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Is it really possible to get rich in only a few years by investing? | You are probably right that using a traditional buy and hold strategy on common equities or funds is very unlikely to generate the types of returns that would make you a millionaire in short order. However, that doesn't mean it isn't possible. You just have to accept a more risk to become eligible for such incredible returns that you'd need to do that. And by more risk I mean a LOT more risk, which is more likely to put you in the poorhouse than a mansion. Mostly we are talking about highly speculative investments like commodities and real estate. However, if you are looking for potential to make (or more likely lose) huge amounts of money in the stock market without a very large cache of cash. Options give you much more leverage than just buying a stock outright. That is, by buying option contracts you can get a much larger return on a small movement in the stock price compared to what you would get for the same investment if you bought the stock directly. Of course, you take on additional risk. A normal long position on a stock is very unlikely to cause you to lose your entire investment, whereas if the stock doesn't move far enough and in the right direction, you will lose your entire investment in option contracts. |
Should I finance a used car or pay cash? | There are several factors here. Firstly, there's opportunity cost, i.e. what you would get with the money elsewhere. If you have higher interest opportunities (investing, paying down debt) elsewhere, you could be paying that down instead. There's also domino effects: by reducing your liquid savings to or below the minimum, you can't move any of it into tax advantaged retirement accounts earning higher interest. Then there's the insurance costs. You are required to buy extra insurance to protect your lender. You should factor in the extra insurance you would buy vs the insurance required. Given that you can buy the car yourself, catastrophic insurance may not be necessary, or you may prefer a higher deductible than your lender will allow. If you're not sufficiently capitalized, you may need gap insurance to cover when your car depreciates faster than your loan is paid down. A 30 percent payment should be enough to not need it though. Finally, there's some value in having options. If you have the loan and the cash, you can likely pay it off without penalty. But it will be harder to get the loan if you don't finance it. Maybe you can take out a loan against the car later, but I haven't looked into the fees that might incur. If it's any help, I'm in the last stretch of a 3 year car loan. At the time paying in cash wasn't an option, and having done it I recognize that it's more complicated than it seems. |
When are investments taxed? | An investment is sold when you sell that particular stock or fund. It doesn't wait until you withdraw cash from the brokerage account. Whether an investment is subject to long term or short term taxes depends on how long you held that particular stock. Sorry, you can't get around the higher short term tax by leaving the money in a brokerage account or re-investing in something else. If you are invested in a mutual fund, whether it's long or short term depends on when you buy and sell the fund. The fact that the fund managers are buying and selling behind your back doesn't affect this. (I don't know what taxes they have to pay, maybe you really are paying for it in the form of management fees or lower returns, but you don't explicitly pay the tax on these "inner" transactions.) Your broker should send you a tax statement every year giving the numbers that you need to fill in to the various boxes of your income tax form. You don't have to figure it out. Of course it helps to know the rules. If you've held a stock for 11 1/2 months and are planning to sell, you might want to consider waiting a couple of weeks so it becomes a long term capital gain rather than short term and thus subject to lower tax. |
Short term cutting losses in a long term investment | What might make more sense is to 'capture' your losses. Sell out the funds you have, move into something else that is different enough that the IRS won't consider it a wash sale, and you can then use those losses to offset gains (you can even carry them forward) You would still be in the market, just having made a sort of 'sideways move'. A month or two later (once you are clear of wash sale rules) you could shift back to your original choices. (this answer presumes you are in the US, or somewhere that lets you use losses to offset gains) |
Should you always max out contributions to your 401k? | Rule of thumb: Invest in a tax deferred account only if your marginal tax rate is higher now than it will be in retirement. If you plan on making more taxable income in retirement than you do right now, then you should invest outside a tax deferred account. |
How do I calculate the quarterly returns of a stock index? | Here's a few demo steps, first calculating the year to date return, then calculating the Q4 quarterly return based on the cumulative returns for Q3 and Q4. It's fine to use closing price to closing price as return periods. |
Electric car lease or buy? | I might be missing something, but I always understood that leasing is about managing cash-flow in a business. You have a fixed monthly out-going as opposed to an up-front payment. My accountant (here in Germany) recommended: pay cash, take a loan (often the manufactures offer good rates) or lease - in that order. The leasing company has to raise the cash from somewhere and they don't want to make a loss on the deal. They will probably know better than I how to manage that and will therefore be calculating in the projected resale value at the end of the leasing period. I can't see how an electric car would make any difference here. These people are probably better informed about the resale value of any type of car than I am. My feeling is to buy using a loan from the manufacturer. The rates are often good and I have also got good deals on insurance as a part of that package. Here in Germany the sales tax (VAT) can be immediately claimed back in full when the loan deal is signed. |
UK Tax - can I claim expenses against a different tax year? | In some circumstances losses from self-employment can be offset against total income and/or capital gains. If this applies to you may be able to claim back some of the tax taken by PAYE from your day job. You can also to some extent carry the loss backwards into previous tax years or forward into the next one if you can't use it fully this year. HMRC have some information available on the current rules: When you can claim losses You can claim: But You can’t claim: |
Annuities question - Equations of value | The solution is x = 8.92. This assumes that Chuck's six years of deposits start from today, so that the first deposit accumulates 10 years of gain, i.e. 20*(1 + 0.1)^10. The second deposit gains nine years' interest: 20*(1 + 0.1)^9 and so on ... If you want to do this calculation using the formula for an annuity due, i.e. http://www.financeformulas.net/Future-Value-of-Annuity-Due.html where (formula by induction) you have to bear in mind this is for the whole time span (k = 1 to n), so for just the first six years you need to calculate for all ten years then subtract another annuity calculation for the last four years. So the full calculation is: As you can see it's not very neat, because the standard formula is for a whole time span. You could make it a little tidier by using a formula for k = m to n instead, i.e. So the calculation becomes which can be done with simple arithmetic (and doesn't actually need a solver). |
Should I really pay off my entire credit card balance each month or should I maintain some balance? | Always pay on time, and stop listening to whoever is telling you not to -- they are clueless. Credit cards are revolving accounts with a grace period. The balance owed is due on the statement date, and you have a grace period of 20-40 days to pay. Paying bills on time is the single most important thing that you can do to have a good credit score. Always pay on time. |
How do I report this cash bonus/tip on income tax return? | Employers are not supposed to give cash gifts to their employees, even if you try to call it a "gift" for tax purposes. Presumably, the reason your wife's employer gave her cash was to be nice and save her taxes on that amount. Her employer already paid tax on that money so that your wife doesn't have to. If she plans to declare it anyway, then she should instead give it back and ask for it to be added to the W2 as an end of year bonus. This way her employer could then deduct the payment and pay her a larger amount of money. (The additional amount would be approximately their tax rate minus about 7.45% for FICA.) In fact, if your wife's tax rate is more than 15% lower than her employer's, then this is actually mathematically best for both parties. |
Why would someone want to sell call options? | I have an example of a trade I made some time ago. By entering the position as a covered call, I was out of pocket $5.10, and if the stock traded flat, i.e. closed at the same $7.10 16 months hence, I was up 39% or nearly 30%/yr. As compared to the stock holder, if the stock fell 28%, I'd still break even, vs his loss of 28%. Last, if the stock shot up, I'd get 7.50/5.10 or a 47% return, vs the shareholder who would need a price of $10.44 to reflect that return. Of course, a huge jump in the shares, say to $15, would benefit the option buyer, and I would have left money on the table. But this didn't happen. The stock was at $8 at expiration, and I got my 47% return. The option buyer got 50 cents for his $2 bet. Note, the $2 option price reflected a very high implied volatility. |
Is the Net Profit the 'final word' on a company's health? | To answer your question briefly: net income is affected by many things inside and outside of management control, and must be supplemented by other elements to gain a clear picture of a company's health. To answer your question in-depth, we must look at the history of financial reporting: Initially, accounting was primarily cash-based. That is, a business records a sale when a customer pays them cash, and records expenses when cash goes out the door. This was not a perfectly accurate system, as cashflow might be quite erratic even if sales are stable (collection times may differ, etc.). To combat problems with cash-based accounting, financial reporting moved to an accrual-based system. An accrual is the recording of an item before it has fully completed in a cash transaction. For example, when you ship goods to a customer and they owe you money, you record the revenue - then you record the future collection of cash as a balance sheet item, rather than an income statement item. Another example: if your landlord charges you rent on December 31st for the past year, then in each month leading up to December, you accrue the expense on the income statement, even though you haven't paid the landlord yet. Accrual-based accounting leaves room for accounting manipulation. Enron is a prime example; among other things, they were accruing revenue for sales that had not occurred. This 'accelerated' their income, by having it recorded years before cash was ever collectible. There are specific guidelines that restrict doing things like this, but management will still attempt to accelerate net income as much as possible under accounting guidelines. Public companies have their financial statements audited by unrelated accounting firms - theoretically, they exist to catch material misstatements in the financial statements. Finally, some items impacting profit do not show up in net income - they show up in "Other Comprehensive Income" (OCI). OCI is meant to show items that occurred in the year, but were outside of management control. For example, changes in the value of foreign subsidiaries, due to fluctuations in currency exchange rates. Or changes in the value of company pension plan, which are impacted by the stock market. However, while OCI is meant to pick up all non-management-caused items, it is a grey area and may not be 100% representative of this idea. So in theory, net income is meant to represent items within management control. However, given the grey area in accounting interpretation, net income may be 'accelerated', and it also may include some items that occurred by some 'random business fluke' outside of company control. Finally, consider that financial statements are prepared months after the last year-end. So a company may show great profit for 2015 when statements come out in March, but perhaps Jan-March results are terrible. In conclusion, net income is an attempt at giving what you want: an accurate representation of the health of a company in terms of what is under management control. However it may be inaccurate due to various factors, from malfeasance to incompetence. That's why other financial measures exist - as another way to answer the same question about a company's health, to see if those answers agree. ex: Say net income is $10M this year, but was only $6M last year - great, it went up by $4M! But now assume that Accounts Receivable shows $7M owed to the company at Dec 31, when last year there was only $1M owed to the company. That might imply that there are problems collecting on that additional revenue (perhaps revenue was recorded prematurely, or perhaps they sold to customers who went bankrupt). Unfortunately there is no single number that you can use to see the whole company - different metrics must be used in conjunction to get a clear picture. |
