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Why does the Fed use PCE over CPI? | The reason is in your own question. The answer is simple. They use that code to tax the product otherwise it would just be out of pocket expenses. |
why is the money withdrawn from traditional IRA taxed at the ordinary income tax rate? | In a Traditional IRA contributions are often tax-deductible. For instance, if a taxpayer contributes $4,000 to a traditional IRA and is in the twenty-five percent marginal tax bracket, then a $1,000 benefit ($1,000 reduced tax liability) will be realized for the year. So that's why they tax you as income, because they didn't tax that income before. If a taxpayer expects to be in a lower tax bracket in retirement than during the working years, then this is one advantage for using a Traditional IRA vs a Roth. Distributions are taxed as ordinary income. So it depends on your tax bracket UPDATE FOR COMMENT: Currently you may have heard on the news about "the fiscal cliff" - CNBC at the end of the year. This is due to the fact that the Bush tax-cuts are set to expire and if they expire. Many tax rates will change. But here is the info as of right now: Dividends: From 2003 to 2007, qualified dividends were taxed at 15% or 5% depending on the individual's ordinary income tax bracket, and from 2008 to 2012, the tax rate on qualified dividends was reduced to 0% for taxpayers in the 10% and 15% ordinary income tax brackets. After 2012, dividends will be taxed at the taxpayer's ordinary income tax rate, regardless of his or her tax bracket. - If the Bush tax cuts are allowed to expire. - Reference - Wikipedia Capital Gains tax rates can be seen here - the Capital Gains tax rate is relative to your Ordinary Income tax rate For Example: this year long term gains will be 0% if you fall in the 15% ordinary tax bracket. NOTE: These rates can change every year so any future rates might be different from the current year. |
Are there any banks with a command-line style user interface? | I think I get your question, but your wording is throwing a lot of us off. If what you want is a clean, effective and efficient interface over port 80, then USAA.com has done some great usability work. Additionally, they have really done some pioneering work with web services and mobile applications. On top of that, they have excellent document archiving. I can navigate their site more quickly than any of the other I've used. |
Pay down the student loan, or buy the car with cash? | Here's another way to look at this that might make the decision easier: Looking at it this way you can turn this into a financial arbitrage opportunity, returning 2.5% compared to paying cash for the vehicle and carrying the student loan. Of course you need to take other factors into account as well, such as your need for liquidity and credit. I hope this helps! |
How to estimate a reasonable amount for a signing bonus? | So you've already considered relocation. Here are a few additional things to consider with respect to negotiating a signing bonus (if any): Would you be leaving a position where you are eligible for an upcoming bonus, profit-share, or other special incentive payout, such as a stock option or RSU vesting date? A signing bonus can help offset the opportunity cost of leaving a previous job when an incentive payout date is near. At the new company, would you be required to wait some pre-defined period to be eligible to participate in the pension or retirement savings plan with employer basic or matching contributions? If you were receiving ongoing employer contributions in your previous company's plan and would need to wait, say, six months before participating in the new company's plan, a signing bonus can offset lost employer contributions in the interim. Consider funding your own IRA in that time. Would you be required to give up something else of value to you that your previous employer was providing, such as an expensive laptop, that is not expected to otherwise be replaced by the new company? Whether they offer a signing bonus and how much you can expect to negotiate is based on a lot of factors and you'll need to "play it by ear." Remember what bonus means: "A payment or gift added to what is usual or expected, in particular." Remember also that a signing bonus is a one time thing. In general, it's more important to consider the overall ongoing compensation package – salary and incentive plans, vacation, retirement benefits, health benefits, etc. – and whether those meet your long-term needs. |
Why does Warren Buffett say his fund performance, relatively, is likely to be better in a bear market than in a bull market? | If I have $100 and put it under the bed it will return 0%. Relatively good in a bear market and relatively bad in a bull market. |
How to prevent myself from buying things I don't want | To me the key is a budget. Each month, before it begins, decide on what to spend on each dollar that you earn. Money should be allotted for normal expenses such as housing, food, transportation, and utilities. If you have any consumer debt that should be a priority. Extra money should go to eliminate that debt. There should be money allotted to savings goals (such as retirement, home down payment, or vacation home). Also there should be money set aside for clothing and giving. Giving is an important part and often overlooked part of wealth creation. Somewhere in there you should also give yourself a bit of free money. For example one of the things I spend my free money on is coffee. I buy freshly ground coffee from a really good supplier. It is a bit expensive, but that is okay as it does not preclude me from meeting other goals. If you still have money left after all of that increase your giving some, your savings some, and your free money some. You can then spend that money without guilt. If your budget includes $100 of free money per month, and you want something that costs $1000, save up the $1,000 and then buy it. Do not borrow to buy free money stuff! Doing those sorts of things will make you weigh purchasing decisions very carefully. If you find that you cannot stick to a budget, you should enlist a friend to be your accountability partner. They have to be very good with money. |
Section 179 vs depreciation of laptop | I'm not a tax expert, but I think you mean Form 4562, right? If you acquire the laptop in the year for which you're filing taxes, then it is just that simple. (At least according to my reading of 4562 instructions, and my history of accepted tax returns where I've done this for my own business.) If, however, you acquired the laptop in a previous year and have already depreciated it previously (with the plan to spread over several years), there is more complexity I believe -- you may limited in how you could accelerate the remaining depreciation. |
Received an unexpected cashiers check for over $2K from another state - is this some scam? | It is likely a scam. In fact the whole mystery shopping "job" may be a scam. There is a Snopes page about cashier's check scams, as well as a US government page which specifically mentions mystery shopping as a scam angle. As for how the scam works, from the occ.gov site I just linked: However, cashier’s checks lately have become an attractive vehicle for fraud when used for payments to consumers. Although, the amount of a cashier’s check quickly becomes "available" for withdrawal by the consumer after the consumer deposits the check, these funds do not belong to the consumer if the check proves to be fraudulent. It may take weeks to discover that a cashier’s check is fraudulent. In the meantime, the consumer may have irrevocably wired the funds to a scam artist or otherwise used the funds—only to find out later, when the fraud is detected—that the consumer owes the bank the full amount of the cashier’s check that had been deposited. It is somewhat unusual in that, from what you say, there has been no attempt thus far to get money back. However, your sister-in-law may have received that info separately, or received it as part of her mystery shopping job but didn't mention it to you with regard to this check. Typically the scam involves telling the recipient to transfer money to a third party (e.g., by buying goods as a mystery shopper, or via wire transfer to "reimburse" someone associated with a sham operation). By the time the cashier's check is revealed as fraudulent, the victim has already transferred away his/her own real money. It's probably worth taking the check to your or her bank and asking them about it. They may have more info. Also, banks usually want to know about scams like this because, in the long run, they accumulate data on them and share that with law enforcement and can eventually catch some of the scammers. Edit: Just to help anyone who may be reading this later. The letter you added confirms it is absolutely a scam. My boss was once contacted via a scam operation very similar to this. The huge red flag (in addition to others already mentioned) is that you are being "given" a check for over $2000, of which only $25 is purportedly for actual mystery shopping and $285 is payment for you, the mystery shopper. The whole rest of the $2000+ amount is for you to wire to "another Mystery/Secret Shopper in order for them to complete their assignment". They are giving you $2000 to give to someone else who is supposedly another one of their own employees/contractors. Ask yourself what sane business would conduct their operations in this way. If you work at a law office, or a hamburger stand, or a school, or anything you like, does your boss ever say "Here is your paycheck for $5000. I know you only earned $1000, but I'm just going to give you the whole $5000, and you're supposed to use $4000 of it to pay your coworker Joe his wages." No. There is no reason to do that except that the "other mystery shopper" is actually the scammer. |
How to evaluate investment risk in practical terms | Generally investing in index-tracking funds in the long term poses relatively low risk (compared to "short term investment", aka speculation). No-one says differently. However, it is a higher risk than money-market/savings/bonds. The reason for that is that the return is not guaranteed and loss is not limited. Here volatility plays part, as well as general market conditions (although the volatility risk also affects bonds at some level as well). While long term trend may be upwards, short term trend may be significantly different. Take as an example year 2008 for S&P500. If, by any chance, you needed to liquidate your investment in November 2008 after investing in November 1998 - you might have ended up with 0 gain (or even loss). Had you waited just another year (or liquidated a year earlier) - the result would be significantly different. That's the volatility risk. You don't invest indefinitely, even when you invest long term. At some point you'll have to liquidate your investment. Higher volatility means that there's a higher chance of downward spike just at that point of time killing your gains, even if the general trend over the period around that point of time was upward (as it was for S&P500, for example, for the period 1998-2014, with the significant downward spikes in 2003 and 2008). If you invest in major indexes, these kinds of risks are hard to avoid (as they're all tied together). So you need to diversify between different kinds of investments (bonds vs stocks, as the books "parrot"), and/or different markets (not only US, but also foreign). |
Can I account for start-up costs that occur before incorporation? | Yes you can. You should talk to your tax advisor re the specific expenditures that can be accounted as startup-costs (legal fees are a good candidate, for example). If they add up to significant amounts (>$5K), you'll have to capitalize them over a certain period of time, and deduct from your business' income. This is not a tax advice.:-) |
What risks are there acting as a broker between PayPal and electronic bank transfers? | Another reason to think it's a scam: fake paypal email notifications are a thing. I've seen one that was quite convincing (but it wasn't mine to properly analyse or report), so the intial payment may be a fake from another account belonging to the scammer, and you've just transferred money to the scammer. The fake email can include links to log in to a fake paypal website, which can be quite convincing as the mark will give the login details which can be used to scrape data. Links not going to where they say is the giveaway here. |
