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Scam or Real: A woman from Facebook apparently needs my bank account to send money
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Well, all of the previous answers already mentioned the upcoming scam and danger situation for your financial position. I thoroughly read all answers and wanted to add a few more lines on it. Cort Ammon) already shows details of it. Any kind of financial transaction involving a complete stranger is the first big scam tag that shows up and this should always 'Never Fall In' type situation. If you open a new bank account or give away any existing bank account to this lady, other than just losing some amount, you might pay earlier than clearing checks you deposited on behalf of your 'stranger' partner. Depending on their target/plan/experience with your bank account they can make you a victim of a bigger crime. There is a full length of scam plans, like sending you false checks to deposit and ask you withdrew money to send them back to even having very big incoming transaction to your account sitting idle on your account which might originate from a crime beyond the financial domain. You can try to be smart, thinking in mind, well, let them send some, I will never send them back before bank declare the deposited checks got horned and clear (and send back the amount after keeping your share). But, still you will face problems later. Even if your account fills up with real money and after confirming with bank you find it OK and never return them (scam a scammer). Still you will not have any valid authority or answer describing how/why you got this money if someone ask you later. Depending on scammer's ability, they might even give you control over fund to spend for your own (to gain some trust from your part). On this type of scam it is a sign of an even bigger danger. I live such a country, Bangladesh, from where recently they successfully transferred out around US$10 millions using a bank account of an outsider like you keeping in between source of money and final unknown destination. The result is the owner / operator of those accounts used for these transfers are now under law enforcement pressure, not only just to find out where ultimately money has gone, but for sure they will face some degree of charge for helping transfer of illegal money overseas". For someone who is not part of a full scam chain it is a big deal. It might ruin their life forever. To be on the safe side, and help protect others from falling on the same type of problem you may contact your local law enforcement agency. Depending on the situation, they might be interested to run a sting operation using your information and support to catch and stop the crime going to happen soon or later. I would give a rare chance of 2% legitimate reason for anyone to use a third-party bank account to pay some other living either different country (still it is not legal, but a lower-type crime). But obviously they will not ask randomly over the Internet/social network sites. In your case this is a real scam. Be careful and stay safe; Good Luck.
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Determining amount of inflation between two dates
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You want percent change between the two numbers listed under whatever heading you'll be using in the CPI. As an example, you'd probably want to use the All Items heading listed here on Page 4 of the August 2016 CPI tables as 240.853, and from August 2015 was listed as 238.316. Percent change is So 1.06% inflation from August 2015 to August 2016.
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Could someone please provide an example of a portfolio similiar to the GFP or Couch potato, but for Australia?
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The portfolio described in that post has a blend of small slices of Vanguard sector funds, such as Vanguard Pacific Stock Index (VPACX). And the theory is that rebalancing across them will give you a good risk-return tradeoff. (Caveat: I haven't read the book, only the post you link to.) Similar ETFs are available from Vanguard, iShares, and State Street. If you want to replicate the GFP exactly, pick from them. (If you have questions about how to match specific funds in Australia, just ask another question.) So I think you could match it fairly exactly if you wanted to. However, I think trying to exactly replicate the Gone Fishin Portfolio in Australia would not be a good move for most people, for a few reasons: Brokerage and management fees are generally higher in Australia (smaller market), so dividing your investment across ten different securities, and rebalancing, is going to be somewhat more expensive. If you have a "middle-class-sized" portfolio of somewhere in the tens of thousands to low millions of dollars, you're cutting it into fairly small slices to manually allocate 5% to various sectors. To keep brokerage costs low you probably want to buy each ETF only once every one-two years or so. You also need to keep track of the tax consequences of each of them. If you are earning and spending Australian dollars, and looking at the portfolio in Australian dollars, a lot of those assets are going to move together as the Australian dollar moves, regardless of changes in the underlying assets. So there is effectively less diversification than you would have in the US. The post doesn't mention the GFP's approach to tax. I expect they do consider it, but it's not going to be directly applicable to Australia. If you are more interested in implementing the general approach of GFP rather than the specific details, what I would recommend is: The Vanguard and superannuation diversified funds have a very similar internal split to the GFP with a mix of local, first-world and emerging market shares, bonds, and property trusts. This is pretty much fire-and-forget: contribute every month and they will take care of rebalancing, spreading across asset classes, and tax calculations. By my calculations the cost is very similar, the diversification is very similar, and it's much easier. The only thing they don't generally cover is a precious metals allocation, and if you want that, just put 5% of your money into the ASX:GOLD ETF, or something similar.
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Does a restaurant have to pay tax on a discount?
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In almost any jurisdiction, the restaurant will pay tax on the amount after the discount. Discounting is just a selective way to reduce prices for particular clients and thus achieve some degree of price discrimination. It's no different in principle to cutting prices for everyone or having a sale or similar. It would be very strange for a tax jurisdiction to work any other way, because businesses would end up being taxed on money they never actually got. While tax systems often have that kind of anomaly in rare cases at the edge of the system, discounting via vouchers is extremely common. For example, here are the rules in the UK.
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What effect would currency devaluation have on my investments?
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First, a clarification. No assets are immune to inflation, apart from inflation-indexed securities like TIPS or inflation-indexed gilts (well, if held to maturity, these are at least close). Inflation causes a decline in the future purchasing power of a given dollar1 amount, and it certainly doesn't just affect government bonds, either. Regardless of whether you hold equity, bonds, derivatives, etc., the real value of those assets is declining because of inflation, all else being equal. For example, if I invest $100 in an asset that pays a 10% rate of return over the next year, and I sell my entire position at the end of the year, I have $110 in nominal terms. Inflation affects the real value of this asset regardless of its asset class because those $110 aren't worth as much in a year as they are today, assuming inflation is positive. An easy way to incorporate inflation into your calculations of rate of return is to simply subtract the rate of inflation from your rate of return. Using the previous example with inflation of 3%, you could estimate that although the nominal value of your investment at the end of one year is $110, the real value is $100*(1 + 10% - 3%) = $107. In other words, you only gained $7 of purchasing power, even though you gained $10 in nominal terms. This back-of-the-envelope calculation works for securities that don't pay fixed returns as well. Consider an example retirement portfolio. Say I make a one-time investment of $50,000 today in a portfolio that pays, on average, 8% annually. I plan to retire in 30 years, without making any further contributions (yes, this is an over-simplified example). I calculate that my portfolio will have a value of 50000 * (1 + 0.08)^30, or $503,132. That looks like a nice amount, but how much is it really worth? I don't care how many dollars I have; I care about what I can buy with those dollars. If I use the same rough estimate of the effect of inflation and use a 8% - 3% = 5% rate of return instead, I get an estimate of what I'll have at retirement, in today's dollars. That allows me to make an easy comparison to my current standard of living, and see if my portfolio is up to scratch. Repeating the calculation with 5% instead of 8% yields 50000 * (1 + 0.05)^30, or $21,6097. As you can see, the amount is significantly different. If I'm accustomed to living off $50,000 a year now, my calculation that doesn't take inflation into account tells me that I'll have over 10 years of living expenses at retirement. The new calculation tells me I'll only have a little over 4 years. Now that I've clarified the basics of inflation, I'll respond to the rest of the answer. I want to know if I need to be making sure my investments span multiple currencies to protect against a single country's currency failing. As others have pointed out, currency doesn't inflate; prices denominated in that currency inflate. Also, a currency failing is significantly different from a prices denominated in a currency inflating. If you're worried about prices inflating and decreasing the purchasing power of your dollars (which usually occurs in modern economies) then it's a good idea to look for investments and asset allocations that, over time, have outpaced the rate of inflation and that even with the effects of inflation, still give you a high enough rate of return to meet your investment goals in real, inflation-adjusted terms. If you have legitimate reason to worry about your currency failing, perhaps because your country doesn't maintain stable monetary or fiscal policies, there are a few things you can do. First, define what you mean by "failing." Do you mean ceasing to exist, or simply falling in unit purchasing power because of inflation? If it's the latter, see the previous paragraph. If the former, investing in other currencies abroad may be a good idea. Questions about currencies actually failing are quite general, however, and (in my opinion) require significant economic analysis before deciding on a course of action/hedging. I would ask the same question about my home's value against an inflated currency as well. Would it keep the same real value. Your home may or may not keep the same real value over time. In some time periods, average home prices have risen at rates significantly higher than the rate of inflation, in which case on paper, their real value has increased. However, if you need to make substantial investments in your home to keep its price rising at the same rate as inflation, you may actually be losing money because your total investment is higher than what you paid for the house initially. Of course, if you own your home and don't have plans to move, you may not be concerned if its value isn't keeping up with inflation at all times. You're deriving additional satisfaction/utility from it, mainly because it's a place for you to live, and you spend money maintaining it in order to maintain your physical standard of living, not just its price at some future sale date. 1) I use dollars as an example. This applies to all currencies.
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How can I profit on the Chinese Real-Estate Bubble?
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Perhaps buying some internationally exchanged stock of China real-estate companies? It's never too late to enter a bubble or profit from a bubble after it bursts. As a native Chinese, my observations suggest that the bubble may exist in a few of the most populated cities of China such as Beijing, Shanghai and Shenzhen, the price doesn't seem to be much higher than expected in cities further within the mainland, such as Xi'an and Chengdu. I myself is living in Xi'an. I did a post about the urban housing cost of Xi'an at the end of last year: http://www.xianhotels.info/urban-housing-cost-of-xian-china~15 It may give you a rough idea of the pricing level. The average of 5,500 CNY per square meter (condo) hasn't fluctuated much since the posting of the entry. But you need to pay about 1,000 to 3,000 higher to get something desirable. For location, just search "Xi'an, China" in Google Maps. =========== I actually have no idea how you, a foreigner can safely and easily profit from this. I'll just share what I know. It's really hard to financially enter China. To prevent oversea speculative funds from freely entering and leaving China, the Admin of Forex (safe.gov.cn) has laid down a range of rigid policies regarding currency exchange. By law, any native individual, such as me, is imposed of a maximum of $50,000 that can be converted from USD to CNY or the other way around per year AND a maximum of $10,000 per day. Larger chunks of exchange must get the written consent of the Admin of Forex or it will simply not be cleared by any of the banks in China, even HSBC that's not owned by China. However, you can circumvent this limit by using the social ID of your immediate relatives when submitting exchange requests. It takes extra time and effort but viable. However, things may change drastically should China be in a forex crisis or simply war. You may not be able to withdraw USD at all from the banks in China, even with a positive balance that's your own money. My whole income stream are USD which is wired monthly from US to Bank of China. I purchased a property in the middle of last year that's worth 275,000 CNY using the funds I exchanged from USD I had earned. It's a 43.7% down payment on a mortgage loan of 20 years: http://www.mlcalc.com/#mortgage-275000-43.7-20-4.284-0-0-0.52-7-2009-year (in CNY, not USD) The current household loan rate is 6.12% across the entire China. However, because this is my first property, it is discounted by 30% to 4.284% to encourage the first house purchase. There will be no more discounts of loan rate for the 2nd property and so forth to discourage speculative stocking that drives the price high. The apartment I bought in July of 2009 can easily be sold at 300,000 now. Some of the earlier buyers have enjoyed much more appreciation than I do. To give you a rough idea, a house bought in 2006 is now evaluated 100% more, one bought in 2008 now 50% more and one bought in the beginning of 2009 now 25% more.
