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Why buy insurance? | There's an old saying among commodities producers... If it's likely to happen, but won't kill you, you hedge (save/"self-insure", options, futures). If it's not likely to happen, but would kill you, you insure. Hedging and insuring are both about managing risk. If you feel there is no risk at all, you don't need to do either. But feeling that you have no risk at all is somewhat naive. |
What do brokerage firms do? | Off the top of my head, a broker: While there are stock exchanges that offer direct market access (DMA), they (nearly) always want a broker as well to back the first two points I made. In that case the broker merely routes your orders directly to the exchange and acts as a custodian, but of course the details heavily depend on the exchange you're talking about. This might give you some insight: Direct Market Access - London Stock Exchange |
What does inflation mean to me? | Inflation as defined in the general, has many impacts at a personal level. For example, you say that the reduction in the price of oil has no impact on you. That's absolutely not true, unless you're a hermit living off of the land. Every box or can or jar of food you buy off the shelf of the grocery store has the price of oil baked into it, because it had to get there somehow. High fuel costs for trucks mean increased costs to put food on shelves, which mean increased prices for that food. Even tobacco prices can affect you, because they affect what other people are spending. Demand is always a significant factor in prices, particularly retail prices, and if people are spending more money on tobacco, they're probably spending less on other things - either buying less snacks, for example, or buying cheaper brands of those snacks. So the price of Doritos may drop a bit (or not rise), for example. General inflation also tends to drive raises, particularly in industries with relatively small performance ties to raises. If inflation is 3%, wages need to raise 3% or so in order to keep up, on average; even if your personal cost-of-living went up 0%, or 5%, or 10%, the default wage inflation will be closer to that of the national average. Any raise less than national average is effectively a pay cut (which is one reason why inflation is needed in a healthy economy). So your company probably has a cost-of-living raise everyone gets that's a bit less than inflation, and then good performers get a bump up to a bit more than inflation. You can read more on this topic for a more in-depth explanation. Finally, inflation rates tend to be major factors in stock market movement. Inflation that is too high, or too low, can lead to higher volatility; inflation that is "right" can lead to higher stability. An economy that has consistently "right" inflation (around 2-3% typically) will tend to have more stable stock market in general, and thus more reliable returns from that market. There are many other factors that lead to stock markets rising and falling, but inflation is one very relevant one, particularly if it's not in the "right" zone. |
Historical data files for NYSE/NASDAQ daily open/close price data? | Another possibly more flexible option is Yahoo finance here is an example for the dow.. http://finance.yahoo.com/q/hp?s=%5EDJI&a=9&b=1&c=1928&d=3&e=10&f=2012&g=d&z=66&y=0 Some of the individual stocks you can dl directly to a spreadsheet (not sure why this isn't offer for indexs but copy and paste should work). http://finance.yahoo.com/q/hp?s=ACTC.OB+Historical+Prices |
Is selling only shares you bought with margin on a margin/unsettled cash purchase free ride? | There is no free ride at most brokers. You will likely be charged a margin fee for that trade even though you only held the margin shares for part of one day. The margin fee would be the annual margin interest rate calculated down to a one day holding period,so it would be smaller. Check your broker's policies but most work like this. |
Who can truly afford luxury cars? | I must say, I can't completely agree with the tone of most of these answers. I think there may be a good reason to buy a new car, or a luxurious used car. For years I drove old, second hand cars that were really cheap. and unreliable. I can't count the number of times I was left stranded because my car didn't start, or the alternator burned out. I could have bought more recent models, but I was trying to save money. But in 2010 I found a very low mileage 2008 Smart Car for small money. It was a good deal at the time. It was almost new, having very low mileage, and about 60% of the price of a new, less well appointed Smart. I found out that I really like driving cars that won't break down and leave me stranded in sleet or ice storms. When my wife's Mazda hatchback finally rusted to the point that it wouldn't pass the safety inspection and couldn't be repaired, we bought a new 2013 Toyota Rav4. We are really happy with it. It's probably not a luxury car to you, but having reliable heat and air conditioning seems like luxury to us, and we are happy with our decision. I get the Smart serviced at the Mercedes shop. They have very nice coffee and pastries, and very fast free wifi. |
How to calculate my real earnings from hourly temp-to-hire moving to salaried employee? | This arrangement is a scam to get around certain tax and benefits laws, both State and Federal. I know they can't get away with this with a person-as-contractor, but this "he's not a contractor, he's a business owner" may move it into a gray area. (I used to know this stuff cold, but I've been retired for a while.) The fact that they asked you to do this is at all is, IMNSHO, a Red Flag®. They think that this way they won't be paying 1/2 your FICA, your Workman's Comp, health insurance, overtime, sick leave or vacation time ... you will. A somewhat simplistic rule of thumb for setting contracting rates is to take your targeted annual salary as a full-time, full-benefits employee and double it. So $50,000 becomes $100,000 a year; $25/hour becomes $50/hour. You can tell them that driving to their workplace from your company's location is now a "site visit" and charge them your hourly rate for the one-way commute time. You could also tell them that your company charges 150% for hours worked over 40 hours/week, plus 150% on Saturdays and 200% on Sundays. Your company may also have a minimum 30 days notice of termination with a penalty kicker. Get it all in writing and signed by someone who has the authority to sign it. Also, Get A Lawyer. The most expensive contracts I've ever signed were ones I thought I was smart enough to draw up myself. |
Do you know of any online monetary systems? | I'm not sure, but I think the monetary system of Second Life or World of Warcraft would correspond to what you are looking for. I don't think they are independent of the dollar though, since acquiring liquidity in those games can be done through exchange for real dollars. But there can be more closed systems, maybe Sim type games where this is not the case. I hope this helps. |
How to send money across borders physically and inexpensively, but not via cash? | I assume the same criteria apply for this as your previous question. You want to physically transfer in excess of 50,000 USD multiple times a week and you want the transportation mechanism to be instant or very quick. I don't believe there is any option that won't raise serious red flags with the government entities you cross the boundaries of. Even a cheque, which a person in the comments of OP's question suggests, wouldn't be sufficient due to government regulation requiring banks to put holds on such large amounts. |
What does it mean for a company to have its market cap larger than the market size? | It is ALWAYS possible for a company's valuation in the market to be larger than the market it serves, and in fact it is not uncommon. There's valid argument that Uber would be a good example of this, with a market cap of more than $60 billion. Market cap is the total value of all shares outstanding. Keep in mind that what a company's shares trade for is less a reflection of its past (or, to some degree, even present) revenue activity and more of a speculative bet on what the company will do in the future. |
How can I find out which ETFs has holdings in a particular stock? | This ETFchannel.com page shows which ETFs hold Wells Fargo and you can search other stocks the get the same information on that site. This the same information for Google This even tells you what percentage of an ETF is a particular stock. Be warned that this site is not entirely free. You will be limited to 6 pages in 6 hours unless you pay for a subscription. Additionally ETFdb.com offers a similar tool. |
A guy scammed me, but he gave me a bank account number & routing number. Can I use that to take out what he owes me? | A routing number and account number are on the bottom of every check. If anybody who ever handled your checks or even saw your checks could just withdraw as much money as they wanted, the whole banking system would need to be reworked. In short, just having that info is not enough. Not legally. |
What happens to options if a company is acquired / bought out? | A lot may depend on the nature of a buyout, sometimes it's is for stock and cash, sometimes just stock, or in the case of this google deal, all cash. Since that deal was used, we'll discuss what happens in a cash buyout. If the stock price goes high enough before the buyout date to put you in the money, pull the trigger before the settlement date (in some cases, it might be pulled for you, see below). Otherwise, once the buyout occurs you will either be done or may receive adjusted options in the stock of the company that did the buyout (not applicable in a cash buyout). Typically the price will approach but not exceed the buyout price as the time gets close to the buyout date. If the buyout price is above your option strike price, then you have some hope of being in the money at some point before the buyout; just be sure to exercise in time. You need to check the fine print on the option contract itself to see if it had some provision that determines what happens in the event of a buyout. That will tell you what happens with your particular options. For example Joe Taxpayer just amended his answer to include the standard language from CBOE on it's options, which if I read it right means if you have options via them you need to check with your broker to see what if any special exercise settlement procedures are being imposed by CBOE in this case. |
Historical company performance data | The S&P report (aka STARS report) for each company has 10 years of financial data. These reports are available free at several online brokers (like E-Trade) if you have an account with the brokerage. |
Borrowing 100k and paying it to someone then declaring bankruptcy | Note that in the UK at least this scam - not so dissimilar from what you propose - seems be perfectly legal behaviour: Evidence to date is that both of you can expect to walk away without much consequence. |
Any reason to keep IRAs separate? | I don't know about keeping different rollover IRAs separate. But I know that there is a reason to keep rollover IRAs separate from other traditional IRAs -- if you want to roll them back into a 401(k) in the future, some 401(k)s only allow funds that were rolled over from a 401(k) originally. |