If I have 10,000 stocks to sell with 23 B market cap | You will almost certainly be able to sell 10,000 shares at once. The question is a matter of price. If you sell "at market" then you may get a lower price for each "batch" of the stock sold (one person buys 50, another buys 200, another buys 1000 etc) at varying prices. Will you be able to execute a single order to sell them all at the same price at the same time? Nobody can say, and it's not really a function of the company size. The exchange has what's called "open interest" which roughly correlates to how many people have active orders in at a given price. This number is constantly changing alongside the bid and ask (particularly for active stocks). So let's say you have 10,000 shares and you want to sell them for $100 each. What you need is at least 10,000 in open interest at $100 bid to execute. By contrast let's say you issue a limit order at $100 for 10,000 shares. Your ask will stay outstanding at that price and you'll be filled at that price if there are enough buyers. I you have a limit sell order at $100 for 10,000 shares the strike price of the stock cannot go to $100.01 until all of your sell orders are filled. |
Who Can I Hire To Calculate the Value of An Estate? | Generally, it would be an accountant. Specifically in the case of very "private" (or unorganized, which is even worse) person - forensic accountant. Since there's no will - it will probably require a lawyer as well to gain access to all the accounts the accountant discovers. I would start with a good estate attorney, who in turn will hire a forensic accountant to trace the accounts. |
What happens with the “long” buyer of a stock when somebody else's short fails (that is, unlimited loss bankrupts short seller) | Unless I am missing something subtle, nothing happens to the buyer. Suppose Alice wants to sell short 1000 shares of XYZ at $5. She borrows the shares from Bob and sells them to Charlie. Now Charlie actually owns the shares; they are in his account. If the stock later goes up to $10, Charlie is happy; he could sell the shares he now owns, and make a $5000 profit. Alice still has the $5000 she received from her short sale, and she owes 1000 shares to Bob. So she's effectively $5000 in debt. If Bob calls in the loan, she'll have to try to come up with another $5000 to buy 1000 shares at $10 on the open market. If she can't, well, that's between her and Bob. Maybe she goes bankrupt and Bob has to write off a loss. But none of this has any effect on Charlie! He got the shares he paid for, and nobody's going to take them away from him. He has no reason to care where they came from, or what sort of complicated transactions brought them into Alice's possession. She had them, and she sold them to him, and that's the end of the story as far as he's concerned. |
Is Real Estate ever a BAD investment? If so, when? | As Yishani points out, you always have to do due diligence in buying a house. As I mentioned in this earlier post I'd highly recommend reading this book on buying a house associated with the Wall Street Journal - it clearly describes the benefits and challenges of owning a house. One key takeaway I had was - on average houses have a "rate of return" on par with treasury bills. Its best to buy a house if you want to live in a house, not as thinking about it as a "great investment". And its certainly worth the 4-6 hours it takes to read the book cover to cover. |
How can you possibly lose on investments in stocks? | If you're talking about a single stock, you greatly underestimate the chances of it dropping, even long-term. Check out the 12 companies that made up the first Dow Jones Industrial Average in 1896. There is probably only one you've heard of: GE. Many of the others are long gone or have since been bought up by larger companies. And remember these were 12 companies that were deemed to be the most representative of the stock market around the turn of the 20th century. Now, if you're talking about funds that hold many stocks (up to thousands), then your question is a little different. Over the long-term (25+ years), we have never experienced a period where the overall market lost value. Of course, as you recognize, the psychology of investors is a very important factor. If the stock market loses half of its value in a year (as it has done a few times), people will be inundated with bad news and proclamations of "this time it's different!" and explanations of why the stock market will never recover. Perhaps this may be true some day, but it never has been thus far. So based on all the evidence we have, if you hold a well-diversified fund, the chances of it going down long-term (again, meaning 25+ years) are basically zero. |
Put idle savings to use while keeping them liquid | This may sound a little crazy but I would take $5K of that money and buy whiskey with it (Jack Daniel's would be my preference). My guess is that in 5 years that whiskey will be worth more than the $10K you put in the bank. I just can't see how the dollar survives the next 5 years without a major downward adjustment. If I'm wrong then you have a nice party and give whiskey for Christmas gifts. If I'm right at least you will have some savings instead of $15K of useless dollars. Here is my justification for converting your US dollars into tangible assets. Do you really think the money printing will ever stop? |
Why do some symbols not have an Options chain for specific expiration dates? | All openly traded securities must be registered with the SEC and setup with clearing agents. This is a costly process. The cost to provide an electronic market for a specific security is negligible. That is why the exchange fees per electronic trade are so small per security. It is so small in fact that exchanges compensate price makers partially at the expense of price takers, that exchanges partially give some portion of the overall fee to those that can help provide liquidity. The cost to provide an open outcry market for a specific security are somewhat onerous, but they are initiated before a security has any continual liquidity to provide a market for large trades, especially for futures. Every individual option contract must be registered and setup for clearing. Aside from the cost to setup each contract, expiration and strike intervals are limited by regulation. For an extremely liquid security like SPY, contracts could be offered for daily expiration and penny strike intervals, but they are currently forbidden. |
Hedging against Exchange Rate Risk | You can calculate your exposure intuitively, by calculating your 'fx sensitivity'. Take your total USD assets, let's assume $50k. Convert to EUR at the current rate, let's assume 1 EUR : 1.1 USD, resulting in 45.5k EUR . If the USD strengthens by 1%, this moves to a rate of ~1.09, resulting in 46k EUR value for the same 50k of USD investments. From this you can see that for every 1% the USD strengthens, you gain 500 EUR. For every 1% the USD weakens, you lose 500 EUR. The simplest way to reduce your exchange rate risk exposure, is to simply eliminate your foreign currency investments. ie: if you do not want to be exposed to fluctuations in the USD, invest in EUR only. This will align your assets with the currency of your future expenses [assuming you intend to continue living in Europe].This is not possible of course, if you would like to maintain investments in US assets. One relatively simple method available to invest in the US, without gaining an exposure to the USD, is to invest in USD assets only with money borrowed in USD. ie: if you borrow $50k USD, and invest $50k in the US stock market, then your new investments will be in the same currency as your debt. Therefore if the USD strengthens, your assets increase in relative EUR value, and your debt becomes more expensive. These two impacts wash out, leaving you with no net exposure to the value of the USD. There is a risk to this option - you are investing with a higher 'financial leverage' ratio. Using borrowed money to invest increases your risk; if your investments fall in value, you still need to make the periodic interest payments. Many people view this increased risk as a reason to never invest with borrowed money. You are compensated for that risk, by increased returns [because you have the ability to earn investment income without contributing any additional money of your own]. Whether the risk is worth it to you will depend on many factors - you should search this site and others on the topic to learn more about what those risks mean. |
How can I help others plan their finances, without being a “conventional” financial planner? | You need a license/registration to be a "conventional" financial planner. But as long as your work is limited to budgets, and cash flow analysis, it may be more like accounting. In your shoes, I would consult the local CPA association about what you need (if anything) to do what you're doing. |
How smart is it to really be 100% debt free? | When you're debt free everything you own feels different. The lack of financial stress in your life goes away. BUT! before you do go gung-ho on paying down debt think through these steps (and no I did not come up with them. Dave Ramsey did and others). Truncated from - http://www.daveramsey.com/new/baby-steps/ I have 1 credit card. Only use it for business/travel but pay it off every month (yay for auto-draft). Everthing else is cash/debit and we live by a budget. If it's not in the budget we don't buy it. Easy as pie. The hard part is disciplining yourself to wait. Our society is gear for BUY NOW! PAY LATER! and well you can see where that has taken our country and families. And celebrate the small victories. Pay off 1 debt then go have a nice dinner. Things like that help keep you motivated and pursuing the end goal. |
Is there any online personal finance software without online banking? | CashBase has a web app, an iPhone app and an Android app, all sync'ed up. It doesn't integrate with banks automatically, but you can import bank statements as CSV. Disclosure: Filip is CashBase's founder. |
Why are American-style options worth more than European-style options? | An option is an instrument that gives you the "right" (but not the obligation) to do something (if you are long). An American option gives you more "rights" (to exercise on more days) than a European option. The more "rights," the greater the (theoretical) value of the option, all other things being equal, of course. That's just how options work. You could point to an ex post result, and and say that's not the case. But it is true ex ante. |
What does market cap (or market capitalization) mean? | Market cap is the current value of a company's equity and is defined as the current share price multiplied by the number of shares. Please check also "enterprise value" for another definition of a company`s total value (enterprise value = market cap adjusted for net nebt). Regarding the second part of your question: Issuing new shares usually does not affect market cap in a significant way because the newly issued shares often result in lower share prices and dilution of the existing share holders shares. |
Optimal way to use a credit card to build better credit? | In addition to the already good answers: I am assuming you are playing a long game and have no specific need for a high credit score in the next couple of years. This list is just good practice that will raise you score. |
