Question stringlengths 14 166 | Answer stringlengths 3 17k |
|---|---|
Shouldn't a Roth IRA accumulate more than 1 cent of interest per month? | There are a couple of misconceptions I think are present here: Firstly, when people say "interest", usually that implies a lower-risk investment, like a government bond or a money market fund. Some interest-earning investments can be higher risk (like junk bonds offered by near-bankrupt companies), but for the most part, stocks are higher risk. With higher risk comes higher reward, but obviously also the chance for a bad year. A "bad year" can mean your fund actually goes down in value, because the companies you are invested in do poorly. So calling all value increases "interest" is not the correct way to think about things. Secondly, remember that "Roth IRA fund" doesn't really tell you what's "inside" it. You could set up your fund to include only low-risk interest earning investments, or higher risk foreign stocks. From what you've said, your fund is a "target retirement date"-type fund. This typically means that it is a mix of stocks and bonds, weighted higher to bonds if you are older (on the theory of minimizing risk near retirement), and higher to stocks if you are younger (on the theory of accepting risk for higher average returns when you have time to overcome losses). What this means is that assuming you're young and the fund you have is typical, you probably have ~50%+ of your money invested in stocks. Stocks don't pay interest, they give you value in two ways: they pay you dividends, and the companies that they are a share of increase in value (remember that a stock is literally a small % ownership of the company). So the value increase you see as the increase due to the increase in the mutual fund's share price, is part of the total "interest" amount you were expecting. Finally, if you are reading about "standard growth" of an account using a given amount of contributions, someone somewhere is making an assumption about how much "growth" actually happens. Either you entered a number in the calculator ("How much do you expect growth to be per year?") or it made an assumption by default (probably something like 7% growth per year - I haven't checked the math on your number to see what the growth rate they used was). These types of assumptions can be helpful for general retirement planning, but they are not "rules" that your investments are required by law to follow. If you invest in something with risk, your return may be less than expected. |
Is an interest-only mortgage a bad idea? | It seems you understand the risks, it seems like a fine enough idea. Hopefully it works out for you. However, you may want to talk to a few local banks about getting a short term home equity loan. I know someone who was able to do this getting a very low rate for 7 years. At the time of the loan, the prevailing rate for a 15 year was 3.25, but they were able to get the HEL at 2.6 fixed. There was no closing costs. The best part about it was the payment was not that much more. While going from ~1200 to ~1800 is a 50% increase it was not that much in dollars in relationship to his household income. Note that I did not say Home Equity Line of Credit, which are vairable rates and amount borrowed. |
Where can I find historical United States treasury note volume? | The Securities Industry and Financial Markets Association (SIFMA) publishes these and other relevant data on their Statistics page, in the "Treasury & Agency" section. The volume spreadsheet contains annual and monthly data with bins for varying maturities. These data only go back as far as January 2001 (in most cases). SIFMA also publishes treasury issuances with monthly data for bills, notes, bonds, etc. going back as far as January 1980. Most of this information comes from the Daily Treasury Statements, so that's another source of specific information that you could aggregate yourself. Somewhere I have a parser for the historical data (since the Treasury doesn't provide it directly; it's only available as daily text files). I'll post it if I can find it. It's buried somewhere at home, I think. |
About to start being an Independent Contractor - Any advice on estimating taxes? | I agree with your strategy of using a conservative estimate to overpay taxes and get a refund next year. As a self-employed individual you are responsible for paying self-employment tax (which means paying Social Security and Medicare tax for yourself as both: employee and an employer.) Current Social Security Rate is 6.2% and Medicare is 1.45%, so your Self-employment tax is 15.3% (7.65%X2) Assuming you are single, your effective tax rate will be over 10% (portion of your income under $ 9,075), but less than 15% ($9,075-$36,900), so to adopt a conservative approach, let's use the 15% number. Given Self-employment and Federal Income tax rate estimates, very conservative approach, your estimated tax can be 30% (Self-employment tax plus income tax) Should you expect much higher compensation, you might move to the 25% tax bracket and adjust this amount to 40%. |
Should I finance a new home theater at 0% even though I have the cash for it? | I think most people have already answered this one pretty well. (It's usually worth it, as long as you pay it off before the interest kicks in, and you don't get hit with any fees.) I just wanted to add one thing that no one else has pointed out: Applying for the loan usually counts as a hard pull on your credit history. It also changes your Debt-to-income ratio (DTI). This can negatively impact your credit score. Usually, the credit score impact for these (relatively) small loans isn't that much. And your score will rebound over time. However, if it makes your score drop below a certain threshold, (e.g. FICO dips below 700), it could trip you up if you are also applying for other sources of credit in the immediate future. Not a big deal, but it is something to keep in mind. |
Buying Fixed Deposit in India from Europe | A few weeks ago, I was thinking about this exact thing (except swap Euros for Canadian Dollars). The good news is that there are options. Option 1: yes, buy Indian fixed deposits Interest rates are high right now- you can get up to 9% p.a. It boils down to your sentiment about the Indian rupee going forward. For instance, let's say you purchase a deposit for amount x at 9% p.a., you can have it double to almost 2x in 10 years. Three things can happen in 10 years: Are you optimistic about Indian governance and economy going forward? If you are, go for it! I certainly am. Option 2: heard of FCNR? Look in to FCNR deposits. I don't know about Europe, but in Canada, the best rate for a 1 year deposit is approximately 1.5%. However, through Foreign Currency Non-Resident (FCNR) deposits, you can get up to 4% or 5%. The other benefit is that you don't have to convert currency to INR which results in conversion savings. However, only major currencies can be used to open such accounts. |
What is the PEG ratio? How is the PEG ratio calculated? How is the PEG ratio useful for stock investing? | PEG is Price/Earnings to Growth. It is calculated as Price/Earnings/Annual EPS Growth. It represents how good a stock is to buy, factoring in growth of earnings, which P/E does not. Obviously when PEG is lower, a stock is more undervalued, which means that it is a better buy, and more likely to go up. Additional References: |
What are the usual terms of a “rent with an option to buy” situation? | While the other people have tried to answer your question as thoroughly as possible, I fear they are entirely incorrect in answering your question itself as it stands. The answer is that there are no usual terms. There are a handful of different options coming out now for this exact scheme. Examples include the UK Governments "Help To Buy" scheme. Accomodation is offered at a normal rate, and a small portion of the rent is set aside each month. At the end of a fixed period, that money becomes a deposit which the letter hands over to a mortgage provider who accepts it as a deposit. This might well be a terminology thing, since the other scenario which people described falls into the same name you've used. That scenario is where the investor who owns the property is considering sale of the property, and is happy to negotiate a price up front for the next year. Usually the rent and price is higher than the market rate because if the market goes well over the next year they could end up out of pocket. Putting that into perspective, over that year they are gaining their $1,000 a month or so, but having $100,000 invested means a return of 12%. If the property value is over $250,000 which I believe to be more likely, they are achieving a return of (I think) 4.8%. That's not a bad rate, by any means, but realistically they are losing a bit more for maintenance, and they could be making more from their money. If the market were to go up in that time by more than 4.8% (my house, for instance, increased in value by over 15% in the last 12 months), they are making a substantial loss since you are getting a house at 15% below the market rate. The total works out to a 10.2% loss for them. Note that I don't know the US housing market at all, I'm speaking mostly from my experience of the market here in the UK. This is what I hear, what I see, and what I've played. To summarise a bit: Make sure you check your terms before signing anything. |
Why do people use mortgages, when they could just pay for the house in full? | Condensed to the essence: if you can reliably get more income from investing the cost of the house than the mortgage is costing you, this is the safest leveraged investment you'll ever make. There's some risk, of course, but there is risk in any financial decision. Taking the mortgage also leaves you with far greater flexibility than if you become "house- rich but cash-poor". (Note that you probably shouldn't be buying at all if you may need geographic flexibility in the next five years or so; that's another part of the liquidity issue.) Also, it doesn't have to be either/or. I borrowed half and paid the rest in cash, though I could have taken either extreme, because that was the balance of certainty vs.risk that I was comfortable with. I also took a shorter mortgage than I might have, again trading off risk and return; I decided I would rather have the house paid off at about the same time that I retire. |
Comparing/reviewing personal health insurance plans for the self-employed | Here's an old-ish article from the NYT that discusses this. |
Is investing exlusively in a small-cap index fund a wise investment? | Stock portfolios have diversifiable risk and undiversifiable risk. The market rewards investors for taking undiversifiable risk (e.g. owning an index of oil producing companies) and does not reward investors for assuming diversifiable risk (e.g. owning a single oil producing company). The market will not provide investors with any extra return for owning a single oil company when they can buy an oil index fund at no additional cost. Similarly, the market will not reward you for owning a small-cap index fund when you can purchase a globally diversified / capitalization diversified index fund at no additional cost. This article provides a more detailed description. The Vanguard Total World Stock Index Fund is a much better staring point for an equity portfolio. You will need to make sure that the asset allocation of your overall portfolio (e.g. stocks, bonds, P2P lending, cash) is consistent with your time horizon (5-10 years). |
Is the best ask price the ask at the “top” of the order book? What is the “top” of the book? | The best ask is the lowest ask, and the best bid is the highest bid. If the ask was lower than the bid then they crossed, and that would be a crossed market and quickly resolved. So the bid will almost always be cheaper than the ask. A heuristic is that a bid is the revenue of the stock at any given time while the ask is the cost, so the market will only ever offer a profit to itself not to the liquidity seeker. If examining the book vertically, all orders are usually sorted descending. Since the best ask is the lowest ask, it is on the bottom of the asks, and vice versa for the best bid. The best bid & best ask will be those closest since that's the narrowest spread and price-time priority will promise that a bid that crosses the asks will hit the lowest ask, the best possible price for the bidder and vice versa for an ask that crosses the best bid. |
