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Ways to establish credit history for international student | I would like to post a followup after almost a quarter. littleadv's advice was very good, and in retrospect exactly what I should have done to begin with. Qualifying for a secured credit card is no issue for people with blank credit history, or perhaps for anyone without any negative entries in their credit history. Perhaps, cash secured loans are only useful for those who really have so bad a credit history that they do not qualify for any other secured credit, but I am not sure. Right now, I have four cash secured credit cards and planning to maintain a 20% utilization ratio across all of them. Perhaps I should update this answer in 1.5 years! |
Can I rollover an “individual retirement annuity” to an IRA? | Annuities, like life insurance, are sold rather than bought. Once upon a time, IRAs inherited from a non-spouse required the beneficiary to (a) take all the money out within 5 years, or (b) choose to receive the value of the IRA at the time of the IRA owner's death in equal installments over the expected lifetime of the beneficiary. If the latter option was chosen, the IRA custodian issued the fixed-term annuity in return for the IRA assets. If the IRA was invested in (say) 15000 shares of IBM stock, that stock would then belong to the IRA custodian who was obligated to pay $x per year to the beneficiary for the next 23 years (say). There was no investment any more that could be transferred to another broker, or be sold and the proceeds invested in Facebook stock (say). Nor was the custodian under any obligation to do anything except pay $x per year to the beneficiary for the 23 years. Financial planners loved to get at this money under the old IRA rules by suggesting that if all the IRA money were taken out and invested in stocks or mutual funds through their company, the company would pay a guaranteed $y per year, would pay more than $y in each year that the investments did well, would continue payment until the beneficiary died (or till the death of the beneficiary or beneficiary's spouse - whoever died later), and would return the entire sum invested (less payouts already made, of course) in case of premature death. $y typically would be a little larger than $x too, because it factored in some earnings of the investment over the years. So what was not to like? Of course, the commissions earned by the planner and the lousy mutual funds and the huge surrender charges were always glossed over. |
Should I make extra payments to my under water mortgage or increase my savings? | You say you are underwater by $10k-15k. Does that include the 6% comission that selling will cost you? If you are underwater and have to sell anyway, why would you want to give the bank any extra money? A loss will be taken on the sale. Personally i would want the bank to take as much of that loss as possible, rather than myself. Depending on the locale the mortgage may or may not be non-recourse, ie the loan contract implies that the bank can take the house from you if you default, but if 'non-recourse' the bank has no legal way to demand more money from you. Getting the bank to cooperate on a short sale might be massively painful. If you have $ in your savings, you might have more leverage to nego with the bank on how much money you have to give them in the event the loan is not 'non-recourse'. Note that even if not 'non-recourse', it's not clear it would be worth the banks time and money to pursue any shortfall after a sale or if you just walk away and mail the keys to the bank. If you're not worried about your credit, the most financially beneficial action for you might be to simply stop paying the mortgage at all and bank the whole payments. It will take the bank some time to get you out of the house and you can live cost-free during that time. You may feel a moral obligation to the bank. I would not feel this way. The banks and bankers took a ton of money out of selling mortgages to buyers and then selling securities based on the mortgages to investors. They looted the whole system and pushed prices up greatly in the process, which burned most home buyers and home owners. It's all about business -my advice is to act like a business does and minimize your costs. The bank should have required a big enough downpayment to cover their risk. If they did not, then they are to blame for any loss they incur. This is the most basic rule of finance. |
Should we park our money in our escrow account? | You should talk to a financial fiduciary (make sure they are a fiduciary, not all planners are) about investing your money. Even ultra safe investments such as treasury bonds will beat the 1% interest rate offered by your savings account (the yield on the 5 year treasury is currently around 2%). |
Why do put option prices go higher when the underlying stock tanks (drops)? | There are two components of option valuation, the value that's "in the money" and the "time value." In the case of the $395 put, that option was already in the money and it will move less than the stock price by a bit as there will still be some time value there. $22.52 is intrinsic value (the right word for 'in the money') and the rest is time. The $365 strike is still out of the money, but as jldugger implied, the chance of it going through that strike is better as it's $6.66 closer. Looking at the options chain gives you a better perspective on this. If Apple went up $20 Monday, and down $20 Tuesday, these prices would be higher as implied volatility would also go higher. Now, I'd hardly call a drop of under 2% "tanking" but on the otherhand, I'd not call the 25% jump in the option price skyrocketing. Options do this all the time. Curious what prompted the question, are you interested in trading options? This stock in particular? |
Contributing factors to historical increase in trading volume | It's not primarily more people investing. In the 1980s stock exchanges went from open outcry trading floors where all trades involved actually exchanging pieces of paper to electronic trading. Once that happened, it wasn't long before most trades were executed by computer programs rather than human beings, turning stocks over rapidly for very short-term profits rather than long-term investment, greatly increasing the number of trades (and also increasing liquidity for the actual investors; it's by no means all bad). |
What do the suffixes on stock symbols indicate | The suffix represents the stock exchange the stock is traded on. N represents the New York Stock Exchange and O represents the Nasdaq. Sometimes a stock can be listed on more than one exchange so the suffix will give you an indication of which exchange the stock is on. For example the Australian company BHP Billiton Ltd is listed on multiple exchanges so is given a different suffix for the different exchanges (especially when the code is the same for each exchange). Below are a few examples of BHP: |
What are the best software tools for personal finance? | Emergency Account Vault (Windows) I use it to store info about all of my accounts/assets in an encrypted document. It's more for keeping track of everything that is in your name than managing money. Good for situations when you need to quickly look up info about a specific account you own. |
What is the field “Folio” in an accounting book for? | It's used as a reference column: In journals folio coloumn is used to mention the reference or “address” of ledger in which the journal entry has been posted thus giving an easy access and also easily understanding whether all the entries has been posted in the relevant accounts or not. |
Why is stock dilution legal? | Alot of these answers have focused on the dilution aspect, but from a purely legal aspect, there are usually corporate bylaws that spell out what kind of vote and percentage of votes is needed to take this type of action. If all other holders of stock voted to do this, so 90% for, and you didn't, so 10% against, it's still legal if that vote meets the threshold for taking the action. As an example of this, I known of a startup where employees got $0/share for their vested shares when the company was sold because the voting stock holders agreed to it. Effectively the purchase amount was just enough to cover debts and preferred stock. |
Is there any real purpose in purchasing bonds? | You ask a question, "Is there any real purpose in purchasing bonds?" and then appear to go off on a rant. Before the question is closed by members here, let me offer this: This chart reflects the 10 year bond rate. From 1960-2004 (give or take) the coupon rate was over 4%. Asset allocation suggests a mix of stocks and bonds seeking to avoid the risk of having "all of one's eggs in one basket." To that end, the simplest approach is a stock/bond mix. Over time, a 70/30 mix provides nearly 95% of the long tern return, but with a much lower volatility. I'm not going to suggest that a 2% 10 year bond is an exciting investment, but bonds may have a place in one's portfolio. I'm not going to debate each and every point you attempted, but #5 is especially questionable. If you feel this is true, you should short bonds. Or you should at least 99% of the time. Do you have data to back up this statement? |
Should I sell when my stocks are growing? | Try to find out (online) what 'the experts' think about your stock. Normally, there are some that advise you to sell, some to hold and some to buy. Hold on to your stock when most advise you to buy, otherwise, just sell it and get it over with. A stock's estimated value depends on a lot of things, the worst of these are human emotions... People buy with the crowd and sell on panic. Not something you should want to do. The 'real' value of a stock depends on assets, cash-flow, backlog, benefits, dividends, etc. Also, their competitors, the market position they have, etc. So, once you have an estimate of how much the stock is 'worth', then you can buy or sell according to the market value. Beware of putting all your eggs in one basket. Look at what happened to Arthur Andersen, Lehman Brothers, Parmalat, Worldcom, Enron, etc. |
What are my risks of early assignment? | The put vs call assignment risk, is actually the reverse: in-the-money calls are more likely to be exercised early than puts. Exercising a call locks in profit for the option holder because they can buy the shares at below market price, and immediately sell them at the higher market price. If there are dividends due, the risk is even higher. By contrast, exercising an in-the-money put locks in a loss for the holder, so it's less common. |
Which r in perpetuity formula to pricing a business? | In the equity markets, the P/E is usually somewhere around 15. The P/E can be viewed as the inverse of the rate of a perpetuity. Since the average is 15, and the E/P of that would be 6.7%, r should be 6.7% on average. If your business is growing, the growth rate can be incorporated like so: As you can see, a high g would make the price negative, in essence the seller should actually pay someone to take the business, but in reality, r is determined from the p and an estimated g. For a business of any growth rate, it's best to compare the multiple to the market, so for the average business in the market with your business's growth rate and industry, that P/E would be best applied to your company's income. |
When after a companys IPO date can I purchase shares? | You can purchase stock immediately in the open market on the day of the IPO when market opens. Below link gives you more information. http://finance.zacks.com/buy-ipo-stock-3903.html |
Approach to share options in the UK | I'm in the US, so there may be idiosyncrasies with UK taxes that I'm not familiar with, but here's how I've always treated stock I get as compensation. Suppose the vested shares are worth X. If I had X in cash, would I buy my company's stock as an investment? Usually the answer is no, not because I think the stock will tank, but because there's better things I can do with that cash (pay off debt, unfortunately). Therefore I sell the shares and use the cash for something else. You have stock options. So suppose the stock value is X but you can buy it for Y. You can either: Therefore, the math is the same. If you had X in cash, would you buy your company's stock as an investment? If so, then option 2 is best, because you can get X in stock for a lower cost. (Option 3 might be better if the gain on the stock will be taxed higher, but they're pretty much equivalent if there's no chance that the stock will drop below Y) If not, then option 4 is best since you will likely get more than X-Y from selling the options that by exercising them and selling the stock (since options have time value). If option 4 is not a possibility, then option 1 is best - you pocket X-Y as "income" and invest it however you see fit. |
Is there a candlestick pattern that guarantees any kind of future profit? | A good poker player lowers the bet on the downside and increases it on the up, by 3 to 10 times. They'll win, and then when the mood swings, generally 3 -5 consecutive downs, it`s time to reduce the bet back to 1. I gambled for a year fulltime - a guest of the house you might say, and I managed to make a living using this system. |
