Question stringlengths 15 166 | Answer stringlengths 3 13.1k |
|---|---|
Margin when entered into a derivative contract | The most obvious use of a collateral is as a risk buffer. Just as when you borrow money to buy a house and the bank uses the house as a collateral, so when people borrow money to loan financial instruments (or as is more accurate, gain leverage) the lender keeps a percentage of that (or an equivalent instrument) as a collateral. In the event that the borrower falls short of margin requirements, brokers (in most cases) have the right to sell that collateral and mitigate the risk. Derivatives contracts, like any other financial instrument, come with their risks. And depending on their nature they may sometimes be much more riskier than their underlying instruments. For example, while a common stock's main risk comes from the movements in its price (which may itself result from many other macro/micro-economic factors), an option in that common stock faces risks from those factors plus the volatility of the stock's price. To cover this risk, lenders apply much higher haircuts when lending against these derivatives. In many cases, depending upon the notional exposure of the derivative, that actual dollar amount of the collateral may be more than the face value or the market value of the derivatives contract. Usually, this collateral is deposited not as the derivatives contract itself but rather as the underlying financial instrument (an equity in case of an option, a bond in case of a CDS, and so on). This allows the lender to offset the risk by executing a trade on that collateral itself. |
Fringe Benefits (Lodging) for single member S-Corp | None whatsoever, no. Moreover, trying something like that would very likely trigger a full audit. |
What assets would be valuable in a post-apocalyptic scenario? | Assuming that the financial system broke down, not enough supply of essential commodities or food but there is political and administrative stability and no such chaos that threatens your life by physical attacks. The best investment would then be some paddy fields, land, some cows, chickens and enough clothing , a safe house to stay and a healthy life style that enables you to work for food and some virtue at heart and management skills to get people work for you on your resources so that they can survive with you (may be you earn some profit -that is up to your moral standards to decide, how much). It all begins to start again; a new Financial System has to be in place….! |
What would be the appropriate account for written off loans to friends and family? | A simple way to account debt forgiveness of your receivables is to utilize a "Bad Debt" expense account. Take the following two examples: If you are only forgiving a portion of the principle, another popular term used is Principle Reduction as the expense account. |
What type of low-cost stock index exchange-traded fund (ETF) would give the best long-term total return? | Small cap and mid cap shares tend to outperform large cap shares in a bull market, but they tend to underperform large cap shares in a bear market. Since the stock markets tend to go up in the long term, this suggests that a low cost small and mid cap index ETF should offer the best long term returns. Having said that, we are currently in a mature bull market having experienced over seven years without encountering a bear market. If a bearish outlook is something you worry about, then perhaps a broad market index, which will be heavily weighted towards large cap shares, may be a better choice for you at this time, with an eye toward switching to small and mid cap indices during the next bear market. |
Virtual currency investment | I don't know much about paypal or bitcoin, but I can provide a little information on BTC(Paypal I thought was just a service for moving real currency). BTC has an exchange, in which the price of a bitcoin goes up and down. You can invest in to it much like you would invest in the stock market. You can also invest in equipment to mine bitcoins, if you feel like that is worthwhile. It takes quite a bit of research and quite a bit of knowledge. If you are looking to provide loans with interest, I would look into P2P lending. Depending on where you live, you can buy portions of loans, and receive monthly payments with the similiar risk that credit card companies take on(Unsecured debt that can be cleared in bankruptcy). I've thrown a small investment into P2P lending and it has had average returns, although I don't feel like my investment strategy was optimal(took on too many high risk notes, a large portion of which defaulted). I've been doing it for about 8 months, and I've seen an APY of roughly 9%, which again I think is sub-optimal. I think with better investment strategy you could see closer to 12-15%, which could swing heavily with economic downturn. It's hard to say. |
Can I write off time spent learning my trade - Two-Man S-Corp | I'm not sure what you mean by "writing off your time," but to answer your questions: Remember that, essentially, you are a salaried employee of a corporation. So if you are spending time at your job, even if you are not billing anything to a client, you are earning your salary. If there are costs involved with these activities (maybe class fees, a book purchase, or travel expenses), the corporation should be paying the costs as business expenses. However, the logistics of this, whether the corporation writes a business check to the vendor directly, or you put the expenses on a personal credit card and are reimbursed with an expense check from the corporation, don't matter. Your accountant can show you the right way to do this. |
Remortgaging my home to release capital for second property | I've had a hard time finding out details on remortgaging Help to Buy loans myself, but found one article (http://www.thisismoney.co.uk/money/mortgageshome/article-3038831/Help-Buy-borrowers-risk-missing-best-remortgage-deals.html) which points out it IS possible. But also that there aren't many lenders offering such deals out there. The article lists a number of lenders that do offer these programs, and the extra requirements on equity you might have to have. It sounds like it's going to be critical to know how much equity you've built up. Since part of the valuation increase will be credited to Help to Buy, you won't get all the £30k increase you've mentioned. Instead, I believe you'll only get 80%, so £24k. Which would mean your total equity is £24k + £7k = £31k, plus whatever you might have already paid off. I'm going to assume there isn't much you've paid off, so will assume just over 18%. (31/170) While this is higher than most of the equity limits mentioned in the above article, keep in mind you'd only get cash out corresponding to the difference between your current equity amount and the equity required for the loan. For example, if you went with a loan requiring 15% equity to qualify, you'd only have 3% over that, and thus get £5.1k out. And that's before any fees you might have to pay! (You might have new origination fees, but you also might have early repayment fees.) Maybe you could pursue a lower money down refi and get to keep more, but the same article points out that Help to Buy might consider that too risky for you, and refuse to allow the refi. I think it's worth shopping around to get actual numbers for your exact situation, but personally it doesn't sound like you have enough equity yet to get much cash out of a refi. Perhaps you'll get lucky though. Best of luck! |
Should I pay half a large balance this month before I get my CC statement? | From what I have heard on Clark Howard if you pay your balance off before the statement's closing date it will help your utilization score. He has had callers confirm this but I don't have first hand knowledge for this to be true. Also this will take two months to make the difference. So it will be boarder line if you will get the benefit in time. Sign up for credit karma if you like. You can get suggestions on how to help your score. |
Should I sell and rebuy stocks before the end of the year to trigger a gain and offset capital losses? | You have multiple issues buried within this question. First, we don't know your tax bracket. For my answer, I'll assume 25%. This simply means that in 2016, you'll have a taxable $37,650 or higher. The interesting thing is that losses and gains are treated differently. A 25%er's long term gain is taxed at 15%, yet losses, up to $3000, can offset ordinary income. This sets the stage for strategic tax loss harvesting. In the linked article, I offered a look at how the strategy would have resulted in the awful 2000-2009 decade producing a slight gain (1%, not great, of course) vs the near 10% loss the S&P suffered over that time. This was by taking losses in down years, and capturing long term gains when positive (and not using a carried loss). Back to you - a 15%er's long term gain tax is zero. So using a gain to offset a loss makes little sense. Just as creating a loss to offset the gain. The bottom line? Enjoy the loss, up to $3000 against your income, and only take gains when there's no loss. This advice is all superseded by my rule "Don't let the tax tail wag the investing dog." For individual stocks, I would never suggest a transaction for tax purposes. You keep good stocks, you sell bad ones. Sell a stock to take a short term loss only to have it recover in the 30 day waiting period just once, and you'll learn that lesson. Learn it here for free, don't make that mistake at your own expense. |
Is insurance worth it if you can afford to replace the item? If not, when is it? | This entirely depends on two factors: Now let's look at what AppleCare gives you: What it covers is any manufacturing defect. It also covers you for phone support, as otherwise it's a $49-per-incident charge even for simple issues. It also covers any software issues that you may come across as long as the issues pertain to Apple software or the operating system itself. What it doesn't cover is any damage caused by the user. If you snap the corner of the screen, drop it, spill liquid on it, modify it, etc... then you're responsible for paying the repair costs. If you're outside of phone support, then you're going to have to pay someone to fix any problems you come across. Now if we're to trust this handy study done in 2009, then we can say that the 3-year failure rate for Macbooks and Macbook Pros is 17.4%. We could go ahead and say that $350 / $2000 = 17.5% so the chances match up, but what's the likelihood that Apple is going to cover the full $2000? Only under extreme cases are you losing the full $2000 (theft, shock damage, etc...), and those are all cases that Apple won't cover anyways. Instead we're looking at cases such as (Please keep in mind it has been several years since I worked for Apple, so these figures may be off): So this reduces our possible savings significantly. Let's then also look at what the warranty becomes after they fixed a part: A replacement part or Apple Product, including a user-installable part that has been installed in accordance with instructions provided by Apple, assumes the remaining term of the Warranty or ninety (90) days from the date of replacement or repair, whichever provides longer coverage for you. Which means in this case that you have a 90-day warranty after they've fixed an issue. This significantly reduces the likelihood of a same part going bad multiple times in a row. Therefore the chances of that $350 being worthwhile are very much against you. Even if the system does fail in some way, it is likely that the repair would be cheaper than the AppleCare. The chances of running into a repair or series of repairs that pays for the AppleCare and then some are astonishingly low. I would still get it if you were giving it to someone who was significantly lacking in any technology concepts (such as a parent or grandparent) as they are more likely to utilize the extended phone support, especially for smaller things that they might nag you about! |
