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What is the lifespan of a series of currency? | In general, currency has no expiration date. Specifically, in Canada, the Bank of Canada has been issuing banknotes since 1935, and these are still considered legal tender, even though they don't look much like the modern banknotes. Before that, Canadian chartered banks issued currency, and these also still have value. However, there are a few things to note. First of all, with currency of that age, it often has more value as a collector's item than the face value. So spending it at a store would be foolish. Second, store clerks are not experts in old currency, and will not accept a bill that they do not recognize. If you want the face value of your old currency, you may need to exchange it for modern currency at a bank. Having said all that, there are certainly cases where currency does expire. Generally this happens when a country changes currency. For example, when the Euro was introduced, the old currencies were discontinued. After a window of exchange, the old currency in many cases lost its value. So if you have some old French Franc notes, for example, they can no longer be exchanged for Euros. These types of events cannot be predicted in the future, of course, so it is impossible to say when, if ever, the Canadian currency you have today will lose its spending value in Canada. |
Negatives to increased credit card spending limit? [duplicate] | The only drawback is if you spend more than you can with the new limit and end up having to pay interest if you can't pay the balance in full. Other than that, there are no drawbacks to getting a credit increase. On the flip side, it's actually good for you. It shows that the banks trust you with more credit, and it also decreases your credit utilization ratio (assuming you spend the same). |
Money market account for emergency savings | Depends on how urgent your need for the emergency savings might be. If the money market account allows you to get your money in the same amount of time as the savings account then there is no real downside, but if the account takes a few days for you to access and you need your money sooner then you probably shouldn't. Also money market accounts DO give more interest than most savings accounts, but the interest rates are generally still pretty low, so it might be an improvement, but probably not a huge one |
For young (lower-mid class) investors what percentage should be in individual stocks? | I would not advise any stock-picking or other active management (even using mutual funds that are actively managed). There is a large body of knowledge that needs learning before you even attempt that. Stay passive with index funds (either ETFs or (even better) low-cost passive mutual funds (because these prevent you from buying/selling). But I have not problem saying you can invest 100% in equity as long as your stomach can handle the price swings. If you freek out after a 25% drop that does not recover within a year, so you sell at the market bottom, then you are better off staying with a lot less risk. It is personal. There are a lot of valid reasons for young people to accept more risk - and equally valid reason why not. See list at http://www.retailinvestor.org/saving.html#norisk |
Vanguard Target Retirement Fund vs. Similar ETF Distribution (w/ REIT) | It looks like an improvement to me, if for no other reason than lowering the expenses. But if you are around 35 years away from retirement you could consider eliminating all bond funds for now. They will pay better in a few years. And the stock market(s) will definitely go up more than bonds over the next 35 years. |
How does owning a home and paying on a mortgage fit into family savings and investment? | 1) How does owning a home fit into my financial portfolio? Most seem to agree that at best it is a hedge against rent or dollar inflation, and at worst it should be viewed as a liability, and has no place alongside other real investments. Periods of high inflation are generally accompanied with high(er) interest rates. Any home is a liability, as has been pointed out in other answers; it costs money to live in, it costs money to keep in good shape, and it offers you no return unless you sell it for more than you have paid for it in total (in fact, as long as you have an outstanding mortgage, it actually costs you money to own, even when not considering things like property taxes, utilities etc.). The only way to make a home an investment is to rent it out for more than it costs you in total to own, but then you can't live in it instead. 2) How should one view payments on a home mortgage? How are they similar or different to investing in low-risk low-reward investments? Like JoeTaxpayer said in a comment, paying off your mortgage should be considered the same as putting money into a certificate of deposit with a term and return equivalent to your mortgage interest cost (adjusting for tax effects). What is important to remember about paying off a mortgage, besides the simple and not so unimportant fact that it lowers your financial risk over time, is that over time it improves your cash flow. If interest rates don't change (unlikely), then as long as you keep paying the interest vigilantly but don't pay down the principal (assuming that the bank is happy with such an arrangement), your monthly cost remains the same and will do so in perpetuity. You currently have a cash flow that enables you to pay down the principal on the loan, and are putting some fairly significant amount of money towards that end. Now, suppose that you were to lose your job, which means a significant cut in the household income. If this cut means that you can't afford paying down the mortgage at the same rate as before, you can always call the bank and tell them to stop the extra payments until you get your ducks back in the proverbial row. It's also possible, with a long history of paying on time and a loan significantly smaller than what the house would bring in in a sale, that you could renegotiate the loan with an extended term, which depending on the exact terms may lower your monthly cost further. If the size of the loan is largely the same as or perhaps even exceeds the market value of the house, the bank would be a lot more unlikely to cooperate in such a scenario. It's also a good idea to at the very least aim to be free of debt by the time you retire. Even if one assumes that the pension systems will be the same by then as they are now (some don't, but that's a completely different question), you are likely to see a significant cut in cash flow on retirement day. Any fixed expenses which cannot easily be cut if needed are going to become a lot more of a liability when you are actually at least in part living off your savings rather than contributing to them. The earlier you get the mortgage paid off, the earlier you will have the freedom to put into other forms of savings the money which is now going not just to principal but to interest as well. What is important to consider is that paying off a mortgage is a very illiquid form of savings; on the other hand, money in stocks, bonds, various mutual funds, and savings accounts, tends to be highly liquid. It is always a good idea to have some savings in easily accessible form, some of it in very low-risk investments such as a simple interest-bearing savings account or government bonds (despite their low rate of return) before you start to aggressively pay down loans, because (particularly when you own a home) you never know when something might come up that ends up costing a fair chunk of money. |
Main source of the shares/stocks data on the web | The main source is a direct feed from the stock market itself. The faster the feed, the more expensive. 15-minute delay is essentially free... and for those of us who do long-term investment is more than adequate. If you want data sooner, sign up with a brokerage that provides that service as part of what you're paying them for... and remember that every bit you spend on services is that much more profit you have to make just to break even, so there's a real tradeoff. |
Repaying Debt and Saving - Difficult Situation | Given the listed expenses, this problem will not have a nice solutions. So lets quickly go through them and see when the most pressing ones can be dealt with: Solved within 1 year: 900 Solved within a few years: 1300: 900+400 You may be able to save a couple of hundred on the rest, but just take a minute to look at the above. Within 1 year she will be able to 'break even' and within a few years she will be able to live fairly comfortably. She will eat through her funds in about 10 months, which should coincide with the end of the tuition costs. If you could just sponsor her a little bit, or just be there for her in case of unexpected expenses, she should make it till the end of the year after which things are looking up and she will have a healthy surplus each month. Soon you and your sister can probably help her build up a nice buffer quickly, after which her worries should be over. |
Why should we expect stocks to go up in the long term? | Does it make sense for stocks to earn a premium indefinitely? Yes. There is good reason to think that the stock market will make money indefinitely: the stock market is the primary mechanism through which investors bear market risk, which requires compensation. If you think of all the owners of firms (stockholders and bondholders, generally) the risk premium that stocks earn stocks is the way bondholders pay equityholders to bear the risk that they do not wish to. Will stock prices always go up in the long run? As long as companies pay out less in dividends than their profit, prices will go up. That could change if we were to change our corporate culture and/or tax practices so that firms paid out more in dividends. However, for the purposes of your question, I think it doesn't matter much whether the investor makes money as dividends or capital gains. Does the 5-7% guess apply only to the US market? I didn't write (nor read) the books in question, but most likely that is a global number. The US dominates the global equity market, so it's often a good proxy. However, international returns taken together have no less risk and earn no less over long horizons in general. The particular examples you have pointed out are special cases that only apply to a part of the global economy and a particular time period. There are plenty of examples of stock markets and time periods that did much better than the US market to offset your examples. Is 5-7% a reasonable long-term estimate of equity returns? Equity will always earn more in expectation than risk-free securities will. How much more depends on major economic factors. 5-7% has been a good estimate for the market risk premium for many, many decades (stocks should earn this plus whatever the risk-free rate is). However, that is just an empirical observation, not a rule. It can change. Some day technological progress could slow down or stop, we could run out of important resources in a way that we can't compensate for, our population permanently could stop growing, aliens could invade, etc. Down the road it is certainly possible for expected equity returns to go down and never go back up again. This would result from a permanent, global, economic shift that I think would be pretty obvious. That is, you wouldn't have to look at stock prices to know it was happening. |
Price of a call option | When I log in to Schwab to look at these options it tells me there's only Adjusted Options available on these terms: Adjusted Options: Multiplier: 100; Deliverable: 15 PTIE; Cash: ---- It does confirm your July Call quote price of $0.05 because the contract, though priced for 100 shares, will only deliver 15 shares. Separately, looking at the company website for news there was a 7 for 1 Reverse Split announced on May 8, which is the culprit for this option adjustment and the seemingly nonsensical call price. |
How hard for US customers make payments to non-resident freelancer by wire transfer? | For most major banks, wire transfers are simple, if expensive, to arrange. For example, I can initiate an international wire transfer from my online banking portal. |
IS it the wrong time to get into the equity market immediately after large gains? | If your gut told you to buy during the depths of '09, your gut might be well-calibrated. The problem is stock market declines during recessions are frequently not that large relative to the average long run return of 9%: A better strategy might be hold a percentage in equities based upon a probability distribution of historical returns. This becomes problematic because of changes in the definition of earnings and the recent inflation stability which has encouraged high valuations: Cash flow has not been as corrupted as earnings now, and might be a better indicator: This obviously isn't perfect either, but returns can be improved. Since there is no formulaic way yet conventionally available, the optimal primary strategy is still buy & hold which has made the most successful investor frequently one of the richest people on the planet for decades, but this could still be used as an auxiliary for cash management reserves during recessions once retired. |
