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How are mortgage payments decided? [duplicate] | It's so that your total mortgage payment stays the same every month. Obviously, the interest due each month decreases over time, as part of the principal is paid off each month, and so if the proportion of interest and principal repayments were to stay the same then your first payment would be very large and your last payment would be almost nothing. |
Is it possible to buy stock as a gift for a minor without involving the guardians? | You should talk to a lawyer. One solution I can think of is using a trust. Keep in mind that that may complicate things (non-revocable trusts are taxed on income not distributed, and revocable trust means you effectively keep the owenership of the stock). If you don't mind paying taxes on the dividends and keep the stocks in a living trust - that would be, IMHO, the simplest solution. That would, however, invoke the gift/estate tax at the value of the stock when the ownership actually passes to the intended receipient (i.e.: you die/gift the stock to the child). It would be very hard to pay the gift tax now and avoid getting the childs SSN and opening an account for the child with it. |
What is the incentive for a bank to refinance a mortgage at a lower rate? | Banks make money on load origination fees. The "points" you pay or closing costs are the primary benefit to the banks. A vast majority of the time risks associated with the mortgage are sold to another party. FYI, the same is true with investment banks. In general, the transaction costs (which are ignored by modern finance theory) are the main thing running the incentives for the industry. |
Finding Uncorrelated Assets | Have a look at: Diversify Portfolio. The site provides various tools all focused on correlation, diversification and portfolio construction. You can scan through every stock and ETF listed on the NASDAQ and NYSE to find any kind of correlation you're looking for. You can also create a portfolio and then analyze all the correlations within it, or search for specific stocks that can be added to the portfolio based on correlation and various other factors. |
What is a good way to keep track of your credit card transactions, to reduce likelihood of fraud? | Sign up for alerts. Everytime you use your card, you'll get an alert. That way if there is an unauthorized transaction, you'll know right away. The alerts can also tell you what amount was charged - since this happens right away, the last last cc transaction is fresh in your memory and any overcharges can be easily detected. Has saved me more times than I can remember! |
Visitor Shopping in the US: Would I get tax refund? Would I have to pay anything upon departure? | Sales tax and luxury tax is what you will have to pay tax wise, and they are non-refundable (in most cases but the rules vary area to area). This really tripped up some friends of mine I had come from England. The rules are complicated and regional. Sales tax is anywhere from 0% to 10.25% and are not usually applied to raw foods. Luxury taxes are usually state level and only apply to things most people consider a large purchase. Jewelry, cars, houses, etc. Not things your likely to buy. (Small, "normal" jewelry usually doesn't count. Diamond covered flava-flav clock ... probably has a luxury tax.) For sales tax, it can change a lot. Don't be afraid to ask. People ask all the time. It's normal. I personally add 10% to what I buy. Sales tax in my city is 7%, county is 6.5%, state is 6%. So you can get different rates depending on what side of the street you shop on some times. Under normal circumstances you do not get a refund on these taxes. Some states do give refunds. Usually however the trouble of getting that refund isn't worth it unless making a large purchase. You are not exempt from paying sales tax. (Depending on where you go you may get asked). Business are exempt if they are purchasing things to re-sell. Only the end customer pays sales tax. Depending on where you go, online purchases may not be subject to sales tax. Though they might. That, again, depends on city, county, and state laws. Normally, you will have to pay sales tax at the register. It will be calculated into your total, and show as a line item on your receipt. http://3.bp.blogspot.com/-yAvAm2BQ3xs/TudY-lfLDzI/AAAAAAAAAGs/gYG8wJeaohw/s1600/great%2Boutdoors%2Breceipt%2BQR-%2Bbefore%2Band%2Bafter.jpg Also some products have other non-refundable taxes. Rental car taxes, fuel taxes and road taxes are all likely taxes you will have to pay. Areas that have a lot of tourists, usually (but not always) have more of these kinds of taxes. Friendly note. DON'T BUY DVDs HERE! They won't work when you get home. I know you didn't ask but this catches a lot of people. Same for electronics (in many cases, specially optical drives and wireless). |
Selling To Close | Yes, if there is liquidity you can sell your option to someone else as a profit. This is what the majority of option trading volume is used for: speculative trading with leverage. |
Stranger in Asia wants to send me $3000 in Europe over Western Union because he “likes me”? [duplicate] | how are the ways he could scam me? There are hundreds of different ways the scam can progress ... broadly; |
How is “The People's Trust” not just another Investment Trust? | Well the People's Trust's IPO prospectus is now (2017-09-08) available for all to read (or there's a smaller "information leaflet"). (May need some disclaimers to be clicked to get access). Both have a "highlights" bullet-point list: Coverage here has a comment thread with some responses by the founder attempting to answer the obvious objection that there's other multi-manager trusts on a discount (e.g Alliance Trust on ~ -5.5%), so why would you buy this one on a (very small) premium? (Update: There's also another recent analysis here.) Personally, I'm thinking the answer to the original question "How is The People's Trust not just another Investment Trust?" is pretty much: "it's just another Investment Trust" (albeit one with its own particular quirks and goals). But good luck to them. |
What is the correct answer for percent change when the start amount is zero dollars $0? | Anyone who has any business looking at growth numbers will know thay are meaningless in the first year, So all they need to know is that it's the first year. It's no different than the Billboard music charts' treatment of the "last week's chart ranking" and "movement up/down" columns. It will help with visual layout if the figure used is about the same size as a percentage number. "New" fits nicely. |
As an employer, how do I start a 401k or traditional IRA plan? | If you are the sole owner (or just you and your spouse) and expect to be that way for a few years, consider the benefits of an individual 401(k). The contribution limits are higher than an IRA, and there are usually no fees involved. You can google "Individual 401k" and any of the major investment firms (Fidelity, Schwab, etc) will set one up free of charge. This option gives you a lot of freedom to decide how much money to put away without any plan management fees. The IRS site has all the details in an article titled One-Participant 401(k) Plans. Once you have employees, if you want to set up a retirement plan for them, you'll need to switch to a traditional, employer-sponsored 401k, which will involve some fees on your part. I seem to recall $2k/yr in fees when I had a sponsored 401(k) for my company, and I'm sure this varies widely. If you have employees and don't feel a need to have a company-wide retirement plan, you can set up your own personal IRA and simply not offer a company plan to your employees. The IRA contribution limits are lower than an individual 401(k), but setting it up is easy and fee-free. So basically, if you want to spend $0 on plan management fees, get an individual 401(k) if you are self-employed, or an IRA for yourself if you have employees. |
Are there any issues with registering an LLC in a foreign state? | This is an older question but I thought I'd give the correct response for anyone else that might look. Yes there definitely could be issues. You can form in friendly states such as Delaware and Nevada without having a physical location in the state but you can't run a business from another state without having to 'qualify' to do business in that State. To give a bit more clarification. Lets say you open a Delaware LLC. But you answer the phone when it rings on your New York phone and money comes into your New York bank account and your suppliers and vendors all use your New York address to send invoices and correspondence. Well you can pretty much count that you fall into the definition of doing business in New York and expected to pay New York taxes and qualify to do business in the state. The solution would be to set up your business to truly 'operate' from the state you would rather be in. |
What market conditions favor small cap stocks over medium cap stocks? | Small companies are generally able to adapt quickly to take advantage of changing conditions to enter new markets when the economy is growing. This gives them a lot of growth potential under those circumstances. However, in times of crisis, there may not be a lot of new markets to enter, and financing to expand any operations may be impossible to get. Under these conditions, small-caps will suffer relative to large-caps. |
Do rental car agencies sell their cars at a time when it is risky for the purchaser? | The rental industry is seasonal. They purchase additional inventory (vehicles) for their busy seasons and sell the extra inventory afterwards. |
ESPP in the UK - worth it? Disqualifying / qualifying sales? | ESPP is common among US companies, often with a framework similar to your outline. In the US, some ESPPs allow sales of shares to be considered qualifying (subject to capital gains rather than ordinary income tax) if they are sold at least 2 years after the enrollment date and at least 1 year after the purchase date. These details can vary from one plan to another and will be stated in the company's ESPP enrollment documents. Do look at the high and low values of the stock over the last year. If it swings up and down more than 15% (or whatever the discount is), then that risk should be a factor in your decision. If the stock is trending upward over the long term and you are confident in the durability of the company, then you might favor holding. |
Is A Company Abusing The Tax Code When It Does This, And How Does The IRS Prevent It? | A rather good IRS paper on the topic states that a donation of a business' in-kind inventory would be Under IRC 170(e)(1), however, the fair market value must be reduced by the amount of gain that would not be long-term capital gain if the property had been sold by the donor at the property's fair market value (determined at the time of the contribution). Under this rule, deductions for donated inventory are limited to the property's basis (generally its cost), where the fair market value exceeds the basis. There are references to IRC regulations in a narrative context you may find helpful: This paper goes on for 16 pages describing detailed exceptions and the political reasons for the exceptions (most of which are concerned with encouraging the donation of prepared food from restaurants/caterers to hunger charities by guaranteeing a value for something that would otherwise be trashed valueless); and a worked out example of fur coats that had a cost of goods of $200 and a market value of $1000. |
What are the gains from more liquidity in ETF for small investors? | In my opinion, if you are doing long-term investing, this is a non-issue. The difference of hours in being able to trade an ETF during the day vs. only being able to trade a traditional mutual fund at day-end is irrelevant if you are holding the investment for a long time. If you are engaging in day trading, market timing, or other advanced/controversial trading practices, then I suppose it could make a difference. For the way I invest (index funds, long-term, set-it-and-forget-it), ETFs have no advantage over traditional mutual funds. |
What should I look at before investing in a start-up? | In addition to evaluating the business (great answer), consider the potential payoff. If bonds pay off in the 5-10% range, the S&P500 has averged 10.5%. You should be expecting a payoff of 15-20% to invest in something riskier than the stock market. That means that if you invest $10k, then in 5 years you'll need to get out $25K (20% returns over 5 years). If you get less than this much in 5 years, the risk-to-reward ratio probably rules this out as a good investment. |