Overnight charges for brokers holding stocks? | If you are trading CFDs, which are usually traded on margin, you will usually be charged an overnight financing fee for long positions held overnight and you will receive an overnight financing credit for short positions held overnight. Most CFD brokers will have their overnight financing rates set at + or - 2.5% or 3% from the country's official interest rates. So if your country's official interest rate is 5% and your broker uses + or - 2.5%, you will get a 2.5% credit for any short positions held overnight and pay 7.5% fee for any long positions held overnight. In Australia the official interest rate is 2.5%, so I get 0% for short positions and pay 5% for long positions held overnight. If you are looking to hold positions open long term (especially long positions) you might think twice before using CFDs to trade as you may end up paying quite a bit in interest over a long period of time. These financing fees are charged because you are borrowing the funds to open your positions, If you buy shares directly you would not be charged such overnight financing fees. |
Does an owner of a bond etf get an income even if he sells before the day of distribution? | Your ETF will return the interest as dividends. If you hold the ETF on the day before the Ex-Dividend date, you will get the dividend. If you sell before that, you will not. Note that at least one other answer to this question is wrong. You do NOT need to hold on the Record date. There is usually 2 days (or so) between the ex-date and the record date, which corresponds to the number of days it takes for your trade to settle. See the rules as published by the SEC: http://www.sec.gov/answers/dividen.htm |
Why would parents, of a young adult without dependents, not profit from the young adult's Term Life Insurance? | It is not likely the YA would die in 10 years. Hence the investment the parents make in policy premiums would lose all of its money. Repeat: lose all money. On average, you'll slightly lose with insurance. It's there for peace of mind and to mitigate a catastrophe. It's not an investment. Of course, if the YA is likely to die suddenly, that might change things. But concealing medical information would be grounds for denying the policy claim. |
Is buying a home a good idea? | The New York Times offer a remarkably detailed Buy vs Rent calculator. You enter - From all of this, it advises the break-even rent, when monetarily, it's equal. I'd suggest you keep a few things in mind when using such a tool. Logic, common sense, and a Nobel prize winner named Robert Shiller all indicate that housing will follow inflation over the long term. Short term, even 20 years, the graphs will hint at something else, but the real long term, the cost of housing can't exceed inflation. The other major point I'd add is that I see you wrote "We rent a nice house." Most often, people are looking to buy what they feel they can't easily rent. Whether it's the yard, room number or sizes, etc. This also leads to the purchase of too big a house. You can find that you can afford the extra bedroom, family room in addition to living room, etc, and then buy a house 50% bigger than what you need or planned on. In my opinion, getting the smallest house you can imagine living in, no bigger than what you live in now, and plan to get on a faster than 30 year repayment. Even with transaction costs, in 10 years, you'll have saved enough to make the bump up to a larger house if you wish. |
why do I need an emergency fund if I already have investments? | Let me first start by defining an emergency fund. This is money which is: Because emergency's usually need to be deal with ASAP, boiler breaks, gears box in a car. Generally you need these to be solved as soon as possible, because ou depend on these things working and you can't budget for this type of expenditure using just your monthly salary. This is a personal opinion but I prefer investment types that don't have another fee on access. I really don't like having another fee on top on money that I need right now. Investment Options: Market based investments should be seen as long term investments, therefore they do not really satisfy requirement one, they can also have broker fees, therefore you might pay a small extra charge for taking money out, and so do not satisfy requirement two. Investment Options for Emergency Funds You want to get the best return on your money even if it's your emergency fund. So use regular saving accounts, but from you emergency fund or use tax effective savings accounts, like a cash ISA if based in the UK. Don't think of an emergency money as just sitting there, you have options just makes sure the options fit the requirements. UPDATE Given feedback I appreciate there are levels of emergency fund, the above details things which might be about 1-2 month salary in cost, car repairs, leaks, boiler repairs. Now I have another fund which is in P2P funds which is higher risk than a deposit account but then gives me a better return and is less subject to market fluctuations and it would be the place I go to for loss of job level emergencies say 6 months of salary, this takes a bit longer to access but given I have the above emergency fund I have given myself time to get the money from the P2P account. |
How credible is Stansberry's video “End of America”? | Others have covered this pretty well, but as someone who once worked for the company that allows Stansberry to publish, let me confirm that their business is about getting you to buy into the financial worldview they promote so that they can sell you more and more "newsletters" and "services". Nothing else. It's a marketing company, and Stansberry is nothing more than a copywriter. |
How can I calculate total return of stock with partial sale? | There are many ways to calculate the return, and every way will give you a different results in terms of a percentage-value. One way to always get something meaningful - count the cash. You had 977 (+ 31) and in the end you have 1.370, which means you have earned 363 dollars. But what is your return in terms of percentage? One way to look at it, is by pretending that it is a fund in which you invest 1 dollar. What is the fund worth in the beginning and in the end? The tricky part in your example is, you injected new capital into the equation. Initially you invested 977 dollars which later, in the second period became worth 1.473. You then sold off 200 shares for 950 dollars. Remember your portfolio is still worth 1.473, split between 950 in cash and 523 in Shares. So far so good - still easy to calculate return (1.473 / 977 -1 = 50.8% return). Now you buy share for 981 dollars, but you only had 950 in cash? We now need to consider 2 scenarios. Either you (or someone else) injected 31 dollars into the fund - or you actually had the 31 dollars in the fund to begin with. If you already had the cash in the fund to begin with, your initial investment is 1.008 and not 977 (977 in shares and 31 in cash). In the end the value of the fund is 1.370, which means your return is 1.370 / 1.007 = 36%. Consider if the 31 dollars was paid in to the fund by someone other than you. You will then need to recalculate how much you each own of the fund. Just before the injection, the fund was worth 950 in cash and 387 in stock (310 - 200 = 110 x 3.54) = 1.339 dollars - then 31 dollars are injected, bringing the value of the fund up to 1.370. The ownership of the fund is split with 1.339 / 1.370 = 97.8% of the value for the old capital and 2.2% for the new capital. If the value of the fund was to change from here, you could calculate the return for each investor individually by applying their share of the funds value respective to their investment. Because the value of the fund has not changed since the last period (bullet 3), the return on the original investment is (977 / 1.339 - 1 = 37.2%) and the return on the new capital is (31 / 31 = 0%). If you (and not someone else) injected the 31 dollar into the fund, you will need to calculate the weight of each share of capital in each period and get the average return for each period to get to a total return. In this specific case you will still get 37.2% return - but it gets even more comlex for each time you inject new capital. |
Online tools for monitoring my portfolio gains/losses in real time? | Do you have a broker? Any online brokerage (TD Ameritrade, E*Trade, Scott Trade, etc) offer the functionality that you want. If you're not interested in opening a brokerage account, you can search for threads here related to stock market simulation, since most of those services also provide the features that you want. If you do you have a physical broker at some firm, contact him/her and ask about the online tools that the brokerage offers. Almost all of them have portfolio management tools available to clients. |
Hobby vs. Business | You can list it as other income reported on line 21 of form 1040. In TurboTax, enter at: - Federal Taxes tab (Personal in Home & Business) - Wages & Income -“I’ll choose what I work on” Button Scroll down to: -Less Common Income -Misc Income, 1099-A, 1099-C. -The next screen will give you several choices. Choose "Other reportable Income". You will reach a screen where you can type a description of the income and the amount. Type in the amount of income and categorize as Tutoring. |
Short Selling Specific to India | In India the Short is what is called in other markets call as "Naked Short" [I think I got the right term]. It means that you can only short sell intra day and by the end of the day you have to buy back the shares [at whatever price, if you don't; the exchange will do it by force the next day]. In other markets the Intra day shorts are not allowed and one can short for several days by borrowing shares from someone else [arranged by broker] India has a futures market, so you can sell/buy something today with the execution date of one month. This is typically a fixed day of the month [I think last Thursday] |
ETF vs Mutual Fund: How to decide which to use for investing in a popular index? | The factors to consider: |
How do I resolve Free Fillable Tax Form error F1040-524-01? | Buried on the IRS web site is the "Fillable Forms Error Search Tool". Rather than including an explanation of errors in the rejection email itself, you're expected to copy and paste the error email into this form, which gives more details about what's wrong. (Don't blame me; I didn't design it.) If I copy your error message in, here's the response I get: There is an error with the “primary taxpayer’s Date of Birth” in Step 2 Section 4. The date of birth that was entered does not match IRS records. Make sure you enter the correct birth date, in the correct format, in the correct space. Scroll down, and enter the current date (“Today’s date”). Today’s date is the day you intend to e-file the return again. Also, if you are making an electronic payment you must re-date that section. E-File your return. You say that you've already checked your birthday, so I don't know as this is particularly helpful. If you're confident that it's correct and in the right place, I think your next step needs to be contacting the IRS directly. They have a link at the bottom of the error lookup response on how to contact them specifically about their solution not working, or you could try contacting your local IRS office or giving them a call. |
How long should I keep an uncleared transaction in my checkbook? | Why would you consider it null and void? It might be that something went wrong and the business "lost" the transaction one way or another. It might be something else. It might never appear. It might appear. In one of the questions a while ago someone posted a link of a story where an account was overdrawn because of a forgotten debit card charge that resurfaced months later. Can't find the link right now, but it can definitely happen. |