Where can I lookup accurate current exchange rates for consumers? | What you see on XE, is the rate at which it is being traded in the market. What you receive from a broker is the rate minus a fee, for the service being provided. You can check what rates are available for visa and mastercard on the following websites. Visa rates Mastercard rates I want to shop in the currency that will be cheapest in CAD at any given time. This is a mirage and isn't going to help much. The prices you pay might be reflecting the exchange rates, difference in the product quality and other factors too. Rates are fixed for a day, so any FX movement you see in the market willn't be reflected in what you pay. |
Investing $50k + Real Estate | My spouse will only be entering medical school within 2 years at the earliest, and will likely be there for about 4-5 years. If she get's into the school she wants we would not have to move This is probably the biggest return on investment that you can get. Sure, you could invest what you have in the market and take out tens or hundreds of thousands of dollars on "cheap" medical school loans, but consider this: Figure out how much you need for all 4-5 years, and develop a plan to make sure you can cash-flow the entire education. Bootstrapping a software company has potential for high rewards, but a much greater risk. you could get 10X back or you could lose it all. With your income, you've got plenty of time to save for college, so I don't see that as a huge win now. I would also dump the lease - you can probably get a much better car for $16k that the five-year old one you have when the lease is up. (or get a similar car for less money). With no debt and a good income you do not need a credit score. The lease probably didn't help it that much anyways - you're paying more for the lease than any benefit you would get by a higher score. |
What is the difference between fixed-income duration and equity duration? | A bond has a duration that can be easily calculated. It's the time weighted average of all the payments you'll receive and helpful to understand the effect a change in rates will have on that instrument. The duration of a stock, on the other hand, is a forced construct to then use in other equations to help calculate, say, the summation of a dividend stream. I can calculate the duration of a bond and come up with an answer that's not up for discussion or dispute. The duration of a stock, on the other hand, isn't such a number. Will J&J last 50 more years? Will Apple? Who knows? |
Trading on forex news, Interactive Brokers / IDEALPRO, and slippage | Slippage is tied to volatility, so when volatility increases the spread will also increase. There is no perfect formula to figure out slippage but from observations, it might make sense to look at the bar size in relation to previous bars to determine slippage (assuming fixed periods). This is because when there is a sudden spike in price, it's usually due to stop order triggering or a news event and those will increase the volatility dramatically in seconds. |
I thought student loans didn't have interest, or at least very low interest? [UK] | If I recall correctly, the pay schedule is such that you initially pay mostly interest. As James Roth suggests, look at the terms of the loan, specifically the payment schedule. It should detail how much is being applied to interest and how much to the actual balance. |
Is there any reason to buy shares before/after a split? | Assuming you plan to buy a whole number of shares and have a maximum dollar value you intend to invest, it may be better to wait for the split if the figures don't quite work out nicely. For example, if you are going to invest $1,000 and the stock pre-split is $400 and the split is 2 for 1, then you'd buy 2 shares before the split unless you have an extra $200 to add. Meanwhile, after the split you could buy 5 shares at $200 so that you invest all that you intend. Aside from that case, it doesn't really make a difference since the split is similar to getting 2 nickels for a dime which in each case is still a total value of 10 cents. |
Is it best to exercise options shares when they vest, or wait | To me it depends on things like your net worth, debt, and how other assets are invested. Currently you have 25K invested in the company you work for. If you have 100K in student loans, are a renter, and 12K in your 401K, then I would recommend exercising almost all of your options. In that case you have a much to large part of your world wrapped up in your company. If you have 250K in your 401K, own a home and have an emergency fund with no debt then you are fine with letting it ride. You can afford to absorb a loss of 25K without wrecking your net worth. More than likely, you are somewhere in between (just statistics speaking there). So why not exercise some of them now with the purpose of improving your financial situation? Say do a 1/3 now and when they come available. When 401ks were first invented people put almost all of their money in their company stock. They lost just about everything when the company went down in value and were often a victim of layoffs exasperating the issue. This is akin to the same situation. Most financial advisers recommend against putting any 401K money to company stock, or at least limiting the amount. |
Why would anyone buy a government bond? | There are a few other factors possible here: Taxes - Something you don't mention is what are the tax rates on each of those choices. If the 4% gain is taxed at 33% while the 3% government bond is taxed at 0% then it may well make more sense to have the government bond that makes more money after taxes. Potential changes in rates - Could that 4% rate change at any time? Yield curves are an idea here to consider where at times they can become inverted where short-term bonds yield more than long-term bonds due to expectations about rates. Some banks may advertise a special rate for a limited time to try to get more deposits and then change the rate later. Beware the fine print. Could the bond have some kind of extra feature on it? For example, in the US there are bonds known as TIPS that while the interest rate may be low, there is a principal adjustment that comes as part of the inflation adjustment that is part how the security is structured. |
Does it make sense to buy a house in my situation? | Short answer: NO. Do NOT buy a house. Houses are a "luxury" good (see Why is a house not an investment?). Although the experience of the early 2000s seemed to convince most people otherwise, houses are not an investment. Historically, it has usually been cheaper to rent, because owning a house has non-pecuniary benefits such as the ability to change things around to exactly the way you like them. Consult a rent vs. buy calculator for your area to see if your area is exceptional. I also would not rely on the mortgage interest deduction for the long term, as it seems increasingly likely the Federal government will do away with it at some point. The first thing you must do is eliminate your credit card and other debts. Try to delay paying your lawyers and anyone else who is not charging you interest (or threatening to harm you in other ways) as long as possible. Save enough money to maintain your current standard of living for 6 months should you lose your job, then put the rest in your 401(k). Another word of advice: learn to live with less. Your kids do not need separate bedrooms. Hopefully one day the time will come when you can afford a larger house, but it should not be your highest priority. You and your kids will all be worse off in the end should you have unexpected financial difficulties and you have overextended yourself to buy a house. Now that your credit score is up, see if you can renegotiate your credit card loans or negotiate a new loan with lower interest. |
Is it irresponsible for me to lease a $300/month car for 18 months? | Some questions: Will you need a car after 18 months? What are you going to do then? How likely are you able to go over the mileage? Granted paying $300 per month seems somewhat attractive as a fixed cost. However lease are notorious for forcing people into making bad decisions. If your car is over miles, or there is some slight damage (even normal wear and tear), or you customize your car (such as window tint) the dealer can demand extra dollars or force you to purchase the car for more than it is actually worth. The bottom line is leasing is one of the most expensive ways to own a vehicle, and while you have a great income you have a poor net worth. So yes I would say it is somewhat irresponsible for you to own a vehicle. If I was in your shoes, I would cut my gym expenses, cut my retirement contributions to the match, and buy another used car. I understand you may have some burnout over your last car, but it is the best mathematical choice. Having said all that you have a great income and you can absorb a lot of less than efficient decisions. You will probably be okay leasing the car. I would suggest going for a longer term, or cutting something to pay off the student loans earlier. This way there is some cushion between when the lease ends and the student loan ends. This way, when lease turn in comes, you will have some room in your budget to pay some fees as you won't have your student loan payment (assuming around 1400/month) that you can then pay to the dealer. |
Which dividend bearing stock should be chosen by price? | In the scenario you describe, the first thing I would look at would be liquidity. In other words, how easy is it to buy and sell shares. If the average daily volume of one share is low compared to the average daily volume of the other, then the more actively traded share would be the more attractive. Low volume shares will have larger bid-offer spreads than high volume shares, so if you need to get out of position quickly you will be at risk of being forced to take a lowball offer. Having said that, it is important to understand that high yielding shares have high yields for a reason. Namely, the market does not think much of the company's prospects and that it is likely that a cut in the dividend is coming in the near future. In general, the nominal price of a share is not important. If two companies have equal prospect, then the percentage movement in their share price will be about the same, so the net profit or loss you realise will be about the same. |
How come the government can value a home more than was paid for the house? | The property tax valuation and the fair market price are NOT one and the same. They track each other, correlate to each other, but are almost NEVER the same number. In some parts of the USA, a municipality has to re-assess property tax values every ten years. In these places, the tax value of a property is on something like a 10-year moving average, NOT on the volatile daily market price. EDIT: It is easy to fall into the "trap" of thinking that property tax valuation is intended to represent fair market value. It's INTENT is to provide an accurate (or, as accurate as possible) RELATIVE VALUATION of your property compared to the other properties in the municipality. The sum of all the property values is the tax base of the municipality. When the town budget (which is paid in part via property taxes) is set, the town simply divides the tax base into the budget total to arrive at the ratio of tax-to-collect, to the tax base, also called the "tax rate per thousand dollars of valuation." i.e. if the town tax base is US$10,000,000, and the town budget is US$500,000, then the ratio is 0.05, or $50 per thousand dollars of valuation. If your property is assessed at US$100,000, then you would pay 100 x $50, or $5000 in property taxes that year. Since this is the goal of the property tax valuation, NOT deciding what your house is worth on the open market, then we are left with the question of "why use the market value of a house for property assessment?" and the answer is that of all the various schemes and algorithms you can try, "fair market value" is the easiest and most accurate...IF TIME FLUCUTATIONS ARE TAKEN OUT. For example, if I buy a house in a development for $250,000 today, and next summer the housing market crashes, and you buy the identical house next door to me for $150,000, it does NOT stand to reason that you should pay less taxes than me, because your house is "worth" $100,000 less. In fact, BOTH our houses are worth $100,000 less. What matters most in property tax valuation isn't the actual number, but rather, is YOUR valuation the same as other essentially similar properties in your tax base? Getting the RELATIVE ratio of value between you and your neighbors correct is the goal of property tax valuation. |
How does one determine the width of a candlestick bar? | You could theoretically use any time period unit, but 1 minute and 30 minute seem to be the most common and useful. Especially for active traders. This also has the added advantage of giving you useful insight into the trade volumes throughout the day; assuming that is also included on the chart. I think most include that as a bar chart across the bottom. Here is a great example for crude oil on dailyfx: https://www.dailyfx.com/crude-oil Notice that the chart has time options at the top left which include 1 minute, 30 minutes, 1 hour, and 1 day. |
