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Is there a Yahoo Finance ticker for NYMEX Crude Oil Front Month? | Yahoo Finance has this now, the ticker is CL=F. |
Paying taxes on income earned in the US, but from a company based in Norway | I don't see why you would need an "international tax specialist". You need a tax specialist to give you a consultation and training on your situation, but it doesn't seem too complicated to me. You invoice your client and get paid - you're a 1099 contractor. They should issue you a 1099 at the end of the year on everything they paid you. Once you become full-time employee - you become a W2 employee and will get a W2 at the end of the year on the amounts paid as such. From your perspective there's nothing international here, regular business. You have to pay your own taxes on the 1099 income (including SE taxes), they have to withhold taxes from your W2 income (including FICA). Since they're foreign employers, they might not do that latter part, and you'll have to deal with that on your tax return, any decent EA/CPA will be able to accommodate you with that. For the employer there's an issue of international taxation. They might have to register as a foreign business in your state, they might be liable for some payroll taxes and State taxes, etc etc. They might not be aware of all that. They might also be liable (or exempt) for Federal taxes, depending on the treaty provisions. But that's their problem. Your only concern is whether they're going to issue you a proper W2 and do all the withholdings or not when the time comes. |
Can a Roth IRA be used as a savings account? | (To be clear, IRA accounts are just wrappers, and can contain a large variety of investments. I'm restricting myself to the usual setup of investment in the stock market.) So, let's say you have $5000 in savings, as an emergency fund. Of the top of my head, putting some of it into a Roth IRA could backfire in the following ways: The basic principle here is that the stock market is not a good place for storing your emergency cash, which needs to be secured against loss and immediately accessible. Once you're happy with your level of emergency cash, however, tax-advantaged investment accounts are a reasonable next step. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | I wouldn't advocate it, but one reason to pay a lower interest rate is if you have $990 on a $1000 limit credit card with 6% interest and $5000 on a $15k limit card at 10% interest. Having $500 to pay in a month and putting it on the lower interest would free up a greater percentage of credit on that card and could potentially help your credit rating I believe. I think having $1000 on 10 different credit cards w/ $15k limit reflects better than $10k on one $15k card, regardless of interest rates. Personally I think that's dumb b/c having the extra credit available is an opportunity to get into trouble a lot easier. |
Understanding SEC Filings | The most important filings are: Form 10-K, which is the annual report required by the U.S. Securities and Exchange Commission (SEC) and Form 10-Q, for the interim quarters. |
Any Tips on How to Get the Highest Returns Within 4 Months by Investing in Stocks? | What you're asking for is a short-term, large return investment. When looking for big returns in a short period of time, risk is inevitable. The more risk you are willing to assume, the higher your potential returns. Of course, the flip is is that the higher your risk, the higher the potential to lose all your money! Since this is an exercise for school (and not real money and not your life savings) your best bet is to "go big or go home". You can safely assume 100% risk! Don't look for value stocks, dividend stocks, or anything that pays a steady return over a long period of time. Instead, look for something risky that has the potential of going up, up, up in the next few months. Are you allowed to trade options in your fake portfolio? Options can have big risk and big reward potential. Penny stocks are super volatile, too. Do some research, look for a fad. In other words, you will most likely lose it all. But you get a little lucky, you could win this thing outright by making some risky investments. A 5% chance of winning $3000 vs 95% of going broke may be pretty good odds if everyone else is value investing for just a few months. You will need to get lucky. Go big or go home! |
Are there any caveats to withdrawing funds from brokerage? | nan |
1.4 million cash. What do I do? | For now, park it in a mix of cash and short term bond funds like the Vanguard Short Term Investment Grade fund. The short term fund will help with the inflation issue. Make sure the cash positions are FDIC insured. Then either educate yourself about investing or start interviewing potential advisors. Look for referrals, and stay away from people peddling annuities or people who will not fully disclose how they get paid. Your goal should be to have a long-term plan within 6-12 months. |
Should I exclude bonds from our retirement investment portfolio if our time horizon is still long enough? | This is always a judgement call based on your own tolerance for risk. Yes, you have a fairly long time horizon and that does mean you can accept more risk/more volatility than someone closer to starting to draw upon those savings, but you're old enough and have enough existing savings that you want to start thinking about reducing the risk a notch. So most folks in your position would not put 100% in stocks, though exactly how much should be moved to bonds is debatable. One traditional rule of thumb for a moderately conservative position is to subtract your age from 100 and keep that percentage of your investments in stock. Websearch for "stock bond age" will find lots of debate about whether and how to modify this rule. I have gone more aggressive myself, and haven't demonstrably hurt myself, but "past results are no guarantee of future performance". A paid financial planning advisor can interview you about your risk tolerance, run some computer models, and recommend a strategy, with some estimate of expected performance and volatility. If you are looking for a semi-rational approach, that may be worth considering, at least as a starting point. |
When buying a call option, is the financial stability of the option writer relevant? | Exchange traded options are issued in a way that there is no counter party risk. Consider, stocks and options are held in street name. So, for example, if I am short and you are long shares, no matter what happens on my end, your shares are yours. To be complete, it's possible to enter into a direct deal, where you have a contract for some non-standard option, but that would be very rare for the average investor. |
Effect of country default on house prices? | It could be a a way to preserve the value of your money, but depends upon various factors. If a country defaults, and it leads to hyper-inflation, by definition that means that money loses its purchasing power. In even simpler terms, it cannot buy as much tomorrow as I could today. Therefore people can be incented to either hoard physical goods, or other non-perishable items. Real-estate may well be such an item. If you are resident in the country, you have to live somewhere. It is possible that a landlord might try to raise rent beyond what your job is willing to pay. Of course, in a house, you might have a similar situation with utilities like electricity... Assuming some kind of re-stabilization of the economy and currency, even with several more zeros on the end, it is conceivable that the house would subsequently sell for an appropriately inflation adjusted amount, as other in-demand physical goods may. Lots of variables. Good Luck. |
How do I adjust to a new social class? | I live in one of the highest cost of living areas in my country. For the cost of less than half the down payment my spouse and I have saved up for a house we could easily buy a home in most of the lower cost of living areas (and several homes in, say, Detroit). As for the rest of your question, though, we've chosen not to live that way. Because, like all high cost of living areas, ours is near a city there are more free and inexpensive things to do than you would think at first. While others in our area think a great time is pre-gaming drinks at a nice bar, an expensive restaurant, then some more drinks we've taught ourselves how to make great meals from scratch using sale and inexpensive ingredients from the grocery store and often do that on weekends, topped off by a movie from the redbox that we promptly return the next day. We have chosen friends who will hang out with us over potluck dinners and board games instead of out on the town. On weekend days we visit free museums, do hikes, wander around revitalized downtown strips, or play at the local parks. Our groceries, as I mentioned, are sale items or use coupons and we go for less expensive meats and produce. We visit our local farmer's market for fun, not to buy the expensive produce. We might find ourselves wandering through the mall to window shop, but when it comes time to actually buy clothing or goods for the apartment we shop around for up to months to find a good deal. Plenty of our friends have money enough to spend, and the most debt they are usually wallowing in is a big car payment, no consumer debt. At the same time I have trouble imagining some of them buying a house any time soon, because they simply can't be saving all that much (since I know their incomes). They may eventually be able to afford a condo and ride rising housing prices to a townhome and then a house - it's what lots of people do around here, loosing buckets money in realtor fees and closing costs along the way. Even with these choices, it's hard to view my friends as selfish knowing that most of them give around 10% of their income to charity. There are probably plenty of people around here swimming in debt (somebody recently asked in a Q&A with the local paper editors how she could stop going to the city's most expensive restaurants and start living within her means when she only liked expensive places), but lots of folks can stretch themselves and afford to get by while wasting a lot of money. It's not what my spouse and I have chosen to do, because we want to be able to live very responsibly and plan for a rainy day, but the longer you live with and around the money that tends to permeate high cost of living areas, the more it will seem normal to you. Also, if it's really $1000/mo for a 2 br. apartment, your cost of living is still lower than mine is. If I were you I wouldn't try to acclimate myself to the spendy habits of your surroundings. Instead I'd find friends who are frugal and work on maintaining your good financial habits. If you ever want one of those $4, $5, or $6K (plus!) houses, you're going to need them. |
Is this mortgage advice good, or is it hooey? | That makes no sense at all. They try to compare and that's exactly the same as comparing apples versus oranges. Mortgage is long-term loan, so for the first many years the huge part of the payment will go to repaying interest, so that ratio 1 will indeed be something like 20% or more despite the fact that the interest rate on the mortgage is much lower - something around 6%. HELOC will have the interest rate of 6%, but it will have the same structure so that you have equal payments, so if you compute that ratio 1 it will be very close to that of the mortgage. The bottom line is - if HELOCs were that great noone would apply for mortgages. You should stick to making extra payments towards the principal on the mortgage. |
Is the contribution towards Employment Insurance (EI) wasted if I never get fired, or are my premiums refunded? | Actually, most insurance policies DON'T have a cash value if you don't make a claim. The reason that some life insurance policies do this is that they are really tax sheltered investments posing as insurance. With that in mind, the root of your question is really whether insurance premiums are wasted if you never make a claim. It really makes no difference if you are talking about EI, Auto, or Homeowner's insurance. My answer to that is no. What you are paying for when you buy insurance is financial risk avoidance. Look at it this way, you don't buy EI as an investment where you hope to get a return on your investment. You are buying the right to be protected against catastrophic financial difficulty associated with losing your job. Whether you claim it or not you did receive that protection. This is what drives me so crazy when I hear people talk about how an insurance company is ripping you off because you paid more in premiums than they paid out in benefits. Of course you did! If most people didn't pay in more than the company paid out there would be no financial interest for someone to form an insurance company. |
How to avoid getting back into debt? | I'm going to subtly and cheekily change the obvious advice. There are three ways to deal with negative cashflow, not two: You're currently studying for a degree. You don't say what country you're in or how your studies are funded, but most people in the US, UK, and a fair number of other countries, run up debts while studying for a degree. They do this because a degree is valuable to them. They can't avoid it because the tuition alone costs more than most students can generate in income, never mind their living expenses. So by all means look for savings, (1). Clearly strangers on the internet can't just think up ways for you to spend less money without knowing anything about what you do spend money on. But you can at least list your expenditures for yourself, and see what's necessary. Consider also how much fun you want your studies to be: 4 years in a cold house to avoid paying for heating, and never going out with friends to avoid spending on unnecessary stuff is all very well. But with hindsight you'll regret torturing yourself if you're ever well-off enough to pay back whatever you would have borrowed to use for heating and fun. Only do (2) if it doesn't affect your studies or if the money you're paid justifies delaying the valuable asset you seek to acquire (a degree, leading perhaps to a better job but at least to the capacity to do a full-time job rather than fitting work around your studies). There are some jobs that are really good fits for students (reasonably low hours that don't clash with classes) and some jobs that are terrible. If these fail, resort to (3). I don't mean dishonest book-keeping, I mean accept that you are going to borrow money in order to pay for something of value that you can account as an asset. Work out now what you'll need to borrow and how you think you can pay it back, make sure the sum is worth it, budget for that, stick to your budget. You'll still have negative cashflow, nothing changes there, but your capital account looks fine. Personally I wouldn't actually put a monetary value on the degree, I'm not that bothered about the accounts and it's really difficult to be accurate about it. You can just consider it, "more than I expect to borrow" and be done with it. Studying costs money. Once you've graduated, you probably aren't going to be back here saying, "I want to buy a house but I have no capital and I don't want to go into debt". Are you? ;-) Although if you are, the answer happens to be "Islamic mortgage"! I don't know whether Islamic banks have an equivalent answer for student debt, since they can't own a share of your degree like they can a share of your home. Unless you're a Muslim, presumably the ways that Islamic finance avoids interest payments would not in any case satisfy your desire to be "not in debt". |