In the USA, why is the Free File software only available for people earning less than $62k? | Regardless of the source of the software (though certainly good to know), there are practical limits to the IRS 1040EZ form. This simplified tax form is not appropriate for use once you reach a certain level of income because it only allows for the "standard" deduction - no itemization. The first year I passed that level, I was panicked because I thought I suddenly owed thousands. Switching to 1040A (aka the short form) and using even the basic itemized deductions showed that the IRS owed me a refund instead. I don't know where that level is for tax year 2015 but as you approach $62k, the simplified form is less-and-less appropriate. It would make sense, given some of the great information in the other answers, that the free offering is only for 1040EZ. That's certainly been true for other "free" software in the past. |
Is it ok to use a check without a pre-printed check number? | For the clearing house, only the routing number and the check amount [which gets encoded before its presented to clearing] is important. The check numbers were put in as a fraud prevention mechanism to ensure that one check was only presented once and that it was issued to a particular account. Typically issued in sequence. So as your account is new, the bank may have a mechanism to verify the checks [maybe based on amount and other info]. If your volume of check issuing increases, they may start putting in a check number to better track. |
Repaying Debt and Saving - Difficult Situation | I see one clear thing to help: She lives alone. Why does she need a two bedroom place? |
Most common types of financial scams an individual investor should beware of? | Pretty much any financial transaction where they start by calling you on the phone is a scam. They aren't doing it for your benefit and the caller is on commission. |
How to Create Personal Balance Sheet and Budget Plan for Several Accounts | As your financial situation becomes more complex, it becomes increasingly more difficult to keep track of everything with a simple spreadsheet. It is much easier to work with software that is specifically designed for personal finances. A good program will allow you to keep track of as many accounts as you want. A great program will completely separate the different account balances (location of the money) from the budget category balances (purpose of the money). Let me explain: When you set up the software, you will enter in all of your different bank accounts with their balances. Perhaps you have three savings accounts and two checking accounts. It doesn't matter. When you are done entering those, the software will total them up, and the next job you have is assigning this money into different budget categories: your spending plan. For example, you might put some of it into a grocery category, some into an entertainment category, some will be assigned to pay your next car insurance bill, and some will be an emergency fund. (These categories are completely customizable, and your budget can be as broad or as detailed as you wish.) When you deposit your paycheck, you assign that new income into budget categories as well. It doesn't matter at this point which accounts your money are located in; the only thing that matters is that you own this money and you have access to it. Now, you might want to use a certain account for a certain budget category, but you are not required to do so. (For example, your grocery category money will probably be in your checking account, since you will be spending from it regularly. Your emergency fund will hopefully be in an account that earns a little higher interest.) Once you take this approach, you might find you don't need as many bank accounts as you thought you did, because the software does the job of separating your money into different "accounts" for different purposes. I've written before about the different categories of personal finance software. YNAB, Mvelopes, and EveryDollar are three examples of software that will take this approach of separating the concepts of the bank account and the budget category. |
How can I stop a merchant from charging a credit card processing fee? | It may seem very simple on its face but you don't know the merchant's agreement. You don't know who is providing the processing equipment. You don't know a lot of things. You know that Visa, Mastercard, Discover, Amex and others have network requirements and agreements. You know that laws have been changed to allow merchant surcharges (previously it was contracts that prohibited surcharges, not laws). That gas station, or that pizza parlor, or any other merchant doesn't have a direct relationship with Visa or Mastercard; it has an agreement with a bank or other processing entity. The issue here, is whom do you even call? And what would you gain? Find out what bank is contracted for that particular equipment and file a complaint that the merchant charged you $0.35? Maybe the merchant agreement allows surcharges up to state and local maximums? You don't know the terms of their agreement. Calling around to figure out what parties are involved to understand the terms of their agreement is a waste of time, like you said you can just go across the street if it's so offensive to you. Or just carry a little cash. If that's not the answer you're looking for, here's one for you: There is no practical recourse. |
How to deal with the credit card debt from family member that has passed away? | Sorry for your loss. I am not a lawyer and this isn;t legal advice -- which I am not licensed to give. But I've had to deal with some debt situations of my own. I think the worst case scenario is the creditor can get a judgment, but that won't be against you unless you were a co-signor. The collectors are going to prey on your decency to make you feel like you should pay it, but you are under no legal obligation to do so. If they file in court and then win a judgment, they may be able to collect on the assets of the estate. You mention no money but you mention a house. That is an asset with value, and putting it in your name isn't going to do much. You should see a lawyer on this, because it seems logical that they could collect on the value of the house at the time of the death, and even if it was willed to you it can still be attacked to pay the debt. Here is a good write-up on NJ death and debt and whether it can be inherited by the adult children: https://www.atrbklaw.com/bankruptcy-resources/83-articles/103-can-you-inherit-your-dead-parent-s-debts |
Why can't the Fed lower interest rates below zero? | Because giving someone a loan and paying them to take it isn't a loan anymore. I'll grant you, some of the treasury bill auctions did slip below 0% -- people paid in slightly more than what the bill would pay out. In as much as this was done by actual investors (and not afore-mentioned helicopter Ben Bernanke keeping the printing presses running hot all night), it was major accounts fearful of the euro disintegrating and banks crashing, and so on, and needing a safe spot to stick their cash for a couple months. Where the Fed is concerned, that interest rate he's referring to is lending they do to banks. So, how much would you take if you ran a bank and the Fed offered to pay you to take their money? A billion? A trillion? As much as you could cram in your vaults, shove in your pockets, and stuff down your favorite teller's blouse? Yea, me too. |
Why buy insurance? | Apart from legal requirements to have insurance, e.g. 3rd party car that other answers have covered well. We can think of all insurance as protecting our “usable” income, as we can use cashflow to pay the costs of a loan to replace whatever we decided not to insure. So for example, if I don’t insure my house contents, I can replace them on my credit card if needed. Therefore we are paying for insurance out of our income, so as to protect our income, knowing that the cost of the protection is on average more than the benefit we get from it. But we all know that having an income of $50K is less than double the value of having an income of $25K. (E.g. being able to eat and remain warm is more important to us then being able to go on anther holiday.) This is way when someone has a higher income; it requires more money to effect their actions. Loss aversion is another factor; we are people not logistical machines. |
Pay off car or use money for down payment | To focus on your question.. pay it off then trade in. The reason is because say you just have 14k laying around and buy a car for 14k, you must pay 14k plus tax. If you are in one of the states that allows the tax break, then trading the 14k valued vehicle in for a 14k vehicle will nullify your sales tax. As per your question, if you traded the car in at 7k, you would then owe 7k plus tax. You only have 7k..so how would you pay for the tax and why would you want to? Pay off the car and you'll have 14k of tax free off any car. |
Companies that use their cash to buy back stock, issue dividends, etc. — how does this this typically affect share price? | IBM is famous for spending lots of money on stock buyback to keep the stock price higher. The technique works, and investors in growth stocks generally prefer a high market prices to a taxable dividend payment. Dividends are ways to return shareholder value when a company generates a lot of cash, but doesn't have alot of growth. Electric and gas companies are a classic example of high-dividend companies. |
Do credit checks affect credit scores? | While one credit provider (or credit reference agency) might score you in one way, others may score you differently including treating different things that contribute to your score differently. Different credit providers may also not see all of your credit score as potentially some data may not be available to all credit suppliers. Further too many searches may trigger systems that recognise behavior that is a sign of possible fraudulent activity (such as applying for many items of credit in a short space of time). Whether this would directly affect a score or trigger manual checks is also likely to vary. In situations like this a person could have applied for (say) a dozen credit cards, with all the credit checks being performed before there is any credit history for any of those dozen cards. |
Is 6% too high to trade stocks on margin? | 6% isn't "too high" in terms of market rates at the moment, however it's a very subjective question whether it's too high for you. The real question to determine is if paying 6%, can you make more than 6% return (to cover the costs plus your profit)? As for a rule of thumb, there's none I know of, however your best bet is to take the time to model it in Excel (not difficult). It's different for each portfolio or investment. Something with a high standard deviation of returns is already high risk, adding margin to it only makes it worse. So, long story short is that, "it depends". |
Do the tax consequences make it worth it for me to hold ESPP stock? | To try to answer the three explicit questions: Every share of stock is treated proportionately: each share is assigned the same dollar amount of investment (1/176th part of the contribution in the example), and has the same discount amount (15% of $20 or $25, depending on when you sell, usually). So if you immediately sell 120 shares at $25, you have taxable income on the gain for those shares (120*($25-$17)). Either selling immediately or holding for the long term period (12-18 mo) can be advantageous, just in different ways. Selling immediately avoids a risk of a decline in the price of the stock, and allows you to invest elsewhere and earn income on the proceeds for the next 12-18 months that you would not otherwise have had. The downside is that all of your gain ($25-$17 per share) is taxed as ordinary income. Holding for the full period is advantageous in that only the discount (15% of $20 or $25) will be taxed as ordinary income and the rest of the gain (sell price minus $20 or $25) will be taxed at long-term capital gain tax rates, which generally are lower than ordinary rates (all taxes are due in the year you do sell). The catch is you will sell at different price, higher or lower, and thus have a risk of loss (or gain). You will never be (Federally) double taxed in any scenario. The $3000 you put in will not be taxed after all is sold, as it is a return of your capital investment. All money you receive in excess of the $3000 will be taxed, in all scenarios, just potentially at different rates, ordinary or capital gain. (All this ignores AMT considerations, which you likely are not subject to.) |
