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How do cashier's checks work and why are they good for scams? | Ok, few things to understand first: Secondly, think about the way a scam usually flows. A person (scammer) with an actual bank account with money issues a valid cashiers check, trick someone else (victim) into receiving it (typically in exchange for a percent) and passing along a portion to another account (back to the scammer). The scammer then reports the first transaction as fraudulent and the bank takes back that transaction. Now the victim is stuck with the second transaction, and without the funds from the first. Meanwhile the scammer has both the original funds and the percentage from the second one. In a way they're attractive for scammers because they're so trusted. |
Investing in the stock market during periods of high inflation | The answer would depend on the equities held. Some can weather inflation better than others (such as companies that have solid dividend growth) and even outpace inflation. Some industries are also safer against inflation than others, such as consumer staples and utilities since people usually have to purchase these regardless of how much $ they have. In looking over the data comparing S&P 500 returns, dividends, and inflation, the results are all over the map. In the 50's the total return was 19.3% with inflation at 2.2%. Then in the 70's returns were 5.8% with inflation at 7.4 percent, leading one to think that inflation diminished returns. But then in the 80's inflation was 5.1%, yet the return on the S&P was up to 17.3% Either way, aside from the 70's every other decade since 1950 has outpaced inflation (as long as you are including dividends; hence my first paragraph). S&P 500: Total and Inflation-Adjusted Historical Returns Also, the 7% average stock appreciation you mention is just that, an average. You are comparing a year-over-year number (7% inflation) with an aggregated one (stock performance over x number of years) and that is a misrepresentation and is not being weighted for the difference in what those numbers mean. Finally, there are thousands of things that have an effect on the stock market and stocks. Some are controllable and others are not. The idea that any one of them, such as inflation, has any sort of long-term, everlasting effect on prices that they cannot outmaneuver is improbable. This is where researching your stocks comes in...and if done prudently, who cares what the inflation rate is? |
Are forward curves useful tools for trading decisions and which informations can be gathered from them? | As far as trading is concerned, these forward curves are the price at which you can speculate on the future value of the commodity. Basically, if you want to speculate on gold, you can either buy the physical and store it somewhere (which may have significant costs) or you can buy futures (ETFs typically hold futures or hold physical and store it for you). If you buy futures, you will have to roll your position every month, meaning you sell the current month's futures and buy the next month's. However, these may not be trading at the same price, so each time you roll your position, you face a risk. If you know you want to hold gold for exactly 1 year, then you can buy a 1-year future, which in this case according to your graph will cost you about $10 more than buying the front month. The forward curve (or sometimes called the futures term structure) represents the prices at which gold can be bought or sold at various points in the future. |
Credit card closed. Effect on credit score (USA) | As documented in MyFICO (http://www.myfico.com/credit-education/whats-in-your-credit-score/), there are several factors that affect credit scores. Payment history (35%) The first thing any lender wants to know is whether you've paid past credit accounts on time. This is one of the most important factors in a FICO® Score. As @Ben Miller mentioned, checking your credit report to determine whether or not late payments were reported to credit bureaus will give you a sense of whether or not this was effected. You mentioned several bounced payments, which certainly could have caused this. This would be my largest concern with a closed account, is to investigate why and what was reported to the bureaus, and in turn, other lenders. Also, since this has the highest impact on credit scores (35%), it's arguably, the most important. This is further detailed here, which details the public record and late payment effect on your score. Amounts owed (30%) Having credit accounts and owing money on them does not necessarily mean you are a high-risk borrower with a low FICO® Score....However, when a high percentage of a person's available credit is been used, this can indicate that a person is overextended, and is more likely to make late or missed payments. Given that this card was closed, whatever your credit limit was is now no longer added into your total credit limit. However, your utilization on that card is gone (assuming it gets paid off), depending on any other credit lines, and since you reported "heavy use" that could be a positive impact, though likely not. Length of credit history (15%) In general, a longer credit history will increase your FICO® Scores. However, even people who haven't been using credit long may have high FICO Scores, depending on how the rest of the credit report looks. Depending how old your card was, and particularly since this was your only credit card, it will likely impact your average age of credit lines, depending on other lines of credit (loans etc) you have open. This accounts for about 15% of your score, so not as large of an impact as the first two. Credit mix in use (10%) FICO Scores will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. Given that this was your only credit card, your loan mix has been reduced (possibly to none). New credit (10%) Research shows that opening several credit accounts in a short period of time represents a greater risk - especially for people who don't have a long credit history. This focuses on credit inquiries, which as you mentioned, you will likely have another either re-opening this credit card or opening another at some point in the future. Regardless, paying off the rest of that card is a priority, as interest rates on average credit cards are over 13%, and often higher (source). This rate comes into play when not paying the balance in full every month, and also as @Ben Miller suggested, I would not utilize a credit card without being able to pay it in full. It can often be a dangerous cycle of debt. |
How can I get a wholesaler ID number? | This is a state by state thing, and I'm cheating because I know you are in New York State: |
Is there a generally accepted term for fractions of Currency Units? | The Coinage Act of 1792 of the Continental Congress established that the lowest money of account for the United States is one-thousandth (1/1000) of a dollar. This sub-unit is the mille (also written mil, mill). Other sub-units given by the act are the disme for one-tenth (1/10) of a dollar (for which, etymologically, is the origin of the word dime), and the cent for one-hundredth (1/100) of a dollar. The ten-thousandth of the dollar value is taken on account by a few financial organizations, but has no official given term. For the monetary value of USD 27.4955, it may be quoted as twenty-seven dollars, forty-nine cents, and five-and-a-half milles. |
Does dollar cost averaging really work? | If you have a lump sum, you could put it into a low risk investment (which should also have low fluctuations) right away to avoid the risk of buying at a down point. Then move it into a higher risk investment over a period of time. That way you'll buy more units when the price is lower than when it's higher. Usually I hear dollar cost averaging applied to the practice of purchasing a fixed dollar amount of an investment every week or month right out of your salary. The effect is pretty minimal though, except on the highest growth portfolios, and is generally just used as a sales tool by investment councilors (in my opinion). |
What is an “at close order” in the stock market? | Usually backtests for (long-term) strategies are evaluated on a end-of-day basis where you only consider close prices. If your strategy performs well in these backtests, hopes are that if you use a market-on-close (MOC) order your performance will not diverge too much from the backtest. The fact that it won't diverge much is important if you keep backtesting the strategy along with the real trading to see regime changes or similar. If you used end-of-day prices for the backtests but some arbitrary intraday market order, you'd have some difficulties to explain deviations between the two. What it is: MOC orders can be submitted during the day, but they won't be executed until shortly before the market (or more precise the current session) closes. |
Comparing IRA vs 401K's rate-of-return with dollar cost averaging | Google Docs spreadsheets have a function for filling in stock and fund prices. You can use that data to graph (fund1 / fund2) over some time period. Syntax: =GoogleFinance("symbol", "attribute", "start_date", "num_days|end_date", "interval") where: This analysis won’t include dividends or distributions. Yahoo provides adjusted data, if you want to include that. |
If I'm cash-flow negative, should I dollar-cost-average the money from my bonus over the entire year? | You will maximize your expected wealth by investing all the money you intend to invest, as soon as you have it available. Don't let the mythos of dollar cost averaging induce you to allocate more much money to a savings account than is optimal. If you want the positive expected return of the market, don't put your money in a savings account. That's especially true now, when you are certainly earning a negative real interest rate on your savings account. Dollar cost averaging and putting all your money in at the beginning would have the same expected return except that if you put all your money in earlier, it spends more time in the market, so your expected return is higher. Your volatility is also higher (because your savings account would have very low volatility) but your preference for investment tells me that you view the expected return and volatility tradeoff of the stock market as acceptable. If you need something to help you feel less stress about investing right away, think of it as dollar cost averaging on a yearly basis instead of monthly. Further, you take take comfort in knowing that you have allocated your wealth as you can instead of letting it fizzle away in real terms in a bank account. |
Can I deduct equipment expenses for a job I began overseas? | I'm not an expert, but here's my $0.02. Deductions for business expenses are subject to the 2% rule. In other words, you can only deduct that which exceeds 2% of your AGI (Adjusted Gross Income). For example, say you have an AGI of $50,000, and you buy a laptop that costs $800. You won't get a write-off from that, because 2% of $50,000 is $1,000, and you can only deduct business-related expenses in excess of that $1,000. If you have an AGI of $50,000 and buy a $2,000 laptop, you can deduct a maximum of $1,000 ($2,000 minus 2% of $50,000 is $2,000 - $1,000 = $1,000). Additionally, you can write off the laptop only to the extent that you use it for business. So in other words, if you have an AGI of $50,000 and buy that $2,000 laptop, but only use it 50% for business, you can only write off $500. Theoretically, they can ask for verification of the business use of your laptop. A log or a diary would be what I would provide, but I'm not an IRS agent. |
IS it the wrong time to get into the equity market immediately after large gains? | Its best to dollar cost average adding say 5%-10% a quarter into the fund. That's what Clark Howard would suggest. Also make sure you do not need the money for 5 years, then you should be okay. Its tough to lose money if you keep your money there for a long period of time. |
Is it financially advantageous and safe to rent out my personal car? | I'm going to address a couple of extra issues over and above mhoran_psprep's great answer. Insurance A lot of the jobs you describe require that you have additional insurance over and above what you currently have, normally insurance that lets you drive for payment. You should insist that anyone you rent to has this insurance. If not, you may find yourself liable and uninsured. Also you should be aware of this story: "Quebec Uber drivers have cars seized, fined up to $7,500". |
60% Downpayment on house? | Keep in mind, this is a matter of preference, and the answers here are going to give you a look at the choices and the member's view on the positive/negative for each one. My opinion is to put 20% down (to avoid PMI) if the bank will lend you the full 80%. Then, buy the house, move in, and furnish it. Keep track of your spending for 2 years minimum. It's the anti-budget. Not a list of constraints you have for each category of spending, but a rear-view mirror of what you spend. This will help tell you if, in the new house, you are still saving well beyond that 401(k) and other retirement accounts, or dipping into that large reserve. At that point, start to think about where kids fit into your plans. People in million dollar homes tend to have child care that's 3-5x the cost the middle class has. (Disclosure - 10 years ago, our's cost $30K/year). Today, your rate will be about 4%, and federal marginal tax rate of 25%+, meaning a real cost of 3%. Just under the long term inflation rate, 3.2% over the last 100 years. I am 53, and for my childhood right through college, the daily passbook rate was 5%. Long term government debt is also at a record low level. This is the chart for 30 year bonds. I'd also suggest you get an understanding of the long term stock market return. Long term, 10%, but with periods as long as 10 years where the return can be negative. Once you are at that point, 2-3 years in the house, you can look at the pile of cash, and have 3 choices. We are in interesting times right now. For much of my life I'd have said the potential positive return wasn't worth the risk, but then the mortgage rate was well above 6-7%. Very different today. |
Is is possible to dispute IRS underpayment penalties? | The underpayment "penalty" is just interest on the late payments--willful or not has nothing to do with it. When they feel it's willful there will be additional penalties. |