Was this bill forgotten by a medical provider, and do notices need to be sent before collections? | Seems like the straightforward answer is to call the provider and ask. They should be able to tell you if you owe them or not. Unfortunately, with small providers there is always a chance they won't get even that right; I would confirm exactly why they think you don't owe them anything if in fact you don't. Medical providers can go after you for years later, depending on your state; so don't assume just because it's been months that they won't eventually. Smaller providers aren't terribly organized, but they do usually eventually go after most of those who owe them. |
New vending route business, not sure how to determine taxes | You're not paying taxes three times but you are paying three different taxes (or more). Sales tax is a business expense, just like costs of goods sold or interest on a loan. Then, depending on how you structure the business, the net income of the business just hits you personally and you pay income taxes. You can work with a tax person to lend some efficiency to this on a long term basis, but it's not like you pay all the taxes against your gross receipts. Whether or not you can make this profitable is a whole different issue. |
Applying for and receiving business credit | Banks will usually look at 2 years worth of tax returns for issuing business credit. If those aren't available (for instance, for recently formed businesses), they will look at the personal returns of the owners. Unfortunately, it sounds like your friend is in the latter category. Bringing in another partner isn't necessarily going to help, either; with only two partners / owners, the bank would probably look at both owners' personal tax returns and credit histories. It may be necessary to offer collateral. I'm sorry I can't offer any better solutions, but alternative funding such as personal loans from family & friends could be necessary. Perhaps making them partners in exchange for capital. |
What is the best asset allocation for a retirement portfolio, and why? | It's all about risk. These guidelines were all developed based on the risk characteristics of the various asset categories. Bonds are ultra-low-risk, large caps are low-risk (you don't see most big stocks like Coca-Cola going anywhere soon), foreign stocks are medium-risk (subject to additional political risk and currency risk, especially so in developing markets) and small-caps are higher risk (more to gain, but more likely to go out of business). Moreover, the risks of different asset classes tend to balance each other out some. When stocks fall, bonds typically rise (the recent credit crunch being a notable but temporary exception) as people flock to safety or as the Fed adjusts interest rates. When stocks soar, bonds don't look as attractive, and interest rates may rise (a bummer when you already own the bonds). Is the US economy stumbling with the dollar in the dumps, while the rest of the world passes us by? Your foreign holdings will be worth more in dollar terms. If you'd like to work alternative asset classes (real estate, gold and other commodities, etc) into your mix, consider their risk characteristics, and what will make them go up and down. A good asset allocation should limit the amount of 'down' that can happen all at once; the more conservative the allocation needs to be, the less 'down' is possible (at the expense of the 'up'). .... As for what risks you are willing to take, that will depend on your position in life, and what risks you are presently are exposed to (including: your job, how stable your company is and whether it could fold or do layoffs in a recession like this one, whether you're married, whether you have kids, where you live). For instance, if you're a realtor by trade, you should probably avoid investing too much in real estate or it'll be a double-whammy if the market crashes. A good financial advisor can discuss these matters with you in detail. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | A lot of these answers are really weak. The expected value is pretty much the answer. You have to also though, especially as many many millions of tickets are purchased--make part of the valuation the odds of the jackpot being split x ways. So about 1 in 290--> the jackpot needs to be a take-home pot of $580 million for the $2 ticket. Assume the average # of winners is about 1.5 so half the time you're going to split the pot, bringing the valuation needed for the same jackpot to be $870 million. It's actually somewhat not common to have split jackpots because the odds are very bad + many people pick 'favourite numbers'. |
Would it be considered appropriate to use a market order for my very first stock trade? | If you want to make sure you pay at or below a specific price per share, use a limit order. If you want to buy the stock close to the current price, but aren't price sensitive, use a market order. Market orders are typically not a great idea because if you're buying thousands or tens of thousands of shares this can mean a large swing in cost if the market suddenly changes direction. |
Why do investors buy stock that had appreciated? | Imagine how foolish the people that bought Apple at $100 must have felt. It was up tenfold for the $10 it traded at just years prior, how could it go any higher? Stocks have no memory. A stock's earnings may grow and justify the new higher price people are willing to pay. When FB came public, I remarked how I'd analyze the price and felt it was overvalued until its earnings came up. Just because it's gone down ever since, doesn't make it a buy, yet. |
My friend wants to put my name down for a house he's buying. What risks would I be taking? | Wrong way round. Transitional arrangements are non-binding guidelines that the lenders can observe if they choose to. The borrower - like your friend - doesn't get to choose whether to use them or not. Your friend obviously can't afford the property, so if you do this, all I can say is congratulations on buying your new house, and I hope you got a deal on the mortgage. |
Why does the Fed use PCE over CPI? | (the average person doesn't care nor are they affected by how much their employer spends in healthcare) It may be true that the average person doesn't care how much their employer spends on healthcare, but it's not true that we aren't affected. From an employer's perspective, healthcare, wages, and all other benefits are part of the cost of having an employee. When healthcare goes up, it increases the total employee cost. Employers can handle this in several ways. They could reduce the amount they give investors (as dividends, stock buybacks, etc.). But then the stock is worth less and they have to make up the money somewhere else. They could pass the expense on to customers. But then the loss in business can easily cost more than the revenue raised. They can cut wages or other benefits. Then the average person will start caring...and might get a different job. (I found this article saying that 12M households spend >=50% of income on rent, so I'm assuming that an even greater number spend more than the recommended 30%, which means rent should be weighted as high as it is in CPI.) According to the census, that's only about 10% of households. It also notes that 64.4% of households are owner-occupied. They don't pay rent. The CPI makes up a number called owner's equivalent rent for those households to get to the higher percentage. The CPI is intended for things like wages. This makes it a good choice for a cost of living adjustment, but it doesn't quite represent the overall economy. And for investments, it's the broader economy that matters. Household consumption is less important. What the Fed says. |
How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap! | I came across an article posted at Squawkfox last week. It's particularly relevant to answering this question. See 10 Ways to Cut Your Fitness Membership Costs. Here's an excerpt: [...] If you’re in the market for a shiny new gym membership, it may be wise to read the fine print and know your rights before agreeing to a fitness club contract. No one wants to be stuck paying for a membership they can no longer use, for whatever reason. But if you’re revved and ready to burn a few calories, here are ten ways to get fitter while saving some cash on a fitness club or gym membership. Yay, fitness tips! [...] Check it out! |
Pay for a cheap car or take out a loan? | If you buy a new car, the odds that it will require repairs are fairly low, and if it does, they should be covered by the warranty. If you buy a used car, there is a fair chance that it will need some sort of repairs, and there probably is no warranty. But think about how much repairs are likely to cost. A new car these days costs like $25,000 or more. You can find reasonably decent used cars for a few thousand dollars. Say you bought a used car for $2,000. Is it likely that it will need $23,000 in repairs? No way. Even if you had to make thousands of dollars worth of repairs to the used car, it would almost certainly be cheaper than buying a new car. I've bought three used vehicles in the last few years, one for me, one for my son, and one for my daughter. I paid, let's see, I think between $4,000 and $6,000 each. We've had my son's car for about 9 months and to date had $40 in repairs. My daughter's car turned out to have a bunch of problems; I ended up putting maybe another $2,000 into it. But now she's got a car she's very happy with that cost me maybe $6,000 between purchase and repairs, still way less than a new car. My pickup had big time problems, including needing a new transmission and a new engine. I've put, hmm, maybe $7,000 into it. It's definitely debatable if it was worth replacing the engine. But even at all that, if I had bought that truck new it would have cost over $30,000. Presumably if I bought new I would have had a nicer vehicle and I could have gotten exactly the options I wanted, so I'm not entirely happy with how this one turned out, but I still saved money by buying used. Here's what I do when I buy a used car: I go into it expecting that there will be repairs. Depending on the age and condition of the car, I plan on about $1000 within the first few months, probably another $1000 stretched out over the next year or so. I plan for this both financially and emotionally. By financially I mean that I have money set aside for repairs or have available credit or one way or another have planned for it in my budget. By emotionally I mean, I have told myself that I expect there to be problems, so I don't get all upset when there are and start screaming and crying about how I was ripped off. When you buy a used car, take it for granted that there will be problems, but you're still saving money over buying new. Sure, it's painful when the repair bills hit. But if you buy a new car, you'll have a monthly loan payment EVERY MONTH. Oh, and if you have a little mechanical aptitude and can do at least some of the maintenance yourself, the savings are bigger. Bear in mind that while you are saving money, you are paying for it in uncertainty and aggravation. With a new car, you can be reasonably confidant that it will indeed start and get you to work each day. With a used car, there's a much bigger chance that it won't start or will leave you stranded. $2,000 is definitely the low end, and you say that that would leave you no reserve for repairs. I don't know where you live or what used cars prices are like in your area. Where I live, in Michigan, you can get a pretty decent used car for about $5,000. If I were you I'd at least look into whether I could get a loan for $4,000 or $5,000 to maybe get a better used car. Of course that all depends on how much money you will be making and what your other expenses are. When you're a little richer and better established, then if a shiny new car is important to you, you can do that. Me, I'm 56 years old, I've bought new cars and I've bought used cars and I've concluded that having a fancy new car just isn't something that I care about, so these days I buy used. |