As an investor what are side effects of Quantitative Easing in US and in EU? | Quantitative Easing Explained: http://www.npr.org/blogs/money/2010/10/07/130408926/quantitative-easing-explained The short of it is that you're right; the Fed (or another country's Central Bank) is basically creating a large amount of new money, which it then injects into the economy by buying government and institutional debt. This is, in fact, one of the main jobs of the central bank for a currency; to manage the money supply, which in most fiat systems involves slowly increasing the amount of money to keep the economy growing (if there isn't enough money moving around in the economy it's reflected in a slowdown in GDP growth), while controlling inflation (the devaluation of a unit of currency with respect to most or all things that unit will buy including other currencies). Inflation's primary cause is defined quite simply as "too many dollars chasing too few goods". When demand is low for cash (because you have a lot of it) while demand for goods is high, the suppliers of those goods will increase their price for the goods (because people are willing to pay that higher price) and will also produce more. With quantitative easing, the central bank is increasing the money supply by several percentage points of GDP, much higher than is normally needed. This normally would cause the two things you mentioned: Inflation - inflation's primary cause is "too many dollars chasing too few goods"; when money is easy to get and various types of goods and services are not, people "bid up" the price on these things to get them (this usually happens when sellers see high demand for a product and increase the price to take advantage and to prevent a shortage). This often happens across the board in a situation like this, but there are certain key drivers that can cause other prices to increase (things like the price of oil, which affects transportation costs and thus the price to have anything shipped anywhere, whether it be the raw materials you need or the finished product you're selling). With the injection of so much money into the economy, rampant inflation would normally be the result. However, there are other variables at play in this particular situation. Chief among them is that no matter how much cash is in the economy, most of it is being sat on, in the form of cash or other "safe havens" like durable commodities (gold) and T-debt. So, most of the money the Fed is injecting into the economy is not chasing goods; it's repaying debt, replenishing savings and generally being hoarded by consumers and institutions as a hedge against the poor economy. In addition, despite how many dollars are in the economy right now, those dollars are in high demand all around the world to buy Treasury debt (one of the biggest safe havens in the global market right now, so much so that buying T-debt is considered "saving"). This is why the yields on Treasury bonds and notes are at historic lows; it's bad everywhere, and U.S. Government debt is one of the surest things in the world market, especially now that Euro-bonds have become suspect. Currency Devaluation - This is basically specialized inflation; when there are more dollars in the market than people want to have in order to use to buy our goods and services, demand for our currency (the medium of trade for our goods and services) drops, and it takes fewer Euros, Yen or Yuan to buy a dollar. This can happen even if demand for our dollars inside our own borders is high, and is generally a function of our trade situation; if we're buying more from other countries than they are from us, then our dollars are flooding the currency exchange markets and thus become cheaper because they're easy to get. Again, there are other variables at play here that keep our currency strong. First off, again, it's bad everywhere; nobody's buying anything from anyone (relatively speaking) and so the relative trade deficits aren't moving much. In addition, devaluation without inflation is self-stablizing; if currency devalues but inflation is low, the cheaper currency makes the things that currency can buy cheaper, which encourages people to buy them. At the same time, the more expensive foreign currency increases the cost in dollars of foreign-made goods. All of this can be beneficial from a money policy standpoint; devaluation makes American goods cheaper to Americans and to foreign consumers alike than foreign goods, and so a policy that puts downward pressure on the dollar but doesn't make inflation a risk can help American manufacturing and other producer businesses. China knows this just as well as we do, and for decades has been artificially fixing the exchange rate of the Renmin B (Yuan) lower than its true value against the dollar, meaning that no matter how cheap American goods get on the world market, Chinese goods are still cheaper, because by definition the Yuan has greater purchasing power for the same cost in dollars. In addition, dollars aren't only used to buy American-made goods and services. The U.S. has positioned its currency over the years to be an international medium of trade for several key commodities (like oil), and the primary currency for global lenders like the IMF and the World Bank. That means that dollars become necessary to buy these things, and are received from and must be repaid to these institutions, and thus the dollar has a built-in demand pretty much regardless of our trade deficits. On top of all that, a lot of countries base their own currencies on our dollar, by basically buying dollars (using other valuable media like gold or oil) and then holding that cash in their own central banks as the store of value backing their own paper money. This is called a "dollar board". Their money becomes worth a particular fraction of a dollar by definition, and that relationship is very precisely controllable; with 10 billion dollars in the vault, and 20 billion Kabukis issued from Kabukistan's central bank, a Kabuki is worth $.50. Print an additional 20 billion Kabuki and the value of one Kabuki decreases to $.25; buy an additional 10 billion dollars and the Kabuki's value increases again to $.50. Quite a few countries do this, mostly in South America, again creating a built-in demand for U.S. dollars and also tying the U.S. dollar to the value of the exports of that country. If Kabukistan's goods become highly demanded by Europe, and its currency increases relative to the dollar, then the U.S. dollar gets a boost because by definition it is worth an exact, fixed number of Kabukis (and also because a country with a dollar board typically has no problem accepting dollars as payment and then printing Kabukis to maintain the exchange rate) |
Is it unreasonable to double your investment year over year? | Not at all impossible. What you need is Fundamental Analysis and Relationship with your investment. If you are just buying shares - not sure you can have those. I will provide examples from my personal experience: My mother has barely high school education. When she saw house and land prices in Bulgaria, she thought it's impossibly cheap. We lived on rent in Israel, our horrible apartment was worth $1M and it was horrible. We could never imagine buying it because we were middle class at best. My mother insisted that we all sell whatever we have and buy land and houses in Bulgaria. One house, for example, went from $20k to EUR150k between 2001 and 2007. But we knew Bulgaria, we knew how to buy, we knew lawyers, we knew builders. The company I currently work for. When I joined, share prices were around 240 (2006). They are now (2015) at 1500. I didn't buy because I was repaying mortgage (at 5%). I am very sorry I didn't. Everybody knew 240 is not a real share price for our company - an established (+30 years) software company with piles of cash. We were not a hot startup, outsiders didn't invest. Many developers and finance people WHO WORK IN THE COMPANY made a fortune. Again: relationship, knowledge! I bought a house in the UK in 2012 - everyone knew house prices were about to go up. I was lucky I had a friend who was a surveyor, he told me: "buy now or lose money". I bought a little house for 200k, it is now worth 260k. Not double, but pretty good money! My point is: take your investment personally. Don't just dump money into something. Once you are an insider, your risk will be almost mitigated and you could buy where you see an opportunity and sell when you feel you are near the maximal real worth of your investment. It's not hard to analyse, it's hard to make a commitment. |
Is my stock gone forever from a reverse split / bought by another company? | You can't own fractional shares. If the Reverse Split resulted in you having less a full share (for example, if you had 500 shares, and they did a 1000:1 reverse split), your fractional share was cashed in (sold). That could be that 'money market' activity shown on the next day? It is your responsibility to be prepared for a reverse split, by either selling at your desired price, or buying more shares, so you end with an integer number of shares after the reverse split. |
Putting borrowed money into an SIPP | If it were possible to take a loan out for a SIPP investment in the future .. I would suggest having an equivalent invested amount already in an ISA .. simply to cover you in the event of a job loss including additional cash in a deposit account. Secondly .. to increase your chances of success with this strategy I would also suggest doing this when the odds are more in your favour during the bottoming out cycle of a market crash. Thirdly .. it depends on how knowledgeable you are about investment , I would suggest being invested globally & in many different sectors to take advantage of various price movements. |
In US, is it a good idea to hire a tax consultant for doing taxes? | Whether you do decide to go with a tax advisor or not, be sure to do some research on your own. When we moved to the US about 5 years ago, I did find the taxes here pretty complicated and confusing. I went ahead and read up all different tax documents and did some calculations of my own before hiring a CPA (at that point, I just wanted a second opinion to make sure I got the calculations right). However, when the office of the CPA was finished with my taxes, I found they had made a mistake! When I went back to their office to point it out, the lady just shrugged, corrected her numbers on the form and said "You seem to know a lot about this stuff already. Why are you here?" I swore to never use them again - not this particular CPA at least. Now, I am not saying all CPAs are the same - some of them are pretty darn good at their job and know what they are doing. All I am saying is it helps to be prepared and know some basic stuff. Just don't go in all blind. After all, they are also humans prone to mistakes and your taxes are your liability in the end. My suggestion is to start with a good tool that supports tax filing for non-residents. Most of them provide a step-by-step QA based tool. As you go through the steps, Google each question you don't understand. It may take more time than hiring a tax advisor directly but in the end it will all be worth it. |
As a total beginner, how do I begin to understand finance & stocks? | Let me first give you my definitions of the words 'investor' and 'speculator'. To me, anyone looking to 'buy low, sell high' is a speculator. Only 'buy and hold' people are investors. The news agencies love to report on changes in the price of a stock. This gives them something to talk about. So speculation is encouraged by the news media. What investors care about is dividends. In my opinion whatwhat news agencies should report on are changes to the dividend provided by a security. I used to be a speculator, but now that I am retired I am an investor. |
Does the IRS give some help or leniency to first-time taxpayers? | It might not be leniency for first time payers, but they do have programs, some federal some local, that help the poor and elderly complete their tax forms. There are also programs that allow the poor to file electronically for free. For most people the first time they file their taxes they are using the EZ form. Which is rather easy to do, even without the use of either web based or PC based software. The software tools all ask enough questions on the EZ forms to allow the user to know with confidence when their life choices have made it advantageous to use the more complex forms. The web versions of the software allow the taxpayer to start for free, thus reducing their initial investment for the software to zero. Because the first time filer is frequently a teenager the parents are generally responsible for proving that initial guidance. The biggest risk for a young taxpayer might be that the first year that itemizing deductions might be advantageous. They might never consider it, so they over pay. Or they discover in April that if they had only kept a receipt from a charity six months ago they could deduct the donation, so they are tempted to claim the donation without proof. Regarding leniency and assistance there is an interesting tax credit. The Earned Income Tax Credit. it gives a Tax credit to the working poor. They alert people that they need to Check Your Eligibility for the Earned Income Tax Credit They know that significant numbers of taxpayers fail to claim it. EITC can be a boost for workers who earned $50,270 or less in 2012. Yet the IRS estimates that one out of five eligible taxpayers fails to claim their EITC each year. The IRS wants everyone who is eligible for the credit to get the credit that they’ve earned. The rules for getting the credit are simple, all the information needed to claim it is already on the basic tax forms, but you have to know that you need a separate form to get the credit. But instead of making the credit automatic they say: If you use IRS e-file to prepare and file your tax return, the software will guide you and not let you forget this important step. E-file does the work and figures your EITC for you! and then : With IRS Free File, you can claim EITC by using brand name tax preparation software to prepare and e-file your tax return for free. It's available exclusively at IRS.gov/freefile. Free help preparing your return to claim your EITC is also available at one of thousands of Volunteer Income Tax Assistance sites around the country. To find the volunteer site nearest to you, use the VITA locator tool on IRS.gov. But if you don't use free file you might never know about the form. Apparently it escapes 20% of the people who could claim it. |
