Question stringlengths 14 166 | Answer stringlengths 3 13.1k |
|---|---|
Possible replacement for Quicken | Do you use any other online features of Quicken? How many unique ticker symbols do you have? How often do you really need to update the prices? You can always continue to use Quicken, and enter the stock prices by hand. Maybe update them once a month to get an idea of how your investments are doing. That should work indefinitely. |
Can a trade happen “in between” the bid and ask price? | As far as i understand the big companies on the stock markets have automated processes that sit VERY close to the stock feeds and continually processes these with the intention of identifying an opportunity to take multiple small lots and buy/sell them as a big lot or vice/versa and do this before a buy or sell completes, thus enabling them to intercept the trade and make a small profit on the delta. With enough of these small gains on enough shares they make big profits and with near zero chance of losing. |
Should we prepay our private student loans, given our particular profile? | You're doing great. I'd suggest trying get putting 5-10% towards your retirement and the balance to the student loans. You are a little weak in retirement savings, but you have $550k house with 20% equity that you bought at the bottom of the market. That's a smart investment IMO, and in my mind compensates somewhat for your low 401k balance. If I were you, I would retire the student loans ASAP to reduce the money that you have to shell out each month. That way, you have the option of scaling back you or your wife's work somewhat to avoid paying thousands for child care. In my mind, less debt == more options, and I like options. |
Transferring money from One business checking to another business checking | You should have separate files for each of the two businesses. The business that transfers money out should "write check" in its QB file. The business that receives money should "make deposit" in its QB file. (In QB you "write check" even when you make the payment by some other means like ACH.) Neither business should have the bank accounts of the other explicitly represented. On each side, you will also need to classify the payment as having originated from / gone to some other account - To know what's correct there, we'd need to know why your transferring the money in the first place and how you otherwise have your books established. I think that's probably beyond the scope of what's on-topic / feasible here. Money into your business from your personal account is probably owner's equity, unless you have something else going on. For example, on the S Corp you should be paying yourself a salary. If you overpay by accident, then you might write a check back to the company from your personal account to correct the mistake. That's not equity - It's probably a "negative expense" in some other account that tracks the salary payments. |
Buying a truck to write off on taxes | Assuming your country is the United States there is. See schedule C line 9 and the corresponding instructions. There are many rules associated with this, in some cases the entire purchase can be written off but typically if the truck is only used for business. Most people write off partial usage in the form of credits for mileage. You are best to consult with a CPA once your business earns a profit. Good luck. |
Is it true that if I work 6 months per year, it is better than to work for 1 calendar year and take a break for 1 year? | In many cases spanning across years will indeed be beneficial. Deductions: You get to take twice as much in deductions (twice the standard deduction, or itemizing - if you can) when you span over two years than in one. IRA: You can only contribute in years when you have earned income. You have all the income in year 1 and none in year 2 - you can only contribute in year 1. You have half of the income in year 1 and half of the income in year 2 - you can contribute in both years (up to the limit/earned income, whichever is less). Social Security: You get 4 credits for each year you earned ~16K in. You earned 32K in year 1, and nothing in year 2 - you get 4 credits. You split it in half for each year - you get 8 credits. The list can go on. If you can do the planning ahead of time and can chose the time periods of your work freely (which is not something most people can do), you can definitely plan ahead with taxes in mind. This is called Tax Planning. |
What's the point of Ford loosening financing requirements? | Why then did Ford (and the auto industry in general) suddenly decide to court such buyers? Clearly when they felt they had a viable solution to the financing and could open up the market of buyers they were previously ignoring. If more sales are desired, surely the same can be accomplished with simply lowering prices? Millions of people have bad credit. Apparently Ford thinks adding millions of people to the pool of potential buyers is more effective to boosting sales than discounting product for the pool of existing potential buyers. |
Real estate agent best practice | This question is a bit off-topic, might be better moved to another SE site. But I'll answer anyway: Sounds like the problem is that your wife is potentially being taken advantage of by people who may not really be prospects. Keep in mind no one can take advantage of you without your permission. There are also some things you and she can do to reduce the amount of wasted time while minimizing the risk of giving up on a potential sale. Qualify your leads: make sure these potential clients are really, truly potential customers. Ask whatever questions you have to ask in order to qualify them as real house hunters. It doesn't have to be binary: you can have hot leads ready to buy now, and lukewarm leads who may not buy for 12 months or more. Treat each one accordingly. Set limits: a lukewarm lead is not allowed to call you 20 times a day. Answer their calls just once per day. By answering the phone every time they call you are training them to call as often as they like! If you only return calls once per day they'll quickly learn to save their questions up and ask them all at once. Showing 10 houses sounds a bit silly. How can you remember any details after seeing 10 houses? By asking more questions and learning more about what your clients want in a house, you can reduce the footwork. Me, I'd flat out limit it to three houses per outing, and I wouldn't even hesitate to tell the client why. I think all these things will come in time. Like any new venture, she needs some experience to learn how to maximize her efficiency and effectiveness. Keep in mind it's better to have the phone ringing too much than not at all! |
Money market account for emergency savings | From a quick look at sources on the web, it looks to me like Money Market Accounts and savings accounts are both paying about the same rate today: around 1%, give or take maybe 0.4%. I suppose that's better than nothing, but it's not a whole lot better than nothing. (I saw several savings accounts advertising 0.1% interest. If they mailed you a check, the postage could be more than the returns.) Personally, I keep a modest amount of emergency cash in my checking account, and I put my "savings" in a very safe mutual fund. That generally gets somewhere from making maybe 3% a year to losing a small amount. Certainly nothing to sing about, but better than savings or money markets. Whether you are willing to tolerate the modest risk or the sales charges is a matter for your personal situation and feelings. |
Can a Covered Call be called away before the expiration date? | Yes. If I own a call, an American call option can be exercised at my wish. A European call can only be exercised at expiration, by the way. Your broker doesn't give you anything but a current quote for a given strike price. There are a number of good option related questions here. A bit of searching and reading will help you understand the process. |
Retirement Options for Income | I agree that you should CONSIDER a shares based dividend income SIPP, however unless you've done self executed trading before, enough to understand and be comfortable with it and know what you're getting into, I would strongly suggest that as you are now near retirement, you have to appreciate that as well as the usual risks associated with markets and their constituent stocks and shares going down as well as up, there is an additional risk that you will achieve sub optimal performance because you are new to the game. I took up self executed trading in 2008 (oh yes, what a great time to learn) and whilst I might have chosen a better time to get into it, and despite being quite successful over all, I have to say it's the hardest thing I've ever done! The biggest reason it'll be hard is emotionally, because this pension pot is all the money you've got to live off until you die right? So, even though you may choose safe quality stocks, when the world economy goes wrong it goes wrong, and your pension pot will still plummet, somewhat at least. Unless you "beat the market", something you should not expect to do if you haven't done it before, taking the rather abysmal FTSE100 as a benchmark (all quality stocks, right? LOL) from last Aprils highs to this months lows, and projecting that performance forwards to the end of March, assuming you get reasonable dividends and draw out £1000 per month, your pot could be worth £164K after one year. Where as with normal / stable / long term market performance (i.e. no horrible devaluation of the market) it could be worth £198K! Going forwards from those 2 hypothetical positions, assuming total market stability for the rest of your life and the same reasonable dividend payouts, this one year of devaluation at the start of your pensions life is enough to reduce the time your pension pot can afford to pay out £1000 per month from 36 years to 24 years. Even if every year after that devaluation is an extra 1% higher return it could still only improve to 30 years. Normally of course, any stocks and shares investment is a long term investment and long term the income should be good, but pensions usually diversify into less and less risky investments as they get close to maturity, holding a certain amount of cash and bonds as well, so in my view a SIPP with stocks and shares should be AT MOST just a part of your strategy, and if you can't watch your pension pot payout term shrink from 26 years to 24 years hold your nerve, then maybe a SIPP with stocks and shares should be a smaller part! When you're dependent on your SIPP for income a market crash could cause you to make bad decisions and lose even more income. All that said now, even with all the new taxes and loss of tax deductible costs, etc, I think your property idea might not be a bad one. It's just diversification at the end of the day, and that's rarely a bad thing. I really DON'T think you should consider it to be a magic bullet though, it's not impossible to get a 10% yield from a property, but usually you won't. I assume you've never done buy to let before, so I would encourage you to set up a spread sheet and model it carefully. If you are realistic then you should find that you have to find really REALLY exceptional properties to get that sort of return, and you won't find them all the time. When you do your spread sheet, make sure you take into account all the one off buying costs, build a ledger effectively, so that you can plot all your costs, income and on going balance, and then see what payouts your model can afford over a reasonable number of years (say 10). Take the sum of those payouts and compare them against the sum you put in to find the whole thing. You must include budget for periodic minor and less frequent larger renovations (your tenants WON'T respect your property like you would, I promise you), land lord insurance (don't omit it unless you maintain capability to access a decent reserve (at least 10-20K say, I mean it, it's happened to me, it cost me 10K once to fix up a place after the damage and negligence of a tenant, and it definitely could have been worse) but I don't really recommend you insuring yourself like this, and taking on the inherent risk), budget for plumber and electrician call out, or for appropriate schemes which include boiler maintenance, etc (basically more insurance). Also consider estate agent fees, which will be either finders fees and/or 10% management fees if you don't manage them yourself. If you manage it yourself, fine, but consider the possibility that at some point someone might have to do that for you... either temporarily or permanently. Budget for a couple of months of vacancy every couple of years is probably prudent. Don't forget you have to pay utilities and council tax when its vacant. For leaseholds don't forget ground rent. You can get a better return on investment by taking out a mortgage (because you make money out of the underlying ROI and the mortgage APR) (this is usually the only way you can approach 10% yield) but don't forget to include the cost of mortgage fees, valuation fees, legal fees, etc, every 2 years (or however long)... and repeat your model to make sure it is viable when interest rates go up a few percent. |
Best way to start investing, for a young person just starting their career? | The most important thing is to start. Don't waste months and years trying to figure out the "optimal" strategy or trying to read all the best books before you start. Pick a solid, simple choice, like investing in your company sponsored 401(k), and do it today. This I Will Teach You To Be Rich post on barriers has some good insight on this. |
Fundamentals of creating a diversified portfolio based on numbers? | Most of the “recommendations” are just total market allocations. Within domestic stocks, the performance rotates. Sometimes large cap outperform, sometimes small cap outperform. You can see the chart here (examine year by year): https://www.google.com/finance?chdnp=1&chdd=1&chds=1&chdv=1&chvs=maximized&chdeh=0&chfdeh=0&chdet=1428692400000&chddm=99646&chls=IntervalBasedLine&cmpto=NYSEARCA:VO;NYSEARCA:VB&cmptdms=0;0&q=NYSEARCA:VV&ntsp=0&ei=_sIqVbHYB4HDrgGA-oGoDA Conventional wisdom is to buy the entire market. If large cap currently make up 80% of the market, you would allocate 80% of domestic stocks to large cap. Same case with International Stocks (Developed). If Japan and UK make up the largest market internationally, then so be it. Similar case with domestic bonds, it is usually total bond market allocation in the beginning. Then there is the question of when you want to withdraw the money. If you are withdrawing in a couple years, you do not want to expose too much to currency risks, thus you would allocate less to international markets. If you are investing for retirement, you will get the total world market. Then there is the question of risk tolerance. Bonds are somewhat negatively correlated with Stocks. When stock dips by 5% in a month, bonds might go up by 2%. Under normal circumstances they both go upward. Bond/Stock allocation ratio is by age I’m sure you knew that already. Then there is the case of Modern portfolio theory. There will be slight adjustments to the ETF weights if it is found that adjusting them would give a smaller portfolio variance, while sacrificing small gains. You can try it yourself using Excel solver. There is a strategy called Sector Rotation. Google it and you will find examples of overweighting the winners periodically. It is difficult to time the rotation, but Healthcare has somehow consistently outperformed. Nonetheless, those “recommendations” you mentioned are likely to be market allocations again. The “Robo-advisors” list out every asset allocation in detail to make you feel overwhelmed and resort to using their service. In extreme cases, they can even break down the holdings to 2/3/4 digit Standard Industrial Classification codes, or break down the bond duration etc. Some “Robo-advisors” would suggest you as many ETF as possible to increase trade commissions (if it isn’t commission free). For example, suggesting you to buy VB, VO, VV instead a VTI. |