If a employers supposed to calulate drive time pay with your weekly gross pay | You're getting paid by the job, not by the hour, so I don't see why you think the employer is obligated to pay you for the drive time. The only way that might be true, as far as I can see, is if he were avoiding paying you minimum wage by structuring your employment this way. It looks like to me you're over the minimum wage based on what you wrote. At maximum "unpaid" drive time (59 min each way) and maximum length of job (4 hours as you stated it), gives your minimum hourly rate of $8.83/hr. The federal minimum wage is currently $7.25/hr, so you're over that. A quick search online suggests that NV does have a higher minimum at $8.25/hr under some conditions, but you're still over that too. The fact that you're required to pick-up the helpers and that you have a company car at home probably does mean that you're "on the clock" from the moment that you leave your house, but, again, you're not actually being paid by the clock. As long as no other law is being broken (and it appears from your telling that there isn't), then the employer can set any policy for how to compute the compensation that he wants. Regarding taxes, the employer probably has no discretion there. You're making what you're making, and the employer needs to tax it in total. Since you're driving a company vehicle from home, I don't think that you're entitled to any reimbursement (vs. wages) that would not be taxed unless maybe you pay for gas yourself. The gas money, if applicable, should be reimbursable as a business expense and that generally would not be taxed. |
Why do investors buy stock that had appreciated? | A few reasons. First, it's hard to buy a stock that has never gone up, and isn't necessarily wise to do so. Even if you just wait for a stock go down, what if you wait and it goes up two dollars, then drops 10 cents? Has it gone up or down? When should you buy it? In general, your idea is correct, the higher the price the less you should want the stock. But in some sense, the past price is irrelevant, you can't buy it at the past price. You should buy it now if it's the best option now. And that is based on your assessment of whether it's future prospects are worth the current price (and in fact enough worth enough to make buying the stock the best economic decision you can currently make). Finally, the price may have gone up for a reason. The company may have done something, or some information about the company may have become known, that affects it's future prospects. That might make it a better deal, perhaps even better than it was before the price increase. |
Are underlying assets supposed to be sold/bought immediately after being bought/sold in call/put option? | No, if you are trading options to profit solely off the option and not own the underlying, you should trade it away because it costs more to exercise: |
60% Downpayment on house? | To answer your precise question, your plans are not at all misguided, and are in fact very reasonable. You are clearly financially very comfortable, and from the tone of your post it sounds like you value security and simplicity over maximizing your investment return over the coming years. If money was the most important thing to you then you would stay shackled to your high paying jobs. @JoeTaxpayer's answer has some great information for a person who is interested in maximizing their investment return. If you followed that advice, you might increase your return on investments by up to 1%/year (I'm just throwing a ball park number out there). So your choice is simple. Peace of mind on one hand and perhaps 1% additional return on investments on the other hand. |
How to realize capital gains before going from non-resident alien to resident alien in USA | This will work as intended, but there's another point to consider. In the US, the tax rate on proceeds from stock sales is higher for short term holdings, which are defined as held for less than one year. Both rates vary based on your income. Bracket numbers are for fiscal year 2014, filing as single. The difference between short and long term capital gains tax in the US is a minimum of ten percentage points, and works out to 15 percentage points on average. This is substantial. If you won't be reporting much income the year you move to the US (say because you only worked for a portion of the year) it is decidedly to your advantage to wait and sell the stocks in the US, to get that sweet 0% rate. At a minimum, you should hold the position for a year if you sell and rebuy, from a tax optimization perspective. Two caveats: |
Why are Rausch Coleman houses so cheap? Is it because they don't have gas? | A 25% variance in price, in most markets, isn't so crazy as to require it be some sort of terrible scam, but that doesn't mean much else. It could be the inclusion of floor plans that are carefully designed to add square footage at minimum cost and thus reduce the average cost per square foot without actually being cheaper otherwise, less insulation, thinner walls, cheap piping, minimized wiring, or they are just efficient and competitive. As you pointed out they don't have gas, so that's certainly one way you know they cut costs - no gas lines to install! As the article from NAHB: Cost of Constructing A Home points out, though, what this figure includes can vary. Does it include the finished lot? If so then a smaller lot would mean lower square footage building price - because the land is smaller and cheaper, not the house! Is any kind of financing quoted in the price? Compare also change-plan costs, any penalties for delays in construction, grade of materials, floor plans, customization costs, fees or premiums to pick colors/floors/counters/cabinets/fixtures, and so on. What about central cooling and heating - are they quoting an electric furnace? How does electrical heating in your area compare to the cost of gas heat? (relative pricing of electric and gas vary widely by region and climate) In short: often square footage price isn't the whole story of what it would cost to construct a home. Ensure you are comparing everything that's important to you and you are getting a full quote, not comparing small isolate sales-pitch figures with no clear details. If it turns out the price is 25% lower than other builders in your area and they give you what you are wanting, and you have the good sense to have a qualified home inspector and/or structural engineer inspect the home thoroughly before you take possession, then you might just have found a good builder! I'd encourage you to personally visit some of their past construction work, such as houses they build 2-10 years ago and ensure they are in the sort of condition you'd expect. |
Credit Card Points from Refund | That transaction probably cost the merchant $0.50 + 3% or close to $5. They should have refunded your credit card so they could have recouped some of the fees. (I imagine that's why big-box retailers like Home Depot always prefer to put it back on your card than give you store credit) Consider yourself lucky you made out with $0.15 this time. (Had they refunded your card, the 1% of $150 credit would have gone against next month's reward) Once upon a time folks were buying money from the US Mint by the tens of thousands $ range and receiving credit card rewards, then depositing the money to pay it off.. They figured that out and put a stop to it. |
When I sell an OTC stock, do I have to check the volume of my sale in order to avoid an NSCC illiquid charge? | It's not enough just to check if your order doesn't exceed 10% of the 20 day average volume. I'll quote from my last answer about NSCC illiquid charges: You may still be assessed a fee for trading OTC stocks even if your account doesn't meet the criteria because these restrictions are applied at the level of the clearing firm, not the individual client. This means that if other investors with your broker, or even at another broker that happens to use the same clearing firm, purchase more than 5 million shares in an individual OTC stock at the same time, all of your accounts may face fees, even though individually, you don't exceed the limits. The NSCC issues a charge to the clearing firm if in aggregate, their orders exceed the limits, and the clearing firm usually passes these charges on to the broker(s) that placed the orders. Your broker may or may not pass the charges through to you; they may simply charge you significantly higher commissions for trading OTC securities and use those to cover the charges. Since checking how the volume of your orders compares to the average past volume, ask your broker about their policies on trading OTC stocks. They may tell you that you won't face illiquid charges because the higher cost of commissions covers these, or they may give you specifics on how to verify that your orders won't incur such charges. Only your broker can answer this with certainty. |
Is there a tax deduction for renting office space in service of employer? | I disagree with BrenBran, I don't think this is qualified as unreimbursed employee expense. For it to qualify, it has to be ordinary and necessary, and specifically - necessary for your employer. This is not the case for you, as there's no such necessity. From employer's perspective, you can work from your home just as well. In fact, the expense is your personal, as it is your choice, not "unreimbursed employee expense" since your employer didn't even ask you to do it. You should clarify this with a licensed tax adviser (EA/CPA licensed in New York). |
What is street-side booking? | The way I would use it is, every trade done by a broker has a client side and a street side. The client side is for their brokerage account, and the street side is whoever they traded with Say, John Doe calls me at Charles Schwab and wants to buy 100 IBM. I look at the market and decide that the best execution is on Arca. I trade on Arca for the client. Then, I book a client side trade into his account, and a street side trade against Arca. If I myself was a dealer in IBM and executed against my inventory, the street side would basically be internal, booking a trade against my account. |
Why is short-selling considered more “advanced” than a simple buy? | In addition to the higher risk as pointed out by @JamesRoth, you also need to consider that there are regulations against 'naked shorting' so you generally need to either own the security, or have someone that is willing to 'loan' the security to you in order to sell short. If you own a stock you are shorting, the IRS could view the transaction as a Sell followed by a buy taking place in a less than 30 day period and you could be subject to wash-sale rules. This added complexity (most often the finding of someone to loan you the security you are shorting) is another reason such trades are considered more advanced. You should also be aware that there are currently a number of proposals to re-instate the 'uptick rule' or some circuit-breaker variant. Designed to prevent short-sellers from driving down the price of a stock (and conducting 'bear raids etc) the first requires that a stock trade at the same or higher price as prior trades before you can submit a short. In the latter shorting would be prohibited after a stock price had fallen a given percentage in a given amount of time. In either case, should such a rule be (re)established then you could face limitations attempting to execute a short which you would not need to worry about doing simple buys or sells. As to vehicles that would do this kind of thing (if you are convinced we are in a bear market and willing to take the risk) there are a number of ETF's classified as 'Inverse Exchange Traded Funds (ETF's) for a variety of markets that via various means seek to deliver a return similar to that of 'shorting the market' in question. One such example for a common broad market is ticker SH the ProShares Short S&P500 ETF, which seeks to deliver a return that is the inverse of the S&P500 (and as would be predicted based on the roughly +15% performance of the S&P500 over the last 12 months, SH is down roughly -15% over the same period). The Wikipedia article on inverse ETF's lists a number of other such funds covering various markets. I think it should be noted that using such a vehicle is a pretty 'aggressive bet' to take in reaction to the belief that a bear market is imminent. A more conservative approach would be to simply take money out of the market and place it in something like CD's or Treasury instruments. In that case, you preserve your capital, regardless of what happens in the market. Using an inverse ETF OTOH means that if the market went bull instead of bear, you would lose money instead of merely holding your position. |
Is there a correlation between self-employment and wealth? | Many studies show that the wealthiest households are self employed and small business owners. But there is significant risk associated, and so the wealth cannot really be enjoyed. |
Organizing finances and assigning a number to each record type | What you are describing is a Chart of Accounts. It's a structure used by accountants to categorise accounts into sub-categories below the standard Asset/Liability/Income/Expense structure. The actual categories used will vary widely between different people and different companies. Every person and company is different, whilst you may be happy to have a single expense account called "Lunch", I may want lots of expense accounts to distinguish between all the different restaurants I eat at regularly. Companies will often change their chart of accounts over time as they decide they want to capture more (or less) detail on where a particular type of Expense is really being spent. All of this makes any attempt to create a standard (in the strict sense) rather futile. I have worked at a few places where discussions about how to structure the chart of accounts and what referencing scheme to use can be surprisingly heated! You'll have to come up with your own system, but I can provide a few common recommendations: If you're looking for some simple examples to get started with, most personal finance software (e.g. GnuCash) will offer to create an example chart of accounts when you first start a session. |