How can I improve my credit score if I am not paying bills or rent? | An activity which can help improve your credit score and actually make you money is stoozing. It's a little complicated but can be beneficial to do. Using either a credit card which allows fee free money withdrawals from cashpoints or building up debt using your credit card gives you access to your credit amount. You then use a long term 0% balance transfer card to transfer the debt which you pay off at the minimum rate. It's 0% so no costs are associated except for the initial fee paid for the balance transfer amount. The money that would have been used to pay off the credit amount (or money withdrawn from a cashpoint) can then be deposited in a savings account so you are now earning interest on the credit balance. Continuing to make monthly minimum payments via direct debit will help improve your credit rating and the savings money will earn interest. (it is also available if you suddenly need to pay off the 0% card) |
Social Trading Platforms Basically Front Running? | I don't think you can really classify it as front running. Technically, the only information, that the alleged front runner in this case has over the followers is the knowledge of the trade itself. Knowledge of the trade may indeed be share price sensitive information (for some high volume traders or those respected and with many followers) but it's not really like they can't know about it before everyone else; parity isn't possible in this case. If an company/organisation (i.e. the social trading platform say) responsible for disseminating the details/log of a trader to a following (or individuals working for said company/organisation), were to act on the trading data before dissemination then THEY would be guilty of front running. The alleged front runner may profit from the following of course, but that's only really occurring due to the publication of information that is share price sensitive, and such information generally has to be published by law (if it is by law so classified) so it's difficult to find too much fault. There has to be a certain amount of consideration on the part of any trader as to who is more the fool, the fool or the fool that follows them? |
Do I have to explain the source of *all* income on my taxes? | This is a case where you sit down with an advisor or two. There are legal, and tax issues. When you deposit the cash, or buy a car with it, the large cash transaction will trigger a notice to the US Government. So they will eventually find out. Before you get to that point you need to know what obligations and consequences you will be facing. Because you don't know if it was a gift, or found money, or if the owner will be back looking for you to return it; therefore you need expert advice. |
Currency exchange problem | For the purposes of report generation, I would recommend that you present the data in the currency of the user's home country. You could present another indicator, if needed, to indicate that a specific transaction was denominated in a foreign currency, where the amount represents the value of the foreign-denominated transaction in the user's home country Currency. For example: Airfare from USA to London: $1,000.00 Taxi from airport to hotel: $100.00 (in £) In terms of your database design, I would recommend not storing the data in any one denomination or reference currency. This would require you to do many more conversions between currencies that is likely to be necessary, and will create additional complexity where in some cases, you will need to do multiple conversions per transaction in and out of your reference currency. I think it will be easier for you to store multiple currencies as themselves, and not in a separate reference currency. I would recommend storing several pieces of information separately for each transaction: This way, you can create a calculated Amount for each transaction that is not in the user's "home" currency, whereas you would need to calculate this for all transactions if you used a universal reference currency. You could also get data from an external source if the user has forgotten the conversion rate. Remember that there are always fees and variations in the exchange rate that a user will get for their home country's currency, even if they change money at the same place at two different times on the same day. As a result, I would recommend building in a simple form that allows a user to enter how much they exchanged and how much they got back to calculate the exchange rate. So for example, let's say I have $ 200.00 USD and I exchanged $ 100.00 USD for £ 60.00, and there was a £ 3.00 fee for the exchange. The exchange rate would be 0.6, and when the user enters a currency conversion, your site could create three separate transactions such as: USD Converted to £: $100.00 £ Received from Exchange: £ 60.00 Exchange Fee: £ 3.00 So if the user exchanged currency and then ran a balance report by Currency, you could either show them that they now have $ 100.00 USD and £ 57.00, or you could alternatively choose to show the £ 57.00 that they have as $95.00 USD instead. If you were showing them a transaction report, you could also show the fee denominated in dollars as well. I would recommend storing your balances and transactions in their own currencies, as you will run into some very interesting problems otherwise. For example, let's say you used a reference currency tied to the dollar. So one day I exchange $ 100.00 USD for £ 60.00. In this system I would still have 100 of my reference currency. However, if the next day, the exchange rate falls and $ 1.00 USD is only worth £ 0.55, and I change my £ 60.00 back into USD, I will get approxiamately $ 109.09 USD back for my £ 60.00. If I then go and buy something for $ 100.00 USD, the balance of the reference currency would be at 0, but I will still have $ 9.09 USD in my pocket as a result of the fluctuating currency values! That is why I'd recommend storing currencies as themselves, and only showing them in another currency for convenience using calculations done "on the fly" at report runtime. Best of luck with your site! |
Which first time Stocks and Shares ISA for UK, frequent trader UK markets? | I wouldn't only consider the entry/exit cost per trade. That's a good comparison page by the way. I would also consider the following. This depends if you are planning on using your online broker to provide all the information for you to trade. I have lower expectations of my online broker, not meant to be harsh on the online brokers, but I expect brokers to assist me in buying/selling, not in selecting. Edit: to add to the answer following a comment. Here are three pieces of software to assist in stock selection |
Does a bid and ask price exist for indices like the S&P500? | Bid and ask prices of stocks change not just daily, but continuously. They are, as the names suggest, what price people are asking for to be willing to sell their stock, and how much people are bidding to be willing to buy it at that moment. Your equation is accurate in theory, but doesn't actually apply. The bid and ask prices are indicators of the value of the stock, but the only think you care about as a trader are what you actually pay and sell it for. So regardless of the bid/ask the equation is: Since you cannot buy an index directly (index, like indicator) it doesn't make sense to discuss how much people are bidding or asking for it. Like JoeTaxpayer said, you can buy (and therefore bid/ask) for ETFs and funds that attempt to track the value of the S&P 500. |
Principal 401(k) managed fund fees, wow. What can I do? | I would even say 1% is not even reasonable in this age. The short answer is there probably isn't much you can do directly. However, there are a few things to consider: |
How exactly does a country devalue its currency? | Currencies that are pegged or fixed require that foreign currencies are held by the central issuer at a proportional amount. This is analogous to having a portfolio of currencies that the central bank issues shares from - in the form of its own currency. We will continue with this analogy, if the central bank says these "shares" are worth $1, but the underlying components of the portfolio are worth $0.80 and decreasing, then it is expensive for the central bank to maintain its peg, and eventually they will have to disregard the peg as people start questioning the central bank's solvency. (People will know the $1 they hold is not really worth what the central bank says it is, because of the price changes people experience in buying goods and services, especially when it comes to imports. Shadow economies will also trade using a currency more reflective of labor, which happens no matter what the government's punishments are for doing so). Swiss National Bank (central bank) did this in early 2015, as it experienced volatility in the Euro which it had previously been trying to keep it's currency pegged to. It became too expensive for it to keep this peg on its own. The central bank can devalue its currency by adjusting the proportions of the reserve, such as selling a lot of foreign currency X, buying more of currency Y. They can and do take losses doing this. (Swiss National Bank is maintaining a large loss) They can also flood their economy with more of their currency, diluting the value of each individual 1 dollar equivalent. This is done by issuing bonds or monetizing goods and services from the private sector in exchange for bonds. People colloquially call this "printing money" but it is a misnomer in this day and age where printers are not relevant tools. The good and service goes onto the central bank's balance book, and the company/entity that provided the service now has a bond on its book which can be immediately sold to someone else for cash (another reading is that the bond is as good as cash). The bond didn't previously exist until the central bank said it did, and central banks can infinitely exchange goods and services for bonds. Bond monetization (also called Quantitative Easing) is practiced by the Federal Reserve in the United States, Bank of Japan, European Central Bank and now the Central Bank of the Republic of China |
What to do if my aging father is sustaining a hobby that is losing several thousand dollars every month? | You've already counted the cost. It will cost your family ~$10,000 per month until your father dies, or until there's no money left, to enable him to pretend that he is a successful business owner. I'd ask him when he thinks business is going to pick up again. He may be honest with himself. Or, ask him to consider what will happen if he outlives the money that's going out the door. Ask him if he would like to be bankrupt on top of needing to close his business. (I don't view asking those questions as being unloving, by the way.) |
Taking a car loan vs cash and effect on credit score | Imagine that your normal mode of using credit gets you a score of X. As time goes by your score trends upward if the positive items (length of credit) outweigh your negative items. But there are no big increases or decrease in your score. Then you make a one time change to how you use credit. If this is a event that helps your score, there will be a increase in your score. If it is bad thing your score will drop. But if you go back to your standard method of operating your score will drift back to the previous range. Getting a car loan for a few months to get a bump in your credit score, will not sustain your score at the new level indefinitely. Overtime the impact will lessen, and the score will return your your normal range. Spending money on the loan just to buy a temporary higher credit score is throwing away money. |