Do governments support their own bonds when their value goes down? | who issued stock typically support it when the stock price go down. No, not many company do that as it is uneconomical for them to do so. Money used up in buying back equity is a wasteful use of a firm's capital, unless it is doing a buyback to return money to shareholders. Does the same thing happen with government bonds? Not necessarily again here. Bond trading is very different from equities trading. There are conditions specified in the offer document on when an issuer can recall bonds(to jack up the price of an oversold bond), even government bonds have them. The actions of the government has a bigger ripple effect as compared to a firm. The government can start buying back bonds to increase it's price, but it will stoke inflation because of the increase in the supply of money in the market, which may or mayn't be desirable. Then again people holding the bond would have to incentivized to sell the bond. Even during the Greek fiasco, the Greek government wasn't buying Greek bonds as it had no capital to buy. Printing more euros wasn't an option as no assets to back the newly printed money and the ECB would have stopped them from being accepted. And generally buying back isn't useful, because they have to return the principal(which might run into billions, invested in long term projects by the government and cannot be liquidated immediately) while servicing a bond is cheaper and investing the proceeds from the bond sale is more useful while being invested in long term projects. The government can just roll over the bonds with a new issue and refrain from returning the capital till it is in a position to do so. |
Company asking for card details to refund over email | I used to work for a online payment posting company. Anytime a payment is made via Credit Card to a company that does not have PCI DSS(aka the ability/certification to store credit card information) there is a MD5 checksum(of the confirmation code, not the Credit Card information) that get sent to the company from the processor(billing tree, paypal, etc). The company should be able to send this information back to the processor in order to refund the payment. If the company isn't able to do this, to be honest they shouldn't be taking online credit card payments. And by all means do not send your credit card information in an email. As said above, call the company's customer service line and give them the info to credit your account. |
Do I pay a zero % loan before another to clear both loans faster? | See many past answers: you will usually save the most money by paying off the highest-intetest-rate loan first. (Remember to allow for tax effects, if any, when comparing real interest rates.) Some folks are more motivated to simplify their finances than to save money; in that case you might pay off the smallest loan first. |
Put idle savings to use while keeping them liquid | I'm new to this, but how about putting a big part of your money into an MMA? I don't know about your country, but in Germany, some online banks easily offer as much as 2.1% pa, and you can access the money daily. If you want decent profit without risk this is a great deal, much better than most saving accounts. |
Why invest in becoming a landlord? | As a landlord for 14 years with 10 properties, I can give a few pointers: be able and skilled enough to perform the majority of maintenance because this is your biggest expense otherwise. it will shock you how much maintenance rental units require. don't invest in real estate where the locality/state favors the tenant (e.g., New York City) in disputes. A great state is Florida where you can have someone evicted very quickly. require a minimum credit score of 620 for all tenants over 21. This seems to be the magic number that keeps most of the nightmare tenants out makes sure they have a job nearby that pays at least three times their annual rent every renewal, adjust your tenant's rent to be approximately 5% less than going rates in your area. Use Zillow as a guide. Keeping just below market rates keeps tenants from moving to cheaper options. do not rent to anyone under 30 and single. Trust me trust me trust me. you can't legally do this officially, but do it while offering another acceptable reason for rejection; there's always something you could say that's legitimate (bad credit, or chose another tenant, etc.) charge a 5% late fee starting 10 days after the rent is due. 20 days late, file for eviction to let the tenant know you mean business. Don't sink yourself too much in debt, put enough money down so that you start profitable. I made the mistake of burying myself and I haven't barely been able to breathe for the entire 14 years. It's just now finally coming into profitability. Don't get adjustable rate or balloon loans under any circumstances. Fixed 30 only. You can pay it down in 20 years and get the same benefits as if you got a fixed 20, but you will want the option of paying less some months so get the 30 and treat it like a 20. don't even try to find your own tenants. Use a realtor and take the 10% cost hit. They actually save you money because they can show your place to a lot more prospective tenants and it will be rented much sooner. Empty place = empty wallet. Also, block out the part of the realtor's agreement-to-lease where it states they keep getting the 10% every year thereafter. Most realtors will go along with this just to get the first year, but if they don't, find another realtor. buy all in the same community if you can, then you can use the same vendor list, the same lease agreement, the same realtor, the same documentation, spreadsheets, etc. Much much easier to have everything a clone. They say don't put all your eggs in one basket, but the reality is, running a bunch of properties is a lot of work, and the more similar they are, the more you can duplicate your work for free. That's worth a lot more day-to-day than the remote chance your entire community goes up in flames |
What steps should be taken, if any, when you find out your home's market value is underwater, i.e. worth less than the mortgage owed? | Step back and take a deep breath. Pay your mortgage. repeat 1 and 2 monthly until equity > mortgage. |
Wardrobe: To Update or Not? How-to without breaking the bank | New clothes isn't exactly an emergency expense :) so I would strongly suggest that you budget for it on a monthly basis. This doesn't mean you have to go spend the money every month, just put a reasonable amount of money into the clothes budget/savings every month and when you need a new shirt or two, take the money out of the saved money and go shopping. If you buy a piece or two of good quality clothing at a time you'd also not run into the situation where all your clothes fall apart at the same time. |
What is the best use of “spare” money? | nan |
Stock market transaction cost calculation | An order is your command to the broker to, say, "sell 100 shares of AAPL". An executed order (or partially executed order) is when all (or some) of that command is successfully completed. A transaction is an actual exchange of shares for money, and there may be one or more transactions per executed order. For example, the broker might perform all of the following 5 transactions in order to do what you asked: On the other hand, if the broker cannot execute your order, then 0 transactions have taken place. The fee schedule you quote is saying that no matter how many transactions the broker has to perform in order to fill your order -- and no matter what the share prices are -- they're only going to charge you $0.005 per share ($0.50 in this example of 100 shares), subject to certain limits. However, as it says at the top of the page you linked, Our Fixed pricing for stocks, ETFs (Exchange Traded Products, or ETPs) and warrants charges a fixed amount per share or a set percent of trade value, and includes all IB commissions, exchange and most regulatory fees with the exception of the transaction fees, which are passed through on all stock sales. certain transaction fees are passed through to the client. The transaction fee you included above is the SEC fee on sales. Many (but not all) transaction fees DO depend on the prices of the shares involved; as a result they cannot be called "fixed" fees. For example, if you sell 100 shares of AAPL at $150 each, But if you sell 100 shares of AMZN at $940 each, So the broker will charge you the same $0.50 on either of those orders, but the SEC will charge you more for the expensive AMZN shares than for the cheaper AAPL shares. The reason this specific SEC fee mentions aggregate sales rather than trade value is because this particular SEC fee applies only to the seller and not to the buyer. So they could have written aggregate trade value, but they probably wanted to highlight to the reader that the fee is only charged on sells. |
What is the preferred way to set up personal finances? | The absolute best advice I ever received was this: You will need three categories of savings in your life: 1) Retirement Savings This is money you put away (in 401-Ks and IRAs) for the time in your life when you can no longer earn enough income to support yourself. You do not borrow against it nor do you withdraw from it in emergencies or to buy a house. 2) Catestrophic savings This is money you put back in case of serious events. Events like: prolonged job loss, hospitalization, extended illness, loss of home, severe and significant loss of transportation, very large aplliance loss or damage. You do not take trips to the Bahamas or buy diamond rings with this money. 3) Urgent, relatively small, need savings. This is the savings you can use from time to time. Use it for bills that arise unexpectedly, unforseen shortfalls in your budget, needed repairs such as car repairs and small appliance repairs, surprising fines, fees, and bills. Put 10% of your income into each category of savings. 10% intro retirement savings, another, separate, 10% intro Catestrophic savings, and yet another 10% intro urgent, small need, savings. So, as you can see, already 30% of your income is already spoken for. Divide up the remaining 70% intro fixed (I recommend 50% toward fixed expenses) and variable expenses. Fixed includes those things that you pay once every month such as housing, utilities, car payment, debt repayment, etc. Variable includes discretionary things like eating out, gifts, and splurges. Most importantly, partner with someone who is your opposite. If you are a saver at heart partner with a spender. If you are a spender partner with a saver. There are three rules to live by regarding the budget: A) no one spends any money unless it is in the budget B) the budget only includes those things to which both the saver and the spender agree C) the budget can, and will, be modified as the pay period unfolds. A budget is a plan not a means to beat the other person up. Plans change as new information arises. A budget must be flexible. The urgent use savings will help to make the budget flexible. Edit due to comments: @enderland Perhaps you do not have children living with you. I am a saver, my wife is a spender. When it came time to do the budget I would forget things like the birthdays of my children, school fees due next pay period, shopping for Christmas gifts, needed new clothes and shoes for the children, broken small appliances that needed to be fixed or replaced, special (non reoccurring) house maintenence (like steam cleaning the carpet), gifts to relatives and friends, exceptional assistance to relatives, etc. As my wife was the spender she would remind me of these things. Perhaps you do not have these events in your life. I am glad to have these events in my life as that means that I have people in my life that I care about. What good is a fat savings account if I have no loved ones that benefit from it? |
Can I pay off my credit card balance to free up available credit? | Is it possible to pay off my balance more than once in a payment period in order to increase the amount I can spend in a payment period? Yes you can pay off the balance more than once even if its not due. This will get applied to outstanding and you will be able to spend again. If so, is there a reason not to do this? There is no harm. However note that it generally takes 2-3 days for the credit to be applied to the card. Hence factor this in before you make new purchases. I just got a credit card to start rebuilding my credit. Spending close to you credit limit does not help much; compared to spending less than 10% of your credit limit. So the sooner you get your limit on card increased the better. |
Calculating Future and Present value into mortgage comparisons | Using the fact that you'd save $160/mo by spending $7000, I'd look at it this way - If I were to lend you the $7000 at 12%/yr, $160 would pay it off in 58 months. At 18%/yr, 72 months or just 6 years. You can run spreadsheets to get breakeven scenarios, and mhoran is on track with his answer, but breakeven is just one point to consider. Beyond that date, it's free money. My approach is to look at it with a question - "How much interest could I afford to pay to make that monthly savings worthwhile?" |
Can I get a discount on merchandise by paying with cash instead of credit? | Slightly off topic... Not merchandise, but I paid for various doctor's appointments with cash (as opposed to paying with health insurance). I'd call ahead of time and notify them that I'd be paying in cash. I got ridiculous discounts, sometimes even less than the copay. I do not know why this discrepancy exists and I didn't want to ask for fear of messing up a good thing. |
W2 vs 1099 Employee status | In general that's illegal. If you're a W2 employee, you don't miraculously become a 1099 contractor just because they pay you more. If your job doesn't change - then your status doesn't change just because they give you a raise. They can be sued (by you, and by the IRS) for that. Other issues have already been raised by other respondents, just wanted to point out this legal perspective. |