Is it advisable to go for an auto loan if I can make the full payment for a new car? | What percentage of your savings is the full car payment? If it's a significant chunk, then I'd finance some of the cost of the car in order to maintain liquidity. |
What are the consequences of IRS “reclassification” on both employer and employee? | You are confusing entirely unrelated things. First the "profit distribution" issue with Bob's S-Corp which is in fact tax evasion and will probably trigger a very nasty audit. Generally, if you're the sole employee of your own S-Corp, and the whole S-Corp income is from your own personal services, as defined by the IRS - there's no profit there. All the net income from such a S-Corp is subject to SE tax, either through payroll or through your K-1. Claiming anything else would be lying and IRS is notorious for going after people doing that. Second - the reclassification issue. The reason employers classify employees as contractors is to avoid payroll taxes (which the IRS gets through Bob's S-Corp, so it doesn't care) and providing benefits (that is Bob's problem, not the IRS). So in the scenario above, the IRS wouldn't care whose employee Bob is since Bob's S-Corp would have to pay all the same payroll taxes. The reclassification is an issue when employees are abused. See examples of Fedex drivers, where they're classified as contractors and are not getting any benefits, spend their own money on the truck and maintenance, etc. The employees are the ones who sued for reclassification, but in this case the IRS would be interested as well since a huge chunk of payroll taxes was not paid (driver's net is after car maintenance and payments, not before as it would be if he was salaried). So in your scenario reclassification is not as much a concern to Bob as his tax evasion scheme claiming earnings from performing personal services as "profits from S-Corp". A precedent to look at, as I mentioned elsewhere, would be the Watson v Commissioner case. |
Pay off car loan entirely or leave $1 until the end of the loan period? | what you aim to do is a great idea and it will work in your favor for a number of reasons. First, paying down your loan early will save you lots in interest, no brainer. Second, keeping the account open will improve your credit score by 1) increases the number of installment trade lines you have open, 2)adds to your positive payment history and 3) varies your credit mix. If your paid your car off you will see a DROP in your credit score because now you have one less trade line. To address other issues as far as credit scoring, it does not matter(much) for your score if you have a $1000 car loan or a $100,000 car loan. what matters is whether or not you pay on time, and what your balance is compared to the original loan amount. So the quicker you pay DOWN the loans or mortgages the better. Pay them down, not off! As far how the extra payments will report, one of two things will happen. Either they will report every month paid as agreed (most likely), or they wont report anything for a few years until your next payment is due(unlikely, this wont hurt you but wont help you either). Someone posted they would lower the amount you paid every month on your report and thus lower your score. This is not true. even if they reported you paid $1/ month the scoring calculations do not care. All they care is whether or not you're on time, and in your case you would be months AHEAD of time(even though your report cant reflect this fact either) HOWEVER, if you are applying for a mortgage the lower monthly payment WOULD affect you in the sense that now you qualify for a BIGGER loan because now your debt to income ratio has improved. People will argue to just pay it off and be debt free, however being debt free does NOT help your credit. And being that you own a home and a car you see the benefits of good credit. You can have a million dollars in the bank but you will be denied a loan if you have NO or bad credit. Nothing wrong with living on cash, I've done it for years, but good luck trying to rent a car, or getting the best insurance rates, and ANYTHING in life with poor credit. Yeah it sucks but you have to play the game. I would not pay down do $1 though because like someone else said they may just close the account. Pay it down to 10 or 20 percent and you will see the most impact on your credit and invest the rest of your cash elsewhere. |
Why would this FHA refinance cause my mortgage insurance payment to increase so much? | The PMI premium you pay is dependent on a very large number of variables in the finance market. Mortgage insurance, at the higher inter-bank levels, is handled with credit default swaps (the ones you've been hearing about on the news for the past 4 years), where the lender bundles a block of mortgages, takes them to a guarantor like AIG or Freddie Mac, and says "We bet you that these mortgages will default this month, because the homeowners have little or no equity to deter them; if we win, you agree to swap these debts for their current face value". The lender examines the mortgages, calculates the odds of a default severe enough that the bank would come to collect, using complex environmental heuristics, multiplies by the value of the potential payout, adds a little for their trouble, and says "well, we'll take that bet if you pay us $X". The bank takes the deal, then divvies up that cost among the mortgages and bills the homeowner for their share. The amount you pay for PMI can therefore depend on pretty much anything in this entire process; the exact outstanding amount and equity status of your loan, the similar status of other mortgages your loan will be bundled with for assessment, who the guarantor is, what exact heuristic they use to come up with an amount, the weighting the bank uses to divvy it up, and how much they actually pass on to you. Most of these same variables are at play when you shop for actual insurance for your car or home, which is why your premiums will go up or down with the same insurer and why someone else always seems to have a better deal (pretty much every insurer can say that "drivers who switched saved an average of $X"; of course they did, otherwise they wouldn't have switched). Thinking of it in those terms, it's easy to see how this number can vary widely based on numbers you can't see. You're free to say no, and it will cost you nothing right up until you sign something that says you agree to be penalized for saying no. While the overall amount of the payments does decrease, the PMI has gone up, and that's money you'll never see again just like interest (except you can deduct interest; not PMI). I would do the tax math; find out how much you could deduct over the next year in interest on your current loan, then on their proposed terms, and what the resulting tax bills will be from both. You may save monthly only to pay more than you saved to Uncle Sam at the end of the year. You're also free to negotiate. The worst they can do is stay firm on their offer, but they may take a second look and say "you're right, that PMI is rather high, we'll try again and see if we can do better". They can either negotiate with their insurer, or they can eat some of the PMI cost that they're currently passing on to you. |
Does financing a portfolio on margin affect the variance of a portfolio? | Financing a portfolio with debt (on margin) leads to higher variance. That's the WHOLE POINT. Let's say it's 50-50. On the downside, with 100% equity, you can never lose more than your whole equity. But if you have assets of 100, of which 50% is equity and 50% is debt, your losses can be greater than 50%, which is to say more than the value of your equity. The reverse is true. You can make money at TWICE the rate if the market goes up. But "you pay your money and you take your chances" (Punch, 1846). |
How does the U.S. wash sale replacement stock rule work? | Edited: Pub 550 says 30 days before or after so the example is ok - but still a gain by average share basis. On sale your basis is likely defaulted to "average price" (in the example 9.67 so there was a gain selling at 10), but can be named shares at your election to your brokerage, and supported by record keeping. A Pub 550 wash might be buy 2000 @ 10 with basis 20000, sell 1000 @9 (nominally a loss of 1000 for now and remaining basis 10000), buy 1000 @ 8 within 30 days. Because of the wash sale rule the basis is 10000+8000 paid + 1000 disallowed loss from wash sale with a final position of 2000 shares at 19000 basis. I think I have the link at the example: http://www.irs.gov/publications/p550/ch04.html#en_US_2014_publink100010601 |
How to sell a stock in a crashing market? | It is typically possible to sell during a crash, because there are enough people that understand the mechanics behind a crash. Generally, you need to understand that you don't lose money from the crash, but from selling. Every single crash in history more than recovered, and by staying invested, you wouldn't have lost anything (this assumes you have enough time to sit it out; it could take several years to recover). On the other side of those deals are people that understand that, and make money by buying during a crash. They simply sit the crash out, and some time later they made a killing from what you panic-sold, when it recovers its value. |
Is owning ADR share for a good idea for long term investor | Usually the ADR fee comes out of dividend payments and is modest. The ADR that I am most familiar with (Vodafone - VOD) pays dividends twice a year and deducts either $0.02 or $0.01 per share. IMO, the ADR fee is not really a material factor. ADRs do have some disadvantages though: |
Would it make sense to buy a rental property as an LLC and not in my own name? | As far as the spam mail goes, I own a rental (in Connecticut) and live in Massachusetts, I get very little mail related to this property. I view this as a non-compelling reason. Your other reasons pick up quick in value. The protection from the rest of your assets is helpful, and the one con for most is the inability to get a loan with such a structure, but in your case, a cash purchase is mentioned. I don't know what the fees are to start an LLC, but overall, I believe the pros outweigh the cons. Yes, your Pro 4 looks good, an ongoing business with a track record will help the next purchase. |
