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Why buy insurance? | It's not a betting game, insurance policy is not akin to a casino bet. While the odds are probably low, the damage of an event may be devastating. Insurance allows mitigating that potential devastating damage, if it occurs. |
what is the meaning of allowing FDI in Insurance and pension funds | Insurance in India is offered by Private companies as well [ICICI, Maxbupa, SBI, Max and tons of other companies]. These are priavte companies, as Insurance sectors one has to look for long term stability, not everyone can just open an Insurance company, there are certain capital requirements. Initially the shareholding pattern was that Indian company should have a majority shareholding, any foreign company can have only 26% share's. This limit has now been extended to 49%, so while the control of the private insurance company will still be with Indian's the foreign companies can invest upto 49%. It's a economic policy decission and the outcome whether positive or negative will be known after 10 years of implemenation :) Pro's: - Brings more funds into the Insurance segment, there by bringing strength to the company - Better global practise on risk & data modelling may reduce premium for most - Innovation in product offering - More Foreign Exchange for country that is badly needed. Con's: - The Global companies may hike premium to make more profits. - They may come up with complex products that common man will not understand and will lead to loss - They may take back money anytime as they are here for profit and not for cause. Pension today is offered only by Government Companies. There is a move to allow private companies to offer pension. Today life insurance companies can launch Pension schemes, however on maturity the annuity amount needs to be invested into LIC to get an annuity [monthly pension]. |
Starting a new job. Help me with retirement/debt planning please! | I would go with your alternative idea: get rid of the debt as fast as possible. You have $32k of debt. It's a lot, but with your new $90k salary, do you think you could get rid of it all in 12 months? See if you can make that happen. Once the debt is gone, you'll be in a position to invest as much as you want and keep all your gains. You are worried about sacrificing future money in your investments, but if you eliminate the debt over the next year, this will be minimized. Just lose the debt. |
How does a bank make money on an interest free secured loan? | Other answers didn't seem to cover it, but most "0%" bank loans (often offered to credit card holders in the form of balance transfer checks), aside from less-obvious fees like already-mentioned late fees, also charge an actual loan fee, typically 2-3% (or a minimum floor amount) - that was the deal with every single transfer 0% offer I ever saw from a bank. So, effectively, even if you pay off the loan perfectly, on time, and within 0% period, you STILL got a 3% loan and not 0% (assuming 0% period lasts 12 months which is often the case). |
Why is retirement planning so commonly recommended? | 1) People aren't always going to be able to do their occupation, or their desired hobby. 2) Government assistance, or whatever you want to call it, is available at a certain age. Some people look forward to this and plan to rely on it, but it isn't really sufficient for living off of and keeping the standard of living you will be used to. Therefore, such situations require you to plan using a variety of other institutions to help you in that time. Finally, more is more: if your retirement funds exceed what you need, you can leave something for your family to help them start at a more stable financial place after you are gone. |
Insurance company sent me huge check instead of pharmacy. Now what? | nan |
Are there any risks from using mint.com? | Mint.com uses something called OFX (Open Financial Exchange) to get the information in your bank account. If someone accessed your mint account they would not be able to perform any transactions with your bank. All they would be able to do is view the same information you do, which some of it could be personal <- that's up to you. Generally the weakest point in security is with the user. An "attacker" is far more likely to get your account information from you then he is from the site your registered with. Why you're the weakest point: When you enter your account information, your password is never saved exactly how you enter it. It's passed through what is called a "one way function", these functions are easy to compute one way but given the end-result is EXTREMELY difficult to compute in reverse. So in a database if someone looked up your password they would see it something like this "31435008693ce6976f45dedc5532e2c1". When you log in to an account your password is sent through this function and then the result is checked against what is saved in the database, if they match you are granted access. The way an attacker would go about getting your password is by entering values into the function and checking the values against yours, this is known as a brute force attack. For our example (31435008693ce6976f45dedc5532e2c1) it would take someone 5 million years to decry-pt using a basic brute force attack. I used "thisismypassword" as my example password, it's 12 characters long. This is why most sites urge you to create long passwords with a mix of numbers, uppercase, lowercase and symbols. This is a very basic explanation of security and both sides have better tools then the one explained but this gives you an idea of how security works for sites like these. You're far more likely to get a virus or a key logger steal your information. I do use Mint. Edit: From the Mint FAQ: Do you store my bank login information on your servers? Your bank login credentials are stored securely in a separate database using multi-layered hardware and software encryption. We only store the information needed to save you the trouble of updating, syncing or uploading financial information manually. Edit 2: From OFX About Security Open Financial Exchange (OFX) is a unified specification for the electronic exchange of financial data between financial institutions, businesses and consumers via the Internet. This is how mint is able to communicate with even your small local bank. FINAL EDIT: ( This answers everything ) For passwords to Mint itself, we compute a secure hash of the user's chosen password and store only the hash (the hash is also salted - see http://en.wikipedia.org/wiki/Sal... ). Hashing is a one-way function and cannot be reversed. It is not possible to ever see or recover the password itself. When the user tries to login, we compute the hash of the password they are attempting to use and compare it to the hashed value on record. (This is a standard technique which every site should use). For banking credentials, we generally must use reversible encryption for which we have special procedures and secure hardware kept in our secure and guarded datacenter. The decryption keys never leave the hardware device (which is built to destroy the key material if the tamper protection is attacked). This device will only decrypt after it is activated by a quorum of other keys, each of which is stored on a smartcard and also encrypted by a password known to only one person. Furthermore the device requires a time-limited cryptographically-signed permission token for each decryption. The system (which I designed and patented) also has facilities for secure remote auditing of each decryption. Source: David K Michaels, VP Engineering, Mint.com - http://www.quora.com/How-do-mint-com-and-similar-websites-avoid-storing-passwords-in-plain-text |
How smart is it to really be 100% debt free? | Keep in mind that you NEED to have a cash reserve. Blindly applying all stray cash to debt reduction is a bad idea. Your lenders do not care about your balance. All they care about is your NEXT payment. It is therefore imperative that you have a cash reserve that can carry these payments for several months. Having zero cash reserves puts you at high risk for such simple things as the payroll clerk at work missing the monthly deposit (Rare, but it happens.) I've also been in situations where a major client had a cash flow issue and delayed payment, and our company had to borrow to meet payroll that month. Fortunately, we were in good standing with the bank and had low debt, but it could have been catastrophic for any employees living paycheque to paycheque. |
How much should a new graduate with new job put towards a car? | As someone who has a very similar debt amount and environment (new grad, nice new paying job, want a car, etc), I'd like to share something with you. Life has unexpected costs. Luckily I didn't buy that new car the first few months out of college like I had planned to; I'm glad that I didn't because, as a fledgling "adult", despite having lived on my own while in college while working part-to-full time there are some things you just don't realize until it either happens or it happens to someone else. Here are some of those things: I could go on but I won't. $95K is good money and I would definitely recommend spending it a bit to enjoy yourself. But I would honestly tell you that taking your monthly expenses, adding a few hundred on top of that and then multiplying that sum by 3 would be a smart savings amount before picking up a car loan. Maybe that's an excessive savings but I've seen way too many people burn out over their cost-of-living and their failure to adjust appropriately when shit hits the fan. So instead of having to deal with the stab at your pride when having to lower the cost/quality of living that you'll probably grow accustomed to at a $95K salary, just prepare for the worst. Oh, and did I mention... A NEW JOB IS NOT A SECURE JOB Consider yourself to likely be the first asset dropped from the company if even the tiniest thing goes wrong. I know way too many people who were fresh hires at Intel, Boeing, and a few other big tech companies that pay around what you make and, despite being bad asses in college, they were dropped like a bad habit when their employers hit rough patches. To those even more experienced than me, please feel free to add to the list. I'd personally love to know them myself. |
Dividend vs Growth Stocks for young investors | First, what Daniel Carson said. Second, if you're getting started, just make sure you are well diversified. Lots of growth stocks turn into dividend stocks over time-- Microsoft and Apple are the classic examples in this era. Someday, Google will pay a dividend too. If you're investing for the long haul, diversify and watch your taxes, and you'll make out better than nearly everyone else. |
As director, can I invoice my self-owned company? | No, as a director normally you can't. As a director of a Limited company, all those payments should be accounted for as directors' remuneration and have been subject to PAYE and NIC, even if you are self-employed. Currently there is no legislation which prevents a director from receiving self-employment income from a company in which he is a director, however the default position of HMRC's is that all the payments derived from the directorship are subject to PAYE. In other words, it's possible only invoice from an unconnected business or in a consultancy role that's not directly related to the trade of business. But it really depends on the circumstances and the contracts in place. Sources: Monsoon at AAT forum, David Griffiths at UKBF, Paula Sparrow and Abutalib at AW More sources: If a person does other work that’s not related to being a director, they may have an employment contract and get employment rights. Source: Employment status as director at Gov.uk In principle, it is possible for an employee or office holder to tender for work with their employer outside their normal duties, in circumstances where that individual will not be providing service as an employee or office holder but as a self-employed contractor. Where there is any doubt about whether service is provided constitutes employment or self-employment, see the Employment Status Manual (ESM). Source: Section 62 ITEPA 2003 at HMRC |
Understanding how this interpretation of kelly criterion helps the trader | The goal of the kelly criterion strategy is to find a balance between preservation of starting capital and returns. One of extreme you could bet the entirety of your account on one trade, which would maximize your returns if you win, but leave you unable to further invest if you lose. On the other extreme, you could bet the smallest amount of capital possible over the course of several trades to increase the probability that you'll even out to 70% accuracy over time. But this method would be extremely slow. So for your case, investing 40% each time is one way to find an optimal balance between these two extremes. Use this as a rule of thumb though, because your own situation and investing goals may differ from the goal of optimal growth. |
Can you explain why these items are considered negatives on my credit report? | Consider that however high your credit score gets, there is a 'worst piece of it'. The automated software will always report your 'weakest' two points, even if they are already at the top 0.0001% of everyone; that's just how it is coded. |
S&P is consistently beating inflation? | The U.S. economy has grown at just under 3% a year after inflation over the past 50 years. (Some of this occurred to "private" companies that are not listed on the stock market, or before they were listed.) The stock market returns averaged 7.14% a year, "gross," but when you subtract the 4.67% inflation, the "net" number is 2.47% a year. That gain corresponds closely to the "just under 3% a year" GDP growth during that time. |