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What's a good free checking account?
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The best bank with least amount of gotchas is Alliant Credit Union. I did a lot of research and finally decided on this bank. I did a comparative study between ING, Ally and Alliant and found Alliant to be superior than the the other two. More about my study: http://www.moneycone.com/a-bank-thats-better-than-ally-and-ingdirect/ If you do find a better bank than this, please update this post, I'd definitely like to know! Disclaimer: I have no relationship with either of the three banks.
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VAT and German freelance working on international project
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The VAT number should be equivalent from the point of view of your client. The fact that you are a sole trader and not a limited liability doesn't matter when it comes down to pay VAT. They should pay the VAT to you and you will pay it to the government. I'll guess that their issue is with tax breaks, it is a bit more tricky to receive a tax break on paid taxes if you buy something abroad (at least it is here in Finland). If they won't pay you because of that, you could open a LTD or contract the services of a 'management company' which will do the job of invoicing, receiving the money and passing it back to you, for a fee.
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What are the best software tools for personal finance?
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Intuit Quicken. Pros: Cons:
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Paid cash for a car, but dealer wants to change price
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As others have said, if the dealer accepted payment and signed over ownership of the vehicle, that's a completed transaction. While there may or may not be a "cooling-off period" in your local laws, those protect the purchaser, not (as far as I know) the seller. The auto dealer could have avoided this by selling for a fixed price. Instead, they chose to negotiate every sale. Having done so, it's entirely their responsibility to check that they are happy with their final agreement. Failing to do so is going to cost someone their commission on the sale, but that's not the buyer's responsibility. They certainly wouldn't let you off the hook if the final price was higher than you had previously agreed to. He who lives by the fine print shall die by the fine print. This is one of the reasons there is huge turnover in auto sales staff; few of them are really good at the job. If you want to be kind to the guy you could give him the chance to sell you something else. Or perhaps even offer him a $100 tip. But assuming the description is correct, and assuming local law doesn't say otherwise (if in any doubt, ask a lawyer!!!), I don't think you have any remaining obligation toward them On the other hand, depending on how they react to this statement, you might want to avoid their service department, just in case someone is unreasonably stupid and tries to make up the difference that was.
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What's the difference, if any, between stock appreciation and compound interest?
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If you mean, If I invest, say, $1000 in a stock that is growing at 5% per year, versus investing $1000 in an account that pays compound interest of 5% per year, how does the amount I have after 5 years compare? Then the answer is, They would be exactly the same. As Kent Anderson says, "compound interest" simply means that as you accumulate interest, that for the next interest cycle, the amount that they pay interest on is based on the previous cycle balance PLUS the interest. For example, suppose you invest $1000 at 5% interest compounded annually. After one year you get 5% of $1000, or $50. You now have $1050. At the end of the second year, you get 5% of $1050 -- not 5% of the original $1000 -- or $52.50, so you now have $1102.50. Etc. Stocks tend to grow in the same way. But here's the big difference: If you get an interest-bearing account, the bank or investment company guarantees the interest rate. Unless they go bankrupt, you WILL get that percentage interest. But there is absolutely no guarantee when you buy stock. It may go up 5% this year, up 4% next year, and down 3% the year after. The company makes no promises about how much growth the stock will show. It may show a loss. It all depends on how well the company does.
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What should I be aware of as a young investor?
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Just don't buy any kind of paper and you will be fine :-) And don't forget most of these 'blue-chip companies' sell marketing garbage which have no real market. Finally, make all decissions slooooowly and after extensive research.
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Prepaying a loan: Shouldn't the interest be recalculated like a shorter loan?
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One way to think of the typical fixed rate mortgage, is that you can calculate the balance at the end of the month. Add a month's interest (rate times balance, then divide by 12) then subtract your payment. The principal is now a bit less, and there's a snowball effect that continues to drop the principal more each month. Even though some might object to my use of the word "compounding," a prepayment has that effect. e.g. you have a 5% mortgage, and pay $100 extra principal. If you did nothing else, 5% compounded over 28 years is about 4X. So, if you did this early on, it would reduce the last payment by about $400. Obviously, there are calculators and spreadsheets that can give the exact numbers. I don't know the rules for car loans, but one would actually expect them to work similarly, and no, you are not crazy to expect that. Just the opposite.
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2 UAN Numbers allotted to my PAN Number
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Option 1: You can write to uanepf@epfindia.gov.in giving the details of both the UAN's. This will be able to merge both these under the current EPF. Option 2: You can request a transfer of EPF from old EPF [under different UAN] to the current EPF. This can be done by submitting the required form. Your company should be able to assist you with the paperwork. Alternatively if you are registered online with EPFO India, you can submit the request online. Once submitted, the system will identify that a duplicate UAN has been issued and automatically merge the accounts.
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If I have all this stock just sitting there, how can I lend it out to people for short selling?
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You just disclosed that you are new investor to the stock market. I'd advise that you first understand investing a bit better, as most will advise that investors need to be above a certain level before picking individual stocks. That said, most stocks trade in high enough volume and have low enough short interest that they don't fall under the category you seek. You want to first ask your broker if they have such a process, not all do. If so, they would need to provide you with the stocks that fall into this odd situation, specifically, the shares that have traders seeking to short the stock, but the stock is unavailable. Even then, the broker may have requirements that you don't fall into, minimum history with broker, minimum size account, etc. Worse, they are not likely to offer this for 100 shares, but may have a 1000 or higher share requirement. Are you willing to buy some obscure $50/sh priced stock to lend out at 1%/mo? The guy trying to short it is far smarter than both you and I, at least regarding this particular stock. This strategy is more appropriate for the 7 figure net worth investor. If any reader has actual experience with this, I'm happy to hear it. This response is from my recollection of two articles I read about 3 years ago, coincidence they both were published within weeks of each other.
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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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This is a very trivial scam. Flow is like this: Send money to Mr. X (you, in this case). Call Mr. X and ask for the money back, because mistake. Usually they ask for a wire transfer/cash/gift cards/prepaid cards or something else irreversible/untraceable. Mr. X initiates transfer back to Scammer. Accept the transfer from Mr. X Dispute the original transfer or otherwise cancel it through the netbank Mr. X cannot dispute his transfer to the Scammer, since it was genuinely and intentionally initiated by Mr. X. End up with twice the money, at the expense of Mr. X In other countries this is usually done with forged checks, but transfers can work just as well. As long as the transfer can be retroactively canceled or reversed - the scam works. You mentioned money laundering - this is definitely a possibility as well. They transfer dirty money to you from unidentified sources, and you send a "gift" to them with a clear paper trail. When the audit comes - the only proof is that you actually sent them the gift, and no-one will believe your story. You'll have to explain why the Mr. Z who's now in jail sent you a $1K of his drug money. However, in this case I think it is more likely a scam, and the scammer didn't really know what he was doing...
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Why bid and ask do not match the price at which the stock is being traded [duplicate]
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Assuming that no one else has hit the ask, and the asks are still there, yes, you will fill $54.55 as long as you didn't exhaust that ask. Actually, there is no "current price at which the stock is exchanging hands"; in reality, it is "the last price traded". The somebody who negotiated prices between buyers & sellers is the exchange through their handling of bids & asks. The real negotiation comes between bids & asks, and if they meet or cross, a trade occurs. It's not that both bid & ask should be $54.55, it's that they were. To answer the title, the reasons why the bid and ask (even their midpoint) move away from the last price are largely unknown, but at least for the market makers, if their sell inventory is going away (people are buying heavily and they're running out of inventory) they will start to hike up their asks a lot and their bids a little because market makers try to stay market neutral, having no opinion on whether an asset will rise or fall, so with stocks, that means having a balanced inventory of longs & shorts. They want to (sometimes have to depending on the exchange) accommodate the buying pressure, but they don't want to lose money, so they simply raise the ask and then raise the bid as people hit their asks since their average cost basis has risen. In fact (yahoo finance is great about showing this), there's rarely 1 bid and 1 ask. Take a look at BAC's limit book: http://finance.yahoo.com/q/ecn?s=BAC+Order+Book You can see that there are many bids and many asks. If one ask is exhausted, the next in line is now the highest. The market maker who just sold at X will certainly step over the highest bid to bid at X*0.9 to get an 11% return on investment.
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Long vs. short term capital gains on real estate
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No, it's not all long-term capital gain. Depending on the facts of your situation, it will be either ordinary income or partially short-term capital gain. You should consider consulting a tax lawyer if you have this issue. This is sort of a weird little corner of the tax law. IRC §§1221-1223 don't go into it, nor do the attendant Regs. It also somewhat stumped the people on TaxAlmanac years ago (they mostly punted and just declared it self-employment income, avoiding the holding period issue). But I did manage to find it in BNA Portfolio 562, buried in there. That cited to a court case Comm'r v. Williams, 256 F.2d 152 (5th Cir. 1958) and to Revenue Ruling 75-524 (and to another Rev. Rul.). Rev Rul 75-524 cites Fred Draper, 32 T.C. 545 (1959) for the proposition that assets are acquired progressively as they are built. Note also that land and improvements on it are treated as separate assets for purposes of depreciation (Pub 946). So between Williams (which says something similar but about the shipbuilding industry) and 75-524, as well as some related rulings and cases, you may be looking at an analysis of how long your property has been built and how built it was. You may be able to apportion some of the building as long-term and some as short-term. Whether the apportionment should be as to cost expended before 1 year or value created before 1 year is explicitly left open in Williams. It may be simpler to account for costs, since you'll have expenditure records with dates. However, if this is properly ordinary income because this is really business inventory and not merely investment property, then you have fully ordinary income and holding period is irrelevant. Your quick turnaround sale tends to suggest this may have been done as a business, not as an investment. A proper advisor with access to these materials could help you formulate a tax strategy and return position. This may be complex and law-driven enough that you'd need a tax lawyer rather than a CPA or preparer. They can sort through the precedent and if you have the money may even provide a formal tax opinion. Experienced real estate lawyers may be able to help, if you screen them appropriately (i.e. those who help prepare real estate tax returns or otherwise have strong tax crossover knowledge).