What size “nest egg” should my husband and I have, and by what age? | There's a bit of working backwards that's required. This is a summary of a spreadsheet I wrote which helps to get to the answer. What you see here is that at age 25, one might have saved about a half year's salary, assuming they worked 5 years. The numbers grow exponentially to at 65, about 15 years salary saved. This will allow a withdrawal of about 60% final income each year using the 4% guideline. More will come from Social Security in the States to get closer to 100%. The sheet start with assumptions, a 10% per year rate of saving, and an 8% annual return. Salary is assumed to rise 3% per year. One can choose their age, enter their current numbers and their own assumptions. I had to include some numbers and at the time, 8% seemed reasonable. Not so sure today. What I do like is the concept of viewing savings in terms of 'years salary' as this leads to replacement rate. Will $1M be enough for you? Only you can answer that. But the goal of 80-100% replacement income is reasonable and this sheet can be used to understand the goals along the way. (note, the uploaded sheet had 15% saving rate, not the 10 I thought. I used 15 to show a 10% saving along with a 5% match to one's 401(k). Those interested are welcome to enter their own numbers. The one objection I've seen is the increase to salary. Increases tend to be higher in the first 20 than the second, or so I'm told.) |
How do I determine how much rent I could charge for a property or location? | Zoopla may not always accurately reflect the market price. Your best bet is to get a quote for local registered) letting agents. That way you know you are close to the real market value. Also, these quotes may come into handy if you have a mortgage on the property. Since most banks will require you to provide proof of rent figures you are projecting by sending in official quotes. Hope this helps.. |
Are there any statistics that support the need for Title Insurance? | I'm really surprised at the answers here. Claims/year per region isn't a statistic that is meaningful here... you need to think about the risk factors and the purpose of the insurance. First, what does title insurance do? It protects you against defects in the deed -- defects that may crop up and mean that your mortgage is no longer valid. This is different from most forms of insurance -- the events that render your title invalid are events that may have happened years, decades or even centuries ago. A big part of the insurance policy and its cost is conducting research to assess the validity of a deed. The whole point of the insurance is to reduce claims by improving data associated with the "chain of custody" of the property. So how do you evaluate the risk of finding out about something that happened a long time ago, that nobody appears to know about? IMO, you have to think about risk factors that increase the probability that things were screwed up in the past: You need to have an informed discussion with your attorney and figure out if it makes sense for you. Don't dismiss it out of hand. |
Why is stock dilution legal? | For new shares to be successfully sold, the price has to be below market price. If you currently own shares of that company, you should always get an option to buy those newly sold shares at that discounted price. The number of options depends on the relative number of shares you hold. Lets say you own 100 out of 1000 shares, currently priced at $10. 100 new shares are to be sold at $9. Since you are holding 10% of all shares, you have the option (i.e. the right) to buy 10 new (cheaper) shares (10% of 100) before anybody else can buy them. Theoretically, the money you save by getting the shares at a discounted price is equal to the money you lose by the share's value being diluted. So, if you're a shareholder and the company is increasing it's capital, you're given the right to "go with it". |
How can I deal with a spouse who compulsively spends? | Perhaps it seems harsh, but I would get separate accounts: credit cards, savings, retirement, all the way down the line. Your only joint account should be for paying mortgage/rent and other bills. And as another poster said, delete all your saved info from browsers &c. Perhaps you even need to set up separate user ids. If this really is a case of compulsive spending, curing it is likely to be a long, hard process, if it's even possible. You need to put yourself in a position where you won't be dragged down with him. |
I have more than $250,000 in a US Bank account… mistake? | Build a trust. I have a trust account under my name and 3 dependents, FDIC confirmed we're good to 1m. Then I have personal accounts for the 4 of us and a corp account, all at the same bank, each also insured. |
Can an unmarried couple buy a home together with only one person on the mortgage? | In this case can the title of the home still be held by both? Yes, it is possible to have additional people on title that are not on the mortgage. Would the lender (bank) have any reservations about this since a party not on the mortgage has ownership of the property? Possibly, but there is a very simple way to avoid this. Clayton could simply purchase the home himself, and add Emma to the title after closing by recording a quitclaim deed. The lender can't stop that, and from their point of view it's actually better, since they have two people to go after in the case of default. (But despite it being better they often make it difficult to purchase Tip, when you have an attorney draft the quitclaim document, have them draft the reverse document too. (Emma relinquishing the property back to Clayton.) There is usually no extra charge for this and then you have it if you need it. For example, you may need to file the reverse forms if you want to refinance. As a side note, I agree with Grade 'Eh' Bacon's and Pete B.'s in recommending that Clayton and Emma do not do this. Once they are married the property will either be automatically jointly owned, or a spouse can be added to the title easily, and until they are married there are no pros but many cons to doing this. Reasons not to do it: As a side note, in a comment it was proposed: ...suppose Clayton loves Emma so much that he wants her name to be on the house... I understand the desire to do this from an emotional point of view, but realize this does not make sense from a financial point of view. |
Is Bogleheadism (index fund investing) dead? | The reports of my death have been greatly exaggerated. - Twain I use index funds in my retirement planning, but don't stick to just S&P 500 index funds. Suppose I balance my money 50/50 between Small Cap and Large Cap and say I have $10,000. I'd buy $5,000 of an S&P Index fund and $5,000 of a Russell 2000 index fund. Now, fast forward a year. Suppose the S&P Index fund has $4900 and the Russell Index fund has $5200. Sell $150 of Russell Index Fund and buy $150 of S&P 500 Index funds to balance. Repeat that activity every 12-18 months. This lets you be hands off (index fund-style) on your investment choices but still take advantage of great markets. This way, I can still rebalance to sell high and buy low, but I'm not stressing about an individual stock or mutual fund choice. You can repeat this model with more categories, I chose two for the simplicity of explaining. |
gnucash share fractions | As BrenBarn stated, tracking fractional transactions beyond 8 decimal places makes no sense in the context of standard stock and mutual fund transactions. This is because even for the most expensive equities, those fractional shares would still not be worth whole cent amounts, even for account balances in the hundreds of thousands of dollars. One important thing to remember is that when dealing with equities the total cost, number of shares, and share price are all 3 components of the same value. Thus if you take 2 of those values, you can always calculate the third: (price * shares = cost, cost / price = shares, etc). What you're seeing in your account (9 decimal places) is probably the result of dividing uneven values (such as $9.37 invested in a commodity which trades for $235.11, results in 0.03985368550891072264046616477394 shares). Most brokerages will round this value off somewhere, yours just happens to include more decimal places than your financial software allows. Since your brokerage is the one who has the definitive total for your account balance, the only real solution is to round up or down, whichever keeps your total balance in the software in line with the balance shown online. |
Making a big purchase over $2500. I have the money to cover it. Should I get a loan or just place it on credit? | From an Indian perspective, this is what I would do. This typically would not only keep your credit score healthy but also give you additional benefits on spends. |
The spread goes to the market maker, is the market maker the exchange? | Joke warning: These days, it seems that rogue trading programs are the big market makers (this concludes the joke) Historically, exchange members were market makers. One or more members guaranteed a market in a particular stock, and would buy whatever you wanted to sell (or vice-versa). In a balanced market -- one where there were an equal number of buyers and sellers -- the spread was indeed profit for them. To make this work, market makers need an enormous amount of liquidity (ability to hold an inventory of stocks) to deal with temporary imbalances. And a day like October 29, 1929, can make that liquidity evaporate. I say "historically," because I don't think that any stock market works this way today (I was discussing this very topic with a colleague last week, went to Wikipedia to look at the structure of the NYSE, and saw no mention of exchange members as market makers -- in fact, it appears that the NYSE is no longer a member-based exchange). Instead, today most (all?) trading happens on "electronic crossing networks," where the spread is simply the difference between the highest bid and lowest ask. In a liquid stock, there will be hundreds if not thousands of orders clustered around the "current" price, usually diverging by fractions of a cent. In an illiquid stock, there may be a spread, but eventually one bid will move up or one ask will move down (or new bids will come in). You could claim that an entity with a large block of stock to move takes the role of market maker, but it doesn't have the same meaning as an exchange market maker. Since there's no entity between the bidder and asker, there's no profit in the spread, just a fee taken by the ECN. Edit: I think you have a misconception of what the "spread" is. It's simply the difference between the highest bid and the lowest offer. At the instant a trade takes place, the spread is 0: the highest bid equals the lowest offer, and the bidder and seller exchange shares for money. As soon as that trade is completed, the spread re-appears. The only way that a trade happens is if buyer and seller agree on price. The traditional market maker is simply an entity that has the ability to buy or sell an effectively unlimited number of shares. However, if the market maker sets a price and there are no buyers, then no trade takes place. And if there's another entity willing to sell shares below the market maker's price, then the buyers will go to that entity unless the market's rules forbid it. |
IRS “convenience of the employer” test when employee lives far from the office | I'm not a tax professional, but as I understand it, you are not expected to commute from San Francisco to Boston. :) If your employer has not provided you with an external office, then yes, you have very likely met the "convenience of the employer" test. However, to take the home office deduction, there are many requirements that have to be met. You can read more at the Nolo article Can You Deduct Your Home Office When You're an Employee? (Thanks, keshlam) The home office deduction has many nuances and is enough of an IRS red flag that you would be well-advised to talk to an accountant about it. You need to be able to show that it is exclusively and necessarily used for your job. Another thing to remember: as an employee, the home office deduction, if you take it, will be deducted on Schedule A, line 21 (unreimbursed employee expenses), among other Miscellaneous Deductions. Deductions in this section need to exceed 2% of your adjusted gross income before you can start to deduct. So it will not be worth it to pursue the deduction if your income is too high, or your housing expenses are too low, or your office is too small compared to the rest of your house, or you don't itemize deductions. |
Why deep in the money options have very low liquidity | One reason might be the 100% margin requirement on long options. Suppose I want to go long AAPL. I could get a deep ITM call or buy shares. $12,700 for 100 shares, with it's 25% margin requirement is like around $3200 locked up cash. Combine with a deep OTM Jan 2017 $70 strike put for $188, would give a $3400 margin requirement to enter the trade. or I could be in the JAN 2017 $70 strike for nearer $5800, but with a 100% margin requirement due to being a long call. So (3400/5800) = 59% increase in margin requirement for Deep ITM calls. Plus long term the shares will pay dividends, while a LEAP CALL does not. |