Buying a home - brokerage fee | That sounds like a particularly egregious version of exclusivity. However, the way that you could handle that is to include a "contingency" in your purchase agreement stating that your offer is contingent upon the seller paying the brokerage fee. The argument against this, and something your broker might use to encourage you not to do so, is that it makes your offer less attractive to the buyer. If they have two offers in hand for the same price, one with contingencies and one without, they will likely take the no-contingency offer. In my area, right now, house offers are being made without very common contingencies like a financing contingency (meaning you can back out if you can't finance the property) or an inspection contingency. So, if your market is really competitive, this may not work. One last thought is that you could also use this to negotiate with your broker. Simply say you're only sign this expecting that any offer would have such a contingency. If it's untenable in your current market, it will likely cause your broker to move on. Either way, I'd say you should push back and potentially talk to some other brokers. A good broker is worth their weight in gold, and a bad one will cost you a boat load. And if you're in Seattle, I'll introduce you to literally the best one in the world. :-) |
What would be a wise way to invest savings for a newly married couple? | First, keep about six months' expenses in immediately-available form (savings account or similar). Second, determine how long you expect to hold on to the rest of it. What's your timeframe for buying a house or starting a family? This determines what you should do with the rest of it. If you're buying a house next year, then a CD (Certificate of Deposit) is a reasonable option; low-ish interest reate, but something, probably roughly inflation level, and quite safe - and you can plan things so it's available when you need it for the down payment. If you've got 3-5 years before you want to touch this money, then invest it in something reasonably safe. You can find reasonable funds that have a fairly low risk profile - usually a combination of stock and bonds - with a few percent higher rate of return on average. Still could lose money, but won't be all that risky. If you've got over five years, then you should probably invest them in an ETF that tracks a large market sector - in the US I'd suggest VOO or similar (Vanguard's S&P 500 fund), I'm sure Australia has something similar which tracks the larger market. Risky, but over 5+ years unlikely to lose money, and will likely have a better rate of return than anything else (6% or higher is reasonable to expect). Five years is long enough that it's vanishingly unlikely to lose money over the time period, and fairly likely to make a good return. Accept the higher risk here for the greater return; and don't cringe when the market falls, as it will go up again. Then, when you get close to your target date, start pulling money out of it and into CDs or safer investments during up periods. |
When does it make financial sense to take advantage of employer's tuition reimbursement program? | If you have decided to do the degree, and are simply deciding whether to accept employer funding for it or not, take the funding. I see no difference between "my employer doesn't pay my tuition" and "my employer paid my tuition but I had to pay it back because I moved on". Therefore there is no downside to letting them pay the tuition. If you want to move on before the two years (or whatever) is up, you pay back that interest free loan. You are still ahead over self funding the degree. If you have not decided to do the degree, and are letting the employer-funded tuition figure into your decision process, stop that right now. Doing a degree is hard work. You will either work much longer hours than you do now, or live on a lower salary, or more likely both. You might enjoy it, you might be worth more afterwards, and it might open the door to a raft of careers available only to those with the degree. The actual cost of the tuition is unlikely to be significant in this decision process. Removing it (by assuming the employer pays it) should still not be done. If it's worth doing when you self fund, then do it and relax knowing you won't feel trapped at your employer even if you let them pay it (or lend you the money for it if you end up leaving.) |
What are the most efficient ways to bet on an individual stock beating the market? | You could buy options. I do not know what your time horizon is but it makes all the difference due to theta burn. There are weekly, monthly, quarterly, yearly and even longer duration options called leaps. You have decided how long of a time frame. You also have to see what the implied volatility is for the underlying because if you think hypothetically that the price of the spy is 100 dollars currently. Today is hypothetically a Thursday and you buy a weekly option expiring on Friday ( the next day) of strike 100.5 and the call option is priced at .55 cents and you buy it. This means that the underlying has to move .5 dollars in one day to be considered in the money but at time 0, the option should only be worth its intrinsic value which is the underlying, (Say the SPY moved 55 cents up from 100 to 100.55), (100.55) minus the strike (100.5) = 5 cents, so if you payed 55 cents and one day later at expiration its worth 5 cents ,you lost almost 91% of your money, rather with buying and holding you lose a lot less. The leverage is on a 10x scale typically. That is why timing is so important. Anyone can say x stock is going to go up in the future, but if you know ****when**** you can make a killing if it is not already priced into the market. Another thing you can do is figure out how much MSFT contributes to the SPX movement in terms of points. What does a 1% move in MSFT doto SPX. If you can calculate that and you think you know where MSFT is going, you can just trade the spy options synthetically as if it were microsoft. You could also buy msft stock on margin as a retail investor, but be careful. Like Rhaskett said, look into an etf that has microsoft. The nasdaq has a nasdaq-100 which microsoft is in called the triple Q. The ticker is qqq. PowerShares QQQ™, formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", is an exchange-traded fund based on the Nasdaq-100 Index®. Best of luck and always understand what you are buying before you buy it, JL |
Diversify across multiple brokers? | You should ensure that your broker is a member of the Securities Investor Protection Corporation (SIPC). SIPC protects the cash and securities in your brokerage account much like the Federal Deposit Insurance Corporation (FDIC) protects bank deposits. Securities are protected with a limit of $500,000 USD. Cash is protected with a limit of $250,000 USD. It should be noted that SIPC does not protect investors against loss of value or bad advice. As far as having multiple brokerage accounts for security, I personally don’t think it’s necessary to have multiple accounts for that reason. Depending on account or transaction fees, it might not hurt to have multiple accounts. It can actually be beneficial to have multiple accounts so long as each account serves a purpose in your overall financial plan. For example, I have three brokerage accounts, each of which serves a specific purpose. One provides low cost stock and bond transactions, another provides superior market data, and the third provides low cost mutual fund transactions. If you’re worried about asset security, there are a few things you can do to protect yourself. I would recommend you begin by consulting a qualified financial advisor about your risk profile. You stated that a considerable portion of your total assets are in securities. Depending on your risk profile and the amount of your net worth held in securities, you might be better served by moving your money into lower risk asset classes. I’m not an attorney or a financial advisor. This is not legal advice or financial advice. You can and should consult your own attorney and financial advisor. |
Deductible expenses paid with credit card: In which tax year would they fall? | Assuming that it's not inventory that is sold in the following year or a depreciable asset, you can deduct it when you make the purchase. The courts have ruled that credit cards balances are considered debt. It's treated the same way as if you went to the bank, got a loan, and used cash or a check to purchase the items. On your accounting books, you would debit the expense account and credit the credit card liability account. This is only for credit cards, which are considered loans. If you use a store charge card, then you cannot deduct it until you pay. Those are considered accounts payable. I'm an IRS agent and a CPA. |
Feasibility of using long term pattern on short term investments | Most patterns can be used on various time frames. For example you could use candle stick reversal patterns on monthly charts, weekly charts, daily charts or intra-day charts like one hour, or even one minute charts. Obviously if you are looking for longer term positions you would be looking at daily, weekly or monthly charts and if you are looking for shorter term positions you would be looking at intra-day to daily charts. You can also use a combination of time frames - for example, if you are trying to enter a trade over a long-term uptrend you could use a weekly chart to determine if the stock is currently uptrending and then use a daily chart to time your entry into the trade. Most patterns in general don't really determine how long you will be in the trade but instead usually can provide an entry trigger, a stop loss location and possibly a profit target. So in general a pattern which is being used to enter into longer term trades on weekly charts can also be used to enter shorter term trades on intra-day charts. |
How come we can find stocks with a Price-to-Book ratio less than 1? | Book value = sell all assets and liquidate company . Then it's the value of company on book. Price = the value at which it's share gets bought or sold between investors. If price to book value is less than one, it shows that an 100$ book value company is being traded at 99$ or below. At cheaper than actually theoretical price. Now say a company has a production plant . Situated at the most costliest real estate . Yet the company's valuation is based upon what it produces, how much orders it has etc while real estate value upon which plant is built stays in book while real investors don't take that into account (to an extend). A construction company might own a huge real estate inventory. However it might not be having enough cash flow to sustain monthly expense. In this scenario , for survival,i the company might have to sell its real estate at discount. And market investors are fox who could smell trouble and bring price way below the book value Hope it helps |
What would I miss out on by self insuring my car? | One way to look at insurance is that it replaces an unpredictable expenses with a predictable fees. That is, you pay a set monthly amount ("premium") instead of the sudden costs associated with a collision or other covered event. Insurance works as a business, which means they intend to make a substantial profit for providing that service. They put a lot of effort in to measuring probabilities, and carefully set the premiums to get make a steady profit*. The odds are in their favor. You have to ask yourself: if X happened tomorrow, how would I feel about the financial impact? Also, how much will it cost me to buy insurance to cover X? If you have a lot of savings, plenty of available credit, a bright financial future, and you take the bus to work anyway, then totaling your car may not be a big deal, money wise. Skip the insurance. If you have no savings, plenty of debt, little prospects for that improving, and you depend on your car to get to work just so you can pay what you already owe, then totaling your car would probably be a big problem for you. Stick with insurance. There is a middle ground. You can adjust your deductible. Raise it as high as you can comfortably handle. You cover the small stuff out of pocket, and save the insurance for the big ticket items. *Insurance companies also invest the money they take as premiums, until they pay out a claim. That's not relevant to this discussion, though. |
Online resource to get expense ratios for mutual funds, index funds & ETFs? | If you want the answer from the horse's mouth, go to the website of the ETF or mutual find, and the expense ratio will be listed there, both on the "Important Information" part of the front page, as well as in the .pdf file that you click on to download the Prospectus. Oh wait, you don't want to go the fund's website at all, just to a query site where you type in something like VFINX. hit SEARCH, and out pops the expense ratio for the Vanguard S&P 500 Index Fund? Well, have you considered MorningStar? |
Td Ameritrade Roth IRA question | Your broker, Ameritrade, offers a variety of Exchange Traded Funds (ETFs) that you can buy and sell with zero commission. An ETF is like a mutual fund, but you buy and sell shares the same way you buy and sell shares of stocks. From your point of view, the relevance of this is that you can buy and sell as many or as few shares as you like, even down to a single share. Note that to get the commission-free trades on the available ETFs you have to sign up for it in your account profile. Be sure to do that before you enter any buy orders. You'll want to start by looking at the Ameritrade's list of commission-free ETFs. Notice that they are divided into different categories: stocks, bonds, international, and commodities. Which categories you pick from will depend on your personal investing goals, time horizon, risk tolerance, and so on. There are lots of questions and answers on this site that talk about asset allocation. You should read them, as it is the most important decision you will make with your portfolio. The other thing you want to be aware of is the expense ratio for each fund. These expenses reduce the fund's return (they are included in the calculation of the net asset value of the shares), so lower is definitely better. Personally, I wouldn't even consider paying more than about 0.10% (commonly read "10 basis points" or "10 bp") for a broad-based domestic stock fund. For a sectoral fund you might put up with as much as 20 bp in expenses. Bond funds tend to be a little more expensive, so maybe allow as much as 25 bp, and likewise for international funds. I've never invested in commodity funds, so I'll let someone else opine on appropriate expense ratios for those. Once you've decided what funds you want (and have signed up for commission-free trades), all you have to do is enter the trade orders. The website where you manage your account has tutorials on how to do that. After that you should be all set. Good luck with your investing! |