Is it better to use DRIP or invest when stock drops before ex-date? | The benefit of a dividend reinvestment program is you, generally, don't pay transaction costs or commissions and you don't have to remember to do it. Whether or not you may be able to eek out a little more by managing this yourself is a crapshoot and the equivalent of timing the market. If you're so good at timing the market you shouldn't even be holding the stock, you should be buying and selling as the price fluctuates. |
Oil Price forcasting | If past is prologue, I'd say $20, give or take, inflation adjusted of course. http://www.antagoniste.net/WP-Uploads/2007/01/oil_prices_1861_2006.jpg If supplies are at nightmare oversupply, say, as an absurd unlikely scenario, 82 year high in US oil supplies or an all time record in EIA weekly inventories, it looks like the oil price could be capped at the cost of oil sands: This one's just plain scary. Unless if there were some changes refinery laws or technology that I'm not aware of, refineries cutting 50% of the retail gasoline volumes looks bad: |
Credit card closed. Effect on credit score (USA) | There are two factors in your credit score that may be affected. The first is payment history. Lenders like to see that you pay your bills, which is the most straightforward part of credit scores IMO. If you've actually been paying your bills on time, though, then this should still be fine. The second factor is the average age of your open accounts. Longer is considered better here because it means you have a history of paying your bills, and you aren't applying for a bunch of credit recently (in which case you may be taking on too much and will have difficulties paying them). If this card is closed, then it will no longer count for this calculation. If you don't have any other open credit accounts, then that means as soon as you open another one, your average age will be one day, and it will take a long time to get it to "good" levels; if you have other matured accounts, then those will balance out any new accounts so you don't get hit as much. Incidentally, this is one of the reasons why it's good to get cards without yearly fees, because you can keep them open for a long time even if you switch to using a different card primarily. |
Why are American Express cards are not as popular as Visa or MasterCard? | My experience is in the United States only. In the past, American Express marketed its products as more exclusive and prestigious than other cards. There was an attempt to give the impression that cardholders were more qualified financially. In return, fees were higher both to merchants and to cardholders. At the time (early 1990's), it was not common to use credit cards for small purchases, such as groceries or fast food. Credit cards were used for larger purchases such as jewelry or electronics or dinner in a nicer restaurant. Once it became popular to use credit cards for everyday purchases, the demand for customers using credit cards changed to the highest number of people instead of people of higher status. At that point, Visa (and to a lesser extent Mastercard) transaction volume increased dramatically. Merchants needed the largest number of customers with cards, not the most financially stable. As Visa volume grew, and people started using Visa for small purchases, the use of American Express decreased as their habits changed (once someone got used to pulling out Visa, they did it in every situation). Merchants are less willing to go through the extra hassle of accepting cards that are used by fewer people. Over time, I suspect this process led to the gap between Visa and American Express. As a merchant, in order to accept credit cards, you have to set up a bank account and maintain a merchant account. Accepting Visa, MC and Discover can all be done through one account, but American Express has traditionally required a separate relationship, as well as its own set of rules and fees that were generally higher. Since there are relatively few American Express cardholders compared to Visa, there is doubt about whether it is worth it accept the card. It depends upon the customer base. Fine restaurants still generally accept American Express. |
Are Certificates of Deposit worth it compared to investing in the stock market? | Of course CDs are worth it compared to the stock market. In fact, most institutional investors are envious of the CDs you have access to as an individual investor that are unavailable to them. You just need to be competent enough to shop around for the best rates and understand your time horizon. There are several concepts to understand here: Banks give out CDs with competitive rates projecting future interest rates. So while the Federal funds rate is currently extremely low, banks know that in order to get any takers on their CDs they have to factor in the public expectation that rates will rise, so if you lock in a longer term CD you get a competitive rate. Institutional investors do not have access to FDIC insured CDs and the closest analog they participate in are the auctions and secondary markets of US Treasuries. These two types of assets have equivalent default (non-)risk if held to maturity: backed by the full faith and credit of the U.S. Here are the current rates (as of question's date) taken from Vanguard that I can get on CDs versus Treasuries (as an individual investor). Notice that CDs outperform Treasuries across any maturity timescale! For fixed-income and bond allocations, institutional investors are lining up for buying treasuries. And yet here you are saying "CDs are not worth it." Might want to rethink that. Now going into the stock market as an investor with expectations of those high returns you quote, means you're willing to stay there for the long-term (at least a decade) and stay the course during volatility to actually have any hope of coming up with the average rate of return. Even then, there's the potential downside of risk that you still lose principal after that duration. So given that assumption, it's only fair to compare against >= 10 year CDs which are currently rated at 2 percent APY. In addition, CDs can be laddered -- allowing you to lock-in newer (and potentially higher) rates as they become available. You essentially stagger your buyin into these investments, and either reinvest upon the stilted maturity dates or use as income. Also keep in mind that while personal emergencies requiring quick access to cash can happen at any time, the most common scenario is during the sudden change from a bull market into a recession -- the time when stocks plummet. If you need money right away, selling your stocks at these times would lock in severe losses, whereas with CDs you still won't lose principal with an early exit and the only penalty is usually a sacrifice of a few months of potential interest. It's easy to think of the high yields during a protracted bull market (such as now), but personal finance has a huge behavioral component to it that is largely ignored until it's too late. One risk that isn't taken care of by either CDs or Treasuries is inflation risk. All the rates here and in the original question are nominal rates, and the real return will depend on inflation (or deflation). There are other options here besides CDs, Treasuries, and the stock market to outpace inflation if you'd like to hedge that risk with inflation protection: Series I Savings Bonds and TIPS. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | It depends on the selling price, but if we can assume the property will be sold at a profit, they are getting a pretty sweet deal at your expense. They are both getting about 5.2% interest on their money, plus the lion's share of any property appreciation. I would say that fair would be either of: |
Search index futures in Yahoo Finance or Google Finance | Yahoo finance does in fact have futures quotes. But I've found them difficult to search for because you also have to know the expiration codes for the contract to find them. S&P 500 Emini quote for June 2012 |
What else besides fees should I consider in rebalancing my fund portfolio's asset allocation? | Taxes Based on the numbers you quoted (-$360) it doesn't appear that you would have a taxable event if you sell all the shares in the account. If you only sell some of the shares, to fund the new account, you should specify which shares you want to sell. If you sell only the shares that you bought when share prices were high, then every share you sell could be considered a loss. This will increase your losses. These losses can be deducted from your taxes, though there are limits. Fees Make sure that you understand the fee structure. Some fund families look at the balance of all your accounts to determine your fee level, others treat each fund separately. Procedure If you were able to get the 10K into the new account in the next few months I would advise not selling the shares. Because it will be 6 to 18 months before you are able to contribute the new funds then rebalancing by selling shares makes more sense. It gets you to your goal quicker. All the funds you mentioned have low expense ratios, I wouldn't move funds just to chase a the lowest expense ratio. I would look at the steps necessary to get the mix you want in the next few weeks, and then what will be needed moving forward. If the 60/40 or 40/60 split makes you comfortable pick one of them. If you want to be able to control the balance via rebalancing or changing your contribution percentage, then go with two funds. |
Why should we expect stocks to go up in the long term? | Stocks "go up 5-7% every year. This has been true for the last 100 years for the S&P500 index...." This was true in the 20th century in America. It was not true (over the whole century) for other major countries like Germany, Russia, Japan, or China. (It was more or less true for Britain and certain Commonwealth countries like Australia and Canada.) A lot of this had to do with which countries were occupied (or not) during the two world wars. In one of his company's annual reports, Warren Buffett pointed out that the U.S. standard of living went up 6-7 times in the 20th century, that this was unprecedented (and might not be repeatable in the 21st century). The performance of the U.S. stock market in the past century is representative of those (and other) past facts. If a different set of facts prevails going forward, the U.S. stock market would be reflective of those "different" facts. |
What is the added advantage of a broker being a member of NFA in addition to IIROC | This shows that in each market (US and Canada) the company is registered with the appropriate regulatory organization. OANDA is registered in the US with the National Futures Association which is a "self-regulatory organization for the U.S. derivatives industry". OANDA Canada is registered in Canada with IIROC which is the "Investment Industry Regulatory Organization of Canada". The company does business in both the US and in Canada so the US arm is registered with the US regulatory organization and the Canadian arm is registered with the Canadian regulatory organization. |