How are days counted when funding a new account within 10 days | If the wording is "within 10 days" then its 10 days. Calendar days. Otherwise they would put "10 business days", for example. Usually, if you need to do something within 10 days from today, the first day to count is today. I would expect "within" to mean that you can fund in any of the days up to the 10th. But that's me, trying to read English as English. Why don't you call the bank and ask them? |
How to calculate my estimated taxes. 1099 MISC + Self Employment | There is a shortcut you can use when calculating federal estimated taxes. Some states may allow the same type of estimation, but I know at least one (my own--Illinois) that does not. The shortcut: you can completely base your estimated taxes for this year on last year's tax return and avoid any underpayment penalty. A quick summary can be found here (emphasis mine): If your prior year Adjusted Gross Income was $150,000 or less, then you can avoid a penalty if you pay either 90 percent of this year's income tax liability or 100 percent of your income tax liability from last year (dividing what you paid last year into four quarterly payments). This rule helps if you have a big spike in income one year, say, because you sell an investment for a huge gain or win the lottery. If wage withholding for the year equals the amount of tax you owed in the previous year, then you wouldn't need to pay estimated taxes, no matter how much extra tax you owe on your windfall. Note that this does not mean you will not owe money when you file your return next April; this shortcut ensures that you pay at least the minimum allowed to avoid penalty. You can see this for yourself by filling out the worksheet on form 1040ES. Line 14a is what your expected tax this year will be, based on your estimated income. Line 14b is your total tax from last year, possibly with some other modifications. Line 14c then asks you to take the lesser of the two numbers. So even if your expected tax this year is one million dollars, you can still base your estimated payments on last year's tax. |
Is it a bad idea to buy a motorcycle with a lien on it? | In the case of a vehicle with a lien, there is a specific place on the title to have a lien holder listed, and the holder of the lien will also hold the title until the lien is cleared. Usually this means you have to pay off the loan when you purchase the vehicle. If that loan is held by a bank, meet the seller at the bank and pay the loan directly with them and have them send the title directly to you when the loan is paid. This usually involves writing up a bill of sale to give to the bank when paying the loan. The only thing you're trying to avoid here is paying cash to the seller--who then keeps the cash without paying the lien holder--who then keeps the title and repossesses the motorcycle. Don't pay the seller if they don't have the title ready to sign over to you. |
How can I save on closing costs when buying a home? | Good answers here. I would like to add one more (less obvious) way to save - look for houses that are For Sale By Owner (FSBO). Owner's who are selling without an agent do not have to pay a seller's agent fee. The closing cost savings here are actually on the seller's side of the transaction. However, since you know the seller is saving money, you may be able to negotiate a lower overall selling price with them (or it may be priced lower than comps already) because of this factor. FSBO houses maybe trickier to find than those listed by an agent, because they will not appear on the national MLS used by realtors to find/advertise houses that aren't being sold by their own clients. You may need to physically walk the streets of the neighborhood you're interested in moving to, to look for FSBO yard signs. FSBO sellers may also advertise in local newspapers. |
Is Bitcoin a commodity or a currency [duplicate] | I would classify Bitcoin as a hybrid. Currency : It is accepted by e-businesses as a form of payment Commodity : Chart illustrating the volatility and speculative nature of Bitcoin |
How to calculate the rate of return on selling a stock? | Simple math. Take the sale proceeds (after trade expenses) and divide by cost. Subtract 1, and this is your return. For example, buy at 80, sell at 100, 100/80 = 1.25, your return is 25%. To annualize this return, multiply by 365 over the days you were in that stock. If the above stock were held for 3 months, you would have an annualized return of 100%. There's an alternative way to annualize, in the same example above take the days invested and dive into 365, here you get 4. I suggested that 25% x 4 = 100%. Others will ask why I don't say 1.25^4 = 2.44 so the return is 144%/yr. (in other words, compound the return, 1.25x1.25x...) A single day trade, noon to noon the next day returning just 1%, would multiply to 365% over a year, ignoring the fact there are about 250 trading days. But 1.01^365 is 37.78 or a 3678% return. For long periods, the compounding makes sense of course, the 8%/yr I hope to see should double my money in 9 years, not 12, but taking the short term trades and compounding creates odd results of little value. |
Is Mint allowed to share user data with other Intuit entities? | I wound up asking Mint over email so I'll share the answer I received: Thank you for contacting Mint.com. From my understand you want to know if Mint can transfer data to other Intuit products and vice versa. Let me address your concern based from what I can see on my tools. Upon confirming, while Mint and other Intuit products are under the same company, Mint.com is not yet integrated to other Intuit products. We’d like to thank you though for giving the idea to us. With this, we would know which future enhancements will our customers appreciate. We have forwarded your request/suggestion to our Product and Development team for their review. At this time though, we can't make any guarantee that your request/suggestion will get implemented as we must balance customer demand with resources and business objectives. Oops... |
Taxable income on full-time job + business earnings | Possible alternative: In my case, the part-time locksmithing is a small enough portion of my I come that I just submit it as hobby income, rather than trying to track it as a separate entity. |
At what point do index funds become unreliable? | A great deal of analysis on this question relies on misunderstandings of the market or noticing trends that happened at the same time but were not caused by each other. Without knowing your view, I'll just give the basic idea. The amount of active management is self-correcting. The reason people have moved out of actively managed funds is that the funds have not been performing well. Their objective is to beat their benchmarks by profiting as they correct mispricing. They are performing poorly because there is too much money chasing too few mispricings. That is why the actively managed industry is shrinking. If it gets small enough, presumably those opportunities will become more abundant and mispricing correction will become more profitable. Then money will flow back into active funds. Relevant active management may not be what a lay person is thinking of. At the retail level, we are observing a shift to passive funds, but there is still plenty of money in other places. For example, pension and endowment funds normally have an objective of beating a market benchmark like the Russell 3000. As a result they are constantly trying to find opportunities to invest in active management that really can outperform. They represent a great deal of money and are nothing like the "buy and forget" stereotype we sometimes imagine. Moreover, hedge funds and propreitary trading shops explicitly and solely try to correct mispricings. They represent a very, very large bucket of money that is not shrinking. Active retail mutual funds and individual investors are not as relevant for pricing as we might think. More trading volume is not necessarily a good thing, nor is it the measure of market quality. One argument against passive funds is that passive funds don't trade much. Yet the volume of trading in the markets has risen dramatically over time as a result of technological improvements (algorithmic traders, mostly). They have out-competed certain market makers who used to make money on inefficiencies of the market. Is this a good thing or a bad thing? Well, prices are more efficient now and it appears that these computers are more responsive to price-relevant information than people used to be. So even if trading volume does decrease, I see no reason to worry that prices will become less efficient. That's not the direction things have gone, even as passive investing has boomed. Overall, worries about passive investing rely on an assumption that there is not enough interest in and resources for making arbitrage profits to keep prices efficient. This is highly counterfactual and always will be. As long as people and institutions want money and have access to the markets, there will be plenty of resources allocated to price correction. |
Will progressively investing with moderate-to-high risk help secure a future? | There are a few flaws in your reasoning: I know my portfolio will always keep going up, No, it won't. You'll have periods of losses. You are starting your investing in a bull market. Do NOT be fooled into believing that your successes now will continue indefinitely. The more risky your portfolio, the bigger the losses. The upside of a risky portfolio is that the gains generally outweigh the losses, but there will be periods of losses. I honestly don't believe that it's possible for me to end up losing in the long term, regardless of risk. I think you vastly underestimate the risk of your strategy and/or the consequences of that risk. There's nothing wrong with investing in risky assets, since over time you'll get higher-than-average returns, but unless you diversify you are exposing yourself to catastrophic losses as well. |
Does the “Free Ride” rule always apply to your entire collection of shares in a particular stock? | Your question is unanswerable as you haven't provided enough information. I.e. If those shares cost $1000 and you have $50000 ( or any number above $1000) of cash available in the account then you can't possibly free ride. I think your understanding of the free ride rule is incorrect. Basically what this rule is stating is that you have to have the cash when the trade is placed in order to settle the trade. Otherwise you are taking on margin (which you can't do in a cash account). So at order entry you have to have the cash to cover the purchase so it's able to be settled. If you do, no problem and you can sell that stock before trade settlement. There is no law that says you have to hold it past trade settlement. However, you cannot spend the same dollar more than once before it settles. This site does a good job explaining this more throughly with examples: http://www.invest-faq.com/articles/trade-day-free-ride.html |
Is candlestick charting an effective trading tool in timing the markets? | Candlesticks and TA are a relic of pre-computer trading, period. Market makers use sophisticated algorithms not for trading, but manipulations. |
Is giving my girlfriend money for her mortgage closing costs and down payment considered fraud? | you have 2 concerns: the lender and the irs. either way you should be fine the lender just wants to know that you have no legal claim to the property or other compensation. simply signing a gift declaration should clear that up, making this a "gift" from their perspective. they probably have some standard form you can sign. otherwise, just a simple note that says "i, so-and-so, gave whats-er-name x$ on the y of june, 20## as a gift, with no expectation of repayment". then, only way you could get charged with "fraud" is if you seek compensation for this "gift" in the future. even then, the bank would probably have to find out about the compensation and complain pretty strongly to get a prosecutor interested in a small dollar misrepresentation case with little or no provable intent. a bigger concern is the bank being uncomfortable with the future renter also giving a gift. that just "smells weird". and bankers hate anything weird. it probably won't prevent the mortgage from getting approved, but it might delay the underwriters a few days while the wring their hands about it. the irs is a bit more complicated. they tend to be the "heads we win, tails you lose" types. assuming they consider this a gift, then you are fine, since it is under the annual gift exclusion (~14k$ these days); you don't even have to tell them about it. however, if she gives you a large financial gift in the near future, they may decide to interpret those two events as a single transaction turning this into a no interest loan. even then, you should be fine since the irs generally doesn't care about loans under 100k$ with "missing" interest under 1k$/yr. since this is a small loan and interest rates are so low, you have no worries. further irs reading on gift loans: https://www.law.cornell.edu/uscode/text/26/7872 |
What is the difference between a scrip dividend and a stock split? | Firstly a stock split is easy, for example each unit of stock is converted into 10 units. So if you owned 1% of the company before the stock split, you will still own 1% after the stock split, but have 10 times the number of shares. The company does not pay out any money when doing this and there is no effect on tax for the company or the share holder. Now onto stock dividend… When a company make a profit, the company gives some of the profit to the share holders as a dividend; this is normally paid in cash. An investor may then wish to buy more shares in the company using the money from the dividend. However buying shares used to have a large cost in broker charges etc. Therefore some companies allowed share holders to choose to have the dividend paid as shares. The company buys enough of their own shares to cover the payout, only having one set of broker charges and then sends the correct number of shares to each share holder that has opted for a stock dividend. (Along with any cash that was not enough to buy a complete share.) This made since when you had paper shares and admin costs where high for stock brokers. It does not make sense these days. A stock dividend is taxed as if you had been paid the dividend in cash and then brought the stock yourself. |
