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Do I need to file a 1099 form for contractors associated with hobby income? | You are expected to file 1099 for each person you pay $600 a year. I.e.: not a one time payment, but the total over the course of the year. Since we don't know how much and what else you paid - we cannot answer this question. The real question you're asking is that if you're treating the enterprise as a hobby, whether you're supposed to file 1099s at all. The answer to that question is yes. You should talk to your tax adviser (a EA/CPA licensed in your state) about this, and whether it is the right thing for you to do treating this as a hobby at all. |
Is transfer of long term investment proceeds from India considered taxable in the U.S.? | If you are a US resident (not necessarily citizen) then yes, you do have to pay capital gains taxes on any capital gains, including interest from assets oversees (like interest from a savings account). Additionally you have to report all your foreign bank accounts according to FATCA (https://www.irs.gov/businesses/corporations/foreign-account-tax-compliance-act-fatca). |
I'm only spending roughly half of what I earn; should I spend more? | Apart from what the other posters have said, you could look at some 'good cause'. I'd keep on saving 50% as spending more won't really make you more happy. You already sound happy. What I used to do, when I could, was to donate 10% of my 'profit' per year. I'd compare year start with year end and do the math. Afterwards it was just a matter of choosing. there are non government organizations that will get most money where it's needed. Edit as soon as the business I'm starting becomes profitable, I'll continue my donations. Thanks for the appreciations. |
How can I lookup the business associated with a FEIN? | In most cases you cannot do "reverse lookup" on tax id in the US. You can verify, but for that you need to have more than just the FEIN/SSN. You should also have a name, and some times address. Non-profits, specifically, have to publish their EIN to donors, so it may be easier than others to identify those. Other businesses may not be as easy to find just by EIN. |
How do Islamic Banking give loans for housing purposes? | As I understand it, if the "borrower" puts a down payment of 20% and the bank puts down 80%, then the bank and the "borrower" own the home jointly as tenants in common with a 20%-80% split of the asset amongst them. The "borrower" moves into the home and pays the bank 80% of the fair rental value of the home each month. {Material added/changed in edit: For the purposes of illustration, suppose that the "borrower" and the bank agree that the fair rental per month is 0.5% of the purchase cost. The "borrower" pays 80% of that amount i.e. 0.4% of the purchase cost to the bank on a monthly basis. The "borrower" is not required to do so but may choose to pay more money than this 0.4% of the purchase cost each month, or pay some amount in a lump sum. If he does so, he will own a larger percentage of the house, and so future monthly payments will be a smaller fraction of the agreed-upon fair rental per month. So there is an incentive to pay off the bank.} If and when the house is sold, the sale price is divided between "borrower" and bank according to the percentage of ownership as of the date of sale. So the bank gets to share in the profits, if any. On the other hand, if the house is sold for less than the original purchase price, then the bank also suffers in the loss. It is not a case of a mortgage being paid off from the proceeds and the home-owner gets whatever is left, or even suffering a loss when the dust has settled; the bank gets only its percentage of the sale price even if this amount is less than what it put up in the first place minus any additional payments made by the "borrower". I have no idea how other costs of home ownership (property taxes, insurance, repair and maintenance) or improvements, additions, etc are handled. Ditto what happens on Schedule A if such a "loan" is made to a US taxpayer. |
Consolidate my debt? Higher APR, but what does that actually mean? | No, it means that each year (Annual Payment Rate) you are accruing interest at 29.8%. If your principal is $10,000, that means you are gaining $3,000 of debt per year in addition to this, excluding payments you make/interest on interest. |
Pattern Day Trade Rule | I would suggest following your quote and having a read of the web page supplied, that buys then sells or sells short then buys (the same security on the same day) four or more times in five business days, ... So it is a two way transaction that counts as 'one'. |
Debt collector has wrong person and is contacting my employer | Assuming you're in the US, you can file complaints against financial institutions (including debt collectors) through the Consumer Financial Protection Bureau. The link to debt collector complaints is: http://www.consumerfinance.gov/Complaint/#debt-collection |
How do amortization schedules work and when are they used? | Amortization is the process by which your loan balance decreases over time. For both mortgages and credit card balances, your interest charges are based on what you owe. The calculation of the balance is a little different, but it still is based on what you owe. You're observing correctly that most of the first payments on a mortgage are interest. This stands to reason since an amortization schedule (for a fixed-rate mortgage) is constructed on the assumption that you're making your payments equally over the course of the mortgage. Since you owe more at the beginning, you accrue more interest, and a larger fraction of your payment is interest. Near the end, you owe little, and most of your payment, therefore, is principal. |
What one bit of financial advice do you wish you could've given yourself five years ago? | Advice to myself: the benefits of being self-employed totally outweigh the risks! |
Income Tax on per Diem (Non Accountable plan) | A per diem payment is a cost of doing business for the company, not for you. They can claim it (probably); you can't (definitely). |
How to build a U.S. credit history as a worker on a visa? | In the US, money talks and bullshit walks. You can skip any credit history requirement if you demonstrate your ability to pay in a very obvious way. Credit history is just a standardized way of weeding out people that cannot reliably pay, instead of having to listen to an individual's excuses about how the bank overdrafted their account five times while they were waiting for their friend to pay them back for bubble gum. If you can show up with a wad of cash, you can get the car, or the apartment, or the bank account without the troubles of everyone else. But you can begin building credit with a secured credit card pretty easily. This will be useful for things like utilities and sometimes jobs. Also, banks won't be opposed to giving you credit if you have a lot of money in an account with them. You should be able to maintain an exemption from all socioeconomic problems in the United States, solely due to your experience with money and assets. |
A guy scammed me, but he gave me a bank account number & routing number. Can I use that to take out what he owes me? | As long as there is nothing more to this story you aren't sharing, you can expect those bills you paid to come back (you will have to pay them again later). You can be pretty certain that the name he gave you was fake, and that the bank account you paid your bills with was not his. I would not try to do anything at all with the information he gave you because first it is not his, and second your name is already tied to this bank account via your utility bills. In other words that would be illegal and you are already on the list of suspects. I would say that if you don't call the police they probably won't call you. The police often times do not even waste their time when somebody's light bill was paid with fraudulent financial information or whatever. I have actually seen similar situations play out a number of times and the police have never gotten involved. Disclaimer: I probably don't live where you live, and I'm not an attorney. But I do know what I am talking about so here's my advice (I know you didn't ask for advice but you probably might benefit from it). Let that money go, sometimes people get you. Take it as a lesson and move on. If you do end up having to have contact with the police and you don't already know, they will lie to you and try to trick you into acting in a way that is not in your self interest. But then you kind of look guilty if you won't even talk to them, and in this case you did not do anything illegal. So if I was you I would probably just think of where I might be incriminating myself by telling the truth, if there were any parts of my story that would raise any flags, and think of how I would smooth those out ahead of time. Also for your personal information you do not need to have a sophisticated understanding of computers to do anything you described, if you are familiar with operating a web browser you can do all types of stuff with Paypal. Most people that give off the vibe "criminal" are not going to be able to make any money conning people and would probably have given it up before they got to you. The information you have is not like the most valuable stuff ever but somebody that knew what they were doing could use it to take money out of your account, and if they had that and then could get a few other pieces they could really mess up your life. So that's part of why they say to be careful, any one piece is maybe not so valuable but if you are loose with everything you will probably have a shitty few weeks at some points in the future. "no aa" lol |
Why do stock prices of retailers not surge during the holidays? | Systemic and well know patterns in sales are priced in to the security. Typically companies with very cyclical earnings like this will issue guidance of earnings per share within a range. These expected earnings are priced in before the earnings are actually booked. If a company meets these expectations the stock will likely stay relatively flat. If the company misses this expectation, the stock, generally, will get slammed. This kind of Wall Street behavior typically mystifies media outlets when a company's stock declines after reporting a record high level of whatever metric. The record high is irrelevant if it misses the expectation. There is no crystal ball but if something is both well known and expected it's already been "priced in." If the well known expected event doesn't occur, maybe it's a new normal. |
60% Downpayment on house? | Peace of mind is the key to your question. Just before the US housing bust of 2007, I had someone try to convince me to take all the equity from my house which was overvalued in an overheated market. The idea was to put that money in the stock market for a bigger return than the interest on the house. Many people did that and found themselves out of jobs as the economy crashed. Unfortunately, they couldn't sell their homes because they owed more than they were worth. I never lost a night of sleep over the money I didn't make in the stock market. I did manage to trade up to a house twice the size by buying another when the housing market bottomed out, but waiting for a market recovery to sell the smaller house. The outcome of my good fortune is a very nice house with no mortgage worth about 1/3 of my total net worth. That's probably a larger percentage than most money managers would recommend, but it is steadily decreasing because now, all the money that would go to a mortgage payment instead gets deposited in retirement accounts, and it still has 30 years to grow before I start drawing it down. I almost don't remember the burden of a mortgage hanging over my head each month. Almost. |
Price difference among shares in Hong Kong and Shang Hai | Wikipedia talks about the Chinese currency: Scholarly studies suggest that the yuan is undervalued on the basis of purchasing power parity analysis. so despite it appearing cheaper due to the official exchange rate, the price in China might actually be fair. There are also restrictions on foreign exchange (purportedly "to prevent inflows of hot money"), which, in concert with any other legal obstacles to owning or trading on the Chinese exchange, may also explain why the high-frequency traders aren't tripping over each other to arbitrage away the difference. |
Split buying a house 3 ways. How do I approach this? | I would second the advice to not do this. Real estate ownership is complex to begin with, involving a constant stream of maintenance, financing, and other decisions. It is difficult enough to do for a single individual or a family as a unit (a couple), but at least spouses are forced to compromise. Friends are not, and you can end up with long-running conflicts and impasses. Financial transactions of any kind impose tensions on relationships, and friendships are no exception. If you want your friendship to survivie, do not sacrifice it to the financial arrangement which seems like a good idea at the moment. My advice would be to steer clear, no matter how attractive on the surface the deal might look. Focus on your own individual finances and use discipline and patience to save the amount needed for acquiring a separate investment property. But it will be 100% yours, and will save tons of headache. Since you are still considering this deal, it's a great time to politely change your mind and walk away - believe me, a few minutes of inconvenience will save you years of frustration. Good luck! |