Getting Cash from Credit Card without Fees | This was actually (sort of) possible a few years ago. The US Mint, trying to encourage use of dollar coins, would sell the coins to customers for face value and no shipping. Many people did exactly what you are proposing: bought hundreds/thousands of dollars worth of coins with credit cards, reaped the rewards, deposited the coins in the bank, and paid off the credit cards. See here, for example. Yeah, they don't have that program any more. Of course, this sort of behavior was completely predictable and painfully obvious to the credit card companies, who, as far as I know, never let users net rewards on cash advances. They're trying to make money after all, unlike the Mint, which, uh, well... |
Can a credit card company raise my rates for making a large payment? | No. Credit card companies will typically not care about your individual credit card account. Instead they look either at a "package" of card accounts opened at roughly the same time, or of "slices" of cardholder accounts by credit rating. If an entire package's or slice's balance drops significantly, they'll take a look, and will adjust rates accordingly (often they may actually decrease rates as an incentive to increase you use of the card). Because credit card debt is unstructured debt, the bank cannot impose an "early payment penalty" of any kind (there's no schedule for paying it off, so there's no way to prove that they're missing out on $X in interest because you paid early). Generally, banks don't like CC debt anyway; it's very risky debt, and they often end up writing large balances off for pennies on the dollar. So, when you pay down your balance by a significant amount, the banks breathe a sigh of relief. The real money, the stable money, is in the usage fees; every time you swipe your card, the business who accepted it owes the credit card company 3% of your purchase, and sometimes more. |
Planning to invest in stock, age 16 | Don't try individual stocks. If you have a job, any job, even one from mowing lawns, you can open a Roth IRA. If you are under 18 you will need your parents/guardian to setting up the account. You can put the an amount equal to your earned income into the Roth IRA, up to the annual maximum of $5500. There are advantages to a Roth IRA: What happens if you are using your income to pay for your car, insurance, etc? You can get the money from your parents, grandparents. The only rule is that you can't invest more than you have earned. Act before Tax day (April 15th). You know what you made last year. If you open the account and make the contribution before April 15th it can count for last year, as long as you are clear with the broker/bank when you make the deposit. |
How does the US Estate Tax affect an Australian with investments domiciled in the US? | I don't think the location of the funds is any of your concern. You're buying a CDI, which is: Australian financial instruments The US has no jurisdiction over you, being you an Australian, so unless you own a US-based asset (i.e.: a real-estate in the US, or a US brokerage account), US tax laws shouldn't matter to you. |
Where can I borrow money for investing? | Borrow money and start a business. Follow your business plan and invest in yourself and your entrepreneurship. If you mean invest in the market, do not borrow money. In your plan, you are willing to make payments right? There are lots of things you can do better, but borrowing money to invest in the market for a couple of years is not one of them. Investing is boring, saving is boring, and planning your financial future is boring. It takes a consistent effort and you aren't going to get rich quick. |
What are the differences between an investment mortgage and a personal mortgage? | According to my wife who used to work in the industry, since an investment mortgage is more likely to fail (they are just riskier) there are higher loan to value requirements and higher interest rates. They are just different products for different situations. |
how does one start an investing club (as a company)? | Taxes are the least of your concerns. Your friends need licenses. Although this COULD be avoided entirely with certain craftily worded disclaimers and exemptions and the WAY that money is given to them. |
What are the implications of a corporate stock repurchase or share buyback program? | Ignoring taxes, a share repurchase has exactly the same effect on the company and the shareholders' wealth as a cash dividend. In either case, the company is disbursing cash to its shareholders; in the former, in exchange for shares which shareholders happen to be selling on the market at the time; in the latter, equally to all shareholders. For those shareholders who do not happen to be selling their shares, a share repurchase by a company is equivalent to a shareholder's reinvestment of a cash dividend in additional shares of the same company. The only difference is the total number of shares left outstanding. Your shares after a share buyback represent ownership of a greater fraction of the company, since in effect the company is buying out other shareholders on your behalf. Theoretically, a share buyback leaves the price of the stock unchanged, whereas a cash dividend tends to reduce the price of the stock by exactly the amount of the dividend, (notwithstanding underlying earnings.) This is because a share buyback concentrates your ownership in the company, but at the same time, the company as a whole is devalued by the exact amount of cash disbursed to buy back shares. Taxwise, a share buyback generally allows you to treat your share of the company's profits as capital gains---and quite possibly defer taxes on it as long as you own the stock. You usually have to pay taxes on dividends at the time they are paid. However, dividends are sometimes seen as instilling discipline in management, because it's a very public and obvious sign of distress for a company to cut its dividend, whereas a share repurchase plan can often be quietly withdrawn without drawing that much attention. A third alternative to a dividend or a share repurchase is for the company to find profitable projects to reinvest its earnings in, and attempt to grow the company as a whole (in the hopes of even greater earnings in the future) rather than distribute current earnings back to shareholders. (A company may alse use its earnings to pay down or repurchase debt, as well.) As to your second question, the SEC has certain rules that regulate the timing and price of share repurchases on the open market. |
Can you explain the mechanism of money inflation? | The mechanism of supply and demand is imperfect. Producers don't know exactly how many purchasers/consumers for a good there are. Some goods, by their nature, are in short supply, and some are plentiful. The process of price discovery is one where (in a nominally free market) producers and purchasers make offers and counter-offers to assess what the price should be. As they do this the historical price changes, usually floating around some long-term average. As it goes up, we experience inflation. As it goes down, deflation. However, there isn't a fixed supply of producers and purchasers, so as new ones arrive and old ones leave, this too has an impact on supply and prices. Money (either in electronic or physical form) needs to be available to reflect the transactions and underpin the economy. Most central banks (at least in more established economies) aim for inflation of 2-4% by controlling the availability of money and the cost of borrowing new money. There are numerous ways they can do this (printing, issuing bonds, etc.). The reason one wants some degree of inflation is because employees will never accept a pay cut even when one would significantly improve the overall economy. Companies often decrease their prices in order to match lower demand, but employees don't usually accept decreased wages for decreased labour demand. A nominal degree of overall money inflation therefore solves this problem. Employees who get a below-inflation wage increase are actually getting a wage cut. Supply and demand must be matched and some inflation is the inevitable consequence of this. |
How can I find a high-risk, high-reward investment that is not strongly correlated with the U.S. economy? | High risk, high reward doesn't really mean anything. The reason that investments are risky is that the investor is clueless. As you gain more information and experience, you reduce the risk. To answer your question, you can consider BRIC ETF's (Brazil, Russia, India and China). They are correlated to the U.S. economy. However, over the long term (say, 40 years), they may make sense. It depends on your outlook. Do you think India and China will have bigger economies in than the U.S. in 40 years? Many people do. Do you think that countries that are rich in commodity resources like oil will do well in the next 5 years? If so, then those countries may do better than the U.S. It's not a clear answer to your question, but maybe it can help lead to a good solution for you. |
U.S. nonresident alien: Is my state tax refund taxable? | Federal income tax refunds received during 2016 are not taxable income for 2016 (or any other year) on either the Federal or the State tax return. The State income tax refund for 2015 received during 2016 is not taxable income on the State tax return for 2016. It is taxable income on the Federal tax return for 2016 only to the extent that you received a tax benefit (reduction in Federal income tax due) from deducting State income tax as an Itemized Deduction on your 2015 Federal return. If you didn't deduct State income tax because you deducted State sales tax instead, then the State income tax refund is not taxable income on the Federal tax return. |
Homeowners: How can you protect yourself from a financial worst-case scenario? | If you have doubts about the long term prospects at your employer or jobs in your area, you may want to keep the option of moving to find a new job open while you save up for a larger down payment on a house. While there are insurance products out there that claim to cover your mortgage, they often have loopholes which make them difficult to collect on. Insurance companies are in business to make money and premiums are high when it's likely that people will try to collect. Splitting those premiums into your mortgage and your own self-insured unemployment fund (i.e. an emergency fund in a money market bank account) will usually be a better deal. As always, make sure you have term life insurance for a family and long term disability insurance just in case something really bad happens in the near term. Buying a home is a better financial decision when you know you'll be in an area for at least 5 years. Saving until you have 20% down on place that you can afford to pay off in 15 years (even if you take a 30 year loan) will be a lot cheaper and less stressful. |
Can I transfer my investment property into a SMSF? | Regarding transferring a residential investment property into your SMSF, no you cannot do it. You cannot transfer residential property into your SMSF from a related party. You can only transfer Business Real Property (that is commercial or industrial property) into a SMSF from a related party. You can buy new residential property inside your SMSF, and you can also borrow within the fund (using a non-recourse loan) to help you buy it, or you could buy it as tenants-in-common with your SMSF (that is you own say 50% in your own name and 50% under the SMSF). Regarding self-managing the investment properties held in your SMSF, yes you can, but you should make sure all your paperwork is in order (all your t's crossed and your i's dotted). You can even charge your SMSF for managing the properties, but this should be at market rates (not more). |