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Why would a company care about the price of its own shares in the stock market?
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The fact you are asking this question, the number of up votes, uncovers the real cause of the banking crisis. Answers which mention that shareholders will fire a public company board are on the bottom. It is obvious that a company owners are interested in company value. And should have direct and easy impact on a directors board if management doesn't increase shareholders wealth. With large number of passive shareholders and current stock market system that impact is very limited. Hence your question. So bank directors, upper management aren't that interested in company value. They are mostly interested in theirs bonuses, their wealth increase, not shareholders. And that's the real problem of capitalism. Public companies slowly drift to function like companies in former socialistic countries. These is no owner, everything is owned by a nation.
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Does a growing economy mean the economy is becoming less efficient?
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A growing economy should become more efficient because of increased opportunity for division of labor: specialization. External regulation or monetary policy external to the free market can cause parts of the economy to grow in response to said regulations. This creates inefficiencies that are wrung out of the economy after the policies reverse. A couple of examples: Tinkering with the economy causes the inefficiencies.
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Should one invest in smaller valued shares in higher amounts, or higher valued shares in smaller amounts?
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There's a case to be made that companies below a certain market cap have more potential than the higher ones. Consider, Apple cannot grow 100 fold from its current value. At $700B or so in value, that would be a $70T goal, just about the value of all the combined wealth in the entire US. At some point, the laws of large numbers take over, and exponential growth starts to flatten out. On the flip side, Apple may have as good or better chance to rise 10% over the next 6-12 months as a random small cap stock.
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Is investing exlusively in a small-cap index fund a wise investment?
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Stock portfolios have diversifiable risk and undiversifiable risk. The market rewards investors for taking undiversifiable risk (e.g. owning an index of oil producing companies) and does not reward investors for assuming diversifiable risk (e.g. owning a single oil producing company). The market will not provide investors with any extra return for owning a single oil company when they can buy an oil index fund at no additional cost. Similarly, the market will not reward you for owning a small-cap index fund when you can purchase a globally diversified / capitalization diversified index fund at no additional cost. This article provides a more detailed description. The Vanguard Total World Stock Index Fund is a much better staring point for an equity portfolio. You will need to make sure that the asset allocation of your overall portfolio (e.g. stocks, bonds, P2P lending, cash) is consistent with your time horizon (5-10 years).
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How to get rid of someone else's debt collector?
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I have been in a similar position for quite a while now and the only thing that seems to help is screening phone calls. I have a long list of collector numbers set to not ring on my phone. They can still leave a voice mail but they never do. As far as I know there aren't any laws that protect you from nuisance phone calls. FDCPA letters only apply to the debtor and the collector it is sent to it doesn't protect an unrelated third party from getting annoying phone calls. I have a feeling that sending FDCPA letters is just confirming that you probably are the debtor and prolong the collection calls.
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What options do I have at 26 years old, with 1.2 million USD?
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Windfalls can disappear in a heartbeat if you're not used to managing large amounts of money. That said, if you can read a bank statement and can exercise a modicum of self control over spending, you do not need a money manager. (See: Leonard Cohen) First, spend $15 on J.L. Collins' book The Simple Path to Wealth. https://www.goodreads.com/book/show/30646587-the-simple-path-to-wealth. Plan to spend about 4% of your wealth annually (4% of $1.2 million = $48,000) Bottom line: ALWAYS live within your means. Own your own home free and clear. Don't buy an annuity unless you have absolutely no self control. If it feels like you're spending money too fast, you almost certainly are.
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Mutual fund value went down, shares went up, no action taken by me
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It is very likely that the fund paid out a dividend in the form of reinvested shares. This happens with many funds, especially as we come to the end of the year. Here's a simplified example of how it works. Assume you invested $1000 and bought 100 units at $10/unit. Ignoring the daily price fluctuations, if the fund paid out a 20% dividend, you would get $200 and the unit price would drop to $8/unit. Assuming you chose to reinvest your dividends, you would automatically purchase another $200 worth of units at the new price (so 25 more units). You would now have 125 units @ $8/unit = $1000 invested. In your example, notice that you now have more shares than you originally purchased, but that the price dropped significantly. Your market value is above what you originally invested, so there was probably also a bit of a price increase for the day. You should see the dividend transaction listed somewhere in your account. Just to confirm, I did a quick search on ICENX and found that they did indeed pay a dividend yesterday.
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When an in-the-money stock option expires does the broker always execute it or does its value become worthless if the owner doesn't execute it?
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It depends on the broker, each one's rules may vary. Your broker should be able to answer this question for how they handle such a situation. The broker I used would execute and immediately sell the stock if the option was 25 cents in the money at expiration. If they simply executed and news broke over the weekend (option expiration is always on Friday), the client could wake up Monday to a bad margin call, or worse.
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Brent crude vs. USD market value
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I don't think the two are particularly linked. While Brick is right in that the price of oil is denominated in dollars, I don't think that's responsible for most of the movement here. Oil has been weak for intrinsic reasons related to oil: supply/demand imbalance, largely. (Oil also was way over-priced back when it was > $100 a barrel; a lot of that was due to worries about instability in the Middle East.) The dollar has been strong for other, separate intrinsic reasons. The American economy has had a stronger rebound than Europe or Asia; while we were hit hard in the 2008 recession, we rebounded pretty quickly from a whole-economy point of view (we still have a lot of weaknesses in terms of long-term unemployment, but that doesn't seem to be hurting our productivity much). Pick another time period, and you won't necessarily see the same matching path (and I would even say that those paths don't match particularly well). Marketwatch covered this for example; other sites show similar things. There is a weak correlation, but only in the short term, or for specific reasons.
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Why does the share price tend to fall if a company's profits decrease, yet remain positive?
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In a rational market, the market caps (total value of all shares of the company) should be determined by the expected future profits of the company, plus the book value (that is the value of all assets that the company holds). The share price is then calculated as market caps divided by number of shares - a company worth a billion dollar could have a million shares at $1000 each or a billion shares at $1 each or anything in between. When profits drop, every investor has to re-think what the expected future profits of the company are. If all the investors say "I thought this company would make a billion profit in the next ten years, but based on the drop in profits I changed my mind and I think they will only make 500 million", then the share price drops. On the other hand, if profits dropped because of some predictable event, then that drop was already priced into the share price. If the profits dropped less than expected, the share price might even go up. You can see the opposite effect: Share price might be very high because everyone expects huge growth in profits over the next ten years. If profits grow less than expected, the share price will drop. Share price depends on predicted future profits, not on profits today.
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Buy tires and keep car for 12-36 months, or replace car now?
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There are a few factors I like to consider when I'm reasoning financially over my households cars. How many KMs will the car travel each year because I like to factor in how often tires will need to be changed, how much tires for my models cost as well as how gas efficient they are. Knowing how much the car is driven and in what environmental/road conditions is also important factors to know because that will help guestimate possible repairs cost. Also possible taxes should be taken in to consideration. For example a few years ago I had a diesel Citroen C5 that had yearly taxes of roughly 500$. The replacement costs only 150$ a year in taxes. So switching cars 3 years early would have saved me 1050$ in taxes. So some information on possible taxes, how far you drive each year, what environmental conditions, type of driving (daily long rides or just short etc..) as well as the fuel efficiency of both cars would help to better calculate your costs for say three scenarios. Car change in 12, 24 and 32 months respectively.
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Should we prepay our private student loans, given our particular profile?
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You're in good shape as long as your income stays. Your only variable-rate debt now is your private student loan. I think you'd be wise to pay that down first, and you sense that already. Worst-case, in the event of a bankruptcy, student loans usually cannot be discharged, so that isn't a way out. Once that loan is gone, apply what you were paying to your other student loan to knock that out. You might investigate refinancing your home (to another 30-year fixed). You may be able to shave a half-percent off if your credit is stellar. Given the size of the mortgage, this could be several thousand out of pocket, so consider that when figuring out potential payback time. Consider using any "free time" to starting up a side business (I'm assuming you both have day jobs but that may not be a correct assumption). Start with what you know well. You and your wife are experts in something, and have passion about something. Go with that. Use the extra income from that to either pay down your debts faster, or just reinvest in the business so that you can offset the income on your taxes. Again, you're in good shape. Just do what you can to protect and grow your income streams.
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Should I buy or lease a car given that its not a super luxury car and I only drive 15 miles/d on avg?
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Alternative: buy a recent-model used car in good condition. Or buy an older car in good condition. Let someone else pay the heavy depreciation that happens the moment you drive a new car off the dealer's lot.
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Should I wait a few days to sell ESPP Stock?
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An instant 15% profit sounds good to me, so you can't go wrong selling as soon as you are able. Here are a couple other considerations: Tax implications: When you sell the stock, you have to pay taxes on the profit (including that 15% discount). The tax rate you pay is based on how long you wait to sell it. If you wait a certain amount of time (usually 2 years, but it will depend on your specific tax codes) before you sell, you could be subject to lower tax rates on that profit. See here for a more detailed description. This might only apply if you're in the US. Since you work for the company, you may be privy to a bit more information about how the company is run and how likely it is to grow. As such, if you feel like the company is headed in the right direction, you may want to hold on the the stock for a while. I am generally wary of being significantly invested in the company you work for. If the company goes south, then the stock price will obviously drop, but you'll also be at risk to be laid off. As such you're exposed much more risk than investing in other companies. This is a good argument to sell the stock and take the 15% profit.* * - I realize your question wasn't really about whether to sell the stock, but more for when, but I felt this was relevant nonetheless.
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Theoretically, if I bought more than 50% of a company's stocks, will I own the company?
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The usual pattern is that shareholders don't run companies in a practical sense, so "if someone was just simply rich to buy > 50%, but does not know how to handle the company" doesn't change anything. In large companies, the involvement of shareholders is limited to a few votes on key issues such as allocating profit (how much to keep in company vs pay in dividends) and choosing board members. And board members also don't run the company - they oversee how the company is being run, and choose executives who will actually run the company. If a rich person simply buys 50% and doesn't desire to get personally involved, then they just vote for whatever board members seem apropriate and forget about it.