What things are important to consider when investing in one's company stock? | It appears your company is offering roughly a 25% discount on its shares. I start there as a basis to give you a perspective on what the 30% matching offer means to you in terms of value. Since you are asking for things to consider not whether to do it, below are a few considerations (there may be others) in general you should think about your sources of income. if this company is your only source of income, it is more prudent to make your investment in their shares a smaller portion of your overall investment/savings strategy. what is the holding period for the shares you purchase. some companies institute a holding period or hold duration which restricts when you can sell the shares. Generally, the shorter the duration period the less risk there is for you. So if you can buy the shares and immediately sell the shares that represents the least amount of relative risk. what are the tax implications for shares offered at such a discount. this may be something you will need to consult a tax adviser to get a better understanding. your company should also be able to provide a reasonable interpretation of the tax consequences for the offering as well. is the stock you are buying liquid. liquid, in this case, is just a fancy term for asking how many shares trade in a public market daily. if it is a very liquid stock you can have some confidence that you may be able to sell out of your shares when you need. personally, i would review the company's financial statements and public statements to investors to get a better understanding of their competitive positioning, market size and prospects for profitability and growth. given you are a novice at this it may be good idea to solicit the opinion of your colleagues at work and others who have insight on the financial performance of the company. you should consider other investment options as well. since this seems to be your first foray into investing you should consider diversifying your savings into a few investments areas (such as big market indices which typically should be less volatile). last, there is always the chance that your company could fail. Companies like Enron, Lehman Brothers and many others that were much smaller than those two examples have failed in the past. only you can gauge your tolerance for risk. As a young investor, the best place to start is to use index funds which track a broader universe of stocks or bonds as the first step in building an investment portfolio. once you own a good set of index funds you can diversify with smaller investments. |
Can I pay a loan under someone else's name? (assume the dispenser of the loan is malicious) | I don't think there's anything to worry about. TFS doesn't really care who's paying, as long as the loan is being paid as agreed. Of course you're helping your dad's credit history and not your own, but I doubt TFS would give back money just because it came from your bank account. A business may claim a payment wasn't made against the loan, but you'd have the records that you did in fact pay (keep those bank statements). In theory they could sue you, in practice you'd send them the proof and they'd investigate and find the misplaced money. THAT does happen sometimes; the wrong account is credited. If it did end up in court, again you'd win because you have proof you sent payments. Even if you put the wrong loan account number to pay to, you'd have proof you in fact sent the money. If you're talking about something like a loan shark... they can do whatever they like. They won't sue you though, because again you'd have proof. That's why they'd use violence. But probably a loan shark wouldn't falsely claim you didn't pay if you did, as word would get out and the loan shark would lose business. And again, as long as they get what's agreed to, they don't care how they get it or who they get it from. |
Is it better to buy a computer on my credit card, or on credit from the computer store? | Using your credit card: Applying for a store credit card: In general it is far better to not buy bigger items like a computer until you can pay cash, or pay for it on credit card (to get reward points) and then pay off the card the next month so you don't pay interest. |
Deductible expenses paid with credit card: In which tax year would they fall? | I'm assuming you're operating on the cash basis of accounting, based on your comment "Cash, I think that's the only way for a sole propriator (sic)" Consider: There are two distinct but similar-name concepts here: "paid for" (in relation to a expense) and "paid off" (in relation to a debt). These both occur in the case you describe: Under the cash basis of accounting, when you can deduct an expense is based on when you paid for the expense, not when you eventually pay off any resulting debt arising from paying for the expense. Admittedly, "cash basis" isn't a great name because things don't solely revolve around cash. Rather, it's when money has changed hands – whether in the form of cash, check, credit card, etc. Perhaps "monetary transaction basis" might have been a better name since it would capture the paid-for concept whether using cash or credit. Unfortunately, we're stuck with the terminology the industry established. |
Swiss-style Monetary Policy | I'm not sure what is traditionally meant by "Swiss-style monetary policy" but lately it has meant the same thing as US monetary policy, or Japanese monetary policy, or Euro monetary policy: PRINT. Look how many Swiss Francs it takes to buy a currency that cannot be printed: I'm not sure why they would be touting "Swiss-style monetary policy". That hasn't been too stellar lately. |
Should a high-school student invest their (relative meager) savings? | Is investing a good idea with a low amount of money? Yes. I'll take the angle that you CAN invest in penny stocks. There's nothing wrong with that. The (oversimplified) suggestion I would make is to answer the question about your risk aversion. This is the four quadrant (e.g., http://njaes.rutgers.edu:8080/money/riskquiz/) you are introduced to when you first sit down to open your brokerage (stocks) or employer retirement account (401K). Along with a release of liability in the language of "past performance is not an indicator..." (which you will not truly understand until you experience a market crash). The reason I say this is because if you are 100% risk averse, then it is clear which vehicles you want to have in your tool belt; t-bills, CDs, money market, and plain vanilla savings. Absolutely nothing wrong with this. Don't let anyone make you feel otherwise with remarks like "your money is not working for you sitting there". It's extremely important to be absolutely honest with yourself in doing this assessment, too. For example, I thought I was a risk taker except when the market tumbled, I reacted exactly how a knee-jerk investor would. Also, I feel it's not easy to know just how honest you are with yourself as we are humans, and not impartial machines. So the recommendation I would give is to make a strong correlation to casino gambling. In other words, conventional advice is to only take "play money" to the casino. This because you assume you WILL lose it. Then you can enjoy yourself at the casino knowing this is capital that you are okay throwing in the trash. I would strongly caution you to only ever invest capital in the stock market that you characterize as play money. I'm convinced financial advisors, fund managers, friends will disagree. Still, I feel this is the only way you will be completely okay when the market fluctuates -- you won't lose sleep. IF you choose this approach, then you can start investing any time. That five drachma you were going to throw away on lottery tickets? transfer it into your Roth IRA. That twenty yen that you were going to ante in your weekly poker night? transfer it into your index fund. You already got past the investors remorse of (losing) that money. IF you truly accept that amount as play money, then you CAN put it into penny stocks. I'll get lots of criticism here. However, I maintain that once you are truly okay with throwing that cash away (like you would drop it into a slot machine), then it's the same whether you lose it one way or in another investment vehicle. |
Would you withdraw your money from your bank if you thought it was going under? | The article you link scares me; but I still have faith that the FDIC will keep me protected. Personally, if the FDIC goes broke, there is something more fundamentally wrong with the government as a whole and dollars won't worry me much. There are lots of issues with the FDIC, and I think the answers lie outside of simply printing more money and funding the FDIC further. There is likely more bad before this storm is over, and I might be ignorant, but I still want to operate normally. My money would stay where it is with things being how I see them in today |
What does ES1 refer to in this picture? | That looks like a Bloomberg terminal. And like @Jer said, it would appear to be the symbol for the S&P 500 E-mini index future. Although it doesn't look right all on its own, as it should have a modifier indicating the month (or quarter) of expiry. However, since it appears on a Bloomberg terminal in the image, I checked a source for Bloomberg Symbol Lists and found one of two possibilities for ES1. It is most likely the S&P 500 e-mini future: CME E-Mini Futures E-Mini S&P 500 ES1 INDEX the only alternative was LIFFE 3 Month Euroswiss ES1 COMDTY I think the former is far more likely, as the latter has the COMDTY commodity tag instead of INDEX as the tag in the image. Also, it isn't the ESI which pertains to Ethibel Sustainability Indices and something with the Eurozone (also Bloomberg Indices). Here we go! Excerpt straight is from a presentation presentation on charting from a business school PDF see pp.12-13, and appears to be a straight excerpt from September 2007 Bloomberg documentation. I didn't know any other way to imbed it besides taking a screen shot then uploading to imgur. Or of course, see pp.12-13 in the referenced PDF I've attached. See |
What market conditions favor small cap stocks over medium cap stocks? | In general, small cap stocks are exposed to more downside during recessions and when credit is tight, because it is more difficult for small companies to raise capital, and minor variations in cash flow have a bigger impact. Coming out of recessions or when credit is cheap, small companies generally perform better than larger companies. In the depths of recession, small companies with good cash flow are often great value investments, as analysts and institutional investors "punish" the entire class of smallcap companies. |
Found Mistake on 2013 1120S Form | I don't know if it's common or necessary to include capital stock as a liability? Yes, if you look at the title of the nonasset part of the balance sheet it actually is titled "Liabilities and Shareholders' Equity". Your capital stock is a component of Equity. This sounds like it was reported in a reasonable manner. "$2,582 listed under Loans from Shareholders (Line 19)." Did you have a basis issue with your distributions? That is did you take shareholder distributions more than your adjusted basis that you have been taxed on? I have seen the practice of considering distributions in excess of basis as short term loans to prevent the additional taxation of the excess distribution. Be careful when you adjust this entry, your balance sheet had to roll from one year to the next. You must have a reasonable transaction to substantiate the removal of the shareholder loan. |
What is quotational loss in stock market? | In this instance "quotational" is a reference to a market price quote, not a mathematical function. Staunch "value investors" like Graham, Dodd, Munger, Buffett et al. believe there is a material difference between what security is "worth" and what the current market mood quotes as its price. You, the investor, perform your analysis then derive a value for a security. If there has been no material change to an aspect of the security you analyzed then there hasn't been a change in that security's value, even if there has been a decline in the price quoted by the market, that is a "quotational loss." |
What size “nest egg” should my husband and I have, and by what age? | I would focus first on maxing out your RRSPs (or 401k) each year, and once you've done that, try to put another 10% of your income away into unregistered long term growth savings. Let's say you're 30 and you've been doing that since you graduated 7 years ago, and maybe you averaged 8% p.a. return and an average of $50k per year salary (as a round number). I would say you should have 60k to 120k in straight up investments around age 30. If that's the case, you're probably well on your way to a very comfortable retirement. |
