case you get audited.
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What is the most effective saving money method?
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Envelope budgeting is pretty simple. It's easy enough that you can teach it to children, and flexible enough you can use it as an adult. The general idea is that you take your cash money (no bank accounts involved in the simple version), and stick it in envelopes marked for what it's supposed to be for. So for example, you get paid, you cash your paycheck and you put $100 in an envelope marked food. Now when you go out to eat, you go get the money out of your food envelope, and spend it on food. When your food envelope is empty you go hungry. In the simple version you have envelopes for things like "food", "candy", "toys", "games". etc. (simple version is usually taught to kids.) So you want a $60 game, and your game envelope only has $5. Well you can't get the game. You need to add more money to the game envelope. You need to eat so you have to put money there, but maybe you don't need toys. So you can divert some incoming money from toys to games. Sure it's still going to take a while to get to $60, but now with some simple kid friendly math you can see how long, and more importantly, you can make decisions on what is more important. Candy or Toys? In the adult version things are much the same. We just have more envelopes. We have Rent, Car Payment, Gas, Food, Electric. Then we need some envelopes for "savings" and "retirement". etc. Now when you get your Paycheck you prioritize your money and you stuff it in the envelopes. How much you put in each envelope is easy. Enough to pay for that thing. Savings and Retirement meet different goals. You want $6,000 savings. Well just like that game in the kid version, you're not going to get there all at once. But you can see and make decisions on what is most important. You want $1,000,000 to retire on. Sure, but that envelope is going to take a while to fill up. At it's core, the important parts are that: Let me explain the rent example, as it's the oddest. You get $500 a week, and you need $1000 for rent. This means you're spending from your envelopes. During week 1 and 2 you're spending last months week 3 and 4. You DO NOT do: This is important because if you lose your paycheck in week 3 or 4 you are homeless. Finally, in general, you stick stuff in savings envelope. And you want to reach a savings envelope goal of 6 months of your average pay checks. Once you reach this goal, then you're in good shape, and a job loss doesn't mean you're homeless. You can always just pull from savings. It's important when using these envelopes to understand that you only make the decision of what is more important when you're sticking money in, not when you're taking money out, and that you only work with the money you have right now today (in your hand). Now what you think you're going to get tomorrow. Money in the bank can be split into virtual envelopes. Money in savings can be in any vehicle, but generally you want a short term emergency envelope (savings account) and a long term envelope (CDs for example). Take a look at YNAB.com they used to provide free lessons in using their software to manage an envelope system. And the I know it's going to get comments section. The rent v.s. homeless is a real example. You should not take money from, say, the food envelope, to cover the rent. This may seem silly, but if you're doing that then you made poor decisions when deciding where the money goes. Use the emergency fund envelope to cover the rent, and next time put less money into food. It's this "rule" that makes envelope budgeting work well. You may be homeless, but you can eat, drive to work, put gas in your car, and pay your bills. Taking money from different envelopes usually results in a spiral, where you attempt to do the sensible thing, but in the end, you're worse off. Migrating to envelope budgeting (in the strict sense) is hard. The best way I have taught people to do it is to only envelope budget an increasing part of their income until their envelopes are full enough for one month. That means that you might only envelope budget 10% of your income at first. But unless your situation is such that you can cover all your bills with one paycheck, it's not going to be possible to transition without breaking the "don't take money from other envelope" rules.
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Beginner questions about stock market
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1st question: If I bought 1 percent share of company X, but unfortunately it closed down because of some reason as it was 1 million in debt. Since I had 1 percent of it shares, does it mean I also have to pay the 1 percent of it's debt? Stock holders are not liable for anything more than their current holdings. In cases of Ch11 bankruptcy stock holders usually get nothing. In Ch7 the holdings will be severely hit but one may get 10% of pre-bk prices. I would strongly recommend against investing in bankrupt companies. A seasoned trader can make plenty off short term trades. The payoff structure is usually: 2nd question: Is there an age requirements to enter the stock market? I am 15 years old this year. Yes it is generally 18, but some firms offer a joint option that your parents can open.
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Are lottery tickets ever a wise investment provided the jackpot is large enough?
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Is playing the lottery a wise investment? --Probably not. Is playing the lottery an investment at all? --Probably not though I'll make a remark on that further below. Does it make any sense to play the lottery in order to improve your total asset allocation? --If you follow the theory of the Black Swan, it actually might. Let me elaborate. The Black Swan theory says that events that we consider extremely improbable can have an extreme impact. So extreme, in fact, that its value would massively outweigh the combined value of all impacts of all probable events together. In statistical terms, we are speaking about events on the outer limits of the common probablity distribution, so called outliers that have a high impact. Example: If you invest $2000 on the stock market today, stay invested for 20 years, and reinvest all earnings, it is probable within a 66% confidence interval that you will have an 8 % expected return (ER) per year on average, giving you a total of roughly $9300. That's very much simplified, of course, the actual number can be very different depending on the deviations from the ER and when they happen. Now let's take the same $2000 and buy weekly lottery tickets for 20 years. For the sake of simplicity I will forgo an NPV calculation and assume one ticket costs roughly $2. If you should win, which would be an entirely improbable event, your winnings would by far outweigh your ER from investing the same amount. When making models that should be mathematically solvable, these outliers are usually not taken into consideration. Standard portfolio management (PM) theory is only working within so called confidence intervals up to 99% - everything else just wouldn't be practical. In other words, if there is not at least a 1% probability a certain outcome will happen, we'll ignore it. In practice, most analysts take even smaller confidence intervals, so they ignore even more. That's the reason, though, why no object that would fall within the realms of this outer limit is an investment in terms of the PM theory. Or at least not a recommendable one. Having said all that, it still might improve your position if you add a lottery ticket to the mix. The Black Swan theory specifically does not only apply to the risk side of things, but also on the chance side. So, while standard PM theory would not consider the lottery ticket an investment, thus not accept it into the asset allocation, the Black Swan theory would appreciate the fact that there is minimal chance of huge success. Still, in terms of valuation, it follows the PM theory. The lottery ticket, while it could be part of some "investment balance sheet", would have to be written off to 0 immediately and no expected value would be attached to it. Consequently, such an investment or gamble only makes sense if your other, safe investments give you so much income that you can easily afford it really without having to give up anything else in your life. In other words, you have to consider it money thrown out of the window. So, while from a psychological perspective it makes sense that especially poorer people will buy a lottery ticket, as Eric very well explained, it is actually the wealthier who should consider doing so. If anyone. :)
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Why does capital gains tax apply to long term stock holdings?
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Why only long term investments? What do they care if I buy and sell shares in a company in the same year? Simple, your actually investing when you hold it for a long term. If you hold a stock for a week or a month there is very little that can happen to change the price, in a perfect market the value of a company should stay the same from yesterday to today so long as there is no news(a perfect market cannot exist). When you hold a stock for a long term you really are investing in the company and saying "this company will grow". Short term investing is mostly speculation and speculation causes securities to be incorrectly valued. So when a retail investor puts money into something like Facebook for example they can easily be burned by speculation whether its to the upside or downside. If the goal is to get me to invest my money, then why not give apply capital gains tax to my savings account at my local bank? Or a CD account? I believe your gains on these accounts are taxed... Not sure at what rate. If the goal is to help the overall health of business, how does it do that? During an IPO, the business certainly raises money, but after that I'm just buying and selling shares with other private shareholders. Why does the government give me an incentive to do this (and then hold onto it for at least a year)? There are many reasons why a company cares about its market price: A companies market cap is calculated by price * shares outstanding. A market cap is basically what the market is saying your company is worth. A company can offer more shares or sell shares they currently hold in order to raise even more capital. A company can offer shares instead of cash when buying out another company. It can pay for many things with shares. Many executives and top level employees are payed with stock options, so they defiantly want to see there price higher. these are some basic reasons but there are more and they can be more complex.
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2016, USA banks with low/no fee for incoming OVERSEAS USD wire transfers?