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Buying a home with down payment from family as a “loan”
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I would recommend against loans from family members. But if you decide to go down that path take care of the basics: This is a business decision so treat it like one. I would add that the situation you describe sounds extremely generous to your family member. I'd look at standard loan agreements (ie. in the marketplace) and model your situation more on them - if you do this, even with you paying a premium, you'd never come up with something as generous as what you have described.
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Should I try to hedge my emergency savings against currency and political concerns?
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First thing is that your English is pretty damn good. You should be proud. There are certainly adult native speakers, here in the US, that cannot write as well. I like your ambition, that you are looking to save money and improve yourself. I like that you want to move your funds into a more stable currency. What is really tough with your plan and situation is your salary. Here in the US banks will typically have minimum deposits that are high for you. I imagine the same is true in the EU. You may have to save up before you can deposit into an EU bank. To answer your question: Yes it is very wise to save money in different containers. My wife and I have one household savings account. Yet that is broken down by different categories (using a spreadsheet). A certain amount might be dedicated to vacation, emergency fund, or the purchase of a luxury item. We also have business and accounts and personal accounts. It goes even further. For spending we use the "envelope system". After our pay check is deposited, one of us goes to the bank and withdraws cash. Some goes into the grocery envelope, some in the entertainment envelope, and so on. So yes I think you have a good plan and I would really like to see a plan on how you can increase your income.
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How to get the lowest mortgage rate on a new purchase?
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Purchase loans tend to be more challenging to get the best possible rate, because you have to balance closing the loan and getting the contract. So there isn't as much time to shop around as when you do a refinance. I disagree with the sentiment to go with your local bank. Nothing wrong with asking at your local bank and using their numbers as a baseline, but chances are they won't be competitive. There are many reputable online mortgage originators that will show accurate fees and rates upfront assuming you provide accurate information. In the past there were a lot of issue with Good Faith Estimates being pretty much worthless. There were a fair number of horror stories about people showing up to closing and finding out fee or rates had increased dramatically. There was a law passed after the housing debacle that severely limits the shenanigans that lenders can do at closing and so there is less risk when going with a lesser known lender. In fact I would say the only real risk with a lender now days is choosing one that happens to be overloaded and or just has poor customer service in general. Personally I have found the most competitive rates from Zillow's mortgage service and the now defunct Google mortgage. The lenders tend to be smaller, but highly efficient. They are very much dependent on their online reputations. I have heard good things about a number of larger online lenders, but I don't have personal experience so I will leave them off. I personally wouldn't worry much about whether the loan is sold or not. Outside of refinancing I don't think I have ever talked to the bank servicing my mortgage about my mortgage. There just isn't much need to talk to them.
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Are mutual funds safe from defaults?
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There are very strict regulations that requires the assets which a fund buys on behalf of its investors to be kept completely separate from the fund's own assets (which it uses to pay its expenses), except for the published fees. Funds are typically audited regularly to ensure this is the case. So the only way in which a default of the fund could cause a loss of invstor money would be if the fund managers broke the regulations and committed various crimes. I've never heard of this actually happening to a normal mutual fund. There is of course also a default risk when a fund buys bonds or other non-equity securities, and this may sometimes be non-obvious. For example, some ETFs which are nominally based on a stock index don't actually buy stocks; instead they buy or sell options on those stocks, which involves a counterparty risk. The ETF may or may not have rules that limit the exposure to any one counterparty.
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What happens to my stocks when broker goes bankrupt?
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Here is my perception of the situation, obtained from reading Degiro's Client Agreement. If Degiro shuts down, it will notify you about the fact at least one month in advance, and you will have enough time to order a transfer of your positions to a different broker. If Degiro shuts down unexpectedly, your assets will remain to be held at SPV, a separate legal entity which Degiro uses to hold the financial instruments belonging to the clients. Since SPV does nothing else but holding the assets, it is very unlikely that something bad will happen with it on its own. With some help from Degiro and/or the regulator (AFM) you should be able to transfer your assets from SPV to a different custodian and broker and thus regain control over them. If you have a non-Custody account, you have slightly higher chances of losing your assets, because Degiro can borrow your securities held at SPV. If both the client for whom Degiro borrowed a security and Degiro itself go bankrupt at the same time, the lent security will not be returned to SPV, there will arise a shortage, which will be proportionally distributed among the accounts of the clients holding this particular security. However, then the investor compensation scheme should kick in and help you recover up to 20000 EUR of your losses.
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How to fill the IRS Offer In Compromise with an underwater asset?
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If you have both consumer debt and IRS debt, you can file Chapter 7 bankruptcy to get rid of all of it. The trick is your taxes have to be at least 3 years old from the due date in order to be considered for bankruptcy. So newer taxes, like 2010 and on, can't be discharged yet (and earlier ones may not be yet, there are rules which toll the time) You'll definitely want to talk to a bankruptcy attorney in your area who focusing on discharge in tax debts. You may be able to kill two birds with one stone. My other concern is are you current? Typically people routinely run up a new debt when trying to settle up on 9old debt. So the OIC route may be a waste of your time. Also, $6000 isn't a lot of money, so there's not a lot of room to negotiate down. It's all how you fill out the 656-OIC. I've seen way to many people not fill it out incorrectly. The IRS has a limited amount of time to collect on a debt, so if there are old taxes, you may be better off getting into CNC status, which it seems like you would qualify for and let the debt expire on your own. That may be another viable solution. Unfortunately, this is really complicated to get the best result. And good tax debt attorneys fees start at the amount of taxes you owe! So that's not really cost effective to hire one.
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Tax consequences of changing state residency?
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I did the reverse several years ago, moving from NH to MA. You will need to file Form 1-NR/PY for 2017, reporting MA income as a part-year residence. I assume you will need to report the April capital gain on your MA tax return, as you incurred the gain while a MA resident. (I am not a lawyer or tax professional, so I don't want to state anything about this as a fact, but I would be very surprised if moving after you incurred the gain would have any affect on where you report it.)
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How long should I keep my tax documents, and why?
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Unfortunately, my taxes tend to be complicated This. In and of itself, is a greater reason to keep the documents. The other answer offered a good summary, but keep in mind, if the IRS decides you fraudulently withheld claiming income, they can go back 7 years. I bought a rental property in 1987, and sold it in 2016. In that case, keeping the returns seemed the right thing to do to have the paper trail for basis, else I could claim anything, and hope for the best. I have all my tax returns since my first tax return, 1980. It's one drawer of a file cabinet. Not too great a burden.
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Why is property investment good if properties de-valuate over time?
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Real estate is not a good investment. In fact, it's easy to make a case for it being the worst possible investment imaginable: Imagine over a cup or coffee or a glass of wine we get to talking about investments. Then maybe one of us, let’s say you, says: “Hey I’ve got an idea. We’re always talking about good investments. What if we came up with the worst possible investment we can construct? What might that look like?” Well, let’s see now (pulling out our lined yellow pad), let’s make a list. To be really terrible: -- Why Your House Is A Terrible Investment There are plenty of good reasons to own a home, but the key word there is "home". Owning housing as an investment property is a horrible idea, and anyone who does it, especially right now with as bubbly as the market is looking again, (or, better put, still, since the last bubble never did fully pop and clear out the underlying systemic instability,) is an idiot. And even after the current housing market bubble pops, it's likely to remain a bad idea for decades. We're never getting the early 2000s back, for basic supply-and-demand reasons: with the Baby Boom generation retiring, aging and dying off, they're not likely to do much more home-buying, and no generation after them is as big as they are, which means a glut of oversupply and weak demand for the entirety of the foreseeable future.
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Which types of insurances do I need to buy?
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It sounds like you're putting all your extra money into insurances because you feel that one can never have too much insurance. That's a very bad idea, financially. Basically it means you'll end up giving your money away to insurance companies in order to satisfy that feeling. Do realize that the expected value of every instuance is negative: on average, you'll pay more money than you'll receive. Otherwise, insurance companies would go bankrupt, so they are very good at ensuring that they get more in premiums than they pay out. Insurance should only be bought to cover essential risks, things that would ruin you: major health problems, death (to cover dependants), disability, liability. For everything else, you should self-insure by saving up money (up to a few months' wages) and putting it into safe and liquid investment vehicles as an emergency fund. That way, you are much more flexible, don't pay for the insurance company's employees, fancy offices and profits, and may even earn some interest.
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Buying a foreclosed property
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Usually... I think that's overstating the case. You CAN get a bargain (especially if the place is in not-so-great condition), but not every foreclosure will be a good deal even if it is priced well below its most recently appraised value. As the buyer it's your responsibility to determine whether it's priced well or not, and to decide whether you're willing and able to repair its deficiencies after you buy it. The same's true when purchasing any house; foreclosures just make it more likely that there are problems and (hopefully) wind up being priced to allow for them. I don't know of a single website which lists all foreclosures. Some of the home listing websites do have a "show me foreclosure listings" filter, and I'm sure that the better tools available to real estate agents can select these. But if that's the direction you're interested in going, you should be looking at distressed properties generally, NOT just foreclosures; you may get a better deal, in the long run, by going for the one that has been mechanically maintained but is just plain ugly rather than the one with a pretty skin whose heating system hasn't been serviced for the last decade. Do your homework, shop around, don't fall in love with any one house... all the same rules apply at this end of the spectrum just as strongly as they do in the mid or upper ranges. Perhaps more so. Happy hunting!
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Why is it good to borrow money to buy a house?
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First, who is saying that it is a better option? In general it is best to pay cash for things when you can. I think the reality is that for most people owning a house would be very difficult without some sort of financing. That said, one argument for financing a house these days even if you could afford to pay cash is that the interest rates are very low. For a 30-year fixed loan you can borrow money under 4.5% APR with decent credit. If you are willing to accept even a little risk you could almost certainly invest that same money and get a return higher than 4.5%. With the US mortgage interest tax deduction the numbers are even more favorable for financing. Those rates look even more attractive when you consider you are paying for the house with today's dollars and paying back the loan with dollars from up to 30 years in the future, which will be worth much less.
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Investing in income stocks for dividends - worth it?