Why does capital gains tax apply to long term stock holdings? | Why only long term investments? What do they care if I buy and sell shares in a company in the same year? Simple, your actually investing when you hold it for a long term. If you hold a stock for a week or a month there is very little that can happen to change the price, in a perfect market the value of a company should stay the same from yesterday to today so long as there is no news(a perfect market cannot exist). When you hold a stock for a long term you really are investing in the company and saying "this company will grow". Short term investing is mostly speculation and speculation causes securities to be incorrectly valued. So when a retail investor puts money into something like Facebook for example they can easily be burned by speculation whether its to the upside or downside. If the goal is to get me to invest my money, then why not give apply capital gains tax to my savings account at my local bank? Or a CD account? I believe your gains on these accounts are taxed... Not sure at what rate. If the goal is to help the overall health of business, how does it do that? During an IPO, the business certainly raises money, but after that I'm just buying and selling shares with other private shareholders. Why does the government give me an incentive to do this (and then hold onto it for at least a year)? There are many reasons why a company cares about its market price: A companies market cap is calculated by price * shares outstanding. A market cap is basically what the market is saying your company is worth. A company can offer more shares or sell shares they currently hold in order to raise even more capital. A company can offer shares instead of cash when buying out another company. It can pay for many things with shares. Many executives and top level employees are payed with stock options, so they defiantly want to see there price higher. these are some basic reasons but there are more and they can be more complex. |
At what point does it become worth it to file an insurance claim? | We learned the hard way on this one. First, our area was hit with what was called an "inland hurricane" where we forced to file a claim as our home received extensive damage. Within the same year, we also incurred an electrical surge which took out our older big screen tv (one of those big monstrosities that sits on the floor). We were granted full replacement with a more modern flat screen TV, TV stand, and DVD player. It seemed like a no brainer. We quickly found it as our premium went up that it wasn't that sweet. It wasn't a huge increase, but it definitely has us truly evaluate if it's really necessary filing a claim. |
How do I go about finding an honest & ethical financial advisor? | I think the other answers raise good points. But to your question, "How do I find an honest financial adviser" ask your friends and family. See who they talk to and confide in. Go meet that person, understand what they do and how they view things and if you gel, great. Honesty and strong ethics exist in individuals regardless of laws. What is it you're trying to accomplish? You just have some money you want to put aside? You want to save for something? You want to start a budget or savings plan? Your first step may be talking to a tax person, not an investment adviser. Sometimes the most significant returns are generated when you simply retain more of your earnings and tax people know how to accomplish that. You're just graduating university, you're just going to get your first job. You don't need to hunt for the right heavy hitter 30% gains generating financial adviser. You need to establish your financial foundation. Crawl, walk, then run. There are some basics (that transcend international borders). If you don't know much about investing, most (if not all) retirement and individual brokerage type accounts will give you access to some kind of market index fund. You don't need to multinationally diversify in to high fee funds because "emerging markets are screaming right now." Typically, over a few years the fees you pay in the more exotic asset classes will eat up the gains you've made compared to a very low fee market index fund. You can open free accounts at a number of financial institutions. These free accounts at these banks all have a list of zero commission zero load funds, all have something resembling an index fund. You can open your account for free, deposit your money for free, and buy shares in an index fund for free. |
Pros/cons for buying gold vs. saving money in an interest-based account? | Just because gold performed that well in the past does not mean it will perform that well in the future. I'm not saying you should or should not buy gold, but the mere fact that it went up a lot recently is not sufficient reason to buy it. Also note that on the house, an investment that accrues continuous interest for 30 years at an annual rate of about 7.7% will multiply by a factor of 10 in 30 years. That rate is pretty high by today's standards, but it might have been more feasible in the past (I don't know historical interest rates very well). Yet again note that the fact that houses went up a lot over the last 30 years does not mean they will continue to do so. |
Why are auto leases stubbornly strict about visa status and how to work around that? | When getting a car always start with your bank or credit union. They are very likely to offer better loan rate than the dealer. Because you start there you have a data point so you can tell if the dealer is giving you a good rate. Having the loan approved before going to the dealer allows you to negotiate the best deal for the purchase price for the car. When you are negotiating price, length of loan, down payment, and trade in it can get very confusing to determine if the deal is a good one. Sometimes you can also get a bigger rebate or discount because to the dealer you are paying cash. The general advice is that a lease for the average consumer is a bad deal. You are paying for the most expensive months, and at the end of the lease you don't have a car. With a loan you keep the car after you are done paying for it. Another reason to avoid the lease. It allows you to purchase a car that is two or three years old. These are the ones that just came off lease. I am not a car dealer, and I have never needed a work visa, but I think their concern is that there is a greater risk of you not being in the country for the entire period of the lease. |
Price graphs: why not percent change? | I am in complete agreement with you. The place i have found with the sort of charts you are looking for is stockcharts.com. To compare the percentage increase of several stocks over a period of 2 market-open days or more, which is quite useful to follow the changes in various stocks… etc., an example: Here the tickers are AA to EEEEE (OTC) and $GOLD / $SILVER for the spot gold / silver price (that isn't really a ticker). It is set to show the last 6 market days (one week+)...the '6' in '6&O'. You can change it in the URL above or change it on the site for the stocks you want... up to 25 in one chart but it gets really hard to tell them apart! By moving the slider just left of the ‘6’ at the bottom right corner of the chart, you can look at 2 days or more. For a specific time period in days, highlight the ‘6’ and type any number of market-open days you want (21 days = about one month, etc.). By setting a time period in days, and moving the entire slider, you can see how your stocks did in the last bull/bear run, as an example. The site has a full how-to, for this and the other types of charts they offer. The only problem is that many OTC stocks are not charted. Save the comparison charts you use regularly in a folder in your browser bookmarks. Blessings. I see the entire needed link isn't in blue... but you need it all. |
Why are the administrative fees for the three biggest donor-advised funds identical? | The commenters who referred you to the prisoner's dilemma are exactly correct, but I wanted to give a more detailed explanation because I find game theory quite interesting. The prisoner's dilemma is a classic scenario in game theory where even though it's in the best interests of two or more players to cooperate, they fail to do so. Wikipedia has a simple example using prisoners, but I'll use a simple example using Fidel and Charles, who are fund managers at Fidelity and Charles Schwab, respectively. To make the table shorter, I abbreviated a bit: INC = increase fees, KEEP=keep fees the same, DEC=decrease fees. Here is the dilemma itself, in the table that shows the resulting market shares if each fund manager follows the course of action in question. While this example isn't mathematically rigorous because I completely fabricated the numbers, it makes a good example. The most profitable course of action would be both fund managers agreeing to increase their fees, which would keep their market shares the same but increase their profits as they earn more fees. However, this won't happen for several reasons. Because economies of scale exist in the market for investment funds, it's reasonable to assume in a simple example that as funds grow larger, their costs decrease, so even though a fund manager decreases his fees (betraying the other players), this decrease won't be enough to reduce their profits. In fact, the increased market share resulting from such a decrease may well dominate the decreased fees and lead to higher profits. The prisoner's dilemma is highly applicable to markets such as these because they exist as oligopolies, i.e. markets where a relatively small number of established sellers possess considerable market power. If you actually wanted to model the market for donor-advised funds using game theory, you need to take a few more things into account. Obviously there are more than two firms. It's probably a valid assumption that the market is an oligopoly with significant economies of scale, but I haven't researched this extensively. There is more than one time period, so some form of the iterated prisoner's dilemma is needed. The market for donor-advised funds is also complicated by the fact that these are philanthropic funds. This may introduce tax implications or the problem of goodwill and institutional opinion of these funds. Although both funds increasing their fees may increase their profits in theory, institutional investors may look on this as a pure profit-seeking and take their funds elsewhere. For example, they may choose to invest in smaller funds with higher fees but better reputations. While reputation is important for any company, it might make more of a difference when the fund/investment vehicle is philanthropic in nature. I am by no means an expert on game theory, so I'm sure there are other nuances to the situation that I'm unaware of. |
Is losing money in my 401K normal? | It is absolutely normal for your investments to go down at times. If you pull money out whenever your investments decrease in value, you lock in the losses. It is better to do a bit of research and come up with some sort of strategy about how you will manage your investments. One such strategy is to choose a target asset allocation (or let the "target date" fund choose it for you) and never sell until you need the money for retirement. Some would advocate various other strategies that involve timing the market. The important thing is that you find a strategy that you can live with and that provides you with enough confidence that you won't buy and sell at random. Acting on gut feelings and selling whenever you feel queasy will likely lead to worse outcomes in the long run. |
Is there any way to buy a new car directly from Toyota without going through a dealership? | You already got good answers on why you can't buy a Toyota from the factory, but my answer is regarding to the implied second part of your question: how to avoid haggling. I found a good way to avoid the haggling at a car dealership can be simply to not haggle. Go in with a different attitude. The main reason car dealers list inflated prices and then haggle is that they expect the customers to haggle. It is fundamentally based on distrust on both sides. Treat the sales person as your advisor, your business partner, as somebody you trust as an expert in his field, and you'll be surprised how the experience changes. Of course, make sure that the trust is justified. Sales reps have a fine line to walk. Of course they like to sell a car for more money, but they also do not want a reputation of overcharging customers. They'd rather you recommend them to your friends and post good reviews on Yelp. In the end, all reputable dealers effectively have a fixed-price policy, or close to it, even those who don't advertise it, and even for used cars. Haggling just prolongs the process to get there. And sales reps are people. Often people who hate the haggling part of their job as much as you do. I was in the market for a new (used) car a few months ago. In the end, it was between two cars (one of them a Toyota), both from the brand-name dealer's respective used car lots. In both cases, I went in knowing in advance what the car's fair market value was and what I was willing to pay (as well as details about the car, mileage, condition etc. - thanks to the Internet). Both cars were marked significantly higher. As soon as the sales rep realized that I wasn't even trying to haggle - the price dropped to the fair value. I didn't even have to ask for it. The rep even offered some extras thrown into the deal, things I hadn't even asked for (things like towing my old car to the junk yard). |