Can you step up your cost basis indefinitely via the 0% capital gains rate? | Your real question, "why is this not discussed more?" is intriguing. I think the media are doing a better job bringing these things into the topics they like to ponder, just not enough, yet. You actually produced the answer to How are long-term capital gains taxed if the gain pushes income into a new tax bracket? so you understand how it works. I am a fan of bracket topping. e.g. A young couple should try to top off their 15% bracket by staying with Roth but then using pretax IRA/401(k) to not creep into 25% bracket. For this discussion, 2013 numbers, a blank return (i.e. no schedule A, no other income) shows a couple with a gross $92,500 being at the 15%/25% line. It happens that $20K is exactly the sum of their standard deduction, and 2 exemptions. The last clean Distribution of Income Data is from 2006, but since wages haven't exploded and inflation has been low, it's fair to say that from the $92,000 representing the top 20% of earners, it won't have many more than top 25% today. So, yes, this is a great opportunity for most people. Any married couple with under that $92,500 figure can use this strategy to exploit your observation, and step up their basis each year. To littleadv objection - I imagine an older couple grossing $75K, by selling stock with $10K in LT gains just getting rid of the potential 15% bill at retirement. No trading cost if a mutual fund, just $20 or so if stocks. The more important point, not yet mentioned - even in a low cost 401(k), a lifetime of savings results in all gains being turned in ordinary income. And the case is strong for 'deposit to the match but no no more' as this strategy would let 2/3 of us pay zero on those gains. (To try to address the rest of your questions a bit - the strategy applies to a small sliver of people. 25% have income too high, the bottom 50% or so, have virtually no savings. Much of the 25% that remain have savings in tax sheltered accounts. With the 2013 401(k) limit of $17,500, a 40 year old couple can save $35,000. This easily suck in most of one's long term retirement savings. We can discuss demographics all day, but I think this addresses your question.) If you add any comments, I'll probably address them via edits, avoiding a long dialog below. |
How to buy stuff (stocks?) in IRA account? What else? | You can buy stocks in the IRA, similarly to your regular investment account. Generally, when you open an account with a retail provider like TDAmeritrade, all the options available for you on that account are allowable. Keep in mind that you cannot just deposit money to IRA. There's a limit on how much you can deposit a year ($5500 as of 2015, $6500 for those 50 or older), and there's also a limit on top of that - the amount you deposit into an IRA cannot be more than your total earned income (i.e. income from work). In addition, there are limits on how much of your contribution you can deduct (depending on your income and whether you/your spouse have an employer-sponsored retirement plan). |
Multi-year profit/tax question | This is called "Net Operating Loss", and it is in fact applicable for individuals as well. You can, under certain circumstances, have NOL even as an individual. But it is far more common in the corporate world. What happens is that you can carry it back or forward, and get refund on taxes paid or adjust income for taxes to pay. In your example, you could carry the $75 NOL back and deduct it from the prior year earnings, reducing the taxable income from $100 to $25, getting $18.75 of the $25 paid as taxes - back. The link is for individual NOL, corporate rules are different, but the principle is the same. |
What are the alternatives to compound interest for a Muslim? | Invest in growth stocks which do not pay any dividends (Note that some part of the dividends issued by a corporation might be from interest received by the company and passed on to you as a dividend); Buy a house from a bank that practices Islamic Banking. See this question which you yourself answered a few weeks ago to understand how this works. |
How do I adjust to a new social class? | Under what conditions did you move? My favourite method of judging prices objectively comes from concepts written in Your Money or Your Life by Joe Dominguez. Essentially it normalizes money spent by making you figure out how much an item costs with respect to the number of hours you needed to work to afford it. I prefer that method versus comparing with others since it is objective for yourself and looks beyond just the bare prices. |
How to spend more? (AKA, how to avoid being a miser) | How much is your time worth This has been useful for me, judging things based on how much their time value is worth to me, weighted more heavily than their actual worth. For instance, there was a time when I used to work on the weekends and pay to have my laundry done. Doing the laundry myself would have cost 25 cents, but taken two hours at least. Since I was making $45 an hour, I would have lost $90 dollars by doing my laundry, instead of paying specialists $28 to do it for me, much better than I would. Your own capital should begin growing at a rate that makes many MANY things worth less than the time it takes for you to entertain it. So in your cable bill example, you shouldn't have argued for a $5 credit for two hours, unless you make $2.25 an hour, after tax. This is simplistic, as you would extrapolate how much this would cost you over a year or two, but such cost benefit analysis' become easy with this simple concept. This can also be used to rationalize your lavish expenditures. Such as not really comparing the costs for a flight, because its a 2 hour flight for $400 and you've found yourself making at least $200 an hour with your $416,000 annual earnings and capital gains. This will cure your frugality while retaining safe guards on your spending. |
Highest market cap for a company from historical data | In common with many companies, Microsoft has been engaging in share buyback programmes, where it buys its own shares in the market and then cancels them. It's often a more tax-efficient way to distribute profits to the shareholders than paying a dividend. So there were more Microsoft shares in circulation in 1999 than there are now. See here for information. |
How to calculate my estimated taxes. 1099 MISC + Self Employment | One way to do these sorts of calculations is to use the spreadsheet version of IRS form 1040 available here. This is provided by a private individual and is not an official IRS tool, but in practice it is usually accurate enough for these purposes. You may have to spend some time figuring out where to enter the info. However, if you enter your self-employment income on Schedule C, this spreadsheet will calculate the self-employment tax as well as the income tax. An advantage is that it is the full 1040, so you can also select the standard deduction and the number of exemptions you are entitled to, enter ordinary W-2 income, even capital gains, etc. Of course you can also make use of other tax software to do this, but in my experience the "Excel 1040" is more convenient, as most websites and tax-prep software tend to be structured in a linear fashion and are more cumbersome to update in an ad-hoc way for purposes like tax estimation. You can do whatever works for you, but I would recommend taking a look at the Excel 1040. It is a surprisingly useful tool. |
A good investment vehicle for saving for a mortgage down payment? | Assuming this'll be a taxable account and you're an above-average wage earner, the following seem to be biggest factors in your decision: tax-advantaged income w/o retirement account protection - so I'd pick a stock/stocks or fund that's designed to minimize earnings taxable at income and/or short-term gains rates (e.g. dividends) declining risk profile - make sure you periodically tweak your investment mix over the 2-3 year period to reduce your risk exposure. You want to be near savings account risk levels by the end of your timeline. But make sure you keep #1 in mind - so probably don't adjust (by selling) anything until you've hit the 1-year holding mark to get the long-term capital gains rates. In addition to tax-sensitive stock & bond funds at the major brokerages like Fidelity, I'd specifically look at tax-free municipal bond funds (targeted for your state of residence) since those generally pay better than savings on after tax basis for little increase in risk (assuming you stick w/ higher-rated municipalities). |
Is an investor of a startup subjected under a vesting schedule? | Recently, I asked about what the company valuation is and how many shares does my 4% represent.CFO told me that there is no point to talk about "shares" or "stock" since the company is not public. Is it right? No, it is wrong. Shares and stocks exist regardless of how they can be traded. Once a company is formed, there are stocks that belong to the owners in the proportion of the ownership. They may not exist physically, but they do exist on paper. As an owner of 5% of the company, you own 5% of the company stocks. I asked if my investor portion equity will be subjected under a vesting schedule, CFO said yes. That doesn't make sense to me, because I bought those 4%? Aren't those supposed to be fully vested? I agree to my employee equity to be vested. Doesn't make sense to me either, since your money is already in their pocket. But I'm not sure if its illegal. If that's what is written in the signed contract - then may be its possible to have that situation. But it doesn't make much sense, because these shares are granted to you in return to your money, not some potential future work (as the 1% employee's portion). You already gave the money, so why wouldn't they be vested? Best to read the contract upon which you gave them your money, I really hope you have at least that and not just gave them a check.... |
What is a subsidy? | A subsidy is a payment made by a group (usually the state) to individuals or corporations in order to shift the balance if the rational economic decision for the individual would be detrimental to the group as a whole otherwise. For example, if there are different quality kinds of crops that can be planted, for example a GM maize that brings in high yields but can only be processed to High Fructose Corn Syrup or a naturally bred corn that brings lower yields but tastes well enough for direct consumption, then if demand for both exceeds supply, the economic choice for the individual farmer is to plant the former. If the claims that HFCS contribute to obesity are founded, then it is in the public interest to produce less of it, and more alternative foods. Given that a market rather than a planned economy is desired, this cannot be achieved by decree, but rather money is used as an incentive. In the long term, this investment may very well pay off through reduced health care costs, so it is a rational economic decision from the state's point of view. In a world where all actors make decisions that are fully in their self interest, in principle subsidies would not be needed as consumers would demand healthy rather than cheap foods, and market mechanisms would provide these. |
Usage of a sell stop order | It depends to some extent on how you interpret the situation, so I think this is the general idea. Say you purchase one share at $50, and soon after, the price moves up, say, to $55. You now have an unrealized profit of $5. Now, you can either sell and realize that profit, or hold on to the position, expecting a further price appreciation. In either case, you will consider the price change from this traded price, which is $55, and not the price you actually bought at. Hence, if the price fell to $52 in the next trade, you have a loss of $3 on your previous profit of $5. This (even though your net P&L is calculated from the initial purchase price of $50), allows you to think in terms of your positions at the latest known prices. This is similar to a Markov process, in the sense that it doesn't matter which route the stock price (and your position's P&L) took to get to the current point; your decision should be based on the current/latest price level. |
Optimal way to use a credit card to build better credit? | First I would like to say, do not pay credit card companies in an attempt to improve your credit rating. In my opinion it's not worth the cash and not fair for the consumer. There are many great resources online that give advice on how to improve your credit score. You can even simulate what would happen to your score if you did "this". Credit Karma - will give you your TransUnion credit score for free and offers a simulation calculator. If you only have one credit card, I would start off by applying for another simply because $700 is such a small limit and to pay a $30 annual fee seems outrageous. Try applying with the bank where you hold your savings or checking account they are more likely to approve your application since they have a working relationship with you. All in all I would not go out of my way and spend money I would not have spent otherwise just to increase my credit score, to me this practice is counter intuitive. You are allowed a free credit report from each bureau, once annually, you can get this from www.annualcreditreport.com, this won't include your credit score but it will let you see what banks see when they run your credit report. In addition you should check it over for any errors or possible identity theft. If there are errors you need to file a claim with the credit agency IMMEDIATELY. (edit from JoeT - with 3 agencies to choose from, you can alternate during the year to pull a different report every 4 months. A couple, every 2.) Here are some resources you can read up on: Improve your FICO Credit Score Top 5 Credit Misconceptions 9 fast fixes for your credit scores |