Making your first million… is easy! (??) | I realize that "a million dollars" is a completely arbitrary figure, but it's one people fixate on. Perhaps folks just meant it's getting easier because inflation has made it a far less lofty sum than when the word "millionaire" was coined. Your point is correct - it' relatively easier as the 1 million dollar nowadays is no where as valuable as compared in the old days after the inflation adjustment. However the way to achieve that is easier said than done: The most possible way is to run your own business (assuming you will make profit). For most of the people running a job to earn a living - the job income is the biggest factor. Being extremely frugal wouldn't help much if you don't maximize your income potential. Earning a million dollar through investment? How much capitals are you able to invest in? 5k? 50k? 500k? I see no way to earn 1 million with 5k from investment, I wouldn't call it easy. This again depends on your income. With better income of course you could dedicate a larger portion to investment, without exposing too much risk and having to affect your way of life. (3) Invest some part of your income over a long period of time and let the stock market do the work I'd say this is more geared towards beating the inflation and earn a few extra bucks instead of getting very rich (this is being very relative). Just a word of cautions, the mindset of investment being the shortcut to wealth is very dangerous and often leads to speculative behavior. |
Organizing finances and assigning a number to each record type | What you are describing is a Chart of Accounts. It's a structure used by accountants to categorise accounts into sub-categories below the standard Asset/Liability/Income/Expense structure. The actual categories used will vary widely between different people and different companies. Every person and company is different, whilst you may be happy to have a single expense account called "Lunch", I may want lots of expense accounts to distinguish between all the different restaurants I eat at regularly. Companies will often change their chart of accounts over time as they decide they want to capture more (or less) detail on where a particular type of Expense is really being spent. All of this makes any attempt to create a standard (in the strict sense) rather futile. I have worked at a few places where discussions about how to structure the chart of accounts and what referencing scheme to use can be surprisingly heated! You'll have to come up with your own system, but I can provide a few common recommendations: If you're looking for some simple examples to get started with, most personal finance software (e.g. GnuCash) will offer to create an example chart of accounts when you first start a session. |
How can I calculate interest portion of income when selling a stock? | When you sell the stock your income is from the difference of prices between when you bought the stock and when you sold it. There's no interest there. The interest is in two places: the underlying company assets (which you own, whether you want it or not), and in the distribution of the income to the owners (the dividends). You can calculate which portion of the interest income constitutes your dividend by allocating the portions of your dividend in the proportions of the company income. That would (very roughly and unreliably, of course) give you an estimate what portion of your dividend income derives from the interest. Underlying assets include all the profits of the company that haven't been distributed through dividends, but rather reinvested back into the business. These may or may not be reflected in the market price of the company. Bottom line is that there's no direct correlation between the income from the sale of the stake of ownership and the company income from interest, if any correlation at all exists. Why would you care about interest income of Salesforce? Its not a bank or a lender, they may have some interest income, but that's definitely not the main income source of the company. If you want to know how much interest income exactly the company had, you'll have to dig deep inside the quarterly and annual reports, and even then I'm not sure if you'll find it as a separate item for a company that's not in the lending business. |
How can cold-callers know about my general financial status | The cold caller is just a different way to contact you compared to the junk mail that they send. The business gets information from the credit rating companies for households that meet a specific set of criteria. It could be town, age, home ownership, low credit utilization...Or the exact opposite depending on what they are selling. Some business do sell your data. Grocery store know who buys certain products: parents buying diapers may want to start saving for college; ones buying acne medicine may want to talk about lower rates for car insurance. When they call via phone they have a different success rate compared to junk mail, but for that business that may be acceptable for their needs. |
Where can I borrow money for investing? | The question should read: "Borrow huge money for speculating". This is a bad idea on many levels. The lowest rates available will be from time-limited credit card offers, followed by broker margin accounts. Personal loans are going to be higher. My advice: if you insist on throwing your money away, go to Vegas with $40k. At least you'll get some complimentary food and drink. |
What should I be aware of as a young investor? | If you're tending toward stocks because you have a long time horizon, you're looking at them for the right reasons. I'm twice your age. I have a mortgage -- two of them, actually! -- a wife, and a six-year-old. I can't really justify being terribly risky with my money because I have others depending on my income. You're nineteen. Unless you've gotten a really early start on life and already have a family, you can take on a lot more risk than stocks. You have time to try things (income things) that I wish I would have tried at that age, like starting a business. The only thing that would push me to do that now would be losing my job, and that wouldn't be the rush I'd like. That's not to say that you can't make a lot of money with stocks, but if that's what you're looking to do, really dig in and research them. You have the time. Whether the tide makes all boats rise or sink is a matter of timing the economy, but some of the companies will ride the waves. It takes time to find those more often than not. Which blue chips are likely to ride the waves? I have no clue. But I'm not invested in them at the moment, so it doesn't matter. :) |
How should I invest my money as a young graduate in Europe? | Using a simple investment calculator to get a sense of scale here, to have 70k total, including the 500 a month invested, after ten years you just need returns of 2%. To earn 70k on top of the money invested you would need returns over 20%. To do that in five years you would need over 50% annual return. That is quite a big difference. Annualized returns of 20% would require high risk and a very large amount of time invested, skill and luck. 2% returns can be nearly guaranteed without much effort. I would encourage you to think about your money more holistically. If you get very unlucky with investments and don't make any money will you not go on the vacations even if your income allows? That doesn't make a lot of sense. As always, spend all your money with the current and future in mind. Investment return Euros are no different from any other Euros. At that point, the advice is the same for all investors try to get as much return as possible for the risk you are comfortable with. You seem to have a high tolerance for risk. Generally, for investors with a high risk tolerance a broadly diversified portfolio of stocks (with maybe a small amount of bonds, other investments) will give the most return over the long term for the risk taken. After that generally the next most useful way to boost your returns is to try to avoid taxes which is why we talk about 401(k)s so much around here. Each European country has different tax law, but please ask questions here about your own country as well as you mention money.se could use more ex-US questions. |
How much time would I have to spend trading to turn a profit? | It depends on how you define trading. If you're looking at day-trading, where you're probably going to be in a highly-leveraged position for minutes or hours, the automated traders are probably going to kill you. But, if you have a handful (less than a dozen) equities, and spend about an hour or so every week conducting research, you have a good chance of doing pretty well. You need to understand the market, listen to the earnings calls, and understand the factors that contribute to the bottom line of your investments. You should not be trading for the sake of trading, you're trading to try to achieve the best returns. Beware of dogmatists and people selling products that align with their dogma. Warren Buffet invests in companies for an extremely long investment window. Mr. Buffet also expends significant resources to gain a deep understanding of the fundamentals of the businesses that he invests in and the factors affecting those fundamentals. Buffet does not buy an S&P 500 index fund and whistle dixie. |
Issuing bonds at discount - computing effective interest rate | In this case the market interest rate is the discount rate that sets equal the market price (current value) of the bond to its present value. To find the market interest rate which is also referred to as promised yield YTM you would have solve for the interest rate in the bond price formula A market price of bond is the sum of discounted coupons and the terminal value of the bond. Most spreadsheet programs and calculators have a RATE function that makes possible finding this market interest rate. First see this for finding a coupon paying bond price The coupon payments are discounted so is the par value of the bond and sum of such discounts is the market price of the bond. The TVM functions in Excel and calculators make this possible using the following equation Let us take your data, 9% $100,000 coupon with 5 years remaining to maturity with market interest rate of 10%. Bonds issued in the US mostly pay two coupons per year. Thus we are finding the present value of 10 coupons each worth $4500 and par value of $100,000. The semi-annual market interest rate is 10%/2 or 5% The negative sign indicate money going out of hand Now solving for RATE is only possible using numerical methods and the RATE function is programmed using Newton-Raphson method to find one of the roots of the bond price equation. This rate will be the periodic rate in this case semi-annual rate which you have to multiply by 2 to get the annual rate. Do remember there is a difference between annual nominal rate and an annualized effective rate. To find the market interest rate If you don't have Excel or a financial calculator then you may opt to use my version of these financial functions in this JavaScript library tadJS |
Using financial news releases to trade stocks? | No matter how a company releases relevant information about their business, SOMEBODY will be the first to see it. I mean, of all the people looking, someone has to be the first. I presume that professional stock brokers have their eyes on these things closely and know exactly who publishes where and when to expect new information. In real life, many brokers are going to be seeing this information within seconds of each other. I suppose if one sees it half a second before everybody else, knows what he's looking for and has already decided what he's going to do based on this information, he might get a buy or sell order in before anybody else. Odds are that if you're not a professional broker, you don't know when to expect new information to be posted, and you probably have a job or a family or like to eat and sleep now and then, so you can't be watching somebody's web site constantly, so you'll be lagging hours or days behind the full-time professionals. |
Is stock in a company considered a good or a service, or something else? | Well it depends on whether or not your differentiating against. If its capital stock or stock as in a share certificate in the company. If its a share in the company then in my opinion using Equity would be best as it is a form of an asset and does refer to a piece of ownership of the entity. I wouldn't consider a share of stock a service, since the service to you is say Facebook or the broker who facilitates the transaction of buying or selling FB stock. I also would not consider it a Capital Good, as the Capital Good's would be the referring to the actual capital like the servers,other computer equipments etc. |
Is CFD a viable option for long-term trading? | Yes it is viable but uncommon. As with everything to do with investment, you have to know what you are doing and must have a plan. I have been successful with long term trading of CFDs for about 4 years now. It is true that the cost of financing to hold positions long term cuts into profits but so do the spreads when you trade frequently. What I have found works well for me is maintaining a portfolio that is low volatility, (e.g. picking a mix of positions that are negatively correlated) has a good sharpe ratio, sound fundamentals (i.e. co-integrated assets - or at least fairly stable correlations) then leveraging a modest amount. |