Higher auto insurance costs: keep car or switch to public transit? | Looking at your numbers, I would definitively consider selling the car, and use the public transportation instead. You could easily save $450 month, plus gas and maintenance. As you mentioned, public transportation will be only a fraction of this amount, so you might end up saving around $400 monthly. If you decide to keep the car, the amount that you will spent monthly is easily a payment for a brand-new car. What if, God forbid, for any kind of reason, you get a traffic ticket that can increase your insurance premium? What if the engine stops working, and you will need to spent thousands of dollars fixing the car? With this, and all of the other expenses pilled up, you might be unable to afford all this at some point. If you decide to sell the car, the money that you will save monthly can be put in a savings account (or in any other sort of "safe" investment instrument). In this way, if your situation changes where you need a car again, you will be able to easily afford a new car. Regarding your need to visit your friends on the suburbs every other weekend, I think you can just talk with them, and meet on places where public transportation is available, or ask them to pick you up in the nearest station to the suburbs. In conclusion, based on what you said, I do not think the "little" convenience that you get in owning the car outweighs the big savings that you get monthly, if you decide to sell the car. |
Making an offer on a property - go in at market price? | First off; I don't know of the nature of the interpersonal relationship between you and your roommate, and I don't really care, but I will say that your use of that term was a red flag to me, and it will be so to a bank; buying a home is a big deal that you normally do not undertake with just a "friend" or "roommate". "Spouses", "business partners", "domestic partners" etc are the types of people that go in together on a home purchase, not "roommates". Going "halvsies" on a house is not something that's easily contracted; you can't take out two primary mortgages for half the house's value each, because you can't split the house in half, so if one of you defaults that bank takes the house leaving both the other person and their bank in the lurch. Co-signing on one mortgage is possible but then you tie your credit histories together; if one of you can't make their half of the mortgage, both of you can be pursued for the full amount and both of you will see your credit tank. That's not as big a problem for two people joined in some other way (marriage/family ties) but for two "friends" there's just way too much risk involved. Second, I don't know what it's like in your market, but when I was buying my first house I learned very quickly that extended haggling is not really tolerated in the housing market. You're not bidding on some trade good the guy bought wholesale for fifty cents and is charging you $10 for; the seller MIGHT be breaking even on this thing. An offer that comes in low is more likely to be rejected outright as frivolous than to be countered. It's a fine line; if you offer a few hundred less than list the seller will think you're nitpicking and stay firm, while if you offer significantly less, the seller may be unable to accept that price because it means he no longer has the cash to close on his new home. REOs and bank-owned properties are often sold at a concrete asking price; the bank will not even respond to anything less, and usually will not even agree to eat closing costs. Even if it's for sale by owner, the owner may be in trouble on their own mortgage, and if they agree to a short sale and the bank gets wind (it's trivial to match a list of distressed mortgaged properties with the MLS listings), the bank can swoop in, foreclose the mortgage, take the property and kill the deal (they're the primary lienholder; you don't "own" your house until it's paid for), and then everybody loses. Third, housing prices in this economy, depending on market, are pretty depressed and have been for years; if you're selling right now, you are almost certainly losing thousands of dollars in cash and/or equity. Despite that, sellers, in listing their home, must offer an attractive price for the market, and so they are in the unenviable position of pricing based on what they can afford to lose. That again often means that even a seller who isn't a bank and isn't in mortgage trouble may still be losing thousands on the deal and is firm on the asking price to staunch the bleeding. Your agent can see the signs of a seller backed against a wall, and again in order for your offer to be considered in such a situation it has to be damn close to list. As far as your agent trying to talk you into offering the asking price, there's honestly not much in it for him to tell you to bid higher vs lower. A $10,000 change in price (which can easily make or break a deal) is only worth $300 to him either way. There is, on the other hand, a huge incentive for him to close the deal at any price that's in the ballpark: whether it's $365k or $375k, he's taking home around $11k in commission, so he's going to recommend an offer that will be seriously considered (from the previous points, that's going to be the asking price right now). The agent's exact motivations for advising you to offer list depend on the exact circumstances, typically centering around the time the house has been on the market and the offer history, which he has access to via his fellow agents and the MLS. The house may have just had a price drop that brings it below comparables, meaning the asking price is a great deal and will attract other offers, meaning you need to move fast. The house may have been offered on at a lower price which the seller is considering (not accepted not rejected), meaning an offer at list price will get you the house, again if you move fast. Or, the house may have been on the market for a while without a price drop, meaning the seller can go no lower but is desperate, again meaning an offer at list will get you the house. Here's a tip: virtually all offers include a "buyer's option". For a negotiated price (typically very small, like $100), from the moment the offer is accepted until a particular time thereafter (one week, two weeks, etc) you can say no at any time, for any reason. During this time period, you get a home inspection, and have a guy you trust look at the bones of the house, check the basic systems, and look for things that are wrong that will be expensive to fix. Never make an offer without this option written in. If your agent says to forego the option, fire him. If the seller wants you to strike the option clause, refuse, and that should be a HUGE red flag that you should rescind the offer entirely; the seller is likely trying to get rid of a house with serious issues and doesn't want a competent inspector telling you to lace up your running shoes. Another tip: depending on the pricepoint, the seller may be expecting to pay closing costs. Those are traditionally the buyer's responsibility along with the buyer's agent commission, but in the current economy, in the pricepoint for your market that attracts "first-time homebuyers", sellers are virtually expected to pay both of those buyer costs, because they're attracting buyers who can just barely scrape the down payment together. $375k in my home region (DFW) is a bit high to expect such a concession for that reason (usually those types of offers come in for homes at around the $100-$150k range here), but in the overall market conditions, you have a good chance of getting the seller to accept that concession if you pay list. But, that is usually an offer made up front, not a weapon kept in reserve, so I would have expected your agent to recommend that combined offer up front; list price and seller pays closing. If you offer at list you don't expect a counter, so you wouldn't keep closing costs as a card to play in that situation. |
1.4 million cash. What do I do? | First--congratulations! I certainly wish I could create something worth buying for $1.4 million. In addition to what @duffbeer703 recommended, consider putting some of the money in Treasury Inflation-Protected Securities (TIPS). I second the advice on staying away from annuities as well. @littleadv is right about certified financial planners. A good one will put those funds in a mix of investments that minimize your potential tax exposure. They will also look at whether you're properly insured. Research what is FDIC-insured (and what isn't) here. Since you're still making a six-figure income in your salaried job, be sure not to neglect things like contributing to your 401(k)--especially if it's a matching one. At your salary level, I think you're still eligible to contribute to a Roth IRA (taxable income goes in, so withdrawals are tax-free). A good adviser will know which options are best. |
How does one's personal credit history affect one's own company's credit rating? | For a newly registered business, you'll be using your "personal" credit score to get the credit. You will need to sign for the credit card personally so that if your business goes under, they still get paid. Your idea of opening a business card to increase your credit score is not a sound one. Business plastic might not show up on your personal credit history. While some issuers report business accounts on a consumer's personal credit history, others don't. This cuts both ways. Some entrepreneurs want business cards on their personal reports, believing those nice high limits and good payment histories will boost their scores. Other small business owners, especially those who keep high running balances, know that including that credit line could potentially lower their personal credit scores even if they pay off the cards in full every month. There is one instance in which the card will show up on your personal credit history: if you go into default. You're not entitled to a positive mark, "but if you get a negative mark, it will go on your personal report," Frank says. And some further information related to evaluating a business for a credit card: If an issuer is evaluating you for a business card, the company should be asking about your business, says Frank. In addition, there "should be something on the application that indicates it's for business use," he says. Bottom line: If it's a business card, expect that the issuer will want at least some information pertaining to your business. There is additional underwriting for small business cards, says Alfonso. In addition to personal salary and credit scores, business owners "can share financials with us, and we evaluate the entire business financial background in order to give them larger lines," she says. Anticipate that the issuer will check your personal credit, too. "The vast majority of business cards are based on a personal credit score," says Frank. In addition, many issuers ask entrepreneurs to personally guarantee the accounts. That means even if the businesses go bust, the owners promise to repay the debts. Source |
Is the contribution towards Employment Insurance (EI) wasted if I never get fired, or are my premiums refunded? | I would suggest they are not wasted because your premiums fund unemployment insurance, which is a net to prevent people from going under if they lose their jobs. Unemployment insurance is in many ways an incubator for success because it allows an entrepreneur to take more risk in starting a business because failure won't mean devastation. Perhaps that person who took the risk because of the ability to fail started the business that you now work for. Society works better (in my opinion) by keeping the bottom closer to the top. Paying into the unemployment insurance fund indirectly provides you opportunity. |
How do I buy bundled insurance policies? | You have 3 companies now that you work with. I would start there. Ask one of them to show you what would happen if you bought the other two policies from them. This may not be something that they will show via the quotes generated on the web page. So you would be better off talking to a person who can generate a quote with that additional information. Make sure that you are comparing exact matches for the limits and options for the policies. Once you have done that with the first then do the same for the other two. I would have to dig into my policy bills for life insurance, but I do know that the bills for the home and auto insurance do show exactly how much I am saving by having multiple polices. |
How to prevent myself from buying things I don't want | Remember where they said "Life, liberty and the pursuit of happiness? That is the essence of this problem. You have freedom including freedom to mess up. On the practical side, it's a matter of structuring your money so it's not available to you for impulse buying, and make it automatic. Have you fully funded your key necessities? You should have an 8-month emergency fund in reserve, in a different savings account. Are you fully maxing out your 401K, 403B, Roth IRA and the like? This single act is so powerful that you're crazy not to - every $1 you save will multiply to $10-100 in retirement. I know a guy who tours the country in an RV with pop-outs and tows a Jeep. He was career Air Force, so clearly not a millionaire; he saved. Money seems so trite to the young, but Seriously. THIS. Have auto-deposits into savings or an investment account. Carry a credit card you are reluctant to use for impulse buys. Make your weekly ATM withdrawal for a fixed amount of cash, and spend only that. When your $100 has to make it through Friday, you think twice about that impulse buy. What about online purchases? Those are a nightmare to manage. If you spend $40 online, reduce your ATM cash withdrawal by $40 the next week, is the best I can think of. Keep in mind, many of these systems are designed to be hard to resist. That's what 1-click ordering is about; they want you to not think about the bill. That's what the "discount codes" are about; those are a fake artifice. Actually they have marked up the regular price so they are only "discounting" to the fair price. You gotta see the scam, unsubscribe and/or tune out. They are preying on you. Get angry about that! Very good people to follow regularly are Suze Orman or Dave Ramsey, depending on your tastes. As for the ontological... freedom is a hard problem. Once food and shelter needs are met, then what? How does a free person deny his own freedom to structure his activities for a loftier goal? Sadly, most people pitching solutions are scammers - churches, gurus, etc. - after your money or your mind. So anyone who is making an effort to get seen by you and promise to help you is probably not a good guy. Though, Napoleon Hill managed to pry some remarkable knowledge from Andrew Carnegie in his book "Think and Grow Rich". Tony Robbins is brilliant, but he lets his staff sell expensive seminars and kit, which make him look like just another shyster. Don't buy that stuff, you don't need it and he doesn't need you to buy it. |
Stock Option Value correlated to net worth of company | There could also be some degree of dilution at play here. If they are rapidly expanding and hiring, or if they took on another round of funding each share may have a lower amount of value though the company might be worth more than they were previously. The newly issued options may also be of a different class. |