What kind of life insurance is cheaper? I'm not sure about term vs. whole vs. universal, etc | Whole life in most instances is a very bad plan. It's marketed as a life insurance policy wrapped in an investment but it does neither very well. The hidden caveat of whole life is that the investment goes away if you die. Say for example I have a $100,000 whole life insurance policy and over the years I have paid in enough to have a $15,000 cash value on the policy. If I die, my family gets $100,000 and the cash value is lost. With term life you can get a substantially higher amount of coverage for a smaller payment. If you invest the difference you end up not only with better coverage, but a better cash value from the difference if you don't die (which is what we all hope for anyways). As JackiYo said, your insurance should be designed around replacing lost income/value. You should get 10x your annual income in term life insurance. |
What are the alternatives to compound interest for a Muslim? | I am not sure if these are available today in your country: but supposedly, back when Catholic countries similarly forbade usury, sinecures were invented to circumvent religious restrictions on finance. Meaning literally 'without care', sinecures were formally prestigious salary-paying jobs with few responsibilities. They were bought by the wealthy from the Church or State. The salaries for sinecures, accumulated over time, exceeded the initial purchase price. As such, some moderns consider sinecures usury in all but name. |
How to invest 100k | How to spend the money is up to you. That includes spending money on your house. (This is a safer way to look at it than an "investment". Not that it can't ever be treated as such, but that doing so often makes it easy to justify bad decisions and overspending on the house.) So with regards to the mortgage: So if it's not a monstrously huge deal, you might prefer to avoid default. Now, how to invest the rest while waiting to spend it, now... |
Buying from an aggressive salesperson | This is way too long for a comment, so I am posting this as an answer. My bet is that you're buying a new piano. It is the only instrument that makes sense. The rest of this answer are going to assume this, but this should apply well if you're going after a violin or marimba for example. For those readers that do not know, a piano is a very delicate and expensive music instrument. My piano is literally more expensive than my car. There are a lot of similarities in sales negotiation between buying a piano and buying a car. You may be surprised to know that the cost for the dealer to acquire a piano is only around half the listed price. Therefore, the salesperson has a lot of room to negotiate a sale price to you. This explains why he was able to make a good offer for the model you are not intending to buy. You are best by comparing the final sale price with other similar models in your region, or the exact model around your region, which you have already did. Those indicate the standard price in your negotiation. You described the dealer had the exact model you desire, only in different appearance. I assume you want a black color while they have a white or wood-pattern one in their showroom. Note, every piano is different. Even with the exact same model, there will be very slight differences in the tune and touch, since some processes are hand finished. (If you're buying a Steinway, treat each of them as an individual hand crafted art.) Play the exact instrument you will be buying before closing the deal. If they do not have your desired model in the showroom, ask for a visit to their inventory facility. Again, play the exact instrument, not a showroom model. Some dishonest dealers will have their showroom pianos regulated and tuned differently than the "standard" pianos from shipping. If you get an extremely good offer, proceed with caution. There may be defects in that particular instrument. Look for rust or oxidized layers on the strings. Look for groves in the hammers. Listen to clicking noises when playing the keys. These are signs that the instrument has been around for quite a while and they cannot sell it. You can also copy down the serial number and look up the manufacturing date online. Before you close the deal, ask for after-sale services. How many free tunings will they provide? Will they polish your piano after delivery? These are bargain chips you can use for final adjustment of the price. |
Why do moving average acts as support and resistance? | As you point out, the moving average is just MA(k)t = (Pt-1 + … + Pt-k )/k and is applied in technical analysis (TA) to smooth out volatile (noise) price action. If it has any logic to it, you might want to think in terms of return series (Pt - Pt-1 / Pt-1) and you could hypothesize that prices are in fact predictable and will oscillate below and above a running moving average. Below is a link to a study on MA trading rules, published in the Journal of Finance, with the conclusion of predictive power and abnormal returns from such strategies. As with any decision made upon historical arguments, one should be aware of structural changes and or data mining. Simple technical trading rules and the stochastic properties of stock returns Brock, W., J. Lakonishok and B. Le Baron, 1992, Simple technical trading rules and the stochastic properties of stock returns, Journal of Finance, 47, 1731-64. MA rules betterthan chance in US stock market, 1897-1986 I don't know whether you are new to TA or not, but a great commercial site, with plenty of computer-generated signals is FinViz. |
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? | You have to be the owner of record before the ex-dividend date, which is not the same day as the date the dividend is paid. This also implies that if you sell on or after the ex-dividend date, you'll still get the dividend, even if you no longer own the stock. Keep in mind, also, that the quoted price of the stock (and on any open orders that are not specifically marked as "do not reduce") on its ex-dividend date is dropped by the amount of the dividend, first thing in the morning before trading starts. If you happen to be the first order of the day, before market forces cause the price to move, you'll end up with zero gain, since the dividend is built into the price, and you got the same value out of it -- the dividend in cash, and the remaining value in stock. As pointed out in the comments (Thanks @Brick), you'll still get a market price for your trade, but the price reduction will have had some impact on the first trade of the day. Source: NYSE Rule 118.30 Also, remember that the dividend yield is expressed in annualized terms. So a 3% yield can only be fully realized by receiving all of the dividend payments made by the company for the year. You can, of course, forget about individual companies and just look for dividends to create your own effective yield over time. But, see the final point... Finally, if you keep buying and selling just to play games with the dividends, you're going to pay far more in transaction fees than you will earn in dividends. And, depending on your individual circumstances, you may end up paying more in capital gains taxes. |
If a put seller closes early, what happens to the buyer? | An option is freely tradable, and all options (of the same kind) are equal. If your position is 0 and you sell 1 option, your new position in that option is -1. If the counterparty to your trade buys or sells more options to close, open, or even reopen their position afterwards, that doesn't matter to your position at all. Of course there's also the issue with American and European Options. European Options expire at their due date, but American Options expire at their due date or at any time before their due date if the holder decides they expire. With American Options, if a holder of an American Option decides to exercise the option, someone who is short the same option will be assigned as the counterparty (this is usually random). Expiry is after market close, so if one of your short American Options expires early, you will need to reopen the position the next day. Keep in mind dividends for slightly increased complexity. American and European Options do not in any way refer to the continents they are traded on, or to the location of the companies. These terms simply describe the expiry rules. |
Safe method of paying for a Gym Membership? | The safest way is to not sign contracts with terms that are onerous to you. |
Bollinger Bands and TRENDING market | Bollinger Bands are placed standard deviations away from the moving average. Therefore if the price is volatile, the bands diverge from the mean. During consolidation the bands would converge. They do not provide a clear indication of whether the price is trending or not. |
Do real nappies (reusable / cloth diapers) really save money? | I don't think they do. And here's why. If you don't want your child to get skin irritation, you need to watch closely and change the "nappy" right when it got wet. For newborns it means like every 2 hours. It creates a big pile of laundry, but the main thing — additional burden on mother. So, even if you save a little on diapers, you will spend that on water+electricity bill + comforting the mother more often than you would otherwise. |
Did my salesman damage my credit? What can I do? | At one point in my life I sold cars and from what I saw, three things stick out. Unless the other dealership was in the same network, eg ABC Ford of City A, and ABC Ford of City B, they never had possession of that truck. So, no REAL application for a loan could be sent in to a bank, just a letter of intent, if one was sent at all. With a letter of intent, a soft pull is done, most likely by the dealership, where they then attached that score to the LOI that the bank has an automated program send back an automatic decline, an officer review reply, or a tentative approval (eg tier 0,1,2...8). The tentative approval is just that, Tentative. Sometime after a lender has a loan officer look at the full application, something prompts them to change their offer. They have internal guidelines, but lets say an app is right at the line for 2-3 of the things they look at, they chose to lower the credit tier or decline the app. The dealership then goes back and looks at what other offers they had. Let's say they had a Chase offer at 3.25% and a CapOne for 5.25% they would say you're approved at 3.5%, they make their money on the .25%. But after Chase looks into the app and sees that, let's say you have been on the job for actually 11 months and not 1 year, and you said you made $50,000, but your 1040 shows $48,200, and you have moved 6 times in the last 5 years. They comeback and say no he is not a tier 2 but a tier 3 @ 5.5%. They switch to CapOne and say your rate has in fact gone up to 5.5%. Ultimately you never had a loan to start with - only a letter of intent. The other thing could be that the dealership finance manager looked at your credit score and guessed they would offer 3.5%, when they sent in the LOI it came back higher than he thought. Or he was BSing you, so if you price shopped while they looked for a truck you wouldn't get far. They didn't find that Truck, or it was not what they thought it would be. If a dealership sees a truck in inventory at another dealer they call and ask if it's available, if they have it, and it's not being used as a demo for a sales manager, they agree to send them something else for the trade, a car, or truck or whatever. A transfer driver of some sort hops in that trade, drives the 30 minutes - 6 hours away and comes back so you can sign the Real Application, TODAY! while you're excited about your new truck and willing to do whatever you need to do to get it. Because they said it would take 2-5 days to "Ship" it tells me it wasn't available. Time Kills Deals, and dealerships know this: they want to sign you TODAY! Some dealerships want "honest" money or a deposit to go get the truck, but reality is that that is a trick to test you to make sure you are going to follow through after they spend the gas and add mileage to a car. But if it takes 2 days+, The truck isn't out there, or the dealer doesn't have a vehicle the other dealership wants back, or no other dealership likes dealing with them. The only way it would take that long is if you were looking for something very rare, an odd color in an unusual configuration. Like a top end model in a low selling color, or configuration you had to have that wouldn't sell well - like you wanted all the options on a car except a cigarette lighter, you get the idea. 99.99% of the time a good enough truck is available. Deposits are BS. They don't setup any kind of real contract, notice most of the time they want a check. Because holding on to a check is about as binding as making you wear a chicken suit to get a rebate. All it is, is a test to see if you will go through with signing the deal. As an example of why you don't let time pass on a car deal is shown in this. One time we had a couple want us to find a Cadillac Escalade Hybrid in red with every available option. Total cost was about $85-90k. Only two new Red Escalade hybrids were for sale in the country at the time, one was in New York, and the other was in San Fransisco, and our dealership is in Texas, and neither was wanting to trade with us, so we ended up having to buy the SUV from one of the other dealerships inventory. That is a very rare thing to do by the way. We took a 25% down payment, around $20,000, in a check. We flew a driver to wherever the SUV was and then drove it back to Texas about 4 days later. The couple came back and hated the color, they would not take the SUV. The General Manager was pissed, he spent around $1000 just to bring the thing to Texas, not to mention he had to buy the thing. The couple walked and there was nothing the sales manager, GM, or salesman could do. We had not been able to deliver the car, and ultimately the dealership ate the loss, but it shows that deposits are useless. You can't sell something you don't own, and dealerships know it. Long story short, you can't claim a damage you never experienced. Not having something happen that you wanted to have happen is not a damage because you can't show a real economic loss. One other thing, When you sign the paperwork that you thought was an application, it was an authorization for them to pull your credit and the fine print at the bottom is boiler plate defense against getting sued for everything imaginable. Ours took up about half of one page and all of the back of the second page. I know dealing with car dealerships is hard, working at them is just as hard, and I'm sorry that you had to deal with it, however the simplest and smoothest car deals are the ones where you pay full price. |