Does financing a portfolio on margin affect the variance of a portfolio? | Variance of a single asset is defined as follows: σ2 = Σi(Xi - μ)2 where Xi's represent all the possible final market values of your asset and μ represents the mean of all such market values. The portfolio's variance is defined as σp2 = Σiwi2σi2 where, σp is the portfolio's variance, and wi stands for the weight of the ith asset. Now, if you include the borrowing in your portfolio, that would classify as technically shorting at the borrowing rate. Thus, this weight would (by the virtue of being negative) increase all other weights. Moreover, the variance of this is likely to be zero (assuming fixed borrowing rates). Thus, weights of risky assets rise and the investor's portfolio's variance will go up. Also see, CML at wikipedia. |
Who receives the money when one company buys another? | Shareholders of Monsanto will get the money from Bayer. Shareholders are independent people or entities. Think of Monsanto as a thing that shareholders had. This thing is now being purchased by Bayer |
What is the purpose of the wash sale rule? | Overall the question is one of a political nature. However, this component can have objective answers: "What behavior is trying to be prevented?" There are mechanisms by which capital gains can be deferred (1031 like-kind exchange, or simply holding a long position for years) or eliminated by the estate step up in basis. With these available, mechanisms that enable basis-reduction are ripe for abuse. On the other hand, if this truly bothers you then if you meet the IRS qualifications of a day trader, you may elect to use "mark to market" accounting, eliminating this entirely as a concern. Special rules for traders of securities |
Should I scale down my 401k? | See if they offer a "Target Date" plan that automatically adjusts throughout your career to balance gains against preserving what you've already built up. You can adjust for more or less aggressive by selecting a plan with a later or sooner target date, respectively. (But check the administrative fees; higher fees can eat up a surprisingly large part of your growth since they're essentially subtracted from rate of return and thus get compounded.) If they don't have that option, or charge too much for it, then yes, you may want to adjust which plan your money is in over time; you can usually "exchange" between these plans at no cost and with no tax penalty. NOTE: The tax-advantaged 401(k) investments should be considered in the context of all your investments. This is one of the things an independent financial planner can help you with. As with other investment decisions, the best answer for you depends on your risk tolerance and your time horizon. |
Why doesn't Japan just divide the Yen by 100? | What benefit vs. what cost? Benefit - none that I can think of. Cost - massive. Every system that handles money would need to re-value overnight, every store would need to re-price. In many ways it would be simpler and maybe even cheaper to introduce a new currency. |
What does the average log-return value of a stock mean? | Probably the best way to investigate this is to look at an example. First, as the commenters above have already said, the log-return from one period is log(price at time t/price at time t-1) which is approximately equal to the percentage change in the price from time t-1 to time t, provided that this percentage change is not big compared to the size of the price. (Note that you have to use the natural log, ie. log to the base e -- ln button on a calculator -- here.) The main use of the log-return is that is a proxy for the percentage change in the price, which turns out to be mathematically convenient, for various reasons which have mostly already been mentioned in the comments. But you already know this; your actual question is about the average log-return over a period of time. What does this indicate about the stock? The answer is: if the stock price is not changing very much, then the average log-return is about equal to the average percentage change in the price, and is very easy and quick to calculate. But if the stock price is very volatile, then the average log-return can be wildly different to the average percentage change in the price. Here is an example: the closing prices for Pitchfork Oil from last week's trading are: 10, 5, 12, 5, 10, 2, 15. The percentage changes are: -0.5, 1.4, -0.58, 1, -0.8, 6.5 (where -0.5 means -50%, etc.) The average percentage change is 1.17, or 117%. On the other hand, the log-returns for the same period are -0.69, 0.88, -0.88, 0.69, -1.6, 2, and the average log-return is about 0.068. If we used this as a proxy for the average percentage change in the price over the whole seven days, we would get 6.8% instead of 117%, which is wildly wrong. The reason why it is wrong is because the price fluctuated so much. On the other hand, the closing prices for United Marshmallow over the same period are 10, 11, 12, 11, 12, 13, 15. The average percentage change from day to day is 0.073, and the average log-return is 0.068, so in this case the log-return is very close to the percentage change. And it has the advantage of being computable from just the first and last prices, because the properties of logarithms imply that it simplifies to (log(15)-log(10))/6. Notice that this is exactly the same as for Pitchfork Oil. So one reason why you might be interested in the average log-return is that it gives a very quick way to estimate the average return, if the stock price is not changing very much. Another, more subtle reason, is that it actually behaves better than the percentage return. When the price of Pitchfork jumps from 5 to 12 and then crashes back to 5 again, the percentage changes are +140% and -58%, for an average of +82%. That sounds good, but if you had bought it at 5, and then sold it at 5, you would actually have made 0% on your money. The log-returns for the same period do not have this disturbing property, because they do add up to 0%. What's the real difference in this example? Well, if you had bought $1 worth of Pitchfork on Tuesday, when it was 5, and sold it on Wednesday, when it was 12, you would have made a profit of $1.40. If you had then bought another $1 on Wednesday and sold it on Thursday, you would have made a loss of $0.58. Overall, your profit would have been $0.82. This is what the average percentage return is calculating. On the other hand, if you had been a long-term investor who had bought on Tuesday and hung on until Thursday, then quoting an "average return" of 82% is highly misleading, because it in no way corresponds to the return of 0% which you actually got! The moral is that it may be better to look at the log-returns if you are a buy-and-hold type of investor, because log-returns cancel out when prices fluctuate, whereas percentage changes in price do not. But the flip-side of this is that your average log-return over a period of time does not give you much information about what the prices have been doing, since it is just (log(final price) - log(initial price))/number of periods. Since it is so easy to calculate from the initial and final prices themselves, you commonly won't see it in the financial pages, as far as I know. Finally, to answer your question: "Does knowing this single piece of information indicate something about the stock?", I would say: not really. From the point of view of this one indicator, Pitchfork Oil and United Marshmallow look like identical investments, when they are clearly not. Knowing the average log-return is exactly the same as knowing the ratio between the final and initial prices. |
How to start personal finances? | A few practical thoughts: A practical thing that helps me immensely not to loose important paperwork (such as bank statements, bills, payroll statement, all those statements you need for filing tax return, ...) is: In addition to the folder (Aktenordner) where the statements ultimately need to go I use a Hängeregistratur. There are also standing instead of hanging varieties of the same idea (may be less expensive if you buy them new - I got most of mine used): you have easy-to-add-to folders where you can just throw in e.g. the bank statement when it arrives. This way I give the statement a preliminary scan for anything that is obviously grossly wrong and throw it into the respective folder (Hängetasche). Every once in a while I take care of all my book-keeping, punch the statements, file them in the Aktenordner and enter them into the software. I used to hate and never do the filing when I tried to use Aktenordner only. I recently learned that it is well known that Aktenordner and Schnellhefter are very time consuming if you have paperwork arriving one sheet at a time. I've tried different accounting software (being somewhat on the nerdy side, I use gnucash), including some phone apps. Personally, I didn't like the phone apps I tried - IMHO it takes too much time to enter things, so I tend to forget it. I'm much better at asking for a sales receipt (Kassenzettel) everywhere and sticking them into a calendar at home (I also note cash payments for which I don't have a receipt as far as I recall them - the forgotten ones = difference ends up in category "hobby" as they are mostly the beer or coke after sports). I was also to impatient for the cloud/online solutions I tried (I use one for business, as there the archiving is guaranteed to be according to the legal requirements - but it really takes far more time than entering the records in gnucash). |
Free “Rich Dad” education, with “free gift”: Is it legitimate, or is it a sales ploy? | Robert Kiyosaki's is basically a get-rich quick author. But to answer your question: It is a sales pitch in disguise. See Marketplace's report on a Kiyosaki seminar, which reveals that the free work shop is a sales pitch for a 3-day work shop which costs several hundred dollars. And the 3-day workshop is a sales pitch for "advanced" training which can cost as much as $45,000 (presumably in Canadian dollars, as the report was done in Canada). He does touch on some basic sound principles, but it's mixed with a lot of really bad (and in some cases illegal) advice. You'll do much better to invest your time and money in reading materials that aren't advertised via infomercials. Kiyosaki may well be rich, but it's from selling his Rich Dad-branded material, not from investing in real estate, or any other investment portfolio See also John T. Reed's guru rating, and his review of Kiyosaki's book, Rich Dad, Poor Dad. |
F-1 Visa expired - Unable to repay private student loan. What to do? | As an international student, the tuition is sky high. Typically, most students take loans for Education and start paying it back once they get a job. If you have exhausted your OPT period and have not got H1B, your options are either to go for further education(Hint: Phd), you can hope to cover living expense by part-time on campus job. This will give you additional time to look for a job and try for H1B again! |
What ways are there for us to earn a little extra side money? | I don't know what you program during the day, but you could always try your hand a programming for iPhone, Android or Blackberry. Just spend an hour or two a night on a simple but useful application. Find something that matches a hobby interest of yours and come up with an app that would be beneficial to people of that hobby. |
How do I know if refinance is beneficial enough to me? | When evaluating a refinance, you need to figure out the payback time. Refinancing costs money in closing costs. The payback time is the time it takes to recover the closing costs with the amount of money you are saving in interest. For example, if the closing costs are $2,000, your payback time is 2 years if it takes 2 years to save that amount in interest with the new interest rate vs. the old one. To estimate this, look at the difference in interest rate between your mortgage and the new one, and your mortgage balance. For example, let's say that you have $100,000 left on your mortgage, and the new rate is 1% lower than your current rate. In one year, you will save roughly $1,000 in interest. If your closing costs are $2,000, then your payback time is somewhere around 2 years. If you plan on staying in this house longer than the payback time, then it is beneficial to refinance. There are mortgage refinance calculators online that will calculate payback time more precisely. One thing to watch out for: when you refinance, if you expand the term of your mortgage, you might end up paying more interest over the long term, even though your rate is less and your monthly payment is less. For example, let's say you currently have 8 years left on a 15-year mortgage. If you refinance to a new 15-year mortgage, your monthly payment will go down, but if you only pay the new minimum payment for the next 15 years, you could end up paying more in interest than if you had just continued with your old mortgage for the next 8 years. To avoid this, refinance to a new mortgage with a term close to what you have left on your current mortgage. If you can't do that, continue paying whatever your current monthly payment is after you refinance, and you'll pay your new mortgage early and save on interest. |