Recommended education path for a future individual investor? | It depends on whether you want a career as a fund manager/ analyst or if you want to be an investor/ trader. A fund manager will have many constraints that a private investor doesn’t have, as they are managing other people’s money. If they do invest their own money as well they usually would invest it differently from how they invest the fund's money. Many would just get someone else to invest their money for them, just as a surgeon would get another surgeon to operate on a family member. My suggestion to you is to find a job you like doing and build up your savings. Whilst you are building up your savings read some books. You said you don’t know much about the financial markets, then learn about them. Get yourself a working knowledge about both fundamental and technical analysis. Work out which method of analysis (if not both) suits you best and you would like to know more about. As you read you will get a better idea if you prefer to be a long term investor or a short term trader or somewhere in-between or a combination of various methods. Now you will start to get an idea of what type of books and areas of analysis you would like to concentrate on. Once you have a better idea of what you would like to do and have gained some knowledge, then you can develop your investment/trading plan and start paper trading. Once you are happy with you plan and your paper trading you can start trading with a small account balance (not more than $10,000 and preferably under $5,000). No matter how well you did with paper trading you will always do worse with real money at first due to your emotions being in it now. So always start off small. If you want to become good at something it takes time and a lot of hard work. You can’t go from knowing nothing to making a million dollars per year without putting in the hard yards first. |
Why would someone buy a way out-of-the-money call option that's expiring soon? | The most likely explanation is that the calls are being bought as a part of a spread trade. It doesn't have to be a super complex trade with a bunch of buys or sells. In fact, I bought a far out of the money option this morning in YHOO as a part of a simple vertical spread. Like you said, it wouldn't make sense and wouldn't be worth it to buy that option by itself. |
Moonlighting as a software developer: employee or independent contractor w/ LLC? | I've been in a similar situation before. While contracting, sometimes the recruiting agency would allow me to choose between being a W2 employee or invoicing them via Corp-2-Corp. I already had a company set up (S-Corp) but the considerations are similar. Typically the C2C rate was higher than the W2 rate, to account for the extra 7.65% FICA taxes and insurance. But there were a few times where the rate offered was identical, and I still choose C2C because it enabled me to deduct many of my business expenses that I wouldn't have otherwise been able to deduct. In my case the deductions turned out to be greater than the FICA savings. Your case is slightly different than mine though in that I already had the company set up so my company related costs were "sunk" as far as my decision was concerned. For you though, the yearly costs associated with running the business must be factored in. For example, suppose the following: Due to these expenses you need to make up $3413 in tax deductions due to the LLC. If your effective tax rate on the extra income is 30%, then your break even point is approximately $8K in deductions (.3*(x+3413)=3413 => x = $7963) So with those made up numbers, if you have at least $8K in legitimate additional business expenses then it would make sense to form an LLC. Otherwise you'd be better off as a W2. Other considerations: |
How and where do companies publish financial reports? | Yes it is true. The US based companies have to meet the requirements placed on them by the US government. The agency with all these reports is the Security and Exchange Commission. They run the EDGAR system to hold all those required reports The SEC’s EDGAR database provides free public access to corporate information, allowing you to quickly research a company’s financial information and operations by reviewing registration statements, prospectuses and periodic reports filed on Forms 10-K and 10-Q. You also can find information about recent corporate events reported on Form 8-K but that a company does not have to disclose to investors. EDGAR also provides access to comment and response letters relating to disclosure filings made after August 1, 2004, and reviewed by either the Division of Corporation Finance or the Division of Investment Management. On May 22, 2006, the staffs of the Divisions of Corporation Finance and Investment Management began to use the EDGAR system to issue notifications of effectiveness for Securities Act registration statements and post-effective amendments, other than those that become effective automatically by law. These notifications will be posted to the EDGAR system the morning after a filing is determined to be effective. As pointed out by Grade 'Eh' Bacon: Other countries may require different types of information to be reported to the public, in particular, financial statements. To find the financial statements released for a particular company, you can go to the appropriate stock exchange, or often simply the company's corporate website. |
How can a Canadian establish US credit score | Sorry. As far as I know, a person's SS is the only way to establish credit. This is the first thing they ask whenever you apply for any service in the US. |
How to reconcile a credit card that has an ongoing billing dispute? | What I would prefer is top open a new category charges under dispute and park the amount there. It can be made as an account as well in place of a income or expenses category. This way your account will reconcile and also you will be able to track the disputes. |
Is Cost of Living overstated? | You mention: High rent places are usually also high property value places. Given the tax incentives, it seems like a good long term idea to grab a house, so if we assume you have the option of working and buying a house in a high CoL or a low CoL city, I think you'd prefer the high cost. Because essentially, after 30 years, you'd have a million dollar house vs a quarter million dollar house. You've captured three quarters of a million dollars in rent, given my napkin math hypothetical. I think you're forgetting about some of the associated costs with "owning" a home, including: |
If a stock has only buyers and no sellers how does its price go up? | You are interpreting things wrong. Indian Infotech and Software Ltd (BOM:509051) clearly has volume and trades. The MoneyControl site says Your words like "Nobody is selling the stock" and "no trade going on" are completely unfounded. |
Options for dummies. Can you explain how puts & calls work, simply? | (buy these when you expect the price to go down) You 'lock in' the price you can sell at. If the price goes down below the 'locked-in' price, you buy at the new low price and sell at the higher 'locked-in' price; make money. (buy these when you expect the price to go up) You 'lock in' the price you can buy at. If the price goes up above the 'locked-in' price, you buy at the 'locked-in' price and sell at the new higher price, make money. |
Cannot get a mortgage because I work through a recruiter | As a follow-up, I was able to find a bank that gave me a loan. I just called several banks listed on Yelp, and one ended up working with me. It is also possible that the previous banks misunderstood me and assumed I was 1099 and not W2. I made it very clear to this guy that I was W2, and there was absolutely no problem. Also, it turned out the recruiter I work for has special paperwork their employees can give to lenders to verify W2 employment. So, I have been in my condo since January. And, the condo was a little under $250K. Anyway, I still think it's ABSOLUTELY RIDICULOUS that banks would not give a loan to a web developer who is in super high demand and making well over 100K/year -- even if I am 1099. I have never, ever in my life been late on a single payment for anything, and I have an 800 credit score. To even question that I could not make payments is ludicrous. Whenever I put my resume on monster.com (just one web site), I receive about 20 phone calls daily -- and I am not exaggerating even slightly. |
How do I bring money overseas? | This page from TripAdvisor may be of interest. Look at what fees are charged on your ATM cards and credit cards, and consider overpaying your credit card so you have a credit balance that you can draw on for cash "advances" from ATMs that will dispense in local currency. Depending on what fees your bank charges, you may get a better rate than the forex cash traders at the airport. Edit: Cards may not always have the best rate. I recently heard from a traveler who was able to use a locally but not globally dominant currency to buy cash of a major currency at a shopping mall (with competitive forex traders) at rates even better than the mid-market rates posted at xe.com and similar places; I don't think you'll have that experience going from Australia to Malaysia (but another traveler reading this might have a different pair). In my experience the card rates are slightly worse than those and the airport forex traders significantly worse. |
What does F[YY]e mean in reporting | that means fiscal year 2015,Most internal company in China or India have different fiscal year to estimate financial state when it run to the end of year |
How come the government can value a home more than was paid for the house? | From my perspective I suspect that if the government use the paid price, people will start to buy at very low nominal prices in order to pay less taxes, and will repay the seller by other means. |
Possible replacement for Quicken | I would investigate mint.com further. Plenty of people have written off using them because Intuit purchased them, but that seems like cutting of your nose to spite your face. I think mint.com is worth it for its Trends functionality alone, not to mention its automatic categorization of your purchases, reminders when bills are due, notifications of increased credit card interest rates, and overdraft notices. I don't think mint.com schedules bills & deposits, but it tracks stocks & mutual fund investments and compares your portfolio returns against Dow Jones, S&P 500, or NASDAQ if you wish. I'm not sure I see the advantage of manual transaction entry, but you can add cash or check transactions manually. As I mentioned earlier, automated categorization is a great feature. In addition, you can tag certain transactions as reimbursable or tax-related. If the primary feature you're interested in is stock quotes, maybe something like Yahoo Finance or Google Finance will be enough. |
Is there a free, online stock screener for UK stocks? | I'm actually building a UK stock screener right now. It's more of an exercise in finding out how to work out technical things like MACD and EMA calculations, but if those are the things you're interested in, it's at http://www.pifflevalve.co.uk/screen-builder/ As I say, it's more of a personal project than anything commercial, but it's fun to play with. |
Is there a significant danger to market orders as opposed to limit orders? | The risk of market orders depends heavily on the size of the market and the exchange. On big exchange and a security which is traded in hue numbers you're likely that there are enough participants to give you a "fair" price. Doing a market order on a security which is hardly dealed you might make a bad deal. In Germany Tradegate Exchange and the sister company the bank Tradegate AG are known to play a bit dirty: Their market is open longer than Frankfurt (Xetra) and has way lower liquidity. So it can happen that not all sell or buy orders can be processes on the Exchange and open orders are kept. Then Tradegate AG steps in with a new offer to full-fill these trades selling high or buying low. There is a German article going in details on wiwo.de either German or via Google Translate |