Is there a good options strategy that has a fairly low risk? | Check out this site: http://www.m-x.ca/produits_options_actions_en.php (Under the Trading Strategies). If you have a background in math or eco or are comfortable with graphs, I suggest you graph the payoffs of each of these strategies. It will really help you understand it. If you need help with this, let me know and I can draw a couple out for you. Your question is rather vague but also complicated however I will try to answer it. First off, many investors buy options to hedge against a current position in a stock (already own the stock). But you can also try to make money off of options rather than protecting yourself. Let's suppose you anticipate that a stock will increase in value so you want to capitalize on this. Suppose further that you have a small amount of money to invest, say $100. Suppose the stock is currently at $100 so that you can only afford 1 share. Suppose there is a call option out there with strike $105 that costs you only $1. Let's compare two scenarios: The stock increases to $120 at the maturity date of the option. So, you made a lot more money with the same initial investment. The amount of money you put in is small (i.e. can be perceived as low risk). However, if the stock price ended up being $104.90 then your options are worthless (i.e. can be perceived as high risk). HTH. |
Why do gas stations charge different amounts in the same local area? | Location, Location, Location. The closer to the highway, the more they can charge. People want to go less than a mile from the exit to get gas. Therefore they save time, but spend more money. That is understandable, so the gas station takes advantage of the situation. |
Does an industry 'standard' have any affect on when a stock might split? | You ask if Tesla being a car company should feel a pressure to split their stock because their share price is much higher than the other car companies. But is Tesla a car company? It was founded by Elon Musk who founded PayPal and SpaceX. He sees him self as the next generation of entrepreneurs that came after Jobs and Gates. So he compares Tesla ($142) companies to Google ($856), Amazon ($284) and eBay ($52). But even if you see Tesla as a car company, Musk sees it more like Audi ($828) or BMW ($100) then he does Ford ($16.30) just because the base price of their models ($80,000+) is much greater than Ford or GM. The theory is that keeping the share price in a lower range helps investors. But since 40% of the company is owned by mutual funds is that really a concern? Therefore most small investors get the company though a mutual fund. |
Is Cash Value Life Insurance (“whole life” insurance) a good idea for my future? | I am of the strong opinion that life insurance should be purchased as a term product and nothing more. The internal expense is usually high, the returns, poor and the product disclosure is often incomprehensible. The only purpose Cash Value Life Insurance serves, in my opinion, is to fund the retirement and college educations of those selling it. |
Book Value vs Market Value of PWT.TO | Have you looked at what is in that book value? Are the assets easily liquidated to get that value or could there be trouble getting the fair market value as some assets may not be as easy to sell as you may think. The Motley Fool a few weeks ago noted a book value of $10 per share. I could wonder what is behind that which could be mispriced as some things may have fallen in value that aren't in updated financials yet. Another point from that link: After suffering through the last few months of constant cries from naysayers about the company’s impending bankruptcy, shareholders of Penn West Petroleum Ltd. (TSX:PWT)(NYSE:PWE) can finally look toward the future with a little optimism. Thus, I'd be inclined to double check what is on the company books. |
How an ETF reinvests dividends | The shareholders can't all re-invest their dividends -- it's not possible. Paying a dividend doesn't issue any new shares, so unless some of the existing shareholders sell their shares instead of re-investing, there aren't any shares available for the shareholders to re-invest in. |
Can one use dollar cost averaging to make money with something highly volatile? | That doesn't sound like dollar cost averaging. That sounds like a form of day trading. Dollar cost averaging is how most people add money to their 401K, or how they add money to some IRA accounts. You are proposing a form of day trading. |
Is there a “reverse wash sale” rule? | Yes, the newly bought shares will have a long-term holding period, regardless of when you sell them. In addition, it's only a wash sale if you sold the first shares for a loss; it's not a wash sale if you sold them for a gain. Wikipedia mentions this: When a wash sale occurs, the holding period for the replacement stock includes the period you held the stock you sold. Example: You've held shares of XYZ for 10 years. You sell it at a loss but then buy it back within the wash sale period. When you sell the replacement stock, your gain or loss will be long-term — no matter how soon you sell it. Charles Schwab also mentions this: Here's a quick example of a wash sale. On 9/30/XX, you buy 500 shares of ABC at $10 per share. One year later the stock price starts to drop, and you sell all your shares at $9 per share on 10/4/XY. Two days later, on 10/6, ABC bottoms out at $8 and you buy 500 shares again. This series of trades triggers a wash sale. The holding period of the original shares will be added to the holding period of the replacement shares, effectively leaving you with a long-term position. |
How can I cash out a check internationally? | Your friend probably cannot deposit the check to your U.S. bank account. U.S. banks that I've worked with will not accept a deposit from someone who is not an owner of the account. I don't know why not. If some stranger wants to make unauthorized deposits to my account, why should I object? But that's the common rule. You could endorse the check, your friend could then deposit it to his own account or cash it, and then transfer the money to you in a variety of ways. But I think it would be easier to just deposit the check in your account wherever it is you live. Most banks have no problem with depositing a foreign check. There may be a fairly long delay before you can get access to the money while the check clears through the system. I don't know exactly what you mean by a "prize check", but assuming that this is taxable income, yes, I assume the U.S. government would want their hard-earned share of your money. These days you can pay U.S. taxes on-line if you have a credit card. If you have not already paid U.S. taxes for the year, you should make an "estimated payment". i.e. you can't wait until April 15 of the next year, you have to pay most or all of the taxes you will owe in the calendar year you earned it. |
What's the fuss about Credit Score / History? | Credit Unions have long advocated their services based on the fact that they consider your "character." Unfortunately, they are then at a loss to explain how they determine the value of your character, other than to say that you're buddies & play pool together so they'll give you a loan. Your Credit History / Score is as accurate a representation of your character in business dealings as can be meaningfully quantified. It tracks your ability to effectively use and manage debt, and your propensity to pay it back responsibly or default on obligations. While it isn't perfect, it is certainly one of the best means currently available for determining someone's trustworthiness when it comes to financial matters. |
When is it worth it to buy dividend-bearing stocks? | Yes, they are, and you've experienced why. Generally speaking, stocks that pay dividends will be better investments than stocks that don't. Here's why: 1) They're actually making money. They can finagle balance sheets and news releases, but cash is cash, it tells no lies. They can't fake it. 2) There's less good they can do with that money than they say. When a business you own is making money, they can do two things with it: reinvest it into the company, or hand it over to you. All companies must reinvest to some degree, but only a few companies worth owning can find profitable ways of reinvesting all of it. Having to hand you, the owner, some of the earnings helps keep that money from leaking away on such "necessities" like corporate jets, expensive printer paper, or ill-conceived corporate buyouts. 3) It helps you not freak out. Markets go up, and markets go down. If you own a good company that's giving you a nice check every three months, it's a lot easier to not panic sell in a downturn. After all, they're handing you a nice check every three months, and checks are cash, and cash tells no lies. You know they're still a good company, and you can ride it out. 4) It helps others not freak out. See #3. That applies to everyone. That, in turn means market downturns weigh less heavily on companies paying solid dividends than on those that do not. 5) It gives you some of the reward of investing in good companies, without having to sell those companies. If you've got a piece of a good, solid, profitable, growing company, why on earth would you want to sell it? But you'd like to see some rewards from making that wise investment, wouldn't you? 6) Dividends can grow. Solid, growing companies produce more and more earnings. Which means they can hand you more and more cash via the dividend. Which means that if, say, they reliably raise dividends 10%/year, that measly 3% dividend turns into a 6% dividend seven years later (on your initial investment). At year 14, it's 12%. Year 21, 24%. See where this is going? Companies like that do exist, google "Dividend Aristocrats". 7) Dividends make growth less important. If you owned a company that paid you a 10% dividend every year, but never grew an inch, would you care? How about 5%, and it grows only slowly? You invest in companies, not dividends. You invest in companies to make money. Dividends are a useful tool when you invest -- to gauge company value, to smooth your ride, and to give you some of the profit of the business you own. They are, however, only part of the total return from investing -- as you found out. |
HSBC Hong Kong's “Deposit Plus” Product: What is it, and what strategies to employ? | HSBC, Hang Seng, and other HK banks had a series of special savings account offers when I lived in HK a few years ago. Some could be linked to the performance of your favorite stock or country's stock index. Interest rates were higher back then, around 6% one year. What they were effectively doing is taking the interest you would have earned and used it to place a bet on the stock or index in question. Technically, one way this can be done, for instance, is with call options and zero coupon bonds or notes. But there was nothing to strategize with once the account was set up, so the investor did not need to know how it worked behind the scenes... Looking at the deposit plus offering in particular, this one looks a little more dangerous than what I describe. See, now we are in an economy of low almost zero interest rates. So to boost the offered rate the bank is offering you an account where you guarantee the AUD/HKD rate for the bank in exchange for some extra interest. Effectively they sell AUD options (or want to cover their own AUD exposures) and you get some of that as extra interest. Problem is, if the AUD declines, then you lose money because the savings and interest will be converted to AUD at a contractual rate that you are agreeing to now when you take the deposit plus account. This risk of loss is also mentioned in the fine print. I wouldn't recommend this especially if the risks are not clear. If you read the fine print, you may determine you are better off with a multicurrency account, where you can change your HK$ into any currency you like and earn interest in that currency. None of these were "leveraged" forex accounts where you can bet on tiny fluctuations in currencies. Tiny being like 1% or 2% moves. Generally you should beware anything offering 50:1 or more leverage as a way to possibly lose all of your money quickly. Since you mentioned being a US citizen, you should learn about IRS form TD F 90-22.1 (which must be filed yearly if you have over $10,000 in foreign accounts) and google a little about the "foreign account tax compliance act", which shows a shift of the government towards more strict oversight of foreign accounts. |