New to investing — I have $20,000 cash saved, what should I do with it? | @mbhunter and @JoeTaxpayer have given good advice. Were I in your situation, the only thing I might do differently is put whatever amount of cash not needed for emergencies in a money market fund with check-writing privileges and/or a debit card. The rate on the account has at least some chance of preserving the value of your principal, and it will be easier to put your money into investments as soon as you're ready. This sort of account is offered by any number of brokerages and financial companies, so pick one you trust and start there. |
Video recommendation for stock market education | Before you go filling your head with useless information as there is way too much stuff out there on the stock market. First ask yourself a few questions: There is going to be a balance between the three... don't kid yourself. After you answer these questions find a trading strategy to get the returns you are looking for. Remember the higher returns you expect... the more time you have to put in. Find a trading strategy you like and that works for you. Ounce you have your strategy then find the stocks or ETF that work for that strategy.... Ignore everything else, it is designed to separate you from your money. Making money in the stock market is easy, don't let the media hype and negative people tell you any different. Find something that works for you and perfect it... stick to it. |
Should I pay cash or prefer a 0% interest loan for home furnishings? | A friend recently bought an 800€ TV on 0% financing. Sounded like a sensible thing to do. Why pay 800 when you can pay 80pm for 10 months? It took 30mins to set up the 'loan'. She had to sign all kinds of documents, giving away much personal information (age, employment info, income, email address etc). She now has a financial relationship with an institution which has nothing to do with the item purchased. She is bombarded with all kinds of financial offerings. She regrets taking out the finance. She had the money. The hassle and the unwanted links to banks make the deal unattractive. Perhaps she should have tried to make a cash deal... |
Does the expense ratio of a fund-of-funds include the expense ratios of its holdings? | From The Prospectus for VTIVX; as compared to the Total Stock Market Fund; You can see how the Target date fund is a 'pass through' type of expense. It's not an adder. That's how I read this. |
Employer skipped payments, should I allow them to defer payment until Jan 2017? | TL;DR: The difference is $230. Just for fun, and to illustrate how brackets work, let's look at the differences you could see from changing when you're paid based on the tax bracket information that Ben Miller provided. If you're paid $87,780 each year, then each year you'll pay $17,716 for a total of $35,432: $5,183 + $12,532 (25% of $50,130 (the amount over $37,650)) If you were paid nothing one year and then double salary ($175,560) the next, you'd pay $0 the first year and $42,193 the next: $18,558 + $23,634 (28% of $84,410 (the amount over $91,150)) So the maximum difference you'd see from shifting when you're paid is $6,761 total, $3,380 per year, or about 4% of your average annual salary. In your particular case, you'd either be paying $35,432 total, or $14,948 followed by $20,714 for $35,662 total, a difference of $230 total, $115 per year, less than 1% of average annual salary: $5,183 + $9,765 (25% of $39,060 (the amount $87,780 - $11,070 is over $37,650)) $18,558 + $2,156 (28% of $7,700 (the amount $87,780 + $11,070 is over $91,150)) |
When to use a stop limit order over a stop order | I would be using stop limit orders for stocks that are not too volatile. If you look at the chart and there are not many gaps especially after peaks, then you have more chance of being filled at your specified stop loss level using a stop limit order. If the stock is very volatile and has a large or many gaps down after most peak, then I would consider using a stop market order to make sure you do get out even if it is somewhat past your desired stop level. One think to consider is to avoid trading very volatile stocks that gap often. This is what I do, and using stop limit orders my stop level is achieved more than 95% of the time. |
Expecting to move in five years; how to lock mortgage rates? | You could consider turning your current place into a Rental Property. This is more easily done with a fixed rate loan, and you said you have an ARM. The way it would work: If you can charge enough rent to cover your current mortgage plus the interest-difference on your new mortgage, then the income from your rental property can effectively lower the interest rate on your new home. By keeping your current low rate, month-after-month, you'll pay the market rate on your new home, but you'll also receive rental income from your previous home to offset the increased cost. Granted, a lot of your value will be locked up in equity in your former home, and not be easily accessible (except through a HELOC or similar), but if you can afford it, it is a good possibility. |
A guy scammed me, but he gave me a bank account number & routing number. Can I use that to take out what he owes me? | OK, reading between the lines here it looks like the services offered by your company are of an "adult" (possibly illegal?) nature and that this individual has actually paid you in full for the services rendered up to this point. The wrinkle here is that you say that you've been offered large cash "gifts" in return for unspecified future favours, but that your client hasn't provided a real Paypal account to do so. When you pressed him on it, he sent a fake email and invented a "financial adviser" to fob you off, then hasn't contacted you since. It's pretty clear that he hasn't got any intention of making these payments to you. What you're now proposing to do is to use his known banking details to collect money to cover those verbal promises. In pretty much every part of the world, that's a crime. Without a written agreement to use that payment method for those promises, he could easily call the police and have you arrested for theft of funds. The further wrinkle is that his actions (claiming to have made payment via paypal, forged email headers, etc) strongly suggest that this individual is involved in cyber-crime and may well have used a fake bank account to pay for your initial services. The bottom line here is that you need real legal advice, from an actual lawyer. |
Buying a building with two flats, can I rent one out and still get a residential mortgage? | I'd talk to a solicitor and see if you can structure the purchase in a way that breaks the property into three pieces. One would be the freehold of the whole building, one would be a long lease on the downstairs part (on which you would get a residential mortgage) and one would be a long lease on the upstairs flat (on which you would get a buy-to-let mortgage). Since there's essentially no price premium for freehold as opposed to long lease, you should be able to raise enough money from the two mortgages to fund the purchase. |
Do stocks give you more control over your finances than mutual funds? | Exchange-traded funds are bought and sold like stocks so you'd be able to place stop orders on them just like you could for individual stocks. For example, SPY would be the ticker for an S & P 500 ETF known as a SPDR. Open-end mutual funds don't have stop orders because of how the buying and selling is done which is on unknown prices and often in fractional shares. For example, the Vanguard 500 Index Investor shares(VFINX) would be an example of an S & P 500 tracker here. |
Student loan payments and opportunity costs | My recommendation would be to pay off your student loan debt as soon as possible. You mention that the difference between your student loan and the historical, long-term return on the stock market is one-half percent. The problem is, the 7% return that you are counting on from the stock market is not guaranteed. You might get 7% over the next few years, but you also might do much worse. The 6.4% interest that you will save by aggressively paying off your debt is guaranteed. You are concerned about the opportunity cost of paying your debt early. However, this cost is only temporary. By drawing out your debt payments, you have a long-term opportunity cost. By this, I mean that 4 years from now, you could still have 6 years of debt payments hanging over your head, or you could be debt free with all of your income available to save, spend, or invest as you see fit. In my opinion, prolonging debt just to try to come out 0.5% ahead is not worth the hassle or risk. |
How can online trading platforms be trustworthly? | In most countries trading platforms are legally required to be overseen by a regulator, in the US this is the SEC (Securities and Exchanges Commission). This regulatory oversight is required in order to operate (i.e. have clients) in that country and the company will lose the right to operate in that country if they do not comply with the regulations. If you believe that you have genuine cause to complain that a trading platform that you are using within your jurisdiction is behaving unfairly towards you you can report this to the regulator and they will investigate so long as you can provide them with some concrete evidence. Note that in many jurisdictions gambling websites are also regulated (they are in the UK for example) and so arguments about their fairness are specious. A big problem with a lot of these complaints is that people who lose money are very vocal about blaming everyone else, people who make money are very vocal about their own amazing skills... think about that! |
Will my current employer find out if I have a sole proprietarship/corporation? | I can see why you'd be reluctant to tell them, but I think you need to be open and honest with them about what you're doing and where you see it going. If the roles were reversed, what would you want your employee to do in this situation? If it were me, I'd be much happier to be told up front than to find out some other way later. If I found out later, I'd feel somewhat betrayed and angry. With the Internet, it seems unlikely that they wouldn't find out eventually, so I think being up front about it is your best option. I also suggest you have a backup plan in case they say no. Perhaps you'd need to find another full-time job that is more tolerant (or even encouraging) of side businesses. |
How to sell a worthless option | Sounds like an illiquid option, if there are actually some bidders, market makers, then sell the option at market price (market sell order). If there are not market makers then place a really low limit sell order so that you can sit at the ask in the order book. A lot of time there is off-book liquidity, so there may be a party looking for buy liquidity. You can also exercise the option to book the loss (immediately selling the shares when they get delivered to you), if this is an American style option. But if the option is worthless then it is probably significantly underwater, and you'd end up losing a lot more as you'd buy the stock at the strike price but only be able to sell at its current market value. The loss could also be increased further if there are even MORE liquidity issues in the stock. |
Is it bad practice to invest in stocks that fluctuate by single points throughout the day? | The strategy has intrinsic value, which may or may not be obstructed in practice by details mentioned in other answers (tax and other overheads, regulation, risk). John Bensin says that as a general principle, if a simple technical analysis is good then someone will have implemented it before you. That's fair, but we can do better than an existence proof for this particular case, we can point to who is doing approximately this. Market makers are already doing this with different numbers. They quote a buy price and a sell price on the same stock, so they are already buying low and selling high with a small margin. If your strategy works in practice, that means you can make low-risk money from short-term volatility that they're missing out on, by setting your margin at approximately the daily price variation instead of the current bid-offer spread. But market makers choose their own bid-offer spread, and they choose it because they think it's the best margin to make low-risk money in the long run. So you'd be relying that: |
Should retirement fund be equal to amount of money needed for financial independence? | It depends what you mean. Finance Independence and Retirement Early (FI/RE) are two overlapping ideas. If you plan to retire early and spend the same amount of money every year (adjusted for inflation), then you need to save twenty-times your yearly spending to satisfy the 4% Safe Withdrawal rule of thumb. Carefully notice I say "yearly spending" and not income. I'm unaware how it is in Pakistan, but in America, people who retire in their sixties tend to reduce their spending by 30%. This is for a host of reasons like not eating out as much, not driving to work, paid off mortgages, and their children being adults now. In this type of profile, a person needs to save 17.5x yearly spending. This numbers presume a person will only use their built assets as an income source. Any programs like a government pension acting as a safety net. If you factor those in, the estimates above become smaller. |