How high should I set my KickStarter funding goal in order to have $35,000 left over? | You are wildly over-estimating your taxes. First, remember that your business expenses reduce your gross income. Second, remember that taxes are progressive, so your flat 35% only applies if you're already making a high salary that pushed you into the higher brackets of US and CA. I think the deeper problems are: 1) you are expecting a super early start-up (with no finished product) to pay you the same as a steady job, including health insurance, and 2) you are expecting Kickstarter to independently fund the venture. The best source of funding is yourself. If you believe in this venture and in your game design abilities, then pay for most of the costs out of your own savings. Cut your expenses to the extent you can. You may want to wander over to startups.SE to get more perspective and ideas on your business plan. |
Is buying a lottery ticket considered an investment? | This question feels like an EL&U question to me, and so I will treat it as one. Investment, noun form of to invest, originally from the Latin investire, meaning to clothe, means: [T]o commit (money) in order to earn a financial return Merriam-Webster Online Dictionary, Invest, vb. tr., definition 1 As such, when a person commits money with the purpose of earning a financial return, they are investing. Playing the lottery, when done so for the purpose of financial return, would fall under this definition - even if it's a poor choice. Gambling, verb tense of to gamble, likely originally from the word gamen, meaning to play, means: a : to play a game for money or property b : to bet on an uncertain outcome Merriam-Webster Online Dictionary, Gamble, vb. itr., definition 1 Playing the lottery is clearly gambling (as a lottery is a game, by definition). The second definition could well include investing in the stock market, particularly certain kinds of investments (derivatives, currency speculation, for example). Aside from the definitions, however, normal usage clearly favors investment to be something with an expectation of positive return, while gambling is taking a risk without that expectation (rather with the hope of positive return). Legally, as well, playing the lottery is not something that is considered investment (so it is taxed differently). However, the question was "Can", and by definition, clearly it can be (assuming you are not asking legally). |
Stock Certificate In two names | The common way to frame the "should I sell" question is ask yourself "would you buy it today at the current price". If you wouldn't, sell it. Is sounds like this may be a paper certificate. You will have to research how to present the certificate to a broker to trade it, or if the company has a direct shareholder program. I have periodically been offered to sell "odd lots" to shareholder programs which, if one exists, may be less hassle than other options. As a part of this, your mother's estate administrator should decide if the estate is selling it's interest, or giving it's interest to heirs before the sale. |
How to rescue my money from negative interest? | You could buy Bitcoins. They are even more deflationary than Swiss Francs. But the exchange rate is currently high, and so is the risk in case of volatility. So maybe buy an AltCoin instead. See altcoin market capitalization for more information. Basically, all you'd be doing is changing SwissFrancs into Bitcoin/AltCoin. You don't need a bank to store it. You don't need to stockpile cash at home. Stays liquid, there's no stock portfolio (albeit a coin portfolio), unlike in stocks there are no noteworthy buy and sell commissions, and the central bank can't just change the bills as in classic-cash-currency. The only risk is volatility in the coin market, which is not necessarely a small risk. Should coins have been going down, then for as long as you don't need that money and keep some for everyday&emergency use on a bank account, you can just wait until said coins re-climb - volatility goes both ways after all. |
found a 1994 uncashed profit sharing retirement plan check | Checks (in the US, anyway) are only good for six months after they have been written. After that. under the US Uniform Commerical Code they are considered "stale checks" and banks need not accept them. My experience is that they generally won't -- but you probably shouldn't count on that, either when figuring out whether to try depositing an old check or figuring out how much cash you need to keep in your checking account to cover recent stale checks. The check you now hold is certainly a statement of intent to pay you and thus is a useful document to supplement other evidence that they still owe you the money -- but since checks can be cancelled and/or a replacement check may have been issued, its value for that purpose may be limited. You can try depositing it and see what happens. If that doesn't work (or you don't want to bother trying it) you can contact the retirement plan, point out that this check went uncashed, and ask them to send you a replacement. If they haven't already done so (you might want to check your own records for that), there shouldn't be any problem with this. (Note: Many business checks have a statement printed on them that they're only good for 90 days or so. If yours does, you can skip trying to cash it; just contact the retirement plan offices.) |
How does a bank make money on an interest free secured loan? | In addition to all the points made in other answers, in some jurisdictions (including the UK where I live) the consumer credit laws require the lender to allow the borrower to pay off the loan at any time. If the lender charges interest and the borrower pays off the loan early then the lender loses the interest that would have been paid during the rest of the loan period. However if the actual interest is baked into the sale price of an item and the loan to pay for it is nominally "0%" then the borrower still pays all the interest even if they pay off the loan immediately. If you think this game is being played then you can ask for a "cash discount" (or similar wording: I once had problems with a car salesman who thought I meant a suitcase full of used £20s), meaning you want to avoid paying the interest as you are not taking a loan. |
Why is Net Asset Value (NAV) only reported by funds, but not stocks? | The (assets - liabilities)/#shares of a company is its book value, and that number is included in their reports. It's easy for a fund to release the net asset value on a daily basis because all of its assets (stocks, bonds, and cash) are given values every day by the market. It's also necessary to have a real time value for a fund as it will be bought and sold every day. A company can't really do the same thing as it will have much more diverse assets - real estate, cars, inventory, goodwill, etc. The real time value of those assets doesn't have the same meaning as a fund; those assets are used to earn cash, while a fund's business is only to maximize its net asset value. |
Data source for historical intra-day bid/ask price data for stocks? | Interactive Brokers provides historical intraday data including Bid, Ask, Last Trade and Volume for the majority of stocks. You can chart the data, download it to Excel or use it in your own application through their API. EDIT: Compared to other solutions (like FreeStockCharts.com for instance), Interactive Brokers provides not only historic intraday LAST**** trades **but also historic BID and ASK data, which is very useful information if you want to design your own trading system. I have enclosed a screenshot to the chart parameter window and a link to the API description. |
A University student wondering if investing in stocks is a good idea? | Investing in the stock market early is a good thing. However, it does have a learning curve, and that curve can, and eventually will, cost you. One basic rule in investing is that risk and reward are proportional. The greater the reward, the higher the risk that you either (a) won't get the reward, or (b) lose your money instead. Given that, don't invest money you can't afford to lose (you mentioned you're on a student budget). If you want to start with short but sercure investments, try finding a high-interest savings account or CD. For example, the bank I use has an offer where the first $500 in your account gets ~6% interest - certainly not bad if you only put $500 in the account. Unfortunately, most banks are offering a pittance for savings rates or CDs. If you're willing to take more risk, you could certainly put money into the stock market. Before you do, I would recommend spending some time learning about how the stock market works, it's flows and ebbs, and how stock valuations work. Don't buy a stock because you hear about it a lot; understand why that stock is being valued as such. Also consider buying index funds (such as SPY) which is like a stock but tracks an entire index. That way if a specific company suddenly drops, you won't be nearly as affected. On the flip side, if only 1 company goes up, but the market goes down, you'll miss out. But consider the odds of having picked that 1 company. |
Long term investing alternative to mutual funds | Typically mutual funds will report an annualized return. It's probably an average of 8% per year from the date of inception of the fund. That at least gives some basis of comparison if you're looking at funds of different ages (they will also often report annualized 1-, 3-, 5-, and 10- year returns, which are probably better basis of comparison since they will have experience the same market booms and busts...). So yes, generally that 8% gets compounded yearly, on average. At that rate, you'd get your investment doubled in roughly 9 years... on average... Of course, "past performance can't guarantee future results" and all that, and variation is often significant with returns that high. Might be 15% one year, -2% the next, etc., hence my emphasis on specifying "on average". EDIT: Based on the Fund given in the comments: So in your fund, the times less than a year (1 Mo, 3 Mo, 6 Mo, 1 Yr) is the actual relative change that of fund in that time period. Anything greater is averaged using CAGR approach. For example. The most recent 3 year period (probably ending end of last month) had a 6.19% averaged return. 2014, 2015, and 2016 had individual returns of 8.05%, 2.47%, and 9.27%. Thus that total return over that three year period was 1.0805*1.0247*1.0927=1.21 = 21% return over three years. This is the same total growth that would be achieved if each year saw consistent 6.5% growth (1.065^3 = 1.21). Not exactly the 6.19%, but remember we're looking at a slightly different time window. But it's pretty close and hopefully helps clarify how the calculation is done. |
Is there a way to buy raw oil today and sell it in 1 year time? | Unless you have the storage and transportation facilities for it, or can come up with the money needed to rent or build those, no -- or not in any significant quantity. Buying oil futures is essentially an on-paper version of the same bet. Futures prices are already taking into account both expectations about price changes and the fact that there's cash tied up until they come due, but storage costs also adjust to follow those expectations. |
Why would a long-term investor ever chose a Mutual Fund over an ETF? | First, it's not always the case that ETFs have lower expenses than the equivalent mutual funds. For example, in the Vanguard family of funds the expense ratio for the ETF version is the same as it is for the Admiral share class in the mutual fund version. With that in mind, the main advantages of a mutual fund over an equivalent ETF are: From a long-term investor's point of view, the main disadvantage of mutual funds relative to ETFs is the minimum account sizes. Especially if the fund has multiple share classes (i.e., where better classes get lower expense ratios), you might have to have quite a lot of money invested in the fund in order to get the same expense ratio as the ETF. There are some other differences that matter to more active investors (e.g., intraday trading, options, etc.), but for a passive investor the ones above are the major ones. Apart from those mutual funds and ETFs are pretty similar. Personally, I prefer mutual funds because I'm at a point where the fund minimums aren't really an issue, and I don't want to deal with the more fiddly aspects of ETFs. For investors just starting out the lower minimum investment for an ETF is a big win, as long as you can get commission-free trades (which is what I've assumed above.) |
Selling on eBay without PayPal? | One option might be to set up a separate bank account and a separate credit card account, which you would use only for your ebay transactions. I have a friend who does a lot of selling on ebay, and this is exactly what she did. It's reasonable to want to protect your personal finances from any complications that might arise with PayPal and/or ebay. But since you definitely have to provide a bank account and c.c. number (there's no way around this), the best solution might be to set up separate "ebay-only" accounts. And be sure not to link them to any of your personal accounts, for added protection. If you're planning to do a lot of selling, this is probably a good idea anyway just for record-keeping purposes. If you do a lot of selling on ebay, you might consider setting up a "merchant account". There are some limitations on international transactions (currently you can't sell to residents of UK, Australia, or France), and payment processing is a few days slower. But there seem to be fewer fees/risks/etc associated with a merchant account. I don't know much more about it, but here's an article from an ebay seller, including pros and cons of PayPal vs. merchant accounts. http://www.ebay.com/gds/Selling-on-eBay-without-PayPal/10000000021351301/g.html |