How can I determine if my portfolio's rate of return has been “good”, or not? | Historically, the market's average rate of return has been about 8%. (Serakfalcon's "6% to 10%" is essentially the same number.) You should be able to get into that range for long-term investments with minimal risk. "5 or 6 companies", unless you know a heck of a lot about those companies, is fairly high risk. If any one of those runs into trouble, a considerable amount of your net investment is riding on it. Of course if any of them invents the Next Big Thing you could hit it big; that's the tradeoff. Diversification isn't sexy, but it buffers you from single-company disasters, and if you diversify across kinds of investment that buffers you from single-sector disasters. Index funds aren't sexy, but they're a low-cost way to diversify, especially if you go with a mix of funds in different categories (large cap, small cap, bond, international, real estate) or a fund which has that mix built into it such as a target date fund. |
How to know which companies enter the stock market? | For months prior to going public a company has to file financial documents with the SEC. These are available to the public at www.sec.gov on their Edgar database. For instance, Eagleline is listed as potentially IPOing next week. You can find out all the details of any IPO including correspondence between the company and the SEC on Edgar. Here's the link for Eagleline (disclaimer, I have not investigated this company. It is an example only) https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001675776&owner=exclude&count=40 The most important, complex, and thorough document is the initial registration statement, usually an S-1, and subsequent amendments that occur as a result of new information or SEC questions. You can often get insight into a new public company by looking at the changes that have occurred in amendments since their initial filings. I highly advise people starting out to first look at the filings of companies they work for or know the industry intimately. This will help you to better understand the filings from companies you may not be so familiar with. A word of caution. Markets and company filings are followed by very large numbers of smart people experienced in each business area so don't assume there is fast and easy money to be made. Still, you will be a bit ahead if you learn to read and understand the filings public companies are required to make. |
Why do US retirement funds typically have way more US assets than international assets? | To expand a bit on @MSalters's answer ... When I read your question title I assumed that by "retirement funds" you meant target-date funds that are close to their target dates (say, the 2015 target fund). When I saw that you were referring to all target-date funds, it occurred to me that examining how such funds modify their portfolios over time would actually help answer your question. If you look at a near-term target fund you can see that a smaller percent is invested internationally, the same way a smaller percent is invested in stocks. It's because of risk. Since it's more likely that you will need some of the money soon, and since you'll be cashing out said money in US Dollars, it's risky to have too much invested in foreign currencies. If you need money that's currently invested in a foreign currency and that currency happens to be doing poorly against USD at the moment, then you'll lose money simply because you need it now. This is the same rationale that goes into target-date funds' moving from stocks to bonds over time. Since the value of a stock portfolio has a lot more natural volatility than the value of a bond portfolio, if you're heavily invested in stocks when you need to withdraw money, there's a higher probability that you'll need to cash out just when stocks happen to be doing relatively poorly. Being invested more in bonds around when you'll need your money is less risky. Similarly, being more invested in US dollars than in foreign currencies around when you'll need your money is also less risky. |
$700 guaranteed to not be touched for 15 years+, should I put it anywhere other than a savings account? | If you plan on holding the money for 15 years, until your daughter turns 21, then advanced algebra tells me she is 6 years old. I think the real question is, what do you intend for your daughter to get out of this? If you want her to get a real return on her money, Mike Haskel has laid out the information to get you started deciding on that. But at 6, is part of the goal also teaching her about financial stewardship, principles of saving, etc.? If so, consider the following: When the money was physically held in the piggy bank, your daughter had theoretical control over it. She was exercising restraint, for delayed gratification (even if she did not really understand that yet, and even if she really didn't understand money / didn't know what she would do with it). By taking this money and putting it away for her, you are taking her out of the decision making - unless you plan on giving her access to the account, letting her decide when to take it out. Still, you could talk her through what you're doing, and ask her how she feels about it. But perhaps she is too young to understand what committing the money away until 21 really means. And if, for example, she wants to buy a bike when she is 10, do you want her to see the fruits of her saved money? Finally, consider that if you (or you & your daughter, depending on whether you want her to help in the decision) decide to put the money in a financial institution in some manner, the risk you are taking on may need to be part of the lesson for her. If you want to teach the general principles of saving, then putting it in bonds/CD's/Savings etc., may be sufficient, even if inflation lowers the value of the money. If you want to teach principles of investing, then perhaps consider waiting until she can understand why you are doing that. To a kid, I think the principles of saving & delayed gratification can be taught, but the principles of assuming risk for greater reward, is a bit more complex. |
Should I buy a house with a friend? | There are lots of good reasons not to do this. HOWEVER if you do decide to, there are four things you need to consider: |
Evidence for timing market in the short run? | Timing the market and by extension the efficient market hypothesis is one of the most hotly debated subjects in finance academia. If you are to believe the majority of finance professors and PHD's out there chances of timing a market like the NYSE, NASDAQ or LSE is not possible. If you are to take into account the huge amount of hedge funds and money managers who make it their job to prove the efficient market hypothesis wrong then you may have a chance. My opinion is that the EMH is true and that timing a highly efficient market like the NYSE is very difficult or impossible even for those who spend their whole lives trying to beat it. For someone whose primary job isn’t in investments I would put the idea of timing the markets out of your head. |
How can I determine which stores are regarded as supermarkets for a rewards credit card? | Looks like a user-contributed list is the only good solution to this question, so I'll start one by making this answer community wiki, meaning anyone can edit it. We only aim to add major chain, not every mom&pop store (which probably don't qualify). The rewards details page looks like this: The lists are in alphabetical order. |
Book or web site resources for an absolute beginner to learn about stocks and investing? | If you just want to save for retirement, start with a financial planning book, like this one: http://www.amazon.com/Smart-Simple-Financial-Strategies-People/dp/0743269942 and here's my editorial on the investing part: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ If you're thinking of spending time stock-picking or trading for fun, then there are lots of options. Web site: Morningstar Premium (http://morningstar.com) has very good information. They analyze almost all large-cap stocks and some small caps too, plus mutual funds and ETFs, and have some good general information articles. It doesn't have the sales-pitch hot-blooded tone of most other sites. Morningstar analyzes companies from a value investing point of view which is probably what you want unless you're day trading. Also they analyze funds, which are probably the most practical investment. Books: If you want to be competent (in the sense that a professional investor trying to beat the market or control risk vs. the market would be) then I thought the CFA curriculum was pretty good: However, this will quickly teach you how much is involved in being competent. The level 1 curriculum when I did it was 6 or 7 thick textbooks, equivalent to probably a college semester courseload. I didn't do level 2 or 3. I don't think level 1 was enough to become competent, it's just enough to learn what you don't know. The actual CFA charter requires all three levels and years of work experience. If you more want to dabble, then Benjamin Graham's The Intelligent Investor certainly isn't a bad place to start, but you'd also want to read some efficient markets stuff (Random Walk Down Wall Street, or something by Bogle, or The Intelligent Asset Allocator http://www.amazon.com/Intelligent-Asset-Allocator-Portfolio-Maximize/dp/0071362363, are some options). It wouldn't be bad to just read a textbook like http://www.amazon.com/Investments-Irwin-Finance-Zvi-Bodie/dp/0256146381 which would be the much-abridged version of the CFA level 1 stuff. If you're into day trading / charting, then I don't know much about that at all, some of the other answers may have some ideas. I've never been able to find info on this that didn't seem like it had a sketchy sales pitch kind of vibe. Honestly in a world of high-frequency trading computers I'm skeptical this is something to get into. Unless you want to program HFT computers: http://howtohft.wordpress.com/ |
Where should my money go next: savings, investments, retirement, or my mortgage? | There's a ton of great advice here. It's very challenging to come up with something that hasn't already been suggested. I'm curious to know how many years you have left to pay down the mortgage at the regular rate of payment. If it's more than 15 years, it might be worthwhile to consider refinancing your mortgage to a shorter term (15 years or even 10 years if your income supports it). Rates on fixed-interest mortgages at those terms are down in the 3% range and lower (at least according to bankrate.com). Refinancing to a shorter term would be another way of paying off your home faster (with fewer of those dollars going toward interest payments). If you've got fewer than 15 years left to pay off your mortgage, following any of the other advice you've received here should keep you in great financial shape. |
Cheapest way to wire or withdraw money from US account while living in Europe | There is a number of cheaper online options that you could use. TranferWise was already mentioned here. Other options i know are Paysera or TransferGo. They state that international transfers are processed on the next day and they are substantially cheaper than those of banks. Currency exchange rate is usually not bad. |
What is inflation? | Inflation is basically this: Over time, prices go up! I will now address the 3 points you have listed. Suppose over a period of 10 years, prices have doubled. Now suppose 10 years ago I earned $100 and bought a nice pair of shoes. Now today because prices have doubled I would have to earn $200 in order to afford the same pair of shoes. Thus if I want to compare my earnings this year to 10 years ago, I will need to adjust for the price of goods going up. That is, I could say that my $100 earnings 10 years ago is the same as having earned $200 today, or alternatively I could say that my earnings of $200 today is equivalent to having earned $100 10 years ago. This is a difficult question because a car is a depreciating asset, which means the real value of the car will go down in value over time. Let us suppose that inflation doesn't exist and the car you bought for $100 today will depreciate to $90 after 1 year (a 10% depreciation). But because inflation does exist, and all prices will be 0.5% higher in 1 years time, we can calculate the true selling price of the car 1 in year as follows: 0.5% of $90 = 0.005*90 = $0.45 Therefore the car will be $90 + $0.45 = $90.45 in 1 years time. If inflation is low, then the repayments do not get much easier to pay back over time because wages have not risen by as much. Similarly the value of your underlying asset will not increase in value by as much. However as compensation, the interest rates on loans are usually lower when inflation is lower. Therefore generally it is better to get a loan in times of high inflation rather than low inflation, however it really depends on how the much the interest rates are relative to the inflation rate. |
What does it mean for a normal citizen like me when my country's dollar value goes down? | This may make Australian exports cheaper, which can be a good thing. However it is at the expense of making imports more expensive. Look to Japan, which is devaluing their currency, and is a large importer of energy: I wont say its bad or unnecessary to hold money in other currencies. However, keep in mind that all AUD-denominated assets will, or at least should, rise as the currency falls. If just AUD/USD falls this may not apply, but if AUD is weakened all around it should hold true. Again, look to Japan, where the Nikkei is closely correlated with the strength of the yen: Another possibility is to buy gold which should rise in AUD terms but other forces are at work with gold price so some would not agree with this. |
Are lottery tickets ever a wise investment provided the jackpot is large enough? | Mathematically speaking there would be a point where the expected value EV of purchasing every possible ticket would be favorable but only if you take in account both the jackpot payout and the lesser payouts of all the wining tickets however practically speaking since the powerball has a liability payout limit which means they dont have to pay out more money than they took in you cant beat the house ( or the government) |