What does net selling or buying of a stock mean? | I'm not sure the term actually has a clear meaning. We can think of "what does this mean" in two ways: its broad semantic/metaphorical meaning, and its mechanical "what actual variables in the market represent this quantity". Net buying/selling have a clear meaning in the former sense by analogy to the basic concept of supply and demand in equilibrium markets. It's not as clear what their meaning should be in the latter sense. Roughly, as the top comment notes, you could say that a price decrease is because of net selling at the previous price level, while a price rise is driven by net buying at the previous price level. But in terms of actual market mechanics, the only way prices move is by matching of a buyer and a seller, so every market transaction inherently represents an instantaneous balance across the bid/ask spread. So then we could think about the notion of orders. Actual transactions only occur in balance, but there is a whole book of standing orders at various prices. So maybe we could use some measure of the volume at various price levels in each of the bid/ask books to decide some notion of net buying/selling. But again, actual transactions occur only when matched across the spread. If a significant order volume is added on one side or the other, but at a price far away from the bid/offer - far enough that an actual trade at that price is unlikely to occur - should that be included in the notion of net buying/selling? Presumably there is some price distance from the bid/offer where the orders don't matter for net buying/selling. I'm sure you'd find a lot of buyers for BRK.A at $1, but that's completely irrelevant to the notion of net buying/selling in BRK.A. Maybe the closest thing I can think of in terms of actual market mechanics is the comparative total volumes during the period that would still have been executed if forced to execute at the end of period price. Assuming that traders' valuations are fixed through the period in question, and trading occurs on the basis of fundamentals (which I know isn't a good assumption in practice, but the impact of price history upon future price is too complex for this analysis), we have two cases. If price falls, we can assume all buyers who executed above the last price in the period would have happily bought at the last price (saving money), while all sellers who executed below the last price in the period would also be happy to sell for more. The former will be larger than the latter. If the price rises, the reverse is true. |
CEO entitlement from share ownership? | In its basic form, a corporation is a type of 'privileged democracy'. Instead of every citizen having a vote, votes are allocated on the basis of share ownership. In the most basic form, each share you own gives you 1 vote. In most public companies, very few shareholders vote [because their vote is statistically meaningless, and they have no particular insight into what they want in their Board]. This means that often the Board is voted in by a "plurality" [ie: 10%-50%] of shareholders who are actually large institutions (like investment firms or pension funds which own many shares of the company). Now, what do shareholders actually "vote on"? You vote to elect individuals to be members of the Board of Directors ("BoD"). The BoD is basically an overarching committee that theoretically steers the company in whatever way they feel best represents the shareholders (because if they do not represent the shareholders, they will get voted out at the next shareholder meeting). The Board members are typically senior individuals with experience in either that industry or a relevant one (ie: someone who was a top lawyer may sit on the BoD and be a member of some type of 'legal issues committee'). These positions typically pay some amount of money, but often they are seen as a form of high prestige for someone nearing / after retirement. It is not typically a full time job. It will typically pay far, far less than the role of CEO at the same company. The BoD meets periodically, to discuss issues regarding the health of the company. Their responsibility is to act in the interests of the shareholders, but they themselves do not necessarily own shares in the company. Often the BoD is broken up into several committees, such as an investment committee [which reviews and approves large scale projects], a finance committee [which reviews and approves large financial decisions, such as how to get funding], an audit committee [which reviews the results of financial statements alongside the external accountants who audit them], etc. But arguably the main role of the BoD is to hire the Chief Executive Officer and possibly other high level individuals [typically referred to as the C-Suite executives, ie Chief Financial Officer, Chief Operating Officer, etc.] The CEO is the Big Cheese, who then typically has authority to rule everyone below him/her. Typically there are things that the Big Cheese cannot do without approval from the board, like start huge investment projects requiring a lot of spending. So the Shareholders own the company [and are therefore entitled to receive all the dividends from profits the company earns] and elects members of the Board of Directors, the BoD oversees the company on the Shareholders' behalf, and the CEO acts based on the wishes of the BoD which hires him/her. So how do you get to be a member of the Board, or the CEO? You become a superstar in your industry, and go through a similar process as getting any other job. You network, you make contacts, you apply, you defend yourself in interviews. The shareholders will elect a Board who acts in their interests. And the Board will hire a CEO that they feel can carry out those interests. If you hold a majority of the shares in a company, you could elect enough Board members that you could control the BoD, and you could then be guaranteed to be hired as the CEO. If you own, say, 10% of the shares you will likely be able to elect a few people to the Board, but maybe not enough to be hired by the Board as the CEO. Short of owning a huge amount of a company, therefore, share ownership will not get you any closer to being the CEO. |
Why would a company care about the price of its own shares in the stock market? | Aside of the other (mostly valid) answers, share price is the most common method of valuating the company. Here is a bogus example that will help you understand the general point: Now, suppose that Company A wants to borrow $20 Million from a bank... Not a chance. Company B? Not a problem. Same situation when trying to raise new funds for the market or when trying to sell the company or to acquire another |
Double entry for mortgage | For the purpose of personal finance, treating $500 as Interest Expense is sufficient. For business accounting, it involves making the $500 a contra-liability and amortizing it as interest expense over the course of life of the loan. |
Is Volvo a public company? | There are two different companies named "Volvo." The publicly-traded company with ticker symbol VOLV-B is called Volvo Group, or AB Volvo. They primarily build trucks, buses, and construction equipment. The company that makes the Volvo branded cars is called Volvo Cars. It is a privately-held company currently owned by the Chinese Geely Holding Group. It was all one company until 1999, when AB Volvo sold off its car brand to Ford. Because of the history, the two companies share the same logo. |
What are the financial advantages of living in Switzerland? | The cost of living is quite high in New York City. It has the highest CPI (Consumer Price Index) of any city in the U.S. Salaries also tend to be highest in NYC. Just about any bicycle lock sold in the U.S. has an exception in its warranty for NYC. It is the most populous American city. So, why do people deal with all the hassles of living here? Because, it is a hotbed of activity. I venture that the advantages are basically the same in Zurich: |
Accounting equation: does income really decrease equity? | Equity is the term to make things balance. In a simple transaction, you get $100 paid to you. Income goes up by $100 and the asset of whatever bank account or petty cash drawer you put it into also goes up by $100. Equity is unchanged. If for some reason you had to take some income into your books, but no asset increased, no debt decreased, and you had no way to take an offsetting expense into your books, then this would lower your equity. How else to explain having "earned" $100 but having nothing to show for it? |
What exactly can a financial advisor do for me, and is it worth the money? | Technically, anyone who advises how you should spend or proportion your money is a financial adviser. A person that does it for money is a Financial Advisor (difference in spelling). Financial Advisors are people that basically build, manage, or advise on your portfolio. They have a little more institutional knowledge on how/where to invest, given your goals, since they do it on a daily basis. They may know a little more than you since, they deal with many different assets: stocks, ETFs, mutual funds, bonds, insurances (home/health/life), REITs, options, futures, LEAPS, etc. There is risk in everything you do, which is why what they propose is generally according to the risk-level you want to assume. Since you're younger, your risk level could be a little higher, as you approach retirement, your risk level will be lower. Risk level should be associated with how likely you're able to reacquire your assets if you lose it all as well as, your likelihood to enjoy the fruits from your investments. Financial Advisors are great, however, be careful about them. Some are payed on commissions, which are given money for investing in packages that they support. Basically, they could get paid $$ for putting you in a losing situation. Also be careful because some announce that they are fee-based - these advisers often receive fees as well as commissions. Basically, associate the term "commission" with "conflict-of-interest", so you want a fee-only Advisor, which isn't persuaded to steer you wrong. Another thing worth noting is that some trading companies (like e*trade) has financial services that may be free, depending how much money you have with them. Generally, $50K is on the lower end to get a Financial Advisors. There has been corruption in the past, where Financial Advisors are only given a limited number of accounts to manage, that means they took the lower-valued ones and basically ran them into the ground, so they could get newer ones from the lot that were hopefully worth more - the larger their portfolio, the more $$ they could make (higher fees or more commissions) and subjectively less work (less accounts to have to deal with), that's subjective, since the spread of the wealth was accross many markets. |
Current accounts reward schemes and reciprocal standing orders? | I don't think it would be counted as income, and if it's a short-term loan it doesn't really matter as the notional interest on the loan would be negligible. But you can avoid any possible complications by just having two accounts in the name of the person trying to get the account benefits, particularly if you're willing to just provide the "seed" money to get the loop started. |
Minor stakes bought at a premium & valuation for target company | In some cases, when a company purchases a minor stake, they often intend to increase the size of the stake over time. As a reference, note that Coca Cola has increased their stake in Green Mountain Coffee Roasters (GMCR) over time. It also adds some "support" to the price because these investors may be willing to step in and purchase the stock if there is any distress or poor performance. Finally, its generally a good "tell" that the stock has good things going for it and may be subject to additional interest from large investors. |