Owner-Financed home sale or Land Contract — how to handle the transaction and the ongoing entity? | You need to talk to a local attorney specializing in real estate matters. The contract needs to ensure that your interests are protected. How you do that is too complex for an answer here and varies from state to state, or even jurisdictions within a state. There are all sorts of options. Sometimes deals like this are structured so that you can actually sell your remaining equity in the property to a third party later on. If the property has value, but the banks aren't interested in lending right now, you could potentially make money on it down the road. |
What happens when a (Internation) Central securities depository goes bankrupt? | There is no generic answer and it would depend on case to case basis. CSD are built on strong foundation in the sense they would have very low cost base and generally would not go bankrupt. However if such a situation as CSD provide an essential role, the regulator, central bank and Government would all step in to prevent a total collapse. They would be forced merged with other entity or more capital raised or put under watch by Govt appointed trustee to settle issues so that there is least or No impact. |
What should a 21 year old do with £60,000 ($91,356 USD) inheritance? | Myself I am in a similar position. I've had a few good conversations about this with people in the financial services industry. It all depends how much time you want to spend on yielding your profits and how much risk you would like to take. High time and high risk obviously means higher expected gain, but also has a high chance of creating a loss. Option 1: You could buy a home now and take out a mortgage with a high down payment (thus lower interest rates) and rent it out. By the time you are ready to have your own house, you can decide to either take out a mortgage on your second house and make money off your first house, and keep renting it out. Or you could move in there yourself. If you use an asset-back mortgage (i'm not sure if that is the term, but a mortgage where in the worst case you give your home back to the bank), you generally carry least risk. If you keep doing this you can have 2 houses paid off if everything goes well. Option 2: You could also invest in stocks. This all depends on the risk you want to take and the time you want to put in it. Option 3: You could also put the money in a savings account. Some banks will give you better interest rates if you lock the money for a set amount of years. Option 4: You could buy a foreclosure and try to flip it, though this is very risky and requires a lot of time. Also, it is important to also have some sort of emergency fund, so whatever you do, don't spend all your money. Save some for a rainy day :-) Hope it helps.. |
Does my net paycheck decrease as the year goes on due to tax brackets filling up? | If your payroll payments are the same each period, you will generally have the same net pay per period. Some things that can cause variations: If your employer puts special payments in a specific paycheck (such as a quarterly or annual bonus, or a vacation payout) this can increase the percentage held from that specific paycheck. The IRS publishes lookup tables, and your payroll system should withhold the amount in the lookup table. If you get a raise midyear, your new payroll withholding rate may increase based on the gross pay amount. http://www.irs.gov/pub/irs-pdf/p15.pdf |
Layman's guide to getting started with Forex (foreign exchange trading)? | There are various indexes on the stock market that track the currencies. Though it is different than Forex (probably less leverage), you may be able to get the effects you're looking for. I don't have a lot of knowledge in this area, but looked some into FXE, to trade the Euro debt crisis. Here's an article on Forex, putting FXE down (obviously a biased view, but perhaps will give you a starting point for comparison, should you want to trade something specific, like the current euro/dollar situation). |
What implications does having the highest household debt to disposable income ratio have on Australia? | It is basically the same situation what US was when the crash happened. People took on debt without the means to pay, even with awful credit records. But the problem isn't the debt people take on themselves, but with the limited disposable income they have how efficiently can their debts be serviced. And how do banks who lend out money can recover their money. When banks lend money to all and sundry, they have to take care of defaults and that is when financial wizardry comes into play. In US people have the option to default on their debt and refinance it, so banks assumed default and tried to hedge their risks. If this is an option in Australia, be ready for a crash else not to worry about much. If banks continue lending expect higher inflation rates, higher interest rates and maybe a downgrade of bonds issued by the Australian government. Higher import costs and a boom in exports because of devalued Australian dollar. |
Investing for Dummys | You can't get started investing. There are preliminary steps that must be taken prior to beginning to invest: Only once these things are complete can you think about investing. Doing so before hand will only likely lose money in the long run. Figure these steps will take about 2.5 years. So you are 2.5 years from investing. Read now: The Total Money Makeover. It is full of inspiring stories of people that were able to turn things around financially. This is good because it is easy to get discouraged and believe all kind of toxic beliefs about money: The little guy can't get ahead, I always will have a car payment, Its too late, etc... They are all false. Part of the book's resources are budgeting forms and hints on budgeting. Read later: John Bogle on Investing and Bogle on Mutual Funds One additional Item: About you calling yourself a "dummy". Building personal wealth is less about knowledge and more about behavior. The reason you don't have a positive net worth is because of how you behaved, not knowledge. Even sticking a small amount in a savings account each paycheck and not spending it would have allowed you to have a positive net worth at this point in your life. Only by changing behavior can you start to build wealth, investing is only a small component. |
Is there any benefit to investing in an index fund? | Why not figure out the % composition of the index and invest in the participating securities directly? This isn't really practical. Two indices I use follow the Russell 2000 and the S&P 500 Those two indices represent 2500 stocks. A $4 brokerage commission per trade would mean that it would cost me $10,000 in transaction fees to buy a position in 2500 stocks. Not to mention, I don't want to track 2500 investments. Index funds provide inexpensive diversity. |
How can you possibly lose on investments in stocks? | Once you buy stocks on X day of the month, the chances of stocks never actually going above and beyond your point of value on the chart are close to none. How about Enron? GM? WorldCom? Lehman Brothers? Those are just a few of the many stocks that went to 0. Even stock in solvent companies have an "all-time high" that it will never reach again. Please explain to my why my thought is [in]correct. It is based on flawed assumptions, specifically that stock always regain any losses from any point in time. This is not true. Stocks go up and down - sometimes that have losses that are never made up, even if they don't go bankrupt. If your argument is that you should cash out any gains regardless of size, and you will "never lose", I would argue that you might have very small gains in most cases, but there are still times where you are going to lose value and never regain it, and those losses can easily wipe out any gains you've made. Never bought stocks and if I try something stupid I'll lose my money, so why not ask the professionals first..? If you really believe that you "can't lose" in the stock market then do NOT buy individual stocks. You may as well buy a lottery ticket (not really, those are actually worthless). Stick to index funds or other stable investments that don't rely on the performance of a single company and its management. Yes, diversification reduces (not eliminates) risk of losses. Yes, chasing unreasonable gains can cause you to lose. But what is a "reasonable gain"? Why is your "guaranteed" X% gain better than the "unreasonable" Y% gain? How do you know what a "reasonable" gain for an individual stock is? |
Please explain the relationship between dividend amount, stock price, and option value? | The exchanges artificially push the price of the stock down on the ex-div date. Often the impact of paying the dividend is absorbed by the ebb and flow of trading in the stock later in the day by the market. I think this was noticable with Nokia because the company is in poor shape and the stock has plunged recently. Dividends are a great way for companies to return value to shareholders. The trend for many companies, particularly growth stocks is to reinvest profits to grow the company. Former growth stocks like Microsoft like to just sit on billions of dollars and do nothing with it. |
How much money are you actually trading with options? | You would have paid $880.00 plus commission in this case, and made $85 before commissions. How much you would have made on expiration depends on the price that TSLA has on April 1, which hasn't come yet. If it expires worthless, you typically don't pay a commission but you will have lost the full $880. If it expires in the money and you want to exercise it, then you would pay a commission (often different than the commission to buy/sell the option itself) and you would have 100 shares of TSLA. You won't know how much you make or lose in this case until you ultimately sell the shares of TSLA. |
When an insider discloses a stock trade are they required to execute? | They are not required to fulfill the trade that they have intended to execute. They are able to cancel or modify the trade at any point. Example: This is how insiders are able to manipulate the price of shares through there buying and selling intentions. A CEO would be able to disclose a buy order for a month from now, or whatever time period is required. This would most likely increase the price of the stock as investors would see this as a good sign of company performance. Up until the point when the buy order is scheduled to execute the CEO can then cancel the order and create a new sell order. Since the stock is high in price, his new order is likely to make him money based on the manipulation from his trading intentions. I am not an expert on the subject and only know as much as I do through personal research. Here is an interesting article about this kind of insider trading and manipulation:http://dealbook.nytimes.com/2012/12/10/the-fine-line-between-legal-and-illegal-insider-trading/?_r=0 |
Does SIPC protect securities purchased in foreign exchanges? | I have received a response from SIPC, confirming littleadv's answer: For a brief background, the protections available under the Securities Investor Protection Act ("SIPA"), are only available in the context of a liquidation proceeding of a SIPC member broker-dealer and relate to the "custody" of securities and related cash at the SIPC member broker-dealer. Thus, if a SIPC member broker-dealer were to fail at a time when a customer had securities and/or cash in the custody of the SIPC member broker-dealer, in most instances it would be SIPC's obligation to restore those securities and cash to the customer, within statutory limits. That does not mean, however, that the customer would necessarily receive the original value of his or her purchase. Rather, the customer receives the security itself and/or the value of the customer's account as of the day that the liquidation commenced. SIPC does not protect against the decline in value of any security. In a liquidation proceeding under the SIPA, SIPC may advance up to $500,000 per customer (including a $250,000 limit on cash in the account). Please note that this protection only applies to the extent that you entrust cash or securities to a U.S. SIPC member. Foreign broker dealer subsidiaries are not SIPC members. However, to the extent that any assets, including foreign securities, are being held by the U.S. broker dealer, the assets are protected by SIPC. Stocks listed on the LSE are protected by SIPC to the extent they are held with a SIPC member broker dealer, up to the statutory limit of $500,000 per customer. As I mentioned in the comments, in the case of IB, indeed they have a foreign subsidiary, which is why SIPC does not cover it (rather they are insured by Lloyds of London for such cases). |
How smart is it to really be 100% debt free? | Having no debt should be the ultimate goal for every household, IMHO, but at what cost? As an example, I had some clients (before they started working with me) that had outstanding debt when they retired and were gung-ho to pay it off. They opted to take it out of their retirement accounts. They didn't set aside enough for taxes which was their first mistake. After a few years, they now have realized they should not have paid off everything as now they have other medical issues that have arisen and not enough in their retirement accounts to satisfy their monthly requirement. |