Selling on eBay without PayPal? | Dwolla looks to be a great option. But it requires users to have an account there (Free to sign up). And there rates are absolutely amazing. Free for transactions under $10 $0.25 to receive money on transactions over $10 |
Is leveraging notoriety to raise stock prices illegal in the US? | If he didn't lie, I don't see the issue. He did not force anyone to buy anything. His opinion was stock X is good, he publicized it and it turned out to be true (at least temporary) - what's wrong with it? It is customary for people who have either fiduciary duty towards the clients or are perceived as independent analysts to disclose their interest and potential conflict of interest, lest they lose the respect of the public as independent and trustworthy sources of financial information. Jackson never had that, express or implied, and never had the duty to provide anybody with impartial financial analysis, so he can say anything he wants. He can invest into the company and promote it and make money from it - isn't it what was called "business" once? Why is it even being questioned? |
So the vending machine tore my $5 in pieces. What now? | There is usually contact information for the owner of the machine printed somewhere on it. Call that number. If it is in a business you could always try the clerk. Whether you get your money back is up to that person, I suppose. |
Would there be tax implications if I used AirBnB as opposed to just renting out a unit normally? | There's no tax difference between using AirBnB or Craigslist or any other method to find tenants. The rules relating to occupancy and frequency may be different for some purposes if you go from yearly or monthly tenants to daily-rate tenants. Your state and local authorities may in the future try to consider you a motel or Bed n Breakfast equivalent, and subject you to various regulations and business taxes. But the method of finding customers itself is probably not meaningful for tax purposes. |
Jointly filing taxes in 2 different states | Both states will want to tax you. Your tax home is where you maintain a domicile, are registered to vote, etc. and you will probably want to keep this as MA since you state that MA is your permanent residence and you are staying in a rented place in PA. But be careful about voter registration; that is one of the items that can be used to determine your state of residence. OK, so if you and your spouse are MA residents, you should file jointly as residents in MA and as nonresidents in PA. Do the calculations on the nonresident return first, and then the calculations on the resident return. Typically, on a nonresident tax return, the calculations are effectively the following: Report all your income (usually AGI from the Federal return). Call this $X. Compute the PA state tax due on $X. Note that you follow the rules for nonresidents in doing this, not the calculations used by PA residents. Call the amount of tax you computed as $Y. What part of the total income $X is attributable to PA sources? If this amount is $Z, then you owe PA $Y times (Z/X). On the resident return in MA, you will likely get some credit for the taxes paid to PA, and this will reduce your MA tax burden. Usually the maximum credit is limited to the lesser of actual tax paid to PA and what you would have had to pay MA for the same income. As far as withholding is concerned, your employer in PA will withhold PA taxes as if you are a PA resident, but you can adjust the amount via the PA equivalent of IRS Form W4 so as to account for any additional tax that might be due because you will be filing as a nonresident. Else you can pay estimated taxes via the PA equivalent of IRS Form 1040ES. Similarly, your wife can adjust her withholding to account for the MA taxes that you will owe on the joint income, or you can pay estimated taxes to MA too. Note that it is unlikely that your employer in Pennsylvania will withhold Massachusetts taxes (and send them to Massachusetts) for you, e.g. if it is a ma-and-pa store, but there may be special deals available if your employer does business in both states, i.e. is a MA-and-PA store. |
Pros/cons of borrowing money using a mortgage loan and investing it in a low-fee index fund? | Essentially, what you're describing is a leveraged investment. As others noted, the question is how confident you can be that (a) the returns on the investment will exceed what you're paying in interest, and (b) that if you lose the bet you'll still be able to pay off the loan without severely injuring yourself. I did essentially this when I bought my house, taking out a larger loan than necessary and leaving more money in my investments, which had been returning more than the mortgage's interest rate. I then got indecently lucky during the recession and was able to refinance down to under 4%, which I am very certain my investment will beat. I actually considered lengthening the term of the loan for that reason, or borrowing a bit more, but decided not to double down on the bet; that was my own risk-comfort threshold. Know exactly what your risks are, including secondary effects of these risks. Run the numbers to see what the likely return is. Decide whether you like the odds enough to go for it. |
Pros/cons for buying gold vs. saving money in an interest-based account? | There's too much here for one question. So no answer can possibly be comprehensive. I think little of gold for the long term. I go to MoneyChimp and see what inflation did from 1974 till now. $1 to $4.74. So $200 inflates to $950 or so. Gold bested that, but hardly stayed ahead in a real way. The stock market blew that number away. And buying gold anytime around the 1980 runup would still leave you behind inflation. As far as housing goes, I have a theory. Take median income, 25% of a month's pay each month. Input it as the payment at the going 30yr fixed rate mortgage. Income rises a bit faster than inflation over time, so that line is nicely curved slightly upward (give or take) but as interest rates vary, that same payment buys you far more or less mortgage. When you graph this, you find the bubble in User210's graph almost non-existent. At 12% (the rate in '85 or so) $1000/mo buys you $97K in mortgage, but at 5%, $186K. So over the 20 years from '85 to 2005, there's a gain created simply by the fact that money was cheaper. No mania, no bubble (not at the median, anyway) just the interest rate effect. Over the same period, inflation totaled 87%. So the same guy just keeping up with inflation in his pay could then afford a house that was 3.5X the price 20 years prior. I'm no rocket scientist, but I see few articles ever discussing housing from this angle. To close my post here, consider that homes have grown in size, 1.5%/yr on average. So the median new home quoted is actually 1/3 greater in size in 2005 than in '85. These factors all need to be normalized out of that crazy Schiller-type* graph. In the end, I believe the median home will always tightly correlate to the "one week income as payment." *I refer here to the work of professor Robert Schiller partner of the Case-Schiller index of home prices which bears his name. |
Under what circumstance will the IRS charge you a late-payment penalty for taxes? | In practice the IRS seems to apply the late payment penalty when they issue a written paper notice. Those notices typically have a pay-by date where no additional penalty applies. The IRS will often waive penalties, but not interest or tax due, if the taxpayer presses the issue. |
When investing, is the risk/reward tradeoff linear? | The relationship is not linear, and depends on a lot of factors. The term you're looking for is efficient frontier, the optimal rate of return for a given level of risk. The goal is to be on the efficient frontier, meaning that for the given level of risk, you're receiving the greatest possible rate of return (reward). http://www.investopedia.com/terms/e/efficientfrontier.asp |
Can I transfer self-employed income into LLC? | An LLC is a very flexible company when it comes to taxation. You have three basic tax options: There are other good reasons to create an LLC (mainly to protect your personal assets) so even if you decide that you don't want to deal with the complications of an S-Corp LLC, you should still consider creating a sole proprietorship LLC. |
Auto insurance on new car | Auto insurance is a highly personalized item, so depending on your driving record and other factors, $600 a month for full coverage may be as good as you can get. Look at the premium for each category, and consider raising the deductible if you have some savings that could be used in the event that you have a claim. Also, you're not only buying insurance to cover the other person's damage and medical expenses, you're paying for insurance for your car. Brand-new cars are more expensive to replace (and thus insure) than used cars. Leasing is effectively renting a car for a long period of time. While the payments are less, when the lease expires you're going to have to decide whether to give up the car or buying it, usually at a price much higher than market value. I'm glad you discovered that the insurance would break your budget before it's too late. My suggestion would be to look for a 1-2 year old car that's less expensive to buy and to insure. |
Why pay estimated taxes? | Your logic is not wrong. But the risk is more significant than you seem to assume. Essentially you are proposing taking a 2.6% loan to buy stocks. Is that a good strategy? On average, probably. But if your stocks crash you might have significant liabilities. In 1929, the Dow Jones dropped 89%. In 1989, >30%. In 2008-9, 54%. This is a huge risk if this is money that you owe in taxes. If you operate the same system year after year the chance of it going horribly wrong increases. |
Why is being “upside down” on a mortgage so bad? | The largest problem and source of anxiety / ruin for homeowners during the housing market collapse was caused by the inability to refinance. Many people had bought homes which they were stretched to afford, by using variable-rate mortgages. These would typically offer a very attractive initial rate, with an annual cap on the potential increase of rate. Many of these people intended to refinance their variable-rate to a fixed rate once terms were more favorable. If their house won't appraise for the value needed to obtain a new loan, they are stuck in their current contract with potentially unfavorable rates in the later years (9.9% above prime was not unheard of.) Also, many people, especially those in areas of high inflation in the housing market, used a financial device known as a Balloon Mortgage, which essentially forced you to get a new loan after some number of years (2, 5, 10) when the entire note became due. Some of those loans offered payments less than Principal + Interest! So, say you move near Los Angeles and can't afford the $1.2M for the 3-bedroom ranch in which you wish to live. You might work out a deal with your mortgage broker/banker in which you agree contractually to only pay $500/month, with a balloon payment of $1.4M due in 5 years, which seemed like a good deal since you (and everyone else,) actually expect the house to be 'worth' $1.5M in 5 years. This type of thing was done all the time back in the day. Now, imagine the housing bubble bursts and your $1.2M home is suddenly only valued at, perhaps, $750k. You still owe $1.4M sometime in the next several years (maybe very soon, depending on timing,) and can only get approved financing for the current $750k value -- so you're basically anticipating becoming homeless and bankrupt within the same year. That is a source of much anxiety about being upside-down on a loan. See this question for an unfortunate example. |
Any problem if I continuously spend my credit card more than normal people? | How will going from 75% Credit Utilization to 0% Credit Utilization affect my credit score? might answer your question if US based. In the US, what counts is what shows on the bill. I've run $20K through a card with a $10K limit, but still ended the month under $2K by making extra payments. As long as you stay ahead of the limit by making mid-cycle payments, I see no issue with this strategy. If you keep running $30K/mo through a card with a $10K limit, the bank will eventually catch this and raise your limit as you will have proven you are more credit worthy. |