What does it mean if “IPOs - normally are sold with an `underwriting discount` (a built in commission)” | Also, in the next sentence, what is buyers commission? Is it referring to the share holder? Or potential share holder? And why does the buyer get commission? The buyer doesn't get a commission. The buyer pays a commission. So normally a buyer would say, "I want to buy a hundred shares at $20." The broker would then charge the buyer a commission. Assuming 4%, the commission would be So the total cost to the buyer is $2080 and the seller receives $2000. The buyer paid a commission of $80 as the buyer's commission. In the case of an IPO, the seller often pays the commission. So the buyer might pay $2000 for a hundred shares which have a 7% commission. The brokering agent (or agents may share) pockets a commission of $140. Total paid to the seller is $1860. Some might argue that the buyer pays either way, as the seller receives money in the transaction. That's a reasonable outlook. A better way to say this might be that typical trades bill the buyer directly for commission while IPO purchases bill the seller. In the typical trade, the buyer negotiates the commission with the broker. In an IPO, the seller does (with the underwriter). Another issue with an IPO is that there are more parties getting commission than just one. As a general rule, you still call your broker to purchase the stock. The broker still expects a commission. But the IPO underwriter also expects a commission. So the 7% commission might be split between the IPO underwriter (works for the selling company) and the broker (works for the buyer). The broker has more work to do than normal. They have to put in the buyer's purchase request and manage the price negotiation. In most purchases, you just say something like "I want to offer $20 a share" or "I want to purchase at the market price." In an IPO, they may increase the price, asking for $25 a share. And they may do that multiple times. Your broker has to come back to you each time and get a new authorization at the higher price. And you still might not get the number of shares that you requested. Beyond all this, you may still be better off buying an IPO than waiting until the next day. Sure, you pay more commission, but you also may be buying at a lower price. If the IPO price is $20 but the price climbs to $30, you would have been better off paying the IPO price even with the higher commission. However, if the IPO price is $20 and the price falls to $19.20, you'd be better off buying at $19.20 after the IPO. Even though in that case, you'd pay the 4% commission on top of the $19.20, so about $19.97. I think that the overall point of the passage is that the IPO underwriter makes the most money by convincing you to pay as high an IPO price as possible. And once they do that, they're out of the picture. Your broker will still be your broker later. So the IPO underwriter has a lot of incentive to encourage you to participate in the IPO instead of waiting until the next day. The broker doesn't care much either way. They want you to buy and sell something. The IPO or something else. They don't care much as to what. The underwriter may overprice the stock, as that maximizes their return. If they can convince enough people to overpay, they don't care that the stock falls the day after that. All their marketing effort is to try to achieve that result. They want you to believe that your $20 purchase will go up to $30 the next day. But it might not. These numbers may not be accurate. Obviously the $20 stock price is made up. But the 4% and 7% numbers may also be inaccurate. Modern online brokers are very competitive and may charge a flat fee rather than a percentage. The book may be giving you older numbers that were correct in 1983 (or whatever year). The buyer's commission could also be lower than 4%, as the seller also may be charged a commission. If each pays 2%, that's about 4% total but split between a buyer's commission and a seller's commission. |
Capital Gains in an S Corp | These are all factually correct claims. S-Corporation is a pass-through entity, so whatever gain you have on the corporate level - is passed to the shareholders. If your S-Corp has capital gains - you'll get your pro-rata share of the capital gains. Interest? The same. Dividends? You get it on your K-1. Earned income? Taxed as such to you. I.e.: whether you earn income as a S-Corp or as a sole proprietor - matters not. That's the answer to your bottom line question. The big issue, however, is this: you cannot have more than 25% passive income in your S-Corp. You pass that limit (three consecutive years, one-off is ok) - your S-Corp automatically converts to C-Corp, and you're taxed at the corporate level at the corporate rates (you then lose the capital gains rates, personal brackets, etc). This means that an S-Corp cannot be an investment company. Most (75%+) of its income has to be earned, not passive. Another problem with S-Corp is that people who work as self-proprietors incorporated as S-Corp try to abuse it and claim that the income they earned by the virtue of their own personal performance shouldn't be taxed as self-employed income. IRS frowns upon such a position, and if considerable amounts are at stake will take you all the way up to the Tax Court to prove you wrong. This has happened before, numerously. You should talk to a licensed tax adviser (EA/CPA/Attorney licensed in your state) to educate you about what S-Corp is and how it is taxed, and whether or not it is appropriate for you. |
Can I use my long position stocks as margin for my short sold stocks? | 200% margin for a short sale is outrageous. You should only need to put up 150% margin, of which 50% is your money, and the 100% is the proceeds. With $100 of your money, you should be able to buy $100 of GOOG and short $100 of PNQI. |
Historical stock prices: Where to find free / low cost data for offline analysis? | There are several Excel spreadsheets for downloading stock quotes (from Yahoo Finance), and historical exchange rates at http://investexcel.net/financial-web-services-kb |
For young (lower-mid class) investors what percentage should be in individual stocks? | I would not advise any stock-picking or other active management (even using mutual funds that are actively managed). There is a large body of knowledge that needs learning before you even attempt that. Stay passive with index funds (either ETFs or (even better) low-cost passive mutual funds (because these prevent you from buying/selling). But I have not problem saying you can invest 100% in equity as long as your stomach can handle the price swings. If you freek out after a 25% drop that does not recover within a year, so you sell at the market bottom, then you are better off staying with a lot less risk. It is personal. There are a lot of valid reasons for young people to accept more risk - and equally valid reason why not. See list at http://www.retailinvestor.org/saving.html#norisk |
Is www.onetwotrade.com a scam? | It is a binary options market licensed by the "gaming authority" of Malta. One of the most liberal "pay to play" jurisdictions in the European Union. It sells access to tighter regulatory regimes. This is distinctly a gambling website, not licensed or protected by securities regulations. But that aside, even if they were able to masquerade more as a financial service, none of that dictates whether you will lose your money. Therefore try to find reviews from people that already use the site. This is not investing, a distinction I am able to make because no product they offer has positive expected value. Cash settled binary options do sound like a lot of fun though! And maybe you can make successful predictions in the allotted time period of the option. The things I would expect are issues withdrawing your funds, or unexplained fees. |
For what dates are the NYSE and U.S. stock exchanges typically closed? | All public US equity exchanges are closed on the 9 US trading holidays (see below) and open on all other days. Exchanges also close early (13:00 ET) on the Friday after Thanksgiving and on the day before Independence Day if Independence Day is being observed on a Tuesday, Wednesday, Thursday, or Friday. (Some venues have extended trading hours as a matter of course; for them an "early close" might be later than 13:00 ET.) To answer the second question, yes, if you know NASDAQ's or AMEX's holiday schedule, then you know NYSE's (modulo the timing of their early close). I'm not sure about the options exchanges; they're not regulated the same way and are a good example of exchanges with extended trading hours in the first place. The US trading holidays are as follows. Note that trading holidays are not the same as federal or bank holidays, which include Columbus Day and Veterans Day but do not include Good Friday. |
Can I resubmit W8-BEN with W9 form? | Since you're a US citizen, submitting W8-BEN was wrong. If you read the form carefully, when you signed it you certified that you are not a US citizen, which is a lie and you knew it. W9 and W8 are mutually exclusive. You're either a US person for tax purposes or you're not, you cannot be both. As a US citizen - you are a US person for tax purposes, whether you have any other citizenship or not, and whether you live in (or have ever been to) the US or not. You do need to file tax returns just like any other US citizen. If you have an aggregate of $10K or more on your bank accounts outside of the US at any given day - you need to file FBAR. FATCA forms may also be applicable, depending on your balances. From foreign banks' perspective you're a US person, with regard to their FATCA obligations. Whether or not you'll be punished is hard to tell. Whether or not you could be punished is easy to tell: you could. You knowingly broke the law by certifying that you're not a US citizen when you were. That is in addition to un-filed tax returns, FBAR, etc etc. The fact that you were born outside of the US and have never lived there is technically irrelevant. Not knowing the law is not a reasonable cause for breaking it. Get a US-licensed tax adviser (EA/CPA licensed in the US) to help you sort it out. |
Is there any reason to choose my bank's index fund over Vanguard? | Basically, no. Selecting an actively managed fund over a low-fee index fund means paying for the opportunity to possibly outperform the index fund. A Random Walk Down Wall Street by Burton Malkiel argues that the best general strategy for the average investor is to select the index fund because the fee savings are certain. Assuming a random walk means that any mutual fund may outperform the index in some years, but this is not an indication that it will overall. Unless you have special information about the effectiveness of the bank fund management (it's run by the next Warren Buffett), you are better off in the index fund. And even Warren Buffett suggests you are probably better off in the index fund: This year, regarding Wall Street, Buffett wrote: “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds.” |
Will a credit card issuer cancel an account if it never incurs interest? | I've got a card that I've had for about 25 years now. The only time they charged me interest I showed it was their goof (the automatic payment failed because of their mistake) and they haven't cancelled it. No annual fee, a bit of cash back. The only cards I've ever had an issuer close are ones I didn't use. |
Payroll taxes on exercised stock options | The trickiest thing is the federal tax. It's typical to withhold 25% federal on this type of event. If your federal marginal rate was already towards the top of that bracket, you'll owe the missing 3% as you enter the 28% bracket. Nothing awful, just be aware. |
Can Form 1040a, Line 10 be left blank if the broker's 1099-Div shows 0? | Capital gain distribution is not capital gain on sale of stock. If you have stock sales (Schedule D) you should be filing 1040, not 1040A. Capital gain distributions are distributions from mutual funds/ETFs that are attributed to capital gains of the funds (you may not have actually received the distribution, but you still may have gain attributed to you). It is reported on 1099-DIV, and if it is 0 - then you don't have any. If you sold a stock, your broker should have given you 1099-B (which is not the same as 1099-DIV, but may be consolidated by your broker into one large PDF and not provided separately). On 1099-B the sales proceeds are recorded, and if you purchased the stock after 2011 - the cost basis is also recorded. The difference between the proceeds and the cost basis is your gain (or loss, if it is negative). Fees are added to cost basis. |