15 year mortgage vs 30 year paid off in 15 | Why won't anyone just answer the original question? The question was not about opportunity cost or flexibility or family expenses. There are no right answers to any of those things and they all depend on individual circumstances. I believe the answer to the question of whether paying off a 30-year mortgage in 15 years would cost the same amount as a 15-year mortgage of the same interest rate is yes but ONLY if you pay it off on the exact same schedule as your supposed 15-year. In reality, the answer is NO for two reasons: the amortization schedule; and the fact that the 30-year will always have a higher interest rate than the 15-year. The way mortgages are amortized, the interest is paid first, essentially. For most people the majority of the monthly payment is interest for the first half of the loan's life. This is good for most people because, in reality, most mortgages only last a couple years after which people refinance or move and for those first couple years the majority of one's housing costs (interest) are tax deductible. It is arguable whether perpetuating this for one's entire life is wise... but that's the reality of most mortgages. So, unless you pay off your 30-year on the exact same amortization schedule of your theoretical 15-year, you will pay more in interest. A common strategy people pursue is paying an extra monthly payment (or more) each year. By the time you get around to chipping away at your principal in that way, you will already have paid a lot more interest than you would have on a 15-year. And, really, if you can afford to substantially pay down principal in the first year or two of your mortgage, you probably should've borrowed less money to begin with. In theory, IF the rates were the same (they're not) and IF you paid the 30 off every month in the EXACT same way as you would've paid a 15 (you won't) you will pay the same amount in the end. You have to decide if the flexibility is worth more to you than the cost savings. For example: a 300k mortgage at 3.5% will have a monthly payment of ~$2150 for a 15-year and ~$1350 for a 30-year, both will start with ~$875/month of that being in interest (gradually declining with time). What I think most people undervalue is the freedom and peace of mind that comes with a paid off or nearly paid off home... and 15 years is a lot more tangible than 30, plus a lot cheaper over all. If you can afford a 15-year mortgage without putting too much stress on your budget, it is definitely the better option for financial security. And be careful of the index fund opportunity cost advice. On average it may be a good idea when you look at the very long run, historically, but a lot of people get less than average returns depending on when they buy and what the market does in the short run. There is no certainty around what returns you will get from the stock market, but if you have a 30-year mortgage there is a lot of certainty around what you will owe every month for the next 30-years. Different mixes of investments make sense for different people, and most people would be wise to get some exposure to the stock market for its returns and liquidity. However, if someone's goal is borrowing more money for their house in order to invest more money in the stock market for their retirement, they would actually be better served in achieving security and independence 15 years sooner. |
Why would selling off some stores improve a company's value? | Maybe the location isn't yet, but will soon become a new loss. For example older soon out of warranty equipment, new tax laws in the locality soon to take affect or even just declining sales over the past periods of measurement. Perhaps labor disputes or other locality issues make running the store difficult. There is the possibility that the land the location occupies is worth more sold to the new big box retailer than it will be in the next 10 years of operation. In some cases, companies want to have a ton of cash on hand, or would sell assets to pay off debt. |
Is it worth it to reconcile my checking/savings accounts every month? | Account statements and the account information provided by your personal finance software should be coming from the same source, namely your bank's internal accounting records. So in theory one is just as good as the other. That being said, an account statement is a snapshot of your account on the date the statement was created, while synchronizations with your personal finance application is dynamically generated upon request (usually once a day or upon login). So what are the implications of this? Your account statement will not show transactions that may have taken place during that period but weren't posted until after the period ended (common with credit card transactions and checks). Instead they'd appear on the next statement. Because electronic account synchronizations are more frequent and not limited to a specific time period those transactions will show up shortly after they are posted. So it is far easier to keep track of your accounts electronically. Every personal finance software I've ever used supports manual entries so what I like to do is on a daily basis I manually enter any transaction which wasn't posted automatically. This usually only takes a few minutes each evening. Then when the transaction eventually shows up it's usually reconciled with my manually entered one automatically. Aside from finding (infrequent) bank errors this has the benefit of keeping me aware of how much I'm spending and how much I have left. I've also caught a number of cashier errors this way (noticing I was double-charged for an item while entering the receipt total) and its the best defense against fraud and identity theft I can think of. If you're looking at your accounts on a daily basis you're far more likely to notice an unusual transaction than any monitoring service. |
why is the money withdrawn from traditional IRA taxed at the ordinary income tax rate? | It would be fairer to the average person if we paid our normal tax rate on the amount we contributed to the IRA and paid at the capital gains rate for the difference. The same as people that invest outside of the IRA. Most IRAs aren't that large and most people are going to have a rough time living on the reduced social security. It seems like we are taxing the average Joe at a higher rate than the rich. |
When the Reserve Bank determines the interest rates, do they take the house prices into account? | I'm not intimately familiar with the situation in Australia, but in the US the powers that be have adopted an interventionist philosophy. The Federal Reserve (Central Bank) is "buying back" US Gov't debt to keep rates low, and the government is keeping mortgage rates low buy buying mortgages with the proceeds of the cheap bond sales. While this isn't directly related to Australia, it is relevant because the largest capital markets are in the US and influence the markets in Australia. In the US, the CPI is a survey of all urban consumers. If you're a younger, middle class consumer with income growth ahead of you, your costs are going to shift more rapidly than an elderly or poor person who already owns or is in subsidized housing, and doesn't spend as much on transportation. For example, my parents are in their early 60's and are living in the house that I grew up in, which they own free and clear. There are alot of people like them, and they aren't affected by the swing in housing prices that we've seen in the last decade. |
What is the next step to collect money after a judgment has been ignored? | In general, if this is in the United States, call your local bar association. Tell them you need a lawyer to help you collect a judgment. They will make a referral. The lawyer should know who can buy the judgment in return for cash. You don't need to give details to the bar association, but you should plan on giving more details to the lawyer about why you need the money. Since this is your ex-husband, your divorce lawyer might be able to help. It's unclear in your question whether you've already explored that option. The divorce lawyer might modify the divorce agreement to give you an asset instead of a monetary claim. |
Using a Roth IRA instead of a college savings account | The problem with this plan is that in order for your children to put money in their own IRA, they need earned income of their own. If your child doesn't have $3000 in earned income for the year, you won't be able to put the $3000 into their Roth IRA. |
What does it mean for a company to have its market cap larger than the market size? | The quickest way to approach this question is to first understand that it compares flows vs. levels. Market size is usually stated as an annual or other period figure, e.g. "The market size of refrigerators will be $10mn in 2019." This is a flow figure. Market capitalization is a level figure at any given point in time, e.g. "The market cap of the company was $20 million at the end of its last fiscal quarter." Confusion sometimes occurs when levels and flows are used loosely for comparisons. It is common for media to make statements such as "Joe Billionaire is worth more than the GDP of Roselandia." That is comparing a current level (net worth) with an annual flow (GDP). With this in mind, there are a variety of conditions where a company's equity market value will exceed its market size. The most extreme example is an innovating, development-stage enterprise, say, a biotech company, developing a new market for a new product; the current market size may be nil while the enterprise is worth something greater. The primary reason however for situations where a company's equity market cap is greater than its market size is usually that the financial market expects the enterprise (and oftentimes its market, though this isn't necessary) to grow substantially over time and hence the discounted value of the company may be greater than the current or near future market size. A final example: US annual GDP (which comprises of much more than corporate incomes and profits) for 2014 was about $17.4tn while the nation's total equity market value in 2014 was $25.1tn, both according to the World Bank. That latter figure also doesn't include the trillions of corporate debts these companies have issued so the total market cap of US, Inc. is substantially greater than $25.1tn. |
Where is “Cash Credit from Unsettled Activity” coming from? | The Cash Credit from Unsettled Activity occurs because AGG issued a dividend in the past week. Since you purchased the ETF long enough before the record date (June 5, 2013) for that trade to settle, you qualified for a dividend. The dividend distribution was $0.195217/share for each of your six shares, for a total credit of $1.17 = 6 * 0.195217. For any ETF, the company's website should tell you when dividends are issued, usually under a section titled "Distributions" or something similar. If you look in your Fidelity account's History page, it should show an entry of "Dividend Received", which confirms that the cash credit is coming from a dividend distribution. You could look up your holdings and see which one(s) recently issued a dividend; in this case, it was AGG. |
How to account for Capital Gains (Losses) in double-entry accounting? | Capital is an Asset. Decreasing value of capital is the decreasing value of an asset. When you buy the forex asset * DR Forex Asset * CR Cash When you sell * DR Cash * CR Forex Asset The difference is now accounted for Here is how: Gains (and losses) are modifications to your financial position (Balance sheet). At the end of the period you take your financial performance (Profit and Loss) and put it into your balance sheet under equity. Meaning that afterwards your balance sheet is better or worse off (Because you made more money = more cash or lost it, whatever). You are wanting to make an income account to reflect the forex revaluation so at the end of the period it is reflected in profit then pushed into your balance sheet. Capital gains directly affect your balance sheet because they increase/decrease your cash and your asset in the journal entry itself (When you buy and sell it). If making money this way is actually how you make you make an income it is possible to make an account for it. If you do this you periodically revalue the asset and write off the changes to the revaluation account. You would do something like *DR Asset *CR Forex Revaluation account; depending on the method you take. Businesses mostly do this because if the capital gains are their line of business they will be taxed on it like it is income. For simplicity just account for it when you buy and sell the assets (Because you as an individual will only recognise a profit/loss when you enter and exit). Its easier to think about income and expenses are extensions of equity. Income increases your equity, expenses decrease it. This is how they relate to the accounting formula (Assets = Liabilities + Owners Equity) |
How To Record Income As An Affiliate ( UK ) | Every bill you write counts as income (if the bill doesn't get paid, you would count that as an expense). In cases where you don't write bills, I think the payment you receive would count as income, but you might check that on the HMRC website. So to record your income, you can basically record the payments that you receive. Anything you pay out for your business is an expense. You keep a receipt for every expense - if you don't have a receipt, you can't count it as an expense, so keeping all the receipts is very, very important. An exception are investments, for example buying a computer that should last multiple years; there you can count a percentage of the investment as expense every year. All income, minus all expenses, is your profit. You pay tax and National Insurance contributions according to your profit. You can do whatever you like with the profit. Notice that I didn't mention any salary. Self employed means you have no salary, you have profits and do with them whatever you like. On the other hand, you pay taxes on these profits almost exactly as if they were income. If you have this blog but are also employed, you'll add the profits to your normal income statement. |
How to account for personal baby sitter? | You should check several things: How your business can deduct your child care expenses is beyond me. If your mother-in-law starts a business as a neighborhood babysitter, she might get some deductions for her related expenses though. |
Pay online: credit card or debit card? | In the UK it is almost always better to purchase with a credit card for transactions above £100 but below £30,000. This is due to Section 75 of the Consumer Credit Act 1974 which makes your credit card company jointly liable if something goes wrong. In other words, if you buy something worth £1000 with your credit card, the company fails to deliver for any reason and you cannot get a refund from them directly, you are entitled to make a claim from your credit card company for the full amount. |