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As a general rule of thumb, age and resiliency of your profession (in terms of high and stable wages) in most cases imply that you have the ABILITY to accept higher than average level of risk by investing in stocks (rather than bonds) in search for capital appreciation (rather than income), simply because you have more time to offset any losses, should you have any, and make capital gains. Dividend yield is mostly sough after by people at or near retirement who need to have some cash inflows but cannot accept high risk of equity investments (hence low risk dividend stocks and greater allocation to bonds). Since you accept passive investment approach, you could consider investing in Target Date Funds (TDFs), which re-allocate assets (roughly, from higher- to lower-risk) gradually as the fund approaches it target, which for you could be your retirement age, or even beyond. Also, why are you so hesitant to consider taking professional advice from a financial adviser?
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How much of a down payment for a car should I save before purchasing it?
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I'd put more money down and avoid financing. I personally don't think car debt is good debt and if you can't afford the car, you are better off with a cheaper car. Also, you should read up on the 0% offer before deciding to commit. Here's one article that is slightly dated, but discusses some pros and cons of 0% financing. My main point though is that 0% financing is not "free" and you need to consider the cost of that financing before making the purchase. Aside from the normal loan costs of having a monthly payment, possibly buying too much car by looking at monthly cost, etc., a 0% financing offer usually forces you to give the dealer/financing company any rebates that are due to you, in essence making the car cost more.
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Low risk hybrid investment strategy
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I think you may be confused on terminology here. Financial leverage is debt that you have taken on, in order to invest. It increases your returns, because it allows you to invest with more money than what you actually own. Example: If a $1,000 mutual fund investment returns $60 [6%], then you could also take on $1,000 of debt at 3% interest, and earn $120 from both mutual fund investments, paying $30 in interest, leaving you with a net $90 [9% of your initial $1,000]. However, if the mutual fund 'takes a nose dive', and loses money, you still need to pay the $30 interest. In this way, using financial leverage actually increases your risk. It may provide higher returns, but you have the risk of losing more than just your initial principle amount. In the example above, imagine if the mutual fund you owned collapsed, and was worth nothing. Now, you would have lost $1,000 from the money you invested in the first place, and you would also still owe $1,000 to the bank. The key take away is that 'no risk' and 'high returns' do not go together. Safe returns right now are hovering around 0% interest rates. If you ever feel you have concocted a mix of options that leaves you with no risk and high returns, check your math again. As an addendum, if instead what you plan on doing is investing, say, 90% of your money in safe(r) money-market type funds, and 10% in the stock market, then this is a good way to reduce your risk. However, it also reduces your returns, as only a small portion of your portfolio will realize the (typically higher) gains of the stock market. Once again, being safer with your investments leads to less return. That is not necessarily a bad thing; in fact investing some part of your portfolio in interest-earning low risk investments is often advised. 99% is basically the same as 100%, however, so you almost don't benefit at all by investing that 1% in the stock market.
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Can you explain “time value of money” and “compound interest” and provide examples of each?
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The fundamental concept of the time value of money is that money now is worth more than the same amount of money later, because of what you can do with money between now and later. If I gave you a choice between $1000 right now and $1000 in six months, if you had any sense whatsoever you would ask for the money now. That's because, in the six months, you could use the thousand dollars in ways that would improve your net worth between now and six months from now; paying down debt, making investments in your home or business, saving for retirement by investing in interest-bearing instruments like stocks, bonds, mutual funds, etc. There's absolutely no advantage and every disadvantage to waiting 6 months to receive the same amount of money that you could get now. However, if I gave you a choice between $1000 now and $1100 in six months, that might be a harder question; you will get more money later, so the question becomes, how much can you improve your net worth in six months given $1000 now? If it's more than $100, you still want the money now, but if nothing you can do will make more than $100, or if there is a high element of risk to what you can do that will make $100 that might in fact cause you to lose money, then you might take the increased, guaranteed money later. There are two fundamental formulas used to calculate the time value of money; the "future value" and the "present value" formulas. They're basically the same formula, rearranged to solve for different values. The future value formula answers the question, "how much money will I have if I invest a certain amount now, at a given rate of return, for a specified time"?. The formula is FV = PV * (1+R)N, where FV is the future value (how much you'll have later), PV is the present value (how much you'll have now), R is the periodic rate of return (the percentage that your money will grow in each unit period of time, say a month or a year), and N is the number of unit periods of time in the overall time span. Now, you asked what "compounding" is. The theory is very simple; if you put an amount of money (the "principal") into an investment that pays you a rate of return (interest), and don't touch the account (in effect reinvesting the interest you earn in the account back into the same account), then after the first period during which interest is calculated and paid, you'll earn interest on not just the original principal, but the amount of interest already earned. This allows your future value to grow faster than if you were paid "simple interest", where interest is only ever paid on the principal (for instance, if you withdrew the amount of interest you earned each time it was paid). That's accounted for in the future value formula using the exponent term; if you're earning 8% a year on your investment, then after 1 year you'll have 108% of your original investment, then after two years you'll have 1.082 = 116.64% (instead of just 116% which you'd get with simple interest). That .64% advantage to compounding doesn't sound like much of an advantage, but stay tuned; after ten years you'll have 215.89% (instead of 180%) of your original investment, after 20 you'll have 466.10% (instead of 260%) and after 30 your money will have grown by over 1000% as opposed to a measly 340% you'd get with simple interest. The present value formula is based on the same fundamental formula, but it's "solved" for the PV term and assumes you'll know the FV amount. The present value formula answers questions like "how much money would I have to invest now in order to have X dollars at a specific future time?". That formula is PV = FV / (1+R)N where all the terms mean the same thing, except that R in this form is typically called the "discount rate", because its purpose here is to lower (discount) a future amount of money to show what it's worth to you now. Now, the discount rate (or yield rate) used in these calculations isn't always the actual yield rate that the investment promises or has been shown to have over time. Investors will calculate the discount rate for a stock or other investment based on the risks they see in the company's financial numbers or in the market as a whole. The models used by professional investors to quantify risk are rather complex (the people who come up with them for the big investment banks are called "quants", and the typical quant graduates with an advanced math degree and is hired out of college with a six-figure salary), but it's typically enough for the average investor to understand that there is an inherent risk in any investment, and the longer the time period, the higher the chance that something bad will happen that reduces the return on your investment. This is why the 30-year Treasury note carries a higher interest rate than the 10-year T-note, which carries higher interest than the 6-month, 1-year and 5-year T-bills. In most cases, you as an individual investor (or even an institutional investor like a hedge fund manager for an investment bank) cannot control the rate of return on an investment. The actual yield is determined by the market as a whole, in the form of people buying and selling the investments at a price that, coupled with the investment's payouts, determines the yield. The risk/return numbers are instead used to make a "buy/don't buy" decision on a particular investment. If the amount of risk you foresee in an investment would require you to be earning 10% to justify it, but in fact the investment only pays 6%, then don't buy it. If however, you'd be willing to accept 4% on the same investment given your perceived level of risk, then you should buy.
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Short selling - lender's motivation
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Oftentimes, the lender (the owner of the security) is not explicitly involved in the lending transaction. Let's say the broker is holding a long-term position of 1MM shares from Client A. It is common for Client A's agreement with Broker A to include a clause that allows the broker to lend out the 1MM shares for its own profit ("rehypothecation"). Client A may be compensated for this in some form (e.g. baked into their financing rates), but they do not receive any compensation that is directly tied to lending activities. You also have securities lending agents that lend securities for an explicit fee. For example, the borrower's broker may not have sufficient inventory, in which case they would need to find a third-party lending agent. This happens both on-demand as well as for a fixed-terms (typically a large basket of securities). SLB (securities lending and borrowing) is a business in its own right. I'm not sure I follow your follow-up question but oftentimes there is no restriction that prevents the broker from lending out shares "for a very short time". Unless there is a transaction-based fee though, the number of times you lend shares does not affect "pocketing the interest" since interest accrues as a function of time.
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How to hedge against specific asset classes at low cost
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I wonder in this case if it might be easier to look for an emerging markets fund that excludes china, and just shift into that. In years past I know there were a variety of 'Asian tiger' funds that excluded Japan for much the same reason, so these days it would not surprise me if there were similar emerging markets funds that excluded China. I can find some inverse ETF's that basically short the emerging markets as a whole, but not one that does just china. (then again I only spent a little time looking)
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I cosigned on a house for my brother
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He wasn't wrong that a mortgage would help your credit score, assuming that this was a perfect world and everyone held up their end of the bargain. However, now that he hasn't, you are still legally obligated to pay the loan amount (including his portion of it). As for a lawsuit, it would be hard to prove what he said verbally, however, it doesn't hurt to call a lawyer for a free consultation.
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Can I borrow against my IRA to pay off debt or pay for a car?
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No. Borrowing is not allowed, but if you take a withdrawal, you have 60 days to deposit into another IRA account. This effectively creates a 60 day loan. Not what you're really looking for. If you take this withdrawal and re-deposit to new account within 60 days, no problem. If not, you owe tax on the untaxed amount as well as a 10% penalty. This comes from IRS' Publication 590, I have the document memorized by substance, not page number.
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Why does my bank suddenly need to know where my money comes from?
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Most likely this is connected with new banking regulations related to the Patriot Act, which require banks to be much more inquisitive about their customers and their money. The requirements are mostly about new accounts, but there may be some provisions to backfill this information for existing accounts.
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Are credit histories/scores international?
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Credit history is local, so when you move to the US you start with the blank slate. Credit history length is a huge factor, so in the first year expect that nobody would trust you and you may be refused credit or asked for deposits. I was asked for deposits at cell phone company and refused for store cards couple of times. My advice - get a secured credit card (that means you put certain sum of money as a deposit in the bank and you get credit equal to that sum of money) and if you have something like a car loan that helps too (of course, you shouldn't buy a car just for that ;) but if you're buying anyway, just know it's not only hurting but also helping when you pay). Once you have a year or two of the history and you've kept with all the payments, you credit score would be OK and everybody would be happy to work with you. In 4-5 years you can have excellent credit record if you pay on time and don't do anything bad. If you are working it the US, a lot of help at first would be to take a letter from your company on an official letterhead saying that you are employed by this and that company and are getting salary of this and that. That can serve as an assurance for some merchants that otherwise would be reluctant to work with you because of the absence of credit history. If you have any assets overseas, especially if they are held in a branch of international bank in US dollars, that could help too. In general, don't count too much on credit for first 1-2 years (though you'd probably could get a car loan, for example, but rates would be exorbitant - easily 10 percentage points higher than with good credit), but it will get better soon.
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What is the best use of “spare” money?