What happens if one brings more than 10,000 USD with them into the US? | The US Customs and Border Protection website states that there is no limit to the amount of currency that can be brought into or taken out of the US. There is no limit on the amount of money that can be taken out of or brought into the United States. However, if a person or persons traveling together and filing a joint declaration (CBP Form 6059-B) have $10,000 or more in currency or negotiable monetary instruments, they must fill out a "Report of International Transportation of Currency and Monetary Instruments" FinCEN 105 (former CF 4790). The CBP site also notes that failure to declare currency and monetary instruments in excess of $10,000 may result in its seizure. Further, the site states that the requirement to report currency on a FinCEN 105 does not apply to imports of gold bullion. However, the legal website The Law Dictionary includes details of how money laundering laws may come into play here : As part of the War on Terror and the War on Drugs, U.S. law enforcement agencies have significantly increased their vigilance over money laundering. To this effect, travelers who carry large amounts of cash without supporting documentation of its legitimate source may be subject to secondary inspections and seizure of funds. In some cases, law enforcement may confiscate cash in excess of $10,000 until supporting documents are produced. So far, I have described the "official" position. However, reading between the lines, I think it is fair to say that in the current climate if you show up at an entry point with a suitcase full of a large amount of cash you would face considerable scrutiny, regardless of any supporting documentation you may present. If you fail to present supporting documentation, then I think your cash would certainly be seized. If you are a US resident, then you would be given the opportunity to obtain satisfactory documentation. If you did present documentation, then I think your cash would be held for as long as it would take to verify the validity of the documentation. Failure to present valid documentation would result in money laundering charges being brought against you and the matter would rest before the courts. If you are not a US resident, then failing to produce supporting documentation would mean your cash being seized and entry into the US would almost certainly be denied. You would then have to deal with the situation from outside of the US. If you did produce supporting documentation, then again I suspect the cash would be held for as long as it takes to verify the validity of the documentation. Whether or not you were allowed to enter the US would depend on what other documentation you possess. |
I am moving to a new city. How do I plan and prepare - financially - for the move? | Some of the costs you might incur include: |
gift is taxable but is “loan” or “debt” taxable? | If you are looking to transfer money to another person in the US, you can do do with no tax consequence. The current annual gift limit is $14k per year per person, so for example, my wife and I can gift $56k to another couple with no tax and no forms. For larger amounts, there is a lifetime exclusion that taps into your $5M+ estate tax. It requires submitting a form 709, but just paperwork, no tax would be due. This is the simplest way to gift a large sum and not have any convoluted tracking or structured loan with annual forgiveness. One form and done. (If the sum is well over $5M you should consider a professional to guide you, not a Q&A board) |
What amount of money can a corporation spend on entertainment | There is no simple rule like "you can/can't spend more/less than $X per person." Instead there is a reasonableness test. There is such a thing as an audit of just your travel and entertainment expenses - I know because I've had one for my Ontario corporation. I've deducted company Christmas parties, and going-away dinners for departing employees, without incident. (You know, I presume, about only deducting half of certain expenses?) If the reason for the entertainment is to acquire or keep either employees or clients, there shouldn't be a problem. Things are slightly trickier with very small companies. Microsoft can send an entire team to Hawaii, with their families, as a reward at the end of a tough project, and deduct it. You probably can't send yourself as a similar reward. If your party is strictly for your neighbours, personal friends, and close family, with no clients, potential clients, employees, potential employees, suppliers, or potential suppliers in attendance, then no, don't deduct it. If you imagine yourself telling an auditor why you threw the party and why the business funded it, you'll know whether it's ok to do it or not. |
How to determine how much to charge your business for rent (in your house)? | If you are talking about a home office, you don't "charge" the business anything. If the area is used exclusively as an office you pro-rate by square footage just the actual expenses. TurboTax recent published an article "Can I Take the Home Office Deduction?" which is a must read if you don't understand the process. (Note: I authored said article.) |
How much would it cost me to buy one gold futures contract on Comex? | The lot size is 100 troy ounce. See the contract specification at the same site; http://www.cmegroup.com/trading/metals/precious/gold_contract_specifications.html So with the current price of around $1785, one lot would cost you around 178,500. There may be other sites that offer smaller lots you would need to check with your broker. if the price moves up by $500, you gain $50,000 for a lot. The margin required changes from time to time: Currently it's $3666, with a maintenance of $3332, so a drop of $3.34 per oz of gold will cause a margin call. You make or lose 100 times the per oz movement as there are 100oz in the contract you cited. There's also a broker fee analogous to the commission on a stock trade. The other option would be to buy a fund that invests in Gold, this will be more easier to buy and the lot sizes will be much less. I hope you jumped into this great opportunity. At the time, experts said gold would have a straight run to $5000. |
Prices go up and salary doesn't: where goes delta? | Salaries normally shouldn't fluctuate with inflation and deflation... Inflation prevents consumers from spending (prices get too high), ultimately taking money out of circulation. This causes the market to go in to deflation (or at least deflate back to normal). That's when people begin to spend again, and start the cycle all over again. Now... Imagine if salaries increased with inflation... Inflation would never end. Everyone could keep affording the high prices. A Starbucks coffee would eventually cost $150, but the "middle-class" would all be millionaires. Your "small-change" would consist of a wad of useless bills, and the government would have to continually print out more money just to keep up. NOTE: This is not a direct answer to "where goes delta?", but would more be directed to the part "Prices go up and salary doesn't". |
Is there any way to know how much new money the US is printing? | The Fed doesn't exactly have a specific schedule when they decide to create a new dollar. Instead, they engage in open market operations, creating and destroying money as is necessary to preserve a certain interest rate for lending and borrowing. It's an ongoing process. When the Fed meets periodically and they see that inflation is getting out of hand, they will raise that rate; when they see that the economy is weak, they will lower it. They change the target rate from time to time, but they seldom tell people exactly what they'll do in advance, aside from them recently saying that rates will remain incredibly low "for an extended period of time". There are people who trade futures contracts based on what they think these rates will be, and the Fed does publish information on what the market thinks the probabilities are. That's probably the closest thing to telling you "how much and when". If you want to know about the size of the money supply, ask the Federal Reserve; you probably want series H.6, Money Stock Measures. For an explanation of what the data series there means, ask Wikipedia: you're probably interested in M2, because that's what actually affects the economy, though M0 is closer to what they actually "print" (currency, bills and coins, and deposits at the central bank). If you're concerned about the actual real value of your dollar dropping, the actual value drop is better understood by looking at either the inflation rate, or an exchange rate against a foreign currency (and depending on what you were hoping to use that dollar for, there are a couple of different inflation rates). The standard inflation rate which measures what happens in your day to day life is the consumer price index, published by the BLS. There are a variety of forecasts of this, but I'm not aware of any official government-agency forecasts. |
If gold's price implodes then what goes up? | It seems that you're interested in an asset which you can hold that would go up when the gold price went down. It seems like a good place to start would be an index fund, which invests in the general stock market. When the gold market falls, this would mainly affect gold mining companies. These do not make up a sizable portion of any index fund, which is invested broadly in the market. Unfortunately, in order to act on this, you would also have to believe that the stock market was a good investment. To test this theory, I looked at an ETF index fund which tracks the S&P 500, and compared it to an ETF which invests in gold. I found that the daily price movements of the stock market were positively correlated with the price of gold. This result was statistically significant. The weekly price movements of the stock market were also correlated with the price of gold. This result was also statistically significant. When the holding period was stretched to one month, there was still a positive relationship between the stock market's price moves and the price of gold. This result was not statistically significant. When the holding period was stretched to one year, there was a negative relationship between the price changes in the stock market and the price of gold. This result was not statistically significant, either. |
Can I change my loan term from 60 to 36 months? | Some places banks/Credit Unions will allow you to refinance a auto loan. My credit Union only does this if the original loan was with another lender. They will send the money to the old lender, then give you a loan under the new terms. They are trying to get your business, not necessarily looking for a way make less money for themselves. You will have to see how much you will save. Which will be based on the delta of the length of the loan or the change in interest rate, or both. My Credit Union has a calculator to show you the numbers based on keeping the size of the payments the same, or keeping the number of payments the same. Make sure you understand any limitations regarding the refinance based on the age of the car, and if you are underwater. |
In your 20s how much money should you have and how to properly use & manage it? | You need a budget. You need to know how much you make and how much you spend. How much you earn and what you choose to spend you money on is your choice. You have your own tolerance for risk and your own taste and style, so lifestyle and what you own isn't something that we can answer. The key to your budget is to really understand where you money goes. Maybe you are the sort of person who needs to know down to the penny, maybe you are a person who rounds off. Either way you should have some idea. How should I make a budget? and How can I come up with a good personal (daily) budget? Once you know what you budget is, here are some pretty standard steps to get started. Each point is a full question in of itself, but these are to give you a place to start thinking and learning. You might have other priorities like a charity or other organizations that go into your priority like. Regardless of your career path and salary, you will need a budget to understand where you money is, where it goes, and how you can reach your goals and which goals are reasonable to have. |
Meanings of “price of the derivative” | @Tim - in this case, a futures contract isn't like an options contract. It's simply a method of entering into an agreement for delivery at a future date. While the speculators appear to have taken over, there are practical examples of use of the futures market. I am a gold miner and I see that my cost is $1200/oz given my quality of ore. I see the price of gold at $1600 and instead of worrying that if it goes too low, I run at a loss, I take advantage and sell contracts to match my production for the next year (or as long as the contracts go, I forget how far out gold futures are). Of course I give up the higher price if gold goes higher, but this scenarion isn't speculation, it's a business decision. The bread maker, on the other hand, might buy wheat futures to guarantee his prices for the next year. |