Ways to invest my saved money in Germany in a halal way? | What is actually a halal investment? Your definition of halal investment is loose and subject to interpretation. On one hand, nothing is fixed in the financial world. You might get a 10 Year Germany Bund with a fixed coupon rate of 1%, but the real rate of return of this investment is far from fixed. It depends on the market environment, the inflation, etc. (Also, you can trade this investment on the secondary market at any time.) Moreover, the country can default. For example, nothing is "fixed" if you hold the Argentina bonds. You might think a saving account in the bank is a fixed investment. But again, what about the inflation? And if you talk with the account holders in Cyprus, you will understand there is no such thing that you are "guaranteed to profit a fixed amount each month or year". So, from this point of view, everything is "halal", because nothing is fixed and the risk of losing the principle is alway there. On the other hand, if you assume that investing a government bond and having a saving account is not halal by definition, you will end up with a situation that every investment is not halal. Suppose you invest in a company. What does the company do with your money? Sure, they will use some of your money to buy equipments, hire new people, and so on. But they will always save some money as cash reserves to meet the short-term and emergency funding needs. Those cash reserves are usually in the form of highly liquid investment, such as short-term bonds, money market funds, savings in a bank account, etc. Because those investments are not halal per definition, is your investment in the company still halal? So in the end, you might just do whatever you want depending on your interpretation. |
Buying a home - brokerage fee | Every situation is possible, it depends on what the contract states. According to Nolo: Your ability to withdraw from a home purchase depends on two things: 1) the exact point at which you are "in contract" to buy the house, and 2) after you're in contract, what the contract says about terminating the transaction. Therefore, you need to be 100% ready for anything to happen. After you sign the contract, it is binding and you must adhere to what the contract states. Buying a home is a big purchase - arguably the biggest of your life - you need to be comfortable with every aspect of this experience. |
What does this statement regarding put options mean? | fennec has a very good answer but i feel it provides too much information. So i'll just try to explain what that sentence says. Put option is the right to sell a stock. "16 puts on Cisco at 71 cents", means John comes to Jim and says, i'll give you 71 cent now, if you allow me to sell one share of Cisco to you at $16 at some point in the future ( on expiration date). NYT quote says 1000 puts that means 1000 contracts - he bought a right to sell 100,000 shares of Cisco on some day at $16/share. Call option - same idea: right to buy a stock. |
How should I handle student loans when leaving University and trying to buy a house? | Concise answers to your questions: Depends on the loan and the bank; when you "accelerate" repayment of a loan by applying a pre-payment balance to the principal, your monthly payment may be reduced. However, standard practice for most loan types is that the repayment schedule will be accelerated; you'll pay no less each month, but you'll pay it off sooner. I can neither confirm nor deny that an internship counts as job experience in the field for the purpose of mortgage lending. It sounds logical, especially if it were a paid internship (in which case you'd just call it a "job"), but I can't be sure as I don't know of anyone who got a mortgage without accruing the necessary job experience post-graduation. A loan officer will be happy to talk to you and answer specific questions, but if you go in today, with no credit history (the student loan probably hasn't even entered repayment) and a lot of unknowns (an offer can be rescinded, for instance), you are virtually certain to be denied a mortgage. The bank is going to want evidence that you will make good on the debt you have over time. One $10,000 payment on the loan, though significant, is just one payment as far as your credit history (and credit score) is concerned. Now, a few more reality checks: $70k/yr is not what you'll be bringing home. As a single person without dependents, you'll be taxed at the highest possible withholdings rate. Your effective tax rate on $70k, depending on the state in which you live, can be as high as 30% (including all payroll/SS taxes, for a 1099 earner and/or an employee in a state with an income tax), so you're actually only bringing home 42k/yr, or about $1,600/paycheck if you're paid biweekly. To that, add a decent chunk for your group healthcare plan (which, as of 2014, you will be required to buy, or else pay another $2500 - effectively another 3% of gross earnings - in taxes). And even now with your first job, you should be at least trying to save up a decent chunk o' change in a 401k or IRA as a retirement nest egg. That student loan, beginning about 6 months after you leave school, will cost you about $555/mo in monthly payments for the next 10 years (if it's all Stafford loans with a 50/50 split between sub/unsub; that could be as much as $600/mo for all-unsub Stafford, or $700 or more for private loans). If you were going to pay all that back in two years, you're looking at paying a ballpark of $2500/mo leaving just $700 to pay all your bills and expenses each month. With a 3-year payoff plan, you're turning around one of your two paychecks every month to the student loan servicer, which for a bachelor is doable but still rather tight. Your mortgage payment isn't the only payment you will make on your house. If you get an FHA loan with 3.5% down, the lender will demand PMI. The city/county will likely levy a property tax on the assessed value of land and building. The lender may require that you purchase home insurance with minimum acceptable coverage limits and deductibles. All of these will be paid into escrow accounts, managed by your lending bank, from a single check you send them monthly. I pay all of these, in a state (Texas) that gets its primary income from sales and property tax instead of income, and my monthly payment isn't quite double the simple P&I. Once you have the house, you'll want to fill the house. Nice bed: probably $1500 between mattress and frame for a nice big queen you can stretch out on (and have lady friends over). Nice couch: $1000. TV: call it $500. That's probably the bare minimum you'll want to buy to replace what you lived through college with (you'll have somewhere to eat and sleep other than the floor of your new home), and we're already talking almost a month's salary, or payments of up to 10% of your monthly take-home pay over a year on a couple of store credit cards. Plates, cookware, etc just keeps bumping this up. Yes, they're (theoretically) all one-time costs, but they're things you need, and things you may not have if you've been living in dorms and eating in dining halls all through college. The house you buy now is likely to be a "starter", maybe 3bed/2bath and 1600 sqft at the upper end (they sell em as small as 2bd/1bt 1100sqft). It will support a spouse and 2 kids, but by that point you'll be bursting at the seams. What happens if your future spouse had the same idea of buying a house early while rates were low? The cost of buying a house may be as little as 3.5% down and a few hundred more in advance escrow and a couple other fees the seller can't pay for you. The cost of selling the same house is likely to include all the costs you made the seller pay when you bought it, because you'll be selling to someone in the same position you're in now. I didn't know it at the time I bought my house, but I paid about $5,000 to get into it (3.5% down and 6 months' escrow up front), while the sellers paid over $10,000 to get out (the owner got married to another homeowner, and they ended up selling both houses to move out of town; I don't even know what kind of bath they took on the house we weren't involved with). I graduated in 2005. I didn't buy my first house until I was married and pretty much well-settled, in 2011 (and yes, we were looking because mortgage rates were at rock bottom). We really lucked out in terms of a home that, if we want to or have to, we can live in for the rest of our lives (only 1700sqft, but it's officially a 4/2 with a spare room, and a downstairs master suite and nursery/office, so when we're old and decrepit we can pretty much live downstairs). I would seriously recommend that you do the same, even if by doing so you miss out on the absolute best interest rates. Last example: let's say, hypothetically, that you bite at current interest rates, and lock in a rate just above prime at 4%, 3.5% down, seller pays closing, but then in two years you get married, change jobs and have to move. Let's further suppose an alternate reality in which, after two years of living in an apartment, all the same life changes happen and you are now shopping for your first house having been pre-approved at 5%. That one percentage point savings by buying now, on a house in the $200k range, is worth about $120/mo or about $1440/yr off of your P&I payment ($921.42 on a $200,000 home with a 30-year term). Not chump change (over 30 years if you had been that lucky, it's $43000), but it's less than 5% of your take-home pay (month-to-month or annually). However, when you move in two years, the buyer's probably going to want the same deal you got - seller pays closing - because that's the market level you bought in to (low-priced starters for first-time homebuyers). That's a 3% commission for both agents, 1% origination, 0.5%-1% guarantor, and various fixed fees (title etc). Assuming the value of the house hasn't changed, let's call total selling costs 8% of the house value of $200k (which is probably low); that's $16,000 in seller's costs. Again, assuming home value didn't change and that you got an FHA loan requiring only 3.5% down, your down payment ($7k) plus principal paid (about another $7k; 6936.27 to be exact) only covers $14k of those costs. You're now in the hole $2,000, and you still have to come up with your next home's down payment. With all other things being equal, in order to get back to where you were in net worth terms before you bought the house (meaning $7,000 cash in the bank after selling it), you would need to stay in the house for 4 and a half years to accumulate the $16,000 in equity through principal payments. That leaves you with your original $7,000 down payment returned to you in cash, and you're even in accounting terms (which means in finance terms you're behind; that $7,000 invested at 3% historical average rate of inflation would have earned you about $800 in those four years, meaning you need to stick around about 5.5 years before you "break even" in TVM terms). For this reason, I would say that you should be very cautious when buying your first home; it may very well be the last one you'll ever buy. Whether that's because you made good choices or bad is up to you. |
Unemployment Insurance Through Options | This is a snapshot of the Jan '17 puts for XBI, the biotech index. The current price is $65.73. You can see that even the puts far out of the money are costly. The $40 put, if you get a fill at $3, means a 10X return if the index drops to $10. A 70X return for a mild, cyclic, drop isn't likely to happen. Sharing youtube links is an awful way to ask a question. The first was far too long to waste my time. The second was a reasonable 5 minutes, but with no example, only vague references to using puts to protect you in bad years. Proper asset allocation is more appropriate for the typical investor than any intricate option-based hedging strategy. I've successfully used option strategies on the up side, multiplying the returns on rising stocks, but have never been comfortable creating a series of puts to hit the jackpot in an awful year. |
Switch from DINK to SIWK: How do people afford kids? | What makes it hard is that you're making this decision now, when you've already made decisions over the years going in a different route. I've noticed this recently w/some of my friends, that decisions, even small ones, over the years now come back to bite them b/c they didn't have a long term view. Now in early 30's they are constrained by choices throughout their 20's. Unfortunately, most people aren't equipped to make good decisions earlier, which hurts them later. So making such a change in lifestyle becomes harder. So while it can be done, it's going to take some hard decisions. Just remember, children are a great reward, and a great sacrifice. |
JCI headache part 2: How to calculate cost basis / tax consequences of JCI -> ADNT spinoff? | I am using the same logic as the two answers above. I got almost the same result ($46.60 instead of $46.59 per share) using the sold fractional share basis. However, the JCI Qualified Dividend (on the 1099-DIV, not the 1099-B) divided by the number of shares spun off yields a basis per share of only $40.97 That compares to $45.349 in answer two above. It seems that we should get the approximately same basis per share using the same arithmetic, and I do not know why we don't. For my tax files, I plan to use the Adient basis equal to the dividend from the 2016 1099-DIV of JCI (the PLC after the merger). My reasoning is that I cannot use an amount for the Adient basis that is greater than the dividend I paid taxes on. [In case this part of the question comes up again, you can get historical quotes at various websites such as https://finance.yahoo.com/quote, which does show $45.51 as the Adient closing price on 10/31/16.] |
why do energy stocks trade at lower prices compared to other sectors? | I don't know why stocks in some industries tend to have lower prices per share than others. It doesn't really matter much. Whether a company has 1,000,0000 shares selling for $100 each, or 10,000,000 shares selling for $10 each, either way the total value is the same. Companies generally like to keep the share price relatively low so that if someone wants to buy a small amount, they can. Like if the price was $10,000 per share, than an investor with less than $10,000 to put in that one stock would be priced out of the market. If it's $10, then if someone wants $10 they can buy one share, and if someone wants $10,000 they can buy 1000 shares. As to why energy stocks are volatile, I can think of several reasons. One, in our current world, energy is highly susceptible to politics. A lot of the world's energy comes from the Middle East, which is a notoriously unstable region. Any time there's conflict there, energy supplies from the region become uncertain. Oil-producing countries may embargo countries that they don't like. A war will, at the very least, interfere with transportation and shipping, and may result in oil wells being destroyed. Etc. Two, energy is consumed when you use it, and most consumers have very limited ability to stockpile. So you're constantly buying the energy you need as you need it. So if demand goes down, it is reflected immediately. Compare this to, say, clothing. Most people expect to keep the same clothes for years, wearing them repeatedly. (Hopefully washing them now and then!) So if for some reason you decided today that you only need three red shirts instead of four, this might not have any immediate impact on your buying. It could be months before you would have bought a new red shirt anyway. There is a tendency for the market to react rather slowly to changes in demand for shirts. But with energy, if you decide you only need to burn 3 gallons of gas per week instead of 4, your consumption goes down immediately, within days. Three, really adding to number two, energy is highly perishable, especially some forms of energy. If a solar power station is capable of producing 10 megawatts but today there is only demand for 9 megawatts, you can't save the unused megawatt for some future time when demand is higher. It's gone. (You can charge a battery with it, but that's pretty limited.) You can pile up coal or store natural gas in a tank until you need it, but you can't save the output of a power plant. Note numbers two and three also apply to food, which is why food production is also very volatile. |