Why are there many small banks and more banks in the U.S.? | Wikipedia has a good summary: Historically, branch banking in the United States - especially interstate branch banking - was viewed unfavorably by regulatory authorities, and this was codified with the enactment of the McFadden Act of 1927, which specifically prohibited interstate banking. Over the next few decades, some banks attempted to circumvent McFadden's provisions by establishing bank holding companies that operated so-called independent banks in multiple states. To address this, The Bank Holding Company Act of 1956 prohibited bank holding companies headquartered in one state from having branches in any other state. Most interstate banking prohibitions were repealed by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. Research has also found that anticompetitive state provisions restricted out-of-state growth when those provisions were more restrictive than the provisions set by the Interstate Banking and Branching Efficiency Act or by neighboring states. Some states have also had restrictive bank branch laws; for example, Illinois outlawed branches (other than the main office) until 1967, and did not allow an unlimited number until 1993. |
Is being a landlord a good idea? Is there a lot of risk? | I have been a landlord in Texas for just over 3 years now. I still feel like a novice, but I will give you the benefit of my experience. If you are relying on rental properties for current income versus a long term return you are going to have to do a good job at shopping for bargains to get monthly cash flow versus equity growth that is locked up in the property until you sell it. If you want to pull a lot of cash out of a property on a regular basis you probably are going to have to get into flipping them, which is decidedly not passive investing. Also, it is easy to underestimate the expenses associated with rental properties. Texas is pretty landlord friendly legally, however it does have higher than usual property taxes, which will eat into your return. Also, you need to factor in maintenance, vacancy, tenant turnover costs, etc. It can add up to a lot more than you would expect. If you are handy and can do a lot of repairs yourself you can increase your return, but that makes it less of a passive investment. The two most common rules I have heard for initially evaluating whether an investment property is likely to be cash flow positive are the 1% and 50% rules. The 1% rule says the expected monthly rent needs to be 1% or greater of the purchase price of the house. So your hypothetical $150K/$10K scenario doesn't pass that test. Some people say this rule is 2% for new landlords, but in my experience you'd have to get lucky in Texas to find a house priced that competitively that didn't need a lot of work to get rents that high. The 50% rule says that the rent needs to be double your mortgage payment to account for expenses. You also have to factor in the hassle of dealing with tenants, the following are not going to happen when you own a mutual fund, but are almost inevitable if you are a landlord long enough: For whatever reason you have to go to court and evict a tenant. A tenant that probably lost their job, or had major medical issues. The nicest tenant you ever met with the cutest kids in the world that you are threatening to make homeless. Every fiber of your being wants to cut them some slack, but you have a mortgage to pay and can't set an expectation that paying the rent on time is a suggestion not a rule. or the tenant, who seemed nice at first, but now considers you "the man" decides to fight the eviction and won't move out. You have to go through a court process, then eventually get the Sheriff to come out and forcibly remove them from the property, which they are treating like crap because they are mad at you. All the while not paying rent or letting you re-let the place. The tenant isn't maintaining the lawn and the HOA is getting on your butt about it. Do you pay someone to mow the grass for them and then try to squeeze the money out of the tenant who "never agreed to pay for that"? You rent to a college kid who has never lived on their own and has adopted you as their new parent figure. "The light in the closet went out, can you come replace the bulb?" Tenants flat out lying to your face. "Of course I don't have any pets that I didn't pay the deposit for!" (Pics all over facebook of their kids playing with a dog in the "pet-free" house) |
What are the ins/outs of writing equipment purchases off as business expenses in a home based business? | Keep this rather corny acronym in mind. Business expenses must be CORN: As other posters have already pointed out, certain expenses that are capital items (computers, furniture, etc.) must be depreciated over several years, but you have a certain amount of capital items that you can write off in the current tax year. |
How can I stop wasting food? | Make a menu of 15 (or more) things you like to eat. Write a grocery list for what it takes. Divide that list into perishable and non-perishable. Put those items into a calendar and try to stick to it. Depending on the amount of storage space you have, once a week fulfill your perishable list. Use coupons and shop the sales to keep your prices down. On your way home, stop at the grocery store and buy only the perishables you will need that night for cooking. I personally chose recipes that didn't always need fresh stuff (like canned tomatoes being good enough.) You spend more on the nightly stuff, but you make up some savings with the long term shopping. Just count on going to the store for 10 minutes a night a part of your cooking routine. I used to just look at the wall, but with an app like Evernote this would be pretty easy. |
Why is auto insurance ridiculously overpriced for those who drive few miles? | People who drive long distances tend to do more of their driving on larger, well-built roads (freeways / motorways) that are designed for high-speed driving. Although some people find them intimidating, they are much safer in terms of accidents per kilometre driven for several reasons: |
Checks not cashed | You're certainly still responsible to pay what you owe the company given that: 1. for whatever reason, the recipient never received the checks. and 2. the money was credited back to you, albeit in a less than timely manner. However, if you take the time to explain the situation to the business, and show them proof that you sent the payments I would guess they would probably be willing to work with you on removing any late fees you have been assessed or possibly setting up a payment plan. Also, if you have been charged any overdraft or minimum balance fees by your bank while they held your money for the payments that was eventually credited back to your account, you might be able to get them to refund those if you explain what has happened. This is really a perfect example though of why balancing your checking account is as important today as it ever was. |
What options do I have at 26 years old, with 1.2 million USD? | If you can still work, I think a very good course of action would be to invest the majority of the money in low-cost index funds for many years. The reason is that you are young and have plenty of time to build a sizable retirement fund. How you go about this course of action depends on your comfort level with managing your money, taxes, retirement accounts, etc. At a minimum, open an investment account at any of the major firms (Schwab, Fidelity, for example). They will provide you with a free financial advisor. Ideally s/he would recommend something like: Open a retirement account and invest as much as you can tax-free or tax-deferred. Since you already received the money tax-free, a Roth IRA seems like a no-brainer. Pick some low-fee equity funds, like an S&P 500 Index fund, for a large chunk of the money. Avoid individual stocks if you aren't comfortable with them. Alternatively, get a recommendation for a fixed-fee financial planner that can help you plan for your future. Above all, don't spend beyond your means! You have an opportunity to fund a very nice future for yourself, especially if you are able to work while you are still so young! |
value of guaranteeing a business loan | You are confining the way you and the other co-founders are paid for guaranteeing the loan to capital shares. Trying to determine payments by equity distribution is hard. It is a practice that many small companies particularly the ones in their initial stage fall into. I always advise against trying to make payments with equity, weather it is for unpaid salary or for guaranteeing a loan such as your case. Instead of thinking about a super sophisticated algorithm to distribute the new shares between the cofounders and the new investors, given a set of constraints, which will most probably fail to make the satisfactory split, you should simply view the co-founders as debt lenders for the company and the shareholders as a capital contributor. If the co-founders are treated as debt lenders, it will be much easier to determine the risk compensation for guaranteeing the loan because it is now assessed in monetary units and this compensation is equal to the risk premium you see fit "taking into consideration the probability of default ". On the other hand, capital contributors will gain capital shares as a percentage of the total value of the company after adding SBA loan. |
How do I know if refinance is beneficial enough to me? | The proper answer is that you run the numbers and see whether what you'll save in interest exceeds the closing costs by enough to be interesting. Most lenders these days have calculations that can help with this on their websites and/or would be glad to help if asked. Rule of thumb: if you can reduce interest rate by 1% or more it's worth investing. |
Why use accounting software like Quickbooks instead of Excel spreadsheets? | Since this is a cooperative I'm guessing your partners may want to be able to view the books so another key point you may want to consider is collaboration. QuickBooks desktop has all of these same issues because it is meant to be used on a single desktop. We're in an age of mobile devices, and especially in a business like landscaping it would be nice if certain aspects of record keeping could be done at the point and time where they are incurred. I'd argue you want a Software as a Service (SaaS) accounting package as opposed to "accounting software" which might come on a CD in the form of QuickBooks, Sage and others. Additionally, most of these will also have guides to help make sure you are properly entering your records. Most of these SaaS products also have customer success teams to help you along should you need assistance. Depending on the level of your subscription you may get more sophisticated handling of taxes, customized invoices or integrated payroll. Your goal is to keep accurate records so you can better run your business and maintain obligations like filing taxes. You're not keeping the records just to have them. Keep them in a place where they will work for you and provide the insights and functionality that will help your business grow and become successful. Accounting software will always win in this scenario over a spreadsheet. FULL DISCLAIMER: I work for Kashoo, a simple cloud accounting product designed for small businesses. But the points I mention above are true for Xero, QuickBooks Online and Wave as well as Kashoo. And if you really want expertise to go with the actual software consider service providers with a platform like: Indinero, Bench, easyrecordbooks or Liberty Accounting. |
Can I buy a new house before selling my current house? | You don't say why you want to move. Without knowing that, it is hard to recommend a course of action. Anyway... The sequence of events for an ECONOMICAL outcome in a strong market is as follows: (1) You begin looking for a new house (2) You rent storage and put large items into storage (3) You rent an apartment and move into the apartment (4) The house now being empty you can easily do any major cleaning and renovations needed to sell it (5) You sell the house (and keep looking for a new house while you do so). Since the house is empty it will sell a lot more easily than if you are in it. (6) You invest the money you get from selling the house (7) You liquidate your investment and buy the new house that you find. If you are lucky, the market will have declined in the meantime and you will get a good deal on the new house in addition to the money you made on your investment. (8) You move your stuff out of storage into the new house. There are other possibilities that involve losing a lot of money. The sequence of events above will make money for you, possibly a LOT of money. |