Home Valuation in a Dodgy neighborhood | Over the last ten years you have reaped the benefits of a good financial decision. (Presumably your low mortgage has freed up money for other financial priorities.) There would be no harm in making a clean break by selling as is. On the other hand, the resale value would probably be rather low considering the condition and the neighborhood. I don't want to assume too much here, but if a potential buyer is interested in the house by virtue of not being able to afford a house in a better neighborhood or better condition, their finances and credit history may make it difficult for them to be approved for a mortgage. That would reduce the potential buyer pool and further reduce the sale price. If you can pull more in rent than the mortgage, you definitely have an opportunity to come ahead. Maybe window A/C units and a repaired chimney are enough if you're renting. Your rental income would pay for that in less than a year even while paying your mortgage for you. (Of course you don't want to become a sleazy slumlord either.) |
Why is a stock dividend considered a dividend? What makes it different from a stock split? | The key difference I've found between a stock split and a stock dividend – of the exact same stock and class, as opposed to a spin-off – seems to be from the company's own accounting perspective. There doesn't appear to be any actual transfer of value to the shareholder with either kind of transaction; i.e. in theory, each transaction would be immaterial to the value of your holdings. With respect to the company's accounting, a stock split affects the par value of the shares, whereas a stock dividend reduces the retained earnings account in order to increase paid-in or contributed capital. I found a good online source which explains the history behind this accounting difference: McGraw-Hill - Intermediate Accounting eBook, 6/e - Chapter 18 - Stock Dividends and Splits. Small quote: [...] Besides being based on fallacious reasoning, accounting for stock dividends by artificially reclassifying “earned” capital as “invested” capital conflicts with the reporting objective of reporting shareholders' equity by source. Despite these limitations, this outdated accounting standard still applies. Since neither the corporation nor its shareholders apparently benefits from stock dividends, why do companies declare them?23 Occasionally, a company tries to give shareholders the illusion that they are receiving a real dividend. Another reason is merely to enable the corporation to take advantage of the accepted accounting practice of capitalizing retained earnings. Specifically, a company might wish to reduce an existing balance in retained earnings—otherwise available for cash dividends—so it can reinvest the earned assets represented by that balance without carrying a large balance in retained earnings. [...] There's a lot more on that page, before and after, worth reading. From another book: Google Books - Comparative Income Taxation, a Structural Analysis - page 314 - Stock Dividends. Small quote: The distribution of dividends in the form of stock or "bonus" shares to existing shareholders typically involves a transfer for corporate law purposes of retained earnings into stated capital. It can been [sic] viewed as a deemed distribution of a cash dividend to the shareholders followed by a corresponding contribution to capital or as solely as an event at the corporate level which has no effect on the shareholders whose economic interest in the corporation is unchanged by the receipt of additional shares. The systems have taken varied approaches to the stock dividend problem. The treatment is in part a function of the rules dealing with distributions of stated capital. [emphases above are mine] [... continues w/descriptions of different countries' tax treatments of the kinds of stock dividends. Includes U.S., Sweden, Japan, Netherlands, Canada, Australia, U.K., France, Germany. ...] As far as why a corporation might want to capitalize earnings and reduce the equity otherwise available for dividends, I can only imagine that, ignoring taxes for a moment, that it may have something to do with capital ratios that need to be maintained for financing or regulatory purposes? Yet, I remain curious. If I discover more on this then I'll update my answer. Additional resources: |
How can one protect oneself from a dividend stock with decreasing price? | Your question reminds me of a Will Rogers quote: buy some good stock, and hold it till it goes up, then sell it. If it don’t go up, don’t buy it. There's no way to prevent yourself from buying a stock that goes down. In fact all stocks go down at some times. The way to protect your long term investment is to diversify, which increases the chances that you have more stocks that go up than go down. So many advisors will encourage index funds, which have a low cost (which eats away at returns) and low rick (because of diversification). If you want to experiment with your criteria that's great, and I wish you luck, but Note that historically, very few managed funds (meaning funds that actively buy and sell stocks based on some set of criteria) outperform the market over long periods. So don't be afraid of some of your stocks losing - if you diversify enough, then statistically you should have more winners than losers. It's like playing blackjack. The goal is not to win every hand. The goal is to have more winning hands than losing hands. |
Standardized loan options to purchase employee stock options | What you want is a cashless transaction. It's part of the normal process. My employer gives me 1000 options at $1, I never need to come up with the money, the shares are bought and sold in one set of transactions, and if the stock is worth $10, I see $9000 less tax withholding, hit the account. No need for me to come up with that $1000. |
How much more than my mortgage should I charge for rent? | I am sorry to say, you are asking the wrong question. If I own a rental that I bought with cash, I have zero mortgage. The guy I sell it to uses a hard money lender (charging a high rate) and finances 100%. All of this means nothing to the prospective tenant. In general, one would look at the rent to buy ratio in the area, and decide whether homes are selling for a price that makes it profitable to buy and then rent out. In your situation, I understand you are looking to decide on a rent based on your costs. That ship has sailed. You own already. You need to look in the area and find out what your house will rent for. And that number will tell you whether you can afford to treat it as a rental or would be better off selling. Keep in mind - you don't list a country, but if you are in US, part of a rental property is that you 'must' depreciate it each year. This is a tax thing. You reduce your cost basis each year and that amount is a loss against income from the rental or might be used against your ordinary income. But, when you sell, your basis is lower by this amount and you will be taxed on the difference from your basis to the sale price. Edit: After reading OP's updated question, let me answer this way. There are experts who suggest that a rental property should have a high enough rent so that 50% of rent covers expenses. This doesn't include the mortgage. e.g. $1500 rent, $750 goes to taxes, insurance, maintenance, repairs, etc. the remaining $750 can be applied to the mortgage, and what remains is cash profit. No one can give you more than a vague idea of what to look for, because you haven't shared the numbers. What are your taxes? Insurance? Annual costs for landscaping/snow plowing? Then take every item that has a limited life, and divide the cost by its lifetime. e.g. $12,000 roof over 20 years is $600. Do this for painting, and every appliance. Then allow a 10% vacancy rate. If you cover all of this and the mortgage, it may be worth keeping. Since you have zero equity, time is on your side, the price may rise, and hopefully, the monthly payments chip away at the loan. |
Should I purchase a whole life insurance policy? (I am close to retirement) | First of all, congratulations on being in an incredible financial position. you have done well. So let's look at the investment side first. If you put 400,000 in a decent index fund at an average 8% growth, and add 75,000 every year, in 10 years you'll have about $1.95 Million, $800k of which is capital gain (more or less due to market risk, of course) - or $560k after 30% tax. If you instead put it in the whole life policy at 1.7% you'll have about $1.3 Million, $133k of which is tax-free capital gain. So the insurance is costing you $430K in opportunity cost, since you could have done something different with the money for more return. The fund you mentioned (Vanguard Wellington) has a 10-year annualized growth of 7.13%. At that growth rate, the opportunity cost is $350k. Even with a portfolio with a more conservative 5% growth rate, the opportunity cost is $178k Now the life insurance. Life insurance is a highly personal product, but I ran a quick quote for a 65-year old male in good health and got a premium of $11,000 per year for a $2M 10-year term policy. So the same amount of term life insurance costs only $110,000. Much less than the $430k in opportunity cost that the whole life would cost you. In addition, you have a mortgage that's costing you about $28K per year now (3.5% of 800,000). Why would you "invest" in a 1.7% insurance policy when you are paying a "low" 3.5% mortgage? I would take as much cash as you are comfortable with and pay down the mortgage as much as possible, and get it paid off quickly. Then you don't need life insurance. Then you can do whatever you want. Retire early, invest and give like crazy, travel the world, whatever. I see no compelling reason to have life insurance at all, let alone life insurance wrapped in a bad investment vehicle. |
What ETF or other security tracks closest to 30 year mortgage rates? | Mortgage rates tend to track the yield on the 10-year Treasury note. The CBOE Interest Rate 10-Year T-Note, TNX, is a security directly related to this rate. Divide the CBOE price of TNX by 10 to get the yield. One can also track the 10Y T-Note yield at yahoo finance using ticker symbol (^TNX). One can also track the 10Y T-Note yield at yahoo finance using ticker symbol (^TNX). |
How will Brexit affect house mortgages? | Nobody can predict the affects of Brexit but it is wise to consider them. We saw the pound weaken after the vote to leave and it is possible the pound will weaken further after Brexit and this devaluation could be quite dramatic. If that happens it is likely to increase inflation, UK inflation has gone from under 1% around the time of the referendum to 3% today and it could well go higher. https://www.rateinflation.com/inflation-rate/uk-historical-inflation-rate If inflation continues to increase, the Bank of England is likely to put up interest rates, as it has historically done this to hedge against inflation. We have been living in a world of artificially low interest rates since the global crash of 2008 as the BoE has tried to stimulate recovery with lower rates. The rates cannot continue at this level if inflation starts to rise. http://www.thisismoney.co.uk/money/news/article-2387744/Base-rate-vs-inflation-chart-How-tell-things-really-got-better.html That in turn will put up mortgage rates. So for example if you have a £100k mortgage at 3.92% (currently this is a reasonable rate to have) your repayments will be £523 a month. If your mortgage rate goes up to say 7% then your repayments are £707 a month, if it goes up to 10% then it's £909 a month and so on. There is a mortgage calculator you can use to try playing with different amounts here: https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator My advice would therefore be try to get as small a mortgage as you can and make sure you can afford it quite comfortably, in case rates go up and you need to find a few hundred pounds a month extra. There are other risks from Brexit as well, house prices could fall as people decide not to buy properties due to excessive interest rates! Overall nobody knows what will happen but it is good to be planning ahead for all eventualities. ** I am not a financial advisor, this advice is given in good faith but with no financial qualification. |
Buying a more expensive house as a tax shelter (larger interest deduction)? | No. This logic is dangerous. The apples to apples comparison between renting and buying should be between similar living arrangements. One can't (legitimately) compare living in a 600 sq ft studio to a 3500 sq ft house. With the proposal you offer, one should get the largest mortgage they qualify for, but that can result in a house far too big for their needs. Borrowing to buy just what you need makes sense. Borrowing to buy a house with rooms you may never visit, not a great idea. By the way, do the numbers. The 30 year rate is 4%. You'd need a $250,000 mortgage to get $10,000 in interest the first year, that's a $312,000 house given an 80% loan. On a median income, do you think it makes sense to buy a house twice the US median? Last, a portion of the tax savings is 'lost' to the fact that you have a standard deduction of nearly $6,000 in 2012. So that huge mortgage gets you an extra $4000 in write-off, and $600 back in taxes. Don't ever let the Tax Tail wag the Investing Dog, or in this case the House Dog. Edit - the investment return on real estate is a hot topic. I think it's fair to say that long term one must include the rental value of the house in calculating returns. In the case of buying of way-too-big house, you are not getting the return, it's the same as renting a four bedroom, but leaving three empty. If I can go on a bit - I own a rental, it's worth $200K and after condo fee and property tax, I get $10K/yr. A 5% return, plus whatever appreciation. Now, if I lived there, I'd correctly claim that part of my return is the rental value, the rent I don't pay elsewhere, so the return to me is the potential growth as well as saved rent. But if the condo rents for $1200, and I'd otherwise live in a $600 apartment with less space, the return to me is lost. In my personal case, in fact, I bought a too big house. Not too big for our paycheck, the cost and therefore the mortgage were well below what the bank qualified us for. Too big for the need. I paid for two rooms we really don't use. |