Can a merchant charge you more in the US if you want to use a credit card? | This isn't so much a legal issue, the prohibition on giving discounts was written into the merchant agreements that most of the major credit card companies enforced on businesses that accepted their credit cards. That is, until the recent Financial Reform Bill (2010) passed Congress. It changes everything. (The logic on this is a little convoluted, so read carefully) Credit card companies can no longer prohibit merchants from requiring a minimum purchase amount to use a credit card. Meaning: That if merchants want to, they can now stop taking credit cards for a $4 latte. Credit card companies can no longer prohibit merchants from giving discounts for cash. Here is an article with a lot more detail: Financial Reform Bill Good News for Credit Card Holders Here is a link to the actual bill details and content: HR 4173 - Dodd-Frank Wall Street Reform and Consumer Protection Act Here is the relevant part: This subsection is supposed to take affect "at the end of the 12-month period beginning on the date of the enactment of the Consumer Financial Protection Act of 2010." In other words, July 21st, 2011. |
What is a subsidy? | Subsidy usually means gratuitous financial support. For example, if for whatever reason you live much below the living average paying utility services in full might be too expensive - you'll be out of money before you even think of buying food and basic clothes. Yet it's clear that once can't live in a city without utility services. So the government might have a program for subsidizing utility services for people with very low income - a person brings in proof of low income and once it is low enough government will step in and pay that person utility services in full or in part depending on actual income he proves. The same can be organized for anything government or some organization wishes to support for whatever reason. The key idea is someone gives you free money for spending on some specific purpose. |
Should I buy a home or rent in my situation? | My experience with owning a home is that its like putting down roots and can be like an anchor holding you to an area. Before considering whether you can financially own a home consider some of the other implications. Once you own it you are stuck for awhile and cannot quickly move away like you can with renting. So if a better job opportunity comes up or your employer moves you to another office across town that doubles your commute time, you'll be regretting the home purchase as it will be a barrier to moving to a more convenient location. I, along with my fiancée and two children, are being forced to move out of my parents home ASAP. Do not rush buying a home. Take your time and find what you want. I made the mistake once of buying a home thinking I could take on some DIY remodeling to correct some features I wasn't fond of. Life intervenes and finding extra time for DIY house updates doesn't come easy, especially with children. Speaking of children, consider the school district when buying a home too. Often times homes in good school districts cost more. If you don't consider the school district now, then you may be faced with a difficult decision when the kids start school. IF you are confident you won't want to move anytime soon and can find a house you like and want to jump into home ownership there are some programs that can help first time buyers, but they can require some effort on your part. FHA has a first time buyer program with a 3.5% down payment. You will need to search for a lender that offers FHA loans and work with them. FHA covers this program by charging mortgage insurance every month that's part of your house payment. Fannie Mae has the HomeReady program where first time home buyers can purchase a foreclosed home from their inventory for as little as 3% down and possibly get up to 3% from the seller to apply toward closing costs. Private mortgage insurance (PMI) is required with this program too. Their inventory of homes can be found on the https://www.homepath.com/ website. There is also NACA, which requires attending workshops and creating a detailed plan to prove you're ready for homeownership. This might be a good option if they have workshops in your area and you want to talk with someone in person. https://www.naca.com/about/ |
How are the $1 salaries that CEOs sometimes take considered legal? | Taxable fringe benefits are included in taxable wages for the purpose of FLSA. So when those executives get to use company cars or company jets that value is "wage" even if it isn't salary. |
What benefits are there to having a Pension (Retirement Account) In Ireland? | Here's an Irish government publication that should give you some background information to get you started. In a nutshell, you get tax benefits, but cannot withdraw money without penalty until you reach retirement age. |
Do I only have to pay income tax on capital gains? | On the revenue only. This amount of 10$ will be considered as interest and fully taxable. It will not be a capital gain. But why would you decide to declare it as an income? 100$ is insignificant. If you lend small amount to friends it cannot be considered a lending business. |
What's a Letter of Credit? Are funds held in my bank for the amount in question? | In a domestic setting, Letters of Credit are often used to build public works needed to support a development. So if you're bulldozing a few 3 story buildings to build a 50 story tower, the municipality will build appropriate water/sewer/gas/road infrastructure, and draw from the developer's letter of credit to fund it. The 'catch' to the developer is that these things usually aren't revokable -- once the city/town/etc starts work, the developer cannot cut-off the funding, even if the project is cancelled. A letter of credit definitely isn't a consumer financing vehicle. The closest equivalent is a "line of credit" tied to an asset like a home. |
Stability of a Broker: What if your broker goes bankrupt? Could you lose equity in your account? | Look at the link to the SIPC. I don't know exactly what you mean by "runs out of funds," but the SIPC will replace shares of stock stolen from your account, and up to $100,000 in cash. The real risk is when a shady brokers sells you shares in a stock that becomes worthless, that's when "buyer beware" kicks in. No help there. |
Why big clients want the contractor to be incorporated before giving them work | They believe that it reduces the risk that Revenue Canada will deem you to be an employee and make them pay a whole pile of tax, EI, CPP and so on that should have been paid if you had been hired as an employee. It's my recollection that the employer gets dinged for both the employee and employer share of those withholdings (and generally the employer's share is larger than yours) so they really want to prevent it. There's a Revenue Canada publication about whether you're an employee or not. There's nothing on it about being incorporated, but still employers feel more protected when their contracts are incorporated. We did work as a sole proprietorship at the very beginning, so that we could deduct our losses against employment income earned earlier in the year, before we started the business. You can find clients who will take you on. We incorporated once the losses were over with (basically we had bought the equipment and office supplies we needed to get started.) It's a simple and relatively inexpensive thing to do, and gives clients a sense of protection. It won't protect you from your own poor decisions since you'll be a director of the firm. |
How do euro hedged index funds work? | When you invest in an S&P500 index fund that is priced in USD, the only major risk you bear is the risk associated with the equity that comprises the index, since both the equities and the index fund are priced in USD. The fund in your question, however, is priced in EUR. For a fund like this to match the performance of the S&P500, which is priced in USD, as closely as possible, it needs to hedge against fluctuations in the EUR/USD exchange rate. If the fund simply converted EUR to USD then invested in an S&P500 index fund priced in USD, the EUR-priced fund may fail to match the USD-priced fund because of exchange rate fluctuations. Here is a simple example demonstrating why hedging is necessary. I assumed the current value of the USD-priced S&P500 index fund is 1,600 USD/share. The exchange rate is 1.3 USD/EUR. If you purchase one share of this index using EUR, you would pay 1230.77 EUR/share: If the S&P500 increases 10% to 1760 USD/share and the exchange rate remains unchanged, the value of the your investment in the EUR fund also increases by 10% (both sides of the equation are multiplied by 1.1): However, the currency risk comes into play when the EUR/USD exchange rate changes. Take the 10% increase in the price of the USD index occurring in tandem with an appreciation of the EUR to 1.4 USD/EUR: Although the USD-priced index gained 10%, the appreciation of the EUR means that the EUR value of your investment is almost unchanged from the first equation. For investments priced in EUR that invest in securities priced in USD, the presence of this additional currency risk mandates the use of a hedge if the indexes are going to track. The fund you linked to uses swap contracts, which I discuss in detail below, to hedge against fluctuations in the EUR/USD exchange rate. Since these derivatives aren't free, the cost of the hedge is included in the expenses of the fund and may result in differences between the S&P500 Index and the S&P 500 Euro Hedged Index. Also, it's important to realize that any time you invest in securities that are priced in a different currency than your own, you take on currency risk whether or not the investments aim to track indexes. This holds true even for securities that trade on an exchange in your local currency, like ADR's or GDR's. I wrote an answer that goes through a simple example in a similar fashion to the one above in that context, so you can read that for more information on currency risk in that context. There are several ways to investors, be they institutional or individual, can hedge against currency risk. iShares offers an ETF that tracks the S&P500 Euro Hedged Index and uses a over-the-counter currency swap contract called a month forward FX contract to hedge against the associated currency risk. In these contracts, two parties agree to swap some amount of one currency for another amount of another currency, at some time in the future. This allows both parties to effectively lock in an exchange rate for a given time period (a month in the case of the iShares ETF) and therefore protect themselves against exchange rate fluctuations in that period. There are other forms of currency swaps, equity swaps, etc. that could be used to hedge against currency risk. In general, two parties agree to swap one quantity, like a EUR cash flow, payments of a fixed interest rate, etc. for another quantity, like a USD cash flow, payments based on a floating interest rate, etc. In many cases these are over-the-counter transactions, there isn't necessarily a standardized definition. For example, if the European manager of a fund that tracks the S&P500 Euro Hedged Index is holding euros and wants to lock in an effective exchange rate of 1.4 USD/EUR (above the current exchange rate), he may find another party that is holding USD and wants to lock in the respective exchange rate of 0.71 EUR/USD. The other party could be an American fund manager that manages a USD-price fund that tracks the FTSE. By swapping USD and EUR, both parties can, at a price, lock in their desired exchange rates. I want to clear up something else in your question too. It's not correct that the "S&P 500 is completely unrelated to the Euro." Far from it. There are many cases in which the EUR/USD exchange rate and the level of the S&P500 index could be related. For example: Troublesome economic news in Europe could cause the euro to depreciate against the dollar as European investors flee to safety, e.g. invest in Treasury bills. However, this economic news could also cause US investors to feel that the global economy won't recover as soon as hoped, which could affect the S&P500. If the euro appreciated against the dollar, for whatever reason, this could increase profits for US businesses that earn part of their profits in Europe. If a US company earns 1 million EUR and the exchange rate is 1.3 USD/EUR, the company earns 1.3 million USD. If the euro appreciates against the dollar to 1.4 USD/EUR in the next quarter and the company still earns 1 million EUR, they now earn 1.4 million USD. Even without additional sales, the US company earned a higher USD profit, which is reflected on their financial statements and could increase their share price (thus affecting the S&P500). Combining examples 1 and 2, if a US company earns some of its profits in Europe and a recession hits in the EU, two things could happen simultaneously. A) The company's sales decline as European consumers scale back their spending, and B) the euro depreciates against the dollar as European investors sell euros and invest in safer securities denominated in other currencies (USD or not). The company suffers a loss in profits both from decreased sales and the depreciation of the EUR. There are many more factors that could lead to correlation between the euro and the S&P500, or more generally, the European and American economies. The balance of trade, investor and consumer confidence, exposure of banks in one region to sovereign debt in another, the spread of asset/mortgage-backed securities from US financial firms to European banks, companies, municipalities, etc. all play a role. One example of this last point comes from this article, which includes an interesting line: Among the victims of America’s subprime crisis are eight municipalities in Norway, which lost a total of $125 million through subprime mortgage-related investments. Long story short, these municipalities had mortgage-backed securities in their investment portfolios that were derived from, far down the line, subprime mortgages on US homes. I don't know the specific cities, but it really demonstrates how interconnected the world's economies are when an American family's payment on their subprime mortgage in, say, Chicago, can end up backing a derivative investment in the investment portfolio of, say, Hammerfest, Norway. |
Accounting for splits in a stock price graph | One way that is common is to show the value over time of an initial investment, say $10,000. The advantage of this is that it doesn't show stock price at all, so handles splits well. It can also take into account dividend reinvestment. Fidelity uses this for their mutual funds, as can be seen here. Another option would be to compute the stock price as if the split didn't happen. So if a stock does a 2:1 split, you show double the actual price starting at that point. |
Should I Pay Off my Student Loan Debts First or Invest in an Index Fund? | You are on the right track with your math, but be wary of your assumptions. If you can borrow money at x% (and can afford to make payments on the debt), and you can get a return of > x% from investing, then you would make more money by keeping the debt and investing your savings. Another way to think of it: by paying off the debt you are getting a guaranteed 5% return because that's the rate you'd have paid if you kept the debt. Be wary of your assumption of getting a 10% return in the S&P 500. Nothing is guaranteed, even over the long term. Actual results may well be less, and you could lose money. It doesn't have to be all-or-nothing: why not pay off the higher rate debt at 5% and keep the 3% debt? That's a guaranteed 5% return by paying off the NSLSC loan. And 3% is a pretty low interest rate. If you can afford to make the payments, I see nothing wrong with investing your savings instead of paying off the loan. Make sure you have an emergency fund, too. |