Is it worth it to reconcile my checking/savings accounts every month? | While it's wise, easier and safer to check your transactions online a few times a month, I opt to receive and file paper statements as a hard copy back up of account history. Any reconciliation I perform is a quick glance to make sure the numbers sound right. It's probably a small waste of time and space, but it settles some of my paranoia (due to my training as a computer engineer) about failure of electronic banking systems. If someone tampers with bank records or a SAN explodes and wipes out a bunch of account data, then I will have years worth of paper statements to back up my numbers. Having years worth of statements printed on the banks stationary will have better credibility in court than a .pdf or printout thereof that could have been doctored, in case I ever needed to take my bank to court. A little piece of mind for the price of a letter opener, a square foot file box and a couple of minutes a month. |
How to avoid getting back into debt? | Spend less than you earn. If you have no job (source of income), then you can not possibly stay out of debt as you have to spend money to live and study. |
Where do expense ratios show up on my statement? | I don't think that you'll notice a difference in the NAV in a fund with fees that are low as the Vanguard Total Stock Market Fund. Their management fees are incorporated into the NAV, but keep in mind that the fund has a total of $144 billion in assets, with $66 billion in the investor class. The actual fees represent a tiny fraction of the NAV, and may only show up at all on the day they assess the fees. With Vanguard total stock market, you notice the fee difference in the distributions. In the example of Vanguard Total Stock Market, there are institutional-class shares (like VITPX with a minimum investment of $200M) with still lower costs -- as low as 0.0250% vs. 0.18% for the investor class. You will notice a different NAV and distributions for that fund, but there may be other reasons for the variation that I'm not familar with, as I'm not an institutional investor. |
Legitimate unclaimed property that doesn't appear in any state directory? | You can't blame companies like 'Legal Claimant Services' for making a profit by providing this service. That is capitalism and it is the way of the world. It is just like any other business you can do yourself - from making dinner to cutting your own grass. If you choose to do it yourself, you save money but you also do the work. When I got my letter telling me about a claim, I automatically went online to do some research. That's how I found this site and information that led me to validate the claim. I then chose to follow a few simple instructions and keep all of the claim instead of giving away 30%. |
What's a normal personal debt / equity ratio for a highly educated person? | Curious, are you asking about average, or the good numbers? The median family doesn't have $2500 to address an emergency. We are a nation of debtors, and spenders. A young couple at .8 is doing well. It means they saved 20% for a down payment, and just bought a house. Not too tough to buy with 5% down, have no other savings, and a student loan to put the debt to equity over 100%. Older people should be shooting for zero. I semi-retired at 50, and my mortgage is at about 8% of my net worth. 50% would be too high. Others 50+ should have at least 50% equity in their home and nearly half their "number," the amount needed to retire. So, a target is 25% maximum. These numbers shouldn't impact you at all. You should plan wisely, spend frugally, and prioritize your goals. There are 'zero debt' people out there who make me look reckless, and others who invest in rentals with a goal of keeping them highly leveraged. Neither group is wrong, what's right for you is what lets you sleep at night. |
What happens if stock purchased on margin plummets below what I have in the brokerage? | Different brokerages have different house rules for margin requirements and margin calls. You will likely get a margin call giving you a small amount of time to deposit the required funds to bring your account balance up to the required margin requirements. In reality, a stock that falls from $50 to $4 in a short period will probably become unmarginable. In short, yes, you will owe the broker for the loss. |
Where are Bogleheadian World ETFs or Index funds? | You weren't really clear about where you are in the world, what currency you are using and what you want your eventual asset allocation to be. If you're in the US, I'd recommend splitting your international investment between a Global ex-US fund like VEU (as Chris suggested in his comment) and an emerging markets ETF like VWO. If you're not in the US, you need to think about how much you would like to invest in US equities and what approach you would like to take to do so. Also, with international funds, particularly emerging markets, low expense ratios aren't necessarily the best value. Active management may help you to avoid some of the risks associated with investing in foreign companies, particularly in emerging markets. If you still want low expenses at all cost, understand the underlying index that the ETF is pegged to. |
To use a line of credit or withdraw from savings | No one can really answer this for you. It is a matter of personal preference and the details of your situation. There are some really smart people on here, when placed in your exact situation, would do completely different things. Personal finance is overall, personal. If it was me, I'd never borrow money in retirement. If I had the cash, I'd use it to help fund the purchase. If I didn't, I simply wouldn't. For me wealth retention (in your case) is surprisingly more about behavior than math (even though I am a math guy). You are simply creating a great deal of risk at a season in your life with a diminished ability to recover from negative events. In my opinion you are inviting "tales of woe" to be part of your future if you borrow. Others would disagree with me. They would point to the math and show how you would be much better off on borrowing instead of pulling out of investments provided a sufficient return on your nest egg. They may even have a case as you might have to pay taxes on money pulled out magnifying the difference in net income on borrowing versus pulling out in a lump sum. Here in the US, the money you pulled out would be taxed at the highest marginal rate. To help with a down payment of 50K, you might have to pull out 66,500 to pay the taxes and have enough for the down payment. The third option is to not help with a down payment or to help them in a different way. Perhaps giving them a few hundred per month for two years to help with their mortgage payment. Maybe watch their kids some to reduce day care costs or help with home improvements so they can buy a lower price home. Those are all viable options. Perhaps the child is not ready to buy a home. Having said all that it really depends on your situation. Say your sitting on 5 million in investments, your pensions is sufficient to have some disposable income, and they are asking for a relatively small amount. Then pull the money out and don't be concerned. You nest egg will quickly recover the money. |
Should I take a personal loan for my postgraduate studies? | I would not take this personal loan. Let's look closer at your options. Currently, you are paying $1100 a month in rent, and you have all the money saved up that you need to be able to pay cash for school. That's a good position to be in. You are proposing to take out a loan and buy an apartment. Between your new mortgage and your new personal loan payment, you'll be paying $1500 a month, and that is before you pay for the extra expenses involved in owning, such as property taxes, insurance, etc. Yes, you'll be gaining some equity in an apartment, but in the short term over the next two years, you'll be spending more money, and in the first two years of a 30 year mortgage, almost all of your payment is interest anyway. In two years from now, you'll have a master's degree and hopefully be able to make more income. Will you want to get a new job? Will you be moving to a new city? Maybe, maybe not. By refraining from purchasing the apartment now, you are able to save up more cash over the next two years and you won't have an apartment tying you down. With the money you save by not taking the personal loan, you'll have enough cash for a down payment for an apartment wherever your new master's degree takes you. |
How can I legally and efficiently help my girlfriend build equity by helping with a mortgage? | I'm looking for something simple, legal, reasonably formal, easy to setup and tax efficient. You just described marriage. Get married. |
Would I ever need credit card if my debit card is issued by MasterCard/Visa? | In most cases, a debit card can be charged like a credit card so there is typically no strict need for a credit card. However, a debit card provides weaker guarantees to the merchant that an arbitrary amount of money will be available. This is for several reasons: As such, there are a few situations where a credit card is required. For example, Amazon requires a credit card for Prime membership, and car rental companies usually require a credit card. The following does not apply to the OP and is provided for reference. Debit cards don't build credit, so if you've never had a credit card or loan before, you'll likely have no credit history at all if you've never had a credit card. This will make it very difficult to get any nontrivially-sized loan. Also, some employers (typically if the job you're applying for involves financial or other highly sensitive information) check credit when hiring, and not having credit puts you at a disadvantage. |
How can risk-reward relationship exist, since the losses due to the risk should offset the reward? | In an "efficient" investment market the amount of risk premium would EXACTLY offset the likelihood of loss, such that over long time frames the expected return on investment would be equal for all investment options. In practice, we usually see that riskier investments yield a higher long-term return because the risk premium is larger than that "efficient" amount. This is because many investors don't have a long-term time horizon, and the pain of loss is greater than the reward of gain ("asymmetric preferences"). It's also important to think about the risk-reward interaction as being PERCEIVED risk to EXPECTED reward. If I'm lending money to somebody who is likely not to pay me back, I'd want a better deal than if I were lending to somebody who is certain to pay. I think that addresses your confusion, but if I misinterpreted what's puzzling you, please let me know and I |
Will capital gains affect my tax bracket? | I think you're misunderstanding how tax brackets work. If you make $1 more and that bumps you into a higher bracket, only THAT particular dollar will be taxed at the higher tax bracket rate... Not your entire income. Short term capital gains are treated as income. Long term capital gains have a special tax rate currently. |
What is the meaning of “short selling” or “going short” a stock? | The 'normal' series of events when trading a stock is to buy it, time passes, then you sell it. If you believe the stock will drop in price, you can reverse the order, selling shares, waiting for the price drop, then buying them back. During that time you own say, -100 shares, and are 'short' those shares. |
What options do I have at 26 years old, with 1.2 million USD? | I'm surprised nobody else has suggested this yet: before you start investing in stocks or bonds, buy a house. Not just any house, but the house you want to live in 20 years from now, in a place where you want to live 20 years from now - but you also have to be savvy about which part of the country or world you buy in. I'm also assuming that you are in the USA, although my suggestion tends to apply equally anywhere in the world. Why? Simple: as long as you own a house, you won't ever have to pay rent (you do have to pay taxes and maintenance, of course). You have a guaranteed return on investment, and the best part is: because it's not money you earn but money you don't have to spend, it's tax free. Even if the house loses value over time, you still come out ahead. And if you live abroad temporarily, you can rent out the house and add the rent to your savings (although that does make various things more complicated). You only asked for options, so that is mine. I'll add some caveats. OK, now here are the caveats: |