Missing 401(k) dividends | Your investment is probably in a Collective Investment Trust. These are not mutual funds, and are not publicly traded. I.e. they are private to plan participants in your company. Because of this, they are not required* to distribute dividends like mutual funds. Instead, they will reinvest dividends automatically, increasing the value of the fund, rather than number of shares, as with dividend reinvestment. Sine you mention the S&P 500 fund you have tracks closely to the S&P Index, keep in mind there's two indexes you could be looking at: Without any new contributions, your fund should closely track the Total Return version for periods 3 months or longer, minus the expense ratio. If you are adding contributions to the fund, you can't just look at the start and end balances. The comparison is trickier and you'll need to use the Internal Rate of Return (look into the XIRR function in Excel/Google Sheets). *MFs are not strictly required to pay dividends, but are strongly tax-incentivized to do so, and essentially all do. |
How might trading volume affect future share price? | Volumes are used to predict momentum of movement, not the direction of it. Large trading volumes generally tend to create a price breakout in either positive or negative direction. Especially in relatively illiquid stocks (like small caps), sudden volume surges can create sharp price fluctuations. |
What is the best way for me to invest my money into my own startup? | Ask your accountant about convertable preference shares. This would permit you to loan money to your company and then convert the debt to equity, should you so choose, at a later stage. As with the answer by bstpierre, these are all contractual arrangements conducted at arms-length. |
How to start buying shares with small amount of money? | Before anything else, read up on the basics of economics. After that, there a few things you need to ask yourself before you even think about investing in anything: If you have an answer to those questions: Once you answered those questions I could make a simple first suggestion: Confident in handling it yourself and low maintenance with uncertain horizon: look up an online bank that offers ETFs such as IWDA (accumulation (dividend is not payed but reinvested) or income(dividend is payed out)) and maybe a few more specific ones then buy and hold for at least 5 years. Confident and high maintenance with long horizon: maybe stock picking but you'll probably never be able to beat the market unless you invest 10's of hours in research per week. However this will also cost a bit and given your initial amount not advisable to do. Be sure that you also have a VERY close look at the prospectus of an investment (especially if you go with a (retail) bank and they "recommend" you certain actively traded funds). They tend to charge you quite a bit (yearly management fees of 2-3% (which is A LOT if you are eying maybe 7%-8% yearly) aren't unheard of). ETF's such IWDA only have for example a yearly cost of 0.20%. Personally I have one portfolio (of many) only consisting of that ETF (so IWDA) and one global small cap. It's one of the best and most consistant ones to date. In the end, the amount you start with doesn't really matter so much as long as it's enough to buy at least a few shares of what you have in mind. If you can then increase your portfolio over time and keep the expenses in check, compounding interest should do the rest. |
gift is taxable but is “loan” or “debt” taxable? | (a) you give away your money - gift tax The person who receives the gift doesn't owe any tax. If you give it out in small amounts, there will be no gift tax. It could have tax and Estate issues for you depending on the size of the gift, the timing, and how much you give away in total. Of course if you give it away to a charity you could deduct the gift. (b) you loan someone some money - tax free?? It there is a loan, and and you collect interest; you will have to declare that interest as income. The IRS will expect that you charge a reasonable rate, otherwise the interest could be considered a gift. Not sure what a reasonable rate is with savings account earning 0.1% per year. (c) you pay back the debt you owe - tax free ?? tax deductible ?? The borrower can't deduct the interest they pay, unless it is a mortgage on the main home, or a business loan. I will admit that there may be a few other narrow categories of loans that would make it deductible for the borrower. If the loan/gift is for the down payment on a house, the lender for the rest of the mortgage will want to make sure that the gift/loan nature is correctly documented. The need to fully understand the obligations of the homeowner. If it is a loan between family members the IRS may want to see the paperwork surrounding a loan, to make sure it isn't really a gift. They don't look kindly on loans that are never paid back and no interest collected. |
Car expense deductions with multiple work locations | Suppose that I work from home, but do not qualify for a business use of home deduction. As I understand it, this means I cannot deduct trips from home to another work location (e.g., going to a client's home or office to do work there). I do not think this is true. You cannot deduct trips to your main business location, i.e.: you cannot deduct trips to your office or client's location if this is your main client and you routinely work on-site. However, if you only visit your clients on occasion for specific events while doing your routine work at home - you can definitely deduct those trips. The deduction of the home usage itself has nothing to do with it. However, there's a different reason they refer to pub 587. Your home must qualify as principal place of business (even if it doesn't qualify for deduction). The qualifications of "principal place of business" are described in pub 587. "if for some personal reason you do not go directly from one location to the other, you cannot deduct more than the amount it would have cost you to go directly from the first location to the second." What is not clear to me is what exactly is deductible if there are significant time gaps (within a single day) between trips to different clients. You got it right. What this quote means is that if you have client A and client B, and you drive from A to B - you can only deduct the travel between A and B, nothing else. I.e.: if you have 2 hours to kill and you take a trip to the mall - you cannot deduct the mileage attributable to that trip. You only deduct the actual distance between A and B as it would be had you driven from A to B directly. The example you cite re first client being considered as the place of business is for the case where your home doesn't qualify as principal place of business. In this case you start counting miles from your first client, and only for direct trips from client to client. If you only have 1 client in that day, tough luck, nothing to deduct. Also, it's not clear whether stopoffs between clients would really be "personal reasons", since the appointment times are often set by the client, so it's not as if the delay between A and B was just because I felt like it; there was never the option of going directly from A to B. That's what is called "facts and circumstances". You can argue that you had enough time between meetings to go back to your home office to continue working. The IRS agent auditing you (and you're likely to get audited) will consider that. Maybe will accept it. Maybe not. If I had a gap like that described above, I could save on my taxes by going to the park or a hamburger stand instead of going home between A and B But then you wouldn't be at home, so why would it be "principal place of business" if you're not there? Boom, lost deduction for the trip to the first client. I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State). You're dealing with deductions that are considered "red flags" for the IRS. I.e.: many people believe that these deductions (business use of your home/car) trigger audits. To substantiate business use of your car you need to keep very good track of your travels (literally travel log, they sell them at Staples), and make sure to distinguish between personal travel and business travel, keep proofs that the meetings took place (although keeping a log is a requirement, it can be backdated/faked, so if audited - the IRS will want to see more than your own documentation). A good tax adviser will educate you on all these rules, and also clarify the complexities you were asking about here. I'm not a tax adviser, so don't rely on this answer when you're preparing your tax return or responding to the IRS audit. In your edit you ask this: Specifically, what I'm wondering is whether it is possible for a home to qualify as a "principal place of business" for purposes of deducting car expenses but not for the home office deduction. The answer is yes. Deductibility is determined by exclusivity of use, among other things. But the fact that you manage your business from your kitchen doesn't make your kitchen any less of a principal place of business. It is non-deductible because you also cook your dinners there, but it is still, nonetheless, your principal place of business. The Pub 587 which I linked to has these qualifications: Your home office will qualify as your principal place of business if you meet the following requirements. You use it exclusively and regularly for administrative or management activities of your trade or business. You have no other fixed location where you conduct substantial administrative or management activities of your trade or business. As you see, exclusivity of the usage of your home area is not a requirement here. The "exclusively and regularly" in the quote refers to your business not using any other location, and managing it from home regularly. I.e.: if you manage your business a day in a year - that's not enough for it to be considered principal. If you manage your business from your office and your home - you cannot consider home as principal. |
Why do 10 year Treasury bond yields affect mortgage interest rates? | Different bonds (and securitized mortgages are bonds) that have similar average lives tend to have similar yields (or at least trade at predictable yield spreads from one another). So, why does a 30 year mortgage not trade in lock-step with 30-year Treasuries? First a little introduction: Mortgages are pooled together into bundles and securitized by the Federal Agencies: Fannie Mae, Freddie Mac, and Ginnie Mae. Investors make assumptions about the prepayments expected for the mortgages in those pools. As explained below: those assumptions show that mortgages tend to have an average life similar to 10-year Treasury Notes. 100% PSA, a so-called average rate of prepayment, means that the prepayment increases linearly from 0% to 6% over the first 30 months of the mortgage. After the first 30 months, mortgages are assumed to prepay at 6% per year. This assumption comes from the fact that people are relatively unlikely to prepay their mortgage in the first 2 1/2 years of the mortgage's life. See the graph below. The faster the repayments the shorter the average life of the mortgage. With 150% PSA a mortgage has an average life of nine years. On average your investment will be returned within 9 years. Some of it will be returned earlier, and some of it later. This return of interest and principal is shown in the graph below: The typical investor in a mortgage receives 100% of this investment back within approximately 10 years, therefore mortgages trade in step with 10 year Treasury Notes. Average life is defined here: The length of time the principal of a debt issue is expected to be outstanding. Average life is an average period before a debt is repaid through amortization or sinking fund payments. To calculate the average life, multiply the date of each payment (expressed as a fraction of years or months) by the percentage of total principal that has been paid by that date, summing the results and dividing by the total issue size. |
If a country can just print money, is global debt between countries real? | Debt can be denominated either in a currency the country controls or a currency the country doesn't control. If the debt is denominated in a currency the country controls then they have the option of "printing their way out of it". That option doesn't come for free, it will devalue their currency on the global market and hurt savers in their country but it is an option. If the debt is denominated in a currency the country does not control then they don't have that option. As I understand it the US debt is in the first category. It's denominated in US dollars so the US government could if they so wished print their way out of it. On the other hand greece's debt is denominated in euros putting them at the mercy of european bankers. |
Teaching school kids about money - what are the real life examples of math, budgeting, finance? | If these are children that may be employed, in a few years, it may well be worth walking them through some basics of the deductions around employment, some basic taxes, uses of banks, and give them enough of a basis in how the economy of the world works. For example, if you get a job and get paid $10/hour, that may sound good but how much do various things eat at that so your take-home pay may be much lower? While this does presume that the kids will get jobs somewhere along the way and have to deal with this, it is worth making this part of the education system on some level rather than shocking them otherwise. Rather than focusing on calculations, I'd be more tempted to consider various scenarios like how do you use a bank, what makes insurance worth having(Life, health, car, and any others may be worth teaching on some level), and how does the government and taxes fit into things. While I may be swinging more for the practical, it is worth considering if these kids will be away in college or university in a few years, how will they handle being away from the parents that may supply the money to meet all the financial needs? |