What is “beta” for an investment or a portfolio, and how do I use it? | Beta is an indication of a Stock's risk with respect to the market. For instance if a stock had a beta of 1 it means it is in tandem with the S&P 500. If it is more than 1, the stock is volatile. If it is less than 1, it implies market movement doesn't affect this stock much. Tech stocks and small cap stocks have high beta, utilities have low beta. (In general, not always). Hope this helps - I've tried to explain it in very simple terms! |
Where should I invest my savings? | Basically the first thing you should do before you invest your money is to learn about investing and learn about what you want to invest in. Another thing to think about is that usually low risk can also mean low returns. As you are quite young and have some savings put aside you should generally aim for higher risk higher return investments and then when you start to reach retirement age aim for less risky lower return investments. In saying that, just because an investment is considered high risk does not mean you have to be exposed to the full risk of that investment. You do this by managing your risk to an acceptable level which will allow you to sleep at night. To do this you need to learn about what you are investing in. As an example about managing your risk in an investment, say you want to invest $50,000 in shares. If you put the full $50,000 into one share and that share price drops dramatically you will lose a large portion of your money straight away. If instead you spent a maximum of $10,000 on 5 different shares, even if one of them falls dramatically, you still have another 4 which may be doing a lot better thus minimising your losses. To take it one step further you might say if anyone of the shares you bought falls by 20% then you will sell those shares and limit your losses to $2000 per share. If the worst case scenario occurred and all 5 of your shares fell during a stock market crash you would limit your total losses to $10,000 instead of $50,000. Most successful investors put just as much if not more emphasis on managing the risk on their investments and limiting their losses as they do in selecting the investments. As I am not in the US, I cannot really comment whether it is the right time to buy property over there, especially as the market conditions would be different in different states and in different areas of each state. However, a good indication of when to buy properties is when prices have dropped and are starting to stabilise. As you are renting at the moment one option you might want to look at is buying a place to live in so you don't need to rent any more. You can compare your current rent payment with the mortgage payment if you were to buy a house to live in. If your mortgage payments are lower than your rent payments then this could be a good option. But whatever you do make sure you learn about it first. Make sure you spend the time looking at for sale properties for a few months in the area you want to buy before you do buy. This will give you an indication of how much properties in that area are really worth and if prices are stable, still falling or starting to go up. Good luck, and remember, research, research and more research. Even if you are to take someone elses advice and recommendations, you should learn enough yourself to be able to tell if their advice and recommendations make sense and are right for your current situation. |
Is a robo-adviser worth the risk? | If you are looking for an advisor to just build a portfolio and then manage it, a robo-advisor can be beneficial (especially if the alternative is doing it your self, assuming that you are not well versed in the markets). The primary risk with one is that it does not build a portfolio that accurately represents your needs and risk tolerance. Some firms base the number of questions they ask you on sign up based not on what is needed to get a good profile, but on how many before people decide that it is too much hassle and bail. That usually results in poorer profiles. Also a live advisor may be better at really getting at your risk tolerance. Many of day our risk tolerance is one thing but in reality we are not so risk tolerant. Once the profile is built. The algorithms maintain your portfolio on a day by day basis. If rebalancing opportunities occur they take advantage of it. The primary benefit of a robo-advisor is lower fees or smaller minimum account balances. The downside is the lack of human interaction and financial advise outside of putting together a portfolio. |
Can I get a tax deduction for PMI? | No. And I'll let my good friend and fellow blogger Kay Bell answer in some detail, in her article Deducting private mortgage insurance. |
My university has tranfered me money by mistake, and wants me to transfer it back | Confirming whether the payment was an error The simplest method is to confirm manually with the University whether the payment was a mistake and satisfy that between yourselves. If you're concerned it's fraudulant, I recommend calling the University finance office on a phone number you find on their website, or call one of the people you know. Reversing the payment To formally reverse the payment, I'd check your Product Disclosure Statement on your account with the bank. There's almost always a fee involved where a payment is reversed. It's probably easiest to just issue the payment back to the university to an agreed BSB/Account Number. |
How can I find if I can buy shares of a specific company? | Hmm... Well there are several ways to do that: Go to any bank (or at the very least major ones). They can assist you with buying and/or selling stocks/shares of any company on the financial market. They keep your shares safe at the bank and take care of them. The downside is that they will calculate fees for every single thing they do with your money or shares or whatever. Go to any Financial broker/trader that deals with the stock market. Open an account and tell them to buy shares from company "X" and keep them. Meaning they won't trade with them if this is what you want. Do the same as point 2, but on your own. Find a suitable broker with decent transaction fees, open an account, find the company's stock code and purchase the stocks via the platform the broker uses. |
Will paying off my car early hinder my ability to build credit? | No. Credit scores are primarily built by doing the following: To build credit, get a few major credit cards and a couple of store cards. Use one of them to make routine purchases like gas and groceries. Pay them on time every month. You're good to go. I would hate to sell stocks to pay off a loan -- try finding a better loan. If you financed through the dealer, try joining a credit union and see if you can get a better rate. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | No It's not a loan. It's an equity investment. Think of it as a business. The parents bought 75% of the equity with $115K, and are entitled to 75% of the sale proceeds, should you someday liquidate the business (i.e. selling the house). The $500 per month is just business revenue and is paid to your parents as a dividend. Imagine you rent it out to your self and charge a $666.66 rent - you take 25% of that back and give your parents the rest. Like any equity investment, the risk for them is that if the value of the house goes down, they will have to shoulder the loss. And you are right, there is no way to build equity. You already sold that to your parents. |
Should I really pay off my entire credit card balance each month or should I maintain some balance? | I think you got the message mixed up a little: Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. What's typically reported to the credit bureaus, and thus calculated into your scores, are the balances reported on your last statements. (That doesn't mean paying off your balances each month isn't financially smart -- it is -- just that the credit scores don't care.) You typically can increase your scores by limiting your charges to 30% or less of a card's limit. -- from 7 Ways to Fix Your Credit Score In other words, ALWAYS pay off your balance if you can. But don't fill up your card to the max of your credit limit each month. i.e. if your credit limit is $5000, only spend $2000 each month. |
When can we exercice an option? | American options (like those on ADBE) can be exercised by the holder anytime before expiration. They will be exercised automatically at expiration if they are in the money. However, if there is still time before expiration (as in this case), and they are not extremely in the money, there is probably extrinsic value to the option, and you should sell it, not exercise it. European options are only automatically exercised at expiration, and only if they are in the money. These are usually cash settled on products like SPX or VIX. They can not be exercised before expiration, but can be sold anytime. |
What's the best application, software or tool that can be used to track time? | The best one I've found is TimeSnapper, I have the worst memory but this basically allows me to visually play back the day. It has a bunch of reporting functionality too. |
Can Per Diem deductions include family travel, meals and housing? | You cannot deduct anything. Since you're actually moving, your tax home will move with you. You can only deduct the moving expenses (actual moving - packing, shipping, and hotels while you drive yourself there). |
What is my next step with investing, given a signing bonus of restricted stock units? | Coincidentally just read a nice post on this topic: http://thefinancebuff.com/no-tax-advantage-in-rsu.html In short, sell the stock as soon as it vests and treat it as a cash bonus. Assuming you're in the US and the stock is possible to sell (public company, no trading window restrictions, you have no material nonpublic information, etc.) What do you do with a cash bonus? If you have no savings, an emergency fund would be good, then start on retirement savings perhaps... it sounds a bit like you could use some broad general financial planning info, my favorite book for that is: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/B0013L2ED6 One exception to selling immediately could be if the company stock is hugely undervalued, but it probably isn't, and it's probably too hard to determine. |
Can my spouse be the primary signer on my car's loan? | Go to your local bank or credit union before talking to a dealership. Ask them if putting both names on the loan makes a difference regarding rates and maximum loan you qualify for. Ask them to run the loan application both ways. Having both names on the loan helps build the credit of the spouse that has a lower score. You may find that both incomes are needed for a car loan if the couple has a mortgage or other joint obligations. The lender will treat the entire mortgage payment or rent payment as a liability against the person applying for the loan, they won't split the housing payment in half if only one name will be on the car loan. Therefore sometimes the 2nd persons income is needed even if their credit is not as good. That additional income without a significant increase in liabilities can make a huge difference regarding the loan they can qualify for. Once the car is in your possession, it doesn't matter who drives it. In general the insurance company will put both spouses as authorized drivers. Note: it is almost always better to ask your bank or credit union about a car loan before going to the dealership. That gives you a solid data point regarding a loan, and removes a major complexity to the negotiations at the dealership. |