Does investing more money into stocks increase chances of profit? | Have a read of this PF&M article, which @Blackjack has an excellent answer that speaks around risk. Answers which suggest that the return is proportional to the amount invested is a very simplistic argument. It is far more complex than that. I would content that your initial question Does investing more money into stocks increase chances of profit? is not the best question. The answer is it depends upon your investment methodology. The following will increase your chance of overall profit in the stock market |
Can PayPal transfer money automatically from my bank account if I link it in PayPal? | As the other answers stated: Yes PayPal will transfer money from your bankaccount automatically if your PayPal balance isn't sufficient. Let's add some proof to the story: (Note, I am in the EU, specifically the Netherlands, situation might be different in other parts of the world) If I login to PayPal and go to my wallet, I have a section that looks like this: If I click on it, I am presented with a screen with details about the connection. Note the "Direct debit instruction". If I click on the "view" link I am presented with the following text (emphasis mine): [snip some arbitrary personal details] This authorisation allows (A) PayPal to send instructions to your bank account and (B) your bank to debit your account in accordance with the instructions from PayPal. As part of your rights, you are entitled to a refund from your bank under the Terms and Conditions of your agreement with your bank. A refund must be claimed within 8 weeks starting from the date on which your account was debited. Your rights are explained in a statement that you can obtain from your bank. Below this text is a button to delete the authorization. |
Is investing in an ETF generally your best option after establishing a Roth IRA? | It's hard to know what to tell you without knowing income, age, marital status, etc., so I'll give some general comments. ETFs come in all varieties. Some have more volatility than others. It all depends on what types of assets are in the fund. Right now it's tough to outpace inflation in an investment that's "safe" (CDs for example). Online savings accounts pay 1% or less now. Invest only in what you understand, and only after everything else is taken care of (debt, living expenses, college costs, etc.) A bank account is just fine. You're investing in US Dollars. Accumulating cash isn't a bad thing to do. |
Purchasing ETFs when (pretty much) everything else is maxed out | Most ETFs are index funds, meaning you get built in diversification so that any one stock going down won't hurt the overall performance much. You can also get essentially the same index funds by directly purchasing them from the mutual fund company. To buy an ETF you need a brokerage account and have to pay a transaction fee. Buying only $1000 at a time the broker transaction fee will eat too much of your money. You want to keep such fees way down below 0.1%. Pay attention to transaction fees and fund expense ratios. Or buy an equivalent index fund directly from the mutual fund company. This generally costs nothing in transaction fees if you have at least the minimum account value built up. If you buy every month or two you are dollar cost averaging, no matter what kind of account you are using. Keep doing that, even if the market values are going down. (Especially if the market values are going down!) If you can keep doing this then forget about certificates of deposit. At current rates you cannot build wealth with CDs. |
Covered call when stock position is at a loss | It's unclear what you're asking. When I originally read your question, it seemed that you had closed out one options position and opened another. When I read your question the second time, it seemed that you were writing a second option while the first was still open. In the second case, you have one covered and one naked position. The covered call will expire worthless, the naked call will expire in the money. How your broker will resolve that is a question best left for them, but my expectation is that they will assign the non-worthless calls. Whereas, if both options expired in the money, you would be assigned and you would have to come up with the additional shares (and again, that depends on how your broker works). In general, for both cases, your net is the premiums you received, plus the difference between strike price and the price that you paid for the stock, minus any cost to close out the position. So whether you make a profit is very much dependent on how much you received for your premiums. Scenario #1: close first call, write second: Scenario #2: write covered + naked, one expires worthless Scenario #3: write covered + naked, both expire in the money Disclaimer: the SEC does not consider me a financial/investment advisor, so this is not financial/investment advice |
Taxable income on full-time job + business earnings | In Australia, any income you earn is taxable despite where it came from. Using your example your taxable income is $70,000. Keep in mind that with a business even as a sole trader any business expenses that contribute to the earning of your business income is deductible, reducing the final amount of tax you'll have to pay. The ATO website has lots of good information and examples to look at including tax rates. If your total income is pushing into a higher tax bracket over 30c tax per $1 earned, it may be worth looking at shifting your business to operate under a company structure that just has a fixed tax rate around 30c per $1. That said, for me, I don't want the paperwork overhead of a company yet so I'm running my side business as a sole trader too. I'd rather do that and keep it easy for now while my business gets profitable that waste time on admin structures for tax reasons even if in the shortterm it may mean slightly higher tax. In the end, you only pay tax on profit (income minus expenses) as opposed to raw/gross income. For more info there are good books in the bookshops or local library (to read free) on starting a business on the side while still working. They discuss these issues too. |
Should I replace bonds in a passive investment strategy | No. That's the point of a passive strategy: you maintain a more or less constant mix of assets and don't try to figure out what's going to move where. |
What is the rate of return for a security when there is no risk-free rate (CAPM)? | For starters, the risk-free rate has nothing to do with stocks. It would be independent of anything. It pays out the same return in all states of nature. The definition of a risk-free asset is that regardless of how the universe turns out, including a meteor striking the Earth killing everyone but the recipient, then the payout would happen exactly as planned. One could imagine a computer still being on, connected to a power supply and printing a check. Most people use the 90-day t-bill as the risk-free rate. A beta greater than one implies it is more volatile than the market, not that it moves more perfectly. The CAPM should not be used for this. Cryptocurrencies should not be used with this model because they have valuation dynamics related to the new issue of coins. In other words, they have non-market price movements as well as market price movements. In general, you should not use the CAPM because it doesn't work empirically. It is famous, but it is also wrong. A scientific hypothesis that is not supported by the data is a bad idea. My strong recommendation is that you read "The Intelligent Investor," by Benjamin Graham. It was last published in 1972, and it is still being printed. I believe Warren Buffett wrote the current forward for it. Always go where the data supports you and never anywhere else, no matter how elegant. Finally, unless you are doing this like a trip to Vegas, for fun and willing to take the losses, I would avoid cryptocurrencies because you don't know what you are doing yet. It is obvious from the posting. I have multiple decades working in every type of financial institution and at every level, bottom to top. I also have a doctorate, and I am an incredible researcher. I am professionally qualified in three different disciplines. If you want to learn how to do this, start with the "Intelligent Investor." Get a basic book on accounting and learn basic accounting. Pick up economics textbooks at least through "Intermediate" for both microeconomics and macroeconomics. Get William Bolstad's book "Introduction to Bayesian Statistics." You will need them for reasons that go very far beyond this post. Trust me; you want to master that book. Find a statistician and ask them to teach it to you as a special topics course. It will help you as both either a Marine officer or a Naval officer. Then after that pick up a copy of "Security Analysis." Either the 1943 copy (yes it is in print) by Benjamin Graham if you feel good about accounting, or the 1987 copy by Cottle under the Graham/Dodd imprimatur. Then, if you are still interested in cryptocurrencies and they will be blasé by then, then pick up an economics textbook on money. If I were you, I would learn about Yap money, commodity money, and prison money first, then you might understand why a cryptocurrency may not be an investment for you. |
Where are Bogleheadian World ETFs or Index funds? | Half VTI (Vanguard Total Stock Market ETF) and half VEU (Vanguard FTSE All-World ex-US ETF), and stop futzing. The US is roughly half the world market cap so this is like a total world equity index. Very low costs. VTI Expense ratio is 0.04% as of 04/27/2017. I don't know what you mean by RSG, but it could be either a waste processor or a gold miner. Either way it seems kind of speculative to hold even 10% of your wealth. |
If I were to get into a life situation where I would not be able to make regular payments, do lenders typically provide options other than default? | Some lenders will work with you if you contact them early and openly discuss your situation. They are not required to do so. The larger and more corporate the lender, the less likely you'll find one that will work with you. My experience is that your success in working out repayment plan for missed payments depends on the duration of your reduced income. If this is a period of unemployment and you will be able to pay again in a number of months, you may be able to work out a plan on some debts. If you're permanently unable to pay in full, or the duration is too long, you may have to file bankruptcy to save your domicile and transportation. The ethics of this go beyond this forum, as do the specifics of when it is advisable to file bankruptcy. Research your area, find debt counselling. They can really help with specifics. Speak with your lenders, they may be able to refer you to local non-profit services. Be sure that you find one of those, not one of the predatory lenders posing as credit counselling services. There's even some that take the money you can afford to pay, divide it up over your creditors, allowing you to keep accruing late/partial payment fees, and charge you a fee on top of it. To me this is fraudulent and should be cause for criminal charges. The key is open communication with your lenders with disclosure to the level that they need to know. If you're disabled, long term, they need to know that. They do not need to know the specific symptoms or causes or discomforts. They need to know whether the Social Security Administration has declared you disabled and are paying you a disability check. (If this is the case, you probably have a case worker who can find you resources to help negotiate with your creditors). |
Pay off car loan entirely or leave $1 until the end of the loan period? | As an FYI, working for a lending company, I can tell you many have a dollar amount limit that they'll just write off at the end of the month/quarter/etc just to get the loan off the books. It's a little goofy, but I actually bothered to plan ahead and save $9.99 on my student loans since the lender would close out all accounts with a < $10 balance. |
How can I figure out how a stock's price would change after I buy shares? | It is possible to figure out the next price. Just not for Joe Average. A stock exchange has a orderbook. This has two sides. One side has alle the buyers, how many shares they want, and what they are willing to pay. The other side has all the sellers, how many shares they got, and what price they are willing to accept. If any buyers and sellers match up, their orders are executed, money and shares are exchanged, everyone is happy. So the current asking price (the price you have to pay, to get some shares) is currently 12.46$. Let's say you want 6000 shares, for any price. The orderbook now looks like this: Your order is executed, you get 6000 shares for a total of 74,761$ (5900 * 12,46 + 100 * 12,47$). The order book now looks like this: The new asking price is 12.47$. Congrats, you knew the price in advance. Of course this is simplified, there are millions of entries on both sides, thousands of trades happen every millisecond and you'll have to pay the stock exchange a lot of money to give you all this information in real time. That's what high frequency traders are doing. They use highly specialised computer systems to exploit differences in stock exchanges all over the world. It's called arbitage. They have to be faster than the other guy. This race has gone on for a few years now, so that the limiting factor starts to become the speed of light. YOU are not going to benefit, or else you would not be asking questions on PERSONAL finance :) |
Working out if I should be registered as self-employed in the UK | As 'anonymous' already mentioned, I think the correct answer is to go see an accountant. That said, if you are already have to fill in a tax return anyway (ie, you're already a high rate taxpayer) then I don't see why it should be an issue if you just told HMRC of your additional profit via your tax return. I never was in the situation of being employed with a side business in the UK, only either/or, but my understanding is that registering as self employed is probably more suitable for someone who doesn't PAYE already. I might be wrong on this as I haven't lived in the UK for a couple of years but an accountant would know the answer. Of course in either case, make sure that you keep each an every scrap of paper to do with your side business. |