Can housing prices rise faster than incomes in the long run? | In a strictly mathematical sense, no. Or rather, it depends what 'long run' means. Say today the home average is $200K, and payment is $900/mo. The $900 today happens to be about 20% of the median US monthly income (which is approximately $54,000/yr). Housing rises 4%/yr, income 3%/yr. In 100 years (long enough?) the house costs $10M but incomes are 'only' $1.03M/yr, and the mortgage, even at the same rate is $45K/month, or, to be clear, it rose to 52% of monthly income. My observation is that, long term, the median home costs what 25% of median income will support, in terms of the mortgage after downpayment. Long term. That means that if you graph this, you'll see trends above and below the long term line. You'll see a 25 year bubble form starting in the late 80's as rates dropped from near 18% to the Sub-4% in the early 00s. But once you normalize it to percent of income to pay the loan, much of the bubble is flattened out. At 18%, $1500/mo bought you a $100K mortgage, but at 3.5%, it bought $335K. This is in absolute dollars, wages also rose during that time. I am just clarifying how rates distort the long term trends and create the short term anomalies. |
To pay off a student loan, should I save up a lump sum payoff payment or pay extra each month? | If the savings rate is the same as the loan rate, mathematically it doesn't make any difference whether you pay down the loan more and save less or vice versa. However, if the loan rate is higher than the savings rate it's better to pay it down as fast as possible. The chart below compares paying down the loan and saving equally (the gradual scenario), versus paying down the loan quickly at 2 x $193 and then saving 2 x $193. The savings rate, for illustration, is 2%. Paying quickly pays down the loan completely by month 51. On the other hand, in the gradual scheme the loan can't be paid down (with the savings) until month 54, which then leaves 3 months less for saving. In conclusion, it's better to pay down the higher rate loan first. Practically speaking, it may be useful to have some savings available. |
Why do only a handful of Canadian companies have options trading on their stocks? | Corporations are removed from the options markets. They can neither permit nor forbid others from trading them, local laws notwithstanding. No national options market is as prolific as the US's. In fact, most countries don't even have options trading. Some won't even allow options but rather option-like derivatives. Finance in Canada is much more tightly regulated than the US. This primer on Canadian option eligibility shows how much. While US eligibility is also stringent, the quotas are far less restrictive, so a highly liquid small company can also be included where it would be excluded in Canada for failing the top 25% rule. |
Why don't banks print their own paper money / bank notes? | Are you talking about printing up more of the same kind of bill, or printing up a different kind of bill? You'll have different answers based on which one you mean. If it's a different kind of bill: Governments don't like competition in this matter. In US history there are examples of the government shutting alternative currencies down. A recent run at an alternative currency is the Liberty Dollar. The similarity is not lost on BitCoin or even Chuck E. Cheese (last one is a satire, but I did worry for a second as I still have a bunch of those tokens!). If it's the same kind of bill: The currency is a tool of the government (in the US) and it does the sourcing for its production. There isn't a whole lot of reason for others to get involved, really. It's special paper, special plates, special presses, special everything, and doing it in one place ensures some consistency of product. There aren't any compelling reason to open up another manufacturing channel to produce exactly the same product. There's no real economic benefit for banks to print their own money. The larger ones play a key role in shaping how much is printed, but actually printing the bills is an offshoot of this. |
Why are daily rebalanced inverse/leveraged ETFs bad for long term investing? | The problem with daily-rebalanced "inverse" or "leveraged" ETFs is that since they rebalance every day, you can lose money even if your guess as to the market's direction is correct. Quoting from FINRA'S guide as to why these are a bad idea: How can this apparent breakdown between longer term index returns and ETF returns happen? Here’s a hypothetical example: let’s say that on Day 1, an index starts with a value of 100 and a leveraged ETF that seeks to double the return of the index starts at $100. If the index drops by 10 points on Day 1, it has a 10 percent loss and a resulting value of 90. Assuming it achieved its stated objective, the leveraged ETF would therefore drop 20 percent on that day and have an ending value of $80. On Day 2, if the index rises 10 percent, the index value increases to 99. For the ETF, its value for Day 2 would rise by 20 percent, which means the ETF would have a value of $96. On both days, the leveraged ETF did exactly what it was supposed to do—it produced daily returns that were two times the daily index returns. But let’s look at the results over the 2 day period: the index lost 1 percent (it fell from 100 to 99) while the 2x leveraged ETF lost 4 percent (it fell from $100 to $96). That means that over the two day period, the ETF's negative returns were 4 times as much as the two-day return of the index instead of 2 times the return. That example is for "just" leveraging 2x in the same direction. Inverse funds have the same kind of issue. An example from Bogleheads Wiki page on these kinds of funds says that over 12/31/2007 to 12/31/2010, The funds do exactly what they say on any given day. But any losses get "locked in" each day. While normally a 50% loss needs a 100% gain to get back to a starting point, a fund like this needs more than a 100% gain to get back to its starting point. The result of these funds across multiple days doesn't match the index it's matching over those several days, and you won't make money over the long term. Do look at the further examples at the links I've referenced above, or do your own research into the performance of these funds during time periods both when the market is going up and going down. Also refer to these related and/or duplicate questions: |
Company revenue increased however stock price did not | If you believe in the efficient market hypothesis then the stock price reflects the information known to market participants. Consequently, if the 'market' expected earnings to rise, and they did, then the price won't change. Clearly there are circumstances, especially in the short term and for illiquid stocks, where this isn't true, but a lot of work points to this being the case on average. |
When should I walk away from my mortgage? | Very few people's credit is worth $100,000. The average homeowner's credit (family of four with good to very good credit) is worth about $30,000. This is a pure business decision. The bank knew the law when they extended the mortgage to you, and part of the amount they're charging you goes to cover the risk that you might opt to walk away. The mortgage was an agreement between you and the bank and it specified the penalty for you walking away. Taking the agreed upon penalty for an action specifically contemplated in the agreement is also keeping the agreement. |
Why does a real estate seller get to know the financing arrangements of the buyer? | The buyer discloses the financing arrangements to the seller because it makes his offer more attractive. When a seller receives and accepts an offer, the deal does not usually close until 30 to 60 days later. If the buyer cannot come up with the money by closing, the deal falls apart. This is a risk for the seller. When a seller is considering whether or not to accept an offer, it is helpful to know the likelihood that the buyer can actually obtain the amount of cash in the offer by the closing date. If the buyer can't acquire the funding, the offer isn't worth the paper it is printed on. The amount of the down payment vs. the amount of financing is also relevant to the seller. Let me give you a real-world example that happened to me once when I was selling a house. The buyer was doing a no-money-down mortgage and had no money for a down payment. He was even borrowing the closing costs. We accepted the offer, but when the bank did the appraisal, it was short of the purchase price. For most home sales, this would not be a problem, as long as the appraisal was more than the amount borrowed. But in this case, because the amount borrowed was more than the appraisal, the bank had a problem. The deal was at risk, and in order to continue either the buyer had to find some money somewhere (which he couldn't), or we had to lower the price to save the deal. Certainly, accepting the offer from a buyer with no cash to bring to the table was a risk. (In our case, we got lucky. We found some errors that were made in the appraisal, and got it redone.) |
What should I consider when I try to invest my money today for a larger immediate income stream that will secure my retirement? | TL:DR: You should read something like The Little Book of Common Sense Investing, and read some of the popular questions on this site. The main message that you will get from that research is that there is an inescapable connection between risk and reward, or to put it another way, volatility and reward. Things like government bonds and money market accounts have quite low risk, but also low reward. They offer a nearly guaranteed 1-3%. Stocks, high-risk bonds, or business ventures (like your soda and vending machine scheme) may return 20% a year some years, but you could also lose money, maybe all you've invested (e.g., what if a vandal breaks one of your machines or the government adds a $5 tax for each can of soda?). Research has shown that the best way for the normal person to use their money to make money is to buy index funds (these are funds that buy a bunch of different stocks), and to hold them for a long time (over 10-15 years). By buying a broad range of stocks, you avoid some of the risks of investing (e.g., if one company's stock tanks, you don't lose very much), while keeping most of the benefits. By keeping them for a long time, the good years more than even out the bad years, and you are almost guaranteed to make ~6-7%/year. Buying individual stocks is a really, really bad idea. If you aren't willing to invest the time to become an expert investor, then you will almost certainly do worse than index funds over the long run. Another option is to use your capital to start a side business (like your vending machine idea). As mentioned before, this still has risks. One of those risks is that it will take more work than you expect (who will find places for your vending machines? Who will fill them? Who will hire those who fill them? etc.). The great thing about an index fund is that it doesn't take work or research. However, if there are things that you want to do, that take capital, this can be a good way to make more income. |
Where to park money while saving for a car | As you're saving up for an expenditure instead of investing for the long run, I would stay away from any sort of "parking facility" where you run the risk of not having the principal protected. The riskier investments that would potentially generate a bigger return also carry a bigger downside, ie you might not be able to get the money back that you put in. I'd shop around for a CD or a MMA/regular savings account with a half-decent interest rate. And yes, I'm aware that the return you might get is probably still less than inflation. |
Do individual investors use Google to obtain stock quotes? | I won't be able to model stock prices using this information. The pros aren't likely to use Google as much. Even the casual investor is likely to have his own habits. For example, I've come to like how Yahoo permits me to set up a portfolio and follow the stocks I want. And the information that interests me is there, laid out nicely, price, history, insider trades, news etc. But your effort probably still has some discovery value, as it will help you understand when interest in a company suddenly swells above normal. Nothing wrong with a good project like that. Just don't expect to extract too much market-beating success from it. The pros will eat your lunch, take your money, and not even say thanks. Welcome to Money.SE. |
Why would I want a diversified portfolio, versus throwing my investments into an index fund? | Diversification is extremely important and the one true "Free Lunch" of investing, meaning it can provide both greater returns and less risk than a portfolio that is not diversified. The reason people say otherwise is because they are talking about "true" portfolio diversification, which cannot be achieved by simply spreading money across stocks. To truly diversify a portfolio it must be diversified across multiple, unrelated "Return Drivers." I describe this throughout my best-selling book and am pleased to provide complimentary links to the following two chapters, where I discuss the lack of diversification from spreading money solely across stocks (including correlation tables), as well as the benefits of true portfolio diversification: Jackass Investing - Myth #8: Trading is Gambling – Investing is Safer Jackass Investing - Myth #20: There is No Free Lunch |
Do company-provided meals need to be claimed on my taxes? | It looks like the resource to deciding these is here Concerning the meals, the law seems a bit vague to me. You can exclude the value of meals you furnish to an employee from the employee's wages if they meet the following tests. This exclusion does not apply if you allow your employee to choose to receive additional pay instead of meals. If the whole point of google providing meals is to benefit Google as such people will not leave the googleplex when to obtain meals elsewhere causing increased productivity for Google, then this is covered as a business expense. (Even if it wasn't, Google would have to notify you that it was providing you a non-expensable benefit, i.e. compensation, by giving you a 1099 at the end of the year). Concerning the other benefits, the only way I could see those items not being taxable benefits is if one of the two applies. |
How do you translate a per year salary into a part-time per hour job? | If you're really a part-time worker, then there are some simple considerations.... The remote working environment, choice of own hours, and non-guarantee of work availability point to your "part-time" situation being more like a consultancy, and that would normally double or triple the gross hourly rate. But if they're already offering or paying you a low hourly figure, they are unlikely to give you consultant rates. |
Is there any truth to the saying '99% of the world's millionaires have become rich by doing real estate'? | 78.84% of statistics are made up on the spot. |