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Ally Bank $0 - from their website (emphasis mine): To receive a wire transfer from a non-U.S. bank: Incoming wire transfers from a non-US bank are processed by our designated receiving bank, JP Morgan Chase Bank, N.A. You'll need to provide the following information to the person or business sending the wire transfer to you: Receiving Bank: JP Morgan Chase Bank, N.A. ABA/Routing Number: 021000021 Address: 1 Chase Manhattan PLZ, New York, NY 10005 SWIFT Code or Bank Identification Code: CHASUS33 Beneficiary Account Number: 802904391 Beneficiary Name: List 'Ally Bank' since the wire is being processed by JP Morgan Chase Bank, N.A. Further Credit: Your Ally Bank Account Number and your name as it appears on your Ally Bank account. Note: We won't charge you to receive a wire transfer into your Ally account. https://www.ally.com/help/search.html?term=SWIFT&console=false&context=Help&domain=www.ally.com§ion=Help+%26+FAQs Alliant Credit Union $0 - from their website (emphasis mine): Direct international wire transfers International wire transfers are handled through our correspondent bank for processing. International wires can take up to 10 business days to be credited to the receiving institution. Funds should be wired to: Northern Trust ABA# 071000152 "Note: US Banks do not use SWIFT codes. This ABA # is used in place of SWIFT codes for US Banks." 50 South La Salle Street, Chicago, IL 60603 For further credit: Alliant Credit Union Account Number 35101804 11545 W. Touhy Avenue, Chicago, IL 60666 For final credit: Member’s name and complete address (No P.O. Box) Member’s 14-digit account number Destination of funds (checking, savings or loan number) Incoming wire transfers: Wire transfers received Monday - Friday, 7:00am - 3:00pm, CT, will be credited to your account the same day. Wire transfers received after 3:00pm, CT, Monday - Friday and on the weekend will be credited the next business day. Fees: We do not charge a fee to receive incoming wire funds. However, the financial institution wiring the funds may charge for this service. http://www.alliantcreditunion.org/help/receiving-a-wire-transfer-to-your-alliant-account
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How should I calculate the opportunity cost of using a 401(k) loan?
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There is no equation. Only data that would help you come to the decision that's right for you. Assuming the 401(k) is invested in a stock fund of one sort or another, the choice is nearly the same as if you had $5K cash to either invest or pay debt. Since stock returns are not fixed, but are a random distribution that somewhat resembles a bell curve, median about 10%, standard deviation about 14%. It's the age old question of "getting a guaranteed X% (paying the debt) or a shot at 8-10% or so in the market." This come up frequently in the decision to pre-pay mortgages at 4-5% versus invest. Many people will take the guaranteed 4% return vs the risk that comes with the market. For your decision, the 401(k) loan, note that the loan is due if you separate from the company for whatever reason. This adds an additional layer of risk and another data point to the mix. For your exact numbers, the savings is barely $50. I'd probably not do it. If the cards were 18%, I'd lean toward the loan, but only if I knew I could raise the cash to pay it back to not default.
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Can my employer limit my maximum 401k contribution amount (below the IRS limit)?
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One description of what happened is at 401(k) Plan Fix-It Guide. The issue is the plan was "Top Heavy," i.e. those making a high income were making disproportionately larger deposits than the lower paid employees. As the IRS article suggests, a nice matching deposit from the employer can eliminate the lower limit caused by the top heavy-ness. Searching on [top heavy 401(k)] will yield more details if you wish to research more.
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How can I figure out how a stock's price would change after I buy shares?
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It depends on many factors, but generally, the bid/ask spread will give you an idea. There are typically two ways to buy (or sell) a security: With a limit order, you would place a buy for 100 shares at $30-. Then it's easy, in the worst case you will get your 100 shares at $30 each exactly. You may get lucky and have the price fall, then you will pay less than $30. Of course if the price immediately goes up to say $35, nobody will sell at the $30 you want, so your broker will happily sit on his hands and rake in the commission while waiting on what is now a hail Mary ask. With a market order, you have the problem you mention: The ticker says $30, but say after you buy the first 5 shares at $30 the price shoots up and the rest are $32 each - you have now paid on average $31.9 per share. This could happen because there is a limit order for 5 at $30 and 200 at $32 (you would have filled only part of that 200). You would be able to see these in the order book (sometimes shown as bid/ask spread or market depth). However, the order book is not law. Just because there's an ask for 10k shares at $35 each for your $30 X stock, doesn't mean that by the time the price comes up to $35, the offer will still be up. The guy (or algorithm) who put it up may see the price going up and decide he now wants $40 each for his 10k shares. Also, people aren't obligated to put in their order: Maybe there's a trader who intends to trade a large volume when the price hits a certain level, like a limit order, but he elected to not put in a limit order and instead watch the ticker and react in real time. Then you will see a huge order suddenly come in out of nowhere. So while the order book is informative, what you are asking is actually fundamentally impossible to know fully, unless you can read the minds of every interested trader. As others said, in "normal" securities (meaning traded at a major exchange, especially those in the S&P500) you simply can't move the price, the market is too deep. You would need millions of dollars to budge the price, and if you had that much money, you wouldn't be asking here on a QA site, you would have a professional financial advisor (or even a team) that specializes in distributing your large transaction over a longer time to minimize the effect on the market. With crazier stocks, such as OTC and especially worthless penny stocks with market caps of $1 mil or less, what you say is a real problem (you can end up paying multiples of the last ticker if not careful) and you do have to be careful about it. Which is why you shouldn't trade penny stocks unless you know what you're doing (and if you're asking this question here, you don't).
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What is the best credit card for someone with no credit history
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You have a lack of credit history. Lending is still tight since the recession and companies aren't as willing to take a gamble on people with no history. The secured credit card is the most direct route to building credit right now. I don't think you're going to be applicable for a department store card (pointless anyways and encourages wasteful spending) nor the gas card. Gas cards are credit cards, funded through a bank just like any ordinary credit card, only you are limited to gas purchases at a particular retailer. Although gas cards, department store cards and other limited usage types of credit cards have less requirements, in this post-financial crisis economy, credit is still stringent and a "no history" file is too risky for banks to take on. Having multiple hard inquiries won't help either. You do have a full-time job that pays well so the $500 deposit shouldn't be a problem for the secured credit card. After 6 months you'll get it back anyways. Just remember to pay off in full every month. After 6 months you'll be upgraded to a regular credit card and you will have established credit history.
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Paying off a loan with a loan to get a better interest rate
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Before we were married my wife financed a car at a terrible rate. I think it was around 20%. When trying to refinance it the remaining loan was much larger than the value of the car, so no one was interested in refinancing. I was able to do a balance transfer to a credit card around 10%. This did take on a bit of risk, which almost came up when the car was totaled in an accident. Fortunately the remaining balance was now less than the value of the car, otherwise I would have been stuck with a credit card payment and no vehicle.
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How to find SEC filings that are important to stock market
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10-Q is the quarterly report, and accordingly is filed quarterly. Similarly, 10-K is the annual report. 8-K is a general form for notification of material events. It is filed every time a material event is required to be reported to the shareholders. It may accompany the periodical reports, but doesn't have to. It can be filed on its own. If you're only interested in the financial statements, then you should be looking for the 10K/10Q forms. SEC will tell you when the forms were filed (dates), but it won't tell you what's more material and what's less. So you can plot a stock price graph on these dates, and see what was deemed more material by the investors based on the price fluctuations, but be prepared to find fluctuations that have no correlation to filings - because the market as a whole can drag the stock up or down. Also, some events may not be required to be reported to SEC, but may be deemed material by the investors. For example, a Cupertino town hall meeting discussing the zoning for the new AAPL HQ building may be deemed material by the investors, based on the sentiments, even if no decision was made to be reported to SEC.
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How are stock buybacks not considered insider trading?
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In fact, buybacks WERE often considered a vehicle for insider trading, especially prior to 1982. For instance, Prior to the Reagan era, executives avoided buybacks due to fears that they would be prosecuted for market manipulation. But under SEC Rule 10b-18, adopted in 1982, companies receive a “safe harbor” from market manipulation liability on stock buybacks if they adhere to four limitations: not engaging in buybacks at the beginning or end of the trading day, using a single broker for the trades, purchasing shares at the prevailing market price, and limiting the volume of buybacks to 25 percent of the average daily trading volume over the previous four weeks.
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Is it easier for brokers to find shares to short in premarket?
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I don't think that the trading volume would impact a broker's ability to find shares to short. You might think that a lot more people are trying to short a stock during regular trading hours than in the pre-market, and that's probably true. But what's also true is that a lot more people are covering their shorts during regular trading hours than in the pre-market. For stocks that have difficulty in finding shares to short, any time someone covers a short is an opportunity for you to enter a short. If you want to short a stock and your broker is rejecting your order because they can't find shares to short, then I would recommend that you continue placing that order throughout the day. You might get lucky and submit one of those orders right after someone else has covered their short and before anyone else can enter a short. I have had success doing this in the past.
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Why is it important to research a stock before buying it?