How should I distribute my savings? | You need to track all of your expenses first, inventarize all of your assets and liabilities, and set financial goals. For example, you need to know your average monthly expenses and exactly what percentages interest each loan charges, and you need to know what to save for (your children, retirement, large purchases, etc). Then you create an emergency fund: keep between 4 to 6 months worth of your monthly expenses in a savings account that you can readily access. Base the size of your emergency fund on your expenses rather than your salary. This also means its size changes over time, for example, it must increase once you have children. You then pay off your loans, starting with the loan charging the highest interest. You do this because e.g. paying off $X of a 7% loan is equivalent to investing $X and getting a guaranteed 7% return. The stock market does generally does not provide guarantees. Starting with the highest interest first is mathematically the most rewarding strategy in the long run. It is not a priori clear whether you should pay off all loans as fast as possible, particularly those with low interest rates, and the mortgage. You need to read up on the subject in order to make an informed decision, this would be too personal advice for us to give. After you've created that emergency fund, and paid of all high interest loans, you can consider investing in vessels that achieve your set financial goals. For example, since you are thinking of having children within five years, you might wish to save for college education. That implies immediately that you should pick an investment vessels that is available after 20 year or so and does not carry too much risk (e.g. perhaps bonds or deposits). These are a few basic advices, and I would recommend to look further on the internet and perhaps read a book on the topic of "personal finance". |
Helping girlfriend accelerate credit score improvement | This is an all too common problem and is not easy to resolve. Divorce agreements do not alter prior mortgage contracts. Most importantly, the bank is not required, and will not normally, remove the girlfriend from the mortgage even if she quitclaimed it to her Ex. If he has abandoned the property there is a good chance he will not make any more future payments. She should be prepared to make the payments if he doesn't or expect her credit to continue to deteriorate rapidly. She needs to contact her divorce attorney to review their mutual obligations. A court can issue orders to try to force the Ex to fulfill the divorce agreement. However, a court cannot impose a change to the mortgage obligations the borrowers made to the bank. Focus on this. It's far more important than adding her to a car loan or credit card. Sorry for the bad news. As for the car loan, it's best to leave her off the loan. You will get better terms without her as a joint owner. You can add her as an additional driver for insurance purposes. Adding her to your credit cards will help her credit but not a lot if the mortgage goes to default or foreclosure. |
Why have candlestick charts overlaps? | Remember that prices refer to discrete events in the market - trades - it is easily possible that the highest price for a trade in the next period is lower than the highest price in the current one as someone in the current period may be willing to pay more in this period than anyone in the next. The ending price of a period is also determined this way; it is the last price that someone was willing to pay in this period not the first price that someone will pay in the next period. Why? because the last price in this period is not in the next period by definition! edit: added something on illiquid stocks Illiquid stocks may have intraday gaps in the sequence of candlesticks where no trading occurred. Below is one such chart for 1pm plc.(OPM.L) a UK based leasing company (thanks to Yahoo finance for this): |
Should I talk about my stocks? | No, there is no significant harm to discussing this. Outside of possibly getting bad advice, excessive advice, or complaints that others just aren't interested... |
Can I use a different HSA than PayFlex that came with aetna? | Much of this is incorrect. Aetna owns Payflex for starters, and it's your EMPLOYER who decides which banks and brokers to offer, not Payflex. An HSA is a checking account with an investment account option after a minimum balance is met. A majority of U.S. employers only OFFER an HSA option but don't contribute a penny, so you're lucky you get anything. The easy solution is just keep the money that is sent to your HSA checking account in your checking account, and once a year roll it over into a different bank's HSA. The vast majority of banks offer HSAs that have no ties to a particular broker (i.e. Citibank, PNC, Chase). I have all my HSA funds in HSA Bank which is online but services lots of employers. Not true that most payroll deductions or employer contributions go to a single HSA custodian (bank). They might offer a single bank that either contracts with an investment provider or lets you invest anywhere. But most employers making contributions are large or mid-market employers offering multiple banks, and that trend is growing fast because of defined contribution, private exchanges and vendor product redesigns. Basically, nobody likes having a second bank account for their HSA when their home bank offers one. |
What emergencies could justify a highly liquid emergency fund? | This might vary from other answers but I generally prefer to use debt before touching an emergency fund. But one of the reasons I have an emergency fund is to that I can make sure I can cover any debt payments. Essentially, this give you leverage. You might start off with a small emergency such as needing a new refrigerator. If you pull the cash out of the fund to pay this off immediately, you've depleted your account and if something major comes along, you might be short. By using debt, you can often cover the costs with cash-flow and leave your risk buffer in place. Often, retailers will offer really sweet financing deals. 0% for 12 months or whatever. Often, though, if you don't pay it off in time, they can be costly. I'm not sure if this is legal (in the US) anymore but if it wasn't fully paid off in time, you'd be retroactively charged interest on the whole amount. But if you have an emergency fund, you pretty much guarantee that won't happen. The only time it will is if something else happens that requires the emergency fund to be cashed in. But if things are that dire, the debt is unsecured. You're credit may suffer but they can't come after your assets. It's not an either-or situation. You give yourself options by having the cash available. It allows you to take advantage of opportunities that might be too risky otherwise. Ultimately what you want to be able to weather the storm in a situation where you have, say, a mortgage on a house that is underwater, the stock market is down, and you have no income. In that situation, you don't want to liquidate your stock when it's down and you (probably) don't want to lose your home equity in a foreclosure. |
How is your credit score related to credit utilization? | Curious, why are you interested in building/improving your credit score? Is it better to use your card and pay off the bill completely every month? Yes. How is credit utiltization calculated? Is it average utilization over the month, or total amount owed/credit_limit per month? It depends on how often your bank reports your balances to the reporting agencies. It can be daily, when your statement cycle closes, or some other interval. How does credit utilization affect your score? Closest to zero without actually being zero is best. This translates to making some charges, even $1 so your statement shows a balance each statement that you pay off. This shows as active use. If you pay off your balance before the statement closes, then it can sometimes be reported as inactive/unused. Is too much a bad thing? Yes. Is too little a bad thing? Depends. Being debt free has its advantages... but if your goal is to raise your credit score, then having a low utilization rate is a good metric. Less than 7% utilization seems to be the optimal level. "Last year we started using a number, not as a recommendation, but as a fact that most of the people with really high FICO scores have credit utilization rates that are 7 percent or lower," Watts said. Read more: http://www.bankrate.com/finance/credit-cards/how-to-bump-up-your-credit-score.aspx Remember that on-time payment is the most important factor. Second is how much you owe. Third is length of credit history. Maintain these factors in good standing and you will improve your score: http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx |
Using Euros to buy and sell NASDAQ stocks | You can check whether the company whose stock you want to buy is present on an european market. For instance this is the case for Apple at Frankfurt. |
Which is the most liquid market for trading? | I would rate index futures, in particular the US index futures (e.g. the S&P 500 future) as the most liquid markets after the forex markets. |
Margin when entered into a derivative contract | A derivative contract can be an option, and you can take a short (sell) position , much the same way you would in a stock. When BUYING options you risk only the money you put in. However when selling naked(you don't have the securities or cash to cover all potential losses) options, you are borrowing. Brokers force you to maintain a required amount of cash called, a maintenance requirement. When selling naked calls - theoretically you are able to lose an INFINITE amount of money, so in order to sell this type of options you have to maintain a certain level of cash in your account. If you fail to maintain this level you will enter into whats often referred to as a "margin-call". And yes they will call your phone and tell you :). Your broker has the right to liquidate your positions in order to meet requirements. PS: From experience my broker has never liquidated any of my holdings, but then again I've never been in a margin call for longer then a few days and never with a severe amount. The margin requirement for investors is regulated and brokers follow these regulations. |
Are there statistics showing percentage of online brokerage customers that are actually making a profit trading forex/futures/options? | It looks like these types of companies have to disclose the health of their accounts to CFTC (Commodity Futures Trading Commission). That is the gist I get at least from this article about the traders that lost money due to the Swiss removing the franc’s cap against the euro. The article says about the U.S. retail FOREX brokerage: Most of FXCM’s retail clients lost money in 2014, according to the company’s disclosures mandated by the CFTC. The percentage of losing accounts climbed from 67 percent in the first and second quarters to 68 percent in the third quarter and 70 percent in the fourth quarter. Side note: The Swiss National Bank abandoned the cap on the currency's value against the euro in mid-January 2015. But above paragraph provides data on FXCM’s retail clients in 2014. It could consequently be concluded that, even without "freak events" (such as Switzerland removing the franc cap), it is more likely for an investor to NOT make a profit on the FOREX market. This is also in line with what "sdfasdf" and "Dario Fumagalli" say in their answers. |
Totally new to finance, economy, where should I start? | If you're looking to invest using stocks and shares, I recommend you set up an account at something like Google Finance - it is free and user-friendly with lots of online help. You can set up some 'virtual cash' and put it into a number of stocks which it'll track for you. Review your progress and close some positions and open others as often as you want, but remember to enter some figure for the cost of the transaction, say $19.95 for a trade, to discourage you from high-frequency trading. Take it as seriously as you want - if you stick to your original cash input, you'll see real results. If you throw in more virtual cash than you could in real life, it'll muddle the outcome. After some evaluation period, say 3 months, look back at your progress. You will learn a tremendous amount from doing this and don't need to have read any books or spent any money to get started. Knowing which stocks to pick and when to buy or sell is much more subtle - see other answers for suggestions. |
How can I live outside of the rat race of American life with 300k? | the short answer: yes. The long answer depends on what you mean by modest living. As others have noted, living off a $300k principle involves risks, but the entire future has risk. By "getting out of the rat race" I hope you don't mean become a slug on the couch. Peruse mr. Money Mustache at https://www.mrmoneymustache.com/. One can live very frugally yet very well in some parts of the US. |
What types of ETFs are taxed differently by the IRS? | Investopedia laid out the general information of tax treatment on the ETF fund structures as well as their underlying asset classes: http://www.investopedia.com/financial-edge/0213/how-tax-treatments-of-etfs-work.aspx |
“Infinite Banking” or “Be Your Own Bank” via Whole Life Insurance…where to start? | Why would you give them the money and borrow it back? If you didn't give it to them in the first place you wouldn't need to borrow! It makes no sense at all. It USED to have a different use--as a tax dodge. You would buy "life insurance" for a low amount of coverage and way overfund it. Let the money grow and in your later years you would "borrow" against the extra value you had built up in the policy. Since this was a loan rather than a payout it wasn't income. When you died the tax liability went poof. Thus so long as what you had to pay in life insurance + the inefficiency of the insurance company was less than the tax rate it was a good deal. Congress closed this loophole a long time ago by prohibiting too great overfunding. |
Do I need to register as self employed in Ontario, Canada? | If your business name is your name, you are automatically considered a sole-proprietorship and any income you generate and expenses you incur can be calculated on your personal tax return. You can use QuickTax Home & Business tax software to lead you through the steps; you don't even need an accountant. One drawback of a sole-proprietorship in your name is liability. You are personally responsible for the business because you are the business. If you get sued, you can lose everything. To limit that liability you can look into opening a corporation. If the corporation gets sued you are insulated from that; the corporation goes bankrupt, not you. A lawyer and an accountant will be required to give you solid advice on this direction. |
In what circumstances will a bank waive the annual credit card fee? | See if the bank has other credit cards they offer. Many banks have multiple ones: some cards have great benefits, others do not; some cards have high rates, some do not; some cards are secured, some do not. If they have a card that you like ask them to switch you to the card you want. They should be able to do so very easily. Your card number will change, but they will treat it is a replacement so that your credit score will not take a hit during the switch. It may be possible to get them to waive the annual fee, but most won't because each card type they offer are separate products so they only allow you to pick one of their options. If they don't have a card to your liking apply for a card from anther bank that has the benefits and annual fees (zero) that you are looking for. It may be that the new card will start with a lower limit, but it will increase over time, especially as you shift more of your business to the new card. When you cancel the old card before the next year rolls around you will take a small short hit to your credit score, but that is ok. |