Simultaneous long/short India | I know its not legal to have open long and short position on specific security (on two stock exchanges - NSE/BSE) There is nothing illegal about it. There are prescribed ways on how this is addressed. In Cash Segment / Intra Day trades: One can short sell a security. If by end of day he does not buy the security; it goes into Auction. The said security is purchased on your behalf. Any profit or loss arising out of this is charged to you. Similarly one can buy a security; if one does not pay the amount by end of day; it would go into auction and sold. Any profit or loss arising out of this is charged to you. If you short sell a security on one exchange; you have to buy it on same exchange. If you buy on other exchange; it will not be adjusted against this short position. Also is it legal to have long position on stock and short its derivative (future/option)? There are no restrictions. Edit: @yety Party A shorts 10 shares of HDFC today in Intra-Day Cash Segment purchased by Party B. Rather than buying back 10 shares or allowing it to go into auction... Party A borrows 10 HDFC Shares from "X" via SLB for a period of say 6 months [1 month to 1 year]. This is recorded as Party A obligation to "X". These 10 borrowed shares are transferred to Party B. So Party "X" doesn't have any HDFC shares at this point in time. However in exchange, Party X receives fees for borrowing from Party A. If there is dividend, are declared, Company pays Party B. However SLB recovers identical amount from Party A and pays Party X. If there is 1:1 split, now party A owes Party X 20 HDFC Shares. On maturity [after 6 months], Party A has to buy these from market and given back the borrowed shares to Party X. If there are some other corporate actions, i.e. mergers / amalgamations ... the obligation of Party A to Party X is closed immediately and position settled. Of course there are provisions whereby party A can pay back the shares earlier or party X can ask for shares earlier and there are rules/trades/mechanisms to facilitate this. |
Credit card transactions for personal finances | I use mint.com for tracking my finances. It works on mobile phones, tablets, and in a browser. If you don't mind the initial hassle of putting in the credentials you use to access your account online, you'll find that you're able to build a comprehensive picture of the state of your finances relatively quickly. It does a great job of separating the various types of financial transactions you engage in, and also lets you customize those classifications with tags. It's ad-supported, so there's no out-of-pocket cost to you, and it doesn't preclude you from using the personal finance software you already have on your phone. |
Why do Americans have to file taxes, even if their only source of income is from a regular job? | Politics is certainly part of the equation, in two ways that I can think of. These don't necessarily reflect my views; just trying to explain as I see it. First, there are a lot of interests in having the current, convoluted tax system entrenched. ProPublica did a piece talking about the question you're asking, and Intuit, makers of the popular tax software TurboTax, is mentioned as someone who lobbied heavily to keep the kind of system you describe out. It's spun as increasing the size and cost of government (which, I guess, is true - someone has to do the work if you aren't filing) while opening up possibilities for error, but the piece portrays the companies as being more interested in preserving the status quo. Second, plenty of people don't like the idea that taxation is done automatically, out of sight and out of mind. An issue that illustrates this is airline pricing. Consumers don't like seeing a $19 fare advertisement and then finding out that they'll actually have to pay $50 after the taxes are added. However, those in the airline industry and those who are generally against taxes don't like the idea that a tax can be added without the consumer really knowing that the government was responsible for the price increase. You sometimes see this with gasoline prices, where taxes are built into the price per gallon. My home state of Pennsylvania recently raised the gas tax without anyone really noticing since the overall price was dropping dramatically at the time. Contrast that to Pittsburgh-area bars who were able to very specifically pin an alcohol tax on its creator. Point being, direct deposits with automatic deductions already take most of the thinking out of taxation. Those in that situation really only think about their income in terms of the amount that shows in their bank account. For some, that time of filing taxes is the one time a year where you actually get to reflect on the amount of money you're paying the government for its services. The more automatic taxation is and the less that the public thinks about it, the easier it is for the government to raise it without people noticing. |
Optimize return of dividends based on payout per share | The term you're looking for is yield (though it's defined the other way around from your "payout efficiency", as dividend / share price, which makes no substantive difference). You're simply saying that you want to buy high-yield shares, which is a common investment strategy. But you have to consider that often a high-yielding share has a reason for the high yield. You probably don't want to buy shares in a company whose current yield is 10% but will go into liquidation next year. |
Avoiding Double-Reporting Income (1099-MISC plus 1099-K) | Your clients should not send you 1099-MISC if they paid with a credit card. You can refer them to this text in the instructions for the form 1099-MISC: Payments made with a credit card or payment card and certain other types of payments, including third party network transactions, must be reported on Form 1099-K by the payment settlement entity under section 6050W and are not subject to reporting on Form 1099-MISC. See the separate Instructions for Form 1099-K. By sending out the 1099-MISC, your clients are essentially saying that they paid you directly (check or cash) in addition to the payment they made with a credit card (which will be reported on 1099-K). In case of an audit, you'll have trouble convincing the IRS that it didn't happen. I suggest asking the clients not to do this to you, since it may cost you significant amounts to fight the IRS later on. In any case, you report on your tax return what you really got, not what the 1099 says. If you have two 1099's covering the same income - there's no legal obligation to report the income twice. You do not have to pay twice the tax just because you have stupid clients. But you may have troubles explaining it to the IRS, especially if you're dealing with cash in your business. If you want to avoid matching issues, consider reporting all the 1099s, and then subtracting the duplicates and attaching a statement (the software will do it automatically when you add the description in the miscellaneous item) about what it is. |
Is is possible to dispute IRS underpayment penalties? | If you file the long-form Form 2210 in which you have to figure out exactly how much you should have had withheld (or paid via quarterly payments of estimated tax), you might be able to reduce the underpayment penalty somewhat, or possibly eliminate it entirely. This often happens because some of your income comes late in the year (e.g. dividend and capital gain distributions from stock mutual funds) and possibly because some of your itemized deductions come early (e.g. real estate tax bills due April 1, charitable deductions early in the year because of New Year resolutions to be more philanthropic) etc. It takes a fair amount of effort to gather up the information you need for this (money management programs help), and it is easy to make mistakes while filling out the form. I strongly recommend use of a "deluxe" or "premier" version of a tax program - basic versions might not include Form 2210 or have only the short version of it. I also seem to remember something to the effect that the long form 2210 must be filed with the tax return and cannot be filed as part of an amended return, and if so, the above advice would be applicable to future years only. But you might be able to fill out the form and appeal to the IRS that you owe a reduced penalty, or don't owe a penalty at all, and that your only mistake was not filing the long form 2210 with your tax return and so please can you be forgiven this once? In any case, I strongly recommend paying the underpayment penalty ASAP because it is increasing day by day due to interest being charged. If the IRS agrees to your eloquent appeal, they will refund the overpayment. |
“Top down” and “bottom-up approach” | I think it's an argument for Keynesian economic policy, basically an abridged version of this paragraph from the Wikipedia article: Keynesian economists often argue that private sector decisions sometimes lead to inefficient macroeconomic outcomes which require active policy responses by the public sector, in particular, monetary policy actions by the central bank and fiscal policy actions by the government, in order to stabilize output over the business cycle. "private sector decisions" are bottom-up: millions of businesses and individuals make economic decisions and "the economy" is the sum of what they do. "monetary policy actions by the central bank and fiscal policy actions by the government" are top-down: central institutions implement measures that are intended to have a positive effect (such as reducing unemployment) on millions of individuals. |
Found an old un-cashed paycheck. How long is it good for? What to do if it's expired? | Look up escheatment. Companies that have unclaimed property are supposed to send it to your State government. They should have a unclaimed property department of some sort. In short, the company is going to have to pay either you, or your State (In Your Name) so they have to pay it either way. It would be easier for them to just give you new check. Expect them to give you some grief in verifying it has not been cashed and such... but if you have the original, in hand, it shouldn't be too bad. A 'Lost' check may be harder to get replaced. Not a lawyer, don't want to be. |
Why don't market indexes use aggregate market capitalization? | They do but you're missing some calculations needed to gain an understanding. Intro To Stock Index Weighting Methods notes in part: Market cap is the most common weighting method used by an index. Market cap or market capitalization is the standard way to measure the size of the company. You might have heard of large, mid, or small cap stocks? Large cap stocks carry a higher weighting in this index. And most of the major indices, like the S&P 500, use the market cap weighting method. Stocks are weighted by the proportion of their market cap to the total market cap of all the stocks in the index. As a stock’s price and market cap rises, it gains a bigger weighting in the index. In turn the opposite, lower stock price and market cap, pushes its weighting down in the index. Pros Proponents argue that large companies have a bigger effect on the economy and are more widely owned. So they should have a bigger representation when measuring the performance of the market. Which is true. Cons It doesn’t make sense as an investment strategy. According to a market cap weighted index, investors would buy more of a stock as its price rises and sell the stock as the price falls. This is the exact opposite of the buy low, sell high mentality investors should use. Eventually, you would have more money in overpriced stocks and less in underpriced stocks. Yet most index funds follow this weighting method. Thus, there was likely a point in time where the S & P 500's initial sum was equated to a specific value though this is the part you may be missing here. Also, how do you handle when constituents change over time? For example, suppose in the S & P 500 that a $100,000,000 company is taken out and replaced with a $10,000,000,000 company that shouldn't suddenly make the index jump by a bunch of points because the underlying security was swapped or would you be cool with there being jumps when companies change or shares outstanding are rebalanced? Consider carefully how you answer that question. In terms of histories, Dow Jones Industrial Average and S & P 500 Index would be covered on Wikipedia where from the latter link: The "Composite Index",[13] as the S&P 500 was first called when it introduced its first stock index in 1923, began tracking a small number of stocks. Three years later in 1926, the Composite Index expanded to 90 stocks and then in 1957 it expanded to its current 500.[13] Standard & Poor's, a company that doles out financial information and analysis, was founded in 1860 by Henry Varnum Poor. In 1941 Poor's Publishing (Henry Varnum Poor's original company) merged with Standard Statistics (founded in 1906 as the Standard Statistics Bureau) and therein assumed the name Standard and Poor's Corporation. The S&P 500 index in its present form began on March 4, 1957. Technology has allowed the index to be calculated and disseminated in real time. The S&P 500 is widely used as a measure of the general level of stock prices, as it includes both growth stocks and value stocks. In September 1962, Ultronic Systems Corp. entered into an agreement with Standard and Poor's. Under the terms of this agreement, Ultronics computed the S&P 500 Stock Composite Index, the 425 Stock Industrial Index, the 50 Stock Utility Index, and the 25 Stock Rail Index. Throughout the market day these statistics were furnished to Standard & Poor's. In addition, Ultronics also computed and reported the 94 S&P sub-indexes.[14] There are also articles like Business Insider that have this graphic that may be interesting: S & P changes over the years The makeup of the S&P 500 is constantly changing notes in part: "In most years 25 to 30 stocks in the S&P 500 are replaced," said David Blitzer, S&P's Chairman of the Index Committee. And while there are strict guidelines for what companies are added, the final decision and timing of that decision depends on what's going through the heads of a handful of people employed by Dow Jones. |
Merchant dispute with airline over changed itinerary | Are you on Twitter? If so, the first thing I'd do is tweet this question to @Orbitz and/or @AmericanAir (AA). I'll edit it to be a bit nicer english-wise. Tweeting (or Facebooking or Instgramming or ...) is one of the most effective ways to get customer service in 'edge' cases. Explain your case in a nice, tight narrative that has the pertinent facts, why you should get an exception. Social media tends to get results that you can't get just talking on the phone; in part because you're effectively talking with a higher-up person, and because you can make your case a bit more clearly. You can actually tweet this StackExchange question directly, or word it yourself in a tweet/FB post/etc. On Twitter i'd link to here or somewhere else (too short), with something like "@Orbitz @AmericanAir, you changed our trip and now it doesn't work with our special needs child. Any way you can help us out? [link to this q or a blog post somewhere]". As far as a merchant dispute; it would realistically depend on the agreement you signed with Orbitz when you bought the tickets. Likely it includes some flexibility for them to change your plans if the airline cancels the flight. If it does, and they followed all of their policies correctly, then technically you shouldn't dispute the charge. It is possible that Chase might have some recourse on your behalf, though I don't think this qualifies for Trip Cancellation Insurance (Which you have through your Sapphire card ). It might be worth calling them, just to see. In the future, I would recommend booking through their site - not only do you get 25% bonus rewards when you use miles through there, which often is enough to offset the advantages of discount travel sites, but they're quite good at helping deal with these sorts of problems (as Sapphire is one of their top cards). |