How to transfer money to yourself internationally? | I use XE.com for almost the same purpose. They have free transfer options, such as ACH withdrawals and deposits. I normally do a online bill payment through my international bank to XE, and have them deposit it in the US via ACH. It takes 1-3 business days, and there's no fee beyond their small percentage (about 1.25%) on top of the exchange rate. |
In the stock market, why is the “open” price value never the same as previous day's “close”? | The two answers so far are right, but there's a third factor - for many stocks, there's after hours trading. So the official 4PM close is not what the stock's last trade was when they open again. Regardless, even that after hour price is not the starting point as Muro points out. |
How can a freelancer get a credit card? (India) | Typically Banks look for a steady source of income or savings based on which they issue a credit card. If you can't show that build a cash balance and show it. For Example if you have an PPF account with say SBI, they issue you a card with a limit of around 50% of the balance in PPF. No other documentation is required. Similarly if you have Fixed Deposits for a large amount quite a few Banks would give you a Credit Card. My wife has a credit card because she had a good balance [around 100,000 INR] for around a year, the Bank kept calling her and offered her a card. |
Is Real Estate ever a BAD investment? If so, when? | Real estate is a lousy investment because: Renting a home and buying a home, all else being equal, are pretty similar in costs in the long term (if you can force yourself to invest the would-be down payment). So, buy a home if you want to enjoy the benefits of home ownership. Buy a home if you need to hedge against rising housing prices (e.g. you're on a fixed income and couldn't cope if rent increased a bunch when the economy heated up). Maybe buy a home if you're in a high tax bracket to save yourself from being taxed on your imputed rent, if it works out that way (consult your financial advisor). But don't consider it a really great investment vehicle. Returns are average and the risk profile isn't that attractive. |
Where can I find all public companies' information? | Here are some approaches you may value: Wolfram Alpha This is a search engine with a difference. It literally is connected to thousands of searchable databases, including financial databases. http://www.wolframalpha.com/input/?i=list+of+public+companies+ Just keep clicking the "more" button until you have them all.You can also get great company specific information there: http://www.wolframalpha.com/input/?i=NYSE%3ADIS&lk=1&a=ClashPrefs_*Financial.NYSE%3ADIS- Just keep clicking the "more" button until you have them all.Then the company it'self will have great information for investors too: [http://thewaltdisneycompany.com/investors][3] (Just keep clicking the "more" button until you have them all.) Regards, Stephen |
Is there a financial product that allows speculation on GDP? | The closest thing that you are looking for would be FOREX exchanges. Currency value is affected by the relative growth of economies among other things, and the arbritrage of currencies would enable you to speculate on the relative growth of an individual economy. |
Is there a difference between buying few shares of an expensive stock vs many shares of an inexpensive one? | One difference is the bid/ask spread will cost you more in a lower cost stock than a higher cost one. Say you have two highly liquid stocks with tiny spreads: If you wanted to buy say $2,000 of stock: Now imagine these are almost identical ETFs tracking the S&P 500 index and extrapolate this to a trade of $2,000,000 and you can see there's some cost savings in the higher priced stock. As a practical example, recently a popular S&P 500 ETF (Vanguard's VOO) did a reverse split to help investors minimize this oft-missed cost. |
Investment time horizon: When is it acceptable to withdraw money from investments? | shouldn't withdraw stock investments for at least 5 years would be better re-phrased as: "don't invest money in stocks if you (really) need it within next few years". The underlying principle is: stocks are one of the higher-risk investment classes out there. While that's exactly what you want over a long time horizon (longer than the ebb and flow of the broader economy); if you know you'll definitely have to withdraw $50k (or any large chunk) of it within just a few years, it's possible that a great long-term vehicle like stocks, could actually rob you of money on a shorter time horizon. So if you want to start a business 2 years from now, you'll probably want to retain some of that $300k initial pile in lower-risk investment vehicles (e.g. bonds, CDs, certain ETFs and mutual funds aimed at "capital preservation", etc). That said, interest rates are so low, that if you're flexible with how much money you'll need to start that business, I'd probably keep as much as you can stomach in diversified stocks (per your original plan). |
Is Mint allowed to share user data with other Intuit entities? | I wound up asking Mint over email so I'll share the answer I received: Thank you for contacting Mint.com. From my understand you want to know if Mint can transfer data to other Intuit products and vice versa. Let me address your concern based from what I can see on my tools. Upon confirming, while Mint and other Intuit products are under the same company, Mint.com is not yet integrated to other Intuit products. We’d like to thank you though for giving the idea to us. With this, we would know which future enhancements will our customers appreciate. We have forwarded your request/suggestion to our Product and Development team for their review. At this time though, we can't make any guarantee that your request/suggestion will get implemented as we must balance customer demand with resources and business objectives. Oops... |
How do day-traders or frequent traders handle their taxes? | There are two ways to handle this. The first is that the better brokers, such as Charles Schwab, will produce summaries of your gains and losses (using historical cost information), as well as your trades, on a monthly and annual basis. These summaries are "ready made" for the IRS. More brokers will provide these summaries come 2011. The second is that if you are a "frequent trader" (see IRS rulings for what constitutes one), then they'll allow you to use the net worth method of accounting. That is, you take the account balance at the end of the year, subtract the beginning balance, adjust the value up for withdrawals and down for infusions, and the summary is your gain or loss. A third way is to do all your trading in say, an IRA, which is taxed on distribution, not on stock sales. |
How do I invest and buy/sell stocks? What does “use a broker” mean? | Some good answers already, but let me add a TL:DR version. Brokers work like a special type of bank account where you can deposit or withdraw money. The major difference is that they also give you the ability to buy/sell investments with the money in your account which you can do by either calling them or using their website. Important: Many investments you will make through a broker(e.g. stocks) are not insured against losing value like the money in your bank account. |
online personal finance software that I can host myself | You can use www.mint.com for most of your requirements. It works great for me, it's free and I'd say is secure. Hosting that kind of service just for your will be time-consuming and not necessarily more secure than most of the stuff that is readily available out there. Good luck. |
Are Index Funds really as good as “experts” claim? | Why would it not make more sense to invest in a handful of these heavyweights instead of also having to carry the weight of the other 450 (some of which are mostly just baggage)? First, a cap-weighted index fund will invest more heavily in larger cap companies, so the 'baggage' you speak of does take up a smaller percentage of the portfolio's value (not that cap always equates to better performance). There are also equal-weighted index funds where each company in the index is given equal weight in the portfolio. If you could accurately pick winners and losers, then of course you could beat index funds, but on average they've performed well enough that there's little incentive for the average investor to look elsewhere. A handful of stocks opens you up to more risk, an Enron in your handful would be pretty devastating if it comprised a large percentage of your portfolio. Additionally, since you pay a fee on each transaction ($5 in your example), you have to out-perform a low-fee index fund significantly, or be investing a very large amount of money to come out ahead. You get diversification and low-fees with an index fund. |
Is there a Canadian credit card which shows holds? | It's not so much a credit card, but a financial institution's online platform that either provides this functionality or not. The following Canadian financial institutions show an itemized list of pre-authorized transactions (not an exhaustive list): The following institutions show a total value of pre-authorized transactions: Most other institutions show the available credit (e.g. Chase Financial used by Amazon Rewards), which give an indication of how much you have to spend. By subtracting the current balance and the available balance from the total credit limit, you can get an indication of the total amount of pre-authorized transactions. Example: $1000 - $500 - $400 = $100 is the amount of pre-authorized transactions. From TD's EasyWeb demo (http://tdeasywebdemo.com/v2/#/en/PFS/accounts/activity/chq), it appears that they don't include pre-authorized transactions in the Available Credit. You can verify for yourself by logging in to online banking after you make a purchase and comparing the Available Credit to [Credit Limit - Current Balance]. If it is equal, then they don't include, if it is different (most likely for the value of the transaction), then they do. |
If I'm going to start doing my own taxes soon, do I need to start keeping receipts for everything? | The other reason you might want to keep receipts is if you do any freelancing or contract work, for your business expenses. You can take a picture of the receipts with your phone, or scan them - you don't have to keep the paper copies. |
Where do short-term traders look for the earliest stock related news? | There's a whole industry devoted to this. Professionals use Bloomberg terminals. High Frequency Traders have computers read news feeds for them. Amateurs use trading consoles (like Thinkorswim) to get headlines quickly on stocks. |
How credible is Stansberry's video “End of America”? | I know nothing about the guy, but I think the "premium" products (Penny stock recommendations, a newsletter devoted to earning 12% per year, every year, etc) sold by his firm speak for themselves. |