If there's no volume discount, does buying in bulk still make sense? | Instead of buying in bulk, I invest the money in equity mutual funds, for an expected return of 12%, which is more than inflation. So, I make more returns. But at the cost of a slight risk, which I'm comfortable with. |
Why do people always talk about stocks that pay high dividends? | The upvoted answers fail to note that dividends are the only benefit that investors collectively receive from the companies they invest in. If you purchase a share for $100, and then later sell it for $150, you should note that there is always someone that purchases the same share for $150. So, you get $150 immediately, but somebody else has to pay $150 immediately. So, investors collectively did not receive any money from the transaction. (Yes, share repurchase can be used instead of dividends, but it can be considered really another form of paying dividends.) The fair value of a stock is the discounted value of all future dividends the stock pays. It is so simple! This shows why dividends are important. Somebody might argue that many successful companies like Berkshire Hathaway do not pay dividend. Yes, it is true that they don't pay dividend now but they will eventually have to start paying dividend. If they reinvest potential dividends continuously, they will run out of things to invest in after several hundred years has passed. So, even in this case the value of the stock is still the discounted value of all future dividends. The only difference is that the dividends are not paid now; the companies will start to pay the dividends later when they run out of things to invest in. It is true that in theory a stock could pay an unsustainable amount of dividend that requires financing it with debt. This is obviously not a good solution. If you see a company that pays dividend while at the same time obtaining more cash from taking more debt or from share issues, think twice whether you want to invest in such a company. What you need to do to valuate companies fairly is to estimate the amount of dividend that can sustain the expected growth rate. It is typically about 60% of the earnings, because a part of the earnings needs to be invested in future growth, but the exact figure may vary depending on the company. Furthermore, to valuate a company, you need the expected growth rate of dividends and the discount rate. You simply discount all future dividends, correcting them up by the expected dividend growth rate and correcting them down by the discount rate. |
To sell or to rent the house? | So either scenario has about $10K upfront costs (either realtor/selling expenses or fixing up for rental). Furthermore, I'm sure that the buyers would want you to fix all these things anyway, or reduce the price accordingly, but let's ignore this. Let's also ignore the remaining mortgage, since it looks like you can comfortably pay it off. Assuming 10% property management and 10% average vacancy (check your market), and rental price at $1000 - you end up with these numbers: I took very conservative estimates both on the rent (lower than you expect) and the maintenance expense (although on average over the years ,since you need to have some reserves, this is probably quite reasonable). You end up with 2.7% ROI, which is not a lot for a rental. The rule of thumb your wife mentioned (1% of cash equity) is indeed usually for ROI of leveraged rental purchase. However, if rental prices in your area are rising, as it sounds like they are, you may end up there quite soon anyway. The downside is that the money is locked in. If you're confident in your ability to rent and are not loosing the tax benefit of selling since it sounds like you've not appreciated, you may take out some cash through a cash-out refi. To keep cash-flow near-0, you need to cash out so that the payments would be at or less than the $3200/year (i.e.: $266/month). That would make about $50K at 30/yr fixed 5% loan. What's best is up to you to decide, of course. Check whether "you can always sell" holds for you. I.e.: how stable is the market, what happens if one or two large employers disappear, etc. |
Sale of jointly owned stock | They may be confused. The combination of "my wife received stock when younger" and "her father just died" leaves questions. A completed gift, when she was a kid, means she has a basis (cost) same as the original owner of that stock. This may need to be researched. The other choice is that she gets a price based on the date of dad's death, a stepped up basis, if it was his, but she got it when he passed. No offense to them, but brokers are not always qualified to offer tax advice. How/when exactly did she get to own the stock. Upon second reading it appears I answered this from a tax perspective. You seem to have issues of ownership. What exactly does the broker tell you? In whose name is the statement for the account holding these shares? Scott, saw your update. For the accounts I have for my 13 year old, I am custodian, but the tax ID is her social security number. When 21, she doesn't need my permission to sell anything, just valid ID. What exactly does the broker tell her? |
Should I finance a new home theater at 0% even though I have the cash for it? | If you do it, be sure to read what you sign. They'll sign you up on some type of "credit insurance" and not tell you about it. It costs like $10 a month. If you don't sign up for that, you should be fine. I bought my HDTV this way, though I wish I would have saved and paid up front. I'm moving more towards the "cash only" mindset. |
Corporate Finance | Your company wants to raise $25,000,000 for a new project, but flotation costs are incurred by issuing securities (underwriting, legal fees, etc) First you must determine how much of the $25,000,000 is going to be debt and equity. The company's target D/E ratio is 50% (or .50). For every $0.50 of debt raised they want to raise $1.00 in equity. $1.00 + $0.50 = $1.50 $0.50/$1.50 = 1/3 debt, that leaves the equity portion being 2/3. $25,000,000 * (1/3) = $8,333,333.33 (DEBT) and $25,000,000 * (2/3) = $16,666,666.67 (EQUITY) Using the Weighted Average Cost then you would do something like this: = (1/3) * .04 + 2/3 * .12 = .09333333 =$25,000,000/(1-.093333) = $27,573,529.40 |
Does this sound like a great idea regarding being a landlord and starting a real estate empire? | This is a reasonable idea and many people have done it. But there are some risks that you need to mitigate. This is a viable business model, but it is a business and you need to treat it as such and expect to work quite hard at it. |
Should we prepay our private student loans, given our particular profile? | See my recent answer to a similar question on prepaying a mortgage versus investing in IRA. The issue here is similar: you want to compare the relative rates of funding your retirement account versus paying down your debt. If you can invest at a better rate than you are paying on your debt, with similar risk, then you should invest. Otherwise, pay down your debt. The big difference with your situation is that you have a variable rate loan, so there's a significant risk that the rate on it will go up. If I was in your shoes, I would do the following: But that's me. If you're more debt-averse, you may decide to prepay that fixed rate loan too. |
What is the difference between fund and portfolio? | A fund is a portfolio, in that it is a collection, so the term is interchangeable for the most part. Funds are made up of a combination of equities positions (i.e., stocks, bonds, etc.) plus some amount of un-invested cash. Most of the time, when people are talking about a "fund", they are describing what is really an investment strategy. In other words, an example would be a "Far East Agressive" fund (just a made up name for illustration here), which focuses on investment opportunities in the Far East that have a higher level of risk than most other investments, thus they provide better returns for the investors. The "portfolio" part of that is what the stocks are that the fund has purchased and is holding on behalf of its investors. Other funds focus on municipal bonds or government bonds, and the list goes on. I hope this helps. Good luck! |
How can contractors recoup taxation-related expenses? | They are already indirectly paying these expenses. They should be built into your rates. The amount per job or per hour needs to cover what would have been your salary, plus the what would have been sick, vacation, holidays, health insurance, life insurance, disability, education, overhead for office expenses, cost of accountants...and all taxes. In many companies the general rule of thumb is that they need to charge a customer 2x the employees salary to cover all this plus make a profit. If this is a side job some of these benefits will come from your main job. Some self employed get some of these benefits from their spouse. The company has said we give you money for the work you perform, but you need to cover everything else including paying all taxes. Depending on where you live you might have to send money in more often then once a year. They are also telling you that they will be reporting the money they give you to the government so they can claim it as a business expense. So you better make sure you report it as income. |
Why buy insurance? | First of all, insurance never covers the cost of the item, it is almost always a partial payout at best. For example, a typical house in the Northeast US where I live that costs $300,000 will have the actual house valued at maybe $100,00 and rest of the value will be in the land. Therefore, the insured value will typically be $100,000. The only problem is that to actually rebuild the house might easily cost $250,000. So, your idea that some kinds of insurance allows the beneficiary to recoup their loss is usually never true. As you say, from an actuarial point of view insurance is a sheer waste of money. For example, a typical house has maybe a 0.5% chance of burning down every year. In other words out of 2000 houses, maybe 1 will burn down every year. So, lets say you got $100,000 of insurance on your house. Then the value of that policy would be $100,000 / 2000 = $50 per year. An insurance company will charge around $700 per year for the policy. That means you are basically flushing $650 down the toilet every year to maintain that policy. The reason why they do this is what blankip says above, they are buying "peace of mind", a psychological product. In other they imagine they are somehow safe. So, even though they are losing money, paying it makes them feel as though they are not losing money. It's delusional, but then again most people have a lot of delusions of which insurance is just one of many. |
Calculating profits for a private fund | One way I heard of, from a friend who ran a similar fund as yours, is to calculate $days of investment and divide the investment as accordingly. For example, If I invested 10$ for 10 days and you have invested 20$ for 5 days. At the end of the 10th day my $day = 10*10=100, while your $day=20*5=100. If the investement has grown to 100$, the I should get $100/(100+100)*100=$50, you also should get the same. This I guess is equitable, you could try dividing the corpus with above method. It consideres the amount invested as well as the time invested for. I think by the above method, you could also handle the inbetween withdrawals. |
Automatic investments for cheap | Almost all major no-load mutual fund families allow you to do the kind of thing you are talking about, however you may need an initial investment of between $1000 to $3000 depending on the fund. Once you have it however, annual fee's are usually very little, and the fees to buy that companies funds are usually zero if it's a no-load company (Vanguard, TRowPrice, etc) With the larger companies that means you have a pretty large selection of funds, but generally EACH fund has a minimum initial purchase, once that's met then you can buy additional amounts in small quantities without a problem. For someone on a smaller budget, many low cost brokers (ETrade as mentioned by Litteadv, Scottrade as mentioned by myself in another similar question today) allow you to start with smaller initial balances and have a small selection of funds or ETF's that you can trade from without commission. In the case of Scottrade, they have like 15 ETF's that you can trade comission free. Check with the various low cost brokerages such as ETrade, Scottrade, and TDAmeritrade, to see what their policies are, and what if any funds/ETF's they allow you to trade in without commissions. Keep in mind that for Mutual funds, there may still be a fund minimum initial investment that applies, be sure to check if that is the case or not. The lack of any minimum investment makes ETF's a slightly more attractive option for someone who doesn't have the 'buy in' that many funds require. |
What determines deal price on stock exchange? [duplicate] | Price is decided by what shares are offered at what prices and who blinks first. The buyer and seller are both trying to find the best offer, for their definition of best, within the constraints then have set on their bid or ask. The seller will sell to the highest bid they can get that they consider acceptable. The buyer will buy from the lowest offer they can get that they consider acceptable. The price -- and whether a sale/purchase happens at all -- depends on what other trades are still available and how long you're willing to wait for one you're happy with, and may be different on one share than another "at the same time" if the purchase couldn't be completed with the single best offer and had to buy from multiple offers. This may have been easier to understand in the days of open outcry pit trading, when you could see just how chaotic the process is... but it all boils down to a high-speed version of seeking the best deal in an old-fashioned marketplace where no prices are fixed and every sale requires (or at least offers the opportunity for) negotiation. "Fred sells it five cents cheaper!" "Then why aren't you buying from him?" "He's out of stock." "Well, when I don't have any, my price is ten cents cheaper." "Maybe I won't buy today, or I'll buy elsewhere. "Maybe I won't sell today. Or maybe someone else will pay my price. Sam looks interested..." "Ok, ok. I can offer two cents more." "Three. Sam looks really interested." "Two and a half, and throw in an apple for Susie." "Done." And the next buyer or seller starts the whole process over again. Open outcry really is just a way of trying to shop around very, very, very fast, and electronic reconciliation speeds it up even more, but it's conceptually the same process -- either seller gets what they're asking, or they adjust and/or the buyer adjusts until they meet, or everyone agrees that there's no agreement and goes home. |