T-mobile stock: difference between TMUSP vs TMUS | The difference between TMUSP and TMUS is that the "with P" ticker is for a TMobile Preferred Stock offering. The "without P" ticker is for TMobile common stock. The difference between the apparent percentage yields is due to Yahoo! Stock misreporting the dividend on the preferred stock for the common stock, which has not paid a dividend (thanks Brick for pointing this out!) Preferred stock holders get paid first in the event of liquidation, in most scenarios they get paid first. They sometimes get better returns. They typically lack voting rights, and after a grace period, they may be recalled by the company at a fixed price (set when they were issued). Common stock holders can vote to alter the board of directors, and are the epitome of the typical "I own a trivial fraction of the company" model that most people think of when owning stocks. As the common stock is valued at much less, it appears that the percent yield is much higher, but in reality, it's 0%. |
Using Loan to Invest - Paying Monthly Installments by Selling Originally Bought Shares | I will add one point missing from the answers by CQM and THEAO. When you take a loan and invest the proceeds, the interest that you pay on the loan is deductible on Schedule A, Line 14 of your Federal income tax return under the category of Investment Interest Expense. If the interest expense is larger than all your investment earnings (not just those from the loan proceeds), then you can deduct at most the amount of the earnings, and carry over the excess investment interest paid this year for deduction against investment earnings in future years. Also, if some of the earnings are long-term capital gains and you choose to deduct the corresponding investment interest expense, then those capital gains are taxed as ordinary income instead of at the favored LTCG rate. You also have the option of choosing to deduct only that amount of interest that offsets dividend (and short-term capital gain) income that is taxed at ordinary rates, pay tax at the LTCG rate on the capital gains, and carry over rest of the interest for deduction in future years. In previous years when the tax laws called for reduction in the Schedule A deductions for high-income earners, this investment interest expense was exempt from the reduction. Whether future tax laws will allow this exemption depends on Congress. So, this should be taken into account when dealing with the taxes issue in deciding whether to take a loan to invest in the stock market. |
The doctor didn't charge the health insurance in time, am I liable? | I was in a similar situation years back and I refused to pay the bill. My point of view was that I provided the hospital with all information needed to submit the claim in a timely matter and that I should not be held responsible for their failure to do so. In the end they waived the charges. So while technically I might have been responsible for paying the charges, in reality I think they decided it wasn't worth the hassle of making me (I would have fought it all the way up to the top). Not sure that I would recommend this approach though :) |
How can this stock have an intra-day range of more than 90% on 24Aug2015? | EDIT: It was System Disruption or Malfunctions August 24, 2015 2:12 PM EDT Pursuant to Rule 11890(b) NASDAQ, on its own motion, in conjunction with BATS, and FINRA has determined to cancel all trades in security Blackrock Capital Investment. (Nasdaq: BKCC) at or below $5.86 that were executed in NASDAQ between 09:38:00 and 09:46:00 ET. This decision cannot be appealed. NASDAQ will be canceling trades on the participants behalf. A person on Reddit claimed that he was the buyer. He used Robinhood, a $0 commission broker and start-up. The canceled trades are reflected on CTA/UTP and the current charts will differ from the one posted below. It is an undesired effect of the 5-minute Trading Halt. It is not "within 1 hour of opening, BKCC traded between $0.97 and $9.5". Those trades only occurred for a few seconds on two occasions. One possible reason is that when the trading halt ended, there was a lot of Market Order to sell accumulated. Refer to the following chart, where each candle represents a 10 second period. As you can see, the low prices did not "sustain" for hours. And the published halts. |
Can someone explain how government bonds work? | The short of it is that bonds are valued based on a fundamental concept of finance called the "time value of money". Stated simply, $100 one year from now is not the same as $100 now. If you had $100 now, you could use it to make more money and have more than $100 in a year. Conversely, if you didn't invest it, the $100 would not buy as much in a year as it would now, and so it would lose real value. Therefore, for these two benefits to be worth the same, the money received a year from now must be more than $100, in the amount of what you could make with $100 if you had it now, or at least the rate of inflation. Or, the amount received now could be less than the amount recieved a year from now, such that if you invested this lesser amount you'd expect to have $100 in a year. The simplest bonds simply pay their face value at maturity, and are sold for less than their face value, the difference being the cost to borrow the cash; "interest". These are called "zero-coupon bonds" and they're around, if maybe uncommon. The price people will pay for these bonds is their "present value", and the difference between the present value and face value determines a "yield"; a rate of return, similar to the interest rate on a CD. Now, zero-coupon bonds are uncommon because they cost a lot. If I buy a zero-coupon bond, I'm basically tying up my money until maturity; I see nothing until the full bond is paid. As such, I would expect the bond issuer to sell me the bond at a rate that makes it worth my while to keep the money tied up. So basically, the bond issuer is paying me compound interest on the loan. The future value of an investment now at a given rate is given by FV = PV(1+r)t. To gain $1 million in new cash today, and pay a 5% yield over 10 years, a company or municipality would have to issue $1.629 million in bonds. You see the effects of the compounding there; the company is paying 5% a year on the principal each year, plus 5% of each 5% already accrued, adding up to an additional 12% of the principal owed as interest. Instead, bond issuers can offer a "coupon bond". A coupon bond has a coupon rate, which is a percentage of the face value of the bond that is paid periodically (often annually, sometimes semi-annually or even quarterly). A coupon rate helps a company in two ways. First, the calculation is very straightforward; if you need a million dollars and are willing to pay 5% over 10 years, then that's exactly how you issue the bonds; $1million worth with a 5% coupon rate and a maturity date 10 years out. A $100 5% coupon bond with a 10-year maturity, if sold at face value, would cost only $150 over its lifetime, making the total cost of capital only 50% of the principal instead of 62%. Now, that sounds like a bad deal; if the company's paying less, then you're getting less, right? Well yes, but you also get money sooner. Remember the fundamental principle here; money now is worth more than money later, because of what you can do with money between now and later. You do realize a lower overall yield from this investment, but you get returns from it quickly which you can turn around and reinvest to make more money. As such, you're usually willing to tolerate a lower rate of return, because of the faster turnaround and thus the higher present value. The "Income Yield %" from your table is also referred to as the "Flat Yield". It is a very crude measure, a simple function of the coupon rate, the current quote price and the face value (R/P * V). For the first bond in your list, the flat yield is (.04/114.63 * 100) = 3.4895%. This is a very simple measure that is roughly analogous to what you would expect to make on the bond if you held it for one year, collected the coupon payment, and then sold the bond for the same price; you'd earn one coupon payment at the end of that year and then recoup the principal. The actual present value calculation for a period of 1 year is PV = FV/(1+r), which rearranges to r = FV/PV - 1; plug in the values (present value 114.63, future value 118.63) and you get exactly the same result. This is crude and inaccurate because in one year, the bond will be a year closer to maturity and will return one less coupon payment; therefore at the same rate of return the present value of the remaining payout of the bond will only be $110.99 (which makes a lot of sense if you think about it; the bond will only pay out $112 if you bought it a year from now, so why would you pay $114 for it?). Another measure, not seen in the list, is the "simple APY". Quite simply, it is the yield that will be realized from all cash flows from the bond (all coupon payments plus the face value of the bond), as if all those cash flows happened at maturity. This is calculated using the future value formula: FV = PV (1+r/n)nt, where FV is the future value (the sum of the face value and all coupon payments to be made before maturity), PV is present value (the current purchase price), r is the annual rate (which we're solving for), n is the number of times interest accrues and/or is paid (for an annual coupon that's 1), and t is the number of years to maturity. For the first bond in the list, the simple APY is 0.2974%. This is the effective compound interest rate you would realize if you bought the bond and then took all the returns and stuffed them in a mattress until maturity. Since nobody does this with investment returns, it's not very useful, but it can be used to compare the yield on a zero-coupon bond to the yield on a coupon bond if you treated both the same way, or to compare a coupon bond to a CD or other compound-interest-bearing account that you planned to buy into and not touch for its lifetime. The Yield to Maturity, which IS seen, is the true yield percentage of the bond in time-valued terms, assuming you buy the bond now, hold it to maturity and all coupon payments are made on time and reinvested at a similar yield. This calculation is based on the simple APY, but takes into account the fact that most of the coupon payments will be made prior to maturity; the present value of these will be higher because they happen sooner. The YTM is calculated by summing the present values of all payments based on when they'll occur; so, you'll get one $4 payment a year from now, then another $4 in two years, then $4 in 3 years, and $104 at maturity. The present value of each of those payments is calculated by flipping around the future value formula: PV = FV/(1+r)t. The present value of the entire bond (its current price) is the sum of the present value of each payment: 114.63 = 4/(1+r) + 4/(1+r)2 + 4/(1+r)3 + 104/(1+r)4. You now have to solve for r, which is difficult to isolate; the easiest way to find the rate with a computer is to "goal seek" (intelligently guess and check). Based on the formula above, I calculated a YTM of .314% for the first bond if you bought on Sept 7, 2012 (and thus missed the upcoming coupon payment). Buying today, you'd also be entitled to about 5 weeks' worth of the coupon payment that is due on Sept 07 2012, which is close enough to the present day that the discounted value is a rounding error, putting the YTM of the bond right at .40%. This is the rate of return you'll get off of your investment if you are able to take all the returns from it, when you receive them, and reinvest them at a similar rate (similar to having a savings account at that rate, or being able to buy fractional shares of a mutual fund giving you that rate). |
Should I fund retirement with a static asset allocation or an age based glide path? | The thing about the glide path is that the closer you're to the retirement age, the less risk you should be taking with your investments. All investments carry risk, but if you invest in a volatile stock market at the age of 20 and lose all your retirement money - it will not have the same effect on your retirement as if you'd invest in a volatile stock market at the age of 65 and then lose all your retirement money. Static allocation throughout your life without changing the risk factor, will lead you to a very conservative investment path, which would mean you're not likely to lose your investments, but you're not likely to gain much either. The point of the glide path is to allow you taking more risks early with more chances of higher gains, but to limit your risks down the road, also limiting your potential gains. That is why it is always suggested to start your retirement funds early in your life, to make sure you have enough time to invest in potentially high return stocks (with high risk), but when you get close to your retirement age, it is advised to do exactly the opposite. The date-targeted funds do that for you, but you can do it on your own as well. As to the academic research - you don't need to go that far. Just look at the graphs to see that over long period investments in stocks give much better return than "conservative" bonds and treasuries (especially when averaging the investments, as it usually is with the retirement funds), but over a given short period, investments in stocks are much more likely to significantly lose in value. |