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Congratulations! You're making enough money to invest. There are two easy places to start: I recommend against savings accounts because they will quite safely lose your money: the inflation rate is usually higher than the interest rate on a savings account. You may have twice as much money after 50 years, but if everything costs four times as much, then you've lost buying power. If, in the course of learning about investing, you'd like to try buying individual stocks, do it only with money you wouldn't mind losing. Index funds will go down slightly if one of the companies in that index fails entirely, but the stock of a failed company is worthless.
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Converting annual interbank rates into monthly rates
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The formula you're looking for is Thus, from 3% p.a. you get ca. 0.247% per month. However, as you see 0.25% is a good approximation (generally, small rates give good approximation).
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Allocating IRA money, clarification needed
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You'll likely see several more scary market events before your autumn years. Ahhh, everyone has an opinion on this so here is mine :) If you are constrained to picking canned mutual fund products then I would target something with decent yield for two points. The third is to keep some in cash for an 'event'. I would say 65/35 at this point so invest 65% and have some liquidity for an 'opportunity'. Because the next crisis is right around the corner. But stay invested.
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Are credit histories/scores international?
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Some countries in European Union are starting to implement credit history sharing, for example now history from polish bureau BIK and German Schufa are mutually available. Similar agreements are planned between polish BIK and bureaus in the Netherlands and United Kingdom.
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Buying an option in the money, at the money, or out of the money
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You can do some very crafty hedging with the variety of options. For instance, deep out of the money options are affected more by changes of market volatility, knowing this you can get long or short vega very easily, as opposed to necessarily betting on changes in the underlying asset.
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What does a stock's quoted value represent?
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The quote price is simply the last price at which a trade completed.
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What are the alternatives to compound interest for a Muslim?
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There are many Shariah compliant investments, so that could direct your resulting searches. Shariah compliance is a very strict interpretation of Islam and for investing offers strict guidelines in what to invest in and excludes investments in companies that engage in certain businesses such as gambling, tobacco, pork and trading of gold and silver on a deferred basis (and more). Many multinational financial service companies such as the Standard & Poors (S&P) offer Shariah Compliant funds and indices, as such, it makes it easier to invest in a variety of different assets through them. You can also look at their fund's constituents and invest in those assets directly. Secondly, going back to your original question about a compound interest equivalent, you can look at the products offered by Shariah Compliant banks. Now, if it is really important for you to adhere to the strictest interpretations of your faith, you should know that most Islamic Banks have interest bearing assets within them and that they disguise that fact. The global financial system is based on interest bearing instruments such as bonds, and Islamic banks are large holders and issuers of those instruments, and all of their consumer products are also based on the interest rates of them. Even convoluted alternatives such as Islamic mortgages, where they are advertised as non-interest bearing equivalents, many times are also the interest bearing version. Unfortunately, these lies are enough for the banks to continue to get business from their target audiences, but outside of Islam this is a very standard and stable business practice. The point is that you should look very carefully at the alternatives you find.
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Are there good investment options to pay off student loans?
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What you're getting at is the same as investing with leverage. Usually this comes in the form in a margin account, which an investor uses to borrow money at a low interest rate, invest the money, and (hopefully!) beat the interest rate. is this approach unwise? That completely depends on how your investments perform and how high your loan's interest rate is. The higher your loan's interest rate, the more risky your investments will have to be in order to beat the interest rate. If you can get a return which beats the interest rates of your loan then congratulations! You have come out ahead and made a profit. If you can keep it up you should make the minimum payment on your loan to maximize the amount of capital you can invest. If not, then it would be better to just use your extra cash to pay down the loan. [are] there really are investments (aside from stocks and such) that I can try to use to my advantage? With interest rates as low as they are right now (at least in the US) you'll probably be hard-pressed to find a savings account or CD that will return a higher interest rate than your loan's. If you're nervous about the risk associated with investing in stocks and bonds (as is healthy!), then know that they come in a wide spectrum of risk. It's up to you to evaluate how much risk you're willing to take on to achieve a higher return.
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What is the difference between a bad/bounced check and insufficient funds?
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There is no difference they are both insufficient in 1 form or another.Bad slang for any check the bank won't cash, for any reason, Ie. insf. unreadable amount, acct or routing number, the acct.has been closed, or you didn't write the check(fraud). Bounced is slang for bank returned check unpaid.I wrote a bad check but it didn't bounce.The check is still insufficient but the bank didn't return it. $500.00 is the felony threshold in okla. less than $500.00 is a misdemeanor. but insf. fees ranging from ($25.00 to $50.00 vendor returned check fee + amount of check) x (bank insf fees of $25 to $50)is an effective deterent.
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Should I cash out my Roth IRA to pay my mother's property tax debt, to avoid foreclosure on her home?
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You're crazy to cash out your Roth or take on 401k loan, as that is addressing a short-term problem without doing anything about the longer-term issue. Just don't do it. Through no fault of her own, your mom is insolvent. It happens to people all of the time, and the solution is chapter 7 bankruptcy. The only thing that I would do with my money in this situation is help her with bankruptcy attorney fees if needed, and maybe bid on it at auction, if the house in in good shape.
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Understanding how this interpretation of kelly criterion helps the trader
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I don't know too much about the kelly criterion, but going by the other answers it sounds like it could be quite risky depending how you use it. I have been taught the first thing you do in trading is protect your existing capital and any profits you have made, and for this reason I prefer and use Position Sizing (PS). The concept with PS is that you only risk a small % of your capital on every trade, usually not more than 1%, however if you want to be very aggressive then not more than 2%. I use 1% of my capital for every trade. So if you are trading with an account of $40,000 and your risk R on every trade is 1%, then R = $400. As an example, say you decide to buy a stock at $10 and you work out your initial stop to be at $9.50, then our maximum risk R of $400 is divided by the stop distance of $0.50 to get your PS = $400/$0.50 = 800 shares. If the price then drops after your purchase, your maximum loss (subject to no slippage) would be $400. If the price moves up you would raise your stop until your potential loss becomes smaller and smaller and then becomes a gain once your stop moves above your initial purchase price. The aim is to make your gains be larger than your losses. So if your average loss is kept to 1R or less then you should aim to get your average gains to 2R, 3R or more. This would be considered a good trading system where you will make regular profits even with a win ratio of 50%.
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Approach to share options in the UK
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When your options vest, you will have the option to buy your company's stock at a particular price (the strike price). A big part of the value of the option is the difference between the price that your company's stock is trading at, and the strike price of the option. If the price of the company stock in the market is lower than the strike price of the option, they are almost worthless. I say 'almost' because there is still the possibility that the stock price could go up before the options expire. If your company is big enough that their stock is not only listed on an exchange, but there is an active options market in your company's stock, you could get a feel for what they are worth by seeing what the market is willing to buy or sell similar exchange listed options. Once the options have vested, you now have the right to purchase your company's stock at the specified strike price until the options expire. When you use that right, you are exercising the option. You don't have to do that until you think it is worthwhile buying company stock at that price. If the company pays a dividend, it would probably be worth exercising the options sooner, (options don't receive a dividend). Ultimately you are buying your company's stock (albeit at a discount). You need to see if your company's stock is still a good investment. If you think your company has growth prospects, you might want to hold onto the stock. If you think you'd be better off putting your money elsewhere in the market, sell the stock you acquired at a discount and use the money to invest in something else. If there are any additional benefits to holding on to the stock for a period of time (e.g. selling part to fit within your capital gain allowance for that year) you should factor that into your investment decision, but it shouldn't force you to invest in, or remain invested in something you would otherwise view as too risky to invest in. A reminder of that fact is that some employees of Enron invested their entire retirement plans into Enron stock, so when Enron went bankrupt, these employees not only lost their job but their savings for retirement as well...
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Why do stocks gap up after a buyout is announced?
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The "random walk" that you describe reflects the nature of the information flow about the value of a stock. If the flow is just little bits of relatively unimportant information (including information about the broader market and the investor pool), you will get small and seemingly random moves, which may look like a meander. If an important bit of information comes out, like a merger, you will see a large and immediate move, which may not look as random. However, the idea that small moves are a meander of search and discovery and large moves are immediate agreements is incorrect. Both small moves and large moves are instantaneous agreements about the value of a stock in the form of a demand/supply equilibrium. As a rule, neither is predictable from the point of view of a single investor, but they are not actually random. They look different from each other only because of the size of the movement, not because of an underlying difference in how the consensus price is reached.
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Online Foreign Exchange Brokerages: Which ones are good & reputable for smaller trades?
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I used XE trade once several years ago. I found them quite easy to use after the slightly fiddly account setup process (needed for security/anti-money laundering I think). I trusted them because I'd been using their online FX rates for a long time. I can't really comment on the specific questions you ask though as this was a long time ago and I haven't needed one since.
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Where should I be investing my money?
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Pay off your debt. As you witnessed, no "investment" % is guaranteed. But your debt payments are... so if you have cash, the best way to "invest" it is to pay off your debt. Since your car is depreciating while your house may be appreciating (don't know but it's possible) you should pay off your car loan first. You're losing money in more than one way on that investment.
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I own ASPIRO shares (Jay Z's new company). Now that it is going private, what about my shares?
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From the press release Based on Aspiro's closing share price of SEK 0.66 as of 29 January 2015, the Offer values each Aspiro share at SEK 1.05 and the total value of the Offer at approximately SEK 464 million.[3] The Offer represents a premium of..... It seems you will get cash. I can't explain the pop to 11. You don't have any option to keep the shares.
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Is it accurate to say that if I was to trade something, my probability of success can't be worse than random?