Why should the P/E ratio of a growth stock match its percentage earnings growth rate? | This is only a rule of thumb. Peter Lynch popularized it; the ratio PE/growth is often called the Lynch Ratio. At best it's a very rough guideline. I could fill up this page with other caveats. I'm not saying that it's wrong, only that it's grossly incomplete. For a 10 second eyeball valuation of growth stocks, it's fine. But that's the extent of its usefulness. |
ESPP cost basis and taxes | This answer fills in some of the details you are unsure about, since I'm further along than you. I bought the ESPP shares in 2012. I didn't sell immediately, but in 2015, so I qualify for the long-term capital gains rate. Here's how it was reported: The 15% discount was reported on a W2 as it was also mentioned twice in the info box (not all of my W2's come with one of these) but also This showed the sale trade, with my cost basis as the discounted price of $5000. And for interests sake, I also got the following in 2012: WARNING! This means that just going ahead and entering the numbers means you will be taxed twice! once as income and once as capital gains. I only noticed this was happening because I no longer worked for the company, so this W2 only had this one item on it. This is another example of the US tax system baffling me with its blend of obsessive compulsive need for documentation coupled with inexplicably missing information that's critical to sensible accounting. The 1099 documents must (says the IRS since 2015) show the basis value as the award price (your discounted price). So reading the form 8949: Note: If you checked Box D above but the basis reported to the IRS was incorrect, enter in column (e) the basis as reported to the IRS, and enter an adjustment in column (g) to correct the basis. We discover the number is incorrect and must adjust. The actual value you need to adjust it by may be reported on your 1099, but also may not (I have examples of both). I calculated the required adjustment by looking at the W2, as detailed above. I gleaned this information from the following documents provided by my stock management company (you should the tax resources section of your provider): |
Can you sell a security through a different broker from which it was purchased? | Many brokers allow you to transfer shares to another broker without selling them. It depends on what kind of account and who the broker is for what forms you might have to fill out and what other hoops you might have to jump through. |
Is it legal if I'm managing my family's entire wealth? | I agree that this is a "bad idea" but I want to add in one more reason. Let's pretend your family and you are ok with all the tax ramifications and legal issues. This is still a horrid idea. You have to deal with the What Ifs. What if you get in an accident with your car, and then a law suit comes around and they decide to seize your assets? Again the reason isn't important—what is important is your ability to pay a critical "thing" is going to be based off accounts and money that are not yours. So you goof up on child support and they "freeze" your accounts. Guess what? Now your family members lose access to their money, because on paper it's your money. Keep in mind it doesn't have to be an irresponsible action that causes the issue. ID theft, for example, often results in a temporary account freeze while things are sorted out. So now your mom can't eat because "your money" is pending review. In this situation you might even turn to your mother or father or brother for help while your accounts are frozen for 2-3 months and everything is sorted out. But now you can't because their money is tied up too. Lastly lets assume the ID theft issue. That ID thief now has access to a big pool of money. They walk off with everyone's nest eggs—not just yours. |
How come the government can value a home more than was paid for the house? | The property tax valuation and the fair market price are NOT one and the same. They track each other, correlate to each other, but are almost NEVER the same number. In some parts of the USA, a municipality has to re-assess property tax values every ten years. In these places, the tax value of a property is on something like a 10-year moving average, NOT on the volatile daily market price. EDIT: It is easy to fall into the "trap" of thinking that property tax valuation is intended to represent fair market value. It's INTENT is to provide an accurate (or, as accurate as possible) RELATIVE VALUATION of your property compared to the other properties in the municipality. The sum of all the property values is the tax base of the municipality. When the town budget (which is paid in part via property taxes) is set, the town simply divides the tax base into the budget total to arrive at the ratio of tax-to-collect, to the tax base, also called the "tax rate per thousand dollars of valuation." i.e. if the town tax base is US$10,000,000, and the town budget is US$500,000, then the ratio is 0.05, or $50 per thousand dollars of valuation. If your property is assessed at US$100,000, then you would pay 100 x $50, or $5000 in property taxes that year. Since this is the goal of the property tax valuation, NOT deciding what your house is worth on the open market, then we are left with the question of "why use the market value of a house for property assessment?" and the answer is that of all the various schemes and algorithms you can try, "fair market value" is the easiest and most accurate...IF TIME FLUCUTATIONS ARE TAKEN OUT. For example, if I buy a house in a development for $250,000 today, and next summer the housing market crashes, and you buy the identical house next door to me for $150,000, it does NOT stand to reason that you should pay less taxes than me, because your house is "worth" $100,000 less. In fact, BOTH our houses are worth $100,000 less. What matters most in property tax valuation isn't the actual number, but rather, is YOUR valuation the same as other essentially similar properties in your tax base? Getting the RELATIVE ratio of value between you and your neighbors correct is the goal of property tax valuation. |
Apartment lease renewal - is this rate increase normal? | There could be a number of reasons for a rent increase. The only information I can offer is how I calculate what rent I will charge. The minimum I would ever charge per unit (Mortgage payment + Water) / Number of units This number is the minimum because it's what I need to keep afloat. Keep in mind these are ballpark numbers The target rent ((Mortgage payment + Water) / Number of units)*1.60 I mark up the price 60% for a few reasons. First, the building needs a repair budget. That money has to come from somewhere. Second, I want to put away for my next acquisition and third I want to make a profit. These get me close to my rental price but ultimately it depends on your location and the comparables in the area. If my target rent is 600 a month but the neighbors are getting 700-800 for the same exact unit I might ask more. It also depends on the types of units. Some of my buildings, all of the units are identical. Other buildings half of the units are bigger than the other half so clearly I wouldn't charge a equal amount for them. Ultimately you have to remember we're not in the game to lose money. I know what my renters are going to pay before I even put an offer in on a building because that's how I stay in business. It might go up over the years but it will always outpace my expenses for that property. |
Why would someone buy a way out-of-the-money call option that's expiring soon? | It could be that the contracts were bought at cheaper prices such as $.01 earlier in the day. What you see there with the bid and ask is the CURRENT bid and CURRENT ask. The high ask price means there is no current liquidity, as someone is quoting a very high ask price just in case someone really wants to trade that price. But as you said, no one would buy this with a better price on a closer strike price. The volume likely occurred at a different price than listed on the current ask. |
Diversification reduces risk, but does this base on the assumption that expected return of each asset is always in proportion to its risk? | If you are diversifying just for diversification purposes then all you are doing is averaging down your returns. You shouldn't just buy two securities because you think it is safer than putting all your money into one. A better method is to use money management and position sizing to limit your risk and exposure in any one security. You should know what your maximum risk is before you buy any security and know when it is time to get out of it. There are better ways to manage your risk. Don't put all your eggs in the one basket - yes, but don't diversify just for diversification purposes. |
Why is it important to research a stock before buying it? | The only sensible reason to invest in individual stocks is if you have reason to think that they will perform better than the market as a whole. How are you to come to that conclusion other than by doing in-depth research into the stock and the company behind it? If you can't, or don't want to, reach that conclusion about particular stocks then you're better off putting your money into cheap index trackers. |
What significant negative factors affect Yahoo's valuation? | There are two very large negative factors that affect Yahoo's valuation. The first is that their search business is in decline and continues to lose ground to Google and even Bing. There's no sign that they have any plan or product in the works to offset this decline, so there's tremendous uncertainty about the company's forward-looking revenues. The second is that the company can't seem to decide what to do with its stake in Alibaba, clearly the company's most valuable asset. It they sell it, the question then becomes what they plan to do with the proceeds. Will they do share buybacks or offer a special dividend to reward investors? Will they use some or all of the money to make strategic acquisitions that are revenue-enhancing? Will they use it to develop new products/services? Keep in mind one other thing here, too. There's a world of difference between what something is valued at and what someone's willing to actually pay for it. A patent portfolio is great and perhaps holds good value, assuming the buyer can find a way to monetize it. How exactly was the valuation of the patents arrived at, and are they worthwhile enough for someone to pay anywhere close to that valuation? There's more to this than meets the eye by using a first-blush look at asset valuation, and that's where the professionals come in. My bet is that they have it right and there's something the rest of the market doesn't see or understand about it, hence questions like yours. I hope this helps. Good luck! |
question about short selling stocks | My take on this is that with any short-selling contract you are engaging in, at a specified time in the future you will need to transfer ownership of the item(s) you sold to the buyer. Whether you own the item(s) or in your case you will buy your friend's used car in the meantime (or dig enough gold out of the ground - in the case of hedging a commodity exposure) is a matter of "trust". Hence there is normally some form of margin or credit-line involved to cover for you failing to deliver on expiry. |
What's the best way to make money from a market correction? | Depends on how long you're willing to invest for. Broadly speaking, the best (by which I mean, more reliably repeatable) way to make money from market corrections is to accept them as a fact of life, and not sell in a panic when they happen, such that the money you already invested can ride back up again. Put another way, just invest your money in one or two broad, low cost index funds with dividends reinvested (maybe spreading your investment over the course of six months or so) and then let time do its work. Have you worked out how much you've missed out on by holding your money as cash all this time (I presume you've been saving up a while) instead of investing it as you went? I suspect that by waiting for your correction, you've already missed out on more than you're going to make from that correction. |