Can paying down a mortgage be considered an “investment”? | If by "investment" you mean something that pays you money that you can spend, then no. But if you view "investment" as something that improves your balance sheet / net worth by reducing debt and reducing how much money you're throwing away in interest each month, then the answer is definitely yes, paying down debt is a good investment to improve your overall financial condition. However, your home mortgage might not be the first place to start looking for pay-downs to save money. Credit cards typically have much higher interest rates than mortgages, so you would save more money by working on eliminating your credit card debt first. I believe Suze Orman said something like: If you found an investment that paid you 25% interest, would you take it? Of course you would! Paying down high interest debt reduces the amount of interest you have to pay next month. Your same amount of income will be able to go farther, do more because you'll be paying less in interest. Pay off your credit card debt first (and keep it off), then pay down your mortgage. A few hundred dollars in extra principal paid in the first few years of a 30 year mortgage can remove years of interest payments from the mortgage term. Whether you plan to keep your home for decades or you plan to move in 10 years, having less debt puts you in a stronger financial position. |
Gigantic point amount on rewards card - what are potential consequences? | First IANAL! This is going to depend on the kind of points. If it's an internal point system that the business is doing on their own, then they may very well, give you that many "extra" points. They may really not care. Specially if the cost of the points is low enough. Remember that steak dinner that you paid $60 for only really cost them $2 and that they use $60 worth of points on it. If the point system is tied to a bank or credit card, then it's far more likely that the "just use them" is not the proper answer. The company doing the reimbursing is giving the location $60 and using your points. The points have a much higher value. With that said, your responsibility is to notify, and follow their rules. So notify them in writing, and use the rewards card as you normally would. If your being honest, then the worst that happens is that your point balance is a little negative (because you spent 100 points but really only had 98 after adjustment). Most likely, if your being honest, they will just eat the few points over that you went on accident. If you get an answer in writing to just keep the points, then I guess you know where your daughter's wedding reception will be. Let's hope it's a classy place. Of course, as a 'good' person (or maybe a 'stupid' person), I should call them, (wait 30 minutes in the queue), and then try to explain the issue to the service desk. I actually did that, and the guy thought I am nuts to even call, and told me to 'just use them they are yours now'. I don't feel like calling again and again until I get someone that believes it, just to return them their points. You will want to do this in writing. Email will work, but you really want a paper trail, either way. I could just toss the card and forget about it. However, I had quite some points on it that really belong to me, so that feels like I pay for their fault. There is no need to do this. It's like a bank error. Talk to them and they will give you an answer. In the mean time, do your best to only use the points you actually have. Use them and play stupid. It's not my duty to check their math, right? Probably nobody will ever care (let's keep religious considerations out here). What would be the consequences if they do realize their error some day in the far future? (I understand this borders on a legal question). Nope, don't do this. If you play dumb and spend 5000 points when you know you only have around 100, best case scenario you end up with -4900 points (effectively canceling the benefit of the card). You may also be banned form the program, the location, the network, etc. Worst case scenario they want the monetary value of the points and sue you for it, and the legal fees. It may even be considered fraud. TL;DR Use your card, but be honest, and handle the mistake in writing. |
Pay online: credit card or debit card? | Nowadays, some banks in some countries offer things like temporary virtual cards for online payments. They are issued either free of charge or at a negligible charge, immediately, via bank's web interface (access to which might either be free or not, this varies). You get a separate account for the newly-issued "card" (the "card" being just a set of numbers), you transfer some money there (same web-interface), you use it to make payment(s), you leave $0 on that "card" and within a day or a month, it expires. Somewhat convenient and your possible loss is limited tightly. Check if your local banks offer this kind of service. |
Converting bank statements to another currency? | If the account is not dollar-denominated, I would say it does not make sense at all to have dollar-denominated statements. Such a statement would not even be accurate for any reasonable amount of time (since FX rates constantly fluctuate). This would be a nightmare for accounting purposes. If you really need to know the statements in USD, I think the best practice would be to perform the conversion yourself using Excel or some similar software. |
Dad paying for my new home in cash. How can I buy the house from him? | You are going to need a lawyer anyway so check with him. But here is a path you might be able to go down. Put the house in your name right from the get go. He gives you the money but you sign over a promissory note to him so that you net less than $14000 (gift tax annual exclusion for the calendar year). He can gift everyone in your household 14k per year tax free and he could gift it to you and your partner in less than 7 years. You can pay him back in anyway you like or not at all as the promissory note could be reduced by 28k per year. I think a CPA and lawyer in your state would be able to confirm that this would work for you. |
Is it adventageous to expedite my wedding before the new year for tax savings? | Yes on taxes. It depends on the other point. As you already see from Ben's comment, if you're both very Western in your culture, you may want to consider Ben's advice because while you will save money, it may not be considered a healthy way to start a relationship. Western culture tends to see marriage as more of a "do it for love" whereas other cultures may view marriage more pragmatically and take economics and finance as a major consideration. For instance, a friend of mine married his spouse and it was 100% pragmatic - considering taxes and laws, driving most of his family insane because "it doesn't sound very loving" (these were the exact words). Unfortunately, this created tension later on because family on both sides kept telling both of them that the other didn't love the partner and they used how their marriage started as proof. As surprising as it is to me (non-Western), many Americans are horrified at people marrying at the JOP or other pragmatic ways, even if it saves them thousands. Answering questions about relationships is very difficult because often the issue is less about money and more about culture. If you're both from pragmatic cultures where economics and finance weigh strongly and you don't see possible issues with family (and really be honest on this point), then consider the financial advantages. |
Should I use a bank or a credit union for my savings account? | In practical terms, these days, a credit union IS a small "savings and loan" bank -- the kind of bank that used to exist before bankers started making money on everything but writing loans. They aren't always going to offer higher interest and/or cheaper loans than the bank-banks, but they're almost always going to be more pleasant to deal with since they consider the depositors and borrowers their stockholders, not just customers. There are minor legal differences (different insurance fund, for example), and you aren't necessarily eligible to open an account at a randomly-chosen credit union (depending on how they've defined the community they're serving), but they will rarely affect you as an account holder. The main downside of credit unions is that, like other small local banks, they will only have a few branches, usually within a limited geographic area. However, I've been using a credit union 200 miles away (and across two state lines on that route, one if I take a large detour) for decades now, and I've found that between bank-by-mail, bank-by-internet, ATM machines, and the "branch exchange" program (which lets you use branches of participating credit unions as if they were branches of your own) I really haven't felt a need to get to the branch. I did find that, due to network limitations of $50K/CU/day, drawing $200,000 worth of bank checks on a single day (when I purchased the house) required running around to four separate branch-exchange credit unions. But that's a weird situation where I was having trouble beating the actual numbers out of the real estate agents until a few days before the sale. And they may have relaxed those limitations since... though if I had to do it again, I'd consider taking a scenic drive to hit an actual branch of my own credit union. If you have the opportunity to join a credit union, I recommend doing so. Even if you don't wind up using it for your "main" accounts, they're likely to be people you want to talk to when you're shopping for a loan. |
How much more than my mortgage should I charge for rent? | Your reasoning is backwards. As others have pointed out, you cannot just decide how much you charge irrespective of the market. Let me paraphrase a little economics 101 to underline why you also should not think like this: You can see a rental property like your house (the same reasoning is usually explained with the example of hotel rooms) as a series of perishable goods. Your house represents the potential sale of the January rent (which perishes once January is over), plus the February rent etc. Your approach was to compute the total costs (all fixed and variable costs of owning that house as well as costs associated to renting specifically) and average them over the time period so that you know how much to ask at least. Assuming that you are only looking to rent it out, not sell it or let a family member live there, you can't think like this. Most of those costs that you averaged are what economists call sunk costs. You have already incurred the mortgage costs and they are not affected by your decision to rent or not to rent. These costs are irrelevant to your decision making process. You only need to think about marginal costs: those additional costs that you have when you rent but not when you don't. Look at the market prices for renting similar properties in that region and compare them with your marginal costs. As long as they are higher than your marginal costs, rent it out. This does not mean that you are sure to make profits, but it means that you are sure to make less losses than in your only alternative of not renting. |
Why don't some places require a credit card receipt signature, and some do? | My understanding it that the signature requirement is at the retailer's discretion. If the merchant decides to require a signature it protects them against fraudulent charge-back claims, but increases their administrative costs. In some situations it just isn't practical for a retailer to require a signature. Consider for example mail-order or online purchases, which I've never had to sign a credit card slip for. |
How can a person with really bad credit history rent decent housing? | This tale makes me sad the more I learn of it. I am impressed with your dedication and caring for your ex-wife and particularly your kids; you seem like a good person from your questions. But you are tired and exasperated too. You have every right to be. The problem isn't how this woman can rent a new apartment (which there isn't a good way that won't screw over some unsuspecting landlord) but how to get this woman into conseling on a regular basis. Not just money, but personal or group therapy. She honestly needs help and must face this problem herself otherwise these questions will never stop. I know you mentioned this doesn't appear to be an option, anf maybe it isn't your job, but I. See your questions are much deeper than personal finance. I wish you the best and I really do admire your resolve to take care of your kids. |
Dispute credit card transaction with merchant or credit card company? | Most merchants (also in Europe) are reasonable, and typically are willing to work with you. credit card companies ask if you tried to work with the merchant first, so although they do not enforce it, it should be the first try. I recommend to give it a try and contact them first. If it doesn't work, you can always go to the credit card company and have the charge reversed. None of this has any effect on your credit score (except if you do nothing and then don't pay your credit card bill). For the future: when a transaction supposedly 'doesn't go through', have them write this on the receipt and give it to you. Only then pay cash. I am travelling 100+ days a year in Europe, using my US credit cards all the time, and there were never any issues - this is not a common problem. |