Paid off oldest CC keep it open or close it? | Close the account. The age doesn't outweigh the fact that you have to pay for the card. It would be one thing if the credit line was a couple thousand but showing the credit bureaus that you are staying away from the $425.00 doesn't really make them think you are any more trustworthy with your available credit. Utilization matters when you are staying away from much larger chunks of your available credit (across all cards). |
Why are American-style options worth more than European-style options? | I'm sorry, but your math is wrong. You are not equally likely to make as much money by waiting for expiration. Share prices are moving constantly in both directions. Very rarely does any stock go either straight up or straight down. Consider a stock with a share price of $12 today. Perhaps that stock is a bad buy, and in 1 month's time it will be down to $10. But the market hasn't quite wised up to this yet, and over the next week it rallies up to $15. If you bought a European option (let's say an at-the-money call, expiring in 1 month, at $12 on our start date), then you lost. Your option expired worthless. If you bought an American option, you could have exercised it when the share price was at $15 and made a nice profit. Keep in mind we are talking about exactly the same stock, with exactly the same history, over exactly the same time period. The only difference is the option contract. The American option could have made you money, if you exercised it at any time during the rally, but not the European option - you would have been forced to hold onto it for a month and finally let it expire worthless. (Of course that's not strictly true, since the European option itself can be sold while it is in the money - but eventually, somebody is going to end up holding the bag, nobody can exercise it until expiration.) The difference between an American and European option is the difference between getting N chances to get it right (N being the number of days 'til expiration) and getting just one chance. It should be easy to see why you're more likely to profit with the former, even if you can't accurately predict price movement. |
I want to invest in Gold. Where do I go and buy it? | You can buy from any of the well known jewelry shops. Or you can even buy it from banks. For a 24carat gold purchase, you would normally also get a certificate attesting the quality of the gold item. Also while selling your gold, you can sell to above mentioned jewellers or any decent jeweller as a matter of fact. |
What exactly can a financial advisor do for me, and is it worth the money? | If you don't have the time or interest to manage investments, you need a financial advisor. Generally speaking, you're better served by an advisor who collects an annual fee based on a percentage of your account value. Advisors who are compensated based on transactions have a vested interest to churn your account, which is often not in your best interest. You also need to be wary of advisors who peddle expensive mutual funds with sales loads (aka kick-backs to the advisor) or annuities. Your advisor's compensation structure should be transparent as well. |
Which Benjamin Graham book should I read first: Security Analysis or Intelligent Investor? | If you're looking to learn more about investing for personal use (as opposed to academic interest), I'd recommend something like The Ages of the Investor instead. |
What are the reasons to get more than one credit card? | nan |
Is there a good rule of thumb for how much I should have set aside as emergency cash? | Between 6 months and a year is normally regarded as the "standard". Plan out what your monthly expenses are and save that money away. One thing to consider is what extras can you give up. If you are currently eating steak and lobster every day can you live with switching to ramen noodles for a period of time? Can you switch from premium cable to basic cable (or cancel it altogether)? Questions like this can greatly impact the amount you have to set aside. I personally have my emergency fund in CDs that mature the first of every month. I know there is less liquidity in this approach but I'm ok with that. My emergency fund is a sum of cash I'll always have so I wanted to reap the benefits of a higher yield. If it comes down to it I can place an expense on a credit card and pay off the credit card when funds become available. |
Stock portfolio value & profit in foreign currency | I think this will do the trick: |
Retirement savings vs building lucrative assets | Fahad, in finance we make a distinction between investments that tend to grow in value and assets that hold value. Investments that grow in value are generally related to investing in well-thought out businesses. Investments can be done in retirement accounts through stocks and bonds but also owning part of a business directly. Good investments make more and more money off the money you put in. Common examples of assets include gold and other non-productive property like real-estate you don't rent or cars. You can even have some assets in your retirement account as many would argue government bonds behave like assets. All of these things tend to (more or less) go up in value as the cost of everything goes up in value, but don't tend to make you any excess money in the long run. There is certainly a place for both investments and assets. Especially as a young person it is good to lean toward investments as you likely have a lot of time for the money to grow as you get older. As RonJohn suggests, in the United States this is fairly easy as retirement accounts are common there is a long history of stable financial law even in crises. Pakistan's institutions are fairly stable and improving but still assets and investments of all types can be riskier. So, I recommend taking your father's advice... partially. Having some assets are good in riskier situations, but good investments are generally the way to grow comfortably wealthy. A good mix of the two is the way to grow wealthy slowly while protecting yourself from risk. You, your father and your neighbors know you local situation better than I, who has only visited a number of Pakistan's neighboring countries, so I can't really give more detailed advice but hopefully this gets you started. |
What exactly is the interest rate that the Fed is going to adjust? | While it is true that if the Federal reserve bank makes a change in their rate there is not an immediate change in the other rates that impact consumers; there is some linkage between the federal rate, and the costs of banks and other lenders regarding borrowing money. Of course the cost of borrowing money does impact the costs for businesses looking to expand, which does impact their ability to hire more workers and expand capacity. A change in business expansion does impact employment and unemployment... Then changes in employment can cause a change in raises, which can cause changes in prices which is inflation... Plus the lenders that lend to business see the flow of new loans change as the employment outlook change. If the costs of doing business for the bank changes or the flow of loans change, they do adjust the rates they pay depositors and the rates they charge borrowers... How long it will take to change the cost of an auto loan? No way to tell. Keep in mind that in complex systems, change can be delayed, and won't move in lock step. For example the price of gas\s doesn't always move the same way a price of a barrel of oil does. |
I'm thinking of getting a new car … why shouldn't I LEASE one? | If you are looking to build wealth, leasing is a bad idea. But so is buying a new car. All cars lose value once you buy them. New cars lose anywhere between 30-60% of their value in the first 4 years of ownership. Buying a good quality, used car is the way to go if you are looking to build wealth. And keeping the car for a while is also desirable. Re-leasing every three years is no way to build wealth. The American Car Payment is probably the biggest factor holding many people back from building wealth. Don't fall into the trap - buy a used car and drive it for as long as you can until the maintenance gets too pricey. Then upgrade to a better used car, etc. If you cannot buy a car outright with cash, you cannot afford it. Period. |
Tax Implications - First 2-Family Rental Property | You should really be talking to a tax adviser (EA/CPA licensed in your State) about taxes and to a lawyer about the liability protection. You won't find answers from neither of theses here. Besides the liability protection, how do these 2 options affect taxes? There's no liability protection difference between the two (talk to a lawyer to verify) since you'll be cosigning them personally either way. In the first case (loan to the LLC) - everything goes on the 1065 and you get the bottom line on K-1 which transfers to you own tax return. In the second case the loan interest is your personal investment expense (Schedule A deduction) while the loan proceeds you moved to the LLC add to your basis. I'd suggest getting the loan directly in the LLC name, if you can. However, the Lawyers seem to agree that this would void the mortgage because of the "Due on Sale" clause in mortgage loans. "Due on sale" may or may not be invoked, but that's a risk you'd be taking, yes. LLC is a separate legal entity (as opposed to a living trust, to which your second quote seems to be referring), so it is definitely a possibility for a lender to call on the loan if you re-title it. |
Does Vanguard grant admiral shares only on a per-account basis? | Yes, each of Vanguard's mutual funds looks only at its own shares when deciding to upgrade/downgrade the shares to/from Admiral status. To the best of my knowledge, if you hold a fund in an IRA as well as a separate investment, the shares are not totaled in deciding whether or not the shares are accorded Admiral shares status; each account is considered separately. Also, for many funds, the minimum investment value is not $10K but is much larger (used to be $100K a long time ago, but recently the rules have been relaxed somewhat). |
How do freight derivatives like Forward Freight Agreements (FFAs) work? | To answer this part of the question: "How can you build an index based on shipping routes - what is the significance of that? Indexes are traditionally built based on companies: e.g. S&P Index is a basket of companies whose price varies. But here you need a basket of FFA contracts from different oil firms (Shell, BP), 5 year Shell FFA's, 10 year shell FFA's. Where do routes enter the picture? Let the tanker any route he feels like." No, you don't get a basket of FFA contracts from given companies (such as Shell and BP). What you get are rates assessed by a panel of brokers for the main tanker routes (especially in the tanker market, there are comparatively few standard routes, because the major oil loading areas are also comparatively few). The panel will assess the spot and future markets on a daily basis, and issue the rates accordingly. |