Why are interest rates on saving accounts so low in USA and Europe? | Banks in general will keep saving rates as low as possible especially if there is a surplus of funds or alternative access for funding as in the case of the Fed in the USA. Generally speaking, why would bank pay you a high interest rate when they cannot generate any income from your money? Usually we will expect to see a drop in the loan interest rate when their is a surplus of funds so as to encourage investment. But if the market is volatile then no banks will allow easy access to money through loans. The old traditional policy of lending money without proper security and no control from the central bank has created serious problems for savings account holders when some of these banks went into bankruptcy. It is for this reason most countries has modified their Financial Act to offer more protection to account holders. At the moment banks must follow rigid guidelines before a loan can be approved to a customer. In my country (Guyana) we have seen the collapse of a few banks which sent a shock wave across the county for those that have savings held at those bank. We have also seen unsecured loans having to be written off thus putting serious pressure of those banks. So government stepped in a few years ago and amended the act to make it mandatory to have commercial banks follow certain strict guidelines before approving a loan. |
Cons of withdrawing money from an Roth IRA account? | In a year with no income, the best advice is to convert existing IRA money to Roth. This lets you take advantage of the 'zero' bracket, the combination of your exemption and standard deduction. This adds to $10,300 for a single person. Other than that, if you are determined to take the money out, just do it. There would be a 10% penalty of the growth, but the original deposit comes out tax free anyway. Edit - There's a rule that if you sell your entire Roth account (i.e. all Roth accounts, you can't pick one of a few) and have a loss, you can take that loss. (Per Dilip's comment, this strategy is pretty moot, it's not a loss taken against other income as a stock loss would potentially be)) |
What debts are both partners liable for in a 'community property' state? | No two states have the same exact laws regarding community property. I would recommend asking a competent financial advisor in your area, as they would be more familiar with the local statutes. |
Can I prove having savings without giving out the account number? | Ask your bank to write a letter asserting that you have $xxxxx on deposit with them, on their letterhead? Though realistically, the chance of your getting hit with identity theft In this situation, when you presumably know exactly who you're dealing with, are vanishingly small. |
Can someone help me understand my student loans? | First to actually answer the question "how long at these rates/payments?"- These is nothing magic or nefarious about what the bank is doing. They add accrued interest and take your payment off the new total. I'd make higher payments to the 8.75% debt until it's gone, $100/mo extra and be done. The first debt, if you bump it to $50 will be paid in 147 months, at $75/mo, 92 months. Everything you pay above the minimum goes right to the principal balance and gets you closer to paying it off. The debt snowball is not the ideal way to pay off your debt. Say I have one 24% credit card the bank was nice enough to give me a $20,000 line of credit on. I also have 20 cards each with $1000 in credit, all at 6%. The snowball dictates that the smallest debt be paid first, so while I pay the minimum on the 24% card, the 6% cards get paid off one by one, but I'm supposed to feel good about the process, as I reduce the number of cards every few months. The correct way to line up debt is to pay off the (tax adjusted) highest rate first, as an extra $100 to the 24% card saves you $2/mo vs 50 cents/mo for the 6% cards. I wrote an article discussing the Debt Snowball which links to a calculator where you can see the difference in methods. I note that if the difference from lowest to highest rate is small, the Snowball method will only cost you a small amount more. If, by coincidence, the balances are close, the difference will also be small. The above aside, it's the rest of your situation that will tell you the right path for you. For example, a matched 401(k) deposit should take priority over most debt repayment. The $11,000 might be better conserved for a house downpayment as that $66/mo is student loan and won't count as the housing debt, rather "other debt" and part of the higher ratio when qualifying for the mortgage. If you already have taken this into account, by all means, pay off the 8.75% debt asap, then start paying off the 3% faster. Keep in mind, this is likely the lowest rate debt one can have and once paid off, you can't withdraw it again. So it's important to consider the big picture first. (Are you depositing to a retirement account? Is it a 401(k) and are you getting any matching from the company?) |
What is the US Fair Tax? | The fair tax is a proposal to replace the US income tax with a sales tax. Pros of Fair Tax: It's a large change to the way the United States currently does things. The "Fair Tax Act of 2011" is H.R.25 in the US House and S.13 in the Senate. The full text of the bill is available at the links provided. There are some fairly large consequences of implementing a fair tax. For example, 401ks and Roth IRAs serve no benefit over non-retirement investments. Mortgages would no longer have a tax advantage. Luxury items would get far more expensive. |
How come the government can value a home more than was paid for the house? | Keep in mind, there are times that house is in such bad shape that it's going to need 6 months of renovations, in which case you might ask the town if they are willing to reappraise a lower value until the work is completed. Keep in mind, you'll get a new appraisal when permitted (I mean pulling a permit from the town) work is done. I finished my basement and the town was eager to send the appraiser over even before work was fully complete. |
Am I entitled to get a maintenance loan? | According to GOV.UK, you can only apply for Student Finance if: Since you don't fulfill the criterion 2 and 3, you are technically not eligible for Student Finance. Since you have received information from Student Finance England that you can apply for the maintenance loan, you should either write to them or call them again, to confirm the information given to you. |
How (or is it necessary) to rebalance a 401k with only one index fund? | Rebalance is across asset-classes which are mutually independent [like stocks and bonds; they may be inversely correlated at times as when stocks go down, bonds go up] 80%-20% (stock-bond) split is good for a young investor [say in 30s, some suggest 110-age as a good stock allocation percentage]. Here rebalance is done when say the asset-allocation(AA) strays away more than say 3 to 5% (again just a rule of thumb). E.g. if due to a recent run-up in stocks, AA could become 85%-15%. Then you sell stocks to buy bonds to make the AA 80%-20% And since this method always sells the winner -- you automatically make gains [selling high and buying low] S&P 500 index gives decent diversification within stocks; you want a total-bond-fund to take care of the bond side of your AA. |
Someone asks you to co-sign a loan. How to reject & say “no” nicely or politely? | I have been in this situation and I essentially went for the truthful answer. I first explained that co-signing for a loan wasn't just vouching for the person, which I certainly would do, but it was putting my name on the loan and making me the person they loan company would go after if a payment was ever missed. Then I explained that even within married couples, money can be a major source of strife and fights, it would be even worse for someone not quite as close like a family member or friend. Essentially I wouldn't want to risk my relationship with a good friend or family member over some financial matter. |
Explain the details and benefits of rebalancing a retirement portfolio? | Rebalancing a portfolio helps you reduce risk, sell high, and buy low. I'll use international stocks and large cap US stocks. They both have ups and downs, and they don't always track with each other (international might be up while large cap US stocks are down and vice-versa) If you started with 50% international and 50% large cap stocks and 1 year later you have 75% international and 25% large cap stocks that means that international stocks are doing (relatively) well to large cap stocks. Comparing only those two categories, large cap stocks are "on sale" relative to international stocks. Now move so you have 50% in each category and you've realized some of the gains from your international investment (sell high) and added to your large cap stocks (buy low). The reason to rebalance is to lower risk. You are spreading your investments across multiple categories to manage risk. If you don't rebalance, you could end up with 95% in one category and 5% in another which means 95% of your portfolio is tied to the performance of a single asset category. I try to rebalance every 12 months and usually get it done by every 18 months. I like being a hands-off long term investor and this has proven often enough to beat the S&P500. |
Can I sell a stock immediately? | You have no guarantees. The stock may last have traded at $100 (so, the market price is $100), but is currently in free-fall and nobody else will be willing to buy it for any more than $80. Or heck, maybe nobody will be willing to buy it at all, at any price. Or maybe trading on this stock will be halted. Remember, the market price is just what the stock last traded at. If you put in a 'market order', you are ordering your broker to sell at the best available current price. Assuming someone's willing to buy your stock, that means you'll sell it. But if it last traded at $100, this doesn't guarantee you'll sell at anything close to that. |
Impact of EIN on taxation | Is it possible if (After getting EIN) I change my LLC type (disregarded entity or C type or S type or corporation or change in number of members) for tax saving ? You marked your question as "real-estate", so I'm guessing you're holding rental properties in your LLC. That means that you will not be able to qualify for S-Corp, only C-Corp treatment. That in turn means that you'll be subject to double taxation and corporate tax rate. I fail to see what tax savings you're expecting in this situation. But yes, you can do it, if you so wish. I suggest you talk to a licensed tax adviser (EA/CPA licensed in your State) before you make any changes, because it will be nearly impossible to reverse the check-the-box election once made (for at least 5 years). |
Is inflation a good or bad thing? Why do governments want some inflation? | Sensitive topic ;) Inflation is a consequence of the mismatch between supply and demand. In an ideal world the amount of goods available would exactly match the demand for those goods. We don't live in an ideal world. One example of oversupply is dollar stores where you can buy remainders from companies that misjudged demand. Most recently we've seen wheat prices rise as fires outside Moscow damaged the harvest and the Russian government banned exports. And that introduces the danger of inflation. Inflation is a signal, like the pain you feel after an injury. If you simply took a painkiller you may completely ignore a broken leg until gangrene took your life. Governments sometimes "ban" inflation by fixing prices. Both the Zimbabwean and Venezuelan governments have tried this recently. The consequence of that is goods become unavailable as producers refuse to create supply for less than the cost of production. As CrimonsX pointed out, governments do desperately want to avoid deflation as much as they want to avoid hyperinflation. There is a "correct" level and that has resulted in the monetary policy called "Inflation targetting" where central banks attempt to manage inflation into a target range (usually around 2% to 6%). The reason is simply that limited inflation drives investment and consumption. With a guaranteed return on investment people with cash will lend it to people with ideas. Consumers will buy goods today if they fear that the price will rise tomorrow. If prices fall (as they have done during the two decades of deflation in Japan) then the result is lower levels of investment and employment as companies cut production capacity. If prices rise to quickly (as in Zimbabwe and Venezuela) then people cannot save enough or earn enough and so their wealth is drained away. Add to this the continual process of innovation and you see how difficult it is to manage inflation at all. Innovation can result in increased efficiency which can reduce prices. It can also result in a new product which is sufficiently unique to allow predatory pricing (the Apple iPhone, new types of medicines, and so on). The best mechanism we have for figuring out where money should be invested and who is the best recipient of any good is the price mechanism. Inflation is the signal that investors need to learn how best to manage their efforts. We hide from it at our peril. |
How much of each stock do index funds hold? | Note that an index fund may not be able to precisely mirror the index it's tracking. If enough many people invest enough money into funds based on that index, there may not always be sufficient shares available of every stock included in the index for the fund to both accept additional investment and track the index precisely. This is one of the places where the details of one index fund may differ from another even when they're following the same index. IDEALLY they ought to deliver the same returns, but in practical terms they're going to diverge a bit. (Personally, as long as I'm getting "market rate of return" or better on average across all my funds, at a risk I'm comfortable with, I honestly don't care enough to try to optimize it further. Pick a distribution based on some stochastic modelling tools, rebalance periodically to maintain that distribution, and otherwise ignore it. That's very much to the taste of someone like me who wants the savings to work for him rather than vice versa.) |