Do query services like Google Finance and Yahoo Finance go back to correct busted and adjusted trades? | No. Busts are very infrequent, and if an equity were illiquid enough to be affected, the bust cost would be enormous. For a liquid equity, the amount of busted volume is insignificant except during a flash crash or flash spike. Then it would be reasonable to redownload. |
Do I need to prove 'Garage Sale' items incurred a loss | -Alain Wertheimer I'm a hobbyist... Most (probably all) of those older items were sold both prior to my establishing the LLC This is a hobby of yours, this is not your business. You purchased all of these goods for your pleasure, not for their future profit. The later items that you bought after your LLC was establish served both purposes (perks of doing what you love). How should I go about reporting this income for the items I don't have records for how much I purchased them for? There's nothing you can do. As noted above, these items (if you were to testify in court against the IRS). "Losses from the sale of personal-use property, such as your home or car, aren't tax deductible." Source Do I need to indicate 100% of the income because I can't prove that I sold it at a loss? Yes, if you do not have previous records you must claim a 100% capital gain. Source Addition: As JoeTaxpayer has mentioned in the comments, the second source I posted is for stocks and bonds. So at year begin of 2016, I started selling what I didn't need on eBay and on various forums [January - September]. Because you are not in the business of doing this, you do not need to explain the cost; but you do need to report the income as Gross Income on your 1040. Yes, if you bought a TV three years ago for a $100 and sold it for $50, the IRS would recognize you earning $50. As these are all personal items, they can not be deducted; regardless of gain or loss. Source Later in the year 2016 (October), I started an LLC (October - December) If these are items that you did not record early in the process of your LLC, then it is reported as a 100% gain as you can not prove any business expenses or costs to acquire associated with it. Source Refer to above answer. Refer to above answer. Conclusion Again, this is a income tax question that is split between business and personal use items. This is not a question of other's assessment of the value of the asset. It is solely based on the instruments of the IRS and their assessment of gains and losses from businesses. As OP does not have the necessary documents to prove otherwise, a cost basis of $0 must be assumed; thus you have a 100% gain on sale. |
Can stock market gains be better protected under an LLC arrangement? | The thing you get wrong is that you think the LLC doesn't pay taxes on gains when it sells assets. It does. In fact, in many countries LLC are considered separate entities for tax properties and you have double taxation - the LLC pays its own taxes, and then when you withdraw the money from the LLC to your own account (i.e.: take dividends) - you pay income tax on the withdrawal again. Corporate entities usually do not have preferential tax treatment for investments. In the US, LLC is a pass-though entity (unless explicitly chosen to be taxed as a corporation, and then the above scenario happens). Pass-through entities (LLCs and partnerships) don't pay taxes, but instead report the gains to the owners, which then pay taxes as if the transaction was their personal one. So if you're in the US - investing under LLC would have no effect whatsoever on your taxes, or adverse effect if you chose to treat it as a corporation. In any case, investing in stocks is not a deductible expense, and as such doesn't reduce profits. |
When to buy and sell bonds | Why does selling a bond drive up the yield? The bond will pay back a fixed amount when it comes due. The yield is a comparison of what you pay for the bond and what will be repaid when it matures (assuming no default). Why does the yield go up if the country is economically unstable? If the country's economy is unstable, that increases the chance that they will default and not pay the full value of the bonds when they mature. People are selling them now at a loss instead of waiting for a default later for a greater loss. So if you think Greece is not going to default as it's highly likely a country would completely default, wouldn't it make sense to hold onto the bonds? Only if you also think that they will pay back the full value at maturity. It's possible that they pay some, but not all. It's also possible that they will default. It's also possible that they will get kicked out of the Euro and start printing Drachmas again, and try to pay the bonds back with those which could devalue the bonds through inflation. The market is made of lots of smart people. If they think there are reasons to worry, there probably are. That doesn't mean they can predict the future, it just means that they are pricing the risk with good information. If you are smarter than the herd, by all means, bet against them and buy the bonds now. It can indeed be lucrative if you are right, and they are wrong. |
How do you declare revenues from YouTube earnings in the USA if you are a minor? | If you receive a 1099-MISC from YouTube, that tells you what they stated to the IRS and leads into most tax preparation software guided interviews or wizards as a topic for you to enter. Whether or not you have a 1099-MISC, this discussion from the IRS is pertinent to your question. You could probably elect to report the income as a royalty on your copyrighted work of art on Schedule E, but see this note: "In most cases you report royalties in Part I of Schedule E (Form 1040). However, if you ... are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040)." Whether reporting on Schedule E or C is more correct or better for your specific circumstances is beyond the advice you should take from strangers on the internet based on a general question - however, know that there are potentially several paths for you. Note that this is revenue from a business, so if you paid for equipment or services that are 100% dedicated to your YouTubing (PC, webcam, upgraded broadband, video editing software, vehicle miles to a shoot, props, etc.) then these are a combination of depreciable capital investments and expenses you can report against the income, reducing the taxes you may owe. If the equipment/services are used for business and personal use, there are further guidelines from the IRS as to estimating the split. These apply whether you report on Sch. E, Sch. C, or Sch C-EZ. Quote: "Self-Employment Income It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income. All income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040. Use Form 1040, Schedule C, Profit or Loss from Business, or Form 1040, Schedule C-EZ, Net Profit from Business (Sole Proprietorship) to report income and expenses. Taxpayers will also need to prepare Form 1040 Schedule SE for self-employment taxes if the net profit exceeds $400 for a year. Do not report this income on Form 1040 Line 21 as Other Income. Independent contractors must report all income as taxable, even if it is less than $600. Even if the client does not issue a Form 1099-MISC, the income, whatever the amount, is still reportable by the taxpayer. Fees received for babysitting, housecleaning and lawn cutting are all examples of taxable income, even if each client paid less than $600 for the year. Someone who repairs computers in his or her spare time needs to report all monies earned as self-employment income even if no one person paid more than $600 for repairs." |
What options do I have at 26 years old, with 1.2 million USD? | Lots of good advice so far. Here's some meta-advice. Read through everything here twice, and distill out what the big picture ideas are. Learn about what you need to know about them. Pick a strategy and/or long term goals. Work toward them. Get advice from many many places and distill it. This is currently known as crowd-sourcing but I've been doing it all my life. It's very effective. No one will ever care as much about your money as you. Some specific things I haven't seen mentioned (or not mentioned much): |
How to find out the amount of preferred stock of Coca Cola Company? | They were issued in 1919 and eliminated in 1926. This means that Coca-Cola redeemed them in 1926 and either converted the preferred's to common stock or paid the preferred investor's back their full par value and took them off the books. |
Are Index Funds really as good as “experts” claim? | A lot of it boils down to these key points: |
Can I trust the Motley Fool? | I would personally beware of the Motley Fool. Their success is based largely on their original investment strategy book. It had a lot of good advice in it, but it pushed a strategy called "The Foolish Four" which was an investing strategy. Since it was based on a buy-and-hold method with 18-month evaluation intervals, it was not a get-rich-quick scheme. However, its methods were validated through data mining and subsequently turned out to be not so good. At least they admit this: http://www.fool.com/ddow/2000/ddow001214.htm |
Is this trick enough to totally prevent bankrupcy in a case of a crash? | Adding to the answers above, there is another source of risk: if one of the companies you are short receives a bid to be purchased by another company, the price will most probably rocket... |
What is the best way to get a “rough” home appraisal prior to starting the refinance process? | I see your remarks regarding Zillow, but would add a question. Why not look only for recent sales? If you find homes similar to yours with recent sales, that's similar to how the appraisers do it. I've refinanced many times and each time, I looked at sales within three miles of my house. I hit the appraised price very close in my estimate, high or low compared to Zillow, but used transaction data from there.just my thought. I chose a random neighborhood, and this was the first house I clicked. The main view shows last sale date, so I'd obviously suggest the OP look for more recent ones. If turnover is that low in his neighborhood, I understand, but the comment that transactions aren't listed is factually incorrect. I'd like my 2pts back. :) |
Why do some companies offer 401k retirement plans? | The company itself doesn't benefit. In most cases, it's an expense as the match that many offer is going to cost the company some percent of salary. As Mike said, it's part of the benefit package. Vacation, medical, dental, cafeteria plans (i.e. both flexible spending and dependent care accounts, not food), stock options, employee stock purchase plans, defined contribution or defined benefit pension, and the 401(k) or 403(b) for teachers. Each and all of these are what one should look at when looking at "total compensation". You allude to the lack of choices in the 401(k) compared to other accounts. Noted. And that lack of choice should be part of your decision process as to how you choose to invest for retirement. If the fess/selection is bad enough, you need to be vocal about it and request a change. Bad choices + no match, and maybe the account should be avoided, else just deposit to the match. Note - Keith thanks for catching and fixing one typo, I just caught another. |
Should I use my non-tax advantaged investment account to pay off debt? | Paying off debts will reduce your monthly obligation to creditors (less risk) and also remove the possibility of foreclosure / repossession / lawsuit if you ever lost access to income (less risk). Risk is an important part of the equation that can get overlooked. It sounds like pulling that money out of the market will reduce your yearly tax bill as well. |
Why do shareholders participate in shorting stocks? | Short sellers have to pay interest on the borrowings to the shareholders. Although many times brokers don't pass on these earnings to the shareholders, this is the exchange. |