Starting with Stocks or Forex? | This is an old post I feel requires some more love for completeness. Though several responses have mentioned the inherent risks that currency speculation, leverage, and frequent trading of stocks or currencies bring about, more information, and possibly a combination of answers, is necessary to fully answer this question. My answer should probably not be the answer, just some additional information to help aid your (and others') decision(s). Firstly, as a retail investor, don't trade forex. Period. Major currency pairs arguably make up the most efficient market in the world, and as a layman, that puts you at a severe disadvantage. You mentioned you were a student—since you have something else to do other than trade currencies, implicitly you cannot spend all of your time researching, monitoring, and investigating the various (infinite) drivers of currency return. Since major financial institutions such as banks, broker-dealers, hedge-funds, brokerages, inter-dealer-brokers, mutual funds, ETF companies, etc..., do have highly intelligent people researching, monitoring, and investigating the various drivers of currency return at all times, you're unlikely to win against the opposing trader. Not impossible to win, just improbable; over time, that probability will rob you clean. Secondly, investing in individual businesses can be a worthwhile endeavor and, especially as a young student, one that could pay dividends (pun intended!) for a very long time. That being said, what I mentioned above also holds true for many large-capitalization equities—there are thousands, maybe millions, of very intelligent people who do nothing other than research a few individual stocks and are often paid quite handsomely to do so. As with forex, you will often be at a severe informational disadvantage when trading. So, view any purchase of a stock as a very long-term commitment—at least five years. And if you're going to invest in a stock, you must review the company's financial history—that means poring through 10-K/Q for several years (I typically examine a minimum ten years of financial statements) and reading the notes to the financial statements. Read the yearly MD&A (quarterly is usually too volatile to be useful for long term investors) – management discussion and analysis – but remember, management pays themselves with your money. I assure you: management will always place a cherry on top, even if that cherry does not exist. If you are a shareholder, any expense the company pays is partially an expense of yours—never forget that no matter how small a position, you have partial ownership of the business in which you're invested. Thirdly, I need to address the stark contrast and often (but not always!) deep conflict between the concepts of investment and speculation. According to Seth Klarman, written on page 21 in his famous Margin of Safety, "both investments and speculations can be bought and sold. Both typically fluctuate in price and can thus appear to generate investment returns. But there is one critical difference: investments throw off cash flow for the benefit of the owners; speculations do not. The return to the owners of speculations depends exclusively on the vagaries of the resale market." This seems simple and it is; but do not underestimate the profound distinction Mr. Klarman makes here. (and ask yourself—will forex pay you cash flows while you have a position on?) A simple litmus test prior to purchasing a stock might help to differentiate between investment and speculation: at what price are you willing to sell, and why? I typically require the answer to be at least 50% higher than the current salable price (so that I have a margin of safety) and that I will never sell unless there is a material operating change, accounting fraud, or more generally, regime change within the industry in which my company operates. Furthermore, I then research what types of operating changes will alter my opinion and how severe they need to be prior to a liquidation. I then write this in a journal to keep myself honest. This is the personal aspect to investing, the kind of thing you learn only by doing yourself—and it takes a lifetime to master. You can try various methodologies (there are tons of books) but overall just be cautious. Money lost does not return on its own. I've just scratched the surface of a 200,000 page investing book you need to read if you'd like to do this professionally or as a hobbyist. If this seems like too much or you want to wait until you've more time to research, consider index investing strategies (I won't delve into these here). And because I'm an investment professional: please do not interpret anything you've read here as personal advice or as a solicitation to buy or sell any securities or types of securities, whatsoever. This has been provided for general informational purposes only. Contact a financial advisor to review your personal circumstances such as time horizon, risk tolerance, liquidity needs, and asset allocation strategies. Again, nothing written herein should be construed as individual advice. |
Tax on Stocks or ETF's | I think the answer you are looking for is: You are not taxed on the original basis (purchase cost) of your investment. If you pay $30 a share, and sell at $35, the $5 per share gain is taxable at time of sale. But the $30 basis cost doesn't enter into tax calculations at all. (So it's important to keep good records on your investments and how much you paid for them at purchase.) |
How can I verify that a broker I found online is legitimate? | Both Scottrade and ING Direct (CapitalOne) have physical branches. Scottrade are wide-spread, ING/CapitalOne are less common (in California where I live, I have a bunch of Scottrade branches around where I live, but the only ING presence I know of is in LA on Sepulveda at Santa Monica). So one way to verify the company is legit is to go to their physical location and talk to the people there. Similarly, you can find physical locations in major metropolitan areas for many other web-based discount brokers. In my area (SF Bay Area) we have Scottrade, ETrade, Fidelity, TD Ameritrade, and that's just those I've actually seen with my own eyes. You can just walk in and talk to the people there about their options and their web operations. It is hard and unlikely for a sting operation to set up a web of brick-and-mortar offices across the nation. Even Madoff had only one or two offices. Of course I totally agree with Chris's answer, especially with regards to the SSL certificates' verification and spoofing and phishing avoidance. |
What happens to an Earnest Money Deposit if underwriting falls through? | Your Purchase and Sale agreement should have a financing contingency. If it doesn't, your money may be at risk, and the agent did you no favor. Edit - I answered when away from computer. This is a snapshot of the standard clause from the Greater Boston Real Estate Board. Each state has its own standard documents. The normal process is to have some level of prequalification, showing a high probability of final approval, make offer, then after it's accepted, this form is part of the purchase and sale process. |
Effective interest rate for mortgage loan | With the $2000 downpayment and interest rate of 11.5% nominal compounded monthly the monthly payments would be $970.49 As you state, that is a monthly rate of 0.9583% Edit With the new information, taking the standard loan equation where Let Now setting s = 98000, with d = 990.291 solve for r |
Best buying price on stock marketing based on market depth detail (CSE atrad tool) | If you are buying your order will be placed in Bid list. If you are selling your order will be placed in the Ask list. The highest Bid price will be placed at the top of the Bid list and the lowest Ask price will be placed at the top of the Ask list. When a Bid and Ask price are matched a transaction will take place and it will the last traded price. If you are looking to buy at a lower price, say $155.01, your Bid price will be placed 3rd in the Bid list, and unless the Ask prices fall to that level, your order will remain in the list until it trades, it expires or you cancel it. If prices don't fall to you Bid price you will not get a trade. If you wanted your trade to go through you could either place a limit buy order closer to the lowest Ask price (however this is still not a certainty), or to be certain place a market buy order which will trade at the lowest Ask price. |
Can I apply prior years' capital losses against my employee stock option exercise? | As I recall, the gain for ISOs is considered ordinary income, and capital losses can only negate up to $3000 of this each year. If you exercised and held the stock, you have ordinary income to the exercise price, and cap gain above that, if you hold the stock for two years. EDIT - as noted below, this answer works for USians who found this question, but not for the OP who is Canadian, or at least asked a question at it relates to Canada's tax code. |
Do credit ratings (by Moody's, S&P, and Fitch) have any relevance? | I like Muro questions! No, I don't think they do. Because for me, as a personal finance investor type just trying to save for retirement, they mean nothing. If I cannot tell what the basic business model of a company is, and how that business model is profitable and makes money, then that is a "no buy" for me. If I do understand it, they I can do some more looking into the stock and company and see if I want to purchase. I buy index funds that are indexes of industries and companies I can understand. I let a fund manager worry about the details, but I get myself in the right ballpark and I use a simple logic test to get there, not the word of a rating agency. If belong in the system as a whole, I could not really say. I could not possibly do the level of accounting research and other investigation that rating agencies do, so even if the business model is sound I might lose an investment because the company is not an ethical one. Again, that is the job of my fund manager to determine. Furthermore and I mitigate that risk by buying indexes instead of individual stock. |
Why is being “upside down” on a mortgage so bad? | The problem comes when the borrower cannot afford his home. If a borrower buys more home than they can afford, as long as he can sell the house for more than he owes, he's not in a disastrous situation. He can sell the house, pay off the mortgage, and choose more affordable housing instead. If he is upside-down on his home, he doesn't have that option. He's stuck in his home. If he sells it, he will have to come up with extra money to pay off the mortgage (which he doesn't have, because he is in a home he can't afford). It used to be commonplace for banks to issue mortgages for 100% of the value of the home. As long as the home keeps appreciating, everybody is happy. But if the house drops in value and the homeowner finds himself unable to make house payments, both the homeowner and the bank are at risk. Recent regulations in the U.S. have made no-down-payment mortgages less common. |
Why would you ever turn down a raise in salary? | This would never apply for tax "brackets". It's not as though making an extra dollar will put you into an entire separate bracket, the IRS isn't that bad. They bump up the "brackets" every $50, so you will never turn down a raise because it would cause you to lose income. However if your raise would preclude you from contributing to your IRA because it pushes you over $110,000 then yes, you could turn it down or explain to your boss that it would need to be just a little bit higher to cover your IRA contribution loss. |
Does Implied Volatilty factor in all known future events? | From every article I've encountered, the chicken and egg aspect suggests that IV is produced by looking at options pricing, and calculating the IV from that. The implication is that whatever is known at that time is included in the price. And that when you see a particular option trade an unusual number of contracts at a given price, the implication is that someone thinks they know something that's not already priced in, i.e. that the current price is not accurate, they can profit on the future event. |
How do you write a check with cents? | In the US, Section 3.114 of the Uniform Commercial Code sets the rules for how any confusion in checks or other business transactions is handled: “If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.” If there was any ambiguity in the way you wrote out the amount, the institution will compare the two fields (the written words and the courtesy box (digits)) to see if the ambiguity can be resolved. The reality is that the busy tellers and ATM operators typically are going to look at the numeric digits first. So even if they happen to notice the traditional "and..." missing, it seems highly unlikely that such an omission would cause enough ambiguity between these the two fields to reject the payment. Common sense dictates here. I wouldn't worry about it. |