Finding stocks following performance of certain investor, like BRK.B for Warren Buffet | Remember that unless you participate in the actual fund that these individuals offer to the public, you will not get the same returns they will. If you instead do something like, look at what Warren Buffet's fund bought/sold yesterday (or even 60 minutes ago), and buy/sell it yourself, you will face 2 obstacles to achieving their returns: 1) The timing difference will mean that the value of the stock purchased by Warren Buffet will be different for your purchase and for his purchase. Because these investors often buy large swathes of stock at once, this may create large variances for 2 reasons: (a) simply buying a large volume of a stock will naturally increase the price, as the lowest sell orders are taken up, and fewer willing sellers remain; and (b) many people (including institutional investors) may be watching what someone like Warren Buffet does, and will want to follow suit, chasing the same pricing problem. 2) You cannot buy multiple stocks as efficiently as a fund can. If Warren Buffet's fund holds, say, 50 stocks, and he trades 1 stock per day [I have absolutely no idea about what diversification exists within his fund], his per-share transaction costs will be quite low, due to share volume. Whereas for you to follow him, you would need 50 transactions upfront, + 1 per day. This may appear to be a small cost, but it could be substantial. Imagine if you wanted to invest 50k using this method - that's $1k for each of 50 companies. A $5 transaction fee would equal 1% of the value of each company invested [$5 to buy, and $5 to sell]. How does that 1% compare to the management fee charged by the actual fund available to you? In short, if you feel that a particular investor has a sound strategy, I suggest that you consider investing with them directly, instead of attempting to recreate their portfolio. |
Can extra mortgage payments be made to lower the monthly payment amount? | That's tricky. Typically you lock in the minimum monthly payment when you close the loan. You can pay more but not less. Options: |
Recourse with Credit Card company after victimized by fraud? | Concealing parts of a document in order to obtain a signature is illegal. The company committed signature forgery because they effectively modified the document after you signed it (i.e. unfolded the parts that were previously folded). I suggest that you go to your local police department to file a report, citing "signature forgery". Once you have the police report, call your bank's fraud department (not the general billing dispute line) and cite the police report right away, specifically calling out "signature forgery". I would be surprised if you don't get a favorable outcome. |
Why and why would/wouldn't a company split their stock? | A reason not to split your stock is that the value of the company might fall back again, and if its stock price falls below $1 it will be delisted from the NYSE. So if the value of your company grows tenfold so the shares go from $5 to $50, you do a ten-for-one split, and then its value shrinks back to where it started, you're off the stock exchange. |
Roth IRA - Vanguard or Fidelity? If a college student had to pick one? | Well, a couple things to keep in mind: Even if you have enough to meet the minimum initial amount, you need to have at least that much income in the year you make the contribution. You'll probably be best served saving up in a savings account so that by the time you have an income (and can thus make contributions), you have enough cash to meet the minimum initial contribution. |
Starting a side business slowly | This is a great question! I've been an entrepreneur and small business owner for 20+ years and have started small businesses in 3 states that grew into nice income streams for me. I've lived off these businesses for 20+ years, so I know it can be done! First let me start by saying that the rules, regulations, requirements and laws for operating a business (small or large) legally, for the most part, are local laws and regulations. Depending on what your business does, you may have some federal rules to follow, but for the most part, it will be your locality (state, county, city) that determines what you'll have to do to comply and be "legal". Also, though it might be better in some cases to incorporate (and even required in some circumstances), you don't always have to. There are many small businesses (think landscapers, housekeepers, babysitters, etc.) that get income from their "business operations" and do so as "individuals". Of course, everyone has to pay taxes - so as long as you property record your income (and expenses) and properly file your tax returns every year, you are "income tax legal". I won't try to answer the income tax question here, though, as that can be a big question. Also, though you certainly can start a business on your own without hiring lawyers or other professionals (more on that below), when it comes to taxes, I definitely recommend you indeed plan to hire a tax professional (even if it's something like H&R Block or Jackson Hewitt, etc). In some cities, there might even be "free" tax preparation services by certain organizations that want to help the community and these are often available even to small businesses. In general, income taxes can be complicated and the rules are always changing. I've found that most small business owners that try to file their own taxes generally end up paying a lot more taxes than they're required to, in essence, they are overpaying! Running a business (and making a profit) can be hard enough, so on to of that, you don't need to be paying more than you are required to! Also, I am going to assume that since it sounds like it would be a business of one (you), that you won't have a Payroll. That is another area that can be complicated for sure. Ok, with those generics out of the way, let me tackle your questions related to starting and operating a business, since you have the "idea for your business" pretty figured out. Will you have to pay any substantial amount of money to attorneys or advisors or accountants or to register with the government? Not necessarily. Since the rules for operating a business legally vary by your operating location (where you will be providing the service or performing your work), you can certainly research this on your own. It might take a little time, but it's doable if you stick with it. Some resources: The state of Florida (where I live) has an excellent page at: http://www.myflorida.com/taxonomy/business/starting%20a%20business%20in%20florida/ You might not be in Florida, but almost every state will have something similar. What all do I need to do to remain on the right side of the law and the smart side of business? All of the answers above still apply to this question, but here are a few more items to consider: You will want to keep good records of all expenses directly related to the business. If you license some content (stock images) for example, you'll want to document receipts. These are easy usually as you know "directly". If you subscribe to the Apple Developer program (which you'll need to if you intend to sell Apps in the Apple App Stores), the subscription is an expense against your business income, etc. You will want to keep good records of indirect costs. These are not so easy to "figure out" (and where a good accountant will help you when this becomes significant) but these are important and a lot of business owners hurt themselves by not considering these. What do I mean? Well, you need an "office" in order to produce your work, right? You might need a computer, a phone, internet, electricity, heat, etc. all of which allow you to create a "working environment" that allows you to "produce your product". The IRS (and state tax authorities) all provide ways for you to quantify these and "count them" as legitimate business expenses. No, you can't use 100% of your electric bill (since your office might be inside your home, and the entire bill is not "just" for your business) but you are certainly entitled to some part of that bill to count as a business expense. Again, I don't want to get too far down the INCOME TAX rabbit hole, but you still need to keep track of what you spend! You must keep good record of ALL your income. This is especially important when you have money coming in from various sources (a payroll, gifts from friends, business income from clients and/or the App Stores, etc.) Do not just assume that copies of your bank deposits tell the whole story. Bank statements might tell you the amount and date of a deposit, but you don't really know "where" that money came from unless you are tracking it! The good news is that the above record keeping can be quite easy with something like Quicken or QuickBooks (or many many other such popular programs.) You will want to ensure you have the needed licenses (not necessarily required at all for a lot of small businesses, especially home based businesses.) Depending on your business activity, you might want to consider business liability insurance. Again, this will depend on your clients and/or other business entities you'll be dealing with. Some might require you to have some insurance. Will be efforts even be considered a business initially until some amount of money actually starts coming in? This might be a legal / accountant question as to the very specific answer from the POV of the law and taxing authorities. However, consider that not all businesses make any money at all, for a long time, and they definitely "are a business". For instance, Twitter was losing money for a long time (years) and no one would argue they were not a business. Again, deferring to the attorneys/cpas here for the legal answer, the practical answer is that you're performing "some" business activity when you start creating a product and working hard to make it happen! I would consider "acting as" a business regardless! What things do I need to do up-front and what things can I defer to later, especially in light of the fact that it might be several months to a couple years before any substantial income starts coming in? This question's answer could be quite long. There are potentially many items you can defer. However, one I can say is that you might consider deferring incorporation. An individual can perform a business activity and draw income from it legally in a lot of situations. (For tax purposes, this is sometimes referred to as "Schedule-C" income.) I'm not saying incorporation is a bad thing (it can shield you from a lot of issues), but I am saying that it's not necessary on day 1 for a lot of small businesses. Having said that, this too can be easy to do on your own. Many companies offer services so you can incorporate for a few hundred dollars. If you do incorporate, as a small business of one person, I would definitely consider a tax concept called an "S-Corp" to avoid paying double taxes.) But here too, we've gone down the tax rabbit hole again. :-) |
Is there a debit card that earns miles (1 mile per $1 spent) and doesn't have an annual fee? | I have an American Airlines VISA with miles that has no annual fee, but only because I request that they waive the fee each year. Word to the wise - they've never refused. |
What one bit of financial advice do you wish you could've given yourself five years ago? | I wish I would have: |
Transfer from credit to debit | As other answers and comments suggest you are trying to do something... odd to say the least. No one wants to use a credit card to finance a checking/current account because you are creating a debt on that credit card (unless you are in the odd situation where the card is in credit) that will immediately start accruing interest at a rate probably in excess of 10% per annum. That is not a clever thing to do. What you really need to do is find an account that one of you owns that has a positive balance and use an internet banking service to transfer part of that positive balance onto the debit card. The other solution is not to use the debit card at all but use the credit card to complete the purchases you are trying to manage with the debit card. The reason that BofA and AmEx customer support can't help you is that no one would ever do what you want to do; they would either move existing money from another account or ask for a bank loan. |
What are a few sites that make it easy to invest in high interest rate mutual funds? | Are you looking for something like Morningstar.com? They provide information about lots of mutual funds so you can search based on many factors and find good candidate mutual funds. Use their fund screener to pick funds with long track records of beating the S&P500. |
I am the sole owner of an LLC. Does it make a difference if I file as an S-Corp or a sole-member LLC? | Be careful of the other answers here. Many are wrong or partially wrong. The question implies that you knew this, but for everyone else's benefit, you can keep you LLC organization and still elect to be treated as a S-Corp by the IRS just for tax purposes. You do this by filing Form 2553 with the IRS. (You can also, by the way, elect to be taxed as a "regular" C-Corp if you want, although that's probably not advantageous. See Form 8832.) The advantage of electing to be treated as an S-Corp is that income beyond what constitutes a "reasonable salary" are not subject to social security and medicare taxes as they would when paid was wages or counted as self-employment income on Schedule C. Depending on what you need to pay yourself to meet the "reasonable salary" test, your overall income, and other factors about your business, this could result in tax savings. Contrary to other answers here, making this election will not force you to create a board of directors. You are still an LLC for all purposes except taxes, so whatever requirements you had in organization and governance at the state level will not change. You will have to file a "corporate" tax return on Form 1120S (and likely some corresponding state tax form), so that is additional paperwork, but this "corporate" return does not mean the S-Corp pays taxes itself. With a couple of exceptions, the S-Corp pays no taxes directly (and therefore does not pay at the corporate tax rate). Instead the S-Corp apportions its income, expenses, and deductions to the owner(s) on Schedule K. The owners get their portion reported from the S-Corp on Schedule K1 and then include that on their personal Form 1040 to pay tax at their personal rate. In addition to filing Form 1120S, you will have to handle payroll taxes, which will create some additional administrative work and/or cost. Using a payroll service for this will likely be your best option and not terribly expensive. You've also got the issue of determining your reasonable salary within the rules, which is the subject of other questions on this site and other IRS guidance. |
Insurance company sent me huge check instead of pharmacy. Now what? | Deposit check and send a personal check (resulting in tax and IRS reporting issues) That's a bad idea, unless maybe the check you're receiving is a certified bank draft. Suppose the insurance company are crooks and the check is fraudulent. It could take weeks or months for some investigation to catch up to that, long after your own personal check was cashed by the pharmacy. The bank will then put you on hook for the 20 grand by reversing the check, even though the funds had been deposited into your account. Do not put yourself into the position of a money handler; you don't have the cash base, insurance, government protection and whatever else that a bank has. And, of course, you're being a free money handler if you do that. (You're not even compensated for postage, time and whatnot). If you're handling money between two parties, you should collect a percentage, or else refuse. That percentage has to be in proportion to the risk, since cashing a check for someone carries a risk similar to (and is effectively a form of) making a loan. |