Why buying an inverse ETF does not give same results as shorting the ETF | Suppose that the ETF is currently at a price of $100. Suppose that the next day it moves up 10% (to a price of $110) and the following day it moves down 5% (to a price of $104.5). Over these two days the ETF has had a net gain of 4.5% from its original price. The inverse ETF reverses the daily gains/losses of the base ETF. Suppose for simplicity that the inverse ETF also starts out at a price of $100. So on the first day it goes down 10% (to $90) and on the second day it goes up 5% (to $94.5). Thus over the two days the inverse ETF has had a net loss of 5.5%. The specific dollar amounts do not matter here. The result is that the ETF winds up at 110%*95% = 104.5% of its original price and the inverse ETF is at 90%*105% = 94.5% of its original price. A similar example is given here. As suggested by your quote, this is due to compounding. A gain of X% followed by a loss of Y% (compounded on the gain) is not in general the same as a loss of X% followed by a gain of Y% (compounded on the loss). Or, more simply put, if something loses 10% of its value and then gains 10% of its new value, it will not return to its original value, because the 10% it gained was 10% of its decreased value, so it's not enough to bring it all the way back up. Likewise if it gains 10% and then loses 10%, it will go slightly below its original value (since it lost 10% of its newly increased value). |
How to start investing/thinking about money as a young person? | There are books like, "The Millionaire Mind" that could be of interest when it comes to basics like living below your means, investing what you save, etc. that while it is common sense, it is uncommonly done in the world. Something to consider is how actively do you want your money management to be? Is it something to spend hours on each week or a few hours a year tops? You have lots of choices and decisions to make. I would suggest keeping part of your savings as an emergency fund just in case something happens. As for another part, this is where you could invest in a few different options and see what happens. There would be a couple of different methods I could see for breaking into finance that I'd imagine: IT of a finance company - In this case you'd likely be working on customizations for what the bank, insurance or other kind of financial firm requires. This could be somewhat boring as you are basically a part of the backbone that keeps the company going but not really able to take much of the glory when the company makes a lot of money. Brains of a hedge fund - In this case, you may have to know some trading algorithms and handle updating the code so that the trading activities can be done by a computer with lightning speed. Harder to crack into since these would be the secretive people to find and join in a way. |
How to protect a Stock you still want to own from a downturn? | Adding on to all the fine answers, you can consider selling a covered call. You will have to own a minimum of 100 shares. It will offer a bit of protection, but limit your upside. If your confident long term, but expect a broader market pull back then a covered call might give you that small protection your looking for. |
Should I try to negotiate a signing bonus? | I was able to request a modest advance on my salary when I started my first job out of college, for essentially the same reason. Alternatively, you might consider requesting a small personal loan from friends or family. If you have a credit card that can cover things like grocery expenses for that period, this may also be the appropriate time to use it. Buy cheap food, like lentils and beans. :P In the future, once you earn some money, you should keep around a few months' worth of essential expenses in a saving account to avoid this situation. :) |
18 year old making $60k a year; how should I invest? Traditional or Roth IRA? | With this level of income, you might consider a Solo 401(k). It would allow you a much higher level of contributions and is more appropriate for your savings than the limited IRA deposits. It also offers a considerable number of options not available for IRAs. A loan for example. |
Bank of the Sierra: Are they legit? How can the checking interest APY be so high? | The FDIC is pretty confident about them being legit. http://www2.fdic.gov/idasp/main_bankfind.asp (type in Bank Of The Sierra in the name field and search on that) You got to realize how much money they will make if you use them per the agreement. Every credit card / debit transaction gets them some cash. Businesses get between 1 and 5% of each transaction even on debit cards. Then there is a flat fee the merchant pays for accepting the credit card between .25 and .50 per transaction. Even at 12 transactions a month, the bank is looking at making around $6/month. Probably more because who uses a debit card just 12 times a month. It would be convenient for most people to juse use it all the time. Does 4.09% APY beat $6/month? You would have to keep a balance of $2000 plus to cost more than you earn. And if you keep more than $2k in the account, they have other ways to make money off of you. I would also assume they make money on the bill pay and direct deposit side of things, but I can't speak for certain about that. Bottom line is this seems like a good deal to attract customers, they would rather make a bit less profit then BofA to grow their business. They are betting their offer restrictions will change your habits and make you more profitable to them. |
Trying to figure out my student loans | The 5% to 6.5% loan rates are a bit high. You'll probably want to pay those off first, and make it one of your priorities as soon as you have a 6-month savings fund. This should probably take precedence over savings for retirement, unless you're giving up a 401(k) match. Pay extra on the highest-interest loan until it's all paid off, then switch to the next one down, and accelerate the payoff as much as you can. If you're looking at a loan at 6% and a payoff date in 8 years or so (2020), am extra dollar paid now will save you ~$0.60. Not a bad return in general, and an excellent return for something that's zero-risk. The other loans, at 2-3%, are different. An extra dollar paid now on a 2% loan will save you $0.17 over 8 years. That's a pretty mediocre return. If you have a good, stable job and good job prospects, and a decent family support network, and few commitments like children and mortgages, and a low cost of living... generally, the things that help you have a high tolerance for risk... then you should consider investing your money in the stock market instead of paying off these loans any earlier than you need to. (Broad index funds and the like, not individual stocks). |
Pros and cons of using a personal assistant service to manage your personal finances? | When you want to hire personal assistants, you must be sure that you are hiring in a trusted company or the person you talk to have been proven by a lot of people. You must be wise in choosing one because these people will handle some of your personal things and data. |
Is there a standard for naming stocks exchanges? Is there a list of abbreviated names? | Wikipedia is your friend: http://en.wikipedia.org/wiki/List_of_stock_exchanges |
Multiple accounts stagnant after quitting job. | What is my best bet with the 401K? I know very little about retirement plans and don't plan to ever touch this money until I retire but could this money be of better use somewhere else? You can roll over a 401k into an IRA. This lets you invest in other funds and stocks that were not available with your 401k plan. Fidelity and Vanguard are 2 huge companies that offer a number of investment opportunities. When I left an employer that had the 401k plan with Fidelity, I was able to rollover the investments and leave them in the existing mutual funds (several of the funds have been closed to new investors for years). Usually, when leaving an employer, I have the funds transferred directly to the place my IRA is at - this avoids tax penalties and potential pitfalls. The student loans.... pay them off in one shot? If the interest is higher than you could earn in a savings account, then it is smarter to pay them off at once. My student loans are 1.8%, so I can earn more money in my mutual funds. I'm suspicious and think something hinky is going to happen with the fiscal cliff negotiations, so I'm going to be paying off my student loans in early 2013. Disclaimer: I have IRA accounts with both Fidelity and Vanguard. My current 401k plan is with Vanguard. |
Is there a widely recognized bond index? | The iShares Barclays Aggregate Bond - ticker AGG, is a ETF that may fit the bill for you. It's an intermediate term fund with annual expenses of .20%. It "seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays Capital U.S. Aggregate Bond Index" |
Why divide by ask rate to get the spread? | Mathematically it's arbitrary - you could just as easily use the bid or the midpoint as the denominator, so long as you're consistent when comparing securities. So there's not a fundamental reason to use the ask. The best argument I can come up with is that most analysis is done from the buy side, so looking at liquidity costs (meaning how much does the value drop instantaneously purely because of the bid-ask spread) when you buy a security would be more relevant by using the ask (purchase price) as the basis. Meaning, if a stock has a bid-ask range of $95-$100, if you buy the stock at $100 (the ask), you immediately "lose" 5% (5/100) of its value since you can only sell it for $95. |
Can future rental income be applied to present debt-to-income ratio when applying for second mortgage? | Having both purchased income properties and converted prior residences into rental properties I have found that it is difficult to get the banks to consider the potential rental income in qualifying you for a loan. It helps if you have prior rental experience but in many cases you will have to qualify outright (i.e. without consideration of the potential income). The early 2000s were great for responsible borrows/investors but today's regulations make it much more difficult to finance income property. |
Why do employers require you to spread your 401(k) contributions throughout the year to get the maximum match? | The only way to know the specific explanation in your situation is to ask your employer. Different companies do it differently, and they will have their reasons for that difference. I've asked "But why is it that way?" enough times to feel confident in telling you it's rarely an arbitrary decision. In the case of your employer's policy, I can think of a number of reasons why they would limit match earnings per paycheck: Vesting, in a sense - Much as stock options have vesting requirements where you have to work for a certain amount of time to receive the options, this policy works as a sort of vesting mechanism for your employer matching funds. Without it, you could rapidly accumulate your full annual match amount in a few pay periods at the beginning of the year, and then immediately leave for employment elsewhere. You gain 100% of the annual match for only 1-2 months of work, while the employees who remain there all year work 12 months to gain the same 100%. Dollar Cost Averaging - By purchasing the same investment vehicle at different prices over time, you can reduce the impact of volatility on your earnings. For the same reason that 401k plans usually restrict you to a limited selection of mutual funds - namely, the implicit assumption is that you probably have little to no clue about investing - they also do other strategic things to encourage employees to invest (at least somewhat) wisely. By spacing their matching fund out over time, they encourage you to space your contributions over time, and they thereby indirectly force you to practice a sensible strategy of dollar cost averaging. Dollar Cost Averaging, seen from another angle - Mutual funds are the 18-wheeler trucks of the investment super-highway. They carry a lot of cargo, but they are difficult to start, stop, or steer quickly. For the same reasons that DCA is smart for you, it's also smart for a fund. The money is easier to manage and invest according to the goals of the fund if the investments trickle in over time and there are no sudden radical changes. Imagine if every employer that does matching allowed the full maximum match to be earned on the first paycheck of the year - the mutual funds in 401ks would get big balloons of money in January followed by a drastically lower investment for the rest of the year. And that would create volatility. Plan Administration Fees - Your employer has to pay the company managing the 401k for their services. It is likely that their agreement with the management company requires them to pay on a monthly basis, so it potentially makes things convenient for the accounting people on both ends if there's a steady monthly flow of money in and out. (Whether this point is at all relevant is very much dependent on how your company's agreement is structured, and how well the folks handling payroll and accounting understand it.) The Bottom Line - Your employer (let us hope) makes profits. And they pay expenses. And companies, for a variety of financial reasons, prefer to spread their profits and expenses as evenly over the year as they can. There are a lot of ways they achieve this - for example, a seasonal business might offer an annual payment plan to spread their seasonal revenue over the year. Likewise, the matching funds they are paying to you the employees are coming out of their bottom line. And the company would rather not have the majority of those funds being disbursed in a single quarter. They want a nice, even distribution. So once again it behooves them to create a 401k system that supports that objective. To Sum Up Ultimately, those 401k matching funds are a carrot. And that carrot manipulates you the employee into behaving in a way that is good for your employer, good for your investment management company, and good for your own investment success. Unless you are one of the rare birds who can outperform a dollar-cost-averaged investment in a low-cost index fund, there's very little to chafe at about this arrangement. If you are that rare bird, then your investment earning power likely outstrips the value of your annual matching monies significantly, in which case it isn't even worth thinking about. |