Consequences of buying/selling a large number of shares for a low volume stock? | I've alway thought that it was strange, but the "price" that gets quoted on a stock exchange is just the price of the last transaction. The irony of this definition of price is that there may not actually be any more shares available on the market at that price. It's also strange to me that the price isn't adjusted at all for the size of the transaction. A transaction of just 1 share will post a new price even if just seconds earlier 100,000 shares traded for a different price. (Ok, unrealistic example, but you get my point.) I've always believed this is an odd way to describe the price. Anyway, my diatribe here is supposed to illustrate the point that the fluctuations you see in price don't really reflect changing valuations by the stock-owning public. Each post in the exchange maintains a book of orders, with unmatched buy orders on one side and unmatched sell orders on the other side. If you go to your broker and tell him, "fill my order for 50,000 shares at market price", then the broker won't fill you 50,000 shares at .20. Instead, he'll buy the 50 @ .22, then 80 @ .23, then 100 @ .30, etc. Because your order is so large compared to the unmatched orders, your market order will get matched a bunch of the unmatched orders on the sell side, and each match will notch the posted price up a bit. If instead you asked the broker, "open a limit order to buy 50000 shares at .20", then the exchange will add your order to the book: In this case, your order likely won't get filled at all, since nobody at the moment wants to sell at .20 and historically speaking it's unlikely that such a seller will suddenly appear. Filling large orders is actually a common problem for institutional investors: http://www.businessweek.com/magazine/content/05_16/b3929113_mz020.htm http://www.cis.upenn.edu/~mkearns/papers/vwap.pdf (Written by a professor I had in school!) |
What is considered a business expense on a business trip? | The IRS Guidance pertaining to the subject. In general the best I can say is your business expense may be deductible. But it depends on the circumstances and what it is you want to deduct. Travel Taxpayers who travel away from home on business may deduct related expenses, including the cost of reaching their destination, the cost of lodging and meals and other ordinary and necessary expenses. Taxpayers are considered “traveling away from home” if their duties require them to be away from home substantially longer than an ordinary day’s work and they need to sleep or rest to meet the demands of their work. The actual cost of meals and incidental expenses may be deducted or the taxpayer may use a standard meal allowance and reduced record keeping requirements. Regardless of the method used, meal deductions are generally limited to 50 percent as stated earlier. Only actual costs for lodging may be claimed as an expense and receipts must be kept for documentation. Expenses must be reasonable and appropriate; deductions for extravagant expenses are not allowable. More information is available in Publication 463, Travel, Entertainment, Gift, and Car Expenses. Entertainment Expenses for entertaining clients, customers or employees may be deducted if they are both ordinary and necessary and meet one of the following tests: Directly-related test: The main purpose of the entertainment activity is the conduct of business, business was actually conducted during the activity and the taxpayer had more than a general expectation of getting income or some other specific business benefit at some future time. Associated test: The entertainment was associated with the active conduct of the taxpayer’s trade or business and occurred directly before or after a substantial business discussion. Publication 463 provides more extensive explanation of these tests as well as other limitations and requirements for deducting entertainment expenses. Gifts Taxpayers may deduct some or all of the cost of gifts given in the course of their trade or business. In general, the deduction is limited to $25 for gifts given directly or indirectly to any one person during the tax year. More discussion of the rules and limitations can be found in Publication 463. If your LLC reimburses you for expenses outside of this guidance it should be treated as Income for tax purposes. Edit for Meal Expenses: Amount of standard meal allowance. The standard meal allowance is the federal M&IE rate. For travel in 2010, the rate for most small localities in the United States is $46 a day. Source IRS P463 Alternately you could reimburse at a per diem rate |
What is title insurance, and should I get title insurance for my home? | If or when you "own" your land outright you need to try and get the land patent on it. That is the supreme form of title to it. It goes back to when the land was acquired by the U.S. (from Britian, France, etc.) by treaty. Treaties trump even our Constitution. When you have a land patent.........IT'S YOURS! That link is to my site but this was so relevant that I had to include it. Hope y'all don't mind. |
Is it really possible to get rich in only a few years by investing? | Yes, it's possible. However, it's not likely, at least not for most people. Earning a million is not that difficult, but when you talk about billions that's an entirely different story. I think the key point that you're missing is leverage. It's common knowledge that Warren Buffett likes to have a huge cash warchest at his disposal and does not soak himself in debt. However, in his early years Buffett did not get to where he's at by investing only his own money. He ran what was basically a hedge fund and leveraged other peoples' money in the market. This magnified his returns quite substantially. If you look at Buffett's investments, you'll notice that he had a handful of HUGE wins in his portfolio and many more just mediocre success stories. Not everything he invested in turned to gold, but his portfolio was rocketed by the large wins that continued to compound over many years because he held them for so long. Also, consider the fact that Buffett's wealth is largely measured in Berkshire stock. This stock is a reflection of anticipated future earnings by the company. There's no way that alone could turn $10k in 1950 into $50B today... could it? Why not? Take the two founders of Google for example, they became billionaires in short order when Google had it's IPO and basically started in a garage with very little cash. Of course, they didn't do this by buying and selling shares. There are many paths to earnings enormous sums of money like the people you're talking about, but one characteristic that the richest people in society seem to have in common is that they all own their own companies. |
Do financial advisors get better deals on mortgages? | Yes, maybe for themselves, but for you that depends on quite a number of things. But not all advisors are scum, but accept the fact that you are their cash cow and you are there for their takings. Some advisors are true to their professions and advise ethically, trying to get the best for their clients. So search for a good advisor rather than a cheap one. And regarding the mortgage you are talking about, the mortgage provider and the mortgage taker don't deal directly, but use their solicitors. Every party wants the least of legal hassles for their transactions and get the best legal help. The financial advisor maybe both rolled into one or he has legal practitioners in his firm who would do the legal job after he takes care of the financial matters. Seems a cost effective workshop. |
How to calculate 1 share movement | The price of a share has two components: Bid: The highest price that someone who wants to buy shares is willing to pay for them. Ask: The lowest price that someone who has a share is willing to sell it for. The ask is always higher than the bid, since if they were equal the buyer and seller would have a deal, make a transaction, and that repeats until they are not equal. For stock with high volume, there is usually a very small difference between the bid and ask, but a stock with lower volume could have a major difference. When you say that the share price is $100, that could mean different things. You could be talking about the price that the shares sold for in the most recent transaction (and that might not even be between the current bid and ask), or you could be talking about any of the bid, the ask, or some value in between them. If you have shares that you are interested in selling, then the bid is what you could immediately sell a share for. If you sell a share for $100, that means someone was willing to pay you $100 for it. If after buying it, they still want to buy more for $100 each, or someone else does, then the bid is still $100, and you haven't changed the price. If no one else is willing to pay more than $90 for a share, then the price would drop to $90 next time a transaction takes place and thats what you would be able to immediately sell the next share for. |
Can I use balance transfer to buy car? | It really depends on the exact wording of that zero rate offer. Some specifically state they are to be used for paying other debt. Others will have wording such as "pay other debt or write yourself a check to pay for that next vacation, or new furniture." Sorry, it's back on you to check this out in advance. |
Where should I park my rainy-day / emergency fund? | I am using ING for my emergency savings, but sometime last year I discovered SmartyPig. As of 4/24/2010 they offer 2.1%, which is even better than the 1 year CDs at most banks. I've switched two small accounts to SmartyPig and plan to switch my emergency savings. Their accounts are geared around monthly contributions, but you don't have to use that feature. |
List of Investments from safest to riskiest? | With every caveat that Rick said plus many many more lets have some fun. One common way to measure risk is volatility of returns roughly how much the value of your asset jumps around. Interestingly, the following ordering is fairly similar for many other common measures of risk. The first three on the list would be mostly interchangeable. Generally, putting your money in "cash" investments has no real day-to-day price variability and the main risk is that the bank won't give you your money back at the end. Money market funds are last as they can "Break the buck". To get a feel for the next few on the list I'm using previous 360 day volatility numbers for representative broad indices (asof 2014-10-27). While these volatility values can move around quite a bit, the order is actually remarkably stable. Hedge funds might seem out of place here, but remember that hedge funds can hold be long and short at the same time and this can cancel out daily variation. However, Hedge funds do have plenty of risks that may not be well accounted for by this measure. For derivatives I'll refer to back to Rick's answer. This is a measure for broad investment in these categories your particular investment in Long-term Capital Management or Argentine Bonds may vary. It is important to note that your return on your investment generally grows as you go toward more risky investments down this list as people generally expect to be rewarded in the long term for risky investments. |
How to find out the amount of preferred stock of Coca Cola Company? | Coca Cola doesn't seem to have any preferred shares outstanding. From the annual report, it does say that the number of common shares outstanding was 2,294,316,831 as of February 22, 2011. (cover page, right before the horizontal break) But normally, you can find it either toward the beginning of the document or in the statement of shareholder's equity. |
Making $100,000 USD per month, no idea what to do with it | What I would do, in this order: Get your taxes in order. Don't worry about fancy tricks to screw the tax man over; you've already admitted that you're literally making more money than you know what to do with, and a lot of that is supported, one way or another, by infrastructure that's supported by tax money. Besides, your first priority is to establish basic security for yourself and your family. Making sure you won't be subjected to stressful audits is an important part of that! Pay off any and all outstanding debts you may have. This establishes a certain baseline standard of living for you: no matter what unexpected tragedies may come up, at least you won't have to deal with them while also keeping the wolves at bay at the same time! Max out a checking account. I believe the FDIC maximum insured value is $250,000. Fill 'er up, get a debit card, and just sit on it. This is a rainy day fund, highly liquid and immediately usable in case you lose your income. Put at least half of it into an IRA or other safe investments. Bonds and reliable dividend-paying stocks are strongly preferred: having money is good but having income is much better, especially in retirement! Quality of life. Splurge a little. (Emphasis on a little!) Look around your life. There are a few things that it would be nice if you just had, but you've never gotten around to getting. Pick up a few of them, but don't go overboard. Spending too much too quickly is a good way to end up with no money and no idea what happened to it. Also, note that this isn't just for you; family members deserve some love too! Charitable giving. If you have more money than you know what to do with, there are plenty of people out there who know exactly what to do--try to go on living and build a basic life for themselves--but have no money with which to do so. Do your research. Scam charities abound, as do more-or-less legitimate ones who actually do help those in need, but also end up sucking up a surprisingly high percentage of donations for "administrative costs". Try and avoid these and send your money where it will actually do some good in the world. Reinvest in yourself. You're running a business. Make sure you have the best tools and training you can afford, now that you can afford more! |