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Most markets around the world have been downtrending for the last 6 to 10 months. The definition of a downtrend is lower lows and lower highs, and until you get a higher low and confirmation with a higher high the downtrend will continue. If you look at the weekly charts of most indexes you can determine the longer term trend. If you are more concerned with the medium term trend then you could look at the daily charts. So if your objective is to try and buy individual stocks and try to make some medium to short term profits from them I would start by first looking at the daily charts of the index your stock belongs to. Only buy when the intermediate trend of the market is moving up (higher highs and higher lows). You can do some brief analysis on the stocks your interested in buying, and two things I would add to the short list in your question would be to check if earnings are increasing year after year. The second thing to look at would be to check if the earnings yield is greater than the dividend yield, that way you know that dividends are being paid out from current earnings and not from previous earning or from borrowings. You could then check the daily charts of these individual stocks and make sure they are uptrending also. Buy uptrending stocks in an uptrending market. Before you buy anything write up a trading plan and develop your trading rules. For example if price breaks through the resistance line of a previous high you will buy at the open of the next day. Have your money management and risk management rules in place and stick to your plan. You can also do some backtesting or paper trading to check the validity of your strategy. A good book to read on money and risk management is - "Trade your way to Financial Freedom" by Van Tharp. Your aim should not be to get a winner on every trade but to let your winners run and keep your losses small.
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Short-sell, or try to rent out?
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A short sale will be pretty bad for your credit report. It will linger for 7 years. This may ruin your opportunity to buy in the new area. On the other hand you need to run the numbers, the last I looked into this, the bank will look at rent and discount it by 25%. So the shortfall of $800/mo (after adjustment) will reduce your borrowing power if you rent it out. In general this is the idea. You rent for a year, and buy into the new area. If you short sell after this, while your credit is trashed, you still have your new home, and $50K less debt. (Disclaimer - There are those who question the ethics of this, a willing short sale. I am offering a purely business answer and making no judgment either way. I owed $90K on a condo where others were selling for $20K. I paid until it came up enough that a lump sum got me out upon sale. The bank got its money in full) An article on the differences between foreclosure and short sale.
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Freelancer: Should I start a second bank account?
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I feel the need to separate my freelance accounts from my personal accounts. Yes, you should. Should I start another savings account or a current account? Do you need the money for daily spending? Do you need to re-invest in your business? Use a current account. If you don't need the money for business expenses, put it away in your savings account or even consider term deposits. Don't rule out a hybrid approach either (some in savings account, some in current account). What criteria should I keep in mind while choosing a bank? (I thought of SBI since it has a lot of branches and ATMs). If you are involved in online banking and that is sufficient for most of your needs, bank and ATM locations shouldn't matter all that much. If you are saving a good chunk of money, you want to at least have that keep up with inflation. Research bank term deposit interest rates. The tend to be higher than just having your money sit in a savings account. Again, it depends on how and when you expect to need the money. What do I keep in mind while paying myself? Paying yourself could have tax implications. This depends on how are set up to freelance. Are you a business entity or are you an individual? You should look in to the following in India: The other thing to consider is rewarding yourself for the good work done. Pay yourself a reasonable amount. If you decide to expand and hire people going forward, you will have a better sense of business expenses involved when paying salaries. Tips on managing money in the business account. This is a very generic question. I can only provide a generic response. Know how much you are earning and how much your are putting back in to the business. Be reasonable in how much you pay yourself and do the proper research and paperwork from a taxation point of view.
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How can I help my friend change his saving habits?
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In the end, this is really not a finance question. It's about changing one's habits. (One step removed, however, since you are helping a friend and not seeking advice for yourself). I've learned a simple cause & effect question - Does someone who wants (goal here) do (this current bad habit)? For example, someone with weight to lose is about to grab the chips to sit and watch TV. They should quickly ask themselves "Does a healthy, energetic person sit in front of the TV eating chips?" The friend needs to make a connection between the expense he'd like to save up for and his current actions. There's a conscious decision in making the takeout purchase, he'd rather spend the money on that meal than to save .5% (or whatever percent) of the trip's cost. If he is clueless in the kitchen, that opens another discussion, one in which I'd remark that on the short list of things parents should teach their kids, cooking is up there. My wife is clueless in the kitchen, I taught our daughter how to be comfortable enough to make her own meals when she wants or when she's off on her own. If this is truly your friend's issue, you might need to be a cooking spirit guide to be successful.
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Is there such a thing as a non-FDIC savings account, which earns better interest?
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Everyone would like a savings/checking account that has the same liquidity as others but pays multiple times as much, but such a thing would break the laws of finance. The thing keeping savings and checking accounts cheap isn't particularly the FDIC insurance but the high liquidity and near certainty that you will not lose money. In all of finance you are compensated for the risk (and perhaps illiquidity) you bear. If you insist on a risk-free and highly liquid investment, you will get the risk-free and highly liquid rate, which is currently around 1%. Doesn't matter what type of investment it is (savings, money market, treasuries, etc.). Money market funds, in particular, were designed to be a replacement for savings accounts. They have decent liquidity and almost no risk (and no FDIC insurance). But they earn about what good savings accounts do, because that's what risk-free investments earn. If you wish to earn more you must decide what you will give up: Decide on one (or both) of those to sacrifice and you will find yourself with options.
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Difference between 'split and redemption' of shares and dividend
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It is the first time I encounter redemption programme and I would like to know what are my options here You can hold on to the shares and automatically receive 2.25 SEK per share some time after 31-May; depending on how fast the company and its bank process the payouts. Alternatively you can trade in the said window for whatever the market is offering. how is this different from paying the dividend? I don't know much about Sweden laws. Structuring this way may be tax beneficial. The other benefit in in company's books the shareholders capital is reduced. can I trade these redemption shares during these 2 weeks in May? What is the point of trading them if they have fixed price? Yes you can. If you need money sooner ... generally the price will be discounted by few cents to cover the interest for the balance days.
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Is this trick enough to totally prevent bankrupcy in a case of a crash?
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When you buy a stock, the worst case scenario is that it drops to 0. Therefore, the most you can lose when buying a stock is 100% of your investment. When you short a stock, however, there's no limit on how high the stock can go. If you short a stock at 10, and it goes up to 30, then you've lost 200% on your investment. Therefore shorting stocks is riskier than buying stocks, since you can lose more than 100% of your investment when shorting. because the price might go up, but it will never be as big of a change as a regular price drop i suppose... That is not true. Stocks can sometimes go up significantly (50-100% or more) in a very short amount of time on a positive news release (such as an earnings or a buyout announcement). A famous example occurred in 2008, when Volkswagen stock quintupled (went up 400%) in less than 2 days on some corporate news: Porsche, for some reason, wants to control Volkswagen, and by building up its stake has driven up the price. Hedge funds, figuring the share price would fall as soon as Porsche got control and stopped buying, sold a lot of VW shares short. Then last weekend, Porsche disclosed that it owned 42.6 percent of the stock and had acquired options for another 31.5 percent. It said it wanted to go to 75 percent. The result: instant short-squeeze. The German state of Lower Saxony owns a 20 percent stake in VW, which it said it would not sell. That left precious few shares available for anyone else. The shorts scrambled to cover, and the price leaped from about €200, or about $265, to above €1,000.
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As a Brit, how do I invest in US ETFs
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Vanguard has just recently started listing its funds in London but it doesn't look like the High Dividend Yield ETF is available yet. You'll need to either get a broker who can trade on the U.S. markets (there might be tax and exchange rate complications), or wait until Vanguard lists this stock on the London exchange.
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I received $1000 and was asked to send it back. How was this scam meant to work?
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The initial story sounds normal. Happens every day. Checksums cannot prevent this, since it is a typo by the sender. The sender typed in a wrong account number. That account number happened to exist (so the sender wouldn't get any immediate error message), your account. But, that innocent story can also be used as part of a money laundering plan. Namely, to give the money a legitimate source. Also can be used in a scheme to frame you for something. The question of how the person got your phone number raises suspicion. The bluffs to avoid the normal paperwork, and then disappearing, make it incriminating. No doubt. Take this to the police. The question arises: even if the plan (whatever it was) failed, why didn't he do the paperwork and get the money back? The answer is that that would leave a trail to possibly be picked up in a future investigation.
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Will a credit card company close my account if I stop using it?
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Please realize that your issuer can close the account for any number of reasons. Inactivity is one, as having a credit line open costs them money and if you never charge anything, the company doesn't get any transaction fees from vendors nor does the company get to charge you any interest. An occasional charge is likely to keep your card from being closed automatically, but it is not a guarantee. Another reason they may close the account is that you have other bad marks show up on your credit score, or their criteria for offering you the card change so you no longer match their target demographic. I have a credit card issued by my credit union that I have not used for a couple of years. They will not close the card account because my other accounts are still very profitable for them. If I were not an otherwise profitable customer, I wouldn't be surprised if they closed my credit card account. If you are serious about keeping the account open, you should probably have more than a trivial amount of usage.
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Why diversify stocks/investments?