Fundamentals of creating a diversified portfolio based on numbers? | Your question is a complex one because knowledge of the investor's beliefs about the market is required. For almost any quantitative portfolio, one must have a good estimate of the expected return vector and covariance matrix of the assets in question. The expected return vector, in particular, is far from estimable. No one agrees on it and there is no way to know who is right and who is wrong. In a world satisfying the conditions of the CAPM, you can bypass this problem because the main implication of the CAPM is that the market weights are optimal. In that case the answer to your question is that you should determine the market weights of the various assets and use those along with saving in a risk-free account or borrowing, depending on your risk tolerance. This portfolio has the added benefit that you don't need to rebalance much...the weights in your portfolio adjust at the same rate as the market weights. Any portfolio that has something besides this also includes some notion of expected return aside from CAPM fair pricing. The question for you, then, is whether you have such a notion. If you do, you can mix your information with the market weights to come up with a portfolio. This is what the Black-Litterman method does, for example: get the expected return vector implied by market weights and the covariance matrix, mix with your expected return vector, then use mean-variance optimization to come up with your final weights. |
Who buys variable annuities? | I wrote a detailed answer about variable annuities on another question, but I want to include one specific situation where a variable annuity may be the right course of action. (For the sake of simplicity, I'm quoting directly from that answer): Three-quarters of US states protect variable annuity assets from creditors. Regular IRA's don't benefit from protection under the Employee Retirement Income Security Act (ERISA) and may therefore be more vulnerable to creditors. If you're a potential target for lawsuits, e.g. a doctor worried about medical malpractice suits, variable annuities may be an option for you. As always, you should consult a legal/tax professional to see if this might be a good option for you to consider. The SEC also has a fantastic publication on variable annuities that provides a great deal of information. It's not directly related to this question because it doesn't necessarily focus on the circumstances in which they might be a good fit for you, but it's educational nevertheless and should give you more than enough information to properly evaluate any policy you're looking to buy. |
Recent college grad. Down payment on a house or car? | That sounds like way too much for a car! I suggest you get a used car that only has a few years on it and is in mint condition. Not only are they cheaper to purchase, they are also the cheapest to insure. |
In today's low interest environment, is it generally more economical to buy or lease a new car in the US? | The most economical way is to save your money, and buy a 1+ year old used car with cash. |
MasterCard won't disclose who leaked my credit card details | Others have already commented on the impact of anything which dissuades merchants from raising possible breaches, so I won't dwell on that. Maybe we need stronger legislation, maybe we don't, but it doesn't change today's answer. Often it works the other way around to what you might expect - rather than the merchant noticing and notifying Visa/MC/others, Visa/MC/others spot patterns of suspicious activity (example 1). I don't have any data on the relative numbers of who is being notified/notifying between merchants and payment processors, but at the point when your card is identified as compromised there's no reason to suppose that an individual merchant in the traditional sense has been compromised, let alone identified. In fact because there's a fast moving investigation it could even be a false alarm that led to your card getting cancelled. Conversely it could be a hugely complex multinational investigation which would be jeopardised. It's simply not safe to assume that simply "brand X" has been compromised, therefore everything "brand X" knows about you is also compromised: Furthermore there's no reason to assume the merchant has even admitted to, or discovered the root cause. MC/Visa/Banks, at the point at which they're cancelling cards simply can't say (at least not in a way that might expensively backfire involving lots of lawyers) because the standard of proof needed to go on record blaming someone is simply not yet met. So: yes it's common that you aren't told anything for all of the above reasons. And of course if you really want to find out more you may have some success with your local data protection legislation and formally make a subject access request (or local equivalent) to see what that brings back. Be sure to do it in writing, to the official address of both mastercard and your bank. |
Does girlfriend have too much savings, time to invest? | There are ETF funds that only purchase preferred stock from banks. I have one that pays a monthly dividend of a little under 6% per year. That means that it pays just under 0.5% every month. The purchase price of this stock just slowly goes up and up. You can do a whole lot better than 2% per year. The crux of the issue, as I understand it, is the lousy 2% interest she is getting. My point is that you can do a lot better than 2%. An ETF is not a scam. The price has stability and slow growth because it buys preferred stock from banks. http://www.marketwatch.com/investing/Fund/PGF?countrycode=US http://stockcharts.com/h-sc/ui?s=PGF&p=D&yr=2&mn=3&dy=0&id=p52078664654 Yes, she should invest. My answer is yes because 2% ROI is a lousy return and she can do better. Looking at the 200 day moving average, the price goes from 15.25 in May of 2014 to 17.95 in Dec of 2015. That, in price appreciation alone, is a 17.7% increase. Add on top of that a 0.5% increase per month and you get a stellar 27.7% Total Return. The increase in the Fed funds rate is a benefit to banks. PGF invests in Banks by buying their preferred stock. This means that the share price of PGF will continue to increase and its ability to pay the, nearly, 6% per year dividend will also improve. |
How do I interpret this analysis from Second Opinion? | In Second Opinion's opinion, they say "Do not initiate new position." This means do not buy the stock if you do not already own it. Since they also say to hold if you do own it, this is a very "who knows what it will do" neutral position (IMO). |
In which situations is it better to consider a loan instead of paying cash? | Your practice of waiting until you can pay cash is a good one. It will certainly prevent you from getting into debt! Now, to be clear, your question puts a credit card in the same category as a loan, but it doesn't have to be. You could use a credit card almost like cash, if you are careful. I'm not familiar with the system in France, but in the US, even if you are paying cash all the time, there are some benefits to getting a credit card and paying it off in full every month, instead of simply paying with cash. Some of those benefits are: One pretty big downside of having a credit card depends on your personality. Some people, once they have credit, end up spending beyond their means, and end up getting into debt. Please look into whether credit cards work the same way in France before considering the above advice. As for your question regarding getting a loan vs paying cash, that will usually be personal preference, since with a loan you can buy expensive items (such as a house or car) much sooner than you otherwise could if you waited until you saved the money. For example, it might take 10 years or more to build up enough money to purchase a house with cash, so if you don't want to wait that long, you'll need to finance it. |
Insider trading of a linked security like an ETF your company has a heavy weighting in | If you are in a position to have information that will impact the shares of a stock or index fund and you use that information for either personal gain or to mitigate the losses that you would have felt then it is insider trading. Even if in the end your quiet period passes with little or no movement of the stocks in question. It is the attempt to benefit from or the appearance of the attempt to benefit from inside information that creates the crime. This is the reason for the quiet periods to attempt to shield the majority of the companies employees from the appearance of impropriety, as well as any actual improprieties. With an index you are running a double edged sword because anything that is likely to cause APPLE to drop 10% is likely to give a bump to Motorola, Google, and its competitors. So you could end up in jail for Insider trading and lose your shirt on a poor decision to short a Tech ETF on knowledge that will cause Apple to take a hit. It is certainly going to be harder to find the trade but the SEC is good at looking around for activity that is inconsistent with normal trading patterns of individuals in a position to have knowledge with the type of market impact you are talking about. |
Assessing risk, and Identifying scams in Alternative Investments | 10 to 20% return on investment annually. "When I hear that an investment has a 10%+ return on it I avoid it because...". In my opinion, and based on my experience, 10% annually is not an exageration. I start to ask questions only if one talks about return of 30% annually or more. These kind of returns are possible, but very rare. What sort of things do we need to look out for with alternative investment? First the quality of the website and the documentation provided. Then the resume of the founders. Who are those guys? I check their LinkedIn profile. If they have none, I am out. A LinkedIn profile is a minimum if you manage an investment company. I also look for diversification and this is the case with Yieldstreet. How do we assess the risks associated with alternative investments? I would never put more than 10% of my capital in any investment, alternative ones included. I also try to find financial information on the promoter itself. In Yieldstreet case check the legal advisor. I remember an international fraud case I analyse. The promoter I investigated had seven small trust involved: in British Virgin Islands, in Panama, in Holland, in Portugal, in the United States and Canada plus a banking account in Switzerland and the biggest shareholding company in the Isle of Man. No need to talk about what happened after. The investors were all non residents in the juridictions involved and no legal recourse were possible. They lost everything. These promoters regularly change juridictions to avoid detection. As far as Yieldstreet is concerned, what I read and checked seems interesting. Thanks for your question. I will check it out myself more. I am also a very cautious investor. To evaluate alternative investments is difficult , but no need to be afraid or to avoid them. We are accredited investors after all. |
Are in-kind donations from my S-Corp tax-deductible in any way? | You should probably have a tax professional help you with that (generally advisable when doing corporation returns, even if its a small S corp with a single shareholder). Some of it may be deductible, depending on the tax-exemption status of the recipients. Some may be deductible as business expenses. To address Chris's comment: Generally you can deduct as a business on your 1120S anything that is necessary and ordinary for your business. Charitable deductions flow through to your personal 1040, so Colin's reference to pub 526 is the right place to look at (if it was a C-corp, it might be different). Advertisement costs is a necessary and ordinary expense for any business, but you need to look at the essence of the transaction. Did you expect the sponsorship to provide you any new clients? Did you anticipate additional exposure to the potential customers? Was the investment (80 hours of your work) similar to the costs of paid advertisement for the same audience? If so - it is probably a business expense. While you can't deduct the time on its own, you can deduct the salary you paid yourself for working on this, materials, attributed depreciation, etc. If you can't justify it as advertisement, then its a donation, and then you cannot deduct it (because you did receive something in return). It might not be allowed as a business expense, and you might be required to consider it as "personal use", i.e.: salary. |
Where to find out conversion ratio between General Motors bonds and new GM stock? | I would imagine that as a holder you will receive information in the post when it's made public, but I don't think it's been decided yet. This thread on the Motley Fool boards is keeping an eye on them - you might want to keep an eye on the thread. |
What happened when the dot com bubble burst? | It's tough to share exactly what happened. Go to yahoo and look at the chart for Cisco from 1990 to 2003 or so. From a split adjusted 8 cents a share, it peaked at just under $80 in March 2000, up by a factor of 1000. People were buying in thinking this stock would continue to rise at this pace, but logic says that's preposterous. By April of 2001, it was down to $14, 80% off its high, and later to drop below $10. This was a classic bubble and should be studied so you don't get caught in them. A book titled Extraordinary Popular Delusions & the Madness of Crowds was published in 1841, yes is still an interesting read. Bubbles in markets are not new, but can be recognized and avoided. Cisco at $80 had a market cap of $438B. Had it risen 1000 fold over another decade, it would have been worth $438T, but all the wealth in the US isn't even $75T, so something was wrong, very wrong. This is one story, one stock. A remarkable time. Yes, many companies went under, and the employees lost their jobs. And those who were heavy into the "dotcom" stocks lost as much as 80% (or more) of their wealth. Entire 401(k) accounts dropping this amount due to bad decisions. Those who bailed out in time survived, some doing better than others. |