Hourly rate negotiation tips for paid internship | They likely have an intern (job title) pay-scale that maxes out somewhere below $30/hr in order to meet the FLSA (that exempt vs non-exempt stuff you were seeing). As a PhD student, you could probably negotiate up into the ~$25/hr range, but from a benefits standpoint, they might not be able to pay you $35/hr without making you an exempt, full-time employee. |
How do you determine the dividend payout date for Mutual Funds? | Determine which fund company issues the fund. In this case, a search reveals the fund name to be Vanguard Dividend Growth Fund from Vanguard Funds. Locate information for the fund on the fund company's web site. Here is the overview page for VDIGX. In the fund information, look for information about distributions. In the case of VDIGX, the fourth tab to the right of "Overview" is "Distributions". See here. At the top: Distributions for this fund are scheduled Semi-Annually The actual distribution history should give you some clues as to when. Failing that, ask your broker or the fund company directly. On "distribution" vs. "dividend": When a mutual fund spins off periodic cash, it is generally not called a "dividend", but rather a "distribution". The terminology is different because a distribution can be made up of more than one kind of payout. Dividends are just one kind. Capital gains, interest, and return of capital are other kinds of cash that can be distributed. While cash is cash, the nature of each varies for tax purposes and so they are classified differently. |
Is it worth buying real estate just to safely invest money? | The main point to consider is that your payments toward your own home replace your rent. Any house or apartment you buy will have changes in value; the value is generally going slowly up, but there is a lot of noise, and you may be in a low phase at any time, and for a long time. So seeing it as an investment is not any better than buying share or funds, and it has a much worse liquidity (= you cannot as easily make it to cash when you want to), and not in parts either. However, if you buy for example a one-room apartment for 80000 with a 2% mortgage, and pay 2% interest = 1600 plus 1% principal = 800, for a total of 2400 per year = 200 per month, you are paying less than your current rent, plus you own it after 30 years. Even if it would be worth nothing after 30 years, you made a lot of money by paying half only every month, and it probably is not worthless. You need to be careful not to compare apples with oranges - if you buy a house for 200000 instead, your payments would be higher than your rent was, but you would be living in your house, not in a room. For most people, that is worth a lot. You need to put your own value to that; if you don't care to have a lot more space and freedom, the extra value is zero; if you like it, put a price to it. With current interest rates, it is probably a good idea for most people to buy a house that they can easily afford instead of paying rent. The usual rules should be considered - don't overstretch yourself, leave some security, etc. Generally, it is rather difficult to buy an affordable house instead of renting today and not saving a lot of money in the process, so I would say go for it. |
Ideas on how to invest a relatively small amount of British pounds | First I assume you are resident for tax purposes in the UK? 1 Put 2000 in a cash ISA as an emergency fund. 2 Buy shares in 2 or 3 of the big generalist Investment trusts as they have low charges and long track records – unless your a higher rate tax payer don’t buy the shares inside the ISA its not worth it You could use FTSE 100 tracker ETF's or iShares instead of Investment Trusts. |
What are the tax implications of exercising options early? | Despite a fair number of views, no one besides @mbhunter answered, so I'll gather the findings of my own research here. Hopefully, this will help others in similar situations. If you spot any errors, please let me know! |
How to work around the Owner Occupancy Affidavit to buy another home in less than a year? | In your particular condition could buy the condo with cash, then get your mortgage on your next house with "less than 20%" down (i.e. with mortgage insurance) but it would still be an owner occupied loan. If you hate the mortgage insurance, you could save up and refi it when you have 20% available, including the initial down payment you made (i.e. 80% LTV ratio total). Or perhaps during the time you live in the condo, you can save up to reach the 20% down for the new house (?). Or perhaps you can just rent somewhere, then get into the house for 20% down, and while there save up and eventually buy a condo "in cash" later. Or perhaps buy the condo for 50% down non owner occupied mortgage... IANAL, but some things that may come in handy: you don't have to occupy your second residence (owner occupied mortgage) for 60 days after closing on it. So could purchase it at month 10 I suppose. In terms of locking down mortgage rates, you could do that up to 3 months before that even, so I've heard. It's not immediately clear if "rent backs" could extend the 60 day intent to occupy, or if so by how long (1 month might be ok, but 2? dunno) Also you could just buy one (or the other, or both) of your mortgages as a 20% down conventional "non owner occupied" mortgage and generate leeway there (ex: buy the home as non owner occupied, and rent it out until your year is up, though non owner occupied mortgage have worse interest rates so that's not as appealing). Or buy one as a "secondary residency" mortgage? Consult your loan officer there, they like to see like "geographic distance" between primary and secondary residences I've heard. If it's HUD (FHA) mortgage, the owner occupancy agreement you will sign is that you "will continue to occupy the property as my primary residence for at least one year after the date of occupancy, unless extenuating circumstances arise which are beyond my control" (ref), i.e. you plan on living in it for a year, so you're kind of stuck in your case. Maybe you'd want to occupy it as quickly as possible initially to make the year up more quickly :) Apparently you can also request the lender to agree to arbitrarily rescind the owner occupancy aspect of the mortgage, half way through, though I'd imagine you need some sort of excuse to convince them. Might not hurt to ask. |
How to plan in a budget for those less frequent but mid-range expensive buys? | I use a "sinking" fund. If you want to buy a $1000 bicycle, you put $100 per month into a savings account. 10 months from now, you can buy your $1000 bicycle. If you get a $500 windfall, you can either put it in the sinking fund and buy the item earlier. If you lose some income, you can put $50 per month in the fund. |
PayPal wants me to “add a bank account”, another funding source. Credit card isn't working. Why? | I'm guessing that you've reached the value limit of a payment that can be made without linking your account to a bank account. While you want privacy, PayPal wants to not be a money launderer. You may need to seek an alternative way to pay for this if you're trying to be private about it. |
At what point should I begin paying off student loans? | Everyone has made some good points that I was going to mention but to put it in terms that might make it easier to decide. As stated by others, paying off debt and being free is always the goal and desirable. However, you must also consider the "efficiency" of what you do as well. For example, there are two common types of student loans (there are others but let's focus on these) and that is subsidized and unsubsidized. The main difference? Subsidized loans don't earn interest on your balance while you are in school, it only happens when you graduate and come out of repayment grace period. Unsubsidized loans begin accumulating interest the moment they are disbursed, but you are not required to make payments on them until you graduate. All student loans are deferred until you graduate and exhaust your grace period or other means of deferring your payment, say for example a postponement or forbearance. However, it is often recommended that on UNSUBSIDIZED loans, you pay down your principle while still in school to avoid that massive interest amount that will get added to it when you are officially in repayment. On the other hand, it is often (if not always) recommended that you hold off on paying SUBSIDIZED loans until you are done and go into repayment, as for all intents and purposes its not costing you anything extra to wait. Family and parent loans are considered and treated more like personal loans, so treat them as such. Hope that helps. Also, don't forget to take advantage of the income based repayment options, as they will make the payments manageable enough to avoid making them a burden while you are trying to get a job and go post education. Further reading: Income-Driven Plans (Department of Education) Income-Driven Repayment Plans (nelnet) |
Does this sound like a great idea regarding being a landlord and starting a real estate empire? | This is a reasonable idea and many people have done it. But there are some risks that you need to mitigate. This is a viable business model, but it is a business and you need to treat it as such and expect to work quite hard at it. |
Why adjust for inflation annually, as opposed to realising it after the holding period? | I would use neither method. Taking a short example first, with just three compounding periods, with interest rate 10%. The start value y0 is 1. So after three years the value is 1.331, the same as y0 (1 + 0.1)^3. Depreciating (like inflation) by 10% (to demonstrate) gets us back to y0 = 1 Appreciating and depreciating by 10% cancels out: Appreciating by 10% interest and depreciating by 3% inflation: This is the same as y0 (1 + 0.1)^3 (1 + 0.03)^-3 = 1.21805 So for 50 years the result is y0 (1 + 0.1)^50 (1 + 0.03)^-50 = 26.7777 Note You can of course use subtraction but the not using the inflation figure directly. E.g. (edit: This appears to be the Fisher equation.) 2nd Note Further to comments, here is a chart to illustrate how much the relative performance improves when inflation is accounted for. The first fund's return is 6% and the second fund's return varies from 3% to 6%. Inflation is 3%. |
Why should we expect stocks to go up in the long term? | Companies are expected to make a profit, otherwise there is no point to their existence and no motivation for investment. That profit comes back to shareholders as growth and/or dividend. If a company is doing well and has a healthy profit to turn back into investment to facilitate increased future earnings, it increases shareholder equity and share price. If a company is doing well and has a healthy profit to pay out in dividend, it makes the shares more attractive to investors which pushes the price up. Either way, shares go up. Share prices drop when companies lose money, or there are market disturbances affecting all companies (recessions), or when individual companies fail. Averaged over all companies over the long term (decades), stocks can be reasonably expected to go up. |
Should I pay cash or prefer a 0% interest loan for home furnishings? | A friend recently bought an 800€ TV on 0% financing. Sounded like a sensible thing to do. Why pay 800 when you can pay 80pm for 10 months? It took 30mins to set up the 'loan'. She had to sign all kinds of documents, giving away much personal information (age, employment info, income, email address etc). She now has a financial relationship with an institution which has nothing to do with the item purchased. She is bombarded with all kinds of financial offerings. She regrets taking out the finance. She had the money. The hassle and the unwanted links to banks make the deal unattractive. Perhaps she should have tried to make a cash deal... |
Best way to start investing, for a young person just starting their career? | If your employer offers a 401(k) match, definitely take advantage of it. It's free money, so take advantage of it! |
Didn't apply for credit card but got an application denied letter? | I would keep the letter in a file for follow-up, and I would do what you are already planning to do and wait to see what shows up on the credit report. If this does reflect an identity theft attempt, chances are that others will follow, so vigilance is key here. If there is a hard credit check, then you can dispute that on your credit report. If there is not a hard credit check, there is nothing further this credit card company can do to help you anyway. |