What's the best way to make money from a market correction? | A lot of people here talk about shorting stocks, buying options, and messing around with leveraged ETFs. While these are excellent tools, that offer novel opportunities for the sophisticated investor, Don't mess around with these until you have been in the game for a few years. Even if you can make money consistently right out of the gate, don't do it. Why? Making money isn't your challenge, NOT LOSING money is your challenge. It's hard to measure the scope of the risk you are assuming with these strategies, much less manage it when things head south. So even if you've gotten lucky enough to have figured out how to make money, you surely haven't learned out how to hold on to it. I am certain that every beginner still hasn't figured out how to comprehend risk and manage losing positions. It's one of those things you only figure out after dealing with it. Stocks (with little to no margin) are a great place to learn how to lose because your risk of losing everything is drastically lower than with the aforementioned tools of the sophisticated investor. Despite what others may say you can make out really well just trading stocks. That being said, one of my favorite beginner strategies is buying stocks that dip for reasons that don't fundamentally affect the company's ability to make money in the mid term (2 quarters). Wallstreet loves these plays because it shakes out amateur investors (release bad news, push the stock down shorting it or selling your position, amateurs sell, which you buy at a discount to the 'fair price'.) A good example is Netflix back in 2007. There was a lawsuit because netflix was throttling movie deliveries to high traffic consumers. The stock dropped a good chunk overnight. A more recent example is petrobras after their huge bond sale and subsequent corruption scandal. A lot of people questioned Petrobras' long-term ability to maintain sufficient liquidity to pay back the loans, but the cashflow and long term projections are more than solid. A year later the stock was pushed further down because a lot of amateur Brazilians invest in Petrobras and they sold while the stock was artificially depressed due to a string of corruption scandals and poor, though temporary, economic conditions. One of my favorite plays back in 2008-2011 was First Solar on the run-up to earnings calls. Analysts would always come out of these meetings downgrading the stock and the forums were full of pikers and pumpers claiming heavy put positions. The stock would go down considerably, but would always pop around earnings. I've made huge returns on this move. Those were the good ole days. Start off just googling financial news and blogs and look for lawsuits and/or scandals. Manufacturing defects or recalls. Starting looking for companies that react predictably to certain events. Plot those events on your chart. If you don't know how to back-test events, learn it. Google Finance had a tool for that back in the day that was rudimentary but helpful for those starting out. Eventually though, moreso than learning any particular strategy, you should learn these three skills: 1) Tooling: to gather, manipulate, and visualize data on your own. These days automated trading also seems to be ever more important, even for the small fish. 2) Analytical Thinking learn to spot patterns of the three types: event based (lawsuits, arbitrage, earnings etc), technical (emas, price action, sup/res), or business-oriented (accounting, strategy, marketing). Don't just listen to what someone else says you should do at any particular moment, critical thinking is essential. 3) Emotions and Attitude: learn how to comprehend risk and manage your trigger finger. Your emotions are like a blade that you must sharpen every day if you want to stay in the game. Disclaimer: I stopped using this strategy in 2011, and moved to a pure technical trading regime. I've been out totally out of the game since 2015. |
Are variable rate loans ever a good idea? | The earlier you are in your career, the more willing you should be to take a better opportunity even if it has a short-term financial cost. You go to college even if McDonald's has an opening. After college you may take an entry level job with better long-term prospects even if a higher paying job is available. You may train for some professional qualification. Having expenses you have to pay limits your flexibility to do this. A variable rate loan that goes up later may give you the freedom to make better decisions early on. Thus in this case it may be worthwhile. That said - be very wary of variable rate loans. Unless you have iron discipline, they give the opportunity to bury yourself. |
Why does Yahoo Finance's data for a Vanguard fund's dividend per share not match the info from Vanguard? | In the context of EDV, 4.46 is the indicated dividend rate. The indicated dividend rate is the rate that would be paid per share throughout the next year, assuming dividends stayed the same as prior payment. sources: |
In accounting and investment, what is the difference and relationship between balance and position | an account balance is your total in the account. The word balance means "to be equal". The use in finance stem from accounting. However you do not need to know why its called a balance to understand that a balance is equal to something. IE: your "account balance" is your total account weather its savings, electric bill, or investment portfolio. A position in your investment portfolio is what you are invested in. IE: If I went 100 shares long(I bought) Apple then I have a 100 share position in Apple. Your position is added to your account balance within your investment portfolio. |
Why ever use a market order? | The original poster's concern is valid. Sometimes, market orders do get executed at seemingly ridiculous prices. In addition to Victor's reasons for using a market order, sometimes a seller does not care how low the price is. For example, after a company goes broke, its stock continues to trade for a while. This allows shareholders to realize their losses for tax purposes, and allows short-sellers to close out their positions. A shareholder who is trying to realize a 10 dollar per share loss for tax purposes probably does not care whether he gets 10 cents per share or 0.001 cents per share, so a sell-at-market order makes sense. |
ETF vs Mutual Fund: How to decide which to use for investing in a popular index? | What is your time horizon? Over long horizons, you absolutely want to minimise the expense ratio – a seemingly puny 2% fee p.a. can cost you a third of your savings over 35 years. Over short horizons, the cost of trading in and trading out might matter more. A mutual fund might be front-loaded, i.e. charge a fixed initial percentage when you first purchase it. ETFs, traded daily on an exchange just like a stock, don't have that. What you'll pay there is the broker commission, and the bid-ask spread (and possibly any premium/discount the ETF has vis-a-vis the underlying asset value). Another thing to keep in mind is tracking error: how closely does the fond mirror the underlying index it attempts to track? More often than not it works against you. However, not sure there is a systematic difference between ETFs and funds there. Size and age of a fund can matter, indeed - I've had new and smallish ETFs that didn't take off close down, so I had to sell and re-allocate the money. Two more minor aspects: Synthetic ETFs and lending to short sellers. 1) Some ETFs are synthetic, that is, they don't buy all the underlying shares replicating the index, actually owning the shares. Instead, they put the money in the bank and enter a swap with a counter-party, typically an investment bank, that promises to pay them the equivalent return of holding that share portfolio. In this case, you have (implicit) credit exposure to that counter-party - if the index performs well, and they don't pay up, well, tough luck. The ETF was relying on that swap, never really held the shares comprising the index, and won't necessarily cough up the difference. 2) In a similar vein, some (non-synthetic) ETFs hold the shares, but then lend them out to short sellers, earning extra money. This will increase the profit of the ETF provider, and potentially decrease your expense ratio (if they pass some of the profit on, or charge lower fees). So, that's a good thing. In case of an operational screw up, or if the short seller can't fulfil their obligations to return the shares, there is a risk of a loss. These two considerations are not really a factor in normal times (except in improving ETF expense ratios), but during the 2009 meltdown they were floated as things to consider. Mutual funds and ETFs re-invest or pay out dividends. For a given mutual fund, you might be able to choose, while ETFs typically are of one type or the other. Not sure how tax treatment differs there, though, sorry (not something I have to deal with in my jurisdiction). As a rule of thumb though, as alex vieux says, for a popular index, ETFs will be cheaper over the long term. Very low cost mutual funds, such as Vanguard, might be competitive though. |
Can I buy a new house before selling my current house? | If you can qualify for two mortgages, this is certainly possible. For this you can talk to a banker. However, most people do not qualify for two mortgages so they go a different route. They make offers on a new home with a contingency to sell the existing home. A good Realtor will walk you through this and any possible side effects. Keep in mind that the more contingencies in an offer the less attractive that offer is to sellers. This is how cash buyers can get a better deal (no contingencies and a very fast close). Given the hotness of your market a seller might reject your offer as opposed to first time home buyer that does not need to sell an old home. On the other hand, they may see your contingency as low risk as the market is so hot. This is why you probably need a really good agent. They can frame the contingency in a very positive light. |
Gym membership tax deductible? | Assuming its in the US: No, it is not, and such things are usually treated as "red flags" for audit (and no, golf club memberships are not deductible either). The food expenses are not deductible in their entirety as well, only up to 50% of the actual expense, and only if it is directly business related. From what you've described, it sounds like if you have an audit coming you'll be in trouble. The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. |
Why would anyone want to pay off their debts in a way other than “highest interest” first? | If you have a debt that has very low interest now, but you are aware that it's not going to stay that way (0% introductory APR on a credit card, for example), it can make sense to pay that off before the higher rate kicks in. |
Should withheld income tax be included as income? | Does it make sense to report withheld tax income as an additional income? Is it required by the IRS? Is $T deductible? This is what is called imputed income. The ticket is an income for you, but the company doesn't want you to pay tax on it. But you have to. But they want to be nice to you and give you the ticket on their buck. But that's the law. So what have the accountants invented? Imputed income. The company raises your salary in the amount of taxes paid (+some, but that's negligible), in addition to the actual ticket. So it seems, to you, that you got the ticket for free. The IRS doesn't see the ticket, it just sees that you got a $T+$X bonus and paid $T taxes. The fact that the $X you got in form of a ticket doesn't matter to them. Re your edit - you cannot deduct anything, since you can only deduct unreimbursed expenses, whereas $X is not at all an expense for you (you didn't buy that ticket, the company did), and $T is taxes, which are not deductible (its not an expense). In other words, had C not have been nice, I would be in a better position! No. Your net pay shouldn't be affected, technically, so from your perspective you just got a plane ticket for free. Had C not been nice, you would still not be able to deduct the whole cost of $X, because unreimbursed employee expenses have a 2% AGI threshold. |
Walking away from an FHA loan | One additional penalty is you will be put on the CAIVRS ("cavers") for your default on the FHA mortgage which will preclude you from FHA financing in the future. When purchasing the multifamily unit it is an FHA requirement that you occupy one of the units. Lastly, I would advise against FHA due to elevated costs. Conventional options have 95% financing options, and don't have mortgage insurance that lasts forever, like FHA does. |
Help: Being charged interest on a loan for which I received no statements telling me of this debt for the past 15 years. Surprise! | There is a ten year statue of limitations on debt collection, bankruptcy, etc. The problem is, if you start paying, even say, $1, you "acknowledge" the debt and the clock starts again. Debt claims fall under the "he said, she said," rubric. In debt restructuring situations, the debtor is taught to write all their creditors DENYING debts. Some percentage of those creditors won't have the paperwork to back up their claims. Others will, and can press their claims. Then a court decides. But in any event, a debt more than tens years old is a "stale," debt. A court is likely to rule in your favor. Unless you "acknowledge" the debt. |
Thinking of doing an MBA: Is an $80K top MBA school better than a $24K online MBA school? | I met two MBA graduates from Harvard - both made VPs at large Canadian companies (i.e. $1B or greater annual revenue) after working 2-5 years as management consultants post-graduation - one is now a divisional president making over $500K in salary along. When I asked one of them (one that is not yet making $500K in salary) about the Harvard MBA difference, he said the brand-name and the network probably set it apart from others, since most MBA schools now uses the same material as Harvard's. I tend to agree with his thoughts - I never did felt the caliber of my professor had much to do with my ability to apply what I learn to practical use. In my own MBA education, the professor did more facilitation than "teaching". Apparently that is the norm, as MBA is less about being fed information than it is about demonstrating the ability to analyze and present information. Back to M.Attia's question, I would go with the highest ranked MBA education I could afford (both financially and lifestyle). A friend of mine was able to get his employer to pay for the $90K tuition fee from Rotman, along with job security for 5 years (not a bad idea in this economy). I settled for Lansbridge University in Fedricton because the flexibility of distance learning and cost was important to me, though I was able to get my employer to pay for the MBA after I started (I switched group within the company shortly after I started my MBA and my new boss was able to get the approval without locking me in). |