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Basically, diversifying narrows the spread of possible results, raising the center of the returns bell-curve by reducing the likelihood of extreme results at either the high or low end. It's largely a matter of basic statistics. Bet double-or-nothing on a single coin flip, and those are the only possible results, and your odds of a disaster (losing most or all of the money) are 50%. Bet half of it on each of two coin flips, and your odds of losing are reduced to 25% at the cost of reducing your odds of winning to 25%, with 50% odds that you retain your money and can try the game again. Three coins divides the space further; the extremes are reduced to 12.5% each, with the middle being most likely. If that was all there was, this would be a zero-sum game and pure gambling. But the stock market is actually positive-sum, since companies are delivering part of their profits to their stockholder owners. This moves the center of the bell curve up a bit from break-even, historically to about +8%. This is why index funds produce a profit with very little active decision; they treat the variation as mostly random (which seems to work statistically) and just try to capture average results of a (hopefully) slightly above-average bucket of stocks and/or bonds. This approach is boring. It will never double your money overnight. On the other hand, it will never wipe you out overnight. If you have patience and are willing to let compound interest work for you, and trust that most market swings regress to the mean in the long run, it quietly builds your savings while not driving you crazy worrying about it. If all you are looking for is better return than the banks, and you have a reasonable amount of time before you need to pull the funds out, it's one of the more reliably predictable risk/reward trade-off points. You may want to refine this by biasing the mix of what you're holding. The simplest adjustment is how much you keep in each of several major investment categories. Large cap stocks, small cap stocks, bonds, and real estate (in the form of REITs) each have different baseline risk/return curves, and move in different ways in response to news, so maintaining a selected ratio between these buckets and adding the resulting curves together is one simple way to make fairly predictable adjustments to the width (and centerline) of the total bell curve. If you think you can do better than this, go for it. But index funds have been outperforming professionally managed funds (after the management fees are accounted for), and unless you are interested in spending a lot of time researching and playing with your money the odds of your doing much better aren't great unless you're willing to risk doing much worse. For me, boring is good. I want my savings to work for me rather than the other way around, and I don't consider the market at all interesting as a game. Others will feel differently.
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Why do I get a much better price for options with a limit order than the ask price?
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There are people whose strategy revolves around putting orders at the bid and ask and making money off people who cross the spread. If you put an order in between the current bid/ask, people running that type of strategy will usually pick it off, viewing it as a discount to the orders that they already have on the bid/ask. Often these people are trading by computer, so your limit order may get hit so quickly that it appears instantaneous to you. In reality, you were probably hit by a limit order placed specifically to fill against yours.
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On what dates do the U.S. and Canada release their respective federal budgets?
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Canada does not have a set date on which a (Federal) budget plan is unveiled. In 2011 it was June 6th. In 2012 it was March 29th and in 2013 it was 21st March.
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What's my risk of buying a house for a friend and sell back to him?
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Also you would need to consider any taxation issues. As he will be paying you rent you will need to include this as income, plus any capital gains tax on the re-sale of the property may need to be paid.
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Should I trade in a car I own to lower my payments on a new lease?
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Trade-in values are generally below what you can get in a private sale. To directly answer your question, you should sell the crossover yourself and use the balance to purchase your new vehicle. I would encourage you to use the $9k to finance directly without a lease, especially if you are planning on financing after the lease term. The lease will not save you money over the time you drive the vehicle in this case, and worse, will likely expose you to risk of having to pay additional fees if you break certain terms in the lease (mileage, wear and tear, etc) Best option mathematically is to use the $9k to purchase a vehicle for cash. This provides the lowest total cost of ownership. Even if you are afraid of purchasing a lemon, leasing a vehicle is awfully expensive insurance against that possibility. You would have to rack up some significant repairs to justify the cost of the lease vs cash over the term of operating the vehicle.
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Can Warren Buffet's method be distilled into basic steps?
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Warren Buffet isn't using any special sauce. He looks for value and ignores hype, greed, and fear. He buys what he knows and looks for companies that generate cash and/or are available for a discount of their true value. He explains what he looks for in a company and his reasons for buying it. He has said on numerous occasions, "I look for intrinsic value." (So there's your formula.) Human nature is often irrational and investing seems to bring out the fear and greed. I've always been a bit surprised when people ascribe some sort of sixth sense to Warren Buffet's success. He just works hard and doesn't deviate from a sound strategy. "Be fearful when others are greedy and greedy when others are fearful." And of course, rule one: "Don't lose money." It's not a joke. How many people buy high and sell low because of fear and greed? When the market tanks, buy more. Finally, anyone can invest with Buffet without all the work. Just buy a few shares of BRK.A or BRK.B.
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Why should one only contribute up to the employer's match in a 401(k)?
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I'd hazard that Jim is mostly worried that people are getting ripped off by high employer 401(k) fund fees. A lot of employers offer funds with fees over 1% a year. This sounds low-ish if you don't realize that the real (inflation-adjusted) return for the fund will probably average out to about 4%, so it's really something like a quarter of your earnings gone. With an IRA, you don't have to do that. You can get an IRA provider which offers good, cheap index funds and the like (cough Vanguard cough). Fund fees will probably be closer to 0.1%-ish. HOWEVER. The maximum IRA contribution in 2013 will be $5,500. The maximum for a 401(k) contribution will be $17,500. That extra capacity is enough to recommend a 401(k) over an IRA for many people. These people may be best served by putting money into the 401(k) and then rolling it over into a rollover IRA when they change jobs. Also, certain people have retirement plans which offer them good cheap index funds. These people probably don't need to worry quite as much. Finally, having two accounts is more complicated. Please contact someone who knows more about taxes than I am to figure out what limitations apply for contributing to both IRAs and 401(k)s in the same year.
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Frequency of investments to maximise returns (and minimise fees)
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Wow, this turns out to be a much more difficult problem than I thought from first looking at it. Let's recast some of the variables to simplify the equations a bit. Let rb be the growth rate of money in your bank for one period. By "growth rate" I mean the amount you will have after one period. So if the interest rate is 3% per year paid monthly, then the interest for one month is 3/12 of 1% = .25%, so after one month you have 1.0025 times as much money as you started with. Similarly, let si be the growth rate of the investment. Then after you make a deposit the amount you have in the bank is pb = s. After another deposit you've collected interest on the first, so you have pb = s * rb + s. That is, the first deposit with one period's growth plus the second deposit. One more deposit and you have pb = ((s * rb) + s) * rb + s = s + s * rb + s * rb^2. Etc. So after n deposits you have pb = s + s * rb + s * rb^2 + s * rb^3 + ... + s * rb^(n-1). This simplifies to pb = s * (rb^n - 1)/(rb - 1). Similarly for the amount you would get by depositing to the investment, let's call that pi, except you must also subtract the amount of the broker fee, b. So you want to make deposits when pb>pi, or s*(ri^n-1)/(ri-1) - b > s*(rb^n-1)/(rb-1) Then just solve for n and you're done! Except ... maybe someone who's better at algebra than me could solve that for n, but I don't see how to do it. Further complicating this is that banks normally pay interest monthly, while stocks go up or down every day. If a calculation said to withdraw after 3.9 months, it might really be better to wait for 4.0 months to collect one additional month's interest. But let's see if we can approximate. If the growth rates and the number of periods are relatively small, the compounding of growth should also be relatively small. So an approximate solution would be when the difference between the interest rates, times the amount of each deposit, summed over the number of deposits, is greater than the fee. That is, say the investment pays 10% per month more than your bank account (wildly optimistic but just for example), the broker fee is $10, and the amount of each deposit is $200. Then if you delay making the investment by one month you're losing 10% of $200 = $20. This is more than the broker fee, so you should invest immediately. Okay, suppose more realistically that the investment pays 1% more per month than the bank account. Then the first month you're losing 1% of $200 = $2. The second month you have $400 in the bank, so you're losing $4, total loss for two months = $6. The third month you have $600 in the bank so you lose an additional $6, total loss = $12. Etc. So you should transfer the money to the investment about the third month. Compounding would mean that losses on transferring to the investment are a little higher than this, so you'd want to bias to transferring a little earlier. Or, you could set up a spreadsheet to do the compounding calculations month by month, and then just look down the column for when the investment total minus the bank total is greater than the broker fee. Sorry I'm not giving you a definitive answer, but maybe this helps.
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No-line-of-credit debit card?
