Question stringlengths 14 166 | Answer stringlengths 3 17k |
|---|---|
Why government bonds fluctuate so much, even though interest rates don't change that often? | Long term gov't bonds fluctuate in price with a seemingly small interest rate fluctuation because many years of cash inflows are discounted at low rates. This phenomenon is dulled in a high interest rate environment. For example, just the principal repayment is worth ~1/3, P * 1/(1+4%)^30, what it will be in 30 years at 4% while an overnight loan paying an unrealistic 4% is worth essentially the same as the principal, P * 1/(1+4%)^(1/365). This is more profound in low interest rate economies because, taking the countries undergoing the present misfortune, one can see that their overnight interest rates are double US long term rates while their long term rates are nearly 10x as large as US long term rates. If there were much supply at the longer maturities which have been restrained by interest rates only manageable by the highly skilled or highly risky, a 4% increase on a 30% bond is only about a 20% decline in bond price while a 4% increase on a 4% bond is a 50% decrease. The easiest long term bond to manipulate quantitatively is the perpetuity where p is the price of the bond, i is the interest payment per some arbitrary period usually 1 year, and r is the interest rate paid per some arbitrary period usually 1 year. Since they are expressly linked, a price can be implied for a given interest rate and vice versa if the interest payment is known or assumed. At a 4% interest rate, the price is At 4.04%, the price is , a 1% increase in interest rates and a 0.8% decrease in price . Longer term bonds such as a 30 year or 20 year bond will not see as extreme price movements. The constant maturity 30 year treasury has fluctuated between 5% and 2.5% to ~3.75% now from before the Great Recession til now, so prices will have more or less doubled and then reduced because bond prices are inversely proportional to interest rates as generally shown above. At shorter maturities, this phenomenon is negligible because future cash inflows are being discounted by such a low amount. The one month bill rarely moves in price beyond the bid/ask spread during expansion but can be expected to collapse before a recession and rebound during. |
What does market cap (or market capitalization) mean? | Market cap is the current value of a company's equity and is defined as the current share price multiplied by the number of shares. Please check also "enterprise value" for another definition of a company`s total value (enterprise value = market cap adjusted for net nebt). Regarding the second part of your question: Issuing new shares usually does not affect market cap in a significant way because the newly issued shares often result in lower share prices and dilution of the existing share holders shares. |
Should I get cash from credit card at 0% for 8 months and put it on loans? | Do you know how many people end up with an 18-21% rate on their credit card? They started off with low teaser rates. There was an article about it recently on Yahoo. Mainly this comes from a lack of discipline, or an unforeseen emergency. However, lets assume, that you are a bit uncommon and have iron discipline. It comes down to a math question. What is the rate on your student loan? I am going to assume 6%, and lets say that you are now paying interest. So there is 7 months between now an then, you would pay $140 (4000 * .06/12 * 7) in interest if you left it on the student loan. Typically there is not really a free lunch with the zero percent interest rate CC. They often charge a 3% balance transfer fee, so you would pay that on the entire amount, about $120. Is it worth the $20? I would say not. However, those simple calculations are not really correct. Since you would have to pay the CC $588.6/month to take care of this, you have to shrink the balance on the student loan to do a true apples to apples comparison. So doing a little loan amortization, you can retire $4000 on the student loan only paying $583/month, and paying a total of $80.40 in interest. So it would cost you money to do what you are suggesting if there is a 3% transfer fee. Even if there is no transfer fee, you only save about $80 in interest. If it was me, I would direct my energy in other areas, like trying to bring in more money to make this student loan go away ASAP. Oh and GO STEELERS! |
What is meant by a market that is technically strong | A technically strong stock or market is simply a stock or market which is up-trending and has been up-trending for a while. Just as a fundamentally strong stock is one with good fundamentals (a stock that is healthy and making higher profits year after year and continually improving), a technically strong stock has a healthy uptrend that continues to go up and up. Apple was technically strong until it hit $700 (its price stayed above the 200 day MA for a long period until after it hit $700, then broke down through the 200 day MA shortly after - the uptrend was over). I will usually buy stocks which are both fundamentally and technically strong, as a technically strong stock will generally stay technically strong longer if it also has strong and good fundamentals. |
Should I sell when my stocks are growing? | I reread your question. You are not asking about the validity of selling a particular stock after a bit of an increase but a group of stocks. We don't know how many. This is the S&P for the past 12 months. Trading at 1025-1200 or so means that 80-100 points is an 8% move. I count 4 such moves during this time. The philosophy of "you can't go wrong taking a gain" is tough for me to grasp as it offers no advice on when to get (back) in. Studies by firms such as Dalbar (you can google for some of their public material) show data that supports the fact that average investors lag the market by a huge amount. 20 years ending 12/31/08 the S&P returned 8.35%, investor equity returns showed 1.87%. I can only conclude that this is a result of buying high and selling low, not staying the course. The data also leads me to believe the best advice one can give to people we meet in these circumstances is to invest in index funds, keeping your expenses low as you can. I've said this since read Jack Bogle decades ago, and this advice would have yielded about 8.25% over the 20 years, beating the average investor by far, by guaranteeing lagging the average by 10 basis points or so. A summary of the more extensive report citing the numbers I referenced is available for down load - QAIB 2015 - Quantitative Analysis of Investor Behavior. It's quite an eye-opener and a worthy read. (The original report was dated 2009, but the link broke, so I've updated to the latest report, 2015) |
Filing taxes on stocks | You need to talk to an accountant who practices tax accounting, preferaby someone who is an Enrolled Agent (EA) with the IRS, and possibly an attorney who specializes in tax law. There are multiple issues here, and the executor of your father's estate might need to be involved here too. Presumably you were a minor in 2007 since the transactions took place in a custodial account, and perhaps you were a dependent of your father in 2007. So, were the transactions reported on your father's 2007 income tax return? or did he file a separate income tax return in your name? You say you have a W2 for 2007. So you were earning some income in 2007? This complicates matters. It is necessary to determine who has the responsibility to file income tax returns for a minor with earned income. Above all, I urge you to not file income tax returns on your own or using a tax return preparation program, or after talking to a tax return preparation service (where you will likely get someone who works on a seasonal basis and is unlikely to be familiar with tax law as of 2007). |
Is the I.T. function in banking considered to be on the expense side, as opposed to revenue side? | Here is how your CEO has to see it. Of course, eventually most revenues are generated by IT systems but technically IT still is an expense only activity unless of course you are selling the software/services offered by it. According to the US GAAP, software development costs are capitalized when a firm develops a software for its own use (e.g., nice shiny UI show bank's VaR, algorithmic trading engines, internal security infrastructure etc.). When the software is developed for sale, all the costs are expensed as incurred until the technical feasibility is established after which the costs are capitalized. The income is realized when licenses to use the software or the services provided by it are sold. According to international standards, the treatment for both the use cases shown above is the same --all the costs are expensed as incurred until the technical feasibility is established after which the costs are capitalized. The income is realized when licenses to use the software or the services provided by it are sold. |
Why index funds have different prices? | Funds which track the same index may have different nominal prices. From an investors point of view, this is not important. What is important is that when the underlying index moves by a given percentage, the price of the tracking funds also move by an equal percentage. In other words, if the S&P500 rises by 5%, then the price of those funds tracking the S&P500 will also rise by 5%. Therefore, investing a given amount in any of the tracking funds will produce the same profit or loss, regardless of the nominal prices at which the individual funds are trading. To see this, use the "compare" function available on the popular online charting services. For example, in Google finance call up a chart of the S&P500 index, then use the compare textbox to enter the codes for the various ETFs tracking the S&P500. You will see that they all track the S&P500 equally so that your relative returns will be equal from each of the tracking funds. Any small difference in total returns will be attributable to management fees and expenses, which is why low fees are so important in passive investing. |
Why does a stock's price fluctuate so often, even when fresh news isn't available? | Investors are "forever" comparing the prices of stocks to other stocks. As others have pointed out, this is done faster and more frequently nowadays with high-speed computer programs. There may be no "fresh" news on stock A, but if there is fresh news on stock B (as there usually is), the news on B affects the COMPARISON with stock A. That could be what causes trading in stock A that has "no news." |
What can I do to remedy ISA cash/shares transfer latency? | One possibility you may consider is to keep all of your funds in the stocks and shares ISA while investing that proportion you wish to keep in cash into a tradeable "Money Market" ETF. A Money Market ETF will give you rates comparable to interest rates on cash and at the same time it will give you "instant access" subject to normal 3 day settlement of equities. This is not exactly a perfect solution. Most Money Market ETFs will pay monthly dividends, so depending on your timing, you may have to give up some interest. In the worst case, if you were to sell the day before going ex-dividend, then you would be giving up a months interest. In the best case, if you were to sell on the day of going ex-dividend, you would be giving up no interest. |
Indie Software Developers - How do I handle taxes? | First of all, consult an accountant who is familiar with tax laws and online businesses. While most accountants know tax laws, fewer know how to handle online income like you describe although the number is growing. Right now, since you're a minor, this complicates things a bit. That's why you'll need a tax accountant to come up with the best business structure to use. You'll need to keep your own records to estimate your quarterly taxes. At the amount you're making, you'll want to do this since you'll pay a substantial penalty at the end of the year if you don't. You can use a small business accounting software package for this or just track everything using Excel or the like. As long as taxes are paid, you won't go to jail. But you need to pay them along with any penalties by April 15, 2013. If you don't do this, then the IRS will want to have a 'discussion' with you. |