Why do grocery stores in the U.S. offer cash back so eagerly? | The cost to the store is small. They may have to pay a slightly greater fee because the transaction is now bigger. They do need additional cash on hand. Even though the majority of transactions are electronic (credit/debit) or check, the local grocery store still seems to have significant cash on hand. This is seen as a customer service. If there is a 2% fee the $50 advance costs them $1 for the minority of customers that take advantage of it. After more than 10 years of doing this they have figured this into the cost of groceries. Of course the credit card company could also waive the fee to store. My credit card online statement does tell me how much cash back was received. The line says date, store, amount ($40.00 cash over and $123.45 purchases) $163.45 total. Therefore the credit card company knows that cash back was used. |
Do I have to pay taxes on income from my website or profits? | Income is income... it depends how it's structured.. personal or corporate.. but still you need to pay taxes... if you get audited, the tax man could look at your bank statements and ask, "where is this money coming from" |
Considerations for holding short-term reserves? | It is a dangerous policy not to have a balance across the terms of assets. Short term reserves should remain in short term investments because they are most likely needed in the short term. The amount can be shaved according to the probability of their respective needs, but long term asset variance usually exceed the probability of needing to use reserves. For example, replacing one month bonds paying essentially nothing with stocks that should be expected to return 9% will expose oneself to a possible sudden 50% loss. If cash is indeed so abundant that reserves can be doubled, this policy can be expected to be stable; however, cash is normally scarce. It is a risky policy to place reserves that have a 20% chance of being 100% liquidated into investments that have a 20% chance of declining by approximately 50% just for a chance of an extra 9% annual return. Financial stability should always be of primary concern with rate of return secondary only after stability has been reasonably assured. |
HELOC vs. Parental Student Loans vs. Second Mortgage? | First of all, I'm happy that the medical treatments were successful. I can't even imagine what you were going through. However, you are now faced with a not-so-uncommon reality that many households face. Here's some other options you might not have thought of: I would avoid adding more debt if at all possible. I would first focus on the the cost side. With a good income you can also squeeze every last dollar out of your budget to send them to school. I agree with your dislike of parent loans for the same reasons, plus they don't encourage cost savings and there's no asset to "give back" if school doesn't work out (roughly half of all students that start college don't graduate) I would also avoid borrowing more than 80% of your home's value to avoid PMI or higher loan rates. You also say that you can pay off the HELOC in 5 years - why can you do that but not cash flow the college? Also note that a second mortgage may be worse that a HELOC - the fees will be higher, and you still won't be able to borrow more that what the house is worth. |
Can I save our credit with a quickie divorce? | If you're not insolvent, doing something like this is both a moral and legal hazard: When you are insolvent, the tax and moral hazard issues can be a non-issue. Setting up a scenario that makes you appear to be insolvent is where the fraud comes in. If you decide to go down this road, spend a few thousand dollars on competent legal advice. |
Should we prepay our private student loans, given our particular profile? | Just for another opinion, radio host Clark Howard would suggest killing the private student loans as quickly as possible. The only reason is the industry around private student loans has fewer rules as to how they interact with you, and they have historically been very unpleasant if you have to deal with them in bad financial times. As a safety net, get rid of the private student loans as your main focus while you have the money and rates are low. Not for financial reasons per se, but for peace of mind. The other advice in this question are great, but nobody mentioned the potential dark side of private student loans. |
Are my parents ripping me off with this deal that doesn't allow me to build my equity in my home? | You're paying 5.2% 'interest' on the $115K (500 * 12 / 115,000) * 100 but the amount you pay back is not $115K but 75% of the property value at sale. Is that right? A mortgage would have cost about half that rate and the balloon payment would have been fixed - you would pay back $115K at maturity plus you could have sold it whenever you liked As Gnasher729 said, if you consider it to be rent then the situation looks different but the point of buying a house is to avoid paying 'useless' rent, build equity and hopefully make a capital gain I'd speak to a lawyer & possibly an accountant (regarding the numbers) |
Why do interest rates increase or decrease? | Fundamentally interest rates reflect the time preference people place on money and the things money can buy. If I have a high time preference then I prefer money in my hand versus money promised to me at some date in the future. Thus, I will only loan my money to someone if they offer me an incentive which would be an amount of money to be received in the future that is larger than the amount of money I’m giving the debtor in the present (i.e. the interest rate). Many factors go into my time preference determination. My demand for cash (i.e. my cash balance), the credit rating of the borrower, the length of the loan, and my expectation of the change in currency value are just a few of the factors that affect what interest rate I will loan money. The first loan I make will have a lower interest rate than the last loan, ceteris paribus. This is because my supply of cash diminishes with each loan which makes my remaining cash more valuable and a higher interest rate will be needed to entice me to make additional loans. This is the theory behind why interest rates will rise when QE3 or QEinfinity ever stops. QE is where the Federal Reserve cartel prints new money to purchase bonds from cartel banks. If QE slows or ends the supply of money will stop increasing which will make cash more valuable and higher interest rates will be needed to entice creditors to loan money. Note that increasing the stock of money does not necessarily result in lower interest rates. As stated earlier, the change in value of the currency also affects the interest rate lenders are willing to accept. If the Federal Reserve cartel deposited $1 million everyday into every US citizen’s bank account it wouldn’t take long before lenders demanded very high interest rates as compensation for the decrease in the value of the currency. Does the Federal Reserve cartel affect interest rates? Yes, in two ways. First, as mentioned before, it prints new money that is loaned to the government. It either purchases the bonds directly or purchases the bonds from cartel banks which give them cash to purchase more government bonds. This keeps demand high for government bonds which lowers the yield on government bonds (yields move inverse to the price of the bond). The Federal Reserve cartel also can provide an unlimited amount of funds at the Federal Funds rate to the cartel member banks. Banks can borrow at this rate and then proceed to make loans at a higher rate and pocket the difference. Remember, however, that the Federal Reserve cartel is not the only market participant. Other bond holders, such as foreign governments and pension funds, buy and sell US bonds. At some point they could demand higher rates. The Federal Reserve cartel, which currently holds close to 17% of US public debt, could attempt to keep rates low by printing new money to buy all existing US bonds to prevent the yield on bonds from going up. At that point, however, holding US dollars becomes very dangerous as it is apparent the Federal Reserve cartel is just a money printing machine for the US government. That’s when most people begin to dump dollars en masse. |
Where can I open a Bank Account in Canadian dollars in the US? | Canada, like other second-rate economies with weak currencies, provides USD accounts. It is not the same vice versa. It is rare to find a direct deposit foreign currency account in the US as it is the world-leading currency. |
Why can't house prices be out of tune with salaries | There's a few things going on here. If we fixed rates (and terms) over time we'd expect a pretty tight chart of home prices to income, almost lockstep. Add a layer of growth above that in boom times due to the wealth effect (when stocks are way up, we have extra money to blow on bigger houses) and the opposite when markets are down. Next, the effect of rates. With long term rates dropping from 14% in 1985 to 5% in 2003, the amount that can be bought for the same monthly payment rises dramatically as rates fall. Easy to lose site of that and the fact that the average size house has increased about 1.5% per year over the last 40 years, surely that can't continue. When you normalize all these factors, houses cost fewer hours-worked almost at the peak of the market than 25 years ago. Mike's logical example of extrapolating out is very clever, I like it. In the short term, we'll see periods that are booms and busts, but actual prices will straddle the line representing the borrowing power of a week's pay. |
What do “cake and underwear” stocks refer to? | JoeTaxpayer's answer is dead on... but let me give my own two cents with a little bit of math. Otherwise, I personally find that people talking about diversified portfolios tends to be full of buzzwords. Let's say that Buffett's investments are $10 million. He would like to earn ≥7% this year, or $700,000. He can invest that money in coca-cola//underwear, which might return: Or he can invest in "genius moves" that will make headlines: (like buying huge stakes in Goldman Sachs), which might return: And he makes plays for the long haul based on the expected value of the investments. So if he splits it 50/50... ($5 million/ $5 million), then his expected value is 822,250: By diversifying, he does reduce the expected value of the portfolio... (He is not giving $10 M the chance to turn into $1.5 million or $2 million for him!). The expected value of that shock-and-awe portfolio with all $10 million invested in it is $1.2M. By taking less risk... for less reward... his expected return is lower. But his risk is lower too. Scale this example back up into the $100 million or billion range that Buffett invests in and that extra margin makes the difference. In the context of your original article, the lower-risk 'cake and underwear' investments let Buffett go big on the things that will make 20%+ returns on billions of dollars, without completely destroying his investment capital when things take a turn for the worse. |
How do 401k handle rate of return | A 401(k) is an investment just like any other investment. You generally get two types of return lumped into that number, but there can be more and you should read your funds prospectus carefully. If you aren't investing in direct companies, you're using mutual funds for instance, then you should read the funds prospectus to see how they handle these situations for the underlying securities they hold for you. Although I think this is the basic answer to the question as you asked. |
What explains the enormous increase in gold price in the early 21st century? | Since 2007 the world has seen a period of striking economic and financial volatility featuring the deepest recession since the 1930s despite this gold has performed strongly with its price roughly doubling since the global financial crisis began in mid-2007. 1. Gold and real interest rates: One of the factor that influences gold prices is real interest rate which is to some extent related to inflation. Since gold lacks a yield of its own, the opportunity cost of holding gold increases with a real interest rate increase and decreases with a fall in real interest rates. 2. Gold and the US dollar: The external value of the US dollar has been a significant influence on short-term gold price movements. The IMF estimated6 in 2008 that 40-50% of the moves in the gold price since 2002 were dollar-related, with a 1% change in the effective external value of the dollar leading to a more than 1% change in the gold price (Source). 3. Gold and financial stress: It is a significant and commonly observed influence on the short-term price of gold. In periods of financial stress gold demand may rise for a number of reasons: 4. Gold and political instability: It is another factor that can boost gold prices. Investor concerns about wars, civil conflicts and international tensions can boost demand for gold for similar reasons to those noted above for periods of financial stress. Gold‟s potential function as a „currency of last resort‟ in case of serious system collapse provides a particular incentive to hold it in case the political situation is especially severe. (Source) 5. Gold and official sector activity: The behaviour of central banks and other parts of the official sector can have an important impact on gold prices. One reason for this is that central banks are big holders of gold, possessing some 30,500 metric tons in 2010, which is approximately 15% of all above-ground gold stocks. As a result, central bank policies on gold sales and purchases can have significant effects, and these policies have been subject to considerable shifts over the decades. (Source) (Source of above graphs) |