Is it true that the price of diamonds is based on a monopoly? | De Beers is the company most cited as the near monopoly. They used to own a massive chunk of the diamond supply and intentionally restricted that supply to increase the price. In recent decades, new sources of diamonds have reduced the De Beers' singular grip. They still have a large share though. Video about this from Adam Ruins Everything: https://www.youtube.com/watch?v=N5kWu1ifBGU it turns out this ancient tradition [of giving diamonds rings for engagements] was invented less than a century ago by the De Beers Diamond Corporation... in 1938, the De Beers Diamond cartel launched a massive ad campaign, claiming that the only way for a real man to show his love is with an expensive hunk of crystallized carbon, and we bought that shit. It continues The only reason diamonds are even expensive is that De Beers has a global monopoly on diamond mining and they artificially restrict the supply, to jack the prices up. Because of this artificial supply restriction, the resale value of diamonds are quite low. |
When paying estimated quarterly taxes, can I prorate the amount based on the irregular payment due dates? | Varying the amount to reflect income during the quarter is entirely legitimate -- consider someone like a salesman whose income is partly driven by commissions, and who therefore can't predict the total. The payments are quarterly precisely so you can base them on actual results. Having said that, I suspect that as long as you show Good Intent they won't quibble if your estimate is off by a few percent. And they'll never complain if you overpay. So it may not be worth the effort to change the payment amount for that last quarter unless the income is very different. |
At what age should I start or stop saving money? | As AskAboutGadgets notes, there's no lower age limit. You current age (24) is a pretty good one; you'll have four decades or so for your money to grow and compound, allowing it to become a veritable fortune when you're ready to retire if you invest it fairly aggressively. |
One company asks for picture of my debit card | Believe it or not, what they're asking you is not as unusual as you might think. Our company sells a tremendous amount of expensive merchandise over the Internet, and whenever there's something odd or suspicious about the transaction, we may ask the customer to provide a picture of the card simply to prove they have physical possession of it. This is more reassurance to us (to the extent that's possible) that the customer isn't using a stolen card number to order stuff. It doesn't help too much, but if the charge is disputed, at least we have something to show we made reasonable efforts to verify the ownership of the card. I think it's pretty thin, but that's what my employer does. |
Can I send a money order from USPS as a business? | Sure you can. You can fill in whatever you want in the From section of a money order, so your business name and address would be fine. The price only includes the money order itself. You can hand deliver it yourself if you want, but if you want to mail it, you'll have to provide an envelope and a stamp. Note that, since you won't have a bank record of this payment, you'll want to make sure you keep other records, such as the stub of the money order. You should probably also ask the contractor to give you a receipt. |
Merits of buying apartment houses and renting them | I’m not an expert on the VISA/US tax or insurance, but you're making enough mistakes in terms of all the associated costs involved in owning and renting houses/apartments that this already looks potentially unwise at this stage of your investment career. Renting cheap properties/to students involves the property constantly being trashed, often being empty and requiring extremely close management (which you either have to pay someone a lot to do, or do yourself and lose other potential earning time. If doing yourself you will also make lots of mistakes in the vetting/managing/marketing process etc at first as this is a complex art in itself). Costs on this type of rental can often get as high as 25% a year depending exactly how lucky you get even if you do it all yourself, and will typically be in the 5-15% range every year once everything you have to constantly maintain, replace and redecorate is totalled up. That's all pre what you could be earning in a job etc, so if you could earn a decent clip elsewhere in the same time also have to deduct that lost potential. Send it all to third parties (so all upkeep by hired contractors, all renting by an agency) you will be lucky to even break even off ~15k a year per property rents to students. You’re not seeming to price in any transaction costs, which usually run at ~5% a time for both entrance and exit. Thats between half and one years rent gone from the ten per property on these numbers. Sell before ten is up its even more. On point three, rounding projections in house price rises to one decimal place is total gibberish – no one who actually has experience investing their own money well ever makes or relies on claims like this. No idea on Pittsburgh market but sound projections of likely asset changes is always a ranged and imprecise figure that cannot (and shouldn’t) be counted on for much. Even if it was, it’s also completely unattainable in property because you have to spend so much money on upkeep: post costs and changes in size/standard, house values generally roughly track inflation. Have a look at this chart and play around with some reasonable yearly upkeep numbers and you will see what I mean. Renting property is an absolute graveyard for inexperienced investors and if you don't know the stuff above already (and it's less than 10% of what you need to know to do this profitably vs other uses of your time), you will nearly always be better off investing the money in more passive investments like diversified bonds, REITs and Stock. |
US resident with Canadian income via T4A-NR | As per the Canada-U.S. Tax Treaty (the “Treaty”), a U.S. corporation carrying on business in Canada is only subject to taxation on income earned in Canada through a fixed place of business or permanent establishment. Therefore, if a U.S. company does not have a permanent establishment (PE) in Canada then their Canadian source business income is not subject to Canadian federal tax. https://www.fin.gc.ca/treaties-conventions/USA_-eng.asp |
Stocks and Bonds in Roth IRA vs non-tax-advantaged | You should definitely favor holding bonds in tax-advantaged accounts, because bonds are not tax-efficient. The reason is that more of their value comes in the form of regular, periodic distributions, rather than an increase in value as is the case with stocks or stock funds. With stocks, you can choose to realize all that appreciation when it is most advantageous for you from a tax perspective. Additionally, stock dividends often receive lower tax rates. For much more detail, see Tax-efficient fund placement. |
Is it worth buying real estate just to safely invest money? | The main point to consider is that your payments toward your own home replace your rent. Any house or apartment you buy will have changes in value; the value is generally going slowly up, but there is a lot of noise, and you may be in a low phase at any time, and for a long time. So seeing it as an investment is not any better than buying share or funds, and it has a much worse liquidity (= you cannot as easily make it to cash when you want to), and not in parts either. However, if you buy for example a one-room apartment for 80000 with a 2% mortgage, and pay 2% interest = 1600 plus 1% principal = 800, for a total of 2400 per year = 200 per month, you are paying less than your current rent, plus you own it after 30 years. Even if it would be worth nothing after 30 years, you made a lot of money by paying half only every month, and it probably is not worthless. You need to be careful not to compare apples with oranges - if you buy a house for 200000 instead, your payments would be higher than your rent was, but you would be living in your house, not in a room. For most people, that is worth a lot. You need to put your own value to that; if you don't care to have a lot more space and freedom, the extra value is zero; if you like it, put a price to it. With current interest rates, it is probably a good idea for most people to buy a house that they can easily afford instead of paying rent. The usual rules should be considered - don't overstretch yourself, leave some security, etc. Generally, it is rather difficult to buy an affordable house instead of renting today and not saving a lot of money in the process, so I would say go for it. |
Why do stocks split? | Stock splits are typically done to increase the liquidity of stock merely by converting every stock of the company into multiple stocks of lower face value. For example, if the initial face value of the stock was $10 and the stock got split 10:1, the new face value of the stock would be $1 each. This has a proportional effect on the market value of the stock also. If the stock was trading at $50, after the split the stock should ideally adjust to $5. This is to ensure that despite the stock split, the market capitalization of the company should remain the same. Number of Shares * Stock Price = Market Capitalization = CONSTANT |
Are Forex traders forced to use leverage? | I recommended Currency Trading For Dummies, in my answer to Layman's guide to getting started with Forex (foreign exchange trading)? The nature of the contract size points toward only putting up a fraction of the value. The Euro FX contract size is 125,000 Euro. If you wish to send the broker US$125K+ to trade this contract, go ahead. Most people trade it with a few thousand dollars. |
How to resolve imbalances and orphan transactions in Gnucash? | I have been following some of these threads. Some of them are really old. I have read used recording to equity accounts to resolve the imbalance USD issue. The thing I noticed is that all my imbalances occur when paying bills. I took all the bills and set them up as vendor accounts, entered the bills in the new bills, and used the process payment when paying bills. The imbalance issue stopped. It makes sense. The system is a double entry. That's it will credit and debit. Assets accounts are increased with a debit and decreased with a credit. Equity accounts are increased with a credit and decreased with a debit. ie; Say you have an monthly insurance bill for $100. You enter it into the new vendor bill. This credits Accounts Payable. When paying the bill it credits checking, debits account payable, credits vendor account, debits the expense insurance. In short for each credit there has to be a debit for the books to balance. When there is no account for it to record to it will record in Imbalance USD to balance the books. |
What is the best way to help my dad consolidate his credit card debt at a lower rate? | Are you doing the right thing? Yes, paying back some of the expense of college is a great way to show your gratitude. Could your sister also pitch in a little to help pay the debt down? Will you get approved for a $30,000 unsecured loan? You don't mention your credit rating but that will have an effect obviously. You might consider visiting a credit union with your father and co-signing a loan since it is his debt that you are assuming. You might still want to write a loan for your dad to sign even if he isn't co-signed on a loan. This could protect you in case of his death if there are other assets to divide. If you are not approved for a loan, you could also simply join your dad in paying down the highest-rate cards first and have a loan agreement for him to pay back that money if/when it is possible. You've mentioned that you have no collateral. There aren't many options for loans with no collateral. Your dad's bank or a credit union might consider a debt consolidation loan with you as a co-signer. That's why I mentioned going to a credit union. Talking to a loan officer at a local financial institution will make it easier to get approved. If they see that you are taking responsible steps to pay off the debt, that reduces your credit risk. If you do get a debt consolidation loan, they will probably ask your dad to close some credit card accounts. |
What's the purpose of having separate checking and savings accounts? | Additionally, it used to be the case that savings accounts would have a noticeably higher interest than checking accounts (if the checking account paid any at all). So you would attempt to maximize your cash working for you by putting as much as you could into the savings account and then only transferring out what you needed to cover bills, etc into the checking account. |
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