What is the correct answer for percent change when the start amount is zero dollars $0? | A value of zero or a negative value makes the percent change meaningless. Saying 100% when going from 0 to some other value is simply wrong. I have seen a similar situation several times when looking at a public company with a loss last quarter. On Google Finance or some other service, the PE ratio will be blank, N/A, or something like that. If the company does not currently have earnings, then the PE ratio is meaningless. Likewise, if the company previously did not have earnings, then the percent change of the earnings is meaningless. Also consider the example where the previous value was negative. If the previous value was negative 1 and the current value is positive 99, then this happens: A negative change? But the value went up! Obviously that value does not make sense and should not be shown. |
Didn't apply for credit card but got an application denied letter? | I would keep the letter in a file for follow-up, and I would do what you are already planning to do and wait to see what shows up on the credit report. If this does reflect an identity theft attempt, chances are that others will follow, so vigilance is key here. If there is a hard credit check, then you can dispute that on your credit report. If there is not a hard credit check, there is nothing further this credit card company can do to help you anyway. |
Taxes for citizen of EU country #1 living in EU country #2 and working from home for non-EU country #3? | There are just too many variables here... Will you legally be considered a permanent resident from the moment you move? Will you work from home as a contractor or as an employee? Those are not questions you can answer yourself, they really depend on your circumstances and how the tax authorities will look at them. I strongly encourage you to speak to an advisor. Very generally spoken, at your place of residence you pay taxes for your worldwide income, at the place of your work base (which is not clear if this really would be Turkey) you pay taxes on the income generated there. If it's one and the same country, it's simple. If not, then theoretically you pay twice. However, most countries have double taxation treaties to avoid just that. This usually works so that the taxes paid abroad (in Turkey) would be deducted from your tax debt at your place of residence. But you might want to read the treaty to be sure how this would be in your specific case (all treaties are publicly available), and you should really consider speaking to a professional. |
How to get rid of someone else's debt collector? | I have been in a similar position for quite a while now and the only thing that seems to help is screening phone calls. I have a long list of collector numbers set to not ring on my phone. They can still leave a voice mail but they never do. As far as I know there aren't any laws that protect you from nuisance phone calls. FDCPA letters only apply to the debtor and the collector it is sent to it doesn't protect an unrelated third party from getting annoying phone calls. I have a feeling that sending FDCPA letters is just confirming that you probably are the debtor and prolong the collection calls. |
How can I stop a merchant from charging a credit card processing fee? | This might not be the answer you are looking for, but the alternative to "don't patronize these merchants" is this: DO patronize these merchants, and pay cash. Credit cards are convenient. (I use a credit card often.) However, there is no denying that they cost the merchants an incredible amount in fees, and that our entire economy is paying for these fees. The price of everything is more than it needs to be because of these fees. Yes, you get some money back with your rewards card, but the money you get back comes directly from the store you made the purchase with, and the reward is paid for by increasing the price of everything you buy. In addition, those among us that do not have the credit score necessary to obtain a rewards card are paying the same higher price for goods as the rest of us, but don't get the cash back reward. Honestly, it seems quite fair to me that only the people charging purchases to a credit card should have to pay the extra fee that goes along with that payment processing. If a store chooses to do that, I pay cash instead, and I am grateful for the discount. |
The Benefits/Disadvantages of using a credit card | Credit cards have three important advantages. None of them are for day-to-day borrowing of money. Safety - Credit cards have better fraud protection than checks or cash, and better than most debit/check cards. If you buy something with a credit card, you also get the issuer's (think Visa) assurances that your will get the product you paid for, or your money back. At almost any time, if a product you buy is not what you expect, you can work with the issuer, even if the store says "screw you". Security - Credit cards are almost universally accepted as a "security" against damages to the vendor. Hotels, car rentals, boat rentals etc. will accept a credit card as a means of securing their interests. Without that, you may have to make huge deposits, or not be able to rent at all. For example, in my area (touristy) you can not rent a car on debit or cash. You must use a credit card. Around here most hotel rooms require a credit card as well. This is different from area to area, but credit cards are nearly universally accepted. Emergencies - If you're using your credit card properly, then you have some extra padding when stuff goes wrong. For example, it may be cheaper to place a bill on a credit card for a couple months while you recover from a car accident, than to deplete your bank account and have to pay fees. Bonus - Some cards have perks, like miles, points, or cash back. Some can be very beneficial. You need to be careful about the rules with these bonuses. For example, some cards only give you points if you carry a balance. Some only give miles if you shop at certain stores. But if you have a good one, these can be pretty fantastic. A 3% cash back on purchases can make a large difference over time. |
How risky is it to keep my emergency fund in stocks? | From mid 2007 to early 2009 the DJI went down about 50 %. This market setback won't happen on a single day or even a few weeks. Emergency funds should be in cash only. Markets could be closed for an unknown period of time. Markets where closed September 11 until September 17 in 2001. |
Why would you elect to apply a refund to next year's tax bill? | If you have non-salary income, you might be required to file 1040ES estimated tax for the next year on a quarterly basis. You can instead pay some or all in advance from your previous year's refund. In theory, you lose the interest you might have made by holding that money for a few months. In practice it might be worth it to avoid needing to send forms and checks every quarter. For instance if you had a $1000 estimated tax requirement and the alternative was to get 1% taxable savings account interest for six months, you'd make about $3 from holding it for the year. I would choose to just pay in advance. If you had a very large estimation, or you could pay off a high-rate debt and get a different effective rate of return, the tradeoff may be different. |
I have $12k in a Chase checking account, but want to start earning interest/saving/investing/etc to make more money. What should I do? | I had some extra money, so I opened American express saving account. At the time which was offering .80%, now .90%. I put most of the money in the saving account. The remainder of my money in a investment account at my local bank. I was in touch once a week with investment, I learned allot how the stock market worked and tax deferment(401k, IRA, IRA Roth). My suggestion is to do test run and see if you like it. Side note, NOT ALL investment are created equal. |
If I believe a stock is going to fall, what options do I have to invest on this? | Aganju has mentioned put options, which are one good possibility. I would suggest considering an even easier strategy: short selling. Technically you are borrowing the stock from someone and selling it. At some point you repurchase the stock to return to the lender ("covering your short"). If the stock price has fallen, then when you repurchase it, it will be cheaper and you keep the profit. Short selling sounds complicated but it's actually very easy--your broker takes care of all the details. Just go to your brokerage and click "sell" or "sell short." You can use a market or limit order just like you were selling something you own. When it sells, you are done. The money gets credited to your account. At some point (after the price falls) you should repurchase it so you don't have a negative position any more, but your brokerage isn't going to hassle you for this unless you bought a lot and the stock price starts rising. There will be limits on how much you can short, depending on how much money is in your account. Some stocks (distressed and small stocks) may sometimes be hard to short, meaning your broker will charge you a kind of interest and/or may not be able to complete your transaction. You will need a margin account (a type of brokerage account) to either use options or short sell. They are easy to come by, though. Note that for a given amount of starting money in your account, puts can give you a much more dramatic gain if the stock price falls. But they can (and often do) expire worthless, causing you to lose all money you have spent on them. If you want to maximize how much you make, use puts. Otherwise I'd short sell. About IPOs, it depends on what you mean. If the IPO has just completed and you want to bet that the share price will fall, either puts or short selling will work. Before an IPO you can't short sell and I doubt you would be able to buy an option either. Foreign stocks? Depends on whether there is an ADR for them that trades on the domestic market and on the details of your brokerage account. Let me put it this way, if you can buy it, you can short sell it. |
What options do I have at 26 years old, with 1.2 million USD? | Since you mentioned moving, you can buy real state very cheap here in Mexico that will give you income monthly. I will tell you some numbers in case you're interested. Now to investments: you can buy houses for rent, and prices are as follows: Average house $25k which will give about $220 monthly of income. Let's say you buy 20 of these that would be $4400 USD monthly. Now you have a very high standard here and you will never have to work again, and each year the income will increase about 2% and you still have $576k left. |
Is a car loan bad debt? | What's missing in your question, so Kate couldn't address, is the rest of your financial picture. If you have a fully funded emergency account, are saving for retirement, and have saved up the $15K for the car, buy in cash. If you tell me that if the day after you buy the car in cash, your furnace/AC system dies, that you'd need to pay for it with an $8K charge to a credit card, that's another story. You see, there's more than one rate at play. You get close to zero on you savings today. You have a 1.5% loan rate available. But what is your marginal cost of borrowing? The next $10K, $20K? If it's 18% on a credit card, I personally would find value in borrowing at sub-2.5% and not depleting my savings. On the other side, the saving side, does your company offer a 401(k) with company match? I find too many people obsessing over their 6% debt, while ignoring a 100% match of 4-6% of their gross income. For what it's worth, trying to place labels on debt is a bit pointless. Any use of debt should be discussed 100% based on the finances of the borrower. |
Is there a free, online stock screener for UK stocks? | AdvFN has one--click the Charts & Research pulldown and choose UK Screener. Free but requires login. |