How can I find the historical stock price for a specific stock on a specific date? | A quick search showed me that UEP merged into Ameren on Dec 31, 1997, and Ameren still exists today. So I took a look at Ameren's Investor Relations website. Unfortunately, they don't provide historical stock prices prior to Ameren forming, so starting with 1998. However, I've had good luck in the past emailing a company's investor relations contact and asking for data like this that isn't on the website. It's reasonably likely they'll have internal records they could look it up within. |
Is there any chance for a layperson to gain from stock exchange? [duplicate] | It depends what you mean by 'gain'. Over long period of times the market increases so using a blind monkey with a dart or index fund should be sufficient to get an average returns. The key difference is that changes in currency are close to zero sum game while money in equity or bonds is actually used for something (building a company etc.). If you mean 'get above average returns' then you will likely get answers depending on person. If you think that markets are efficient then you won't beat the market consistently - over long periods the returns are likely to be no better then average - because of large number of 'smart people' trying to beat each other (and even them are likely to have below-average returns). If you don't think so then it is possible to get above average consistently - as long as you know how to beat those 'smart people'. |
Do I even need credit cards? | I can't answer the question if you should or shouldn't get a credit card; after all, you seem to manage fine without one (which is good). I started using credit cards when I lived in the UK as the consumer protection you get from a credit card there tends to be better than from a debit card. I'd also treat it as a debit or charge card, ie pay it off in full every month. That way, because you're not carrying a balance the high interest rate doesn't matter and you avoid the trap of digging yourself deeper into the hole each month. Cashback or other perks offered by a credit card can be worth it, but (a) make sure that they're worth more than the yearly fee and (b) that they're perks you're actually using. For that reason, cashback tends to work best. I'd get a VISA or Mastercard, they seem to be the ones that pretty much everybody accepts. Amex can have better perks but tends to be more expensive and isn't accepted everywhere, especially not outside the US. But in the end, do you really need one if you're managing fine without one? |
I paid a contractor to make roof repairs to a house in my LLC. How can I deduct this cost? | This new roof should go on the 2016 LLC business return, but you probably won't be able to expense the entire roof as a repair. A new roof is most likely a capital improvement, which means that it would need to be depreciated over many years instead of expensed all in 2016. The depreciation period for a residential rental property is 27.5 years. Please consider seeking a CPA or Enrolled Agent for the preparation of your LLC business return. See also: IRS Tangible Property Regulations FAQ list When you made the loan to the LLC (by paying the contractor and making a contract with the LLC), did you state an interest rate? If not, you and your brother should correct the contract so that an interest rate is stated, then follow it. The LLC needs to pay you interest until the loan is paid off. You need to report the interest income on your personal return, and the LLC needs to report the interest expense in its business return. |
Does the profit of a company directly affect its stock or indirectly by causing people to buy or sell? | people implicity agree to sell stocks when a company does bad But, remember, when you sell the stock of a company that, in your estimation, 'did bad', someone else had to buy; otherwise, there is no sale. The someone else who bought your shares evidently disagrees with your assessment. Did you sell because the company didn't earn a profit at all? Did it not earn a profit because it's in a dead-end business that is slowly but inevitably declining to zero? Something like Sears Holdings? Or did it not make a profit because it is in an emerging market that will possibly someday become hugely profitable? Something like Tesla, Inc.? Did you sell because the company made a profit, but it was lower than expected? Did they make a lower-than-expected profit because of lower sales? Why were the sales lower? Is the industry declining? Was the snow too heavy to send the construction crews out? Did the company make a big investment to build a new plant that will, in a few years, yield even higher sales and profits? What are the profits year-over-year? Increasing? Declining? Usually, investors are willing to pay a premium, that is more than expected, for a stock in a company with robust growth. As you can see, the mere fact that a company reported a profit is only one of many factors that determine the price of the shares in the market. |
Should I use a credit repair agency? | So you are in IT, that is great news because you can earn a fabulous income. The part time is not great, but you can use this to your advantage. You can get another job or three to boost your income in the short term. In the long term you should be able to find a better paying job fairly easily. There is one way to never deal with creditors again: never borrow money again. Its pretty damn simple and from the suggestions of your post you don't seem to be very good at handling credit. This would make you fairly normal. 78% of US households don't have $1000 saved. How are they going to handle a brake job/broken dryer/emergency room visit? Those things happen. Cut your lifestyle to nothing, earn money and save it. Say you have 2000 saved up. Then a creditor calls saying you owe 5K. Tell me you are willing to settle for the 2K you have saved. If they don't, hang up. If they are willing getting it writing and pay by a method that insulates you from further charges. Boom one out of the way and keep going. You will be 1099'd for some income, but it is a easy way to "earn" extra money. This will all work if you commit yourself to never again borrowing money. |
Option Trading / Demo Account | How would this trade behave IRL? I don't know how the simulation handles limit orders and bid/ask spreads to know it's feasible, but buying at 4.04 when the current ask is 8.00 seems unlikely. That would mean that all other sell orders between 8.00 and 4.04 were fulfilled, which means that there were very few sellers or that sell pressure spiked, both of which seem unlikely. In reality, it seems more likely that your order would have sat there until the ask dropped to $4.04 (if it ever did), and then you'd have to wait until the bid rose to $7.89 in order to sell them at that price. However, that kind of swing in option prices in not unrealistic. Options near at-the-money tend to move in price at about 50% of the change in the underlying, so if amazon suddenly dropped by $5, the option price could drop by $2.60 (from 6.66 to $4.04), and then rise back to $7.89 if the price rose $8 (which would be 1% swing and not unheard of intra-day). But it sounds like you got very lucky (or the simulation doesn't handle option trading realistically) - I've traded options in the past and have had some breaks similar to yours. I've also had bad breaks where I lost my entire investment (the options expire out-of-the money). So it should be a very limited part of your portfolio, and probably only used for risk management (e.g. buying put options to lock in some gains but keeping some upside potential). |
Over contributing to workplace pension or private pension | Firstly (and this part is rather opinion-based) I would absolutely not think of making more pension contributions when you are currently totaling 6% of salary as "over contributing". There are some who argue that you should be putting a minimum of 20% away for retirement throughout your working life; you don't say how old you are / how close to retirement you are, but a common rule of thumb is to halve your age and put away that % of your salary into your pension. So I would certainly start with upping those contributions. I actually don't think it makes much difference whether you go for just your workplace pension versus a separate private one - in general you end up paying management fees that are a % of the value, so whether it is in one place or split doesn't cost any less. The "all eggs in one basket" syndrome is a possible argument but equally if you change jobs a few times and end up with half a dozen pension pots it can be very hard to stay on top of them all. If you end up with everything in one pot and then transfer it when you change jobs, it's easier to manage. Other options: ISA as you mentioned; on the plus side these are tax free. On the minus side, you can either go for a cash ISA which at the moment has very low rates of return, and/or a stocks and shares ISA which exposes you to risks in the stock market. If you have debt, consider paying it off early / overpaying. Student loans may or may not be the exception to this depending on your personal situation. Certainly if you have a mortgage you can save a vast amount by overpaying early. Other investments - stocks and shares, BTL housing, fine wines, Bitcoin, there are almost limitless possibilities. But it makes sense to max out the tax-efficient options before you look into these. |
What should I look at before investing in a start-up? | Turukawa's answer is quite good, and for your own specific situation, you might begin by being sceptical about what you are getting for investing a few thousand dollars. With the exception of Paul Graham's Y-Combinator, there are very few opportunities to invest at that type of level, and Y-Combinator provides a lot of other assistance besides their modest initial investment. I can tell from your post that you think like an investor. It is highly unlikely that the entrepreneurial programmers that you will be backing will be wired that way. From the modest amount that you are investing, you are unlikely to be the lead investor in this opportunity. If you are interested in proceeding, simply stick along for the ride, examining the terms and documents that more significant investors will be demanding. Remain positive and supportive, but simply wait to sign on the dotted line until others have done the heavy lifting. For more insights into startups themselves, see Paul Graham's essays at www.paulgraham.com. He's the real deal, and his recent essays will provide you with current insights about software startups. Good luck. |
What does it mean for a company to have its market cap larger than the market size? | First read mhoran's answer, Then this - If the company sold nothing but refrigerators, and had 40% market share, that's $4M/yr in sales. If they have a 30% profit margin, $1.2M in profit each year. A P/E of 10 would give a stock value totaling $12M, more than the market size. The numbers are related, of course, but one isn't the maximum of the other. |
How do I know if refinance is beneficial enough to me? | When evaluating a refinance, you need to figure out the payback time. Refinancing costs money in closing costs. The payback time is the time it takes to recover the closing costs with the amount of money you are saving in interest. For example, if the closing costs are $2,000, your payback time is 2 years if it takes 2 years to save that amount in interest with the new interest rate vs. the old one. To estimate this, look at the difference in interest rate between your mortgage and the new one, and your mortgage balance. For example, let's say that you have $100,000 left on your mortgage, and the new rate is 1% lower than your current rate. In one year, you will save roughly $1,000 in interest. If your closing costs are $2,000, then your payback time is somewhere around 2 years. If you plan on staying in this house longer than the payback time, then it is beneficial to refinance. There are mortgage refinance calculators online that will calculate payback time more precisely. One thing to watch out for: when you refinance, if you expand the term of your mortgage, you might end up paying more interest over the long term, even though your rate is less and your monthly payment is less. For example, let's say you currently have 8 years left on a 15-year mortgage. If you refinance to a new 15-year mortgage, your monthly payment will go down, but if you only pay the new minimum payment for the next 15 years, you could end up paying more in interest than if you had just continued with your old mortgage for the next 8 years. To avoid this, refinance to a new mortgage with a term close to what you have left on your current mortgage. If you can't do that, continue paying whatever your current monthly payment is after you refinance, and you'll pay your new mortgage early and save on interest. |
Health insurance lapsed due to employer fraud. How to get medications while in transition? | Check with the manufacturer of the name brand medication. Most of them have programs to help people who need their medication but can not afford it. They may be able to send you coupons for discounted or free medication. You can go to a free clinic. If your income is low enough the free clinic will provide medicine until you can get back on insurance. You can do what alot of people who work hard and do not have insurance do and pay for it outof pocket. You can talk to your doctor and see if there is an alternative to the expensive medicine that your insurance used to pay for. It may not be as effective or may have other side affects but many people are forced to go with these alternatives. You situation is certianly unfortunate but also not terribly uncommon. You probably also have recourse against the former employer but if they commited fraud, and faked your insurance there probably is not alot of money to recoup. If it was a person who commited fraud then you may be able to get a judgement against them that would survive bankruptcy and the business but it will probably be at least 5 years before you can recoup anything possibly much longer and your attorney will probably not take it on contingency. |