I'm an American in my mid 20's. Is there something I should be doing to secure myself financially? | On average, you should be saving at least 10-15% of your income in order to be financially secure when you retire. Different people will tell you different things, but really this can be split between short term savings (cash), long term savings (401ks, IRAs, stocks & bonds), and paying down debt. That $5k is a good start on an emergency fund, but you probably want a little more. As justkt said, 6 months' worth is what you want to aim for. Put this in a Money Market account, where you'll earn a little more interest but won't be penalized from withdrawing it when its needed (you may have to live off it, after all). Beyond that, I would split things up; if possible, have payroll deductions going to a broker (sharebuilder is a good one to start with if you can't spare much change), as well as an IRA at a bank. Set up a separate checking account just for rent and utilities, put a month's worth of cash in there, and have another payroll deduction that covers your living expenses + maybe 5% put in there automatically. Then, set up automatic bill payments, so you don't even have to think about it. Check it once a month to make sure there aren't any surprises. Pay off your credit cards every month. These are, by far, the most expensive forms of credit that most people have. You shouldn't be financing large purchases with them (you'll get better rates by taking a personal loan from a bank). Set specific goals for savings, and set up automatic payroll deductions to work towards them. Especially for buying a house; most responsible lenders will ask for 20% down. In today's market, that means you need to write a check for $40k or $50k. While it's tempting to finance up to 100% of the property value, it's also risky considering how volatile markets can be. You don't want to end up owing more on the property than it's worth two years down the road. If you find yourself at the end of the month with an extra $50 or so, consider your savings goals or your current debt instead of blowing it on a toy. Especially if you have long term debt (high balance credit cards, vehicle or property loans), applying that money directly to principal can save you months (or years) paying it back, and hundreds or thousands of dollars of interest (all depending on the details of the loan, of course). Above all, have fun with it :) Think of your personal net worth as you do your Gamer score on the XBox, and look for ways to maximize it with a minimum of effort or investment on your part! Investing in yourself and your future can be incredibly rewarding emotionally :) |
Learning investing and the stock market | I would recommend getting a used set of Chartered Financial Analyst books. The series is a great broad introduction to the most important aspects of investing and the markets. Combining both day-to-day knowledge and fundamental theory. CFA materials include in depth discussions of: After you have a strong base then stop by quant.stackexchange and ask about more specialized books or anything else that interests you. Have fun with your journey. |
Start Investing - France | In france you have several options: A good place to starts with: 1% as of may 2015 interest is low, but's money is 100% liquid (you can withdraw antime). You got slightly superior interest rates, and have to wire at least 45€ a month on it. It gives you lots of advantages if you use it to buy a house. You cannot use the money unless you close the account, so it's not as flexible. You get 2% rates as of may 2015 which is quite good. [If you open this account now, it's only 1% making it not so attractive. Look at Life Insurance Instead.] This one is useless: interest rate is too low. I highly recommend this one. You can open it with 0 cost with several online banks (ing, boursorama, ...) Minimum deposit should be around 1000€. Rate is flexible, but usually higher than what you get with the others. You shouldn't withdraw the money before 8 years (because of taxes, but you can still do it if you need). You can add money on it later if you want. Because of the 8 year duration, it's better to open one as soon as you can, even with the minimum amount. Open an PEL + Livret A + Life insurance. Put the minimum on both PEL + life insurance. Put every thing else on Livret A. If you are 100% sure you don't need some of the livret A money, send it to PEL. [As of 2017, PEL is not so attractive anymore. Bet on the Life Insurance instead, unless your account was open prior to this]. |
How do I enter Canadian tax info from US form 1042-S and record captial gains from cashing in stock options? | I can't give you a specific answer because I'm not a tax accountant, so you should seek advice from a tax professional with experience relevant to your situation. This could be a complicated situation. That being said, one place you could start is the Canada Revenue Agency's statement on investment income, which contains this paragraph: Interest, foreign interest and dividend income, foreign income, foreign non-business income, and certain other income are all amounts you report on your return. They are usually shown on the following slips: T5, T3, T5013, T5013A To avoid double taxation, Canada and the US almost certainly have a foreign tax treaty that ensures you are only taxed in your country of residence. I'm assuming you're a resident of Canada. Also, this page states that: If you received foreign interest or dividend income, you have to report it in Canadian dollars. Use the Bank of Canada exchange rate that was in effect on the day you received the income. If you received the income at different times during the year, use the average annual exchange rate. You should consult a tax professional. I'm not a tax professional, let alone one who specializes in the Canadian tax system. A professional is the only one you should trust to answer your question with 100% accuracy. |
How to calculate money needed for bills, by day | Trying to figure out how much money you have available each day sounds like you're making this more complicated than it needs to be. Unless you're extremely tight and you're trying to squeeze by day by day, asking "do I have enough cash to buy food for today?" and so on, you're doing too much work. Here's what I do. I make a list of all my bills. Some are a fixed amount every month, like the mortgage and insurance premiums. Others are variable, like electric and heating bills, but still pretty predictable. Most bills are monthly, but I have a few that come less frequently, like water bills in my area come every 3 months and I have to pay property taxes twice a year. For these you have to calculate how much they cost each month. Like for the water bill, it's once every 3 months so I divide a typical bill by 3. Always round up or estimate a little high to be safe. Groceries are a little tricky because I don't buy groceries on any regular schedule, and sometimes I buy a whole bunch at once and other times just a few things. When groceries were a bigger share of my income, I kept track of what I spent for a couple of months to figure out an average per month. (Today I'm a little richer and I just think of groceries as coming from my spending money.) I allocate a percentage of my income for contributions to church and charities and count this just like bills. It's a good idea to put aside something for savings and/or paying down any outstanding loans every month. Then I add these up to say okay, here's how much I need each month to pay the bills. Subtract that from my monthly income and that's what I have for spending money. I get paid twice a month so I generally pay bills when I get paid. For most bills the due date is far enough ahead that I can wait the maximum half a month to pay it. (Worst case the bill comes the day after I pay the bills from this paycheck.) Then I keep enough money in my checking account to, (a) Cover any bills until the next paycheck and allow for the particularly large bills; and (b) provide some cushion in case I make a mistake -- forget to record a check or make an arithmetic error or whatever; and (c) provide some cushion for short-term unexpected expenses. To be safe, (a) should be the total of your bills for a month, or as close to that as you can manage. (b) should be a couple of hundred dollars if you can manage it, more if you make a lot of mistakes. If you've calculated your expenses properly and only spend the difference, keeping enough money in the bank should fall out naturally. I think it's a lot easier to try to manage your money on a monthly basis than on a daily basis. Most of us don't spend money every day, and we spend wildly different amounts from day to day. Most days I probably spend zero, but then one day I'll buy a new TV or computer and spend hundreds. Update in response to question What I do in real life is this: To calculate my available cash to spend, I simply take the balance in my checking account -- assuming that all checks and electronic payments have cleared. My mortgage is deducted from my checking every month so I post that to my checking a month in advance. I pay a lot of things with automatic charges to a credit card these days, so my credit card bills are large and can't be ignored. So subtract my credit card balances. Subtract my reserve amount. What's left is how much I can afford to spend. So for example: Say I look at the balance in my checkbook today and it's, say, $3000. That's the balance after any checks and other transactions have cleared, and after subtracting my next mortgage payment. Then I subtract what I owe on credit cards. Let's say that was $1,200. So that leaves $1,800. I try to keep a reserve of $1,500. That's plenty to pay my routine monthly bills and leave a healthy reserve. So subtract another $1,500 leaves $300. That's how much I can spend. I could keep track of this with a spreadsheet or a database but what would that gain? The amount in my checking account is actual money. Any spreadsheet could accumulate errors and get farther and farther from accurate values. I use a spreadsheet to figure out how much spending money I should have each month, but that's just to use as a guideline. If it came to, say, $100, I wouldn't make grandiose plans about buying a new Mercedes. If it came to $5,000 a month than buying a fancy new car might be realistic. It also tells me how much I can spend without having to carefully check balances and add it up. These days I have a fair amount of spending money so when, for example, I recently decided I wanted to buy some software that cost $100 I just bought it with barely a second thought. When my spending money was more like $100 a month, lunch at a fast food place was a big event that I planned weeks in advance. (Obviously, I hope, don't get stupid about "small amounts". If you can easily afford $100 for an impulse purchase, that doesn't mean that you can afford $100 five times a day every day.) Two caveats: 1. It helps to have a limited number of credit cards so you can keep the balances under control. I have two credit cards I use for almost everything, so I only have two balances to keep track of. I used to have more and it got confusing, it was easy to lose track of how much I really owed, which is a set up for getting in trouble. |
Rate of change of beta | This is a useful metric in that it gives you a trust factor on how reliable the beta is for future expectations It is akin to velocity and acceleration First and second order derivatives of distance / time. Erratic acceleration implies the velocity is less trustworthy Same idea for beta |
moving family deposits away from Greece (possibly in UK) | I can't comment about your tax liability in Greece. You will have to pay tax on interest in the UK. If you are earning massive amounts of interest, unlikely with the current interest policies from Merv, then you might be bumped up a tier. The receiving bank may ask for proof of the source of the funds, particularly if it is a fair chunk of change. |
How can I determine which stores are regarded as supermarkets for a rewards credit card? | Credit card companies organize types of businesses into different categories. (They charge different types of businesses different fees.) When a business first sets up their credit card processing merchant account, they need to specify the category. Here is a list of categories that Visa uses. Grocery stores and supermarkets are category number 5411. Other types of businesses, such as the examples you provided in your question, have a different category number. American Express simply looks at the merchant category code for each of your transactions and only gives you rewards for the ones in the grocery store category. It's all automated. They likely don't have a list of every grocery store in the US, and even if they did, they would probably not provide it to the public, for proprietary reasons. If you are in doubt about whether or not a particular store is in the grocery category, you'll just have to charge it to your card and see what happens. Often, the category of transaction will be shown for each transaction on your credit card's website. |