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The stock market is not a zero-sum game. Some parts are (forex, some option trading), but plain old stock trading is not zero sum. That is to say, if you were to invest "at random", you would on average make money. That's because the market as a whole makes money - it goes up over time (6-10% annually, averaged over time). That's because you're not just gambling when you buy a stock; you're actually contributing money to a company (directly or indirectly), which it uses to fund activities that (on average) make money. When you buy Caterpillar stock, you're indirectly funding Caterpillar building tractors, which they then sell for a profit, and thus your stock appreciates in value. While not every company makes a profit, and thus not every stock appreciates in true value, the average one does. To some extent, buying index funds is pretty close to "investing at random". It has a far lower risk quotient, of course, since you're not buying a few stocks at random but instead are buying all stocks in an index; but buying stocks from the S&P 500 at random would on average give the same return as VOO (with way more volatility). So for one, you definitely could do worse than 50/50; if you simply sold the market short (sold random stocks short), you would lose money over time on average, above and beyond the transaction cost, since the market will go up over time on average. Secondly, there is the consideration of limited and unlimited gains or losses. Some trades, specifically some option trades, have limited potential gains, and unlimited potential losses. Take for example, a simple call option. If you sell a naked call option - meaning you sell a call option but don't own the stock - for $100, at a strike price of $20, for 100 shares, you make money as long as the price of that stock is under $21. You have a potential to make $100, because that's what you sold it for; if the price is under $20, it's not exercised, and you just get that $100, free. But, on the other hand, if the stock goes up, you could potentially be out any amount of money. If the stock trades at $24, you're out $400-100 = $300, right? (Plus transaction costs.) But what if it trades at $60? Or $100? Or $10000? You're still out 100 * that amount, so in the latter case, $1 million. It's not likely to trade at that point, but it could. If you were to trade "at random", you'd probably run into one of those types of situations. That's because there are lots of potential trades out there that nobody expects anyone to take - but that doesn't mean that people wouldn't be happy to take your money if you offered it to them. That's the reason your 16.66 vs 83.33 argument is faulty: you're absolutely right that if there were a consistently losing line, that the consistently winning line would exist, but that requires someone that is willing to take the losing line. Trades require two actors, one on each side; if you're willing to be the patsy, there's always someone happy to take advantage of you, but you might not get a patsy.
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Wash sale rules in India (NSE/BSE)
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Looks like there are no specific rule in India to prevent Wash sales. See the link below. http://economictimes.indiatimes.com/wealth/personal-finance-news/investors-can-rejig-portfolio-book-short-term-loss-to-save-tax/articleshow/7812788.cms?intenttarget=no
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Peer to peer lending business model (i.e. Lending Club)
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This is all answered in the prospectus. The money not yet invested (available/committed to a note but not yet funded) is held in pooled trust account insured by FDIC. Money funded is delivered to the borrower. Lending Club service their notes themselves. Read also my reviews on Lending Club.
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Should I charge my children interest when they borrow money?
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If they have borrowed money without paying it back, what makes you think you could get interest paid? The problem that you face first is to make clear to them that a loan is a loan. As long as they can get free money off you, they will keep borrowing.
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More money towards down payment versus long-term investments
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There are two components to any non-trivial financial decision: Assuming that all things remain equal, borrowing money at a low rate while investing for a higher return is a no-brainer. The problem is, all things do not remain equal. For example: I think that you need to assess your position and preferences. I'd err on the side of being in less debt.
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What is the opposite of a sunk cost? A “sunk gain”?
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The opposite of a cost is an investment. Buying a car is an expense, usually a sunk cost, whereas purchasing real-estate, e.g. productive farmland, is an investment. (Some investments are wasting assets, as the value decreases over time, but they are still investments with market value, not costs.) "Sunk cost" isn't a fallacy. It just means an expenditure that one cannot expect to recoup. The action item is, "Don't throw good money after bad." The opposite of a sunk cost is an investment.
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When would one actually want to use a market order instead of a limit order?
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After learning about things that happened in the "flash crash" I always use limit orders. In an extremely rare instance if you place a market order when there is a some glitch, for example some large trader adds a zero at the end of their volume, you could get an awful price. If I want to buy at the market price, I just set the limit about 1% above the market price. If I want to sell, I set the limit 1% below the market price. I should point out that your trade is not executed at the limit price. If your limit price on a buy order is higher than the lowest offer, you still get filled at the lowest offer. If before your order is submitted someone fills all offers up to your limit price, you will get your limit price. If someone, perhaps by accident, fills all orders up to twice your limit price, you won't end up making the purchase. I have executed many purchases this way and never been filled at my limit price.
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Should market based health insurance premiums be factored into 6 months emergency fund savings?
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Yes factor into your fund the cost of health insurance. You basically have three options when facing a loss of income for 3-6 months: Pre-ACA the COBRA one was the default option many planned for because there was no need to change doctors. Of course many people were shocked how expensive it was compared to just looking at the employees share of the monthly premium. For planning you can do some research into the cost of one of the ACA approved plans in your state. Keeping in mind that the lack of income might qualify you for a subsidy. As to the coverage level, that would depend on your situation and the perceived gap. I have known many people who didn't have to pick COBRA until after the new job started so they knew exactly what they needed to cover and what their bills were during the gap.
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What's the fuss about Credit Score / History?
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Since we seem to be discussing credit score and credit history interchangeably, if I can add credit report as the third part of the puzzle, I have another point. Your credit score and credit report can be effective tools to notice identity theft or fraud in your name. Keeping track of your report will allow you to not only protect your good name (which is apparently in dispute here) but also those businesses who ultimately end up paying for the stolen goods or services.
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Why do shareholders participate in shorting stocks?
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When I have stock at my brokerage account, the title is in street name - the brokerage's name and the quantity I own is on the books of the brokerage (insured by SIPC, etc). The brokerage loans "my" shares to a short seller and is happy to facilitate trades in both directions for commissions (it's a nice trick to get other parties to hold the inventory while you reap income from the churn); by selecting the account I have I don't get to choose to not loan out the shares.
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What can I replace Microsoft Money with, now that MS has abandoned it?
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I use http://moneydance.com/ it has Mac, Windows and Linux versions and works well for my needs.
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Sage Instant Accounts or Quickbooks?
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Note: Specific to UK. I can't recommend anything higher than Crunch - they act as your accountant and have their own cloud accounting software, so it's more expensive than just using cloud accounting software, but if you use an accountant to do your year-end anyway, then they cost about the same as using cloud accounting software plus using an accountant to do your year-end. The thing I like (as a software development contractor) is that I don't have to know or worry about different ledger accounts, or journal entries, or any of the other weird accounting things, etc. Most cloud accounting software claim to simplify accounting "so that you can concentrate on running your business" whereas the reality is that you still have to spend ages learning how to be an accountant just to fill it in correctly. With Crunch that's actually true, it does actually make it simple. I've used Crunch, Sage, and Xero, so my sample-set isn't very big - just thought I'd share my experiences. If you value your time and get annoyed by having to create multiple internal transfers between different ledgers just to do something simple, it's for you. This probably sounds like a sales pitch, but I have nothing to do with them and nothing to gain by recommending them. The only reason I'm so passionate is I started a new business to do an online shop and tried to use Crunch, but they don't do retail businesses. Only contractors/freelancers or simple service-based businesses (their software is geared up specifically for that which I guess is why it's more simple than the others). Anyway, so now I'm annoyed at having to use the more complicated ones.
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Super-generic mutual fund type
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It sounds like you want a place to park some money that's reasonably safe and liquid, but can sustain light to moderate losses. Consider some bond funds or bond ETFs filled with medium-term corporate bonds. It looks like you can get 3-3.5% or so. (I'd skip the municipal bond market right now, but "why" is a matter for its own question). Avoid long-term bonds or CDs if you're worried about inflation; interest rates will rise and the immediate value of the bonds will fall until the final payout value matches those rates.
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Tax benefits of recycling
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They are certainly only suggesting that the money you pay to recycle the bulbs is tax deductible as a donation, assuming that they are indeed a 501(c)(3) non-profit. Donations of goods are only deductible at fair market value. Light bulbs that no longer light up have no market value, so only the payment could possibly be deductible.
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How much is university projected to cost in Canada in 18 years?
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Here's a great Canadian college/university cost calculator I used; found at Canadian Business - they say: Our tool is divided into three easy steps. First, calculate the tuition cost for the university and faculty you wish to attend. Then, calculate any additional fees for residence (on campus student housing), meal plans, athletics, health and student services. This will give you the total cost a student will pay at a Canadian university in 2006/7. Once you know the total annual cost, take the third step to calculate the total cost for the duration of the course of study. Of course, this only calculates what it will cost you NOW, not eighteen years from now, but it's a good start :)
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IRS “convenience of the employer” test when employee lives far from the office
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The decision whether this test is or is not met seems to be highly dependent on the specific situation of the employer and the employee. I think that you won't find a lot of general references meeting your needs. There is such a thing as a "private ruling letter," where individuals provide specific information about their situation and request the IRS to rule in advance on how the situation falls with respect to the tax law. I don't know a lot about that process or what you need to do to qualify to get a private ruling. I do know that anonymized versions of at least some of the rulings are published. You might look for such rulings that are close to your situation. I did a quick search and found two that are somewhat related: As regards your situation, my (non-expert) understanding is that you will not pass in this case unless either (a) the employer specifies that you must live on the West Coast or you'll be fired, (b) the employer would refuse to provide space for you if you moved to Boston (or another company location), or (c) you can show that you could not possibly do your job out of Boston. For (c), that might mean, for example, you need to make visits to client locations in SF on short-notice to meet business requirements. If you are only physically needed in SF occasionally and with "reasonable" notice, I don't think you could make it under (c), although if the employer doesn't want to pay travel costs, then you might still make it under (a) in this case.
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What ETF best tracks the price of gasoline, or else crude oil?
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UNG United States Natural Gas Fund Natural Gas USO United States Oil Fund West Texas Intermediate Crude Oil UGA United States Gasoline Fund Gasoline DBO PowerShares DB Oil Fund West Texas Intermediate Crude Oil UHN United States Heating Oil Fund Heating Oil I believe these are as close as you'd get. I'd avoid the double return flavors as they do not track well at all. Update - I understand James' issue. An unmanaged single commodity ETF (for which it's impractical to take delivery and store) is always going to lag the spot price rise over time. And therefore, the claims of the ETF issuer aside, these products will almost certain fail over time. As shown above, When my underlying asset rises 50%, and I see 24% return, I'm not happy. Gold doesn't have this effect as the ETF GLD just buys gold, you can't really do that with oil.
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IRA contributions in a bear (bad) market: Should I build up cash savings instead?