Query regarding international transaction between governments | Buyer A didn't send money to the US government, Buyer A sent money to Seller B, a US resident. I think the most common way to facilitate a transaction like this is a regular old international wire transfer. Buyer A in India goes to their bank to exchange X INR to $1mm USD. $1mm USD is then wire transferred to Seller B's bank account. The USD was sold to Buyer A, either by funds held by Buyer A's bank, or foreign exchange markets, or possibly the US government. Seller B may owe taxes on the gain derived from the sale of this thing to Buyer A, but that taxation would arise regardless of who the buyer was. Buyer A may owe an import tax in India upon importing whatever they bought. I don't think it's common to tax imported money in this sort of transactional setting though. |
What makes a Company's Stock prices go up or down? | There are many things that can make a company's share price go up or down. Generally, over the long term, the more consistently profitable a company is the more its share price will go up. However, there are times when a company may not be making any profits yet but its share price still goes up. This can be due to forecasts that the company will start making profits in the near future. Sometimes a company may report increased profits from the previous year but makes less than what the market was expecting it to make. This can cause its share price to fall, as the market is disappointed in the results. In the shorter term greed, fear and speculation can make a company's share price move irrationally. When you think the share price should be going up it suddenly falls, and Vis-versa. When interest rates are low, companies with higher dividend yields (compared to bank account interest rates) become high in demand and their shares generally go up in price. As the share price goes up the dividend yield will be reduced unless the company continues to increase the dividend it distributes to shareholders. When interest rates start to rise these companies become less favourable as they are seen as higher risk comparable to similar returns from having one's money in the safety of the bank. This can cause the share prices to fall. These are just some of the reasons that make a company's share price move up or down. As humans are an irrational bunch often ruled by emotions, sometimes the reasons share prices move in a particular direction can be quite confusing, but that is the nature of the financial markets. |
What size “nest egg” should my husband and I have, and by what age? | There's a bit of working backwards that's required. This is a summary of a spreadsheet I wrote which helps to get to the answer. What you see here is that at age 25, one might have saved about a half year's salary, assuming they worked 5 years. The numbers grow exponentially to at 65, about 15 years salary saved. This will allow a withdrawal of about 60% final income each year using the 4% guideline. More will come from Social Security in the States to get closer to 100%. The sheet start with assumptions, a 10% per year rate of saving, and an 8% annual return. Salary is assumed to rise 3% per year. One can choose their age, enter their current numbers and their own assumptions. I had to include some numbers and at the time, 8% seemed reasonable. Not so sure today. What I do like is the concept of viewing savings in terms of 'years salary' as this leads to replacement rate. Will $1M be enough for you? Only you can answer that. But the goal of 80-100% replacement income is reasonable and this sheet can be used to understand the goals along the way. (note, the uploaded sheet had 15% saving rate, not the 10 I thought. I used 15 to show a 10% saving along with a 5% match to one's 401(k). Those interested are welcome to enter their own numbers. The one objection I've seen is the increase to salary. Increases tend to be higher in the first 20 than the second, or so I'm told.) |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | Here's an interesting link to a discussion about an Australian investor group back in the 1990s that bought almost every combination in the West Virginia lottery. It's pretty fascinating stuff. How An Australian Group Cornered A Lottery I don't need to add to what's already been said here, but it's a fun story! |
Why are banks providing credit scores for free? | An alternative take on the "why" is that most people's credit is better than they think, and all of these banks offer credit products. Put a "good credit" badge next to an ad for a shiny new card or auto refi, and it's just good business. |
Is there any benefit to investing in an index fund? | Beatrice does a good job of summarizing things. Tracking the index yourself is expensive (transaction costs) and tedious (number of transactions, keeping up with the changes, etc.) One of the points of using an index fund is to reduce your workload. Diversification is another point, though that depends on the indexes that you decide to use. That said, even with a relatively narrow index you diversify in that segment of the market. A point I'd like to add is that the management which occurs for an index fund is not exactly "active." The decisions on which stocks to select are already made by the maintainers of the index. Thus, the only management that has to occur involves the trades required to mimic the index. |
Does a growing economy mean the economy is becoming less efficient? | Growth and efficiency can occur independently of each other. For instance, if an economy consists of one inefficient business and then a second more efficient business opens to compete agains the first the overall efficiency increases while the economy grows. New industries tend to be inefficient at the beginning (since initiation is more important than optimisation) and then become more efficient over time. Agriculture is an amazingly efficient business if you consider how many people now produce the amount of food we consume in comparison to only 100 years ago. Plus, efficiency is not only about producing extra widgets. You could produce the same number of widgets for lower cost. Outsourcing to China (taking advantage of their lower cost of production) increases the efficiency of the US economy, but also increases the efficiency of the Chinese economy (since extra work is created producing more things). Lower costs in the US lead to increased investment in other production. Increased production in China leads to the rising wages there. Growth can be achieved in both places for very different reasons. So, no, growth doesn't have to come about through less efficiency. |
Discount Rate vs. IRR | The IRR is the Discount Rate r* that makes Net Present Value NPV(r*)==0. What this boils down to is two ways of making the same kind of profitability calculation. You can choose a project with NPV(10%)>0, or you can choose based on IRR>10%, and the idea is you get to the same set of projects. That's if everything is well behaved mathematically. But that's not the end of this story of finance, math, and alphabet soup. For investments that have multiple positive and negative cash flows, finding that r* becomes solving for the roots of a polynomial in r*, so that there can be multiple roots. Usually people use the lowest positive root but really it only makes sense for projects where NPV(r)>0 for r<r* and NPV(r)<0 for r>r*. To try to help with your understanding, you can evaluate a real estate project with r=10%, find the sum future discounted cash flows, which is the NPV, and do the project if NPV>0. Or, you can take the future cash flows of a project, find the NPV as a function of the rate r, and find r* where NPV(r*)==0. That r* is the IRR. If IRR=r*>10% and the NPV function is well behaved as above, you can also do the project. When we don't have to worry about multiple roots, the preceding two paragraphs will select the same identical sets of projects as meeting the 10% return requirement. |
How does a typical vesting timeline work with respect to employer contributions? | There are two dates that matter for vesting in this situation: If you left the company on 12/31/16, you would be entitled to none of the company contributions. If you left on 1/1/17, you would be entitled to all $20k. This is sometimes known as a cliff vesting schedule. Some companies do a stair step - 20% after year 1, 40% after year 2, etc. This is known as graded vesting. But, that is not the case based on the language here. |
Why could rental costs for apartments/houses rise while buying prices can go up and down? | Economically, you would say that purchased and rented real estate are not perfect substitutes--they are largely separate markets. Only a few people are able to easily switch from one to the other and that choice is sticky--for example, once you buy a house, prices would have to rise a lot for it to be worth it to sell it and move into an apartment. In both markets there is a supply and demand curve, but the slope of the demand curve for houses to purchase is much steeper than the demand curve for rentals. The market for new housing fluctuates rapidly because it requires a large change in housing prices to change the number of people looking to buy a house. Most decisions to buy a house are not driven by the state of the housing market. This describes a supply/demand graph with a very steep demand curve. Additionally, because of the leverage provided by mortgages, the demand for houses depends critically on relatively small changes in the interest rate and availability of loans. Thus the steep demand curve shifts all over the place as borrowing conditions change. On the other hand, apartment prices are more stable because people easily move from one apartment to another and people living in their parent's basements easily move into apartments if prices change. A small change in the price or quantity of rentals brings about reasonable response in quantity demanded. This is the situation where the demand curve is shallow. In addition, rentals are not tied to interest rates tightly, nor are they as strongly tied to economic conditions (in a recession, people avoid buying but renters continue to rent). |
S-Corp partnership startup. How to pay owners with minimal profit? | S-Corp income is passed through to owners and is taxed on their 1040 as ordinary income. If you take a wage (pay FICA) and then take additional distributions these are not subject to FICA. A lot of business owners will buy up supplies/ necessary expenses right before the end of the tax year to lower their tax liability. |
Good Percentage Return on Equity? | Yes definitely Warren Buffet averaged returns of only around 21% throughout his 40 years in business. ROE of 23% is probably more than double the ROE of most companies , whats more as the saying goes its easier to grow sales from 1 million to 100 million than to grow sales from 100 million to 10 billion |
What is the role of a manager in a passively managed index fund? | There is trading, and while it can be automated, someone has to define the rules for the automated system. Why not call that person the manager? |