How does Value Averaging work in practice? | Value averaging has you shift the balance of your portfolio over time, not the amount of contributions. So you can only do it if you have a portfolio holding both risky assets (shares etc) and some cash. You start out by making a plan about how much you will contribute every month and at what rate you expect the share part of the portfolio to grow. Perhaps based on 20th century data you think an 8% growth rate is reasonable. Or alternatively if you know your desired final amount obviously you can work backwards to a desired rate from that. If in any month the share part is falling below its expected growth path, you would put more money into it: possibly your whole paycheck contribution plus some from the savings cash account. On the other hand if the share component is growing "too fast" you would put all your additional savings into cash. So if your investments are doing well, you're not supposed to spend the excess money, but rather to put it aside into a dedicated cash account to top up your share component when prices fall. In theory, this has the auto-levelling benefit of Dollar Cost Averaging, but even better: when prices are high, you'll automatically buy fewer shares, or even sell some; conversely when prices are low you'll buy extra shares from your reserve account. If it turns out your estimate was unreasonably optimistic, and over your lifetime shares only ever average 3%, you'll end up with an entirely share portfolio, and a bumpier ride than you might have liked. If you have horrible luck and over your entire investing life shares return less than cash (which has happened, though not yet in the USA), then this will be worse than a standard balanced portfolio. The original book Value Averaging by Edelson has a pretty good explanation of various cases, though I would say some of the examples are worked in excessive detail. I have not implemented this myself, one reason being that the amount I'm able to save from year to year varies, as it probably does for you, and so predicting a path is not quite so simple as he assumes. You could still do it I suppose. I think you could get a very crude approximation to this by simply directing your savings into cash when the share market's rate of growth over the last several years is above what you think is the long term average. |
How can the ROE on a stock be more than 100%? | A company's Return on Equity (ROE) is its net income divided by its shareholder's equity. The shareholder's equity is the difference between total assets and total liabilities, and is not dependent on the stock price. What it takes to have a ROE over 100% is to have the income be greater than the equity. This might happen for a variety of reasons, but one way a high ROE happens is if the shareholder's equity (the divisor) is small, which can occur if past losses have eroded the company's capital (the original invested cash and retained earnings). If the equity has become a small value, the income for some period might exceed it, and so the ROE would be over 100%. Operating margin is not closely related to ROE. Although operating income is related to net income, to calculate the margin you divide by sales, which is completely unrelated to shareholder's equity. So there is no relationship with ROE to be expected. Operating margin is primarily dependent on market conditions, and can be substantially different in different industries. |
Can a non dividend-paying product (say ETF) suddenly start paying dividends? | Yes, absolutely. Consider Microsoft, Updated Jan. 17, 2003 11:59 p.m. ET Software giant Microsoft Corp., finally bowing to mounting pressure to return some of its huge cash hoard to investors, said it will begin paying a regular annual dividend to shareholders. From Wall Street Journal. Thus, for the years prior to 2003, the company didn't pay dividends but changed that. There can also be some special one-time dividends as Microsoft did the following year according to the Wall Street Journal: The $32 billion one-time dividend payment, which comes to $3 for each share of Microsoft stock, could be a measurable stimulus to the U.S. economy -- and is expected to arrive just in time for holiday shopping. Course companies can also reduce to stop dividends as well. |
How to prevent myself from buying things I don't want | Since these are specific items that you don't really want to buy, it might help to figure out what you could spend that money on that you DO really want. It sounds like right now you are thinking "Wow, I can get this widget (that I don't really want) for so cheap with this discount code!" Try changing your thinking to something along the lines of "This widget is pretty cool, but I could buy this doodad that I really want instead" or "This widget is nice, but if I don't buy it, I could have a latte every other day this month." I've found this to be a very effective technique-- and I often don't end up buying the doodads or lattes either. It's just a good way to put the cost of your purchase in perspective. The other thing I do when I want something is to write it down and revisit it a week or so later. If I still want it and I still have the budget for it (and especially if I've skipped other purchases to save up for it), then I buy it. That advice doesn't sound like it will work for you though, since it sounds like you've wanted to buy these things for a long time. So... are you REALLY sure you don't want them, or do you just not want to want them? |
Are social media accounts (e.g. YouTube, Twitter, Instagram, etc.) considered assets? | The buyer of such an account is likely treating it as an asset, and if they ever resell it capital gains (or loss) would be realized. I don't see why this would be any different for the person that created the account initially, except that the basis starts at $0 making the entire sale price taxable. How you figure the value of the account before the initial sale would be more difficult, but fortunately you may not ever need to know the value (for tax purposes) until you actually sell it. |
What to do with an old building to get money | There are a few ways to get money from property, but I'm not sure any would work for you: 1) Firstly you could sell it. Selling the building might require enough repairs that the building is habitable; if the repair costs are too high, you might not be able to recover costs from selling. For a particularly old and unkempt building, this is more likely to be the case. In extreme scenarios, you may earn more net profit by demolishing a decrepit building, and simply selling the land. Make sure you aren't setting your price too high if you are desperate to sell; dropping your price might make the headache of upkeep go away, and might be better for you financially in the long run. 2) You could rent it - but if it is so uninhabitable you can't sell it, then this is unlikely without repairs (and it seems you don't want to do this anyway). 3) If your building is in an area where the zoning laws are not strict, you may be able to apply for a permit to have it zoned for commercial use - and either run a business out of it, or rent it to someone else to do so. Again, this would be dependent on repairs if the building is uninhabitable, and also would require the building to well-situated for a business. 4) You could take out a mortgage on the building. Of course, this has two big caveats: (a) the bank would need to assess the building for value [and it seems not to be worth much in your case]; and (b) this provides only temporary cash, which you would need to pay back to the bank over time. In some cases, if you had a solid plan, you might be able to take a mortgage out against the value of the land, and use the cash from the mortgage to do some repairs, so that it would be in good shape for selling. |
$65000/year or $2500 every two weeks: If I claim 3 exemptions instead of zero, how much would my take home pay be? | I use paycheckcity.com and first punch in my paycheck and make sure it calculates within a few pennies the value of my actual paycheck. Then I fiddle with withholding values, etc. to see the effect of change. It has been very effective for me over the years. |
Best way to invest money as a 22 year old? | What is the goal of the money? If it is to use in the short term, like savings for a car or college, then stick it in the bank and use it for that purpose. If you really want this money to mean something, then in my opinion you have only one choice: Open a ROTH IRA with something like Vanguard or Fidelity and invest in an index fund. Then do something that will be very difficult: Don't touch it. By the time you are 65, it will grow to about 60,000. However, assuming a 20% tax bracket, the value of that money is really more like 75,000. Clearly this will not make or break you either way. The way you live the rest of your life will have far more of an impact. It will get you started on the right path. BTW this is advice I gave my son who is about your age, and does not earn a ton of money as a state trooper. Half of his overtime pay goes into a ROTH. If he lives the rest of his life like he does now, he will be a wealthy man despite making an average income. No debt, and investing a decent portion of his pay. |
mortgage vs car loan vs invest extra cash? | A point that hasn't been mentioned is whether paying down the mortgage sooner will get you out of unnecessary additional costs, such as PMI or a lender's requirement that you carry flood insurance on the outstanding mortgage balance, rather than the actual value/replacement cost of the structures. (My personal bugbear: house worth about $100K, while the bare land could be sold for about twice that, so I'm paying about 50% extra for flood insurance.) May not apply to your loan-from-parents situation, but in the general case it should be considered. FWIW, in your situation I'd probably invest the money. |
DJIA components multipliers | You can create something like that by: You'll have to determine the PE ratio manually from the financial statements. To get the PE ratio for each company, you can try the Edgar database, though I doubt it goes as far back as 1950. This blog has a graph of the DJIA PE ratio from 1929 - 2009. |
Is stock trading based more on luck than poker playing? | This depends strongly on what you mean by "stock trading". It isn't a single game, but a huge number of games grouped under a single name. You can invest in individual stocks. If you're willing to make the (large) effort needed to research the companies and their current position and potentialities, this can yield large returns at high risk, or moderate returns at moderate risk. You need to diversify across multiple stocks, and multiple kinds of stocks (and probably bonds and other investment vehicles as well) to manage that risk. Or you can invest in managed mutual funds, where someone picks and balances the stocks for you. They charge a fee for that service, which has to be subtracted from their stated returns. You need to decide how much you trust them. You will usually need to diversify across multiple funds to get the balance of risk you're looking for, with a few exceptions like Target Date funds. Or you can invest in index funds, which automate the stock-picking process to take a wide view of the market and count on the fact that, over time, the market as a whole moves upward. These may not produce the same returns on paper, but their fees are MUCH lower -- enough so that the actual returns to the investor can be as good as, or better than, managed funds. The same point about diversification remains true, with the same exceptions. Or you can invest in a mixture of these, plus bonds and other investment vehicles, to suit your own level of confidence in your abilities, confidence in the market as a whole, risk tolerance, and so on. Having said all that, there's also a huge difference between "trading" and "investing", at least as I use the terms. Stock trading on a short-term basis is much closer to pure gambling -- unless you do the work to deeply research the stocks in question so you know their value better than other people do, and you're playing against pros. You know the rule about poker: If you look around the table and don't see the sucker, he's sitting in your seat... well, that's true to some degree in short-term trading too. This isn't quite a zero-sum game, but it takes more work to play well than I consider worth the effort. Investing for the long term -- defining a balanced mixture of investments and maintaining that mixture for years, with purchases and sales chosen to keep things balanced -- is a positive sum game, since the market does drift upward over time at a long-term average of about 8%/year. If you're sufficiently diversified (which is one reason I like index funds), you're basically riding that rise. This puts you in the position of betting with the pros rather than against them, which is a lower-risk position. Of course the potential returns are reduced too, but I've found that "market rate of return" has been entirely adequate, though not exciting. Of course there's risk here too, if the market dips for some reason, such as the "great recession" we just went through -- but if you're planning for the long term you can usually ride out such dips, and perhaps even see them as opportunities to buy at a discount. Others can tell you more about the details of each of these, and may disagree with my characterizations ... but that's the approach I've taken, based on advice I trust. I could probably increase my returns if I was willing to invest more time and effort in doing so, but I don't especially like playing games for money, and I'm getting quite enough for my purposes and spending near-zero effort on it, which is exactly what I want. |
International (ex-US) ETFs with low exposure to financial sector? | Another European financial ETF that you could sell short is the iShares MSCI Europe Financials Sector Index Fund (EUFN). It's traded on American exchanges, so it should be easier to access if you're in the United States. It is a relatively low-volume issue, however, so it may be difficult to locate shares to short, and the bid/ask spread could be a significant factor. |