Risk tolerance as I age | You say you have 90% in stocks. I'll assume that you have the other 10% in bonds. For the sake of simplicity, I'll assume that your investments in stocks are in nice, passive indexed mutual funds and ETFs, rather than in individual stocks. A 90% allocation in stocks is considered aggressive. The problem is that if the stock market crashes, you may lose 40% or more of your investment in a single year. As you point out, you are investing for the long term. That's great, it means you can rest easy if the stock market crashes, safe in the hope that you have many years for it to recover. So long as you have the emotional willpower to stick with it. Would you be better off with a 100% allocation in stocks? You'd think so, wouldn't you. After all, the stock market as a whole gives better expected returns than the bond market. But keep in mind, the stock market and the bond market are (somewhat) negatively correlated. That means when the stock market goes down, the bond market often goes up, and vice versa. Investing some of your money in bonds will slightly reduce your expected return but will also reduce your standard deviation and your maximum annual loss. Canadian Couch Potato has an interesting write-up on how to estimate stock and bond returns. It's based on your stocks being invested equally in the Canadian, U.S., and international markets. As you live in the U.S., that likely doesn't directly apply to you; you probably ignore the Canadian stock market, but your returns will be fairly similar. I've reproduced part of that table here: As you can see, your expected return is highest with a 100% allocation in stocks. With a 20 year window, you likely can recover from any crash. If you have the stomach for it, it's the allocation with the highest expected return. Once you get closer to retirement, though, you have less time to wait for the stock market to recover. If you still have 90% or 100% of your investment in stocks and the market crashes by 44%, it might well take you more than 6 years to recover. Canadian Couch Potato has another article, Does a 60/40 Portfolio Still Make Sense? A 60/40 portfolio is a fairly common split for regular investors. Typically considered not too aggressive, not too conservative. The article references an AP article that suggests, in the current financial climate, 60/40 isn't enough. Even they aren't recommending a 90/10 or a 100/0 split, though. Personally, I think 60/40 is too conservative. However, I don't have the stomach for a 100/0 split or even a 90/10 split. Okay, to get back to your question. So long as your time horizon is far enough out, the expected return is highest with a 100% allocation in stocks. Be sure that you can tolerate the risk, though. A 30% or 40% hit to your investments is enough to make anyone jittery. Investing a portion of your money in bonds slightly lowers your expected return but can measurably reduce your risk. As you get closer to retirement and your time horizon narrows, you have less time to recover from a stock market crash and do need to be more conservative. 6 years is probably too short to keep all your money in stocks. Is your stated approach reasonable? Well, only you can answer that. :) |
FOK order type: can they be market or limit orders? | You can do FOK on both market and limit orders. Normal market orders will partial fill if you want more shares than are being offered, or if someone pulled their order before you get there and now there are fewer shares than you placed a trade for. With a FOK limit order not at the BBO you are shooting in the dark for a quick match, most of the time it does not fill. This is a commonly used order type for UHFT arbitrage. Some exchanges will not attempt to cross it for a match if its price is not at, or better than the market price. When the FOK limit order is at the BBO it is essentially a FOK market order. FYI: Sometimes you have a minimum quantity to fill option, so you can let the order sit on the book until it fills or you cancel. |
What can I replace Microsoft Money with, now that MS has abandoned it? | MoneyDance Is the way to go. I've been using it for years and it works well. It keeps getting better, and best of all, it's completely cross platform! Mac, Windows and linux! |
What do I need to be aware of if I choose to resell property early (in Alberta)? | You will have no problem doing this for one home and living in it for one or two years. There's a recent court case with around six homes bought and sold by the same person in that time frame. That's what you've probably heard about. There's no hard and fast rule about when it becomes a business but here are some highlights from that court case. Among the criteria developed by the case law, the following are of note: Constantin v. The Queen, 2014 TCC 327 (CanLII) |
How can I find out which ETFs has holdings in a particular stock? | This ETFchannel.com page shows which ETFs hold Wells Fargo and you can search other stocks the get the same information on that site. This the same information for Google This even tells you what percentage of an ETF is a particular stock. Be warned that this site is not entirely free. You will be limited to 6 pages in 6 hours unless you pay for a subscription. Additionally ETFdb.com offers a similar tool. |
What's the appropriate way to signify an S-Corp? | S-Corp is a corporation. I.e.: you add a "Inc." or "Corp." to the name or something of that kind. "S" denotes a specific tax treatment which may change during the lifetime of the corporation. It doesn't refer to a legal status. |
Can a CEO short his own company? | mhoran_psprep has answered the question well about "shorting" e.g. making a profit if the stock price goes down. However a CEO can take out insurance (called hedging) against the stock price going down in relation to stocks they already own in some cases. But is must be disclosed in public filings etc. This may be done for example if most of the CEO’s money is in the stock of the company and they can’t sell for tax reasons. Normally it would only be done for part of the CEO’s holding. |
250k USD in savings. What's next? | A good answer to the question really depends on where you want to live, ultimately. Where you want to live pretty much dictates your investment priorities. If you want to invest in "terrain" so you can build a house next to all the "cool," people in Guayaquil that should be your first priority. Your new wife may have an opinion on that matter, you should consult her. In real life, most people are less concerned about their absolute level of wealth than with "keeping up" with their friends, or other reference group. If you don't buy the "terrain," the danger is that in five years, it may go up three, four, five times and be out of your reach, even if your other investments do well on the absolute standard. While it's fairly easy to invest the equivalent of $250K in Ecuadorian land, it's hard to invest that much in Ecuadorian stocks. If you want to buy stocks with that kind of money, it will be U.S., European, or maybe other Latin American, e.g., Brazilian stocks. That kind of asset allocation would tell me that you are thinking of leaving your country at some point. If you're "undecided," a sensible allocation might be 50-50. But in any event, first decide how you want to live your life, then adopt the investment strategy that best supports that life. |
How good is Wall Street Survivor for learning about investing? | I find this site to be really poor for the virtual play portion, especially the options league. After you place a trade, you can't tell what you actually traded. The columns for Exp and type are blank. I have had better luck with OptionsXpress virtual trader. Although they have recently changed their criteria for a non funded accounts and will only keep them active for 90 days. I know the cboe has a paper trading platform but I haven't tried it out yet. |
What can I do when the trading price of a stock or ETF I want to buy is too high? | You have a couple of options: Auto-investing in an open-end mutual fund. Some companies may waive a minimum if you sign up for an automatic investing, e.g. T. Rowe Price will waive its minimum if you agree to invest $100/month. There may be some lower ones out there as well. Some brokers like ShareBuilder have programs where someone could auto-invest getting fractional shares with each purchase. However, something to consider is what percentage is it costing you to buy each time as it may be quite a bit of friction if you are paying $4 a purchase and only buying $40, this is 10% of your investment being eaten up in costs that I'd highly advise taking the first option. |
Where should I park my money if I'm pessimistic about the economy and I think there will be high inflation? | Apart from some of the excellent things others say, you could borrow money in AUD and invest that in another currency (that's risky but interesting) if the AUD interest rate is low and the other countries interest rate is higher, you'll eventually win. Also, look at what John Paulson did in 2007, 2008... I wish I'd thought of that when I was in your position (predicting a housing crisis) |
Should I sell a 2nd home, or rent it out? | If you can generate a higher ROI by renting than by cashing out and investing, then you should rent it out. Please consider your risk tolerance as well. It's always a personal decision whether to assume higher risk for a higher return. |
How do I add my income to my personal finance balance? | Create an account called, say, "Paycheck". When you get paid, create an entry with your gross income as a deposit. For each deduction in your paycheck, create a minus (or expense) entry. After doing that, what will be left in the Paycheck account will be your net income. Simply transfer this amount to the real account your paycheck goes into (your checking account, probably). Almost all the time, the value of your Paycheck account will be 0. It will be nonzero only for a moment every two weeks (or however often you get paid). I don't know if this is the standard way of doing it (in the professional accounting world). It's a way I developed on my own and it works well, I think. I think it's better than just adding a deposit entry in your checking account for your net income as it lets you keep track of all your deductions. (I use Quicken for the Mac. Before they added a Paycheck feature, I used this method. Then they removed the Paycheck feature from the latest version of Quicken for the Mac and I now use this method again.) |
When you're really young and have about 2K to start investing $ for retirement, why do some people advise you to go risky? | Why it is good to be risky The reason why it is good to be risky is because risky investments can result in higher returns on your money. The problem with being risky, is there is a chance you can lose money. However, in the long term you can usually benefit from higher returns even if you have a few slip ups. Let me show you an example: These two lines are based off of placing $2,000 in a retirement fund at age of 20 and then at age of 25 start investing $6,500 a year (based off of a salary of $65,000 with a company that will 1 to 1 match up to 5% IRA contribution, presumably someone with a Master's should be able to get this) and then being able to increase your contribution amount by $150 a year as your salary begins to increase as well. The blue line assumes that all of this money that you are putting in a retirement account has a fixed 3% interest (compounded yearly for simplicity sake) every year until you retire. The red line is earning a 12% interest rate while you are 20 years old and then decreasing by 0.5% per year until you retire. Since this is using more risky investments when you are younger, I have even gone ahead and included losing 20% of your money when you are 24, another 20% when you are 29, and then again another 20% when you are 34. As you can see, even with losing 20% of your money 3 different times, you still end up with more money then you would have had if you stuck with a more conservative investment plan. If I change this to 50% each 3 times, you will still come out about equal to a more conservative investment. Now, I do have these 3 loses placed at a younger age when there is less to lose, but this is to be expected since you are being more risky when you are young. When you are closer to retirement you have less of a chance of losing money since you will be investing more conservatively. Why it is OK to be risky when you are young but not old Lets say you loose 20% of your $2,000 when you are young, you have 30-40 years to make that back. That's roughly $1 a month extra that you are having to come up with. So, if you have a risky investment go bad when you are young, you have plenty of time to account for it before you retire. Now lets say you have $1,000,000 when you are 5 years from retiring and loose 20% of it, you have to come up with an extra $3,333 a month if you want to retire on time. So, if you have a risky investment go bad when you are close to retiring, you will most likely have to work for many more years just to be able to recover from your loses. What to invest in This is a little bit more difficult question to answer. If there was one "right" way to invest your money, every one would be doing that one "right" way and would result in it not turning out to be that good of investment. What you need to do is come up with a plan for yourself. My biggest advice that I can give is to be careful with fees. Some places will charge a fixed dollar amount per trade, while others might charge a fixed dollar amount per month, while even others might charge a percentage of your investment. With only having $2,000 to invest, a large fee might make it difficult to make money. |
Stock portfolio value & profit in foreign currency | It's very simple. Use USDSGD. Here's why: Presenting profits/losses in other currencies or denominations can be useful if you want to sketch out the profit/loss you made due to foreign currency exposure but depending on the audience of your app this may sometimes confuse people (like yourself). |
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