How to acquire assets without buying them? | Your question seems to be premised on your personal understanding of economics, and asking that people present to you an explanation of business transactions that is consistent with your own personal worldview. But your premises are flawed, so an accurate answer should not accept them. The basics of trade is that something is worth more to one person than another; a wheat farmer has more wheat that they could possibly eat, and so it has no value other than what they can get by selling it, while an accountant will starve if they do not have any food and thus is willing to pay what the market demands. The two parties can both be better off by having a transaction. The other motivation for transactions is that parties may disagree as to what something is worth; even if one party will lose from the transaction, they may both believe they will profit. |
How to save criteria in Google Finance Stock Screener? | There is probably a better way, but you can do the following: (1) Right click on the right pointing arrow next to the "1-20 of xx rows" message at the bottom right of the table, and select "Copy link location" (2) Paste that into the location (3) At the end of the pasted text there is a "&output=json", delete that and everything after it. (4) hit enter What you get is a page that displays the set of securities returned by and in a very similar display to the "stock screener" without the UI elements to change your selections. You can bookmark this page. |
Why can't house prices be out of tune with salaries | The big problem with your argument is the 10% per year figure, because in the long term (especially if adjusted for inflation) the prices have not been going up nearly that fast. Here is a site with some nice graphs for prices over the last 40 years, and it's pretty clear to see that pretty much just what you were talking about happened, prices outpaced the ability of people to pay, which progressively locked out more and more first time buyers, and eventually that breaks the cycle, pops the bubble, and the prices adjust. There is always of course the choice to NOT buy a house, and just rent, or if you had the feeling that you are near the top of a bubble, SELL and go back to renting. It's interesting to note that in general, rental rates did not increase at nearly the same pace as the prices in the recent bubble. (which of course made it harder for anyone who bought 'investment' properties in the recent 8 years or so to cover their payments via rental revenue.) |
Self employed, putting away tax money | Hearing somewhere is a level or two worse than "my friend told me." You need to do some planning to forecast your full year income and tax bill. In general, you should be filing a quarterly form and tax payment. You'll still reconcile the year with an April filing, but if you are looking to save up to pay a huge bill next year, you are looking at the potential of a penalty for under-withholding. The instructions and payment coupons are available at the IRS site. At this point I'm required to offer the following advice - If you are making enough money that this even concerns you, you should consider starting to save for the future. A Solo-401(k) or IRA, or both. Read more on these two accounts and ask separate questions, if you'd like. |
Understanding the phrase “afford to lose” better | Keep in mind that it's a cliche statement used as non-controversial filler in articles, not some universal truth. When you were young, did you mom tell you to eat your vegetables because children are starving in Ethiopia? This is the personal finance article equivalent of that. Generally speaking, the statement as an air of truth about it. If you're living hand to mouth, you probably shouldn't be thinking about the stock market. If you're a typical middle class individual investor, you probably shouldn't be messing around with very speculative investments. That said, be careful about looking for some deeper meaning that just isn't there. If the secret of investment success is hidden in that statement, I have a bridge to sell you that has a great view of Brooklyn. |
Is investing in an ETF generally your best option after establishing a Roth IRA? | When investing small amounts, you should consider the substantial toll that commissions will take on your investment. In your case, $800 placed in just one ETF will incur commissions of about $8 each way, or a total of 2% of your investment. I suggest you wait until you have at least $5000 to invest in stocks or ETFs. Since this is in a IRA, your options are limited, but perhaps you may qualify for a Vanguard mutual fund, which will not charge commissions and will have annual expenses only a trivial amount higher than the corresponding ETF. it should probably go in a mixed allocation fund, and since you are young, it should be a relatively aggressive one. Mutual funds will also allow you to contribute small amounts over time without incurring any extra fees. |
Should I get a personal loan to pay on my mortgage to go “above water” to qualify for a refinance? | Does it cost money to refi? I know there are quite a few deals out there, I refi'd in June for $500, not bad. But sometimes can cost couple grand. If so, you have up front costs, plus the cost of the personal loan, that probably would break even at some point after your refi, but at what point? Will you sell before then, or even think about it? Or would you break even next year, then its a no brainer. As mentioned by others, do the numbers. |
If banks offer a fixed rate lower than the variable rate, is that an indication interest rates may head down? | Usually that is the case that when fixed rates are lower than the variable rates, it is an indication that the banks feel the next movement in rates could be down. You also need to look at the fixed rates for different periods, for example 1 year fixed compared to 3 year fixed and 5 year fixed rates. If you find the 3 and 5 year fixed rates are higher than the 1 year fixed rates this could be an indication that the banks feel rates will fall in the short term but the falls won't last long and will continue to rise after a year or so. If the 3 year fixed rates are also low in comparison, then the banks may feel that the economy is heading for a longer term down trend. The banks won't want to lose out, so will change their fixed rates on their perception of where they feel the economy is headed. Since your post in May 2011, the standard variable rate has since dropped twice (in November and December) to be at 7.30%. You will also find that fixed rates have also been dropped further by the banks, indicating additional future cuts in the variable rates. Regards, Victor |
Can individual investors buy precious metals at the spot price? | There are various exchanges around the world that handle spot precious metal trading; for the most part these are also the primary spot foreign exchange markets, like EBS, Thomson Reuters, Currenex (website seems to be down), etc. You can trade on these markets through brokers just like you can trade on stock markets. However, the vast majority of traders on these exchanges do not intend to hold any bullion ownership at the end of the day; they want to buy as much as they sell each day. A minority of traders do intend to hold metal positions for longer periods, but I doubt any of them intend to actually go collect bullion from the exchange. I don't think it's even possible. Really the only way to get bullion is to pay a service fee to a dealer like you mentioned. But on an exchange like the ones above you have to pay three different fees: So in the end you can't even get the spot price on the exchanges where the spot prices are determined. You might even come out ahead by going to a dealer. You should try to find a reputable dealer, and go in knowing the latest trade prices. An honest dealer will have a website showing you the current trade prices, so you know that they expect you to know the prices when you come in. For example, here's a well-known dealer in Chicago that happily shows you the spot prices from KITCO so you can decide whether their service fee is worth it or not. |
What does it mean for a company to have its market cap larger than the market size? | It is ALWAYS possible for a company's valuation in the market to be larger than the market it serves, and in fact it is not uncommon. There's valid argument that Uber would be a good example of this, with a market cap of more than $60 billion. Market cap is the total value of all shares outstanding. Keep in mind that what a company's shares trade for is less a reflection of its past (or, to some degree, even present) revenue activity and more of a speculative bet on what the company will do in the future. |
Filing 1040-NR when I have been outside the US the entire year? | Yes, you can still file a 1040nr. You are a nonresident alien and were: engaged in a trade or business in the United States Normally, assuming your withholding was correct, you would get a minimal amount back. Income earned in the US is definitely Effectively Connected Income and is taxed at the graduated rates that apply to U.S. citizens and resident aliens. However, there is a tax treaty between US and India, and it suggests that you would be taxed on the entirety of the income by India. This suggests to me that you would get everything that was withheld back. |
Why are there many small banks and more banks in the U.S.? | First, is population density. You didn't say where exactly, but for example here in Tampa, Wells Fargo has 25 branches in the area (though that is a bit larger then what I would think of the Tampa area as a local) Second, we can mix in service expectation. I expect that in addition to "good" online service, "great" phone service, "great" email service, that when I have a problem, don't understand something, or want to talk about my options for investing or choosing account types, that I am able to go into a branch. That I can "walk in" and see someone quickly, or schedule an appointment and see some one right away (at my appointment time). Together, these two options means that on a busy day, the nearest Wells Fargo Branch to me has at any one time, 50 - 60 people in it. Smaller branches, of course have less, and larger branches exist. So it just takes that many branches to address the number of people and their expected needs. As to why there are so many different brands/banks Well that's just the USA. We believe in capitalism. We have believed in it much stronger in the past, but banks are the central to capitalism so why shouldn't they serve as an example. At it's core (a very simplistic look) Capitalism and a free market means that we as customers are better served by having lots of different brands fighting for our business. It should drive more consumer desired features (like lower prices, higher interest rates, better fee schedules, etc.) while forcing those brands to operate "better". (Just ignore the bail out, that's a loaded topic) So for some of us, we want a big bank like Wells Fargo, because we want the rates, structure, and service they can provide as a "big bank". For others they want the more personal touch of a "small bank". There are benefits both ways. For example there may be a bank that only allows people with excellent credit to open accounts. That allows they to have lower over all mortgage rates, but means their checking accounts have higher minimums. While the next bank may be more inclusive, and have smaller minimum balances, but as a result charge more for loans. We like our options, and rest assured all those "brands" offer products that have differences that attract customers. |
How many warrants do I need to exercise to get a stock? | No, you trade the warrant and the warrant price of $11.50 for one stock. The warrant is a little like an option, but with a longer term. If you buy a IPOA.WS warrant then that warrant gives you the option to buy one share of class A stock at $11.50 at a future date. If in the future, the stock is worth $20, then you make $20 - $11.50 - per share. If you buy one IPOA.U, then you get 1/3 of a warrant and 1 share of stock, the warrants will be useless unless you buy in groups of 3 for the IPOA.U. I didn't see the timeframe of the warrant, they're usually good for 10+ years, and they're currently trading in the $1.5-1.8 range. To confirm, here's a decent article about how warrants work: http://www.investopedia.com/articles/04/021704.asp |