What expenses do most people not prepare for that turn into “emergencies” but are not covered by an Emergency Fund? | While it is true that homeowners insurance will cover emergencies, it is very important to check and make sure that your policy is covering everything that it needs to. A great example is what happened to all of those without flood insurance in Tennessee last year. You may opt not to get additional coverage, but then you should make sure that you are setting aside funds for such a catastrophe. |
Online service that computes implied volatility | My broker (thinkorswim) offers this from the platform's trade tab. I believe this feature isn't crippled in the PaperMoney version which is effectively a "free online service." |
New to investing — I have $20,000 cash saved, what should I do with it? | My advice to you is not to take any advice from anyone when it comes to investing, especially when you don't know much about what you are investing in. mbhunter is correct, take your time to learn about what you want to invest in. If your goal at the moment is short term don't invest in stocks unless you really know what you are doing. Put your money where you can get the highest interest rate, continue saving and do a lot of research on the house you wish to buy. Even if you are not ready to buy a house yet, start looking so that by the time you are ready to buy, you know how much the house is really worth. Before buying our house we spent about 7 months looking and researching and looked at more than 100 houses. |
Looking at Options Liquidity: what makes some stocks so attractive for options traders? | Option liquidity and underlying liquidity tend to go hand in hand. According to regulation, what kinds of issues can have options even trading are restricted by volume and cost due to registration with the authorities. Studies have shown that the introduction of option trading causes a spike in underlying trading. Market makers and the like can provide more option liquidity if there is more underlying and option liquidity, a reflexive relationship. The cost to provide liquidity is directly related to the cost for liquidity providers to hedge, as evidenced by the bid ask spread. Liquidity providers in option markets prefer to hedge mostly with other options, hedging residual greeks with other assets such as the underlying, volatility, time, interest rates, etc because trading costs are lower since the two offsetting options hedge most of each other out, requiring less trading in the other assets. |
Does investing in a company support it? | We're not "helping" the company in a comparable sense to donating money to a non-profit. As you wrote, investing in a company deals with ownership and in a sense, becoming a part owner of a company, even if it is a minor ownership, indicates that we sense it has some sort of value, whether that's ethical, financial or tangible value. As investors, we should take responsibility and ensure that our voices are heard when voting occurs (sadly, not too common). EDIT: @thepassiveinvestor makes an excellent point that this paragraph only applies to IPOs: Keep in mind, when we purchase stock in a company, that money is used for business purposes. It also signals value to the market as well, if enough money or enough investors buy the stock. |
Can value from labor provided to oneself be taxed? | This is called imputed income, which is generally not taxed in the US. |
Are banks really making less profit when interest rates are low? | Banks make less profit when "long" rates are low compared to "short" rates. Banks lend for long term purposes like five year business loans or 30 year mortgages. They get their funds from (mostly) "short term" deposits, which can be emptied in days. Banks make money on the difference between 5 and 30 year rates, and short term rates. It is the difference, and not the absolute level of rates, that determines their profitability. A bank that pays 1% on CDs, and lends at 3% will make money. During the 1970s, short rates kept rising,and banks were stuck with 30 year loans at 7% from the early part of the decade, when short rates rose to double digits around 1980, and they lost money. |
Is Bogleheadism (index fund investing) dead? | If the ship is sinking, switching cabins with your neighbor isn't necessarily a good survival strategy. Index funds have sucked, because frankly just about everything has sucked lately. I still think it is a viable long term strategy as long as you are doing some dollar cost averaging. You can't think about long term investing as a steady climb up a hill, markets are erratic, but over long periods of time trend upwards. Now is your chance to get in near the ground floor. I can completely empathize that it is painful right now, but I am a believer in market efficiency and that over the long haul smart money is just more expensive (in terms of fees) than set-it-and-forget it diversified investments or target funds. |
How do I account for 100 percent vendor discounts in GnuCash 2.6.5 | I am no expert on the situation nor do I pretend to act like one, but, as a business owner, allow me to give you my personal opinion. Option 3 is closest to what you want. Why? Well: This way, you have both the record of everything that was done, and also IRS can see exactly what happened. Another suggestion would be to ask the GnuCash maintainers and community directly. You can have a chat with them on their IRC channel #gnucash, send them an email, maybe find the answer in the documentation or wiki. Popular software apps usually have both support people and a helpful community, so if the above method is in any way inconvenient for you, you can give this one a try. Hope this helps! Robert |
How to start personal finances? | There are many paths to success, but they all begin with education. You made the first big step just by visiting here. We have 17,000 questions, arranged by tag so you can view those on a given topic. You can sort by votes to see the ones that have the best member acceptance. I'll agree with Ben that one of the best ones is "The correct order of investing." We both offered answers there, and that helps address a big chunk of your issue. The book recommendations are fine, you'll quickly find that each author has his/her own slant or focus on a certain approach. For example, one financial celebrity (note - in the US, there are private advisors, usually with credentials of some sort, there are those who work for brokers and also offers help, there are financial bloggers (I am one), and there are those who are on the radio or TV who may or may not have any credentials) suggests that credit cards are to be avoided. The line in another answer here, "You're not going to get rich earning 1% on a credit card," is a direct quote of one such celebrity. I disputed that in my post "I got rich on credit card points!" The article is nearly 2 years old, the account accumulating the rewards has recently passed $34,000. This sum of money is more wealth than 81% of people in the world have. The article was a bit tongue in cheek (sarcastic) but it made a point. A young person should get a credit card, a good one, with no fee, and generous rewards. Use the card to buy only what you can pay back that month. At year end, I can download all my spending. The use of the card helps, not hinders, the budgeting process, and provides a bit of safety with its guarantees and theft protection. Your question really has multiple facets. If these answers aren't helpful enough, I suggest you ask a new question, but focus on one narrow issue. "Paying off debt" "Getting organized" "Saving" "Budgeting" all seem to be part of your one question here. |
Personal Tax Return software for Linux? | TurboTax online works via Firefox (i.e. it is a cloud-based service.) I don't think any downloaded software is available directly for Linux. |
Better to rent condo to daughter or put her on title? | Obviously you have done well financially in order to be able to purchase a condo for cash, presumably, without risk of your other obligations. To put things in perspective, we are probably talking about less than $5,000 in tax savings. If she is on the title then she is a co-owner. Are you okay with that? You would essentially be giving this child a 50% stake in a property without compensation. Will your other children be okay with it? As your question stated you would prefer to not have her as an owner. However, is it better to not have her as an owner, So I would buy the condo without her on the title and just pay the extra $100 per month in property tax. It is probably "small potatoes" in comparison to your net worth. I would also only charge her at most your cost of carrying the property as rent. While you will create income all of it (and probably more) could be written off as costs. There should be no income tax burden created from this situation. Your accountant can help with any paperwork that needs to be filed. |
Supply & Demand - How Price Changes, Buy Orders vs Sell Orders [duplicate] | That is mostly true, in most situations when there are more buy orders than sell orders (higher buy volume orders than sell volume orders), the price will generally move upwards and vice versa, when there are more sell orders than buy orders (higher sell volume orders than buy volume orders), the price will generally move downwards. Note that this does not always happen, but usually it does. You are also correct that for a trade to take place a buyer has to be matched with a seller (or the buy volume matched with the sell volume). But not all orders get executed as trades. Say there are 50 buy orders in the order book with a total volume of 100,000 shares and the highest buy order is currently at $10.00. On the other side there are only 10 sell orders in the order book with total volume of 10,000 shares and the lowest sell order is currently $10.05. At the moment there won't be a trade unless a new buyer or seller enters the market to match the opposing side, or an existing order gets amended upper or lower to match the opposing side. With more demand than supply in the order books what will be the most likely direction that this stock moves in? Most likely the price will move upwards. If a new buyer sees the price moving higher and then looks at the market depth, they would most likely place an order closer to the lowest sell order than the current highest buy order, say $10.01, to be first in line in case a market sell order is placed on the market. As new buy orders enter the market it drives the price higher and higher until the buy orders dry up. |
What are the alternatives to compound interest for a Muslim? | I cannot tell you what is or is not allowed under Islamic law. What I can tell you is that when most investors talk about the "power of compound interest," they are not actually necessarily talking about interest! The idea of the magic of compound interest is that when you receive an interest payment on your investment, you now have a larger investment, earning more interest. Your investment grows exponentially. This doesn't just apply to interest payments, however, but can apply to any type of investment where the profits of the investment cause the investment to get larger. For example, if you invest in a company's stock, and the value of the stock goes up 10% in a year, after that year your investment is worth more than it was at the beginning. If it goes up another 10% the following year, you have gained more money in the second year than you did in the first. Your gains are compounding, even though interest payments are not involved at all. The same is true if you reinvest dividends or if you use business profit to expand your business, for example. The term "power of compound interest" is so named for historical reasons, but really applies to any type of investment where the investment itself is growing. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.