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Having worked at a financial institution, this is a somewhat simple, two-part solution. 1) The lendor/vendor/financial institution simply turns off the overdraft protection in all its forms. If no funds are available at a pin-presented transaction, the payment is simply declined. No fee, no overdraft, no mess. 2) This sticking point for a recurring transaction, is that merchants such as Netflix, Gold's Gym etc, CHOOSE to allow payments like this, BECAUSE they are assured they are going to get paid by the financial institution. It prevents them from having issues. Only a gift card will not cost you more money than you put in, BUT I know of several institutions, that too many non-payment periods can cause them to cease doing business with you in the future. TL:DR/IMO If you don't want to pay more than you have, gift cards are the way to go. You can re-charge them whenever you choose, and should you run into a problem, simply buy a new card and start over.
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2008-2009 Stock Market Crash — what caused the second drop?
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First, I would like to use a better chart. In my opinion, a close of day line chart obscures a lot of important information. Here is a daily OHLC log chart: The initial drop from the 1099.23 close on Oct 3 was to 839.8 intraday, to close at 899.22 on Oct 10. After this the market was still very volatile and reached a low of 747.78 on Nov 20, closing only slightly higher than this. It traded as high as 934.70 on Jan 6, 2009, but the whole period of Nov 24 - Feb 13 was somewhat of a trading range of roughly 800-900. Despite this, the news reports of the time were frequently saying things like "this isn't going to be a V shaped recovery, it is going to be U shaped." The roughly one week dip you see Feb 27 - Mar 9 taking it to an intraday low of 666.79 (only about 11% below the previous low) on first glance appears to be just a continuation of the previous trend. However... The Mar 10 uptrend started with various news articles (such as this one) which I recall at the time suggested things like reinstating the parts of the Glass–Steagall Act of 1933 which had been repealed by the Gramm–Leach–Bliley Act. Although these attempts appear to have been unsuccessful, the widespread telegraphing of such attempts in the media seemed to have reversed a common notion which I saw widespread on forums and other places that, "we are going to be in this mess forever, the market has nowhere to go but down, and therefore shorting the market is a good idea now." I don't find the article itself, but one prominent theme was the "up-tick" rule on short selling: source From this viewpoint, then, that the last dip was driven not so much by a recognition that the economy was really in the toilet (as this really was discounted in the first drop and at least by late November had already been figured into the price). Instead, it was sort of the opposite of a market top, where now you started seeing individual investors jump on the band-wagon and decide that now was the time for a foray into selling (short). The fact that the up-tick rule was likely to be re-instated had a noticeable effect on halting the final slide.
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Relation between inflation rates and interest rates
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I haven't read the terms here but the question may not have a good answer. That won't stop me from trying. Call the real rate (interest rate - inflation) and you'll have what is called negative real rates. It's rare for the overnight real rate to be negative. If you check the same sources for historical data you'll find it's usually higher. This is because borrowing money is usually done to gain an economic benefit, ie. make a profit. That is no longer a consideration when borrowing money short term and is IMO a serious problem. This will cause poor investment decisions like you see in housing. Notice I said overnight rate. That is the only rate set by the BoC and the longer rates are set by the market. The central bank has some influence because a longer term is just a series of shorter terms but if you looked up the rate on long Canadian real return bonds, you'd see them with a real rate around 1%. What happens when the central bank raise or lowers rates will depend on the circumstances. The rate in India is so high because they are using it to defend the rupee. If people earn more interest they have a preference to buy that currency rather than others. However these people aren't stupid, they realize it's the real rate that matters. That's why Japan can get away with very low rates and still have demand for the currency - they have, or had, deflation. When that changed, the preference for their currency changed. So if Canada hast forex driven inflation then the BoC will have to raise rates to defend the dollar for the purpose of lowering inflation from imports. Whether it works or not is another story. Note that the Canadian dollar is very dependant on the total dollar value of net oil exports. If Canada has inflation due too an accelerating economy this implies that there are profitable opportunities so businesses and individuals will be more likely to pay a positive real rate of interest. In that scenario the demand for credit money will drive the real rate of return.
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Is avoiding fees commonly found with CFD trading possible?
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The fees with trading CFDs are usually lower than standard share trading. There is usually no joining fee to join a broker and start trading with them, you must be talking about the minimum required to fund your account to trade with. What country are you in? Because if you are in the USA I believe CFD trading is not allowed there. Also there is no margin fee associated with trading CFDs. The margin is what you put in to buy or sell the CFD when you open a position. For example if you were to open a position in a share CFD where the underlying share had a price of $10 and you were looking to buy 1000 units. To buy the shares outright your outlay would be $10000 plus brokerage. If the CFD provider had a 10% margin on these share, then your initial margin to open a CFD position would be 10% of $10000 or $1000. If the price of the shares went up to $11 and you sold the shares you would get $11000 ($1000 profit), if you sold the CFDs you would get $2000 ($1000 profit). If on the other hand the shares went down to $9 and you sold the shares you would get $9000 ($1000 loss), if you sold the CFDs you would get $0 ($1000 loss). You have to be careful with margin, it is a two edged sword - it can multiply your gains as well as multiply your losses. The only fees you should be charged with CFDs is brokerage (which should be less than for share trading), and overnight financing costs. This is charged for everyday you hold a long position overnight. You should not be charge any overnight financing cost for holding short positions overnight, and if interest rates were higher you might actually get paid an overnight financing for holding short positions overnight. You may have been closed out of your bitcoin position because you didn't have enough funds in your trading account to open the size trade that you opened. From your question it seems like you are not ready to trade CFDs, you should really learn more about CFDs and the trading platform/s you plan to use before trading with your valuable money. You could probably open up a simulation account whilst you are learning the ropes and become more familiar with the trading platform and with CFDs. And if you are not sure about something ask your broker, they usually have training videos and seminars.
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Identity theft?
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Assuming you live in the US, it is quite normal when you are applying for a loan that the application will ask you to confirm your identity. One of these methods is to ask you which of the following addresses you have lived at, with some of them being very similar (i.e. same city, or maybe even the same street). Sometimes they will ask questions and your answer would be "None of the above." This is done to prevent fraudsters from applying for a loan under your identity. If you see no signs of unauthorized accounts or activities on your credit reports, and you initiated the car loan application, then you should be fine.
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What low-fee & liquid exchange-traded index funds / ETFs should I consider holding in a retirement portfolio?
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If liquidity and cost are your primary objectives, Vanguard is indeed a good bet. They are the walmart of finance and the absolute best at minimizing fees and other expenses. Your main portfolio holding should be VTI, the total stock market fund. Highly liquid and has the lowest fees out there at 0.05%. You can augment this with a world-minus-US fund if you want. No need to buy sector or specific geography funds when you can get the whole market for less. Add some bond funds and alternative investments (but not too much) if you want to be fully diversified.
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Can unclear or deceptive company news and updates affect the stock price in the opposite direction of where the company is actually headed?
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Yes, but only in a relatively short term. False news or speculations can definitely change the stock price, sometimes even significantly. However, the stock price will eventually (in the long-term) correct itself and head to the right direction.
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Is it true that the price of diamonds is based on a monopoly?
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Yes, the De Beers Group of Companies is a diamond cartel that had complete control of the diamond market for most of the 20th century. They still control a sizable portion of the market and their effort at marketing (particularly with the slogan "A Diamond is Forever") has done much to inflate the market for diamonds in our society. The intrinsic value of diamonds is much lower than the market prices currently reflect, but with the caveat that there is a rarity factor which does drive up the price of larger diamonds. The larger the diamond, the more likely it is to have flaws, so when it comes to diamonds that are 5 carats or greater, you are not as likely to see a new supply of diamonds disrupt the prices of those larger stones. Some other ways that high end jewelers and suppliers are differentiating themselves is by patenting a specific cut that they design. This is another barrier to entry that works to create some artificial price inflation. One common example is the Lucida cut sometimes referred to as the Tiffany cut. Diamonds can also be manufactured. The same carbon structure can be grown in a lab. These stones have the same carbon structure as natural diamonds but without the flaws and visible impurities. Most manufactured diamonds are used industrially, but processes have improved sufficiently to allow for gemstone quality synthetic diamonds. They sell at a decent discount, so that might be an option to consider if you want a substitute. In the years to come, you can expect prices for synthetic diamonds to continue to decrease which will probably put some further downward pressure on jewelers' prices.
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Will my current employer find out if I have a sole proprietarship/corporation?
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Tell your employer during your initial contract Terms of Service discussions. Ordinarily, this is boilerplate but you should ask for a rider in your contract which says - in some form - I already have IP, I will continue to work on this IP in my own time, and any benefit or opportunity derived from this IP will continue to be entirely mine. I requested exactly such a rider when I took up a new job just over a year ago and my employer was extremely accommodating. That I already had a company in which that IP could reside actually made the process easier. As @JohnFX has already mentioned, not telling your employer is both unethical as well as storing up potential legal hassles for you in the futre.