Corporate Equity Draw vs Income | You tagged with S-Corp, so I assume that you have that tax status. Under that situation, you don't get taxed on distributions regardless of what you call them. You get taxed on the portion of the net income that is attributable to you through the Schedule K that the S-Corp should distribute to you when the S-Corp files its tax return. You get taxed on that income whether or not it's distributed. If you also work for the small business, then you need to pay yourself a reasonable wage. The amount that you distribute can be one factor in determining reasonableness. That doesn't seem to be what you asked, but it is something to consider. |
Options tax treatment | You would not owe any taxes in the 2015 year, unless you got exercised and called away in 2015. The premium would be short term capital gains barring some other exception I'm not aware of, and if you retain a gain on the underlying shares then that would still be long term capital gains. If it gets called in say April 2016, is the premium+profit+dividends all long term capital gains for the year 2016? The profits are long term capital gains and the premium serves to lower your cost basis, dividends have their own conditions so you'll have to do separate research on that, fortunately they'll likely be negligible compared to the potential capital gains and options premium. |
What time period is used by yahoo finance to calculate beta | Citing the Yahoo Finance Help page, Beta: The Beta used is Beta of Equity. Beta is the monthly price change of a particular company relative to the monthly price change of the S&P500. The time period for Beta is 3 years (36 months) when available. Regarding customised time periods, I do not think so. |
Buying a house, how much should my down payment be? | Mortgage qualification is typically done based on pretax income. To keep the math easy, let's assume $10K/month gross. A well written loan allows 28% or $2800 to be used for the mortgage and property tax. Property tax varies, but 1% is the average of the 2 states mentioned. This results in $7500/yr property or $625/mo tax leaving $2175/mo. Note here - OP stated $750K house. $2175 will finance $450K at 4%/30 years. $2175 will finance $300K at 3.5% /15years. Let me pause here. Facts are most important to make these decisions. Unless you're clear on gross income, which may be higher, the constraints above quickly come into play. Once the numbers are spelled out, you may find that you are qualified to only borrow $350K based on a 30 year note. Nathan's $2500 payment was correct, but for the mortgage only. Add property tax and you'd be at $3125. You'd need a gross $11,160/mo. to meet the 28% rule. The above discussion would render any further thoughts (of mine) moot. |
Why would a company care about the price of its own shares in the stock market? | Originally, stocks were ownership in a company just like any other business- you expected to make a profit from your investment, which is what we call dividends to stock holders. Since these dividends had real value, the stock price was based on what this return rate was, factoring in what it might be expected to be in the future, etc. Nowdays many companies never issue any dividends, so you have to consider the full value of the company and what benefit could be gained by another company if it were to acquire it. the market will likely adjust the share price to factor in what the value of the company might be to an acquirer. But otherwise, some companies today trading at an astronimical price, and which nevers pays a dividend- chalk it up to market stupidity. In this investor'd mind, there is no logical reason for these prices, except based on the idea that someone else might pay you more for it later... for what reason? I can't figure it out. Take it back to it's roots and imagine pitching a new business idea to you uncle to invest in- it will make almost nothing compared to it's share price, and even what it does make it won't pay anything to him for his investment. Why wouldn't he just laugh at you? |
Income tax on my online drop-shipping business (India) | I find that there are two violation of law , prima facie , if someone earns money by depositing in the online account and then not reporting it ( including in his total income for the year ) and not bringing in India. Income Tax Act violation 1. It is simply comcealment liable for penalty & prosecution under I.T.Act. 2. You should know that anyone who is resident of India as per income Tax Act and having taxable income ( gross total income exceeding exemption limit) will have to fill up the column in his/her income tax return whether Previously these column were not in the Income Tax Return. So , now anyone who is liable to file return of Income can be tried for false return if he has hiddne assets aborad. 2. FEMA violation RBI permits remittance under Liberalized Remittance Scheme. However this scheme can not be used for certain purpose . It is important to examine whether RBI prohibits use of remittance for any entity or business you have described. You can read following FAQ on RBI site Q. 30. What are the prohibited items under the Scheme? Ans. The remittance facility under the Scheme is not available for the following: i) Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000; ii) Remittance from India for margins or margin calls to overseas exchanges / overseas counter-party; iii) Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market; iv) Remittance for trading in foreign exchange abroad; v) Remittance by a resident individual for setting up a company abroad; vi) Remittances directly or indirectly to Bhutan, Nepal, Mauritius and Pakistan; vii) Remittances directly or indirectly to countries identified by the Financial Action Task Force (FATF) as “non co-operative countries and territories”, from time to time; and viii) Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks. You will have to examine , if the remittance was NOT done for purpose not allowed by RBI under LRS . If you clear this , you can say there is no violation and your violation is restricted to I.T.Act only. |
How is a relocation fee of more than 40k taxed? | It is ordinary income to you. You should probably talk to a California licensed CRTP/EA/CPA, but I doubt they'll say anything different. You would probably ask them whether you can treat some of it as a refund of rent paid, but I personally wouldn't feel comfortable with that. |
Wash sale rule impact on different scenarios between different types of accounts | Brokerage->Brokerage 13-16 The loss from the previous purchase will be added to the cost basis of the security for the second purchase. Since you sold it at a loss again it would increase your losses. Your loss from the first sale will be disallowed. Your loss will be added to the cost basis of the next purchase. Your gains will be taxed on the total of the cost basis which will reduce your gains. Which you will taxed 'less'. Your gains will be taxed. Your loss is allowed. You will be taxed on both. Wash Sales really only applies to losses. If you sell for gain, the tax man will be happy to take his share. From my understanding, it does not matter if it is IRA or Brokerage, the wash sale rule affects them all. Check this link: http://www.marketwatch.com/story/understanding-the-wash-sale-rules-2015-03-02 |
How does UpWork allow US companies to make payments outside of the US? | Permanent employees are the distinct opposite of contractors. Upwork can easily have business entities (limited liability company equivalents) in multiple countries, and it can make payments between them. Or they can merely use existing payment infrastructure (paypal, amazon) to accomplish the same thing. Their corporate structure is a red herring and most likely unrelated to what they've accomplished. |
How to measure a currencies valuation or devaluation in relevance to itself | As the value of a currency declines, commodities, priced in that currency, will rise. The two best commodities to see a change in would be oil and gold. |
How do I manage my portfolio as stock evaluation criteria evolve? | If your criteria has changed but some of your existing holdings don't meet your new criteria you should eventually liquidate them, because they are not part of your new strategy. However, you don't want to just liquidate them right now if they are currently performing quite well (share price currently uptrending). One way you could handle this is to place a trailing stop loss on the stocks that don't meet your current criteria and let the market take you out when the stocks have stopped up trending. |
Is 401k as good as it sounds given the way it is taxed? | Your analysis is not comparing apples to apples which is why it looks like investing money in a non-qualified account is better than a 401k (traditional or Roth). For the non-qual you are using post tax dollars (money that has already been taxed). Now on top of that original tax you are also going to pay capital gains tax for any growth plus dividend rates for any dividends it throws off. For the 401k, let's assume for the moment that $10,000 is invested in a traditional and that the marginal tax rate is always 20%. And for growth let's assume 10x. With a traditional your money will grow to $100,000 and then the IRS gets $20,000 as you pull the money out. The result is a net 80,000 for you. For a Roth 401k, it is taxed first so only $8,000 gets invested. This then grows by the same multiplier to $80,000. (Until you consider changing tax rates the Roth and traditional give the same growth of money). Considering the non-qual option, like with the Roth we only have $8,000 to invest. However in this case you will not realize the full 10x growth as you will have to pay taxes on $72,000. These are taxes that the 401ks (and also IRAs) do not pay. There are other reasons to consider non-qual over maxing out your 401k. Liquidity, quality of investments, and fees being some of those. But the capital gains rate vs. ordinary income rate is not one, as the money in the non-qual still has to go through that ordinary income tax first before it is available to even invest. |
Gift card fraud: To whom to report? How to recover funds? Is the party which issued me the card liable? | Have you checked to see if anything else went missing? Walmart says that because I was not the original purchaser of the gift card, they could not help me directly Just to build on what @littleadv already gave you, my personal experience on this is that none of the companies that you'll likely be dealing with in a situation like this will be falling over themselves to help you out. Unless it also helps them for some reason, or if they're compelled by consumer laws. If you think you should be protected from this sort of thing happening, feel free to reference the FCRA to see if you might get any consumer protections. But just from what you've said here, it doesn't sound like you do. So if anything else went missing (or even if not), it might have been someone working for Citi, who may have had access to more of your personal information than just your card. ID theft is unfortunately common, as a fairly easy crime to commit, a hard one to protect yourself against, and a very hard one to prosecute. When did you last check your credit report? |
Should I buy or lease a car given that its not a super luxury car and I only drive 15 miles/d on avg? | I have a few recommendations/comments: The trick here is to make it clear to the dealer that you will not be getting a new car from them and their only hope of making some money is to sell you your own car. You need to be prepared to walk away and follow through. DON'T buy a new car from them even if you end up turning it in! They could still come back a day later and offer a deal. Leasing a new car every 3 years is not the best use of money. You have to really, really like that new car feeling every three years and be willing to pay a premium for it. If you're a car nut (like me) and want to spend money on a luxury car, it's far wiser to purchase a slightly used luxury vehicle, keep it for 8+ years, and that way you won't have a car payment half the time! |