Can a Covered Call be called away before the expiration date? | Yes. If I own a call, an American call option can be exercised at my wish. A European call can only be exercised at expiration, by the way. Your broker doesn't give you anything but a current quote for a given strike price. There are a number of good option related questions here. A bit of searching and reading will help you understand the process. |
How much should I save up per trade? | I'd answer it this way: What do you want to do? I'd say any amount is acceptable from as low as $100. When you look at the specific "tree" of investing paying $5 for a $100 seems unacceptable. However when observing the "forest" what does it matter if you "waste" $5 on a commission? Your friends (and maybe you) probably waste more than $5 multiple times per day. For them buying a latte might empower them, if buying another share of HD, for a similar cost, empowers you than do it. In the end who will be better off? Studies show that the more important part of building a significant investment portfolio is actually doing it. Rate of return and the cost of investing pales in comparison to actually doing it. How many of your peers are doing similar things? You are probably in very rare company. If it makes you happy, it is a wonderful way to spend your money. |
Loan math problem | The price inflation isn't a percentage, it's a fixed amount. If the dealer adds $R to the price of both the trade-in and the purchased car, then everyone ends up with the right amount of money in their pockets. So your formula should be: D + T + R = 0.1 * (P + R) |
Investment strategy for a 20 year old with about 30k in bank account | If you have already maxed your TSP contributions, the "401k" for military folks, you could consider a Traditional IRA contribution. They are tax-deductible, based on some limits, so it may reduce your tax liability. Many online services (Vanguard, Fidelity, etc.) offer quick and free setup of Traditional IRA accounts. If you have already maxed the Traditional IRA as well, you could look at making taxable investments through an online service. Like homer150mw, I would recommend low-cost funds. For reasons why, see this article by John Bogle. |
Is it worth investing in Index Fund, Bond Index Fund and Gold at the same time? | Taking into account that you are in Cyprus, a Euro country, you should not invest in USD as the USA and China are starting a currency war that will benefit the Euro. Meaning, if you buy USD today, they will be worth less in a couple of months. As for the way of investing your money. Look at it like a boat race, starting on the 1st of January and ending on the 31st of December each year. There are a lot of boats in the water. Some are small, some are big, some are whole fleets. Your objective is to choose the fastest boat at any time. If you invest all of your money in one small boat, that might sink before the end of the year, you are putting yourself at risk. Say: Startup Capital. If you invest all of your money in a medium sized boat, you still run the risk of it sinking. Say: Stock market stock. If you invest all of your money in a supertanker, the risk of it sinking is smaller, and the probability of it ending first in the race is also smaller. Say: a stock of a multinational. A fleet is limited by it's slowest boat, but it will surely reach the shore. Say: a fund. Now investing money is time consuming, and you may not have the money to create your own portfolio (your own fleet). So a fund should be your choice. However, there are a lot of funds out there, and not all funds perform the same. Most funds are compared with their index. A 3 star Morningstar rated fund is performing on par with it's index for a time period. A 4 or 5 star rated fund is doing better than it's index. Most funds fluctuate between ratings. A 4 star rated fund can be mismanaged and in a number of months become a 2 star rated fund. Or the other way around. But it's not just luck. Depending on the money you have available, your best bet is to buy a number of star rated, managed funds. There are a lot of factors to keep into account. Currency is one. Geography, Sector... Don't buy for less than 1.000€ in one fund, and don't buy more than 10 funds. Stay away from Gold, unless you want to speculate (short term). Stay away from the USD (for now). And if you can prevent it, don't put all your eggs in one basket. |
Can a stock exchange company actually go bust? | Technically, of course. Almost any company can go bankrupt. One small note: a company goes bankrupt, not its stock. Its stock may become worthless in bankruptcy, but a stock disappearing or being delisted doesn't necessarily mean the company went bankrupt. Bankruptcy has implications for a company's debt as well, so it applies to more than just its stock. I don't know of any historical instances where this has happened, but presumably, the warning signs of bankruptcy would be evident enough that a few things could happen. Another company, e.g. another exchange, holding firm, etc. could buy out the exchange that's facing financial difficulty, and the companies traded on it would transfer to the new company that's formed. If another exchange bought out the struggling exchange, the shares of the latter could transfer to the former. This is an attractive option because exchanges possess a great deal of infrastructure already in place. Depending on the country, this could face regulatory scrutiny however. Other firms or governments could bail out the exchange if no one presented a buyout offer. The likelihood of this occurring depends on several factors, e.g. political will, the government(s) in question, etc. For a smaller exchange, the exchange could close all open positions at a set price. This is exactly what happened with the Hong Kong Mercantile Exchange (HKMex) that MSalters mentioned. When the exchange collapsed in May 2013, it closed all open positions for their price on the Thursday before the shutdown date. I don't know if a stock exchange would simply close all open positions at a set price, since equity technically exists in perpetuity regardless of the shutdown of an exchange, while many derivatives have an expiration date. Furthermore, this might not be a feasible option for a large exchange. For example, the Chicago Mercantile Exchange lists thousands of products and manages hundreds of millions of transactions, so closing all open positions could be a significant undertaking. If none of the above options were available, I presume companies listed on the exchange would actively move to other, more financially stable exchanges. These companies wouldn't simply go bankrupt. Contracts can always be listed on other exchanges as well. Considering the high level of mergers and acquisitions, both unsuccessful and successful, in the market for exchanges in recent years, I would assume that option 1 would be the most likely (see the NYSE Euronext/Deutsche Börse merger talks and the NYSE Euronext/ICE merger that's currently in progress), but for smaller exchanges, there is the recent historical precedent of the HKMex that speaks to #3. Also, the above answer really only applies to publicly traded stock exchanges, and not all stock exchanges are publicly-held entities. For example, the Shanghai Stock Exchange is a quasi-governmental organization, so I presume option 2 would apply because it already receives government backing. Its bankruptcy would mean something occurred for the government to withdraw its backing or that it became public, and a discussion of those events occurring in the future is pure speculation. |
First time home buyer. How to negotiate price? | Advice from a long-time flipper You negotiate price based on four factors and none of these are set in stone: How much you love the house. Is this house a 100 out of 100 for you or a 85 or a 75. How much have you compromised. What is the likelihood that you will find a house that will make you just as happy or at least close. You might have a house that is a 95 out of 100 but there are five other houses that you rated between 93-95. What is your timeframe. Know that playing hardball takes longer and can knock you out of the game sometimes and takes a little while to find a new game. What is the relative housing market. Zillow and other such sites are crap. Yes the give you a generalized feel for a community but their estimates are off sometimes by 30-40%. Other factors like street/noise/updates to house/ and so on are huge factors. You will have to really navigate the area and look for very comparable houses that have recently sold. Then use average housing movements to extrapolate your future houses cost. As a buyer you have two jobs. Buy the house you want and manage your agent. Your agent wants you to buy a house as soon as possible and to increase their reputation. Those are their only two factors of working. By you offering closer to the asking price they are able to get their sales as quick as possible. Also other agents will love working with them. In fact your agent is selling you on the home and the price. Agents hardly worry about you paying too much - as most buyers oversell the deal they get on their home. Admitting that you paid too much for your house is more of an admission of ignorance of yourself, compared to agent incompetency. If you decide to low-ball the owner, your agent spends more time with you and possibly reduces their reputation with the selling agent. So it is common for agents to tell you that you should not offer a low price as you will insult the owner. My advice. Unless the home is truly one of a kind for the market offering anything within 20% of the asking price is DEFINITELY within range. I have offered 40% less. If a house is asking too much and has been on the market for 8 months there is no way I am going in with an offer of even 15% lower. That leaves you no room. What you do? First think about how much you think this house could sell for in the next 3 months. In your example let's say 80K based on conservative comps. Then take the most you would actually pay for it. Let's say 75K. 70K is about as high of an opening offer I would go. Do NOT tell your agent your true breaking points. If you tell your agent that you would go to 75K on the house. Then that is what their negotiations will start at. Remember they want the sale to happen as soon as possible. Very likely the other agent - especially if they know each other - will ask if how flexible you are going to be. Then next thing you know your agent calls you back and says would you be willing to go 77K or the owner is firm at 80K. Do not give up your position. You should never forecast to your agent what your next bid or offer would be for the house. Never get into scenarios or future counters. So you offer 70K. If your agent asks you how firm that is? "Very firm". If your agent doesn't want to take the offer to them, "Thank you for being my agent, but I am going to be working with someone that represents what I want." If the owner says "You are done too me cheapskate." Well that's how it goes. If the owner stays firm at asking or lowers - then you can come up if you feel comfortable doing so. But understand what your goal is. Is it to get a house or to get a good deal on a house? Mine was always to get a good deal on a house. So I might offer 72K next. If they didn't budge, I am out. If they moved down I went from there. Easy Summary The fact is if they aren't willing to negotiate with you enough it always ends the same. You give them your take-it-or-leave-it offer. You tell your agent that if he/she comes back with one penny over it comes from their commission (god I have said this 100 times in my life and it is the best negotiation tactic you have with your agent). The owner says yes or no and it is over. |
Is the need to issue bonds a telltale sign that the company would have a hard time paying coupons? | One more scenario is when the company already has maturing debt. e.g Company took out a debt of 2 billion in 2010 and is maturing 2016. It has paid back say 500 million but has to pay back the debtors the remaining 1.5 billion. It will again go to the debt markets to fund this 1.5 billion maybe at better terms than the 2010 issue based on market conditions and its business. The debt is to keep the business running or grow it. The people issuing debt will do complete research before issuing the debt. It can always sell stock but that results in dilution and affects shareholders. Debt also affects shareholders but when interest rates are lower, companies tend to go to debt markets. Although sometimes they can just do a secondary and be done with it if the float is low. |
What is the best way to make a bet that a certain stock will go up in the medium term? | You could try to refine your options strategy: For instance you could buy the USD 750 call option(s) you mentioned and at the same time sell (short) call options with a higher strike price, which is above the share price level you expect that Apple will trade at in one year (for instance USD 1,100). By doing this, you would receive the premium of the call option(s) with the higher option, which in turn would help you finance buying your USD 750 call(s). The net effect of this trading strategy would be that you would give up the extra profit you would earn if Apple would rose above USD 1,100 (the strike price of the call option sold short). Your total risk would be even less than with your actual strategy (in my view). |
How does the Dow Jones Industrial Average (DJIA) divisor change to account for dividends? | Scrip dividends are similar to stock splits. With a stock split, 100 shares can turn into 200 shares; with scrip dividends they might turn into 105 shares. |
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? | The rest of the market knows when the dividends are paid out, and that will be reflected naturally in the share price. That's why there is no way to consistently beat the market. Because the market is other human beings, who's sum of knowledge is greater than any individual. Everything in the stock market boils down to this in one way or another. |
Personal finance software for Mac that can track stocks and mutual funds? (Even manual updating of share prices will do.) | I'm using iBank on my Mac here and that definitely supports different currencies and is also supposed to be able to track investments (I haven't used it to track investments yet, hence the 'supposed to' caveat). |
Why should a company go public? | You go public to raise money, to invest in the business and/or pay off the existing shareholders. It's really as simple as that. The advantage of being public is that your shares can easily be bought and sold, and so you can issue and sell new ones and your existing shareholders can sell out if they want to. The disadvantage is that you are much more tightly regulated, with more disclosure requirements, and also that you are exposed to much more pressure from your shareholders to maintain and increase your share price. |
What are the risks of Dividend-yielding stocks? | Having a good dividend yield doesn't guarantee that a stock is safe. In the future, the company may run into financial trouble, stop paying dividends, or even go bankrupt. For this reason, you should never buy a stock just because it has a high dividend yield. You also need some criteria to determine whether that stock is safe to buy. Personally, I consider a stock is reasonably safe if it meets the following criteria: |
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