State tax issues for NJ resident with DC tax withheld, and likely refunded | If you already filed the DC return, you can try and wait with filing the NJ return until you get the answer from DC. You can file an extension request with the NJ division of taxation here. Or, you can file without claiming the credit, and worst case amend later and claim it if DC refuse to refund. I find it highly unlikely that DC will decide that a person staying for a couple of months over the year in hotels will count as a resident. |
How should my brother and I structure our real estate purchase? | Because this question seems like it will stick around, I will flesh out my comments into an actual answer. I apologize if this does not answer your question as-asked, but I believe these are the real issues at stake. For the actual questions you have asked, I have paraphrased and bolded below: Firstly, don't do a real estate transaction without talking to a lawyer at some stage [note: a real estate broker is not a lawyer]. Secondly, as with all transactions with family, get everything in writing. Feelings get hurt when someone mis-remembers a deal and wants the terms to change in the future. Being cold and calculated now, by detailing all money in and out, will save you from losing a brother in the future. "Should my brother give me money as a down payment, and I finance the remainder with the bank?" If the bank is not aware that this is what is happening, this is fraud. Calling something a 'gift' when really it's a payment for part ownership of 'your' house is fraud. There does not seem to be any debate here (though I am not a lawyer). If the bank is aware that this is what is happening, then you might be able to do this. However, it is unlikely that the bank will allow you to take out a mortgage on a house which you will not fully own. By given your brother a share in the future value in the house, the bank might not be able to foreclose on the whole house without fighting the brother on it. Therefore they would want him on the mortgage. The fact that he can't get another mortgage means (a) The banks may be unwilling to allow him to be involved at all, and (b) it becomes even more critical to not commit fraud! You are effectively tricking the bank into thinking that you have the money for a down payment, and also that your brother is not involved! Now, to the actual question at hand - which I answer only for use on other transactions that do not meet the pitfalls listed above: This is an incredibly difficult question - What happens to your relationship with your brother when the value of the house goes down, and he wants to sell, but you want to stay living there? What about when the market changes and one of you feels that you're getting a raw deal? You don't know where the housing market will go. As an investment that's maybe acceptable (because risk forms some of the basis of returns). But with you getting to live there and with him taking only the risk, that risk is maybe unfairly on him. He may not think so today while he's optimistic, but what about tomorrow if the market crashes? Whatever the terms of the agreement are, get them in writing, and preferably get them looked at by a lawyer. Consider all scenarios, like what if one of you wants to sell, does the other have the right to delay, or buy you out. Or what if one if you wants to buy the other out? etc etc etc. There are too many clauses to enumerate here, which is why you need to get a lawyer. |
Is there any downside snapping a picture (or scanning a copy) of every check one writes vs. using a duplicate check? | When banks would return the actual physical cheque, at least you had some printing / writing from the other bank on it, as some type of not-easily-Photoshopped proof. Now many (most?) banks don't return the actual cheques anyway, just an image of it - sometimes a low quality shrunken B&W photocopy-like image too. You'd have to check with a lawyer or court in your area, but I suspect any photocopy or image, as well as a written or carbon-copy duplicate, would not be good enough proof for a law court, since they could all be easily re-written or Photoshopped. So I don't think there's a real upside anyway. Only an official bank statement saying that the name/people written actually cashed the cheque might be "good evidence" (I'm having doubts that the bank's own low quality "image" would even qualify, unless it's verified as coming directly from the bank somehow). I'd agree with Nate (+1) that a big downside could be identity theft, either online or alongside phone loss/theft. |
Do ETF dividends make up for fees? | It depends. Dividends and fees are usually unrelated. If the ETF holds a lot of stocks which pay significant dividends (e.g. an S&P500 index fund) these will probably cover the cost of the fees pretty readily. If the ETF holds a lot of stocks which do not pay significant dividends (e.g. growth stocks) there may not be any dividends - though hopefully there will be capital appreciation. Some ETFs don't contain stocks at all, but rather some other instruments (e.g. commodity-trust ETFs which hold precious metals like gold and silver, or daily-leveraged ETFs which hold options). In those cases there will never be any dividends. And depending on the performance of the market, the capital appreciation may or may not cover the expenses of the fund, either. If you look up QQQ's financials, you'll find it most recently paid out a dividend at an annualized rate of 0.71%. Its expense ratio is 0.20%. So the dividends more than cover its expense ratio. You could also ask "why would I care?" because unless you're doing some pretty-darned-specific tax-related modeling, it doesn't matter much whether the ETF covers its expense ratio via dividends or whether it comes out of capital gains. You should probably be more concerned with overall returns (for QQQ in the most recent year, 8.50% - which easily eclipses the dividends.) |
Is there a general guideline for what percentage of a portfolio should be in gold? | My personal gold/metals target is 5.0% of my retirement portfolio. Right now I'm underweight because of the run up in gold/metals prices. (I haven't been selling, but as I add to retirement accounts, I haven't been buying gold so it is going below the 5% mark.) I arrived at this number after reading a lot of different sample portfolio allocations, and some books. Some people recommend what I consider crazy allocations: 25-50% in gold. From what I could figure out in terms of modern portfolio theory, holding some metal reduces your overall risk because it generally has a low correlation to equity markets. The problem with gold is that it is a lousy investment. It doesn't produce any income, and only has costs (storage, insurance, commissions to buy/sell, management of ETF if that's what you're using, etc). The only thing going for it is that it can be a hedge during tough times. In this case, when you rebalance, your gold will be high, you'll sell it, and buy the stocks that are down. (In theory -- assuming you stick to disciplined rebalancing.) So for me, 5% seemed to be enough to shave off a little overall risk without wasting too much expense on a hedge. (I don't go over this, and like I said, now I'm underweighted.) |
Where can I find open source portfolio management software? | I've just recently launched an open source wealth management platform - wealthbot.io ... "Webo" is mostly targeted at RIA's to help the manage multiple portfolios, etc. Take a look at the demo at demo.wealthbot.io, you'll also find links to github, etc. there. It's a rather involved project, but if you are looking for use cases of rebalancing, portfolio accounting, custodian integration, tax loss harvesting, and many other features available at some of the popular robo-advisors, you might find it interesting. |
What is inflation? | Inflation refers to the money supply. Think of all money being air in a balloon. Inflation is what happens when you blow more air in the balloon. Deflation is what happens when you let air escape. Inflation may cause prices to go up. However there are many scenarios possible in which this does not happen. For example, at the same time of inflation, there might be unemployment, making consumers unable to pay higher prices. Or some important resource (oil) may go down in price (due to political reasons, war has ended etc), compensating for the money having less value. Similarly, peoples wages will tend to rise over time. They have to, otherwise everyone would be earning less, due to inflation. However again there are many scenarios in which wages do not keep up with inflation, or rise much faster. In fact over the past 40 years or so, US wages have not been able to keep up with inflation, making the average worker 'poorer' than 40 years ago. At its core, inflation refers to the value of the money itself. As all values of other products, services, assets etc are expressed in terms of money which itself also changes value, this can quickly become very complex. Most countries calculate inflation by averaging the price change of a basket of goods that are supposed to represent the average Joe's spending pattern. However these methods are often criticized as they would be 'hiding' inflation. The hidden inflation may come back later to bite us. |
Was this bill forgotten by a medical provider, and do notices need to be sent before collections? | Sometimes I think a question like this is one of moral versus legal. The reality is that you know you owe the money because you received the services. You're right that the bill should have been sent to you, and the natural urge for many people is to just count it in the win column when things like this happen and there's the chance to avoid paying. I suppose my question for you is, are you comfortable with the notion that you are not paying something that your heart of hearts tells you should be paid? If roles were reversed and you, as a business owner, had forgotten to bill something for which you were rightfully due payment, wouldn't you hope they'd have the integrity to pay you anyway? The legal side of this can be a bit trickier, and much depends on the state you're in (assuming you're in the U.S.) because some have stiffer consumer collection and protection laws than others. The rehab center could, when doing an audit of its accounts, discover that you didn't pay for these. They could take the polite course of action and call you with a gentle reminder or send a bill, or they could be not so nice about it. Either way, they can't send anything to collections for which you haven't been presented a bill and demonstrated an unwillingness to pay. There's a process in place, regardless of the state, so they can't just automatically put it into collections. I will close with this question for you: did the rehab center help you with what you needed, and are you healthier and better because of their care? If so, pay the bill. That's my advice. Keep in mind that unpaid medical costs just raise the prices for everyone else, because these providers will make up for the loss somewhere. I hope this helps. Good luck! |
MasterCard won't disclose who leaked my credit card details | As indicated in comments, this is common practice in the US as well as EU. For example, in this Fox Business article, a user had basically the same experience: their card was replaced but without the specific merchant being disclosed. When the reporter contacted Visa, they were told: "We also believe that the public interest is best served by quickly notifying financial institutions with the information necessary to protect themselves and their cardholders from fraud losses. Even a slight delay in notification to financial institutions could be costly,” the spokesperson said in an e-mail statement. “Visa works with the breached entity to collect the necessary information and provides payment card issuers with the affected account numbers so they can take steps to protect consumers through independent fraud monitoring, and if needed, reissuing cards. The most critical information needed is the affected accounts, which Visa works to provide as quickly as possible.” What they're not saying, of course, is that it's in Visa's best interests that merchants let Visa know right away when a leak occurs, without having to think about whether it's going to screw that merchant over in the press. If the merchant has to consider PR, they may not let the networks know in as timely of a fashion - they may at least wait until they've verified the issue in more detail, or even wait until they've found who to pin it on so they don't get blamed. But beyond that, the point is that it's easier for the network (Visa/Mastercard/etc.) to have a system that's just a list of card numbers to submit to the bank for re-issuing; nobody there really cares which merchant was at fault, they just want to re-issue the cards quickly. Letting you know who's at fault is separate. There's little reason for the issuing bank to ever know; you should find out from the merchant themselves or from the network (and in my experience, usually the former). Eventually you may well find out - the article suggest that: [T]he situation is common, but there is some good news: consumers do in many cases find out the source of the breach. But of course doesn't go into detail about numbers. |