Allocation between 401K/retirement accounts and taxable investments, as a young adult? | First off, great job on your finances so far. You are off on the right foot and have some sense of planning for the future. Also, it is a great question. First, I agree with @littleadv. Take advantage of your employer match. Do not drop your 401(k) contributions below that. Also, good job on putting your contributions into the Roth account. Second, I would ask: Are you out of debt? If not, put all your extra income towards paying off debt, and then you can work your plan. Third, time to do some math. What will your business look like? How much capital would you need to get started? Are there things you can do now on a part-time basis to start this business or prepare you to start the business? Come up with a figure, find some mutual funds that have a low beta, and back out how much money you need to save per month, so you have around that total. Then you have a figure. e.g. Assume you need $20,000, and you find a fund that has done 8% over the past 20 years. Then, you would need to save about $110/month to be ready to go in 10 years, or $273/month to go in about 5 years. (It's a time value of money calculation.) The house is really a long way off, but you could do the same kind of calculation. I feel that you think your income, and possibly locale, will change dramatically over the next few years. It might not be bad to double what you are saving for the business, and designate one half for the house. |
Is it legal if I'm managing my family's entire wealth? | My answer is with respect to the United States. I have no idea about India's regulatory environment. You are opening yourself up to massive liabilities and problems if you deposit their money in your account. I managed investment accounts as a private investment advisor for years (those with less than 15 clients were not required to register) until Dodd-Frank changed the rules. Thus you would have to register as an advisor, probably needing to take the series 65 exam (or qualifying some other way, e.g. getting your CFP/CFA/etc...). I used a discount broker/dealer (Scottrade) as the custodian. Here's how it works: Each client's account was their own account, and I had a master account that allowed me to bill their accounts and manage them. They signed paperwork making me the advisor on their account. I had very little accounting to handle (aside from tracking basis for taxed accounts). If you take custody of the money, you'll have regulatory obligations. There are always lots of stories in the financial advisor trade publications about advisors who go to jail for screwing their clients. The most common factor: they took custody of the assets. I understand why you want a single account - you want to ensure that each client gets the same results, right? Does each client want the same results? Certainly the tax situation for each is different, yes? Perhaps one has gains and wants to take losses in one year, and the other doesn't. If their accounts are managed separately, one can take losses while the other realizes gains to offset other losses. Financial advisors offer these kinds of accounts as Separately Managed Accounts (SMAs). The advisors on these kinds of accounts are mutual funds managers, and they try to match a target portfolio, but they can do things like realize gains or losses for clients if their tax situation would prefer it. You certainly can't let them put retirement accounts into your single account unless the IRS has you on their list of acceptable custodians. I suggest that you familiarize yourself thoroughly with the regulatory environment that you want to operate under. Then, after examining the pros and cons, you should decide which route you want to take. I think the most direct and feasible route is to pass the Series 65, register as an investment advisor, and find a custodian who will let you manage the assets as the advisor on the account. Real estate is another matter, you should talk to an attorney, not some random guy on the internet (even if he has an MBA and a BS in Real Estate, which I do). This is very much a state law thing. |
Paying myself a dividend from ltd company | In a simple case as the sole UK resident director/shareholder of a company, with that company as your only income, you are usually best paying yourself a salary of the maximum tax free amount allowed under your tax code (~£11k for most people at present). On this you will have to pay some employer and employee National Insurance (NI) contributions (totalling around £1000). Your salary/employer NI counts as an expense, so that is taken off the company profits. You then pay corporation tax on the remainder (20%). The first £5k you take as dividends is tax free, the remainder at a lower tax rate than the equivalent combined income tax/NI (starting at 7.5% instead of 20% tax plus employee plus employer NI), giving a significant saving compared to salaried income even after corporation tax. To declare and pay the tax, you would need to complete a self-assessment tax return. Your company will also need to file a return. The Contractor UK website, although aimed at IT contractors, has some very useful information on operating Ltd companies. That said, finances are rarely that simple so I would concur with the recommendation you engage an accountant, which is a tax-deductible expense. |
Finding a good small business CPA? | Look for an accountant who brings not only expertise in number crunching, but consulting and business planning - a full package. |
How does stabilization work during an IPO? | IPO's are priced so that there's a pop" on the opening day." If I were IPOing my company and the price "popped" on the open, I would think the underwriter priced it too low. In fact if I were to IPO, I'd seek an underwriter whose offerings consistently traded on the first day pretty unchanged. That means they priced it correctly. In the 90's IPO boom, there were stocks that opened up 3X and more. The original owners must have been pretty upset as the poor pricing guidance the underwriter offered. |
Gigantic point amount on rewards card - what are potential consequences? | Most likely scenario (A): You spend tons of time and effort talking to them, with the end result that they take away the extra points. You feel screwed having to do their job for them - they've given you no benefit for looking out for them, and you're left with the points you've earned but maybe less desire to go back and use them. Most likely scenario (B): You just use the points, they eventually figure out the problem and fix it. They send you a nasty letter, demanding some sort of compensation that they have no legal obligation to (because points are not money, you will have rendered existing points for service, and they have, per your existing phone call which can be substantiated in existence though not content through phone records, confirmed that they are yours) - they may go so far as to bar you from their premises. If you don't use enough points to go "negative" before they fix it, you may avoid this. If they can deal with this competently from a customer service/PR standpoint, then in scenario (A) they may understand you quickly, and they may leave you with some extra points for your trouble. In scenario (B), pretty much the same thing - they'll let you have the points you used and even leave you a little extra. I suggest in either case you only engage in written communication with them or, if your jurisdiction allows it, record voice conversations. You need a record of what you've been told. |
How long to wait before refinancing a high interest car loan, after improving credit history? | Between half a year and a year should be enough to improve your interest rates drastically on car loan refinance. Make sure that your new credit card has already been reported to the agencies, and that the credit/debt ratio is lower than 30% on your revolving (credit card) accounts. That also means that you shouldn't carry too much balance, even if the APR is 0%. |
Which kind of investment seems feasible to have more cashflow every week or month? | I'll mirror what the others have said in that your expectations for returns are wildly out of line with reality. If you could achieve that with only moderate risk hopefully you can see that you could ladder those returns by re-investing them and become a billionaire in short order. You may have noticed that there are a lot of really financially savvy people who are not billionaires. So the math for your plan falls apart somewhere, obviously. However, in the spirit of being helpful, and with the caveat that super high returns involve super high risk I'll try and point you in the direction where this is theoretically possible, even if the odds would be better buying lottery tickets. One way to get more leverage from your money than just buying stocks is to buy options. With an options strategy your return/loss will be magnified greatly compared to buying stocks. That is, you can lose or gain a much higher multiplier of your original investment. That said, I don't advise doing that with any money that you can't afford to lose every penny of, because you likely will. |
mortgage vs car loan vs invest extra cash? | A point that hasn't been mentioned is whether paying down the mortgage sooner will get you out of unnecessary additional costs, such as PMI or a lender's requirement that you carry flood insurance on the outstanding mortgage balance, rather than the actual value/replacement cost of the structures. (My personal bugbear: house worth about $100K, while the bare land could be sold for about twice that, so I'm paying about 50% extra for flood insurance.) May not apply to your loan-from-parents situation, but in the general case it should be considered. FWIW, in your situation I'd probably invest the money. |
How should I deal with my long term gain this year? | Long term capital gains are taxed at 15% this year, so the most you stand to save is $150. I wouldn't sell anything at a loss just to offset that, unless you planned on selling anyways. A few reasons: The Long term capital gains rate will go up to 20% next year, so your losses will be "worth more" next year than this year. Short term capital gains rates will go up next year as well, so again, better off saving your losses for next year. You must use capital losses to offset capital gains if you have them, but if you don't have any capital gains, you can use capital losses to offset ordinary income (up to a limit - $3,000 a year IIRC). So, if you just bite the bullet and pay the 15% on your gains this year, you could use your losses to offset your (likely higher rate) ordinary income next year. FYI, complete chart for capital gains tax rates is here. I also posted another answer about capital gains to this question a while back that might be useful. |
How often do typical investors really lose money? | The earlier answers answered the question on how a more practical trader can lose money. Here I'd like to mention some obtuse ways Using debt to buy stocks. If one is borrowing at a higher rate than they are getting back, from an economics prospective their stocks are losing money even if the value of those stocks are going up. Using debt to buy stocks. I'll simplify the nightmare situation. I know someone who has Y dollars of cash. Their broker will loan them X. With their X+Y money, they purchase some equities through the broker. The agreement of the loan is that if the value of those equities drops below a certain percentage of the outstanding debt (ex 150%), the broker will automatically and without notification, sell some equities indiscriminately to reduce the outstanding debt. Being in high-interest debt but buying stocks. There are millions of people who are paying 15+% interest rates on consumer debt while investing and getting 5% returns or less on average. Similar to an earlier point, from an economics prospective the choice to buy equities is a profit losing choice. |