Is the need to issue bonds a telltale sign that the company would have a hard time paying coupons? | One more scenario is when the company already has maturing debt. e.g Company took out a debt of 2 billion in 2010 and is maturing 2016. It has paid back say 500 million but has to pay back the debtors the remaining 1.5 billion. It will again go to the debt markets to fund this 1.5 billion maybe at better terms than the 2010 issue based on market conditions and its business. The debt is to keep the business running or grow it. The people issuing debt will do complete research before issuing the debt. It can always sell stock but that results in dilution and affects shareholders. Debt also affects shareholders but when interest rates are lower, companies tend to go to debt markets. Although sometimes they can just do a secondary and be done with it if the float is low. |
Missing opportunity cost of mortgage prepayment | You seem to really have your financial act together. Your combination of assets, and ongoing savings makes you the ideal candidate for paying it off. One way to look at it is that your mortgage offers you a place to 'invest' at a fixed 2-7/8% rate. "I'd really like to not have a house payment" is all I need to hear. The flip side is the lecture that talks about long term market returns, the fact that the combination of your deductible mortgage, but 15% cap gain rate means you need 2.5% return to break even, and odds are pretty high that will occur over the next 15 years. "pretty high" does not equal "guaranteed". And I won't debate the value of sleeping soundly vs an excess 5-8% return on this money that you'd maybe achieve. You haven't missed anything. In fact, though I advocate saving first, you are already doing that. This is above and beyond. Good work. |
Who owned my shares before me? | The answer in theory is yes. The answer in reality is no. Let me explain: Combine all of these lists and perhaps you could get a complete record. |
Investing: P/E Ratio basic question | Let's take a step back. My fictional company 'A' is a solid, old, established company. It's in consumer staples, so people buy the products in good times and bad. It has a dividend of $1/yr. Only knowing this, you have to decide how much you would be willing to pay for one share. You might decide that $20 is fair. Why? Because that's a 5% return on your money, 1/20 = 5%, and given the current rates, you're happy for a 5% dividend. But this company doesn't give out all its earnings as a dividend. It really earns $1.50, so the P/E you are willing to pay is 20/1.5 or 13.3. Many companies offer no dividend, but of course they still might have earnings, and the P/E is one metric that used to judge whether one wishes to buy a stock. A high P/E implies the buyers think the stock will have future growth, and they are wiling to pay more today to hold it. A low P/E might be a sign the company is solid, but not growing, if such a thing is possible. |
Why some things are traded in an exchange while others are traded OTC | All securities must be registered with the SEC. Securities are defined as (1) The term “security” means any note, stock, treasury stock, security future, security-based swap, bond, debenture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement, collateral-trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit for a security, fractional undivided interest in oil, gas, or other mineral rights, any put, call, straddle, option, or privilege on any security, certificate of deposit, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or, in general, any interest or instrument commonly known as a “security”, or any certificate of interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or warrant or right to subscribe to or purchase, any of the foregoing. thus currencies are not defined as securities. While OTC transactions of securities is not outright forbidden, there are numerous regulations issued by the SEC as a result of the 1943 Exchange Act and others that make this difficult and/or costly. Many other securities are exempted from registration thus trade in a way that could be called OTC. Different countries have variances upon US law but are very similar. Any security could be traded OTC, but law prohibits it expressly or in such a way to make it relatively expensive; further, stock options are so tightly regulated that expiration dates, expiration intervals, strike intervals, and minimum ticks are all set by the authorities. |
Should I pay more into company pension, or is there a better way to save? | Re: Specifically, am I right in that everything I put on these is deducted from tax, or are there other rules? and Am I correctly understanding this as "anything above £3,600 per year will not be deducted from your tax"? Neither interpretation seems quite right… Unless what you mean is this: The contributions (to a pension, or to the share-save scheme) are deducted from your pay before it is taxed. That's how it works for employer-run pension schemes. In other words, you are paying the gross amount you earn into the pension, not the amount after tax. It's a tax-efficient way to save, because: compared to other forms of saving: (The bit about the £3,600: you can ignore this assuming you're earning more than £3,600 a year.) What happens to the pension if you decide to move back to France or another country? In some cases you can transfer tax free. Worst case, you'd pay some tax on the transfer but not more than 25%. [See here for the current rules: https://www.gov.uk/transferring-your-pension/transferring-to-an-overseas-pension-scheme. Re: the share scheme, if by 'salary exchange' you mean salary sacrifice (where your gross pay is officially reduced by that amount e.g. £150 a month), that's even more tax-efficient, because it saves you paying the National Insurance contribution too (approx 9% of the pay packet). Conclusion: Saving into pension and company share save schemes is supremely tax-efficient and, provided you're OK with your money being locked away until you're 57 (pension) or tied up in company shares, it's understandably many people's priority to make use of these schemes before considering other forms of saving where you pay into them from your salary after tax. Now, about this: I am trying to understand how much I should put into it Should I put money into these, or should look for another way to save (how will this work out if I go back to France or another country)? Nobody here can advise you what to do since individuals' goals and circumstances are different and we don't know enough of the picture. That said: FWIW, I'll tell you what I might do based solely on what you've told us in the question… First, I'd definitely contribute 6% to the company pension. This gets you the full employer match. That's free money (plus, remember the tax relief = more free money). If you're 27, a total of 12% salary into a pension a year is a decent rate to start saving for retirement. Actually, 14% would be generally advisable, and maybe more still – it's generally a case of 'the more the better' especially while young, as you have time for growth and you don't know what later priorities might change / financial needs might arise. Nevertheless, you said you might move overseas. So in your position I would then: |
What tax year does my income get assigned to if my client sends the payment in December but I receive it in January? | Confused? see your CPA |
How can I improve my credit score if I am not paying bills or rent? | One of the other things you could do to improve your score would be along the lines of what Pete said in his answer, but using the current financial climate to your advantage. I'm not sure what interest rates are available to you in the UK, but I currently have 4 lines of credit aside from my house. One is a credit card I use for every day purchases and like you pay off immediately with every statement. The other three are technically credit cards, however all three were used to make purchases with 0% financing. The one was for a TV I bought that even gave me 5% off if I pay it off within 6 months. That cash has been sitting in my savings since the day I bought it. I'm making regular payments on all three, but not having to pay any interest. My credit score dropped 25 points with the one as it was an elective medical expense (Visian eye surgery), so for the time the balance is near my credit limit. However, that will bounce back up as the balance lowers. My score was also able to take that hit and still be very high. If you don't have 0% (or very close) available, your better bet would be to follow the other suggestions about saving for a sizable down payment, or other every day expenses like a cell phone. |
why do I need an emergency fund if I already have investments? | I treat the concept of emergency funds as a series of financial buffers. One layer is that I have various credit cards with a small positive balance, that I can max out in an emergency should I go broke and not be in employment (those have saved me once or twice) My final level of emergency funds, is kept at home in the form of cash, I've never needed it, but it protects against getting locked out of the financial system (I lose my debit cards, banking system freezes all withdrawals, zombie invasion). It also doubles as my destitution fund, as if all else fails I still have raw cash to buy food and thus I won't starve (at least for a few months). |
In a competitive market, why is movie theater popcorn expensive? | I think a labor management issue explains the high cost of popcorn. Some weeks theaters are loaded with patrons and other weeks there are many fewer patrons. If popcorn were priced so that most patrons bought some the theater manager would have to have lots of employees to sell popcorn on the really busy days. The manager would have to cover the cost of wages on the slow days. A simple solution would be to adjust employee hours. To a certain extent I suspect this is done. If you look at the situation from the standpoint of the employee being sent home early or being told not to work tomorrow or, perhaps for the next week because the theater has a bunch of bombs, is not a good situation. A job in popcorn sales is probably not a high paying job so the employees may just quit and they may do this, not by giving notice, but rather by not showing up for a scheduled shift. The result of this is that managers determine the maximum number of employees they can hire if there theater has low drawing movies and they set the price of popcorn so that when the theater is filled this number of employees will not be overwhelmed by patron buying popcorn. At least not to the extent that the start of the movie has to be delayed. |
Why do banks insist on allowing transactions without sufficient funds? | This really should be a comment, but I can't yet. The question desperately needs a location tag. In at least some countries(New Zealand), the default action on all insufficient funds transactions is to refuse the transaction. Credit cards are the only common exception. Every bank operating in NZ that I know of acts this way. Sometimes there is a fee for bouncing a transaction, sometimes not, that depends on the bank. Any other option must be explicitly arranged in writing with the bank. Personally, coming from a country where declining transactions is the default, I'd be shocked and angry to be stuck with an automatic transfer from another account. Angry enough to change banks if they won't immediately cease and desist. |
GAAP for items that you both sell and make? | First, please allow me to recommend that you do not try gimmickry when financials do give expected results. It's a sure path to disaster and illegality. The best route is to first check if accounts are being properly booked. If they are then there is most likely a problem with the business. Anything out of bounds yet properly booked is indeed the problem. Now, the reason why your results seem strange is because investments are being improperly booked as inventory; therefore, the current account is deviating badly from the industry mean. The dividing line for distinguishing between current and long term assets is one year; although, modern financial accounting theorists & regulators have tried to smudge that line, so standards do not always adhere to that line. Therefore, any seedlings for resale should be booked as inventory while those for potting as investment. It's been some time since I've looked at the standards closely, but this used to fall under "property, plant, & equipment". Generally, it is a "capital expenditure" by the oldest definition. It is not necessary to obsess over initial bookings because inventory turnover will quickly resolve itself, so a simple running or historical rate can be applied to the seedling purchases. The books will now appear more normal, and better subsequent strategic decisions can now be made. |
How are mortgage payments decided? [duplicate] | It's easiest to get your payment from the PMT function in Excel or Google Sheets. So a $100,000 30 year mortgage at 3% looks like this: The basic calculation is pretty simple. You take the annual interest rate, say 3%, divided by 12, times the existing principal balance: The idea is that borrowers would like to have a predictable payment. The earlier payments are proportionally more interest than principal than later payments are but that's because there is much more principal outstanding on month 1 than on month 200. |
When the market crashes, should I sell bonds and buy equities for the inevitable recovery? | When the market moves significantly, you should rebalance your investments to maintain the diversification ratios you have selected. That means if bonds go up and stocks go down, you sell bonds and buy stocks (to some degree), and vice versa. Sell high to buy low, and remember that over the long run most things regress to the mean. |
Is losing money in my 401K normal? | Depends on how the money is invested within the 401k... but in general, prices move both up and down with a long-tem bias toward up. Think of it this way: with fund shares priced lower now, you are getting shares cheaper than when you entered the plan. So this dip is actually working in your favor, as long as you are comfortable trusting that long-term view (and trusting the funds your 401k money is going into). Believe me, it's even scarier when you're nearer your target retirement date and a 10% dip may be six figures... but it's all theoretical until you actually start drawing the money back out, and you have to learn to accept some volatility as part of the trade-off for getting returns better than bonds. |
collateralized mortgage obligations | Say there are 5 people took loan of $100000 each. Those 5 people work in different jobs and have different capacity to payoff loan. Someone earning $40000 a year has higher risk to default on their payment then someone making $250000 a year. As Bank wants to sell this CDO to investor but how would investor know what the risk factor for this CDO is. This is where rating agency comes in picture. They apparently look at the underlying asset and assign rating to this CDO say AAA, B, AA etc which give investor idea of underlying risk. Problem here is rating agency gets paid by Bank to rate their CDO. So if a rating agency starts rating their CDO to higher risk Bank will go to next agency round the corner to get better rating and agency will lose commission. You can see the problem here. Now if people start struggling to pay loan, bank will not get money and it cannot pay CDO holders. If house that was worth $100000 when CDO was created is devalued to say $50000 today the underlying asset is not worth as much when CDO was sold. That is what happened when market crashed in 2008 and GFC hit. |