Does the profit of a company directly affect its stock or indirectly by causing people to buy or sell? | The short answer to your question is yes. Company performance affects stock price only through investors' views. But note that selling for higher and lower prices when the company is doing well or poorly is not an arbitrary choice. A stock is a claim on the future cash flows of the firm, which ultimately come from its future profits. If the company is doing well, investors will likely expect that there will large cash flows (dividends) in the future and be willing to pay more to hold it (or require more to sell it). The price of a stock is equal what people think the future dividends are worth. If market participants started behaving irrationally, like not reacting to changes in the expected future cash flows, then arbitrageurs would make a ton of money trading against them until the situation was rectified. |
Should I sell my stocks when the stock hits a 52-week high in order to “Buy Low, Sell High”? | Buy low, sell high. I think a lot of people apply that advice wrongly. Instead of using this as advice about when to buy and when to sell, you should use it as advice about when not to buy and when not to sell. Don't buy when P/Es cannot support the current stock price. Don't sell when stocks have already fallen due to a market panic. Don't follow the herd or you will get trampled when they reverse direction in a panic. If you are smart enough to sell ahead of the panics, more power to you, but you should be using more than a 52-week high on a graph to make that decision. |
Are credit cards not viewed as credit until you miss one payment? | I can't think of any conceivable circumstance in which the banker's advice would be true. (edit: Actually, yes I can, but things haven't worked that way since 1899 so his information is a little stale. Credit bureaus got their start by only reporting information about bad debtors.) The bureaus only store on your file what gets reported to them by the institution who extended you the credit. This reporting tends to happen at 30, 60 or 90-day intervals, depending on the contract the bureau has with that institution. All credit accounts are "real" from the day you open them. I suspect the banker might be under the misguided impression the account doesn't show up on your report (become "real") until you miss a payment, which forces the institution to report it, but this is incorrect-- the institution won't report it until the 30-day mark at the earliest, whether or not you miss a payment or pay it in full. The cynic in me suspects this banker might give customers such advice to sabotage their credit so he can sell them higher-interest loans. UDAAP laws were created for a reason. |
Are traders 100% responsible for a stock's price changes? | Yes traders, living or algorithmic, are the only direct factors that can cause a change in the price of a marketable item. Traders can be affected by news, broken exchanges ;), emotional cycles, lunar cycles, time the trader goes to lunch (or a power cycle if you are an algo running on that unfortunate OS), anything. |
What exactly is a “derivative”? | A derivative in finance is simply any asset whose value is based on the value of another asset or based on the value of a group of assets. A derivative contract is a type of contract (usually a 'standardized contract') with specific payout instruction based on the price changes of a different asset. The basic idea is that it becomes easier to make a claim to an asset or property (and profit from this claim), without needing to physically transfer it (or even the title to said asset), and use much less capital to do so (reduce risk). They become problematic when multiple people may have claims to the real asset, or when the value of the derivatives changes very quickly or are hard to calculate. There are also liquidity problems the further you get from the real asset. This is not a problem for all kinds of derivatives contracts. And you must recognize that derivatives are used colloquially in a way that has nothing to do with reality to cause fear in people/investors that are not financially savvy. Many derivatives also have dubious or no economic purposes such that regulators don't allow them to be traded since they can't see how it is different from gambling. This is seen in financial markets that are less liberalized or cultures with puritanical backgrounds. Typically the trick is to convince regulators that the derivative or financial product helps with reducing risk and hedging and it will get approved. I've mentioned some terminology, but this depends specifically on what kind of derivatives contract you become interested in. Swaps, Credit Default Swaps, Futures, Options, Options on Futures, Leveraged Exchange Traded Funds, Inverse Leveraged Exchange Traded Funds, warrants, and more all have their own terminology. How to trade them in a simulation? It all depends on which financial product you really become interested in. |
What is the purpose of property tax? | Property taxes, at least in Canada, are levied by the municipality or city in which the property is situated. For many cities, it is a significant source of income. Part of the justification from the municipal point of view is that the land is serviced, in that it generally has city services like water, sewer, garbage collection and the like. The taxes also commonly pay for city services like libraries, fire and ambulance. The tax rates vary widely across cities, so where your dream house is located may have a large impact on your overall tax bill. Property tax is more-or-less a government imposed lien on your house. You can be foreclosed on if you are unable to pay. This is a last resort of course, but can and does happen. |
What emergencies could justify a highly liquid emergency fund? | I suppose this could really depend on the part of the world you're in, but there are still many instances of "emergencies" that need "cash". You have to decide how much cash is the right amount, but I still recommend having $1,000 or so in liquid cash. It can really make a huge difference. Let me give a few examples. Bad weather. I live in Florida and after a hurricane if you want gas, food, or water, you're going to need cash. ATM networks are the last to get repaired. Same for internet. Cell services are not at the top of the list. You could be 4-5 days without access to your accounts. If you need anything in that time frame it's cash or the Red Cross. Children. As a foster parent we keep some cash on hand because as kids come in to our care we want to get them in school right away. How are they going to eat? You can't give them your plastic, you haven't had time to setup "lunch accounts" or the like. Cash always works. Along those same lines are bus tickets, clothes, supplies and what not. Not everywhere will take an ATM card, and if your money is tied up in a stock then what are you supposed to do for 3 days? Tell your new kid that he can't eat? Big Emergency problems. Like your car breaks down on the interstate. Sure it can get towed to the dealership, and yes they will add the tow to your bill, and sure you have a few days to pay it (while your car gets fixed), but how are you going to get around? Not all taxis take plastic around here. Almost none of the busses take plastic even though they are supposed to. Lost Wallet or ID theft. Lose your wallet, good luck getting into your bank accounts. It can take weeks to establish your ID after you lose it in some cases. You want your ID, but you need your birth certificate. You have to GO to the state of birth and request it. Oh but wait, to travel you need an ID. No problem send away for it, but wait, you need to send them money to mail it. To bad all your money is tied up. Running or Evacuating - So you need to evacuate for some reason. No big deal. But all your money is in a place you can't get to it. How do you put gas in your car. Lets stick with it and say you get to "cash out" an account of some kind. Guess what, they're not going to mail it to some random address. Now you're stuck fighting support centers to get them to understand that you need your funds delivered to New York even though you live in Florida. In short, you don't need $100,000 in liquid funds, but there are a few cases that you need something liquid. You also make a lot of assumptions. For example, not every one will have health insurance, or a heath problem that is covered by their insurance. Some serious home repairs are "down payment" upfront. Car problems like an accident that means you need a rental can totally be up front. Especially if credit cards can't be used. |
Where can I find filings of HUD-1 statements? | Three companies may have copies of it: the bank, the Title Company (aka settlement company), and perhaps the real estate agent. The bank (assuming you had a mortgage) is usually the easiest one to contact, as you're probably still making payments to them. They may have sent you the form in a large packet when you sold the house and paid off the old mortgage. There is a tradition of sending customers their entire mortgage file once they pay off the mortgage after 30 years - which is very rare nowadays but many banks still adhere to it because the mortgage business is built on momentum and very slow to change. Otherwise, the title company should have a copy of it. If you don't know which company was used, they should be named as Trustee on the Deed Of Trust (which in most states is the official name of the document that we call a "mortgage"). The county recorder's office will have a copy of that Deed Of Trust on record if you can't find it anywhere. Some counties have digitized these so you could find it online, but some would require you to request a copy and pay a small printing fee for it. |
Buying my first car out of college | Buying this car would be a good idea because you will quickly learn why you feel you need a BMW (that you cannot afford). This is not an investment, but a financing decision, beyond your means of living. As a future MBA you will regret not investing this money now. |
How do I cash in physical stock certificates? (GM 1989) | which means the current total is $548,100. Is that correct? Yep Unfortunately the "current" GM stock is different than the GM stock of 1989. GM went bankrupt in 2011. It's original stock changed to Motors Liquidation Company (MTLQQ) and is essentially worthless today. There was no conversion from the old stock to the new stock. What do I do with these certificates? Can I bring them to my bank, or do I need to open an account with a stock company like Fidelity? See here for some instructions on cashing them in (or at least registering them electronically). I've never dealt with physical stocks, but I presume that a broker is going to charge you something for registering them vs. direct registration, though I have no idea how much that would be. I read somewhere that I only have to pay taxes when I cash out these stocks. But are these rules any different because I inherited the stocks? You will pay capital gains tax on the increase in value from the time your father died to the time you sell the shares. If that time is more than one year (and the stock has gone up in value) you will pay a 15% tax on the total increase. If you have held them less than one year, they will be short-term capital gains which will count as regular income, and you will pay whatever your marginal tax rate is. If you sell the stock at a loss, then you'll be able to deduct some or all of that loss from your income, and may be able to carry forward losses for a few years as well. I did not catch that the stock you mention was GM stock. GM went bankrupt in 2011, so it's likely that the stock you own is worthless. I have edited the first answer appropriately but left the other two since they apply more generally. In your case the best you get is a tax deduction for the loss in value from the date your father died. |