Would cross holding make market capitalization apparently more? | I started to work out, step by step, why this doesn't work, but the scenario is too convoluted to make that helpful. Basically, you're making mistakes in some or all of the following spots: |
Growth rate plus dividend yieid total? | In my mind its not the same. If growth is stock value then this is incorrect because of compound interest in stock price. $100 stock price after one year would be $105 and a dividend would be $2 Next year the stock would be $110.20 (Compound Interest) and would the Dividend really go up in lock step with the stock price? Well probably not, but if it did then maybe you could call it the same. Even if the dollars are the same the growth rate is more variable than the dividends so its valuable to segregate the two. I am open to criticism, my answer is based on my personal experience and would love to hear contrary positions on this. |
Invest in (say, index funds) vs spending all money on home? | Rules of thumb? Sure - Put down 20% to pay no PMI. The mortgage payment (including property tax) should be no more than 28% of your gross monthly income. These two rules will certainly put a cap on the home price. If you have more than the 20% to put down on the house you like, stop right here. Don't put more down and don't buy a bigger house. Set that money aside for long term investing (i.e. retirement savings) or your emergency fund. You can always make extra payments and shorten the length of the mortgage, you just can't easily get it back. In my opinion, one is better off getting a home that's too small and paying the transaction costs to upsize 5-10 years later than to buy too big, and pay all the costs associated with the home for the time you are living there. The mortgage, property tax, maintenance, etc. The too-big house can really take it toll on your wallet. |
Is insurance worth it if you can afford to replace the item? If not, when is it? | In general, if you can afford to replace something, you are able to "self-insure". You really want to understand a little of the statistics before you can make a generic call, but my rule of thumb is that insurance via "extended warranty" is rarely a good deal. Here is a simple expected value math formula you can apply (when the > is true, then you should buy it): replacement cost x likelihood of using warranty % > cost of insurance You can then back-compute, what is the likelihood that I'd need to lose this item to break even? Given your numbers: $2000 x Y > $350 or Y > (350/2000) or Y > 17.5% So if you think there is a 17.5% or greater chance that you'll need to have you system replaced (i.e. not just a simple fix) AND (as Scott pointed out) you'll be able to actually use the replacement warranty then the applecare is a good purchase. Note, this only applies to items you can replace out-of-pocket without significant burden, because if you didn't have the $10k to replace your car, it wouldn't matter if the insurance wasn't such a good deal (especially if you need the car to get to work, etc.) So the obvious question is: "Why would a for-profit company ever offer insurance on something they are statistically likely to lose money on?" The obvious answer is "they wouldn't," but that doesn't mean you should never buy this type of insurance, because you may have statistically significant circumstances. For instance, I purchased a $40 remote helicopter as a gift for my children. I also paid the $5 for a "no questions asked" warranty on it because, knowing my kids, I knew there was a nearly 100% chance they would break it at least once. In this case, this warranty was well worth the $5, because they did break it! Presumably they make money on these warranties because most of the purchasers of the plan are more attentive (or too lazy to make the claim) than in this case. Edit note: I incorporated Scott's comment about likelihood of being able to utilize the warranty into a combined "likelihood of using warranty" term. This term could be broken up into likelihood of needing replacement x likelihood of actually getting company to replace it I didn't do this above because it makes it a little harder to understand, and may not be a major factor in all cases, but you can definitely add it after the fact (i.e. if there's only a 90% chance Applecare will pay out at all, then divide the 17.5% by 0.9 to get 19.4% likelihood of needing the replacement for it to be cost effective). More complete formulas can be derived also (including terms for full replacement costs vs repair costs and including terms for "deductible" type costs or shipping), but I'm trying to keep things relatively simple for those who aren't statistics nerds like I am. |
What should I consider when I try to invest my money today for a larger immediate income stream that will secure my retirement? | I don't understand the OP's desire " I'd love to have a few hundred dollars coming in each month until I really get the hang of things. " When growing your wealth so that it will be large enough in retirement to throw off enough profits to live on ... you must not touch the profits generated along the way. You must reinvest them to earn even more profits. The profits you earn need not show up as 'cash'. Most investments also grow in re-sale value. This growth is called capital gains, and is just-as/more important than cash flows like interest income or dividends. When evaluating investing choices, you think of your returns as a percent of your total savings at any time. So expecting $100/month equals $1,200/year would require a $12,000 investment to earn 10%/yr. From the sounds of it the OP's principal is not near that amount, and an average 10% should not be expected by an investment with reasonable risk. I would conclude that 'There is no free lunch'. You need to continually save and add to your principal. You must invest to expect a reasonable return (less than 10%) and you must reinvest all profits (whether cash or capital gains). Or else start a business - which cannot be compared to passive investing. |
What are some good ways to control costs for groceries? | For a while I tried shopping multiple grocery stores, checking fliers each week from three different stores and then making the trip to all three stores to save ten cents on each item. After a couple months, I decided it just wasn't worth it. So, I picked my favorite store. I shop once a week, after reviewing the flier and making a list. I clip coupons and try to only buy what's on my list. (I confess that coupons sometimes get me to buy a brand or item I wouldn't have otherwise... it's my weakness!) The biggest place that we save money though, is by paying attention to meat prices. I know that chicken and pork go on sale for $1.99/lb every 4 to 6 weeks at my grocery store. When it does, I buy a enough to last until the next sale, and freeze it in single-meal portions. Steak and fish are special treats, but on the rare occasion that they're less than $4/lb, I'll buy those. We also try to limit our meat consumption to every-other-day. It's not worth it for me to obsess over the price of ketchup that I buy twice a year, but on expensive items like meat, and items we use daily, I become familiar with their regular prices and sale prices, and buy extra when it's on sale. If, like me, you don't have room in your brain to keep track of the prices of everything, stick with the things you spend the most on, either because they're expensive, or you buy a lot. |
Why is the stock market price for a share always higher than the earnings per share? | First, the earnings are per year, not per quarter. Why would you expect to get a 100% per year return on your money? The earnings can go one of two ways. They can be retained, reinvested in the company, or they can be distributed as a dividend. So, the 'return' on this share is just over 5%, which is competitive with the rate you'd get on fixed investments. It's higher, in fact, as there's the risk that comes with holding the stock. |
Can extra mortgage payments be made to lower the monthly payment amount? | Some types of loans allow for reamortization (recasting) - which does exactly what you're talking about (making a big payment and then refiguring the monthly amount rather than the overall lifespan), without requiring any kind of a fee that refinancing does. Not every, or even most, mortgages, allow for recasting. And most that do offer recasting, may limit the recasting to a once-a-loan type of thing. So check beforehand, and make those big payments before you do any recasting. (Most banks and mortgage servicing companies may not advertise or even speak about recasting options unless you specifically ask your loan officer.) |
In which country can I set up a small company so that I pay a lower rate of corporate tax? | There are countries out there that are known as tax havens, where they offer companies low or no taxes on earned revenue. I haven't looked into this in over a decade, but recall that countries like the Cayman Islands, Switzerland, Ireland, and Nauru, to name a few fit that tag. But like bstpierre stated, there's a reason why the IBM's of the world can pull that off easier then us mere mortals. They have the financial clout to make sure they have accountants that dot every i, cross every t, and close every loophole that would give an "in" to the folks at the IRS, CRA, Inland Revenue, or who have you. |
When buying a call option, is the financial stability of the option writer relevant? | Exchange traded options are issued in a way that there is no counter party risk. Consider, stocks and options are held in street name. So, for example, if I am short and you are long shares, no matter what happens on my end, your shares are yours. To be complete, it's possible to enter into a direct deal, where you have a contract for some non-standard option, but that would be very rare for the average investor. |
Account that is debited and account that is credited | I'm not sure if this is your point of confusion, but when an account is said to be debited (or credited), the words "debited" or "credited" are not referring to a type of account (such as "checking"). They are referring to an operation that is performed on an account. The same account can be credited at one time and debited at another time. |
Do I need to pay quarterly 1040 ES and 941 (payroll)? | I'm not sure why you're confusing the two unrelated things. 1040ES is your estimated tax payments. 941 is your corporation's payroll tax report. They have nothing to do with each other. You being the corporation's employee is accidental, and can only help you to avoid 1040ES and use the W2 withholding instead - like any other employee. From the IRS standpoint you're not running a LLC - you're running a corporation, and you're that corporation's employee. While technically you're self-employed, from tax perspective - you're not (to the extent of your corporate salary, at least). |
Personal Loan: How to define loan purpose | Does that justify the purpose? That is for individual Banks to decide. No bank would pay for daily expenditure if you are saying primary salary you are spending on eduction. So your declaration is right. You are looking at funding your eduction via loan and you are earning enough for living and paying of the loan. I noticed that a lot of lenders do not lend to applicants whose purpose is to finance the tuition for post-secondary education This could be because the lenders have seen larger percentage defaults when people opt for such loans. It could be due to mix of factors like the the drag this would cause to an individual who may not benefit enough in terms of higher salary to repay the loan, or moves out of country getting a better job. If it is education loan, have you looked at getting scholarships or student loans. |
Is gold really an investment or just a hedge against inflation? | Over on Quantitative Finance Stack Exchange, I asked and answered a more technical and broader version of this question, Should the average investor hold commodities as part of a broadly diversified portfolio? In short, I believe the answer to your question is that gold is neither an investment nor a hedge against inflation. Although many studies claim that commodities (such as gold) do offer some diversification benefit, the most credible academic study I have seen to date, Should Investors Include Commodities in Their Portfolios After All? New Evidence, shows that a mean-variance investor would not want to allocate any of their portfolio to commodities (this would include gold, presumably). Nevertheless, many asset managers, such as PIMCO, offer funds that are marketed as "real return" or "inflation-managed" and include commodities (including gold) in their portfolios. PIMCO has also commissioned some research, Strategic Asset Allocation and Commodities, claiming that holding some commodities offers both diversification and inflation hedging benefits. |
Technical Analysis: the concepts of overbought / oversold don't make sense | You are right that every transaction involves a seller and a buyer. The difference is the level of willingness from both parties. Overbought and oversold, as I understand them (particularly in the context of stocks), describe prolonged price increase (overbought, people are more willing to buy than sell, driving price up) and price decrease (oversold, people are more willing to sell than buy, driving price down). |