Is it practical to take actual delivery on a futures contract, and what is the process? | As mentioned in other answers, you find out by reading the Rulebook for that commodity and exchange. I'll quote a couple of random passages to show how they vary: For CME (Chicago Mercantile Exchange) Random Length Lumber Futures, the delivery is ornate: Seller shall give his Notice of Intent to Deliver to the Clearing House prior to 12:00 noon (on any Business Day after termination of trading in the contract month. 20103.D. Seller's Duties If the buyer's designated destination is east of the western boundaries of North Dakota, South Dakota, Nebraska, Kansas, Texas and Oklahoma, and the western boundary of Manitoba, Canada, the seller shall follow the buyer's shipping instructions within seven (7) Business Days after receipt of such instructions. In addition, the seller shall prepay the actual freight charges and bill the buyer, through the Clearing House, the lowest published freight rate for 73-foot railcars from Prince George, British Columbia to the buyer's destination. If the lowest published freight rate from Prince George, British Columbia to buyer's destination is a rate per one hundred pounds, the seller shall bill the buyer on the weight basis of 1,650 pounds per thousand board feet. The term "lowest published freight rate" refers only to the lowest published "general through rate" and not to rates published in any other rate class. If, however, the buyer’s destination is outside of the aforementioned area, the seller shall follow the same procedures except that the seller shall have the right to change the point of origin and/or originating carrier within 2 Business Days after receipt of buyer’s original shipping instructions. If a change of origin and/or originating carrier is made, the seller shall then follow the buyer's revised instructions within seven (7) Business Days after receipt of such instructions. If the freight rate to the buyer's destination is not published, the freight charge shall be negotiated between the buyer and seller in accordance with industry practice. Any additional freight charges resulting from diversion by the buyer in excess of the actual charges for shipment to the destination specified in the shipping instructions submitted to the Clearing House are the responsibility of the buyer. Any reduction in freight charges that may result from a diversion is not subject to billing adjustment through the Clearing House. Any applicable surcharges noted by the rail carrier shall be considered as part of the freight rate and can be billed to the buyer through the CME Clearing House. If within two (2) Business Days of the receipt of the Notice of Intent the buyer has not designated a destination, or if during that time the buyer and seller fail to agree on a negotiated freight charge, the seller shall treat the destination as Chicago, Illinois. If the buyer does not designate a carrier or routing, the seller shall select same according to normal trade practices. To complete delivery, the seller must deposit with the Clearing House a Delivery Notice, a uniform straight bill of lading (or a copy thereof) and written information specifying grade, a tally of pieces of each length, board feet by sizes and total board feet. The foregoing documents must be received by the Clearing House postmarked within fourteen (14) Business Days of the date of receipt of shipping instructions. In addition, within one (1) Business Day after acceptance by the railroad, the Clearing House must receive information (via a telephone call, facsimile or electronic transmission) from the seller giving the car number, piece count by length, unit size, total board footage and date of acceptance. The date of acceptance by the railroad is the date of the bill of lading, signed and/or stamped by the originating carrier, except when determined otherwise by the Clearing House. For some commodities you can't get physical delivery (for instance, Cheese futures won't deliver piles of cheese to your door, for reasons that may be obvious) 6003.A. Final Settlement There shall be no delivery of cheese in settlement of this contract. All contracts open as of the termination of trading shall be cash settled based upon the USDA monthly weighted average price in the U.S. for cheese. The reported USDA monthly weighted average price for cheese uses both 40 pound cheddar block and 500 pound barrel prices. CME gold futures will deliver to a licensed depository, so you would have to arrange for delivery from the depository (they'll issue you a warrant), assuming you really want a 100 troy oz. bar of gold: CONTRACT SPECIFICATIONS The contract for delivery on futures contracts shall be one hundred (100) troy ounces of gold with a weight tolerance of 5% either higher or lower. Gold delivered under this contract shall assay to a minimum of 995 fineness and must be a brand approved by the Exchange. Gold meeting all of the following specifications shall be deliverable in satisfaction of futures contract delivery obligations under this rule: Either one (1) 100 troy ounce bar, or three (3) one (1) kilo bars. Gold must consist of one or more of the Exchange’s Brand marks, as provided in Chapter 7, current at the date of the delivery of contract. Each bar of Eligible gold must have the weight, fineness, bar number, and brand mark clearly incised on the bar. The weight may be in troy ounces or grams. If the weight is in grams, it must be converted to troy ounces for documentation purposes by dividing the weight in grams by 31.1035 and rounding to the nearest one hundredth of a troy ounce. All documentation must illustrate the weight in troy ounces. Each Warrant issued by a Depository shall reference the serial number and name of the Producer of each bar. Each assay certificate issued by an Assayer shall certify that each bar of gold in the lot assays no less than 995 fineness and weight of each bar and the name of the Producer that produced each bar. Gold must be delivered to a Depository by a Carrier as follows: a. directly from a Producer; b. directly from an Assayer, provided that such gold is accompanied by an assay certificate of such Assayer; or c. directly from another Depository; provided, that such gold was placed in such other Depository pursuant to paragraphs (a) or (b) above. |
What prevents investors from buying high yield stocks and selling them as soon as their dividend is paid out? | This investment strategy may have tax advantages. In some countries, income received from dividends is taxed as income, whereas profits on share trades are capital gains. If you have already exceeded your tax-free income limit for the year, but not your capital gains tax allowance, it may be preferable to make a dealing profit rather than an investment income. These arrangements are called a bed-and-breakfast. |
Restricting a check from being deposited via cell phone | No, most check deposits are processed that way. Banks transmit the pictures of the checks between themselves, and allow business customers to deposit scans for quite some time now. I see no reason for you to be concerned of a check being in a dusty drawer, it's been deposited, cannot be deposited again. If you're concerned of forgery - well, nothing new there. |
How can I withdraw money from my LLC? | There are TWO parts to an LLC or any company structure. This being the entire point of creating an LLC. The context is that a lawyer is after your LLC, and he's arguing that the LLC is not genuine, so he can go after your personal assets - your house, car, IRAs, tap your wife's salary etc. This is called "piercing the corporate veil". What would he use to claim the LLC is not genuine? The determination here is between you and the judge in a lawsuit. Suffice it to say, the way you withdraw money must consider the above issues, or you risk breaking the liability shield and becoming personally liable, which means you've been wasting the $25 every year to keep it registered. The IRS has a word for single member LLCs: "Disregarded entity". The IRS wants to know that the entity exists and it's connected to you. But for reporting tax numbers, they simply want the LLC's numbers folded into your personal numbers, because you are the same entity for tax purposes. The determination here is made by you. *LLCs are incredible versatile structures, and you can actually choose to have it taxed like a corporation where it is a separate "person" which files its own tax return. * The IRS doesn't care how you move money from the LLC to yourself, since it's all the same to them. The upshot is that while your own lawyer prohibits you from thinking of the assets as "all one big pile", IRS requires you to. Yes, it's enough to give you whiplash. |
What are the costs to establish an LLC and to maintain it? | The cost will be around $300-$500 if you do it correctly it in Florida and can be over a $1,000 if you do it in New York (New York is more expensive due to a publication requirement that New York has for LLC’s). The price ranges I’ve given include filing, state fees, getting a tax ID number (EIN), operating agreement, membership certificates, registered agent fees and publication fees if done in New York. Each state also have licensing boards and city fees that are applicable, so you would want to also make sure that you are keeping compliant there. Yearly paperwork to keep the LLC running won’t be so expensive, expect the state to charge a yearly fee and require some basic information to be submitted. I had a quick look at Florida, and with someone filing it for you, expect around $200 to $250 a year, plus registered agent fees. If you are late in Florida the penalty is $400 so you definitely would want a service that provides compliance calendar notifications to make sure you are on time with fees. In regards to bookkeeping and taxes, yearly tax filing will start at $250 to $500 for an LLC and move up from there depending on the services being offered and the amount of time of work. I recently referred someone to an accountant that will charge $250 to file an almost zero tax return on an LLC. I think $40 an hour is a little low for a bookkeeper but it all depends on where you are. I know in some major cities bookkeepers expect $75 an hour or higher. So the expectation in Miami and Manhattan will probably be more expensive than Jacksonville and Albany. If you doing a little business don’t expect the cost to be too much on the bookkeeping. So, breakdown: $300-$500 (FL) - $1,000 (NY) Registration of LLC + any business license, city or other registrations $250 Yearly Fee + Yearly Registered Agent + any business licenses, city or other fee $500 Tax Return + Bookkeeping Fee Banks will charge more than a personal account so expect $120 a year plus. In regards to service I would look at companies that specialize in foreigners setting up businesses in the US, because they will have services designed to help you more than services that primarily specialize with US clients. You are going to have some different needs, based on not having a Social Security Number or establishing from overseas. |
First time consultant, doubts on Taxation | This is how a consulting engagement in India works. If you are registered for Service Tax and have a service tax number, no tax is deducted at source and you have to pay 12.36% to service tax department during filing (once a quarter). If you do not have Service tax number i.e. not registered for service tax, the company is liable to deduct 10% at source and give the same to Income Tax Dept. and give you a Form-16 at the end of the financial year. If you fall in 10% tax bracket, no further tax liability, if you are in 30%, 20% more needs to be paid to Income Tax Dept.(calculate for 20% tax bracket). The tax slabs given above are fine. If you fail to pay the remainder tax (if applicable) Income Tax Dept. will send you a demand notice, politely asking you to pay at the end of the FY. I would suggest you talk to a CA, as there are implications of advance tax (on your consulting income) to be paid once a quarter. |
Who can truly afford luxury cars? | Most of the people I know that own them are slightly older, and thus in their prime earning years, and many have paid off their homes. That can free up $1000 a month or more in monthly expenses, which would easily cover a nice luxury car payment. If you've got it, and are into cars, why not? What's the point in having the biggest tombstone in the graveyard? |
Does an industry 'standard' have any affect on when a stock might split? | You ask if Tesla being a car company should feel a pressure to split their stock because their share price is much higher than the other car companies. But is Tesla a car company? It was founded by Elon Musk who founded PayPal and SpaceX. He sees him self as the next generation of entrepreneurs that came after Jobs and Gates. So he compares Tesla ($142) companies to Google ($856), Amazon ($284) and eBay ($52). But even if you see Tesla as a car company, Musk sees it more like Audi ($828) or BMW ($100) then he does Ford ($16.30) just because the base price of their models ($80,000+) is much greater than Ford or GM. The theory is that keeping the share price in a lower range helps investors. But since 40% of the company is owned by mutual funds is that really a concern? Therefore most small investors get the company though a mutual fund. |
operating income | Sedar is I guess the Canadian equivalent of EDGAR. You can find the company's filings there. Here's a picture from their filings. Can't post the link, if you go and find the filing through Sedar you'll know why (it's not as nice a site as EDGAR). The 4.8 million is from unrealized gain on biological assets. So that's what it is. The reason, I think, as to why Operating Income is a positive 2.67 even though Operating Expense and Gross Profit are both negative is because Google Finance backed into Operating Expense. Operating Income is the same between the two sources, it's just the unrealized gain that moves. |