How to compare the value of a Masters to the cost? | Just looking at your question I can tell it's not worth it financially, even if you didn't borrow the money to do it. At your current rate, you'll be making 54,384 in 5 years, which is roughly a growth of 2.5% per year. If you go for the masters, in 5 years you'll be making 55,680, with roughly the same growth rate (2.5%). So it's costing you $70,000 (the cost of school plus the 2 years of reduced income) to raise your salary by $1,300. The payback period would be about 25 years. It would be MUCH worse if you borrowed the money to do it. Not a chance. |
What is 'consolidating' debt and why do people do it? | This can mean a few things to me. Some of which has been mentioned already. It can mean one (or all) of the following to me: You take out a new credit card and transfer ALL other credit balances to it. (Only good if you destroy the others, this is a 0% offer, AND you plan on paying this card off furiously.) You do the loan thing mentioned earlier. You go to a credit consolidation service who will handle your paying your payments and you send them one payment each month. (Highly discourage using them. A majority of them are shady, and won't get do what they say they will do. Check Better Business Bureau if you find yourself considering them as an option.) In the first two cases, you are just reducing the number of hands reaching into your bank account. But keep in mind, doing this is not the same as paying off debt. You can't borrow your way out. You can do this as part of your plan, but do so CAREFULLY. |
One of my stocks dropped 40% in 2 days, how should I mentally approach this? | You shouldn't be picking stocks in the first place. From New York Magazine, tweeted by Ezra Klein: New evidence for that reality comes from Goldman Sachs, via Bloomberg News. The investment bank analyzed the holdings of 854 funds with $2.1 trillion in equity positions. It found, first of all, that all those “sophisticated investors” would have been better off stashing their money in basic, hands-off index funds or mutual funds last year — both of them had higher average returns than hedge funds did. The average hedge fund returned 3 percent last year, versus 14 percent for the Standard & Poor’s 500. Mutual funds do worse than index funds. Tangentially-related to the question of whether Wall Street types deserve their compensation packages is the yearly phenomenon in which actively managed mutual funds underperform the market. Between 2004 and 2008, 66.21% of domestic funds did worse than the S&P Composite 1500. In 2008, 64.23% underperformed. In other words, if you had a fund manager and his employees bringing their skill and knowledge to bear on your portfolio, you probably lost money as compared to the market as a whole. That's not to say you lost money in all cases. Just in most. The math is really simple on this one. Stock picking is fun, but undiversified and brings you competing with Wall Streeters with math Ph.Ds. and twenty-thousand-dollars-a-year Bloomberg terminals. What do you know about Apple's new iPhone that they don't? You should compare your emotional reaction to losing 40% in two days to your reaction to gaining 40% in two days... then compare both of those to losing 6% and gaining 6%, respectively. Picking stocks is not financially wise. Period. |
How do I know when I am financially stable/ready to move out on my own? | It all depends on what your financial goals are when you are ready. You sound like you could be ready today if you wanted to be. The steps that I would take are. Create a monthly draft budget. This doesn't have to be something hard and fast, just a gague of what your living expenses would be compared to your after-tax salary. Make sure there would be room for "fun" money. a. Consider adding a new car fund line item to this budget, and deducting that amount from your paycheck starting now so that you can save for the car. Based on the most realistic estimate that you can make, you'll get a good idea if you want to spend the money it takes to move out alone now or later. You'll also see the price for various levels of rentals in your area (renting a single family home, townhouse, condo, apartment, living in a rented room or basement, sharing a place with friends, etc) and know some of the costs of setting up for yourself. Since you're looking at the real estate market, you may want to do a cost comparison of renting versus buying. I've found the New York Times interactive graphic on this is excellent. If you are looking to buy, make sure to research the hidden costs of buying thoroughly before taking this step. To answer your last question, if you have the cash you should consider upping your 401K investment (or using Roth or regular IRA). Make sure you are investing enough to get your full employer match, if your employer offers one, and then get as close as you can to government maximum contribution limits. Compound interest is a big deal when you are 23. |
Limits and taxation of receiving gift money, in India, from a friend in Italy? | He wants to send me money, as a gift. Do you know this friend? It could easily be a scam. What I don't know is that how much money can he send and what are the taxes that would be applicable in this case? There is no limit; you have to pay taxes as per your tax brackets. This will be added as "income from other sources". I'll probably be using that money to invest in stock market. If the idea is you will make profits from stock market and pay this back, you need to follow the Foreign Exchange Management Act. There are restrictions on transfer of funds outside of India. |
Are there online brokers in the UK which don't require margin account? | Disclosure: I am working for an aggregation startup business called Brokerchooser, that is matching the needs of clients to the right online broker. FxPro and similar brokers are rather CFD/FX brokers. If you want to trade stocks you have to find a broker who is registered member of an exchange like LSE. Long list: http://www.londonstockexchange.com/exchange/traders-and-brokers/membership/member-firm-directory/member-firm-directory-search.html From the brokers we have tested at Brokerchooser.com I would suggest: |
What is the “point” (purpose) of the S&P 500? | I hate to point to Wikipedia as an answer, but it does describe exactly what you are looking for... The S&P 500 is a free-float capitalization-weighted index published since 1957 of the prices of 500 large-cap common stocks actively traded in the United States. The stocks included in the S&P 500 are those of large publicly held companies that trade on either of the two largest American stock market exchanges; the New York Stock Exchange and the NASDAQ. The components of the S&P 500 are selected by committee... The committee selects the companies in the S&P 500 so they are representative of the industries in the United States economy. In addition, companies that do not trade publicly (such as those that are privately or mutually held) and stocks that do not have sufficient liquidity are not in the index. The S&P is a capitalization weighted index. If a stock price goes up, then it comprises more of the total index. If a stock goes down, it comprises less, and if it goes down too much, the committee will likely replace it. So to answer your question, if one stock were to suddenly skyrocket, nothing would happen beyond the fact that the index was now worth more and that particular stock would now make up a larger percentage of the S&P 500 index. |
If I helped my friend to file taxes; can I represent her on a phone call with FTB? | In order for you to be able to talk to the FTB on someone's behalf, that someone has to submit form 3520. Note that since you're not a professional, this form must be paper-filed (CRTP, EA, CPA or attorneys can have this filed on-line). Once the form is accepted by the FTB, you can contact the FTB on behalf of your friend. Pay attention: you're going to represent the partnership, not the individual. |
Buy home and leverage roommates, or split rent? | Mixing friendship and money, whether that's loans or landlording, is risky. Often things work out, but sometimes the unexpected happens, and it doesn't. If things go wrong, are you prepared to walk away from either the friendship or the money? After you've considered that, the next question is how your roommates feel about the deal. You're looking to charge your friends $2000 to rent part of a property that, from the sound of it, they could rent much cheaper from a stranger. Maybe the market is different in Cleveland, but in my area, I'd expect to pay $2000 in rent for a place worth closer to $300,000 than $100,000. Have your roommates expressed interest in the idea, and have you discussed dollar values with them? Are you still interested if they ended up paying $1600 in rent? $1000? |
Are market orders safe? | Market orders can be reasonably safe when dealing with stocks that are rather liquid and have quite low volatility. But it's important to note that you're trading a large degree of control over your buy / sell price for a small benefit in speed or complexity of entering an order. I always use limit orders as they help me guard against unexpected moves of the stock. Patience and attention to details are good qualities to have as an investor. |
How can I help my friend change his saving habits? | If he's not used to cooking, recipes might not be enough. Maybe he needs cooking lessons. I used to think if you could read, you could cook -- but I grew up "helping" my mom in the kitchen and in the process learning what all the instructions in cookbooks meant. But it also might just be force of habit, in which case about all you could do would be to go over and cook for (or with) him. Maybe if you helped him get into a good habit, he would be more likely to continue with it. Otherwise, I don't see that there's much of anything you can do. If he isn't motivated to change his habits to save for his trip, you can't make him be. |
How can I stop wasting food? | Make a menu of 15 (or more) things you like to eat. Write a grocery list for what it takes. Divide that list into perishable and non-perishable. Put those items into a calendar and try to stick to it. Depending on the amount of storage space you have, once a week fulfill your perishable list. Use coupons and shop the sales to keep your prices down. On your way home, stop at the grocery store and buy only the perishables you will need that night for cooking. I personally chose recipes that didn't always need fresh stuff (like canned tomatoes being good enough.) You spend more on the nightly stuff, but you make up some savings with the long term shopping. Just count on going to the store for 10 minutes a night a part of your cooking routine. I used to just look at the wall, but with an app like Evernote this would be pretty easy. |