why if change manufacturing of a product not change the price for the buyer? | In highly developed and competitive industries companies tread a continuous and very fine line between maximising shareholder profits by keeping prices up while making products as cheaply as possible, vs competitors lowering prices when they work out a way to make equivalents cheaper. In the short run you will quite often see companies hold onto large portions of efficiency savings (particularly if they make a major breakthrough in a specific manufacturing process etc) by holding old prices up, but in the long run competition pretty quickly lowers prices as the companies trying to keep high margins and prices get ruthlessly undercut by smaller competitors happy to make a bit less. |
Why are daily rebalanced inverse/leveraged ETFs bad for long term investing? | Fund rebalancing typically refers to changing the investment mix to stay within the guidelines of the mutual fund objective. For example, lets say a fund is supposed to have at least 20% in bonds. Because of a dramatic increase in stock price and decrease in bond values it finds itself with only 19.9% in bonds at the end of the trading day. The fund manager would sell sufficient equities to reduce its equity holdings and buy more bonds. Rebalancing is not always preferential because it could cause capital gain distribution, typically once per year, without selling the fund. And really any trading within the fun could do the same. In the case you cite the verbiage is confusing. Often times I wonder if the author knows less then the reader. It might also be a bit of a rush to get the article out, and the author did not write correctly. I agree that the ETFs cited are suitable for short term traders. However, that is because, traditionaly, the market has increased in value over the long term. If you bet it will go down over the long term, you are almost certain to lose money. Like you, I cannot figure out how rebalancing makes this suitable only for short term traders. If the ETFs distribute capital gains events much more frequently then once per year, that is worth mentioning, but does not provide a case for short versus long term traders. Secondly, I don't think these funds are doing true rebalancing. They might change investments daily for the most likely profitable outcome, but that really isn't rebalancing. It seems the author is confused. |
What does it mean for a normal citizen like me when my country's dollar value goes down? | Essentially imported goods from the country (in this case the US) that is improving against your local currency will become more expensive. For the most part, that is the only practical effect on you on an individual financial level. |
Can paying down a mortgage be considered an “investment”? | From what I've read, paying down your mortgage -- above and beyond what you'd normally pay -- is indeed an investment but a very poor form of investment. In other words, you could take that extra money you'd apply towards your mortgage and put it in something that has a much higher rate of return than a house. As an extreme example, consider: if I took $6k extra I would have paid toward my mortgage in a single year, and bought a nice performing stock, I could see returns of 2x or 3x. Now, that implies I know which stock to pick, etcetera.. I found a "mortgage or investment" calculator which could be of use as well: http://www.planningtips.com/cgi-bin/prepay_v_invest.pl (scroll to bottom to see the summary and whether or not prepay or invest wins for the numbers you plugged in) |
How did I end up with a fraction of a share? | Fractional shares don't occur from Dividend Reinvestment Programs - residual credit is carried over until there is enough to purchase a whole share. |
What publicly available software do professional stock traders use for stock analysis? | If you are looking to analyze stocks and don't need the other features provided by Bloomberg and Reuters (e.g. derivatives and FX), you could also look at WorldCap, which is a mobile solution to analyze global stocks, at FactSet and S&P CapitalIQ. Please note that I am affiliated with WorldCap. |
Advantage of Financial Times vs. free news sources for improving own knowledge of finance? | I recommend using Morning Brew. They email you a free daily newsletter with the top financial news stories and earnings events. I have subscribed to the Wall Street Journal and Financial Times before. Morning Brew basically covers all of the headlines you would see on those sites. |
$700 guaranteed to not be touched for 15 years+, should I put it anywhere other than a savings account? | If you plan on holding the money for 15 years, until your daughter turns 21, then advanced algebra tells me she is 6 years old. I think the real question is, what do you intend for your daughter to get out of this? If you want her to get a real return on her money, Mike Haskel has laid out the information to get you started deciding on that. But at 6, is part of the goal also teaching her about financial stewardship, principles of saving, etc.? If so, consider the following: When the money was physically held in the piggy bank, your daughter had theoretical control over it. She was exercising restraint, for delayed gratification (even if she did not really understand that yet, and even if she really didn't understand money / didn't know what she would do with it). By taking this money and putting it away for her, you are taking her out of the decision making - unless you plan on giving her access to the account, letting her decide when to take it out. Still, you could talk her through what you're doing, and ask her how she feels about it. But perhaps she is too young to understand what committing the money away until 21 really means. And if, for example, she wants to buy a bike when she is 10, do you want her to see the fruits of her saved money? Finally, consider that if you (or you & your daughter, depending on whether you want her to help in the decision) decide to put the money in a financial institution in some manner, the risk you are taking on may need to be part of the lesson for her. If you want to teach the general principles of saving, then putting it in bonds/CD's/Savings etc., may be sufficient, even if inflation lowers the value of the money. If you want to teach principles of investing, then perhaps consider waiting until she can understand why you are doing that. To a kid, I think the principles of saving & delayed gratification can be taught, but the principles of assuming risk for greater reward, is a bit more complex. |
Double-entry accounting: how to keep track of mortgage installments as expenses? | If your mortgage is an interest only one then the full amount of the payment you make should be to an expense account perhaps called mortgage interest. If the mortgage is a repayment mortgage you need to split the amount of the payment between such an expense account called mortgage interest and between a liability account which is the amount of the loan. In practice I have not found it very easy to do all this as the actual amounts vary depending on number of days in the month and then there are occasional charges etc made by the mortgage company so some approximations seem to be needed unless one is to spend hours trying to get it exactly correct...... Steve |
Saving for a down payment on a new house, a few years out. Where do we put our money next? | In October 2011 in the United States, you just don't have any options. Save your money in a savings account and that is the best you can do. Your desire to buy a house means you are a saver not an investor, and you risk tolerance on this pile of money is 0. Save it in a bank account; I highly doubt chasing an interest rate will pay off with any significance. (being highly dependent on your opinion of significant) |
I have savings and excess income. Is it time for me to find a financial advisor? | I think you might be asking the wrong question. You have plenty of capital on the side that can be invested. Instead of asking whether you should get an adviser, you might want to examine what your end goal is. Are you looking to build long term growth of you capital? Are you asking about and adviser because you don't want to handle your money, or is it simply because "that's what people do?" I would imagine that the answer to 1. is yes and that the answer to 2. is that you want to handle your money, and you always considered this something best left to the advisers. I shall proceed on these hypothetical assumptions. In my humble opinion, I would do the following: Skip the adviser and the fees that go with it. For a young professional like yourself, especially with an engineering background, you can certainly handle the education required to learn the mechanics of investing. Invest some time to learn the fundamentals of the market such as asset classes, basic terminology ect. You will benefit in several ways. For one, you will learn an invaluable skill and save tens of thousands in fees during your lifetime. Moreover, you will have complete control of your risk profile, allocation, and every penny that belongs to you. I really am not bashing advisers, but no one will care as much about your money as you will. And don't be fooled. The market is efficient. An adviser does not have any more edge in a market than anyone else. And from first hand experience, they rarely outperform benchmarks net of fees. I assume you have made it to this step because you want to manage your own money and financial future. Sounds scary, how should one proceed? Let's assume that $100,000 is "in play". And since you are learning the ropes, let's leave $50,000 in cash for now. This leaves $50,000 to start a portfolio. I'd start by building a core position of all the major asset classes in ETF form. This means buying things like SPY or TLT. If you're comfortable, you can start selling monthly calls against these positions to reduce basis and earn some income. The point is, your only limitation at this point is taking time to learn the ropes. The technology is there, the free education is there, and liquidity and product mix is there. Next thing you know you're learning how gamma scalping works, or maybe you're more of a Buffett type. This is how I view finance in general, and truly hope you break through the initial barrier to controling your own finances. |
Is diversification better | Diversification is the only real free lunch in finance (reduction in risk without any reduction in expected returns), so clearly every good answer to your question will be "yes." Diversification is good." Let's talk about many details your question solicits. Many funds are already pretty diversified. If you buy a mutual fund, you are generally already getting a large portion of the gains from diversification. There is a very large difference between the unnecessary risk in your portfolio if you only hold a couple of stocks and if you hold a mutual fund. Should you be diversified across mutual funds as well? It depends on what your funds are. Many funds, such as target-date funds, are intended to be your sole investment. If you have funds covering every major asset class, then there may not be any additional benefit to buying other funds. You probably could not have picked your "favorite fund" early on. As humans, we have cognitive biases that make us think we knew things early on that we did not. I'm sure at some point at the very beginning you had a positive feeling toward that fund. Today you regret not acting on it and putting all your money there. But the number of such feelings is very large and if you acted on all those, you would do a lot of crazy and harmful things. You didn't know early on which fund would do well. You could just as well have had a good feeling about a fund that subsequently did much worse than your diversified portfolio did. The advice you have had about your portfolio probably isn't based on sound finance theory. You say you have always kept your investments in line with your age. This implies that you believe the guidelines given you by your broker or financial advisor are based in finance theory. Generally speaking, they are not. They are rules of thumb that seemed good to someone but are not rigorously proven either in theory or empirics. For example the notion that you should slowly shift your investments from speculative to conservative as you age is not based on sound finance theory. It just seems good to the people who give advice on such things. Nothing particularly wrong with it, I guess, but it's not remotely on par with the general concept of being well-diversified. The latter is extremely well established and verified, both in theory and in practice. Don't confuse the concept of diversification with the specific advice you have received from your advisor. A fund averaging very good returns is not an anomaly--at least going forward it will not be. There are many thousand funds and a large distribution in their historical performance. Just by random chance, some funds will have a truly outstanding track record. Perhaps the manager really was skilled. However, very careful empirical testing has shown the following: (1) You, me, and people whose profession it is to select outperforming mutual funds are unable to reliably detect which ones will outperform, except in hindsight (2) A fund that has outperformed, even over a long horizon, is not more likely to outperform in the future. No one is stopping you from putting all your money in that fund. Depending on its investment objective, you may even have decent diversification if you do so. However, please be aware that if you move your money based on historical outperformance, you will be acting on the same cognitive bias that makes gamblers believe they are on a "hot streak" and "can't lose." They can, and so can you. ======== Edit to answer a more specific line of questions =========== One of your questions is whether it makes sense to buy a number of mutual funds as part of your diversification strategy. This is a slightly more subtle