Obtaining Pound Sterling Cheque in US to pay for family history records from England? | Most US banks don't allow you the ability to draft a foreign currency check from USD. Though, I know Canadian banks are more workable. For instance, TD allows you to do this from CAD to many other currencies for a small fee. I believe even as a US Citizen you can quite easily open a TD Trust account and you'd be good to go. Also, at one time Zions bank was one of the few which lets US customers do this add-hoc. And there is a fee associated. Even as a business, you can't usually do this without jumping thru hoops and proving your business dealings in foreign countries. Most businesses who do this often will opt to using a payment processor service from a 3rd party which cuts checks in foreign currencies at a monthly and per check base. Your other option, which may be more feasible if you're planning on doing this often, would be to open a British bank account. But this can be difficult if not impossible due to the strict money laundering anti-fraud regulations. Many banks simply won't do it. But, you might try a few of the newer British banks like Tesco, Virgin and Metro. |
Will I get taxed on withdrawals from Real Cash Economy games? | Situation #1: I keep playing, and eventually earn 1000 PED. I withdraw this. Will I get taxed? If so, by how much? This is probably considered an "award", so whatever your country taxes for lottery/gambling winnings would be applicable. If there's no specific taxation on this kinds of income - then it is ordinary income. Situation #2: I deposit $5000, play the game, lose some money and withdraw PED equal to $4000. Will I get taxed? If so, by how much? Since it is a game, it is unlikely that deducting losses from your income would be allowed. However, the $4000 would probably not be taxed as income (since you are getting your own money back). Situation #3: I deposit $5000 and use this to buy in-game items. I later sell these items for massive profits (200%+, this can happen over the course of 2 years for sure). I withdraw $10000. Will I get taxed? If so, by how much? Either the same as #1 (i.e.: ordinary income) or as capital gains (although tax authority may argue that this was not a for-profit investment, and capital gains treatment shouldn't be applicable). Will I get taxed on withdrawals from Real Cash Economy games? And do the taxes apply to the full withdrawal, or only on the profits? Or only on the profits above a certain amount? Generally income taxes only apply on income. So if you paid $10000 and got back $12000 - only the $2000 is considered income. However some countries may tax full amounts under certain conditions. Such taxes are called "franchise taxes". For a proper tax advice consult with the locally licensed tax adviser. |
Pros and Cons of Interest Only Loans | The main disadvantage is that interest rates are higher for the interest-only loan. It's higher risk to the bank, since the principal outstanding is higher for longer. According to the New York Times, "Interest rates are usually an eighth- to a half-percentage point higher than on fully amortized jumbo loans." They're also tougher to qualify for, and fewer lenders offer them, again due to the risk to the bank. Since you can always put extra towards the principal, strictly speaking, these are the only downsides. The upside, of course, is that you can make a lower payment each month. The question is what are you doing with this? If this is the only way you can afford the payments, there's a good chance the house is too expensive for you. You're not building equity in the home, and you have the risk of being underwater if the house price goes down. If you're using the money for other things, or you have variable income, it might be a different story. For the former, reinvesting in a business you own might be a reason, if you're cognizant of the risks. For the latter, salespeople on commission, or financial industry types who get most of their income in bonuses, can benefit from the flexibility. |
Question about MBS and how it pays | A security is a class of financial instrument you can trade on the market. A share of stock is a kind of security, for example, as is a bond. In the case of your mortgage, what happens: You take out a loan for $180k. The loan has two components. a. The payment stream (meaning the principal and the interest) from the loan b. The servicing of the loan, meaning the company who is responsible for accepting payments, giving the resulting income to whomever owns it. Many originating banks, such as my initial lender, do neither of these things - they sell the payment stream to a large bank or consortium (often Fannie Mae) and they also sell the servicing of the loan to another company. The payment stream is the primary value here (the servicing is worth essentially a tip off the top). The originating bank lends $180k of their own money. Then they have something that is worth some amount - say $450k total value, $15k per year for 30 years - and they sell it for however much they can get for it. The actual value of $15k/year for 30 years is somewhere in between - less than $450k more than $180k - since there is risk involved, and the present value is far less. The originating bank has the benefit of selling that they can then originate more mortgages (and make money off the fees) plus they can reduce their risk exposure. Then a security is created by the bigger bank, where they take a bunch of mortgages of different risk levels and group them together to make something with a very predictable risk quotient. Very similar to insurance, really, except the other way around. One mortage will either default or not at some % chance, but it's a one off thing - any good statistician will tell you that you don't do statistics on n=1. One hundred mortgages, each with some risk level, will very consistently return a particular amount, within a certain error, and thus you have something that people are willing to pay money on the market for. |
Foreign company incorporated in US and W9 | According to the W9 instructions you are considered a U.S. person if: According to the following section, it looks like a C corporation may be easier then an LLC: All of this information can be found here: http://www.irs.gov/pub/irs-pdf/fw9.pdf Hope this helps! |
Why doesn't Japan just divide the Yen by 100? | Currently, there is simply no reason to do so. It's not a problem. It is no more of a problem or effort to denote "5,000" than it is to denote "50.00". But if there were a reason to do so, it wouldn't be all that difficult. Of course there would be some minor complications because some people (mostly old people presumably) would take time getting used to it, but nothing that would stop a nation from doing so. In Iceland, this has happened on several occasions in the past and while Iceland is indeed a very small economy, it shouldn't be that difficult at all for a larger one. A country would need a grace period while the old currency is still valid, new editions of already circulating cash would need to be produced, and a coordinated time would need to be set, at which point financial institutions change their balances. Of course it would take some planning and coordination, but nothing close to for example unifying two or more currencies into one, like the did with the euro. The biggest side-effect there was an inflation shot when the currencies got changed in each country, but this can be done even with giant economies like Germany and France. Cutting off two zeros would be a cakewalk in comparison. But in case of currencies like the Japanese Yen, there is simply no reason to take off 2 zeros yet. Northern-Americans may find it strange that the numbers are so high, but that's merely a matter of what you're used to. There is no added complication in paying 5.000 vs. 50 at a restaurant, it merely takes more space on a computer screen and bill, and that's not a real problem. Besides, most of the time, even in N-America, the cents are listed as well, and that doesn't seem to be enough of a problem for people to concern themselves with. It's only when you get into hyper-inflation when the shear space required for denoting prices becomes a problem, that economies have a real reason to cut off zeros. |
What suggested supplemental income opportunities exist for a 70 year old Canadian retiree? | My initial thoughts would be an ESL teacher or a private tutor for various subjects would likely be the easiest ones to consider. Possibly there are some people that could use the help in their education that would work well. |
Student loan payments and opportunity costs | I bought a house when I was 22, I also had $10k in student load debt. After the down payment, I had $1,500 to my name and $82k worth of debt. All the advice pointed to "pay the minimum payment and invest the rest." I discarded the advice and scrimped and put everything extra to those bills. I paid it all off by the time I was 31, and now at 34 I'm self employed, have about $110,000 saved up, a house worth $105,000, 2 cars worth a total of $8,000 and no debt. Keep in mind most of those years I was making $24-$30k a year I might have lost out on a couple years of investments, but right now there are no money worries... wouldn't you rather be like that instead of worrying if you might lose your job? |
What are a few sites that make it easy to invest in high interest rate mutual funds? | Any investment company or online brokerage makes investing in their products easy. The hard part is choosing which fund(s) will earn you 12% and up. |
Why does Yahoo Finance list the 10y T note (TNX) at 1/10 of CBOE and Google Finance? | The CBOE states, in an investor's guide to Interest Rate Options: The Options’ Underlying Values Underlying values for the option contracts are 10 times the underlying Treasury yields (rates)— 13-week T-bill yield (for IRX), 5-year T-note yield (for FVX), 10-year T-note yield (for TNX) and 30-year T-bond yield (for TYX). The Yahoo! rate listed is the actual Treasury yield; the Google Finance and CBOE rates reflect the 10 times value. I don't think there's a specific advantage to "being contrary", more likely it's a mistake, or just different. |
How can I withdraw money from my LLC? | There are TWO parts to an LLC or any company structure. This being the entire point of creating an LLC. The context is that a lawyer is after your LLC, and he's arguing that the LLC is not genuine, so he can go after your personal assets - your house, car, IRAs, tap your wife's salary etc. This is called "piercing the corporate veil". What would he use to claim the LLC is not genuine? The determination here is between you and the judge in a lawsuit. Suffice it to say, the way you withdraw money must consider the above issues, or you risk breaking the liability shield and becoming personally liable, which means you've been wasting the $25 every year to keep it registered. The IRS has a word for single member LLCs: "Disregarded entity". The IRS wants to know that the entity exists and it's connected to you. But for reporting tax numbers, they simply want the LLC's numbers folded into your personal numbers, because you are the same entity for tax purposes. The determination here is made by you. *LLCs are incredible versatile structures, and you can actually choose to have it taxed like a corporation where it is a separate "person" which files its own tax return. * The IRS doesn't care how you move money from the LLC to yourself, since it's all the same to them. The upshot is that while your own lawyer prohibits you from thinking of the assets as "all one big pile", IRS requires you to. Yes, it's enough to give you whiplash. |
Did I get screwed in taxes on a mutual fund dividend payment? | No, not screwed. This is just an artifact of the tax code and year end dividends. You paid a tax, and in return, got a higher basis. When you sell, you will have less profit, therefore less tax to pay than the guy who bought right after the dividend. You can call the fund company if you want to buy later this year. Once you understand the process, it might not bother you at all. |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | The way you ask this is interesting, it implies (quite correctly) that for many, an annual bill for house insurance, property tax, etc, can turn into an emergency. My answer to the true emergency is a breakage that can't be foreseen (although you have to know the furnace isn't going to last forever) or a medical bill that's not covered (our dental is limited and the Mrs root canal can be $1000 out of pocket) |
How does one interpret financial data for stocks listed on multiple exchanges? | First and foremost you need to be aware of what you are comparing. In this case, HSBC as traded on the NYSE exchange is not common shares, but an ADR (American Depository Receipt) with a 5:1 ratio from the actual shares. So for most intents and purposes owning one ADR is like owning five common shares. But for special events like dividends, there may be other considerations, such as the depository bank (the institution that created the ADR) may take a percentage. Further, given that some people, accounts or institutions may be required to invest in a given country or not, there may be some permanent price dislocation between the shares and the ADR, which can further lead to discrepancies which are then highlighted by the seeming difference in dividends. |
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