Is buying a home a good idea? | A home actually IS a terrible investment. It has all the traits of something you would NEVER want to plunge your hard-earned money into. The only way that buying a house makes good money sense is if you pay cash for it and get a really good deal. It should also be a house you can see yourself keeping for decades or until you're older and want something easier to take care of. Of course, nothing can replace "sense of ownership" or "sense of pride" other than owning a house. And your local realtor is banking (really, laughing all the way to the bank) on your emotions overcoming your smart money savvy. This post really goes to work listing all the reasons why a house is a horrible investment. Should be required reading for everyone about to buy a house. Why your house is a terrible investment - jlcollinsnh.com TLDR; - You must decide what is more important, the money or the feelings. But you can't have both. If you read the article linked and still want to buy a house...then you probably should. |
Why do people buy US dollars on the black market? | As a Venezuelan who used to buy USD, I believe there is not better explanation than the one given to someone who actually lives and works here in Venezuela. Back in 1998 when Hugo Chavez took the presidency, we had a good economy. Fast forward 10 years laters and you could see how poor management, corruption and communist measurements had wreaked havoc in our Economy. It was because most of the money (USD) coming in Venezuela were not invested here but instead, given away to "pimp countries" like Cuba. Remember, communism lasts while you have money. Back then we had an Oil Barrel going over 100$ and crazy amounts of money were coming in the country. However, little to no money was invested in the country itself. That is why some of the richest people with bank account in Swiss are Venezuelans who stole huge amounts of Oil Money. I know this is a lot to take in, but all of this led to Venezuelan economy being the worst in The American Continent and because there is not enough money inside the country to satisfy the inner market, people would pay overprice to have anything that is bought abroad. You have to consider that only a very small amount of people can actually buy USD here in Venezuela. Back in 2013 I was doing it, I could buy about 80 usd/month with my monthly income. However, nowdays that's nearly impossible for about 99% of Venezuelans. To Illustrate. Minimum wage = 10.000 bolivares / month Black market exchange rate (As of January 2016) = 900bs per 1usd 10.000/900 = 11,11 usd. <<< that is what about 50% of Venezuelans earn every month. That's why this happens: http://i.imgur.com/dPOC2e3.jpg The guy is holding a huge stack of money of the highest Venezuelan note, which he got from exchanging only 100 usd. I am a computer science engineer, the monthly income for someone like me is about 30.000 bolivares --- so that is about 34$ a month. oh dear! So finally, answering your question Q: Why do people buy USD even at this unfavorable rate? A: There are many reasons but being the main 2 the following 1.- Inflation in Venezuela is crazy high. The inflation from 2014-2015 was 241%. Which means that having The Venezuelan currency (Bolivares) in your bank account makes no sense... in two weeks you won't be able to buy half of the things you used to with the same amount of money. 2.- A huge amount of Venezuelans dream with living abroad (me included) why, you ask? well sir, it is certain that life in this country is not the best: I hope you can understand better why people in 3rd world countries and crappy economies buy USD even at an unfavorable rate. The last question was: Q: Why would Venezuela want to block the sale of dollars? A: Centralized currency management is an Economic Measure that should last 6 months tops. (This was Argentina's case in 2013) but at this point, reverting that would take quite a few years. However, Turukawa's wikipedia link explains that very well. Regards. |
Mortgage loan plus home loan | You can be a co-borrower on the property that your father owns. Some Banks require that you also be part owner of the property, some banks do not require this. You can take a home loan for a new property, normally Banks will ask you of all your current loans [auto/other home/personal/ etc] to determine the amount they will be ready to lend. Edit: The first loan I believe your father already has a property in his name ... your father can apply for Loan against property ... if he does not have sufficient income, then you can guarantee the loan [ie co-sign on the loan, some banks allow this ... however there is no tax benefit on this loan] . The second is the Home Loan for the balance amount that you would get it … Both the loans can be taken from the same Bank, there would be a overall cap as to the amount of loan a Bank would give depending on your income, further the finance for this house will only be to the extent of 80% of the value. |
Freelance trading of products in India | For most goods there is no license required, unless you are trading in restricted goods. Remittance need to be routed via banks and they should comply with FMEA. Your Bank or a qualified CA can guide you. |
Long term investment for money | What explains the most of the future returns of a portfolio is the allocation between asset classes. In the long term, stock investments are almost certain to return more than any other kinds of investments. For 40+ years, I would choose a portfolio of 100% stocks. How to construct the portfolio, then? Diversification is the key. You should diversify in time (don't put a large sum of money into your stock portfolio immediately; if you have a large sum to invest, spread it around several years). You should diversify based on company size (invest in both large and small companies). You should also diversify internationally (don't invest in just US companies). If you prefer to pick individual stocks, 20 very carefully selected stocks may provide enough diversification if you keep diversification in mind during stock picking. However, careful stock picking cannot be expected to yield excess returns, and if you pick stocks manually, you need to rebalance your portfolio occasionally. Thus, if you're lazy, I would recommend a mutual fund, or many mutual funds if you have difficulty finding a low-cost one that is internationally diversified. The most important consideration is the cost. You cannot expect careful fund selection to yield excess returns before expenses. However, the expenses are certain costs, so prefer low-cost funds. Almost always this means picking index funds. Avoid funds that have a small number of stocks, because they typically invest only in the largest companies, which means you fail to get diversification in company size. So, instead of Euro STOXX 50, select STOXX 600 when investing to the European market. ETFs may have lower costs than traditional mutual funds, so keep ETFs in mind when selecting the mutual funds in which to invest. For international diversification, do not forget emerging markets. It is not excessive to invest e.g. 20% to emerging markets. Emerging markets have a higher risk but they also have a higher return. A portfolio that does not include emerging markets is not in my opinion well diversified. When getting close to retirement age, I would consider increasing the percentage of bonds in the portfolio. This should be done primarily by putting additional money to bonds instead of selling existing investments to avoid additional taxes (not sure if this applies to other taxation systems than the Finnish one). Bond investments are best made though low-cost mutual funds as well. Keep bond investments in your local currency and risk-free assets (i.e. select US government bonds). Whatever you do, remember that historical return is no guarantee of future return. Actually, the opposite may be true: there is a mean reversion law. If a particular investment has returned well in the past, it often means its price has gone up, making it more likely that the price goes down in the future. So don't select a fund based on its historical return; instead, select a fund based on low costs. However, I'm 99% certain that over a period of 40 years, stocks will return better than other investments. In addition to fund costs, taxes are the other certain thing that will be deducted from your returns. Research what options you have to reduce the taxes you need to pay. 401-K was explained in another answer; this may be a good option. Some things recommended in other answers that I would avoid: |
Why do stocks gap up after a buyout is announced? | The "random walk" that you describe reflects the nature of the information flow about the value of a stock. If the flow is just little bits of relatively unimportant information (including information about the broader market and the investor pool), you will get small and seemingly random moves, which may look like a meander. If an important bit of information comes out, like a merger, you will see a large and immediate move, which may not look as random. However, the idea that small moves are a meander of search and discovery and large moves are immediate agreements is incorrect. Both small moves and large moves are instantaneous agreements about the value of a stock in the form of a demand/supply equilibrium. As a rule, neither is predictable from the point of view of a single investor, but they are not actually random. They look different from each other only because of the size of the movement, not because of an underlying difference in how the consensus price is reached. |
The formula equivalent of EBITDA for personal finance? | This should not be taken to be financial advice or guidance. My opinions are my own and do not represent professional advice or consultation on my part or that my employer. Now that we have that clear... Your idea is a very good one. I'm not sure about the benefits of a EBITDA for personal financial planning (or for financial analysis, for that matter, but we will that matter to the side). If you have a moderate (>$40,000) income, then taxes should be one the largest, if not the largest chunk of your paycheck out the door. I personally track my cash flow on a day-by-day basis. That is to say, I break out the actual cash payments (paychecks) that I receive and break them apart into the 14 day increments (paycheck/14). I then take my expenses and do the same. If you organize your expenses into categories, you will receive some meaningful numbers about your daily liquidity (i.e: cash flow before taxes, after taxes, cash flow after house expenses, ect) This serves two purposes. One, you will understand how much you can actually spend on a day-to-day basis. Second, once you realize your flexibility on a day-to-day basis, it is easy to plan and forecast your expenses. |
TFSA over-contributions: How would the penalty apply in this scenario? | First, if your stock is trading at $1 and you transfer the 5000 shares in-kind to your TFSA on August 2, 2011, you are deemed to have disbursed that stock in your (assumed) non-registered account. This may have tax consequences depending on the ACB of the original purchase. As for your TFSA overcontribution, you will only have to pay the 1% monthly penalty on the value of the overcontribution, i.e. $5000. You will pay 1%/month for each month the overcontribution exists, regardless of what the value of the overcontributed assets end up being. Thus, you'll pay a $250 penalty for an overcontribution life of 5 months. The stock price could go to $2 or $0, but you'll pay a fixed tax of $250 for the value of the initial overcontribution. See these articles at the CRA website for more information:Tax payable on excess TFSA amount and Examples - Tax payable on excess TFSA amount. |
Can mutual fund prices have opening gaps? Might my order to be filled at a higher price? | Mutual funds don't work like stocks in that way. The price of a mutual fund is set at the end of each day and doesn't fluctuate during the day. So no matter when you put in your order, it will be filled at the end of the day at whatever the closing price is for that day. Here is some good information on that There is no continuous pricing of fund shares throughout the trading day. When an investor places an order to buy or sell a fund's shares, the order is executed based on the NAV calculated at the end of that trading day, regardless of what time during the day the order was placed. On the other hand, if the investor were to check the price of his or her fund shares halfway through the business day, the price quoted would be the previous day's NAV because that was the last time the fund calculated and reported the value. -http://www.finweb.com/investing/how-mutual-funds-are-priced.html |
Meaning of “readily transferable”? | Securities or quite a few negotiable instruments can change title of ownership without any issue. Many at times the owner ship in implicit if you are holding a certain instrument. So for example in Stock its a fractional ownership in a company, this ownership transfers to the buyer from the seller without requiring any permission from the company. In case of say Loans, One cannot transfer the loan to some one else without the Banks permission. |