question and I will indicate where there is uncertainty in my answer. Diversifying across asset classes. Most of the gains from diversification are available in a single fund. There is a lot of idiosyncratic risk in one or two stocks and much less in a collection of hundreds of stocks, which is what any mutual fund will hold. Still,you will probably want at least a couple of funds in your portfolio. I will list them from most important to least and I will assume the bulk of your portfolio is in a total US equity fund (or S&P500-style fund) so that you are almost completely diversified already. Risky Bonds. These are corporate, municipal, sovereign debt, and long-term treasury debt funds. There is almost certainly a good deal to be gained by having a portion of your portfolio in bonds, and normally a total market fund will not include bond exposure. Bonds fund returns are closely related to interest rate and inflation changes. They are also exposed to some market risk but it's more efficient to get that from equity. The bond market is very large, so if you did market weights you would have more in bonds than in equity. Normally people do not do this, though. Instead you can get the exposure to interest rates by holding a lesser amount in longer-term bonds, rather than more in shorter-term bonds. I don't believe in shifting your weights toward nor away from this type of bond (as opposed to equity) as you age so if you are getting that advice, know that it is not well-founded in theory. Whatever your relative weight in risky bonds when you are young is should also be your weight when you are older. International. There are probably some gains from having some exposure to international markets, although these have decreased over time as economies have become more integrated. If we followed market weights, you would actually put half your equity weight in an international fund. Because international funds are taxed differently (gains are always taxed at the short-term capital gains rate) and because they have higher management fees, most people make only a small investment to international funds, if any at all. Emerging markets International funds often ignore emerging markets in order to maintain liquidity and low fees. You can get some exposure to these markets through emerging markets funds. However, the value of public equity in emerging markets is small when compared with that of developed markets, so according to finance theory, your investment in them should be small as well. That's a theoretical, not an empirical result. Emerging market funds charge high fees as well, so this one is kind of up to your taste. I can't say whether it will work out in the future. Real estate. You may want to get exposure to real estate by buying a real-estate fund (REIT). Though, if you own a house you are already exposed to the real estate market, perhaps more than you want to be. REITs often invest in commercial real estate, which is a little different from the residential market. Small Cap. Although total market funds invest in all capitalization levels, the market is so skewed toward large firms that many total market funds don't have any significant small cap exposure. It's common for individuals to hold a small cap fund to compensate for this, but it's not actually required by investment theory. In principle, the most diversified portfolio should be market-cap weighted, so small cap should have negligible weight in your portfolio. Many people hold small cap because historically it has outperformed large cap firms of equal risk, but this trend is uncertain. Many researchers feel that the small cap "premium" may have been a short-term artifact in the data. Given these facts and the fact that small-cap funds charge higher fees, it may make sense to pass on this asset class. Depends on your opinion and beliefs. Value (or Growth) Funds. Half the market can be classed as "value", while the other half is "growth." Your total market fund should have equal representation in both so there is no diversification reason to buy a special value or growth fund. Historically, value funds have outperformed over long horizons and many researchers think this will continue, but it's not exactly mandated by the theory. If you choose to skew your portfolio by buying one of these, it should be a value fund. Sector funds. There is, in general, no diversification reason to buy funds that invest in a particular sector. If you are trying to hedge your income (like trying to avoid investing in the tech sector because you work in that sector) or your costs (buying energy because you buy use a disproportionate amount of energy) I could imagine you buying one of these funds. Risk-free bonds. Funds specializing in short-term treasuries or short-term high-quality bonds of other types are basically a substitute for a savings account, CD, money market fund, or other cash equivalent. Use as appropriate but there is little diversification here per se. In short, there is some value in diversifying across asset classes, and it is open to opinion how much you should do. Less well-justified is diversifying across managers within the same asset class. There's very little if any advantage to doing that. |
Paying Off Principal of Home vs. Investing In Mutual Fund | Naturally the advice from JoeTaxpayer and dsimcha is correct, every situation is different. I will get reckless, go nuts and make a recommendation! You are young, childless for the time being. Do the following with your money: ALTERNATE IDEA for #6 Fix yourself up for the long term first, then have a bit of fun, then get out of the house debt. In that order. |
Better to have a non-registered (taxable) investment account in one/both names and/or based on income? | It should be in the name(s) of whomever puts money in the account. When filing your taxes there will be a question or space to mark the percentage of income in each others name. If you're just looking for small amounts of income splitting, then it's legal for the higher earning spouse to pay household expenses and then the lower earning spouse can save all or some of his/her income. Whether or not to have 2 accounts or not has more to do with estate planning and minimizing account fees if applicable. It can also help in a small way for asset allocation if that's based on family assets and also, minimizing commissions. |
Is it wise to invest small amounts of money short-term? | I would agree with the other answers about it being a bad idea to invest in stocks in the short term. However, do consider also long-term repairs. For example, you should be prepared to a repair happening in 20 years in addition to repairs happening in a couple of months. So, if it is at all possible for you to save a bit more, put 2% of the construction cost of a typical new house (just a house, not the land the house is standing on) aside every year into a long-term repair fund and invest it into stocks. I would recommend a low-cost index fund or passive ETF instead of manually picking stocks. When you have a long-term repair that requires large amounts of money but will be good for decades to come, you will take some money out of the long-term repair fund. Where I live, houses cost about 4000 EUR per square meter, but most of that is the land and building permit cost. The actual construction cost is about 2500 EUR per square meter. So, I would put away 50 EUR per square meter every year. So, for example, for a relatively small 50 square meter apartment, that would mean 2500 EUR per year. There are quite many repairs that are long-term repairs. For example, in apartment buildings, plumbing needs to be redone every 40 years or so. Given such a long time period, it makes sense to invest the money into stocks. So, my recommendation would be to have two repair funds: short-term repairs and long-term repairs. Only the long-term repair fund should be invested into stocks. |
OTC Markets, Time, and Trading | Something to consider is that in the case of the company you chose, on the OTC market, that stock is thinly traded and with such low volume, it can be easy for it to fluctuate greatly to have trades occur. This is why volume can matter for some people when it comes to buying shares. Some OTC stocks may have really low volume and thus may have bigger swings than other stocks that have higher volume. |
When to convert employee shares in an RRSP into cash, even if there is a penalty? | The cost to you for selling is 3/8% of a years salary, this is what you won't get if you sell. Tough to calculate the what-if scenarios beyond this, since I can't quantify the risk of a price drop. Once the amount in he stock is say,10%, of a years salary, if you know a drop is coming, a sale is probably worth it, for a steep drop. My stronger focus would be on how much of your wealth is concentrated in that one stock, Enron, and all. |
How to invest 100k | Your question is listed as "How to invest 100k", not how would I find someone without a hidden agenda - so I'll answer that: It depends. I believe the best choices available are essentially as follows: If you are looking to pay for your childrens' college, it might be nice just to put the money in a Roth IRA and have that done right off the bat. If you disciplined enough to keep the money invested in some type of stock indexed fund, that might be good - the stock market has often outperformed almost every other form of investment over the very long haul. But if you could see yourself tapping it for things, then you might not want this. Another option is to put the money against your house. If that doesn't pay it off, refinance the remaining portion into a lower rate for less years. Obviously this knocks down a huge portion of the interest (duh) and gives you a nice cash flow you can use for investing. Also, the money you've put into a primary residence is pretty safe. I believe in some cases, safe even from bankruptcy. But as you've noted, being underwater on the home you are essentially throwing that money away in some way or fashion. And really, all in all, houses are terrible investments. You never really get your money out of your primary home, unless you downsize. The money is essentially "saved" without an equity line. This is a good choice if you're not disciplined. Your choice depends on: Of course, you can do any combination of these things and as Dave Ramsey is apt to remind his listeners and callers: you ought to have your emergency fund set before you do any of these things. |
Do banks give us interest even for the money that we only had briefly in our account? | Ditto @MichaelBorgwardt Just to get concrete: I just checked one bank in India and they say they are paying 4% on savings accounts. I don't know what you're getting or if 4% is typical in India, but it's at least an example. So if the bank pays interest based on average daily balance, and you left the money in the bank for a week, you'd get 4%/52 = .077%. So on Rs 95,000 that would be Rs 73. I live in the US where typical interest on a savings account today is about 1%. So an equivalent amount of money -- I think that would be about $1,500 -- would get 1/52 of 1%, or 29 cents. Don't leave the lights turned on while you do the calculations -- you'll spend more on the electricity than you make on the interest. :-) ** Addendum ** This suddenly reminds me ... I read a news story a few years ago about a man who was expecting a tax refund check from the IRS of a few hundred dollars, and when the check arrived it was for several million. Well obviously it was a mistake. But he came up with the clever idea: Deposit the check in an interest-bearing account. Promptly contact the IRS, inform them of the mistake, and ask how and where to go about returning the money. Hope that it takes at least a few days for them to figure everything out. Then keep the interest accumulated on the several-million dollars for the time that he had the money. And as he contacted them immediately about the error, they can't say he was trying to hide anything. It was a nice try, but it didn't work. They demanded he send them the interest as well as the principle. |
Offshore bank account with online International wire-transfer facility for Indians | Well first off, I would advice you to do this research yourself. You should not base your selection off someone's opinion such as mines. With that being said, these are some factors I suggest you consider and research before talking to an offshore bank account: Now, when opening an offshore account most offshore banks do not require you to be present at all. You can open an account simply by calling them or filling out their application online. However, be prepared to provide them with some information to verify who you are and the nature of your business such as a notarized passport along with other various forms of information that they may require. Just think of what your local bank requires is generally what they will ask as well. Here is a compiled list of offshore bank accounts to consider: These banks overall have a range between $0 - $1 million (domestic currency) minimum deposits. Most of them ranging from $1000-$5000. It all depends on the type of account, the nature of the account, and the business associated with the account. |