Would the effects of an anticipated default by a nation be mostly symbolic? | It's only symbolic if things continue as if nothing had happened. Once large segments of people start becoming poor, it ceases to be symbolic and starts becoming real. Will a Greek default be felt in the US? Hard to say, but probably not. Will it be felt in Greece? You bet it will. |
Should I use a credit repair agency? | Here's what my wife and I did. First, we stopped using credit cards and got rid of all other expenses that we absolutely didn't need. A few examples: cable TV, home phone, high end internet - all shut off. We changed our cell phone plan to a cheap one and stopped going out to restaurants or bars. We also got rid of the cars that had payments on them and replaced them with ones we paid cash for. Probably the most painful thing for me was selling a 2 year old 'vette and replacing it with a 5 year old random 4 door. Some people might tell you don't do this because older cars need repairs. Fact is, nearly all cars are going to need repairs. It's just a matter of whether you are also making payments on it when they need them and if you can discipline yourself enough to save up a bit to cover those. After doing all this the only payments we had to make were for the house (plus electric/gas/water) and the debt we had accumulated. I'd say that if you have the option to move back into your parent's house then do it. Yes, it will suck for a while but you'll be able to pay everything off so much faster. Just make sure to help around the house. Ignore the guys saying that this tanks your score and will make getting a house difficult. Although they are right that it will drop your score the fact is that you aren't in any position to make large purchases anyway and won't be for quite some time, so it really doesn't matter. Your number one goal is to dig yourself out of this hole, not engage in activity that will keep you in it. Next, if you are only working part time then you need to do one of two things. Either get a full time job or go find a second part time one. The preference is obviously on the first, which you should be able to do in your spare time. If, for some reason, you don't have the tech skills necessary to do this then go find any part time job you can. It took us about 3 years to finally pay everything (except the house) off - we owed a lot. During that time everything we bought was paid for in cash with the vast majority of our money going to pay off those accounts. Once the final account was paid off, I did go ahead and get a credit card. I made very minor purchases on it - mostly just gas - and paid it off a few days before it was due each month. Every 4 months they increased my limit. After around 18 months of using that one card my credit score was back in the 700+ range and with no debt other than the mortgage. *note: I echo what others have said about "Credit Repair" companies. Anything they can do, you can too. It's a matter of cutting costs, living within your means and paying the bills. If the interest rates are killing you, then try to get a consolidation loan. If you can't do that then negotiate settlements with them, just get everything in writing prior to making a payment on it if you go this route. BTW, make sure you actually can't pay them before attempting to settle. |
Recommendation for learning fundamental analysis? | Below is just a little information on this topic from my small unique book "The small stock trader": The most significant non-company-specific factor affecting stock price is the market sentiment, while the most significant company-specific factor is the earning power of the company. Perhaps it would be safe to say that technical analysis is more related to psychology/emotions, while fundamental analysis is more related to reason – that is why it is said that fundamental analysis tells you what to trade and technical analysis tells you when to trade. Thus, many stock traders use technical analysis as a timing tool for their entry and exit points. Technical analysis is more suitable for short-term trading and works best with large caps, for stock prices of large caps are more correlated with the general market, while small caps are more affected by company-specific news and speculation…: Perhaps small stock traders should not waste a lot of time on fundamental analysis; avoid overanalyzing the financial position, market position, and management of the focus companies. It is difficult to make wise trading decisions based only on fundamental analysis (company-specific news accounts for only about 25 percent of stock price fluctuations). There are only a few important figures and ratios to look at, such as: perhaps also: Furthermore, single ratios and figures do not tell much, so it is wise to use a few ratios and figures in combination. You should look at their trends and also compare them with the company’s main competitors and the industry average. Preferably, you want to see trend improvements in these above-mentioned figures and ratios, or at least some stability when the times are tough. Despite all the exotic names found in technical analysis, simply put, it is the study of supply and demand for the stock, in order to predict and follow the trend. Many stock traders claim stock price just represents the current supply and demand for that stock and moves to the greater side of the forces of supply and demand. If you focus on a few simple small caps, perhaps you should just use the basic principles of technical analysis, such as: I have no doubt that there are different ways to make money in the stock market. Some may succeed purely on the basis of technical analysis, some purely due to fundamental analysis, and others from a combination of these two like most of the great stock traders have done (Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, William O’Neil, and Steven Cohen). It is just a matter of finding out what best fits your personality. I hope the above little information from my small unique book was a little helpful! Mika (author of "The small stock trader") |
At what age should I start or stop saving money? | As all said, the age limitation thing is nothing, and saving money not necessarily means to live poor nor Skimpy, spend your needs and try to get what you need instead of what you want, the 24 years old is a good start for saving money, the whole life still in front of you Good luck! |
File bankruptcy, consolidate, or other options? | If your parents' business isn't viable (regardless of what combination of the economy or their management of it caused it not to be viable) it would seem that you'd be throwing good money after bad to save it. If the whole thing gets paid off, then they get rid of the debt, but the economy will still be in the tank and they'll be going in the hole again. If they think they're five years away from retirement, then they're kidding themselves. They won't be able to retire. They should get bankruptcy advice and should start looking for other sources of income. Maybe sell their house and get something smaller. Have their expenses match their income. Sorry if this sounds harsh but it will be difficult for them to recover from this mess if they're in their late fifties. |
Why is gold not a good investment? | Gold is not really an investment at all, because it doesn't generate an income. It's only worth money because people think it's worth money (it has some industrial uses, but most gold is used as a store of value and not for industrial purposes), not because of its income stream. |
Optimal way to use a credit card to build better credit? | Great question. First, my recommendation would be for you to get a card that does not have a yearly fee. There are many credit cards out there that provide cash back on your purchases or points to redeem for gift cards or other items. Be sure to cancel the credit card that you have now so you don't forget about that yearly fee. Canceling will have a temporary impact on your credit score if the credit card is your longest held line of credit. Second, it is recommended not to use more than 20% of all the available credit, staying above that line can affect your credit score. I think that is what you are hearing about running up large balances on your credit card. If you are worried about staying below the 20% line, you can always request a larger line of credit. Just keep paying it off each month though and you will be fine. You already have a history of credit if you have begun paying off your student loans. |
Why does it take so long to refund to credit card? | It's not usually apparent to the average consumer, but there's actually two stages to collecting a payment, and two ways to undo it. The particular combination that occurs may lead to long refund times, on top of any human delays (like Ben Miller's answer addresses). When you pay with a credit card, it is typically only authorized - the issuing bank says "I'm setting this money aside for this transaction", but no money actually changes hands. You'll typically see this on your statement as a "pending" charge. Only later, in a process called "settlement", does your bank actually send money to the merchant's bank. Typically, this process starts the same day that the authorization happens (at close of business), but it may take a few days to complete. In the case of an ecommerce transaction, the merchant may not be allowed to start it until they ship whatever you ordered. On the flip side, a given transaction can be voided off or money can be sent back to your card. In the first case, the transaction will just disappear altogether; in the second, it may disappear or you may see both the payment and the refund on your statement. Voids can be as fast as an authorization, but once a transaction has started settlement, it can't be voided any more. Sending money back (a "refund") goes through the same settlement process as above, and can take just as long. So, to specifically apply that to your question: You get the SMS when the transaction is authorized, even though no money has yet moved. The refund money won't show up until several days after someone indicates that it should happen, and there's no "reverse authorize" operation to let you or your bank know that it's coming. |
When I ask a broker to buy stock, what does the broker do? | You or the broker place an order to buy the share with the stock exchange. There has to be a matching sell order by someone. Once a match is made, you pay the money and get the share. |
What is vested stock and yearly dividends? | Vesting As you may know a stock option is the right to acquire a given amount of stock at a given price. Actually acquiring the stock is referred to as exercising the option. Your company is offering you options over 200,000 shares but not all of those options can be exercised immediately. Initially you will only be able to acquire 25,000 shares; the other 175,000 have conditions attached, the condition in this case presumably being that you are still employed by the company at the specified time in the future. When the conditions attached to a stock option are satisfied that option is said to have vested - this simply means that the holder of the option can now exercise that option at any time they choose and thereby acquire the relevant shares. Dividends Arguably the primary purpose of most private companies is to make money for their owners (i.e. the shareholders) by selling goods and/or services at a profit. How does that money actually get to the shareholders? There are a few possible ways of which paying a dividend is one. Periodically (potentially annually but possibly more or less frequently or irregularly) the management of a company may look at how it is doing and decide that it can afford to pay so many cents per share as a dividend. Every shareholder would then receive that number of cents multiplied by the number of shares held. So for example in 4 years or so, after all your stock options have vested and assuming you have exercised them you will own 200,000 shares in your company. If the board declares a dividend of 10 cents per share you would receive $20,000. Depending on where you are and your exact circumstances you may or may not have to pay tax on this. Those are the basic concepts - as you might expect there are all kinds of variations and complications that can occur, but that's hopefully enough to get you started. |
Historical share price at exact day and time | You'd have to buy that information. Quoting from this page, Commercial Historical Data Higher resolution and more complete datasets are generally not available for free. Below is a list of vendors which have passed our quality screening (in total, we screened over a dozen vendors). To qualify, the vendor must aggregate data from all US national/regional exchanges as only complete datasets are suitable for research use. The last point is especially important as there are many vendors who just get data from a couple sources and is missing important information such as dark pool trades. They offer some alternatives for free data: Daily Resolution Data 1) Yahoo! Finance– Daily resolution data, with split/dividend adjustments can be downloaded from here. The download procedure can be automated using this tool. Note, Yahoo quite frequently has errors in its database and does not contain data for delisted symbols. 2) QuantQuote Free Data– QuantQuote offers free daily resolution data for the S&P500 at this web page under the Free Data tab. The data accounts for symbol changes, splits, and dividends, and is largely free of the errors found in the Yahoo data. Note, only 500 symbols are available unlike Yahoo which provides all listed symbols. And they list recommendations about who to buy the data from. |
Do any publically available documents from IR or SEC include all patents the company holds? | It appears as others have said that companies are not required to state this on as any sort of Asset. I remembered a friend of mine is a lawyer specializing in Intellectual Property Rights so asked him and confirmed that there's no document companies are required to file which states all patent holdings as assets. There are two ways he suggested for finding out. Once you find a company you're interested in can search patents by company using one of the two following: US Patent Office website's advanced search: http://patft.uspto.gov/netahtml/PTO/search-adv.htm aanm/company for example entering into the textarea, "aanm/google" without the quotation marks will find patents by Google. The other is a Google Patent Search: http://www.google.com/patents/ |
Is there anything I can do to prepare myself for the tax consequences of selling investments to buy a house? | Have you changed how you handle fund distributions? While it is typical to re-invest the distributions to buy additional shares, this may not make sense if you want to get a little cash to use for the home purchase. While you may already handle this, it isn't mentioned in the question. While it likely won't make a big difference, it could be a useful factor to consider, potentially if you ponder how risky is it having your down payment fluctuate in value from day to day. I'd just think it is more convenient to take the distributions in cash and that way have fewer transactions to report in the following year. Unless you have a working crystal ball, there is no way to definitively predict if the market will be up or down in exactly 2 years from now. Thus, I suggest taking the distributions in cash and investing in something much lower risk like a money market mutual fund. |