Beginning investment | Your question is very broad. Whole books can and have been written on this topic. The right place to start is for you and your wife to sit down together and figure out your goals. Where do you want to be in 5 years, 25 years, 50 years? To quote Yogi Berra "If you don't know where you are going, you'll end up someplace else." Let's go backwards. 50 Years I'm guessing the answer is "retired, living comfortably and not having to worry about money". You say you work an unskilled government job. Does that job have a pension program? How about other retirement savings options? Will the pension be enough or do you need to start putting money into the other retirement savings options? Career wise, do you want to be working as in unskilled government jobs until you retire, or do you want to retire from something else? If so, how do you get there? Your goals here will affect both your 25 year plan and your 5 year plan. Finally, as you plan for death, which will happen eventually. What do you want to leave for your children? Likely the pension will not be transferred to your children, so if you want to leave them something, you need to start planning ahead. 25 Years At this stage in your life, you are likely talking, college for the children and possibly your wife back at work (could happen much earlier than this, e.g., when the kids are all in school). What do you want for your children in college? Do you want them to have the opportunity to go without having to take on debt? What savings options are there for your children's college? Also, likely with all your children out of the house at college, what do you and your wife want to do? Travel? Give to charity? Own your own home? 5 Years You mention having children and your wife staying at home with them. Can your family live on just your income? Can you do that and still achieve your 50 and 25 year goals? If not, further education or training on your part may be needed. Are you in debt? Would you like to be out of debt in the next 5-10 years? I know I've raised more questions than answers. This is due mostly to the nature of the question you've asked. It is very personal, and I don't know you. What I find most useful is to look at where I want to be in the near, mid and long term and then start to build a plan for how I get there. If you have older friends or family who are where you want to be when you reach their age, talk to them. Ask them how they got there. Also, there are tons of resources out there to help you. I won't suggest any specific books, but look around at the local library or look online. Read reviews of personal finance books. Read many and see how they can give you the advice you need to reach your specific goals. Good luck! |
Is threatening to close the account a good way to negotiate with the bank? | To avoid going on and on in the comments I'm going to add this point that seems to be missing from the other answers. "Banks often offer me deals while negotiating to open an account (since they are under high pressure to open an account)" Would these happen to be the regionally advertised account opening deals like a $200 new checking account bonus if you deposit at least $x and leave it for at least 90 days? This kind of deal is not unique to you. This is not offered to you because of your unique negotiating ability. You need to understand the authority of the person you're dealing with. Products are designed in the corporate arm of the bank. Once a product is ready, it's rolled out to branches to be sold; sometimes with some fancy sign-up bonus. A checking account is a product, just like an iPhone. Apple took the headphone jack out of the iPhone 7, no amount of negotiating with the Genius at the Apple store will put it back for you. Vote with your wallet, show the bank you're unhappy by leaving. |
Search index futures in Yahoo Finance or Google Finance | Options - yes we can :) Options tickers on Yahoo! Finance will be displayed as per new options symbology announced by OCC. The basic parts of new option symbol are: Root symbol + Expiration Year(yy)+ Expiration Month(mm)+ Expiration Day(dd) + Call/Put Indicator (C or P) + Strike price Ex.: AAPL January 19 2013, Put 615 would be AAPL130119P00615000 http://finance.yahoo.com/q?s=AAPL130119P00615000&ql=1 Futures - yes as well (: Ex.: 6A.M12.E would be 6AM12.CME using Yahoo Finance symbology. (simple as that, try it out) Get your major futures symbols from here: http://quotes.ino.com/exchanges/exchange.html?e=CME |
Is there any downside to using temporary credit card numbers with subscription services? | I did just what you suggest. The card company honored the charge, they told me the temporary number was solely for the purpose of assigning a number to one vendor/business. So even though I set a low limit, the number was still active and the card company paid the request. Small price to pay, but it didn't go as I wished. For this purpose, I've used Visa/Mastercard gift cards. They are often on sale for face value and no additional fees. |
Wardrobe: To Update or Not? How-to without breaking the bank | If you budget for cloths and save up the money, you may be able to take advantage of sales when they are on. However only buy what you will use! You need to ask yourself what value you put on cloths compared to other things you can spend the money on. Also would you rather have money in the bank encase you need it rather than lots of cloths in the wardrobe? |
What are the implications of a corporate stock repurchase or share buyback program? | A stock buy back reduces the number of stocks available on the open market. Since stocks are literally a share in ownership a buy back of the stock then when the company repurchases it has the effect of increasing the percent of ownership of the company of each stock. Zynga has a Market Cap of ~1810M so a 200M buy back will increase the ownership value of each stock by ~12%. This has had the effect of an immediate stock price bump of around 12% which is to be expected as the value becomes the expected post buyback value. However long term gains will require Zynga to turn around their business. This bump will only be sustainable if they can. If their business continues to decline then its stock price will continue to slide. There are some who would rather see Zynga invest that 200m in getting a new product to market to bring revenues up rather than spending precious capital on a plan to temporarily bump a stock that is headed towards the floor. If on the other hand the revenue is poised to recover and the company has the excess capitol buying back stock low is a great way to get the most back for your shareholders bucks. Can they repurchase at any price and any time? They can write a buy order for any price at any time in the future, though they have some restrictions from the SEC mostly involving disclosures. But it is up to the sellers to choose to sell at that price. If they execute the buy back at a rate comparable to market rate then they are more likely to get takers than if they attempt to buy it back at a significant reduction from market price. So since today(10-25-2012) the it is selling for ~2.30 A buy order for 2.30 is going to get more action than one at 2.00. Investors will often look at the companies buy back offer for a company in decline(like Zynga has been) as the true value of the company. If so then a lowball buyback offer could add downward pressure on the stock price. |
Simple and safe way to manage a lot of cash | As your question appears in the second half, so will my answer. Like you, I will provide some background. I remember buying gasoline for $1.759 per gallon. I am so old that I remember buying gasoline for $0.759 per gallon. I recently paid $2.759 per gallon. You claim that your relative is not getting a very good return. Some would suggest that, at $2.759 per gallon, I am not getting a very good price on gasoline. Rates, yields, returns and the price of gas are not what they once were. It is actually difficult to get a pretty bad return relative to the current market. I suspect your relative is no longer getting what he used to get but he is getting a fair return. About record keeping. Your Uncle Sam benefits at your expense when you keep poor records. There are substantial penalties for failing to report everything. Most high school graduates can manage one checking account, one savings account, several charge cards and about 20 CDs and stocks at different institutions with little more than the following: a) a wall calendar b) a shoe box and c) a stack of 3 by 5 cards. Don't misplace the shoe box. If you can use a spreadsheet, it is even easier. Backup your data. There are a several reasons why you shouldn't consolidate all his cash and put it in a single mutual fund account and then put together a mix of investments that work well for him. - you are doing it backwards 1st put together a mix of investments that work well for him 2nd consolidate the assets. Your phrasing suggests a general lack of understanding - most CDs have penalties for early withdrawal. - while you enjoy managing your 401K in a single online account, your older relative might not be as comfortable with a lack of paper statements (see shoe box above) Let me tell you a little about my 401K. x% blue chip, y% small cap, z% bonds, w% foreign stock. Once a quarter, I change my current contribution to re-balance current value towards my target percentages. Every 30 months or so, I consider changing my asset allocation. The allocation considers my age, my spouses age, our childrens ages, my risk tolerance and my intermediate view of the markets. Your mileage my vary. to recap |
When is it better to rent and when is better buy in a certain property market? | For US punters, the Centre for Economic and Policy Research has a Housing Cost Calculator you can play with. The BBC provides this one for the UK. For everyone else, there are a few rules of thumb (use with discretion and only as a ball-park guide): Your example of a Gross Rental Yield of 5% would have to be weighed up against local investment returns. Read Wikipedia's comprehensive "Real-estate bubble" article. Update: spotted that Fennec included this link at the NY Times which contains a Buy or Rent Calculator. |
Why is tax loss harvesting helpful for passive investing? | You also may want to consider how this interacts with the stepped up basis of estates. If you never sell the stock and it passes to your heirs with your estate, under current tax law the basis will increase from the purchase price to the market price at the time of transfer. In a comment, you proposed: Thinking more deeply though, I am a little skeptical that it's a free lunch: Say I buy stock A (a computer manufacturer) at $100 which I intend to hold long term. It ends up falling to $80 and the robo-advisor sells it for tax loss harvesting, buying stock B (a similar computer manufacturer) as a replacement. So I benefit from realizing those losses. HOWEVER, say both stocks then rise by 50% over 3 years. At this point, selling B gives me more capital gains tax than if I had held A through the losses, since A's rise from 80 back to 100 would have been free for me since I purchased at 100. And then later thought Although thinking even more (sorry, thinking out loud here), I guess I still come out ahead on taxes since I was able to deduct the $20 loss on A against ordinary income, and while I pay extra capital gains on B, that's a lower tax rate. So the free lunch is $20*[number of shares]*([my tax bracket] - [capital gains rates]) That's true. And in addition to that, if you never sell B, which continues to rise to $200 (was last at $120 after a 50% increase from $80), the basis steps up to $200 on transfer to your heirs. Of course, your estate may have to pay a 40% tax on the $200 before transferring the shares to your heirs. So this isn't exactly a free lunch either. But you have to pay that 40% tax regardless of the form in which the money is held. Cash, real estate, stocks, whatever. Whether you have a large or small capital gain on the stock is irrelevant to the estate tax. This type of planning may not matter to you personally, but it is another aspect of what wealth management can impact. |