How does start-up equity end up paying off? | I agree with all the people cautioning against working for free, but I'll also have a go at answering the question: When do I see money related to that 5%? Is it only when they get bought, or is there some sort of quarterly payout of profits? It's up to the shareholders of the company whether and when it pays dividends. A new startup will typically have a small number of people, perhaps 1-3, who between them control any shareholder vote (the founder(s) and an investor). If they're offering you 5%, chances are they've made sure your vote will not matter, but some companies (an equity partnership springs to mind) might be structured such that control is genuinely distributed. You would want to check what the particular situation is in this company. Assuming the founders/main investors have control, those people (or that person) will decide whether to pay dividends, so you can ask them their plans to realise money from the company. It is very rare for startups to pay any dividends. This is firstly because they're rarely profitable, but even when they are profitable the whole point of a startup is to grow, so there are plenty of things to spend cash on other than payouts to shareholders. Paying anything out to shareholders is the opposite of receiving investment. So unless you're in the very unusual position of a startup that will quickly make so much money that it doesn't need investment, and is planning to pay out to shareholders rather than spend on growth, then no, it will not pay out. One way for a shareholder to exit is to be bought out by other shareholders. For example if they want to get rid of you then they might make you an offer for your 5%. This can be any amount they think you'll take, given the situation at the time. If you don't take it, there may be things they can do in future to reduce its value to you (see below). If you do take it then your 5% would pay you once, when you leave. If the company succeeds, commonly it will be wholly or partly sold (either privately or by IPO). At this point, if it's wholly sold then the soon-to-be-ex-shareholders at the time will receive the proceeds of the sale. If it's partly sold then as with an investment round it's up for negotiation what happens. For example I believe the cash from an IPO of X% of the company could be taken into the company, leaving the shareholders with no immediate direct payout but (100-X)% of shares in their names that they're more-or-less free to sell, or retain and receive future dividends. Alternatively, if the company settles down as a small private business that's no longer in startup mode, it might start paying out without a sale. If the company fails, as most startups do, it will never pay anything. It's very important to remember that it's the shareholders at the time who receive money in proportion to their holding (or as defined by the company articles, if there are different classes of share). Just because you have 5% now doesn't mean you'll have 5% by that time, because any new investment into the company in the mean time will "dilute" your shareholding. It works like this: Note that I've assumed for simplicity that the new investment comes in at equal value to the old investment. This isn't necessarily the case, it can be more or less according to the terms of the new investment voted for by the shareholders, so the first line really is "nominal value", not necessarily the actual cash the founders put in. Therefore, you should not think of your 5% as 5% of what you imagine a company like yours might eventually exit for. At best, think of it as 5% of what a company like yours might exit for, if it receives no further investment whatsoever. Ah, but won't the founders also have their holdings diluted and lose control of the company, so they wouldn't do that? Well, not necessarily. Look carefully at whether you're being offered the same class of shares as the founders. If not consider whether they can dilute your shares without diluting their own. Look also at whether a new investor could use the founders' executive positions to give them new equity in the same way they gave you old equity, without giving you any new equity. Look at whether the founders will themselves participate in future investment rounds using sacks of cash that they own from other ventures, when you can't afford to keep up. Look at whether new investors will receive a priority class of share that's guaranteed at exit to pay out a certain multiple of the money invested before the older, inferior classes of shares receive anything (VCs like to do this, at least in the UK). Look at any other tricks they can legally pull: even if the founders aren't inclined to be tricky, they may eventually be forced to consider pulling them by a future new investor. And when I say "look", I mean get your lawyer to look. If your shareholding survives until exit, then it will pay out at exit. But repeated dilutions and investors with priority classes of shares could mean that your holding doesn't survive to exit even if the company does. Your 5% could turn into a nominal holding that hasn't really "survived", that entitles you to 0.5% of any sale value over $100 million. Then if the company sells for $50 million you get $0, while other investors are getting a good return. All of this is why you should not work for equity unless you can afford to work for free. And even then you need to lawyer up, now and during any future investment, so your lawyer can explain to you what your investment actually is, which almost certainly is different from what it looks like at a casual uninformed glance. |
Ways to save for child's college education where one need not commit to set contributions? [duplicate] | In my opinion, whichever plan or commodity system you use is just supplemental to a very simple thing: go to your bank's online account, set up a regular transfer (monthly in my case, maybe weekly for you depending on when you get your salary in your country/state) to a savings' account in your kid's name with a decent rate, and just watch it grow. Then adjust to salary fluctuations if needed. Also, prefer a tax-free savings account. Been working fine for me for my oldest who's now 4 yo. Started by saving only a little each month and increased as our financial pressure eased up a bit. For his sister, I already set up a similar thing and I will "equalize" both accounts with additional payments over time (Hmm, actually, maybe that's not fair and they just need to be "equalized" in that they both have the same amount for a given age... but that's another question). Another option, which I set up for my oldest but not for his sister was a child trust fund with an initial payment. We moved countries and I don't find a plan that I find similarly attractive here, and the other one is locked until 18 yo. But, as with all portfolios, it comes with a risk. Note that I don't live in the U.S. in the land of crazy college fees. Though I've studied myself in countries where fees were already a drag (and I'm being polite) for various fields (IT and music studies, anyone?), I have to say when I see fees for the big league universities and colleges in the U.S. I am kind of shocked. Doable, but good luck with that and with your loans. |
In general, is it financially better to buy or to rent a house? | Which is generally the better option (financially)? Invest. If you can return 7-8% (less than the historical return of the S&P 500) on your money over the course of 25 years this will outperform purchasing personal property. If you WANT to own a house for other reason apart from the financial benefits then buy a house. Will you earn 7-8% on your money, there is a pretty good chance this is no because investors are prone to act emotionally. |
What argument(s) support the claim that long-term housing prices trend upward? | It is supported by inflation and historical values. if you look at real estate as well as the stock market they have consistently increased over a long period of history even with short term drops. It is also based on inflation and the fact that the price of land and building material has increased over time. |
How much lump sum investment in stocks would be needed to yield a target stable monthly income? | I will add another point to ChrisinEdmonton's answer... I recognize that this is perhaps appropriate as a comment--or maybe 1/2 of an answer, but the comment formatting is inadequate for what I want to say. The magic formula that you need to understand is this: (Capital Invested) * (Rate of Return) = (Income per Period) When ChrisinEdmonton says that you need $300,000, he is doing some basic algebra... (Capital Required) = (Income per Period) / (Rate of Return) So if you're looking at $12,000 per year in passive income as a goal, and you can find a "safe" 4% yield, then what ChrisinEdmonton did is: $12,000 / 0.04 = $300,000 You can use this to play around with different rates of return and see what investment options you can find to purchase. Investment categories like REITs will risk your principal a little more, but have some of the highest dividend yields of around 8%--12%. You would need $100,000--$150,000 at those yields. Some of the safest approaches would be bonds or industrial stocks that pay dividends. Bonds exist around 3%--4%, and industrial dividend stocks (think GE or UTX or Coca Cola) tend to pay more like 2%-3%. The key point I'm trying to make is that if you're looking for this type of passive income, I recommend that you don't plan on the income coming from gains to the investment... This was something that ChrisinEdmonton wasn't entirely clear about. It can be complicated and expensive to whittle away at a portfolio and spend it along the way. |
What is a Student Loan and does it allow you to cover a wide range of expenses relating to school? | The short answer is that you can use student loans for living expenses. Joe provides a nice taxonomy of loans. I would just add that some loans are not only guaranteed, but also subsidized. Essentially the Government buys down the rate of the loan. The mechanics are that a financial aid package might consist of grants, work study (job), subsidized, and guaranteed loans. One can turn down one or more of the elements of the package. All will be limited in some form. The work study will have a maximum number of hours and generally has low pay. Many find better deals working in the businesses surrounding the college or starting their own services type business. The grants rarely cover the full cost of tuition and books. The loans will both be limited in amount. It mainly depends on what you qualify for, and generally speaking the lower the income the more aid one qualifies for. Now some students use all their grant, all their loan money and buy things that are not necessary. For example are you going to live in the $450/month dorm, or the new fancy apartments that are running $800/month? Are you going to use the student loan money to buy a car? Will it be a new BMW or a 8 year old Camary? I see this first hand as I live near a large university. The pubs are filled with college students, not working, but drinking and eating every night. Many of them drive very fancy cars. The most onerous example of this is students at the military academies. Attendees have their books and tuition completely paid for. They also receive a stipend, and more money can be earned over the summer. They also all qualify for a 35K student loan in their junior year. Just about every kid, takes this loan. Most of those use the money to buy a car. I know a young lady who did exactly that, and so did many of her friends. So kids with a starting pay of 45K also start life with a 35K. Buying a nice car in the military is especially silly as they cannot drive it while deployed and they are very likely to be deployed. At least, however, they are guaranteed a starting job with a nice starting pay, and upward potential. College kids who behave similarly might not have it as good. Will they even find work? Will the job have the ability to move up? How much security is in the job? One might say that this does not apply to engineers and such, but I am working with a fellow with a computer science degree who cannot find a job and has not worked in the past 6 months. This even though the market is super hot right now for computer engineers. So, in a word, be very careful what you borrow. |