Why are credit cards preferred in the US? | The real reason credit cards are so popular in the US is that Americans are lazy and broke, and the credit card companies know how to market to that. Have you ever heard of the $30k millionaires? These were individuals that purchased as if they were some of the wealthy elite, but had no real money to back it up. American society has pushed the idea of "living on credit" for quite some time now. An idea that is even furthered by watching the US government operate solely on credit. (Raise the debt ceiling much?) Live in America for more than six months and you will be bombarded with "Pre-Approved Deals" with low introductory rates that are designed to sucker the average consumer into opening multiple accounts that they don't need. Then, they try and get you to carry a balance by allowing low minimum payments that could take in the neighborhood of 20 years to pay off, depending on carried balance. This in turn pads the credit companies' pockets with all of the interest you now pay on the account. The few truly wealthy Americans do not purchase on credit. |
Investing small amounts at regular intervals while minimizing fees? | It is difficult to find investment banks that offer both low fees and low minimum investments. If you google around for "no-fee low-minimum mutual funds" you can find various articles with recommendations, such as this one. One fund they mention that looks promising is the Schwab Total Stock Market Index Fund, which apparently has a minimum investment of only $100 and an expense ratio of 0.09%. (I've never heard of this fund before, so I'm just repeating the info from the site. Be sure to look into it more thoroughly to see if there are any hidden costs here. I'm not recommending this fund, just mentioning it as an example of what you may be able to find.) Another possibility is to make use of funds in an existing brokerage account that you use for yourself. This could allow you to make use of Craig W.'s suggestion about ETFs. For instance, if you already have a brokerage account at Vanguard or another firm, you could add $100 to the account and buy some particular fund, mentally earmarking it as your daughter's. |
Automatic investments for cheap | For your purposes, I would recommend using direct investment in a no-load mutual fund. I mostly use Vanguard and would recommend them. They just about invented index funds, usually have the lowest (internal) expenses for index and many other funds, if you take electronic instead of paper statements there is no maintenance fee, have no transaction commission, can do periodic automatic investment from a bank account etc. A typical index fund there would require an initial $3000 investment and would have a minimum of $100 for each additional investment. If you can't come up with an initial sum of that size, you might be able to find a broker with a lower minimum and suitable free ETFs trades as others have suggested. |
Is it bad etiquette to use a credit or debit card to pay for single figure amounts at the POS | Intellectually and logically, it shouldn't bother me for a second to charge something for a buck. It's a losing proposition for the merchant, but their immediate business costs should be of little concern to me. (They're making a choice to sell that item to me at that price and by accepting that means of payment, right?) but the more I charge as opposed to paying cash, the more cash back I get. In my old-ish age, I've gotten a little softer and will pay cash more often for smaller amounts because I understand the business costs, but it's not a matter of caring what other people think. Accepting credit cards, or not, is a business decision. It's usually a good one. But with that decision come the rules, which up until about a year ago, meant that merchants couldn't set a minimum charge amount. Now that's not the case; merchant account providers can no longer demand that their merchant clients accept all charges, though they are allowed to set a minimum amount that is no lower than $10.00. In the end, it's a matter of how much you're willing to pay in order to influence people's thinking of you, because the business/financial benefits of doing one or the other are pretty clear. |
Why is a stock that pays a dividend preferrable to one that doesn't? | Dividend paying stocks are not "better" In particular shareholders will get taxed on the distribution while the company can most likely invest the money tax free in their operations. The shareholder then has the opportunity to decide when to pay the taxes when they sell their shares. Companies pay dividends for a couple of reasons.... 1.) To signal the strength of the company. 2.) To reward the shareholders (oftentimes the executives of the firm get rather large rewards without having to sell shares they control.) 3.) If they don't have suitable investment opportunities in their field. IE they don't have anything useful to do with the money. |
Credit Card Approval | Bigger than the three mentioned above is on-time payment and/or collections activity. If your report shows you have not paid accounts on time, or have accounts in collections, that is almost guaranteed decline except for the least desirable cards. Another factor is number of hard inquiries. If you have been on a recent application spree, you will get declined for too many recent inquiries. Wait 12-18 months for the inquiries to roll off your report. Applications for business cards are a little tricky depending on whether you are applying as an individual or as an employee of a corporation. I usually stay away from these as you can be liable for company debts you did not charge under the right circumstances. |
Why could rental costs for apartments/houses rise while buying prices can go up and down? | I am from Australia, so my answer is based on my experience over here, however it should be similar for the USA. Generally, what determines both the price of houses/apartments and the rents for them is supply and demand. When there is high demand and low supply prices (or rents) generally go up. When there is low demand and high supply prices (or rents) usually go down. What can sometimes happen when house prices go down, is that the demand can drop but so can supply. As the prices drop, developers will make less money on building new houses, so stop building new houses. Other developers can go bankrupt. As less people (including investors) are buying houses, and more people (including investors) try to sell their existing houses, there will be more people looking to rent and less rental properties available to rent. This produces a perfect storm of high demand and low supply of rental properties, causing rents to rise strongly. When the property prices start to go up again as demand increases, there is a shortfall of new properties being built (due to the developers not building during the downturn). At this time developers start to build again but there is a lag time before the new houses can be completed. This lack of supply puts more pressure on both house prices and rents to go up further. Until equilibrium between supply and demand is realised or an oversupply of rental properties exists in the market, rents will continue to rise. |
College student - I'm a 'dependent' and my parents won't apply for the Parent PLUS loan or cosign a private loan | Smart parents not wanting to get stuck with a student loan or co-signing on a loan. because rent is so high Are you able to live with your parents? Is there anyway to reduce the cost of rent like renting a room? Can you move somewhere where the rent is cheaper? working 25 hours per week Working 25 hours per week and taking 6 hours is a pretty light schedule. It is not even 40 hours per week. What is stopping you from working 40 hours and paying for school from your salary? In my own life I created a pretty crappy situation for myself when I was a young man. I really wanted to go to a prestigious university, but ended up going to a community college, and then to a university that was lesser known in a less expensive area. I had to work like crazy, upwards of 50 hours per week. I also took a full load in a difficult degree program. You probably don't have to go to the extremes that I went through, but you can work more. Most adults work at their jobs well more than 40 hours per week, then come home and continue to work (on the house, raising kids, trying to start a side business, etc...). So you might as well become an adult now. There are ways to become independent from your parents for FAFSA like have a baby, get married, or join the military. I'd only recommend the last one as you will also receive the GI Bill. Another option is to try and obtain a job that offers financial aid. |
Opening and funding an IRA in three days - is this feasible? | Some banks and credit unions have IRA accounts. They pay interest like a savings account or a CD but they are an IRA. After the 15th you can roll them over into a IRA at one of the big investment companies so you can get invest in an index or Target Retirement Fund. But it is not too late. Opening an account at one of the big companies takes ten minutes (you need to know your social security number and your bank account info) they can pull it out of your bank account. I helped my kid do the same thing this week. We went on-line Tuesday night, and they pulled the money from his account on Thursday morning. Also know which type you want (Roth or regular) before you start. Also make sure you specify that the money is for 2013 not 2014. |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | I really don't feel co-signing this loan is in the best interests of either of us. Lets talk about the amount of money you need and perhaps I can assist you in another way. I would be honest and tell them it isn't a good deal for anybody, especially not me. I would then offer an alternative "loan" of some amount of money to help them get financing on their own. The key here is the "loan" I offer is really a gift and should it ever be returned I would be floored and overjoyed. I wouldn't give more than I can afford to not have. Part of why I'd be honest to spread the good word about responsible money handling. Co-signed loans (and many loans themselves) probably aren't good financial policy if not a life & death or emergency situation. If they get mad at me it won't matter too much because they are family and that won't change. |
Hired with W-9, will I owe estimated tax quarterly? | You must pay your taxes at the quarterly intervals. For most people the withholding done by their employer satisfies this requirement. However, if your income does not have any withholding (or sufficient), then you must file quarterly estimated tax payments. Note that if you have a second job that does withhold, then you can adjust your W4 to request further withholding there and possibly reduce the need for estimated payments. Estimated tax payments also come into play with large investment earnings. The amount that you need to prepay the IRS is impacted by the safe harbor rule, which I am sure others will provide the exact details on. |
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