Can a wealthy investor invest in or make a deal with a company before it goes public / IPO? | Yes, an investment can be made in a company before IPO. The valuation process is similar as that done for arriving at IPO or for a normal listed company. The difference may be the premium perceived for the idea in question. This would differ from one investor to other. For example, whether Facebook will be able to grow at the rate and generate enough revenues and win against competition is all a mathematical model based on projections. There are quite a few times the projection would go wrong, and quite a few times it would go correct. An individual investor cannot generally borrow from banks to invest into a company (listed or otherwise) (or for any other purpose) if he does not have any collateral that can be kept as security by the bank. An individual can get a loan only if he has sufficient collateral. The exceptions being small personal loans depending on one's credit history. The Private Equity placement arm of banks or firms in the business of private equity invest in start-up and most of the time make an educated guess based on their experience. More than half of their investments into start-ups end up as wiped out. An occasional one or two companies are ones that they make a windfall gain on. |
Dad paying for my new home in cash. How can I buy the house from him? | You have four basic options. |
Why do some symbols not have an Options chain for specific expiration dates? | The answer is actually very simple: the cost of data. Seriously. Call the CBOE tomorrow and ask yourself. They have two big programs: 1) the penny pilot program, where options trade at penny increments instead of 5 cent increments. This is only extended to a select few symbols because of the amount of data this can generate is too much for the data vendors. Data vendors store and sell historical data. The exchanges themselves often have a big data vending business too. 2) the weekly options program, where only select symbols get these chains because of the amount of data they will generate. Liquidity and demand are factors in determining if the CBOE will consider enabling those series on new issues. (although they have to give the list of which symbols are on these programs to the SEC) |
Should I take a personal loan for my postgraduate studies? | As mentioned in the comments, there are costs associated with owning & living in an apartment. First you have to pay maintenance charges on a monthly basis and perhaps also property tax. Find out the overall outgoings when you live in that apartment & add the EMI payments to the bank, it should not be way higher than your current rent. As an advantage you are getting an asset when you buy an apartment & rent is a complete loss, ast least financial terms. So, real estate is in general a good idea over paying rent. As for the loan part, personal loans are by far the most expensive of loans as they are in general unsecured loans (but do check with your bank). One way is to try and get a student loan, which should be cheaper. If you can borrow from family that is the best option, you could return the money with perhaps bank fixed deposit rates, it is better to pay family interest than bank. If none of the options are workable, then personal loan is something you need to look at with a clear goal to pay it off as soon as possible and try to take it in stages, as an when you require it and if possible avoid taking all the 15,000/- at once. |
My company didn't pay taxes on my behalf | Many a time even if the tax is deducted and paid by the company it does not reflect as a credit against your PAN for various reasons like, you not submitting it to your employer in time, errors of reconciliation, etc. Its advisable that you inform your company finance officer that you have received such a letter. Q1. The sure shot way of knowing that your company is depositing tax with government is to view your tax credit report. This was set-up in 2004 and gives the details of all credits against your PAN and the tax deducted against your PAN. It shows if the tax was TDS and which employer paid it, or if this was a self assessment, or TCS, etc. To view this report there are 2 options: Register directly at http://www.tin-nsdl.com/panregistration.asp. Follow the one time registration process and keep viewing the tax credits. Note it normally takes 2-3 months to reflect the data. The other alternative is that quite a few leading banks [Citi, SBI, etc] provide a direct access to this report from their internet banking frontend, provided your PAN is associated to your account. Q2. The only details you need to submit are the Form 16. This would have all the details of when the tax was paid and the BSR number required for reconciling. Q3. TDS is the liability of the employer. However if this has not been deducted or too little was deducted based on incorrect/incomplete information give by you, then its your liability. For example if you change jobs in a year, the tax deducted is always less and you have to pay the difference. Q4. If its established that the company was at fault for not deducting the tax or deducting and not paying it to government on time, there are enough provisions to penalize the company including putting the top management team behind bars. |
How do I use investments to lower my taxes [US]? | Not exactly. There are a few ways to manage your taxes with investments. 1) For most investments you get taxed on any gain in value in the investment or dividends paid by that investment. Most investments (with some exceptions for mutual funds) you don't take the tax hit until you sell the investment and realize the gain. For bonds, cds, and other cash type investments you have to pay taxes in the year they pay out the interest or dividend. 2) You can put money (up to a certain limit) in a traditional IRA and can subtract that amount from your income for tax calculation for the year you invest it. However, you are going to pay taxes on it when you take the money out at retirement. It really just delays the taxes. 3) If you put the money in a Roth IRA, you don't get a tax break now, but you don't have to pay any taxes on the money or the gains when you take it out at retirement. 4) The gains from some mutual funds can be tax exempt, but that just saves you from paying tax on the increase in value. 5) Don't fall for scams that try to use insurance policies as investments to avoid taxes. The fees are ginormous, which usually makes them a ripoff. |
Steps to buying a home | Pre-edit, Pete mentioned that he feels real estate agents would (a) like you to buy as much house as you afford, and (b) would love to show you three houses and have you choose one. As a real estate agent myself, I believe his warnings were understated. As with any industry, there are good and bad people. Agents are paid to move houses. If the median US home is under $200K, and commissions average say 5%, the $10,000 to be gained is split between the buyer brokerage and selling agent. The $5000 to each is then shared with 'the house.' So, this sale would net me $2500, gross. Move one a week, and the income is great, one per month, not so much. Tire kickers will waste an agent's time for a potential decision to wait another year and continue renting. Their obligation is to tell you the truth, but not to offer financial advice. Remember the mortgage crisis? It seems the banks and brokers aren't watching out for you either. They will tell you what they'll lend you, but not what you can afford. These numbers are worlds apart. I strongly recommend a 20% downpayment. The FHA PMI calculator shows that a 90% LTV (i.e. a 10% downpayment) for a $100K house will cost you $1200/yr in PMI. Think about this. For the $10,000 that you didn't put down, you are paying an extra $1200 each year. This is on top of the interest, so even at 5%, that last $10,000 is costing nearly 17%. If you can't raise that $10K (or whatever 10% is on that house) in cheaper funds, you should hold off. Using the 401(k) loan for this purpose is appropriate, yet emotionally charged. As if suck loans are written by the devil himself. "Buy the biggest house you can"? No. I have a better idea. Buy the smallest place you can tolerate. I have a living room (in addition to family room) that has been used 3 times in 20 years. A dining room we actually use. Twice per year. When your house is 50% too big, you pay 50% more property tax, more utility bills, and more maintenance. Closing costs, commission, etc, isn't cheap, but the lifetime cost of living in a too-big house is a money pit. |
Can a non dividend-paying product (say ETF) suddenly start paying dividends? | Yes, absolutely. Consider Microsoft, Updated Jan. 17, 2003 11:59 p.m. ET Software giant Microsoft Corp., finally bowing to mounting pressure to return some of its huge cash hoard to investors, said it will begin paying a regular annual dividend to shareholders. From Wall Street Journal. Thus, for the years prior to 2003, the company didn't pay dividends but changed that. There can also be some special one-time dividends as Microsoft did the following year according to the Wall Street Journal: The $32 billion one-time dividend payment, which comes to $3 for each share of Microsoft stock, could be a measurable stimulus to the U.S. economy -- and is expected to arrive just in time for holiday shopping. Course companies can also reduce to stop dividends as well. |
What is the process of getting your first share? | Let's handle this as a "proof of concept" (POC); OP wants to buy 1 share of anything just to prove that they can do it before doing the months of painstaking analysis that is required before buying shares as an investment. I will also assume that the risks and costs of ownership and taxes would be included in OP's future analyses. To trade a stock you need a financed broker account and a way to place orders. Open a dealing account, NOT an options or CFD etc. account, with a broker. I chose a broker who I was confident that I could trust, others will tell you to look for brokers based on cost or other metrics. In the end you need to be happy that you can get what you want out of your broker, that is likely to include some modicum of trust since you will be keeping money with them. When you create this account they will ask for your bank account details (plus a few other details to prevent fraud, insider trading, money laundering etc.) and may also ask for a minimum deposit. Either deposit enough to cover the price of your share plus taxes and the broker's commission, plus a little extra to be on the safe side as prices move for every trade, including yours, or the minimum if it is higher. Once you have an account the broker will provide an interface through which to buy the share. This will usually either be a web interface, a phone number, or a fax number. They will also provide you with details of how their orders are structured. The simplest type of order is a "market order". This tells the broker that you want to buy your shares at the market price rather than specifying only to buy at a given price. After you have sent that order the broker will buy the share from the market, deduct the price plus tax and her commission from your account and credit your account with your share. |
Put a dollar value on pensions? | There are two steps. First you take the age at retirement and annual benefit. Say it's $10,000/yr. You can easily look up the present value of a $10k/yr annuity starting at age X. (I used age 62, male, at Immediate Annuity. It calculates to be $147K. You then need to look at your current age and with a finance calculator calculate the annual deposits required to get to $147K by that age. What I can't tell you is what value to use as a cost of money until retiring. 4%? 6%? That's the larger unknown. |
How long should I keep my bills? | Consumerist posted a list of how long to keep bills. |
Making higher payments on primary residence mortgage or rental? | A lot depends on whether your mortgage payments are interest only or 'repayment' and what the remaining term is on each of the mortgages. Either way I suspect that the best value for the money you put in will be had by making payments to the larger, newer mortgage. This is because the quicker you reduce the capital owed the less interest you will pay over the whole term of the mortgage and you've already had the older mortgage for sometime (unless you remortgaged) so the benefit you can get from an arbitrary reduction in the capital is inevitably less than you will get from the same reduction in the capital of the newer mortgage. Even if the two mortgages are the same age then the benefit of putting money into the one on the new house is greater due to the greater interest charged on it. |
Which technical indicators are suitable for medium-term strategies? | If I knew a surefire way to make money in FOREX (or any market for that matter) I would not be sharing it with you. If you find an indicator that makes sense to you and you think you can make money, use it. For what it's worth, I think technical analysis is nonsense. If you're just now wading in to the FOREX markets because of the Brexit vote I suggest you set up a play-money account first. The contracts and trades can be complicated, losses can be very large and you can lose big -- quickly. I suspect FOREX brokers have been laughing to the bank the last couple weeks with all the guppies jumping in to play with the sharks. |
Why might it be advisable to keep student debt vs. paying it off quickly? | I have never double-answered till now. This loan can't be taken out of context. By the way, how much is it? What rate? "Debt bad." Really? Line the debt up. This is the highest debt you have. But, you work for a company that offers a generous match, i.e. the match to your 401(k). Now, it's a choice, pay off 6% debt or deposit that money to get an immediate 100% return. Your question has validity. In the end, we can tell you when to pay off the debt. After - The issue is that you are quoting a third party without having the discussion or ever being privy to it. In court, this is called 'hearsay.' The best we can do is offer both sides of the issue and priority for the payments. Welcome to Money.SE, nice first question. |