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You have heard the old adage "Buy low, sell high", right? That sounds so obvious that you'd have to wonder why they would ever bother coining such an expression. It should rank up there with "Don't walk in front of a moving car" on the Duh scale of advice. Well, your question demonstrates exactly why it isn't quite so obvious in the real world and that people need to be reminded of it. So, in your example, the stock prices are currently low (relative to what they have been). So per that adage, do you sell or buy when prices are low? Hint: It isn't sell. Yes. Your gut is going to tell you the exact opposite thanks to the fact that our brains are unfortunately wired to make us susceptible to the loss aversion fallacy. When the market has undergone a big drop is the WORST time to stop contributing (buying stocks). This example might help get your brain and gut to agree a little more easily: If you were talking about any other non-investment commodity, cars for instance. Your question equates to.. I really need a car, but the prices have been dropping like crazy lately. Maybe I should wait until the car dealers start raising their prices again before I buy one. Dollar Cost Averaging As littleadv suggested, if you have an automatic payroll deduction for your retirement account, you are getting the benefit of Dollar Cost Averaging. Because you are investing the same amount on a scheduled interval, you are buying more shares when they are cheap and fewer when they are expensive. It is like an automatic buy low strategy is built into the account. The alternative, which you are implying, is a market timing strategy. Under this strategy, instead of investing regularly you try to get in and out of investments right before they go up/drop. There are two MAJOR flaws with this approach: 1) Your brain will work against you (see above) and encourage you to do the exact opposite of what you should be doing. 2) Unless you are clairvoyant, this strategy isn't much better than gambling. If you are lucky it can work, but because of #1, the odds are stacked against you.
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When is an IPO considered failure?
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Just skimming through the Wikipedia article on airberlin, I notice there is more to the story than simply "airberlin's IPO failed, so they postponed it and did it anyways." 3 points to keep in mind about IPOs: 1) An IPO is the mechanism for taking a private company and setting it up for shares to be owned by "the public". 2) The process of selling shares to the public often allows original owners and/or early investors to "cash out". Most countries (including member nations of the EU) limit some transactions like pre-IPO companies to "accredited investors". 3) Selling shares to the public also can allow the company to access more funds for growth. This is particularly important in a capital-intensive business like an airline; new B737-MAX costs >$110M. New A320neo costs >$105M USD. Ultimately, the question of a successful IPO depends on how you define success. Initially, there was a lot of concern that the IPO was set up with too much focus on goal #2... allowing the management & owners to cash out. It looks like the first approach was not meeting good opinions in the market during 2006. A major concern was that the initial approach focused on management only cashing out its shares and no money actually going to the company to support its future. The investment bankers restructured the IPO, including the issuance of more new shares so that more $ could end up in the company's accounts, not just in the accounts of the management. If anything, it's still a pretty successful IPO given that the shares were successfully listed, the company collected the money it needed to invest and grow, and the management still cashed out.
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Why do moving average acts as support and resistance?
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It's not stopped. Crossing a moving average is considered a signal to buy or sell. Yahoo stock charts offer the ability to add moving averages to the charts, and you can observe all stocks cross the line regularly. As a contrast to Victor's charts, you can see that Apple, over the last two years, has traded above and below the 50 day MA. A believer in technical analysis using MA will observe a buy signal in Dec '11 just under $400, with a sell in mid-$500s in May. Moving averages are a form of following the trend, and work well when either trend is strong. It's when the stock is too close to the line that's it's tough to call whether it's time to be in or out.
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My bank wants to lower my credit limit on my credit card. Will this impact me negatively?
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No, it will have no negative impact on getting a mortgage. You are building up a history with regular payments and are not carrying a balance on the card each month. Your ability to get a mortgage will ultimately be based on other things. Money Saving Expert has a good guide on what will affect your credit score. A further discussion on the topic that backs up that what a mortgage company is interested in is affordability and a stable history. They really don't care about utilisation ratios. (Though might be spooked by almost maxed out cards - sign of poor spending control, or large unused limits - too easy to go into bad debt.)
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What's the benefit of opening a Certificate of Deposit (CD) Account?
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Others have pointed out why one typically chooses a CD: to lock in an interest rate that's higher than most other savings accounts (at the expense of having quick access to your money). While most savings accounts have practically 0% return, there are high yield savings accounts out there with little to no strings that offer ~1% APY. I've personally not found CDs to be compelling when viewed against those, especially for something like an emergency fund where I'd rather just know it's available without having to think about penalties and such. Some people ladder CDs so that they're always no more than a month or so away from having access to some of the money, but for the return I've decided I prefer to just avoid the hassle. For 2.25%, which I haven't really seen, I might consider it, but in any case, you're better served by paying more to your loans.
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How does giving to charity work?
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If something is tax-deductible in the US, it means that, in the eyes of the Internal Revenue Service, you effectively didn't earn that money. Within restrictions, your adjusted gross income, which is the income that your tax is calculated on, is reduced by the amount of your tax deductions. In the case of the ASPCA, they've jumped through the appropriate hoops to become a 501(c)(3) organization, which, among other things, means that donations to them are tax-deductible by the donor (a) if they itemize, and (b) if they haven't reached a donation cap. That's the carrot that encourages donations to these organizations. There are restrictions, meaning that there can be only certain types of privileges or exchange between the donor and the organization. Essentially, it has to be a donation, and not a purchase of substantial goods or services. Your donation to these kinds of organizations doesn't hurt their funding elsewhere, or shouldn't. As mentioned above, if you don't itemize your deductions, you won't gain any extra tax savings from the donation. (You shouldn't itemize if you're better off taking the standard deduction.) Having said that, though, please give whatever you're led to give, after considering all of the ramifications (financial and spiritual). The tax deduction is only a subsidy; the IRS doesn't "pick up the whole tab" but only refunds a fraction to you in the form of tax savings through itemized deductions. If you don't feel you have the money, then donate your time. It might be more needed anyway!
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Mitigate Effects Of Credit With Tangible Money
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Right now you are standing at a fork in the road. If I could tell my younger self who blasted past that fork without noticing it what to do, I would say: Research "Financial Independence" and "Early Retirement" and "frugal living". If you do it right you can be financially independent in 5-15 years depending on your comfort level with frugal living. Many people celebrate graduation by financing a new car. It's like a quadruple whammy. New car brings sticker shock. Financing is paying to use someone else's money. Buying a car period is buying into the commuter lifestyle. And the cash flow could have gone to reducing debt or building savings. One blog I read advises that this step adds ten years to the time you have to work before you become financially independent.
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What industries soar when oil prices go up?
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You can look at it from a fundamental perspective to see who benefits from rising oil prices. That's a high level analysis and the devil is in the details - higher oil prices may favour electric car producers for example or discount clothes retailers vs. branded clothes manufacturers. Another approach it to use a statistical analysis. I have run a quick and dirty correlation of the various S&P sector indices against the oil prices (Crude). Based on the the results below, you would conclude that materials and energy stocks should perform well with rising oil prices. There again, it is a behaviour you would expect at the group level but it may not translate to each individual company within those groups (in particular in the materials sector where some would benefit and some would be detrimentally affected). You could get exposure to those sectors using ETFs, such as XLB and XLE in the US. Or you could run the same analysis for each stock within the S&P 500 (or whatever index you are looking at) and create a portfolio with the stocks that are the most correlated with oil prices. This is calculated over 10 years of monthly returns after removing the market component from the individual sectors. The two important columns are:
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How can we get a hold of our finances again, with much less time to spend on accounting and budgeting, due to the arrival of our child?
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Good question, very well asked! The key here is that you need to find a solution that works for you two without an overt amount of effort. So in a sense it is somewhat behavior driven, but it is also technology driven. My wife and I use spreadsheets for both checking account management and budgeting. A key time saver is that we have a template sheet that gets copied and pasted, then modified for the current month. Typically 90% of the stuff is the same and each month requires very little modification. This is one of my problems with EveryDollar. I have to enter everything each and every month. We also have separate checking accounts and responsibility for different areas of the family expenses. Doing this risks that we act as roommates, but we both clearly understand the money in one persons account equally belongs to the other and during hard times had to make up for shortfalls on the part of the other. Also we use cash for groceries, eating out, and other day to day expenses. So we don't have a great need to track expenses or enter transactions. That is what works for us, and it takes us very little time to manage our money. The budget meeting normally lasts less than a half hour and that includes goal tracking. We kind of live by the 80/20 principle. We don't see a value in tracking where every dime went. We see more value in setting and meeting larger financial goals like contributing X amount to retirement and things of that nature. If we overspent a bit at Walgreens who cares provided the larger goals are meant and we do not incur debt.
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How does a 2 year treasury note work?
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Notes and Bonds sell at par (1.0). When rates go up, their value goes down. When rates go down, their value goes up. As an individual investor, you really don't have any business buying individual bonds unless you are holding them to maturity. Buy a short-duration bond fund or ETF.
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I carelessly invested in a stock on a spike near the peak price. How can I salvage my investment?
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Basically, your question boils down to this: Where and how do I squeeze the stock market so that within time period X, it will make me Y dollars. (Where I'm emotionally attached to the Y figure because I recently lost it, and X is "as soon as possible".) To make money on the stock market (in a quasi-guaranteed way), you have to adjust X and Y so that they are realistic. For instance, let X be twenty-five years, and Y be "7% annual return". Small values of X are risky, unless X is on the order of milliseconds and you have a computer program working for you. To mitigate some of the risk of short term trading, you have to treat trading seriously and study like mad: study the stock market in general, and not only that, but carefully research the companies whose stocks you are buying. Work actively to discover stocks which are under-valued relative to the performance of their corporation, and which might correct upward relative to the performance of similar stocks. Always have an exit strategy for every position and stick to it. Use instruments like "trailing stops": automatic tracking which follows a price in one direction, and then produces an order to close the position when the price reverses by a certain amount.
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Optimal Asset Allocation
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There are some good answers about the benefits of diversification, but I'm going to go into what is going on mathematically with what you are attempting. I was always under the assumption that as long as two securities are less than perfectly correlated (i.e. 1), that the standard deviation/risk would be less than if I had put 100% into either of the securities. While there does exist a minimum variance portfolio that is a combination of the two with lower vol than 100% of either individually, this portfolio is not necessarily the portfolio with highest utility under your metric. Your metric includes returns not just volatility/variance so the different returns bias the result away from the min-vol portfolio. Using the utility function: E[x] - .5*A*sig^2 results in the highest utility of 100% VTSAX. So here the Sharpe ratio (risk adjusted return) of the U.S. portfolio is so much higher than the international portfolio over the period tracked that the loss of returns from adding more international stocks outweigh the lower risk that you would get from both just adding the lower vol international stocks and the diversification effects from having a correlation less than one. The key point in the above is "over the period tracked". When you do this type of analysis you implicitly assume that the returns/risk observed in the past will be similar to the returns/risk in the future. Certainly, if you had invested 100% in the U.S. recently you would have done better than investing in a mix of US/Intl. However, while the risk and correlations of assets can be (somewhat) stable over time relative returns can vary wildly! This uncertainty of future returns is why most people use a diversified portfolio of assets. What is the exact right amount is a very hard question though.
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