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Vanguard Target Retirement Fund vs. Similar ETF Distribution (w/ REIT)
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Your approach sounds solid to me. Alternatively, if (as appears to be the case) then you might want to consider devoting your tax-advantaged accounts to tax-inefficient investments, such as REITs and high-yield bond funds. That way your investments that generate non-capital-gain (i.e. tax-expensive) income are safe from the IRS until retirement (or forever). And your investments that generate only capital gains income are safe until you sell them (and then they're tax-cheap anyway). Of course, since there aren't really that many tax-expensive investment vehicles (especially not for a young person), you may still have room in your retirement accounts after allocating all the money you feel comfortable putting into REITs and junk bonds. In that case, the article I linked above ranks investment types by tax-efficiency so you can figure out the next best thing to put into your IRA, then the next, etc.
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Paying over the minimum mortgage payment
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take a look at this graph here: http://mortgagevista.com/#m=1&a=40000&b=4&c=30y&B&oa&ob&oc&od It shows how much it costs to borrow $40k for 30 years. You did not post your mortgage rate or loan term, so I used 4% over 30 years (you can easily update this with your actual details). While this does not show the costs of your total mortgage, it does help you get an idea of just how much the 40k$ in question is costing you in interest. If you hover over the month one year from now you will see that you will have paid around $1587 in interest over the course of the year. If you were to put the full 40k$ toward your mortgage right now, you would avoid having to pay this interest over the next year. The next question I think you would have to ask yourself is if there is anything else you could do with that money that is worth more than the $1587 to you. Is it worth $1587 to keep those funds liquid/available in case you need to use them for something else? Could you find other investments you feel comfortable with that could earn you more than $1587? Is it worth the hassle/risk of investing the funds somewhere else with a better return? If you can't come up with anything better to do with the money then yes, you should probably use the funds (or at least part of them) towards the mortgage.
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(Legitimate & respectable) strategies to generate “passive income” on the Internet?
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One such place where you can sell your photos is iStockPhoto. They are pretty picky about the photos they allow, so you should be a pretty good photographer and have good equipment. It can take a while to build up an interest in your photos, but once you do you can make some decent money off it. My sister is a semi-pro photographer and makes about $500 a month off photos she sells there.
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What's the best use for this money? Its only a small amount but can make a big difference to me
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Its very silly of you to have house savings while you have these debts. Your total (listed) debt is 1657, with a savings of 2000, and a tax refund of 985. I'd be done with the Apple loan and CC tomorrow. Does that accomplish the goal of making a significant difference in your debt? Yes it does. This will leave you with 1328. I'd keep 500 or so in an emergency fund, and put the rest to the car. Although 828 will not help much with the car it would probably knock a month off. Next work like crazy to pay off the car. Get a second job or work overtime. Then save a emergency fund of 3 to 6 months of expenses as if you already owned the house. I would tend to go on the high side as I suspect you are single. Only then does it makes sense to save for a down payment. Although it is an American institution, the book The Millionaire Next Door might be helpful for you. Your most powerful wealth building tool is your income. When one handicaps that tool with payments and exorbitant lifestyle choices you greatly reduce your ability to become wealthy. These amounts are so small, you should just knock them out.
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Why would a company sell debt in order to buy back shares and/or pay dividends?
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When I play Railroad Tycoon III, I often send my company deep into debt to get cash on hand to buy back shares, effectively increasing my ownership of the company as an absolute percentage. Then I issue massive dividends until my company goes bankrupt, and start a new company. It's a way to shuttle money borrowed against a company's assets into my personal bank account at no risk to me. In the MSFT case, maybe they think there will be inflation and this is a hedge against holding so many dollars in cash already. If they can borrow a couple billion in 2010 dollars and pay it back in 2015 dollars, they're probably going to end up ahead if all they do is buy back shares. Paying dividends with the money seems stupid vs. buying back shares - they're just driving up income taxes for investors.
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What's the catch with biweekly mortgage payments?
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Depending on who you have the loan through and how they figure the interest charges (whether daily, monthly, bi-monthly, etc. normally monthly I would assume), your interest is probably figured either daily or once a month. Let's assume that it is figured daily, otherwise it wouldn't make sense to make bi-weekly payments. At 4% Annual Interest on a $150,000 home loan the interested added each day is about $16.44, but it doesn't stop there because it is compounding interest daily so the next day it becomes 4% of 150,0016.44 (which is negligibly larger amount) and they will tack on another $16.44. So what will happen is that the amount of interest you owe grows rather quickly, especially if you miss a monthly payment. Everyone knows that the faster you pay something off the less interest you pay, but not everyone knows the formula for compounding interest. a quick Google search rendered this site with a simple explanation Compound Interest Formula unfortunately this formula doesn't take into account the payments being made. The big thing with making your payments bi-weekly rather than a bigger payment once a month is that you pay off some of that principle right away and it won't collect interest for 14 more days. if the interest is only calculated once a month, make your full payment before the interest is calculated, the same goes for your credit cards.
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Is it OK to use a credit card on zero-interest to pay some other credit cards with higher-interest?
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I've done exactly what you are describing and it was a great move for me. A few years back I had two credit cards. One had a $6000 balance and a fairly high interest rate that I was making steady payments to (including interest). The other was actually tied to a HELOC (home equity line of credit) whose interest rate was fixed to "prime", which was very low at the time, I think my effective rate on the card was around 3%. So, I pulled out one of the "cash advance checks" from the HELOC account and paid off the $6000 balance. Then I started making my monthly payments against the balance on the HELOC, and paid it off a bit more quickly and with less overall money spent because I was paying way less interest. Another, similar, tactic is to find a card that doesn't charge fees for balance transfers and that has a 0% interest rate for the first 12 months on transferred balances. I am pretty sure they are out there. Open an account on that card, transfer the balance to it, and pay it down within 12 months. And, try not to use the card for anything else if you can help it.
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Is there an advantage to keeping a liquid emergency fund if one also has an untapped line of credit?
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recommend keeping some amount of money in cash as an emergency fund I see two keywords, with two interpretations here. Cash: Emergency: 1 + 1 is rarely a problem. Even if it takes a couple of days to sell reliable investments. 1 + 2 is a rather large problem. You need to leave town, today, because the town won't be there tomorrow. You're out of gas, and the phones are not working. The guy minding the local service station with an AR-15 can't process your Amex Centurion card and would prefer actual cash. I live in an area prone to earthquakes and cyclonic storms. The last large one didn't knock out anything major, but the cash machines emptied out rather quickly. We keep a month's income in cash in the house, and I have a spare tank of gas in storage*. As others have said, there is no single answer for everyone. But do consider what you take for granted and what happens when it goes away. *Change it every 2 months - common gasoline is not chemically stable
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Personal Tax Deduction for written work to a recognized 501c3
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If it's work you'd be producing specifically for this organization, that would not be deductable. Per Publication 526, Charitable Deductions, "You can't deduct the value of your time or services, including: … The value of income lost while you work as an unpaid volunteer for a qualified organization." On the other hand, if you were say an author of a published book or something (not specifically written for this organization), you could donate a copy of the book and probably deduct its fair market value (or perhaps only your basis, if it's your business's inventory).
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Selling equities for real-estate down payment
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My suggestion would be to do the math. That is the best advice you can get when considering any investment. There are other factors you haven't considered, too... like the fact that interest rates are at extremely low levels right now, so borrowing money is relatively cheap. If you're outside the US though, that may be less of a consideration as the mortgage lending institutions in Europe only tend to give 5-year locks on loan rates without requiring a premium. You may be somewhere else in the world. You will probably struggle to do the actual math about the probability of the market going down or up, but what you can do is this: Figure out what it would cost you to cash out the investments. You say your balance is $53,000 in various items. (Congrats! That's a nice chunk of money.) But with commissions and taxes and etc., it may reduce the value of your investments by 10% - 25% when you try to cash out those investments. Paying $3,000 to get that money out of the investments is one thing... but if you're sending $10,000 to the tax man when you sell this all off, that changes the economics of your investments a LOT. In that case you might be better off seeing what happens if the markets correct by 10%... you'd still have more than if you sold out and paid major taxes. Once you know your down payment, calculate the amount of property you could afford. You know your down payment could be somewhere around $50,000 after taxes and other items... At an 80:20 loan-to-value ratio that's about $250,000 of a property that you can qualify for, assuming you could obtain the loan for $200,000. What could you buy for that? Do some shopping and figure out what your options are... Once you have two or three potential properties, figure out the answer to "What would the property give you?" Is it going to be rented out? Are you going to live there? Both? If you're living in it, then you come out ahead if the costs for the mortgage debt and the ongoing maintenance and repairs are less than what you currently pay in rent. Figure out what you pay right now to put a roof over your head. Will the place you could buy need repairs? Will you pay more on a mortgage for $200,000 USD (in your local currency) than what you currently do for housing? Don't even factor in the possible appreciation of a house you inhabit when you're making this kind of investment decision... it could just as easily burn down as go up in value. If you would rent it, what kind of rental would that be? Long-term rental? Expect to pay for other people to break your stuff. Short-term rental? You can collect more money per tenant per day, but you'll end up with higher vacancy rates. And people still break your stuff. But do the math and see if you could collect enough in rent from a tenant (person or business or whatever the properties are you could buy) to cover the amount you are paying in debt, plus what you would pay in taxes (rent is income), plus what you would need for maintenance, plus insurance. IF the numbers make sense, then real estate can be a phenomenally lucrative investment. I own some investment properties myself. It is a great hedge against inflation (you can raise rents when contracts lapse... usually) and it is an excellent way to own a tangible item. But if you don't know the numbers and exactly how it would make you better off than sitting and hoping that the markets go up, because they generally do over time, then don't take the jump.