Is there any way to know how much new money the US is printing? | The Federal Reserve is not the only way that money can be "printed." Every bank does fractional reserve banking, thereby increasing the money supply every time they make a new loan. There's a number called the reserve requirement which limits how much money each bank can create. Lowering the reserve requirement allows banks to create more money. Raising it will destroy money. But banks can also destroy money by calling in loans or being less willing to make new loans. So when you look at the number of banks in the US, and the number of loans they all have, it's impossible to figure out exactly how much the money supply is expanding or contracting. |
Pros & cons in Hungary of investing retirement savings exclusively in silver? What better alternatives, given my concerns? | First is storage which is a big and a detrimental headache. Security is another big headache. Investing in precious metal has always been an investment opportunity in the countries in the east i.e. India and China because of cultural reason and due to absence of investment opportunities for the less fortunate ones. It isn't the case so in the West. Secondly what is the right an opportune moment is open to question. When the worlwide economy is up and running, that is probably the time to buy i.e. people would like to put money in use rather than store. The saying goes the other way when the economy is stagnating. Then there is also the case of waiting out the bad periods to sell your gold and silver. If you do want to buy precious metals then use a service like BullionVault, rather than doing those yourself. It takes care of the 2 big headaches, I mentioned earlier. |
How can I have credit cards without having a credit history or credit score? | That is an opinion. I don't think so. Here are some differences: If you use credit responsibly and take the time to make sure the reporting agencies are being accurate, a good report can benefit you. So that isn't like a criminal record. What is also important to know is that in the United States, a credit report is about you, not for you. You are the product being sold. This is, in my opinion, and unfortunate situation but it is what it is. You will more than likely benefit for keeping a good report, even if you never use credit. There are many credit scores that can be calculated from your report; the score is just a number used to compare and evaluate you on a common set of criteria. If you think about it, that doesn't make sense. The score is a reflection of how you use credit. Having and using credit is a commitment. Your are committing to the lender that you will repay them as agreed. Your choice is who you decide to make agreements with. I personally find the business practices of my local credit union to be more palatable than the business practices of the national bank I was with. I chose to use credit provided by the credit union rather than by the bank. I am careful about where I take auto loans from, and to what extent I can control it, where I take home loans from. Since it is absolutely a commitment, you are personally responsible for making sure that you like who you are making commitments with. |
How to calculate the closing price percentage change for a stock? | The previous day's close on Thursday 10th October was 5,000.00 The close on Friday 11th October is 5,025.92 So the gain on Friday was 25.92 (5025.92 - 5000) or 0.52% (25.92/5000 x 100%). No mystery! |
Are stories of turning a few thousands into millions by trading stocks real? | If they could really do this, do you really think they would be wasting their time offering this course? You are being lied to. (Or more accurately: It's certainly possible to gamble and get lucky, but those gambles are more likely to result in your rapidly losing your money than in your rapidly gaining value.) It is possible to make money in the market. But "market rate of return" has historically averaged around 8%. That won't make you rich by itself, but it's better return than you can get from banks... at higher risk, please note. There are places in the market where, by accepting more risk of losing your money, you can improve on that 8%. For me the risk and effort are too much for the potential additional gains, but de gustibus. |
Where can you find historical PEs of US indices? | Internet sites Books Academic |
Why does it take 3 days to do electronic transfers between banks? [duplicate] | When Laurence Olivier took the role of Douglas Macarthur in the Unification Church's filming of Inchon, he told the press, "People ask me why I'm playing in this picture. The answer is simple: Money, dear boy." Banking systems are typically decades old and subject to innumerable legal and technical restrictions. Moving money more quickly from one client's account to another would definitely be in the clients' interest, but |
Short-sell, or try to rent out? | There is another option. Stay where you are. |
Why is tax being paid on my salary multiple times? | Your wages are an expense to your employer and are therefore 100% tax deductible in the business income. The company should not be paying tax on that, so your double-tax scenario, as described, isn't really correct. [The phrase "double taxation" with respect to US corporations usually comes into play with dividends. In that case, however, it's the shareholders (owners) that pay double. The answer to "why?" in that case can only be "because it's the law."] |
Why Are Credit Card Rates Increasing / Credit Limits Falling? | Of course your situation is very hurtful at a personal level, and I sympathize. I just don't get your point about being driven further into debt? It would seem that with a lower credit score you are prevented from taking on more debt. That can absolutely be hurtful especially to someone who runs a business that relies on short term credit. As for why they do this, they do it to reduce their risk - they don't want to lend more money, they are afraid that you will lose your job and default. Of course it is not as personal as I am writing it, not for you (they don't target you personally - they target your credit profile) and not for them (it is a matter of how the market views the debt and how much they can trade on such debt, not what they want to do personally). As for the TARP bailouts not releasing enough credit - this is reality. Goverment always thinks it can influence the situation more than it actually can. In order to unfreeze credit there needs to be a growing economy that makes the risk look acceptable. No amount of Goverment nudging will really change that more than marginally. By the way, legislation like this (forcing credit card companies to not raise their rates) can lead to credit restrictions. By artifically forcing the rates down the risk has to be ballanced somewhere - so it will be ballanced by lowering credit lines or by other means. Like any price control, if you restrict the price, it causes shortages. Intrest rates are the price of credit. |
Is it legal if I'm managing my family's entire wealth? | There are two issues. The first is that you can manage all of your family's money. The second issue arises if you now "own" all of your family's money. As far as entities go, it is best to keep money or assets in as many different hands as possible. Right now, if someone sued you and won, they could take away not only your money, but your parents' and brother's money, under your name. Also, there are gift, estate and inheritance tax consequences to your parents and brother handing all their money to you. You should have three or four separate "piles" of money, one for yourself, one for your brother and one for each of your parents, or at least both of them as a couple. If someone sued one parent, the other parent, your brother and you are protected. You can have all these piles of money under your management. That is, your parents and brother should each maintain separate brokerage accounts from yours, and then give you the authorization to trade (but not withdraw from) their accounts. This could all be at the same brokerage house, to make the reporting and other logistics relatively easy. |
What are the ramifications of lawsuits over “breaches of fiduciary duty” for the average shareholder? | Mostly these are results of arguments between shareholders. These suits come when shareholders alleged that directors didn't act in their best interests. Unless its a class action suit, I'd say there's no ramifications for an average shareholder. |
401(k) not fully vested at time of acquisition | Probably not. If you were at a small company and asked such a question, you'd get advice and links to erisa or other case law, etc. it's safe to say that a Fortune 500 company such as IBM is going to have their facts in order, and not going to run afoul of the rules in these cases (vesting rules and takeover of other company). I was in a company that cancelled its pension program. Those of us with the required years got the option of a lump sum payout, those with less than 5 years had no vested value and got nothing. One month longer employment, in the case of a particular coworker, would have given him a lump sum worth nearly 6 months pay. |
Is it true that 90% of investors lose their money? | The article "Best Stock Fund of the Decade: CGM Focus" from the Wall Street Journal in 2009 describe the highest performing mutual fund in the USA between 2000 and 2009. The investor return in the fund (what the shareholders actually earned) was abysmal. Why? Because the fund was so volatile that investors panicked and bailed out, locking in losses instead of waiting them out. The reality is that almost any strategy will lead to success in investing, so long as it is actually followed. A strategy keeps you from making emotional or knee-jerk decisions. (BTW, beware of anyone selling you a strategy by telling you that everyone in the world is a failure except for the few special people who have the privilege of knowing their "secrets.") (Link removed, as it's gone dead) |
Can anyone help me figure out what my monthly take-home salary will be? | If you are not taking any of the options in the Flexible Benefit Plan, then everything is taxable. Check about "Retirals", the practise differs from organization to organization. Some pay it out annually and some only pay on completion of certain duration on exit. So Deduct 47K from 7 lacs. Gross of around 653,000. Total tax for this around 53,000. After tax yearly around 600,000. Individual contribution to PF@ 12% of basic around 33,600. Net Yearly around 567,225. So net take home would be around 47,268. You can easily take items 3,6,7,8 around 62,400. Thus you will save tax of around 13,000. So take home will increase 1,080. |
If gold's price implodes then what goes up? | It's not clear that anything needs to go up if gold goes down. In a bubble, asset prices can just collapse, without some other asset increasing to compensate. Economies are not a zero-sum game. On the other hand, gold may fall when people decide they don't need to hoard some store of value that, to their minds, never changes. It could very well indicate that there is more confidence in the broader economy. I am not a gold bug, so I don't much see the point in "investing" in something that is non-productive and also inedible, but to each his own. |
Who Bought A Large Number Of Shares? | Schedule 13D (or the abbreviated version, schedule 13G) would be the most likely place to find this info. When a person or group of persons acquires beneficial ownership of more than 5% of a voting class of a company’s equity securities registered under Section 12 of the Securities Exchange Act of 1934, they are required to file a Schedule 13D with the SEC. Schedule 13D reports the acquisition and other information within ten days after the purchase. Any material changes in the facts contained in the schedule require a prompt amendment. You can find the Schedules 13D for most publicly traded companies in the SEC’s EDGAR database. A 1% change in the amount of ownership is considered material. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.