What are the best software tools for personal finance? | I'm a big fan of buxfer.com |
Does a US LLC need to file taxes if owned by a foreign citizen? | First, yes, your LLC has to file annual taxes to the US government. All US companies do, regardless of where their owners live. Second, you will also probably be liable to personally file a return in the US and unless the US has a tax treaty with India (which I don't believe it does) you may end up paying taxes on your same income to both countries. Finally, opening a US bank account as a foreign citizen can be very tricky. You need to talk to a US accountant who is familiar with Indian & US laws. |
What do these numbers mean? (futures) | The other answer covers the mechanics of how to buy/sell a future contract. You seem however to be under the impression that you can buy the contract at 1,581.90 today and sell at 1,588.85 on expiry date if the index does not move. This is true but there are two important caveats: In other words, it is not the case that your chance of making money by buying that contract is more than 50%... |
What are the tax implications of lending to my own LLC? | It looks like you'd just be charging yourself interest and paying yourself back, because it's a pass-through entity, as I'm sure you know. (This assumes you're the only member of the LLC.) It all depends on how much money you want inside the protective cover of the LLC, and for how long. It doesn't seem to make much difference how you get the cash in or out, or how complicated or easy you make it for yourself. |
Looking to buy a property that's 12-14x my income. How can it be done? | You need a cosigner. Someone prepared to repay the mortgager if you should fail to. Needless to say this is going to have to be someone who knows you and trusts you very much. One way is to find someone prepared to share a house with you. Buy a bigger house than you would otherwise need. You would own half each, and the sharing agreement would specify that if one of you defaulted on their payments the other would get a larger share according to how much extra they end up paying. The other way is to find a silent partner, who doesn't live there. They put up no money unless you actually default. They would almost certainly have to be part owners, but you can structure the agreement so that you end up with the whole house if you succeed in paying off the mortgage, or miss no payments until you sell. Parents sometimes do this for their kids. |
Is a fixed-price natural gas or electricity contract likely to save money? | In my area, the fixed prices are based on an average. My gas company will look at my previous months (six months if I remember correctly) payments and give me an average based on that amount. Then I am contracted for a year based on that average. If I lower my costs, I'm under contract and will not see the savings but if I go over for some reason, I will save money there. It really depends on how your utility companies work so I would check with them, look at your previous billing cycles and determine if the plan will possibly save you money. Of course some things can't be planned for such as the economic downturn like someone else mentioned. |
How do you quantify investment risk? | The standard measure of risk is the variance of the asset. The return on investment of the asset is understood as a random variable with a particular distribution. One can make inferences about the underlying distribution using historical data. As you say, this is what the quants do. There are other, more sophisticated measures of risk that allow for such things as skewed distributions and Markov switching. If you are interested in learning more, I suggest starting with the foundations of Modern Portfolio Theory: "Portfolio Selection" by Harry Markowitz and "Capital Asset Prices" by William Sharpe. |
Are variable rate loans ever a good idea? | Up to some degree, a higher or lower interest rate means a bit less or a bit more money in your pocket. If the interest rate gets too high, you may be in trouble. So you first look at the situation and ask yourself: At what interest rate would I be in trouble? If this is a $20,000 student loan, then even a very high rate wouldn't be trouble. It would be unfortunate and unpleasant, but not fatal. For a $800,000 mortgage, that's different. Each percent more is $8,000 a year. Going from 3% to 10% would change the interest from $24,000 to $80,000 a year, which would be fatal for many people. In a situation where you can afford increasing variable payments without problems you can go for it. If your variable rate would vary over time between 4% and 6% you would still be even. In that situation, go for variable (taking into account where you think interest rates will go in the future). For a mortgage, the security would likely be more important. (On the other hand, if your dad is a multi-millionaire who would help you out, then that big rate increase wouldn't be fatal, and you could go for a variable rate mortgage). In some countries, you can cancel any loan contract when the interest rate is raised. So raising a variable mortgage interest rate would allow you to look elsewhere without early repayment penalties. Check out if that is the case for you. |
How does a small worker co-op track/manage stocks/shares | What I know about small companies and companies who are not listed on the stock markets is this: If a small company has shares issued to different people either within an organization or outside the value of the shares is generally decided by the individual who wants to sell the share and the buyer who wants to buy it. Suppose my company issued 10 shares to you for your help in the organization. Now you need money and you want to sell it. You can offer it at any price you want to to the buyer. If the buyer accepts your offer thats the price you get. So the price of the share is determined by the price a buyer is willing to buy it at from you. Remember the Face value of the shares remains the same no matter what price you sell it for. Now annual profit distribution is again something called dividends. Suppose my company has 100 shares in total out of which I have given you 10. This means you are a 10% owner of the company and you will be entitled to 10% of the net profit the company makes. Now at the end of the year suppose my company makes a 12,000 USD net profit. Now a panel called board of directors which is appointed by share holders will decide on how much profit to keep within the company for future business and how much to distribute about share holders. Suppose they decide to keep 2000 and distribute 10,000 out of total profit. Since you own 10% shares of the company you get 1000. The softwares you are talking are accounting softwares. You can do everything with those softwares. After-all a company is only about profit and loss statements. |
Calculating Future and Present value into mortgage comparisons | Keep in mind the number of months or years before you break even. You pay money to lower the interest rate, and lower the monthly cost. But it takes a number of months, using your numbers $7,000 to save $160 a month will take ~43 months. That is before figuring in the future or present value. If you sell or refinance the mortgage, the initial points to lower the rate is gone. |
Capital gains on no-dividend stocks - a theoretical question | Stock prices are set by the market - supply and demand. See Apple for example, which is exactly the company you described: tons of earnings, zero dividends. The stock price goes up and down depending on what happens with the company and how investors feel about it, and it can happen that the total value of the outstanding stock shares will be less than the value of the underlying assets of the company (including the cash resulted from the retained earnings). It can happen, also, that if the investors feel that the stock is not going to appreciate significantly, they will vote to distribute dividends. Its not the company's decision, its the board's. The board is appointed by the shareholders, which is exactly why the voting rights are important. |
Switch from DINK to SIWK: How do people afford kids? | Others have tip-toed around this, but I'll just come out and say it. The amount of money you're giving to the church is bordering on irresponsible given that you're just barely breaking even yourself. The best thing you can do if you want to have children is to stop paying such a high amount to the church, and redirect most, if not all, of that money to your savings account. |
Is Stock Trading legal for a student on F-1 Visa in USA? [duplicate] | You can buy and sell stocks, if you like. You'll have to pay taxes on any profits. And short-term is speculating, not investing, and has high risk |
I'm only spending roughly half of what I earn; should I spend more? | I have an idea. Keep saving what you are and think "Early Retirement". Work for 20 years, then do whatever you want 40 hours a week. If your satisfied with your current lifestyle, start thinking of your bigger long term financial goals and when you want to accomplish them by. Maybe you can accomplish these sooner than you think. Saving to buy a house/property? Investment portfolio? Want to travel all over the world? Family planning/kids? I am sure you will figure out how you would want to spend it. |
How would I go about selling the stock of a privately held company? | The easiest way to find a buyer should be to ask the company to connect you to some of their other shareholders. I imagine they are much more likely to take those shares off you than a random investor on the street. Otherwise, well, talk to people. At a golf club, maybe? :) Valuation is not going to be very straightforward. Basically you'll get whatever someone is willing to pay. That's what FMV means when there's no real "market". Realistically, the price is mainly going to be based on divididend history and the company's assets, discounted for risk and liquidity (you're currently feeling the reason for the latter discount). |
Should I switch/rollover my IRA to a Gold IRA at Regal Assets? | The link you originally included had an affiliate code included (now removed). It is likely that your "friend" suggested the site to you because there is something in it for your "friend" if you sign up with their link. Seek independent financial advice, not from somebody trying to earn a commission off you. Don't trust everything you read online – again, the advice may be biased. Many of the online "reviews" for Regal Assets look like excuses to post affiliate links. A handful of the highly-ranked (by Google Search) "reviews" about this company even obscure their links to this company using HTTP redirects. Whenever I see this practice in a "review" for a web site, I have to ask if it is to try and appear more independent by hiding the affiliation? Gold and other precious metal commodities can be part of a diversified portfolio, a small part with some value as a hedge, but IMHO it isn't prudent to put all your eggs in that basket. Look up the benefits of diversification. It isn't hard to find compelling evidence in favor of the practice. You should also look up the benefits of low-fee passively-managed index funds. A self-directed IRA with a reputable broker can give you access to a wide selection of low-fee funds, not just a single risky asset class. |