Split buying a house 3 ways. How do I approach this? | Get everything in writing. That includes ownership %, money in, money out, who is allowed to use the place, how much they need to pay the other partners, who pays for repairs, whether to provide 'friends and family' discounts, who is allowed to sell, what happens if someone dies, how is the mortgage set up, what to do if one of you becomes delinquent, etc. etc. etc. Money and friends don't mix. And that's mostly because people have different ideas in their head about what 'fair' means. Anything you don't have in writing, if it comes up in a disagreement, could cause a friendship-ending fight. Even if you are able to agree on every term and condition under the sun, there's still a problem - what if 5 years from now, someone decides that a certain clause isn't fair? Imagine one of you needs to move into the condo because your primary residence was pulled out from under you. They crash at the condo because they have no where else to go. You try to demand payment, but they lost their job. The agreement might say "you must pay the partnership if you use the condo personally, at the standard monthly rate * # of days". But what is the penalty clause - is everything under penalty of eviction, and forced sale of the condo and distribution of profits? Following through on such a penalty means the friendship would be over. You would feel guilty about doing it, and also about not doing it [at the same time, your other partner loses their job, and can't make 1/3rd of the mortgage payments anymore! They need the rent or the bank will foreclose on their house!] etc etc etc Even things like maintenance - are the 3 of you going to do it yourselves? Labour distributed how? Will anyone get a management fee? What about a referral fee for a new renter? Once you've thought of all possible circumstances and rules, and drafted it in writing, go talk to a lawyer, and maybe an accountant. There will be many things you won't have considered yet, and paying a few grand today will save you money and friends in the future. |
Checking the math on a Truth-in-Lending Disclosure | As your question is written now, it looks like you have a typo. Your stated APR is 5.542% = 0.05542, not 0.005542 as you've written. I ran the numbers that you gave (accounting for the typo) through the formula at Wikipedia and got $849.2528 / month, which will round to $849.25 for most payments. That doesn't match the number that you computed or the number on your TIL. (Maybe you also miskeyed the result of your calculation?) I agree that it's unlikely that this is just a calculation error by the mortgage company, although I wouldn't completely rule it out. Are you paying anything else like a property tax escrow? I didn't pull a blank TIL form to see what might go into the monthly payment line that you showed, but in many cases you do pay more than just principle and interest each month. (Not sure if that gets reflected at that point on the form though.) |
What is the term for the quantity (high price minus low price) for a stock? | Just guessing here… How about Daily Median price? StockCharts provides a similar value they call VWAP. Which stands for Volume-Weighted Average Price. I believe it is a better 'average' for the day (click on link). |
Why would you ever turn down a raise in salary? | There is currently a bill in Washington that will change the limit for salaried employees receiving overtime pay. It will be raised to $50400. I work 4 hours of overtime each week, which if the bill is passed, equates to an additional $7800 annually. If my company raises my salary to just above the limit then they would not have to pay the overtime. That would only be a raise of approx. $3000. Why would I want to take the raise, and still have to work the overtime, when I can choose to not take the raise and possibly not have to work it any longer. I would rather have the time off, but if I'm going to have to work it, then I'll take the more than double overtime pay. |
How does on-demand insurance company Trov prevent insurance fraud or high prices? | I am not familiar with the startup you mentioned, but in general there are three approaches to avoid losing money in insurance business: review before policy is issued (underwriting) review before claim is paid (claims handling) setting high enough rates to cover underwriting losses The fact that Trov is customer friendly / lax (make your choice of term) when issuing a policy says nothing about their rates or claims payment. It is even possible they are building a portfolio for sale, and do not really care about the claims performance (policies are sold / customers acquired now, and it takes a time for claims to arrive). |
How often are preferred shareholders made whole after a company goes bankrupt? | From the Times A Reader Q.&A. on G.M.’s Bankruptcy Q. I own G.M. preferred shares. Should I be looking to sell them, or hold on? I bought them at $25 a share when they were issued in late 2001. — Karen, Manhattan A. When a company files for bankruptcy, its various stock and bondholders essentially get in line. The first investors to be repaid are secured debt holders, then senior bond investors, followed by subordinated debt holders. Preferred shareholders are next, and lastly, holders of common stock. In a bankruptcy, preferred shares are usually worthless, much like shares of common stock. But in the case of G.M., there may be some good — or at least somewhat better — news. Most of G.M.’s preferred shares are actually senior notes or “quarterly interest bonds,” which means you will be treated as a bondholder, according to Marilyn Cohen, president of Envision Capital Management. So you will be able to exchange your preferreds for G.M. stock (bondholders will receive 10 percent of the new company’s stock). It’s not the best deal, but it beats the empty bag true preferred shareholders would have been left holding. Of course this is just one example, and you were hoping to get some larger picture. The article stated "In a bankruptcy, preferred shares are usually worthless, much like shares of common stock" which at least is a bit closer to that, if you accept usually as a statistic. |
If there's no volume discount, does buying in bulk still make sense? | To Rich Seller's point, we live 1/2 gallon of gas and 30 minute round trip from the supermarket. For the items that are non-perishable, such as bathroom or facial tissue, paper towels, shampoo,soap, toothpaste, etc, there's value in never running out of it. (@JohnFx - your point is well taken. When my daughter was a toddler, I found her covered in band-aids. One tiny scratch, 9 band-aids. My wife asked why I was concerned, we had hundreds in the pantry. I can see how some items might just encourage over-use) |
I have an extra 1000€ per month, what should I do with it? | Lots of good advice on investing already. You may also want to think about two things: A Bausparvertrag. You can set this up for different monthly saving rates. You'll get a modest interest payment, and once you have saved up enough (the contract is zuteilungsreif), you will be eligible for a loan at a low rate. However, you can only use the loan for building, buying or renovating real estate. With interest rates as low as they are right now, this is not overly attractive. However, depending on your salary, you may qualify for subsidies, and these could indeed be rather attractive. This may be helpful (in German). A Riester-Rente. This is a subsidized saving scheme - you save something every year and again get subsidies at the end of the year. I think the salary thresholds where you qualify for a subsidy are a bit higher for the Riester-Rente than for a Bausparvertrag, and even if you don't qualify for a subsidy, your contributions will be deducted from your taxable income. I wouldn't invest all my leftover money in these, considering that you commit yourself for the medium to long term, but they might well be attractive options for at least part of your money, say 20-25% of what you aim at saving every month. Finally, as others have written: banks and insurance companies exist to make money, and they live off their provisions. Get an independent financial advisor you pay by the hour, who doesn't get provisions, and have him help you. |
Combined annual contribution limits for individuals [duplicate] | Your contribution limit to a 401(k) is $18,000. Your employer is allowed to contribute to your 401(k), usually a "matching contribution". That matching contribution comes from your employer, so is not subject to your personal contribution limit. A contribution to a regular 401(k) is typically made with pre-tax money (i.e. you don't pay payroll taxes on the money you contribute) so you pay less taxes for the current tax year. However when you retire and you take money out, you pay taxes on the money you take out. On one hand, your tax rate may be lower when you have retired, but on the other hand, if your investments have appreciated over time, the total amount of tax you pay would be higher. If your company offers a Roth 401(k) plan, you can contribute $18,000 of after tax money. This way you pay the tax on the $18,000 today, as you would if you did not put the money in the 401(k), but when you take the money out at retirement, you would not have to pay tax. In my opinion, that serves as a way to pay effectively more money into your 401(k). Some firms put vesting provisions on the amount that they match in your 401(k), e.g. 4 years at 25% per year. So you have to work 1 full year to be entitled to 25% of their matching contribution, 2 years for 50%, and 4 years to receive all of it. Check your company's Summary Plan Description of the 401(k) to be sure. You are not allowed to invest pre-tax money into a Traditional IRA if you are already contributing to a 401(k) plan and have reached the income limits ($62,000 AGI for single head of household). You are allowed to contribute post-tax money to a Traditional IRA plan if you have already contributed to a 401(k), which you can then Roll-over into a Roth IRA (look up 'backdoor IRA'). The IRA contribution limit applies to all IRA accounts over that calendar year. You could put some money in a traditional IRA, a Roth IRA, another traditional IRA, etc. so long as the total amount is not more than the contribution limit. This gives you an upper limit of 5.5k + 18k = 23.5 investments in retirement accounts. Note however, once you reach age 50, these limits increase to 6.5k (IRA) + 24k (401(k)). They also are adjusted periodically with the rate of inflation. The following approach may be more efficient for building wealth: This ordering is the subject of debate and people have different opinions. There is a separate discussion of these priorities here: Best way to start investing, for a young person just starting their career? Note however, a 401(k) loan becomes payable if you leave your company, and if not repaid, is an unauthorised distribution from your 401k (and therefore subject to an additional 10% tax penalty). You should also be careful putting money into an IRA, as you will be subject to an additional 10% tax penalty if you take out the money (distribution) before retirement, unless one of the exceptions defined by the IRA applies (e.g. $10,000 for first time home purchase), which could wipe out more than any gains you made by putting it in there in the first place. Your specific circumstances may vary, so this approach may not be best for you. A registered financial advisor may be able to help - ensure they are legitimate: https://adviserinfo.sec.gov |
Is it safer to send credit card number via unsecured website form or by e-mail? What safer options are there? | Your biggest risk with a vendor like this is not that your Credit Card Number will be stolen in transit, it is that it will be stolen from the vendor. I agree with @mhoran that using a one-time number is the best plan, provided you have a bank that offers such numbers. Bank of America calls it "Shop Safe" while Citibank calls it "Virtual Account Numbers". I think Discover card has something similar, but less useful, in that they aren't really one-time use, and I think American Express discontinued their service. AFAIK no one else offers anything like it. If you can't get a one-time number, then I was going to suggest buying a Visa gift card, until I put together the fact that you are making a purchase in Asia and the gift cards are not authorized for international payments (due to PATRIOT act restrictions). Visa does offer the V.me service which might help, but I doubt your vendor participates (or would even be allowed to participate) if they don't offer a secure order form. You can open a pre-paid Visa card account, which is probably what I'd do. You can buy pre-paid Visa cards the same way you buy Visa gift cards, the difference being you have to register the pre-paid cards (thanks, PATRIOT act) before you can use them. But it's not that big a deal to register one, you just fill out the online form your your SSN etc and you're good to go. Load it up with enough money to cover your purchase and the FX fees and then cut it up. |
Can I estimate other people's credit limit at the grocery store? | The minimum amount is set by the merchant services provider based on the kind of business, its location and the history. It mostly has nothing to do with you personally. However, the minimum amount differs based on the kind of credit cards being used. For example, foreign credit cards will require signatures on much lower amounts than domestic. In my local Safeway (NoCal analog of Ralph's) the limit for domestic credit cards is set at $50. If your credit limit is $5000, you might think that its a 1% of your limit. But if your limit is $50000 or $500 - it will still be $50. You cannot deduce anything about a specific person's credit situation based on whether or not they are required to sign the receipt. It has no affect on the decision. |
Do shares purchased on FTSE AIM move with company to other markets? | Any shares you buy when a company is listed on one market will remain yours if the company moves to another market. Markets and exchanges like AIM are just venues for dealing in shares - indeed you can deal in those shares anywhere else that will allow you as well as on the AIM. The benefit of being listed in a market is that trade in the shares will be more "liquid" - there's more likely to be people who want to buy and sell them at any given time. The bigger concern would be what happens if the company does badly and drops out of the AIM entirely. You'd still be able to sell your shares to any willing buyer, but finding that buyer might get harder. |
Once stock prices are down, where to look for good stock market deals? | Do your own research There are hundreds of places where people will give you all sorts of recommendations. There is as much noise in the recommendations as there is in the stock market itself. Become your own filter. You need to work on your own instinct. Pick a couple of sectors and a few stocks in each and study them. It is useful to know where the main indexes are going, but - unless you are trading the indexes - it is the individual sectors that you should focus on more. |
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