Can I do periodic rollovers from my low-perfoming 401k to an IRA? | My two-cents, read your plan document or Summary Plan Description. The availability of in-service withdrawals will vary by document. Moreover, many plans, especially those compliant with 404(c) of ERISA will allow for individual brokerage accounts. This is common for smaller plans. If so, you can request to direct your own investments in your own account. You will likely have to pay any associated fees. Resources: work as actuary at a TPA firm |
What is a maximum amount that I can wire transfer out of US? | Chase has a limit of $500,000 per day. A banker should be able to help you determine any immediate tax liabilities that will arise as a direct result of the transaction. You may wish to consult with a tax professional about any indirect implications the transfer may have. This transaction will be reported to the government but assuming that you are not involved in any illegitimate activities the likelihood of the US government taking any action on the notice is incredibly low. I have heard of 7 and 14 day holds being placed on out of character transfers but if you are buying property you should work with your bank to help facilitate. Bankers understand the business and can help you avoid any appearances of impropriety that the government flags. Should your account be flagged, I would retain a lawyer immediately. If you feel you have a reason to be concerned, then I would contact a lawyer in the US and Thailand before initiating the transfer. As they say an ounce of prevention is worth a pound of cure. |
Why will the bank only loan us 80% of the value of our fully paid for home? | To supplement existing answers: the appraised value does not necessarily represent the net amount the bank could actually recover with a foreclosure. Let's look at it from the point of view of the bank. Suppose the property appraises at $200,000 and they do what you want: loan you $200,000 with the property as collateral. Now suppose a short time later, you quit paying the mortgage and they have to foreclose. Can the bank get their $200,000 back? An appraisal is only an estimate; nobody can predict perfectly how much a property will sell for. Maybe the appraiser missed something significant, and the property will only fetch $180,000. Even if the appraisal was accurate when it was made, property values may have dropped in the meantime. Maybe a sudden economic crisis is driving real estate prices down across the board. Maybe interest rates have spiked. Maybe the county has changed the zoning regulations to locate a toxic waste dump next door to the property. In any of these cases, the property may again fetch well under $200,000. Maybe the condition of the property has changed. Perhaps you trashed the place and it will take $30,000 to clean it up. (People have a tendency to do things like that when they get foreclosed.) If the bank wants to get full market value for the property, they will incur the usual costs of selling a property: paying a real estate agent's commission, painting, renting furniture to stage the property, and so on. This will eat into the net amount they actually get from the sale. It may take some time (perhaps months) for a property to sell at its full market value. During this time, the bank is out $200,000. That's money they would rather be loaning out at interest to someone else, so this represents lost income. Foreclosing a mortgage is a fairly complicated procedure. The bank has to pay its staff, including lawyers, for a significant number of hours to get the foreclosure done. There will be court filing fees and so on. If you refuse to leave, they may have to get the sheriff to evict you; that has a fee as well. If you fight the foreclosure, that racks up even more legal fees. This too eats into the net proceeds from the sale. So if the bank loans you the full $200,000, they stand a pretty significant risk of not getting all of it back, after expenses. You can understand that risk may not be worth the interest they would get from you on the extra $40,000. On the other hand, if they loan you only 80% of the property's appraised value ($160,000), they effectively shift that risk onto you. Should you default on the loan, and they foreclose, all they have to do is sell the property for $160,000 or a little bit more. That shouldn't be too hard, even if it is not freshly painted or a bit trashed. They probably don't need to hire a real estate agent: just hold a quick auction, maybe first calling up a few investors who might be interested in flipping it. If it happens to sell for more than the outstanding principal of the loan, plus the bank's costs, then they will pay you the difference; but they have no incentive to make that happen, and every incentive to just get it sold quick. So any difference between the property's true value and the actual sale price now represents a loss to you first, not to the bank. So you can see why the bank would rather not loan you the full value of the property. 80% is a somewhat arbitrary figure but it cuts their risk by a lot. |
How are stock buybacks not considered insider trading? | In most countries there are specific guidelines on buy backs. It is never a case where by one fine morning company would buy its shares and sell it whenever it wants. In general company has to pass a board resolution, sometimes it also requires it to be approved by share holders. It has to notify the exchange weeks in advance. Quite a few countries require a price offer to all. I.E. it cannot execute a market order. All in all the company may have inside information, but it cannot time the market. |
Estimate a future option price given greeks and a 1$ move in underlying | It's not that straightforward, even though your gamma will change your delta on the fly, you likely won't see the full $.48 after such a small move. If the vega drops due to lack of volatility while the stock is moving up, those few percentage points up might help your delta (2% gain $50 to $51 in your example) but will be partially negated by volatility going down. I mean, don't be surprised to see it at closer to $1.33 or something. The market is out to make money, not to make you money. |
Separated spouse filed for SNAP benefits as single. Does this affect ability to file taxes jointly? | The IRS isn't going to care how you filed for benefits - they're effectively the high man on the totem pole. The agency that administers the SNAP program is the one who might care. File the 1040 correctly, and then deal with SNAP as you note. Do deal with SNAP, though; otherwise they might be in trouble if SNAP notices the discrepancy in an audit of their paperwork. Further, SNAP doesn't necessarily care here either. SNAP defines a household as the people who live together in a house and share expenses; a separated couple who neither shared expenses nor lived together would not be treated as a single household, and thus one or both would separately qualify. See this Geeks on Finance article or this Federal SNAP page for more details; and ask the state program administrator. It may well be that this has no impact for him/her. The details are complicated though, particularly when it comes to joint assets (which may still be joint even if they're otherwise separated), so look it over in detail, and talk to the agency to attempt to correct any issues. Note that depending on the exact circumstances, your friend might have another option other than Married Filing Jointly. If the following are true: Then she may file as "Head of Household", and her (soon-to-be) ex would file as "Married Filing Separately", unless s/he also has dependents which would separately allow filing as Head of Household. See the IRS document on Filing Status for more details, and consider consulting a tax advisor, particularly if she qualifies to consult one for free due to lower income. |
How can I save money on a gym / fitness membership? New Year's Resolution is to get in shape - but on the cheap! | The gym I used to use was around £35-40 a month, its quite a big whack but if you think about it; its pretty good value for money. That includes gym use, swimming pool use, and most classes Paying for a gym session is around £6 a go, so if you do that 3 times a week, then make use of the other facilities like swimming at the weekends, maybe a few classes on the nights your not at the gym it does work out ok As for deals, my one used to do family membership deals, and I think things like referring a friend gives you money off etc. They will probably also put on some deals in January since lots of people want to give it a go being new year and all |
College student - I'm a 'dependent' and my parents won't apply for the Parent PLUS loan or cosign a private loan | If the 6 credits per semester working part time schedule includes no loans, consider this. Yes, it may take you twice as long to finish, BUT, you'll have a lot of working experience, AND zero student loans when you're done. Compare this to someone who graduates in four years and has 20k in student loans. If they set up a 20 year repayment for the loans, they'll still have 16-18k left to pay and 4 years of job experience. You'll have 8 years of half time job experience and zero debt. The key would be to find a job in your area of interest. More ideal would be one that pays for classes as a benefit. Then you might increase your class load and decrease the total time to graduate, AND have relevant job experience when you graduate. |
Does wash sale apply if I buy stock on 2 two different dates and sell it later | Wash sale applies. If you purchase shares within 30 days of that Feb 3 sell date, the wash sale kicks in, preventing the loss on that sale, and deferring it into the new shares. |
Why do new car loans, used car loans, and refinanced loans have different rates and terms? | According to AutoTrader, there are many different reasons, but here are three: New cars have a better resale value and it's easier to predict its resale value in case you default on the loan and they repossess the car. Lenders that are through auto makers can use different incentives for getting you to buy a new car. Used car financing is usually through other banks. People with higher credit scores tend to buy new cars, and therefore can get a lower rate because of their higher credit score. |
Highstreet bank fund, custom ETF or Nutmeg? | It's a good question, I am amazed how few people ask this. To summarise: is it really worth paying substantial fees to arrange a generic investment though your high street bank? Almost certainly not. However, one caveat: You didn't mention what kind of fund(s) you want to invest in, or for how long. You also mention an “advice fee”. Are you actually getting financial advice – i.e. a personal recommendation relating to one or more specific investments, based on the investments' suitability for your circumstances – and are you content with the quality of that advice? If you are, it may be worth it. If they've advised you to choose this fund that has the potential to achieve your desired returns while matching the amount of risk you are willing to take, then the advice could be worth paying for. It entirely depends how much guidance you need. Or are you choosing your own fund anyway? It sounds to me like you have done some research on your own, you believe the building society adviser is “trying to sell” a fund and you aren't entirely convinced by their recommendation. If you are happy making your own investment decisions and are merely looking for a place to execute that trade, the deal you have described via your bank would almost certainly be poor value – and you're looking in the right places for an alternative. ~ ~ ~ On to the active-vs-passive fund debate: That AMC of 1.43% you mention would not be unreasonable for an actively managed fund that you strongly feel will outperform the market. However, you also mention ETFs (a passive type of fund) and believe that after charges they might offer at least as good net performance as many actively managed funds. Good point – although please note that many comparisons of this nature compare passives to all actively managed funds (the good and bad, including e.g. poorly managed life company funds). A better comparison would be to compare the fund managers you're considering vs. the benchmark – although obviously this is past performance and won't necessarily be repeated. At the crux of the matter is cost, of course. So if you're looking for low-cost funds, the cost of the platform is also significant. Therefore if you are comfortable going with a passive investment strategy, let's look at how much that might cost you on the platform you mentioned, Hargreaves Lansdown. Two of the most popular FTSE All-Share tracker funds among Hargreaves Lansdown clients are: (You'll notice they have slightly different performance btw. That's a funny thing with trackers. They all aim to track but have a slightly different way of trading to achieve it.) To hold either of these funds in a Hargreaves Lansdown account you'll also pay the 0.45% platform charge (this percentage tapers off for portolio values higher than £250,000 if you get that far). So in total to track the FTSE All Share with these funds through an HL account you would be paying: This gives you an indication of how much less you could pay to run a DIY portfolio based on passive funds. NB. Both the above are a 100% equities allocation with a large UK companies weighting, so won't suit a lower risk approach. You'll also end up invested indiscriminately in eg. mining, tobacco, oil companies, whoever's in the index – perhaps you'd prefer to be more selective. If you feel you need financial advice (with Nationwide) or portfolio management (with Nutmeg) you have to judge whether these services are worth the added charges. It sounds like you're not convinced! In which case, all the best with a low-cost passive funds strategy. |
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