Is 401k as good as it sounds given the way it is taxed? | When you are investing for 40 years, you will have taxable events before retirement. You'll need to pay tax along the way, which will eat away at your gains. For example, in your taxable account, any dividends and capital gain distributions will need taxes paid each year. In your 401(k) or IRA, these are not taxable until retirement. In addition, what happens if you want to change investments before retirement? In your taxable account, taxes on the capital gains will be due at that time, but in a retirement account, you can change investments anytime you like without having to pay taxes early. Finally, when you do pull money out of your 401(k) at retirement, it will be taxed at whatever your tax rate is at retirement. After you retire, your income will probably be lower than when you were working, so your tax rate might be less. |
Why should a company go public? | You go public to raise money, to invest in the business and/or pay off the existing shareholders. It's really as simple as that. The advantage of being public is that your shares can easily be bought and sold, and so you can issue and sell new ones and your existing shareholders can sell out if they want to. The disadvantage is that you are much more tightly regulated, with more disclosure requirements, and also that you are exposed to much more pressure from your shareholders to maintain and increase your share price. |
How to deposit a cheque issued to an associate in my business into my business account? | Have the check reissued to the proper payee. |
Why do I get a much better price for options with a limit order than the ask price? | Sounds to me like you're describing just how it should work. Ask is at 30, Bid is at 20; you offer a new bid at 25. Either: Depending on liquidity, one or the other may be more likely. This Investorplace article on the subject describes what you're seeing, and recommends the strategy you're describing precisely. Instead of a market order, take advantage of the fact that the options world truly is a marketplace — one where you can possibly get a better price just by asking. How does that work? If you use a limit order (instead of a market order) when opening a position, you can tell your broker how much you are willing to pay to enter a trade. For example, if you enter a limit price of $1.15, you can see whether the market-maker will bite. You will be surprised at how many times you will get your price (i.e., $1.15) instead of the ask price of $1.30. If your order at $1.15 is not filled after a few minutes, you can modify your order and pay the ask price by entering a market order or limit order at the ask price (that is, you can tell your broker to pay no more than $1.30). |
How to negotiate when you have something to give back? | I don't think that there is a generic answer that will apply to this question across all goods. The answer depends on how the related businesses work, how much insight you have into the true value of the goods, and probably other things. Your car example is a good one that shows multiple options - There are dealers who will buy as a single transaction, sell as a single transaction, or do a simultaneous sell with trade-in. I had a hot tub once, on the other hand, where I could find people who would do a trade-in, but there was no dealer who would just buy my used tub. There's not much parallel between the car and the tub because the options available are very different. To the extent that there is a generic answer, I generally agree with the point in @keshlam's answer about trying to avoid entrapment, but I take a slightly different view. If you want to get your best deal, you need to have an idea going into the process of what you want in net and keep focused on meeting your goal. If for some reason, it's convenient for the dealer to "move money around" between the new car and the trade-in, I'm ok with that as long as I'm getting what I want out of the deal. If possible, I prefer to deal with both transactions at once because it's simpler. At the same time, I'm willing to remove the trade-in from the deal if I'm not getting what I want. (Threatening to do so can also give you some information about where the dealer really puts the value between the new car and trade-in since, if you threaten to pull the trade-in, the price on the car will probably change in response.) |
I want to invest in a U.S.-based company with unquoted stocks, but I am a foreigner. How to do this? | Life would be nicer had we not needed lawyers. But for some things - you better get a proper legal advice. This is one of these things. Generally, the United States is a union of 50 different sovereign entities, so you're asking more about Texas, less about the US. So you'd better talk to a Texas lawyer. Usually, stock ownership is only registered by the company itself (and sometimes not even that, look up "street name"), and not reported to the government. You may get a paper stock certificate, but many companies no longer issue those. Don't forget to talk to a lawyer and a tax adviser in your home country, as well. You'll be dealing with tax authorities there as well. The difference between "unoted" (never heard of this term before) and "regular" stocks is that the "unoted" are not publicly traded. As such, many things that your broker does (like tax statements, at source withholding, etc) you and your company will have to do on your own. If your company plans on paying dividends, you'll have to have a US tax ID (ITIN or SSN), and the company will have to withhold the US portion of the taxes. Don't forget to talk to a tax adviser about what happens when you sell the stock. Also, since the company is not publicly traded, consider how will you be able to sell it, if at all. |
Is there a free, online stock screener for UK stocks? | Yes, http://shares.telegraph.co.uk/stockscreener/ has what you're looking for. |
How to Transition From Employee to Employer? | Having been both I see the pros and cons Employers: I personally hated all the paperwork. Government forms, legal protection, insurance, taxes, payroll, accounting, year ends, bank accounts, inventory tracking, expenses. The best bosses don't worry about the product, they worry about maintaining an environment that is good for the product. Good employees who are happy will make good products that you can sell to customers who are happy with your company. I personally went back to employee because I wanted to go home at night and forget about work. Employers cannot do that. |
What is inflation? | When we speak about a product or service, we generally refer to its value. Currency, while neither a product or service, has its own value. As the value of currency goes down, the price of products bought by that currency will go up. You could consider the price of a product or service the value of the product multiplied by the value of the currency. For your first example, we compare two cars, one bought in 1990, and one bought in 2015. Each car has the same features (AC, radio, ABS, etc). We can say that, when these products were new, each had the same value. However, we can deduce that since the 1990 car cost $100, and the 2015 car cost $400, that there has been 75% inflation over 25 years. Comparing prices over time helps identify the inflation (or devaluation of currency) that an economy is experiencing. In regards to your second question, you can say that there was 7% inflation over five years (total). Keep in mind that these are absolute cumulative values. It doesn't mean that there was a 7% increase year over year (that would be 35% inflation over five years), but simply that the absolute value of the dollar has changed 7% over those five years. The sum of the percentages over those five years will be less than 7%, because inflation is measured yearly, but the total cumulative change is 7% from the original value. To put that in perspective, say that you have $100 in 2010, with an expected 7% inflation by 2015, which means that your $100 will be worth $93 in 2015. This means that the yearly inflation would be about 1.5% for five years, resulting in a total of 7% inflation over five years. Note that you still have a hundred dollar bill in your pocket that you've saved for five years, but now that money can buy less product. For example, if you say that $100 buys 50 gallons of gasoline ($2/gallon) in 2010, you will only be able to afford 46.5 gallons with that same bill in 2015 ($2.15/gallon). As you can see, the 7% inflation caused a 7% increase in gasoline prices. In other words, if the value of the car remained the same, its actual price would go up, because the value stayed the same. However, it's more likely that the car's value will decrease significantly in those five years (perhaps as much as 50% or more in some cases), but its price would be higher than it would have been without inflation. If the car's value had dropped 50% (so $50 in original year prices), then it would have a higher price (50 value * 1.07 currency ratio = $53.50). Note that even though its value has decreased by half, its price has not decreased by 50%, because it was hoisted up by inflation. For your final question, the purpose of a loan is so that the loaner will make a profit from the transaction. Consider your prior example where there was 7% inflation over five years. That means that a loan for $100 in 2010 would only be worth $93 in 2015. Interest is how loans combat this loss of value (as well as to earn some profit), so if the loaner expects 7% inflation over five years, they'll charge some higher interest (say 8-10%, or even more), so that when you pay them back on time, they'll come out ahead, or they might use more advanced schemes, like adjustable rates, etc. So, interest rates will naturally be lower when forecasted inflation is lower, and higher when forecasted inflation is higher. The best time to get a loan is when interest rates are low-- if you get locked into a high interest loan and inflation stalls, they will make more money off of you (because the currency has more value), while if inflation skyrockets, your loan will be worth less to loaner. However, they're usually really good about predicting inflation, so it would take an incredible amount of inflation to actually come out on top of a loan. |
Why do banks insist on allowing transactions without sufficient funds? | The reason they want the transaction to go through is because they make money that way. Remember the overdraft protection might incur a fee. If it does their experience may show them that the fee is a greater source of profit when balanced against the losses incurred because of insufficient funds. Even free overdraft transactions are limited. If they didn't want to make money they would have a way to make sure that multiple overdrafts in a short time window wouldn't require multiple protection events. Remember each time they transfer funds they only bring you to zero. As it is now the coffee you buy after putting money on your subway fare card might also trigger an overdraft transfer. |
Dividend vs Growth Stocks for young investors | A lot of people use dividend stocks as a regular income, which is why dividend stocks are often associated with retirement. If your goal is growth and you're reinvesting capital gains and dividends then investing growth stocks or dividend stocks should have the same effect. The only difference would be if you are manually reinvesting dividends, which could incur extra trading fees. |
Priced out of London property market. What are my accommodation investment options? | NB - I live in Surrey and bought my house in January 2014. If you don't have a very social life, it does pay to stay outside London. Places outside London are cheap and you will get a better deal in relation to houses or flats as compared to London. I feel very priced out of the market regarding London mortgages I will strongly question you logic behind this ? Why only London ? Why not live in the commuter belt outside London. Good places to reside, good schools, nice neighbourhood and away from the hustle and bustle of London. Many of my colleagues commute from Cambridge and Oxford daily into Central London and they laugh at people who want to buy a house in London, just for the sake of buying a house. It seems that the housing market is generally in a bubble due to being distorted by the finance market London house market is different from the rest of UK. People from overseas tend to invest in London property market, so it is always inflated. Even the property tax hasn't deterred many. I could look into buying somewhere and renting it out You are trying to join the same people, because of whom you have been put out of the housing market. I strictly question this logic unless your mortgage is less than the rent you pay and what rent you get. Buy a roof over your head first, then think of profiting from property. |
Resources to begin trading from home? | Since then I had gotten a job at a supermarket stocking shelves, but recently got fired because I kept zoning out at work This is not a good sign for day trading, where you spend all day monitoring investments. If you start focusing on the interesting math problem and ignoring your portfolio, you can easily lose money. Not so big a problem for missed buy opportunities, but this could be fatal for missed sale opportunities. Realize that in day trading, if you miss the uptick, you can get caught in a stock that is now going down. And I agree with those who say that you aren't capitalized well enough to get started. You need significantly more capital so that you can buy a diversified portfolio (diversification is your limitation, not hedging). Let's say that you make money on two out of three stocks on average. What are the chances that you will lose money on three stocks in a row? One in twenty-seven. What if that happens on your first three stocks? What if your odds at starting are really one in three to make money? Then you'll lose money more than half the time on each of your first three stocks. The odds don't favor you. If you really think that finance would interest you, consider signing up for an internship at an investment management firm or hedge fund. Rather than being the person who monitors stocks for changes, you would be the person doing mathematical analysis on stock information. Focusing on the math problem over other things is then what you are supposed to be doing. If you are good at that, you should be able to turn that into a permanent job. If not, then go back to school somewhere. You may not like your schooling options, but they may be better than your work options at this time. Note that most internships will be easier to get if you imply that you are only taking a break from schooling. Avoid outright lying, but saying things like needing to find the right fit should work. You may even want to start applying to schools now. Then you can truthfully say that you are involved in the application process. Be open about your interest in the mathematics of finance. Serious math minds can be difficult to find at those firms. Given your finances, it is not practical to become a day trader. If you want proof, pick a stock that is less than $100. Found it? Write down its current price and the date and time. You just bought that stock. Now sell it for a profit. Ignore historical data. Just monitor the current price. Missed the uptick? Too bad. That's reality. Once you've sold it, pick another stock that you can afford. Don't forget to mark your price down for the trading commission. A quick search suggests that $7 a trade is a cheap price. Realize that you make two trades on each stock (buy and sell), so that's $14 that you need to make on every stock. Keep doing that until you've run out of money. Realize that that is what you are proposing to do. If you can make enough money doing that to replace a minimum wage job, then we're all wrong. Borrow a $100 from your mom and go to town. But as others have said, it is far more realistic to do this with a starting stake of $100,000 where you can invest in multiple stocks at once and spread your $7 trading fee over a hundred shares. Starting with $100, you are more likely to run out of money within ten stocks. |