An online casino owes me money and wants to pay with a wire transfer. Is this safe? | I have won a large amount of money on an online casino. How reputed is the company? Have you done any research around it? It has taken 2 months for me to see any payouts. Last week I received $2300 check from them. Did you win everything in the same period? If so there is no reason why they sent you a smaller check of $2300 instead of the full amount. This should raise a red flag. Why would someone write multiple checks. The only valid reason is you won in different months. The payout for first month was $2300 and they sent a check. The payout for next month is large amount ... the request for Bank Details. that they would rather wire me the money and they are asking for my banking account number and routing number. Although giving bank account number and routing has some risks. This is the fundamental information that is need to make a credit to your account directly. You would be giving this to quite a few entities / people. In most countries, this information is printed on every check that you write from your account. Is this safe? Or am I stupid for even considering this? Online world is full of traps and this could be a scam. So proceed with extreme caution. Insist of check. In worst case open a different savings account, that does not allow direct debits, does not have over draft, etc. Use this to receive money and move it into your regular account. |
How to determine duration of a common stock whose dividends grow in perpetuity? | The fact that dividends grow in perpetuity does not prevent one from calculating duration. In fact, many academic papers look at exactly this problem, such as Lewin and Satchell. This Wilmott thread discusses some of the pros and cons of the concept in some detail. PS: Although I was already broadly familiar with the literature and I use the duration of equities in some of my every-day work as a professional working in finance, I found the links above doing a simple google search for "equity duration." |
I'm 13. Can I buy supplies at a pet store without a parent/adult present? | My 12 year old routinely makes purchases with cash or a gift card (either a store's card or a Visa/Amex card that acts like credit card but is a gift card) and has never had an issue. Clothing, make-up, bath items, etc. I understand in some areas you need to be over 18 to buy certain markers, spraypaint, or other propellant items that can be fatal if inhaled. I see little issue with buying pet supplies, but it wouldn't hurt to have your sibling nearby if you think there will be an issue. |
How does giving to charity work? | If I donate $10,000 to charity then I can deduct that $10,000 from my income and not pay income taxes on it. So if I make $50,000 a year then I will only pay income taxes on $40,000 instead of $50,000 since I donated $10,000 to charity. This is what is meant when charity contributions are said to be tax deductible. Don't feel like you have to donate to charity. You owe no one anything. You do more for others by working (assuming you work in the private sector). If you know of someone personally that is in need of aid then you could give them some help directly. I find this more effective then blindly dumping money in a bureaucratic, inefficient charity. I also find there are very few people in need of charity. Personally, I think charity donations are a way for people to feel good about themselves. They rarely care if their donations are effective. |
Which account type to use for claimable expense I pay upfront for my employer? | I used Quicken, so this may or may not be helpful. I have a Cash account that I call "Temporary Assets and Liabilities" where I track money that I am owed (or that I owe in some cases). So if I pay for something that is really not my expense, it is transferred to this account ("transferred" in Quicken terms). The payment is then not treated as an expense and the reimbursement is not treated as income--the two transactions just balance out. |
question regarding W4 | There are still ways that the default values on the W4 can lead you to get a refund or owe the IRS. If there was a big delta in your paychecks, it can lead to problems. If you make 260,000 and get 26 paychecks that means each check had a gross of 10,000. Your company will withhold the same amount from each check. But If you earned a big bonus then the smaller regular paychecks may not have been withholding enough. When bonus checks are involved the payroll office has to treat them as irregular pay to be able to make it work out. Some companies don't do this, so you may under or over pay during the year. If you changed companies during the year, this can lead to under or over payment. The lower paying company would not know about the higher rate of pay at the other company. so at one you would under pay, and the other you would over pay. There are also social security issues with more than one employer. |
Selling stocks as LIFO or FIFO | According to the IRS, you must have written confirmation from your broker "or other agent" whenever you sell shares using a method other than FIFO: Specific share identification. If you adequately identify the shares you sold, you can use the adjusted basis of those particular shares to figure your gain or loss. You will adequately identify your mutual fund shares, even if you bought the shares in different lots at various prices and times, if you: Specify to your broker or other agent the particular shares to be sold or transferred at the time of the sale or transfer, and Receive confirmation in writing from your broker or other agent within a reasonable time of your specification of the particular shares sold or transferred. If you don't have a stockbroker, I'm not sure how you even got the shares. If you have an actual stock certificate, then you are selling very specific shares and the purchase date corresponds to the purchase date of those shares represented on the certificate. |
How to treat miles driven to the mechanic, gas station, etc when calculating business use of car? | Alright, IRS Publication 463: Travel, Entertainment, Gift, and Car Expenses Business and personal use. If you use your car for both business and personal purposes, you must divide your expenses between business and personal use. You can divide your expense based on the miles driven for each purpose. Example. You are a sales representative for a clothing firm and drive your car 20,000 miles during the year: 12,000 miles for business and 8,000 miles for personal use. You can claim only 60% (12,000 ÷ 20,000) of the cost of operating your car as a business expense Obviously nothing helpful in the code. So I would use option 1, weight the maintenance-related mileage by the proportion of business use. Although if you use your car for business a lot (and perhaps have a spouse with a car), an argument could be made for 3. So I would consider my odds of being audited (even lower this year due to IRS budget cuts) and choose 1 or 3. And of course never throw anything away until you're room temperature. |
If I have some old gold jewellery, is it worth it to sell it for its melt value? | Get your jewelery appraised. (Don't let whoever does the appraisal be the same person whom you would sell it to.) Logically jewelery must be worthy more than the raw gold that makes it up because somebody took the time to design patterns and do specialty craft to the metal. |
More money towards down payment versus long-term investments | Every payment you make on your house will already be increasing your equity in it. For that reason alone, I'd recommend moving additional savings into other long-term funds. |
How to distinguish gift from payment for the service? | All of this assumes that this relationship isn't as employer-employee relationship, which would require you to withhold taxes. If you send them a small token of appreciation, and you are unable to record it as a business expense, or some other deductible expense, you don't have to be concerned about how they claim it. They decide if they want to risk claiming it was a gift, or if they want to record it as an expense. Even if you say some magic phrase that you think will impress the IRS, the recipient can still decide declare it as income. To have any hope of being able to treat it as a gift they would have to be able to demonstrate that there is a non-business relationship. If you can claim it as a business expense, or a deductible expense, they will have to also claim it as income; because your documentation could point the IRS to their lack of documentation. Giving them a check or sending the payment electronically will require them to claim it as an income, since an audit could require them to explain every line on their bank statements. |
Do Americans really use checks that often? | Ever since my apartment complex started accepting rent payments online, I've almost never written a check. I use my debit card for everything. And I get paid by direct deposit. |
Are there any banks with a command-line style user interface? | A bank is unlikely to provide a 'command line' interface because typical users consider a graphical interface easier to use than a command line interface. The extra effort in providing a command line interface for the remaining handful of people isn't worth it. It's the same reason that everything else in the world has a point and click interface. Command line-like features, such as easy repetition and keystroke shortcuts are also unlikely to implemented for the same reasons. They are hard to implement in a web interface, and most people aren't interested in them. Most people have only a few accounts and don't need to download multiple files on a frequent basis. They do typically provide link shortcuts to commonly used features. However all online banking works by implementing the HTTP protocol in some way. You should be able to deduce the HTTP transactions necessary to get the information you want, and implement your own 'command-line'style' interface, or any other interface you want. That won't be easy, especially since you will almost certainly have to implement the security protocols too, but it should be possible. |
If a stock doesn't pay dividends, then why is the stock worth anything? | While there are many very good and detailed answers to this question, there is one key term from finance that none of them used and that is Net Present Value. While this is a term generally associate with debt and assets, it also can be applied to the valuation models of a company's share price. The price of the share of a stock in a company represents the Net Present Value of all future cash flows of that company divided by the total number of shares outstanding. This is also the reason behind why the payment of dividends will cause the share price valuation to be less than its valuation if the company did not pay a dividend. That/those future outflows are factored into the NPV calculation, actually performed or implied, and results in a current valuation that is less than it would have been had that capital been retained. Unlike with a fixed income security, or even a variable rate debenture, it is difficult to predict what the future cashflows of a company will be, and how investors chose to value things as intangible as brand recognition, market penetration, and executive competence are often far more subjective that using 10 year libor rates to plug into a present value calculation for a floating rate bond of similar tenor. Opinion enters into the calculus and this is why you end up having a greater degree of price variance than you see in the fixed income markets. You have had situations where companies such as Amazon.com, Google, and Facebook had highly valued shares before they they ever posted a profit. That is because the analysis of the value of their intellectual properties or business models would, overtime provide a future value that was equivalent to their stock price at that time. |
Calculating the cost of waiting longer for money | The cost of an extra 30 days is $1459.80 |
Where can I find open source portfolio management software? | Take a look at this: http://code.google.com/p/stock-portfolio-manager/ It is an open source project aimed to manage your stock portfolio. |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.