What size “nest egg” should my husband and I have, and by what age? | One more thing to consider is that $1M today is not the same as $1M 30 years from now because of inflation. Consider that just 30 years ago (1980) the average house price in the US was only about $69K and a new car cost around $7K on average. When you retire, it isn't much of a stretch to assume that you could be paying $1.5M for a typical house, $100K for mid-grade car, by the time you retire in 30 years. Of course, over the rest of your working life your salary will likely increase due to inflation too, so that will help. In 1980 the average US income was around $19K/year. So even though that number seems huge, it is because it is denominated in currency that has been devalued significantly. |
In which situations is it better to consider a loan instead of paying cash? | A loan with modest interest is better than paying by cash if there are better alternatives for investment. For example, suppose you are buying a house. Consider two extremes: a) you pay the house entirely by cash, b) the entire buy is financed by the bank. Historically, real (subtracting inflation) house prices (at least in the U.S.) have not risen at all in the long run, and investing all of your own capital in this way may not be optimal. Notice that we are looking at a situation where one is buying a house and living in it in any case. Rent savings are equal in cases a) and b). If instead you were buying a house not for yourself, but as a separate investment for renting out, then you would receive rent. In the case a), the real return on your capital will be zero, whereas in case b), you can invest the cash in e.g. the stock market and get, on average, 7% (the stock market has yielded a 7% real return annually including dividends) annually minus the bank's interest rate. If the interest is lower than 7%, it may be profitable to take the loan. Of course, the final decision depends on your risk preferences. |
Does an option trading below parity always indicate an arbitrage opportunity? | Probably but not necessarily. Your question could also be posed regarding cash & carry for commodities in contango: If I can take delivery on the gold now, short the gold next year and make delivery then, paying the storage fees, is this an arbitrage opportunity? It is in the sense that you know your delivery and the money you will make, but it's not in the sense that until delivery (or execution in the options case) you are still on the hook for the margins due from price fluctuations. Additionally you need to consider what ROI you will make from the trade. Even though it's "guaranteed" it may be less than what you can earn from other "zero risk" opportunities. |
Accepting personal “donations” (not as a non-profit) | I see two ways you can handle this. Use the gifts for the purpose of creating more free software. This is fundraising, and your cause is writing free software. The language is a little tricky from the PayPal Donate button (emphasis mine): This button is intended for fundraising. If you are not raising money for a cause, please choose another option. Nonprofits must verify their status to withdraw donations they receive. Users that are not verified nonprofits must demonstrate how their donations will be used, once they raise more than $10,000 USD. You don't have to be a nonprofit; they are only requiring existing nonprofits to verify their status. You don't even have to account for the donations if they are below $10,000. Give out your PayPal email address and instruct the gift-givers to simply send you money through their PayPal interface. They can mark it as a gift when they send the money. I think option one is how the various bloggers and other personal users are justifiying their collection of donations, and I think its a valid use of the PayPal Donate button. |
Does investing in a company support it? | As said by others, buying shares of a company will not support it directly. But let's think about two example companies: Company A, which has 90 % stocks owned by supporters, and Company B, which has only 1 % of stocks owned by supporters. Both companies release bad news, for example profits have decreased. In Company B, most investors might want to sell their stock quickly and the price will plummet. In Company A, the supporters continue believing in the company and will not want to sell it. The price will drop less (usually, but it can drop even more if the sellers of Company A are very desperate to get rid of the stock). So, why is it important for the company to have a high stock price? In the short-term, it's not important. One example is that the company can release more stocks and receive more financing by doing that. Other reasons are listed here: http://www.investopedia.com/articles/basics/03/020703.asp |
What do Earnings Per Share tell potential shareholders? | nan |
What is the benefit of investing in retirement plan versus investing directly in stocks yourself? | In the US, the key to understanding the benefits of retirement accounts is to understand capital gains taxes and how they work. Retirement accounts are designed for making investments throughout your career, then after several decades of contributions, withdrawing that money to pay for your needs when your full-time employment has concluded. Normally when you invest money in a brokerage account, if the value of your investment increases, and you sell in less than a year, those investments are considered short-term gains and taxed as ordinary income. If you hold that same investment for over a year, the same investment is taxed at a lower capital gains rate (depending on which tax bracket you are in during that year, the amount due could be up to 20%, but much lower than your regular income tax rate). When you place your money in a retirement account, you are choosing to either pay the tax due on the income when you put it in the account, or put the money in tax free and pay the tax when you withdraw (these are called tax-deferred accounts). When you have money invested several decades, the raw dollar amount increases greatly, but inflation is also reducing the value of those dollars. Imagine you bought some bonds that payed 4% over 40 years, but inflation was 2% during those same years. When you sell those bonds 40 years later, you will owe capital gains on the entire gain even though half of the gain came from inflation. Retirement accounts allow you to buy and sell according to your investment needs and goals without any consideration about whether the gains are short-term or long-term, and they also allow you to pay taxes just once, either when you put it in, or when you take it out, with no worries about whether you're paying taxes on inflated gains. |
What are some signs that the stock market might crash? | Although it is impossible to predict the next stock market crash, what are some signs or measures that indicate the economy is unstable? These questions are really two sides of the same coin. As such, there's really no way to tell, at least not with any amount of accuracy that would allow you time the market. Instead, follow the advice of William Bernstein regarding long-term investments. I'm paraphrasing, but the gist is: Markets crash every so often. It's a fact of life. If you maintain financial and investment discipline, you can take advantage of the crashes by having sufficient funds to purchase when stocks are on sale. With a long-term investment horizon, crashes are actually a blessing since you're in prime position to profit from them. |
Can I buy only 4 shares of a company? | The least expensive way to buy such small amounts is through ING's Sharebuilder service. You can perform a real-time trade for $9, or you can add a one-time trade to their investment schedule for $4 (transaction will be processed on the next upcoming Tuesday morning). They also allow you to purchase fractional shares. |
Wash Sales and Day Trading | Yes, an overall $500 loss on the stock can be claimed. Since the day trader sold both lots she acquired, the Wash Sale rule has no net impact on her taxes. The Wash Sale rule would come into play if within thirty days of second sale, she purchased the stock a third time. Then she would have to amend her taxes because claiming the $500 loss would no longer be a valid under the Wash Sale rule. It would have to be added to the cost basis of the most recent purchase. |
How can I investigate historical effect of Rebalancing on Return and Standard Deviation? | Doesn't "no rebalancing" mean "start with a portfolio and let it fly?" Seems like incorporation of rebalancing is more sophisticated than not. Just "buy" your portfolio at the start and see where it ends up with no buying/selling, as compared with where it ends up if you do rebalance. Or is it not that simple? |
What will my taxes be as self employed? | The amount of the income taxes you will owe depends upon how much income you have, after valid business expenses, also it will depend upon your filing status as well as the ownership form of your business and what state you live in. That said, you will need to be sure to make the Federal 1040ES quarterly prepayments of your tax on time or there will be penalties. You also must remember that you will be needing to file a schedule SE with your 1040. That is for the social security taxes you owe, which is in addition to your income taxes. With an employer/employee situation, the FICA withhoding you have seen on your paycheck are matched by the same payment by your employer. Now that you are self-employed you are responcible for your share and the employer share as well; in this situation it is known as self-employment tax. the amount of it will be the same as your share of FICA and half of the employer's share of FICA taxes. If you are married and your wife also is working self-employed, then she will have to files herown schedule SE along with yours. meaning that you will pay based on your business income and she will pay baed on hers. your 1040Es quarterly prepayment must cover your income tax and your combined (yours and hers) Self Employment taxes. Many people will debate on the final results of the results of schedule SE vrs an employee's and an employer's payments combined. If one were to provides a ball park percentage that would likely apply to you final total addition to your tax libility as a result of needing schedule SE would tend to fluctuate depending upon your total tax situation; many would debate it. It has been this way since, I first studied and use this schedule decades ago. For this reason it is best for you to review these PDF documents, Form 1040 Schedule SE Instructions and Form 1040 Schedule SE. As for your state income taxes, it will depend on the laws of the state you are based in. |
What ETF or other security tracks closest to 30 year mortgage rates? | TBF - Proshares short 20+ Year Treasury The TBF fund is designed to track (hopefully) 100 percent of the inverse daily returns of the Barclays Capital 20+ Year U.S. Treasury Index. there's some risk of tracking error, and also a compounding effect if it's down several days in a row. (invest with care) There's also a TBT fund, but the risks are even greater since it is leveraged, potentially you could make the right long term call, but lose a lot in the short term due to tracking error and effect of compounding) (that would tend to make this one more appropriate for short term 'bets' on interest rates, and less so for a long term investor) There are also quite a few floating rate closed-end funds (Click here, then click on "loan participation funds") that should do well in a rising rate environment. Just beware that these funds seem to incorporate a substantial amount of credit risk as well as floating interest rate exposure. Closed end funds trade a lot like securities, since the fund is closed, you have to buy shares from another owner that is selling (just like with stocks), that means the shares can sometimes trade above or below the underlying value of the actual assets held by the fund depending on buying/selling pressure and the relative liquidity of a given fund. |
Why do only a handful of Canadian companies have options trading on their stocks? | Corporations are removed from the options markets. They can neither permit nor forbid others from trading them, local laws notwithstanding. No national options market is as prolific as the US's. In fact, most countries don't even have options trading. Some won't even allow options but rather option-like derivatives. Finance in Canada is much more tightly regulated than the US. This primer on Canadian option eligibility shows how much. While US eligibility is also stringent, the quotas are far less restrictive, so a highly liquid small company can also be included where it would be excluded in Canada for failing the top 25% rule. |
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