How to Deduct Family Health Care Premiums Under Side Business | No, not on schedule C, better. Its an "above the line" deduction (line 29 on your 1040). Here's the turbo tax article on it. The instructions for this line set certain limitations that you must take into the account, and yes - it is limited to the net profit from the business. One of the following statements must be true. You were self-employed and had a net profit for the year. You were a partner with net earnings from self-employment. You used one of the optional methods to figure your net earnings from self-employment on Schedule SE. You received wages in 2011 from an S corporation in which you were a more-than-2% shareholder. Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2. The insurance plan must be established under your business. Your personal services must have been a material income-producing factor in the business. If you are filing Schedule C, C-EZ, or F, the policy can be either in your name or in the name of the business. |
For an equivalent company security, does it make more sense to trade them in country with dividend tax free? | You might have to pay a premium for the stocks on the dividend tax–free exchanges. For example, HSBC on the NYSE yields 4.71% versus HSBC on the LSE which yields only 4.56%. Assuming the shares are truly identical, the only reason for this (aside from market fluctuations) is if the taxes are more favorable in the UK versus the US, thus increasing demand for HSBC on the LSE, raising the price, and reducing the yield. A difference of 0.15% in yield is pretty insignificant relative to a 30% versus 0% dividend tax. But a key question is, does your country have a foreign tax credit like the US does? If so you (usually) end up getting that 30% back, just delayed until you get your tax return, and the question of which exchange to buy on becomes not so clear cut. If your country doesn't have such a tax credit, then yes, you'll want to buy on an exchange where you won't get hit with the dividend tax. Note that I got this information from a great article I read several months back (site requires free registration to see it all unfortunately). They discuss the case of UN versus UL--both on the NYSE but ADRs for Unilever in the Netherlands and the UK, respectively. The logic is very similar to your situation. |
What is the difference between a stock and a bond? | WilliamKF explained it pretty well, but I want to put it in a more simplistic form: |
Selling Stock - All or Nothing? | Set a good till cancel GTC order, and partial fills will just roll over to the market session if it doesn't fill completely during the first market session It is a very low probability that each share will only be taken one at a time. It isn't a low probability that it will fill in two or three orders, but this is all a factor of how liquid the stocks you bought are. Also your limit order price is also a factor in this |
Tax deductions on empty property | If the building has no income, it also probably has minimal expenses. The heat, water and electricity costs are nearly zero. They are letting the value depreciate, and taking it off the taxes. I also suspect the condition of the building is poor, so any effort to make the building productive would be very costly. Many cities combat this by setting the tax on empty buildings or empty lots at a much higher rate. Or they set the value of the property at a high valuation based on what it could generate. Sometimes this is only targeted at some sections of the city to encourage development. They also offer tax breaks when the owner of a house has the house as their principal residence. |
Should you co-sign a personal loan for a friend/family member? Why/why not? | I know this question has a lot of answers already, but I feel the answers are phrased either strongly against, or mildly for, co-signing. What it amounts down to is that this is a personal choice. You cannot receive reliable information as to whether or not co-signing this loan is a good move due to lack of information. The person involved is going to know the person they would be co-signing for, and the people on this site will only have their own personal preferences of experiences to draw from. You know if they are reliable, if they will be able to pay off the loan without need for the banks to come after you. This site can offer general theories, but I think it should be kept in mind that this is wholly a personal decision for the person involved, and them alone to make based on the facts that they know and we do not. |
Why are real-term bond yields systematically declining, and what does it mean for investors? | Keep in mind there are a couple of points to ponder here: Rates are really low. With rates being so low, unless there is deflation, it is pretty easy to see even moderate inflation of 1-2% being enough to eat the yield completely which would be why the returns are negative. Inflation is still relatively contained. With inflation low, there is no reason for the central banks to raise rates which would give new bonds a better rate. Thus, this changes in CPI are still in the range where central banks want to be stimulative with their policy which means rates are low which if lower than inflation rates would give a negative real return which would be seen as a way to trigger more spending since putting the money into treasury debt will lose money to inflation in terms of purchasing power. A good question to ponder is has this happened before in the history of the world and what could we learn from that point in time. The idea for investors would be to find alternative holdings for their cash and bonds if they want to beat inflation though there are some inflation-indexed bonds that aren't likely appearing in the chart that could also be something to add to the picture here. |
Choosing a vehicle to invest a kid's money on their behalf (college, etc.)? | Roth is currently not an option, unless you can manage to document income. At 6, this would be difficult but not impossible. My daughter was babysitting at 10, that's when we started her Roth. The 529 is the only option listed that offers the protection of not permitting an 18 year old to "blow the money." But only if you maintain ownership with the child as beneficiary. The downside of the 529 is the limited investment options, extra layer of fees, and the potential to pay tax if the money is withdrawn without child going to college. As you noted, since it's his money already, you should not be the owner of the account. That would be stealing. The regular account, a UGMA, is his money, but you have to act as custodian. A minor can't trade his own stock account. In that account, you can easily manage it to take advantage of the kiddie tax structure. The first $1000 of realized gains go untaxed, the next $1000 is at his rate, 10%. Above this, is taxed at your rate, with the chance for long tern capital gains at a 15% rate. When he actually has income, you can deposit the lesser of up to the full income or $5500 into a Roth. This was how we shifted this kind of gift money to my daughter's Roth IRA. $2000 income from sitting permitted her to deposit $2000 in funds to the Roth. The income must be documented, but the dollars don't actually need to be the exact dollars earned. This money grows tax free and the deposits may be withdrawn without penalty. The gains are tax free if taken after age 59-1/2. Please comment if you'd like me to expand on any piece of this answer. |
Responsible investing - just a marketing trick? | A share is just a part ownership of a company. If you buy a share of a green stock in the open market, you now just own part of a green company. Just like if you buy a house, the money you paid moves to the former owner, but what you are getting is a clear asset in return that you now own. Via mutual funds/indexes this can get a little more complicated (voting rights etc tend to go to the mutual/indexing company rather than the holders of the fund), but is approximately the same thing: the fund buys assets on the open market, then holds them, buys more, or sells them on behalf of the fund investors. |
Do I have to repay the First-Time Homebuyers tax credit if I refinance? | The Homebuyers Tax Credit was unrelated to whether or not a mortgage was part of the purchase. You will have no issue with this credit if you refinance. |
Which set of earnings is used to work out the P/E of a stock | This is a note from my broker, CMC Markets, who use Morningstar: Morningstar calculate the P/E Ratio using a weighted average of the most recent earnings and the projected earnings for the next year. This may result in a different P/E Ratio to those based solely on past earnings as reported on some sites and other publications. They show the P/E as being 9.93. So obviously past earnings would usually be used but you would need to check with your source which numbers they are using. Also, as BHP's results just came out yesterday it may take a while for the most recent financial details to be updated. |
Is there any online personal finance software without online banking? | neobudget.com is a website that does exactly what you are describing. It is set up for electronically using the envelope system of budgeting. Disclosure: neobudget was founded by a former coworker of mine. |
Do large market players using HFT make it unsafe for individual investors to be in the stock market? | There's a lot of hype about HFT. It involves computers doing things that people don't really understand and making a bunch of rich guys a bunch of money, and there was a crisis and so we hate rich wall street guys this year, and so it's a hot-button issue. Meh. There's some reason for concern about the safety of the markets, but I think there's also a lot more of people trying to sell you a newspaper. Remember that while HFT may mean there are a lot of trades, the buying and the selling add up to the same thing. Meanwhile, people who buy stock to hold on to it for significant periods of time will still affect the quantity of stock out there on the market, applying pressure to the price, buying and selling at the prices that they think the security is worth. As a result, it's unlikely that high-frequency trading moves the stock price very far from the price that the rest of the market would determine for very long; if it did, the lower-frequency traders could take advantage of it, buying if it's too low and selling if it's too high. How long do you plan to hold a stock? If you're trying to do day-trading, you might have some trouble; these people are competing with you to do the same thing, and have significant resources at their disposal. If you're holding onto your stock for years on end (like you probably should be doing with most stock) then a trivial premium or discount on the price probably isn't going to be a big deal for you. |
Does a disciplined stock investor stick with their original sell strategy, or stay in and make more? | Ask yourself a better question: Under my current investment criteria would I buy the stock at this price? If the answer to that question is yes you need to work out at what price you would now sell out of the position. Think of these as totally separate decisions from your original decisions to buy and at what price to sell. If you would buy the stock now if you didn't already hold a position then you should keep that position as if you had sold out at the price that you had originally seen as your take profit level and bought a new position at the current price without incurring the costs. If you would not buy now by those criteria then you should sell out as planned. This is essentially netting off two investing decisions. Something to think about is that the world has changed and if you knew what you know now then you would probably have set your price limit higher. To be disciplined as an investor also means reviewing current positions frequently and without any sympathy for past decisions. |
How can I get the car refinanced under my name if my girlfriend signed for the loan? | You should have her sell it to you for the amount of the outstanding loan. You take out a loan in your name for the amount (or at least, the amount you have to come up with). You then transfer the title from her to you, just as you would if you were buying the car from someone else. While the title is in her name, she has ownership. This isn't a technicality, this is the explicit legal situation you two have agreed to. |
Where to park money while saving for a car | Nothing's generating a whole lot of interest right now. But more liquid and stable is better (cash or cash-like). But a related question: Why a new car? You can knock thousands of dollars off of the price of a comparable vehicle by buying one that's one or two years old. Your new vehicle loses thousands of dollars in value the moment it goes off the lot. |