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Mutual Funds Definition and Role
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I think you are asking about actively managed funds vs. indexes and possibly also vs. diversified funds like target date funds. This is also related to the question of mutual fund vs. ETF. First, a fund can be either actively managed or it can attempt to track an index. An actively managed fund has a fund manager who tries to find the best stocks to invest in within some constraints, like "this fund invests in large cap US companies". An index fund tries to match as closely as possible the performance of an index like the S&P 500. A fund may also try to offer a portfolio that is suitable for someone to put their entire account into. For example, a target date fund is a fund that may invest in a mix of stocks, bonds and foreign stock in a proportion that would be appropriate to someone expecting to retire in a certain year. These are not what people tend to think of as the canonical examples of mutual funds, even though they share the same legal structure and investment mechanisms. Secondly, a fund can either be a traditional mutual fund or it can be an exchange traded fund (ETF). To invest in a traditional mutual fund, you send money to the fund, and they give you a number of shares equal to what that money would have bought of the net asset value (NAV) of the fund at the end of trading on the day they receive your deposit, possibly minus a sales charge. To invest in an ETF, you buy shares of the ETF on the stock market like any other stock. Under the covers, an ETF does have something similar to the mechanism of depositing money to get shares, but only big traders can use that, and it's not used for investing, but only for people who are making a market in the stock (if lots of people are buying VTI, Big Dealer Co will get 100,000 shares from Vanguard so that they can sell them on the market the next day). Historically and traditionally, ETFs are associated with an indexing strategy, while if not specifically mentioned, people assume that traditional mutual funds are actively managed. Many ETFs, notably all the Vanguard ETFs, are actually just a different way to hold the same underlying fund. The best way to understand this is to read the prospectus for a mutual fund and an ETF. It's all there in reasonably plain English.
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Should I pay off my car loan within the year?
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Pay it off....I've only ever paid interest on mortgages to buy the houses I've lived in (I paid both mortgages of years ahead of schedule) & as a result my credit rating's way above average, I use credit cards for everything, pay 'em off in full every month unless I'm paid not to (currently have around 8,000 sitting interest free while the cash earns 6% elsewhere). Life's sweet if you understand the system. Hell if you don't. Keep saving...
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What does “100% stock dividend” mean?
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A 100% stock dividend means that you get one share of the "stock dividend" for every share you own. For example, Google did this in 2014 when they gave all of their Class A shareholders one class C share for every Class A that they owned. If the 100% stock dividend is for the exactly the same stock, it is basically the same as a 2-for-1 stock split. If, however, the 100% stock dividend is to give you a different stock, then this is typically due to a corporate reorganization or demerger/spinoff event. Some countries have different tax treatments for the events - for example, with demergers in Australia, Class Rulings need to be obtained from the Australian Taxation Office to declare demergers as tax free. A recent demerger was in Australia as South32, demerged from BHP Billiton. References: http://economix.blogs.nytimes.com/2014/04/02/the-many-classes-of-google-stock/ http://www.bhpbilliton.com/investors/shareholderinfo/demerger-taxation-information
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What one bit of financial advice do you wish you could've given yourself five years ago?
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When I was contracting I wish I had joined a tax efficient umbrella organisation rather than just work as a sole trader. I also wish I had put money aside to pay my taxes rather than just spend it all. :(
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Can I convert spread option into regular call or put?
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Just so I'm clear- the end result is a long call, and you think the stock is going up. There is nothing wrong with that fundamentally. Be aware though: That's a negative theta trade. This means if your stock doesn't increase in price during the remaining time to expiration of your call option, the option will lose some of its value every day. It may still lose some of its value every day, depending on how much the stock price increases. The value of the call option just goes down and down as it approaches maturity, even if the stock price stays about the same. Being long a call (or a put) is a tough way to make money in the options market. I would suggest using an out-of-the-money butterfly spread. The potential returns are a bit less. However, this is a cheap positive theta trade so you avoid time decay on the value of the option.
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Using 2 different social security numbers
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While I agree with keshlam@ that the gym had no reason (or right) to ask for your SSN, giving false SSN to obtain credit or services (including gym membership) may be considered a crime. While courts disagree on whether you can be charged with identity theft in this scenario, you may very well be charged with fraud, and if State lines are crossed (which in case of store cards is likely the case) - it would be a Federal felony charge. Other than criminal persecution, obviously not paying your debt will affect your credit report. Since you provided false identity information, the negative report may not be matched to you right away, but it may eventually. In the case the lender discovers later that you materially misrepresented information on your mortgage application - they may call on your loan and either demand repayment in full at once or foreclose on you. Also, material misrepresentation of facts on loan application is also a criminal fraud. Again, if State lines are crossed (which in most cases, with mortgages they are), it becomes a Federal wire fraud case. On mortgage application you're required to disclose your debts, and that includes lines of credits (store cards and credit cards are the same thing) and unpaid debts (like your gym membership, if its in collection).
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Does it make sense to buy an index ETF (e.g. S&P 500) when the index is at an all-time high?
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In other words, to a first-order approximation, the S&P 500 is always at an all-time high. I'm going to run with this observation a bit. The crash of '87 was remarkable. It was a drop of 1/3 in a short time, yet, when one looked at the year, the Dow was up nearly 5% with dividends included. A one-year Rip Van Winkler would have woken up thinking it an unremarkable year. I actually recall a conversation I had on Aug 25th 1987. I was discussing the market with a colleague over lunch, and while I didn't call the top that day, I remarked that it didn't matter much, that 5-10 years later just staying in the market would have been the right thing. Compare this 87-95 chart to the longer term chart derobert shows. In his chart, this is all but a blip. In my chart you can see it took about 3-1/2 years to be in the black, as the market then shot up from there. A dollar cost averager would not have bought at that short term high, well not more than a tiny bit. The best I can do to conclude is to say I'd never just buy in all at once. You buy in over time, X% of your income each month, and if you have a chunk to invest, smooth it out over a few years.
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How do I explain why debt on debt is bad to my brother?
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Talk about opportunity cost. Show a rope, and put a tag with him on the end of it. Explain that since he has max out his credit, he can no longer get more. Without more credit here are the things he can't have The key to illustrate is that all the money he makes, for the next several years is obligated to the people he has already borrowed it from. Try to have him imagine giving his entire paycheck to a bank, and then doing that for the next five years. To drive it home, point out that there are 5 super bowls, 5 college championship games, 5 final fours, 5 annual concerts he likes, 5 model years of cars, 5 or more iPhone versions in those five years. Or whatever he is into. 5 years of laptops, 5 years of fishing trips. These things are not affordable to him right now. He has already spent his money for the next 5 years, and those are the things he cannot have because he is, in fact, out of cash. Furthermore, if he continues, the credit will dry up completely and his 5 year horizon could easily become ten. To illustrate how long 5 or 10 years is, have him remember that 10 years ago he might have been in college or the military. That 5 years ago Facebook was no big thing. That 5 years ago the Razr was an awesome phone. That 5 years ago we had a different president.
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What is the difference between a bond and a debenture?
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Some additional links which explain their differences. But mostly as @bstpierre says, both are very similar and in some cases the terms may be used inter changeably
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Investing in a offshore bank account
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when investing in index funds Index fund as the name suggests invests in the same proportion of the stocks that make up the index. You can choose a Index Fund that tracks NYSE or S&P etc. You cannot select individual companies. Generally these are passively managed, i.e. just follow the index composition via automated algorithms resulting in lower Fund Manager costs. is it possible to establish an offshore company Yes it is possible and most large organization or High Net-worth individuals do this. Its expensive and complicated for ordinary individuals. One needs and army of International Tax Consultants / International Lawyers / etc but do I have to pay taxes from the capital gains at the end of the year? Yes Canada taxes on world wide income and you would have to pay taxes on gains in Canada. Note depending on your tax residency status in US, you may have to pay tax in US as well.