Why would a car company lend me money at a very low interest rate? | Here I thought I would not ever answer a question on this site and boom first ten minutes. First and foremost I am in the automotive industry, specifically one of our core competencies is finance department management consulting and the sales process both for the sale of the care as well as the financial transaction. First and foremost new vehicle gross profits are nowhere near 20% for the dealership. In an entry level vehicle like say a Toyota Corolla there is only a few hundreds of dollars in markup from invoice to M.S.R.P. There is also something called holdback that dealers get for achieving certain goals such as sales volume. These are usually pretty easy to hit. As a matter of fact I have never heard of a dealer not getting the hold back on a deal. This hold back is there to cover overhead for the car, the cost of getting it ready to sell, having a lot to park it on, making it ready for delivery, offset some of the cost of sales labor etc. Most dealerships consider the holdback portion of the invoice to not be part of the deal when it comes to negotiations. Certain brands such as KIA and Chrysler have something called "Dealer Cash" these payouts are usually stair stepped according to volume and vary by dealer, location, past history, how the guys at the factory feel that day and any number of combinations. Then there is CSI or Customer Service Index payments, these payments are usually made every 1/4 are on the Parts Statement not the Sales Doc and while they effect the dealers bottom line they almost never affect the sales managers or sales persons payroll so they are not considered a part of the cost of the car. They are however extremely important to the dealer and this is why after you have your new car they want you to bring in your survey for a free oil change or something. IF you are going to give a bad survey they want to throw it away and not send it in, if you are going to give a good survey they want to make sure you fill it out correctly. This is because lets say they ask you on a scale of 1-10 how was your sales person and you put a 9 that is a failing score. Dumb I know but that is how every factory CSI score system I have seen worked. According to NADA the average New Vehicle gross profit including hold back and dealer cash is around $1000.00. No where near 20%. Dealerships would love it if they made 20% on your new F250 Supercrew Diesel at around $50,000.00. One last thing there is something on the invoice called Wholesale Finance Reserve. This is the amount of money the factory forwards to the Dealership to offset the cost of financing vehicle on the floor plan so they can have it for you to look at before you buy. This is usually equal to around 3 months of interest and while you might buy a vehicle that has been on the lot for 2 days they have plenty that have been there much longer so this equals out in a fair to middling run store. General Mangers that know what they are doing can make this really pad their net profit to statement. On to incentives, there are basically 3 kinds. Cash to customer in the form of rebates, Dealer Cash in the form of incentives to dealerships based on volume or the undesirability of a vehicle, and incentive rates or Subvented leases. The rates are pretty self explanatory as they advertised as such (example 0% for 60 Months). Subvented Leased are harder to figure out and usually not disclosed as they are hard to explain and also a source of increased profit. Subvented leases are usually powered by lower cost of money called a money factor (think of it as an interest rate) that is discounted from the lease company or a subsidized residual. Subsidized residuals are virtually verboten on domestic vehicles due to their poor resell values. A subsidized residual works like this, you buy a Toyota Camry and the ALG (automotive lease guide) says it has a residual at 36 months of 48%. Well Toyota Motor Credit says we will give you a subvented residual of 60% basically subsidizing a 2% increase in residual. Since they do not expect to be able to sell the car at auction for that amount they have to set aside the 2% as a future expense. What does this mean to you, it means a lower payment. Also a good rule of thumb if you are told a money factor by your salesperson to figure out what the interest rate is just multiply it by 2400. So if a money factor is give of .00345 you know your actual interest rate is a little bit lower than 8.28% (illustration purposes only money factors are much lower than that right now). So how does this save you money well a lease is basically calculated by multiplying the MSRP by the residual and then subtracting that amount from the "Capitalized Cost" which is the Price paid for the car - trade in + payoff + TT&L-Rebate-Down Payment. That is the depreciation. Then you divide that number by the term of the loan and you have the depreciation amount. So if you have 20K CC and 10K R your D = 10K / 36 = 277 monthly payment. For the rest of the monthly payment you add (I think been a long time since I did this with out a computer) the Residual plus the CC for $30,000 * MF of .00345 = 107 for a total payment of 404 ish. This is not completely accurate but you can use it to make sure a salesperson/finance person is not trying to do one thing and say another as so often happens on leases. 0% how the heck do they make money at that, well its simple. First in 2008 the Fed made all the "Captive" lenders into actual banks instead of whatever they were before. So now they have access to the Fed's discounting window which with todays monetary policies make it almost free money. In the past these lenders had to go through all kinds of hoops to raise funds and securitize loans even for super prime credit. Those days are essentially over. Now they get their short term money just like Bank of America does. Eventually they still bundle these loans and sell them. So in the short term YOU pay for the 0% by giving up part or all of your rebate. This is really important DO NOT GIVE up your rebate for 0% unless it makes sense to do so. When you can get the money at 2.5% and get a $7000.00 rebate (customer cash) on that F250 or 0% take the cash. First of all make the finance guy/gal show you the the difference in total cost they can do do this using the federal truth in lending disclosures on a finance contract. Secondly how long will you keep the vehicle? If you come out ahead by say $1500 by taking the lower rate but you usually trade out every three years this is not going to work. Also and this is important if you are involved in a situation with a total loss like a stolen car or even worse a bad wreck before the breakeven point you lose that price break. Finally on judging what is right for you, just know that future value of the vehicle on for resell or trade-in will take into effect all of these past rebates and value the car accordingly. So if a vehicle depreciates 20% a year for the first 3 years the starting point will essentially be $7000.00 less than you actually paid, using rough numbers. How does this help the dealers and car companies? Well while a dealer struggles to make money on new cars the factory makes all of their money on the new cars and the new car financing. While your individual loan might lose money that money is offset by the loss of rebate and I think Ford does actually pay Ford Motor Credit Company the difference in the rate. The most important thing is what happens later FMCC now has 2500 loans with people with perfect credit. They can now use those loans to budle with people with not so perfect credit that they financed at 12%-18% and buy that money with interest rates in the 2%-3% range. Well that is a hell of a lot of profit. 'How does it help the dealership, well the more super prime credit they have in their portfolio the more subprime credit the banks will buy for them. This means they have more loans originated that are more profitable for them. Say you come in for the 0% but have 590 credit score, they get FMCC to buy the deal because they have a good portfolio and you win because the dealer gets to buy the money at say 9% and sell it to you at say 12% making the spread. You win there because you actually qualified for a rate of around 18% with a subprime company like Santander or Capital One (yes that capital one) so you save a ton on your overall cost of the car. Any dealership that is half way well run makes as much or money in the finance and insurance office than the rest of the dealership. When you factor in what a good F&I Director can do to get deals done with favorable terms that really goes up. Think about that the guys sitting a desk drinking coffee making more than the service department guys all put together. Well that was long winded but there I broke down the car business for whoever read this far. |
What are support and resistance of a stock? | You should check out existing resources like Investopedia for definitions, and ask questions if there is something you do not understand, instead of asking folks to spit out definitions. A good book for you to read might be Wall Street Words |
How can I avoid international wire fees or currency transfer fees? | I faced something similar for travel or work reasons, and as for me I preferred wire transfer over credit card withdrawals because my bank has huge fees. My thoughts so far are: the fee can vary a lot for credit card. As for me, I can expect 5% fees on foreign withdrawals. But I considered changing bank and I think a Gold (or premium) card might be a good idea as well. The idea is you pay a big subscription (100 euros or so) but have no fee. The total of withdrawal fees could easily (if you stay long abroad) reach this amount. There are also banks like HSBC that offer low fees on withdrawals abroad, you can ask them. The problem is that you cannot really withdraw huge amounts to lower the fee (since you carry this cash in the street). for wire transfers the total fee is usually $50 or more (I had a fee from distant bank, a fee for change and a fee in my home bank). But the amount is unlimited (or high enough to be of little matter) and I needed to do this once per year or so. So I guess it could be interesting if you have enough savings to only transfer money every couple of months or so. I think Western Union is also involved this profitable business. I never used it because the fees are pretty high, but maybe it is useful for not too big amounts frequently transfered. Actually, have you considered a loan? It's a very random idea but maybe you can use a loan as a swap and then transfer money when you have enough to reimburse it all. But the question is very interesting, I think the business is pretty huge due to globalization. It is expensive because some people can make a lot of money out of it. |
Is gold really an investment or just a hedge against inflation? | Over time, gold has mainly a hedge against inflation, based on its scarcity value. That is, unless finds some "killer app" for it that would also make it a good investment. The "usual" ones, metallurgical, electronic, medicine, dental, don't really do the trick. It should be noted that gold performs its inflation hedge function over a long period of time, say $50-$100 years. Over shorter periods of time, it will spike for other reasons. The latest classic example was in 1979-80, and the main reason, in my opinion, was the Iranian hostage crisis (inflation was secondary.) This was a POLITICAL risk situation, but one that was not unwarranted. An attack on 52 U.S. hostages (diplomats, no less), was potenially an attack on the U.S. dollar. But gold got so pricey that it lost its "inflation hedge" function for some two decades (until about 2000). Inflation has not been a notable factor in 2011. But Mideastern political risk has been. Witness Egypt, Libya, and potentially Syria and other countries. Put another way, gold is less of an investment that a "hedge." And not just against inflation. |
How does giving to charity work? | Charitable donations can be deducted from your income, and in that way make your taxable income lower, hence lower taxes. That's the meaning of "tax deductible". As to "if I donate it then the money will be given right to the charity instead of spread out to many other places" - taxes are being used by the government based on its own decisions (presumably made by elected officials thus representing the will of the voters). Charities use the money based on their defined goals. Giving money to a charity will ensure it is used for the specific goal the charity declared, and that's the way for you to funnel money to the goals of your preference/choice. For example, you can donate money to your temple, orphanage around the corner, or the gay rights organization. Or anti gay, for that matters. Your money will be spent on the goals of your choosing. Re advantages - charitable donations are used by the rich folks to avoid paying taxes on their income (because they're deductible), so someone might donate money to places they use themselves (like the temple/church for example, or the school where the kids go, or politician which will "objectively" choose someone's business for a big government contract, etc etc). For "ordinary" people it's a way to reduce the taxable income and divert the money to the specific goals of their choice. For example, donating $100 to Red Cross Japan Tsunami relief fund, will reduce your taxable income by $100, and total taxes by $28 (assuming you're in the 28% bracket), thus the $28 will go to the specific goal your choose instead of the general taxes. |
How to share income after marriage and kids? | Now I have been trying to figure out how to split the money that we both earn. From what I can see there are several concepts but none of them really seems ideal to me. There is nothing fair or unfair in such arrangements. It is what you both agree. You can try and make this as scientific as possible. But then there is no golden rule. For example, your girlfriend makes 2200 now and due to child, she is making 1100. The child is both of your responsibility; so you need to compensate half of her salary loss. 550 and she takes the other half. If you hire a nanny to look after you kinds, it would say cost you 500. But your girlfriend is doing that job, so she should get additional 500 from common pot. Plus due to loss of few years in looking after the children, she has a lost opportunity in career growth. i.e. she may indefinitely make less money than she can... So one gets into all kinds of theories and analysis and any arrangements will have some or the other gaps. So my suggestion, don't get too scientific about it. Just talk it out as to what you both feel how this should be and arrive it. It is something every individual has to agree. It also make sense to have the large assets [or assets that matter], like house, car etc in clear title and who gets what in case you decide to separate. Other should be incidental. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.