Any difference between buying a few shares of expensive stock or a bunch of cheap stock | There is no difference between more shares of a relatively cheaper stock and less shares of a relatively more expensive stock. When you invest in a stock, the percentage increase (or decrease) in the share price results in gains (or losses). This is a fundamental concept of investing. Your question suggests that you would benefit from further research before investing your money. Trading real dollars can be difficult without a strong understanding of the principles involved. Investing your money without a good knowledge base will likely be stressful and could have a discouraging effect if it doesn't go well. Before you open an investment account, read up on investing fundamentals, particularly mutual funds as those can be a great place to start as a new investor. There are many sources of information including books, websites such as http://investor.gov/investing-basics and this website. Don't skip the sections on taxes, as those matter just as much and sometimes more than the simple buying and selling. You might look at tax advantaged accounts, such as 401k's, IRA's, etc. It shouldn't take long but it will be one of the most important things you do as a beginning investor. Everyone has to start here. Understanding the vocabulary and concepts will likely save you time and money throughout your investing life. |
Can stock market gains be better protected under an LLC arrangement? | The thing you get wrong is that you think the LLC doesn't pay taxes on gains when it sells assets. It does. In fact, in many countries LLC are considered separate entities for tax properties and you have double taxation - the LLC pays its own taxes, and then when you withdraw the money from the LLC to your own account (i.e.: take dividends) - you pay income tax on the withdrawal again. Corporate entities usually do not have preferential tax treatment for investments. In the US, LLC is a pass-though entity (unless explicitly chosen to be taxed as a corporation, and then the above scenario happens). Pass-through entities (LLCs and partnerships) don't pay taxes, but instead report the gains to the owners, which then pay taxes as if the transaction was their personal one. So if you're in the US - investing under LLC would have no effect whatsoever on your taxes, or adverse effect if you chose to treat it as a corporation. In any case, investing in stocks is not a deductible expense, and as such doesn't reduce profits. |
What does it mean when Share price and volume sales aren't negatively correlated? | When stocks have a change in price it is because of a TRADE. To have a trade you have to have both a buyer and a seller. When the price of a security is going up there are an equal amount of shares being sold as being bought. When the price of a security is going down there are an equal amount of shares being bought as being sold. There almost always is an unequal amount of shares waiting to be sold compared to the amount waiting to be bought. But waiting shares do not move the price, only when the purchase price and the sale price agree, and a trade occurs, does the price move. So the price does not go down because more shares are being sold. Neither does the price go up because more shares are being bought. |
I'm thinking about selling some original artwork: when does the government start caring about sales tax and income tax and such? | If you sell through an intermediate who sets up the shop for you, odds are they collect and pay the sales tax for you. My experience is with publishing books through Amazon, where they definitely handle this for you. If you can find a retailer that will handle the tax implications, that might be a good reason to use them. It looks like Etsy uses a different model where you yourself are responsible for the sales tax, which requires you to register with your state (looks like this is the information for New York) and pay the taxes yourself on a regular basis; see this link for a simple guide. If you're doing this, you'll need to keep track of how much tax you owe from your sales each month, quarter, or year (depending on the state laws). You can usually be a sole proprietor, which is the easiest business structure to set up; if you want to limit your legal liability, or work with a partner, you may want to look into other forms of business structure, but for most craftspeople a sole proprietorship is fine to start out with. If you do a sole proprietorship, you can probably file the income on a 1040 Schedule C when you do your personal taxes each year. |
Deposit a cheque in an alternative name into a personal bank account (Australia) | Unfortunately, Australian bureocrats made it impossible to register a small business without making the person's home address, full name, date of birth and other personal information available to the whole world. They tell us the same old story about preventing crime, money laundering and terrorism, but in fact it is just suffocating small business in favour of capitalistic behemoths. With so many weirdos and identity thieves out there, many people running a small business from home feel unsafe publishing all their personal details. I use a short form of my first name and real surname for my business, and reguraly have problems cashing in cheques written to this variation of my name. Even though I've had my account with this bank for decades and the name is obviously mine, just a pet or diminitive form of my first name (e.g. Becky instead of Rebecca). This creates a lot of inconvenience to ask every customer to write the cheque to my full name, or make the cheque "bearer" (or not to cross "or bearer" if it is printed on the cheque already). It is very sad that there is protection for individual privacy in Australia, unless you can afford to have a business address. But even in this case, your name, date of birth and other personal information will be pusblished in the business register and the access to this information will be sold to all sorts of dubious enterprises like credit report companies, debt collectors, market researchers, etc. It seems like Australian system is not interested in people being independent, safe, self-sufficient and working for themselves. Everyone has to be under constant surveliance. |
Roth vs. Whole Insurance vs. Cash | You're extremely fortunate to have $50k in CDs, no debt, and $3800 disposable after food and rent. Congrats. Here's how I would approach it. If you see yourself getting into a home in the next couple of years, stay safe and liquid. CDs (depending on the duration) fit that description. Because you have disposable income and you're young, you should be contributing to a Roth IRA. This will build in value and compound over your lifetime, so that when you're in your 70s you'll actually have a retirement. Financial planners love life insurance because that's how they make all their money. I have whole life insurance because its cash value will be part of my retirement. It may also cover my wife if I ever decide to get married. It may or may not make sense for you now depending on how soon you want to buy a home and home expensive they are in your zip code. Higher risk, higher reward- you can count on that. Keep the funds in the United States and don't try to get into any slick financial moves. If you have a school in town, see if you can take an Intro to Financial Planning class. It's extremely helpful for anyone with these kinds of questions. |
Placing bid in market price | Market price is just the bid or offer price of the last sell or buy order in the market. The price that you actually receive or pay will be the price that the person buying the stock off you or selling it to you will accept. If there are no other participants in the market to make up the other side of your order (i.e. to buy off you if you are selling or to sell to you if you are buying) the exchange pays large banks to be "market makers"; they fulfil your order using stocks that they don't want to either buy or sell just so that you get your order filled. When you place an order outside of market hours the order is kept on the broker's order books until the market reopens and then, at market opening time there is an opening "auction" at which orders are matched to opposing orders (i.e. each buy order will be matched with a sell) at a price determined by auction. You will not know what price the order was filled at until it has been filled. If you want to guarantee a price you can do so by placing a limit order that says not to pay more than a certain price for any unit of the stock. |
Can a high down-payment on a house offset the need for proof of income? | It's difficult to provide an exact answer as this will very much depend on the bank & the local regulatory scheme. However as a business owner you should be able to provide incorporation docs, some proof of ownership of the company and last years' financial statements or tax returns, many banks would accept this as a proof of income for the purposes of granting credit. In general in most jurisdictions I can think of, a high downpayment will not remove the need to verify income as the bank needs to feel comfortable that you have the ability to pay the remaining 25% (e.g. how do they know you're not a serially unemployed lottery winner) and if the downpayment is quite large they may want some assurance that you got the money legally (e.g. how do they make sure you're not a drug dealer). So probably regardless of how large a downpayment most banks would probably want some additional proofs of income however what proofs are needed may be more flexible than just a salary stub. I suggest taking a look at what sort of documents you may have on hand that can serve to validate your revenue in some way and contacting a few banks directly to see what options they can provide and whether some custom-tailored arrangement can be made. |
Pensions, annuities, and “retirement” | There are broadly two kinds of pension: final salary / defined benefit, and money purchase. The text you quote above, where it talks about "pension" it is referring to a final salary / defined benefit scheme. In this type of scheme you earn a salary of £X during your working life, and you are then entitled to a proportion of £X (the proportion depends on how long you worked there) as a pension. These types of scheme are relatively rare now (outside the public sector) because the employer is liable for making enough investments into a pot to have enough money to pay everyone's pension entitlements, and when the investments do poorly the liability for the shortfall ends up on the employer's plate. You might have heard about the "black hole in public sector pensions" which is what this refers to - the investments that the government have made to pay public sector workers' pensions has not in fact been sufficient. The other type of scheme is a money purchase scheme. In this scheme, you and/or your employer make payments into an investment pot which is locked away until you retire. Once you retire, that pot is yours but there are restrictions on what you can do with it - you can use it to purchase an annuity (I will give you my £X,000 pension pot in return for you giving me an annual income of £Y, say) and you can take some of it as a lump sum. The onus is on you to make sure that you (and/or your employer) have contributed enough to make a large enough pot to give you the income you want to live on, and to make a sensible decision about what to do with the pot when you retire and what to use it as income. With either type of scheme, you can claim this pension after you reach retirement age, whether or not you are still working. In some schemes you are also permitted to claim the pension earlier than retirement age if you have stopped working - it will depend on the rules of the scheme. What counts as "retirement age" depends on how old you are now (and whether you are male or female) as the government has been pushing this age out as people have been living longer. In addition to both schemes, there is also a "state pension" which is a fixed, non-means-tested, weekly amount paid from government funds. Again you are entitled to receive this after you pass retirement age, whether or not you are still working. |
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