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In a house with shared ownership, if one person moves out and the other assumes mortgage, how do we determine who owns what share in the end?
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Market value and assessments are two different things. No matter how amical the agreement seems on buying and selling, the future could result in damaged relationships without an absolute sale. I would strongly recommend getting into an agreement to split the purchase of a house as a means to save money. If it's too late, sell immediately.
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Why do 10 year Treasury bond yields affect mortgage interest rates?
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The yield on treasury bond indicates the amount of money anyone at can make at virtually zero risk. So lets say banks have X [say 100] amount of money. They can either invest this in treasury bonds and get Y% [say 1%] interest that is very safe, or invest into mortgage loans [i.e. lend it to people] at Y+Z% [say at 3%]. The extra Z% is to cover the servicing cost and the associated risk. (Put another way, if you wanted only Y%, why not invest into treasury bonds, rather than take the risk and hassle of getting the same Y% by lending to individuals?) In short, treasury bond rates drive the rate at which banks can invest surplus money in the market or borrow from the market. This indirectly translates into the savings & lending rates to the banks' customers.
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Can I register for VAT to claim back VAT without selling VAT applicable goods? (UK)
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As far as I know any business can register for VAT regardless of the nature of the business. If all the goods you sell (or services you provide) are VAT-exempt or zero-rated then you will get refunds from HMRC on VAT your business pays. Any business whose non-VAT exempt turnover (which would include zero-rated goods and services provided) exceeds the registration threshold must register, again even if that means they are "forced" to claim refunds. So the only question would be whether your rather nebulous activities were enough to qualify you as a business or organisation to which the VAT regime applies at all. The one-liner answer to that is generally, if goods or services are provided in return for a charge, there’s a business activity for VAT purposes Inevitably there's a much bigger body of statute and case law and it won't always be obvious whether the one-liner answer applies or not to a particular activity so it may be necessary to seek specialist advice.
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Incorporating real-world parameters into simulated(paper) trading
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You said the decision will be made by EOD. If you've made the decision prior to the market close, I'd execute on the closing price. If you are trading stocks with any decent volume, I'd not worry about the liquidity. If your strategy's profits are so small that your gains are significantly impacted by say, the bid/ask spread (a penny or less for liquid stocks) I'd rethink the approach. You'll find the difference between the market open and prior night close is far greater than the normal bid/ask.
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Tax: 1099 paper form
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You can print them on any IRS-approved paper, you don't have to use pre-printed forms. The IRS publishes specifications for paper that is approved for use for these kinds of forms (109*, W*, etc). Here's the reason why it is important: Even the slightest deviation can result in incorrect scanning, and may affect money amounts reported for employees. Note that some portions of these forms are in different color (1099-MISC copy A). This is important, and using incorrect color will affect the IRS OCR mechanisms. Forms for individuals are less complicated with regards to technical specifications, because individuals must file them, and as such any complication will unnecessarily burden the citizenry. All the 109*, W* etc forms are not legally required to be filed by all citizens. You're only required to file them if you chose to do business, or chose to employ others. As such, using professional software and special forms is a cost of doing your business, and not a tax as it would be had it been mandatory to everyone. Mistakes in individual forms due to OCR failure or something else will be noticed by the taxpayers (less/more refund, etc) or through the internal matching and cross-check. However, forms 109* and W* feed that matching and cross-check system and are considered source of truth by it, and as such their processing must be much more reliable and precise.
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If the U.S. defaults on its debt, what will happen to my bank money?
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If you are actually referring to all the political rhetoric and posturing over the debt ceiling issue. That's a long ways from the US actually defaulting on paying debts. A lot of government offices might shut down, but I expect anyone holding US debt to be paid off. (they have the printing presses after all) If that's what you are referring to, based on the LAST time that the governement had to shut down because they didn't raise the debt ceiling, it won't be a big deal. Last time, no debt was defaulted on, a bunch of the less essential government offices shut down for a few days, and the stock market did a collective 'meh' over the whole thing. It was basically a non event. I've no reason to expect it will be different this time. (btw, where were all these republican budget cutters hiding when 10 years ago they started with a nearly balanced budget, and ended up blowing up the national debt by about 80% in 8 years time? (from roughly $6B to $11B) I wish they'd been screaming about the debt as much then as they are now. Not that there isn't ample blame to go around, and both sides have not been spending in ways that make a drunken sailor look like the paragon of a fiscal conservative, but to hear nearly any of them tell it, their party had nothing to do with taking us from a balanced budget to the highest burn rate ever while they were in control (with a giant financial crisis through in as pure 'bonus')
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Is it a good investment for a foreigner to purchase a flat/apartment in China?
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No, it's not. This could be a great question, but with no background, not so much. Do you live there now? For how long, and how much longer? You say investment, are you looking to live in it or rent it out? I have nothing against China, but I'd not buy anywhere unless the price, location, and timing all were right.
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Why are interest rates on saving accounts so low in USA and Europe?
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Some comments above are inaccurate. Advertised interest rates for deposits and savings in Russia (from Russian banks) are generally for Ruble (RUB) denominated accounts; however, USD and EUR denominated accounts still offer favorable interest rates when compared to Western counterparts. For example, Sberbank advertises these Annual Interest Rates: RUB — 8.79–11.52% USD — 2.05–5.31% EUR — 2.05–5.21%
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how does one start an investing club (as a company)?
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Taxes are the least of your concerns. Your friends need licenses. Although this COULD be avoided entirely with certain craftily worded disclaimers and exemptions and the WAY that money is given to them.
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Am I eligible for a student maintenance loan?
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Looking at https://www.gov.uk/student-finance/who-qualifies, it says: You can only apply if: As you meet all three requirements I think you are counted as a English student in every respect. I would advise applying as soon as possible though to verify this. EDIT: also, getting a British passport anyway might not hurt; it makes sense as you've spent almost all your life here, and it would insulate you against any issues that might arise if Britain ends up leaving the EU.
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What are investment options for young married couple with no debt that have maxed out retirement savings?
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4.7 is a pretty low rate, especially if you are deducting that from your taxes. If you reduce the number by your marginal tax rate to get the real cost of the money you end up with a number that isn't far off from inflation, and also represents a pretty low 'yield' in terms of paying off the loan early. (e.g. if your marginal tax rate is 28%, then the net you are paying in interest after the tax deduction is 4.7 * .72 = 3.384) While I'm all for paying off loans with higher rates (since it's in effect the same as making that much risk free on the money) it doesn't make a lot of sense when you are down at 3.4 unless there is a strong 'security factor' (which really makes a difference to some folks) to be had that really helps you sleep at night. (to be realistic, for some folks close to retirement, there can be a lot to be said for the security of not having to worry about house payments, although you don't seem to be in that situation yet) As others have said, first make sure you have enough liquid 'emergency money' in something like a money market account, or a ladder of short term CD's If you are sure that the sprouts will be going to college, then there's a lot to be said for kicking a decent amount into a 529, Coverdell ESA (Educational Savings Account), uniform gift to minors account, or some combination of those. I'm not sure if any of those plans can be used for a kid that has not been born yet however. I'd recommend http://www.savingforcollege.com as a good starting point to get more information on your various options. As with retirement savings, money put in earlier has a lot more 'power' over the final balance due to compounding interest, so there's a lot to be said for starting early, although depending on what it takes to qualify for the plans there could be such a thing as too early ;-) ). There's nothing wrong with Managed mutual funds as long as the fund objective and investing style is in alignment with your objectives and risk tolerance; The fund is giving you a good return relative to the market as a whole; You are not paying high fees or load charges; You are not losing a lot to taxes. I would always look at the return after expenses when comparing to other options, and if the money is not in a tax deferred account, also look at what sort of tax burden you will be faced with. A fund that trades a lot will generate more short term gains which means more taxes than compared to a more passive fund. Anything lost to taxes is money lost to you so needs to come out of the total return when you calculate that. Sometimes such funds are better off as a choice inside an IRA or 401K, and you can instead use more tax efficient vehicles for money where you have to pay the taxes every year on the gains. The reason a lot of folks like index funds better is that: Given your described age, it's not appropriate now, but in the long run as you get closer to retirement, you may want to start looking at building up some investments that are geared more towards generating income, such as bonds, or depending on taxes where you live, Municipal bonds. In any case, the more money you can set aside for retirement now, both inside and outside of tax deferred accounts, the sooner you will get to the point of the 'critical mass' you need to retire, at that point you can work because you want to, not because you have to.
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