Online transaction - Money taken out late | Debit Cards have a certain processing delay, "lag time", before the transaction from the vendor completes with your bank. In the US it's typically 3 business days but I have seen even a 15 day lag from Panera Bread. I guess in the UK, payment processors have similar processing delays. A business is not obliged to run its payment processing in realtime, as that's very expensive. Whatever be the lag time, your bank is supposed to cover the payment you promised through your card. Now if you don't have agreements in place (for example, overdraft) with your bank, they will likely have to turn down payments that exceed your available balance. Here is the raw deal: In the end, the responsibility to ensure that your available balance is enough is upon you (and whether you have agreements in place to handle such situations) So what happened is very much legal, a business is not obliged to run its payment processing in realtime and no ethics are at stake. To ensure such things do not happen to me, I used to use a sub-account from which my debit card used to get paid. I have since moved to credit cards as the hassle of not overdrawing was too much (and overdraft fees from banks in the US are disastrous, especially for people who actually need such a facility) |
How much does it cost to build a subdivision of houses on a large plot of land? | The basic answer is that you are comparing apples and oranges. On the one hand, you are considering a case where someone buys a single already-built house. On the other hand, you are considering a case where someone buys a large piece of land, builds 10 houses, and (presumably) sells or rents the 9 they're not living in. Those are two totally different endeavors. It might be reasonable to compare the cost of a plot of land sized for a single house to the cost of a similar plot with a house already on it. But you can't directly compare the cost of buying 10 houses worth of land to the cost of one house. As other answers have mentioned, building 10 houses involves a massive amount of work: an architect has to design a house, somebody has to get permits to build it, someone may have to get water/power/sewage hookups, somebody has to physically build it -- then multiply all that by 10 for 10 houses. Once you're done, you still haven't recouped your investment. You just have 10 houses. Now you have to sell them, which is a whole other job in itself. Because the things you're comparing are so different, the potential buyers for the two cases are also completely different. This explains the "inconsistency" between the asking price and your perception of its value. The two kinds of properties are in two different markets. The people looking to buy a single home are just regular people looking for a place to live (or maybe trying to get a rental property). The people looking to buy a 10-house plot are real estate developers with a whole different set of concerns. There could be many reasons why the land hasn't been purchased yet, but you can't compare it to the cost of comparable houses, because almost no one who is looking for a house is going to consider buying 2 acres of land instead. It's like asking why filling up your car with gas is so much more expensive per gallon than buying a gas station and giving yourself free gas. They're just not the same thing. But given the size of the land, I can join forces with other people which are also in the market and totally bring down the land price per piece to say 100k? You can do that, but basically what you'll be doing is forming a real estate development company of some sort. This opens a whole other world of possible snafus (for instance, how ownership is to be divided, and what happens if the owners disagree on appropriate development of their portions). It is absolutely possible to make money by buying land and building houses on it, especially in California. People do it all the time. But it's not something you should attempt if you don't know what you're doing, and it's definitely not the same thing as just buying a house to live in. |
Credit card issued against my express refusal; What action can I take? | I would go speak to the bank manager. With Wells, you have to make sure it is the bank manager and not a service manager or something you are talking to (I learned that a few months ago). Tell her/him exactly what happened in detail and that you want the credit card closed and the credit inquiry removed from your credit report. Further, say that once all of that is done, you will decide whether to continue banking with them and whether any legal action is appropriate. If they give you any kind of push back, I'd get advice from a lawyer. The truth is they did open an account against your expressed wishes and it required them to check your credit so it does constitute fraud unless they can produce a signed document saying you agreed to the card. Edit: I just saw that this happened about a year ago. It may have been easier if you had done something at the time and may be more difficult if you've used the card in the meantime. |
View asset/holdings breakdown within fund | according to the SEC: Shareholder Reports A mutual fund and a closed-end fund respectively must provide shareholders with annual and semi-annual reports 60 days after the end of the fund’s fiscal year and 60 days after the fund’s fiscal mid-year. These reports contain updated financial information, a list of the fund’s portfolio securities, and other information. The information in the shareholder reports will be current as of the date of the particular report (that is, the last day of the fund’s fiscal year for the annual report, and the last day of the fund’s fiscal mid-year for the semi-annual report). Other Reports A mutual fund and a closed-end fund must file a Form N-Q each quarter and a Form N-PX each year on the SEC’s EDGAR database, although funds are not required to mail these reports to shareholders. Funds disclose portfolio holdings on Form N-Q. Form N-PX identifies specific proposals on which the fund has voted portfolio securities over the past year and discloses how the fund voted on each. This disclosure enables fund shareholders to monitor their funds’ involvement in the governance activities of portfolio companies. which means that sixty days after the end of each quarter they will tell you what they owned 60 days ago. This makes sense; why would they want to tell the world what companies they are buying and selling. |
Do I pay a zero % loan before another to clear both loans faster? | While, from a money-saving standpoint, the obviously-right course of action is to make only the minimum payment on the 0% loan, there are potentially legal reasons to try to pay off a car loan early. With a mortgage, you are the legal owner of the property and any action by the lender beyond imposing fees (e.g. foreclosure) requires going through the proper legal channels. On the other hand, in most jurisdictions, you are not the legal owner of a car purchased on a loan, and a missed or even lost payment can result in repossession without the lender even having to go to court. So from a risk-aversion standpoint, there's something to be said for getting rid of car loans as soon as you can. |
Calculate time to reach investment goals given starting balance? | The Finance functions in spreadsheet software will calculate this for you. The basic functions are for Rate, Payment, PV (present value), FV (Future value), and NPER, the number of periods. The single calculation faces a couple issues, dealing with inflation, and with a changing deposit. If you plan to save for 30 years, and today are saving $500/mo, for example, in ten years I hope the deposits have risen as well. I suggest you use a spreadsheet, a full sheet, to let you adjust for this. Last, there's a strange effect that happens. Precision without accuracy. See the results for 30-40 years of compounding today's deposit given a return of 6%, 7%, up to 10% or so. Your forecast will be as weak as the variable with the greatest range. And there's more than one, return, inflation, percent you'll increase deposits, all unknown, and really unknowable. The best advice I can offer is to save till it hurts, plan for the return to be at the lower end of the range, and every so often, re-evaluate where you stand. Better to turn 40, and see you are on track to retire early, than to plan on too high a return, and at 60 realize you missed it, badly. As far as the spreadsheet goes, this is for the Google Sheets - Type this into a cell =nper(0.01,-100,0,1000,0) It represents 1% interest per month, a payment (deposit) of $100, a starting value of $0, a goal of $1000, and interest added at month end. For whatever reason, a starting balance must be entered as a negative number, for example - =nper(0.01,-100,-500,1000,0) Will return 4.675, the number of months to get you from $500 to $1000 with a $100/mo deposit and 1%/mo return. Someone smarter than I (Chris Degnen comes to mind) can explain why the starting balance needs to be entered this way. But it does show the correct result. As confirmed by my TI BA-35 financial calculator, which doesn't need $500 to be negative. |
Benjamin Graham: Minimum Size of the company | Smaller markets can actually be more volatile so it's not a good idea to lower Graham's criteria for them. The only real adjustment possible is inflation adjustment. $100 million in 1973 United States works out to $500 million today based on the difference in CPI/Inflation from 1973. This number will be different for other markets where the rate of inflation since 1973 has been different. So the real question to ask is - what is to $100 million in the United States in 1973 worth today in your market? Source: http://www.serenitystocks.com/how-build-complete-benjamin-graham-portfolio |
Why do car rental companies prefer/require credit over debit cards? | I have looked at the conditions of a car rental company, and I believe it provides the answers: Upon pick up of your vehicle, you must present a valid credit card (*) used to make the booking and which must be in the driver´s name. If you do not have a valid credit card we will accept your debit card when you pick up your vehicle. However, as we cannot reserve credit to cover the potential damage or refueling costs, you will need to take SuperCover and a fuel tank of fuel at the start of the rental. We will refund the value of the unused fuel at the end of the rental unless otherwise agreed with you. (*) VISA, MasterCard and American Express are accepted. Credit card or Third Party Insurance IMPORTANT: In case of damage, we will charge you the incurred amount up to the excess. You will then need to reclaim this amount from the provider of the credit card or third party insurer. We strongly recommend that you fully read and understand the terms and conditions of any cover provided by your chosen provider before you decline any of our optional services. Without our SuperCover, should you damage the vehicle during your rental period, we will charge you the corresponding amount up to the excess, regardless of whether you can subsequently reclaim this amount from the provider of the credit card or the third party insurer. In the event you would like to dispute any of the above mentioned charges you should send your request by mail or email to the Firefly location state on your rental agreement. https://global.fireflycarrental.com/qualifications-ES.html From that, we can conclude that : It's likely that disputes with customers in case of damage cost a lot to car rental companies, and for the 2 above reasons, demanding a credit card may alleviate it. |
Gym membership tax deductible? | Assuming its in the US: No, it is not, and such things are usually treated as "red flags" for audit (and no, golf club memberships are not deductible either). The food expenses are not deductible in their entirety as well, only up to 50% of the actual expense, and only if it is directly business related. From what you've described, it sounds like if you have an audit coming you'll be in trouble. The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. |
Why does my bank suddenly need to know where my money comes from? | Bank runs very complex software to detect suspicious activity - terrorism financing, money laundering, etc. How would a program know that some person's activity is suspicious? It uses a set of rules. That set might be imperfect (that likely was not intended) - there might be some rule that triggers a warning on your account dominating the fact you've been with them for 15 years. So it's highly likely that an imperfect program triggered a warning on your account and the bank employer didn't dismiss it. |
Why should the P/E ratio of a growth stock match its percentage earnings growth rate? | Your observation is mostly right, that 1 is a the number around which this varies. You are actually referencing PEG, P/E to Growth ratio, which is a common benchmark to use to evaluate a stock. The article I link to provides more discussion. |
Why can't I short a particular stock? | In order to short a stock, you have to borrow the number of shares that you're shorting from someone else who holds the shares, so that you can deliver the shares you're shorting if it becomes necessary to do so (usually; there's also naked short selling, where you don't have to do this, but it's banned in a number of jurisdictions including the US). If a stock has poor liquidity, or is in high demand for shorting, then it may well be impossible to find anyone from whom it can be borrowed, which is what has happened in this instance. |
Does the Black-Scholes Model apply to American Style options? | Black-Scholes is "close enough" for American options since there aren't usually reasons to exercise early, so the ability to do so doesn't matter. Which is good since it's tough to model mathematically, I've read. Early exercise would usually be caused by a weird mispricing for some technical / market-action reason where the theoretical option valuations are messed up. If you sell a call that's far in the money and don't get any time value (after the spread), for example, you probably sold the call to an arbitrageur who's just going to exercise it. But unusual stuff like this doesn't change the big picture much. |
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